Friday, June 24, 2011

Big regulatory week for the FEHBP

FEHB  plans have two types of financing mechanisms -- retrospective experience rating and community rating. Nationwide fee for service plans must use experience rating. HMO plans (known as comprehensive medical plans under the FEHB Act) can use experience rating or community rating. Community rating sets premiums based on prices while experience rating sets premiums based on costs.

OPM historically has required community rated carriers to provide the best price from its similarly sized subscriber group. OPM recently noted that this SSSG methodology has grown cumbersome and outdated. Yesterday, OPM released in the Federal Register a replacement approach that is based on the Affordable Care Act's minimum loss ratio. This sensible decision will encourage continuing HMO participation / competition in the FEHB Program.

The Affordable Care Act ("ACA") regulators issued an amended claims procedure rule in today's Federal Register which impacts all FEHB plans. The Affordable Care Act required governmental plans like the FEHBP to adopt ERISA's claims and internal appeals procedures with regulatory adjustments described in these ACA rules. The FEHBP's external claims appeal process remains OPM's responsibility under 5 U.S.C. Sec. 8902(j) and 5 C.F.R. Sec. 890.105. In today's rule, the ACA regulators make some common sense changes to last year's rule as discussed in this Business Insurance article.

While this is progress, the ACA regulators still are working on the four page summary of benefits that health plans are required to provide consumers. The regulation deadline had been March 23, 2011. This Kaiser Health Plan news article discusses the hang up - development of so-called cost of treatment labels which are now receiving the focus group feedback.

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