Eliminating Coverage Discrimination Through the Essential Health Benefit's Anti-Discrimination Provisions

The Affordable Care Act (ACA) was primarily intended to ensure that all citizens could access health insurance. Before the ACA, insurer policies often excluded sick people though eligibility discrimination. Under eligibility discrimination, insurers used an individual’s health status to determine whether that person could enroll in the plan, to set that person’s monthly premium, and to modulate the types of coverage available after enrollment. The ACA blocked these practices by prohibiting plans containing preexisting condition exclusions, unreasonable waiting periods, and discriminatory pricing.¹ The ACA also prevented insurers from issuing different plans to similarly situated enrollees based on health status alone. These provisions have allowed many previously uninsured individuals to purchase health insurance.

In recent years, however, a new problem has arisen among certain insurers—so-called “coverage discrimination,” or the design of benefit plans that can prevent individuals with complex or otherwise costly conditions from obtaining appropriate treatment. Coverage discrimination can be intentional or an unanticipated by-product of an insurance scheme that disproportionately impacts individuals with high-cost conditions. A health plan that excludes cancer or transplant centers from its provider network may enroll fewer patients who rely on these specialized centers. A plan could also discourage certain patients from enrolling if the plan set disproportionately high cost-sharing requirements for drugs used to treat health conditions requiring delivery of cost-intensive care.² In 2014, patients with HIV/AIDS alleged that insurers were discriminating by placing all drugs that treat HIV on the highest formulary tier with the highest patient copay, making the drugs prohibitively expensive.³ Such policies lead these patients to seek their health coverage elsewhere or prevent these patients from receiving appropriate care, thus saving the insurer money. As with eligibility discrimination, coverage discrimination can lead to poor health outcomes when patients cannot access medically necessary treatments.

Fortunately, the ACA offers protections from coverage discrimination. Whether and how the government has applied ACA’s protections to address this problematic insurer practice requires additional attention.

The ACA contains three nondiscrimination provisions aimed at preventing coverage discrimination: sections 1311, 1557, and 1302. The government has issued detailed regulations or guidance to implement sections 1311 and 1557. Section 1311 applies to Qualified Health Plans (QHPs), plans that can be sold on an exchange because an exchange administrator has certified that the plans fulfill section 1311's cost-sharing and benefit-design requirements.⁴ Under section 1311, a health plan cannot employ marketing practices or design benefits to discourage enrollment of individuals with significant health needs. Each year, the federal or state government administering each exchange analyzes all plans applying for QHP certification. The analysis identifies potentially discriminatory plans by flagging benefit designs that present unusually high out-of-pocket costs for certain chronic conditions. Section 1311's protections may prevent discriminatory plans from entering the exchanges, but section 1311 does not apply to plans sold outside the exchange.

Section 1557 prohibits discrimination based on race, color, national origin, sex, age, or disability. The Office for Civil Rights (OCR) applies section 1557 to all plans issued by insurers that receive financial assistance from the US Department of Health and Human Services (HHS). If OCR suspects that a health plan is discriminatory, OCR can conduct a review or investigation to determine whether an issuer used a neutral rule to adopt the suspect feature or whether the design was pretext for discrimination.⁵ But section 1557's protections would not arise until after discriminatory plans are sold to consumers, which could result in costly delay before OCR could identify and address the problem. For example, HIV adverse tiering health plans were on the market for a year before insurers signed a consent order removing the plans from the market.⁶ During the year, many patients with HIV/AIDS on adverse tiering plans did not receive medically necessary care.

Section 1302 lists the requirements for Essential Health Benefits (EHBs), a set of medical services that all individual and small group plans must offer. A health plan does not provide EHBs if the plan discriminates against beneficiaries based on age, expected length of life, present or predicted disability, degree of medical dependency, quality of life, or other health conditions. Unlike regulations and guidance implementing sections 1311 and 1557, the government has issued no meaningful regulations or guidance on discriminatory benefit design under section 1302. In particular, HHS has yet to provide specific instructions on how states, insurers, and consumers should identify or prevent discrimination under the EHB standard.⁷

We recommend that the federal government adopt stronger protections against coverage discrimination by fully implementing section 1302's nondiscrimination provisions. As a first step, HHS should issue a report, as required by section 1302(G), to assess whether enrollees, particularly enrollees with chronic conditions, are having difficulty accessing needed services because of health plan benefit designs. This in-depth assessment could help shed light on whether HHS needs to use the EHB nondiscrimination standard more routinely to address gaps in access.

In the meantime, the Centers for Medicare and Medicaid Services (CMS) could also strengthen the nondiscrimination provision under EHBs. CMS could issue guidelines that define and identify coverage discrimination for all EHB plans. One basis for this standard could be the analysis that CMS conducts for discrimination within QHPs. Such an analysis would find plans that are outliers in providing access to treatments for certain chronic conditions, but may not flag widespread practices in discriminatory benefit design.

Alternatively, CMS could issue a new set of coverage discrimination guidelines under EHBs. For example, CMS could define a plan as discriminatory if it prevented individuals with specific diseases from accessing medically necessary and evidence-based treatments or services. Insurers should expect to cover and provide patients with reasonable access to treatment recommendations that have the highest degree of clinical consensus (e.g., antiretrovirals for patients with HIV or tyrosine kinase inhibitors for chronic myelogenous leukemia treatment) based on available data, such as professional clinical practice guidelines or evidence synthesis clearinghouses like the Cochrane Collaboration. Benefit designs that fail to meet enumerated standards would be presumed discriminatory. States would be responsible for ensuring that individual and small-group health plans meet the minimum nondiscrimination standards, and plans that do not meet the standards could not enter the insurance market. Plans that reach the market may also be liable under state law claims. Using a discrimination standard tied to evidence-based recommendations would make it harder for insurers to prevent certain patients from accessing medically necessary care.

The ACA has made it easier for individuals to find health care coverage. Now, the government should take additional steps to ensure that all individuals can access the care they need. More effective implementation of section 1302 under the ACA can ensure that patients have not only insurance coverage, but also adequate insurance.