Bare necessities

Little state progress on defining coverage requirements

Architects of the Patient Protection and Affordable Care Act made a deal, of sorts, with the nation’s uninsured. The law mandated that nearly everyone carry insurance, whether provided by an employer or bought in the marketplace. But it also sought to guarantee the benefits would be adequate and affordable.

Now states are busy deciding how well that deal holds up for the sickest patients.

The health reform law mandates 10 broad categories of care that must be covered but says nothing about what that coverage will look like or what restrictions or limits will apply to the benefits. Those decisions, federal health officials said in December, will be made by the states, which individually must select a health plan before Sept. 30 that will be the benchmark for benefits sold in the market.

The law requires that insurers include ambulatory, emergency and hospital care, as well as prescription drug coverage and laboratory services. Care for expectant mothers and newborns, often omitted from health plans sold to individuals, must be covered, along with pediatric services. Prevention, wellness and chronicdisease management—one focus of the law’s payment reform efforts—must also be covered. Mental-health and substanceabuse treatment services and rehabilitative and habilitative care are required, as well.

Health policy experts say coverage expansion under the law will provide significant access and financial protection by mandating coverage for services that have previously been excluded in some markets, such as mental health and maternity care.

But advocacy groups, including national organizations for patients with cancer, heart disease, diabetes and multiple sclerosis, are urging state insurance commissioners to pay close attention to health plan details, which may still cap benefits based on the cost or number of services, such as physical therapy, radiation therapy and chemotherapy.

For patients—low-income patients in particular—who require frequent or specialty ser- vices, benefit restrictions could leave households with unexpected and substantial medical bills, placing the patient “in a very precarious position,” said Stephen Finan, senior director of policy for the American Cancer Society Cancer Action Network, one of four groups that surveyed the state insurance commissioners.

For hospitals and medical groups, that could mean continued write-offs from unpaid bills despite the expansion of insurance cover- age, in the event that benefit restrictions leave households “underinsured.”

The underinsured—those with benefits that fail to protect against the financial strain of medical bills—typically spend more than 10% of their income on medical care, though for low-income households, the threshold is often considered 5% of household income.

A new wave of underinsured individuals could also undermine the healthcare industry’s push to better coordinate care and help patients avoid costly and harmful complications. The underinsured are more likely to skip tests, medications and follow-up visits than those with more generous benefits.

Health insurers typically have limited options to manage the benefits’ price, or premium, Finan said, adding that insurers may increase deductibles and other cost-sharing for households or reduce benefits to manage costs.

As the country attempts to define for the first time which health benefits are considered essential, advocacy groups are concerned that restrictions on services needed by the sickest patients will be arbitrarily limited to control premium costs. Finan said advocates hope to raise awareness among insurance commissioners and consumers of a “critically and nontransparent set of problems that exist in health insurance.”

In Washington state, one of the first to select a benchmark plan, insurance officials selected Regence Innova to be the benchmark for services. The plan was identified by consultants hired by the state as the leanest of 10 options. The consultants found variation among the 10 options on limits for services such as home health; some providers limit care to 130 visits a year and others cap care at 25 visits of two hours.

Cassie Sauer, a spokeswoman for the Washington State Hospital Association, said the Regence Innova plan includes benefits already mandated by the state and supported by hospitals, such as maternity care, hospital stays and mental healthcare.

“It appears to me that they have done a good job selecting a plan that is not so rich or comprehensive as to render it unaffordable but also that really covers the essential services,” she said.

Officials with Virginia Mason Medical Center, a 248-bed hospital in Seattle, are analyzing the plan, a spokesman said.

Karen Davis, Commonwealth Fund president, said that for most families, the services most required—hospitals, physician visits and prescription drugs—will be covered by insurance, though there are always patients who need more care. She said benefit limits may be one way newly insured patients meet with unexpected costs but that patients may also see unanticipated expenses if an insurer’s network of approved providers is limited.

Sara Collins, senior vice president at the Commonwealth Fund, told Congress in 2009 that nearly one in five underinsured adults reported limits on the number of physician visits per year. That figure was roughly one in 10 among adults with more generous coverage.

And the benchmark plan selected by each state will serve as a guide, not the rule, for other insurers in the market, which means consumers must carefully compare benefits that likely will vary, said Sabrina Corlette, a research professor at Georgetown University Health Policy Institute.

“There’s sort of a thousand and one different ways they could vary,” she said.