Essential Benefits: The Mystery Definition That Could Make or Break Healthcare Reform
A little known but potentially contentious provision of the Affordable Care Act (ACA) requires the Department of Health and Human Services (HHS) to determine the minimum services that must be covered by the plans offered through the state insurance exchanges. What's included in this "essential" or standard benefits package -- and the mechanism HHS adopts to keep up with medical advances -- will help determine whether the U.S. can achieve near-universal health care and whether health costs can be controlled.
It may surprise you that a below-the-radar feature of the reform law could have such incalculable and long-lasting effects. After all, the insurance exchanges will initially be open only to individuals and small firms. But the door has been left open for them to bring in larger companies, starting in 2017. Moreover, the standard benefits package is expected to have an influence on health plans outside the exchanges, just as Medicare does today.
"Medically necessary" vs. standard benefits
Currently, Medicare covers all "medically necessary" services within the categories of care that it has to pay for. Except for certain new technologies for which CMS requires evidence, that means whatever physicians consider necessary. Comparative effectiveness research will throw light on what works best, but under the ACA, it can't be used as the basis of Medicare coverage.
Most private insurance companies follow Medicare's lead in covering what's medically necessary. This usually excludes cosmetic procedures and "experimental" technologies that have not been proved effective. The carriers offer a wide variety of benefit designs; but until recently, these plans have differed mainly in who pays how much for what, not in what's covered. (Some insurers, though, are starting to exclude some services from low-end individual health plans.)
The ACA, similarly, prescribes four different coverage levels related to the cost of plans in the insurance exchanges. In addition, it requires HHS to draw up a standard benefits package that encompasses 10 general categories. These include ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.
A plague of lobbyists
Beyond that, a panel established by the Institute of Medicine (IOM) will advise HHS on how to develop the standard benefits package and how to update it as new services become available. As one might expect, the insurance companies want the package to be as flexible as possible, and consumer groups would like to see HHS specify what will be covered in great detail. Drug and device manufacturers, hospitals and physicians will undoubtedly lobby for their own products and the most lucrative services they provide.
Julie Appleby of Kaiser Health News points out, "The Obama administration faces a tough balancing act: the benefits package must be broad enough to be comprehensive but not too broad as to be unaffordable."
But of course, the devil's in the details, and it's hard to understand how a governmental agency can make completely objective decisions on these matters. One thinks of all the state benefit mandates that various interest groups have pushed into law, and the problem becomes clear: The pressure to include benefits that some patient advocates or industry players regard as essential will be intense.
Let the experts decide
The solution is equally clear: Have HHS appoint a board of independent experts and let them decide what should be in the standard benefits package. Perhaps this could be similar to the IOM panel, which includes economists, consumer advocates, a state health commissioner, and a former CEO of insurer WellPoint, as well as health policy experts and physicians. I'd also favor the inclusion of some ordinary consumers who would have to pay insurance premiums based on the decisions of the board -- an idea suggested by managed care consultant David Eddy many years ago.
However this was done, the panel members would have to be shielded from the influence of powerful healthcare interests. So, although their deliberations would be public, their identities would have to be kept secret.
I grant that this approach is not very democratic. But it's probably the only way that we'll ever be able to create a standard benefit package that covers only services that are truly necessary for good health care.
Image supplied courtesy of Flickr.
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