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7
Examining Two Categories of Care in Section 1302
Section 1302 of the Patient Protection and Affordable Care Act (ACA) outlines 10 broad categories of care
that, by 2014, must be included as essential health benefits (EHB) in any qualified health plan (QHP). Although
time constraints prohibited the committee from hearing testimony related to each of these categories in detail, 1 two
specific categories, about which many questions had been raised, were investigated: mental health and substance use
disorder services, including behavioral health; and rehabilitative and habilitative services and devices. Dr. Kenneth
Wells and Dr. Kavita Patel from University of California, Los Angeles (UCLA) and Mr. Paul Samuels from the
Legal Action Center (LAC) and the Coalition for Whole Health emphasized the need for:
• Reasonable access to a range of evidence-based mental health and substance use disorder services, as
called for under federal parity provisions;
• Treatment that recognizes the chronic, not just acute, dimensions of these illnesses; and
• Collaboration and integration of services across the mental health, substance disorder, and physical health
sectors.
Mr. Peter Thomas from the Consortium of Citizens with Disabilities (CCD), Dr. Gary Ulicny from the Ameri -
can Congress for Rehabilitative Medicine (ACRM), and Ms. Marty Ford of The Arc and the United Cerebral Palsy
(UCP) Disability Policy Collaboration focused on the need to develop criteria for the EHB package that ensures
people with disabilities and chronic conditions can access rehabilitative and habilitative services and devices that
help them improve, maintain, and limit deterioration of function. The committee’s work, these latter panelists
argued, will determine whether plans in the exchanges meet the needs of people confronted with illness, injury,
disability, or other health condition by enabling them to become more healthy, functional, and independent.
PRESENTATION BY DR. KENNETH WELLS, DAVID GEFFEN SCHOOL OF MEDICINE, UCLA
Dr. Wells began by emphasizing that the delivery of behavioral health services in the United States is
“extremely problematic.” Stigma, he said, prevents people from seeking needed care. Additionally, the “private
1See Chapter 9 for brief presentations related to other categories. Additional written testimony related to each category has been received
from other parties through the IOM committee’s online public comment form and other means.
71
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72 PERSPECTIVES ON ESSENTIAL HEALTH BENEFITS
sector does not have the infrastructure to care for more severe mental disorders” because “most people with severe
and persistent illness are primarily in the public sector.” These problems are compounded by poor information
systems, a lack of clinical decision support and data analysis, and a lack of availability in the market of many
established, evidence-based treatments. Individuals with schizophrenia, for example, benefit from evidence-based
family psycho-education in addition to medication (UNC School of Medicine, 2011). Yet, Dr. Wells said, many
people with schizophrenia in outpatient specialty mental health settings do not get adequate family psychosocial
management in practice; most of this family management is informal rather than following evidence-based prac -
tices (Dixon et al., 2001; Young et al., 1998), and few families are referred to evidence-based family psychosocial
treatment even when it is available (Cohen et al., 2010).
Science should inform the provision of services and help define future research questions, he said. However,
there is a lack of adoption of evidence-based psychosocial treatments for many behavioral health disorders, espe -
cially in primary care, which tends to focus on medication management strategies. Furthermore, demonstrated
competence in delivering a wide range of evidence-based psychosocial treatments is not necessarily a requirement
of professional training programs. With more limited insurance reimbursement for behavioral health services,
incentives have been poor for improving the market for delivering such services. With the passage of parity legisla -
tion and requirements to cover behavioral health services in the EHB package under insurance exchanges, Dr. Wells
suggested that it was “time for a wide range of evidence-based treatments and system-based quality improvement
interventions, to be viewed as essential benefits.” In addition, he suggested that in areas where evidence is limited
but the need for services is great due to the severity of illness, benefits should include services that meet reason -
able community practice standards.
Many persons with behavioral health needs can have difficulty obtaining care and finding providers in a timely
manner even when they have private insurance (Wang et al., 2005). Furthermore, behavioral health conditions
have their roots in both biological and social factors, and this requires a range of biological and psychosocial
treatments. Current mental health and substance abuse providers for safety-net populations will likely be the
only available, initial source of care even as low-income populations transition to the private insurance market or
into the expanded Medicaid program. These providers have expertise in managing this population. In addition to
covering such providers to have adequate capacity for expanded services, the covered services should include the
necessary range of services (including psychosocial services outside of the traditional medical model) to improve
outcomes, especially for severely ill populations. Otherwise, Dr. Wells argued, “we will continue to have people
who are vulnerable, do not necessarily understand the conditions they have, and will not receive the best evidence-
based care.” It is key, he said, that the full set of providers and service settings be eligible for reimbursement, thus
requiring a broadening of insurer views of eligible providers and services, which in turn should lead to an improved
market environment for the availability of evidence-based services.
Additionally, Dr. Wells suggested that individuals should be able to access care “for all of their illnesses.”
This is especially important, he said, for people with behavioral health conditions because they have a higher
prevalence of physical health conditions (De Hert, 2011; Goodell et al., 2011). Largely because of co-morbid medi-
cal conditions, people with schizophrenia have a life expectancy 20 years less than those without schizophrenia
(Goodell et al., 2011; Wildgust et al., 2010), while people with bipolar illness have a 15-year shorter life expectancy
(Roshanaei-Moghaddam and Katon, 2009), and people with depression also have reduced life expectancy (Schulz
et al., 2000). Cost effectiveness for mental health and substance use services “has to be thought of differently,”
Dr. Wells explained, to include the effects of treatments on reducing societal costs of illness, including premature
mortality and morbidity (Schoenbaum et al., 2001; Wells et al., 2000). Behavioral health conditions are prevalent
across the lifespan, have a relatively early age of onset, and tend to have long-term health and social consequences,
including across generations in the same family (IOM, 2009). These factors increase the importance of assuring
that affected individuals and families have access to the range of services needed to improve outcomes early in
the course of illness and over time.
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EXAMINING TWO CATEGORIES OF CARE IN SECTION 1302
The Mental Health Parity Act and the Affordable Care Act
The Wellstone Domenici Mental Health Parity and Addiction Equity Act2 “fundamentally changed the land-
scape” of many health insurance markets by requiring mental health and addiction services, when offered, to be
under equivalent terms of coverage to those services covered for medical conditions. The focus on coverage parity
was further extended by the ACA. Because of the Parity Act, typical private insurance is currently in a state of
flux regarding the coverage of mental health and substance use care to conform with that law, as well as interim
regulations issued by the U.S. Department of Health and Human Services (HHS), which require parity of coverage
in terms of both quantitative limits such as co-payments or co-insurance rates, and non-quantitative limits such
as preauthorization and benefit management strategies. The current market, Dr. Wells said, “is already changing
and will be changing rapidly over the next three years,” so HHS will need to look beyond the historical data on
benefit policies in typical employer plans to find a benchmark benefit plan.
Dr. Wells pointed out that outpatient medical expenditures for mental health as a percentage of gross domestic
product (GDP) have not increased over the last 10 years (Frank and Glied, 2006; Glied and Frank, 2009) because
mental health care has been so extensively managed. “People are not rushing in to get this kind of care,” he said,
“because if you have to get pre-authorized every four visits, how many of those pre-authorizations will be approved
for evidence-based psychotherapy for depression?” Instead, the market has “tilted away from psychosocial treat-
ments to medication-based treatments.”
Dr. Wells concluded by expressing that the design of the EHB package “is an opportunity to truly shift the
paradigm of mental health care.” “We have an opportunity,” he said, to define services as essential, rather than
only providing a “minimum” set of services, which has been the case in mental health care. Additionally, Dr. Wells
urged the committee to think of the long-term and social costs of untreated mental health problems, which society
tends not to think about until there is a tragedy.
PRESENTATION BY DR. KAVITA PATEL, UCLA SEMEL INSTITUTE
Dr. Patel used her experience working on health insurance policy for Senator Ted Kennedy and the Obama
administration, as well as her knowledge of the Massachusetts reform efforts as an avenue for explaining the unique
nature of mental health and substance use benefits. Her view of Congress’ intent in crafting Section 1302 of the
ACA was that there was no desire to incorporate the expansiveness of benefits provided in the Medicaid program
into the EHB, especially given the heterogeneity across Medicaid programs with respect to behavioral health
services. But, she advised the committee to look to Massachusetts’ experience with implementation to determine
who is likely to enroll (see related general comments on legislative intent and the Massachusetts experience in
Chapters 2 and 4).
Lessons from Massachusetts
Most insurers, particularly commercial insurers, will need to consider the unique needs of the populations
who will purchase insurance through the exchanges. Massachusetts’ experience in covering mental health is that
these newly insured people tend to be low-income and racially and ethnically diverse (MA Health Connector,
2009). This population necessitates an infrastructure of community-based behavioral health services. Committee
member Mr. Koller supported the importance of examining the Massachusetts experience to “see who the bulk of
new enrollees will be in the exchange come 2014,” as these will be the first groups subject to the EHB package
and many will likely have characteristics similar to the Medicaid population. Dr. Patel concurred, saying that a
recent study showed that for outpatient utilization, the newly covered “behaved a lot more like Medicaid TANF
[Temporary Assistance for Needy Families] adults” than like the commercially insured, with a resulting increase
in emergency room use specifically because of mental health disorders.
2Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008. Public Law 110-343, 110th Cong., 2d sess.
(October 3, 2008).
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74 PERSPECTIVES ON ESSENTIAL HEALTH BENEFITS
The Need for Comprehensive Benefits
The full scope of services necessary to achieve and sustain recovery and prevent behavioral health conditions
should be considered essential, Dr. Patel argued. In particular, she said, the committee should ensure that the EHB
package devote its attention to case or care management, patient education and activation, and coordination of
services for patients who are vulnerable due to illness or social factors. Community-based services, which take
place in churches, barber shops, or in lay worker settings, she said, have been shown to be effective in treating
mental health, behavioral health, and substance use disorders. Traditionally, she said, these services would not be
covered because they would be considered outside the scope and setting of benefits.
Scope, setting, and the range of providers are “critically important” principles that HHS should consider.
Dr. Patel used an example of lay community and social case workers to support screening, education, and coping
skills for individuals with behavioral health problems in Los Angeles as part of the National Institute of Mental
Health’s Community Partners in Care study (Chung et al., 2010) and in post-Katrina New Orleans as part of the
Mental Health Infrastructure and Training Project (Wennerstrom et al., in press). While lay community workers
and case managers have a “long history” of working with patients with various chronic conditions, under the Parity
Act, it is possible that they “may be eliminated from being part of the team that provides care.” Lay community
workers and case managers may be excluded for two reasons:
1. Under the Interim Final Rule and the Parity Act itself, six classifications of benefits are specified: inpatient,
in-network; inpatient, out-of-network; outpatient, in-network; outpatient, out-of-network; emergency care;
and prescription drugs (U.S. Department of the Treasury et al., 2010). These categories do not necessarily
lend themselves to community-based care.
2. Medical necessity determination: parity regulations allow for coverage based on “medical necessity” if
care is provided by a licensed health care professional within his/her scope of practice.
She urged the committee to include communities, clients, providers, and patients in the process of determining
adequacy and effectiveness of mental health services in a QHP, consistent with the patient-centered spirit of the
ACA.
Dr. Patel urged the committee to use benchmarks from the private sector and commercial plans, as feasible,
to understand the challenges in designing behavioral health benefits. However, such benchmark programs need to
be compatible with the principles and regulations that apply under parity and reform legislation, such as parity of
coverage and, for the exchanges, mandated inclusion of substance abuse and mental health services. Further, the
benefit designs in such plans may need to be rethought to determine how to provide reimbursement support for a
broader range of disorders and services together with incentives to promote quality and efficiency. Plans operat -
ing under the parity mandate, such as the Federal Employees Health Benefits Program (FEHBP), may provide
examples of covered services and quantitative benefits. Based on plans currently available, though, it will be harder
to identify examples of benchmarks under parity for nonquantitative benefits.
Committee member Dr. Linda Randolph indicated that most of the discussion by Drs. Wells and Patel had
focused on treatment, and asked for comment on whether plans could or should cover preventive interventions since
such interventions are not traditionally provided in medical settings. Dr. Patel acknowledged that “this is where
it gets more complicated, because the evidence base is not there,” and asked the committee to build flexibility
into the process for updating the EHB package so that preventive care can be addressed as evidence develops.
Dr. Wells noted that screenings for depression in primary care settings and in school-based clinics provide one
potential avenue for consideration. “No one would argue,” he said, “with the fact that there is strong evidence for
teen suicide prevention strategies through schools” (Eggert et al., 2002). In addition, he said, there are a range of
early intervention programs for reducing depressive disorder in high-risk teens (Clarke et al., 2005) and a range
of evidence-based substance use prevention interventions, including school programs such as Project ALERT 3
(Ellickson and Bell, 1990).
3 Project ALERT is a school-based program which focuses on resisting substance abuse in 7th and 8th graders, most specifically tobacco,
alcohol, marijuana, and inhalants (Project ALERT, 2011).
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EXAMINING TWO CATEGORIES OF CARE IN SECTION 1302
PRESENTATION BY MR. PAUL SAMUELS,
LEGAL ACTION CENTER (LAC) AND THE COALITION FOR WHOLE HEALTH
Mr. Samuels, the Director of the LAC and co-chair of the Coalition for Whole Health, echoed the previous
panelists in saying that the history of stigma and discrimination in mental health and substance use disorders,
and the history of inadequate coverage of mental health and substance use benefits, could be partially mitigated
by ensuring these services are comprehensively covered in the EHB package. He urged HHS to ensure equality
in coverage for mental health and substance use disorder benefits, and to consider a change in how illnesses are
characterized. “One of those problems through the years,” he said, “has been a focus on these illnesses as acute,
rather than chronic, and addressing them only at the beginning and not as they move forward.”
Large treatment gaps exist for mental health and substance use disorders, a problem Mr. Samuels credited to
“an over-reliance on public funding for care” (Scanlon, 2002). Less than half of the 15 million adults with serious
mental illness receive any care, and less than 20 percent of the more than 22 million Americans with substance use
disorders receive any care (SAMHSA, 2010b). These untreated illnesses and disorders create co-morbidity prob -
lems: 25 percent of hospital admissions are directly related to untreated mental illness and substance use disorders
(AHRQ, 2007). Addressing these unmet needs, Mr. Samuels said, “will save lives and huge amounts of money.”
In response to a question from committee member Dr. Sabin, Mr. Samuels pointed out that the failure of
insurers to adequately cover these services has “cost a lot of money” because when people do not get treatment,
they develop “other kinds of problems” (e.g., heart disease or liver failure) when the underlying condition is not
addressed. Furthermore, when these services are not covered by private insurance, “the public dollar is being
disproportionately tapped into.” Fifty-eight percent of all funding for mental health treatment and 77 percent of
all funding for substance use disorder treatment is from the public sector (Levit et al., 2008; Mark et al., 2007).
Mental Health and Substance Use Disorder Parity
The ACA requires mental health and substance use disorder benefits to be included as EHB, thus extending the
Parity Act2 to QHPs and new Medicaid eligibles under benchmark and benchmark-equivalent plans. Parity prohibits
quantitative limitations that are “more limited than for other types of medical/surgical benefits” (e.g., mental health
and substance use disorder services cannot have higher deductibles and co-payments than medical benefits), and
it prohibits non-quantitative limitations that are “more severe and more strictly limiting than for medical/surgical”
(e.g., medical management techniques cannot be more restrictive for mental health and substance use disorders
than they are for medical benefits).4 Mr. Koller noted that if the Parity Act was completely successful, the list of
10 categories of care included in the ACA would not need to include a separate line for mental and behavioral
health as these services would be included in inpatient and outpatient services. “Yes,” responded Mr. Samuels, the
goal of parity is to eliminate the disparity that is present between physical illnesses and illnesses of the brain and
reach the point where people get what they need no matter which kind of illness it is.
Mental health and substance use disorders have long been recognized by health care and scientific experts as
preventable and treatable, but law and insurance policy have not granted these disorders the same recognition. “The
history of discrimination in coverage of mental health and substance use disorder benefits needs to be remedied,”
Mr. Samuels said. He expressed his agreement with points made by Drs. Wells and Patel: individuals need to be
able to access the type, level, amount, and duration of care they need, including care for relapses. Thus, medical
necessity criteria should reflect the chronicity of mental illness and substance abuse disorders.
Criteria and Methods
Mr. Samuels urged the committee to focus on the quality of mental health and substance use care when
determining the criteria and methods for defining and updating the EHB package. Work by the Institute of Medi -
cine (IOM) (2005), the National Quality Forum (NQF) (2007), and the Surgeon General (HHS, 1999), he said,
4 U.S.C. 300gg-5(a)(3)(A)(ii); Interim Final Rule under Wellstone Domenici: 45 CFR Part 146.
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76 PERSPECTIVES ON ESSENTIAL HEALTH BENEFITS
confirms that there is a great wealth of evidence-based practices on which the committee can draw. Furthermore,
he said, HHS should consider ways to create incentives to utilize evidence-based or consensus-based practices
(e.g., utilizing the full continuum of care, matching patients to the appropriate services, and using medications
when they are appropriate).
Mental Health and Substance Use Disorder Benefits
Broad and robust benefits for mental health and substance use disorders would provide access to prevention,
wellness, chronic disease management, habilitation, rehabilitation, and recovery at the clinically appropriate level,
type, and amount of care; thus, participating plans, Mr. Samuels said, should be required to provide a robust set of
benefits in each category of care outlined in the ACA. Additionally, benefit packages should not arbitrarily exclude
certain types of services (e.g., excluding residential or non-hospital inpatient services, not covering appropriate
medications). Mr. Samuels advocated for an EHB package that includes services, interventions, and strategies to
prevent, intervene early, and treat people with these illnesses by helping them achieve and maintain long-term
wellness. Research shows that delaying the age of initiation of alcohol and other drug use, for example, will delay
and often prevent alcohol and drug addiction in the future (SAMHSA, 2010c). There should also be, Mr. Samuels
noted, ongoing support to help people manage their disease over the course of their life, services for children and
families, and services that are culturally appropriate. A robust EHB package would:
• Include a full range of services provided at parity with other medical/surgical benefits;
• Manage benefits using good clinical judgment;
• Ensure decisions about the type and amount of care are driven by the treating professional, not payers or
other third parties;
• Provide care to individuals and family members over their lifetime;
• Use process measures, such as those developed by the NQF, and outcome measures to ensure care focuses
on the patient’s quality of life and ability to function;
• Consider the individual treatment needs of the patient and the availability of evidence-based practices as
part of medical necessity determinations;
• Change the practice of unfair and inappropriate denials of care; and
• Clearly define and make available to patients and providers the medical necessity criteria and reasons for
denial.
In addition to these services, Mr. Samuels noted, individuals suffering from mental health and substance use
disorders need access to rehabilitative and habilitative services as many of these individuals lack skills, housing,
education, and social supports.
Mr. Samuels advised the committee to look at the Substance Abuse and Mental Health Services Administration
(SAMHSA) publication titled Description of a Good and Modern Addictions and Mental Health Service System
(SAMHSA, 2010a). SAMHSA is currently working with stakeholders and researchers to identify the best services,
interventions, and strategies to prevent disease and help individuals with illness achieve and maintain long-term
wellness. Other issues facing these fields include workforce development, licensing and credentialing issues, and
the delivery of physical and mental health services in a more integrated way.
As the committee develops a process and criteria for defining and updating the EHB package, Mr. Samuels
suggested establishing regular working groups of mental health and substance use disorder service providers,
consumers, and state directors of mental health, substance use disorder programs, and Medicaid programs. The
feedback of these individuals will help ensure the criteria facilitate innovation and account for promising practices
that may not yet have a research base. To “redress the history of discrimination in managing benefits,” HHS, he
said, should make sure that people not only have coverage for these services, but also access.
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EXAMINING TWO CATEGORIES OF CARE IN SECTION 1302
Question & Answer Session
Mr. Koller asked the panelists to what extent parity is about benefit definition and to what extent it is about
benefit administration. In addition to coverage decisions, Mr. Koller said, the standards for network development
must also be in place. Dr. Patel concurred, noting that benefit administration is “an art.” While a lot of benefit issues
are related to administration, not definition, the committee can have an impact, she said, by defining the elements
of the benefit design and explicitly noting that the administration of the design is an important consideration,
especially for behavioral health, which has traditionally been subject to numerous carve-outs.
Mr. Samuels stated that in the absence of good benefit administration, individuals with mental health and
substance use disorders, including people who are homeless, unemployed, and in the criminal justice system “could
easily fall through the cracks.” We know that a disproportionate share of people who are uninsured have mental
illness and substance use disorders (Wu and Ringwalt, 2005), and this has remained the case even after health
reform in Massachusetts, Maine, and Vermont (NASADAD, 2010).
Dr. Wells added that defining EHB for this population provides the opportunity to also improve some of the
“market problems” that have limited access to evidence-based treatment (e.g., for case management and collabora -
tive care). A recent study showed that integrated collaborative care for depression and chronic medical conditions
(heart disease and diabetes) improved outcomes for both types of conditions (Katon et al., 2010). Although collab -
orative care for depression is typically not covered, other 10-year outcome data indicate that vulnerable populations
with depression who receive access to collaborative care continue to do better than their counterparts not initially
under collaborative care, long after they may stop seeing their provider; this suggests that they have learned how
to better manage their own symptoms and illness due to their initial experience with collaborative care (Wells et
al., 2008). These findings indicate that given reasonable, initial attention to patient learning, patients do not have
to be “micromanaged through the health care system for a decade” in order to have better outcomes. Dr. Wells
stated that there is currently “enormous variation in how mental health and substance abuse is handled” by state
Medicaid programs. The EHB will help ensure parity by “leveling the playing field” in some of these plans, which
“is a huge change, especially for substance abuse.”
PRESENTATION BY MR. PETER THOMAS,
CONSORTIUM FOR CITIZENS WITH DISABILITIES (CCD)
Mr. Thomas began a panel that focused on the need for comprehensive benefits for rehabilitative and habilita -
tive services and devices. First, he provided formal definitions of these terms, as well as legislator’s statements
on the meaning of these terms5,6:
• Rehabilitation therapies are provided from a continuum of accredited programs and treatment settings
based on the intensity of service that helps improve, maintain, and prevent deterioration of function
(settings include inpatient rehabilitation hospitals, long-term acute care hospitals, skilled nursing facilities
[SNFs], long-term residential transitional rehabilitation programs, outpatient therapy, home care, and
community-based programs).
• Habilitation therapies are services or supports that enable a person with a significant disability to acquire,
retain, improve, or prevent deterioration of activities of daily living (ADLs) or instrumental activities of
daily living (IADLs) over time.7
5 Congressman Pascrell, a co-chair of the Congressional Brain Injury Task Force, included the following in his House floor statement: “The
term rehabilitative and habilitative services includes items and services used to restore functional capacity, minimize limitations on physical
and cognitive functions, and maintain or prevent deterioration of functioning as a result of an illness, injury, disorder or other health condition.
Such services also include training of individuals with mental and physical disabilities to enhance functional development” (Pascrell, 2010).
6 Congressman George Miller, the Chair of the Committee on Education and Labor, explained that the term rehabilitative and habilita -
tive devices “includes durable medical equipment, prosthetics, orthotics, and related supplies.” Miller also stated that “it is my expectation
‘prosthetics, orthotics, and related supplies’ will be defined separately from ‘durable medical equipment.” In addition, Congressman Miller
explained, “I also expect that durable medical equipment will not be limited to ‘in-home’ use only” (Miller, 2010).
7 Italics added to aid comparison.
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78 PERSPECTIVES ON ESSENTIAL HEALTH BENEFITS
Durable medical equipment (DME), prosthetic limbs, orthopedic braces, and other assistive technologies
•
improve, maintain, and limit deterioration of function in mobility, communication, hearing, and vision.
While there is some overlap in definition, habilitation therapies are distinct when they relate to the acquisi -
tion of function. Mr. Thomas advised that a sparse EHB package could result in employers eroding their current
benefit packages and noted that in the EHB debate, there was recognition that people with disabilities and chronic
conditions have greater health care needs. The ACA not only requires coverage of rehabilitation and habilitation
services, but also mandates that the EHB package ensure an “appropriate balance,” “non-discrimination,” and
non-denial on the basis of a present or predicted disability. He advocated for a transparent process in which the
EHB package would be certified on an annual basis by the Secretary of HHS based on recommendations by a
federal advisory body.
Typical Employer Plans
Mr. Thomas explained that most private plans cover rehabilitation services and devices. Both the preferred and
standard options of the FEHBP, for instance, cover rehabilitation in a variety of settings at different levels of inten -
sity. Furthermore, the plans cover DME and prosthetics and orthotics. While they have “various types” of exclu -
sions and limitations, “the vast majority of these benefits are routinely covered by health plans, and certainly by
public programs.” Nevertheless, the U.S. Department of Labor’s (DOL’s) attempt, Mr. Thomas said, to accurately
quantify the typical employer plan’s coverage of these benefits will be seriously hampered because the DOL lacks
the essential authority and resources to collect detailed data on what employer plans cover. Instead, the department
depends on voluntarily submitted plan descriptions that vary in length, scope, and transparency. It is unlikely the
DOL report (see Chapter 2), Mr. Thomas argued, will provide a complete understanding of rehabilitation and
habilitation coverage provided under the typical employer plan. Rather, HHS will need to acquire supplemental
information about typical employer plans.
PRESENTATION BY DR. GARY ULICNY, THE SHEPHERD CENTER
Dr. Gary Ulicny, President of the Shepherd Center, spoke on behalf of the members of the American Congress
of Rehabilitation Medicine (ACRM) and cautioned the committee against establishing a rigid or too narrow benefit
package for rehabilitation and habilitation because these patients “come with distinct needs running the gamut”
from needing to regain function after a fracture to catastrophic brain injuries. Yet arbitrary limits on physical
therapy benefits, outpatient therapy, and DME spending are typical of current plans, regardless of diagnosis and
individual need (e.g., 30-day inpatient stay, DME cap, outpatient therapy visits) and often “impede the provider
from giving the best treatment regimen.” Limits, he said, should not be based on arbitrary monetary caps. Instead,
benefit design should be based on medical necessity and coverage limitations should be based on evidence, not
the cost concerns of plans.
Return on Investment
Rigid or narrowly defined benefit packages are often not cost-effective because they are shortsighted, he
emphasized. Determination of benefits should focus on the return on investment based on the reduction in long-
term disability and dependency. Given some of the ACA’s proposed changes (e.g., the elimination of lifetime caps
and the portability of insurance), these long-term costs will become more important to both government and the
private insurance market. In today’s health insurance market, Mr. Ulicny said, a patient may be unable to receive
a medically necessary service if it is not expressly included in their health insurance policy. Plans should have
the flexibility to cover extra-contractual services when they meet the recovery needs of the individual patient and
provide substantial return on investment.
Furthermore, he suggested that when discussing affordability, in addition to the cost of the service, HHS should
consider long-term savings associated with the prevention of secondary conditions and deterioration in function,
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EXAMINING TWO CATEGORIES OF CARE IN SECTION 1302
in addition to the cost of the service. For example, he said, a person with a spinal cord injury who is denied cov -
erage for an appropriate wheelchair may, in two years time, develop a skin breakdown that requires expensive
reconstructive surgery to repair. In this case, the appropriate (and perhaps more expensive) wheelchair would have
been a cost-saving investment. The ultimate outcome of rehabilitation is an improvement in the patient’s func -
tion. In some instances, traditional definitions of medical necessity do not appropriately weight the importance of
functional improvement. Too often, he said, insurers apply medical necessity without considering the long-term
functional and health benefits to the patient of a service or device. And in many instances, these decisions lead to
much greater disability and long-term dependency costs to the system.
Criteria and Processes
Current reimbursement models, Dr. Ulicny stressed, do not incentivize good outcomes: “We get paid for doing
more, we do not get paid for doing better, and I think that is something that needs to be inherently changed.” The
design of the EHB package, he argued, can play a role in incentivizing providers to “do the things that are right
and produce meaningful outcomes.”
Dr. Ulicny noted that “although we cannot overly rely on randomized clinical trials,” the committee should
establish evidence-based criteria for updating the EHB package by recognizing the value in clinical replication
(Level II and III evidence) and utilizing expert consensus. In rehabilitation, large teams of providers make it dif -
ficult to tease out the effectiveness of each piece of intervention.
In sum, he suggested HHS:
• Include items and services that assist in regaining and maintaining functional capacity and preventing
deterioration,
• Include a mechanism for individualizing benefits,
• Ensure limitations and exclusions for rehabilitative and habilitation benefits are evidence-based,
• Establish a formal advisory committee, including consumers, to advise the HHS Secretary on benefit
design and related issues, and
• Consider alternative reimbursement strategies that encourage good performance.
The committee, he suggested, should “veer away from using Medicare as a benefit design model” for the rehabili -
tative and habilitative services covered in the EHB because Medicare is designed primarily for people over age
65 and its benefit design will not adequately take into account the needs of, for example, a 15-year-old who has
experienced a catastrophic spinal cord injury.
Role of Device Manufacturers
When committee member Dr. Santa asked to what degree the benefit design should “try to make the behavior
of device companies more functional in terms of pay for performance and outcomes, Dr. Ulicny stated that “the
problem with the device industry is that the device is released far before we are able to provide a measurement of
its functional improvement capability.” The lack of information about functional improvement, Dr. Ulicny said, is
something to address “as we begin to look at what things are most appropriate, whether it is the intensity of the
service or the device itself.” In lieu of functional improvement information from device manufacturers, the industry,
Dr. Ulicny said, has its own “self-leveling process.” Providers, for example, did not endorse a $22,000 wheelchair
because providers thought it unaffordable for most individuals and that the “additional benefit was not worth the
cost.” Without provider endorsement, production of this particular device stopped.
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80 PERSPECTIVES ON ESSENTIAL HEALTH BENEFITS
PRESENTATION BY MS. MARTY FORD,
THE ARC AND UNITED CEREBRAL PALSY DISABILITY POLICY COLLABORATION
Ms. Ford, who spoke on behalf of the Long Term Services and Supports and Health Task Forces of the CCD,
began by stating that Medicaid defines habilitative services as those services designed to assist participants in
acquiring, retaining, and improving the self-help, socialization, and adaptive skills necessary to reside successfully
in home and community-based settings.8 These therapies, services, and supports, which are needed over the course
of a person’s lifetime, enable people with significant disabilities to learn, improve, or prevent deterioration of activi-
ties of daily living. Habilitation therapies, she said, include occupational, physical, speech, and behavioral therapies,
along with other services and supports. Ms. Ford noted that habilitation services can prevent costly institutionaliza -
tion; help people function better in the community; prevent frequent hospitalization and emergency room visits;
build social, communication, and personal hygiene skills; and facilitate behavior and medication management. 9
Definitions
“One of the issues” in coverage of habilitation services, Ms. Ford stated, is that it is often unclear why a
distinction between habilitation and rehabilitation is made. The distinction used to determine coverage is often
whether the person is learning something for the first time or whether they are re-learning something following
an accident, injury, or medical event. When this distinction is made, she said, a person “learning something for
the first time” is often not covered for the service. If a person has severe developmental disabilities, teaching the
person the fine motor coordination needed to get dressed is considered habilitation and not typically covered under
private insurance, whereas if the person had a stroke, teaching him these skills is considered rehabilitation and
would be covered. Ms. Ford further illustrated the distinction with two additional examples:
• The services provided by a speech therapist to a 3-year-old child with autism are considered habilitation
because the child has never spoken. The services provided by a speech therapist to a 3-year-old to regain
speech after a traumatic brain injury are considered rehabilitation. There is no difference, Ms. Ford said,
in the child’s need for that service.
• A strength-training program for a person with a congenital spine condition is considered habilitation,
whereas a strength-training program for a person with a spinal cord injury is considered rehabilitation.
Again, she said, there is no difference in the patient’s need for that service.
Acquiring, retaining, and improving skills can be both habilitative and rehabilitative, depending specifically on
the needs of that individual.10
Legislative Intent
Children and adults with disabilities and significant health needs require both habilitative and rehabilitative
services and supports. Ms. Ford argued that the discrimination against children and adults who need these services
8 U.S.C. Title 42 § 1915(c)(5)(A).
9 When states propose to provide services under the Home and Community-Based Services Waiver (including habilitation services), CMS
reviews the proposed services to ascertain whether the service: contributes to the community functioning of waiver participants and thereby
avoids institutionalization; is reasonably related to addressing waiver participant needs that arise as a result of their functional limitations
and/or conditions; and/or falls within the scope of Section 1915(c) of the Act and is not at odds with other provisions of the Act (CMS, 2008,
p. 127). Note: By definition, for coverage under the waiver, habilitation services must be capable of reducing institutionalization and assisting
people to function better.
10 Another speaker pointed out that habilitative services differ from rehabilitative services in that they do not serve to improve the patient
to a pre-illness or injury state, and therefore, do not always have a clearly defined endpoint in either time or scope of services. Without some
limitations, these services (e.g., for autism) can substantially increase costs and lead to unaffordability and adverse selection in the insurance
market, said Ms. Ehnes in her presentation. Additionally, insurers have traditionally set definable and predictable parameters to exclude
coverage of non-medical services (see Chapter 12) (DMHC, 2011).
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EXAMINING TWO CATEGORIES OF CARE IN SECTION 1302
denies them access to medically necessary and appropriate interventions. Members of Congress, she said, are very
familiar with the term habilitation from its use in the Medicaid program, and, as indicated in floor statements,
Congress clearly intended to include habilitation services and supports in the EHB package. 5,6
As stated in the ACA, the category of rehabilitative and habilitative services and devices is a broad category
that, since combined, indicates that acquiring and retaining function are critical aspects of the benefit category.
State Mandates
Many states, Ms. Ford noted, have “recognized the importance of habilitation” by requiring private insurers to
provide these services. Of the 23 states that passed statutes requiring coverage of benefits for people with autism
spectrum disorders, 14 have used the term habilitative and rehabilitative care in the legislative language (NCSL,
2010a). In many states, she said, the term habilitative is defined as “any professional counseling and guidance
service and treatment program, including applied behavior analysis that is necessary to develop, maintain and
restore, to the maximum extent possible, the function of an individual” (Autism Speaks, 2011). Additionally, she
said, many of these state mandates specifically require coverage of a broad list of therapies including occupational,
physical, speech, and behavioral therapies (NCSL, 2010b).11
Illinois and Maryland have mandated health plans to provide habilitation services to children under age 18
with congenital, genetic, or early acquired disorders (Illinois Department of Insurance, 2010; Maryland Insurance
Administration, 2009). Since 2000, Maryland has tracked the economic impact of the state mandate and found
that the mandate costs two dollars of the average annual group health insurance policy premium, or 0.04 percent
(Rosenblatt, 2007).
Building an Evidence Base
When committee member Dr. Ho asked how, in the absence of an evidence base for some of these services,
plans should make medical necessity determinations, Ms. Ford responded that rehabilitative and habilitative ser-
vices are “always based on an individualized plan of care” and that medical decisions are often based on decisions
by patients, their families, and their health care provider. It would therefore be a mistake, she said, to “not take
clinical expertise into account” when making medical necessity determinations. Mr. Thomas supported Ms. Ford’s
argument while also noting that “you go with the highest level of evidence that you have.” While the evidence
base for rehabilitative services has developed significantly, it is “still a work in progress,” Mr. Thomas said. Some
medical necessity determinations, he noted, are obvious even without clear evidence: a randomized controlled trial
(RCT) is not necessary, for example, to understand that providing an artificial limb to someone without limbs will
improve function. Level I, RCT studies are not practical for many rehabilitation services and devices, he said, so
“there must be a different way to approach the evidence base.” Mr. Thomas added that hospitals and payers often
use proprietary rehabilitation treatment guidelines (e.g., McKesson’s InterQual ® guidelines and Milliman Care
Guidelines®), which he described as “quite unrealistic in many instances.” Despite not being “particularly well
evidence-based,” he said, they are often overly restrictive and rigidly applied.
Dr. Ulicny noted that the Shepherd Center is part of a national study to measure outcomes of therapy ses -
sions. After every session, therapists use a hand-held computer to enter what they did with the patient and the
outcome of that particular session. This study, which is being conducted across six model centers, may help build
an evidence base, he said.
In lieu of this evidence, Dr. Sabin asked the presenters for examples of “clinically wise and ethically admi -
rable managed care” in their fields. The American Physical Therapy Association, Dr. Ulicny noted, has developed
an evidence-based database that makes available clinical decision-making support to providers. Additionally,
Dr. Ulicny said, workers’ compensation programs are historically good at using processes and tools to make what
Dr. Sabin described as “clinically well-informed and ethically admirable” decisions. The workers’ compensation
11 Others have pointed out that, in general, health insurance contracts cover only “medical” services. These contracts do not cover all
potentially beneficial services (DMHC, 2011).
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82 PERSPECTIVES ON ESSENTIAL HEALTH BENEFITS
model, Dr. Ulicny said, uses external case management, utilization management, and a collaborative approach with
payers. This process ensures the workers’ compensation program does “what is best for the patient and family,
the payer, and the provider.”
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