Benefit Flexibility Benchmark Benefit Plans

Deficit Reduction Act Important Facts for State Policymakers

February 21, 2008


State Flexibility in Benefit Packages
The Deficit Reduction Act of 2005 allows States to vary the Medicaid benefit packages available to
1Medicaid beneficiaries.
Background
Prior to passage of the Deficit Reduction Act (DRA) of 2005, Medicaid statute and regulations required
States to cover specific services and allowed States the option to cover additional services for all of their
Medicaid beneficiaries. DRA Section 6044 provides a unique opportunity for States to design a set of
Medicaid services as an alternative benefit package to specified Medicaid–covered populations.
Benefit Packages under the Deficit Reduction Act
States now have the option to provide different “benefit packages” to certain populations. These benefit
2packages do not need to follow Medicaid’s traditional rules requiring statewideness , freedom of choice,
or comparability. The coverage can be modeled on “benchmark” or “benchmark equivalent” plans.

Benchmark Plans

The alternative benefit packages may be based on any of the following benchmark plans:

(1) the standard Blue Cross Blue Shield preferred provider option under the
Federal Employee Health Benefit Plan
(2) the HMO plan with the largest commercial, non-Medicaid enrollment in the State
(3) any generally available State employee plan (regardless of whether any State
employees select the plan)
(4) any plan that the ...