“Essential Health Benefits” Outlined in IOM Report

 The Institute of Medicine, under the direction of HHS, has released a report outlining the “essential health benefits” (EHB) that must be included in some health plans offered by state-based insurance exchanges as required by § 1302 of the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148). The EHB represents a minimum level of benefits that must be included in some health plans; it does not restrict health insurers from offering plans with more benefits.

 PPACA requires that an EHB include at least 10 general categories of medically necessary health services and benefits, including ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services; chronic disease management services; and pediatric services, including oral and vision care.

 The EHB, as described by the IOM, “are intended to cover health care needs, to promote services that are medically effective, and to be affordable to purchasers.”  The IOM proposed that HHS put in place a framework for EHB that would: (1) consider the population’s health needs as a whole; (2) encourage better care by ensuring good science is used to inform practice decisions; (3) emphasize the judicious use of resources; and (4) carefully use economic tools to improve value and performance.

State Flexibility

The IOM report noted that current state health insurance mandates “should not automatically be included in the EHB package but reviewed in the same way as other potential benefits.” The IOM added, however, that state-specific variations in the EHB will help encourage innovation at the state level, as long as the variations are consistent with the PPACA requirements for EHB packages.

 The IOM also recommended that HHS update the EHB package annually, keeping it based on credible evidence of effectiveness, but also considering both the cost of the EHB package and limiting medical inflation. “Without serious attention to rising health care costs across all sectors, the EHB will become unaffordable over time,” the IOM report noted.

The full report is available here: http://www.iom.edu/Reports/2011/Essential-Health-Benefits-Balancing-Coverage-and-Cost.aspx