[Federal Register Volume 60, Number 236 (Friday, December 8, 1995)]
[Rules and Regulations]
[Pages 62987-62988]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-29882]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
Prices of new books are listed in the first FEDERAL REGISTER issue of each
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Federal Register / Vol. 60, No. 236 / Friday, December 8, 1995 /
Rules and Regulations
[[Page 62987]]
OFFICE OF PERSONNEL MANAGEMENT
5 CFR Part 890
RIN 3206-AG40
Federal Employees Health Benefits Program; HMO Plan Applications
AGENCY: Office of Personnel Management.
ACTION: Final rule.
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SUMMARY: The Office of Personnel Management (OPM) is issuing final
regulations to clarify the policy under which it invites applications
from comprehensive medical plans (CMP's), commonly referred to as
Health Maintenance Organizations (HMO's), to participate in the Federal
Employees Health Benefits (FEHB) Program. This clarification is
necessary in order to ensure that OPM and the CMP's (HMO's) are
providing the best possible service to FEHB enrollees.
EFFECTIVE DATE: February 6, 1996.
FOR FURTHER INFORMATION CONTACT: Faith M. Hannon, (202) 606-0004.
SUPPLEMENTARY INFORMATION: On December 5, 1994, OPM published an
interim regulation in the Federal Register (59 FR 62283) to clarify the
policy under which it invites applications from comprehensive medical
plans (CMP's), commonly referred to as Health Maintenance Organizations
(HMO's), to participate in the FEHB Program. OPM made a determination
not to invite new plan applications, with a limited exception, for
contract year 1996. In addition, OPM decided neither to accept benefit
change proposals from plans already in the FEHB Program nor to print
new plan brochures or a comparison guide for contract year 1996.
OPM received 15 written comments and numerous phone calls
concerning the regulation. All of the commenters objected that OPM did
not give HMO's sufficient notice of its determination not to accept
applications and benefit change proposals for the 1996 contract year.
Among other issues, they contended that many HMO's had already expended
a substantial amount of time preparing applications or developing plan
benefit designs and that OPM's decision, therefore, caused them undue
hardship. In addition, some commenters disagreed with OPM's position
that this regulation clarified existing policy and that the Director of
OPM had authority to determine when plan applications would be
accepted.
After careful consideration of the comments received, OPM concluded
that its time frames had, in fact, been too compressed to allow for a
thorough review of all the consequences of the decision not to accept
applications and that it had not allowed sufficient time for comments.
As a result, OPM decided to accept applications and benefit change
proposals for contract year 1996 and to provide the public with a
longer comment period.
Therefore, OPM published a notice in the Federal Register on March
13, 1995, (60 FR 13491), which stated that OPM would accept
applications from new HMO's for participation in the FEHB Program, and
benefit change proposals from plans currently participating, for
contract year 1996. In this notice, OPM extended the deadline for
submission of the completed applications from January 31 to March 31,
1995, and allowed for a second extension if OPM requested additional
information from the applicants. OPM also published the clarification
of the policy under which it invites applications from HMO's as a
proposed regulation in the Federal Register, (60 FR 15074), on March
22, 1995. This issuance was in response to those commenters who
objected to the length of the comment period of the interim regulation
and other alleged publication technicalities under the Administrative
Procedure Act (APA).
OPM received seven written responses to the proposed regulation.
The primary issues mentioned by most commenters were that closing the
FEHB Program for an unlimited period of time would limit health plan
choices for Federal employees, and would restrict competition within
the FEHB Program. Both features are considered to be hallmarks of the
Program. Some commenters also opined that this regulation contravenes
OPM's obligation to contract with federally qualified HMO's and the
related HMO dual choice mandate. These comments may have originated
from a misunderstanding of the extent of the regulation. It was never
OPM's intention to close the FEHB Program to new HMO's for unlimited
periods of time. Because this misconception appears to be widespread,
the final rule states that it is OPM's intention to accept new HMO
applications on an annual basis except in those rare instances when the
Director decides it is not in the best interest of the Federal
enrollees and the FEHB Program. If this should occur, sufficient
advance notice would be given to the HMO industry, i.e., an entry in
the Federal Register at least seven months prior to the date
applications would be due for the contract year for which applications
will not be accepted, allowing for a comment period of sixty days.
Generally, there is eleven months lead time between when applications
are due on January 31, and the start of the contract year for which the
applications are being accepted.
Several commenters stated that it is their belief that the Federal
Employees Health Benefits Act (FEHBA) does not grant the Director of
OPM the authority to determine when it is beneficial to the FEHB
Program to accept applications from HMO's for participation in the
Program. It was, and is, the conclusion of OPM that the Director has
always had this authority and that this regulation simply clarifies the
policy under which this authority is administered. The final rule
states this conclusion.
Many commenters offered to assist OPM in streamlining the
application process so that OPM might utilize its resources in the most
effective way to benefit Program enrollees. OPM is appreciative of
these offers and is working closely with representatives of the
industry and other knowledgeable organizations to improve the
application process.
This Final Rule is also updating the mailing address of the Office
of Insurance Programs listed in the final sentence of
Sec. 890.203(a)(5).
Regulatory Flexibility Act
I certify that these regulations will not have a significant
economic impact on a substantial number of small entities
[[Page 62988]]
because they primarily affect OPM's administrative procedures.
List of Subjects in 5 CFR Part 890
Administrative practice and procedure, Government employees, Health
facilities, Health insurance, Health professions, Hostages, Iraq,
Kuwait, Lebanon, Reporting and recordkeeping requirements, Retirement.
U.S. Office of Personnel Management.
James B. King,
Director.
Accordingly, OPM is amending 5 CFR Part 890 as follows:
PART 890--FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM
1. The authority citation for part 890 continues to read as
follows:
Authority: 5 U.S.C. 8913; Sec. 890.803 also issued under 50
U.S.C. 403p, 22 U.S.C. 4069c and 4069c-1; Subpart L also issued
under sec. 599C of Pub. L. 101-513, 104 Stat. 2064, as amended.
2. In Sec. 890.203, paragraphs (a)(1) and (a)(2), and the last
sentence in paragraph (a)(5) are revised to read as follows:
Sec. 890.203 Application for approval of, and proposal of amendments
to, health benefits plans.
(a) New plan applications. (1) The Director of OPM shall consider
applications to participate in the FEHB Program from comprehensive
medical plans (CMP's) at his or her discretion. CMP's are automatically
invited to submit applications annually to participate in the FEHB
Program unless otherwise notified by OPM. If the Director should
determine that it is not beneficial to the enrollees and the Program to
consider applications for a specific contract year, OPM will publish a
notice with a 60 day comment period in the Federal Register no less
than 7 months prior to the date applications would be due for the
specific contract year for which applications will not be accepted.
(2) When applications are considered, CMP's should apply for
approval by writing to the Office of Personnel Management, Washington,
DC 20415. Application letters must be accompanied by any descriptive
material, financial data, or other documentation required by OPM. Plans
must submit the letter and attachments in the OPM-specified format by
January 31, or another date specified by OPM, of the year preceding the
contract year for which applications are being accepted. Plans must
submit evidence demonstrating they meet all requirements for approval
by March 31 of the year preceding the contract year for which
applications are being accepted. Plans that miss either deadline cannot
be considered for participation in the next contract year. All newly
approved plans must submit benefit and rate proposals to OPM by May 31
of the year preceding the contract year for which applications are
being accepted in order to be considered for participation in that
contract year. OPM may make counter-proposals at any time.
* * * * *
(5) * * * The extent of the data and documentation to be submitted
by a plan so qualified by HHS, as well as by a non-qualified plan, for
a particular review cycle may be obtained by writing directly to the
Office of Insurance Programs, Retirement and Insurance Service, Office
of Personnel Management, Washington, DC 20415.
* * * * *
[FR Doc. 95-29882 Filed 12-7-95; 8:45 am]
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