GAO: Early retiree program owes $2.5B in unpaid claims

The Center for Consumer Information and Insurance Oversight, which owes $2.5 billion in unpaid claims, is going to have a lot of trouble making good.

That's the upshot of a new Government Accountability Report on the state of affairs at CCIIO, which discontinued enrollment in its Early Retiree Reinsurance Program in early 2011 and stopped making reimbursements to plan sponsors in September of last year.

The program was started as a stop-gap measure in the Patient Protection and Affordable Care Act to reimburse sponsors of employment-based health plans for the cost of providing health benefits to early retirees over age 55 who are not eligible for Medicare. The money was expected to last through the end of 2013, when the PPACA would provide new insurance coverage options.

Reimbursements reached the $4.7 billion cap established for paying claims under the original appropriation and the remainder was reserved for administrative expenses. When the program ceased, there were still 5,699 reimbursement requests left outstanding.

CCIIO officials told GAO they planned to pay some of the outstanding reimbursement requests by redistributing any overpayments recovered from plan sponsors and money recovered from program audits.

As of January, the CCIIO had recovered $54 million and redistributed $20.7 million of this amount.

The GAO also looked at enrollment and spending for the Pre-existing Condition Insurance Plan (PCIP) program, which was another program developed as part of the Patient Protection and Affordable Care Act. By the end of January, total PCIP spending reached $2.6 billion, representing over half of the $5 billion PCIP appropriation compared to a year earlier, when only about 16 percent of the total appropriation had been spent.

PCIP spending has varied on a monthly basis, but overall it has increased over the life of the program. Monthly spending reached its highest point since the program’s inception, increasing about 35 percent, from December 2012 to January 2013.

According to the Centers for Medicare and Medicaid Services, PCIP spending is likely to approach the $5 billion appropriation by the end of 2013 and CCIIO is taking steps to ensure it does not exceed that amount.

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