Essential Health Benefits: Balancing Coverage and Cost

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Nothing in the ACA prevents her from deferring to states that select benchmark plans from among the few options she has provided. That choice to defer is itself an exercise of her delegated powers.

IOM Report

The second potential objection to the benchmark approach is both less obvious and more substantial. Notwithstanding the secretary's wide discretion to define essential health benefits, there are limits to the deference that courts afford to agencies that interpret open-ended statutory language.

As the D. Labor Executives' Ass'n v.

Balancing adequacy and affordability?: Essential Health Benefits under the Affordable Care Act.

Nat'l Mediation Bd. FCC , S. Where an agency's interpretation of an open-ended provision clashes with the statutory scheme as a whole, the courts will not presume that Congress meant to authorize the agency to so interpret the statute Brown v. Gardner , U. As we have discussed, the ACA was enacted on the assumption that HHS would establish a nationally uniform slate of essential health benefits. Under the benchmark approach, however, there will now be dozens of state-specific sets of essential health benefits. Many provisions of the ACA are inscrutable, extraneous, or impossible to implement in the face of that kind of variation.

Nowhere is the problem more apparent than in provisions governing state coverage mandates. Congress, however, did not want to devote the tax credits and cost-sharing payments available on the exchanges to the coverage of these state-mandated benefits. The ACA therefore limits federal subsidies to defraying the costs of essential health benefits section States must pick up the rest of the tab to assure that exchange plans that include extra state-mandated benefits remain affordable section Under the benchmark approach, however, this cost-sharing arrangement becomes irrelevant.

A state's benchmark plan will inevitably cover the treatments or services that the state has mandated. As such, a state's essential health benefits will by definition include all of the benefits for which the state mandates coverage. State coverage mandates can therefore never exceed essential health benefits, and states with extensive coverage mandates will never assume the additional costs that the ACA anticipates they will assume. Did Congress really intend its cost-sharing provisions to do no work at all? The benchmark approach also raises questions about certain specialized insurance plans that will be sold on the exchanges.

Where essential health benefits vary from state to state, however, a multistate plan cannot both be uniform and cover only the essential health benefits. In proposing regulations for multistate plans, the OPM recognized this problem. The bare language of the uniformity provision is perhaps amenable to this interpretation. Other statutory clues, however, suggest that Congress meant uniformity among states. Congress specified, for example, that a state can require a multistate plan to cover state-mandated benefits, but only if the state picks up the increased expense section There would have been no need for Congress to bless that limited inroad on uniformity among the states if the ACA required uniformity only within each state.

In short, the benchmark approach to essential health benefits fits poorly with a number of provisions of the ACA. That poor fit raises the prospect of a legal challenge: perhaps it suggests that HHS exceeded its delegated powers in adopting the benchmark approach. In this, the claim is reminiscent of FDA v. The agency countered by arguing that it could continue to allow cigarettes to be sold because banning them would cause a shift to dangerous black-market cigarettes, harming overall public health.

The benchmark approach is subject to similar criticism for its incompatibility with provisions of the ACA that anticipate a single, uniform standard for essential health benefits.

Health Care Costs Are a Barrier to Care for Many Women

In the final estimation, however, demonstrating the unlawfulness of HHS's approach requires more than showing that its interpretation aligns awkwardly with scattered provisions of the ACA. The question remains whether the fit is so poor that it justifies the inference that Congress could not have meant to allow HHS to interpret the ACA in the manner that it did California Indep. Operator Corp.

We think not, although the question is close. The agency has just chosen to involve the states in defining a statutory term that Congress gave it wide latitude to define. Congress may not have contemplated that HHS would adopt a benchmark approach, but so what? Agencies routinely discharge their statutory obligations in ways that Congress never anticipated, particularly in complex and fast-changing regulatory environments. While HHS's interpretation does fit uneasily with several provisions of the ACA, the agency could always shift course, and provisions that do no work today may be crucial tomorrow.

More importantly, the interpretation of a complex statute is a messy business. Some statutory provisions will inevitably prove less significant than they would have been under alternative readings. An agency's choice is not usually deficient for that reason alone Babbitt v. As is typically the case with such a policy statement, the bulletin nowhere committed the agency to the approach that it outlined. As a formal legal matter, it had no more significance than an advance notice of proposed rulemaking or a press release.

Given the looming deadlines for the exchanges, states and insurers understood that the benchmark approach outlined in the bulletin was not just one possibility among many. It was almost certainly the rule.

IOM Details Essential Health Benefits, Emphasizes Cost

More significantly, the agency began the traditional rulemaking process required under the Administrative Procedure Act APA after the states' deadline for selecting benchmark plans had passed and after insurers started developing new insurance products for the exchanges. The federal courts have a practice of asking whether policy statements, although they nominally lack the force of law, are nonetheless binding as a practical matter Community Nutrition Inst.

Young , F. United States , F. Judged by this standard, the bulletin arguably became a legislative rule once states, insurers, and employers realized that they had no choice but to conform to it and HHS had no time left to rethink it. The bulletin, however, did not go through the formal rulemaking process. But what, exactly, did the use of guidance allow HHS to avoid? We consider three procedural requirements that would have applied in a conventional rulemaking setting, but to which the bulletin, as a guidance document, was not subject: notice and comment, immediate judicial review, and OIRA review.

What is most notable about HHS's unorthodox process, however, is not that the agency avoided these procedures. It is that the agency voluntarily subjected itself to most of the obligations that adherence to the procedures would have entailed. The APA's notice-and-comment process is meant to allow for public feedback on proposed rules, to supply agencies with information that can aid them in revising those rules, and to publicly legitimate the rules they finally adopt Breyer et al. Notice and comment, however, can serve those purposes only if agencies are open to revisiting their proposed rules when they receive feedback.

In the case of essential benefits, HHS committed itself to the benchmark approach long before issuing its notice of proposed rulemaking. HHS's curt dismissal in the final rule of comments suggesting a single, nationwide standard may have signaled its unwillingness at that late stage even to entertain the possibility. Still, it does not appear that HHS used the bulletin to avoid public feedback on the benchmark approach. Around the same time, HHS also made it known to outside groups that it was toying with the idea of delegating authority to the states to establish their own essential health benefits.

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These public discussions and the responses they engendered came on top of both the conferences that the IOM had organized and the notice-and-comment processes that twenty-seven states used to select their benchmark plans. The agency had no obligation to do any of this public outreach.

Without informing anyone of its thinking, HHS could simply have issued a notice of proposed rulemaking announcing the benchmark approach. After receiving comments and issuing a final rule, HHS would then have complied with all of the APA's notice-and-comment requirements. Paradoxically, however, formal compliance might have undermined HHS's effort to seek and receive meaningful public input on its proposed approach.

Because courts insist that agencies provide a fulsome explanation of the basis for their proposed rules, HHS would have had to elaborate its benchmark approach in a lengthy notice of considerable specificity Elliott : HHS could then have discarded that approach only if it went through the laborious process of issuing a new notice of proposed rulemaking Int'l Union, United Mine Workers of Am. But with statutory deadlines looming, the agency could have ill afforded the delay associated with restarting the notice-and-comment process.

IOM Issues Report, Essential Health Benefits: Balancing Coverage and Costs

Instead, HHS used the bulletin to secure public input during the brief window where it could have reconsidered the benchmark approach. Although agencies do not have to solicit feedback on guidance documents, the bulletin's very first sentence explicitly invited comments from the public. In response, the agency received more than eleven thousand comments NPRM : 70, HHS did not respond publicly to those comments, as the APA would have required in connection with a rulemaking.

Nor does it seem that the absence of a requirement to publish comments received in response to the bulletin silenced any criticism. Just as the Internet allowed HHS to make the bulletin immediately available to the public, the Internet allowed commenters to publicize their concerns. Posting the bulletin was an ingenious way to invite public comment without irrevocably committing the agency to the benchmark approach. From the perspective of meaningfully involving the public in agency decision making, then, the bulletin-followed-by-rulemaking approach was superior to a routine process of APA notice-and-comment rulemaking.

Significantly, it cleared a route for the agency to receive public comment at the critical prenotice phase of agency rulemaking. Commentators regularly lament that well-organized groups with concentrated interests have better access than diffuse public interest groups to this prenotice process where most important choices are made Elliott : The bulletin addressed this imbalance by telling everyone that the agency was open to hearing from them. By using a guidance document to announce the benchmark approach, HHS also arguably circumvented judicial review.

Per section of the APA, final rules issued through notice-and-comment rulemaking can usually be challenged in court by those whose conduct the rule affects. In contrast, challenging guidance is much more difficult. Courts often conclude either that guidance is not final agency action or that it is not ripe for review Mendelson : One purpose of judicial review is to assure that agencies do not force regulated interests to comply with rules that agencies lack the authority to issue Abbott Laboratories v.

It is therefore arguably worrisome that states, employers, and insurers did not have an opportunity to challenge HHS's benchmark approach before making costly efforts to conform to that approach. Had HHS issued a proposed rule instead of the bulletin, the agency could have finalized the rule sometime in or early A more regular process would therefore have given affected interests an opportunity to challenge the final rule before the requirement to cover essential health benefits sprang into force in January The benchmark approach embodied in the bulletin will not evade preenforcement review altogether.

At most, HHS's decision to outline its approach in a bulletin allowed the agency to delay the date on which it issued a final rule. Now that the final rule has issued, someone will probably bring a preenforcement challenge. Perhaps the plaintiff will be the mother of an autistic child who can find no insurance plan in her state that covers needed services but who believes that, had the agency gone through the process of establishing a uniform federal standard, HHS might have included such services in the package of essential health benefits.

Or perhaps it will be a California insurance company complaining that it must cover acupuncture services. The important point is that HHS knew when it issued the bulletin that any final rule adopting the benchmark approach would eventually be challenged. The agency's choice was therefore disciplined by the near-certainty that the courts would one day scrutinize that choice.

HHS's reliance on the bulletin just delayed when judicial review would occur. Nor is it especially worrisome that some states and insurers had to take immediate steps to comply with the approach HHS outlined in the bulletin. Even in the absence of final agency action, parties often structure their affairs in anticipation of governmental action.

Essential Health Benefits: Balancing Coverage and Cost sets forth the methods and criteria that the IOM recommends be used to develop the actual list of essential benefits.

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That big job will fall to the Department of Health and Human Services. As required by Patient Protection and Affordable Care Act, b eginning in , health insurance exchanges, as well as individual and small group health insurance policies must offer these essential benefits.

IOM Details Essential Health Benefits, Emphasizes Cost | HealthLeaders Media

To balance cost and affordability of the essential benefits package, the IOM recommends that the essential benefits reflect "the scope and design of packages offered by small employers today. Developing a premium target. The report recommends that HHS determine what the national average premium of typical small employer plans would be in and match the benefits to that premium cost.

Defining priorities. The report recommends a series of small group meeting be held around the country to discuss the benefits and costs of different plan designs, including coverage-specific services and cost-sharing. Register Now. Login Forgot username? Username Please enter your username. Forgot password? Password Please enter your password. Need a login? Create an account. Not a member of APhA? Join now.