[Federal Register Volume 63, Number 136 (Thursday, July 16, 1998)]
[Proposed Rules]
[Pages 38360-38364]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-18967]
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OFFICE OF PERSONNEL MANAGEMENT
48 CFR Parts 1609, 1632, 1652
RIN 3206-AI16
Federal Employees Health Benefits Program Improving Carrier
Performance; Conforming Changes
AGENCY: Office of Personnel Management.
[[Page 38361]]
ACTION: Proposed rulemaking.
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SUMMARY: The Office of Personnel Management (OPM) is proposing to issue
a regulation that would amend the Federal Employees Health Benefits
Acquisition Regulation (FEHBAR) to underscore accountability for
customer service and contractual compliance among the Federal Employees
Health Benefits (FEHB) Program community-rated carriers. The regulation
would enable OPM to better manage carriers' performance over key
contract areas, including customer service measures, information and
reporting requirements, and significant events that might affect
service to enrollees. Accurate and timely performance by carriers will
facilitate the Program meeting its customer service standards.
DATES: Comments must be received on or before August 17, 1998.
ADDRESSES: Written comments may be sent to Abby L. Block, Chief,
Insurance Policy and Information Division, Office of Insurance
Programs, Retirement and Insurance Service, Office of Personnel
Management, P.O. Box 57, Washington, DC 20044; delivered to OPM, Room
3425, 1900 E Street NW., Washington, DC; or FAX to (202) 606-0633.
FOR FURTHER INFORMATION CONTACT: Mary Ann Mercer, (202) 606-0004.
SUPPLEMENTARY INFORMATION: Among OPM's guiding principles in its role
as administrator of the FEHB Program, and consistent with the
Government's customer service initiatives, is the goal of ensuring high
quality customer service for enrollees in the FEHB Program. In order to
accomplish this goal, each carrier participating in the Program must
meet its responsibility to provide high quality customer service.
OPM's customer service focus has led to our establishing certain
Program requirements that will enable both OPM and carriers to provide
enrollees with the quality of service they expect. These requirements
are generally set by regulation, the FEHB contract, or OPM's
administrative policies, and the vast majority of FEHB carriers comply
with them. Nevertheless, sometimes FEHB carriers fall short of one or
more of the requirements, for example, by failing to meet a specified
standard for customer service or submitting a required report late or
with incorrect information. A carrier's failure to meet its obligations
reduces OPM's ability to ensure that the FEHB Program provides good
customer service to FEHB enrollees, and may reduce the Program's
efficiency and effectiveness. Accordingly, OPM seeks to implement a
system of monetary performance incentives that would hold community-
rated carriers accountable for their performance. Such incentives are
already in place for experience-rated carriers.
OPM has identified certain carrier obligations that, when unmet,
can delay or keep customer service goals from being met. Some examples
of poor performance reducing customer service are: Failure to meet
customer service standards; failure to provide accurate and timely
benefits and rate information, brochures, or reports; failure to comply
with the disputed claims process; failure to comply with the
requirement for a paperless enrollment system, failure to accurately
reconcile enrollment data; and failure to cooperate in survey
administration. A carrier's failure to meet its obligations,
particularly with regard to surveys and brochures, impedes or delays
OPM's ability to provide enrollees with information that will enable
them to make an informed decision in selecting a health plan. An
additional critical obligation is the carrier's responsibility to
provide information regarding events that might have a material effect
upon the carrier's ability to meet its obligations under the contract,
such as, changes to its participating providers, a change of corporate
name or ownership or a transfer of assets, and labor disputes. These
events may reduce the carrier's ability to provide required services to
our enrollees.
Under authority of the regulations, OPM would withhold a portion of
the community-rated carrier's premium if the carrier does not meet its
FEHB Program obligations. It should be emphasized that we expect the
vast majority of community-rated carriers will receive minor, if any,
premium adjustment.
Incentive percentage factors will be assigned to two basic
elements, Customer Service and Critical Contract Compliance
Requirements, described below. The Contracting Officer will assign a
percentage factor for each basic element based on the carrier's
demonstrated record in meeting its obligations during the contract
year. The percentage factor will be applied to each community-rated
carrier's total FEHB premiums. The aggregate withhold amount for any
carrier would not exceed one percent of premium paid for any contract
year. OPM would evaluate the carrier's performance after the contract
year ends, apply the percentage factors directly to the total net-to-
carrier premium dollars paid for the preceding contract year, and
withhold the amount from the carrier's periodic premium payments
payable during the first quarter of the following contract year.
Carriers could make alternative payment arrangements acceptable to
their FEHB contracting officer.
So that there will be no question as to what level of effort OPM
expects, we have developed a standard evaluation list with sub-elements
that will be used by the FEHB contracting officers in evaluating the
carriers' performance, and will share it with all community-rated
carriers during the public comment period. An understanding of the
elements and sub-elements should make it easier for carriers to achieve
full performance under the contract and ensure that the FEHB Program
maintains its position as a leader in meeting its customers' needs.
The regulation also amends FEHBAR 1632.170, Recurring payments to
carriers, FEHBAR 1652.232-70, Payments-community-rated contracts, and
FEHBAR 1652.232-71, Payments-experience-rated contracts, to enable OPM
to withhold monies from premium payments for other contractual
obligations, such as the carrier's share of the cost of a customer
satisfaction survey.
Reference changes have been made to the FEHBP Clause Matrix at
1652.3 to conform to reference changes in the Federal Acquisition
Regulation (FAR) [Chapter 1 of Title 48, Code of Federal Regulations]
since the last FEHBP Clause Matrix update, and the reference to FAR
52.215-70 is corrected to read 1652.215-70.
Reduction of Comment Period for Proposed Rulemaking
I have determined that the comment period will be thirty days
because OPM must receive public comments on this new initiative as soon
as possible in order to analyze them, work with interested parties, and
publish a final regulation prior to the beginning of the 1999 Contract
Year.
Regulatory Flexibility Act
I certify that this regulation will not have a significant economic
impact on a substantial number of small entities because in no case
will it affect more than one percent of a carrier's premium.
List of Subjects in 48 CFR Parts 1609, 1632, and 1652
Administrative practice and procedure, Government employees,
Government procurement, Health facilities, Health insurance, Health
professions, Reporting and recordkeeping requirements, Retirement.
[[Page 38362]]
Office of Personnel Management.
Janice R. Lachance,
Director.
Accordingly, OPM is proposing to amend Chapter 16 of Title 48, Code
of Federal Regulations, as follows:
CHAPTER 16--OFFICE OF PERSONNEL MANAGEMENT FEDERAL EMPLOYEES HEALTH
BENEFITS ACQUISITION REGULATION
1. The authority citation for 48 CFR Parts 1609, 1632, and 1652
continue to read as follows:
Authority: 5 U.S.C. 8913; 40 U.S.C. 486(c); 48 CFR 1.301.
PART 1609--CONTRACTOR QUALIFICATIONS
2. Subpart 1609.71 is added to read as follows:
Subpart 1609.71--Performance Incentives
Sec.
1609.7101 Policy.
1609.7101-1 Community-rated carrier incentive elements.
1609.7101-2 Community-rated carrier performance incentive factors.
Subpart 1609.71--Performance Incentives
1609.7101 Policy.
At the end of each contract period, the contracting officer shall
determine each community-rated carrier's responsiveness to the Program
requirements in 1609.7101-1.
1609.7101-1 Community-rated carrier incentive elements.
(a) Customer Service. This incentive element is intended to assist
OPM in achieving the goal of providing customer service that meets or
exceeds the expectations of Federal enrollees. The Customer Service
element shall represent 70 percent of the total calculation and shall
be based on the carrier's compliance with the following sub-elements:
(1) Meeting Customer Service Performance Standards. Compliance with
this sub-element is essential so that OPM can ensure that the carrier
is providing quality health care and other services to enrollees. The
contracting officer will evaluate this sub-element based on the
carrier's compliance with the FEHB Quality Assurance clause of the
contract and shall consider the carrier's demonstrated efforts in
responding to its members' needs, providing quality services, applying
its quality assurance program, verifying that its physicians are
credentialed, making appointments for patients, assessing the quality
of its health care, accurately processing claims, properly responding
to requests for reconsideration of disputed claims, and making timely
payments to members and providers.
(2) Timely Closure on Rates and Benefits Consistent with Policy
Guidelines. In order for information to be available to our customers
in time for the annual Open Season, carriers must work with OPM to
conclude benefits and rate negotiations by mid-August. The contracting
officer will evaluate this sub-element based on the carrier's
demonstrated record in providing its rate proposal, rate reconciliation
data, and necessary clarifications within the time frames prescribed by
and in the format required by OPM. The contracting officer also will
evaluate this sub-element based on the carrier's record in submitting
proposed benefit changes and clarifications and proposed brochure
language in accordance with the instructions in the Call Letter.
(3) Customer Information. Enrollees must have accurate information
and adequate time to make informed Open Season choices in selecting a
health plan. In evaluating this sub-element, the contracting officer
will consider the carrier's timely submission of the contract, signed
by the contracting official, to OPM; the carrier's compliance with
FEHBP Supplemental Literature Guidelines; the timeliness of the
carrier's compliance with the Information and Marketing Materials
clause of the contract and the carrier's efforts in submitting complete
and accurate brochures to OPM's distribution center for annuitants, OPM
contract specialists, and its current enrollees. The contracting
officer shall also consider the timely submission of an electronic
brochure for OPM's World Wide Web Site and the carrier's efforts in
verifying, within the OPM-specified time frame, the accuracy of the
information in the current FEHB Guide in preparation for the upcoming
contract period as part of this requirement.
(4) Cooperation in Surveys. FEHB enrollees rely on feedback from
the customer satisfaction survey in selecting a health plan. The
contracting officer will evaluate this sub-element based on the
carrier's record in cooperating with OPM and/or its designated
representative in administering a customer satisfaction survey as
specified in the FEHB contract and OPM guidance.
(5) Reconsideration/Disputed Claims. The requirement for carriers
to reconsider disputed health benefits claims is in 5 CFR 890.105. An
incomplete explanation of denied benefits by the carrier places a
burden on enrollees, causing them to seek reconsideration because the
carrier did not fully explain its denial. Incomplete responses to
enrollee requests for reconsideration drive enrollees to take the
additional step of requesting reconsideration by OPM. Late carrier
responses to OPM's requests for the carrier's reconsideration file
delays OPM's response to enrollees. When a dispute is brought to OPM
through the disputed claims process, community-rated carriers must
provide thorough and complete information according to OPM-specified
time frames. The contracting officer will evaluate this sub-element
based on the carrier's reconsideration files, including the responses
to enrollees' requests for reconsideration and the carrier's submission
of the reconsideration files to OPM for review of the carrier's
decisions within the time frame specified by OPM.
(6) Paperless Enrollment/Enrollment Reconciliation--(i) Paperless
Enrollment. The requirement to cooperate in the OPM designated system
for paperless enrollment is under the section entitled ``Enrollment
Instructions'' in the FEHB Supplemental Literature Guidelines in the
FEHB contract. The contracting officer will evaluate this sub-element
based on the carrier's efforts at setting up a method of accepting
electronic data transmission from the OPM designated electronic
enrollment system, processing enrollment changes on a weekly basis, and
issuing ID cards timely. Consideration will also be given if the
carrier does not accept enrollment verification letters provided
through the electronic system as proof of insurance.
(ii) Enrollment Reconciliation. The requirement for carriers to
reconcile their enrollment records on a quarterly basis with those
provided by Federal Government agencies is in the Records and
Information to be Furnished by OPM clause of the contract, as well as 5
CFR 890.110 and 5 CFR 890.308 (final regulations pending). The
carrier's cooperation in the enrollment reconciliation process is
essential so that OPM can determine the total premium payment to the
carrier. The contracting officer will evaluate this sub-element based
on the carrier's demonstrated record of complying with OPM guidance in
reconciling enrollments and resolving enrollment discrepancies, as well
as on the carrier's demonstrated record of following disenrollment
procedures in accordance with 5 CFR 890.110 and 890.308 (final
regulations pending).
(b) Critical Contract Compliance Requirements. This performance
[[Page 38363]]
incentive element shall represent 30 percent of the total computation
and shall be based on the carrier's compliance with the following sub-
elements:
(1) Notification of Changes in Name or Ownership; or Transfer of
Assets. OPM must be able to assess the viability of the carrier and its
ability to provide health care to enrollees so that they do not
experience difficulty obtaining treatment and other services. The
contracting officer will evaluate this sub-element based on the
carrier's compliance with FEHBAR Subparts1642.12, Novation and Change-
of-Name Agreements, and 1642.70, Management Agreement (in Lieu of
Novation Agreement).
(2) Notification of Other Significant Events. The carrier must
notify OPM of significant events such as lawsuits, strikes, and natural
disasters so that OPM can assess the carrier's ability to pay claims
and provide services to enrollees. In evaluating this sub-element, the
contracting officer will consider the carrier's demonstrated record of
compliance with 1652.222-70, including timely notification and
explanation of all significant events that may have a material effect
on the carrier's ability to perform the contract. Such events include,
but are not limited to: Disposal of major assets; loss of 15% or more
of its overall membership; addition or termination of provider
agreements; and changes of participating plans.
(3) Notification of Changes in Contract Administrators. OPM must be
able to reach the person responsible for managing the carrier's FEHB
contract without delay when an enrollee calls OPM in need of urgent
medical treatment, an ID card, or other service. Each carrier's
designated contact will maintain telephone and electronic
communications with OPM so that issues can be resolved quickly. The
contracting officer will evaluate this sub-element based on the
carrier's compliance with the Notice clause and Contract Administration
Data sheet in the contract, and will consider the carrier's record in
notifying OPM promptly of changes in its carrier Representative or
contracting official, mailing or electronic address, telephone or FAX
number.
(4) Submission of Required Reports. The reports specified in the
Statistics and Special Studies and FEHB Quality Assurance clauses of
the contract and are essential for tracking enrollment, finances,
rates, etc. The contracting officer will base the carrier's performance
in this sub-element on its demonstrated record in providing timely and
accurate performance, demographics, fraud and abuse, debarment, and CPA
reports, HEDIS and FACCT measures, and other reports as required by OPM
within the OPM-specified time frames.
1609.7101-2 Community-rated carrier performance incentive factors.
OPM will apply the Customer Service and Critical Contract
Compliance Requirements percentage factors specified by the contracting
officer when a community-rated carrier does not provide the
information, payment, or service, perform the function, or otherwise
meet its obligations as stated in 1609.7101-1. The factors will be
added and applied to the carrier's total premium dollars paid for the
preceding contract period. The amount obtained after the total premium
is multiplied by the factor will be withheld from the carrier's
periodic premium payments payable during the first quarter of the
following contract period, unless an alternative payment arrangement is
made with the carrier's contracting officer.
The incentive factors for each basic element are set forth below:
Community-Rated Carrier Performance Incentive Factors
------------------------------------------------------------------------
Incentive
factor (To
be
multiplied
Element by premium
and withheld
from
carrier's
payments)
------------------------------------------------------------------------
I. Customer Service (70% of Total)........................ .007
II. Critical Contract Compliance Requirements (30% of
Total)................................................... .003
Maximum Aggregate Percent of Premium...................... .01
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PART 1632--CONTRACT FINANCING
3. In section 1632.170, paragraphs (a) and (b)(1) are revised to
read as follows:
1632.170 Recurring premium payments to carriers.
(a)(1) Recurring payments to carriers of community-rated plans. OPM
will pay to carriers of community-rated plans the premium payments
received for the plan less the amounts credited to the contingency and
administrative reserves, amounts assessed under paragraph (a)(2) of
this section, and amounts due for other contractual obligations.
Premiums will be due and payable not later than 30 days after receipt
by the Employees Health Benefits (EHB) Fund.
(2) The sum of the two performance incentive factors applicable
under 1609.7101-2 will be multiplied by the carrier's total net-to-
carrier premium dollars paid for the preceding contract period. The
amount obtained after the total premium is multiplied by the sum of the
factors will be withheld from the carrier's periodic premium payment
payable during the first quarter of the following contract period
unless an alternative payment arrangement is made with the carrier's
contracting officer. OPM will deposit the withheld funds in the
carrier's contingency reserve for the plan. The aggregate amount
withheld annually for performance for any carrier shall not exceed one
percent of premium for any contract period.
(b)(1) Recurring payments to carriers of experience-rated plans.
OPM will make payments on a letter of credit (LOC) basis. Premium
payments received for the plan, less the amounts credited to the
contingency and administrative reserves and amounts for other
obligations due under the contract, will be made available for carrier
drawdown not later than 30 days after receipt by the EHB Fund.
* * * * *
PART 1652--CONTRACT CLAUSES
4. The clause heading and paragraph (a) of the clause in section
1652.232-70 are revised to read as follows:
1652.232-70 Payments--community-rated contracts.
* * * * *
PAYMENTS (JAN 1999)
(a) OPM will pay to the Carrier, in full settlement of its
obligations under this contract, subject to adjustment for error or
fraud, the subscription charges received for the plan by the
Employees Health Benefits Fund (hereinafter called the Fund) less
the amounts set aside by OPM for the Contingency Reserve and for the
administrative expenses of OPM, amounts assessed under 1609.7101-2,
and amounts for other obligations due under the contract, plus any
payments made by OPM from the Contingency Reserve.
* * * * *
5. In section 1652.232-71, the clause heading and paragraph (a) of
the clause are revised to read as follows:
1652.232-71 Payments--experience-rated contracts.
* * * * *
PAYMENTS (JAN 1999)
(a) OPM will pay to the Carrier, in full settlement of its
obligations under this contract, subject to adjustment for error or
fraud, the subscription charges received for the Plan by the
Employees Health Benefits
[[Page 38364]]
Fund (hereinafter called the Fund) less the amounts set aside by OPM
for the Contingency Reserve and for the administrative expenses of
OPM and amounts for other obligations due under the contract, plus
any payments made by OPM from the Contingency Reserve.
* * * * *
1652.244-70 [Amended]
6. In section 1652.244-70, in paragraph (f) of the clause, the FAR
reference ``15.903(d)'' is removed and the FAR reference ``15.404-
4(c)(4)(i)'' is added in its place.
7. Section 1652.370 in the table in paragraph (c) the following
clauses and Text references in the FEHBP Clause Matrix are revised as
follows: FAR 52.215-22 and FAR 15.804-8(a) are revised to read 52.215-
10 and 15.408(b) respectively; 52.215-24 and 15.804-8(c) are revised to
read 52.215-12 and 15.408(d) respectively; 52.215-27 and 15.804-8(e)
are revised to read 52.215-15 and 15.408(g) respectively; 52.215-30 and
15.904(a) are revised to read 52.215-16 and 15.408(h) respectively;
52.215-31 and 15.904(b) are revised to read 52.215-17 and 15.408(i)
respectively; and 52.215-39 and 15.804-8(f) are revised to read 52.215-
18 and 15.408(j) respectively; FAR 52.215-70 is revised to read
1652.215-70.
[FR Doc. 98-18967 Filed 7-15-98; 8:45 am]
BILLING CODE 6325-01-P
