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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: June 8, 2000

FROM: Barry McVay, CPCM

SUBJECT: Federal Employees Health Benefits Program Acquisition Regulation (FEHBAR); Department of Defense (DOD) Demonstration Project

SOURCE: Federal Register, June 8, 2000, Vol. 65, No. 111, page 36382

AGENCIES: Office of Personnel Management (OPM)

ACTION: Final Rule

SYNOPSIS: OPM is finalizing with changes the July 6, 1999, interim rule that amended the FEHBAR to implement Section 721 of the Defense Authorization Act for 1999 (Public Law 105-261). Section 721 established 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.

EDITOR'S NOTE: The FEHBAR is Chapter 16 of Title 48 of the Code ofFederal Regulations.

EFFECTIVE DATE: July 10, 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; 202-606-0004; e-mail: mwkaszyn@opm.gov.

SUPPLEMENTAL INFORMATION: Section 721 of Public Law 105-261 became law on October 17, 1998. It authorized a demonstration project in which no more than 66,000 individuals in no more than 10 selected geographic areas would be eligible to enroll under the FEHB program. The demonstration project will be conducted for three years, from January 1, 2000, through December 31, 2002. Title 5 of the Code of Federal Regulations, Chapter 890, Federal Employees Health Benefits Program, Section 890.1303, Eligibility, provides the definition of an "eligible beneficiary". Basically, those eligible to participate are current or former members of the uniformed services who are entitled to hospital insurance benefits, an unremarried former spouse, or a dependent of a deceased or current or former member.

DOD, with OPM concurrence, selected eight geographical areas for the demonstration project: Dover Air Force Base, DE; all of Puerto Rico; Fort Knox, KY; Greensboro/Winston-Salem/High Point, NC; Dallas, TX; Humboldt County, CA, and surrounding counties; Naval Hospital, Camp Pendleton, CA; and New Orleans, LA. Beneficiaries who are provided coverage under the demonstration project are not 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.

OPM determined that it was necessary to specify certain differences from existing FEHB Program regulations because of the unique features of the demonstration project. Therefore, on July 6, 1999, OPM issued an interim rule implementing Section 721. OPM received comments from three organizations: one trade association representing FEHB fee-for-service/PPO [preferred provider organization] plans, one fee-for-service/PPO health benefit carrier, and one employee union. As a result, OPM is finalizing the rule with changes.

In addition, the following miscellaneous changes are being made to the FEHBAR by this final rule:

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

Copyright 2000 by Panoptic Enterprises. All Rights Reserved.

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