+-----------------------------------------+----------------------------+
| **FEHB Program Carrier Letter**         | **U.S. Office of Personnel |
|                                         | Management**               |
| **Fee-for-Service Carriers**            |                            |
|                                         | **Office of Insurance      |
|                                         | Programs**                 |
+-----------------------------------------+----------------------------+
| > **Letter No. 1999-038 A** **Date:**   |                            |
| > August 18, 1999                       |                            |
| >                                       |                            |
| > Fee-for-service \[ 32 \]              |                            |
| > Experience-rated HMO \[ n/a \]        |                            |
| > Community-rated \[ n/a \]             |                            |
+-----------------------------------------+----------------------------+

> **SUBJECT: Amendments to the Standard Contracts for Fee-for-Service
> Carriers**
>
> Please review the enclosed Standard Contract amendments for
> Fee-for-Service carriers for Contract Year 2000. New language is in
> **boldface** and language to be deleted is in ~~strikeout~~. So that
> we can consider your comments, we must receive them no later than
> September 3, 1999.
>
> Section 1.22, Year 2000 Compliance, has been amended to include more
> specific language with regard to the technology you use to perform
> date/time processing involving dates later than December 31, 1999. The
> clause now refers to hardware, software, and firmware containing
> embedded chip technology. The clause also prescribes OPM=s remedy in
> the event you are unable to provide benefits and services to enrollees
> as a result of non-compliant information technology. A system failure
> caused by the failure of hardware, software, or firmware containing
> embedded chip technology that results in your inability to deliver
> required benefits and services to FEHB enrollees is a significant
> event under Section 1.10, and we will take appropriate action as
> authorized under that clause.
>
> Two new Sections, 1.24, Notice to Enrollees on Termination of FEHBP or
> Provider Contract, and 1.25, Transitional Care, implement the
> continuity of care provisions of the Patients= Bill of Rights. Section
> 1.24 requires you to make every effort to notify FEHB Program
> enrollees at least 90 days in advance when you terminate a specialty
> provider contract or a Preferred Provider Organization (PPO) or Point
> of Service (POS) network contract, unless you terminate them for
> cause. The requirement to notify enrollees also applies in the event
> you terminate your FEHB contract. Your prompt notice will ensure that
> the notification period and the transitional care period run
> concurrently.

Section 1.25 sets out your responsibilities when an enrollee qualifies
for transitional care because you terminate your FEHB contract, a
specialty provider contract, or a PPO or POS network contract, or you
are enrolling a new member who involuntarily changed carriers because
their former carrier is no longer available in the FEHB Program. The
clause covers your responsibilities when your enrollees remain in your
plan after a provider change. The clause also requires you to provide
the services required at no additional cost to enrollees during the
transition period. In addition, you must require the specialty provider
or PPO or POS network to: (1) promptly transfer all medical records to
the designated new provider; (2) provide any necessary assistance to
enrollees in obtaining or amending medical records; and (3) give you all
needed information from the provider for quality assurance purposes.

New Section 2.12, Continuing Requirements After Termination of the
Carrier, states that when a carrier=s contract is terminated, it
continues to be responsible for the obligations that it agreed to under
the contract. Such obligations include offering conversion contracts to
enrollees during the 31-day extension of coverage so that they may
convert to a private policy, providing benefits to the enrollee until
the effective date of the new enrollment, and processing and paying
disputed claims incurred under the contract.

We have revised Sections 3.1, Payments, and 3.2, Accounting and
Allowable Cost, to include guidance for carriers designated to
participate in a DoD Demonstration Project authorized by Public Law
105-261 \[10 U.S.C. 1108\]. The law allows certain Medicare and other
eligible DoD beneficiaries to enroll in health benefit plans in certain
geographic areas under the FEHB Program. On July 6, 1999, we published
an interim regulation that amends the Federal Employees Health Benefits
Acquisition Regulation (FEHBAR), as well as Part 890 of title 5, Code of
Federal Regulations (CFR), to implement the law. The FEHBAR amendment
includes the contract clauses we are amending, and you will have the
opportunity to comment on them during the public comment period.

We also have updated the Payments and Accounting and Allowable Cost
clauses to reflect current procedures implemented by the FEHBP
Experience-Rated Carrier and Service Organization Audit Guide and to
incorporate Aplain language@ concepts.

We have added a new section 3.12, Audit of Provider Contracts, to
authorize OPM and the Comptroller General to audit the provider=s costs
when the provider contract or agreement exceeds 5 percent of your
previous year=s total benefit costs under the FEHBP contract. This
change will enable OPM and the Comptroller General to audit the larger
providers on an as-needed basis.

You will note that we are not proposing to amend Part IV of the contract
to implement the Cost Accounting Standards (CAS). The Cost Accounting
Standards (CAS) provision remains the same as the March 5, 1999,
contract amendment. That is, your contractual responsibility is to
implement the current CAS to the extent compliance is, and has been,
required by the FAR and FEHBAR cost principles, Parts 31.2 and 1631.2
respectively. For this purpose only, CAS clauses 5.30, 5.31, and 5.32
will remain in Part V of the contract. We plan to request an
administrative exception to CAS implementation in the FEHB Program, as
we did last year, unless an extension to last year=s exemption is
enacted into law.

If you are a carrier participating in the DoD/FEHBP Demonstration
Project, your contract amendment also includes a separate clause
entitled AParticipation in the DoD Demonstration Project.@ The clause
requires you to participate in the DoD Demonstration Project and sets
out reporting requirements. Bracketed language regarding our
reimbursement of your costs that are in excess of premiums may be
removed pending final resolution of the issue.

We have also updated the introductory language and paragraph (a)5. of
Appendix D-a, FEHB Supplemental Literature Guidelines, and have included
website material as supplemental marketing literature.

When we send you the final contract amendments, we will update Federal
Acquisition Regulation clauses that have been revised during the past
year so that the most recent version will appear in the contract. All
new and revised clauses in Parts I through IV will show the date AJAN
2000.\" Revised FAR clauses in Part V will show the date of the FAR
revision. You will receive the final contract amendments for signature
at the same time we execute your Year 2000 rates and benefits.

Please forward your comments to Mary Ann Mercer at OPM or fax them to
(202) 606-0633. I look forward to working with you during contract year
2000.

Sincerely,

Frank D. Titus

Assistant Director

for Insurance Programs

Enclosure

Proposed Year 2000 Amendments to the Standard Contract for

**Fee-For-Service Carriers (DoD Demonstration Project)**

1\. Redate Section 1.22, YEAR 2000 COMPLIANCE, as JAN 2000 and update
and revise the clause as follows:

SECTION 1.22

YEAR 2000 COMPLIANCE (JAN ~~1999~~ **2000**)

\(a\) The Carrier shall ensure that hardware, software, and firmware it
uses in the performance of its FEHB Program contract will accurately
process date/time data (including, but not limited to, calculating,
comparing and sequencing) involving dates later than December 31, 1999,
including leap year calculations. ~~On May 31, 1999, the Carrier shall
either notify the Contracting Officer that the system will be compliant
or provide the Contracting Officer with a contingency plan that will
detail how the system will remain operational after December 31, 1999.~~

\(b\) When acquiring information

technology that will be required to perform date/time processing
involving dates later than December 31, 1999, the Carrier shall ensure
that solicitations and contracts~~: (1)~~ require the information
technology to be Year 2000 compliant ~~; or (2) require that
non-compliant information technology be upgraded to be Year 2000
compliant prior to the earlier of (i) the earliest date on which the
information technology may be required to perform date/time processing
involving dates later than December 31, 1999, or (ii) December 31,
1999.~~

~~(c) Not later than May 31, 1999, the Carrier shall submit a copy of
its company purchase policy that the hardware, software, and firmware it
either contracts for or purchases is Year 2000 compliant.~~

~~(d)~~ **(c)** "Year 2000 compliant" means that the information
technology accurately processes date/time data (including, but not
limited to, calculating, comparing, and sequencing) involving dates
later than December 31, 1999, including leap year calculations, to the
extent that other information technology used in combination with the
information technology being acquired, properly exchanges date/time data
with it.

**(d) A system failure caused by the failure of hardware, software, or
firmware covered under this clause that results in the Carrier's
inability to deliver benefits and services to FEHB Program enrollees is
a significant event under Section 1.10 of this contract, Notice of
Significant Events, and must be reported promptly to OPM.**

2\. Add new Sections 1.24, NOTICE TO ENROLLEES ON TERMINATION OF FEHBP
OR PROVIDER CONTRACT, and 1.25, TRANSITIONAL CARE, to implement the
continuity of care provisions of the Patient Bill of Rights, as follows:

**SECTION 1.24**

**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) its FEHBP contract, (2) the enrollees'
specialty provider contract,** **or (3) a Preferred Provider
Organization (PPO) or Point of Service (POS) network 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 its FEHBP contract, the enrollees' specialty provider
contract, or a PPO or POS network 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 1.25**

**TRANSITIONAL CARE (JAN 2000)**

**(a) "Transitional care" is specialized care provided for up to 90 days
or through the postpartum period to an enrollee who is 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)
its FEHBP contract, (2) a specialty provider contract, or (3) a
Preferred Provider Organization (PPO) or Point of Service (POS) network
contract for reasons other than cause. The 90-day period begins the
earlier of the date the enrollee receives the notice required under
Section 1.24, 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 specialty provider contract, or a PPO or POS
network 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 condition 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 for the transitional care 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 or network to promptly transfer all
medical records to the designated new provider during or upon completion
of the transition period, as authorized by the patient;**

**(3) provide assistance to enrollees who want to obtain records from
the specialty provider and/or request that the provider amend or allow
them to append a record they believe is inaccurate, irrelevant, or
incomplete; and,**

**(4) require the specialty provider or network to give all necessary
information to the Carrier for quality assurance purposes.**

3\. Add a new Section 2.12, CONTINUING REQUIREMENTS AFTER TERMINATION,
to reinforce certain existing contractual requirements as follows:

**SECTION 2.12**

**CONTINUING REQUIREMENTS AFTER TERMINATION (JAN 2000)**

**(a) The Carrier shall fulfill all of the requirements agreed to under
the contract that continue after termination.**

**(b) Requirements of the contract 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.**

4\. Redate Section 3.1, PAYMENTS, as JAN 2000 and add a new paragraph
(f) to implement the DoD Demonstration Project authorized by 10 U.S.C.
1108, as follows:

SECTION 3.1

PAYMENTS (JAN ~~1999~~ **2000**) (FEHBAR 1652.232-71)

**(f) *[Exception for the 3-Year DoD Demonstration Project (10 U.S.C.
1108).]{.underline}* The Carrier will perform a final reconciliation of
revenue and costs for the demonstration project group at the end of the
demonstration project. Costs in excess of the premiums will be
reimbursed first from the carrier's demonstration project Contingency
Reserve and then from OPM's Administrative Reserve. Any surplus after
the final accounting will be paid by the Carrier to OPM's Administrative
Reserve.**

(End of Clause)

5\. Redate Section 3.2, ACCOUNTING AND ALLOWABLE COST (FEHBAR
1652.216-71), as JAN 2000; add a new paragraph (d) to implement the DoD
Demonstration Project authorized by 10 U.S.C. 1108; update the clause to
reflect current procedures in the FEHBP Experience-Rated Carrier and
Service Organization Audit Guide; and make clarifying changes, as
follows:

SECTION 3.2

ACCOUNTING AND ALLOWABLE COST (FEHBAR 1652.216-71) (JAN ~~1999~~
**2000**)

[]{.mark}

[(a) [Annual Accounting Statements]{.underline}. (1) The
Carrier,]{.mark} ~~not later than the date specified by the contract,~~
shall furnish to OPM ~~for that contract period []{.mark}~~[an
accounting of its operations under the contract.]{.mark} ~~The
accounting shall be in the form prescribed by OPM and shall include,
among other things, a Balance Sheet and a Summary Statement of FEHBP
Financial Operations. The Summary Statement of FEHBP Financial
Operations shall include the following items for each option provided by
the contract:~~ **In preparing the accounting, the Carrier shall follow
the reporting requirements and statement formats prescribed by OPM in
the FEHBP Experience-Rated Carrier and Service Organization Audit Guide
(Guide).**

~~(i) Subscription income received and accrued (including amounts
received from the Contingency Reserve);~~

~~(ii) Health Benefits charges paid and accrued;~~

~~(iii) Administrative expenses and other charges paid and accrued;~~

~~(iv) Income on investments;~~

~~(v) Other adjustments;~~

~~(vi) Sum of items (i) minus (ii) minus (iii) plus (iv) plus or minus
(v).~~

[(2) The Carrier shall have its **Annual Accounting Statements
**]{.mark}~~most recent financial statement~~ and that of its
underwriter, if any, audited **in accordance with the Guide.** ~~by an
accounting firm that ascribes to the standards of the American Institute
of Certified Public Accountants.~~ The ~~report shall be submitted~~
Carrier shall submit the **audit** report **and the Annual Accounting
Statements** to OPM ~~not later than 180 days after the end of the
contract period~~ in accordance with the requirements of the Guide.

\(3\) Based on the results of either the independent audit **prescribed
by the Guide** or a Government audit, ~~the Carrier's annual accounting
statements may be (i) adjusted by amounts found not to constitute
allowable costs; or (ii) adjusted for prior overpayments or
underpayments~~ **the Carrier shall adjust its annual accounting
statements (i) by amounts found not to constitute actual, reasonable,
allowable, or allocable costs; or (ii) to reflect prior overpayments or
underpayments.**

**(4) The Carrier shall develop corrective action plans, in accordance
with and as defined by the Guide, to resolve all audit findings.**

\(b\) [Definition of costs]{.underline}. (1) ~~The allowable costs
chargeable to the contract for a contract period shall be the actual,
necessary and reasonable amounts incurred with proper justification and
accounting support, determined in accordance with the terms of this
contract, subpart 31.2 of the Federal Acquitition Regulation (FAR) and
subpart 1631.2 of the Federal Employees Health Benefits Program
Acquisition Regulation (FEHBAR) applicable on the first day of the
contract period.~~ **The Carrier may charge a cost to the contract for a
contract term if the cost is actual, allowable, allocable, and
reasonable. In addition, the Carrier must:**

**(i) on request, document and** **make available** **accounting support
for the cost and justify that the cost is reasonable and necessary;
and**

**(ii) determine the cost in accordance with: (A) the terms of this
contract, and (B) Subpart 31.2 of the Federal Acquisition Regulation
(FAR) and Subpart 1631.2 of the Federal Employees Health Benefits
Program Acquisition Regulation (FEHBAR) applicable** **on the first day
of the contract period.**

\(2\) In the absence of specific contract terms to the contrary,
~~contract costs shall be classified~~ **the Carrier shall classify**
contract costs in accordance with the following criteria:

\(i\) [Benefits]{.underline}. Benefit costs consist of payments made and
liabilities incurred for covered health care services on behalf of FEHBP
subscribers less any refunds, rebates, allowances or other credits
received.

\(ii\) [Administrative expenses]{.underline}. Administrative expenses
consist of all actual, **allocable,** allowable and reasonable expenses
incurred in the adjudication of subscriber benefit claims or incurred in
the Carrier\'s overall operation of the business. Unless otherwise
stated in the contract, administrative expenses include, in part: all
taxes (excluding premium taxes, as provided in section 1631.205-41),
insurance and reinsurance premiums, medical and dental consultants used
in the adjudication process, concurrent or managed care review when not
billed by a health care provider and other forms of utilization review,
the cost of maintaining eligibility files, legal expenses incurred in
the litigation of benefit payments and bank charges for letters of
credit. Administrative expenses exclude the cost of Carrier personnel,
equipment, and facilities directly used in the delivery of health care
services, which are benefit costs, and the expense of managing the FEHBP
investment program which is a reduction of investment income earned.

\(iii\) [Investment income]{.underline}. **While compliance with the
checks presented letter of credit methodology will minimize funds on
hand**, **the** ~~The~~ Carrier ~~is required to~~ **shall** invest and
reinvest all funds on hand, including any in the Special Reserve or any
attributable to the reserve for incurred but unpaid claims, which are in
excess of the funds needed to discharge promptly the obligations
incurred under the contract. Investment income represents the net amount
earned by the Carrier after deducting investment expenses ~~as a result
of investing the FEHBP funds. The direct or allocable indirect expenses
incurred in managing the investment program, such as consultant or
management fees, are chargeable against the investment income earned.~~
**Investment expenses are those actual, allowable, allocable, and
reasonable contract costs which are attributable to the investment of
FEHBP funds, such as consultant or management fees.**

\(iv\) [Other charges]{.underline}. (A) [Mandatory statutory
reserve]{.underline}. Charges for mandatory statutory reserves are not
allowable unless specifically provided for in the contract. When the
term \"mandatory statutory reserve\" is specifically identified as an
allowable contract charge without further definition or explanation, it
means a requirement imposed by State law upon the Carrier to set aside a
specific amount or rate of funds into a restricted reserve that is
accounted for separately from all other reserves and surpluses of the
Carrier and which may be used only with the specific approval of the
State official designated by law to make such approvals. The amount
chargeable to the contract may not exceed an allocable portion of the
amount actually set aside. If the statutory reserve is no longer
required for the purpose for which it was created, and these funds
become available for the general use of the Carrier, **the Carrier shall
return to the FEHBP** a pro rata share based upon FEHBP\'s contribution
to the total Carrier\'s set aside ~~shall be returned to the FEHBP~~ in
accordance with FAR 31.201-5.

\(B\) [Premium taxes]{.underline}. When the term "premium taxes" is used
in this contract without further definition or explanation, it means a
tax, ~~imposed by State or local statutes upon the Carrier's gross or
net premiums received.~~ **fee, or other monetary payment directly or
indirectly imposed on FEHB premiums by any State, the District of
Columbia, or the Commonwealth of Puerto Rico or by any political
subdivision or other governmental authority of those entities, with the
sole exception of a tax on net income or profit, if that tax, fee, or
payment is applicable to a broad range of business activity.**

\(c\) [Certification of Accounting Statement Accuracy]{.underline}. (1)
The Carrier shall certify the annual accounting statement in the form
set forth in paragraph (c)(3) of this clause. ~~The certificate shall be
signed by the chief executive officer and the chief financial officer of
the Carrier.~~ **The Carrier's chief executive officer and the chief
financial officer shall sign the certificate.**

\(2\) The Carrier shall require an authorized agent of its underwriter,
if any, also to certify the annual accounting statement.

\(3\) The certificate required shall be in the following form:

CERTIFICATION OF ACCOUNTING

STATEMENT ACCURACY

This is to certify that I have reviewed this accounting statement and to
the best of my knowledge and belief:

1\. The statement was prepared in conformity with the guidelines issued
by the Office of Personnel Management and fairly presents the financial
results of this ~~contract~~ **reporting** period in conformity with
those guidelines.

2\. The costs included in the statement are ~~allowable and allocable~~
**actual, allowable, allocable, and reasonable** in accordance with the
terms of the contract and with the cost principles of the Federal
Employees Health Benefits Acquisition Regulation and the Federal
Acquisition Regulation;

3\. Income, rebates, allowances, refunds and other credits made or owed
in accordance with the terms of the contract and applicable cost
principles have been included in the statement;

4\. If applicable, the letter of credit account was managed in
accordance with 5 CFR part 890, 48 CFR chapter 16, and OPM guidelines.

Carrier Name
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_Name
of Chief Executive Officer:

(Type or Print)

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Name of Chief Financial Officer:

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Signature of Chief Executive Officer:

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Signature of Chief Financial Officer:

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Date Signed:

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Date Signed:

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Underwriter:

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Name and Title of Responsible Corporate Official:

(Type or Print :)

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Signature of Responsible Corporate Official:

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Date Signed: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(End of Certificate)

~~\[NOTE: As required by subsection (a)(1) of this section, the Carrier,
not later than 90 days after the end of the contract period, shall
furnish OPM for that period an accounting of its operations under the
contract.\]~~

**(d) *[Exceptions for the 3-Year DoD Demonstration Project (10 U.S.C.
1108)]{.underline}*. (1) The Carrier shall draw funds from its Letter of
Credit (LOC) account to pay demonstration project benefits costs in the
same manner as it does for benefits costs incurred by regular FEHB
members. The Carrier shall account separately for health benefits
charges paid using demonstration project funds and regular FEHB funds.
Direct administrative costs attributable solely to the demonstration
project shall be fully chargeable to the demonstration project. Indirect
administrative costs associated with the demonstration project will be
allocated to the demonstration project based on the percentage obtained
by dividing the dollar amount of claims processed under the
demonstration project by the total claims processed for FEHB Program
activity. This same percentage will also be used to determine the amount
of the Carrier's service charge that will be allocated to the
demonstration project.**

**(2) The Carrier shall submit a separate annual accounting statement
and monthly incurred claims report for demonstration project
experience.**

(End of Clause)

6.  Add a new section 3.12, Audit of Provider Contracts, to authorize
    audit of certain provider contracts, as follows:

# 

# SECTION 3.12

**AUDIT OF PROVIDER CONTRACTS**

**(JAN 2000)**

**(a) Any provider contract or agreement which exceeds 5 percent of the
Carrier's previous year's total benefit costs under the FEHBP contract
is subject to audit by OPM and the Comptroller General of the United
States or an authorized representative.**

**(b) If the Carrier enters into a contract or agreement with a provider
to provide benefits for this contract and the contract with the provider
meets the cost criteria in paragraph (a), the Carrier shall require the
provider to make available such documentation as OPM shall require to
audit the provider under this clause.**

7\. Add a new clause in 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:

**SECTION 4.1**

**PARTICIPATION IN THE DoD**

**DEMONSTRATION PROJECT**

**(JAN 2000)**

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

**(b) The Carrier shall account for health benefits charges paid in
accordance with**

**Section 3.2, Accounting and Allowable Cost (FEHBAR 1652.216-71).**

**(c) The Carrier shall report on demonstration project revenues, health
benefits charges, and administrative expenses as directed by OPM.**

**(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.**

8\. 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~~ **the official statement of benefits**. 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.\"*

PART IV \-- SPECIAL PROVISIONS

SECTION 4.1

ALTERATIONS IN CONTRACT (JAN 1998) (FAR 52.252-4)

Portions of this contract are altered as follows:

**(a)** Section 3.2. As required by Public Law 101-508, \' 8909 of title
5, U.S.C., and Section 3.2(b)(2)(ii) of this contract are amended by the
following:

\(1\) No tax, fee, or other monetary payment may be imposed, directly or
indirectly, on a Carrier or an underwriting or plan administration
subcontractor of an approved health benefits plan by any State, the
District of Columbia, or the Commonwealth of Puerto Rico, or by any
political subdivision or other governmental authority thereof, with
respect to any payment made from the Fund.

\(2\) Paragraph (1) shall not be construed to exempt any Carrier or
subcontractor of an approved health benefits plan from the imposition,
payment, or collection of a tax, fee, or other monetary payment on the
net income or profit accruing to or realized by such Carrier or
underwriting or plan administration subcontractor from business
conducted under this Chapter, if that tax, fee, or payment is applicable
to a broad range of business activity.

**(b)** Sections 5.30, 5.31, 5.32. The Cost Accounting Standards, Part
30 and Chapter 99 of the FAR, are applicable to this contract. The
Carrier shall apply the Cost Accounting Standards to the maximum extent
practicable and shall adjust its cost accounting practices and
procedures as necessary to conform to 48 CFR Part 30 and 48 CFR Chapter
99. The Carrier shall submit a Disclosure Statement not later than
twelve months after the date an appropriate Disclosure form is provided
by OPM.

**(c)** **PARTICIPATION IN /FEHBP**

**DEMONSTRATION PROJECT**

**(JAN 2000)**

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

**(b) The Carrier shall account for health benefits charges paid in
accordance with Section 3.2, Accounting and Allowable Cost (FEHBAR
1652.216-71).**

**(c) The Carrier shall report on demonstration project revenues, health
benefits charges, and administrative expenses as directed by OPM.**

**(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.**

Proposed Year 2000 Amendments to the Standard Contract for

**Fee-For-Service Carriers**

1\. Redate Section 1.22, YEAR 2000 COMPLIANCE, as JAN 2000 and update
and revise the clause as follows:

SECTION 1.22

YEAR 2000 COMPLIANCE (JAN ~~1999~~ **2000**)

\(a\) The Carrier shall ensure that hardware, software, and firmware it
uses in the performance of its FEHB Program contract will accurately
process date/time data (including, but not limited to, calculating,
comparing and sequencing) involving dates later than December 31, 1999,
including leap year calculations. ~~On May 31, 1999, the Carrier shall
either notify the Contracting Officer that the system will be compliant
or provide the Contracting Officer with a contingency plan that will
detail how the system will remain operational after December 31, 1999.~~

\(b\) When acquiring information

technology that will be required to perform date/time processing
involving dates later than December 31, 1999, the Carrier shall ensure
that solicitations and contracts~~: (1)~~ require the information
technology to be Year 2000 compliant ~~; or (2) require that
non-compliant information technology be upgraded to be Year 2000
compliant prior to the earlier of (i) the earliest date on which the
information technology may be required to perform date/time processing
involving dates later than December 31, 1999, or (ii) December 31,
1999.~~

~~(c) Not later than May 31, 1999, the Carrier shall submit a copy of
its company purchase policy that the hardware, software, and firmware it
either contracts for or purchases is Year 2000 compliant.~~

~~(d)~~ **(c)** "Year 2000 compliant" means that the information
technology accurately processes date/time data (including, but not
limited to, calculating, comparing, and sequencing) involving dates
later than December 31, 1999, including leap year calculations, to the
extent that other information technology used in combination with the
information technology being acquired, properly exchanges date/time data
with it.

**(d) A system failure caused by the failure of hardware, software, or
firmware covered under this clause that results in the Carrier's
inability to deliver benefits and services to FEHB Program enrollees is
a significant event under Section 1.10 of this contract, Notice of
Significant Events, and must be reported promptly to OPM.**

2\. Add new Sections 1.24, NOTICE TO ENROLLEES ON TERMINATION OF FEHBP
OR PROVIDER CONTRACT, and 1.25, TRANSITIONAL CARE, to implement the
continuity of care provisions of the Patient Bill of Rights, as follows:

**SECTION 1.24**

**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) its FEHBP contract, (2) the enrollees'
specialty provider contract,** **or (3) a Preferred Provider
Organization (PPO) or Point of Service (POS) network 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 its FEHBP contract, the enrollees' specialty provider
contract, or a PPO or POS network 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 1.25**

**TRANSITIONAL CARE (JAN 2000)**

**(a) "Transitional care" is specialized care provided for up to 90 days
or through the postpartum period to an enrollee who is 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)
its FEHBP contract, (2) a specialty provider contract, or (3) a
Preferred Provider Organization (PPO) or Point of Service (POS) network
contract for reasons other than cause. The 90-day period begins the
earlier of the date the enrollee receives the notice required under
Section 1.24, 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 specialty provider contract, or a PPO or POS
network 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 for the transitional care 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 or network to promptly transfer all
medical records to the designated new provider during or upon completion
of the transition period, as authorized by the patient;**

**(3) provide assistance to enrollees who want to obtain records from
the specialty provider and/or request that the provider amend or allow
them to append a record they believe is inaccurate, irrelevant, or
incomplete; and,**

**(4) require the specialty provider or network to give all necessary
information to the Carrier for quality assurance purposes.**

3\. Add a new Section 2.12, CONTINUING REQUIREMENTS AFTER TERMINATION,
to reinforce certain existing contractual requirements as follows:

**SECTION 2.12**

**CONTINUING REQUIREMENTS AFTER TERMINATION (JAN 2000)**

**(a) The Carrier shall fulfill all of the requirements agreed to under
the contract that continue after termination.**

**(b) Requirements of the contract 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.**

4\. Redate Section 3.1, PAYMENTS, as JAN 2000 and add a new paragraph
(f) to implement the DoD Demonstration Project authorized by 10 U.S.C.
1108, as follows:

SECTION 3.1

PAYMENTS (JAN ~~1999~~ **2000**) (FEHBAR 1652.232-71)

**(f) *[Exception for the 3-Year DoD Demonstration Project (10 U.S.C.
1108).]{.underline}* The Carrier will perform a final reconciliation of
revenue and costs for the demonstration project group at the end of the
demonstration project. Costs in excess of the premiums will be
reimbursed first from the carrier's demonstration project Contingency
Reserve and then from OPM's Administrative Reserve. Any surplus after
the final accounting will be paid by the Carrier to OPM's Administrative
Reserve.**

(End of Clause)

5\. Redate Section 3.2, ACCOUNTING AND ALLOWABLE COST (FEHBAR
1652.216-71), as JAN 2000; add a new paragraph (d) to implement the DoD
Demonstration Project authorized by 10 U.S.C. 1108; update the clause to
reflect current procedures in the FEHBP Experience-Rated Carrier and
Service Organization Audit Guide; and make clarifying changes, as
follows:

SECTION 3.2

ACCOUNTING AND ALLOWABLE COST (FEHBAR 1652.216-71) (JAN ~~1999~~
**2000**)

[]{.mark}

[(a) [Annual Accounting Statements]{.underline}. (1) The
Carrier,]{.mark} ~~not later than the date specified by the contract,~~
shall furnish to OPM ~~for that contract period []{.mark}~~[an
accounting of its operations under the contract.]{.mark} ~~The
accounting shall be in the form prescribed by OPM and shall include,
among other things, a Balance Sheet and a Summary Statement of FEHBP
Financial Operations. The Summary Statement of FEHBP Financial
Operations shall include the following items for each option provided by
the contract:~~ **In preparing the accounting, the Carrier shall follow
the reporting requirements and statement formats prescribed by OPM in
the FEHBP Experience-Rated Carrier and Service Organization Audit Guide
(Guide).**

~~(i) Subscription income received and accrued (including amounts
received from the Contingency Reserve);~~

~~(ii) Health Benefits charges paid and accrued;~~

~~(iii) Administrative expenses and other charges paid and accrued;~~

~~(iv) Income on investments;~~

~~(v) Other adjustments;~~

~~(vi) Sum of items (i) minus (ii) minus (iii) plus (iv) plus or minus
(v).~~

[(2) The Carrier shall have its **Annual Accounting Statements
**]{.mark}~~most recent financial statement~~ and that of its
underwriter, if any, audited **in accordance with the Guide.** ~~by an
accounting firm that ascribes to the standards of the American Institute
of Certified Public Accountants.~~ The ~~report shall be submitted~~
Carrier shall submit the **audit** report **and the Annual Accounting
Statements** to OPM ~~not later than 180 days after the end of the
contract period~~ in accordance with the requirements of the Guide.

\(3\) Based on the results of either the independent audit **prescribed
by the Guide** or a Government audit, ~~the Carrier's annual accounting
statements may be (i) adjusted by amounts found not to constitute
allowable costs; or (ii) adjusted for prior overpayments or
underpayments~~ **the Carrier shall adjust its annual accounting
statements (i) by amounts found not to constitute actual, reasonable,
allowable, or allocable costs; or (ii) to reflect prior overpayments or
underpayments.**

**(4) The Carrier shall develop corrective action plans, in accordance
with and as defined by the Guide, to resolve all audit findings.**

\(b\) [Definition of costs]{.underline}. (1) ~~The allowable costs
chargeable to the contract for a contract period shall be the actual,
necessary and reasonable amounts incurred with proper justification and
accounting support, determined in accordance with the terms of this
contract, subpart 31.2 of the Federal Acquitition Regulation (FAR) and
subpart 1631.2 of the Federal Employees Health Benefits Program
Acquisition Regulation (FEHBAR) applicable on the first day of the
contract period.~~ **The Carrier may charge a cost to the contract for a
contract term if the cost is actual, allowable, allocable, and
reasonable. In addition, the Carrier must:**

**(i) on request, document and** **make available** **accounting support
for the cost and justify that the cost is reasonable and necessary;
and**

**(ii) determine the cost in accordance with: (A) the terms of this
contract, and (B) Subpart 31.2 of the Federal Acquisition Regulation
(FAR) and Subpart 1631.2 of the Federal Employees Health Benefits
Program Acquisition Regulation (FEHBAR) applicable** **on the first day
of the contract period.**

\(2\) In the absence of specific contract terms to the contrary,
~~contract costs shall be classified~~ **the Carrier shall classify**
contract costs in accordance with the following criteria:

\(i\) [Benefits]{.underline}. Benefit costs consist of payments made and
liabilities incurred for covered health care services on behalf of FEHBP
subscribers less any refunds, rebates, allowances or other credits
received.

\(ii\) [Administrative expenses]{.underline}. Administrative expenses
consist of all actual, **allocable,** allowable and reasonable expenses
incurred in the adjudication of subscriber benefit claims or incurred in
the Carrier\'s overall operation of the business. Unless otherwise
stated in the contract, administrative expenses include, in part: all
taxes (excluding premium taxes, as provided in section 1631.205-41),
insurance and reinsurance premiums, medical and dental consultants used
in the adjudication process, concurrent or managed care review when not
billed by a health care provider and other forms of utilization review,
the cost of maintaining eligibility files, legal expenses incurred in
the litigation of benefit payments and bank charges for letters of
credit. Administrative expenses exclude the cost of Carrier personnel,
equipment, and facilities directly used in the delivery of health care
services, which are benefit costs, and the expense of managing the FEHBP
investment program which is a reduction of investment income earned.

\(iii\) [Investment income]{.underline}. **While compliance with the
checks presented letter of credit methodology will minimize funds on
hand**, **the** ~~The~~ Carrier ~~is required to~~ **shall** invest and
reinvest all funds on hand, including any in the Special Reserve or any
attributable to the reserve for incurred but unpaid claims, which are in
excess of the funds needed to discharge promptly the obligations
incurred under the contract. Investment income represents the net amount
earned by the Carrier after deducting investment expenses ~~as a result
of investing the FEHBP funds. The direct or allocable indirect expenses
incurred in managing the investment program, such as consultant or
management fees, are chargeable against the investment income earned.~~
**Investment expenses are those actual, allowable, allocable, and
reasonable contract costs which are attributable to the investment of
FEHBP funds, such as consultant or management fees.**

\(iv\) [Other charges]{.underline}. (A) [Mandatory statutory
reserve]{.underline}. Charges for mandatory statutory reserves are not
allowable unless specifically provided for in the contract. When the
term \"mandatory statutory reserve\" is specifically identified as an
allowable contract charge without further definition or explanation, it
means a requirement imposed by State law upon the Carrier to set aside a
specific amount or rate of funds into a restricted reserve that is
accounted for separately from all other reserves and surpluses of the
Carrier and which may be used only with the specific approval of the
State official designated by law to make such approvals. The amount
chargeable to the contract may not exceed an allocable portion of the
amount actually set aside. If the statutory reserve is no longer
required for the purpose for which it was created, and these funds
become available for the general use of the Carrier, **the Carrier shall
return to the FEHBP** a pro rata share based upon FEHBP\'s contribution
to the total Carrier\'s set aside ~~shall be returned to the FEHBP~~ in
accordance with FAR 31.201-5.

\(B\) [Premium taxes]{.underline}. When the term "premium taxes" is used
in this contract without further definition or explanation, it means a
tax, ~~imposed by State or local statutes upon the Carrier's gross or
net premiums received.~~ **fee, or other monetary payment directly or
indirectly imposed on FEHB premiums by any State, the District of
Columbia, or the Commonwealth of Puerto Rico or by any political
subdivision or other governmental authority of those entities, with the
sole exception of a tax on net income or profit, if that tax, fee, or
payment is applicable to a broad range of business activity.**

\(c\) [Certification of Accounting Statement Accuracy]{.underline}. (1)
The Carrier shall certify the annual accounting statement in the form
set forth in paragraph (c)(3) of this clause. ~~The certificate shall be
signed by the chief executive officer and the chief financial officer of
the Carrier.~~ **The Carrier's chief executive officer and the chief
financial officer shall sign the certificate.**

\(2\) The Carrier shall require an authorized agent of its underwriter,
if any, also to certify the annual accounting statement.

\(3\) The certificate required shall be in the following form:

CERTIFICATION OF ACCOUNTING

STATEMENT ACCURACY

This is to certify that I have reviewed this accounting statement and to
the best of my knowledge and belief:

1\. The statement was prepared in conformity with the guidelines issued
by the Office of Personnel Management and fairly presents the financial
results of this ~~contract~~ **reporting** period in conformity with
those guidelines.

2\. The costs included in the statement are ~~allowable and allocable~~
**actual, allowable, allocable, and reasonable** in accordance with the
terms of the contract and with the cost principles of the Federal
Employees Health Benefits Acquisition Regulation and the Federal
Acquisition Regulation;

3\. Income, rebates, allowances, refunds and other credits made or owed
in accordance with the terms of the contract and applicable cost
principles have been included in the statement;

4\. If applicable, the letter of credit account was managed in
accordance with 5 CFR part 890, 48 CFR chapter 16, and OPM guidelines.

Carrier Name
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_Name
of Chief Executive Officer:

(Type or Print)

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Name of Chief Financial Officer:

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Signature of Chief Executive Officer:

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Signature of Chief Financial Officer:

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Date Signed:

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Date Signed:

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Underwriter:

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

**Name and Title of Responsible Corporate Official:**

(Type or Print :)

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Signature of Responsible Corporate Official:

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Date Signed: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(End of Certificate)

~~\[NOTE: As required by subsection (a)(1) of this section, the Carrier,
not later than 90 days after the end of the contract period, shall
furnish OPM for that period an accounting of its operations under the
contract.\]~~

**(d) *[Exceptions for the 3-Year DoD Demonstration Project (10 U.S.C.
1108)]{.underline}*. (1) The Carrier shall draw funds from its Letter of
Credit (LOC) account to pay demonstration project benefits costs in the
same manner as it does for benefits costs incurred by regular FEHB
members. The Carrier shall account separately for health benefits
charges paid using demonstration project funds and regular FEHB funds.
Direct administrative costs attributable solely to the demonstration
project shall be fully chargeable to the demonstration project. Indirect
administrative costs associated with the demonstration project will be
allocated to the demonstration project based on the percentage obtained
by dividing the dollar amount of claims processed under the
demonstration project by the total claims processed for FEHB Program
activity. This same percentage will also be used to determine the amount
of the Carrier's service charge that will be allocated to the
demonstration project.**

**(2) The Carrier shall submit a separate annual accounting statement
and monthly incurred claims report for demonstration project
experience.**

(End of Clause)

6.  Add a new section 3.12, Audit of Provider Contracts, to authorize
    audit of certain provider contracts, as follows:

# SECTION 3.12

**AUDIT OF PROVIDER CONTRACTS**

**(JAN 2000)**

**(a) Any provider contract or agreement which exceeds 5 percent of the
Carrier's previous year's total benefit costs under the FEHBP contract
is subject to audit by OPM and the Comptroller General of the United
States or an authorized representative.**

**(b) If the Carrier enters into a contract or agreement with a provider
to provide benefits for this contract and the contract with the provider
meets the cost criteria in paragraph (a), the Carrier shall require the
provider to make available such documentation as OPM shall require to
audit the provider under this clause.**

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~~ **the official statement of benefits**. 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.\"*