State benchmark plan decisions—the first step on the path to essential health benefits as part of the Affordable Care Act—are rolling in. So far, 20 states and the District of Columbia have at least made a preliminary benchmark plan decision, and 15 of these states and DC have chosen a small employer plan.
On State Refor(u)m, with the help of our community of users, we are tracking state benchmark plan decisions, and so far we have information and analysis from 40 states and the District of Columbia. In this post, I’ll take a look at where states have landed; implications of states’ decisions so far; what states can do if they want to encourage more value-based benefit design; why so many states are active in this particular health reform decision; and how these decisions were made. If you need more background about essential health benefits (“EHB”), and benchmark plans defined in the Federal EHB Bulletin and subsequent FAQ, I suggest reading Tim Jost’s blog post.
Where did states land? The small employer plan has been the most popular benchmark plan option to date. So far, 20 states—Arkansas, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Kansas, Maryland, Michigan, North Dakota, New Hampshire, Nevada, New York, Oregon, Rhode Island, Utah, Virginia, Vermont, Washington—and the District of Columbia have made at least a preliminary recommendation on a benchmark plan. Fifteen states and the District of Columbia have chosen to go with a small employer plan.
Connecticut, Michigan and North Dakota have instead chosen an HMO plan. And, Utah and Maryland have recommended a state employee plan. No single carrier’s name has dominated the small employer plan choice, with Blue Cross Blue Shield, Kaiser, Anthem, United, Regence Innova, and PacificSource all in the mix. For updates and more details, including links to the details of the plans states chose, view our tracking chart. HHS’s September 30 deadline was a soft deadline, put in place to help states and health plans get ready for 2014, and we expect state decisions to continue to take shape in the coming weeks.
Some states have also needed to select a supplemental benchmark plan. Under federal guidance, if a benchmark plan is missing coverage in one or more of the ten statutory EHB categories, the state must supplement the benchmark by reference to another benchmark plan that includes coverage of services in the missing category. So far, a group of states have recommended supplements for pediatric dental (Arkansas, California, Colorado, Connecticut, Illinois, Kansas, Michigan, North Dakota, New York, Oregon, Rhode Island, Virginia and Vermont) and pediatric vision (Connecticut, Illinois, Kansas, Michigan, North Dakota, New York, Oregon and Arkansas), habilitative services (Vermont), and mental health and substance abuse services (Arkansas).
States are considering choosing the Children’s Health Insurance Program, Medicaid, or the Federal Employee’s VIP (FedVIP) plan for the pediatric dental benefit, and the FEDVIP plan for the pediatric vision benefit. So far, only one state, Vermont, has made a preliminary recommendation about habilitative services; Vermont has followed federal guidance and preliminarily recommended that habilitative services in the benchmark plan be provided at parity with rehabilitative services. Arkansas, which needed to supplement mental health and substance abuse services, chose the FedVIP plan.
However, when the federal government reviews the benchmark plans, it may call for additional supplementation if needed.
What are the implications of most states choosing existing small employer plans as the benchmark? Most states are choosing existing, small employer plans with high levels of enrollment as the benchmark plan, which means that most or all of state-mandated benefits in these states will be included in individual and small-group health plans at least in 2014 and 2015, the early years of health reform. Some see this as stabilizing to the market, given that there will be fewer benefit changes for people enrolled in these popular plans, but others see it as a missed opportunity to force states to revisit their past mandated benefits decisions.
Federal EHB guidance allows that for 2014 and 2015, states do not have to defray the cost of state-mandated benefits included in a benchmark plan. Given this federal guidance, states are tending to stick to the status quo and pick plans including mandated benefits in order to avoid opening up time-consuming and potentially controversial legislative debates about what benefits should be out of or in the benchmark.
What can states do if they want to do more to encourage value-based benefit design? States that wanted to use health reform to move toward value-based benefit design in the commercial market were disappointed that they had to pick a “status quo” plan from 2012 that would serve as a model all the way through 2014 and 2015. Value-based benefit design aligns patients’ out of pocket costs, like copays and premiums, with the value of health services. In a nutshell, it tries to reduce barriers to high-value treatments through lower costs to patients and discourage low-value treatments through higher costs to patients.
However, states do have room to encourage plans to innovate even during this benchmark plan phase. First, the entire scope of benefit design is not included in benchmark plan, which is limited to the list of services to be paid for by a plan and limits on the numbers of visits and services. Plans can still innovate in two other important ways: in the terms and conditions of coverage—such as the cost-sharing structure or network limitations, and on how those terms and conditions are administered—such as how the plan determines whether a service is medically necessary or not. Furthermore, a state that is an active purchaser in its health insurance exchange could negotiate with plans and push them to use plan designs with value-based cost-sharing and network structures.
Why are so many states active in this decision? Unlike other areas of health reform, like building a state-based health insurance exchange, where a relatively small group of states is actively engaged, a large majority of states (40 states and DC so far), are considering making an active choice about benchmark plans rather than defaulting to HHS. One reason for this is that the benchmark plan decision affects the whole fully insured individual and small employer market (inside or outside the health insurance exchange), with the exception of grandfathered plans. It is distinct from a state’s decision about whether to operate its own state health insurance exchange.
Who made these decisions and how? Many states are making this choice based on detailed analysis and open discussions. In most states, a workgroup of the exchange or health reform advisory group recommended a benchmark plan decision to the governor, insurance commissioner, and–in at least one case (Utah)–the legislature. Generally, states have analyzed the plans available in the state under the four benchmark options and have tried to identify which benchmark plan includes which mandated and other benefits.
Most states formed a workgroup of state officials and other stakeholders (31 states), and analyzed the existing benefit mandates (30 states) and benchmark plan options (32 states). Roughly half (27 states) then held a public comment period to gather feedback on the options. Once the decision is finalized, states will file it with HHS through an online portal that asks them a number of standardized questions about the benchmark plan and supplemental plans.
Choosing a benchmark plan is a step forward for states on benefit design rather than a leap. But with all the decisions on states’ plates as they prepare for 2014, one more milestone under their belts is certainly a step in the right direction.