Federal Employees Health Benefits (FEHB) Program and Department of Defense (DoD) Demonstration Project

OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 890

RIN 3206 AI63

Federal Employees Health Benefits (FEHB) Program and Department

of Defense (DoD) Demonstration Project

AGENCY: Office of Personnel Management.

ACTION: Interim regulation.

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SUMMARY: OPM is issuing an interim regulation to implement the portion

of the Defense Authorization Act for 1999 that establishes authority

for a demonstration project under which certain Medicare and other

eligible DoD beneficiaries can enroll in health benefit plans in

certain geographic areas under the Federal Employees Health Benefits

(FEHB) Program. The demonstration project will run for a period of

three years from January 1, 2000, through December 31, 2002. This

regulation specifies only the requirements that differ from existing

FEHB Program regulations because of unique aspects of the demonstration

project.

DATES: The effective date of this regulation is July 6, 1999. Comments

must be received on or before September 7, 1999.

ADDRESSES: Comments must be sent to Abby L. Block, Chief, Insurance

Policy and Information Division, OPM, Room 3425, 1900 E Street, NW.,

Washington, DC 20415-0001.

FOR FURTHER INFORMATION CONTACT: Michael W. Kaszynski, (202) 606-0004.

You may submit comments and data by sending electronic mail (E-mail)

to: [email protected].

SUPPLEMENTARY INFORMATION: The purpose of this regulation is to

implement the portion of the Defense Authorization Act for 1999, Public

Law 105-261, that amended chapter 55 of title 10, United States Code,

and chapter 89 of title 5, United States Code, to establish a

demonstration project under which certain Medicare and other eligible

DoD beneficiaries can enroll in health benefit plans under the FEHB

Program. The legislation was signed into law on October 17, 1998. The

demonstration project will run for a period of three years from January

1, 2000, through December 31, 2002. DoD, with OPM concurrence, has

selected eight geographic areas to serve as demonstration areas. The

legislation requires that between 6 and 10 geographic areas be

selected. No more than 66,000 individuals can participate in the

demonstration project at any one time. Beneficiaries who are provided

coverage under the demonstration project will not be eligible to

receive care at a military medical treatment facility or to enroll in a

health care plan under DoD's TRICARE program. Individuals who disenroll

or cancel enrollment from the demonstration project are not eligible to

reenroll in the demonstration project. OPM will establish separate risk

pools for developing demonstration project enrollee premium rates. The

Government contribution for demonstration enrollees will be paid by DoD

and cannot exceed the amount that the Government would have contributed

had the enrollee been enrolled as a regular FEHB enrollee in the same

health benefits plan and level of benefits.

The legislation requires OPM and DoD to jointly produce and submit

two reports to Congress designed to assess the viability of expanding

access to the FEHB Program to certain Medicare and other eligible DoD

beneficiaries permanently. The first report is due by April 1, 2001;

the second is due by December 31, 2002. The reports will focus on

enrollee participation levels, impact on Medicare Part B enrollment,

impact on premium rates and costs as compared to regular FEHB

enrollees, impact on accessibility of care in military treatment

facilities, impact on medical readiness and training in military

treatment facilities, impact on the cost, accessibility, and

availability of prescription drugs for DoD beneficiaries, and

recommendations on eligibility and enrollment.

OPM has determined it necessary to specify certain differences from

existing FEHB Program regulations because of the unique features of the

demonstration project. This regulation amends Part 890 of title 5, Code

of Federal Regulations (CFR) to authorize these differences. Should the

program be extended beyond the three year demonstration project period,

we will regulate to address any necessary changes to these provisions.

Waiver of Notice of Proposed Rule Making

Pursuant to section 553(b)(3)(B) of title 5 of the United States

Code, I find that good cause exists for waiving the general notice of

proposed rulemaking. The notice is being waived because FEHB Program

carriers need the information contained in these regulations now to

define policy parameters and operational requirements for the

demonstration project in order to prepare and submit benefit and rate

proposals. Carriers need sufficient time to implement changes necessary

for enrollments to be effective January 1, 2000, as required by Public

Law 105-261.

Regulatory Flexibility Act

I certify that this regulation will not have a significant economic

impact on a substantial number of small entities because the regulation

will only affect health insurance carriers under the Federal Employees

Health Benefits Program.

Executive Order 12866, Regulatory Review

This rule has been reviewed by the Office of Management and Budget

in accordance with Executive Order 12866.

List of Subjects in 5 CFR Part 890

Administrative practice and procedure, Government employees, Health

facilities, Health insurance, Health professionals, Hostages, Iraq,

Kuwait, Lebanon, Reporting and record keeping requirements, Retirement.

Office of Personnel Management.

Janice R. Lachance,

Director.

For the reasons set forth in the preamble, OPM is amending 5 CFR

Part 890 as follows:

PART 890--FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM

1. The authority citation for Part 890 is revised to read as

follows:

[[Page 36238]]

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;

Sec. 890.102 also issued under sections 11202(f), 11232(e), 11246

(b) and (c) of Pub. L. 105-33, 111 Stat. 251; and section 721 of

Pub. L. 105-261, 112 Stat. 2061.

PART 890--FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM

2. A new Subpart M is added to read as follows:

Subpart M--Department of Defense Federal Employees Health Benefits

Program Demonstration Project

Sec.

890.1301 Purpose.

890.1302 Duration.

890.1303 Eligibility.

890.1304 Enrollment.

890.1305 Termination and cancellation.

890.1306 Government premium contributions.

890.1307 Data collection.

890.1308 Carrier participation.

Subpart M--Department of Defense Federal Employees Health Benefits

Program Demonstration Project

Sec. 890.1301 Purpose.

The purpose of this subpart is to implement the portion of the

Defense Authorization Act for 1999, Public Law 105-261, that amended

chapter 55 of title 10, United States Code, and chapter 89 of title 5,

United States Code, to establish a demonstration project under which

certain Medicare and other eligible Department of Defense (DoD)

beneficiaries can enroll in health benefit plans in certain geographic

areas under the Federal Employees Health Benefits (FEHB) Program. The

legislation was signed into law on October 17, 1998. The demonstration

project will run for a period of three years. The legislation requires

the Office of Personnel Management (OPM) and DoD to jointly produce and

submit two reports to Congress designed to assess the viability of

expanding access to the FEHB Program to certain Medicare and other

eligible DoD beneficiaries permanently. OPM is authorizing certain

differences from regular FEHB Program practices in order to ensure the

successful implementation of the demonstration project. This subpart

authorizes those differences.

Sec. 890.1302 Duration.

The demonstration project will run from January 1, 2000, through

December 31, 2002.

Sec. 890.1303 Eligibility.

(a) Eligible enrollees must live within one of the demonstration

areas and meet the definition of an eligible beneficiary in 10 U.S.C.

1108 (b). An eligible beneficiary under this subpart is--

(1) A member or former member of the uniformed services described

in section 1074(b) of title 10, United States Code, who is entitled to

hospital insurance benefits under part A of title XVIII of the Social

Security Act (42 U.S.C. 1395c et seq.);

(2) An individual who is an unremarried former spouse of a member

or former member described in section 1072(2)(F) or section 1072(2)(G)

of title 10, United States Code;

(3) An individual who is--

(i) A dependent of a deceased member or former member described in

section 1076(b) or 1076(a)(2)(B) of title 10, United States Code, or of

a member who died while on active duty for a period of more than 30

days; and

(ii) A ``member of family'' as defined in section 8901(5) of title

5, United States Code; or

(4) An individual who is--

(i) A dependent of a living member or former member described in

section 1076(b)(1) of title 10, United States Code, who is entitled to

hospital insurance benefits under part A of title XVIII of the Social

Security Act, regardless of the member's or former member's eligibility

for such hospital insurance benefits; and

(ii) A ``member of family'' as defined in section 8901(5) of title

5, United States Code.

(b) An eligible beneficiary may enroll in an FEHB plan under

chapter 89 of title 5, United States Code, for self-only coverage or

for self and family coverage. A self and family enrollment will include

coverage of a dependent of the military member or former member who

meets the definition of a ``member of family'' in section 8901(5) of

title 5, United States Code. A self and family enrollment will not

cover a person related to the beneficiary that does not qualify as a

``member of family'' (as defined in section 8901(5) of title 5, United

States Code) of the military member or former member.

(c) A person eligible for coverage under this subpart shall not be

required to satisfy any eligibility criteria specified in chapter 89 of

title 5, United States Code, or in other subparts of this part (except

as provided in paragraphs (a)(3), (a)(4), and (b) of this section) as a

condition for enrollment in health benefit plans offered through the

FEHB Program under the demonstration project.

(d) For purposes of determining whether an individual is a ``member

of family'' under section 8901(5) of title 5, United States Code, for

purposes of paragraph (a)(3) and (a)(4) of this section, a DoD member

or former member described in section 1076(b) or 1076(a)(2)(B) of title

10, United States Code, shall only be deemed to be an employee under

8901(5) of title 5, United States Code, for the purpose of determining

enrollment eligibility of a demonstration project dependent

beneficiary.

(e) A person who is eligible to enroll in the FEHB Program as an

employee as defined in section 8901(1) of title 5, United States Code,

is not eligible to enroll in an FEHB plan under the demonstration

project.

Sec. 890.1304 Enrollment.

(a) The 1999 health benefits open season for demonstration

enrollees will be held concurrent with the open season for regular FEHB

enrollees. Open seasons also will be held during the same period in the

years 2000 and 2001. Eligible beneficiaries will be able to enroll for

coverage, change enrollment tiers (e.g., self-only or self and family),

or change health benefit plans or plan options during these periods.

(b) Demonstration project enrollees are required to pay associate

membership dues if they enroll in open employee organization sponsored

plans that are participating in the demonstration project.

(c) DoD will deny enrollment of eligible beneficiaries when the

total number of beneficiaries and family members enrolled in the

demonstration project reaches 66,000.

(d) Eligible beneficiaries can enroll only in health plans offered

by health benefit carriers who are participating in the demonstration

project.

(e) Beneficiaries and family members enrolled in the demonstration

project are not eligible to obtain services from military treatment

facilities or to enroll in a health care plan under the TRICARE

Program.

(f) An eligible beneficiary enrolled in an FEHB plan under the

demonstration project may change health benefits plans and coverage in

the same manner as any other FEHB Program enrollee, except as provided

for in this subpart.

Sec. 890.1305 Termination and cancellation.

(a) If a DoD enrolled beneficiary moves out of a demonstration

area, the enrollment of the beneficiary and all family members will be

terminated. If a beneficiary moves to an area located within a

demonstration area, he or she will continue to be eligible to

participate in the demonstration project. If the beneficiary was

enrolled prior to the move in an HMO that does not serve the new

demonstration area, the beneficiary will have an opportunity to

[[Page 36239]]

select a new health plan offered by a carrier participating in the

demonstration project in the new area. If the beneficiary was enrolled

in a fee-for-service plan prior to the move and moves to another area

that is within an existing demonstration area, the beneficiary can

maintain his or her current coverage.

(b) If a DoD beneficiary disenrolls, cancels, or terminates

enrollment for any reason, he or she will not be eligible to reenroll

in the demonstration project. Once coverage ends, members have the

right to revert back to all of the benefits to which they were entitled

to under title 10 of the United States Code. Medicare covered members

who had a Medigap policy prior to their enrollment in the demonstration

project are entitled to reinstate that coverage under the conditions

stated in section 1108(l) of title 10 United States Code.

(c) Demonstration project beneficiaries and members of family are

eligible for Temporary Continuation of Coverage (TCC) under the

conditions and for the durations described in subpart K or until the

end of the demonstration project, whichever occurs first. The effective

date of TCC for demonstration project beneficiaries or members of

family will be the day after other coverage under this subpart ends.

Beneficiaries or members of family selecting TCC must enroll in a

health plan offered by a carrier participating in the demonstration

project. If an individual enrolled in DoD TCC moves from a

demonstration project area, coverage ends. Beneficiaries will be

responsible for paying the entire DoD premium rate (OPM's approved net-

to-carrier DoD rate plus 4 percent for contingency and administration

reserves) plus 2 percent of this premium rate for administration of the

program. DoD will make arrangements to collect premiums plus the 2

percent administrative charge from beneficiaries and forward them to

OPM's Health Benefits Fund. OPM will establish procedures for receiving

the 2 percent administrative payment into the Health Benefits Fund and

making this amount available to DoD for administration of the program.

(d) Enrolled demonstration project beneficiaries are not eligible

for the temporary extension of coverage and conversion opportunities

described in subpart D of this part.

Sec. 890.1306 Government premium contributions.

The Secretary of Defense is responsible for the Government

contribution for demonstration project enrolled beneficiaries. The

Government contribution toward demonstration project premium rates will

be determined in accordance with subpart E of this part.

Sec. 890.1307 Data collection.

Carriers will compile, maintain, and when requested by OPM or DoD

report data on their plan's experience necessary to produce reports

containing the following information and analysis:

(a) The number of eligible beneficiaries who elect to participate

in the demonstration project.

(b) The number of eligible beneficiaries who elected to participate

in the demonstration project and did not have Medicare Part B coverage

before electing to participate.

(c) The costs of health benefits charges and the costs (direct and

indirect) of administering the benefits and services provided to

eligible beneficiaries who elect to participate in the demonstration

project as compared to similarly situated enrollees in the FEHB

Program.

(d) Prescription drug costs for demonstration project

beneficiaries.

Sec. 890.1308 Carrier participation.

(a) All carriers who participate in the FEHB Program and provide

benefits to enrollees in the geographic areas selected as demonstration

project areas must participate in the demonstration project, except as

provided for in paragraphs (b), (c), and (d) of this section.

(b) Carriers who have less than 300 FEHB enrollees may, but are not

required to, participate in the demonstration project.

(c) Carriers may, but are not required to, participate in the

demonstration project if their service area overlaps a small portion

(as determined by OPM) of a demonstration project geographic area.

(d) Carriers offering fee-for-service plans with enrollment limited

to specific groups will not participate in the demonstration project.

[FR Doc. 99-16912 Filed 7-2-99; 8:45 am]

BILLING CODE 6325-01-U