White House Issues Final Rule on ACA’s Essential Health Benefits

On Wednesday, the Obama administration issued a final rule outlining 10 broad categories of essential health benefits that most health insurance plans must offer in 2014 under the Affordable Care Act, Reuters reports (Reuters, 2/20).

About the Final Rule

Under the ACA, health plans in state health insurance exchanges must provide coverage for 10 broad categories of benefits, such as maternity care, prescription drugs and preventive care. HHS in November 2012 released a proposed rule on the minimum benefits (California Healthline, 11/21/12).

The final rule goes beyond what regulators initially proposed and applies to non-grandfathered plans for individual and small group markets inside and outside of the health insurance exchanges.

Most of the rules include benefits that commonly are covered by plans, including:

• Ambulatory patient services;
• Chronic disease management; 
• Emergency care;
• Hospital services;
• Laboratory services;
• Maternity and newborn care;
• Prescription drugs; and
• Preventive wellness services.

However, some changes represent an expansion of coverage to include rehabilitative care, pediatric dental care and pediatric vision care. Further, the rule expanded coverage and federal parity protections for mental health and substance use disorder services, including behavioral health treatment, to both the individual and the small group market (Kennedy, USA Today, 2/20). 

HHS Secretary Kathleen Sebelius described the rule as a major expansion of mental health coverage, noting that millions of individuals will gain access to mental health care and an additional 30 million individuals who already have some mental health coverage will see their benefits become more generous (Pear, New York Times, 2/20). 

The final rule also prohibits insurers from discriminating based on an "individual's age, expected length of life, present or predicted disability, degree of medical dependency, quality of life or other health conditions" (USA Today, 2/20).

In addition, the rule sets four levels of coverage that new health policies offered on health insurance exchanges must offer. Consumers choosing bronze plans -- the least generous policy -- will pay an average of 40% of the costs of covered benefits, while insurers will pay the remainder. Those choosing platinum plans -- the most generous policy -- will pay 10% of the costs, and the insurer will pick up the rest. 

However, the administration did not set a national standard and allowed states to set specific requirements for the minimum benefits to be covered in each essential health benefit category. Under the rule, each state could select a benchmark plan reflecting coverage typically offered by the largest plan by enrollment for employers. 

In addition, insurers in each state typically will be required to cover all benefits required under state laws adopted prior to Dec. 31, 2011. States can require insurers to cover additional benefits, but they will have to cover the extra costs themselves.

Although states will be responsible for ensuring that insurers comply with the rule, the federal government said it will step in if a state is not adequately protecting consumers (New York Times, 2/20).

Cost of Coverage

Insurers and some business groups had lobbied the federal government to scale back the scope of mandated coverage categories because of concerns that such coverage would make policies too costly, the Wall Street Journal reports (Corbett Dooren, Wall Street Journal, 2/20). 

However, rather than scale back benefits, the rule includes several ways to limit the costs to consumers, such as capping total out-of-pocket costs and limiting the deductible amount for plans offered in the small-group market to about $2,000 for an individual and $4,000 for a family. 

Consumers could face extra costs if the seek care outside of their plan's network of physicians and hospitals (New York Times, 2/20). 

Health insurers have been waiting for the final rule and other pending regulations before finalizing plans and pricing them. Further, state insurance regulators must also approve the plans before they can be marketed.

Advocacy, Consumer Groups React

Consumer groups praised the Obama administration for not giving in to pressure from business and insurance groups to scale back coverage, the Journal reports. 

Marc Boutin, executive vice president at the National Health Council, said, "We are a giant step closer to all people -- particularly people with chronic health conditions -- having access to meaningful coverage" (Wall Street Journal, 2/20).

Stephen Finan, senior director of policy at the American Cancer Society's Cancer Action Network advocacy affiliate, lauded the section that prohibited insurers from charging a copayment if a polyp is removed during a colonoscopy, which is covered under preventive care. 

However, some groups were upset with the rule. Neil Trautwein, vice president at the National Retail Federation, said applying mental health parity to small group and individual plans is "an imperfect way to take on society's problems." He added, "It's a cost question and a suitability issue" (USA Today, 2/20). 

Carl Schmid, deputy executive director of the AIDS Institute, said his group had hoped the federal government would set explicit and uniform federal standards. "We thought the federal government would spell out essential health benefits in more detail" (New York Times, 2/20).