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Federal Government Signals Significant State Flexibility in Determining Essential Health Benefits – Will Your Obesity Treatment be Covered in the Reformed Healthcare System?

by Chris Gallagher, OAC Policy Consultant

Spring 2012

Late last year, the United States Department of Health and Human Services (HHS) began sending out signals that the federal government will be giving states significant flexibility in determining which healthcare services will be deemed essential health benefits (EHB) in the new state-based exchange health plans enacted under the healthcare reform law. This has stirred up quite a storm among healthcare professional and patient groups, which do not trust a system where states will set the rules surrounding coverage for specific diseases, such as obesity.

How States are Determining the Coverage they Will Offer

On January 25, 2012, HHS released a document entitled, “Essential Health Benefits: Illustrative List of the Largest Three Small Group Products by State.” According to HHS, the purpose of the document is to provide consumers, employers, issuers, states and other stakeholders with additional information about the small group products in each state. Under the Department’s intended approach, states would have the flexibility to select an existing health plan to set the “benchmark” for the items and services included in the EHB package.

For example, while many plans include some level of bariatric surgery coverage in the general policies for these plans, it may be offered as a rider. Would this mean that these treatments would be viewed as “add-ons” to the core benefits of these plans and therefore, included ONLY if a state chooses to offset the cost of these services? Such an interpretation would surely have a chilling effect on obesity coverage – especially as state budgets continue to face major fiscal challenges.

OAC’s Efforts

In an effort to see how individuals affected by obesity would “be treated” under each of these plans, OAC has partnered with Johnson & Johnson, George Washington University and the STOP Obesity Alliance, The Obesity Society (TOS) and the State Chapters of the American Society for Metabolic and Bariatric Surgery (ASMBS) in producing an analysis of obesity coverage under each of the 150 state health plans highlighted by HHS. At press time, this evaluation was underway.

What Does All this Mean for OAC Members?

It means that the federal government is leaning toward allowing states to pick one of the three private health plans included in the afore-mentioned “Illustrative List,” which would then effectively become the essential benefit package for that state. Under such an approach, coverage for obesity treatment services will vary considerably from state-to-state. In many cases, states could choose health plans that provide little or no coverage for obesity treatment.

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