CMS proposes letting states change ACA’s essential health benefits, medical loss ratio

The definition of “essential health benefits” which Affordable Care Act-compliant health plans have to cover would be up for states to decide under a rule proposed by CMS, echoing similar provisions which had been included in Republican legislative efforts to repeal and replace the ACA.

The 365-page proposed rule, released late on a Friday afternoon, offers several changes to “significantly expand the role of States in the administration” of the ACA, by offering additional “flexibility on:

  • Defining essential health benefits (EHBs)
  • Assuming “a larger role” in certifying qualified health plans
  • Allow states to apply for adjustments on the medical loss ratio allowable under ACA-compliant plans
  • Exempting student insurance plans from the federal rate review process

Current law requires compliant insurance plans to cover 10 benefits: outpatient care, emergency services, hospitalization, maternity care, mental health, prescription drugs, rehabilitation, laboratory services, preventive care and pediatric services. In the pre-ACA individual market, maternity care was the most likely of those benefits to be excluded, with 75 percent of nongroup plans in 2013 not offering those services.

In Republican-backed bills to repeal-and-replace the ACA introduced this year, states would have been allowed to waive those benefit requirements, which drew strong opposition at the time from groups like the American College of Emergency Physicians and America’s Essential Hospitals.

“It could leave countless people with too little coverage to meet their health care needs and drive higher rates of uncompensated care at hospitals already struggling to cover their costs,” said America’s Essential Hospitals president and CEO Bruce Siegel, MD, MPH. “Americans deserve better than a future where they could be denied basic health care services.”

The EHB provisions in the rule would begin with the next two plan years. Starting in either the 2019 or 2020 plan years, states would be allowed to modify the benefits “to increase affordability of health insurance in the individual and small group markets” as well as proposing “that the current EHB-benchmark plan selection would continue to apply for any year for which a State does not select a new EHB-benchmark plan.”

In the long term, CMS “is considering establishing a Federal default definition of EHB that would better align medical risk in insurance products by balancing costs to the scope of benefits.”

The rule will be officially published on the Federal Register on Nov. 2. The comment period will be short, with responses due by Nov. 27.