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Health insurers, regulators wary of state-defined marketplace plan benefits

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Health insurers, regulators wary of state-defined marketplace plan benefits

A proposed rule from a federal regulator of health insurance marketplaces would allow states to dramatically change the benefits covered in basic exchange plans, sparking disagreement among insurers and regulators alike.

Under the current Affordable Care Act rules, all marketplace plans have to cover the same 10 “essential health benefits.” The Centers for Medicare and Medicaid Services' proposed rule would allow states to pick and choose which benefits must be offered in benchmark plans. States could also choose to add more benefits to the list.

Doing so could sow confusion among consumers and possibly raise costs if more benefits were required in some states, insurers and regulators said. Some also pushed back on another component of the rule: creating a basic federal marketplace plan that states would default to if they did not set their own essential benefits.

In late October, the agency proposed the idea, which would take effect for 2019 health plans, in a 365-page rule. CMS proposed that states could annually draw up their own minimum set of benefits, select elements of other states' plans or adopt another state's entire set of benefits.

Under the ACA, insurers participating in state or federal exchanges have to offer the essential benefits in their plans. The national law's existing essential benefits include coverage for outpatient, inpatient and emergency care; prescription drugs; pregnancy, maternity and newborn care; and mental health and substance abuse.

In letters to the regulator, most insurers were resistant to the rule, arguing they would have to eat any cost increases if states included more benefits in benchmark plan requirements. Consumers satisfied with their plan generally re-enroll in the same plan year after year. By allowing states to change the makeup of basic plans each year, premiums are likely to change, which would confuse returning plan enrollees, insurers said.

Anthony Mader, vice president of public policy at Anthem Inc., wrote in the company's comment that allowing states to substitute benchmark plans or benefits categories each year may "lead states to expand benefits under their benchmark plans without defraying the costs of such benefits, increasing the cost of coverage."

Mader added that the year-to-year decisions would confuse consumers who rely on "consistency" in annual plan benefit packages.

Centene Corp. Senior Vice President of Government Relations Jonathan Dinesman recommended that the agency postpone any changes to benchmark plan selection until 2020 or later.

"While Centene supports affording more flexibility to the states," Dinesman wrote, "we believe annual changes to benchmark plans create more of a burden than a benefit to the market."

Molina Healthcare Inc., the Blue Cross and Blue Shield Association, Cigna Corp. and Kaiser Permanente Insurance Co. echoed Centene and Anthem's position that the benefits change could cause confusion for consumers.

But Aetna Inc.'s executive vice president of corporate affairs, Steven Kelmar, wrote that the company "generally" supports the proposal. It would prefer to push the change back later for 2019 and limit how often states can change their essential benefits.

Among state regulators, support for the provision was also mixed.

Allison O'Toole, CEO of MNsure, Minnesota's ACA exchange, wrote that the exchange has concerns that the new rule would limit a state's new benchmark to the standards of a previous plan. That could exclude coverage for innovations in medicine and technology.

She wrote that while the exchange supports greater flexibility in the selection process to change benchmark plans in response to medical advances, it should not come at "the expense of the vital consumer protections afforded under the current essential health benefits structure."

California Insurance Commissioner Dave Jones favored the idea of allowing states more flexibility but argued against a federal definition of essential health benefits that would create a low baseline for benefits in every state.

In the preamble of the rule, the agency suggested creating a default federal benchmark plan corresponding to the federal definition of essential health benefits. That would impose a "one size fits all" approach to the required benefits if a state defaults to the federal definition, Jones argued.

There is currently no federal benchmark health plan uniform across the U.S.

Jones wrote that a federal default definition of benefits that does not include a state’s pre-existing insurance benefit mandates would be "extremely disruptive" to individual and small-group market insurance consumers who rely on a baseline level of coverage afforded by state law.

"If you go down this path," Jones wrote, "you invite lawsuits from states whose markets you will be disrupting."