SD46 - An Essential Health Services Access Program and a Standard Health Services Program Pursuant to SB 506 of 1992

  • Published: 1993
  • Author: Essential Health Services Panel
  • Enabling Authority: Chapter 847 (Regular Session, 1992)

Executive Summary:
Since 1988, concentrated efforts to address the health care crisis in Virginia have been the focus of the Joint Commission on Health Care and its antecedents. The commission has found that nearly one million Virginians are without health insurance and that thousands of others have limited health insurance. Designing programs to address lack of health care access and availability, while containing the ever-rising costs of health care, is the primary focus of the joint commission.

Established as an initiative of the Joint Commission on Health Care pursuant to SB 506 of 1992, the Essential Health Services Panel, a group of experts and citizens, was charged with assisting the joint commission by developing an essential health services access program and a standard health services program which includes all the essential health services plus additional, but not necessarily essential, services. The enabling legislation directed the panel to emphasize primary and preventive health care services and to concentrate on the specific services that must be made accessible to all Virginians, regardless of circumstances.

Among the panel's first tasks was defining an essential health services access program, essential health services, and determinative principles for identifying those health services considered essential. An essential health services access program was defined as a government effort to ensure all citizens' access to minimum health services. The panel determined that "essential health services" means those age-appropriate, preventive, diagnostic, and treatment services required to maintain good health and to return individuals to good health.

Determinative principles for identifying essential health services were also recognized as:

• Appropriate and effective for the prevention, diagnosis, or treatment of disease, injury, or congenital conditions (clinical effectiveness test)

• Good value for the dollar spent (cost effectiveness test)

• Contributing to the quality of life or providing comfort care for the terminally ill (quality of life test)

• Chosen for the individual or family without regard for the individual's or family's ability to pay (paternalistic test)

• Consideration of consistency with the health services common to most current health benefit plans and public health programs (equity test)

• Defined in terms of health services, not providers (health services test)

Over the panel's short, but active, history, much material and data were presented. Current efforts in other states, including Arizona, Florida, Hawaii, New York, Ohio, Connecticut, Michigan, Minnesota, South Carolina, Washington, and Maine were summarized. For example, in Oregon, following an extensive process which included community meetings, public hearings, and a significant telephone survey, the Oregon Health Services Commission, a panel of health care providers, identified 17 categories of care encompassing 709 condition-treatment pairs. The Oregon methodology also included research and expert testimony on the effectiveness of treatments, a formula that considered cost and benefit of treatments, public values, and independent commissioner judgment. The Oregon plan, because it is Medicaid specific, required a federal waiver. The Health Care Financing Administration denied the Oregon waiver application in August 1992, stating that Oregon's plan violated the Americans with Disabilities Act; however, Oregon officials submitted a revised application and Oregon was granted a waiver in March 1993.

On the opposite extreme from the Oregon Plan, the Washington Basic Health Plan includes physician services, inpatient and outpatient hospital services, proven preventive and primary care services, prenatal, postnatal, and well-child care, and other services determined to be necessary for basic health care. The administrator will design and revise the benefits.

The two major public health benefits programs--Medicare and Medicaid--each also defining its covered services, were reviewed. Medicare is a federal health insurance program for the elderly and the disabled; Medicaid is a federally-established, state-administered program which is jointly funded by the federal and state governments. States do have some flexibility in designing their Medicaid programs; however, many of the Medicaid rules are federally mandated. In reviewing these programs, the panel noted that Virginia's Medicaid program provides generous services to recipients, with tightly controlled reimbursement for providers.

Information on certain other countries' health care programs was also provided, particularly the Canadian system. The Canadian health care system has been touted by many experts as a model for the United States. The components of the Canadian system are: all residents are covered for necessary physician and hospital care; each province administers the program for its residents; direct patient payments to providers are prohibited; no copayments or deductibles are allowed; physicians' fees are negotiated annually; and lump-sum budgeting and controls on acquisition of technology mean lower administrative costs for hospitals.

The provincial programs must comply with five conditions: (i) universal coverage for all legal residents; (ii) comprehensive coverage of all medically required services; (iii) reasonable access to services with no deductibles, copayments or additional fees; (iv) portability; and (v) public, nonprofit administration. Provider participation is not mandatory; however, because of the availability of free care, full-time private practice is seldom feasible.

One of the Canadian requirements is that the services be "comprehensive." Based on available materials, most, if not all, of the provincial programs cover preventive/primary care, including family physicians and other general practitioners; apparently unlimited outpatient primary care, e.g., prenatal care; comprehensive childhood immunizations; mammograms; some dental services; and drugs and appliances as necessary. The Canadian system also covers emergency care, inpatient hospital care, outpatient hospital care, and diagnostic tests and specialty care. Physicians determine priority for specialty surgical procedures; hospital "gatekeepers" manage the hospital-based high technology diagnostic equipment; diagnostic tests and specialty care patients are classified as "emergent, urgent, or elective" by physicians ("emergent" patients are to be seen first; however, there are no definitions of these terms and each physician subjectively determines the classification). High technology diagnostic testing and specialty care appear to be rationed through the fee structure and limitations on technology dissemination; there are waiting lists.

The panel repeatedly evaluated the services on a staff-developed matrix in detail, directing that provider/site specific coverage should be eliminated. In August, presentations from representatives of business, insurance, consumer, and provider organizations and other interested parties were heard as well as an overview of health insurance policies/plans and the Board of Health's perspective. Two public forums were held in November and December. Statements concerning copayments, deductibles, and other means of limiting services and containing costs noted that, if a cost-effective administrative structure existed, such limitations might not be needed. Many individuals testified concerning mental health services as "essential" services for the citizens of the Commonwealth.

A three-round Delphi survey was conducted of the panel's members concerning services considered to be "essential." Ranking for the Delphi survey was based on the following relative value scale:

MUST have
SHOULD have
Important
Moderately Important
Not Particularly Important

The panel collectively reviewed and ranked the services listed on the Delphi survey over a series of meetings; the ranked services were retained on the essential/MUST have list, moved out of the MUST have ranking for further discussion, or designated for exclusion.

There were many different reasons for the panel's collective rankings. For example, some matrix services were considered to be included under retained broader categories and certain terminology, such as maternity care/obstetrics, was deemed redundant (maternity care was retained). All provider/site specific services, such as optometry services and rural health clinic services, were marked for possible exclusion. This notation does not, however, mean that health services identified as "essential" could not be delivered by the specific provider or at the specific site. Further, some matrix services did not, in the judgment of the panel, meet the established determinative principles.

Definitions were developed as follows:

"Medical emergency" means a condition or chief complaint manifested by acute symptoms of sufficient severity which, without immediate and necessary medical attention, could reasonably be expected to result in (i) serious jeopardy to the mental or physical health of the individual, or (ii) danger of serious impairment of the individual's bodily functions, or (iii) serious dysfunction of any of the individual's organs, and (iv), in the case of a pregnant woman, serious jeopardy to the health of the fetus.

"Medically necessary" means a service acknowledged as acceptable medical practice by an established United States medical society for the treatment or management of pregnancy, illness, or injury which (i) is the most appropriate and cost-effective service to be provided safely to the patient, (ii) is consistent with the patient's symptoms or diagnosis, and (iii) is not experimental or investigative in nature. The fact that a physician prescribes a service does not automatically mean such service is medically necessary and will qualify for coverage.

Subject to appropriate utilization review and payment authorization, "covered inpatient hospital care" for individuals age 18 and over shall be limited to 21 days of hospitalization in a 12-month period, whether incurred for one or more hospital stays in the same or a different hospital. For individuals up to the age of 18, "covered inpatient hospital care" also includes primary care provider-certified, medically necessary inpatient hospitalization beyond the 21-day limitation, upon appropriate utilization review and payment authorization.

The panel's consensus was that the essential health services plan(s) should focus on improving the health status of Virginians at reasonably low costs, with some incentives for patient responsibility, and that the plan(s) should provide incentives for employers to maintain or expand their commitment to health care benefits. The panel also opined that a tightly managed plan, which encourages physician participation, would: facilitate containment of costs while enhancing primary care. Repeatedly, the panel noted that the list of essential health services will need to be reviewed on an ongoing basis as new treatments and diagnostic tools are developed and outcomes assessment, standards of practice, patterns of care, and medical technology evolve. Therefore, if the essential health services plan becomes the basis for legislative action, the panel strongly recommends the establishment of a mechanism for continuous review and modification of the essential health care access services, especially to maintain currency, cost effectiveness, and treatment efficacy.

In deliberating on the various uses and cost limitations or cost containment devices, the panel was advised of managed care provisions, caps on expenditures, stop-loss provisions, fee schedules, rating bands, risk spreading, state subsidies, tax credits, etc. Twenty-seven other states, it was noted, have adopted conceptually similar legislation.

The panel discussed the availability of information sufficient for health insurance comparison shopping, the viability of developing limitations on the essential health services, and the merit of examining several different approaches or plans for essential health services. To assist the consumer in comparison shopping for health coverage, the panel suggested that a set of standardized health plans (two or three policies/plans/programs) covering the essential health services list be developed and statutorily required to be offered by insurers (e.g., those insurers operating in the small business market).

The panel further suggested that comparison shopping would be easier and more meaningful for the consumer, if such plans were regulated by the Commissioner of Insurance, with standardized format and definitions, and if insurers were required to publish the premiums for these essential health services products.

The panel concluded that providing the Advisory Commission on Mandated Health Insurance Benefits, the Joint Commission on Health Care, and the General Assembly with a list of essential health services and standard health services as well as a selection of proposed flexible plans for limiting costs would increase the potential uses of their report.

To develop a selection of proposed flexible plans for limiting costs, a pricing study group was assembled, consisting of panel staff and representatives of Blue Cross and Blue Shield of Virginia, Kaiser Permanente, and the Department of Medical Assistance Services. Optima and Southern Health Services also assisted in this effort. The participating organizations agreed to collaborate with the panel in developing cost estimates for the essential health services program, using various assumptions regarding limitations, deductibles, co-insurance or co-payments, premium cost sharing, maximums, and the pricing of specific services, etc.

In devising these estimates, the price or cost of alternative essential health service programs was estimated by using available data and assuming the package of designated services will cover the same populations as the respective plans. Certain assumptions were also made regarding the level and types of managed care delivery systems which will be recommended in order to price the programs.

As described to the panel, possible uses of Virginia's essential health services access plan might be for: the Governor's Child Health Program; a reinsurance pool as part of small business insurance reform; a state-subsidized insurance plan for small employers who are not otherwise able to obtain or afford coverage for employees; an alternative to a state-mandated benefits plan for individuals and families or employers who cannot afford the cost of current policies, but who can pay for an affordable benefit package; an approach to expanded coverage for children using Medicaid administrative mechanisms and state-only funds; a state-subsidized insurance plan for individuals and families who are otherwise uninsurable or cannot afford coverage; and direct provision of services, using existing state facilities and contract providers to deliver some or all of the services outside of an insurance product.

In the event state-subsidized plans or programs implementing direct provision of services are developed for utilization of the essential health services access plan, the panel suggests that the value of sliding fee scales to contain costs and promote patient responsibility be examined.

In October, the panel developed a draft report, including a list of "MUST HAVE" or essential health services, as well as lists of "SHOULD HAVE" or standard health services. A set of flexible plans was also developed for the consideration of the Joint Commission on Health Care. The draft report was transmitted to the Advisory Commission on Mandated Health Insurance Benefits for review and evaluation.

Pursuant to the requirements of SB 506, public forums were held in November and December. In December, the panel revised its draft report in response to the recommendations received from the Advisory Commission on Mandated Health Insurance Benefits.

Conceivably, Virginia's unique approach to the issue of the uninsured--establishing a panel of experts and citizens to objectively evaluate and determine essential health care services, submitting the draft for review by a knowledgeable organization (the advisory commission), and revising and transmitting the plan to the legislative Joint Commission on Health Care for consideration--could lay the groundwork for "bellwether" changes in the Commonwealth's health care system, with national ramifications. Throughout its study, however, the panel reiterated that, in the final analysis, the ultimate authority and responsibility for determining the purpose/use of any essential health services plan rests with the Joint Commission on Health Care and the General Assembly.