[Federal Register Volume 74, Number 33 (Friday, February 20, 2009)]
[Rules and Regulations]
[Pages 7823-7824]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-3675]
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OFFICE OF PERSONNEL MANAGEMENT
48 CFR Part 1652
RIN 3206-AL66
Federal Employees Health Benefits Program Acquisition Regulation:
Miscellaneous Clarifications and Corrections
AGENCY: U.S. Office of Personnel Management.
ACTION: Final rule.
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SUMMARY: The U.S. Office of Personnel Management (OPM) is issuing a
final 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: Effective Date: March 23, 2009.
FOR FURTHER INFORMATION CONTACT: Edward M. DeHarde, Senior Policy
Analyst at 202-606-0004, or e-mail [email protected].
SUPPLEMENTARY INFORMATION: The purpose of this 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.
A proposed rule was published to amend 48 CFR part 1652 in the
Federal Register at 73 FR 51260, September 2, 2008. OPM requested
comments by October 2, 2008. We received one set of comments by that
date, from an FEHBP carrier. The issues raised by the commenter are
discussed below.
The commenter did not have issue with our change at Sec. 1652.216-
70(b)(2) but suggested that we change ``methodology'' in the second
sentence to ``established policy'' to be consistent with the language
used earlier in the section. We have made this clarifying edit in the
final rule.
The commenter indicated that the rule at Sec. 1652.216-70(b)(7)
would encourage carriers to reduce the discounts given to OPM or
eliminate them entirely. The commentator stated that some carriers
offer discounts to prevent against errors and changing assumptions in
the rate proposal, such as changes in assumed Medicare Advantage or
Medicare Part D rates. To offset these changes or errors, the carrier
can then lower the discount it originally offered to OPM. The commenter
suggested that we strike the word ``guaranteed'' from our regulation
and indicate that discounts may be adjusted only ``if the adjustment
results in no change to the net to carrier rate agreed to by OPM before
the beginning of the contract year.''
The proposed rule at Sec. 1652.216-70(b)(7) is consistent with the
requirements of a fixed price health benefits contract established
under the principles of community rating. That is, a plan's premium as
agreed to at time of proposal may change only to the extent that it
reflects a change that occurs in the plan's community. Discounts that
are offered to OPM and guaranteed by the carrier cannot be adjusted
after the start of the contract period.
Finally, the commenter indicated that the proposed regulation was
too broad at Sec. 1652.216-70(b)(8), because OPM sometimes purchases
benefits that are greater than those that the carrier prices in its
community using its ``established rating method.''
Nothing in the proposed rule precludes a carrier from rating for
FEHB-specific provisions or requirements. The carrier must utilize a
consistent rating method for any FEHB-specific provisions and
requirements, and would need to apply this same method to its community
if such provisions or requirements are extended to its community.
Therefore, for the reasons explained above and in the supplementary
information of the proposed rule, the proposed rule amending 48 CFR
part 1652 published in the Federal Register at 73 FR 51260, September
2, 2008, is adopted as final with a minor clarification at Sec.
1652.216-70(b)(2) to change ``methodology'' to ``established policy.''
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.
[[Page 7824]]
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 Part 1652
Government employees, Government procurement, Health insurance,
Reporting and recordkeeping requirements.
U.S. Office of Personnel Management.
Kathie Ann Whipple,
Acting Director.
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Accordingly, OPM is amending chapter 16 of title 48, Code of Federal
Regulations, as follows:
CHAPTER 16--OFFICE OF PERSONNEL MANAGEMENT FEDERAL EMPLOYEES HEALTH
BENEFITS ACQUISITION REGULATION
Subchapter H--Clauses and Forms
PART 1652--CONTRACT CLAUSES
0
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
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2. In Sec. 1652.216-70, revise paragraphs (b)(2), (b)(3), (b)(4), and
(b)(6), and add paragraphs (b)(7) and (b)(8) to read as follows:
Sec. 1652.216-70 Accounting and price adjustment.
* * * * *
(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 SSSGs. If an SSSG receives a rate lower than that
determined according to the carrier's established policy, 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.
* * * * *
[FR Doc. E9-3675 Filed 2-19-09; 8:45 am]
BILLING CODE 6325-39-P