+-----------------------------------------+----------------------------+
| **FEHB Program Carrier Letter**         | **U.S. Office of Personnel |
|                                         | Management**               |
| **Community-Rated Carriers**            |                            |
|                                         | **Office of Insurance      |
|                                         | Programs**                 |
+-----------------------------------------+----------------------------+
| > **Letter No. 1999-058** **Date:**     |                            |
| > November 23, 1999                     |                            |
| >                                       |                            |
| > Fee-for-service \[ \-- \]             |                            |
| > Experience-rated HMO \[ \-- \]        |                            |
| > Community-rated \[ 48 \]              |                            |
+-----------------------------------------+----------------------------+

# SUBJECT: Amendments to the Standard Contract for Community-Rated Carriers

> Enclosed is the standard contract for the year 2000. You should
> arrange for the contract to be signed and returned to us by December
> 27, 1999. The contract language is final and we will not be taking
> additional comments on it. This letter explains our resolution of the
> proposed amendments sent to you in August.
>
> We appreciate your comments and suggestions on the amendments. We
> considered all of them carefully and made modifications based on many
> of them. Changes to the 2000 contracts fall into two major
> categories: 1) Amendments relating to transitional care; and, 2)
> amendments relating to the DoD Demonstration Project.

# 

# [Year 2000 Compliance]{.underline}

> We are dropping this section entirely for the Year 2000. We expect you
> to be completely functional and Year 2000 compliant on January 1,
> 2000. Carriers who are not should refer to the remedies for
> noncompliance in the Notice of Significant Events clause of the
> contract.

# [Notice to Enrollees on Termination of FEHBP or Provider Contract and Transitional Care]{.underline}

## We received numerous comments on the transitional care requirement and the requirement to notify enrollees eligible for transitional care when you terminate a provider contract or terminate participation in the FEHB Program. Because you asked numerous questions on implementation of the transitional care and notice provisions, we prepared Enclosure A to address your specific concerns.

## 

## [Continuing Requirements after Termination]{.underline}

> This section requires no change in current FEHB Program requirements.
> It is intended to reinforce existing contract requirements and the
> carrier's obligation to comply with all laws and regulations relating
> to the FEHB Program. The order of precedence for the laws,
> regulations, and contract applicable to the Program is set out in
> Section 1.3 of the contract. For clarification, the final contract
> amendment references Section 1.3 in the Continuing Requirements
> clause.
>
> Carriers have a requirement under law and regulation to provide a
> 31-day period during which enrollees receive benefits and have the
> option of converting to a private policy. The requirement of this
> section reminding you of your obligation in the event the enrollee
> leaves the FEHB Program refers only to the 31-day period before a
> conversion contract or temporary continuation of coverage (TCC) begins
> and applies to the few enrollees who leave the Program because they no
> longer meet the statutory requirements for coverage at the same time
> you drop out. It does not mean that you must provide a 31-day
> extension of coverage and conversion contract for all enrollees at the
> time you leave the FEHB Program. The majority of FEHB Program carriers
> understand and comply with this provision; however, for the few that
> do not, we are emphasizing the requirement specifically in the
> contract.
>
> The requirement may differ from your contracts with your other lines
> of business. It is required by the FEHB law at 5 U.S.C. 8902(g) and
> FEHB regulations at 5 CFR 890.201(a)(4). In addition, the Carrier
> Handbook that we provide you with each year states your requirements
> under the FEHB Program, including 5 U.S.C. 8902(g). The requirement
> should be familiar to you.
>
> Carrier concerns over the rates for this requirement are unfounded.
> Since the beginning of the Program, OPM's actuaries have added a
> loading factor to or adjusted the FEHB premiums for this 31-day
> continuation of coverage. There is no conflict with the regulatory
> provision concerning enrollees who are confined in a hospital or other
> covered facility or who are receiving medical care in an alternative
> care setting on the last day of their enrollment under the prior plan
> or option. The two provisions are separate and distinct.
>
> **[Payments]{.underline}**
>
> While we have not amended this section, we will amend it in the final
> DoD Demonstration regulations to state that 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. OPM will credit any surplus to all FEHB carriers\'
> contingency reserves after the final accounting of revenues and costs
> at the end of the DoD Demonstration Project.
>
> **[Accounting and Price Adjustment and Rate Reduction for Defective
> Pricing or Defective Cost or Pricing Data]{.underline}**
>
> These two clauses are amended to conform to the DoD Demonstration
> Project interim regulations published on July 6, 1999. The amendments
> provide guidance for carriers participating in the DoD Demonstration
> Project authorized under Public Law 105-261.
>
> **[Survey Charges]{.underline}**
>
> We have clarified Section 3.7, Survey Charges, to reflect the current
> procedure that carriers pay a pro rata share of the total cost of
> consolidating and reporting the annual consumer assessment survey
> results to OPM. The cost for contracting with a vendor to conduct the
> survey itself is your responsibility.
>
> **[Alterations in Contract]{.underline}**
>
> Section 4.1 of your contract includes a clause entitled "Participation
> in the DoD Demonstration Project." It applies only to carriers
> participating in the 3-year DoD Demonstration Project authorized by P.
> L. 105-261.
>
> **[Revised FAR Clauses]{.underline}**
>
> Your final contract will contain updated Federal Acquisition
> Regulation (FAR) clauses in Part V that have been revised during the
> past year so that the most recent version appears in the contract. All
> new and revised clauses in Parts I through IV will show the date "JAN
> 2000." Revised FAR clauses in Part V will show the date of the FAR
> revision. Enclosure B to this letter lists the FAR clauses that have
> been revised.

### [Appendix D-a FEHB Supplemental Literature Guidelines]{.underline}

> We kept the reference to website material as a form of supplemental
> literature, but reverted to the 1999 contract language that the
> brochure text is based on text approved by OPM and is a complete
> statement of benefits, limitations, and exclusions. The statement is
> sometimes relied on in litigating claims disputes because it makes
> clear that OPM has the final decision with regard to the brochure
> text.

##### Appendix D-b Advertisements of Accident and Sickness Insurance Model Regulation

The National Association of Insurance Commissioners updated its Model
Regulation on Advertisements of Accident and Sickness Insurance earlier
this year. We will include a copy of the revised version with your
contract.

> **[Anti-Lobbying Act]{.underline}**
>
> We remind you of your continuing obligations under the Anti-Lobbying
> Act, P.L. 101-121, as amended, which prohibits Federal contractors
> from spending appropriated funds to pay any person for influencing or
> attempting to influence an officer or employee of the Government. All
> carriers must keep their Anti-Lobbying certification (OMB Standard
> Form LLL) compliant. If there is a change to your current form, or if
> you are involved in a sale or merger, you are required to submit an
> updated OMB Standard Form LLL certifying that you will not spend any
> appropriated government funds on lobbying activities.
>
> Questions regarding final contract changes should be directed to your
> Contract Specialist.
>
> Sincerely,
>
> (signed)
>
> David A. Lewis
>
> Contracting Officer
>
> Chief, Insurance
>
> Contract Division III
>
> Enclosures
>
> **OPM Guidance on Notice Requirements**

**and**

###### Transitional Care

The text of the Patients' Bill of Rights (PBR) previously provided to
you is the basis for the information below, and we have not attempted to
modify it. We expect you to rely on the PBR as the basis for your
actions. You may access the PBR through OPM's website at opm.gov/insure.

# 

FEHB carriers must provide transitional care for up to 90 days to
enrollees who are undergoing treatment for a chronic or disabling
condition, or through the postpartum period for those who are in the
second or third trimester of pregnancy, *at the time they involuntarily
change health plans or at the time a carrier terminates a provider for
other than cause* (emphasis added). A carrier's termination of its
participation in the FEHB Program effectively terminates the providers
under the carrier's FEHB health benefits plan and creates a situation
where the enrollee must involuntarily change health plans in order to
remain in the FEHB Program. Under the Patients' Bill of Rights, the
enrollee is therefore entitled to transitional care, if he or she is
eligible.

# 

[Notice Requirement]{.underline}

-   You must provide notice to enrollees only when you terminate your
    participation in the FEHB Program or terminate a provider other than
    for cause. You do [not]{.underline} have to give notice to enrollees
    if the provider terminates or does not renew participation with you
    or your network.

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-   Your OPM contract requires you to give "at least" 60 days notice if
    you decide to withdraw from the FEHB Program. That does not preclude
    you from giving us or your enrollees a longer notice period.

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-   Most carriers renew their provider contracts, just as we renew your
    FEHB contract, on an annual basis. A number of carriers have
    provider contract nonrenewal provisions that stipulate the provider
    be given 60 days notice. If you send a general notice to your
    enrollees at approximately the same time, notifying them of the
    providers who will not be participating in your plan for the
    following contract year, the maximum period of time you will have to
    provide transitional care benefits for enrollees with chronic or
    disabling conditions beyond the 60-day notice period is 30 days.
    Ideally, however, you will send your notice to enrollees 90 days
    prior to the end of the contract year so that your members'
    transitional care needs will be met before the provider contract
    ends.

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-   OPM will not be providing a list of chronic or disabling conditions
    to carriers. Carriers should use the protocols currently in place to
    administer this provision.

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-   A provider providing goods or services under a treatment plan for a
    chronic or disabling condition (or for enrollees who are in the
    second or third trimester of a pregnancy) should be considered a
    specialty provider. For example, chemotherapy treatment provided by
    a physician to a cancer patient is care by a specialty provider. It
    is possible that enrollees eligible for transitional care will have
    more than one specialty provider.

-   

ENCLOSURE A

-   You must provide transitional care to those who are eligible
    regardless of whether you or your Network PPO or POS terminates the
    provider, except for cause.

-   If the terminated provider is not terminated for cause, you must
    provide transitional care. Where quality enters into the decision,
    you will have to decide if it is "for cause."

**[Transitional Care]{.underline}**

-   You are responsible for notifying enrollees of their transitional
    care rights when you withdraw from the FEHB Program, reduce your
    service area, or terminate a provider for other than cause. After
    you fulfill your notification requirements, the enrollees must
    assert their transitional care rights. You are not required to
    identify enrollees who are transitional care candidates. Where you
    cannot process transitional care claims on an up-front basis, you
    may do so on a case by case basis.

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-   Providing care under the terms and conditions of the prior carrier's
    contract is not necessarily included in your rates. Further, when a
    transitional care enrollee of a carrier that does not renew its FEHB
    Program contract transfers to your plan, there is no additional
    payment of premiums to you to cover the transitional care during the
    balance of the transitional care period. The 1998 and 1999 Call
    Letters advised you to consider how any necessary changes could be
    implemented to ensure that you meet the time frame for program-wide
    compliance. The Call Letters also advised you to propose your
    strategy to bring your plan into full compliance by the start of
    contract year 2000 in your May 31^st^ benefit and rate proposals.
    Therefore, you should already have integrated this into your rate
    proposal for contract year 2000.

-   Enrollees entitled to transitional care pay no additional cost for
    the care through the transitional period. However, the plan's own
    deductibles would apply to medically necessary treatment that was
    for other than the chronic or disabling condition or pregnancy. All
    enrollees must pay the mandated benefit amounts that are effective
    as of contract year 2000.

-   The PBR requires that the specialty provider or network promptly
    transfer all medical records authorized by the patient to a
    designated new provider during the transition period. OPM recognizes
    that carriers are limited in the assistance they can provide to
    enrollees in this regard. You may fulfill your requirement by
    transmitting a letter to the provider on behalf of the enrollee
    asking for its cooperation and assistance.

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-   The requirement for carriers to assist enrollees in amending and
    appending provider records they believe are inaccurate, irrelevant,
    or incomplete has broader application to the FEHB contracts than
    transitional care. Consequently, we have deleted it from the
    transitional care clause. It is covered under the general PBR clause
    in Section I of your FEHBP contract, and you may refer to it in
    Chapter 6 of the Patients' Bill of Rights.

ENCLOSURE A (cont)

**FAR CLAUSE CHANGES FOR THE YEAR 2000 CONTRACTS**

Contract FAR

[Section Cite Clause Title Action]{.underline}

5.7 52.215-2 Audit and Records\--Negotiation (JUN 1999) Revised

5.14 52-219-8 Utilization of Small Business Concerns (OCT 1999) Revised

5.19 52.222-26 Equal Opportunity (FEB 1999) Revised

5.21 52.222-29 Notification of Visa Denial (FEB 1999) Revised

5.32 52.230-6 Administration of Cost Accounting Standards (NOV 1999)
Revised

5.36 52.233-1 Disputes (DEC 1998) Revised

5.55 52.222-37 Employment Reports On Disabled Veterans and Revised

Veterans of the Vietnam Era (JAN 1999)

5.58 52.232-33 Payment by Electronic Funds Transfer---Central Revised

Contractor Registration (MAY 1999)

5.59 52.222-21 Prohibition on Segregated Facilities (FEB 1999) Revised

ENCLOSURE B