“Essential” Health Benefits? Researchers Report in AJMC that Two States Don't Meet Minimum Standards

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Amid the outcry over cancelled health plans that don't meet minimum standards under the Affordable Care Act, here's a twist: A study in The American Journal of Managed Care finds that California and Massachusetts fall short in demanding that health plan drug benefits follow the law.

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The key question for policy makers is how well an essential health benefits approach balances consumers' desire for an affordable and comprehensive benefit package, while offering flexibility with respect to formulary benefit design.

Think those old “grandfathered” health care plans are the only ones that don’t meet the minimum standard for “essential health benefits” under the Affordable Care Act? The problem may run far deeper, based on the results of a study published in the February 2014 issue of The American Journal of Managed Care.

The study, led by Joshua P. Cohen, PhD, found that health plan drug benefits in two key states in the reform hierarchy -- Massachusetts and California – don’t meet state and federal requirements for essential health benefits, even though the plans in question were approved.

Cohen’s group scrutinized formularies – the lists of drugs covered by plans -- from the three largest small group plans in California and Massachusetts. These two states are of special interest to researchers, with Massachusetts having been the incubator of this type of reform seven years ago, and California running the nation’s largest state-based exchange. To see the full study, click here.

Researchers evaluated the plans against the so-called “benchmark” plans in each state, and the study found that health plans in both states are not fully compliant with state and federal rules. Cohen’s group found major differences among plans relating to cost-sharing, reimbursement criteria, prior authorization, and quantity limits.

The authors concluded that both states would need to adjust their formularies, with state policymakers taking another try at balancing “competing aims of comprehensiveness of coverage and drug affordability.” This gets to the heart of the balancing act involved in regulating healthcare: Mandates, or required benefits, can drive up costs, but they also assure that patients get the care they need.

“The key question for policy makers is how well an essential health benefits approach balances consumers’ desire for an affordable and comprehensive benefit package, while offering flexibility with respect to formulary benefit design and hence leverage for competitive pricing,” the authors wrote.

Massachusetts’ transition from its own version of healthcare reform to ACA requirements has been rocky; the commonwealth’s enrollment tool, Healthcare Connector, has been beset by problems leading to unprocessed applications. On February 13, 2014, federal officials gave Massachusetts a three-month extension to fully comply with the ACA.

MEDIA CONTACT:     
Mary Caffrey (609) 716-7777 x 144
mcaffrey(at)ajmc(dot)com
http://www.ajmc.com

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Mary Caffrey

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