[Federal Register Volume 61, Number 189 (Friday, September 27, 1996)]
[Rules and Regulations]
[Page 50689]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-24831]



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  Federal Register / Vol. 61, No. 189 / Friday, September 27, 1996 / 
Rules and Regulations  

[[Page 50689]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 890

RIN 3206-AG31


Federal Employees Health Benefits Program: Limitation on 
Physician Charges and FEHB Program Payments

AGENCY: Office of Personnel Management.

ACTION: Final rule.

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SUMMARY: The Office of Personnel Management (OPM) is making final its 
interim regulation that amends current Federal Employees Health 
Benefits (FEHB) Program regulations. The final regulation requires that 
the charges and FEHB fee-for-service plans' benefit payments for 
certain physician services furnished to retired enrolled individuals do 
not exceed the limits on charges and payments established under the 
Medicare fee schedule for physician services.

EFFECTIVE DATE: This final regulation is effective October 28, 1996.

FOR FURTHER INFORMATION CONTACT: Robert G. Iadicicco (202) 606-0004.

SUPPLEMENTARY INFORMATION: On May 18, 1995, OPM issued interim 
regulations in the Federal Register [60 FR 26667] that amended part 890 
to implement section 11003 of the Omnibus Budget Reconciliation Act 
(OBRA) of 1993, Public Law 103-66, which was enacted on August 10, 
1993. Section 11003 of OBRA of 1993 amended the FEHB law at 5 U.S.C. 
8904(b) to limit the charges and FEHB fee-for-service plans' benefit 
payments for certain physician services (as defined in section 1848(j) 
of the Social Security Act) received by retired enrolled individuals.
    We received three written comments from two FEHB fee-for-service 
plans and one retiree organization. One FEHB plan wrote that the 
interim regulation, though generally comprehensive, did not address 
coverage situations in which the FEHB plan is secondary to another 
group health plan. Since the limits on physician charges apply only to 
FEHB plans, if retired enrolled individuals have primary coverage under 
another group health plan, the primary plan cannot limit physician 
charges to the applicable Medicare limits.
    The plan stated that it has determined the plan's secondary benefit 
payment under its coordination of benefits provision will not exceed 
the Medicare limits on virtually all claims arising under this coverage 
situation. Consequently, the plan believed that it will achieve time 
and administrative expense savings, and avoid customer service 
disputes, if the Medicare limits are not applied to these claims.
    OBRA of 1993 was a deficit reduction measure, and the overriding 
goal of its FEHB provision was to reduce the Program's costs. When FEHB 
plans are secondary payers, it costs them more to apply the Medicare 
limits than they save by applying the limits. We do not believe this is 
the result intended by the law. Therefore, FEHB plans are not required 
to apply the Medicare limits when paying the claims of retired enrolled 
individuals who have primary coverage under another group health plan. 
The plans must pay these claims under their coordination of benefits 
provision.
    Another FEHB plan noted that section 890.808 of the interim 
regulation states that plans, under the oversight of OPM, will notify 
the Department of Health and Human Services (HHS) of health care 
providers who knowingly, willfully, and repeatedly violate the Medicare 
limits. The plan requested that OPM provide the mailing address of a 
contact at HHS to forward member complaints about providers who violate 
the Medicare limits.
    We agree that it is important to have a contact at HHS to whom FEHB 
plans can report providers who are violating the Medicare limits. We 
are working with HHS to select an appropriate contact. Once an HHS 
contact is selected, we will notify the FEHB plans.
    The retiree organization noted that the FEHB plans are crucial to 
the success of the enforcement of the Medicare limits. The commenter 
expressed concern that the plans do not have an adequate incentive to 
vigorously pursue providers who overcharge retirees. In fact, the plans 
have a powerful incentive to enforce the charge limits. If a plan fails 
to protect its members from overcharges, the members will soon consider 
choosing another plan that will protect them.

Regulatory Flexibility Act

    I certify that these regulations will not have a significant 
economic impact on a substantial number of small entities because they 
primarily affect the health care coverage of Federal annuitants, their 
spouses, and former spouses.

E.O. 12866, Regulatory Review

    This rule has been reviewed by OMB in accordance with E.O. 12866.

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, under the authority of 5 U.S.C. 8913, OPM is adopting 
its interim regulation under 5 CFR part 890 as published on May 18, 
1995, [60 FR 26667], as a final rule without change.

[FR Doc. 96-24831 Filed 9-26-96; 8:45 am]
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