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PersPectives on essential
HealtH Benefits
Workshop Report
Cheryl Ulmer, Bernadette McFadden, and Cassandra Cacace, Rapporteurs
Committee on Defining and Revising an Essential Health Benefits Package for Qualified Health Plans
Board on Health Care Services
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THE NATIONAL ACADEMIES PRESS 500 Fifth Street, N.W. Washington, DC 20001
NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council,
whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering,
and the Institute of Medicine.
This study was supported by Contract No. HHSP23320042509XI, Task Order HHSP23337027T between the National Academy
of Sciences and the Assistant Secretary for Planning and Evaluation of the U.S. Department of Health and Human Services.
Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not
necessarily reflect the view of the organizations or agencies that provided support for this project.
International Standard Book Number-13: 978-0-309-21543-5
International Standard Book Number-10: 0-309-21543-9
Additional copies of this report are available from the National Academies Press, 500 Fifth Street, N.W., Lockbox 285, Wash-
ington, DC 20055; (800) 624-6242 or (202) 334-3313 (in the Washington metropolitan area); Internet, http://www.nap.edu.
For more information about the Institute of Medicine, visit the IOM home page at: www.iom.edu.
Copyright 2012 by the National Academy of Sciences. All rights reserved.
Printed in the United States of America
The serpent has been a symbol of long life, healing, and knowledge among almost all cultures and religions since the beginning
of recorded history. The serpent adopted as a logotype by the Institute of Medicine is a relief carving from ancient Greece, now
held by the Staatliche Museen in Berlin.
Suggested citation: IOM (Institute of Medicine). 2012. Perspectives on Essential Health Benefits: Workshop Report. Washing-
ton, DC: The National Academies Press.
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“Knowing is not enough; we must apply.
Willing is not enough; we must do.”
— Goethe
Advising the Nation. Improving Health.
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The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in
scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general
welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to
advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy
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ognizes the superior achievements of engineers. Dr. Charles M. Vest is president of the National Academy of Engineering.
The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent
members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts
under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal
government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg
is president of the Institute of Medicine.
The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad com -
munity of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government.
Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating
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National Research Council.
www.national-academies.org
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COMMITTEE ON DEFINING AND REVISING AN ESSENTIAL HEALTH
BENEFITS PACKAGE FOR QUALIFIED HEALTH PLANS1
JOHN R. BALL (Chair), Former Executive Vice President, American Society for Clinical Pathology
MICHAEL S. ABROE, Principal and Consulting Actuary, Milliman, Inc.
MICHAEL E. CHERNEW, Professor of Health Care Policy, Harvard Medical School
PAUL FRONSTIN, Director, Health Research & Education Program, Employee Benefit Research Institute
ROBERT S. GALVIN, Chief Executive Officer, Equity Healthcare, Blackstone Group
MARJORIE GINSBURG, Executive Director, Center for Healthcare Decisions
DAVID S. GUZICK, Senior Vice President for Health Affairs, and President, UF&Shands Health System,
University of Florida
SAM HO, Executive Vice President and Chief Medical Officer, UnitedHealthcare
CHRISTOPHER F. KOLLER, Health Insurance Commissioner, State of Rhode Island
ELIZABETH A. McGLYNN, Director, Kaiser Permanente Center for Effectiveness & Safety Research
AMY B. MONAHAN, Associate Professor, University of Minnesota Law School
ALAN R. NELSON, Internist-Endocrinologist
LINDA RANDOLPH, President and Chief Executive Officer, Developing Families Center
JAMES SABIN, Clinical Professor, Departments of Psychiatry and Population Health, Harvard Medical School,
and Director, Harvard Pilgrim Health Care Ethics Program
JOHN SANTA, Director of Consumer Reports Health Ratings Center, Consumer Reports
LEONARD D. SCHAEFFER, Judge Robert Maclay Widney Chair and Professor, University of Southern
California
JOE V. SELBY, Executive Director, Patient-Centered Outcomes Research Institute
SANDEEP WADHWA, Chief Medical Officer and Vice President of Reimbursement and Payer Markets,
3M Health Information Systems
Study Staff
CHERYL ULMER, Study Director
BERNADETTE McFADDEN, Consultant
SHADIA BEL HAMDOUNIA, Research Associate
CASSANDRA L. CACACE, Research Assistant
ASHLEY McWILLIAMS, Senior Program Assistant (through July 2011)
ROGER C. HERDMAN, Board Director
1 The report summarizes the views expressed by workshop participants, and while the committee is responsible for the overall quality
and accuracy of the report as a record of what transpired at the workshop, the views contained in the report are not necessarily those of the
committee.
v
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Reviewers
This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical
expertise, in accordance with procedures approved by the National Research Council’s Report Review Committee.
The purpose of this independent review is to provide candid and critical comments that will assist the institution
in making its published report as sound as possible and to ensure that the report meets institutional standards for
objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain
confidential to protect the integrity of the process. We wish to thank the following individuals for their review of
this report:
CINDY EHNES, President and CEO, California Children’s Hospital Association
SHANA A. LAVARREDA, Director, Health Insurance Studies, and Research Scientist, UCLA Center for
Health Policy Research
ROBERT S. McDONOUGH, Head, Clinical Policy Research and Development, Aetna U.S. Healthcare
SARA ROSENBAUM, Professor and Chair, Department of Health Policy, George Washington University
School of Public Health and Health Services
Although the reviewers listed above have provided constructive comments and suggestions, they were not asked
to endorse the final draft of the report before its release. The review of this report was overseen by CHRISTINE
K. CASSEL, American Board of Internal Medicine. Appointed by the Institute of Medicine, she was responsible
for making certain that an independent examination of this report was carried out in accordance with institutional
procedures and that all review comments were carefully considered. Responsibility for the final content of this
report rests entirely with the authors and the institution.
vii
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Acknowledgments
The committee and staff are grateful to many individuals and organizations who contributed to the success of
the two workshops. Many thanks to the individuals who testified before the committee during the workshops as
well as to the numerous individuals who submitted materials to the committee throughout the study process. We
would like to especially thank the employees of the National Academies who assisted us with the first workshop,
coordinating meeting rooms, as well as setting up and controlling the video, audio, and webcast, and providing
liaison with the press: Christian Dobbins, Eileen Milner, Patsy Powell, Christine Stencel, and Nicole Stephenson.
Thanks too to Jordan Wyndelts for her work on the project website and development of the public input portal.
Additional thanks to Institute of Medicine staff, including Abbey Meltzer for preparing the highlights document
of this workshop report. Lastly, we would like to thank the sponsoring staff at the Office of Assistant Secretary for
Planning and Evaluation, Department of Health and Human Services, including Sherry Glied, Richard Kronick,
Caroline Taplin, Lee Wilson, and Pierre Yong, for their financial support and guidance on this project.
ix
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Contents
SUMMARY 1
1 INTRODUCTION 13
Exchanges and Essential Health Benefits, 13
Study Charge and Approach, 14
2 THE POLICY CONTEXT FOR ESSENTIAL HEALTH BENEFITS 17
Presentation by Dr. Sherry Glied, Assistant Secretary for Planning and Evaluation (ASPE), HHS, 17
Legislative Intent, 19
The Republican Perspective, 19
Presentation by Mr. Mark Hayes, Greenberg Taurig, LLP, 19
Presentation by Ms. Katy Spangler, Staff, Senate Health, Education, Labor, & Pensions
(HELP) Committee, 20
The Democratic Perspective, 21
Presentation by Mr. David Schwartz, Staff, Senate Finance Committee, 21
Presentation by Dr. David Bowen, The Bill & Melinda Gates Foundation, 22
Contrasting Views, 22
Department of Labor (DOL) Surveys on Employer-Sponsored Insurance, 22
Presentation by Dr. Joseph Piacentini, EBSA, and Mr. William Wiatrowski, BLS, 23
References, 25
3 PURCHASER PERSPECTIVES ON THE EHB 27
Presentation by Ms. Jerry Malooley, U.S. Chamber of Commerce, 27
Presentation by Mr. Michael Turpin, USI Insurance Services, 29
Presentation by Ms. Helen Darling, National Business Group on Health, 31
References, 34
xi
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xii CONTENTS
4 STATE EXPERIENCES WITH DEFINING A MINIMUM BENEFIT STANDARD 37
Presentation by Dr. Jonathan Gruber, Massachusetts Institute of Technology (MIT) and the
National Bureau of Economic Research (NBER), 37
Presentation by Dr. Jon Kingsdale, Wakely Consulting, 41
Presentation by Dr. Beth Sammis, Maryland Insurance Administration (MIA), 42
Presentation by Dr. Rex Cowdry, MHCC, 44
Presentation by Representative James Dunnigan, State of Utah House of Representatives, 46
Presentation by Mr. Matthew Salo, The National Governors Association, 48
References, 49
5 MEDICAL NECCESSITY AND USE OF EVIDENCE 51
Presentation by Dr. Alan Garber, VA Palo Alto Health Care System and Stanford University, 51
Presentation by Dr. Barbara Warren, Consumers United for Evidence-Based Healthcare (CUE), 55
References, 57
6 INSURER DECISIONS OF BENEFIT COVERAGE AND MEDICAL NECESSITY 59
Presentation by Dr. Louis Jacques, Centers for Medicare & Medicaid Services (CMS), 59
Presentation by Dr. Jeffrey Kang, CIGNA Corporation, 61
Presentation by Dr. Virginia Calega, Blue Cross and Blue Shield Association (BCBSA), 63
Presentation by Dr. Robert McDonough, Aetna, 65
Presentation by Ms. Carmella Bocchino, America’s Health Insurance Plans (AHIP), 67
References, 69
7 EXAMINING TWO CATEGORIES OF CARE IN SECTION 1302 71
Presentation by Dr. Kenneth Wells, David Geffen School of Medicine, UCLA, 71
Presentation by Dr. Kavita Patel, UCLA Semel Institute, 73
Presentation by Mr. Paul Samuels, Legal Action Center (LAC) and the Coalition for Whole Health, 75
Presentation by Mr. Peter Thomas, Consortium for Citizens with Disabilities (CCD), 77
Presentation by Dr. Gary Ulicny, The Shepherd Center, 78
Presentation by Ms. Marty Ford, The Arc and United Cerebral Palsy Disability Policy Collaboration, 80
References, 82
8 NON-DISCRIMINATION IN THE REQUIRED ELEMENTS FOR CONSIDERATION 85
Presentation by Ms. Sara Rosenbaum, The George Washington University, 85
References, 89
9 ADDITIONAL STAKEHOLDER PERSPECTIVES 91
Presentation by Dr. R. Sean Morrison, National Palliative Care Research Center (NPCRC), 91
Presentation by Ms. Jina Dhillon, National Health Law Program (NHeLP), 92
Presentation by Mr. Stuart Spielman, Autism Speaks, 93
Presentation by Ms. Meg Booth, Children’s Dental Health Project (CDHP), 93
Presentation by Dr. Andrew Racine, American Academy of Pediatrics, 95
Presentation by Dr. Gerald Harmon, Council on Medical Service, American Medical
Association (AMA), 96
Presentation by Dr. Robert Murphy, American Society of Plastic Surgeons (ASPS), 98
Presentation by Ms. Linda Fishman, American Hospital Association (AHA), 99
Presentation by Mr. John Falardeau, American Chiropractic Association, 99
Presentation by Dr. Arnold Cohen, American Congress of Obstetricians and
Gynecologists (ACOG), 100
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xiii
CONTENTS
Presentation by Mr. Thomas Sellers, National Coalition for Cancer Survivorship (NCCS), 100
Presentation by Mr. Troy Zimmerman, National Kidney Foundation (NKF), 101
Presentation by Mr. Richard Smith, Pharmaceutical Research and Manufacturers of
America (PhRMA), 102
Presentation by Mr. Brian Gallagher, American Pharmacists Association, 104
Presentation by Mr. Bruce Wolfe, Obesity Care Continuum (OCC), 104
References, 106
10 TWO PRIVATE-SECTOR APPROACHES TO BENEFIT COVERAGE AND DESIGN 109
Presentation by Dr. Samuel Nussbaum, WellPoint, Inc., 109
Presentation by Dr. Sharon Levine, The Permanente Medical Group, 113
References, 116
11 DECIDING WHAT IS ESSENTIAL AND EVIDENCE-BASED IN TWO STATES FOR
PUBLIC INSURANCE PROGRAMS 117
Presentation by Ms. Carolyn Ingram, CHCS, 117
Presentation by Dr. Jeffery Thompson, Washington State Department of Social and
Health Services, 121
Presentation by Ms. Leah Hole-Curry, Washington State Health Technology Assessment
(HTA) Program, 124
References, 127
12 LESSONS FROM CALIFORNIA’S BENEFIT REVIEW PROCESSES 129
Presentation by Ms. Cindy Ehnes, Ms. Maureen McKennan, and Mr. Andrew George,
California Department of Managed Health Care (DMHC), 129
Presentation by Ms. Susan Philip, California Health Benefits Review Program (CHBRP), 134
Presentation by Mr. Anthony Wright, Health Access California, 137
References, 139
13 PRIORITY SETTING AND VALUE-BASED INSURANCE DESIGN 141
Presentation by Dr. Somnath Saha, Portland VA Medical Center and the Oregon HSC, 141
Presentation by Dr. Jeanene Smith, Office for Oregon Health Policy and Research, 144
Presentation by Ms. Jean Fraser, San Mateo County Health System, 146
References, 148
14 ASSESSING AFFORDABILITY AND THE POTENTIAL FOR UNDERINSURANCE 149
Presentation by Dr. Jessica Banthin, Agency for Healthcare Research and Quality (AHRQ), 149
Presentation by Ms. Cathy Schoen, The Commonwealth Fund, 151
References, 155
APPENDIXES
A Patient Protection and Affordable Care Act, Section 1302 157
B Web-Based Questions for Public Input on Determination of Essential Health Benefits 161
C Stanford Model Contractual Language for Medical Necessity 163
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Boxes, Figures, and Tables
Summary
Box
S-1 Statement of Task for the IOM Committee, 2
Chapter 1
Boxes
1-1 Essential Health Benefits Categories in ACA, 14
1-2 Statement of Task for the IOM Committee, 15
Chapter 2
Box
2-1 Characteristics of the National Compensation Survey, 24
Chapter 3
Figures
3-1 Insurance premiums can rise as state-mandated health benefits accumulate, 29
3-2 Insurers use a continuum of patient risk factors to guide consumer engagement efforts, 31
Chapter 4
Figure
4-1 The benefit categories in the ACA could vary in breadth and depth of coverage, 45
Table
4-1 The Marginal Cost of Maryland’s State-Mandated Benefits Is Less Than the Full Cost Per Benefit, 46
xv
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xvi BOXES, FIGURES, AND TABLES
Chapter 6
Box
6-1 The Blue Cross and Blue Shield Association’s Technology Evaluation Center Clinical Coverage
Criteria, 66
Figure
6-1 Defining benefit plans requires balancing administrative agility or consistency with the need to
proactively or reactively define benefits, 60
Table
6-1 Scope of Included Benefits: ACA vs. CIGNA’s Standard Employer Plan, 62
Chapter 10
Figures
10-1 WellPoint, Inc. has various paths for reviewing benefit coverage to make medical policy
decisions, 110
10-2 Prostate cancer treatments vary in cost but not necessarily in outcomes, 112
Chapter 11
Box
11-1 Criteria Used by the Washington State Health Technology Assessment Program to Make Coverage
Decisions, 125
Figures
11-1 New Mexico’s traditional Medicaid has a broader array of benefits than the State Covered Insurance
(SCI) Program, 120
11-2 The Washington Department of Social and Health Services uses levels of evidence to choose covered
benefits, 122
11-3 The Washington Department of Social and Health Services considers comparative costs to a reference
price when designing pharmaceutical benefits and payment, 123
11-4 Health Technology Assessment (HTA) program coverage decisions may vary between Washington
(WA) state and private insurers, 126
Table
11-1 Traditional Medicaid, Medicaid Expansion, and Exchange Plans Vary in Population Served and
Benefits Offered, 118
Chapter 12
Tables
12-1 The Covered Benefits, Mandatory Benefits, and Optional Benefits for Plans Governed by California’s
Knox-Keene Act, 130
12-2 Independent Medical Reviews (IMRs) by Treatment 2008-2010, 132
12-3 Comparison of 2010 Independent Medical Review (IMR) Results, 132
12-4 Comparison of Grievance and Appeals Processes Under the Knox-Keene Act and the ACA, 134
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xvii
BOXES, FIGURES, AND TABLES
Chapter 13
Boxes
13-1 Example of Oregon’s Criteria for Line Item Scoring: Type II Diabetes Mellitus, 143
13-2 Hypothetical Example of Costs and Benefits Under a Silver-Level Plan, 145
Tables
13-1 Selected Elements and Rankings from the Oregon Health Services Commission’s Prioritized List for
Medicaid, 142
13-2 Oregon Health Services Commission’s Prioritized Categories of Care and Associated Weights, 142
13-3 Oregon’s Proposed Value-Based Benefit Tiers Vary in Benefits and Patient Cost Sharing, 144
13-4 Oregon Expects Reduced Cost Sharing in Value-Based Tiers to Increase Utilization of Desirable
Services, 146
Chapter 14
Figures
14-1 Percent of families spending 10 percent or more of family income by insurance status, 151
14-2 Underinsured and uninsured adults are at high risk of going without needed care and having financial
stress due to medical debt, 152
14-3 U.S. adults (under age 65) with below-average income have high out-of-pocket health care costs even
when insured, 153
Table
14-1 The Commonwealth Fund’s Analysis of Premiums as a Proportion of Income, Out-of-Pocket
Maximum, and Actuarial Value for Plans Established Under the ACA, 154
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