Last Friday evening, the Department of Health and Human Services (HHS) released the proposed requirements for qualified health plans (QHPs) in 2019. QHPs are those health plans offered on the individual and small-group markets, both on and off the Marketplaces (or Exchanges). Many of the proposals were familiar, such as delegating more authority and flexibility to states, and were perhaps milder than some observers were expecting.
However, one proposal has caught stakeholders’ eyes, and its potential implications are coming into focus. Tucked away in a section of the rule that would delegate additional flexibility to states concerning essential health benefits (EHBs) was a proposal to broaden the plans that would be eligible for selection as a state’s “benchmark” plan.
What’s a Benchmark Plan and Why Is It Important?
The ACA requires broad coverage requirements, like prescription drugs and hospital services. But as the saying goes, the devil is always in the details. The benchmark plan is what establishes the base requirements for what, or how many, items and services are covered under those broad categories. For example, QHPs have to cover the same number of prescription drugs in each category and class that the state benchmark plan covers. In short, QHPs must be at least as generous in coverage at the state’s benchmark plan.
What are the Current Rules for Benchmark Plan Selection?
Currently, states are supposed to use a “typical” employer plan as a benchmark. However, that has been further defined as the largest, by enrollment, small-group, large-group, or Federal Employees Health Benefit Plan within the state. Essentially, states had a selection of roughly three plans as benchmarks.
How Would the Proposal Change That?
The proposal would broaden the plans eligible for benchmark plan selection to any plan with at least 5,000 covered lives. Depending on the state, that could open the door for the state to select a less generous plan as the state’s benchmark. CMS has released an example of how a state could select a benchmark under the proposal.
Additionally, states would be able to use other state’s benchmark plans for a specific category. So, Alabama could use Georgia’s benchmark plan formulary if the Georgia benchmark formulary was less generous.
How Could This Impact Benefits and Costs?
It is likely that if a state selects a less generous benchmark plan, then costs for QHPs would generally decrease, as plans could cover fewer items and services. However, it is tough to say for now just what that would look like in real life: what would the less generous benefits look like and how much money would that save? Supplemental information released by HHS predicts that up to 30 states could change their benchmark methodology because of this rule change.
Stay tuned to see how this evolves. Comments on the proposal are due November 27, 2017. It is likely that a final rule will be released in late 2017 or early 2018, as plans need to start preparing for the 2019 plan year in March or April 2018.
If you have any additional questions about how the proposals for 2019 could impact you, please contact Melissa Andel, Director of Health Policy, at melissa@appliedpolicy.com or 202-558-5272.