[Federal Register Volume 64, Number 128 (Tuesday, July 6, 1999)]
[Rules and Regulations]
[Pages 36237-36239]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-16912]



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 Rules and Regulations
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  Federal Register / Vol. 64, No. 128 / Tuesday, July 6, 1999 / Rules 
and Regulations  

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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