U.S. flag
          An official website of the United States Government  Main navigation
  

        

              Data Initiatives
                              Regulations
                                                                        Row 1
                                              FAR FAR
                              Smart Matrix Smart Matrix
                              Chapter 99 (CAS) Chapter 99 (CAS)
                              Row 2
                                              DFARS DFARS
                              DFARSPGI DFARSPGI
                              AFARS AFARS
                              DAFFARS DAFFARS
                              DAFFARS MP DAFFARS MP
                              DARS DARS
                              DLAD DLAD
                              NMCARS NMCARS
                              Row 3
                                              SOFARS SOFARS
                              TRANSFARS TRANSFARS
                              AGAR AGAR
                              AIDAR AIDAR
                              CAR CAR
                              DEAR DEAR
                              DIAR DIAR
                              DOLAR DOLAR
                              Row 4
                                              DOSAR DOSAR
                              DTAR DTAR
                              EDAR EDAR
                              EPAAR EPAAR
                              FEHBAR FEHBAR
                              GSAM/R GSAM/R
                              HHSAR HHSAR
                              HSAR HSAR
                              Row 5
                                              HUDAR HUDAR
                              IAAR IAAR
                              JAR JAR
                              LIFAR LIFAR
                              NFS NFS
                              NRCAR NRCAR
                              TAR TAR
                              VAAR VAAR
                              Tools
                                                                        Archives
                              Smart Matrix
                              Regulations Search
                              Acquisition Regulation Comparator (ARC)
                              Policy Network
                                                                        CAOC
                              CAAC
                              FAR Council
                              ISDC
 Breadcrumb
        Home
                            Regulations
                            FEHBAR
                            PART 1615—CONTRACTING BY NEGOTIATION
        
                  HTML
FEHBARPart Number: 1615
        
                  

                                
                  
        Federal Employee Health Benefits Acquisition Regulation
« PreviousNext »
PART 1615—CONTRACTING BY NEGOTIATIONPART 1615—CONTRACTING BY NEGOTIATION       Authority:                            5 U.S.C. 8913; 40 U.S.C. 486(c); 48 CFR 1.301; 5 U.S.C. 8902.          Source:                            52 FR 16040, May 1, 1987, unless otherwise noted.                                       1615.070 Negotiation authority.                                          Subpart 1615.1—Source Selection Processes and Techniques                                                         1615.170 Applicability.                                                                             Subpart 1615.2—Solicitations and Receipt of Proposals and Information                                                         1615.270 Applicability.                                                                             Subpart 1615.3—Source Selection                                                         1615.370 Applicability.                                                                             Subpart 1615.4—Contract Pricing                                                         1615.402 Pricing policy.                                                            1615.404-4 Profit.                                                            1615.404-70 Profit analysis factors.                                                            1615.406-2 Certificates of accurate cost or pricing data for community rated carriers.                                                            1615.407-1 Rate reduction for defective pricing or defective cost or pricing data.                                                            1615.470 Carrier investment of FEHB funds.                                                            1615.470-1 Investment income clause.                                                                             Subparts 1615.8–1615.9 [Reserved]                                          Subpart 1615.70—Audit and Records—Negotiation                                                         1615.7001 Audit and records.    **Parent topic:**  SUBCHAPTER C—CONTRACTING METHODS AND CONTRACT TYPES1615.070 Negotiation authority.       The authority to negotiate FEHB contracts is conferred by 5 U.S.C. 8902.Subpart 1615.1—Source Selection Processes and Techniques    1615.170 Applicability.       FAR subpart 15.1 has no practical application to the FEHB Program because prospective contractors (carriers) are considered for inclusion in the FEHB Program according to criteria in 5 U.S.C. chapter 89 and 5 CFR part 890 rather than by competition between prospective carriers.Subpart 1615.2—Solicitations and Receipt of Proposals and Information    1615.270 Applicability.       FAR subpart 15.2 has no practical application to the FEHB Program because OPM does not issue formal procurement solicitations to health benefits carriers. Eligible contractors (i.e., qualified health benefits carriers) are identified in accordance with 5 U.S.C. 8903. Offerors voluntarily come forth in accordance with procedures provided in 5 CFR part 890.Subpart 1615.3—Source Selection    1615.370 Applicability.       FAR subpart 15.3 has no practical application to the FEHBP because prospective contractors (carriers) are considered for inclusion in the FEHBP in accordance with criteria provided in 5 U.S.C. chapter 89 and 5 CFR part 890 rather than on the basis of competition *between* prospective carriers.Subpart 1615.4—Contract Pricing       Authority:                               5 U.S.C. 8913; 40 U.S.C. 486(c); 48 CFR 1.301.          Source:                               70 FR 31380, June 1, 2005, unless otherwise noted.    1615.402 Pricing policy.       Pricing of FEHB contracts is governed by 5 U.S.C. 8902(i), 5 U.S.C. 8906, and other applicable law. FAR subpart 15.4 will be implemented by applying its policies and procedures—to the extent practicable—as follows:          (a) For both experience-rated and community-rated contracts for which the FEHB Program premiums for the contract term will be less than the threshold at FAR 15.403–4(a)(1), OPM will not require the carrier to provide cost or pricing data in the rate proposal for the following contract term.          (b) Cost analysis will be used for contracts where premiums and subscription income are determined on the basis of experience rating.          (c)          (1)  			A combination of cost and price analysis will be used for contracts where premiums and subscription income are based on community-rates. For contracts for which the FEHB Program premiums for the contract term will be less than the threshold at FAR 15.403–4(a)(1), OPM will not require the carrier to provide cost or pricing data. The carrier is required to submit only a rate proposal and abbreviated utilization data for the applicable contract year. OPM will evaluate the proposed rates by performing a basic reasonableness test on the information submitted. Rates failing this test will be subject to further review.          (2) For contracts with fewer than 1,500 enrollee contracts for which the FEHB Program premiums for the contract term will be at or above the threshold at FAR 15.403–4(a)(1), OPM will require the carrier to submit its rate proposal, utilization data, and a certificate of accurate cost or pricing data required in 1615.406–2. In addition, OPM will require the carrier to complete the proposed rates form containing cost and pricing data, and the Community-Rate Questionnaire, but will not require the carrier to send these documents to OPM. The carrier will keep the documents on file for periodic auditor and actuarial review in accordance with 1652.204–70. OPM will perform a basic reasonableness test on the data submitted. Rates that do not pass this test will be subject to further OPM review.          (3) For plan year 2012, plans will have the option of continuing to use the similarly sized subscriber group (SSSG) rating methodology described in paragraph (c)(3)          (i)  			of this section or using the MLR rating methodology described in paragraph (c)(3)(ii) of this section. All non-traditional community rated (TCR) plans will be required to submit FEHB-specific MLR information for every year beginning with plan year 2011.          (i) *Similarly sized subscriber group (SSSG) methodology.*          (A)  			For contracts with 1,500 or more enrollee contracts for which the FEHB Program premiums for the contract term will be at or above the threshold at FAR 15.403–4(a)(1), OPM will require the carrier to provide the data and methodology used to determine the FEHB Program rates. OPM will also require the data and methodology used to determine the rates for the carrier's SSSG. The carrier will provide cost or pricing data required by OPM in its rate instructions for the applicable contract period. OPM will evaluate the data to ensure that the rate is reasonable and consistent with the requirements in this chapter. If necessary, OPM may require the carrier to provide additional documentation.          (B) Contracts will be subject to a downward price adjustment if OPM determines that the Federal group was charged more than it would have been charged using a methodology consistent with that used for the SSSG. Such adjustments will be based on the rate determined by using the methodology (including discounts) the carrier used for the SSSG.          (C) FEHB Program community-rated carriers will comply with SSSG criteria provided by OPM in the rate instructions for the applicable contract period.          (ii) *FEHB-specific medical loss ratio (MLR) threshold methodology.*          (A)  			For contracts with 1,500 or more enrollee contracts for which the FEHB Program premiums for the contract term will be at or above the threshold at FAR 15.403–4(a)(1), OPM will require the carrier to provide the data and methodology used to determine the FEHB Program rates. OPM will also require the data and methodology used to determine the medical loss ratio (MLR) as defined in the ACA (Pub. L. 111–148) and as defined by HHS in 45 CFR part 158 for all FEHB community rated plans other than those required by state law to use Traditional Community Rating. The carrier will provide cost or pricing data, as well as the FEHB-specific MLR threshold data required by OPM in its rate instructions for the applicable contract period. OPM will evaluate the data to ensure that the rate is reasonable and consistent with the requirements in this chapter. If necessary, OPM may require the carrier to provide additional documentation.          (B) Contracts will be subject to a subsidization penalty if OPM determines that the FEHB group did not meet the FEHB-specific MLR threshold specified in the annual rate instruction to carriers. Such a subsidization penalty will be deposited into a Subsidization Penalty Account held at the U.S. Treasury. This Subsidization Penalty Account will be held in common with all community rated carriers and will be annually distributed to the contingency reserve accounts of all non-TCR community rated plans on a pro-rata basis.          (C) FEHB Program community-rated carriers will comply with the MLR criteria, including the FEHB-specific MLR threshold provided by OPM in the rate instructions for the applicable contract period. FEHB plans that are required by state law to use TCR are exempt from this requirement and will use the SSSG methodology outlined in paragraph (c)(3)(i) of this section.          (4) Contracts will be subject to a downward price adjustment if OPM determines that the Federal group was charged more than it would have been charged using a methodology consistent with that used for the similarly-sized subscriber group (SSSG). Such adjustments will be based on the rate determined by using the methodology (including discounts) the carrier used for the SSSG.          (5) FEHB Program community-rated carriers will comply with SSSG criteria provided by OPM in the rate instructions for the applicable contract period.          (d) The application of FAR 15.402(b)(2) should not be construed to prohibit the consideration of preceding year surpluses or deficits in carrier-held reserves in the rate adjustments for subsequent year renewals of contracts based, in whole or in part, on cost analysis.1615.404-4 Profit.       (a) When the pricing of FEHB Program contracts is determined by cost analysis (experience-rated) or by a combination of cost and price analysis (community rated), OPM will determine a performance based percentage of the price using a weighted guidelines structured approach based on the profit analysis factors described in 1615.404–70. For experience-rated plans, OPM will use the performance based percentage so determined to develop the profit or fee prenegotiation objective, which will be the total profit (service charge) negotiated for the contract. For community-rated plans, OPM will use the performance based percentage so determined to develop an adjustment to net-to-carrier premiums, (performance adjustment) to be made during the first quarter of the following contract period.          (b) OPM will not guarantee a minimum service charge.1615.404-70 Profit analysis factors.       (a) OPM Contracting Officers will apply a weighted guidelines method in developing the performance based percentage for FEHB Program contracts. For experience-rated plans, the performance based percentage will be applied to projected incurred claims and allowable administrative expenses. For community-rated plans, the performance based percentage will be applied to subscription income and will be used to calculate a performance adjustment to net-to-carrier premiums, as described at 48 CFR 1632.170(a)(2), to be made during the first quarter of the following contract period. In the context of the factors outlined in FAR 15.404– 4(d), OPM will assess performance of FEHB carriers according to four factors.          (1) *Clinical quality.* OPM will consider elements within such domains as preventive care, chronic disease management, medication use, and behavioral health. This factor incorporates elements from the FAR factor “contractor effort.”          (2) *Customer service.* OPM will consider elements within such domains as communication, access, claims, and member experience/engagement. This factor incorporates elements of the FAR factor “contractor effort.”          (3) *Resource use.* OPM will consider elements within such domains as utilization management, administrative, and cost trends. This factor incorporates elements of the FAR factors “contractor effort,” “contract cost risk,” and “cost control and other past accomplishments.”          (4) *Contract oversight.* OPM will consider an assessment of contract performance in specific areas such as audit findings, fraud/waste/abuse, and responsiveness to OPM, benefits/network management, contract compliance, technology management, data security, and Federal socioeconomic programs. This factor could incorporate any of the FAR profit analysis factors listed at 15.404–4(d)(1)(i)–(vi).          (b) The sum of the maximum scores for the profit analysis factors will be 1 percent.1615.406-2 Certificates of accurate cost or pricing data for community rated carriers.       (a) The contracting officer will require a carrier with a contract meeting the requirements in 1615.402(c)(2) or (3) to execute one or more of the Certificates contained in this section. A carrier with a contract meeting the requirements in 1615.402(c)(2) will complete the appropriate Certificate(s) and keep such on file at the carrier's place of business in accordance with 1652.204–70. A carrier with a contract meeting the requirements in 1615.402(c)(3) will complete and submit the appropriate certificate(s) to OPM.          (b) A carrier using the SSSG methodology described in 1615.402(c)(3)(i) will submit the “Certificate of Accurate Cost or Pricing Data for Community-Rated Carriers (SSSG methodology)” along with its rate reconciliation during the first quarter of the applicable contract year. A carrier using the MLR methodology described in 1615.402(c)(3)(ii) will submit two forms. The “Certificate of Accurate Cost or Pricing Data for Community-Rated Carriers (MLR methodology)” will be submitted along with the rate reconciliation during the first quarter of the applicable contract year. The “Certificate of Accurate MLR Calculation” will be submitted when the carrier submits its FEHB-specific MLR calculation to OPM.          (Beginning of first certificate)                                  This is to certify that, to the best of my knowledge and belief: (1) The cost or pricing data submitted (or, if not submitted, maintained and identified by the carrier as supporting documentation) to the Contracting officer or the Contracting officer's representative or designee, in support of the ____* FEHB Program rates were developed in accordance with the requirements of 48 CFR Chapter 16 and the FEHB Program contract and are accurate, complete, and current as of the date this certificate is executed; and (2) the methodology used to determine the FEHB Program rates is consistent with the methodology used to determine the rates for the carrier's Similarly Sized Subscriber Group.                                  * Insert the year for which the rates apply.                                  Firm:                                  Name:                                  Signature:                                  Date of Execution:                               (End of first certificate)          (Beginning of second certificate)                                  Certificate of Accurate Cost or Pricing Data for Community-Rated Carriers (MLR methodology)                                  This is to certify that, to the best of my knowledge and belief: (1) The cost or pricing data submitted (or, if not submitted, maintained and identified by the carrier as supporting documentation) to the Contracting officer or the Contracting officer's representative or designee, in support of the ______*FEHB Program rates were developed in accordance with the requirements of 48 CFR Chapter 16 and the FEHB Program contract and are accurate, complete, and current as of the date this certificate is executed;                                  *Insert the year for which the rates apply.                                  Firm:                                  Name:                                  Signature:                                  Date of Execution:                               (End of second certificate)          (Beginning of third certificate)                                  Certificate of Accurate MLR Calculation                                  This is to certify that, to the best of my knowledge and belief: the determination of the carrier's FEHB-specific medical loss ratio for * is accurate, complete, and consistent with the methodology as stated in § 1615.402(c)(3)(ii).                                  *Insert the year for which the MLR calculation applies.                                  Firm:                                  Name:                                  Signature:                                  Date of Execution:                               (End of certificate)1615.407-1 Rate reduction for defective pricing or defective cost or pricing data.       The clause set forth in section 1652.215–70 will be inserted in FEHB Program contracts, at or above the threshold in FAR 15.403–4(a)(1), that are based on a combination of cost and price analysis (community-rated).1615.470 Carrier investment of FEHB funds.       (a) Except for contracts based on a combination of cost and price analysis (community-rated), the carrier is required to invest and reinvest all funds on hand, including any attributable to the special reserve or the reserve for incurred but unpaid claims, exceeding the funds needed to discharge promptly the obligations incurred under the contract.          (b) The carrier is required to credit income earned from its investment of FEHB funds to the special reserve on behalf of the FEHB Program. If a carrier, for any reason, fails to invest excess FEHB funds or to credit any income due to the contract, it will return or credit any investment income lost to OPM or the special reserve.          (c) Investment income. Investment income is the net amount earned by the carrier after deducting investment expenses.1615.470-1 Investment income clause.       The clause set forth in 1652.215–71 will be inserted in all FEHB contracts based on cost analysis.Subparts 1615.8–1615.9 [Reserved]Subpart 1615.70—Audit and Records—Negotiation    1615.7001 Audit and records.       The Contracting officer will modify 52.215–2 in all FEHB Program experience-rated contracts by amending paragraph (g) of that section to replace the words “exceed the simplified acquisition threshold” with “equals or exceeds $550,000.” This amount shall be adjusted by the same amount and at the same time as any change to the threshold for application of the Truth in Negotiations Act pursuant to 41 U.S.C. 254b(a)(7).
« PreviousNext »
FavoriteX

      FEHBAR Parts
            Regulations Fehbar Menu
  

        
      Index
                              1600
                              1601
                              1602
                              1603
                              1604
                              1605
                              1606
                              1609
                              1614
                              1615
                              1616
                              1622
                              1624
                              1629
                              1631
                              1632
                              1633
                              1642
                              1643
                              1644
                              1645
                              1646
                              1649
                              1652
                              1699

      ×
        Data Initiatives
                                                              Regulations
                                                              Tools
                                              Archives
                                                              Smart Matrix
                                                              Regulations Search
                                                              Acquisition Regulation Comparator (ARC)
                                                              Policy Network
                                              CAO.gov
                                                        CAO Home
                                                              Council Member
                                                                    Large Agencies
                                                              Small Agencies
                                                              Council Defining Documents
                                                                    CAOC History
                                                              CAOC Charter
                                                              Civilian Agency Acquisition Council (CAAC)
                                                              Federal Acquisition Regulatory Council
                                                              Interagency Suspension and Debarment Committee (ISDC)
                                                              Search
 ˄ Top Sign up for FAR News

                            Share the FAR
                        Upper Footer Menu
  

        
      Useful Links
                              FAR Resources
                              Training
                              Acquisition Systems
            
                            **Contact Us/FAQs**
                        **Privacy and Security Notice**
                        **Accessibility Aids**
                        **Last Updated 03/29/2024**
 ACQUISITION.GOV
                An official website of the General Services Administration About GSA
                Accessibility support
                FOIA requests
                No FEAR Act data
                Office of the Inspector General
                Performance reports
                Privacy policy Looking for U.S. government information and services?
            Visit USA.gov
 «
    
    Tt