By Sara Rosenbaum

Background

A recurring health reform theme over the years has been the “essential community provider.” Originated as an aspect of President Clinton’s health reform plan, the term has been used by policymakers and researchers alike to denote health care providers that through legal obligation or mission, organizational and service structure, and patient population characteristics, play a significant role in health care for patients and populations at disparate risk for inadequate access. Examples of patient populations reached by essential community providers include uninsured and underinsured persons, residents of medically underserved urban and rural communities that experience primary health care shortages, children with special health care needs and serious and chronic conditions, adults with mental illness and substance use disorders, disadvantaged patients who seek family planning and primary reproductive health services, seriously and chronically ill and disabled low-income populations including Medicare/Medicaid “dual enrollees,” homeless individuals, persons with HIV/AIDS, high risk pregnant women and newborns, and farm workers and their families.

In creating “essential community providers,” the proposed 1993 Health Security Act^[1] did not define the term but instead authorized the Secretary of HHS to conduct studies that ultimately would lead to a regulatory definition.^[2] The purpose of the provision was to assure that health insurance plans whose service areas included such providers (and therefore presumably included populations who depended on them) would not exclude them from their provider networks. The Clinton plan allowed providers designated as “essential community providers” to select between two types of relationships. The first type was as a participating provider; to this end, the Health Security bill provided for negotiations between a plan and the provider not unlike routine provider/plan negotiations and covering such matters as the scope of covered services that would be purchased and for which payment would be made, payment terms for covered care and services, financial incentives and limits on financial risk, and the terms of network participation.

The bill also permitted a second type of relationship termed a “non-participation” agreement. Under this second type of agreement, the essential community provider would not serve as a formal network provider but instead would be paid by the plan, in accordance with Medicare rate methodologies (or another rate methodology specified by the Secretary), for covered services and benefits furnished to plan members. The Clinton plan also required plans to pay for services furnished to plan enrollees by school health clinics. The Clinton plan called for the essential community provider requirements to sunset at the end of 5 years, subject to a Secretarial study and further Congressional action.

The advent of Medicaid managed care, which like managed care in the private insurance market grew rapidly with the 1994 demise of the Clinton plan, gave a fresh boost to the essential community provider concept. The revival of the concept in Medicaid managed care arose from the same concern that had propelled the issue forward previously: the potential exclusion of traditional providers from provider networks and the resulting loss of patient access to care. The impetus for essential provider designation in Medicaid managed care was further encouraged by evidence of Medicaid’s cyclical eligibility patterns that result in frequent coverage lapses and the threatened loss of care. A number of states recognize essential community providers and specify network inclusion arrangements for health plans in one or more public and private health insurance markets.^[3]

Through the establishment of state health insurance Exchanges offering affordable coverage, the Affordable Care Act (ACA) effectively ends the threat of total loss of coverage for millions of near-poor Americans whose lose their Medicaid eligibility. At the same time, coverage gaps remain a challenge as a result of the Act’s multi-payer, multi-market approach, as do the large number of uninsured persons who will remain even after full implementation.^[4] Furthermore, considerable evidence shows that health insurance alone cannot address the types of health care access barriers that essential community providers typically are structured to address through patient support services, language services, specially trained providers, strategic location, and integration with health and social services.^[5]

Changes Made by the Affordable Care Act

Reflecting the fact that state health insurance Exchanges will serve millions of persons with modest incomes and at risk for medical underservice, the ACA establishes a series of requirements related to essential community providers.

• Requires the Secretary of HHS to establish certification standards for qualified health benefit plans operating in health insurance exchanges, including a requirement that certified plans include in their networks “essential community providers, where available, that serve predominantly low income, medically underserved individuals”;
• Specifies generally that qualified health plans must “ensure a sufficient choice of providers consistent with section 2702(c) of the Public Health Service Act”;^[6]
• Identifies certain entities that must be recognized as essential community providers for purposes of qualified health plans’ provider networks^[7] “such as health care providers defined in section 340B(a)(4) of the Public Health Service Act^[8] and providers described in section 1927(c)(1)(D)(i)(IV) of the Social Security Act”;^[9]
• Specifies that qualified health plans (whether sold in health insurance exchanges or otherwise) that are required to comply with the ACA’s essential health benefits provision^[10] must pay federally qualified health centers no less than their Medicaid payments for “any item or service” covered by the plan;^[11] and
• Specifies that nothing in the law is to be interpreted as requiring “any health plan to provide coverage for any specific medical procedure.”^[12]

Implementation

Agency and Key Dates

The Secretary of HHS is charged with implementation of the essential community providers provisions. Regulations interpreting the provisions are expected to be part of the Exchange and essential health benefit rulemakings applicable to qualified health plans sold in Exchanges beginning January, 2014. The FQHC payment rules apply to all health plans selling coverage that complies with the essential health benefit statute. The essential community provider rules apply only to qualified health plans sold in Exchanges. 

Implementation of the essential community provider requirements as well as the FQHC payment rules is expected to happen through a formal rulemaking process, although it is possible that the Secretary will also issue less formal guidelines to further inform implementation.

Key Issues

Several key issues arise:

What is meant by “essential”? The ACA provides examples of who is an essential community provider, but makes clear that the examples are not exhaustive by using the phrase “such as.” Will the regulations recognize other types of providers (e.g., clinics that receive funding under the Title V Maternal and Child Health Block Grant)? Will the regulation develop a more generic definition of “essential community provider” such that recognition extends beyond specifically listed entities and more broadly describes the features of an essential provider in relation to a health plan’s network adequacy as required by law? For example, will private health care providers that do not receive federal grants or special payment recognition be considered “essential” if they offer services in multiple languages? If the Secretary’s definition includes a broader generic component, will state health insurance Exchanges be empowered to expand the list as a matter of health plan certification standards?

What is meant by “community”? The term “community”, as traditionally used to describe essential community providers, may mean a geographic place, but it also could connote a community of people (e.g., migrant and seasonal farmworkers or persons with HIV/AIDS) whose identifying characteristics involves personal attributes rather than place. How will the regulations use the term?

What is meant by “provider”? The ACA uses the term “essential community provider” in the context of health plan provider networks that furnish one or more covered items and services. But it is possible that in the context of “essential” and “community” the provider network requirements could be understood as including providers that enable access to health care rather than furnishing it directly. An example might be a local public health agency that assists certain populations gain access to covered services rather than furnishing services itself, through outreach and patient assistance. In order to be considered “essential community providers,” will entities be required to demonstrate that they in fact furnish one or more covered services and benefits?

Will the essential community provider provision apply to both the individual and group health plan markets within Exchanges? The ACA does not distinguish for plan certification purposes between the individual and small group markets within Exchanges. Will the Secretary apply the essential community provider statute to both markets?

What minimum contracting standards would apply, and what issues are left to health plan discretion? The ACA specifies that nothing in the essential community provider statute requires “any health plan to provide coverage for any specific medical procedure.” Will this phrase be interpreted as empowering health plans to refuse to cover certain medical procedures when furnished by certain essential community providers, or will plans be required to contract with essential community providers for the full range of covered services they furnish? For example, will a health plan’s contract with a federally qualified health center be required to cover the center’s pharmacy service, its pediatric vision and dental care programs for children (required essential health benefits), and its home health program (if home health benefits fall within covered rehabilitation services)? Will the plan be able to selectively contract only for certain FQHC services even though it covers a far fuller range of services? Will plans be able to impose otherwise applicable quality improvement and performance measures as well as payment terms outside the federal FQHC payment requirements?

How will the adverse selection implications of the essential community provider and FQHC payment requirements be addressed? The essential community provider provisions apply only to health plans sold in Exchanges, a reflection of the lower income and higher health risks anticipated among Exchange populations. In states that continue to recognize an individual and small group market outside of their Exchanges, how will these states be expected to guard against the adverse selection that might occur as sicker or higher need patients select Exchange plans that offer essential community providers in their networks? For example, if Ryan White Care Act AIDS providers are found only in the networks of qualified health benefit plans because a state has elected not to apply essential community provider requirements in its non-exchange market, how will the state be expected to adjust risk?

How will the FQHC payment requirement be implemented? The FQHC payment rules apply to all health plans obligated to cover essential health benefits, whether sold inside or outside state Exchanges. What rules will be established to guide implementation of the payment requirement and reconciliation between FQHC payment rates for covered services and the plan’s normal payment rates? Will the rules prohibit plans from penalizing FQHCs in terms of the scope and elements of their provider agreements in order to offset higher payment expectations? Will plans and FQHCs be empowered to negotiate alternative payment arrangements?

Recent Agency Action

There has been no recent agency action.

Authorized Funding Levels

The essential community provider provisions are regulatory and do not directly implicate federal spending.