95-29882. Federal Employees Health Benefits Program; HMO Plan Applications  

  • [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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    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.
    
    -----------------------------------------------------------------------
    
    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]
    BILLING CODE 6325-01-P
    
    

Document Information

Effective Date:
2/6/1996
Published:
12/08/1995
Department:
Personnel Management Office
Entry Type:
Rule
Action:
Final rule.
Document Number:
95-29882
Dates:
February 6, 1996.
Pages:
62987-62988 (2 pages)
RINs:
3206-AG40
PDF File:
95-29882.pdf
CFR: (2)
5 CFR 890.203(a)(5)
5 CFR 890.203