NEJM: IOM advises HHS in defining 'essential health benefits'

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An Institute of Medicine (IOM) committee has made six recommendations to the Department of Health and Human Services (HHS), for the process of defining essential health benefits (EHBs), mandated under the Patient Protection and Affordable Care Act (PPACA). The HHS sought recommendations from the IOM in defining EHBs offered by health plans participating in newly created state-based insurance exchanges.

The committee recognized that finding a middle ground between the comprehensiveness and affordability of EHBs will be a “politically and socially charged endeavor,” wrote New England Journal of Medicine's U.S. correspondent John K. Iglehart in an Oct. 7 perspective. In response to the potential controversy, the committee recommended the HHS create an interactive process.

Essential health benefits should be equivalent in scope to what a small business would pay on behalf of an employee, according to the committee, and if the HHS endorses a more expansive package, the committee cautioned that “many currently uninsured individuals and small businesses would find it unaffordable, which would undermine the overriding goal of the reform law—to make coverage both meaningful and nearly universal.”

According to the legislation, benefit packages must include 10 benefit categories: ambulatory patient services, emergency services, hospitalization, 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. States may offer broader plans, but must incur costs associated with them, they noted.

The IOM identified specific challenges that the HHS will face in equating the PPACA-defined EHBs with those provided in a typical small-business package. A survey mandated by the healthcare legislation of 3,200 employer-sponsored insurance plans found it difficult to describe a typical employer package. Also, some benefits mandated by the law are often not included in small-employer or large-group insurance contracts.

Iglehart summarized the IOM committee’s recommendations as follows:

  1. The HHS secretary should establish an essential health benefits package including the 10 categories contained in the PPACA and as guided by a national average premium target. Once developed, the package should be adjusted so that the expected national average premium for a “silver” plan is actuarially equivalent to the average premium small employers would have paid in 2014 for a typical plan. A public deliberative process should be used to make adjustments to the initial EHB package.
  2. By January 2013, the secretary should establish a framework for monitoring EHB implementation and updating that accounts for changes in provider payment rates, financial incentives, practice organizations and other relevant matters. The secretary should implement this framework and coordinate federal efforts to produce and make the data accessible for public use.
  3. Beginning in 2015, the secretary should update the EHB package to make it more fully evidence-based, specific and value-promoting—explicitly incorporating costs. A public deliberative process should be used to inform choices about what to include in or exclude from the updated packages.
  4. The secretary should permit states administering their own exchanges to adopt variants of the federal EHB package, provided that modifications are consistent with the federal package, not significantly more or less generous and are subject to public input.
  5. The secretary should establish a National Benefits Council, with members appointed through a nonpartisan process, which should make recommendations annually stemming from its oversight of the EHB package.
  6. To ensure that the EHB-defined packages remain affordable and sustainable, the secretary should develop a strategy, in collaboration with others, for aligning the growth rate of healthcare spending in all sectors with that economy.

The NEJM perspective can be found here.