Essential Health Benefits: Specific Recommendations and Implications

Our post today comes from guest blogger David Jacobson. He is a consultant for HealthCare Strategic Management – SM. He is a knowledgeable and creative thinker of healthcare reform strategies, and a subject matter expert about Medicaid managed care and the Affordable Care Act including the purchasing Exchange and other reform initiatives. David has over 16 years’ experience and developed Medicaid managed care products for chronically ill, disabled and long term supports and services. 

Specific Recommendations and Implications
Part 1 of this Blog discussed IOM’s overall recommendation for HHS to define Essential Health Benefits. It is a balance of coverage and affordability, and affordability should be a key to support the goals of ACA. This Blog drills-down on the specific recommendations and includes analysis of implications.

Following are IOM committee recommendations and editorial analysis. The detailed recommendation framework was comprised of three major areas. See the IOM report for more specifics.

• • Policy Foundation that included stewardship of limited resources under an Ethic dimension
• • Summary of Criteria for the: 1) aggregate package, 2) specific components, and 3) defining and updating the specific components
• • Eight recommendations addressing in the six categories that address:
• o Establish initial EHB: Reality will be in the specifics of how HHS interprets and applies the IOM guidelines. The IOM strongly recommended effective public deliberation and the process will need to make tough a-political decisions to define EHBs that will support affordability. A challenge will be the level of benefits for the chronically ill and disabled segment. This segment may need special consideration such as targeted programs and effective risk-adjustments that can actually attract health plans with care management expertise. Additionally, the EHB needs to consider Medicaid benefits to support continuity of care for enrollees that switch between subsidized and Medicaid plans (bubble population).
• o Foundation for updating with monitoring and research: Establishing data standards is a valuable component in order to have information to evaluate performance and outcomes to improve the system. This will increase administrative costs in the short-term and, when done right, can reduce cost and improve outcomes in the medium term. Useful and actionable data is essential to reforming the system.
• o Allow for State innovation: This component is needed in order for states to continue to design programs for the local market and be a laboratory for innovation. However, it will also create challenges to maintain actuarial neutral benefit designs and avoid an onerous waiver process like what states currently face for Medicaid.
• o Update the EHB with evidence-based information and explicitly consider costs:A challenge here is that new treatments may initially lack sufficient evidence-based data. Additionally, cost neutrality presents the challenge of comparative effectiveness and politicizing the process when choices need to made about what benefits to add or change. It will be important to maintain affordable premium price-points and avoid political influence driving the cost up or complaints of rationing.
• o HHS strategy to address rising costs across all sectors: As noted above, this is critical for the success of ACA and American healthcare in general. To highlight, the recommendation is across all sectors which can help minimize pushing the financial bubble around the system between payers and providers.
• o Create a National Benefits Advisory Council (NBAC): This needs to be kept non-partisan. The ACA says that the council would be staffed by HHS and appointed through a non-partisan process.

The next step is for HHS to conduct listening sessions and the IOM report targets the definition of the initial EHB package by May 1, 2012. The sooner the better due to the implications of EHB and the ever narrowing window to implement ACA. The next steps will be an intense process and fortunately the IOM committee proceeded in the right direction and recommended a solid framework to support the ACA.

Contact David at: djacobson@healthsm.com