A new study indicates that basic prescription drug coverage could vary dramatically from state to state as requirements under the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) are implemented. Under the new regulations, states have the ability to set minimum mandatory benefits for private health plans that will be offered beginning in January, 2014.
In a study released last week, the market analysis firm Avalere Health found that some states will require coverage of virtually all FDA-approved drugs, while others will only require coverage of about half of medications. Connecticut,Virginia and Arizona will be among the states with the most generous coverage, while California, Minnesota and North Carolina will be among states with the most limited coverage. Consumers in all states will have access to essential medications, but some will have fewer choices than others.
CMS recently released a proposed rule covering the requirements for the essential health benefits under section 1302 of PPACA, including the prescription drug and other benefits, the determination of the actuarial value of the health benefits, and recognition of accreditation agencies that will be responsible for determining whether health plans are qualified. The proposed requirements would apply to non-grandfathered health insurance plans offered in the individual and small group markets beginning January 1, 2014, whether or not they are offered on the health insurance exchange, but not to self-insured plans.
Essential health benefit requirements apply to health plans in the individual and small group markets, both inside and outside of health insurance exchanges. The plan must offer a package of ten core services, including:
- ambulatory patient services;
- emergency services; hospitalization;
- maternity and newborn care;
- mental health and substance abuse disorder services, including behavioral health;
- prescription drugs;
- rehabilitative and habilitative services;
- laboratory services;
- preventive and wellness services and chronic disease management; and
- pediatric services, including oral and vision care.
The coverage must have an actuarial value equivalent to benchmark plans at a percentage described by a metal level:
- bronze, covering 60 percent of the cost;
- silver, covering 70 percent
- gold, covering 80 percent; or
- platinum, covering 90 percent.
The actuarial value of each benchmark plan and qualified health plans must be certified by a member of the Academy of Actuaries (AAA).
Under the new proposed rule, states will have some flexibility with their prescription drug coverage under their basic, benchmark plans. To comply with the proposed essential health benefit requirements, a state plan would only have to cover the same number of drugs in the benchmark plan. Therefore, the state plans can cover just a single drug in a single category and still meet the requirements. Each state plan could cover different drugs than those covered by the benchmark plan, because the requirement only specifies the number of drugs within a single class.
Between the number requirement and the lack of a requirement for a specific drug, states will have a lot of flexibility in making their determinations of what or how much to cover. The recent study by Avalere proves that point. There is a huge disparity among states and what they plan to offer. Time will tell whether the playing field will even itself out.