CMS to Stop Accepting Claims under the Early Retiree Reinsurance Program

          The Centers for Medicare & Medicaid Services issued a Notice on December 9 announcing that it will not accept claims incurred after December 31, 2011 under the Early Retiree Reinsurance Program (ERRP or Program). It is taking this action because ERRP has already disbursed $4.5 billion of the $5 billion appropriated by Congress for the Program.

          ERRP is a temporary program established under the Patient Protection and Affordable Care Act of 2010 (PPACA). It provides reimbursement to eligible sponsors of employment-based retiree health coverage for a portion of the costs of providing health coverage to early retirees and their eligible spouses, surviving spouses, and dependents. Under PPACA, ERRP could have lasted as late as December 31, 2013; however, the Program will end much earlier due to the rapid depletion of the funds budgeted for the Program.

          CMS' announcement states that it will begin rejecting Claim Lists and Summary Cost Data in their entirety that include claims incurred after December 31, 2011. In other words, CMS will reject the entire list and will not manually separate claims incurred after December 31, 2011 from those incurred on or before that date. Therefore, sponsors of retiree coverage participating in ERRP must take special care to ensure that they promptly submit Claim Lists that contain all claims incurred on or before December 31, 2011, but that do not contain any claims incurred thereafter. A claim may be submitted under ERRP only after it has been both incurred and paid. Therefore, if a claim is incurred before January 1, 2012, but paid after December 31, 2011, it still may be submitted after December 31, 2011.

          CMS' announcement makes time of the essence. It will continue to process Claim Lists as received, but the Claim List being processed at the moment the funds run out will be the last one to be honored. In a news release associated with its announcement, CMS stated: "If there are not sufficient funds to pay in its entirety the last reimbursement request that causes the initial exhaustion of the $5 billion, CMS will use available funds to partially honor that reimbursement request, and will pay the balance of that reimbursement request if additional funds become available."

          Plan sponsors that participate in ERRP are strongly encouraged to collect all claims that are eligible for submission and submit those claims as soon as possible. At this point, only approximately $500 million of the original $5 billion in funds earmarked for ERRP remain, and the race is on to claim the last of those funds.

          Ice Miller LLP has been tracking the regulations and other guidance issued under PPACA, and you can read about the guidance that has been issued to date on Ice Miller's Health Care Reform Web site.

          For more information about ERRP or any employee benefits matter, contact Mary Beth Braitman, Terry A. M. Mumford, Melissa Proffitt Reese, Christopher S. Sears, Tara Schulstad Sciscoe, or Shalina A. Schaefer.