[Federal Register Volume 63, Number 199 (Thursday, October 15, 1998)]
[Rules and Regulations]
[Pages 55336-55339]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-27343]
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OFFICE OF PERSONNEL MANAGEMENT
48 CFR Parts 1609, 1632 and 1652
RIN 3206-AI16
Federal Employees Health Benefits Program Improving Carrier
Performance; Conforming Changes
AGENCY: Office of Personnel Management.
ACTION: Final rule.
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SUMMARY: The Office of Personnel Management (OPM) is issuing a final
regulation that implements OPM's initiative to ensure high quality
customer service to its enrollees in the Federal Employees Health
Benefits (FEHB) Program by establishing a performance evaluation
program that will hold community-rated carriers accountable for their
performance. The regulation would enable OPM to better manage carriers'
performance in key contract areas, including customer service measures,
information and reporting requirements, and significant events that
might affect service to enrollees.
EFFECTIVE DATE: November 16, 1998.
FOR FURTHER INFORMATION CONTACT: Mary Ann Mercer (202) 606-0004.
SUPPLEMENTARY INFORMATION: On July 16, 1998, OPM issued a proposed
regulation in the Federal Register (63 FR 38360) 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. Such a program is 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. Percentage factors will be assigned to two overall
categories, Customer Service and Critical Contract Compliance
Requirements. The Contracting Officer will assign a percentage factor
for each category based on the carrier's record in meeting its
obligations during the contract year. The percentage factor will be
applied to each community-rated carrier's total annual FEHB premium.
The total amount withheld from a carrier cannot exceed one percent of
premium paid for any contract year. Accurate and timely performance by
carriers will facilitate the Program meeting its customer service
standards.
OPM received comments from sixteen insurance carriers, one
Government agency, and one health plan trade association. The majority
of the commenters were in favor of the proposed regulations, although
each had specific areas of concern, which are addressed below.
Comments focused on uncertainty regarding the amount of money at
potential risk; subjectivity of the FEHB Program Carrier Evaluation
rating system; the percentage of premium used; the absence of weights
for each category; the rating of performance elements when there is a
nonoccurrence of an event; and other sources than total premium for the
withhold. Some commenters had the perception that the withhold is a
penalty rather than an incentive or that OPM might unilaterally
withhold amounts for items not previously agreed to by contract. Others
were more concerned about the absence of notification to carriers of
withdrawal of funds, and the lack of an appeals process.
Numerous carriers felt the rating categories outlined in the
proposed regulation and provided in detail in draft separately to
carriers as the FEHB Program Carrier Evaluation form were subjective
and had no assigned weights to the items of the performance standards.
OPM considered the comments and made the following changes to the FEHB
Program Carrier Evaluation form. Each item of the performance standard
was ranked and assigned a weight, and components within such elements
were reviewed and streamlined to make the form more functional and
objective. The total Customer Service and Critical Contract Compliance
Requirements percentage factors remain unchanged at a maximum of one
percent of total premium.
Items of the standard, Meeting Customer Service Performance
Standards, were ranked as follows: (1) Timely Closure on Rates and
Benefits Consistent with Policy Guidelines; (2) Customer Information;
(3) Meeting Customer Service Performance Standards; (4) Cooperation in
Surveys; (5) Paperless Enrollment/Enrollment Reconciliation, and; (6)
Reconsideration/Disputed Claims. The Critical Contract Compliance
Requirements were ranked: (1) Timeliness of Submissions, (2)
Notification of Changes in Contract Administrators, and; (3)
Notification of Changes in Name or Ownership or Transfer of Assets, and
Notification of Other Significant Events.
One commenter expressed concern about how carriers would be rated
for the nonoccurrence of an event, such as would likely occur in the
Critical Contract Compliance Requirements. Carriers will be evaluated
on each item of the performance category and it is expected that, in
most cases, the performance factor percentage applied to carriers'
total premium will be substantially less than one percent. If an event
does not occur, no deduction will be taken.
OPM has considered the carriers' comments about using contingency
reserves as the source of the withhold,
[[Page 55337]]
but we do not believe such reserve is the appropriate vehicle. The
clause has been amended to allow the carrier 60 days in which to rebate
the FEHB Program before OPM will take action to withhold the amount
owed from the carrier's total premiums. Carriers are also assured that
OPM will not apply the withhold provision in the Payments clause to
matters not previously agreed to as a program or contract requirement
between OPM and the carriers.
Two commenters stated that the performance regulation does not
comport with the Debt Collection Act, 5 U.S.C. 5514. The Debt
Collection Act referenced by this commenter does not apply to the
government contracts affected by this regulation. Rather, that Act
relates to actions of the United States in collecting debts owed by
employees or members of the Armed Services by offset from certain
authorized sources of pay. The Act does not apply with respect to the
collection or offset of monies owed to the United States by an
insurance carrier under contract with the government.
The same commenters stated that the performance regulation does not
comport with ``Contract Debts,'' Part 32.6 of the FAR. It is OPM's view
that the contract debt provisions harmonize with and support the
implementation of the performance regulation. Assuming that the
performance failure were considered a contract debt, Part 32.6 of the
FAR contains provisions that contemplate liquidation of the debt by
credit against existing unpaid bills due the contractor, or offset of
the debt in place of demand for payment so long as an explanation of
the offset is provided. In the event that a performance amount is
withheld from premium payment to a carrier, OPM intends to provide full
information and explanation with respect to the offset. Thus, we do not
believe that the performance regulation fails to comport with Part 32.6
of the FAR.
Numerous commenters stated that the performance regulation
constitutes a penalty and not an incentive. In the private sector
various purchasing groups use comparable performance factors as
incentives. Such programs frequently require a rebate by the carrier
when certain purchaser set requirements are not met. Incentive by
definition is neither positive or negative. Nevertheless, we have
changed the term from performance incentive to performance clause.
In response to concerns about a carrier's right to appeal a
performance determination, OPM seeks to assure carriers that the
appeals process will be consistent with the appeals process for other
issues of contract administration. In the event that a performance
factor is applied against a carrier, OPM will inform the carrier of the
amount due and will provide documentation supporting the reasons for
the performance finding. The carrier may seek reconsideration of the
finding, and may contest the Contracting Officer's final decision by
asserting a claim against the government in the same manner that the
carrier would pursue any other administrative claim under the contract.
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 record keeping requirements, Retirement.
Office of Personnel Management.
Janice R. Lachance,
Director.
Accordingly, OPM is amending title 48 CFR Parts 1609, 1632, and
1652 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 Evaluation
Sec.
1609.7101 Policy.
1609.7101-1 Community-rated carrier incentive performance elements.
1609.7101-2 Community-rated carrier performance factors.
1609.7101 Policy.
At the end of each contract period, the contracting officer will
determine each community-rated carrier's responsiveness to the Program
requirements in 1609.7101-1.
1609.7101-1 Community-rated carrier incentive performance elements.
(a) Customer Service. This 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 category
will represent 70 percent of the total calculation and will be based on
the carrier's compliance with the following items:
(1) 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 the established time frames.
The contracting officer will evaluate this item based on the carrier's
demonstrated record in providing its rate reconciliation and benefits
information within the time frames prescribed by and in the format
required by OPM.
(2) Customer Information. Enrollees must have accurate information
and adequate time to make informed Open Season choices in selecting a
health plan. In evaluating this item, the contracting officer will
consider the carrier's timeliness and accuracy of information.
(3) Meeting Customer Service Performance Standards. Compliance with
this item 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 item based on the carrier's
submission of the Consumer Assessment of Health Plans Study (CAHPS)
survey results and other measures as required contractually between OPM
and the carrier. (This element will be implemented beginning with
contract year 2000).
(4) Cooperation in Surveys. FEHB enrollees rely on feedback from
the consumer assessment survey in selecting a health plan. The
contracting officer will evaluate this item based on the carrier's
record in cooperating with OPM and/or its designated representative in
administering a consumer assessment survey or providing comparable
survey results as specified in the FEHB contract and OPM guidance.
(5) 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 item based on
the carrier's
[[Page 55338]]
ability to accept electronic data transmission from the OPM designated
electronic enrollment system and issue ID cards timely.
(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. The contracting officer will evaluate
this item based on the carrier's demonstrated record of initiating
reconciliation procedures with applicable agency payroll offices on a
quarterly basis in accordance with OPM guidance on 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.
(6) 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. Late carrier responses to
OPM's requests for the carrier's reconsideration file delays OPM's
response to enrollees. The contracting officer will evaluate this item
based on whether the carrier provided OPM a complete reconciliation
file within the time frame specified.
(b) Critical Contract Compliance Requirements. This performance
category will represent 30 percent of the total computation and will be
based on the carrier's compliance with the following items:
(1) Timely Submissions. 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. In
evaluating this item, the contracting officer will consider the
carrier's timely submission of the contract, signed by the contracting
official, to OPM, and on its demonstrated record in providing timely
and accurate reports as required.
(2) 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 must maintain telephone and electronic
communications with OPM so that issues can be resolved quickly. The
contracting officer will evaluate this item 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.
(3) Notification of Changes in Name or Ownership; or Transfer of
Assets, and Notification of Other Significant Events. 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. Additionally, with regard to
notification to OPM of other significant events, the carrier must
notify OPM of such events as lawsuits, strikes, and natural disasters
so that OPM can assess the carrier's ability to pay claims and provide
services to enrollees. The contracting officer will evaluate this item
based on the carrier's compliance with FEHBAR Subparts 1642.12,
Novation and Change-of-Name Agreements, 1642.70, Management Agreement
(in Lieu of Novation Agreement), and 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.
1609.7101-2 Community-rated carrier performance 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 total premium will
be multiplied by the sum of all the factors and the resulting amount
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 factors for each basic element are set forth as follows:
Community-Rated Carrier Performance Factors
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Performance
factor (to
be
multiplied
Element by premium
and withheld
from
carrier's
payments)
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I. Customer Service (70% of Total)........................ .007
II. Critical Contract Compliance Requirements (30% of
Total)................................................... .003
Maximum Aggregate Performance Factor...................... .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.
Premium payments will be due and payable not later than 30 days after
receipt by the Federal Employees Health Benefits (FEHB) Fund.
(2) The sum of the two performance 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 will 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 FEHB Fund.
* * * * *
[[Page 55339]]
PART 1652--CONTRACT CLAUSES
4. In 1652.232-70 the clause date is revised, and paragraphs (b),
(c), and (d) are redesignated as (c), (d), and (e) respectively,
paragraph (a) is revised, and a new paragraph (b) is added 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 FEHBAR
1609.7101-2, and amounts for obligations due pursuant to paragraph
(b) of this clause, plus any payments made by OPM from the
Contingency Reserve.
(b) OPM will notify the Carrier of amounts due for outstanding
obligations under the contract. Not later than 60 days after the
date of written notice from OPM, the Carrier shall reimburse OPM. If
payment is not received within the prescribed time frame, OPM shall
withhold the amount due from the subscription charges owed the
Carrier under paragraph (a) of this clause.
* * * * *
5. In 1652.232-71 the clause date is revised, paragraphs (b), (c),
and (d) are redesignated as (c), (d), and (e) respectively, paragraph
(a) is revised, and a new paragraph (b) is added 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 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 obligations due
pursuant to paragraph (b) of this clause, plus any payments made by
OPM from the Contingency Reserve.
(b) OPM will notify the Carrier of amounts due for outstanding
obligations under the contract. Not later than 60 days after the
date of written notice from OPM, the Carrier shall reimburse OPM. If
payment is not received within the prescribed time frame, OPM shall
withhold the amount due from the subscription charges owed the
Carrier under paragraph (a) of this clause.
* * * * *
1652.244-70 [Amended]
6. In section 1652.244-70, in paragraph (f), the FAR reference
``15.903(d)'' is removed and the FAR reference ``15.404-4(c)(4)(i)'' is
added in its place.
7. The following clauses and Text references in the FEHBP Clause
Matrix at 1652.3 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.
8. In Subpart 1652.3, FEHBP Clause Matrix, clause number 52.222-36
is revised to read Affirmative Action for Workers with Disabilities.
[FR Doc. 98-27343 Filed10-14-98; 8:45 am]
BILLING CODE 6325-01-P