Memorandum
To: Interested Parties
From: National Health Law Program
Re: CA EHB Legislation?Updated Analysis
The two Essential Health Benefits (EHB) bills in California, Senate Bill 951 (Hernandez) and Assembly Bill 1453 (Monning), were amended in March 2012, to include the state?s selection of an EHB benchmark plan. The plan selected is the second-largest small group plan1, a Kaiser HMO regulated by the Department of Managed Health Care (DMHC). This memo includes our updated analysis of the state?s EHB benchmark selection process.
EHB Benchmark Selection process
States can select their EHB benchmark from among ten options: the three largest federal employee plans, three largest state employee plans, three largest small group plans, or the largest commercial HMO operating in the state. In California, the health benefit exchange board asked Milliman, an independent actuarial and consulting firm, to do an analysis of the ten potential EHB plans in CA. Milliman?s analysis is posted on the health benefit exchange website.2
As we understand, the following criteria were considered when selecting an EHB benchmark plan for the state: the plan should include state benefit mandates and be a DMHC regulated plan containing the Knox-Keene Act consumer protections (which require standards for particular benefits.)
State benefit mandates
The U.S. Department of Health and Human Services? (HHS) EHB Bulletin outlines the intended approach for handling state benefit mandates in 2014 and 2015.3 For these two ?transitional? years, if a state selects an EHB benchmark, which is subject to state benefit mandates, those mandates will be included in the state?s EHB package and the state will not have to defray the cost of covering those benefits.4
Selecting an EHB benchmark plan in California that includes state mandates is important because the state has a total of 53 health insurance benefit mandates, which provide coverage for valuable services.5 In California, only four of the ten possible EHB benchmark plans (the three small group plans and the largest commercial HMO) cover state benefit mandates. Therefore, the EHB benchmark selection process can be narrowed down to four plans.
Selecting a DMHC plan with Knox-Keene Act Protections
Out of the four plans that include state benefit mandates, three plans are DMHC regulated plans and one is a California Department of Insurance (CDI) regulated plan. The remaining plans (federal and state employee plans) are not regulated by either state agency. DMHC licenses approximately 125 health care service plans, 70 of which are full-service health plans and 55 specialized health plans, and covers approximately 21.6 million lives (significantly more than CDI.)6
DMHC regulated plans are also required to comply with the Knox-Keene Health Care Service Plan Act of 1975 and the accompanying laws that regulate managed care plans. The intent of the Knox-Keene Act is to ensure that health care service plans provide enrollees with access to quality health care services and protect and promote the interests of enrollees.7 Therefore not only do Knox-Keene Act licensed plans have to provide valuable protections, they specifically must include particular services which are reflected in the plans? benefits package. By selecting a plan that is regulated by DMHC and includes Knox-Keene Act protections, the benchmark selection in the state is narrowed down to three plan options.
Evaluating the three DMHC benchmark plans
The following section offers a comparison of the Evidence of Coverage (EOC) for the three DMHC EHB benchmark plans: Small Group Anthem Blue Cross PPO30, Small Group Kaiser HMO, and Large Commercial Group Kaiser HMO.8
A. Small Group Anthem Blue Cross PPO30
The EOC for the Small Group Anthem Blue Cross plan had more limits on services than the other two plans, and the EOC was hard to follow, making it difficult to understand the specific coverage provided. Given the number of service limits, we did not consider this plan further. Therefore, the specific analysis of this plan is not included. The remaining two plans, the second-largest small group plan and the largest commercial HMO (both Kaiser plans) are compared below.
B. Comparing the Kaiser small group plan and Kaiser large group HMO
The benefit coverage under these two plans is comprehensive and both plans offer comparable benefits. However, there are a few areas where the plans do not adequately provide coverage: mental health services, rehabilitative & habilitative services, and pediatric vision services. Dental care is not covered by either plan and is supplemented by the Federal Employees Dental and Vision Insurance Program (FEDVIP), per the latest amendment to the EHB bills.9
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