CENTER FOR HEALTH INFORMATION AND ANALYSIS

AN OVERVIEW OF HEALTH BENEFIT MANDATES

JANUARY 29, 2014

center for health information and analysis

INTRODUCTION

The Center for Health Information and In Massachusetts, benefit mandates are Analysis (CHIA) is required to evaluate the governed by section 38C of Chapter 3 of the impact of benefit mandate bills referred by General Laws. When a legislator introduces a legislative committees for review. These bill that proposes a benefit mandate, it is sent evaluations provide a medical efficacy analysis, to a Joint Legislative Committee, usually the an actuarial estimate of the effect that the Committee on Financial Services, the Committee proposed benefit mandate would have on the on Health Care Financing, the Committee on cost of health insurance, and cost estimates Public Health, or the Committees on Ways and of potential state liability associated with Means. When reviewing a benefit mandate mandating the benefit. CHIA produces reports proposal, a Committee must hold a public on each reviewed benefit mandate proposal hearing on the bill and then decide whether to and performs a comprehensive retrospective report the bill favorably, unfavorably, or to report review, typically every four years, of all that the subject should be further studied. When mandates in effect. a Joint Committee of the General Court or the House and Senate Committees on Ways and WHAT ARE HEALTH BENEFIT MANDATES? Means reports favorably on a mandated health Health benefit mandates are laws passed by benefit bill, a review or evaluation conducted by states that require state licensed health CHIA must be included. However, a Committee insurance carriers to include specific health has the option to report favorably on a proposed care benefits in certain insured health benefit health benefit mandate bill without including a plans.1 All states have such benefit mandates. review and evaluation by CHIA if the review is Examples range from commonly offered not produced within 45 days from when the services, such as emergency department Committee requested the review. services or diabetic supplies, to less standard benefits, such as in vitro fertilization and As of early of 2014, CHIA has published reviews applied behavior treatment for autism.2 While of 31 proposed benefit mandate bills, 9 of which mandates may make insured health coverage have become law. Most benefit mandates in more comprehensive, they also may make it Massachusetts require insurance carriers to more expensive. Thus, 29 states, including cover specific services, treatments, or supplies Massachusetts, have systematic processes in for their plans’ insured members. Another place to study the efficacy and cost of existing smaller set of provider-centered mandates and proposed health benefit mandates.3 requires insurers to cover otherwise covered services when provided by specific types of providers. Most provider-centered mandates require payers to pay licensed practitioners of a specified provider type when the provider type is licensed to provide a service that is covered by the payer.4 A list of proposed benefit mandate bills reviewed by CHIA can be found in Appendix A. A list of the health benefit mandates currently in effect in Massachusetts by type of mandate can be found in Appendix B.5

1 An Overview of Health Benefit Mandates center for health information and analysis

TO WHOM DO HEALTH BENEFIT HOW DOES CHIA REVIEW A PROPOSED MANDATES APPLY? HEALTH BENEFIT MANDATE? Health benefit mandate provisions typically apply When a proposed benefit mandate is referred to to both individual and group insured health CHIA for review, CHIA works with an actuarial benefit plans offered by the following types firm to evaluate the medical efficacy and cost of insurance carriers: commercial impact. Beginning in 2014, CHIA intends to insurance companies licensed under provide cost estimates of potential state liability M.G.L. c. 175; associated with mandating the benefit. Blue Cross and Blue Shield of Massachusetts, Inc. (organized as both a nonprofit hospital CHIA’s Information Sources service corporation under M.G.L. c. 176A and The party or organization on whose behalf the a medical service corporation under c. 176B); bill was filed may provide CHIA with any cost or and Health Maintenance Organizations (HMOs) utilization data that the party or organization has licensed under M.G.L. c. 176G. Many health gathered. All interested parties supporting or benefit mandates also specifically apply to opposing the bill may also provide CHIA products offered through the Group Insurance with any information relevant to CHIA’s Commission (GIC) governed by M.G.L. c. 32A. review. CHIA may request data from insurers Benefit mandates require plans subject to to whom the proposed bill applies, as health benefit mandate laws to cover members necessary. residing within the Commonwealth and may Where possible, CHIA utilizes data from its also require such plans to cover non-residents databases, including the Acute Hospital Case who have their principal place of employment in Mix Databases and the All Payer Claims the Commonwealth.6 Database (APCD) to support CHIA’s benefit mandate reviews. Although self-insured benefit plans are generally excluded due to federal ERISA (Employee Medical Efficacy Analysis Retirement Income Security Act) preemptions, GIC self-insured plans are sometimes explicitly As part of the review, CHIA assesses the included.7 State benefit mandates do not medical efficacy of the proposed benefit. This apply to the federal Employees Health Benefits assessment includes the benefit’s potential Program8 and TRICARE.9 Medicare and impact on the quality of patient care and the Medicare HMO plans are also excluded as health status of the population. It also these policies are tied to Federal Medicare contains the results of any research benefits and cover patient cost-sharing within demonstrating the Medicare benefit structure. MassHealth, the the medical efficacy of the treatment or Massachusetts Medicaid program, is also not service compared to alternative treatments subject to mandate requirements.10 or services or to not providing the treatment or service. CHIA does not declare any given service or provider type efficacious or not, but rather summarizes how the service is currently regarded in medical literature and by governmental or professional entities that recommend treatment. If the efficacy of a service or provider type is debated, CHIA reports, but does not attempt to resolve, the debate.

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For provider-centered mandates, CHIA reviews ■ Second, CHIA assesses the incremental whether the specific provider’s services are impact of the proposed law by widely covered or whether standard-setting determining whether other state or federal entities, such as Medicare, pay for them. mandates already require coverage and by CHIA does not assess current thought on the reviewing current coverage practices—i.e., clinical effectiveness of an entire profession. whether insurers cover the service For mandates with a potentially significant voluntarily even without a mandate. effect on the health of individuals other than those ■ Third, CHIA determines the PMPM covered by the benefit mandate, CHIA provides estimates stemming from the a description of the impact, but generally does incremental effect of the proposed law not attempt to quantify it.11 for the next five years: Cost Analysis A. CHIA estimates the proportion of CHIA also assesses the financial impact of the population affected (those with a mandating the proposed benefit, which may condition who are treated, who use include: the net impact of the mandate on the specific services, or who use the carrier medical expense per member per month specified provider), and what kind and (PMPM); the net increase in premium PMPM; how much treatment they receive. and the 5 year estimated impact of the proposed mandate on medical expenses and B. CHIA determines the cost of each premiums. The cost analysis may also assess unit of estimated service. the proposed benefit’s impact on utilization, such as C. After considering several perspectives, the proposed benefit’s effect on the appropriate CHIA estimates the incremental or inappropriate use of the service; the extent to service use due to the proposed which the service might serve as an alternative mandate; for other services; and/or the extent the “net” effect equals the projected to which coverage may affect the number cost of the proposed benefit mandate and types of providers. less the costs already being incurred through existing mandates or In conducting its financial impact analysis, CHIA voluntary coverage, trended forward. follows a number of steps.12 D. CHIA assesses how treatment use ■ First, CHIA analyzes the bill to determine the will change if the proposed types of insurance entities affected, the set mandate changes cost to patients of members affected (sometimes limited by and how treatment cost will change age, diagnosis, and/or geography), the over the coming five years given services mandated, and related policies expected technology change. affected. CHIA always defers to explicit bill language when performing the analysis. When ambiguities exist in the bill language, CHIA asks the legislature for clarification on legislative intent.

3 An Overview of Health Benefit Mandates center for health information and analysis

State Liability for Health Benefit Mandates CONCLUSION Under the ACA The review of health benefit mandates balances Analysis of the cost associated with proposed the goal of ensuring adequate protection for state benefit mandates is also important health care consumers with the goal of in light of new requirements introduced managing increasing health care costs. The new by the Affordable Care Act (ACA). Starting requirements introduced by the ACA may in impact the types and number of benefit mandate 2014, in addition to the analysis explicitly bills passed in Massachusetts. By evaluating the required by section 38C of Chapter 3, CHIA medical efficacy and the cost impacts, including intends to provide cost estimates of the state liability, of proposed benefit mandate potential state liability under the ACA bills, CHIA will continue to provide stakeholders associated with mandating the benefit. with neutral, reliable information.

In accordance with the ACA, all states must set an Essential Health Benefits (EHB) benchmark that all qualified health plans (QHPs), and those plans sold in the individual and small-group markets, must cover, at a minimum.13 Section 1311(d)(3)(B) of the ACA, as codified in C.F.R. § 155.170, explicitly permits a state to require QHPs to offer benefits in addition to EHB, provided that the state is liable to defray the cost of additional mandated benefits by making payments to or on behalf of individuals enrolled in QHPs. The state is not financially responsible for the costs of state-required benefits that are considered part of the EHB benchmark plan. State-required benefits enacted on or before December 31, 2011, (even if effective after that date) are not considered “in addition” to EHB and therefore will not be the financial obligation of the state.14

The policy regarding state-required benefits is effective as of January 1, 2014 and is intended to apply for at least plan years 2014 and 2015.15 Beginning in 2014, when reviewing proposed benefit mandates that are additions to EHB, CHIA intends to include cost estimates of potential state liability associated with mandating the health benefit. CHIA is currently working with the relevant state agencies with respect to the determination of a methodology for estimating this potential state liability.

4 An Overview of Health Benefit Mandates center for health information and analysis

APPENDIX A HEALTH BENEFIT MANDATES REVIEWED BY CHIA

Proposed Benefit Mandates Reviewed Proposed Benefit Mandates Reviewed and Not and In Effect In Effect

■ Scalp Hair Prosthesis ■ Asthma Rates ■ Chiropractic Services ■ Senior Citizen Hearing Tests ■ Certain Prosthetic Devices ■ Equitable Coverage for Substance ■ Mental Health Parity Abuse ■ Infertility Treatments ■ Marriage and Family Therapists ■ Insurance Coverage for Autism ■ Ectodermal Dysplasia

After December 31, 2011 (in addition to EHB) ■ Educational Psychologists ■ Eating Disorders ■ Cleft Palate and Cleft ■ Children’s Mental Health ■ Lip Hearing Aids for ■ Prescription Drug Voice Synthesizers ■ Children Oral Cancer ■ Vision Screening for Children Therapy ■ Urea Cycle Disorders ■ Prescription Drug Coverage ■ Hearing Aids ■ Childhood Vaccine Program and Immunization Registry ■ Children’s Medical Security Plan ■ Colorectal Cancer Screenings ■ Women’s Health and Cancer Recovery ■ Marriage and Family Therapy ■ Craniofacial Disorders ■ Care of Patients with Mitochondrial Disease ■ Mastectomies ■ Insurance Coverage for Devic’s Disease

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APPENDIX B MASSACHUSETTS BENEFIT MANDATES BY TYPE Services and Supplies

■ Coverage for Autism ■ Preventive Care for Children Up to ■ Bone Marrow Transplants for Age Six (Including Specific Newborn Treatment of Breast Cancer Testing) ■ Cardiac Rehabilitation ■ Prosthetic Devices ■ Chiropractic Services ■ Scalp Hair Prostheses for Cancer Patients ■ Cleft Palate and Cleft Lip ■ Speech, Hearing and Language ■ Clinical Trials (to Treat Cancer) Disorders ■ Contraceptive Services ■ Telemedicine Services ■ Cytologic Screening (Pap Smear) ■ Diabetes-Related Services & Supplies Providers (Mandated Coverage)

■ Early Intervention Services ■ Certified Nurse Midwives ■ Hearing Aids for Children ■ Certified Registered Nurse Anesthetists ■ Hearing Screening for Newborns ■ Nurse Practitioners ■ Home Health Care ■ Mental Health Providers: Licensed ■ Hormone Replacement Therapy (HRT) Psychiatrists, Psychologists, Independent Clinical Social Workers, ■ Hospice Care Mental Health Counselors, and Nurse ■ Human Leukocyte Antigen Testing Mental Health Clinical Specialists ■ Hypodermic Syringes or Needles ■ Infertility Treatment Providrs (Nondiscrimination) ■ Lead Poisoning Screening ■ Chiropractors ■ Low Protein Food Product for Inherited ■ Dentists Amino Acid and Organic Acid Diseases ■ Nurse Midwives (PKU) ■ Nurse Practitioners ■ Mammography ■ Optometrists ■ Maternity Health Care (Including Minimum Maternity Stay) ■ Physician Assistants ■ Mental Health Care ■ Podiatrists ■ Nonprescription Enteral Formulas ■ Off-Label Uses of Prescription Drugs to Treat Cancer ■ Off-Label Uses of Prescription Drugs to Treat HIV/AIDS ■ Oral Cancer Therapy

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REFERENCES

1 CHIA, Comprehensive review of mandated 9 See 10 U.S.C. § 1103. Benefits in massaChusetts report to the LegisLature (July 7, 2008), available at http://ww w . 10 Compass Health Analytics, state-mandated mass.gov/chia/docs/r/pubs/mandates/comp-rev- heaLth insuranCe Benefits and heaLth insuranCe mand-benefits.pdf . Costs in massaChusetts.

2 Health Affairs, Essential Health Benefits, 11 Ibid. heaLth poLiCy Briefs (May 2, 2013), available at 12 See ibid for more information. http://ww w .healtha f fairs.o r g/healthpolicybriefs/ 13 McDermott Will & Emery, essentiaL heaLth brief.php?brief_id=91 . Benefits proposed ruLe: additionaL detaiL 3 California Health Benefits Review Program, with few surprises (Nov. 30, 2012), available at other states’ heaLth Benefit review http://ww w .mwe.com/Essential-Health- programs (Sept. 20, 2013), available at Benefits- Proposed-Rule-Additional-Detail- http://ww w .chbrp.o r g/docs/Survey_and_Analysis_ with-Few- Surprises- 1 1-30-2012/ . of_Other_States Health_Benefit_Review_ 14 Patient Protection and Affordable Care Act; Programs_2013_FINAL_092013.pdf . Standards Related to Essential Health Benefits,

4 Compass Health Analytics, state-mandated heaLth Actuarial Value, and Accreditation; Final Rule, insuranCe Benefits and heaLth insuranCe Costs in 37 massaChusetts (Jan. 2013), available at Fed. Reg. 12834 (2013) (C.F.R. §§ 147, 155, 156), http://ww w .mass.gov/chia/docs/r/pubs/13/ available at http://ww w .gpo.gov/fdsys/pkg/FR- comprehensive-mandate-review-report-2013-1-10.pdf. 2013-02-25/pdf/2013-04084.pdf . See the Proposed Rule at http://ww w .gpo.gov/fdsys/pkg/FR-2012- 1 1- 5 For more information, see http://ww w .mass . 26/pdf/2012-28362.pdf . See also Massachusetts’s gov/ocabr/consumer/insurance/health-insurance/ EHB Benchmark Plan, available at consume r -guides/mandatory-benefits- http://ww w .cms. gov/CCIIO/Resources/Data- guide.html . Resources/Downloads/ ma-state-required- benefits.pdf . 6 Compass Health Analytics, state-mandated heaLth insuranCe Benefits and heaLth insuranCe 15 Final Rule, ibid. Costs in massaChusetts.

7 Self-insured policies are regulated under Federal ERISA legislation, not by the Massachusetts Division of Insurance, and thus are not subject to the mandate laws. Compass Health Analytics, state-mandated heaLth insuranCe Benefits and ACKNOWLEDGMENTS heaLth insuranCe Costs in massaChusetts. CHIA Staff for this report:

8 Randall R. Bovbjerg, Lessons for heaLth reform Catherine West, MPA, Director of from the federaL empLoyees heaLth Benefits External Research Partnerships program, pg. 2 (Aug. 2009), available at http://ww w .urban.o r g/uploadedpdf/4 1 1940_ Gretchen Losordo, JD, Senior Health Policy Analyst lessons_for_health_reform.pdf .

7 An Overview of Health Benefit Mandates For more information, please contact:

CENTER FOR HEALTH INFORMATION AND ANALYSIS Two Boylston Street Boston, MA 02116 617.988.3100

ww w .mass.gov/chia Publication Number – 14-29-CHIA-01