In today’s episode of Regulatory Joe, we’re diving into an important topic that is shaping the future of health plan offerings: Essential Health Benefit (EHB) benchmark updates. These changes, outlined in the 2025 Notice of Benefit Payment Parameters (NBPP), have significant implications for health plans across the country. Let’s break down what you need to know and how to prepare for upcoming changes.

EHBs are the core set of ten services that health plans are required to cover under the Affordable Care Act. EHB benchmark plans, typically based on larger carriers’ offerings, provide a detailed template for what an ideal health plan portfolio should look like in each market.

Historically, these benchmarks have remained static for years in many states. However, CMS is now pushing for updates to reflect evolving healthcare needs and market conditions.

Key Changes for 2025 and Beyond

One big shift for health plans is that CMS is introducing more flexibility around formulary requirements within EHB benchmark plans. Plans offering standalone medical coverage will no longer be obligated to cover formulary information, simplifying the process for medical-only submissions. It is important to note that this may still impact carriers offering combined medical and pharmacy portfolios, so plans should carefully review their current strategy.

Another major update involves the process of benchmark plan revisions. In a move that grants carriers more control over their plan designs, CMS will no longer require the replacement of entire benchmark plans. Instead, carriers can update specific subsets of benefits. This selective approach allows for more tailored and strategic plan designs, enabling health plans to adapt more nimbly to market demands and member needs.

In addition, CMS is proposing a significant change in how they evaluate EHB benchmark plans. The plan is to eliminate the prioritization of generosity standards in these updates, representing a more equitable approach to mandated benefits.

Regulatory Joe Recommendations:

• Establish a dedicated workgroup
  Form a specialized team within your organization to address new EHB benchmark changes. This team should focus on understanding the new requirements, lobbying against unfavorable changes and ensuring timely implementation. This includes ensuring appropriately resourced compliance and government advocacy for the states that you have a footprint in as of today. Having a depth of understanding (whether you are in one or multiple markets) with dedicated resources and strengthening relationships with your regulators to justify your market position and strategy will help you be very proactive in engaging states—as well as preparing you for being “reactive” where needed as new policies, bills and rules are passed into law. Remember: this is a long-term game, as updates can only be made by the state-allotted window and you traditionally have one plan year to ready your team for changes.
• Regularly update your benchmark plans
  Review and update your benchmark plans annually to stay compliant and competitive. This involves extracting the latest benchmark plan from the CMS application website or your respective division of insurance. Each year CMS will publish updates via their EHB benchmark plan carrier website for users to review the latest plan summary, benefit summary and full benchmark plan by the company that has been selected to lead this by state. We understand this may be overwhelming, but it’s best practice for our issuer and carrier partners.
• Leverage new flexibilities
  Take advantage of the new flexibility in the benchmark update process. This includes selectively updating cost-sharing parameters and benefits without having to replace the entire benchmark plan, allowing for more strategic and creative adjustments. Carve out all the time you need with your product strategy team and benefit specialists to understand how your benefits are coded today. Understanding TCoC (total cost of care) is critical to understanding how your benefits currently are being utilized, the cost of those benefits and what is driving the members’ need for care in the right way.
• Monitor state-specific changes
  Stay informed about changes specific to the states you play in and how they impact your benchmark plans. States converting from federally facilitated marketplaces to state-based exchanges will have more flexibility, which could affect how benchmarks are defined and implemented. One way to do this is to delegate or assign your team state assignments by region to establish recurring communications with specific regulators. You can also track their websites and develop a standard process that articulates how to track these not just on an ongoing (versus annual) basis.

All in all, these EHB benchmark updates signal a positive shift for health plans. The increased flexibility in formulary requirements and benchmark updates gives health plans more tools to craft competitive, member-centric offerings while the shift away from prioritizing generosity standards opens the door for more nuanced, locally appropriate benefit designs.

While implementation will require careful planning and execution, these changes ultimately empower health plans to be more responsive and innovative in serving their members.

Be sure to watch the full episode for a more detailed run-down of changes and recommendations.

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Video Transcript

Hey, everybody. Welcome to Regulatory Joe. I’m Joe Boyle, president of regulatory solutions here at Penstock. Today’s topic: we’re going to be discussing EHB benchmark updates and what it means for a couple of years to come.

EHBs, short for essential health benefits, are a byproduct of CMS’ federal governance over ACA plans. EHBs inherently are the ten benefits that all carriers in the country are required to cover, no matter what. So even though states have their essential health benefits in addition to federal EHBs, the ten must always be covered.

When we talk about EHB benchmark plans, it really opens back up, well, how are these parameters set and where do they come from? Well, anybody new to the space or newly playing in the ACA marketplace or on the exchanges may not be familiar with the history of essential health benefits. Historically speaking, CMS has identified larger carriers in the marketplace to establish EHB benchmark plans.

What is an actual benchmark plan? A benchmark plan is an expansion and an addition to the ten core essential health benefits that CMS has published. A benchmark plan details an end-to-end portfolio of what the ideal or desired portfolio a member should see within that given market. Generally speaking, carriers can use the benchmark plan to develop a more custom approach. For example, using Anthem’s baseline member contracts for your evidence of coverage, summary of benefits, or SBC.

Generally speaking, benchmark plans are lengthy documents totaling close to 90 to over 100 pages in one clip and usually is an annual process that carriers should be going out to the CMS application website or the respective location for their division of insurance, extracting the benchmark plan to help you develop your portfolio for the future plan year. What it does is it details all the cost shares and copays that you should be offering to the members within that state.

Now, health plans, contrary to the benchmark plan, have the ability to augment the benefits within that portfolio to create their own plan, as long as you follow the guiding principles put forth by the baseline benchmark. This could be something such as understanding limitations for certain benefits, where if you have something such as occupational therapy or speech therapy benefits, maybe that benchmark plan is stating that you have to cover a certain number of visits. For example, if a health plan wants to cover it at two visits per year or two visits per month, maybe the benchmark plan states that you have to cover that same benefit at five visits per month.

Generally speaking, benchmark plans mean a couple of different things for different folks within a health plan organization. For somebody leading the product strategy for a portfolio, you would look at a benchmark plan as the minimum viable requirements that you’re supposed to meet to be compliant within the marketplace. For an operations person, you’re really looking at a benchmark plan to implement all the cost shares and copays and limitations and exclusions in the actual documents that you’re going to be completing for an annual filing, coupled with a plan’s portfolio strategy.

Plans have historically not updated their benchmarks in five, six, seven, or even eight years. So the push for this and why this even really came up was in the notice of benefit payment parameters for 2025, CMS had released some new guidance, which we expect to increase year over year, that states should be augmenting their benchmark plans to cover new limits and exclusions.

The future of benchmark plans is we do see that there’s going to be a lot of changes slowly but surely in the next couple of years. But plans should really, truly be prepared for unexpected benefit changes that are now required that maybe weren’t required in the past, which could be detrimental to a plan portfolio. If a benchmark’s updated, it has underlying implications to if you are the lowest cost carrier within the marketplace, maybe these new requirements will cause your price point to drive up for your premium rates. If you’re the lowest cost carrier within the marketplace and additional EHBs are required or benchmark plans are updated, it could become a financial burden for some plans trying to play with larger carriers.

While I definitely appreciate and understand the need for EHBs and benchmark plans to be strengthened and updated, because it’s been long overdue for a refresh to dust off all the old benefit requirements that need to be changed, I do think that there is a substantial risk to some plans being able to implement these changes correctly and timely. If you haven’t, establish a workforce or a workgroup within your health plan to address some of these issues, to lobby against changes for EHB benchmarks or even if you have a preference—maybe your carrier is the benchmark plan, maybe you want to be the benchmark plan.

So that being said, what actually is CMS changing for this year and years to come? Starting with one, the elimination of the requirement for health plans to have to furnish formulary information, if they do not offer standalone formulary benefits within their health plan. It’s really interesting to think about how different plans can file their portfolios differently, and what the requirements mean to them. Plans have the option to file medical-only portfolios, pharmacy-only portfolios or combined medical and pharmacy. So what does that mean? For this benefit, if you are a combined medical and pharmacy portfolio, you may still be subject to having to furnish certain levels of drug benefits if you’re updating your benchmark plan. Otherwise, for medical-only submissions going directly to DOI or CMS, this would actually be a relief for some plans to have to furnish less information, to alleviate the process, saving a little bit of time and resources. But just be mindful if your strategy is to offer combined medical and drug portfolios.

Going forward, just keep up with the guidance. Subscribe to the CMS updates, read the notice of benefit payment parameters, and better understand where your organization sits today with your current strategy and if you are impacted by this. Even something as simple, something as small as this, if you do want to make a change to your benchmark, it could take time if you’re not prepared.

Number two. It’s really important to know, and an alleviation for folks working with this day to day from the carrier and issuer side, that CMS will no longer require carriers to find and replace the entire 100-plus page EHB benchmark plan going forward. But if carriers would like to find and replace a subset of costs of benefits, they’ll be detailed out for carriers to pick and choose from as an a la carte menu per se. That being said, this allows carriers to have the flexibility and option to make some informed decisions on their own without ceding completely and entirely to the benchmark plan.

With respect to plan strategy, this will allow carriers to make some more creative decisions or to get ahead of the competition by not being bound to all the limitations the former benchmark plan posed for health plans. So, in layman’s terms, this piece allows flexibility for health plans to make more changes on their own while still being compliant.

Third and final, it’s really interesting to see how we’ve prioritized things in the past. Going forward, CMS is also proposing that they’re going to be removing the prioritization of generosity standards for EHB benchmark plan updates. And what does this mean? It means that they will no longer be weighting generosity standards from least to greatest or greatest to least, which, in our opinion, is offering a more arbitrary approach to how mandated benefits are produced.

Understanding that each state has a different type of member within that geography and a different type of employer group within that geography, a benchmark plan could mean something very different, depending on the person enrolling into the subset of benefits for that given plan year. We think that this third and final update is favorable to members and favorable to employer groups, as it does not discriminate against them with how EHB benchmarks are created.

Formerly, CMS had appeared to look at the size of groups, largest to smallest or smallest to largest, or the type of member based on their utilization or behavior, to then come to a conclusion of how benchmark plans would be approved. By not prioritizing these factors in these ways any longer, or proposing to remove that standard, this offers a more equitable approach to how we deploy essential health benefits for the members that we serve.

It’s important to mention that overall, this increases a lot of flexibility for states, specifically within state-based marketplaces and exchanges. We are seeing a common theme of states converting from federally-facilitated marketplaces or FFM state partnership exchanges to state-based exchanges solely. While it’s a multi-year process generally for the conversion to happen, we do see more states early adopting to convert their status with CMS, which would allow even further flexibility with how EHB benchmark plans are defined.

Understanding that health plans have different value propositions and regarding the typicality standard that is also inherently included within EHB benchmark standards, the traditional benchmarking process could be different for an established plan or established carrier, a new carrier entering a marketplace, or even a third unique situation where you have a carrier who’s merged with another carrier or who’s acquired another carrier. There are a few of those across the country. We see that a common theme where if there’s a benchmark strategy followed by a state, maybe one carrier follows this a different way, and another carrier will have to implement this in another way. As those corporations align, it may cause abrasion between the process and operational execution.

Be mindful and be on the lookout. This isn’t a one-and-done exercise, but I encourage everybody to, if you haven’t harnessed this this year, to really take a hard look at your current operational process and plan not just for next year, but for a few years out to come. By the end of 2027, it’ll be really important to understand the federal requirements.

By CMS introducing the new typicality standard starting this year and for years to come, we can see that they’ve reviewed how traditional employer-sponsored coverage has been administered in years past up until today. Using some of the core principles that predate the ACA, we could see a lot of enhancements that would increase competitiveness across plans, whether you’re a regional player, a large player, or even a new market entrant. Just understand the flexibilities that you have now that a lot of carriers have not had before.

We can thank CMS for softening this requirement for a lot of plans for a lot of reasons. Generally speaking, specific to formulary, plans should have more control over decisions they make in terms of adding new pharmacy benefits or taking pharmacy benefits away. While we’re on the topic of formulary standards, it’ll be interesting to see how health plans react to the softening of formulary EHBs, being able to have the flexibility in terms of changing your pharmacy benefits with more fluidity and what that means for your portfolio strategy.

We need to be mindful of how this will impact the cost shares and co-pay structures with how you deliver the plans to the marketplace within a filing. What your portfolio looks like last year could be very different next year, based on how your strategy team reacts to these changes federally. Overall, this is a good change and it will streamline operational processes internal to organizations, saving time for the people doing this work, specifically from the pharmacy area or the PBM that you work with internally.

As we’re winding down for today, I think it’s safe to say that essential health benefits in the benchmarking plan process can be fun even though it sounds a little bit dry to begin with. Really appreciate you guys watching today’s episode and look forward to seeing you again. Give us a like, give us a share and we’ll see you next time.