HHS Issues Guidance on Early Retiree Reinsurance Program

The Department of Health and Human Services’ Office of Consumer Information and Insurance Oversight (OCIIO) has released additional guidance material for health insurance plan sponsors on the Early Retiree Reinsurance Program (ERRP). Created by the Patient Protection and Affordable Care Act (“Affordable Care Act”), the ERRP provides $5 billion in temporary financial help for employer health plans that continue to provide health coverage to “early retirees,” defined as individuals age 55 and older who are neither active employees nor eligible for Medicare, and to the early retirees’ spouses, surviving spouses, and dependents. Under the plan, the HHS will reimburse plan sponsors for certain claims between $15,000 and $90,000 (with those amounts being indexed for plan years starting on or after October 1, 2011). The reimbursable amount is limited to a portion of certain “health benefits,” which include medical, surgical, hospital, and prescription drug costs. One new guidance document, entitled “Claims Ineligible for Reimbursement under the Early Retiree Reinsurance Program,” (pdf) clarifies the ERRP reimbursement policy. According to this document, in addition to the exclusions listed in the ERRP’s regulations, (pdf) the following items and services will not be credited toward the cost threshold or be reimbursed under the ERRP:

• Custodial care, such as personal care by non-medically trained personnel and institutional care that does not qualify as skilled nursing facility care;
• Routine foot care, such as orthopedic shoes;
• Personal comfort items, such as a TV in a hospital room;
• Routine services and appliances for vision, such as glasses and contact lenses;
• Hearing aids and auditory implants;
• Cosmetic surgery except when required for the prompt repair of an accidental injury or malformation of a body part;
• Routine dental services;
• Assisted suicide;
• Certain fertility services, such as in-vitro fertilization;
• Abortion, except in cases of rape or incest or when the pregnancy endangers the life of the mother;
• Drugs not covered by a standard Part D plan, unless covered under Parts A or B;
• Items or services not provided in the United States.

The OCIIO notes that this list is not exhaustive, and will be updated as needed. In addition, the guidance explains that the HHS will not apply Medicare medical necessity determinations to the ERRP, and will instead defer to such determinations made by the plan sponsor. Moreover, the HHS will similarly defer to the frequency and maximum limits set by the employment-based health plan sponsor, and not impose those established under Medicare.

The OCIIO has also made available instructions for delivering the required notice to plan participants and sponsors participating in the ERRP, and a sample notice. (pdf)  Sponsors participating in the ERRP must provide a form notice to plan participants explaining that the sponsor may use the reimbursements to reduce the participants’ premium contributions, co-payments, deductibles, co-insurance, or other out-of-pocket costs. All participants – not just early retirees – are to receive this notice within a reasonable time before or after the sponsor receives its first ERRP reimbursement.

In addition to the above guidance documents, the OCIIO has created a web page devoted to frequently asked questions (FAQs) regarding the ERRP. The FAQs are divvied up by the following categories: Application; Costs and Reimbursement; Early Retirees; Fraud, Wages and Abuse; Price Concessions and Cost Adjustments; Prohibition on Using funds as General Revenue; System Roles and Privileges; Use of Reimbursement; and Miscellaneous issues.

This entry was written by Ilyse Schuman.