+----------------------------------+----------------------------------+
| **FEHB Program Carrier Letter**  | **U.S. Office of Personnel       |
|                                  | Management**                     |
| **Experience Rated Carriers**    |                                  |
|                                  | ** Office of Insurance           |
|                                  | Programs**                       |
+----------------------------------+----------------------------------+
| **Letter No. 1999-039 **         |                                  |
| **Date:** August 27, 1999        |                                  |
|                                  |                                  |
| Fee-for-service \[ 33 \]         |                                  |
| Experience-rated HMO \[ 33 \]    |                                  |
| Community-Rated HMO \[ n/a \]    |                                  |
+----------------------------------+----------------------------------+

**SUBJECT: Class Deviation from Federal Acquisition Regulation (FAR)
31.205-46(a)(2)(i), Maximum Per Diem Rates Under the Federal Travel
Regulations (FTR)**

This letter transmits an authorization of deviation from the travel
costs requirements of Federal Acquisition Regulation (FAR)
31.205-46(a)(2)(i) for experience-rated carriers. Effective January 1,
1999, carriers may choose to satisfy the limitation on allowable travel
costs by either using the revised Federal Travel Regulations (FTR) rates
and definitions that are effective as of January 1, 1999, or by
continuing to use the FTR maximum per diem rates and definitions of
lodging, meals, and incidental expenses in effect on December 31, 1998.
This class deviation is approved through December 31, 1999.

Carriers must consistently use either the 1998 or 1999 FTRs during the
approved time period. That is, carriers may not pick and choose for
individual trips which set of FTRs they will follow.

Contact your OPM contract specialist if you have any questions about
this deviation.

Sincerely,

(signed)

Frank D. Titus

Assistant Director

for Insurance Programs

Enclosure

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| United States                           |                           |
|                                         |                           |
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+-----------------------------------------+---------------------------+

August 27, 1999

MEMORANDUM FOR THE FILE

SUBJECT: Class Deviation from Federal Acquisition Regulation (FAR)

31.205-46(a)(2)(i), Maximum Per Diem Rates Under the Federal

Travel Regulations (FTR)

I authorize all Federal Employees Health Benefits Program experience
rated carriers to deviate from the requirements of FAR
31.205-46(a)(2)(i). Effective January 1, 1999, FEHB experience rated
carriers may choose to satisfy the limitation on allowable travel costs
by continuing to use the Federal Travel Regulation (FTR) maximum per
diem rates and the definitions of lodging, meals, and incidental
expenses in effect on December 31, 1998, or by using the revised FTR
rates and definitions that are effective January 1, 1999.

FAR 31.205-46(a)(2)(i) limits allowable costs for contractor employee
lodging, meals, and incidental expenses to the maximum per diem rates in
effect at the time of travel set forth in the FTR for travel in the
conterminous 48 United States.

On December 2, 1998, the General Services Administration (GSA) issued a
final rule that significantly changes how the FTR maximum per diem rate
limitations are computed, including extracting lodging taxes from the
per diem rates and allowing payment of lodging taxes as a miscellaneous
expense instead. The revised FTR rule went into effect on January 1,
1999.

The amended GSA rule may cause carriers to experience a significant
administrative burden and incur substantial costs in modifying their
systems to comply with this new rule. At the same time, the Civilian
Agency Acquisition Council is proposing to amend the FAR to remove the
maximum per diem rate limitations and adopt an allowability standard
that is more consistent with the commercial marketplace **\[64 FR 27654,
May 20, 1999\]**. Therefore, I am authorizing a class deviation to
permit the use of either the FTR rates and definitions effective on
December 31, 1998, or the revised FTR rates and definitions that went
into effect on January 1, 1999.

This class deviation is approved until December 31, 1999.

*(Signed)*

Frank D. Titus

Assistant Director,

Office of Insurance Programs

Concurrence:

*(Signed)*

**[\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
]{.underline}**

Nancy Kichak, Actuary

*[(]{.underline}Signed[)]{.underline}*

# [\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_]{.underline}

# Kathleen M. McGettigan

Assistant Director for Systems, Finance,

and Administration

*(Signed)*

**[\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_]{.underline}**

Sanders Gerson,

Deputy Assistant Inspector General for Audits