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Summary of Proposed Federal Rules on EHB, Actuarial Value and Accreditation of QHP

  1. Plans in the individual and small employer markets must offer the 10 essential health benefits. 45 CFR §147.150 Plans in the individual market must offer child only coverage as well.
    1. Comment: this does not apply to grandfathered plans or to large and mid sized employer plans.
  2. A state can require “qualified health plans” to offer additional required benefits. §155.170 However
    1. The state must pay the full incremental cost of the additional required benefits either to the individual or to the QHP.
    2. QHP must have a fully accredited actuary report the costs of the additional required benefits to the Exchange.
    3. A state required benefit enacted on or before 12/31/11 is not considered an additional required benefit.
  3. The accreditation timelines for QHPs are as follows: See §155.1045
    1. Exchanges must set a uniform timeline for accreditation.
    2. For federally facilitated Exchanges, the plan must have accreditation in the first year or being in the process of applying for it.
    3. In the second and third year, the QHP must have accreditation by a recognized accrediting agency for the Exchange, or a commercial or Medicaid health plan.
    4. By the fourth year, a QHP must be accredited as an Exchange plan.
  4. Definitions. See §156.20
    1. Actuarial value means the percent of costs paid by the health plan – i.e. 60, 70, 80 or 90%.
    2. Base benchmark plan means the basic plan selected by each state – i.e. the three largest small group plans, largest HMO, three largest state employee plans and 3 largest federal employee plans.
    3. EHB benchmark plan means the ten essential health benefits – e.g. hospitals, doctors, prescription drugs and behavioral health.
    4. EHB package means the scope of covered benefits with cost sharing.
    5. Percent of total allowed costs means the plan’s share of expected health costs.
    6. Comment: What is the difference between “actuarial value” and “percent of total allowed costs”?
  5. States must select a base benchmark plan, §156.100 from the following ten benefit choices
    1. The three largest small group products
    2. The three largest state employee health plans
    3. The three largest federal employee health benefit plans
    4. The largest commercial HMO benefit
    5. If a state makes no selection, it will be the largest product in the small employer market, which is the plan that was selected by the California legislature.
    6. The US Office of Personnel Management sets the base benchmark for the multi-state plan. §156.110
  6. The ten essential health benefits that must be covered are: ambulatory, emergency, hospitalization, maternity and newborn, mental health and substance abuse, prescription drugs, rehabilitative and habilitative, laboratory, prevention and wellness, and pediatric including oral and vision. §156.110
    1. If the base benchmark plan fails to cover any of the above categories, the state must choose a benefit from among the other products.
      • The pediatric dental benefit must be the CHIP benefit or the federal employees dental plan with the largest enrollment.
      • The pediatric vision benefit must be the CHIP benefit or the federal employees vision plan with the largest enrollment.
      • The state can determine the extent of coverage of habilitative services
    2. Benefit designs must be non-discriminatory and balanced.
  7. Essential Health Benefits §156.115
    1. Plan benefits must substantially equal the EHB benchmark
      • Prescription drug benefits must have at least one drug for each US Pharmacopeia category and class
    2. Behavioral health benefits must comply with the federal parity laws
    3. Preventive care (see §147.130) must be covered with no copays if,
      • The care is rated of A or B for efficacy by the US Preventive Services Taskforce
      • Immunizations recommended by the CDC
      • Screening and preventive services for children as provided by HRSA guidelines
      • Screening and preventive services for women as provided by HRSA guidelines
    4. If the benchmark plan does not cover “habilitative” services, they must be covered in parity with rehabilitative services or as determined by the plan and reported to HHS
    5. Benefit substitution is permitted within the same essential benefit category (i.e. trade-offs within the hospital benefit or the behavioral health benefit, but not between the hospital and behavioral benefits) and must be actuarially equivalent to the benefit being replaced.
    6. EHB does not include dental or vision services for adults, long term or custodial nursing home care or cosmetic orthodontia.
  8. Prescription drugs §156.120
    1. Plans must cover the greater of
      • One drug in each US Pharmacopeia category and class
      • The same drugs covered by the EHB benchmark plan
    2. Plans must allow subscribers to request coverage of clinically appropriate drugs not covered by the health plan.
  9. Discrimination § 156.125
    1. Benefit plan designs must not discriminate based on age, disability, quality of life or degree of medical dependency.
  10. Cost sharing §156.130
    1. The annual limitation on cost sharing is linked to §223(c)(2)(A)(ii)(1) of the Internal Revenue Code. In 2013 it is $6,250 for an individual and $12,500 for a family.
      • The amount will increase annually by average percentage in increase in insurance premiums.
    2. The maximum deductible for small group plans is $2,000 for an individual and $4,000 for a family.
      • The amount will increase annually by average percentage in increase in insurance premiums.
      • The annual deductible can exceed this amount if the plan cannot reasonably reach the actuarial value (e.g. bronze plans have a 60% actuarial value) without exceeding the maximum deductibles.
    3. Out of network costs of care do not count towards meeting one’s deductible or annual out of pocket limits.
    4. Cost sharing cannot be discriminatory. See §156.125
    5. Emergency services have to be provided without regard to prior authorization or network requirements. The cost sharing requirements are governed by §147.138(b)(3). In essence a plan must pay the same for in and outwork emergency services, but the out of network provider can charge the patient (but not the plan) more for their services.
  11. Calculating Actuarial Value §156.135
    1. The plans must use the actuarial value (AV) calculator developed by HHS.
      • There is an exception where the benefit design is not compatible with the AV calculator, in which case the plan can use an actuary.
    2. Employer contributions to HSA and HRA accounts are counted as part of the plan coverage in calculating actuarial value.
    3. Beginning in 2015, a state can use its own data in calculating the actuarial value of its health plan offerings.
  12. Levels of coverage §156.140
    1. Bronze = 60% AV
    2. Silver = 70% AV
    3. Gold = 80% AV
    4. Platinum = 90% AV
    5. De minimis variations in the AV are +/- 2%, in other words a silver plan might cover between 68% and 72% of expected medical expenses.
  13. Minimum value (MV) (see § 156.145) is a concept that applies to large and mid sized employer group plans, whether insured or self insured. Under the ACA § 1302(d)(2)(c) these plans are not subject to the EHB requirements of small group and individual plans, but rather set their own levels of covered benefits and MV refers to the minimum percent (60%) of expected medical costs for the benefits that a large and mid sized employer group plan opts to cover.
    1. HHS and IRS will create a MV calculator
    2. HHS and IRS will designate safe harbor plans
    3. Alternatively, an actuary may certify MV for large and mid sized employer group plans.
    4. MV is determined by using the expected medical use of the plan’s covered benefit for populations covered by self-insured group plans.
  14. Stand-alone dental plans for pediatric dental benefits §156.150. These plans must offer a reasonable level of coverage of expected dental costs as defined below.
    1. A low level of coverage means a 75% AV.
    2. A high level of coverage means a 85% AV.
    3. De minimis variations are +/- 2%.
    4. The level of dental coverage must be certified by an actuary.
  15. Accreditation agencies for QHP plans §156.275
    1. NCQA and URAC are the only accrediting agencies for QHPs currently recognized by HHS
    2. This rule sets the requirements for other entities to be certified by HHS as accrediting agencies.

This summary is also available for download:
Summary of EHB, AV and Accreditation of QHP Summary of EHB, AV and Accreditation of QHP.pdf

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