New Guidance on ERRP Claims and Procedures

• Calendar Quarter - Reimbursement requests may be submitted once per calendar quarter - not plan year quarter. As the guidance indicates, the plan year is irrelevant for purposes of determining the frequency and periods in which requests for reimbursement can be made.
• Detailed Claims Data - Although only summary cost data is now being submitted by plan sponsors as part of a reimbursement request, detailed claims data will be required under guidance to be released later this month, in January 2011.
• Out-of-Network Costs - To the extent an early retiree, spouse, surviving spouse or dependent incurs and pays for costs for health benefits provided by an out-of-network or out-of-service provider, the costs may count toward the ERRP cost threshold and cost limit, and be reimbursed provided that the plan pays for the benefit (or would have paid it but for the fact that the individual has not satisfied the deductible). The services must have been furnished within the United States, and the sponsor must submit proof that the individual paid the costs.
• Incurred and Paid Claims - To be submitted, a claim must have been incurred in the applicable plan year and paid (but not necessarily during the plan year). Claims paid after the close of the plan year can be submitted toward the cost threshold and cost limit, and for reimbursement, for the plan year the claim was incurred. Costs for hospital stays that span more than a day are incurred on the date of admission. Costs for services rendered over more than a day are incurred on the first day the services are rendered. Costs for prescription drugs are incurred on the date the prescription is filled. Items and services furnished pursuant to a capitated arrangement or integrated health care system are considered paid on the date the costs were incurred - as long as there is no outstanding liability for payment on the part of the plan or the individual - however, if the items or services are provided over more than a day, a claim may not be submitted until the item or service is actually provided (i.e., the sponsor may not project costs and submit cost data for items or services not provided as of the date of the reimbursement request).

Early Retirees

• U.S. Citizens - Sponsors must make a reasonable good faith effort to ensure that the retirees, spouses, surviving spouses and dependents are United States citizens or legally present in the U.S. With regard to the retiree, this is expected to have been done by the employer at the time of hire. Ensuring that all such individuals have a Social Security Number would be a reasonable way of performing the necessary due diligence. The Early Retiree Lists require one of the following numbers for spouses, surviving spouses, and dependents: Social Security Number, Alien Identification Number, I-94 Number, or other Federal identification number. If the sponsor can complete the Early Retiree List with such identifiers it will have made a reasonable good faith effort to comply.

Price Concessions and Cost Adjustments

• Post Point of Sale Price Concessions - A sponsor may submit a request for reimbursement net of its known post point-of-sale price concession (even though it has not yet actually received the price concession) to avoid subsequent reimbursement adjustments. Moreover, a sponsor that has received post point-of-sale price concessions must take them into account in reimbursement requests, even though the particular amount that applies to each individual retiree, spouse, surviving spouse or dependent is not known. In that case, sponsors must apply a reasonable methodology to allocate the price concessions to each individual in the plan and thereby reduce the costs reported as paid in the reimbursement request. The concessions must also be allocated for purposes of determining when the individuals meet the cost threshold. The DHHS will be issuing guidance on what constitutes a reasonable methodology for this purpose.

If you have any questions or need additional information about articles appearing in this or previous versions of Washington Bulletin, please contact:

Robert Davis 202.879.3094, Elizabeth Drigotas 202.879.4985, Mary Jones 202.378.5067, Stephen LaGarde 202.879-5608, Erinn Madden 202.220.2692, Bart Massey 202.220.2104, Tom Pevarnik 202.879.5314, Sandra Rolitsky 202.220.2025, Deborah Walker 202.879.4955.

Copyright 2011, Deloitte.

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