Year 2000 Amendments to the Standard Contract for

**Community-Rated Carriers**

1\. Add new Sections 1.23, NOTICE TO ENROLLEES ON TERMINATION OF FEHBP
OR PROVIDER CONTRACT, and 1.24, TRANSITIONAL CARE, to implement the
continuity of care provisions of the Patients' Bill of Rights, as
follows:

SECTION 1.23

NOTICE TO ENROLLEES ON TERMINATION OF FEHBP OR PROVIDER CONTRACT (JAN
2000)

\(a\) Enrollees who are undergoing treatment for a chronic or disabling
condition or who are in the second or third trimester of pregnancy at
the time a carrier terminates (1) all or part of its FEHBP contract, or
(2) the enrollee's specialty provider contract for reasons other than
cause, may be able to continue to see their specialty provider for up to
90 days or through their postpartum care.

\(b\) The Carrier shall notify its enrollees in writing of its intent to
terminate all or part of its FEHBP contract, including service area
reductions, or the enrollees' specialty provider contract, for reasons
other than cause in order to allow sufficient time for the enrollees to
arrange for continued care after the 90-day period. The Carrier shall
send the notice in time to ensure it is received by the enrollees no
less than 90 days prior to the date it terminates the contract, unless
the Carrier demonstrates it was prevented from doing so for reasons
beyond its control. The Carrier's prompt notice will ensure that the
notification period and the transitional care period run concurrently.

SECTION 1.24

TRANSITIONAL CARE (JAN 2000)

\(a\) Transitional care is specialized care provided for up to 90 days
or through the postpartum period to an enrollee undergoing treatment for
a chronic or disabling condition or who is in the second or third
trimester of pregnancy when his or her carrier terminates (1) all or
part of its FEHBP contract, or (2) the enrollee's specialty provider
contract for reasons other than cause. The 90-day period begins the
earlier of the date the enrollee receives the notice required under
Section 1.23, Notice to Enrollees on Termination of FEHBP or Provider
Contract, or the date the Carrier's or the provider's contract ends.

\(b\) Beginning January 1, 2000, the Carrier shall ensure the following:

\(1\) *If it terminates a part of its FEHB contract or a specialty
provider* *contract* other than for cause, it allows enrollees who are
undergoing treatment for a chronic or disabling condition or who are in
the second or third trimester of pregnancy to continue treatment under
the specialty provider for up to 90 days, or through their postpartum
period, under the same terms and conditions that existed at the
beginning of the transitional care period; and

\(2\) *If it enrolls a new member who involuntarily changed carriers
because the enrollee's former carrier was no longer available in the
FEHB Program*, it provides transitional care for the enrollee if he or
she is undergoing treatment for a chronic or disabling condition or is
in the second or third trimester of pregnancy for up to 90 days, or
through the postpartum period, under the same terms and conditions the
enrollee had under the prior carrier.

\(c\) In addition, the Carrier shall (1) pay for or provide the
transitional care required under this clause at no additional cost to
enrollees;

\(2\) require the specialty provider to promptly transfer all medical
records to the designated new provider during or upon completion of the
transition period, as authorized by the patient; and,

\(3\) require the specialty provider to give all necessary information
to the Carrier for quality assurance purposes.

2\. Add a new clause 2.14, CONTINUING REQUIREMENTS AFTER TERMINATION OF
THE CARRIER, to reinforce certain existing contractual requirements as
follows:

SECTION 2.14

CONTINUING REQUIREMENTS AFTER TERMINATION OF THE CARRIER (JAN 2000)

\(a\) The Carrier shall fulfill all of the requirements agreed to under
the contract that continue after termination. The order of precedence
for the applicable laws, regulations, and the contract are listed in
Section 1.3.

\(b\) Contract requirements that extend beyond the date of the Carrier's
termination include, but are not limited to, offering conversion
contracts to enrollees during the 31-day extension of coverage for
conversion, providing benefits to the enrollee until the effective date
of the new enrollment, and processing and paying claims incurred prior
to the termination date.

3\. Redate Section 3.2, ACCOUNTING AND

PRICE ADJUSTMENT, as JAN 2000; add a new paragraph (c) to conform to the
DoD Demonstration Project interim regulations published on July 6, 1999,
as follows:

SECTION 3.2

ACCOUNTING AND PRICE ADJUSTMENT (JAN 2000) (FEHBAR 1652.216-70)

\(a\) *Annual Accounting Statement*. The Carrier, not later than 90 days
after the end of each contract period, shall furnish to OPM for that
contract period an accounting of its operations under the contract. The
accounting shall be in the form prescribed by OPM.

\(b\) *Adjustment.* (1) This contract is community rated as defined in
FEHBAR 1602.170-2.

\(2\) The subscription rates agreed to in this contract shall be
equivalent to the subscription rates given to the Carrier\'s similarly
sized subscriber groups (SSSGs) as defined in FEHBAR1602.170-13.

\(3\) If, at the time of the rate reconciliation, the subscription rates
are found to be lower than the equivalent rates for the lower of the two
SSSGs, the Carrier may include an adjustment to the Federal group\'s
rates for the next contract period.

\(4\) If, at the time of the rate reconciliation, the subscription rates
are found to be higher than the equivalent rates for the lower of the
two SSSGs, the Carrier shall reimburse the Fund, for example, by
reducing the FEHB rates for the next contract term to reflect the
difference between the estimated rates and the rates which are derived
using the methodology of the lower rated SSSG.

\(5\) No upward adjustment in the rate established for this contract
will be allowed or considered by the Government or will be made by the
Carrier in this or in any other contract period on the basis of actual
costs incurred, actual benefits provided, or actual size or composition
of the FEHBP group during this contract period.

\(6\) In the event this contract is not renewed, neither the Government
nor the Carrier shall be entitled to any adjustment or claim for the
difference between the subscription rates prior to rate reconciliation
and the actual subscription rates.

\(c\) *[Exception for the 3-Year DoD Demonstration Project (10 U.S.C.
1108).]{.underline}* Similarly sized subscriber group (SSSG) rating
methodologies shall not be used to determine the reasonableness of the
Carrier's demonstration project premium rates. The Carrier's rates shall
not be adjusted for equivalency with SSSG rating methodologies. The
Carrier shall benchmark premiums against adjusted community rates if
available, Medigap offerings, or other similar products.

(End of Clause)

4\. Redate Section 3.3, RATE REDUCTION FOR DEFECTIVE PRICING OR
DEFECTIVE COST OR PRICING DATA (FEHBAR 1652.215-70), as JAN 2000; add a
new paragraph (d) to to conform to the DoD Demonstration Project interim
regulations published on July 6, 1999, as follows:

SECTION 3.3

RATE REDUCTION FOR DEFECTIVE PRICING OR DEFECTIVE COST OR PRICING DATA
(JAN 2000) (FEHBAR 1652.215-70)

\(a\) If any rate established in connection with this contract was
increased because (1) the Carrier submitted, or kept in its files in
support of the FEHBP rate, cost or pricing data that were not complete,
accurate, or current as certified in the Certificate of Accurate Cost or
Pricing Data (FEHBAR 1615.804-70); (2) the Carrier submitted, or kept in
its files in support of the FEHBP rate, cost or pricing data that were
not accurate as represented in the rate proposal documents; (3) the
Carrier developed FEHBP rates with a rating methodology and structure
inconsistent with that used to develop rates for similarly sized
subscriber groups (see FEHBAR §1602.170-13) as certified in the
Certificate of Accurate Cost or Pricing Data for Community Rated
Carriers; or (4) the Carrier submitted or kept in its files in support
of the FEHBP rate, data or information of any description that were not
complete, accurate, and current\--then, the rate shall be reduced in the
amount by which the price was increased because of the defective data or
information.

(b)(1) If the Contracting Officer determines under paragraph (a) of this
clause that a price or cost reduction should be made, the Carrier agrees
not to raise the following matters as a defense: (i) The Carrier was a
sole source supplier or otherwise was in a superior bargaining position
and thus the price of the contract would not have been modified even if
accurate, complete, and current cost or pricing data had been submitted
or maintained and identified.

\(ii\) The Contracting Officer should have known that the cost or
pricing data in issue were defective even though the Carrier took no
affirmative action to bring the character of the data to the attention
of the Contracting Officer.

\(iii\) The contract was based on an agreement about the total cost of
the contract and there was no agreement about the cost of each item
procured under the contract.

\(iv\) The Carrier did not submit or keep in its files a Certificate of
Current Cost or Pricing Data.

(2)(i) Except as prohibited by subdivision (b)(2)(ii) of this clause, an
offset in an amount determined appropriate by the Contracting Officer
based upon the facts shall be allowed against the amount of a contract
price reduction if\--

\(A\) The Carrier certifies to the Contracting Officer that, to the best
of the Carrier\'s knowledge and belief, the Carrier is entitled to the
offset in the amount requested; and

\(B\) The Carrier proves that the cost or pricing data were available
before the date of agreement on the price of the contract (or price of
the modification) and that the data were not submitted before such date.
(ii) An offset shall not be allowed if---

\(A\) The understated data was known by the Carrier to be understated
when the Certificate of Current Cost or Pricing Data was signed; or

\(B\) The Government proves that the facts demonstrate that the contract
price would not have increased in the amount to be offset even if the
available data had been submitted before the date of agreement on price.

\(c\) When the Contracting Officer determines that the rates shall be
reduced and the Government is thereby entitled to a refund, the Carrier
shall be liable to and shall pay the FEHB Fund at the time the
overpayment is repaid\--

\(1\) Simple interest on the amount of the overpayment from the date the
overpayment was paid from the FEHB Fund to the Carrier until the date
the overcharge is liquidated. In calculating the amount of interest due,
the Carrier shall use the quarterly rate determinations by the Secretary
of the Treasury under the authority of 26 U.S.C. 6621(a)(2) applicable
to the periods the overcharge was retained by the Carrier shall be used;
and,

\(2\) A penalty equal to the amount of overpayment, if the Carrier
knowingly submitted cost or pricing data which was incomplete,
inaccurate, or noncurrent.

\(d\) *[Exception for the DoD Demonstration Project.]{.underline}*
Similarly sized subscriber group (SSSG) rating methodologies shall not
be used to determine the reasonableness of the Carrier's demonstration
project premium rates. The Carrier's rates shall not be adjusted for
equivalency with SSSG rating methodologies. The Carrier shall benchmark
premiums against adjusted community rates if available, Medigap
offerings, or other similar products.

(End of Clause)

5\. Redate Section 3.7, SURVEY CHARGES, as JAN 2000 and add amended
language as follows:

SECTION 3.7

SURVEY CHARGES (JAN 2000)

\(a\) If the Carrier participates in an FEHB annual consumer assessment
survey, it shall pay OPM's contractor a pro rata share of the total cost
of consolidating and reporting the survey results to OPM. The Carrier
shall pay a separate fee for each plan option and /or rating area. The
Carrier agrees to pay the contractor's invoice within 30 days of the
billing date. If the Carrier does not remit payment to the contractor
within 60 days of the billing date, OPM shall withhold the amount due
from the Carrier's subscription charges according to FEHBAR 1652.232-70,
Payments--community-rated contracts, and forward payment to the
contractor.

\(b\) Costs incurred by the Carrier for contracting with a vendor to
conduct the survey shall be the Carrier\'s responsibility.

6\. For carriers participating in the 3-year DoD Demonstration Project
only, add a new clause under Section 4.1, entitled PARTICIPATION IN THE
DoD DEMONSTRATION PROJECT, to implement the joint DoD/FEHBP
Demonstration Project authorized by 10 U.S.C. 1108, as follows:

For carriers participating in the 3-Year DoD Demonstration Project only:

SECTION 4.1

PARTICIPATION IN DoD/FEHBP

DEMONSTRATION PROJECT

(JAN 2000)

\(a\) The Carrier shall participate in the DoD/FEHBP Demonstration
Project authorized by 10 U.S.C. 1108 ("DoD Demonstration Project") under
the terms and conditions specified by OPM.

\(b\) In setting the premium rate, the Carrier shall comply with the
requirements in Section 3.2, Accounting and Price Adjustment (FEHBAR
1652.216-70), and 3.3, Rate Reduction for Defective Pricing or Defective
Cost or Pricing Data (FEHBAR 1652.215-70).

\(c\) If the Carrier has experienced costs far in excess of the premiums
for the DoD enrollment group, OPM will reimburse the Carrier first from
the Carrier's demonstration project Contingency Reserve and then from
OPM's Administrative Reserve. At the end of the demonstration project,
any surplus will be placed in the Contingency Reserve of all carriers
continuing in the FEHB Program following the termination of the DoD
demonstration project. Credit will be in proportion to the amount of
subscription charges paid and accrued to the carriers' plan during the
final year of the demonstration project.

\(d\) The Carrier shall compile, maintain, and, when requested by OPM,
report data on the plan's experience to produce reports containing the
following information and analysis:

\(1\) The number of eligible beneficiaries who elect to participate in
the demonstration project.

\(2\) 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.

\(3\) 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.

\(4\) Prescription drug costs for demonstration project beneficiaries.

7\. Update the introductory paragraph and paragraph (a)5. of Appendix
D-a to include website material under supplemental literature, as
follows:

APPENDIX D-a

FEHB SUPPLEMENTAL LITERATURE GUIDELINES

This is the primary guide a Carrier should use to assess whether the
Carrier\'s supple­mental marketing literature, including website
material, complies with FEHBAR 1603.70, Misleading, Deceptive or Unfair
Advertising. (Use the NAIC Guidelines for additional guidance when
needed.)

a\) 5. Under the FEHBP, the FEHB brochure is based on text approved by
OPM and is a complete statement of benefits, limitations, and
exclusions. Include the following statement (website material should
include the statement as a preface) in all supplemental litera­ture which
in any way discusses Plan benefits:

\"*This is a summary \[or brief description\] of the features of the
\[insert Plan\'s name\]. Before making a final decision, please read the
Plan\'s Federal brochure (\[insert bro­chure number\]). All benefits are
subject to the definitions, limitations, and exclusions set forth in the
Federal brochure.*