Louisville, Ky. (December 13, 2005) SHPS, a leading provider of Integrated Health Management, announced today a revolutionary approach to retiree healthcare that can help reduce employers staggering healthcare costs while retaining retiree benefits: consumer-directed retiree health plans, or CDRHPs.

Despite the escalating financial crisis facing American companies and their workers as they become increasingly burdened with healthcare costs, employers must keep their commitment to supporting current and future retirees. Prior approaches havent worked, but SHPS consumer-directed plans are a win-win solution for both employees and their companies, said Rishabh Mehrotra, SHPS president, human resource services and chief technology officer.

Just as countless companies moved from offering traditional pensions to 401(k)s, CDRHPs transition retiree healthcare from a defined-benefit to a defined-contribution approach, though they also have the added benefit of using tax-favored funds to purchase government-subsidized insurance. These fixed-cost healthcare plans more equitably share the new Medicare benefits between employers and retirees, and most importantly act to reduce the long-term cost trend for retiree healthcare through consumerism.

CDRHPs have been endorsed by many of SHPS large employer clients. According to Erik Sossa, director of benefits at Pepsi Bottling Group, CDRHPs represent an innovative approach to retiree benefits. This is a natural extension of the principles of consumerism that many employers have been promoting with our active employees. Further, it leverages the emerging offerings in the retiree benefits space between company sponsored plans, Medicare Part D, and the growing Medicare Advantage market.

Essentially, CDRHPs embrace healthcare consumerism by putting control of healthcare expenditures in a retirees hands, and level the playing field for employers by moving from open-ended healthcare agreements to more manageable defined contributions, said Mehrotra.

In CDRHPs simplest form, an employer would credit money to an employees tax-free retiree health reimbursement arrangement (HRA), perhaps based on years of service, and the retiree could then choose coverage from a variety of Medicare prescription drug plans and Medicare Advantage plans. The companys contributions may accrue during the employees active lifetime, during retirement or both, and near-eligible retirees may be grandfathered into the plans. Medicare-eligible retirees could use the employer contributions to pay for out-of-pocket healthcare expenses not covered by Medicare, providing valuable first-dollar coverage not available with many benefit plans. They also could use the employer contribution to pay Medicare Part B and D premiums and co-payments, which enables the retiree to choose a health plan that best meets their coverage needs.

The premise is to empower retirees with better health information and decision-making tools, and motivate them by providing financial incentives to spend wisely. Convenient debit cards and access to web-based cost and quality information and a retiree support call center make these plans easy for retirees to use.

With SHPS integrated model, consumer-directed retiree health plans can be combined with other health management programs for maximum value. For example, care management strategies, including disease management and 24-hour nurse line programs, coupled with spending accounts, will encourage most participants to make better health decisions at lower costs.

CDRHPs are the latest of SHPS new products for retiree healthcare administration, as it recently unveiled new Medicare Part D services, including support for both employers and Medicare prescription drug providers.

CDRHPs are the right prescription for organizations stuck with high-cost health plans or capped plans. They will also become increasingly valuable to employers wanting to differentiate themselves to attract and retain scarce, highly skilled workers by rewarding years of service, added Mehrotra.

About SHPS | Carewise Health
SHPS is a leading, independent provider of integrated health solutions that improve personal health and reduce spending. By integrating traditional health management and benefits administration services, SHPS delivers people-centric solutions that empower individuals to make wise healthcare choices. It serves large and mid-sized employers, government agencies, and third-party administrators through the company’s Carewise Health, Landacorp, and SHPS brands. Visit www.carewisehealth.com.

For More Information
LeAnn Ross
Director of Marketing
leann.ross@shps.com

(Return to News Releases)