DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services  
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, MD 21244-1850 
 
 
CMCS Informational Bulletin 
 
DATE:  August 8, 2019 
 
FROM:  Calder Lynch, Acting Deputy Administrator and Director 
  Center for Medicaid and CHIP Services 
 
SUBJECT:  New State Flexibilities and Requirements regarding Alternative Benefit  
  Plans (ABP) and Essential Health Benefits (EHB) 
 
Purpose 
 
This Informational Bulletin provides updates to states about recent regulatory changes in 
Essential Health Benefit (EHB) standards affecting Medicaid Alternative Benefit Plans (ABPs). 
This Bulletin includes information about conforming changes related to updating the benchmark 
plan used to define EHBs.  This Bulletin also addresses the state-required actions as a result of 
these changes, including state plan amendment (SPA) submissions and ABP public notice 
requirements.  
 
Background 
 
Under 42 CFR 440.347, ABPs authorized under section 1937 of the Social Security Act (the 
Act) are required to meet EHB standards. Currently, ABPs must include the EHB in one of the 
10 base-benchmark plans provided at 45 CFR 156.100, subject to supplementation under 45 
CFR 156.110(b) and substitution as permitted under 45 CFR 156.115(b).  The base-benchmark 
plans provided at 45 CFR 156.100(a) are:  
 
  The largest health plan by enrollment in any of the three largest small group insurance 
products by enrollment in the states small group market,  
  Any of the largest three employee health benefit plan options by enrollment offered and 
generally available to state employees in the state,  
  Any of the largest three national Federal Employees Health Benefits Program (FEHBP) 
plan options by  aggregate enrollment that is offered to  all health-benefits-eligible 
Federal employees, or  
  The coverage plan with the largest insured commercial non-Medicaid enrollment offered 
by a health maintenance organization operating in the state. 
 
The Health and Human Services (HHS) Notice of Benefit and Payment Parameters for 2019 
Final Regulation (referred to in this Bulletin as the CMS 2019 Payment Notice)1 published on 
April 17, 2018 finalized changes that will provide new  flexibility to states regarding EHB  that 
                                                      
1 83 FR 16930.  Page 2 - CMCS Informational Bulletin - ABP 
 
impact Medicaid ABPs. 
 
New State Flexibilities and EHB Requirements 
 
EHB-Benchmark Plan Flexibilities 
 
The CMS 2019 Payment Notice created new choices with respect to states selection of EHB-
benchmark plans applicable to their individual and small group markets for plan years beginning 
on or after January 1, 2020.  These options will also be available to states when choosing the 
benchmark plan used to define EHB in an ABP.  Please note that a state may continue to use its 
current benchmark plan selection, including when it amends an existing ABP. However, if a 
state decides to change its benchmark plan used to define EHB in its ABP, or a state decides to 
implement a new ABP in which an initial benchmark plan selection must be made, and is not 
the same as the states benchmark plan chosen for the commercial market, the state would be 
required to choose one of the following options to define EHB for its ABP: 
  
1.  Option 1 - Select an EHB-benchmark plan from another state  Under this option a 
state may select one of the EHB-benchmark plans used for the 2017 plan year by any 
other state. 
 
2.  Option 2 - Replace category or categories with categories from another states 
EHB-benchmark plan  Under this option  a state may replace any of the 10 required 
EHB categories of benefits in its EHB-benchmark plan with the same category or 
categories of benefits from another states EHB-benchmark plan used for the 2017 plan 
year. 
 
3.  Option 3  Propose a set of benefits  Under this option a state may select a set of 
benefits consistent with the 10 EHB categories that would become its EHB-benchmark 
plan. 
 
Under any of the above options, the EHB-benchmark plan is required to meet coverage and 
scope of benefits standards specified at 45 CFR 156.111(b), including that it is no more generous 
than the most generous among a set of comparison plans, including the EHB-benchmark plan 
used by the state in 2017 and any of the base-benchmark plan options for the 2017 plan year as 
described in 45 CFR 156.100(a)(1), supplemented as necessary.  Lastly, the scope of benefits 
must be equal to, or greater than, to the extent any supplementation is required to provide 
coverage within each EHB category, the scope of benefits provided under a typical employer 
plan as defined at 45 CFR 156.111(b)(2).   For this purposes, a state may choose to compare its 
EHB-benchmark plan to one of the 10 base-benchmark plan options established at 45 CFR 
156.100 that the state could have selected for the 2017 plan year, or compare to the largest health 
insurance plan by enrollment in one of the five largest large group health insurance products by 
enrollment in the state in accordance with 42 CFR 156.111(b)(2)(B). 
  
When comparing benefits under the ABP for purposes of the maximum generosity and typical 
employer plan standards, the state need only compare the benefits used to define EHB.  Services  Page 3 - CMCS Informational Bulletin - ABP 
 
provided under 1937 that are not considered part of the EHB-benchmark plan for the ABP 
should not be included in the comparisons. 
  
Additionally, states must document meeting these requirements through an actuarial certification 
and associated actuarial report from an actuary who is a member of the American Academy of 
Actuaries, in accordance with generally accepted actuarial principles and methodologies. For 
additional guidance please see Attachment A (Questions and Answers) and Attachment B 
(Example of an Acceptable Methodology for Comparing Benefits of a States EHB-benchmark 
Plan Selection in Accordance with 45 CFR 156.111(b)(2)(i) and (ii)).  
 
ABP Process Reminders 
 
Amendments to ABPs  
 
States choosing to update the benchmark plan selection used to define EHB using one of the 
new options under 45 CFR 156.111 will be required to submit a SPA.   CMS reminds states that 
have chosen to align their ABPs with their Medicaid state plan that ABPs must be kept in 
alignment with or exceed the scope of the states approved underlying state plan on an ongoing 
basis.  In order to maintain alignment, states are required to submit an ABP SPA when they 
amend benefits in the state plan.  For example, revisions that add, delete or change coverage 
based on limitations of amount, duration or scope or authorization requirements in the states 
state plan will need to also be included in an amendment to the states ABP(s).  States are 
required to submit amendments to an ABP in the same quarter as corresponding changes in the 
states traditional state plan in order to keep effective dates aligned between the states state 
plan and the ABP. Please see the Process for Amending Alternative Plans CMCS Information 
Bulletin dated September 16, 2014 for more information.  
 
Public Notice Requirements 
 
CMS reminds states and stakeholders that prior to submitting a SPA to either establish an ABP 
or substantially modify an existing ABP, the state must have provided the public with advance 
notice of the amendment and reasonable opportunity to comment on such amendment, as 
specified at 42 CFR 440.386. Tribal consultation is also required, if applicable in the state. The 
notice published for public comment must include a description of the method for assuring 
compliance with 42 CFR 440.345 related to full access to Early and Periodic Screening, 
Diagnostic and Treatment services (EPSDT). If a state is not certain whether a change to its ABP 
is substantially modifying the existing ABP, please consult with CMS well in advance of 
submitting the ABP SPA, to confirm whether the change requires public notice and, if required, 
to allow sufficient time for public notice, including a reasonable opportunity to comment. 
 
For additional information about this Informational Bulletin, please contact Kirsten Jensen, 
Director of the Division of Benefits and Coverage, at Kirsten.Jensen@cms.hhs.gov.  
    Page 4 - CMCS Informational Bulletin - ABP 
 
Attachment A 
Questions and Answers 
 
1)  Does a state with an existing Medicaid alternative benefit plan (ABP) have to change 
its base benchmark plan for purposes of defining EHB for the ABP when the new 
CCIIO flexibilities take effect? 
No.  There is no requirement for the state to make a change.   Unless there are future 
regulatory changes, the state may continue to use its existing base benchmark plan. 
 
2)  My state would like to offer a new Medicaid ABP.  For the commercial market, the 
state uses a small group market plan for its Essential Health Benefits (EHB) 
benchmark plan.  May we use the same EHB benchmark plan as the basis to define 
EHBs for our ABP?   
Yes.  The state would identify the benchmark plan in its SPA submission. An actuarial 
certification is not necessary in this circumstance. 
 
3)  My state would like to offer an ABP.  For the commercial market, our state uses a 
small group market plan for its EHB benchmark plan. However, for the ABP, we 
want to use the largest insured commercial non-Medicaid HMO another state used 
for the 2017 plan year.  May we identify that plan as our benchmark plan used to 
define our ABP EHBs?   
Yes.  If the largest insured commercial non-Medicaid HMO was the other states EHB 
benchmark plan for plan year 2017, then this decision would fall under Option 1 
described in the Informational Bulletin. If it was not available, then this decision would 
fall under Option 3.  Under either option, the state would identify the plan and the state 
the plan is from in its SPA submission.  
 
4)  Our state would like to define EHB for our ABP using our state EHB benchmark 
plan, except for mental health services defined in the plan.  We would like to use the 
mental health services defined in the EHB benchmark another state used in 2017.  
May we do that? 
Yes. This decision would fall under Option 2 described in the Informational Bulletin. The 
state would identify the benchmark plan and the benchmark plan from which it selected 
the substituted category in its SPA submission. 
 
5)  Prior to January 1, 2020, a state that wanted to create an ABP that aligned with the 
states Medicaid state plan had to complete a two-step process to define the 
traditional services under EHB rules.  Does the new flexibility require the same 
process? 
Under the new flexibility, a state can use Option 1, 2 or 3 described in the Informational 
Bulletin.   Using Option 1 and 2 would require the state to complete the same two-step 
process used prior to January 1, 2020.  For example, under Option 3, a state may propose 
a set of benefits from its traditional Medicaid state plan to define EHB.  However, the 
state must ensure that the set of benefits provide a scope of benefits equal to, or greater 
than, to the extent any supplementation is required to provide coverage within each EHB  Page 5 - CMCS Informational Bulletin - ABP 
 
category, the scope of benefits provided under a typical employer plan, and are no more 
generous than the most generous of the comparison plans in the state.  The state would do 
this by having an actuary perform this comparison and certify that the EHB services meet 
this criteria.  The requirements for this certification are found at 45 CFR 156.111(e)(2).  
An example of an acceptable methodology for comparing benefits of a states EHB-
benchmark Plan Selection is found  in Appendix B Example of an Acceptable 
Methodology for Comparing Benefits of a States EHB-benchmark Plan Selection in 
Accordance with 45 CFR 156.111(b)(2)(i) and (ii)2. 
                                                      
2 Example of an Acceptable Methodology for Comparing Benefits of a States EHB-benchmark Plan Selection in 
Accordance with 45 CFR 156.111(b)(2)(i) and (ii), April 9, 2018. 
https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Final-Example-Acceptable-
Methodology-for-Comparing-Benefits.pdf  Attachment B 
 
DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
Center for Consumer Information and Insurance Oversight 
200 Independence Avenue SW 
Washington, DC 20201 
 
 
Date: April 9, 2018 
Title: Example of an Acceptable Methodology for Comparing Benefits of a States EHB- 
benchmark Plan Selection in Accordance with 45 CFR 156.111(b)(2)(i) and (ii) 
 
 
Background 
New flexibility will be available allowing Under 45 CFR 156.111 in the HHS Notice of Benefit 
and Payment Parameters for 2019 Final Rule (2019 Payment Notice) displayed on April 9, 
2018,1 we finalized that States may select a new essential health benefits (EHB) benchmark plan 
for plan years beginning on or after January 1, 2020. If a State opts to select a new EHB- 
benchmark plan utilizing any of the selection options at 156.111(a), the State is required under 
156.111(e)(2)(i) and (ii) to submit an actuarial certification and associated actuarial report from 
an actuary, who is a member of the American Academy of Actuaries, in accordance with 
generally accepted actuarial principles and methodologies. 
This actuarial certification and associated actuarial report must affirm that the States EHB- 
benchmark plan provides a scope of benefits that is equal to, or greater than, to the extent any 
supplementation is required to provide coverage within each EHB category at 156.110(a), the 
scope of benefits provided under a typical employer plan (Typical Employer Plan), as defined 
at 156.111(b)(2)(i), and that it does not exceed the generosity of the most generous among the 
plans (Comparison Plan) listed at 156.111(b)(2)(ii)(A) and (B). This set of comparison plans 
for purposes of the generosity standard includes the States EHB-benchmark plan used for the 
2017 plan year, and any of the States base-benchmark plan options used for the 2017 plan year 
described in 156.100(a)(1), supplemented as necessary under 156.110.2 
This methodology below outlines an example of one approach for actuaries to follow when 
comparing benefits in order to complete the required actuarial certification and associated 
actuarial report under 156.111(e)(2)(i) for typicality. This approach could also be taken for 
comparing benefits for generosity in order to complete the required actuarial certification and 
associated actuarial report under 156.111(e)(2)(ii). 
 
 
 
1 A copy of the final rule is available on the Center for Consumer Information and Insurance Oversight website at: 
https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/index.html. 
2 The States EHB-benchmark plans used for the 2017 plan year are based on plans from the 2014 plan year, but we 
occasionally refer to them as 2017 plans because these plans are applicable as the States EHB-benchmark plans for 
plan years beginning in 2017. The Essential Health Benefits: List of the Largest Three Small Group Products by 
State for 2017 is available at https://www.cms.gov/CCIIO/Resources/Regulations-and- 
Guidance/Downloads/Top3ListFinal-5-19-2015.pdf. States EHB-benchmark plans used for the 2017 plan year are 
available at https://www.cms.gov/CCIIO/Resources/Data-Resources/Downloads/Final-List-of-BMPs_4816.pdf.   
Example of an Acceptable Methodology for Comparing Benefits 
 
 
Methodology for Comparing Benefits 
The actuarial certification and associated actuarial report required by 156.111(e)(2) are required 
to comply with generally accepted actuarial principles and methodologies. This includes 
complying with all applicable Actuarial Standards of Practice (ASOPs). For example, ASOP 41 
on Actuarial Communications3 includes disclosure requirements, including those that apply to 
the disclosure of information on the methods and assumptions being used for the actuarial 
certification and report. ASOP 8 on Regulatory Filings for Health Benefits, Accident and Health 
Insurance, and Entities Providing Health Benefits4 and ASOP 50 on Determining Minimum 
Value and Actuarial Value under the Affordable Care Act 5 also provides additional guidance. 
The actuarial certification for this requirement is in a template incorporated in the Paperwork 
Reduction Act (PRA) notice on the EHB-benchmark plans (OMB Control Number: 0938-1174).6 
This PRA notice includes an attestation that the standard actuarial practices have been followed 
or that exceptions have been noted. The signing actuary must be a Member of the American 
Academy of Actuaries. 
 
One example of an acceptable methodology for comparing the benefits of a Typical Employer 
Plan or the Comparison Plan to the States proposed EHB-benchmark plan is to compare 
expected values as follows. Note that there are other requirements that a States EHB- 
benchmark plan must comply with at 156.111(b). If the actuary is using different plans as the 
Typical Employer Plan and Comparison Plan, the actuary will need to repeat the below 
steps. 
1.  Select a Typical Employer Plan Pursuant to 156.111(b)(2)(i) or a Comparison 
Plan Pursuant to 156.111(b)(2)(ii). The 2019 Payment Notice defines a Typical 
Employer Plan as either: 
 
1.  One of the selecting States ten base-benchmark plan options established at 156.100 and 
available for the selecting States selection for the 2017 plan year; or 
2.  The largest health insurance plan by enrollment within one of the five largest large group 
health insurance products by enrollment in the State, as product and plan are defined at 
144.103, provided that: 
A.  The product has at least ten percent of the total enrollment of the five largest large 
group health insurance products in the State; 
B.  The plan provides minimum value, as defined under 156.145; 
C.  The benefits are not excepted benefits, as established under 146.145(b), and 
148.220; and 
D.  The benefits in the plan are from a plan year beginning after December 31, 2013. 
 
 
 
 
3           http://www.actuarialstandardsboard.org/wp-content/uploads/2014/02/asop041_120.pdf. 
4           http://www.actuarialstandardsboard.org/wp-content/uploads/2014/08/asop008_176.pdf. 
5           http://www.actuarialstandardsboard.org/wp-content/uploads/2015/10/asop050_182.pdf. 
6 The PRA documents include the required template for this actuarial certification. Documents associated with the 
PRA are posted on the Centers for Medicare & Medicaid Services PRA website at: 
https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing.html. 
Comments on these documents should be submitted to www.regulations.gov. 
  2   
Example of an Acceptable Methodology for Comparing Benefits 
 
 
To select a Typical Employer Plan, the State may need to determine which of the plans in 
the State meet the above definition and depending on the selection under this definition, the 
actuary may need to affirm that the plan provides minimum value in accordance with 
156.145. 
A Comparison Plan is defined as the States EHB-benchmark plan used for the 2017 plan 
year, or any of the States base-benchmark plan options for the 2017 plan year described in 
156.100(a)(1), supplemented as necessary under 156.110. Specifically, if a State selects as 
a Comparison Plan under the above definition a base-benchmark plan that does not provide 
any coverage in one or more of the categories of EHB, as defined at 156.110(a),7 the 
actuary would need to supplement the selected plan with the category or categories of such 
benefits from another plan that meets the definition of Comparison Plan, using the 
supplementation process described at 156.110(b). 
To reduce burden, the actuary may want to consider using the same plan, for both the 
typicality and the generosity tests, provided that the plan meets the standards at both 
156.111(b)(2)(i) and (ii).  For example, the actuary may only need to do one plan 
comparison for the purposes of both of these certification requirements. Specifically, the 
actuary could use the same plan, such as the States EHB-benchmark plan used for the 2017 
plan year. That plan would, by definition, be a Comparison Plan. Because the States EHB- 
benchmark plan used for the 2017 plan year would simply be one of the States base- 
benchmark plans, supplemented as necessary under 156.110, that plan also could be used 
for purposes of determining typicality, as a proposed State EHB-benchmark plan that was 
equal in scope of benefits to the States EHB-benchmark plan used for the 2017 plan year 
within each EHB category at 156.110(a) would be equal to or greater in scope of benefits 
within each EHB category at 156.110(a) than the base-benchmark plan underlying the 
EHB-benchmark plan used for the 2017 plan year, to the extent of the required 
supplementation. 
 
2.  Calculate the expected value of covering all of the benefits at 100 percent actuarial 
value in each EHB category in the proposed EHB-benchmark plan and in the Typical 
Employer Plan or Comparison Plan, including any necessary supplementation. The 
State must use reasonable actuarial assumptions and methods in accordance with generally 
accepted actuarial principles and methodologies. For example, the actuary may use data 
acquired from issuers in the State for a recent plan year, and weight the services and benefits 
provided in each EHB category. Other potential data sources include any all-payer claims 
databases maintained by the State or other databases that reflect the States population. 
 
 
 
 
 
7 The EHB categories at 156.110(a) 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. 
  3   
Example of an Acceptable Methodology for Comparing Benefits 
 
 
3.  Compare the expected value of covering all of the benefits (at 100 percent actuarial 
value) in each EHB category of the Typical Employer Plan or the Comparison Plan 
to that of the corresponding EHB category of the proposed States EHB-benchmark 
plan. Under this example methodology, we would consider the States proposed EHB- 
benchmark to satisfy the Typical Employer Plan requirement, if the States actuary 
certifies that the expected value of each applicable EHB category of benefits in the States 
proposed EHB-benchmark plan has an expected value equal to, or greater than, 100 percent 
of the expected value for those same categories of benefits of the Typical Employer Plan. 
In the case of the generosity standard, we would not consider the States proposed EHB- 
benchmark to satisfy the requirement if the expected value for each applicable EHB category 
of benefits in the proposed States EHB-benchmark plan exceeds 100 percent of expected 
value for those same EHB categories of benefits in the most generous Comparison Plan. 
  4