The Patient Protection and Affordable Care Act (ACA),1 which was signed into law on March 23, 2010, requires all individuals to purchase health insurance beginning in 2014. Purchasers are allowed but not obliged to buy their coverage through newly established health insurance exchanges—marketplaces designed to make it easier for customers to comparison shop among plans. The exchanges will offer a choice of health plans, and all plans must include a standard core set of covered benefits, called essential health benefits (EHB). Additionally, the EHB are required to be included in new private individual and small group health insurance plans offered outside of the exchanges, and in certain public insurance programs. Subsidies will only be available through the exchanges, and then on the basis of a sliding scale for individuals whose incomes are between 133 and 400 percent of the federal poverty level.2
Section 1302 of the ACA stipulates that the Secretary of the U.S. Department of Health and Human Services (HHS) is to define the EHB (Appendix A). The EHB must include at least 10 general categories of care and be equal in scope to those offered by a typical employer plan. The health insurance exchanges will only offer qualified health plans (QHPs), meaning the plans are deemed to cover the EHB and to meet other requirements set by the ACA.
CHARGE TO THE COMMITTEE
HHS requested guidance from the Institute of Medicine (IOM) on criteria and methods for determining and updating the EHB package to help the Secretary in carrying out the responsibilities assigned under ACA. Accordingly, the IOM formed the Committee on Defining and Revising an Essential Health Benefits Package for Qualified Health Plans to undertake the task described in Box S-1. The committee began its work by affording the public opportunities for comment through two venues. First, through online submission of comments to a set of relevant questions (Appendix B) and through invitations to present at public workshops held on January 13-14, 2011, in Washington, DC, and on March 2, 2011, in Costa Mesa, California.
During these workshops, many stakeholders (e.g., experts from federal and state government, employers,
1 Patient Protection and Affordable Care Act of 2010 as amended. Public Law 111-148, 111th Cong., 2d sess. (See http://docs.house.gov/energycommerce/ppacacon.pdf as amended through May 1, 2010; all references to the Act reflect this version.)
2 Individuals whose incomes are below 133 percent of the federal poverty level will be eligible for Medicaid, and the EHB do not apply to the traditional Medicaid program, although they are applicable to state expansions of insurance for low income individuals, called Medicaid benchmark or benchmark equivalent plans, and state basic health insurance (§ 2001 and § 1331).
The Patient Protection and Affordable Care Act (Affordable Care Act) established criteria for qualified health plans (QHPs) to participate in exchanges as defined in Section 1301 of the statute. An ad hoc IOM committee will make recommendations on the methods for determining and updating essential health benefits for QHPs based on examination of the subject matter below.
In so doing, the committee will identify the criteria and policy foundations for determination of the essen tial health benefits offered by QHPs taking into account benefits as described in Sections 1302(b) (1) and 1302(b)(2)(A), and the committee will assess the methods used by insurers currently to determine medical necessity and will provide guidance on the “required elements for consideration” taking into account those outlined in Section 1302(b)(4)(A-G), including ensuring appropriate balance among the categories of care covered by the essential health benefits, accounting for the health care needs of diverse segments of the population, and preventing discrimination against age, disability, or expected length of life. The committee will also take into account language in Section 1302 on periodic review of essential health benefits, and other sections of the Affordable Care Act: for example, coverage of preventive health services (Section 2713), utilization of uniform explanation of coverage documents and standardized definitions (Section 2715), and other relevant tasks found in the Affordable Care Act for the Secretary of HHS. The committee will provide an opportunity for public comment on the tasks of defining and revising the essential health benefits.
insurers, health care providers, consumers, and health care researchers) contributed to the policy debate; their presentations are the subject of this summary report. This report only contains the summaries of presentations from the two workshops, which were just one aspect of the committee’s information gathering steps. Thus, the workshop report is not intended to provide recommendations in response to the statement of task.
To explain HHS’s expectations of the committee, Dr. Sherry Glied, the Assistant Secretary for Planning and Evaluation and the study sponsor, remarked at the first workshop that we do not expect this committee “to identify the individual elements or the detailed provisions” of the EHB package. Instead, she asked the committee to develop a framework for considering the EHB package “that will be logically cohesive, address statutory requirements, and serve HHS now and in the future.”
Over the course of the workshops, participants noted many potential implications of the definition of the EHB, recognizing both the promise and challenges that lie ahead. Discussion of the committee’s charge coalesced around the following topics, including:
- Balancing the generosity of coverage with affordability of insurance products;
- Defining a “typical” employer plan;
- Evaluating existing state mandates for inclusion into the EHB;
- Considering the degree of specificity versus flexibility in forthcoming secretarial guidance;
- Determining the medical necessity of care;
- Promoting value in benefit design;
- Applying evidence to benefit coverage;
- Monitoring Section 1302’s “required elements for consideration";
- Instituting an appeals process as a safeguard; and
- Ensuring fair processes.
This summary chapter of the workshop report presents illustrative comments of different viewpoints according to key themes raised. The chapters that follow more fully capture the statements of all of the presenters; speakers were given the opportunity to review the summary of their individual presentations for the chapters before publication. Any conclusions, recommendations, or supporting documentation offered in this publication are those of the speakers and not the IOM committee, whose own consensus recommendations are featured in a companion report called Essential Health Benefits: Balancing Coverage and Cost.
BALANCING GENEROSITY AND AFFORDABILITY
Numerous speakers noted the clear tension between the desire to make the EHB package as comprehensive as possible and the need to make the EHB package affordable for individuals, families, employers, states, and the federal government. Dr. Louis Jacques, director of the Coverage & Analysis Group at the Centers for Medicare & Medicaid Services, advised the committee to balance the competing needs of generosity and affordability, but to resist the temptation to bend to the demands of influential stakeholder groups.
Presentations by a bipartisan panel of former and current Senate staff members noted that Congress wanted the legislation to have general benefit descriptions, preferring that details be worked out during implementation. That said, the panelists expressed some disagreement about what the ultimate package would look like—whether the desire was to create a “robust” benefit package vs. a “minimum” benefit package. Mr. David Schwartz said that Congress intended the EHB package to be “meaningful” and comprehensive and thus, linked it to the benefits of a typical large employer plan. Echoing Mr. Schwartz’s comment, Dr. David Bowen said that the Senate did not intend for the EHB package to be a “skimpy plan” but one covering “at least” 10 categories of care. In contrast, Mr. Mark Hayes similarly pointed out that the ACA uses the term essential because the legislature intended these to be basic not comprehensive benefits. Moreover, Ms. Katy Spangler emphasized that the committee should “look at the least robust version of the benefit package as meeting” the standard of minimum essential coverage; otherwise, she said, fewer people will be able to afford coverage thus defeating the purpose of ACA to expand coverage.
Other presenters drew on their experiences with performing microsimulations and real world tradeoffs of benefits and their costs. Dr. Jonathan Gruber of MIT, and on the board of the Massachusetts Health Insurance Connector Authority (an operational health insurance exchange), illustrated tradeoffs with what he called an extreme example from a microsimulation: a 10 percent increase in costs due to a more generous package would erode the effectiveness of the insurance mandate because an estimated 4.5 percent (approximately 1.5 million) fewer people would be insured. Dr. Jon Kingsdale, formerly executive director of the Connector Authority, said the ACA is “about giving more people decent coverage as opposed to being about raising the standard of coverage.” He advised HHS, therefore, that when it has to “make decisions about close calls regarding benefits,” it is important to remember that additional benefits are costly. Ms. Jean Fraser, the current chief of the San Mateo County Health System and the former CEO of the San Francisco Health Plan, discussed her experience “making hard choices” between coverage and cost when designing Healthy San Francisco, a public universal coverage program. To ensure stewardship of limited public resources, she made some “difficult decisions,” resulting in a lengthy list of excluded services and a very narrow provider network. These limits, she said, allowed the program to affordably cover a “limited set of core services” for “most medical conditions for tens of thousands of people who did not have coverage before.”
Employer groups and an insurance broker at the first workshop, including Ms. Jerry Malooley, a representative from the U.S. Chamber of Commerce; Mr. Michael Turpin from USI Insurance Services; and Ms. Helen Darling from the National Business Group on Health (NBGH), all expressed a strong desire to limit the comprehensiveness of the package. The more expansive the package, these panelists said, the greater the cost. Ms. Malooley cautioned that expansive benefits would likely force small employers to stop offering coverage, while Mr. Turpin noted that small and mid-size employers believe support for a “basic” level of benefits would help reduce cost growth.
Throughout the workshops, consumer and provider advocates, however, expressed their support and need for a robust, comprehensive plan. During a panel of presentations from 15 representatives of organizations spanning health care provider, pharmacy industry, and consumer perspectives, stakeholders advocated for an EHB package that encompasses a broad range of services, variously including coverage of medical, surgical, psychiatric,
rehabilitative, habilitative, dental, vision, primary and secondary preventive, palliative, pharmaceutical, and hospice services, among others. Along with these expressed desires, these stakeholders also often referenced the need for an affordable package, and the need for insurers and employers not to be short-sighted when it comes to evaluating the long-term value of a benefit offered today on future health outcomes.
The financial burden of premiums and other out-of-pocket medical costs can lead to persons having insurance but being underinsured. Dr. Jessica Banthin of the Agency for Healthcare Research and Quality and Ms. Cathy Schoen of The Commonwealth Fund explored this aspect of affordability. Dr. Banthin noted that in 2005, about 19 percent of the U.S. nonelderly population lived in families with high total out-of-pocket (OOP) financial burden (i.e., spending 10 percent or more of their income on OOP expenditures for health care) (Banthin, 2011). Ms. Schoen stressed that both uninsured and underinsured individuals are at high risk of foregoing needed care and of having financial stress related to outstanding medical bills or medical debt; her presentation also showed a significant portion of individuals with insurance forego care (31 percent) and have financial stress due to medical bills (21 percent). She credited some of this foregone care to the burden created by having plans with high deductibles.
DEFINING A “TYPICAL” EMPLOYER PLAN
Section 1302 of the ACA states that the scope of the essential health benefits should be “equal to the scope of benefits provided under a typical employer plan” and required the Secretary of Labor (DOL) to conduct a survey of employer-sponsored coverage. At the time of the January workshop, the DOL was in the “final stages of extracting and tabulating” data; its report was made available to HHS and the public in April 2011 (DOL, 2011). In lieu of that data, Mr. William Wiatrowski of the Bureau of Labor Statistics summarized data his department gathered in 2008:
- 99% of plan participants had coverage for hospital room and board charges
- 67% of plan participants had coverage for hospice care
- The median deductible was $500 per individual per year3
- The median co-payment for a physician office visit was $20 for a fee-for-service (FFS) plan and $15 for health maintenance organization (HMO)
Results, he said, showed considerable variation in the incidence4 and cost of health benefits, based on worker and establishment characteristics (including occupational group, union status, full-time/part-time work schedule, industry, and employer size and location).
In response to an inquiry from committee member Dr. Elizabeth McGlynn, Dr. Glied of HHS noted that the committee’s interpretation of the word “typical” would be useful. Paralleling the previous discussion of generosity and affordability, respondents associated large employer plans with more comprehensiveness and larger premiums. Dr. Bowen indicated that members of the Senate intended coverage to be consistent with a relatively generous large employer plan, whereas Dr. Virginia Calega from Highmark advocated that the committee consider small employer plans as “typical” because the definition of EHB will “primarily impact individual consumers, small businesses, and the self-employed.”
Dr. Jeffrey Kang of CIGNA Corporation noted that the categories of care listed in the ACA are similar to the benefits offered by large employer plans either in standard plans or as supplements, with the exception of habilitation. However, Ms. Carmella Bocchino of America’s Health Insurance Plans (AHIP) asserted that the ACA required maternity benefits, prescription drugs, and mental health coverage requires benefit categories not typically covered in the small group market. She said that consumers “choose to buy products without those services because: a) they do not feel the services meet their individual needs, and b) it helps to keep the premium down.”
3 In plans that impose an overall plan deductible (where the deductible varied based on the provider, the median was $350 for preferred providers and $750 for out-of-network providers).
4 That is who has the health insurance available to them from their employer and what percentage of workers, who have it available, actually participate in the plan.
Dr. Kenneth Wells of UCLA emphasized how the Wellstone Domenici Mental Health Parity and Addiction Equity Act5 “fundamentally changed the landscape” of what employers will cover regarding mental health and substance use treatment. Therefore, he felt it is necessary to look beyond what typical employer plans have covered in the past. Dr. Kavita Patel of UCLA elaborated that when health insurance expanded in Massachusetts, the newly insured included many individuals with mental health and substance use disorders, and these newly insured individuals tended to access mental health care by visiting the emergency room or community-based services, rather than private providers.
An additional consideration was brought forth by Ms. Carolyn Ingram, the former director of New Mexico’s Medicaid, Children’s Health Insurance Program, and a Medicaid expansion program for low-income workers. She suggested that HHS consider not only how the contents of a typical employer plan should influence essential health benefits but also those of traditional Medicaid and existing Medicaid expansions. She expressed concern that if the public and private packages differ substantially in benefits, people might not “want to migrate out of the Medicaid program and into the exchange.”
EVALUATING STATE MANDATES FOR INCLUSION
The ACA allows states to require QHPs to offer benefits beyond the defined set of EHB as long as the state assumes the incremental costs of subsidies for the additional mandated benefits.6 Mr. Hayes noted that the Senate Finance Committee included this provision because benefits that “make a lot of sense” for one state might not make “as much sense for other states.” Presenters discussed what processes are used by states to assess the mandates and whether HHS should include state mandates in the EHB package.
Several presenters argued that state mandates are not evidence-based, contribute to increasing insurance premiums, and increase variability across states. Ms. Bocchino stated, for instance, that most state mandates have been enacted without an assessment of scientific evidence. Furthermore, it would be “almost impossible,” she said, to include a large number of mandates in the EHB package or require individuals, small businesses, or states that do not currently have these mandates to incur the added cost. Similarly, Ms. Darling suggested that because state mandates are often driven “by forces that sometimes have very little to do with evidence and very little to do with cost considerations,” the committee should not consider state mandates as a criterion for the EHB package.
Others argued for judgment based on the strength of evidence and/or consideration of popular support for mandates. For example, Mr. Stuart Spielman of Autism Speaks argued that HHS should view state mandates “as informed judgments of what is needed by populations,” and Mr. John Falardeau of the American Chiropractic Association recommended that any benefit mandated in 25 or more states should be included in the EHB. Additional presenters, including Dr. Samuel Nussbaum of WellPoint, Inc., acknowledged that for mandates in which there is “absolute proof that something is beneficial,” a “national coverage model” might help minimize state-by-state variation. Dr. Sharon Levine of the Permanente Medical Group agreed, but noted that states apply varying degrees of rigor in assessing evidence before mandating a benefit.
Determination of how much state mandates impact costs depends on the methodologies employed and the point of comparison—for example, whether presenters were discussing full or marginal costs, and if the comparison is to a comprehensive or slimmed down base plan. Drs. Beth Sammis of the Maryland Insurance Administration and Rex Cowdry of the Maryland Health Care Commission noted that Maryland has a mandate review process that calculates the full and the marginal costs of adding benefits. The full cost of Maryland’s mandated benefits is 18.6 percent of average individual premiums and 15.4 percent of group premiums; however, the marginal cost of these state mandates is only approximately 2.2 percent because most of the mandated benefits are already voluntarily available in comparative self-funded plans that are exempt from mandates (MHCC, 2008). Ms. Malooley, on behalf of the U.S. Chamber of Commerce, argued that the added cost of state-mandated benefits is substantial,
5 Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008. Public Law 110-343, 110th Cong., 2d sess. (October 3, 2008).
6 Patient Protection and Affordable Care Act of 2010 as amended. Public Law 111-148 § 1331(d)(3)(B)(ii), 111th Cong., 2d sess.
referencing a study that indicated premiums rise by half a percent or more per mandated benefit, so as these mandates accumulate, costs aggregate (CAHI, 2010).
The California Health Benefits Review Program (CHBRP) is an example of independent public review of proposed state mandates before they become law. It reviews medical effectiveness, cost impact, and public health impact for each proposed mandate. Ms. Susan Philip pointed out that CHBRP researchers do not examine the full cost of adopting a mandate de novo. Rather, they examine the impact of adding a mandate, including changes in health care expenditures, premiums, and OOP costs compared to existing coverage levels already available in the market. In a recent analysis of the marginal cost of the state’s 44 mandates compared with requirements already mandated for managed care by California’s Knox-Keene Health Care Service Plan Act of 1975,7 researchers determined there would be a 2 to 5 percent cost reduction in the absence of the current 44 mandates.
CONSIDERING SPECIFICITY AND FLEXIBILITY IN GUIDANCE
Many speakers, including patient advocates, employers, state policy makers, and insurers, emphasized the importance of allowing flexibility in benefit design. The “buckets of care” included in the ACA, Ms. Spangler said, were “intentionally left vague so that details of what plans would cover could be left to the marketplace.” An argument against further specificity was supported by Representative James Dunnigan of the Utah State House of Representatives and Mr. Matthew Salo of the National Governors Association (NGA), both of whom urged the committee to allow state-by-state flexibility in implementation. Dr. Cowdry, for instance, cautioned the committee against “too much design specificity or standardization [in the EHB package]” as this prevents the kind of innovation needed to control health care costs.
On the other hand, other stakeholders expressed concerns about too much flexibility in benefit design. Ms. Cindy Ehnes, the Director of California’s Department of Managed Health Care (DMHC) described the DMHC’s experiences with health benefits provided under California’s Knox-Keene Health Care Service Plan Act of 1975. While broad categories of benefits allow for flexibility as new diagnoses and treatments become recognized standards, broad categories create uncertainty about whether a treatment must be covered by a plan. This latter concern has resulted in numerous state-mandated benefits. Defined benefits, she said, eliminate this uncertainty by providing clarity about whether a particular service is covered, but may increase the risk that something not specifically defined will be considered excluded. On behalf of the American Congress of Obstetricians and Gynecologists (ACOG), Dr. Arnold Cohen said that describing the EHB as specifically as possible “is the surest way to protect our patients against potential conflict or debate regarding medical necessity.”
DETERMINING MEDICAL NECESSITY
HHS asked the committee to explore how insurers determine medical necessity. Dr. Alan Garber, the director of the Center for Health Policy at Stanford University, explained the differences between the delineation of included and excluded services in a benefit package and the application of medical necessity. The scope of coverage in a health insurance contract is a policy decision based on the expected general needs of the insured population, whereas a medical necessity determination assesses whether the intervention is appropriate for a specific patient and thus eligible for payment by the insurer. He reviewed some precedents, including a definition developed by a committee convened by Stanford University, and a definition agreed to by several large insurers as part of a class action lawsuit settlement.
Additional medical necessity definitions were offered. For example, Dr. Cohen of ACOG asked the committee to consider adopting the definition of medical necessity developed by the AMA, and advised clarifying that physicians are practicing “in accordance with generally accepted standards” if they adhere to the guidelines developed and adopted by their respective medical specialty. Similarly, Dr. Andrew Racine of the American Academy of Pediatrics (AAP) noted that AAP’s “Policy Statement on Contractual Language for Medical Necessity for Children” supports the use of evidence-based interventions, but because large scale randomized controlled trials are “significantly
7 California Knox-Keene Health Care Service Plan Act and Regulations of 1975. California Health and Safety Code Chapter 2.2 § 1340.
less plentiful” for children than for adults, observational studies, professional standards of care, or consensus of pediatric expert opinion must serve as acceptable substitutes. Ms. Meg Booth of the Children’s Dental Health Project endorsed the definition of dental necessity in The Children’s Health Insurance Program Reauthorization Act of 20098 (CHIPRA) and the maintenance of parity in dental benefits for prevention, restoration, and treatment.
Patient advocates identified interpretation of medical necessity definitions as presenting a potential barrier to meeting the medical needs of specific types of patients. Additionally, Ms. Linda Fishman of the American Hospital Association (AHA) identified the lack of consistent standards as affecting both providers and patients as it “allows insurers to control not only coverage decisions but also treatment decisions, sometimes overriding clinical standards and the patient’s needs.” The rules and decision processes that govern EHB and medically necessity should, she said, be transparent so that enrollees understand in advance the limitations of their coverage. Mr. Troy Zimmerman from the National Kidney Foundation cautioned that “vague definition(s)” of what is medically necessary can inhibit innovation and patient choice. Mr. Peter Thomas of the Consortium for Citizens with Disabilities, and Ms. Marty Ford of the United Cerebral Palsy Disability Policy Coalition illustrated how definitions of medical necessity that focus only on restoring function without consideration of maintenance or acquisition of function have presented barriers to care for people with disabilities, especially developmental disabilities. Similarly, Dr. Gary Ulicny of the Shepherd Center said the primary goal of rehabilitation is to decrease the patient’s reliance on medical intervention and to increase functional independence rather than necessarily providing a cure. Applications of definitions of medical necessity that require the intervention “to cure” present roadblocks to reimbursement for needed care. Mr. Paul Samuels of the Legal Action Center expressed that individuals with mental health and substance use disorders need to be able to access the type, level, amount, and duration of care that they need, including care for relapses. Thus, medical necessity criteria should reflect the chronicity of mental illness and substance abuse disorder.
Medical necessity reviews by insurers, Ms. Bocchino pointed out, are not conducted on most services that individuals receive every day. These reviews “come into play” if questions arise regarding a lack of evidence for such treatment, concerns about clinical effectiveness or potential harm, or if a patient did not meet the sub population characteristics for which the intervention might be prescribed.
PROMOTING VALUE IN INSURANCE BENEFIT DESIGN
Many employers, insurers, and some states as well are adopting value-based insurance design (VBID) to reduce excessive and inappropriate utilization and improve quality. Dr. Cowdry suggested comprehensive coverage may “be the right place to be” if such coverage can be merged with value-based incentives for patients and providers, and if there is a rigorous process to exclude non-medically necessary interventions. State exchanges, he suggested, “can be laboratories for exploring different limits and the kind of cost-sharing designs that make sense.”
Participants who discussed VBID principally described two considerations: evidence and setting appropriate incentives. Dr. Nussbaum of WellPoint, Inc. explained this concept by describing a diabetes management program in which an employer plan waived all co-pays for diabetes medications, steered patients to higher quality hospitals and physicians, removed deductibles for preventive care (before the ACA mandated the removal of these deductibles), and provided free diabetes education and support. While the program increased short-term costs, it has the potential to demonstrate long-term savings from higher medication compliance and use of preventive services. Similarly, Mr. Brian Gallagher of the American Pharmacist Association advocated for mechanisms to optimize medication use through medication therapy management services, and he pointed out that medication use can be optimized by removing barriers such as co-pays and deductibles and by empowering patients to take an active role in medication self-management.
Dr. Somnath Saha, the chair of Oregon’s Health Services Commission (HSC), and Dr. Jeanene Smith, the administrator of Oregon’s Office for Health Policy and Research (OHPR), provided insights into Oregon’s process for setting priorities for its Medicaid program and new efforts with value-based tiers of coverage for the private sector. The HSC maintains a prioritized list of covered services that are “rank-ordered” according to impact on
8 The Children’s Health Insurance Program Reauthorization Act of 2009. Public Law 111-3, 111th Cong., 1st sess. (February 4, 2009).
health, treatment effectiveness in improving and promoting health, and public values. The state legislature then uses this prioritized list to determine which benefits the state can afford to cover. The prioritized list is being used to design value-based tiers of coverage for the commercial market: the highest “value-based” tier includes tests and treatments that are highly effective, low cost, and that are considered desirable to encourage in the population. Thus, the highest value services would have the lowest cost sharing.
Utilization management, network design, and the exclusion of specific services (i.e., contractual exclusions, and the exclusion of services deemed experimental, investigational, or not medically necessary) were cited by presenters as components of benefit design that insurers employ; any package of defined benefits is subject to such rules, which can vary from plan to plan. Insurers and employers view these, along with medical necessity determination, as ways to better ensure appropriate care as well as manage costs. However, Ms. Jina Dhillon of the National Health Law Program (NHeLP) cautioned that insurers’ steps for medical utilization management need special oversight. For instance, step therapy may be an effective strategy for providing safe, cost-effective care, but she suggested that there be an exceptions process that allows “first fail”9 to be avoided if there is an important clinical reason for pursuing a different medical option in individual cases.
APPLYING EVIDENCE TO BENEFIT COVERAGE
Uniformly, speakers supported the use of evidence in deciding which benefits should be covered in an essential package, and in developing clinical policies by insurers and guidelines by provider groups that identify the care patients should be eligible to receive. Several speakers specifically endorsed comparative effectiveness research. It was pointed out, however, that different entities may come to different conclusions about whether to cover a specific benefit or not. These decisions may have to do, not only with the evidence base, but also with the cost of adding a benefit, the importance of including the benefit to the potential purchaser, and competition in the marketplace, among other considerations.
Washington State employs a transparent hierarchy of evidence in deciding which benefits it will cover. Dr. Jeffery Thompson, the chief medical officer of Washington State’s Department of Social and Health Services and the Health Care Authority, described how a service supported by “A-level evidence based on randomized trials” is likely to be added to the state benefit package. For example, before the introduction of the evidence-based benefit design approach, cardiac rehabilitation was not a covered benefit. Once reviewed, however, A-level evidence showed cardiac rehabilitation helped to avoid further surgery, hospitalization, and subsequent heart attacks; the benefit is now paid for. Covered benefits are not limited to those that only have A- or B-level evidence; there is room for consideration of lower level evidence and experimental and investigational treatment. Furthermore, as new technology-related benefits can be beneficial for patients but costly for insurers and purchasers if used indiscriminately, Ms. Leah Hole-Curry described the complementary Washington State Health Technology Assessment (HTA) program. First, they consider efficacy and safety to determine the degree of variation between how the technology functions in the “best environments” and the “real world.” Only after a technology has “passed” the tests of efficacy and safety do they consider “the cost question.” Of the 20 evaluations HTA has undertaken, they have considered cost for only “a few,” either because the technology has not gotten through the “first two hoops,” or because the “first two hoops answer the question and cost becomes immaterial because there is value that’s uniquely provided by the technology.”
Private insurers similarly evaluate new technologies for coverage and review evidence for the development of clinical policies that are applied in medical necessity determinations. When Aetna evaluates a new technology for coverage, the insurer, Dr. Robert McDonough said, considers whether the technology has final approval from governmental regulatory bodies and the scientific evidence supporting the effect of the technology on health outcomes. Aetna was the first to publish its clinical policies on its website, and now other insurers are following this practice.
In the face of less evidence than is often needed to make evidence-based coverage decisions, “it is critically important,” Dr. Calega said, that the nation devote funding to develop more evidence, including comparative effectiveness
9 Under “first fail” policies, patients are first treated with the most cost-effective drug therapy. The patient progresses to more costly therapies only if clinically necessary.
research (CER). Ms. Philip said, for example, that in the absence of comparative effectiveness research, CHBRP was unable to compare the effectiveness of an injectable cancer medication with an oral cancer medication. Ms. Darling noted that comparative effectiveness research will “provide us with very valuable information about how to fine tune” coverage decisions. Similarly, Ms. Fishman said, limits placed on the EHB package could focus on services that are marginally effective and could change as underlying scientific evidence or CER informs clinical best practices.
Insurers may choose to exclude certain services from coverage altogether or limit access to certain clinical circumstances, but providers and consumers raised questions about timely access to what they deem evidence-based services. For example, cosmetic surgery and bariatric surgery are sometimes excluded from policies. Dr. Robert Murphy of the American Society of Plastic Surgeons (ASPS) maintained that there are an increasing number of insurers denying plastic surgery for children born with disfiguring birth defects by labeling the procedures “cosmetic” or “non-functional” in nature, requiring many time-delaying appeals. Similarly, Dr. Bruce Wolfe of the American Society for Metabolic and Bariatric Surgery said access to obesity prevention and treatment is severely limited despite a growing body of evidence supporting intervention.
Consumers and providers also argued for flexibility in application of standards of evidence to ensure patients have access to care. Mr. Thomas, for instance, noted that “you go with the highest level of evidence you have,” but have to be careful about rigid application in all circumstances. Dr. Cohen concurred with the need for flexibility; the EHB package, he argued, must allow for medically appropriate off-label use of FDA-approved drugs and devices, a common practice in OB/GYN. Similarly, Mr. Thomas Sellers of the National Coalition for Cancer Survivorship (NCCS) remarked that Medicare’s policy of covering clinical trials has “yielded significant benefits for individual patients and for the health care system” because patients are permitted to enroll in trials without fear that their routine costs will be denied and the enrollment of patients in the trial furthers evidence development (CMS, 2011).
MONITORING REQUIRED ELEMENTS FOR CONSIDERATION
Section 1302 specifies certain “required elements for consideration,” the core of which are that the Secretary shall (1) ensure that the EHB “reflect an appropriate balance among the categories”; (2) not make coverage or benefit decisions that “discriminate against individuals because of their age, disability, or expected length of life”; (3) take into account the health care needs of diverse segments of the populations; and (4) ensure that EHB are not subject to denial against individuals’ wishes on the basis of age, expected length of life, present or predicted disability, degree of medical dependency, or quality of life.
Regarding the consideration of “appropriate balance” among the categories of care, the committee heard perspectives from health care providers, industry, and consumers. Dr. Gerald Harmon, provided the AMA’s position that rather than striving for an appropriate balance, “the goal should be to assure parity in terms of access and coverage” for each category. Mr. Falardeau shared the American Chiropractic Association’s opinion that the top priority should be to ensure a complete essential benefits package, as opposed to having an equal number of services in each of the 10 categories. For example, there may be a relatively large number of ambulatory services that could be considered essential and fewer hospitalization services that could be considered essential. Mr. Richard Smith, speaking for the Pharmaceutical Research and Manufacturers of America, also cautioned HHS to consider “rapid changes in the patterns of care.” He explained that when health insurance first originated, there were fewer effective pharmaceutical treatments available. The availability of treatments for acute and chronic conditions have changed significantly with time, yet insurance benefits often seem to reflect more traditional patterns of care.
Ms. Sara Rosenbaum from the George Washington School of Public Health and Health Services argued that the required elements for consideration provision is designed to address the issue of insurer discretion to discriminate against certain types of conditions in the context of benefit design and coverage determinations. In some cases, excluded conditions may be quite specific, while in others a proxy of “recovery” or “restore” is commonly used to differentiate chronic conditions for which there may be no “recovery” from those that are acute and time-limited and for which recovery is possible. Disability and age both raise this issue, since age can affect the potential for recovery and because individuals with developmental disabilities may never recover. The question should be whether treatment aids functioning and serves to maintain health or avert a deterioration in health, not whether
recovery can be expected. Ms. Rosenbaum further suggested that one way to minimize insurers’ discretion would be to caution insurers about using medical necessity definitions that inherently discriminate by limiting coverage only to “medical conditions.” Such a definition, she said, would discriminate against individuals with developmental disabilities as these are often not considered medical conditions. The central question is whether the treatment in question is medical in nature and whether the individual can be expected to medically benefit from the treatment. In her opinion, that the health benefit will have spillover effects in educational, employment, or social contexts should be irrelevant to the coverage determination.
From the health care provider perspective, Dr. Harmon said that age, disability, and gender, among other considerations, have to be taken into account by the “prudent physician” in deciding clinical care. Ms. Rosenbaum agreed that the use of patient characteristics such as age that rest on a reasonable clinical and scientific evidentiary base are not discriminatory (e.g., immunizing a child at a specific age).
Dr. Harmon also argued that strong physician-patient relationships allow physicians and patients to jointly participate in making value-based health care decisions to determine the patient’s wishes. As an example, Dr. R. Sean Morrison, Director of the National Palliative Care Research Center, advocated for the inclusion of palliative care in the EHB package, noting that under the current insurance model the only reimbursement for palliative care is via hospice, which some insurance companies do not even cover. He cited a study showing how palliative care can reduce hospital costs as well as better meet patient and family goals to spend less time or die in intensive care. Having the benefit available would allow physicians to provide options in accord with the patient’s wishes.
INSTITUTING AN APPEALS PROCESS
ACA requires health insurance plans to have internal and external grievance and appeals processes; therefore, appeals processes were discussed by several presenters. Health plans, Ms. Bocchino said, “fully support a fair, robust, and timely process for consumers to appeal benefit denials through external review administered by independent third-party review organizations.” Dr. Kang noted that CIGNA Corporation’s internal appeals process serves an important function, but is infrequently needed: last year, approximately 99 percent of its U.S. claims were paid without any denial or required pre-authorization. After the appeals process was exhausted, about .006 percent of the total number of claims were ultimately denied.
California’s Knox-Keene Act provides one model of an existing independent external appeals process, such as ACA requires to be developed in each state. Knox-Keene mandates plans operating in California to have an internal process for resolving enrollee grievances, and when enrollees have exhausted this process, they can appeal to the state. A team from the California Department of Managed Health Care, described the main classifications of appeals (i.e., medical necessity determinations, experimental and investigational therapies, and emergency room use), treatments and conditions experiencing the most frequent reviews, and how often appeals were upheld or overturned. Ms. Ehnes said one of her principal concerns as director is that patients have to raise the complaint so there must be a process where people “who do not complain are able to start accessing the advances in science and medicine.” Accordingly, each appeal provides the insurance regulator an opportunity to consider if there is a more widespread problem.
ENSURING FAIR PROCESSES
Another theme raised by several presenters was the challenge of making information transparent to consumers, whether it be clinical policies, medical necessity decisions, or scope of coverage in a plan. On behalf of Consumers United for Evidence-Based Healthcare (CUE), Dr. Barbara Warren advocated for the inclusion of educated consumers in making benefit design decisions and in defining medical necessity. Consumer participation, she argued, pays off in that consumers can provide insights and perspectives that are often not apparent to clinicians, policy makers, and industry representatives. Consumers, Dr. Warren acknowledged, are often misrepresented as being opposed to limits or not willing to discuss what care might be essential and necessary.
As the committee considers methods to determine and update EHB, some speakers thought the processes used by states to transparently evaluate benefits—whether through reviews of state mandate proposals, appeals of denials
of care, or benefit design processes—might provide important insights for methods to define EHB. California and Oregon, for instance, have established processes for gaining stakeholder buy-in. For example, Ms. Philip of the CHBRP made a case for independence and transparency as California has in the state mandate evaluation process. The transparency of CHBRP’s processes, she added, has helped improve its methods while enhancing the credibility and reliability of its reports. Mr. Wright of Health Access California supports independent medical review processes of insurance company denials, he said, because they address the key consumer concern: transparency. Likewise, Mr. Thomas from the Consortium of Citizens with Disabilities advocated for transparent processes, including the formation of a formal advisory body to update the EHB package.
ORGANIZATION OF WORKSHOP REPORT
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