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The National Healthcare Quality Report and Essential Health Benefits: Opportunity Squandered

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This month the Department of Health and Human Services (HHS) through its Agency for Healthcare Research and Quality (AHRQ) released the 2012 National Healthcare Quality Report, along with the companion 2012 National Healthcare Disparities Report. The opening paragraph of the report describes the purpose of our health care system. It is "...designed to improve the physical and mental well-being of all Americans by preventing, diagnosing, and treating illness and by supporting optimal function. Across the lifespan, health care helps people stay healthy, recover from illness, live with chronic disease or disability, and cope with death and dying. Quality health care delivers these services in ways that are safe, timely, patient centered, efficient, and equitable".

"Unfortunately", the report goes on to say, "Americans too often do not receive care they need, or they receive care that causes harm. Care can be delivered too late or without full consideration of a patient's preferences and values. Many times, our system of health care distributes services inefficiently and unevenly across populations. Some Americans receive worse care than others. These disparities may occur for a variety of reasons, including differences in access to care, social determinants, provider biases, poor provider-patient communication, and poor health literacy."

With these admonitions as backdrop, I call your attention to the Essential Health Benefits Rules recently promulgated by the Secretary of HHS, Kathleen Sebelius.

The Affordable Care Act (ACA) authorized state-level "health insurance exchanges" which are scheduled to open for business in October 2013. These exchanges are envisioned as online marketplaces through which individuals and small businesses can pool their purchasing power and buy private health plans that would, otherwise, be unaffordable.

The Obama Administration got it right by mandating coverage, by providing means-tested premium support for those who qualify, and by allowing consumers to choose their insurers. The law creates the potential for robust competition for these new consumers as insurers and providers compete for market share by demonstrating value to the individual customers. Consumers must be equipped with and empowered to use data and information that promote understanding of the panoply of options that are available in the marketplace.

The Obama Administration has gotten it terribly wrong, however, in its determination of Essential Health Benefits. ACA directs Secretary Sebelius to define a set of "essential health benefits (EHB)" which these new insurance policies must cover. The scope of EHB must equal the scope of benefits provided under a typical employer plan. In defining EHB, however, the Secretary is instructed not to make coverage decisions, determine reimbursement rates, or establish incentive programs. Benefits must not be designed in ways that discriminate based on age, disability, or expected length of life, but must consider the health care needs of diverse segments of the population.

The Secretary found that the typical employer plan provided drug coverage, and, appropriately, included that category of benefit in the final rule. But the Secretary seems to have concluded also that, since typical employer plans employ drug formularies as administrative tools to control access, these drug management tools should be incorporated into EHB, as well. Not a wise decision given the role of drug formularies in rationing access to prescription drugs for the purpose of containing costs.

Drug formularies are not designed to consider the "health care needs of diverse segments of the population". As a matter of routine, they make no provision for age, gender, genetic variations, culture, health status or medical need. They subordinate the heterogeneity of patient need and response to the primacy of cost control.

Fifty-seven patient advocacy groups recently delivered a letter to Secretary Sebelius, expressing concern that "...limiting medications to just one drug per class will not meet the needs of patients and certainly does not meet the non-discriminatory protections outlined in the law". They urged the Secretary to "abandon this approach and instead require plans to cover a full range of medications that will meet the needs of all patients".

Why? Because all drugs that treat a certain disorder may not be in the same therapeutic class; nor will all drugs in the same therapeutic class be equally beneficial to all patients. The solution is to open the formularies so that patient need and provider knowledge guide the treatment plan.

The Secretary's parsimonious response in the final EHB rule enables exchanges to satisfy the nondiscrimination provisions of the ACA by covering "...at least the greater of (1) One drug in every USP category and class; or (2) the same number of drugs in each category and class as the EHB-benchmark plan."

This determination is potentially toxic to the 30 million previously uninsured Americans who will gain access to health insurance as a result of the Affordable Care Act. The Secretary's approach to prescription drug coverage makes no provision for the heterogeneity of these new health care consumers, who will purchase insurance with the expectation that it will help meet their health care needs.

EHB should be working to resolve the challenges enumerated in the AHRQ reports, not perpetuating them. We encourage Secretary Sebellius to redraft the rule to assure that ACA focuses on quality of care and improved outcomes as the first step towards containing the growth of healthcare expenditures.