If the Patient Protection and Affordable Care Act (PPACA or ACA)—the national healthcare reform law—survives a U.S. Supreme Court challenge scheduled for March and the November presidential election, most Americans will find themselves obligated to have some type of healthcare coverage starting in 2014—or pay a penalty for not doing so. This is commonly referred to as the "individual mandate" to purchase health insurance, and it is perhaps the most controversial aspect of the healthcare reform law. In order to avoid being penalized, most Americans will be required to secure coverage of an "essential health benefits" (EHB) package consisting of coverage of at least ten statutorily required categories of benefits.
A key question surrounding implementation of the ACA involves the specific contents of the EHB package. The ten benefit categories listed in the statute are broad and do not detail specific treatments, devices, or drugs; the statute also does not address the amount, duration, or scope of benefits covered. There has been an ongoing debate in Washington DC about the process to be used to establish the EHB package. Some stakeholders prefer a federally defined set of healthcare benefits that will be consistently offered in every state through state-based insurance exchanges. Others believe this would lead to a one-size-fits-all healthcare benefit design and would result in unnecessary costs and top-down federal control. Recently, the secretary of the U.S. Department of Health and Human Services (HHS) offered guidance on EHB that attempted to bridge the gap.
In developing this guidance, the HHS secretary was not alone. In addition to gathering input from private organizations such as the National Association for the Advancement of Orthotics & Prosthetics (NAAOP), the American Orthotic & Prosthetic Association (AOPA), the American Academy of Orthotists and Prosthetists (the Academy), the Amputee Coalition, and other O&P organizations, several federal agencies and organizations also contributed to the process. For instance, the statute called for the U.S. Department of Labor (DOL) to conduct a study over the past year to help define the healthcare benefits covered by the "typical employer plan" to serve as a guide to the HHS secretary in issuing regulations involving the EHB package. This report, issued in mid-2011, was unsatisfying from an O&P-coverage perspective for a variety of reasons.
In particular, the DOL, which collects data on self-insured health plans, does not have a robust system of data collection and, therefore, the DOL report was not nearly specific enough to accurately inform the HHS secretary as to a range of healthcare benefits typically covered by self-insured plans. "Orthotics" and "prosthetics" are terms that are not used by the DOL in the data-collection process and, therefore, the report indicated only moderate coverage for prosthetics and relatively minimal coverage for orthotics, despite the reality that coverage of O&P care is fairly well established.
The Institute of Medicine (IOM), part of the National Academy of Sciences (NAS), spent the better part of 2011 working on a report to the HHS secretary to inform the process for establishing EHB and updating the EHB package in the future. NAAOP and other O&P organizations testified before the IOM and submitted written testimony as well. AOPA commissioned a report that collected data and analyzed coverage levels for O&P across the country. This data lay in stark contrast to the DOL report, finding widespread coverage of prosthetics in private health insurance plans and slightly less-significant coverage of orthotics. The IOM report was issued in the fall of 2011 and concluded that the vast majority of private health insurance plans across the country cover O&P services and devices, at least to some extent.
After the IOM report was released, HHS held a series of "listening sessions" in Washington DC and across the country to solicit further information from public witnesses. A bevy of stakeholders and interest groups participated in these listening sessions and submitted testimony urging the HHS secretary to issue proposed regulations outlining the EHB package. Again, NAAOP and other O&P organizations participated in these listening sessions and underscored many of the favorable recommendations included in the IOM report.
HHS Issues Bulletin on EHB
On December 16, 2011, the Center for Consumer Information and Insurance Oversight (CCIIO), part of the HHS, released a bulletin that described the department's thinking with respect to the establishment of the EHB package. The 16-page bulletin addressed the process that HHS plans to utilize to establish the EHB. In short, HHS surprised many stakeholders by adopting a system whereby states would choose one of four different types of private healthcare plans currently operating in the state, known as "benchmark" or "reference" plans. These four plans include the following:
- The largest plan by enrollment in any of the three largest small group insurance products in the state's small group market;
- Any of the three largest state employee healthcare benefit plans by enrollment;
- Any of the three largest national Federal Employees Health Benefits (FEHB) plans by enrollment; or
- The largest insured commercial non-Medicaid health maintenance organization (HMO) operating in the state.
Under the bulletin, each state would be able to choose one of these health insurance plans as a benchmark and then augment it with statutory requirements. In other words, once a state selects a benchmark healthcare plan, it would have to add benefits listed in the ACA to bring it into compliance with the law, including coverage of one of the mandated benefit categories known as "rehabilitative and habilitative services and devices." This is the term used by Congress to denote coverage of, among other things, orthotics and prosthetics. Although not specifically mentioned in the statute, there is strong legislative history that indicates that Congress intended O&P to be covered under this healthcare benefit category.
There are also a number of consumer protections in the statute that would require the state to ensure that the categories of benefits are balanced in terms of coverage and account for diverse healthcare needs across many populations. States would also be required to ensure there are no incentives for coverage decisions, cost sharing, or reimbursement rates that discriminate impermissibly against individuals based on age, disability, or expected length of life. Finally, the state would have to ensure that the benchmark healthcare plan covers mental-health services on par with physical health services (known as mental-health parity) and that the plan balances comprehensiveness of coverage with affordability.
While HHS requested public comments on the non-enforceable bulletin, they were not obligated to offer the public an opportunity to comment. This is because the bulletin was not a proposed regulation (also known as a Notice of Proposed Rule Making or NPRM), as expected. HHS officials, however, insisted that a proposed rule will still be issued and suggested it would be released "soon."
The major impact of the approach described in the bulletin is that HHS does not appear likely to place a detailed EHB package in regulation that all healthcare plans must cover both inside and outside of state insurance exchanges starting in 2014. Rather, HHS proposes to give each state considerable flexibility to define a benchmark healthcare plan of its own. This state-by-state process is similar to the approach used by states in implementing the State Children's Health Insurance Program (SCHIP), and use of the SCHIP model is directly cited in the guidance.
Finally, if the state chooses as its benchmark healthcare plan the first option, one of the three largest insurance products in the small group market, the federal government will subsidize all healthcare benefits for which the state has mandated coverage for a two-year period. This is expected to drive states toward selection of one of the small group healthcare plans, as they will be able to keep their state benefit mandates at federal expense for an initial two-year period.
This is a significant victory for advocates across the states who have spent years ensuring that health insurance plans in their states cover certain benefits. However, when you compare sample small group market healthcare plans of this type against the benefit package covered by the federal employee healthcare plans, for instance, the comprehensiveness of benefits provided to federal employees creates a stark difference between the two. This argues for adoption by the states of FEHB-style packages, at least from an O&P perspective.
Reaction and Recommendations
The bulletin fails to provide sufficient information on the actual healthcare benefits to be covered under the benchmark plan options. HHS recently released additional information pertaining to specific benefits covered by FEHB plans, but they were prohibited from releasing benefit designs of private healthcare plans. With this relative lack of information, it is difficult to accurately assess whether the approach taken by HHS in the guidance document is worthy of support.
From a political perspective, the Administration's approach to this issue appears balanced. In fact, many consumer and provider groups have significant concerns that the approach being taken by HHS will not produce a reliable and consistent healthcare benefit package across the country. In essence, HHS has taken a safe approach thus far, providing sufficient guidance to states to allow them to continue implementing the ACA at a time when the entire law is under serious attack. If HHS were to have issued a federal standard healthcare benefit package that everyone would be required to purchase, they would likely have incurred serious backlash for issuing a top-down, one-size-fits-all benefits approach. With this guidance, that argument is largely silenced. HHS' current approach gives the states tremendous flexibility or, some would argue, too much flexibility.
Coverage of Orthotics and Prosthetics
In its bulletin, HHS explicitly states that "hospitalizations, physician and specialist visits, rehabilitation, orthotics and prosthetics, and durable medical equipment" are typically covered across all private health insurance plans, meaning that they should be considered part of any minimum benchmark plan. While this is encouraging, the O&P community cannot assume that this sentiment is set in stone. Insurance, business, and state advocates will press hard for limits and exclusions in benefits under the EHB package in the coming years, and the O&P groups must continue to protect access to and coverage of comprehensive O&P benefits. To accomplish this, the O&P community must continue to make the following arguments with HHS:
- To ensure consistent and appropriate coverage for O&P care across the country without arbitrary exclusions and limitations, there needs to be a strong federal role in the approval, oversight, updating, and enforcement of EHB.
- The bulletin leaves many unanswered questions about the comprehensiveness of covered healthcare benefits, including O&P care, and our national organizations need more specific information before an accurate assessment of O&P coverage under the proposed benchmark approach can be conducted.
- The O&P community needs to express strong agreement with statements in the bulletin that acknowledge that O&P care is a typically covered private healthcare plan benefit and assume that all EHB plans will cover these important services without arbitrary limitations.
- The O&P community must remain skeptical of the proposed benchmark approach until it is clear exactly which healthcare benefits are covered under the private benchmark plans. While FEHB plans tend to cover O&P adequately and without arbitrary limits, there is much less known about the state of coverage of O&P care in the small group plan market. From the available documents, there appears to be significant limitations and exclusions in these plans that we believe would violate the mandated healthcare benefit categories, as well as the non-discrimination provisions of the ACA.
- The mandated benefit category of "rehabilitation and habilitation services and devices" that appears in Section 1302(b) of the ACA was intended by Congress to include the full spectrum of O&P care as a benefit that is separate and distinct from coverage of durable medical equipment (DME). In fact, the ACA's legislative history explicitly discusses treatment of O&P separate from DME coverage.
The guidance on EHB sent some surprising messages and created significant concerns, but there are major areas where advocacy efforts of the O&P industry have paid dividends thus far. Further advocacy efforts will be necessary on this issue, however, as the HHS secretary fully intends to issue a proposed and final regulation implementing the EHB package in the near future.
Peter W. Thomas, JD, serves as general counsel for the National Association for the Advancement of Orthotics & Prosthetics (NAAOP). Theresa Morgan is the legislative director at Powers Pyles Sutter & Verville, PC, Washington DC.