HHS Gives States Flexibility in Implementing Health Care Reform


In December, the U.S. Department of Health and Human
Services (HHS) issued a bulletin that gives states
more flexibility in implementing the Affordable Care
Act (ACA), including possibly allowing substitutions
of services. This makes it essential for substance abuse
treatment providers to make sure that their services
will be covered. HHS asked for public input, which is
due Jan. 31.

All health plans, including those operating within and
without state-run exchanges, must offer the essential
health benefits by 2014.

According to Paul Samuels, director of the Legal Action
Center, the bulletin’s recognition of the Mental Health
Parity and Addiction Equity Act (MHPAEA) will help
safeguard the treatment needs of substance use disorder
(SUD) patients. “The HHS bulletin firmly establishes
the requirements of parity, so that SUD and MH coverage
is required for all types of services where other
medical/surgical care is covered,” he said in an email to
ADAW after the bulletin was released last month.

However, HHS, in a press release accompanying the
December 16 bulletin, says that “Plans could modify
coverage within a benefit category so long as they do
not reduce the value of coverage.” Antennae of interest
groups in all 10 benefit categories (see sidebar, next
page) shot up at this, but SUD and MH treatment are
among the most vulnerable.

Does this mean that within the SUD and MH category,
coverage could be limited if it is strengthened in other
categories? We asked the Substance Abuse and Mental
Health Services Administration (SAMHSA), where
John O’Brien, senior advisor for health finance, has
been shepherding the SUD and MH aspects of essential
health benefits through the HHS process for almost
two years. O’Brien, who is leaving SAMHSA in March,
demurred, directing us to HHS.

The December 16 bulletin is the “intended approach,”
according to Erin Shields, HHS director of communications
for health care. “The bulletin outlines a comprehensive,
affordable and flexible proposal and informs
the public about the approach that HHS intends to pursue
in rulemaking to define essential health benefits,”
she said in an email to ADAW last week. “More specifics
will be detailed in the notice of proposed rulemaking,
which will be the Department’s next step in this process.
The bulletin also solicits public comment on the
approach, including comments on balance within and
across categories.”

The bulletin clearly lays out what HHS is considering
— allowing states to take away from one category and
give to another, asking whether such a practice would
need to be scrutinized. “We are considering permitting
substitutions that may occur only within each of the 10
categories specified by the Affordable Care Act. However,
we are also considering whether to allow substitution
across the benefit categories. If such flexibility
is permitted, we seek input on whether substitution
across categories should be subject to a higher level of
scrutiny in order to mitigate the potential for eliminating
important services or benefits in particular categories.”
Samuels, who has been closely involved in the process
as co-chair of the Coalition for Whole Health (with cochair
Ron Manderscheid), doesn’t think the category of
SUD and MH can be chipped away at. “It is our understanding
that SUD and MH services will not be subject
to actuarial adjustment, so coverage cannot be shifted
from SUD/MH to any other categories,” Samuels told
ADAW. “We will of course be staying on top of this issue,
including staying in close touch with HHS, as implementation
and enforcement of parity are critical to
ensuring that people with substance use and mental
disorders receive the life-saving — and cost-efficient
— services they need.”

The Coalition for Whole Health posted its recommendations
for a minimum essential benefits package for
mental health and substance use disorder services last
summer (see ADAW, Sept. 15, 2011).


The bulletin was developed with input from the public,
the Department of Labor, the Institute of Medicine
(IOM), and other HHS researchers, according to HHS.
The IOM, commissioned by HHS to lay out paradigms
(but not specific benefits) for the essential benefits
package, last fall issued its report calling for the package
to consider “affordability,” not “comprehensiveness”
as a primary factor (see ADAW, Oct. 17, 2011).
After the IOM’s recommendations were released, HHS
held meetings with “stakeholders, including consumers,
providers, employers, plans, and State representatives,”
according to the Dec. 16 bulletin. Themes that
emerged were similar to the those surrounding the
ACA and parity: consumers and providers were concerned
that there was too much emphasis on cost and
not enough on having a comprehensive benefit, while
employers and insurance companies agreed with the
IOM conclusions.

Consumers and providers were also concerned about
relying on small group plans as a model, instead of the
“typical employer plan” required under the ACA. Again,
employers and insurance companies favored having
benefits based on small group plans, which are generally
less generous in terms of benefits than large groups.
Consumers and providers wanted HHS to specify what
benefits should be included, while employers and insurance
companies wanted more flexibility.

Finally, consumers and providers were concerned about
discrimination against people with certain conditions,
and employers and insurance companies countered
with concerns about resources and asked for a moderate
benefits package.

Whether employers and insurance companies, on the
one hand, and providers and consumers, on the other,
win their case is unclear. HHS is optimistically assuring
people that both affordability and comprehensiveness
will be reflected in the package.

“Under the Affordable Care Act, consumers and small
businesses can be confident that the insurance plans
they choose and purchase will cover a comprehensive
and affordable set of health services,” said HHS Secretary
Kathleen Sebelius in releasing the bulletin. “Our
approach will protect consumers and give states the
flexibility to design coverage options that meet their
unique needs.”

‘Benchmark’ plan

Under the plan, states can select an existing health plan
to set the benchmark for items and services included
in the essential health benefits package. States would
choose one of the following plans as a benchmark:

• One of the three largest small-group plans
in the state.

• One of the three largest state employee
health plans.

• One of the three largest federal employee
health plan options.

• The largest HMO plan offered in the state’s
commercial market.

Whatever benefits and services are included in the
health insurance plan selected by the state would be
the essential health benefits package. Consistent with
the ACA, the essential health benefits package must
cover at least 10 categories of care, including SUDs and

But mental health and SUD services do come in for
special treatment in the bulletin, mainly because typical
plans may not offer adequate benefits, the bulletin
says, in an admission by HHS that many plans are not
complying with the MHPAEA. “In general, the plans and
products studied appear to cover inpatient and outpatient
mental health and substance use disorder services;
however, coverage in the small group market often
has limits,” the bulletin said.

The good news for MH/SUD providers and patients:
there is no flexibility about complying with the MHPAEA.
Go to http://bit.ly/sfgzym for the bulletin. Comments
on the proposal are due by January 31 and should go
to EssentialHealthBenefits@cms.hhs.gov.

Editor’s note: There is no time frame for publishing the
Notice of Proposed Rulemaking yet. Stay tuned.

Alcoholism & Drug Abuse Weekly
HHS Gives States Flexibility in Implementing Health
Care Reform was first published in Alcoholism & Drug
Abuse Weekly Volume 24, No. 01, January 9, 2012.
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Alison Knopf, Editor