Office of Personnel Management

Retirement and Insurance Service

1920 1954 1959 1986 

 

Benefits Administration Letter

Number: 96-204 Date: May 21, 1996 

SUBJECT: Service Benefit Plan Contract Change

 

Purpose

The purpose of this letter is to notify you of a retroactive change

in the Blue Cross and Blue Shield Service Benefit Plan contract

for calendar year 1996. A copy of the contract change is

attached.

 

Old provision Before 1996, the allowable charges for services of

nonparticipating providers were based on 100% of the Usual,

Customary, and Reasonable (UCR) amounts as determined by

local plans. Therefore, the Standard Option benefit was 75% of

100% of the UCR and the High Option benefit was 80% of

100% of the UCR.

Effective January 1, 1996, allowable charges for services of

nonparticipating providers are based on the Medicare

participating fee schedule amounts for the geographic area in

which the services were provided or 60% of the billed charge if

there is no equivalent Medicare fee schedule amount.

 

New provision Under the new retroactive 1996 contract provision, allowable

charges will be based on the greater of--

the Medicare participating fee schedule amount for the

service or supply in the geographic area in which it was

performed or obtained (or 60% of the billed charge if

there is no equivalent Medicare fee schedule amount), or

80% of the 1996 UCR amount for the service or supply in

the geographic area in which it was performed or

obtained.
Blue Cross and Blue Shield calculates the benefit on the

allowable charge. If 80% of the UCR is greater than the

Medicare participating fee schedule amount, the Standard Option

benefit would be calculated as 75% of 80% of the UCR and a

High Option benefit would be calculated as 80% of 80% of the

UCR, after any applicable deductible has been taken.

 

Examples Example of a Standard Option Benefit in 1995:

Billed amount $1,200

UCR amount 1,000

Allowable charge 

(100% of the UCR) 1,000

Standard Option Benefit (75% 

of the allowable charge 750

Example of a Standard Option Benefit in 1996 when 80% of

the UCR is greater than the Medicare fee schedule amount: 

Billed amount $1,200

UCR amount 1,000

Allowable charge

(80% of the UCR) 800

Standard Option Benefit (75% 

of the allowable charge) 600

 

When the change

will be effective

The plan will have all the necessary administrative and claimsprocessing changes in place by July 8, 1996. Claims paid after

that date will be based on the new provision. 

The plan will automatically reprocess all claims that were paid

before July 8, 1996, and will make any appropriate payment

adjustment no later than October 31, 1996.

 

Abby L. Block, Chief

Insurance Policy

 and Information Division

Attachment
AMENDMENT TO CONTRACT CS 1039

CONTRACT NO: CS 1039 AMENDMENT NO: 1996-D

EFFECTIVE: January 1, 1960 EFFECTIVE: 1/1/96

BETWEEN: THE UNITED STATES OFFICE OF PERSONNEL MANAGEMENT

hereinafter called the OPM, the Agency, or the Government.

AND 

CONTRACTOR: Blue Cross and Blue Shield Association 

Service Benefit Plan

hereinafter also called the Carrier.

Address: 1310 G Street, N.W., Suite 900

Washington, DC 20005 

Section 4.10 is added to the Contract to amend the definition of "Non-participating Provider

Allowance."

SECTION 4.10

NON-PARTICIPATING PROVIDER ALLOWANCE (NPA)

 (a) Notwithstanding the provisions stated in the certified brochure text at page 48 of

Appendix A, or any other provision of the Contract, for purposes of determining the

Non-participating Provider Allowance (NPA) solely for those Non-participating

providers which are not facilities, the following definitions shall apply for the 1996

contract year:

Non-participating Provider Allowance (NPA) for Non-participating Providers

Other Than Facilities -- An allowance equal to the greater of (1) the Medicare

participating fee schedule amount for the service or supply in the geographic area in

which it was performed or obtained (or 60% of the Billed charge if there is no

equivalent Medicare fee schedule amount) or (2) 80% of the 1996 Usual, Customary

and Reasonable (UCR) amount for the service or supply in the geographic area in

which it was performed or obtained.

Usual, Customary and Reasonable (UCR)--

Profile: Local Plans determine reimbursement for covered services by
applying a profile. The profile is developed from the actual charges by

providers in their area. The profiles are generally updated annually; however,

local exceptions may apply.

Accepted allowance: Local Plans may determine reimbursement for covered expenses

based on an accepted allowance instead of a profile. Accepted allowances are based

on what Participating providers are accepting as payment in full in the Local Plan area.

All other terms set forth in the definition of NPA shall apply to claims for covered services

provided by Non-participating providers other than facilities.

(b) The Carrier shall implement the necessary claims processing system and other

administrative changes by July 8, 1996, to accommodate this amendment. Any

affected 1996 claims for covered services processed prior to July 8, 1996, shall

be identified and retroactively reprocessed. Adjustments shall be sent to

Enrollees by October 31, 1996. The Enrollee's adjustment for covered services

shall be determined by readjudicating the claims using the definition of "Nonparticipating Provider Allowance" set forth in paragraph (a) of this section.

(c) The Carrier shall readjudicate at the time of reconsideration any affected claim

that is submitted to the Plan for reconsideration prior to the effective date of the

system and administrative changes.

(d) The Explanation of Benefits (EOB) for each Non-participating provider claim

that is based on 80% of the Usual, Customary and Reasonable allowance shall

explain that the Member's out of pocket costs were capped on this payment and

shall provide the Member a comparison with a payment of the same claim

using the Medicare participating fee schedule or 60% of the Billed charge if

there is no equivalent Medicare fee schedule amount.

(e) The Addendum to the brochure outlining the new provisions set forth in this

amendment shall be mailed by the Carrier to the enrollees.