As an alternative to traditional Medicaid benefits, states were given authority under the Deficit Reduction Act of 2005 (P.L. 109-171) to enroll state-specified groups (excluding individuals with special medical needs and certain others) in benchmark and benchmark-equivalent benefit packages.1 States that elect to use this benefit design can provide coverage that is equal to the Blue Cross and Blue Shield standard provider plan under the Federal Employees Health Benefits Program; a plan offered to state employees; the largest commercial health maintenance organization in the state; or other coverage approved by the Secretary of the U.S. Department of Health and Human Services (the Secretary) appropriate for the targeted population. A benchmark-equivalent benefit package must be actuarially equivalent to the benchmark to which it is being compared and must include certain benefits. Such packages allow states to bypass requirements that have traditionally applied to Medicaid, such as statewideness, comparability, and freedom of choice. States must assure access to federally qualified health center (FQHC) services and Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) services for children under age 21 either through these packages or as additional benefits provided by the state.
Under the Patient Protection and Affordable Care Act (ACA, P.L. 111-148, as amended), benchmark and benchmark-equivalent packages must now cover ten essential health benefits (EHBs) so that they align with plans offered through the individual and small group insurance markets. These benefits are ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.
States can use Secretary-approved coverage to customize the benefit package for certain populations. For example, states can add some optional benefits without expanding coverage to include all optional benefits. Some states, however, have used Secretary-approved coverage more broadly to align the alternative benefit plan with traditional Medicaid, and include all Medicaid state plan benefits in that package.
Adults who become eligible for Medicaid under the new adult group must be offered an alternative benefit plan (ABP) that covers the 10 EHBs mandated by the ACA. States are not required to offer as part of this package all the benefits that it offers in traditional Medicaid. For example, a state that has extended optional benefits such as adult dental care to its traditional Medicaid enrollees is not required to extend those benefits to the new adult group. Adults who are eligible under the new adult group but are medically frail or have special health needs must be given the option of an ABP that includes all the benefits under the approved state plan.
1Groups that are exempt from mandatory enrollment in these benefit packages include certain parents, pregnant women, persons dually enrolled in Medicaid and Medicare, those who qualify for Medicaid on the basis of blindness or disability, enrollees receiving hospice care, and those who are medically frail or have special medical needs.