MEMORANDUM
TO: CLIENTS POTENTIALLY ELIGIBLE FOR THE FEDERAL
EARLY RETIREE REINSURANCE PROGRAM
FROM: RUTH LEE and TIM KEARNS
SUBJECT: HEALTH CARE REFORM REINSURANCE PROGRAM
MAY 26, 2010 DATE:
The recently enacted health care reform legislation contains a program designed to reimburse health plans for certain claims incurred by early retirees (ages 55-64, or otherwise not covered by Medicare). Those eligible include spouses and dependents of such retirees, also. Any claims in excess of $15,000 and less than $90,000 are eligible for reimbursement at 80% of the claim cost. The maximum reimbursement per individual would be $90,000-$15,000x80% or $60,000. There at $5 billion earmarked to distribute to plans that apply, qualify, and submit claims that qualify. The program begins on June
1, 2010.
There are several qualifications that have been identified, but there still are many more questions than answers. However, we are contacting you to determine your interest in proceeding with an application for reimbursement. Before you automatically say “yes”, we want to share some of the qualifications and provide you with the information currently available. In order to qualify, your plan must meet certain criteria.
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You must submit an application. Unfortunately, the form has not been developed to date so we cannot share it with you. What has been indicated is that the application is likely to be similar to the Medicare Part D application. We anticipate the application will be available by the end of June. Correctly completed applications will be approved on a first come/first processed basis.
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You will be required to provide the usual identifying information (e.g., tax identification number, address, etc.). You also just include a projection of your anticipated reimbursement amount each year for the next two years.

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You must have programs and procedures in place to generate cost savings on claims for participants with chronic and high cost conditions. This includes both large case management and chronic disease management programs. While you may have large case management in place, implementation of a disease management program would result in additional cost to the plan. Depending on the type of program you implement, it could cost ___________ per employee per month. However, properly utilized, such a program could result in long-term cost savings, as well as better quality of life for participants with chronic conditions.
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Reimbursement received by your plan, if you application is successful, must be utilized to offset increases in plan costs or to reduce participants’ costs. The participants’ cost reduction can be in the form of reduced deductibles, co-pays, or to reduce participant contributions to the cost of coverage. You will be required to explain to the government what your plan is to use the reimbursement to maintain your plan and lower participants’ costs.
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You must demonstrate how the plan performs fraud, abuse, and waste detection.
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You must demonstrate how your plan will allow for “more favorable out-ofpocket costs (e.g., deductibles, co-pays, coinsurance terms) for those with chronic or other high cost conditions.” This may pose some difficulties in that it could be viewed by other plan participants as discriminatory.
As you can see, there are many decisions to be made and much data to be gathered without a great deal of government guidance. However, if a decision about whether to proceed is deferred too long, the application may be delayed, resulting in less likelihood of success.
We can perform a certain amount of preliminary work such as determining claims dollars spend in the past two years that would qualify (medical and prescription drug). However, proceeding beyond that without discussion with you is not possible. Therefore, we would like to schedule either a face-to-face meeting or a conference call with you to discuss your preferred approach to dealing with this program. It may even be possible to meet with some of you at the same time if schedules permit.
We will be contacting you in the near future to schedule. In the meantime, feel free to contact us.