Communities pursue retiree drug subsidy program

With local budgets strained to the limit, many communities have been tapping into dollars from the federal Retiree Drug Subsidy program, which was launched in 2006 as part of the Medicare Modernization Act.

The intent of the program, which subsidizes the cost of prescription drug benefits for retirees, was to encourage employers not to eliminate or drastically reduce retiree benefits.

Many Massachusetts communities offer retiree plans with a prescription drug benefit and, therefore, qualify to participate in the federal program. The subsidy payment amounts are primarily based on a formula that reflects the headcount of eligible retirees, the employer contribution share, the retiree benefit design, and prescription claims costs.

The filing process has evolved over time, but has not been without its challenges. There is an initial filing, followed by a payment request and reconciliation phase. All steps of the process require careful coordination with the community, the heath insurer and the federal program. Each community needs to consider if the program is worthwhile in terms of the time required to complete the filing compared with the amount of the subsidy available.

Many communities have reaped rewards from the program and are likely to continue filing as long as funds are available. Most tend to redistribute the payments back to the community’s general fund; the exact dollar amounts vary widely.

Since the Retiree Drug Subsidy program began, MIIA has partnered with about 36 members each year to assist with filing the application, requesting payment, and reconciliation. To date, MIIA has helped members get nearly $8 million in federal subsidies.

The multi-faceted process requires timely communication, regular updates to the members, and coordination with the Retiree Drug Subsidy Program and Blue Cross Blue Shield of Massachusetts. MIIA manages the process for multiple years simultaneously with one key goal in mind: to achieve the best possible outcome for members.

For more information about the program, MIIA members may contact Program Coordinator Monica Desjardins at (800) 374-4405, ext. 264, or visit the program website (rds.cms.hhs.gov).