Defining 'Essential' Care

Regulators Move to Specify Coverage Under Health Law; Insurers Seek Flexibility.

By AVERY JOHNSON
WSJ February 28, 2011

Maggie Haslam's five-year-old autistic son, Drew, has undergone intense behavioral, physical and speech therapy that helped him learn to dress himself and communicate such concepts as "over" and "under."

Drew Haslam, 5, is autistic and has received care that may not be covered under the new health law.
.The therapy greatly helped Drew, said Ms. Haslam, a public-relations agent in Silver Spring, Md. But was it essential?

The next big issue for the federal health law as it moves toward implementation is how regulators will define so-called essential benefits—the basic medical services that health plans must cover under the law.

The legislation gives 10 categories of care that plans must provide for customers of the health-insurance exchanges that are launching in 2014. But the law leaves details up to regulators, who are now starting to develop the rules.

Habilitative services, used by such patients as Drew, have become a contentious point in the debate. Unlike rehabilitation, which helps patients recover skills they have lost, habilitation helps patients acquire new skills. Such services can be costly because the process can take years, and insurers haven't typically covered many of them, sometimes labeling them educational or experimental.

The debate over exactly what habilitative services to include in the new rules—and how much of them—exemplifies the challenge of defining what health benefits are truly essential.

This week, insurers and patient groups are expected to face off at a meeting hosted by the Institute of Medicine, which has been charged by the Department of Health and Human Services with making recommendations on defining criteria for deciding what are essential benefits.

Benefits Questions
Here are the 10 general categories of benefits that the health law considers essential, and some services within each that could trigger debate as regulators develop rules governing insurance plans that will be sold on the exchanges:

Ambulatory patient services

-Varicose vein treatment

Emergency services

-Nonemergency care administered in ER

Hospitalization

-Total hip replacement

Maternity and newborn care

-Fertility treatments

Mental health and substance-abuse disorders

-Unlimited length of stay in a facility

Prescription drugs

-"Lifestyle" medications such as Viagra

Rehabilitative and habilitative services and devices

-Unlimited physical therapy

Laboratory services

-Biometric testing, including genetic markers or DNA analysis

Preventative and wellness services and chronic disease management

-Nutritional counseling

Pediatric services, including oral and vision care

-Braces

Source: WSJ Research .Lobbying on all categories has been intense, and the institute has received over 330 comments from groups including insurers, patient advocates and medical professionals.

America's Health Insurance Plans, the industry trade group, is emphasizing to policy makers and regulators that costs will rise if insurers have to cover too many specific services, and if they aren't allowed to limit the number of reimbursed services.

Insurers want to keep the categories as broad as possible so they have flexibility in designing benefits packages.

Others, especially in the medical and patient-advocacy communities, are pressing for specifics to be set out and coverage limits to be lifted.

"All of it needs to be spelled out because if it isn't spelled out it will be denied," said Andrew Racine, chief of the pediatrics division at the Children's Hospital at Montefiore in New York. He submitted testimony to the institute on behalf of the American Academy of Pediatrics.

Habilitative services have been particularly contentious because they can be costly and difficult to define. A three-year-old child who lost speech after a brain injury would require rehabilitation. But a three-year-old child with autism who has never learned to speak would require habilitation, said Marty Ford of the Consortium for Citizens with Disabilities.

In addition to autism, habilitative services could be used to help children with cerebral palsy learn to walk, children with Down syndrome to acquire language skills or people with schizophrenia to learn basic social skills.

A study by consulting firm Oliver Wyman estimated behavioral programs can cost about $60,000 yearly when a child is young, dropping dramatically after that as he or she becomes more independent.

For Drew Haslam's services, the expenses mounted after a state program for infants and toddlers ended and the family's insurance limited their coverage. Ms. Haslam said they spent $20,000 a year on the therapies until the time and expense became overwhelming.

Because treatments can last years, insurers warn that unlimited coverage could push up the prices of policies that will be sold through the insurance exchanges.

"The legislation raises the question: Are we going to have unlimited amounts of physical therapy? That would add certain costs," said Robert McDonough, Aetna Inc.'s head of clinical policy research and development.

Jeffrey Kang, Cigna Corp.'s chief medical officer, who submitted a statement to the Institute of Medicine in January, suggested that many habilitative therapies might not be included in the most basic plan sold on exchanges, known as bronze plans. Instead, he said, they could be covered starting with the silver plans that are the next most expensive.

"What we are suggesting is that we ought to make the minimum to protect the healthy population against catastrophic events," Mr. Kang said.

Insurers say they want the flexibility to design plans for consumers with different needs. "A 25-year-old doesn't think they will need habilitative care, and they need to be able to afford the benefit package they pick," said Virginia Calega, Highmark Blue Cross Blue Shield's vice president of medical management and policy.

Patient advocates say that consumers shouldn't have to pay extra for habilitative coverage.

"Health care for autism shouldn't be like the sporty option on a car," said Stuart Spielman, senior policy advisor for Autism Speaks, a patient-advocacy organization.

The lowest-level policy should cover all eventualities, said Dr. Racine.

"You don't know if you will need this stuff. That's what insurance is all about."

Write to Avery Johnson at avery.johnson@WSJ.com