[Federal Register Volume 65, Number 107 (Friday, June 2, 2000)]
[Rules and Regulations]
[Pages 35259-35261]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-13850]



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 Rules and Regulations
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  Federal Register / Vol. 65, No. 107 / Friday, June 2, 2000 / Rules 
and Regulations  

[[Page 35259]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 890

RIN 3206 AJ03 (3206 AI63)


Federal Employees Health Benefits (FEHB) Program and Department 
of Defense (DoD) Demonstration Project

AGENCY: Office of Personnel Management.

ACTION: Final rule.

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SUMMARY: OPM is issuing a final regulation to implement the portion of 
the National 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 3, 2000.

FOR FURTHER INFORMATION CONTACT: Michael W. Kaszynski, Policy Analyst, 
Insurance Policy and Information Division, OPM, Room 3425, 1900 E 
Street, NW., Washington, DC 20415-0001. He can also be reached at (202) 
606-0004 or by electronic mail (E-mail) at: [email protected].

SUPPLEMENTARY INFORMATION: The purpose of this regulation is to 
implement the portion of the National 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 
offered 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 maximum percentage 
or dollar amount that the government would have contributed had the 
enrollee been enrolled as a regular FEHB enrollee in the same health 
benefits plan and at the same 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, 
premium rates and costs as compared to those for 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.
    On July 6,1999, OPM published an interim regulation in the Federal 
Register (64 FR 36237). OPM subsequently received one comment from a 
trade association representing FEHB fee-for-service/PPO plans. The 
commenter indicated that the regulation does not address whether FEHB 
carriers must issue certificates of creditable coverage required under 
the Health Insurance Portability and Accountability Act (HIPAA) and 
asked if this was required under the demonstration project. The 
regulation is intended to change normal FEHB Program practice where 
specifically indicated. It is not intended to affect practices that 
have not been specifically addressed. Therefore, carriers must issue 
certificates of creditable coverage to meet the requirements of HIPAA 
for demonstration project enrollees the same as they do for regular 
FEHB Program enrollees.
    Other minor clarifying changes have been made to the regulation.

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:

[[Page 35260]]

PART 890--FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM

    1. The authority citation for part 890 is revised 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; 
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 revised 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 section 721 of the 
National Defense Authorization Act for 1999, Public Law 105-261. This 
section 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 offered under 
the Federal Employees Health Benefits (FEHB) Program in certain 
geographic areas. 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 regulation 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) To enroll in the demonstration project, an individual 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 eligible 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) When 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 be deemed to be an employee under chapter 
89 of title 5, United States Code. The sole purpose for deeming these 
members or former members of the uniformed services employees under 
chapter 89 of title 5, United States Code, is to determine which of 
their dependents can enroll as eligible beneficiaries in the 
demonstration project.
    (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) Open Season for eligible beneficiaries will be held concurrent 
with the Open Season for regular FEHB enrollees. Open Seasons will be 
held in the years 1999, 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) Enrolled eligible beneficiaries 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 eligible 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) Eligible beneficiaries and family members enrolled in the 
demonstration project are not eligible to obtain services from military 
medical 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.

[[Page 35261]]

Sec. 890.1305  Termination and cancellation.

    (a) If an enrolled eligible beneficiary moves out of a 
demonstration area, the enrollment of the eligible beneficiary and all 
family members will be terminated. If an enrolled eligible 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 eligible beneficiary was enrolled prior to the move in an HMO that 
does not serve the new demonstration area, the eligible beneficiary 
will have an opportunity to select a new health plan offered by a 
carrier participating in the demonstration project in the new area. If 
the eligible 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 eligible beneficiary can maintain his or her 
current coverage.
    (b) If an enrolled eligible 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, eligible 
beneficiaries and all family members have the right to resume all of 
the benefits to which they are entitled to under title 10 of the United 
States Code. Medicare-covered eligible beneficiaries and their eligible 
family members who had Medigap policies 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) Eligible beneficiaries and their family members 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 eligible beneficiaries or their eligible family members will be 
the day after other coverage under this subpart ends. Eligible 
beneficiaries or their eligible family members selecting TCC must 
enroll in a health plan offered by a carrier participating in the 
demonstration project. If an eligible beneficiary or eligible family 
member enrolled in DoD TCC moves from a demonstration project area, 
coverage ends. DoD TCC enrollees 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 eligible beneficiaries and forward them to OPM's Employees 
Health Benefits Fund. OPM will establish procedures for receiving the 2 
percent administrative payment into the Employees Health Benefits Fund 
and making this amount available to DoD for administration of the 
program.
    (d) Enrolled eligible 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 enrolled eligible beneficiaries and family members. 
The government contribution toward demonstration project premium rates 
will be determined in accordance with subpart E of this part.


Sec. 890.1307  Data collection.

    Each carrier will compile, maintain, and when requested by OPM or 
DoD, report data on its 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. 00-13850 Filed 6-1-00; 8:45 am]
BILLING CODE 6325-01-U