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[Senate Report 108-393]
[From the U.S. Government Publishing Office]

108th Congress                                                   Report
                                 SENATE
 2d Session                                                     108-393
_______________________________________________________________________

                                     

                                                       Calendar No. 783

  FEDERAL EMPLOYEE DENTAL AND VISION BENEFITS ENHANCEMENT ACT OF 2004

                               __________

                              R E P O R T

                                 of the

                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                              to accompany

                                S. 2657

                October 8, 2004.--Ordered to be printed
                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   SUSAN M. COLLINS. Maine, Chairman
TED STEVENS, Alaska                  JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio            CARL LEVIN, Michigan
NORM COLEMAN, Minnesota              DANIEL K. AKAKA, Hawaii
ARLEN SPECTER, Pennsylvania          RICHARD J. DURBIN, Illinois
ROBERT F. BENNETT, Utah              THOMAS R. CARPER, Delaware
PETER G. FITZGERALD, Illinois        MARK DAYTON, Minnesota
JOHN E. SUNUNU, New Hampshire        FRANK LAUTENBERG, New Jersey
RICHARD C. SHELBY, Alabama           MARK PRYOR, Arkansas
           Michael D. Bopp, Staff Director and Chief Counsel
            Jennifer A. Hemingway, Professional Staff Member
Heather Hogg, Professional Staff, Subcommittee on Financial Management, 
                 the Budget, and International Security
      Joyce A. Rechtschaffen, Minority Staff Director and Counsel
                  Lawrence B. Novey, Minority Counsel
   Nanci Langley, Minority Staff Director, Subcommittee on Financial 
           Management, the Budget, and International Security

                                                       Calendar No. 783
108th Congress                                                   Report
                                 SENATE
 2d Session                                                     108-393

======================================================================

 
  FEDERAL EMPLOYEE DENTAL AND VISION BENEFITS ENHANCEMENT ACT OF 2004

                                _______
                                

                October 8, 2004.--Ordered to be printed

                                _______
                                

Ms. Collins, from the Committee on Governmental Affairs, submitted the 
                               following

                              R E P O R T

                         [To accompany S. 2657]

    The Committee on Governmental Affairs, to which was 
referred the bill (S. 2657) to amend part III of title 5, 
United States Code, to provide for the establishment of 
programs under which supplemental dental and vision benefits 
are made available to Federal employees, retirees, and their 
dependents, to expand the contracting authority of the Office 
of Personnel Management, and for other purposes, having 
considered the same, reports favorably thereon and recommends 
that the bill do pass.

                                CONTENTS

                                                                   Page
  I. Purpose and Summary..............................................1
 II. Background.......................................................2
III. Legislative History..............................................7
 IV. Section-by-Section Analysis......................................8
  V. Estimated Cost of Legislation...................................13
 VI. Evaluation of Regulatory Impact.................................14
VII. Changes in Existing Law.........................................15

                         I. Purpose and Summary

    S. 2657, the Federal Employee Dental and Vision Benefits 
Enhancement Act of 2004, is a bill to provide federal 
employees, annuitants, and their dependents access to 
voluntary, supplemental dental and vision coverage on an 
employee-paid basis. The purpose of the legislation is to grant 
the Office of Personnel Management the framework and authority 
to contract with qualified companies to provide the 
supplemental coverage. The legislation also expresses the sense 
of Congress that health insurance benefits available to federal 
employees should be sufficient to promote the health and 
productivity of all federal workers and to support the 
recruitment and retention of a highly qualified workforce, and 
states that, to help achieve these goals, Congress should 
evaluate the supplemental plans established under this Act to 
determine the options for and feasibility of providing an 
employer contribution. In addition, the legislation would 
require the Office of Personnel Management to submit to 
Congress a report describing and evaluating options whereby 
coverage under the Federal Employees Health Benefits Program 
could be made available to unmarried dependent children of 
federal employees and annuitants, under 25 years of age, who 
are enrolled as full-time students at institutes of higher 
education.

                             II. Background

   WHY SHOULD THE FEDERAL GOVERNMENT--AS AN EMPLOYER--OFFER ENHANCED 
                      DENTAL AND VISION BENEFITS?

    There are several important considerations that support 
offering dental and vision benefits to federal employees, 
including improved recruitment and retention, improved employee 
health, and improved employee satisfaction.

Improved recruitment and retention

    Ensuring the right people, in the right place, at the right 
time--is a high priority for the federal government as an 
employer. Therefore, it is important to understand the 
competitive employment environment when making decisions about 
benefit offerings. The overwhelming majority of both large 
private and public sector employers offer some combination of 
dental or vision benefits to their employees.
    In 2003, 96 percent of employers with 500 or more 
employees, and 98 percent of employers with 20,000 or more 
employees provided dental benefits to their workforce.\1\ For 
county, city, and state government entities, the survey 
revealed that 95 percent of the aforementioned government 
employers with over 500 employees offered dental benefits with 
median deductible and maximums of $50 and $1,000, 
respectively.\2\ All states, except Kentucky and Mississippi, 
offer dental coverage to state employees.
---------------------------------------------------------------------------
    \1\ Mercer Survey of Employer-Sponsored Health Plans, December 8, 
2003.
    \2\ Ibid.
---------------------------------------------------------------------------
    Moreover, the government finds itself at a critical 
juncture in its ability to carry out its work. The Government 
Accountability Office has identified human capital management 
as a High Risk area, calling for concerted action in addressing 
the issue. Various studies have identified the likely 
retirement of significant numbers of federal employees, leaving 
some agencies with critical shortages of needed skills in a 
variety of occupations and important areas of governmental 
activity. The establishment of a program of dental and vision 
insurance for the federal workforce can be a significant 
component in addressing these issues.

Improved employee health

    Access to dental and vision care can improve the overall 
health and well-being of employees. Routine dental and vision 
services can prevent diseases from developing and identify 
major diseases in their early stages when they are easier and 
less expensive to treat. Healthier employees are generally more 
productive employees.
    Oral health is an essential element of over-all health. The 
2000 Surgeon General report, ``Oral Health in America,'' 
estimated that approximately 108 million Americans did not have 
access to a dental benefit, about 2.5 times the number who do 
not have medical coverage. The report found that 70.4 percent 
of individuals with private dental insurance reported seeing a 
dentist in the past year while only 50.7 percent of those 
without benefits did.\3\ The report notes that preventive care 
is essential to keeping down overall dental and medical costs 
because early detection of other diseases, including oral 
cancer, can be found through oral check-ups. The National 
Institute of Dental and Craniofacial Research estimates that 
for every dollar spent on dental disease prevention, $4 is 
saved in subsequent treatment costs. Research continues to 
support the association of dental disease with coronary heart 
disease, stroke, and premature childbirth.\4\ In view of the 
proven relationship between good oral health and good overall 
health, promoting access to dental care is essential.
---------------------------------------------------------------------------
    \3\ Oral Health in America: A Report of the Surgeon General, U.S. 
Public Health Service, May 25, 2000.
    \4\ Dental and Vision Benefits for Federal Employees, hearing 
before the House Subcommittee on Civil Service and Agency 
Reorganization, 108th Congress, (February 24, 2004) (testimony by Jon 
Seltenheim, National Association of Dental Plans).
---------------------------------------------------------------------------
    Dental health can be linked directly to the physical health 
of employees. Each year, adults miss more than 164 million 
hours (approximately 20.5 million days) of work due to oral 
health problems or dental treatments.\5\ While the percentage 
of adult Americans missing all of their teeth has declined 
significantly over the past 20 years, today, one in every 250 
young adults have lost all their teeth.\6\ There is a 
developing body of medical evidence that correlates severe gum 
disease in mothers to low-birth-weight babies. Obstetricians 
and gynecologists are increasingly asking pregnant women about 
their dental history in the first trimester of their pregnancy 
to identify and treat potential infections as early as 
possible. Other researchers have asserted that the link of 
periodontic disease to heart disease may be as strong as the 
risks of smoking and high blood lipids. In addition, there is 
evidence that gum disease makes controlling insulin levels more 
difficult for diabetics.\7\ Clearly the better an individual's 
dental health, the better that individual's overall physical 
health will be.
---------------------------------------------------------------------------
    \5\ Journal of Dental Education, Association Report: Trends in 
Dentistry and Dental Education, June 2001.
    \6\ National Center for Chronic Disease Prevention and Health 
Promotion, ``Oral Health for Adults.''
    \7\ Richmond Times Dispatch, ``More Reasons To Brush and Floss 
Research Suggests Severe Gum Disease Can Affect Heart, Pregnancy and 
Other Body Systems,'' May 2, 2002, Section F-1.
---------------------------------------------------------------------------
    The links between vision health and physical health are no 
less strong. Routine eye exams are an ideal opportunity to 
identify more significant health issues, some of which can be 
life-threatening such as high blood pressure, arteriosclerosis 
and diabetes. These are diseases that if left untreated can 
lead to serious and expensive complications.\8\ More than 5 
million Americans have vision problems that are related to 
diabetes.\9\ Diabetics are 25 times more likely to lose vision 
than those who do not, and yet, with early intervention, 
ninety-five percent of people with significant diabetic 
retinopathy can avoid significant vision loss.\10\ In addition, 
with the use of computers in the workforce becoming 
increasingly common, ``Computer vision syndrome'' (CVS) has 
emerged as a growing issue facing many employees. CVS causes 
headaches, dry eyes, and other related problems. The 
availability of basic vision benefits can help minimize the 
impact of CVS on employees.\11\ In addition to assuring proper 
visual correction, a vision benefit can also provide the 
opportunity for early detection of serious eye and systemic 
conditions from glaucoma to high blood pressure and diabetes. 
Early treatment is key to avoiding serious health 
consequences.\12\
---------------------------------------------------------------------------
    \8\ Dental and Vision Benefits for Federal Employees, hearing 
before the House Subcommittee on Civil Service and Agency 
Reorganization, 108th Congress, (February 24, 2004) (testimony of Dr. 
Howard J. Braverman, O.D., Past President, American Optometric 
Association).
    \9\ National Eye Institute, ``Vision Problem in the United 
States,'' 2002.
    \10\ American Academy of Ophthalmology, April 2004.
    \11\ Dental and Vision Benefits for Federal Employees, hearing 
before the House Subcommittee on Civil Service and Agency 
Reorganization, 108th Congress, (February 24, 2004) (testimony of Dr. 
Howard J. Braverman, O.D., Past President, American Optometric 
Association).
    \12\ Letter to the Honorable Susan Collins, American Optometric 
Association, July 15, 2004.
---------------------------------------------------------------------------
    Simply put, employers can offer the advantages of group 
purchasing of dental and vision benefits to their employees and 
contribute to improved physical health (and corresponding 
improvements in productivity) while incurring only minimal 
administrative costs. Under the Federal Employees Dental and 
Vision Enhancement Act of 2004, the federal government's 
administrative costs would be limited to costs incurred between 
the date of enactment and the initial contract agreements 
between OPM and interested companies.

Improved employee satisfaction

    Employees value the ability to purchase dental and vision 
benefits at a group rate from their employer. In addition to 
having access to these benefits, employees also appreciate 
having decision tools to support them as they select providers 
and make critical care decisions.
    The U.S. Chamber of Commerce Annual Report on Employee 
Benefits indicates that employees rank dental benefits as one 
of the top 5 benefit offerings along with medical, life, long-
term disability, and 401(k)'s. Seven of 10 employees want to 
have a vision plan as a part of their benefits package. One 
study even suggests that two-thirds of employees would trade a 
day off for vision benefits.\13\
---------------------------------------------------------------------------
    \13\ Dental and Vision Benefits for Federal Employees, hearing 
before the House Subcommittee on Civil Service and Agency 
Reorganization, 108th Congress, (February 24, 2004) (testimony of Dr. 
Howard J. Braverman, O.D., Past President, American Optometric 
Association).
---------------------------------------------------------------------------

                COMPREHENSIVE DENTAL AND VISION COVERAGE

    While some federal government employees have access to 
limited preventive dental and vision care through their medical 
plans, many federal employees do not have coverage. By offering 
an opportunity for all federal government employees to purchase 
coverage, the government can be assured that all employees and 
retirees will have access to comprehensive basic coverage.
    Today, federal employees have access to comprehensive 
medical insurance through the Federal Employees Health Benefits 
Program (FEHBP); \14\ however, the FEHBP provides little in the 
way of dental and vision coverage. While some of the health 
insurance plans offered under the FEHBP include dental and 
vision benefits, they typically provide lower levels of 
coverage when compared to the array of plans available to both 
the public and private sectors. For example, the Blue Cross and 
Blue Shield Association plans, which provide coverage to 
approximately 52 percent of the federal workforce, pays $8 of a 
$24 maximum allowable charge for a periodic oral 
evaluation.\15\ In testimony before the House Government Reform 
Subcommittee on Civil Service and Agency Organization, 
CompBenefits Corporation presented a review of dental benefits 
available through the FEHBP.\16\ The review covered 150 of plan 
documents of carriers participating in the FEHBP. The review 
found that only one carrier offered specific preventative care 
for children, approximately one-third offered preventative care 
for all ages, less than one-third offered minor restorative 
dental care, one-fifth offered any major restorative dental 
care, and fourteen offered any orthodontic care.\17\
---------------------------------------------------------------------------
    \14\ Chapter 89 of title 5, United States Code.
    \15\ 2004 Blue Cross and Blue Shield Service Benefit Plan Brochure, 
www.fepblue.org.
    \16\ ``Resource on Optional Dental/Vision Benefits for Federal 
Employees,'' A Report to the House Subcommittee on Civil Service and 
Agency Reorganization, CompBenefits Corporation, February 24, 2004.
    \17\ Ibid.
---------------------------------------------------------------------------
    Customer surveys, focus groups, and other feedback indicate 
the FEHBP enrollees want better dental and vision benefits 
coverage than is currently available in the FEHBP. Since the 
1980s, OPM has not accepted proposals from participating 
companies to increase dental benefits because either coverage 
for basic medical services would have to be reduced or premiums 
increase significantly to cover the cost. The statutory 
framework in the Federal Employee Dental and Vision Enhancement 
Act of 2004 will provide federal employees, annuitants, and 
their dependents with access to separate and improved dental 
and vision coverage.
    As the legislation was developed, some expressed concern 
that the supplemental benefits created by the bill would serve 
as a precedent for carving out other benefits the FEHBP 
insurers provide today. Those concerned believe that 
segregating core medical benefits, such as prescription drugs, 
would impair the ability of FEHBP insurers to continue 
providing federal employees, annuitants, and their dependents 
with highest-quality health benefits at affordable premiums. 
The Committee understands that concern. The Federal Employee 
Dental and Vision Enhancements Act of 2004 should not be viewed 
as a precedent for segregating treatments or procedures that, 
unlike dental and vision, are integrally related to the 
practice of medicine.

    ADVANTAGES OF EMPLOYER-SPONSORED DENTAL AND VISION BENEFITS TO 
                               EMPLOYEES

    Offering employees supplemental dental and vision benefits 
offers clear advantages to the federal government. But what 
about advantages to the federal employee? Supplemental dental 
and vision benefits offer three, clear-cut advantages to the 
employee: (1) access to more comprehensive dental and vision 
benefits coverage; (2) a greater sense of financial security; 
and (3) tax savings.
    The first two employee advantages are linked: whether or 
not the individual chooses additional levels of dental or 
vision coverage, the reality is that the coverage is available. 
Employees feel more secure that the employer is able to provide 
access to higher levels of coverage. And for those who feel 
they really need that additional coverage, they feel good about 
not having to look elsewhere for the coverage they feel they 
need.
    More tangibly, offering additional dental and vision 
benefits on a pre-tax (or ``before-tax'') basis has an 
immediate, positive impact on the individual: savings. Pre-tax 
contributions means the individual pays the cost of coverage 
before taxes are calculated on pay. Consequently, the 
individual lowers his or her taxable pay by the amount they 
contribute toward the cost of coverage. For the average Federal 
employee earning $56,400 per year this means a savings of 25% 
of premiums. In short, they save money relative to paying for 
coverage after taxes are taken out.
    Finally, beyond the obvious benefit of having to pay less 
for coverage, pre-tax savings also means the individual has 
additional dollars (not spent on coverage), that are available 
for other areas--such as contributions to a flexible spending 
account which can be applied to a variety of medical expenses 
like co-pays, doctor visit charges, eyeglasses, etc. Since 
money contributed to a spending account is also pre-tax, the 
average Federal employee will have $1.25 of purchasing power 
for every dollar placed into the spending account.
    To ensure that employees understand the services and 
benefits available under the various offerings, the bill 
includes provision requiring OPM to work with the participating 
companies to provide federal employees and annuitants with the 
education materials necessary to evaluate the new offerings.
    The Committee believes competition among carriers, group 
discounts, and volumes of sales should keep premiums affordable 
for federal employees. In recognition of the enormous fiscal 
pressures faced by the federal government, the legislation is 
designed to provide a voluntary, employee-paid dental and 
vision benefit, patterned after the Federal Employees Long-Term 
Care Insurance Program.

              BENEFIT OFFERINGS AND BENEFIT ADMINISTRATION

    In designing the future benefit packages, there are several 
plan design alternatives to be considered. In addition, there 
are important administration considerations as well. 
Flexibility in both design and administration is critically 
important for the employer and the employee. The employer needs 
the flexibility to respond to the ever changing market and the 
employee needs flexibility to respond to his or her changing 
needs. The Federal Employee Dental and Vision Benefits 
Enhancement Act of 2004 is written to mirror the prevalent 
practices in the private sector. Therefore, it is important to 
understand how the private sector has designed their programs 
in a way that offers both cost efficiency and administrative 
simplicity.

Design considerations

    There are a wide variety of stand-alone dental plans on the 
market that OPM could adapt in order to meet the demand for 
enhanced dental coverage, including dental health maintenance 
organizations, dental preferred provider organizations, dental 
indemnity plans, and discount dental plans. According to the 
National Association of Dental Plans, premiums range from a few 
dollars a month for discount dental plans to an average of $90 
a month for family indemnity plans.\18\ An array of vision 
plans is available as well. The existing variety of plans will 
allow the Office of Personnel Management wide flexibility in 
providing employees, annuitants, and their dependents access to 
a level of dental benefits appropriate for their individual 
dental care needs.
---------------------------------------------------------------------------
    \18\ Dental and Vision Benefits for Federal Employees, hearing 
before the House Subcommittee on Civil Service and Agency 
Reorganization, 108th Congress, (February 24, 2004) (testimony by Jon 
Seltenheim, National Association of Dental Plans).
---------------------------------------------------------------------------

Administration considerations

    How employers deliver benefits is often as important as the 
benefits delivered. Today's employees have high expectations 
for fast, high quality service delivery. Consequently, 
mostlarge employers in the United States have decided to contract with 
organizations whose core competencies include benefits administration 
for the delivery of dental and vision benefits. Many of the nation's 
largest employers have decided to contract with alternate service 
administrators for the administration of their health and welfare 
plans, including dental and vision benefits. In addition to managing 
enrollment, claims processing and regulatory compliance, large 
administrators have a wealth of decision support tools that help 
employees make smart choices about how to use their benefits. Examples 
of such tools include: comparison charts that allow employees to 
quickly compare costs and coverages of different plans, complete with 
web links to those plans if more detail is desired, personalized 
provider directories that allow employees to see which local dentists 
or eye doctors are aligned to the offered plans, and health content 
sites that allow employees to learn more about their health conditions. 
The Committee urges OPM to give strong consideration to companies with 
decision support tools to assist the federal workforce and annuitant 
population in becoming better consumers of their vision and dental 
services.

                        III. Legislative History

    S. 2657 was introduced by Senators Collins and Akaka on 
July 14, 2004, and was referred to the Committee on 
Governmental Affairs. Senator Lieberman cosponsored the 
legislation on July 15, Senator Voinovich cosponsored the 
legislation on July 22, and Senator Santorum cosponsored the 
legislation on September 9.
    The legislation was referred to the Subcommittee on 
Financial Management, the Budget, and International Security on 
July 15, 2004. On July 20, 2004, the Subcommittee on Financial 
Management, the Budget, and International Security favorably 
polled out S. 2657 to the full Committee.
    On July 21, 2004, the Committee on Governmental Affairs 
considered S. 2657 and ordered the bill reported by voice vote 
without amendment. Senators present: Collins, Voinovich, 
Specter, Fitzgerald, Lieberman, Akaka, Durbin, Carper, and 
Lautenberg.

                    IV. Section-by-Section Analysis

Section 1. Short title

    This section establishes the title of the legislation as 
the ``Federal Employee Dental and Vision Benefits Enhancement 
Act of 2004.''

Section 2. Enhanced dental benefits for federal employees

    This section amends subpart G of part III of title 5, 
United States Code, by adding a new chapter 89A to allow the 
Office of Personnel Management to establish a program under 
which supplemental dental insurance is made available to 
federal employees, annuitants, and their dependents.
    New section 8951 defines the terms used in chapter 89A, 
including the definition of employee, annuitant, member of 
family, dependent, eligible individual, Office, qualified 
company, employee organization, and State.
    New section 8952 requires OPM to establish and administer 
the dental program. Subsection (a) states that OPM shall 
establish and administer a program through which an eligible 
individual may obtain dental coverage to supplement coverage 
available through the Federal Employees Health Benefits Program 
codified at chapter 89 of title 5, United States Code. 
Subsection (b) states that OPM shall use reasonable discretion 
to determine the financial requirements for qualified companies 
to participate in the supplemental dental program. Subsection 
(c) makes clear that nothing in the supplemental dental program 
shall be construed to prohibit the availability of dental 
benefits provided by a health benefits plan under chapter 89 of 
title 5, United States Code.
    New section 8953 provides the contracting framework for OPM 
to use in establishing and operating the program. Subsection 
(a) states that OPM shall contract with a reasonable number of 
qualified companies for a policy or policies of benefits 
described under new section 8954 without regard to section 5 of 
title 41 or any other statute requiring competitive bidding. In 
addition, this subsection states that an employee organization 
may contract with a qualified company to participate with the 
company in any contract between OPM and that qualified company 
in order to offer a supplemental dental package under chapter 
89A. Subsection (b) requires OPM to ensure that contracts are 
awarded on the basis of contractor qualifications, price, and 
reasonable competition. Subsection (c) allows companies to 
apply additional waiting periods for benefits for individuals 
who enroll after their initial enrollment opportunity. 
Subsection (d) requires companies to establish internal dispute 
resolution procedures as well as alternative dispute resolution 
procedures involving independent third-party review. This 
subsection states that the district courts of the United States 
would have original jurisdiction, concurrent with the United 
States Court of Federal Claims, over any action described in 
section (10)(a)(1) of the Contract Disputes Act relating to 
such a dispute arising under the contract. Subsection (e) 
states that this section does not authorize OPM or a third-
party reviewer to change the terms of any contract under 
chapter 89A. Subsection (f) states that contracts under chapter 
89A shall be for seven years and may not be renewed 
automatically.
    New section 8954 relates to benefits. Subsection (a) grants 
OPM the authority to set reasonable minimum standards for 
enhanced dental benefits plans under chapter 89A and for 
qualified companies offering those plans. Subsection (b) 
specifies that contracts may include more than 1 level of 
benefits. Subsection (c) describes categories of benefits that 
may be offered under chapter 89A dental plans. Subsection (d) 
requires contracts to cover geographic service delivery areas 
specified by OPM, and makes clear that OPM shall require 
companies to include dentally underserved areas in their 
service delivery areas. Subsection (e) states that the health 
benefits plans under chapter 89 of title 5, United States Code, 
shall be the first payor of any benefit payments for an 
individual with dental coverage under chapter 89 and chapter 
89A.
    New section 8955 specifies information requirements. 
Subsection (a) requires companies tomake available to each 
individual eligible to enroll information on services and benefits that 
OPM considers necessary to enable the individual to make an informed 
decision about electing coverage under chapter 89A. Subsection (b) 
states that OPM shall make available to each individual eligible to 
enroll in a dental benefits plan information on services and benefits 
provided by companies participating in the Federal Employees Health 
Benefits Program under chapter 89 of title 5, United States Code.
    New section 8956 governs elections of coverage. Subsection 
(a) allows eligible individuals to enroll in a dental benefits 
plan for self-only, self plus one, or for self and family. 
Subsection (b) requires OPM to prescribe regulations under 
which eligible individuals may enroll. Subsection (c) permits 
eligible individuals to cancel or transfer enrollment before 
the start of any contract term in which there is a change in 
rates charged or benefits provided, in which a new plan is 
offered, or in which an existing plan is terminated, or during 
other times and circumstances as specified by OPM.
    New section 8957 states that a surviving spouse, disability 
annuitant, or surviving child whose annuity is terminated and 
is later restored, may continue enrollment in a dental benefits 
plan under chapter 89A, subject to OPM regulations.
    New section 8958 relates to premiums. Subsection (a) states 
that each eligible individual obtaining dental coverage under 
chapter 89A is responsible for 100 percent of the premiums for 
such coverage. Subsection (b) requires OPM to issue regulations 
specifying the terms under which individuals are required to 
pay the premiums for enrollment. Subsection (c) states that the 
amount necessary to pay the premiums may be withheld from an 
individual's federal pay or annuity. Subsection (d) specifies 
that premiums shall be paid directly to the qualified company. 
Subsection (e) requires participating qualified companies to 
maintain accounting records as OPM may require. Subsection (f) 
makes the Employee Health Benefits Fund available for 
reasonable expenses incurred by OPM in administering chapter 
89A before the first day of the first contract period, 
including reasonable implementation costs. In addition, this 
subsection establishes a Dental Benefits Administrative Account 
available to OPM to defray administrative costs after the start 
of the first contract year. Contracts under chapter 89A would 
include appropriate provisions for companies to reimburse the 
Dental Benefits Administrative Account.
    New section 8959 provides that contracts established under 
chapter 89A preempt any State or local law which relates to 
dental benefits, insurance, plans, or contracts.
    New section 8960 imposes requirements for studies, reports, 
and audits relating to the dental benefits program. Subsection 
(a) requires participating companies to both furnish such 
reasonable reports as OPM determines to be necessary and permit 
OPM and representatives of the General Accounting Office to 
examine the records of such companies as necessary. Subsection 
(b) requires each federal agency to keep records, make 
certifications, and furnish OPM, the company, or both, with the 
information and reports OPM requires. Subsection (c) requires 
OPM to conduct periodic reviews of the plans under chapter 89A, 
including a comparison of the dental benefits available under 
chapter 89 of title 5, United States Code, to ensure the 
competitiveness of plans under new chapter 89A.
    New section 8961 grants the district courts of the United 
States original jurisdiction, concurrent with the United States 
Court of Federal Claims, for a civil action or claim against 
the United States under chapter 89A after administrative 
remedies under chapter 8953(d) have been exhausted.
    New section 8962 relates to administrative functions for 
OPM. Subsection (a) requires OPM to prescribe regulations to 
carry out new chapter 89A. Subsection (b) requires OPM to 
provide for coordinated enrollment, promotion, and education 
efforts as appropriate in consultation with each qualified 
company. The information must include information relating to 
the dental benefits available under chapter 89 of title 5, 
United States Code, and the advantages and disadvantages of 
additional coverage under chapter 89A.

Section 3. Enhanced vision benefits for federal employees

    This section amends subpart G of part III of title 5, 
United States Code, by adding a new chapter 89B to allow the 
Office of Personnel Management to establish a program under 
which supplemental vision insurance is made available to 
federal employees, annuitants, and their dependents.
    New section 8981 defines the terms used in chapter 89B, 
including the definition of employee, annuitant, member of 
family, dependent, eligible individual, Office, qualified 
company, employee organization, and State.
    New section 8982 requires OPM to establish and administer 
the vision program. Subsection (a) states that OPM shall 
establish and administer a program through which an eligible 
individual may obtain vision coverage to supplement coverage 
available through the Federal Employees Health Benefits Program 
codified at chapter 89 of title 5, United States Code. 
Subsection (b) states that OPM shall use reasonable discretion 
to determine the financial requirements for qualified companies 
to participate in the supplemental vision program. Subsection 
(c) makes clear that nothing in the supplemental vision program 
shall be construed to prohibit the availability of vision 
benefits provided by a health benefits plan under chapter 89 of 
title 5, United States Code.
    New section 8983 provides the contracting framework for OPM 
to use in establishing and operating the program. Subsection 
(a) states that OPM shall contract with a reasonable number of 
qualified companies for a policy or policies of benefits 
described under new section 8984 without regard to section 5 of 
title 41 or any other statute requiring competitive bidding. In 
addition, this subsection states that an employee organization 
may contract with a qualified company to participate with the 
company in any contract between OPM and that qualified company 
in order to offer a supplemental vision package under chapter 
89A. Subsection (b) requires OPM to ensure that contracts are 
awarded on the basis of contractor qualifications, price, and 
reasonable competition. Subsection (c) allows companies to 
apply additional waiting periodsfor benefits for individuals 
who enroll after their initial enrollment opportunity. Subsection (d) 
requires companies to establish internal dispute resolution procedures 
as well as alternative dispute resolution procedures involving 
independent third-party review. This subsection also states that the 
district courts of the United States would have original jurisdiction, 
concurrent with the United States Court of Federal Claims, over any 
action described in section (10)(a)(1) of the Contract Disputes Act 
relating to such a dispute arising under the contract. Subsection (e) 
states that this section does not authorize OPM or a third-party 
reviewer to change the terms of any contract under chapter 89A. 
Subsection (f) states that contracts under chapter 89B shall be for 
seven years and may not be renewed automatically.
    New section 8984 relates to benefits. Subsection (a) grants 
OPM the authority to set reasonable minimum standards for 
enhanced vision benefits plans under chapter 89B and for 
qualified companies offering those plans. Subsection (b) 
specifies that contracts may include more than 1 level of 
benefits. Subsection (c) describes categories of benefits that 
may be offered under chapter 89B vision plans. Subsection (d) 
requires contracts to cover geographic service delivery areas 
specified by OPM, and makes clear that OPM shall require 
companies to include underserved vision areas in their service 
delivery areas. Subsection (e) states that the health benefits 
plans under chapter 89 of title 5, United States Code, shall be 
the first payor of any benefit payments for an individual with 
vision coverage under chapter 89 and chapter 89B.
    New section 8985 specifies information requirements. 
Subsection (a) requires companies to make available to each 
individual eligible to enroll information on services and 
benefits that OPM considers necessary to enable the individual 
to make an informed decision about electing coverage under 
chapter 89B. Subsection (b) states that OPM shall make 
available to each individual eligible to enroll in a vision 
benefits plan information on services and benefits provided by 
companies participating in the Federal Employees Health 
Benefits Program under chapter 89 of title 5, United States 
Code.
    New section 8986 governs elections of coverage. Subsection 
(a) allows eligible individuals to enroll in a vision benefits 
plan for self-only, self plus one, or for self and family. 
Subsection (b) requires OPM to prescribe regulations under 
which eligible individuals may enroll. Subsection (c) permits 
eligible individuals to cancel or transfer enrollment before 
the start of any contract term in which there is a change in 
rates charged or benefits provided, in which a new plan is 
offered, or in which an existing plan is terminated, or during 
other times and circumstances as specified by OPM.
    New section 8987 states that a surviving spouse, disability 
annuitant, or surviving child whose annuity is terminated and 
is later restored, may continue enrollment in a vision benefits 
plan under chapter 89B, subject to OPM regulations.
    New section 8988 relates to premiums. Subsection (a) states 
that each eligible individual obtaining vision coverage under 
chapter 89B is responsible for 100 percent of the premiums for 
such coverage. Subsection (b) requires OPM to issue regulations 
specifying the terms under which individuals are required to 
pay the premiums for enrollment. Subsection (c) states that the 
amount necessary to pay the premiums may be withheld from an 
individual's federal pay or annuity. Subsection (d) specifies 
that premiums shall be paid directly to the qualified company. 
Subsection (e) requires participating qualified companies to 
maintain accounting records as OPM may require. Subsection (f) 
makes the Employee Health Benefits Fund available for 
reasonable expenses incurred by OPM in administering chapter 
89B before the first day of the first contract period, 
including reasonable implementation costs. In addition, this 
subsection establishes a Vision Benefits Administrative Account 
available to OPM to defray administrative costs after the start 
of the first contract year. Contracts under chapter 89B would 
include appropriate provisions for companies to reimburse the 
Vision Benefits Administrative Account.
    New section 8989 provides that contracts established under 
chapter 89B preempt any State or local law which relates to 
vision benefits, insurance, plans, or contracts.
    New section 8990 imposes requirements for studies, reports, 
and audits relating to the vision benefits program. Subsection 
(a) requires participating companies to both furnish such 
reasonable reports as OPM determines to be necessary and permit 
OPM and representatives of the General Accounting Office to 
examine the records of such companies as necessary. Subsection 
(c) of new section 8990 requires OPM to conduct periodic 
reviews of the plans under chapter 89B, including a comparison 
of the vision benefits available under chapter 89 of title 5, 
United States Code, to ensure the competitiveness of plans 
under chapter 89B.
    New section 8991 grants the district courts of the United 
States original jurisdiction, concurrent with the United States 
Court of Federal Claims, for a civil action or claim against 
the United States under chapter 89B after administrative 
remedies under chapter 8983 (d) have been exhausted.
    New section 8992 relates to administrative functions for 
OPM. Subsection (a) requires OPM to prescribe regulations to 
carry out chapter 89B. Subsection (b) requires OPM to provide 
for coordinated enrollment, promotion, and education efforts as 
appropriate in consultation with each qualified company. The 
information must include information relating to the vision 
benefits available under chapter 89 of title 5, United States 
Code, and the advantages and disadvantages of additional 
coverage under chapter 89B.

Section 4. Technical and conforming amendment

    This section makes technical and conforming amendments to 
the table of chapters for part III of title 5, United States 
Code, to reflect the enhanced dental and vision benefits 
sections.

Section 5. Application to postal service employees

    This section amends section 1005(f) of title 39, United 
States Code, to make postal service employees eligible to 
participate in the supplemental dental and vision benefit 
programs under S. 2657.

Section 6. Sense of Congress

    Subsection (a) states the finding that oral and vision and 
general health and well-being are inseparable and access to 
dental and vision services is an essential factor in 
maintaining good health; and that it is in the interest of the 
federal government to take reasonable steps to ensure the 
health and well-being of its employees.
    Subsection (b) expresses the sense of Congress that health 
insurance benefits available to federal employees should be 
sufficient to promote the health and productivity of all 
federal workers and to support the recruitment and retention of 
a highly qualified workforce. This subsection also states that 
to help achieve these goals Congress should evaluate the 
supplemental plans established under S. 2657 to determine the 
options for and feasibility of providing an employer 
contribution.

Section 7. Requirement to study health benefits coverage for dependent 
        children who are full-time students

    This section requires the Office of Personnel Management to 
report to Congress describing and evaluating the options 
whereby coverage under the Federal Employees Health Benefits 
program could be made available to unmarried dependent children 
under the age of 25 who are full-time students. The report is 
due to Congress no later than 6 months after the date of 
enactment.

Section 8. Effective date

    This section applies the provisions of S. 2657 to contracts 
that take effect in calendar year 2006.

                    V. Estimated Cost of Legislation

S. 2657--Federal Employee Dental and Vision Benefits Enhancement Act of 
        2004

    S. 2657 would establish a voluntary program under which 
federal civilian employees and annuitants would be able to 
purchase supplemental insurance coverage for vision and dental 
care. The coverage authorized under the bill would be available 
regardless of whether eligible individuals are enrolled in the 
Federal Employees Health Benefits (FEHB) program. (Plans 
currently participating in the FEHB program may offer enrollees 
coverage for dental or vision services, although such coverage 
is often limited.)
    Although the federal government would not contribute toward 
enrollees' premiums for the benefit, the Office of Personnel 
Management (OPM) would incur costs to implement and administer 
the program. CBO estimates that implementing S. 2657 would 
increase direct spending by OPM for its administrative expenses 
by about $1 million in fiscal year 2005.
    According to OPM, its limited administrative role would be 
similar to the one it has in the federal long-term care 
insurance program, in which qualifying companies are 
responsible for costly marketing and enrollment activities. The 
bill would authorize any administrative expenses incurred by 
OPM to be paid from the federal government's Employees Health 
Benefits Fund.
    The bill would require companies providing the vision and 
dental benefit to reimburse OPM for its future administrative 
expenses after the first contract year begins. Assuming 
enactment of the bill in the fall of 2004, CBO expects that 
contracts would be awarded during the last quarter of fiscal 
year 2005 in anticipation of coverage beginning at the start of 
calendar year 2006. We assume that companies would begin to 
reimburse OPM for its administrative costs once contracts are 
signed.
    Based on information provided by OPM, CBO estimates that 
start-up costs in fiscal year 2005 would amount to about $1 
million. In future years, CBO expects that reimbursements from 
qualifying companies generally would cover OPM's costs to 
administer the program, so net federal outlays would be zero 
after the first year. S. 2657 would not affect federal 
revenues.
    CBO anticipates that establishing a new supplemental dental 
and vision benefit program for federal civilian employees would 
increase the administrative workload of federal agencies by a 
negligible amount. The bill also would require OPM to conduct a 
feasibility study on options to expand FEHB coverage to certain 
dependents of federal employees. We estimate that preparing and 
issuing the report would cost less than $500,000 in 2005. 
Federal spending for such activities would be subject to the 
availability of appropriated funds.
    S. 2657 would preempt state and local laws that establish 
coverage levels or benefit requirements that would otherwise 
apply to vision or dental benefits offered under the new 
benefit programs authorized by the bill. Such preemptions are 
intergovernmental mandates as defined in the Unfunded Mandates 
Reform Act, but CBO estimates that they would not affect the 
budgets of state, local, or tribal governments. While the 
preemptions would limit the application of state laws, they 
would not preempt state taxing authority and would impose no 
duties on states that would result in additional spending. The 
bill does not contain any private-sector mandates.
    The CBO staff contact for this estimate is Julia 
Christensen. This estimate was approved by Robert A. Sunshine, 
Assistant Director for Budget Analysis.

                  VI. Evaluation of Regulatory Impact

    Pursuant to the requirements of paragraph 11(b) of rule 
XXVI of the Standing Rules of the Senate, the Committee has 
considered the regulatory impact of this bill. CBO states that 
there are no intergovernmental or private-sector mandates as 
defined in the Unfunded Mandates Reform Act and no costs on 
state, local, or tribal governments. The legislation contains 
no other regulatory impact.

                      VII. Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic and existing law, in which no 
change is proposed, is shown in roman):

TITLE 5, UNITED STATES CODE

           *       *       *       *       *       *       *

GOVERNMENT ORGANIZATION AND EMPLOYEES

           *       *       *       *       *       *       *

PART III--EMPLOYEES

           *       *       *       *       *       *       *

Subpart G--Insurance and Annuities

           *       *       *       *       *       *       *

CHAPTER 89--HEALTH INSURANCE

           *       *       *       *       *       *       *

                 CHAPTER 89A--ENHANCED DENTAL BENEFITS

8951.  Definitions.
8952.  Availability of dental benefits.
8953.  Contracting authority.
8954.  Benefits.
8955.  Information to individuals eligible to enroll.
8956.  Election of coverage.
8957.  Coverage of restored survivor or disability annuitants.
8958.  Premiums.
8959.  Preemption.
8960.  Studies, reports, and audits.
8961.  Jurisdiction of courts.
8962.  Administrative functions.

SEC. 8951. DEFINITIONS.

    In this chapter:
          (1) The term ``employee'' means an employee defined 
        under section 8901(1).
          (2) The terms ``annuitant'', ``member of family'', 
        and ``dependent'' have the meanings as such terms are 
        defined under paragraphs (3), (5), and (9), 
        respectively, of section 8901.
          (3) The term ``eligible individual'' refers to an 
        individual described in paragraph (1) or (2), without 
        regard to whether the individual is enrolled in a 
        health benefits plan under chapter 89.
          (4) The term ``Office'' means the Office of Personnel 
        Management.
          (5) The term ``qualified company'' means a company 
        (or consortium of companies) that offers indemnity, 
        preferred provider organization, health maintenance 
        organization, or discount dental programs and if 
        required is licensed to issue applicable coverage in 
        any number of States, taking any subsidiaries of such a 
        company into account (and, in the case of a consortium, 
        considering the member companies and any subsidiaries 
        thereof, collectively).
          (6) The term ``employee organization'' means an 
        association or other organization of employees which is 
        national in scope, or in which membership is open to 
        all employees of a Government agency who are eligible 
        to enroll in a health benefits plan under chapter 89.
          (7) The term ``State'' includes the District of 
        Columbia.

SEC. 8952. AVAILABILITY OF DENTAL BENEFITS.

    (a) The Office shall establish and administer a program 
through which an eligible individual may obtain dental coverage 
to supplement coverage available through chapter 89.
    (b) The Office shall determine, in the exercise of its 
reasonable discretion, the financial requirements for qualified 
companies to participate in the program.
    (c) Nothing in this chapter shall be construed to prohibit 
the availability of dental benefits provided by health benefits 
plans under chapter 89.

SEC. 8953. CONTRACTING AUTHORITY.

    (a)(1) The Office shall contract with a reasonable number 
of qualified companies for a policy or policies of benefits 
described under section 8954 without regard to section 5 of 
title 41 or any other statute requiring competitive bidding. An 
employee organization may contract with a qualified company for 
the purpose of participating with that qualified company in any 
contract between the Office and that qualified company.
    (2) The Office shall ensure that each resulting contract is 
awarded on the basis of contractor qualifications, price, and 
reasonable competition.
    (b) Each contract under this section shall contain--
          (1) the requirements under section 8902 (d), (f), and 
        (i) made applicable to contracts under this section by 
        regulations prescribed by the Office;
          (2) the terms of the enrollment period; and
          (3) such other terms and conditions as may be 
        mutually agreed to by the Office and the qualified 
        company involved, consistent with the requirements of 
        this chapter and regulations prescribed by the Office.
    (c) Nothing in this chapter shall, in the case of an 
individual electing dental supplemental benefit coverage under 
this chapter after the expiration of such individual's first 
opportunity to enroll, preclude the application of waiting 
periods more stringent than those that would have applied if 
that opportunity had not yet expired.
    (d)(1) Each contract under this chapter shall require the 
qualified company to agree--
          (A) to provide payments or benefits to an eligible 
        individual if such individual is entitled thereto under 
        the terms of the contract; and
          (B) with respect to disputes regarding claims for 
        payments or benefits under the terms of the contract--
                  (i) to establish internal procedures designed 
                to expeditiously resolve such disputes; and
                  (ii) to establish, for disputes not resolved 
                through procedures under clause (i), procedures 
                for 1 or more alternative means of dispute 
                resolution involving independent third-party 
                review under appropriate circumstances by 
                entities mutually acceptable to the Office and 
                the qualified company.
    (2) A determination by a qualified company as to whether or 
not a particular individual is eligible to obtain coverage 
under this chapter shall be subject to review only to the 
extent and in the manner provided in the applicable contract.
    (3) For purposes of applying the Contract Disputes Act of 
1978 to disputes arising under this chapter between a qualified 
company and the Office--
          (A) the agency board having jurisdiction to decide an 
        appeal relative to such a dispute shall be such board 
        of contract appeals as the Director of the Office of 
        Personnel Management shall specify in writing (after 
        appropriate arrangements, as described in section 8(c) 
        of such Act); and
          (B) the district courts of the United States shall 
        have original jurisdiction, concurrent with the United 
        States Court of Federal Claims, of any action described 
        in section 10(a)(1) of such Act relative to such a 
        dispute.
    (e) Nothing in this section shall be considered to grant 
authority for the Office or third-party reviewer to change the 
terms of any contract under this chapter.
    (f) Contracts under this chapter shall be for a uniform 
term of 7 years and may not be renewed automatically.

SEC. 8954. BENEFITS.

    (a) The Office may prescribe reasonable minimum standards 
for enhanced dental benefits plans offered under this chapter 
and for qualified companies offering the plans.
    (b) Each contract may include more than 1 level of benefits 
that shall be made available to all eligible individuals.
    (c) The benefits to be provided under enhanced dental 
benefits plans under this chapter may be of the following 
types:
          (1) Diagnostic.
          (2) Preventive.
          (3) Emergency care.
          (4) Restorative.
          (5) Oral and maxillofacial surgery.
          (6) Endodontics.
          (7) Periodontics.
          (8) Prosthodontics.
          (9) Orthodontics.
    (d) A contract approved under this chapter shall require 
the qualified company to cover the geographic service delivery 
specified by the Office. The Office shall require qualified 
companies to include dentally underserved areas in their 
service delivery areas.
    (e) If an individual has dental coverage under a health 
benefits plan under chapter 89 and also has coverage under a 
plan under this chapter, the health benefits plan under chapter 
89 shall be the first payor of any benefit payments.

SEC. 8955. INFORMATION TO INDIVIDUALS ELIGIBLE TO ENROLL.

    (a) The qualified companies at the direction and with the 
approval of the Office, shall make available to each individual 
eligible to enroll in a dental benefits plan information on 
services and benefits (including maximums, limitations, and 
exclusions), that the Office considers necessary to enable the 
individual to make an informed decision about electing 
coverage.
    (b) The Office shall make available to each individual 
eligible to enroll in a dental benefits plan, information on 
services and benefits provided by qualified companies 
participating under chapter 89.

SEC. 8956. ELECTION OF COVERAGE.

    (a) An eligible individual may enroll in a dental benefits 
plan for self-only, self plus one, or for self and family. If 
an eligible individual has a spouse who is also eligible to 
enroll, either spouse, but not both, may enroll for self plus 
one or self and family. An individual may not be enrolled both 
as an employee, annuitant, or other individual eligible to 
enroll and as a member of the family.
    (b) The Office shall prescribe regulations under which--
          (1) an eligible individual may enroll in a dental 
        benefits plan; and
          (2) an enrolled individual may change the self-only, 
        self plus one, or self and family coverage of that 
        individual.
    (c)(1) Regulations under subsection (b) shall permit an 
eligible individual to cancel or transfer the enrollment of 
that individual to another dental benefits plan--
          (A) before the start of any contract term in which 
        there is a change in rates charged or benefits 
        provided, in which a new plan is offered, or in which 
        an existing plan is terminated; or
          (B) during other times and under other circumstances 
        specified by the Office.
    (2) A transfer under paragraph (1) shall be subject to 
waiting periods provided under a new plan.

SEC. 8957. COVERAGE OF RESTORED SURVIVOR OR DISABILITY ANNUITANTS.

    A surviving spouse, disability annuitant, or surviving 
child whose annuity is terminated and is later restored, may 
continue enrollment in a dental benefits plan subject to the 
terms and conditions prescribed in regulations issued by the 
Office.

SEC. 8958. PREMIUMS.

    (a) Each eligible individual obtaining supplemental dental 
coverage under this chapter shall be responsible for 100 
percent of the premiums for such coverage.
    (b) The Office shall prescribe regulations specifying the 
terms and conditions under which individuals are required to 
pay the premiums for enrollment.
    (c) The amount necessary to pay the premiums for enrollment 
may--
          (1) in the case of an employee, be withheld from the 
        pay of such an employee; or
          (2) in the case of an annuitant, be withheld from the 
        annuity of such an annuitant.
    (d) All amounts withheld under this section shall be paid 
directly to the qualified company.
    (e) Each participating qualified company shall maintain 
accounting records that contain such information and reports as 
the Office may require.
    (f)(1) The Employee Health Benefits Fund is available, 
without fiscal year limitation, for reasonable expenses 
incurred by the Office in administering this chapter before the 
first day of the first contract period, including reasonable 
implementation costs.
    (2)(A) There is established in the Employees Health 
Benefits Fund a Dental Benefits Administrative Account, which 
shall be available to the Office, without fiscal year 
limitation, to defray reasonable expenses incurred by the 
Office in administering this chapter after the start of the 
first contract year.
    (B) A contract under this chapter shall include appropriate 
provisions under which the qualified company involved shall, 
during each year, make such periodic contributions to the 
Dental Benefits Administrative Account as necessary to ensure 
that the reasonableanticipated expenses of the Office in 
administering this chapter during such year are defrayed.

SEC. 8959. PREEMPTION.

    The terms of any contract that relate to the nature, 
provision, or extent of coverage or benefits (including 
payments with respect to benefits) shall supersede and preempt 
any State or local law, or any regulation issued thereunder, 
which relates to dental benefits, insurance, plans, or 
contracts.

SEC. 8960. STUDIES, REPORTS, AND AUDITS.

    (a) Each contract shall contain provisions requiring the 
qualified company to--
          (1) furnish such reasonable reports as the Office 
        determines to be necessary to enable it to carry out 
        its functions under this chapter; and
          (2) permit the Office and representatives of the 
        General Accounting Office to examine such records of 
        the qualified company as may be necessary to carry out 
        the purposes of this chapter.
    (b) Each Federal agency shall keep such records, make such 
certifications, and furnish the Office, the qualified company, 
or both, with such information and reports as the Office may 
require.
    (c) The Office shall conduct periodic reviews of plans 
under this chapter, including a comparison of the dental 
benefits available under chapter 89, to ensure the 
competitiveness of plans under this chapter. The Office shall 
cooperate with the General Accounting Office to provide 
periodic evaluations of the program.

SEC. 8961. JURISDICTION OF COURTS.

    The district courts of the United States have original 
jurisdiction, concurrent with the United States Court of 
Federal Claims, of a civil action or claim against the United 
States under this chapter after such administrative remedies as 
required under section 8953(d) have been exhausted, but only to 
the extent judicial review is not precluded by any dispute 
resolution or other remedy under this chapter.

SEC. 8962. ADMINISTRATIVE FUNCTIONS.

    (a) The Office shall prescribe regulations to carry out 
this chapter. The regulations may exclude an employee on the 
basis of the nature and type of employment or conditions 
pertaining to it.
    (b) The Office shall, as appropriate, provide for 
coordinated enrollment, promotion, and education efforts as 
appropriate in consultation with each qualified company. The 
information under this subsection shall include information 
relating to the dental benefits available under chapter 89, 
including the advantages and disadvantages of obtaining 
additional coverage under this chapter.

           *       *       *       *       *       *       *

                 CHAPTER 89B--ENHANCED VISION BENEFITS

8981.  Definitions.
8982.  Availability of vision benefits.
8983.  Contracting authority.
8984.  Benefits.
8985.  Information to individuals eligible to enroll.
8986.  Election of coverage.
8987.  Coverage of restored survivor or disability annuitants.
8988.  Premiums.
8989.  Preemption.
8990.  Studies, reports, and audits.
8991.  Jurisdiction of courts.
8992.  Administrative functions.

SEC. 8981. DEFINITIONS.

    In this chapter:
          (1) The term ``employee'' means an employee defined 
        under section 8901(1).
          (2) The terms ``annuitant'', ``member of family'', 
        and ``dependent'' have the meanings as such terms are 
        defined under paragraphs (3), (5), and (9), 
        respectively, of section 8901.
          (3) The term ``eligible individual'' refers to an 
        individual described in paragraph (1) or (2), without 
        regard to whether the individual is enrolled in a 
        health benefits plan under chapter 89.
          (4) The term ``Office'' means the Office of Personnel 
        Management.
          (5) The term ``qualified company'' means a company 
        (or consortium of companies) that offers indemnity, 
        preferred provider organization, health maintenance 
        organization,or discount vision programs and if 
required is licensed to issue applicable coverage in any number of 
States, taking any subsidiaries of such a company into account (and, in 
the case of a consortium, considering the member companies and any 
subsidiaries thereof, collectively).
          (6) The term ``employee organization'' means an 
        association or other organization of employees which is 
        national in scope, or in which membership is open to 
        all employees of a Government agency who are eligible 
        to enroll in a health benefits plan under chapter 89.
          (7) The term ``State'' includes the District of 
        Columbia.

SEC. 8982. AVAILABILITY OF VISION BENEFITS.

    (a) The Office shall establish and administer a program 
through which an eligible individual may obtain vision coverage 
to supplement coverage available through chapter 89.
    (b) The Office shall determine, in the exercise of its 
reasonable discretion, the financial requirements for qualified 
companies to participate in the program.
    (c) Nothing in this chapter shall be construed to prohibit 
the availability of vision benefits provided by health benefits 
plans under chapter 89.

SEC. 8983. CONTRACTING AUTHORITY.

    (a)(1) The Office shall contract with a reasonable number 
of qualified companies for a policy or policies of benefits 
described under section 8984 without regard to section 5 of 
title 41 or any other statute requiring competitive bidding. An 
employee organization may contract with a qualified company for 
the purpose of participating with that qualified company in any 
contract between the Office and that qualified company.
    (2) The Office shall ensure that each resulting contract is 
awarded on the basis of contractor qualifications, price, and 
reasonable competition.
    (b) Each contract under this section shall contain--
          (1) the requirements under section 8902 (d), (f), and 
        (i) made applicable to contracts under this section by 
        regulations prescribed by the Office;
          (2) the terms of the enrollment period; and
          (3) such other terms and conditions as may be 
        mutually agreed to by the Office and the qualified 
        company involved, consistent with the requirements of 
        this chapter and regulations prescribed by the Office.
    (c) Nothing in this chapter shall, in the case of an 
individual electing vision supplemental benefit coverage under 
this chapter after the expiration of such individual's first 
opportunity to enroll, preclude the application of waiting 
periods more stringent than those that would have applied if 
that opportunity had not yet expired.
    (d)(1) Each contract under this chapter shall require the 
qualified company to agree--
          (A) to provide payments or benefits to an eligible 
        individual if such individual is entitled thereto under 
        the terms of the contract; and
          (B) with respect to disputes regarding claims for 
        payments or benefits under the terms of the contract--
                  (i) to establish internal procedures designed 
                to expeditiously resolve such disputes; and
                  (ii) to establish, for disputes not resolved 
                through procedures under clause (i), procedures 
                for 1 or more alternative means of dispute 
                resolution involving independent third-party 
                review under appropriate circumstances by 
                entities mutually acceptable to the Office and 
                the qualified company.
    (2) A determination by a qualified company as to whether or 
not a particular individual is eligible to obtain coverage 
under this chapter shall be subject to review only to the 
extent and in the manner provided in the applicable contract.
    (3) For purposes of applying the Contract Disputes Act of 
1978 to disputes arising under this chapter between a qualified 
company and the Office--
          (A) the agency board having jurisdiction to decide an 
        appeal relative to such a dispute shall be such board 
        of contract appeals as the Director of the Office of 
        Personnel Management shall specify in writing (after 
        appropriate arrangements, as described in section 8(c) 
        of such Act); and
          (B) the district courts of the United States shall 
        have original jurisdiction, concurrent with the United 
        States Court of Federal Claims, of any action described 
        in section 10(a)(1) of such Act relative to such a 
        dispute.
    (e) Nothing in this section shall be considered to grant 
authority for the Office or third-party reviewer to change the 
terms of any contract under this chapter.
    (f) Contracts under this chapter shall be for a uniform 
term of 7 years and may not be renewed automatically.

SEC. 8984. BENEFITS.

    (a) The Office may prescribe reasonable minimum standards 
for enhanced vision benefits plans offered under this chapter 
and for qualified companies offering the plans.
    (b) Each contract may include more than 1 level of benefits 
that shall be made available to all eligible individuals.
    (c) The benefits to be provided under enhanced vision 
benefits plans under this chapter may be of the following 
types:
          (1) Diagnostic (to include refractive services).
          (2) Preventive.
          (3) Eyewear.
    (d) A contract approved under this chapter shall require 
the qualified company to cover the geographic service delivery 
specified by the Office. The Office shall require qualified 
companies to include visually underserved areas in their 
service delivery areas.
    (e) If an individual has vision coverage under a health 
benefits plan under chapter 89 and also has coverage under a 
plan under this chapter, the health benefits plan under chapter 
89 shall be the first payor of any benefit payments.

SEC. 8985. INFORMATION TO INDIVIDUALS ELIGIBLE TO ENROLL.

    (a) The qualified companies at the direction and with the 
approval of the Office, shall make available to each individual 
eligible to enroll in a vision benefits plan information on 
services and benefits (including maximums, limitations, and 
exclusions), that the Office considers necessary to enable the 
individual to make an informed decision about electing 
coverage.
    (b) The Office shall make available to each individual 
eligible to enroll in a vision benefits plan, information on 
services and benefits provided by qualified companies 
participating under chapter 89.

SEC. 8986. ELECTION OF COVERAGE.

    (a) An eligible individual may enroll in a vision benefits 
plan for self-only, self plus one, or for self and family. If 
an eligible individual has a spouse who is also eligible to 
enroll, either spouse, but not both, may enroll for self plus 
one or self and family. An individual may not be enrolled both 
as an employee, annuitant, or other individual eligible to 
enroll and as a member of the family.
    (b) The Office shall prescribe regulations under which--
          (1) an eligible individual may enroll in a vision 
        benefits plan; and
          (2) an enrolled individual may change the self-only, 
        self plus one, or self and family coverage of that 
        individual.
    (c)(1) Regulations under subsection (b) shall permit an 
eligible individual to cancel or transfer the enrollment of 
that individual to another vision benefits plan--
          (A) before the start of any contract term in which 
        there is a change in rates charged or benefits 
        provided, in which a new plan is offered, or in which 
        an existing plan is terminated; or
          (B) during other times and under other circumstances 
        specified by the Office.
    (2) A transfer under paragraph (1) shall be subject to 
waiting periods provided under a new plan.

SEC. 8987. COVERAGE OF RESTORED SURVIVOR OR DISABILITY ANNUITANTS.

    A surviving spouse, disability annuitant, or surviving 
child whose annuity is terminated and is later restored, may 
continue enrollment in a vision benefits plan subject to the 
terms and conditions prescribed in regulations issued by the 
Office.

SEC. 8988. PREMIUMS.

    (a) Each eligible individual obtaining supplemental vision 
coverage under this chapter shall be responsible for 100 
percent of the premiums for such coverage.
    (b) The Office shall prescribe regulations specifying the 
terms and conditions under which individuals are required to 
pay the premiums for enrollment.
    (c) The amount necessary to pay the premiums for enrollment 
may--
          (1) in the case of an employee, be withheld from the 
        pay of such an employee; or
          (2) in the case of an annuitant, be withheld from the 
        annuity of such an annuitant.
    (d) All amounts withheld under this section shall be paid 
directly to the qualified company.
    (e) Each participating qualified company shall maintain 
accounting records that contain such information and reports as 
the Office may require.
    (f)(1) The Employee Health Benefits Fund is available, 
without fiscal year limitation, for reasonable expenses 
incurred by the Office in administering this chapter before the 
first day of the first contract period, including reasonable 
implementation costs.
    (2)(A) There is established in the Employees Health 
Benefits Fund a Vision Benefits Administrative Account, which 
shall be available to the Office, without fiscal year 
limitation, to defray reasonable expenses incurred by the 
Office in administering this chapter after the start of the 
first contract year.
    (B) A contract under this chapter shall include appropriate 
provisions under which the qualified company involved shall, 
during each year, make such periodic contributions to the 
Vision Benefits Administrative Account as necessary to ensure 
that the reasonable anticipated expenses of the Office in 
administering this chapter during such year are defrayed.

SEC. 8989. PREEMPTION.

    The terms of any contract that relate to the nature, 
provision, or extent of coverage or benefits (including 
payments with respect to benefits) shall supersede and preempt 
any State or local law, or any regulation issued thereunder, 
which relates to vision benefits, insurance, plans, or 
contracts.

SEC. 8990. STUDIES, REPORTS, AND AUDITS.

    (a) Each contract shall contain provisions requiring the 
qualified company to--
         (1) furnish such reasonable reports as the Office 
        determines to be necessary to enable it to carry out 
        its functions under this chapter; and
         (2) permit the Office and representatives of the 
        General Accounting Office to examine such records of 
        the qualified company as may be necessary to carry out 
        the purposes of this chapter.
    (b) Each Federal agency shall keep such records, make such 
certifications, and furnish the Office, the qualified company, 
or both, with such information and reports as the Office may 
require.
    (c) The Office shall conduct periodic reviews of plans 
under this chapter, including a comparison of the vision 
benefits available under chapter 89, to ensure the 
competitiveness of plans under this chapter. The Office shall 
cooperate with the General Accounting Office to provide 
periodic evaluations of the program.

SEC. 8991. JURISDICTION OF COURTS.

    The district courts of the United States have original 
jurisdiction, concurrent with the United States Court of 
Federal Claims, of a civil action or claim against the United 
States under this chapter after such administrative remedies as 
required under section 8983(d) have been exhausted, but only to 
the extent judicial review is not precluded by any dispute 
resolution or other remedy under this chapter.

SEC. 8992. ADMINISTRATIVE FUNCTIONS.

    (a) The Office shall prescribe regulations to carry out 
this chapter. The regulations may exclude an employee on the 
basis of the nature and type of employment or conditions 
pertaining to it.
    (b) The Office shall, as appropriate, provide for 
coordinated enrollment, promotion, and education efforts as 
appropriate in consultation with each qualified company. The 
information under this subsection shall include information 
relating to the vision benefits available under chapter 89, 
including the advantages and disadvantages of obtaining 
additional coverage under this chapter.

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TITLE 39, UNITED STATES CODE

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POSTAL SERVICE

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PART II--PERSONNEL

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CHAPTER 10--EMPLOYMENT WITHIN THE POSTAL SERVICE

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SEC. 1005. APPLICABILITY OF LAWS RELATING TO FEDERAL EMPLOYEES.

    (f) Compensation, benefits, and other terms and conditions 
of employment in effect immediately prior to the effective date 
of this section, whether provided by statute or by rules and 
regulations of the former Post Office Department or the 
executive branch of the Government of the United States, shall 
continue to apply to officers and employees of the Postal 
Service, until changed by the Postal Service in accordance with 
this chapter and chapter 12 of this title. Subject to the 
provisions of this chapter and chapter 12 of this title, the 
provisions of subchapter I of chapter 85 and [chapters 87 and 
89] chapters 87, 89, 89A, and 89B of title 5 shall apply to 
officers and employees of the Postal Service, unless varied, 
added to, or substituted for, under this subsection. No 
variation, addition, or substitution with respect to fringe 
benefits shall result in a program of fringe benefits which on 
the whole is less favorable to the officers and employees than 
fringe benefits in effect on the effective date of this 
section, and as to officers and employees for whom there is a 
collective-bargaining representative, no such variation, 
addition, or substitution shall be made except by agreement 
between the collective-bargaining representative and the Postal 
Service.

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