The U.S. Department of Health and Human Services (HHS) plans to publish in tomorrow’s edition of the Federal Register interim final regulations (pdf) to implement the provisions of the Early Retiree Reinsurance Program (ERRP), the temporary cost assistance program instituted as part of the Patient Protection and Affordable Care Act (PPACA).  The ERRP provides $5 billion in temporary financial help for employer 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, plus their spouses, surviving spouses and dependents.  Under the ERRP, the Secretary will reimburse plans for certain claims between $15,000 and $90,000 (with those amounts being indexed for plan years starting on or after October 1, 2011).  Funds will be available until the earlier of January 1, 2014 or until the $5 billion is depleted.  These plans can receive reimbursement for a portion of medical, surgical, hospital, and prescription drug costs.  Such payments will be excluded from gross income, but must be used to lower health costs for enrollees.  According to the interim final rule, the purpose of the reimbursement “is to make health benefits more affordable for plan participants and sponsors so that health benefits are accessible to more Americans than they would otherwise be without this program.” 

The interim final rule creates the framework for implementing the ERRP.  Please see Littler's ASAP: HHS Issues Interim Rule for Early Retiree Reinsurance Program for a full discussion of the rule.

Some highlights of the regulations include:

• An “employment-based plan” is defined as a group health plan.  The regulation uses the term “sponsor” when referring to the entity that applies for and receives reimbursement under the program, and uses the term “employment-based plan” when discussing the health benefits arrangement the sponsor must offer.
• Reimbursement under ERRP is provided to a “sponsor,” which the regulations equate to a “plan sponsor” as defined by the Employee Retirement Income Security Act of 1974 (ERISA).  If, however, a plan is maintained jointly by one employer and an employee organization and the employer is the primary source of financing, the term “sponsor” means the employer. 
• “Health benefits” is defined as medical, surgical, hospital, prescription drug, and other benefits that may be specified by the Secretary, whether self-funded or delivered through the purchase of health insurance or otherwise.  Such benefits include benefits for the diagnosis, cure, mitigation, or prevention of physical or mental disease or condition with respect to any structure or function of the body.  The regulations state that this list is not exhaustive. 
• To qualify for the ERRP, an employment-based plan must have programs and procedures in place to generate cost savings for participants with chronic and high-cost conditions.  The regulations define “chronic and high-cost condition” as a condition for which $15,000 or more in health benefit claims are likely to be incurred during a plan year by any one participant.  In addition, the regulations interpret this requirement to mean that the plan must have in place programs and procedures that have generated or have the potential to generate cost-savings for participants, not necessarily that the sponsor has to ensure that new programs and procedures are in place. 
• A sponsor must have a written agreement with its health insurance issuer or employment-based plan (as applicable) regarding disclosure of information, data, documents, and records, to the Secretary, and the health insurance issuer or employment-based plan must disclose to the Secretary, on behalf of the sponsor, at a time and in a manner specified by the Secretary in guidance, the information, data, documents and records necessary for the sponsor to comply with the program, this part, and program guidance.  Moreover, the sponsor must ensure that policies and procedures to protect against fraud, waste and abuse under the ERRP are in place, and submit an application, which will be made available by the HHS before the start of the program.
• An employment-based plan and a sponsor must be certified by the Secretary before claims can be submitted and a reimbursement request may be made.
• Claims for health benefits may be submitted for a given plan year only upon the approval of an application that references that plan year cycle.  Claims for an early retiree for a plan year cannot be submitted until the total paid costs for health benefits for that early retiree incurred for that plan year exceed the applicable cost threshold. 
• A submission of claims consists of a list of early retirees for whom claims are being submitted, and documentation of the actual costs of the items and services for claims being submitted, in a form and manner specified by the Secretary.
• The HHS Secretary may reopen and revise a reimbursement determination at the request of a sponsor within one year of the determination for any reason, within four years for good cause, and at any time in the event of fraud.  Examples of “good cause” include clerical or other errors, and the emergence of new and material evidence that was not readily available when the reimbursement determination was made.

Comments on this interim final rule must contain the identifier:  DHHS-9996-IFC, and be received on or after June 3, 2010.  Written comments may be sent to: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: DHHS-9996-IFC, P.O. Box 8014, Baltimore, MD 21244-8014.  Hand-delivered comments can be brought to: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201, or the Baltimore location:  Centers for Medicare & Medicaid Services, Department of Health and Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850.  Baltimore hand-deliveries must be scheduled in advance by calling:  (410) 786-9994.  In the alternative, comments may be submitted electronically via the federal eRulemaking portal:  www.regulations.gov. 

This entry was written by Ilyse Schuman.