[Federal Register: December 8, 1995 (Volume 60, Number 236)] [Rules and Regulations] [Page 62987-62988] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr08de95-1] ======================================================================== Rules and Regulations Federal Register ________________________________________________________________________ This section of the FEDERAL REGISTER contains regulatory documents having general applicability and legal effect, most of which are keyed to and codified in the Code of Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510. The Code of Federal Regulations is sold by the Superintendent of Documents. Prices of new books are listed in the first FEDERAL REGISTER issue of each week. ======================================================================== [[Page 62987]] OFFICE OF PERSONNEL MANAGEMENT 5 CFR Part 890 RIN 3206-AG40 Federal Employees Health Benefits Program; HMO Plan Applications AGENCY: Office of Personnel Management. ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: The Office of Personnel Management (OPM) is issuing final regulations to clarify the policy under which it invites applications from comprehensive medical plans (CMP's), commonly referred to as Health Maintenance Organizations (HMO's), to participate in the Federal Employees Health Benefits (FEHB) Program. This clarification is necessary in order to ensure that OPM and the CMP's (HMO's) are providing the best possible service to FEHB enrollees. EFFECTIVE DATE: February 6, 1996. FOR FURTHER INFORMATION CONTACT: Faith M. Hannon, (202) 606-0004. SUPPLEMENTARY INFORMATION: On December 5, 1994, OPM published an interim regulation in the Federal Register (59 FR 62283) to clarify the policy under which it invites applications from comprehensive medical plans (CMP's), commonly referred to as Health Maintenance Organizations (HMO's), to participate in the FEHB Program. OPM made a determination not to invite new plan applications, with a limited exception, for contract year 1996. In addition, OPM decided neither to accept benefit change proposals from plans already in the FEHB Program nor to print new plan brochures or a comparison guide for contract year 1996. OPM received 15 written comments and numerous phone calls concerning the regulation. All of the commenters objected that OPM did not give HMO's sufficient notice of its determination not to accept applications and benefit change proposals for the 1996 contract year. Among other issues, they contended that many HMO's had already expended a substantial amount of time preparing applications or developing plan benefit designs and that OPM's decision, therefore, caused them undue hardship. In addition, some commenters disagreed with OPM's position that this regulation clarified existing policy and that the Director of OPM had authority to determine when plan applications would be accepted. After careful consideration of the comments received, OPM concluded that its time frames had, in fact, been too compressed to allow for a thorough review of all the consequences of the decision not to accept applications and that it had not allowed sufficient time for comments. As a result, OPM decided to accept applications and benefit change proposals for contract year 1996 and to provide the public with a longer comment period. Therefore, OPM published a notice in the Federal Register on March 13, 1995, (60 FR 13491), which stated that OPM would accept applications from new HMO's for participation in the FEHB Program, and benefit change proposals from plans currently participating, for contract year 1996. In this notice, OPM extended the deadline for submission of the completed applications from January 31 to March 31, 1995, and allowed for a second extension if OPM requested additional information from the applicants. OPM also published the clarification of the policy under which it invites applications from HMO's as a proposed regulation in the Federal Register, (60 FR 15074), on March 22, 1995. This issuance was in response to those commenters who objected to the length of the comment period of the interim regulation and other alleged publication technicalities under the Administrative Procedure Act (APA). OPM received seven written responses to the proposed regulation. The primary issues mentioned by most commenters were that closing the FEHB Program for an unlimited period of time would limit health plan choices for Federal employees, and would restrict competition within the FEHB Program. Both features are considered to be hallmarks of the Program. Some commenters also opined that this regulation contravenes OPM's obligation to contract with federally qualified HMO's and the related HMO dual choice mandate. These comments may have originated from a misunderstanding of the extent of the regulation. It was never OPM's intention to close the FEHB Program to new HMO's for unlimited periods of time. Because this misconception appears to be widespread, the final rule states that it is OPM's intention to accept new HMO applications on an annual basis except in those rare instances when the Director decides it is not in the best interest of the Federal enrollees and the FEHB Program. If this should occur, sufficient advance notice would be given to the HMO industry, i.e., an entry in the Federal Register at least seven months prior to the date applications would be due for the contract year for which applications will not be accepted, allowing for a comment period of sixty days. Generally, there is eleven months lead time between when applications are due on January 31, and the start of the contract year for which the applications are being accepted. Several commenters stated that it is their belief that the Federal Employees Health Benefits Act (FEHBA) does not grant the Director of OPM the authority to determine when it is beneficial to the FEHB Program to accept applications from HMO's for participation in the Program. It was, and is, the conclusion of OPM that the Director has always had this authority and that this regulation simply clarifies the policy under which this authority is administered. The final rule states this conclusion. Many commenters offered to assist OPM in streamlining the application process so that OPM might utilize its resources in the most effective way to benefit Program enrollees. OPM is appreciative of these offers and is working closely with representatives of the industry and other knowledgeable organizations to improve the application process. This Final Rule is also updating the mailing address of the Office of Insurance Programs listed in the final sentence of Sec. 890.203(a)(5). Regulatory Flexibility Act I certify that these regulations will not have a significant economic impact on a substantial number of small entities [[Page 62988]] because they primarily affect OPM's administrative procedures. List of Subjects in 5 CFR Part 890 Administrative practice and procedure, Government employees, Health facilities, Health insurance, Health professions, Hostages, Iraq, Kuwait, Lebanon, Reporting and recordkeeping requirements, Retirement. U.S. Office of Personnel Management. James B. King, Director. Accordingly, OPM is amending 5 CFR Part 890 as follows: PART 890--FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM 1. The authority citation for part 890 continues to read as follows: 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. 2. In Sec. 890.203, paragraphs (a)(1) and (a)(2), and the last sentence in paragraph (a)(5) are revised to read as follows: Sec. 890.203 Application for approval of, and proposal of amendments to, health benefits plans. (a) New plan applications. (1) The Director of OPM shall consider applications to participate in the FEHB Program from comprehensive medical plans (CMP's) at his or her discretion. CMP's are automatically invited to submit applications annually to participate in the FEHB Program unless otherwise notified by OPM. If the Director should determine that it is not beneficial to the enrollees and the Program to consider applications for a specific contract year, OPM will publish a notice with a 60 day comment period in the Federal Register no less than 7 months prior to the date applications would be due for the specific contract year for which applications will not be accepted. (2) When applications are considered, CMP's should apply for approval by writing to the Office of Personnel Management, Washington, DC 20415. Application letters must be accompanied by any descriptive material, financial data, or other documentation required by OPM. Plans must submit the letter and attachments in the OPM-specified format by January 31, or another date specified by OPM, of the year preceding the contract year for which applications are being accepted. Plans must submit evidence demonstrating they meet all requirements for approval by March 31 of the year preceding the contract year for which applications are being accepted. Plans that miss either deadline cannot be considered for participation in the next contract year. All newly approved plans must submit benefit and rate proposals to OPM by May 31 of the year preceding the contract year for which applications are being accepted in order to be considered for participation in that contract year. OPM may make counter-proposals at any time. * * * * * (5) * * * The extent of the data and documentation to be submitted by a plan so qualified by HHS, as well as by a non-qualified plan, for a particular review cycle may be obtained by writing directly to the Office of Insurance Programs, Retirement and Insurance Service, Office of Personnel Management, Washington, DC 20415. * * * * * [FR Doc. 95-29882 Filed 12-7-95; 8:45 am] BILLING CODE 6325-01-P