82 FR 60126 - Federal Employees Health Benefits Program Flexibilities

OFFICE OF PERSONNEL MANAGEMENT

Federal Register Volume 82, Issue 242 (December 19, 2017)

To correct an asymmetry in the insurance market for Federal employees and annuitants, this proposed regulation provides all Federal Employees Health Benefits (FEHB) Program carriers the ability to offer the same number and types of plan options. Currently, OPM regulations defining minimum standards for health benefits plans allows certain plans to have two options and a high deductible health plan, while other plans may have three options of any type or two options and a high deductible health plan, creating an asymmetry between the potential offerings of health benefits plans. We are revising the regulations so all health benefits plans are able to offer three options or two options and a high deductible health plan. This rule will give FEHB enrollees more health plan choices allowing them to select a health plan that best meets their family's health care needs.

[Federal Register Volume 82, Number 242 (Tuesday, December 19, 2017)]
[Proposed Rules]
[Pages 60126-60128]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-27067]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 82, No. 242 / Tuesday, December 19, 2017 / 
Proposed Rules

[[Page 60126]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 890

RIN 3206-AN54


Federal Employees Health Benefits Program Flexibilities

AGENCY: Office of Personnel Management.

ACTION: Proposed rule.

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SUMMARY: To correct an asymmetry in the insurance market for Federal 
employees and annuitants, this proposed regulation provides all Federal 
Employees Health Benefits (FEHB) Program carriers the ability to offer 
the same number and types of plan options. Currently, OPM regulations 
defining minimum standards for health benefits plans allows certain 
plans to have two options and a high deductible health plan, while 
other plans may have three options of any type or two options and a 
high deductible health plan, creating an asymmetry between the 
potential offerings of health benefits plans. We are revising the 
regulations so all health benefits plans are able to offer three 
options or two options and a high deductible health plan. This rule 
will give FEHB enrollees more health plan choices allowing them to 
select a health plan that best meets their family's health care needs.

DATES: OPM must receive comments on or before February 20, 2018.

ADDRESSES: You may submit comments, identified by docket number and/or 
Regulatory Information Number (RIN) and title, by any of the following 
methods:
     Federal Rulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail: Michael Kaszysnki, Senior Policy Analyst, Planning 
and Policy Analysis, U.S. Office of Personnel Management, Room 4312, 
1900 E Street NW, Washington, DC 20415.
    All submissions received must include the agency name and docket 
number or RIN for this document. The general policy for comments and 
other submissions from members of the public is to make these 
submissions available for public viewing at http://www.regulations.gov 
as they are received without change, including any personal identifiers 
or contact information.

FOR FURTHER INFORMATION CONTACT: Michael W. Kaszynski, Senior Policy 
Analyst, at [email protected] or (202) 606-0004.

SUPPLEMENTARY INFORMATION:

Authority for This Rulemaking

    The Federal Employees Health Benefits (FEHB) Program is 
administered by the Office of Personnel Management (OPM) in accordance 
with Title 5, Chapter 89 U.S.C. and our implementing regulations (Title 
5, Part 890 and Title 48, Chapter 16). The statute establishes the 
basic rules for benefits, enrollment, and participation. OPM is 
authorized to contract with health insurance carriers; approve health 
plans for participation in the program; negotiate with carriers about 
benefit and premium levels; determine the times and conditions for an 
annual open enrollment period known as ``open season'' during which 
eligible individuals may elect coverage or change plans; make 
information available to employees concerning plan options; evaluate 
health plans on key parameters of clinical quality, customer service, 
resource use in comparison with national benchmarks and contract 
oversight requirements; apply administrative sanctions to health care 
providers that have committed certain violations; and administer the 
program's financing.
    OPM is also responsible for maintaining the funds that hold 
contingency reserves for the plans and the fund that receives premium 
payments from enrollees and Federal agencies, from which premiums are 
disbursed to participating plans. OPM determines whether retiring 
employees or survivor annuitants meet the requirements to continue 
health insurance coverage; takes the action necessary to terminate, 
accept, or continue enrollment; oversees the automatic deduction of 
premiums from monthly annuity checks and credits the premiums, along 
with the applicable Government contribution, to the proper account; 
processes all enrollment changes; notifies affected carriers of 
enrollment changes; and keeps enrolled retirees advised of rate and 
benefit changes within their plan.

Background

    The Federal Employees Health Benefits (FEHB) Program provides 
health insurance to about 8.2 million Federal employees, retirees, and 
their dependents each year. It is the largest employer-sponsored health 
insurance program in the country providing more than $53 billion in 
health care benefits annually. Eligible individuals include Federal 
employees, retirees, and their family members. As of May 2012, certain 
Indian tribal employers began purchasing coverage for their employees. 
Coverage options available to eligible individuals include individual 
or family coverage in an approved health benefits plan. Beginning in 
calendar year 2016, individuals have a third coverage option: Self plus 
one coverage for themselves and one eligible family member.
    Generally, available health benefits plans fall into two broad 
categories: Fee-for-service (FFS) or health maintenance organizations 
(HMOs). FFS plans tend to be available nationwide, and HMOs tend to be 
locally available. Based on our March 2017 headcount reports, 16 
percent of all contracts are enrolled in HMO plans and 84 percent are 
enrolled in FFS plans. Premiums are shared between the Federal 
Government and the employee or retiree. Benefits and cost sharing vary 
among FEHB plans, but all plans must cover basic services such as 
hospital and physician care and may require cost sharing in the form of 
deductibles, co-payments, or coinsurance. FEHB financing includes 
Government contributions to premiums, policyholder contributions to 
premiums, contingency reserves in the U.S. Treasury to offset 
unexpected increases in costs, and administrative expenses incurred by 
OPM.
    By statute, Government and the employee or retiree share the cost 
of health insurance, with the Federal Government contributing 72 
percent of the weighted average premium of all plans but no more than 
75 percent of any given plan's premium, with the exception of employees 
of the United States Postal Service (USPS), whose

[[Page 60127]]

share of the premium is collectively bargained and certain other 
exempted agencies.
    Title 5 U.S.C. 8903 specifies the types of health plans with which 
OPM may contract for FEHB. Enrollees choose a health plan from a health 
insurance carrier that offers one or more plans. There are currently 
262 different health plan options to choose from. As a practical 
matter, depending on where an enrollee resides, his or her choice of 
plans is limited to about 15 different plans on average.
    Individuals may enroll or change plans during the FEHB annual open 
season, or through a Qualifying Life Event (QLE), such as marriage. 
Plan offerings in terms of benefits and premiums may change during each 
open season. Details for all FEHB plans are available on OPM's website 
at https://www.opm.gov/healthcare-insurance/healthcare/plan-information/plans/.

Summary of Current Health Plan Options

    Generally, health insurance carriers and their health plans fall 
into two broad categories: Fee-for-service (FFS) plans (plans under 5 
U.S.C. 8903(1), (2) and (3)) or health maintenance organizations (HMOs) 
(plans under 5 U.S.C. 8903(4)). FFS plans are generally available 
nationwide, and HMOs tend to be locally available.
    FFS plans and HMOs are structured differently. Enrollees may base 
their decision to join a FFS plan or an HMO based on a variety of 
factors, such as whether they already have a preferred medical provider 
and where they live. However, a key difference for enrollees is the 
flexibility that FFS plans usually provide around the use of out-of-
network providers. FFS plans are more likely to allow access to out-of-
network providers, with increased out-of-pocket costs, than HMOs.
    The FEHB Program typically offers about 19 FFS plans that are 
available nationally across the Federal Government (although 4 are open 
only to certain types of Federal employees). Many FFS plans have a 
preferred provider organization (PPO) whereby medical providers have 
contracted with the health plan to offer discounted charges. Enrollees 
may choose providers outside of the PPO but will pay a larger share of 
the cost of services from these providers. Some FFS plans only offer 
in-network providers, except in emergencies.

Discussion of the Proposed Changes

    To correct an asymmetry in the insurance market for Federal 
employees and annuitants, this proposed regulation provides all Federal 
Employees Health Benefits (FEHB) Program carriers the ability to offer 
the same number and types of plan options. Currently, OPM regulations 
at 5 CFR 890.201 on minimum standards for health benefits plans allows 
5 U.S.C. 8903(1) and (2) to have two options and a high deductible 
health plan, but plan types under 5 U.S.C. 8903(3) and (4) may have 
three options or two options and a high deductible health plan creating 
an asymmetry between the potential offerings of types of health 
benefits plans. We are revising the regulations so all health benefits 
plans under 5 U.S.C. 8903 have the language that includes three options 
or two options and a high deductible health plan. This will give 
enrollees additional options when considering which health plan is best 
suited for them, for example, using a variety of variables such as 
premium, co-pay, and deductible costs, provider networks, and referral 
and pre-authorization policies. Since all health plans must compete 
annually for enrollees, adding additional options could create an 
incentive for plans to keep premiums as low as possible to attract 
enrollees. This regulation fully aligns with the Administration's goal 
of promoting affordable health plan choices.

Expected Impact of Proposed Changes

    The FEHB Program currently contracts with 83 health plan carriers 
which offer a total of 262 health plan options. These proposed changes 
are projected to create two additional plan options in the FEHB 
Program.
    OPM expects that this regulatory change allowing an increase in the 
number plan options will have a positive effect on the market dynamics 
in the FEHB Program by potentially increasing competition between 
health plans. This regulatory change will allow health plans under 5 
U.S.C. 8903(1) and (2) to offer lower cost, higher quality options to 
better serve FEHB Program enrollee interests.
    It is difficult to anticipate potential changes in enrollment due 
to this regulatory change because our regulations have previously 
prohibited plans in these statutory categories from having three 
options. However, we anticipate that a portion of enrollees will move 
to lower cost, higher quality options because OPM will ensure that 
additional options are distinct and meet enrollee interests and 
enrollees will have access to adequate information to understand the 
available plan options.
    While this rule will allow another option for certain carriers, a 
carrier is not mandated to offer a new option and this regulation does 
not increase the number of insured individuals in the FEHB Program. If 
a current enrollee enrolls in one of the new plan options they will be 
disenrolled from their old one.
    OPM does not believe that this regulation will have a large impact 
on the broader health insurance market since FEHB generally constitutes 
a smaller percentage of the overall health insurance carrier's book of 
business. OPM also believes that employees and annuitants make their 
health care decisions based on a variety of factors, including 
networks, premiums, etc., so changes in plan enrollments will be 
determined by individual choice. However, because OPM does not have 
extensive data to determine the impact of this regulation, we are 
seeking comments on the following:
    1. How will the changes made by this regulation impact the broader 
health insurance market?
    2. How will the changes made by this regulation impact the 
enrollment of annuitants compared to employees?
    3. How will the regulation impact changes to enrollment in the FEHB 
Program?

Executive Order Requirements

    Executive Orders 13563 and 12866 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This rule has been designated a ``significant regulatory 
action,'' under Executive Order 12866.

Paperwork Reduction Act Requirements

    Notwithstanding any other provision of law, no person is required 
to respond to, nor shall any person be subject to a penalty for failure 
to comply with a collection of information subject to the requirements 
of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), 
unless that collection of information displays a currently valid Office 
of Management and Budget (OMB) Control Number.
    This rule involves an OMB approved collection of information 
subject to the PRA--OMB No. 3206-0160, Health Benefits Election Form. 
The public reporting burden for this collection is

[[Page 60128]]

estimated to average 30 minutes per response, including time for 
reviewing instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information. The total burden hour estimate for this form 
is 9,000 hours. The systems of record notice for this collection is: 
OPM/Central 1 Civil Service Retirement and Insurance Records, available 
at https://www.opm.gov/information-management/privacy-policy/sorn/opm-sorn-central-1-civil-service-retirement-and-insurance-records.pdf.
    The FEHB Program currently has a total of 262 health plan options 
for employees to choose from for their health benefits coverage. 
Historically, about 18,000 of FEHB participants switch health care 
plans in any given year. This regulation has the potential to add two 
new enrollment codes representing new plan options and is not 
anticipated to significantly change the burden associated with this 
collection.
    Send comments regarding the burden estimate or any other aspect of 
this collection of information, including suggestions for reducing this 
burden to [email protected]. The final rule will respond to any OMB 
or public comments on the information collection requirements contained 
in this proposal.

Regulatory Flexibility Act

    I certify that these regulations will not have a significant 
economic impact on a substantial number of small entities.

EO 13771: Reducing Regulation and Controlling Regulatory Costs

    This proposed rule is expected to be an EO 13771 deregulatory 
action as it addresses an asymmetry in the Federal Employees Health 
Benefits (FEHB) Program market by allowing all carriers to offer three 
plan options. Additional information can be found in the ``Expected 
Impact of Proposed Changes'' section of the rule.

List of Subjects in 5 CFR Parts 890

    Administration and general provisions; Health benefits plans; 
Enrollment, temporary extension of coverage and conversion; 
Contributions and withholdings; Transfers from retired FEHB Program; 
Benefits in medically underserved areas; Benefits for former spouses; 
Limit on inpatient hospital charges, physician charges, and FEHB 
benefit payments; Administrative sanctions imposed against health care 
providers; Temporary continuation of coverage; Benefits for United 
States hostages in Iraq and Kuwait and United States hostages captured 
in Lebanon; Department of Defense Federal Employees Health Benefits 
Program demonstration project; Administrative practice and procedure, 
employee benefit plans, Government employees; Reporting and 
recordkeeping requirements, Retirement.

U.S. Office of Personnel Management.
Kathleen M. McGettigan,
Acting Director.

    Accordingly, OPM is amending title 5, Code of Federal Regulations 
as follows:

PART 890--FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM

0
1. The authority citation for part 890 continues to read as follows:

    Authority:  5 U.S.C. 8913; Sec. 890.301 also issued under sec. 
311 of Pub. L. 111-03, 123 Stat. 64; Sec. 890.111 also issued under 
section 1622(b) of Pub. L. 104-106, 110 Stat. 521; Sec. 890.112 also 
issued under section 1 of Pub. L. 110-279, 122 Stat. 2604; 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; Pub. 
L. 111-148, as amended by Pub. L. 111-152.

0
2. Amend Sec.  890.201 by revising (b)(3)(i) to read as follows:


Sec.  890.201   Minimum standards for health benefits plans.

* * * * *
    (b) * * *
    (3)(i) Have either more than three options, or more than two 
options and a high deductible health plan (26 U.S.C. 223(c)(2)(A)) if 
the plan is described under 5 U.S.C. 8903(1), (2), (3) or (4).
* * * * *


Sec.  890.201   [Amended]

0
3. Amend Sec.  890.201 by removing paragraph (b)(3)(ii).

[FR Doc. 2017-27067 Filed 12-18-17; 8:45 am]
 BILLING CODE 6325-63-P