What’s an “Essential” Benefit?

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Let’s get something out of the way.

The accusation that the Affordable Care Act will determine which medical treatments, procedures, tests and drugs Americans will be allowed to get is false. Rather, the government will continue to decide which services Medicare will reimburse for, while also deciding what care private insurers will be required to reimburse for. This seems basic, but I never pass up the opportunity to explain the distinction between the government denying care – which the law won’t do – and denying (or not requiring) reimbursement.

Of course, denying reimbursement may amount to denying care for Americans who can’t afford to pay out of pocket, but it’s still worth pointing out this distinction while anti-health reform crusaders accuse the law and Democrats of taking away freedoms. It’s the freedom to be reimbursed that may be curbed, not the freedom to get care. Even despite that, there’s nothing in the law prohibiting insurers from reimbursing more than the government requires.

But contrary to what some Democrats may have you believe, the newly empowered federal government will be making some dicey – and potentially controversial – decisions in the coming years regarding reimbursements.

Beginning in 2014, the Affordable Care Act will fine Americans who don’t have health insurance that provides “essential benefits.” The idea here is to eliminate Swiss cheese coverage and ensure that every American has comprehensive insurance. (This provision was the source of much discussion during the reform debate.) As a result, medical special interest groups are already lobbying hard to try and get their products and procedures included in the “essential benefits” package, which is broadly outlined in the law, but which will be specifically defined by 2014.

The Associated Press recently reported on one class of expenses that will continue to be mulled over by federal rule makers in the coming years – cancer treatments. Under the headline, “How much is a life worth?” the AP story focused on a new prostate cancer treatment that, on average, extends the lives of patients four months. (Medicare doesn’t cover it, although AP reports the government is considering it.) The price tag: $93,000 per year. The list of incredibly expensive drugs that extend life for relatively short periods of time is endless.

Doctors also have questioned the value of Genentech’s Tarceva for pancreatic cancer. The $4,000-a-month drug won approval by boosting median survival by a mere 12 days. Here’s how to think about this cost: People who added Tarceva to standard chemotherapy lived nearly 6 1/2 months, versus 6 months for those on chemo alone. So the Tarceva folks spent more than $24,000 to get those extra 12 days.

Then today, Politico reported that a maker of custom-made breast prostheses, for patients stricken with breast cancer who’ve undergone mastectomies, is lobbying to get its product included in the “essential benefits” package. Currently, the Centers for Medicare & Medicaid Services (CMS) do not consider such prostheses medically necessary. (Reconstructive surgery and off-the-shelf prosthetics are covered.)

Expect to see more of these stories in the years to come, as device makers, drug companies and medical societies fight to prove their products and services are medically necessary and cost effective. This is the nitty-gritty of health care reform, with an army of lobbyists ready to make their cases – in the media if necessary – and a cadre of federal rule makers teed up to make crucial decisions about what will be covered by insurance in the coming years.

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