KC Health Care Reform

Blue Cross and Blue Shield of Kansas City (Blue KC) would like to update you on the Early Retiree Reinsurance Program that is part of the health reform bill that was passed in March. This write-up includes information on how we plan to support our clients who wish to apply for funds under this program. This program encourages employers to maintain insurance benefits for early retirees by reimbursing the employer for some of the increased costs of providing insurance for them.

Background on Health Coverage for Early Retirees

• Nationwide, early retiree coverage has dropped from 66% in 1988 to 31% in 2008.
• The Affordable Care Act provides $5 billion to employers to help them maintain coverage for early retirees age 55 and older who are not eligible for Medicare.
• Employers can use this financial assistance to reduce their own health care costs, provide premium relief to workers or a combination of both.

Who is eligible?

• Private or governmental employers that provide insured or self-funded health benefits to retirees age 55 and older (and their dependents including surviving spouses) and who are not eligible for Medicare.

How to participate in the program?

• To be eligible, the group health plan must apply to and be certified by the Secretary of Health and Human Services (HHS). The program will go into effect on June 1, 2010 and applications are expected to be available by the end of June.
• Companies can apply for reimbursement if they believe they are eligible and offer early retiree insurance.

What is the amount of reimbursement?

• The amount of reimbursement to the employer is up to 80% of claim costs for eligible retirees for health benefits between $15,000 and $90,000. In 2010, claims incurred between the start of the plan year (often January 1) and June 1st are credited towards the $15,000 threshold for reimbursement. However, only medical expenses incurred after June 1, 2010 are eligible for reimbursement under this program.

Funds allocated for the program are not expected to last through 2014, when the program will cease existence. Funds will be available on a first come first serve basis, creating a sense of urgency for eligible employer groups. In 2014, early retirees will be able to obtain insurance through the State Exchanges that will be established.

Will Blue KC apply for funds on behalf of its client?

• Blue KC cannot apply on behalf of our clients under this program. The employer must apply.

What if clients need help determining whether they should apply?

• Blue KC will be developing a process to provide historical claims data to clients in an aggregated format to facilitate a decision by the group on whether to apply. We expect this process to be in place by the end of May.

How will Blue KC support clients during the application process?

• The application will require that employers demonstrate that they have implemented programs/procedures that have generated or have the potential to generate cost savings for participants with chronic and high cost conditions. For those clients where Blue KC provides case management and disease management, Blue KC will provide necessary information to employers upon request so that they can complete this part of the application.
• The application also requests that employers project expected claims under the reinsurance program for the first two years. Blue KC will provide expected claims experience to employers upon request to meet this application requirement.
• The application requires that employers ensure that policies and procedures are in place to protect against fraud, waste and abuse for this program and that if requested by HHS, that the policies be produced as well as any documentation or data to substantiate the implementation of the policies and their effectiveness. Blue KC is evaluating this requirement and how our internal policies may or may not be applicable to this requirement.

NOTE: The regulations require that employers have a signed agreement with their insurance carrier or third party administrator at the time of application. As a result, Blue KC will require a signed agreement with the employer prior to providing the assistance outlined above.

Blue KC is currently developing this agreement and expects to have it available by the end of May. We are also currently building internal processes/documents to support this assistance and Sales team members will be trained to handle inquiries as this process is finalized.

How will Blue KC support the need for claim reimbursements once an employer has been certified under the program?

• Under HIPAA privacy rules, Blue KC cannot provide non-aggregated claims data to our insured and cost plus clients unless the Plan Sponsor has amended its plan documents to restrict uses and disclosures of PHI by the Plan Sponsor consistent with the HIPAA Privacy Rule. We anticipate most of our insured and cost plus clients do not have these procedures in place. For these clients, Blue KC will submit claims on behalf of our clients who have obtained certification for the program upon request.
• For ASO (Administrative Services Only) clients, Blue KC will provide data directly to the employer for submission. Alternatively, Blue KC will submit claims directly for the ASO client upon request, but the submission will be limited to those claims that are administered by Blue KC.

Further guidance on claims file formats and content is expected. A team has begun to evaluate the requirements that were included in the regulation in an effort to be able to support these requests timely once employers are certified. Sales team member will be trained to handle inquiries on our business processes related to these claim reimbursement requests as internal processes are finalized.

Will I be charged for the Blue KC Assistance?

• Blue KC will provide this assistance as a service to our clients and no separate fee will be charged.