+-----------------------------------------+----------------------------+
| **FEHB Program Carrier Letter**         | **U.S. Office of Personnel |
|                                         | Management**               |
| Health Maintenance Organizations (new)  |                            |
|                                         | **Office of Insurance      |
|                                         | Programs**                 |
+-----------------------------------------+----------------------------+
| > **Letter No. 2000-21C** **Date:** May |                            |
| > 5, 2000                               |                            |
| >                                       |                            |
| > Fee-for-service \[ \]                 |                            |
| > Experience-rated HMO \[ x \]          |                            |
| > Community-rated HMO \[ x \]           |                            |
+-----------------------------------------+----------------------------+

> SUBJECT: Technical Guidance for Benefit and Service Area Proposals

This is additional guidance on benefit changes, instructions for
submitting benefit proposals, and instructions for service area
proposals for the upcoming contract term (January 1 through December 31,
2001). You must propose benefit changes according to carrier letter
2000-17, *Call Letter for Contract Year 2001 \-- Policy Guidance*, dated
April 11, 2000.

This letter has three parts:

Part One ‑ Preparing Your Benefit Proposal

Part Two ‑ Changes in Service Area Since You Applied to the FEHB Program

Part Three ‑ Benefit Requirements for Newly-Approved HMOs

**Remember that brochure language that accompanies and describes your
benefit proposals must be in plain language and received by your OPM
contract specialist by May 31, 2000. Non-benefit brochure language,
using plain language throughout, is due to your contract specialist July
1, 2000.**

We sent rate instructions in Carrier Letter 2000-18, dated April 19,
2000. Keep in mind that FEHB rate submissions are the cornerstone of our
financial relationship with HMOs. We may audit your FEHB rates and their
supporting documentation to ensure they are accurate and reasonable. If
you misrepresent your FEHB Program rates, we may take criminal or civil
legal actions against the carrier or its officials. We, with the support
of the Inspector General\'s Office and the Justice Department, will
aggressively pursue any misrepresentation.

**Policies established in prior years remain in effect unless we say
otherwise. See Part Three of this letter for details.** We will not
consider proposals that are contrary to these policies.

In keeping with the spirit of the call letter, we remain extremely price
sensitive but do not limit HMOs to zero cost benefit tradeoffs. However,
we prefer that benefits remain consistent with your community package.

Our experience is that a plan with less than four years experience in
the FEHB Program is most

at-risk for dropping out of the Program. Newer plans that drop out are
more likely to cite insufficient FEHB enrollment as the reason for no
longer wishing to participate. The FEHB Program is a mature, managed
care market. Your ability to differentiate yourself in terms of pricing,
benefits, service, or provider panel will go a long way in determining
your Program success. Keep your lines of communication open with your
OPM contract specialist. Don't hesitate to call if you have any
questions about the call letter or the material enclosed in this letter.

Sincerely,

(signed)

Frank D. Titus

Assistant Director

for Insurance Programs

**Part One ‑ Preparing Your Benefit Proposal**

We expect every HMO to prepare a complete proposal according to these
instructions and submit it by **May 31, 2000.**

Your actual benefit proposal will consist of several parts:

‑ Benefit package documentation;

> ‑ Proposed 2001 benefit language (non-benefit brochure language in
> plain language format is due by July 1, 2000); and
>
> \- Signed contracting official form

If you foresee unusual or extensive changes to your community package,
please discuss them with your OPM contract representative before you
prepare your submission.

**2001 FEHB Proposal Instructions**

A. Provide the following material by **May 31, 2000:**

> 1\. [Experience‑rated plans]{.underline} ‑ Provide a copy of a fully
> executed employer group contract for 2000. If you have not made
> changes to this level of coverage since filing your application to
> participate in the FEHB Program, then submit a statement to this
> effect. If you have made changes, submit a copy of the new benefit
> description and answer the questions below (you must have filed this
> benefit package and the associated rate with your State if a filing is
> required by the State):

Attach a chart displaying the following information:

a.  Benefits that are covered in one package but not the other;

> b\. Differences in coinsurance, copays, numbers of days of coverage
> and other levels of coverage between one package and the other;
>
> c\. Whether you include the costs of the differences in a. and b.
> within or in addition to the community rate charged to other groups
> that purchase this community benefits package; and
>
> d\. The number of subscribers/contract holders who currently purchase
> each package.
>
> 2.[Community‑rated plans]{.underline} ‑ We prefer to purchase the same
> community benefit package that covers the majority of your
> subscribers/contract holders, with adjustments for any benefit
> differences resulting from specific requirements of the FEHB Program.
> If you offer a variety of community packages, you should propose the
> core package of benefits that a majority (or the largest number) of
> plan subscribers or contract holders (not members or employer groups)
> purchase. If we later determine that the community benefits package we
> purchased is not the community benefits package purchased on behalf of
> the majority, we will adjust your 2001 FEHB rates.
>
> Please append descriptions of community‑based riders (e.g.,
> prescription drugs, durable medical equipment) and other additions to
> the basic package that reflect changes, or mandated additions, to the
> community package. This material must show all benefits proposed for
> the FEHB Program for the 2001 contract term except those still under
> review by your State as described in Item B. below.

B.  Describe the procedure in your State for filing and/or obtaining
    approval of community benefit packages and changes. If the State
    requires filing and/or approval, **provide a copy of the approval
    issued by the State applicable to the community package you submit
    in response to A1 or A2 above.** Please highlight and address any
    State mandated benefits that you have not specifically addressed in
    previous communications with us. Please note that we will accept
    proposed benefit changes only if: (1) you submitted the changes to
    your State prior to **May 31** and (2) you obtain approval and
    submit documentation of the approval to us by **June 30, 2000**. If
    the State grants approval by default, i.e., the State does not
    object to proposed changes within a certain period after they
    receive the proposal, please so note; the review period must have
    elapsed without objection by June 30.

> We will contact the State about benefits as necessary; please provide
> the name and phone number of the State official responsible for
> reviewing your plan\'s benefits. If your plan operates in more than
> one State, provide this information for each State.

Carrier Contracting Officials

The Office of Personnel Management (OPM) will not accept any contractual
action from

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(Carrier),

including those involving rates and benefits, unless it is signed by one
of the persons named below (including the executor of this form), or on
an amended form accepted by OPM. This list of contracting officials will
remain in effect until the carrier amends or revises it.

The persons named below have the authority to sign a contract or
otherwise to bind the Carrier

for
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(Plan)

Enrollment
code(s):\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Typed name Title Signature Date

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

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

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

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

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

By:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(Signature of contracting official) (Date)

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

(Typed name and title)

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

(Phone number) (FAX Number)

**Part Two ‑ Changes in Service Areas**

**or Plan Designation Since You Applied**

**to the FEHB Program**

We expect that your present service area and the individual doctors or
medical groups with whom you contract to offer services to the FEHB will
be available to our members for the 2001 contract term. You must inform
us of any changes.

> **Service Area Reduction** ‑ Explain the reason for and provide
> supporting documentation (e.g., withdrawal notice from medical group)
> for any proposed reduction to your service area. Does this reduction
> apply only to the Federal group?
>
> **Service Area Expansion** ‑ You must propose any service area
> expansion by **May 31**. We will grant an extension no later than June
> 30 for submitting supporting documentation described below, including
> all necessary State authorizations. We cannot grant exceptions to this
> date.
>
> **Redesignation as a Mixed Model Plan** - If you applied as a Group
> Practice Plan (GPP) or Individual Practice Plan (IPP) during the
> application process and you now offer both types of providers,
> redesignation as a Mixed Model Plan (MMP) may be appropriate. You must
> request redesignation and describe the delivery system that you added.

**Please note:** You must indicate to us that the information you
provide concerning your delivery system is based on providers with whom
you have [executed]{.underline} contracts; letters of intent are not
acceptable in lieu of executed contracts. We also require that you state
that all contracts with providers contain a \"hold harmless\" clause.
Use the statement form included in this mailing.

OPM will evaluate your proposal according to these criteria: legal
authority to operate, reasonable access to and choice of quality primary
and specialty medical care throughout the service area, and your ability
to provide contracted benefits. Please provide the following
information:

**A. Provide a description of the proposed expansion area in which you
are approved to operate (if different from what you proposed and what we
accepted in your application):**

> 1\. Describe the proposed service area expansion by zip code, county,
> city or town, and provide a map of the old and new service areas.

**B. Authority to operate in proposed area:**

> 1\. Please provide a copy of the State approval document authorizing
> you to both market and provide services in the proposed expansion
> area, and the name and telephone number of the person at the state
> agency who worked on the authorization. The document must include a
> description of the approved area.

**C. Access to Providers**

1.  Please provide the number of primary care physicians, specialty
    physicians, and

> hospitals in the proposed area with whom you have
> [executed]{.underline} contracts.

**Service Area and Additional Geographic Areas -** Federal employees and
annuitants

who live within the service area we approve are eligible to enroll in
your plan. If you

enroll commercial, non-Federal members from an [additional]{.underline}
geographic area that

surrounds, or is adjacent to, your service area you may propose to
enroll Federal

employees and annuitants who live in this area. In addition, if the
State where you have

legal authority to operate permits you to enroll members who
[work]{.underline} but do not reside

within your commercial service area, and/or any additional geographic
area, you may

propose the same enrollment policy for your FEHB Program enrollees. We
will provide

model language for stating your policy in your brochure.

Since benefits may be restricted for nonemergency care received outside
the service area where plan providers are generally located, your
proposal must include language to clearly describe this additional
geographic area as well as your service area.

**D. Redesignation as a Mixed Model Plan** ‑ This section applies
[only]{.underline} if you applied as a GPP or IPP and, since the
application approval, now offer both types of providers. Please indicate
the provider system you are adding.

If you are adding a GPP component to an existing IPP delivery system,
please note that in order to meet FEHB requirements you must demonstrate
that the group includes \"at least

three physicians who receive all or a substantial part of their
professional income from the

HMO funds and who represent one or more medical specialties appropriate
and necessary for the population proposed to be served by the plan.\" (5
USC 8903(4)(A))

If we approve your proposal, you will need to provide the following
information:

> 1\. Do you require all members of a family to use the same delivery
> system, or may some members of a family use GPP doctors while others
> use IPP doctors?
>
> 2\. If you restrict members to one type of delivery system, what must
> a member do to change from one delivery system to the other during a
> contract term? How soon after it is requested would such a change be
> effective?
>
> 3\. If a member wants to change primary care doctors (centers for
> GPPs), what must the member do? Is there a limit on the number of
> times a member may change primary care doctors (centers)? If yes, will
> you waive the limit for FEHB members? How soon is a requested change
> effective?

**Federal Employees Health Benefits Program**

**Statement About Service Area Expansion**

We have prepared the attached service area expansion proposal in
accordance with the requirements found in Part Two, Changes in Service
Area, of Carrier Letter 2000-21C. Specifically,

1\. All provider contracts have hold harmless provisions in them.

2\. All provider contracts are fully executed at the time of this
submission. I understand that letters of intent are not considered
contracts for purposes of this certification.

3\. All of the information provided in response to Part Two, Paragraph C
(Access to Providers) is accurate as of the date of this statement.

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

Signature of Plan Contracting Official

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

Title

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

Plan Name

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

Date

**Part Three ‑ Benefit Requirements for**

**Newly-Approved HMOs**

Policies established in prior years remain in effect unless we say
otherwise. We have highlighted some here as an aid to you in preparing
your proposal. We will not consider proposed benefits that are contrary
to policy. You should work closely with your contract specialist to
develop a complete benefit package for 2001.

A. **Mental Health and Substance Abuse** ‑ Under mental health and
substance abuse parity, your coverage for mental health and substance
abuse must be identical with regard to traditional medical care
deductibles, coinsurance, copays, and day and visit limitations. We
would like to see you make patient access to adequate mental health
services happen through managed care networks of behavioral health care
providers and innovative benefits design.

B. **Maternity and Mastectomy Admissions** - All plans must provide for
maternity admission lengths of stay of at least 48 hours after a regular
delivery and 96 hours after a caesarian delivery, at the mother\'s
option. Similarly, all plans must provide a mastectomy patient the
option of having the procedure performed on an inpatient basis and
remaining in the hospital for at least 48 hours after the procedure.

C. **Pre-existing Conditions** - We do not allow pre-existing condition
limitations on any benefit, including cosmetic surgery and dental
benefits.

D. **Point of Service Product** ‑ We will consider proposals to offer a
Point of Service product under the FEHB Program [only if you can
demonstrate experience with a private sector employer who has purchased
this product]{.underline}.

E. **Waiver of Office Visit Copayments for Prenatal and Postnatal Care**
‑ A number of plans waive these copayments to help assure that pregnant
members obtain adequate pre‑ and post‑natal care, and thereby increase
the likelihood that their babies will be born without complications. We
encourage other HMOs to do the same.

F. **Coverage for Fertility Drugs** ‑ We require you to cover treatment
of infertility, but this requirement does not include related
prescription drugs. Brochure language should clearly indicate whether
you cover fertility drugs or not, in both the infertility benefit
description and the prescription drug benefit description. You may not
exclude drugs for sexual dysfunction (impotence), but you may place
limits on the benefit.

G. **Immunizations for Children** ‑ All FEHB plans must provide coverage
for childhood immunizations, including the cost of inoculations or sera.

H. **Transplants** ‑All plans must provide coverage for all
non‑experimental bone marrow transplants (including non‑experimental
allogeneic bone marrow transplants, and autologous bone marrow
transplants for acute lymphocytic and non‑lymphocytic leukemia, advanced
Hodgkin\'s lymphoma, advanced non‑Hodgkin\'s lymphoma, advanced
neuroblastoma, and testicular, mediastinal, retroperitoneal, and ovarian
germ cell tumors), cornea, heart, liver, and kidney transplants. In
addition, all FEHB plans must provide coverage for HDC/ABMT for the
treatment of breast cancer, multiple myeloma, and epithelial ovarian
cancer. You may limit coverage for these three conditions to services
provided at a recognized Center of Excellence and received in clinical
trials, as long as both randomized and nonrandomized trials are included
(the benefit may not be limited to randomized trials). Otherwise,
experimental transplant procedures need not be covered, but you must
provide necessary follow‑up care to the experimental procedure. All HMOs
must cover related medical and hospital expenses of the donor (when the
recipient is covered by the Plan). If the donor has primary coverage
that provides benefits for organ transplant donors,you will coordinate
benefits according to NAIC guidelines, as with any other benefit.

> You may exclude from your FEHB benefits other transplants not mandated
> by us if they are not in the community benefit package we purchase,
> and as permitted by applicable State law.

I. **Dental and Vision Benefits** ‑ We will consider dental or vision
care benefits only from community‑rated plans and only when they are a
part of the core community benefits package we purchase.

J. **Prescription Drugs** ‑ All plans must provide at least a minimum
level of coverage for all medically necessary drugs that require a
prescription for their use, and insulin.

> Drug benefit deductibles may not exceed \$600 and member coinsurance
> may not exceed 50%. We don't allow lifetime or annual benefit maximums
> on prescription drugs.
>
> You must cover disposable needles and syringes to administer covered
> injectables, IV fluids and medications for home use, growth hormones,
> and allergy serum. In addition, you must provide benefits for
> \"off‑label\" use of covered medications if prescribed for such use by
> a plan doctor in accordance with generally accepted medical practice.
>
> You may use a drug formulary as long as the plan provides benefits for
> non‑formulary drugs when prescribed by a Plan doctor. You cannot use
> the formulary as a means to
>
> exclude benefits for the types of drugs mandated for the FEHB. We
> don't allow blanket
>
> exclusions of broad categories of drugs such as \"non‑generics,\"
> \"psychotropic drugs,\" or \"injectables\".

K.  **Coverage for Contraceptives** -You must provide coverage for all
    FDA-approved prescriptions and devices for contraception.

L. **DHHS‑Mandated Benefits** ‑ All HMOs **must** offer certain benefits
that are mandated for Federally qualified plans by the Department of
Health and Human Services (DHHS), **without limitation as to time and
cost,** other than as prescribed in the Public Health Service Act and
DHHS regulations. These required benefits include:

 Nonexperimental bone marrow, cornea, kidney, and liver transplants
(see H. above for other FEHB requirements in this area);

 Short‑term rehabilitative therapy (physical, speech, and
occupational), if significant improvement in the patient\'s condition
can be expected within two months;

 Family planning services, including all necessary nonexperimental
infertility services, to include artificial insemination with either the
husband\'s or donor sperm. You don't have to cover the cost of donor
sperm. You may exlude other costs of conception by artificial means or
assisted reproductive technology (such as in vitro fertilization or
embryo transplants) to the extent permitted by applicable State law;

 Home health services;

 Inhospital administration of blood and blood products (including
\"blood processing\");

 Surgical treatment of morbid obesity, when medically necessary;

 Implants ‑ the surgical procedure must be covered, although the cost
of the device may be excluded.

> Federally qualified community‑rated plans offer these benefits at no
> additional cost, i.e., the cost is covered by the community rate.
> Community-rated plans that are not Federally‑qualified should reflect
> the cost of any non‑community benefits on Attachment 2 of their rate
> calculation (if there is no additional cost, the cost entry should be
> zero).