E8-20269. Federal Employees Health Benefits Program Acquisition Regulation: Miscellaneous Clarifications and Corrections

AGENCY:

Office of Personnel Management.

ACTION:

Proposed rule.

SUMMARY:

The Office of Personnel Management (OPM) is issuing a proposed rule to amend the Federal Employees Health Benefits Acquisition Regulations (FEHBAR). The rule clarifies the rate setting process for community rated carriers with respect to Similarly Sized Subscriber Groups (SSSG) and removes the ban on adjustments based on rate reconciliation for the final year of Federal Employees Health Benefits Program (FEHBP) contracts.

DATES:

Comments must be received on or before: October 2, 2008.

FOR FURTHER INFORMATION CONTACT:

Edward M. DeHarde, Senior Policy Analyst at 202-606-0004, or e-mail [e-mail].

ADDRESSES:

You may submit comments, identified by docket number and/or RIN number by any of the following methods:

• Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.
• Mail: Edward M. DeHarde, Senior Policy Analyst, Insurance Policy Group, Office of Personnel Management, 1900 E Street, NW., Room 3415, Washington, DC 20415.

SUPPLEMENTARY INFORMATION:

The purpose of this proposed regulation is to clarify requirements with respect to the rate setting process for community rated carriers and to require rate reconciliation for the final contract term for community rated carriers that leave the FEHBP.

In prior years, carriers were not subjected to rate reconciliation in the final year of their contracts. Information technology and electronic transmission and storage of data now make it possible to efficiently perform rate reconciliation for the final contract year. Therefore, OPM will begin conducting such rate reconciliation on community rated contracts that terminate after January 1, 2009.

Regulatory Flexibility Act

I certify that this regulation will not have a significant economic impact on a substantial number of small entities because all the small plan FEHBP contracts fall below the threshold for submitting cost or pricing data.

Executive Order 12866, Regulatory Review

This rule has been reviewed by the Office of Management and Budget in accordance with Executive Order 12866.

Lists of Subjects in 48 CFR Parts 1652

• Government employees
• Government procurement
• Health insurance
• Reporting and recordkeeping requirements

Office of Personnel Management.

Michael W. Hager,

Acting Director.

Accordingly, OPM proposes to amend chapter 16 of title 48, CFR as follows:

PART 1652—CONTRACT CLAUSES

1. The authority citation for part 1652 continues to read as follows:

Authority: 5 U.S.C. 8913; 40 U.S.C. 486(c); 48 CFR 1.301.

Subpart 1652.2—Texts of FEHBP Clauses

2. Amend § 1652.216-70 by revising paragraphs (b)(2) through (b)(4) and (b)(6), and adding paragraphs (b)(7) and (b)(8) to read as follows:

1652.216-70

Accounting and price adjustment.

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(b) * * *

(2) The subscription rates agreed to in this contract shall be equivalent to the subscription rates given to the carrier's similarly sized subscriber groups (SSSGs) as defined in FEHBAR 1602.170-13. The subscription rates shall be determined according to the carrier's established policy which must be applied consistently to the FEHBP and to the carrier's similarly sized subscriber groups (SSSGs). If an SSSG receives a rate lower than that determined according to the carrier's methodology, it is considered a discount. The FEHBP must receive a discount equal to or greater than the carrier's largest SSSG discount.

(3) If, at the time of the rate reconciliation, the subscription rates are found to be lower than the equivalent rates for the lower of the two SSSGs, the carrier may include an adjustment to the Federal group's rates for the next contract period, except as noted in paragraph (b)(7) of this clause.

(4) If, at the time of the rate reconciliation, the subscription rates are found to be higher than the equivalent rates for the lower of the two SSSGs, the Carrier shall reimburse the Fund, for example, by reducing the FEHB rates for the next contract term to reflect the difference between the estimated rates and the rates which are derived using the methodology of the lower rated SSSG, except as noted in paragraph (b)(7) of this clause.

* * * * *

(6) For contract years beginning on or after January 1, 2009, in the event this contract is not renewed, the final rate reconciliation will be performed. The carrier must promptly pay any amount owed to OPM. Any amount recoverable by the carrier is limited to the amount in the contingency reserve for the terminating plan as of December 31 of the terminating year.

(7) Carriers may provide additional guaranteed discounts to the FEHBP that are not given to SSSGs. Any such guaranteed discounts must be clearly identified as guaranteed discounts. After the beginning of the contract year for which the rates are set, these guaranteed FEHBP discounts may not be adjusted.

(8) Carriers may not impose surcharges (loadings not defined based on an established rating method) on the FEHBP subscription rates or use surcharges in the rate reconciliation process irrespective of whether surcharges are applied to the SSSGs.