[Federal Register Volume 60, Number 60 (Wednesday, March 29, 1995)]
[Rules and Regulations]
[Pages 16056-16058]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-7792]



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OFFICE OF PERSONNEL MANAGEMENT

48 CFR Parts 1604 and 1652

RIN 3206-AG30


Federal Employees Health Benefits Acquisition Regulation Filing 
Health Benefit Claims; Addition of Contract Clause

AGENCY: Office of Personnel Management.

ACTION: Interim regulations with request for comments.

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SUMMARY: The Office of Personnel Management (OPM) is issuing interim 
regulations to add a new contract clause of the Federal Employees 
Health Benefits Acquisition Regulation (FEHBAR). The clause clarifies 
for both FEHB carriers and covered individuals the circumstances under 
which OPM may render a decision regarding a covered individual who asks 
OPM to review a health benefits plan's denial of a claim if the plan 
has either affirmed its denial when the covered individual requested 
reconsideration, or failed to respond to the covered individual's 
request for reconsideration as provided by OPM's regulations. The 
clause further clarifies the circumstances under which claimants may 
seek court review of benefit denials under the FEHB Program. The 
purpose of these interim regulations is to clarify that covered 
individuals who wish to bring legal action regarding a denial of an 
FEHB benefit must pursue such claim against OPM. Further, the interim 
regulations clarify the administrative review process that must precede 
legal action in the courts.

DATES: These interim regulations are effective March 29, 1995. Comments 
must be received on or before May 30, 1995.

ADDRESSES: Send written comments to Lucretia F. Myers, Assistant 
Director for Insurance Programs, Retirement and Insurance Service, 
Office of Personnel Management, P.O. Box 57, Washington, DC 20044; or 
deliver to OPM, Room 3451, 1900 E Street NW., Washington, DC; or FAX to 
(202) 606-0633.

FOR FURTHER INFORMATION CONTACT:
Margaret Sears, (202) 606-0004.

SUPPLEMENTARY INFORMATION: Historically, OPM has required that 
[[Page 16057]] covered individuals who want to bring suit because an 
FEHB carrier has denied their claim for health benefits must sue the 
carrier, not OPM. These interim regulations provide that legal actions 
arising out of a denial of FEHB benefits should be brought against OPM 
rather than the FEHB carrier that made the initial denial decision. 
Because OPM has the authority under the FEHB law to order the carrier 
to pay the claim, OPM has determined it is appropriate under current 
statute for the covered individuals to bring suit against OPM if OPM 
declines to order the carrier to pay the claim. The clause clarifies 
the process and circumstances for bringing legal actions under the FEHB 
Program and gives the administrative review process that must be 
completed before suit is brought.
    The legislative history of Sec. 8902(j), title 5, United States 
Code, shows that Congress intended OPM (at that time the Civil Service 
Commission) to provide an administrative appeal process, binding upon 
the carriers, that would save covered individuals the expense and delay 
of being forced into the courts to recover on meritorious claims for 
benefits. Based upon this directive and its central role in the 
administration of the FEHB Program, OPM established a detailed 
administrative review process for benefits claims leading to a final 
decision on such claims by OPM. It is OPM's view that this 
administrative review process must be followed before legal action is 
pursued in the courts. Further, the matter to be reviewed by a court 
upon appeal is the OPM decision affirming the carrier's denial of 
benefits, with the court's review being limited to an examination of 
OPM's administrative decision to deny the claim for payment or 
services.
    Health insurance contracts under the FEHB Program are Federal 
contracts under 5 U.S.C., chapter 89. Accordingly, legal actions 
concerning disputes arising or relating to those contracts are 
controlled by Federal, rather than State law. Congress, in the FEHB 
Act, mandated Federal uniformity for all matters that relate to (1) the 
nature or extent of coverage; (2) benefits; and (3) payment of benefits 
under the FEHB Program. By statute, all health insurance contracts 
require the carrier to agree to pay or provide a health service or 
supply in an individual case if OPM finds that the covered individual 
is entitled to the benefit under the terms of the contract. Congress 
also directed OPM to take a central role in determining whether a 
health service or supply should be provided in individual cases to 
covered individuals and, if it should be provided, to require carriers 
to pay for such health service or supply. These interim regulations 
reaffirm the principle of uniformity in the FEHB Program by providing 
that in judicial disputes regarding the denial of a health benefits 
claim, review is to be limited to the record that was before OPM and 
that was the basis of the OPM decision to disallow the benefit. In the 
event that an appropriate court concludes that benefits should have 
been awarded under the FEHB Act, the court possesses ample authority to 
require OPM to order that such payments be made to the covered 
individual from the carrier. These interim regulations clarify that OPM 
intends for its decision to be upheld unless the Court concludes that 
the OPM decision affirming the carrier's denial of benefits was 
inconsistent with the standard for final agency action under applicable 
Federal law.
    The new clause reflects the administrative review procedures that 
must precede court review. These procedures are prescribed by 
regulations at 5 CFR 890.105 and reflects minor changes that OPM is 
making to 5 CFR 890.105 by interim regulations being published in 
conjunction with this interim regulation The new clause also reflects 
regulations and 5 CFR 890.107 regarding court review and reflects 
changes OPM is making to 5 CFR 890.107 by regulations also being 
published in conjunction with this interim regulations.
    OPM proposes to incorporate these procedures into the FEHB contract 
by adding a new clause 1652.204-72, Filing Health Benefit Claims/Court 
Review of Disputed Claims, to Subpart 1652.2 of the Federal Employees 
Health Benefits Acquisition Regulation (FEHBAR).

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 
merely incorporates administrative procedures and regulatory 
requirements into FEHB contracts.

List of Subjects in 48 CFR Parts 1604 and 1652

    Government employees, Government procurement, Health insurance.

Office of Personnel Management.
James B. King,
Director.

    Accordingly, OPM proposes to amend 48 CFR chapter 16 as follows:

PART 1604--ADMINISTRATIVE MATTERS

    1. The authority citation for parts 1604 and 1652 continue to read 
as follows:

    Authority: 5 U.S.C. 8913; 40 U.S.C. 486(c); 48 CFR 1.301.

    2. In part 1604 subpart 1604.71 is added to read as follows:

Subpart 1604.71--Disputed Health Benefit Claims


1604.7101  Filing Health Benefit Claims/Court Review of Disputed 
Claims.

    Guidelines for an Federal Employees Health Benefit (FEHB) Program 
covered individual to file a claim for payment or service and for legal 
actions on disputed health benefit claims are found at 5 CFR 890.105 
and 890.107, respectively. The contract clause at 1652.204-72 of this 
chapter, reflecting this guidance, must be inserted in all FEHB Program 
contracts.

PART 1652--CONTRACT CLAUSES

    3. Subpart 1652.2 is amended by adding section 1652.204-72 to read 
as follows:

Subpart 1652.2--Texts of FEHBP Clauses


1652.204-72  Filing Health Benefit Claims/Court Review of Disputed 
Claims.

    As prescribed in 1604.7101 of this chapter, the following clause 
must be inserted in all FEHB Program contracts.

FILING HEALTH BENEFIT CLAIMS/COURT REVIEW OF DISPUTED CLAIMS

    (a) General. The Carrier resolves claims filed under the Plan. 
All health benefit claims must be submitted initially to the 
Carrier. If the Carrier denies a claim (or a portion of a claim), 
the covered individual may ask the Carrier to reconsider its denial. 
If the Carrier affirms its denial or fails to respond as required by 
paragraph (b) of this clause, the covered individual may ask OPM to 
review the claim. A covered individual must exhaust both the Carrier 
and OPM review processes specified in this clause before seeking 
judicial review of the denied claim.
    (b) Time limits for reconsidering a claim. (1) The covered 
individual has 1 year from the date of the notice to the covered 
individual that a claim (or a portion of a claim) was denied by the 
Carrier in which to submit a written request for reconsideration to 
the Carrier.
    (2) The Carrier has 30 days after the date of receipt of a 
timely-filed request for reconsideration to:
    (i) Affirm the denial in writing to the covered individual;
    (ii) Pay the bill or provide the service; or
    (iii) Request from the covered individual or provider additional 
information needed to [[Page 16058]] make a decision on the claim. 
The Carrier must simultaneously notify the covered individual of the 
information requested if it requests additional information from a 
provider. The Carrier has 30 days after the date the information is 
received to affirm the denial in writing to the covered individual 
or pay the bill or provide the service. The Carrier must make its 
decision based on the evidence it has if the covered individual or 
provider does not respond within 60 days after the date of the 
Carrier's notice requesting additional information. The Carrier must 
then send written notice to the covered individual of its decision 
on the claim. The covered individual may request OPM review as 
provided in paragraph (b)(3) of this clause if the Carrier fails to 
act within 30 days after the covered individual's request for 
reconsideration or the Carrier's receipt of additional information.
    (3) The covered individual may write to OPM and request that OPM 
review the Carrier's decision if the Carrier either affirms its 
denial of a claim or fails to respond to a covered individual's 
written request for reconsideration within 30 days after the date it 
receives the request or within 30 days after the date it receives 
the additional information requested. The covered individual must 
submit the request for OPM review within the time limit specified in 
paragraph (e)(1) of this clause.
    (4) The Carrier may extend the time limit for a covered 
individual's submission of additional information to the Carrier 
when the covered individual shows he or she was not notified of the 
time limit or was prevented by circumstances beyond his or her 
control from submitting the additional information.
    (c) Information required to process requests for 
reconsideration. (1) The covered individual must put the request to 
the Carrier to reconsider a claim in writing and give the reasons, 
in terms of applicable brochure provisions, that the denied claim 
should have been approved.
    (2) If the Carrier needs additional information from the covered 
individual to make a decision, it must:
    (i) Specifically identify the information needed;
    (ii) State the reason the information is required to make a 
decision on the claim;
    (iii) Specify the time limit (60 days after the date of the 
Carrier's request) for submitting the information; and
    (iv) State the consequences of failure to respond within the 
time limit specified, as set out in paragraph (b)(2) of this clause.
    (d) Carrier determinations. The Carrier must provide written 
notice to the covered individual of its determination. If the 
Carrier affirms the initial denial, the notice must inform the 
covered individual of:
    (1) The specific and detailed reasons for the denial;
    (2) The covered individual's right to request a review by OPM; 
and
    (3) The requirement that requests for OPM review must be 
received within 90 days after the date of the Carrier's denial 
notice and include a copy of the denial notice as well as documents 
to support the covered individual's position.
    (e) OPM review. (1) If the covered individual seeks further 
review of the denied claim, the covered individual must make a 
request to OPM to review the Carrier's decision. Such a request to 
OPM must be made:
    (i) Within 90 days after the date of the Carrier's notice to the 
covered individual that the denial was affirmed; or
    (ii) If the Carrier fails to respond to the covered individual 
as provided in paragraph (b)(2) of this clause, within 120 days 
after the date of the covered individual's timely request for 
reconsideration by the Carrier; or
    (iii) Within 120 days after the date the Carrier requests 
additional information from the covered individual, or the date the 
covered individual is notified that the Carrier is requesting 
additional information from a provider. OPM may extend the time 
limit for a covered individual's request for OPM review when the 
covered individual shows he or she was not notified of the time 
limit or was prevented by circumstances beyond his or her control 
from submitting the request for OPM review within the time limit.
    (2) In reviewing a claim denied by the Carrier, OPM may
    (i) Request that the covered individual submit additional 
information;
    (ii) Obtain an advisory opinion from an independent physician;
    (iii) Obtain any other information as may in its judgment be 
required to make a determination; or
    (iv) Make its decision based solely on the information the 
covered individual provided with his or her request for review.
    (3) When OPM requests information from the Carrier, the Carrier 
must release the information within 30 days after the date of OPM's 
written request unless a different time limit is specified by OPM in 
its request.
    (4) Within 90 days after receipt of the request for review, OPM 
will either:
    (i) Give a written notice of its decision to the covered 
individual and the Carrier; or
    (ii) Notify the individual of the status of the review. If OPM 
does not receive requested evidence within 15 days after expiration 
of the applicable time limit in paragraph (e)(3) of this clause, OPM 
may make its decision based solely on information available to it at 
that time and give a written notice of its decision to the covered 
individual and to the Carrier.
    (f) Court review. (1) A suit to compel enrollment under 
Sec. 890.102 of Title 5, Code of Federal Regulations, must be 
brought against the employing office that made the enrollment 
decision.
    (2) A suit to review the legality of OPM's regulations under 
this part must be brought against the Office of Personnel 
Management.
    (3) Federal Employees Health Benefits (FEHB) carriers resolve 
FEHB claims under authority of Federal statute (chapter 89, title 5, 
United States Code). A covered individual may seek judicial review 
of OPM's final action on the denial of a health benefits claim. A 
legal action to review final action by OPM involving such denial of 
health benefits must be brought against OPM. The recovery in such a 
suit will be limited to the amount of benefits in dispute.
    (4) An action under paragraph (f)(3) of this clause to recover 
on a claim for health benefits:
    (i) May not be brought prior to exhaustion of the administrative 
remedies provided in paragraphs (a) through (e) of this clause;
    (ii) May not be brought later than December 31 of the third year 
after the year in which the care or service was provided; and
    (iii) Will be limited to the record that was before OPM when it 
rendered its decision affirming the Carrier's denial of benefits.

(End of Clause)

[FR Doc. 95-7792 Filed 3-28-95; 8:45 am]
BILLING CODE 6325-01-M