On behalf of the State Corporation Commission, the Bureau of Insurance (BOI) submits the attached reports pursuant to Item 493 D from the 2022 Special Session I Budget Bill – HB 30 (Chapter 2), which instructed the BOI to “study and analyze the Commonwealth's options for potential implementation in 2025 of a new Essential Health Benefit (EHB) benchmark plan for individual and small group health insurance coverage that comply with federal regulations 45 CFR 156.111."

Virginia’s current Essential Health Benefits benchmark plan (EHB BP) has been in place since 2017. It establishes the minimum level of benefits that individual and small group health insurance policies must provide pursuant to § 38.2-3451 of the Code of Virginia (the Code). The number of persons covered under these policies represents roughly 6% of the Virginia population (about 560,000 individuals). Under federal law, states may, but are not required to, change their EHB BP for future years. Without a change, Virginia’s EHB BP will remain constant.

This letter sets out: (1) a summary of each phase of the reports, (2) certain considerations for best practices in the state development of an EHB BP, and (3) a timeline of next steps.

1. Description of the Reports

a. Phase I: Review and Evaluation of Potential Changes to the Virginia Essential Health Benefits Benchmark Plan and Comparison to Neighboring Jurisdictions

The BOI directed its contracted actuarial firm, NovaRest, Inc., to prepare the reports. NovaRest conducted two phases of analysis. In the first phase, it prepared a report reviewing recent changes other states have made to their EHB BPs as well as the extent of coverage provided under Virginia’s current EHB BP in comparison with neighboring states specifically. NovaRest’s first phase report includes the following highlights:

• As compared to the majority of neighboring states, Virginia’s EHB BP does not provide the following three benefits:

o Oral Surgery – removal of impacted teeth
o Bariatric/Obesity Surgery
o Hearing Aids for Minors

• The Virginia EHB BP covers one benefit that is not covered in most of the neighboring states:

o Wigs & Scalp Prosthetics for Hair Loss Due to Chemotherapy

• In comparing many of the recent benefits added by other states, not only limited to neighboring states, Virginia’s EHB BP does not specify coverage or exclusion of most newly added benefits, with the exception of the following, which Virginia’s EHB BP specifically excludes:

o Acupuncture
o Weight Loss Programs

• Lastly, NovaRest found that states that have made a recent change to their EHB BPs have generally elected to add benefits to their existing EHB BPs. This approach (Option 3, below) constitutes one of three pathways available to states to change their EHB BPs under 45 CFR 156.111(a):

o Option 1: Select the EHB-benchmark plan that another state used for the 2017 plan year.

o Option 2: Replace one or more categories of EHBs under its EHB-benchmark plan used for the 2017 plan year with the same category or categories of EHB from the EHB-benchmark plan that another state used for the 2017 plan year.

o Option 3: Otherwise select a set of benefits that would become the state’s EHBbenchmark plan.

b. Phase II: Review and Evaluation of Potential Changes to the Virginia Essential Health Benefits Benchmark Plan and Potential Cost Impacts

NovaRest’s second phase report addresses the extent to which benefits may be added to the current EHB BP. When a state opts to revise its EHB BP, 45 CFR 156.111(b)(2) require two important considerations that should be part of the new plan:

• The new EHB BP provides benefits that are at least equal to the scope of benefits in a typical employer plan (of which the current Virginia EHB BP is an example); and

• The new EHB BP is not more generous than the most generous EHB BP option the state had in 2017.

NovaRest completed a preliminary cost analysis and found that Virginia is able to add benefits that total up to $2.56 Per Member Per Month (PMPM) to its EHB BP without exceeding its most generous EHB BP option. Further, NovaRest indicated that given the time constraints and information available, they could perform a preliminary cost analysis for three to four additional benefits. The BOI selected four benefits that were recently recommended by the Health Insurance Reform Commission (HIRC):

• Oral Enteral Formula and Nutrition Products
• Donated Human Breast Milk
• Enhanced Prosthetics
• Hearing Aids

The preliminary cost estimate to add the above four benefits to Virginia’s current EHB BP is $0.87 PMPM.

2. Authority to Select the EHB BP

Under existing state law, no one entity is explicitly given the responsibility of selecting and updating the EHB BP. In 2012 and 2015 the Governor made the decisions to select the EHB BP.

3. Timeline for a New EHB BP

Under federal rules, any update to the EHB BP requires federal review and approval with a deadline for final submission of the proposed EHB BP by the first Wednesday in May two years prior to the effective date of the new EHB BP. The below chart outlines next steps in meeting this deadline should Virginia decide to request to establish a new EHB BP in 2025.

Timeline for a New EHB BP for 2025

by November 30, 2022: Appropriate state body will determine if application will be made for a change to the EHB BP for 2025 and what benefit change(s) will be further explored.

If a New EHB BP will be pursued for 2025:

December 2022: BOI/NovaRest will survey plans to get information for full actuarial analysis of potential change(s) in EHB BP, to include any new or revised benefits compared to those already reviewed.

January 2023: BOI/NovaRest to present actuarial analysis of proposed EHB BP to appropriate state body.

by February 14, 2023: Appropriate state body makes final decision on any EHB BP changes.

March 1-March 31, 2023: Public notice and comment.

April 2023: BOI/NovaRest prepare and submit application to CMS.

By this correspondence, these reports are being provided to you and will be posted on the SCC’s website.

Respectfully submitted,

/s/ Scott A. White
Commissioner of Insurance