Federal Register / Vol. 80, No. 4 / Wednesday, January 7, 2015 / Proposed Rules 931 

was enrolled or another health plan of 

his or her choice retroactively within 

90-days after OPM advises the annuitant 

of the new enrollment; 

(v) If the discontinuance of the plan, 

whether permanent or temporary, is due 

to a disaster, an annuitant must change 

the enrollment within 60 days of the 

disaster, as announced by OPM. If an 

annuitant does not change the 

enrollment within the time frame 

announced by OPM, the annuitant will 

be enrolled in the lowest-cost 

nationwide plan option, as defined in 

§ 890.301(n). The effective date of 

enrollment changes under this provision 

will be set by OPM when it makes the 

announcement allowing such changes; 

(vi) An annuitant who is unable, for 

causes beyond his or her control, to 

make an enrollment change within the 

60 days following a disaster and is, as 

a result, enrolled in the lowest-cost 

nationwide plan as defined in 

§ 890.301(n), may request a belated 

enrollment into the plan of his or her 

choice subject to the requirements of 

paragraph (c) of this section. 

* * * * * 

■ 4. Amend § 890.806 by revising 

paragraphs (j)(4)(ii), (iii), and (iv) and 

adding paragraph (j)(4)(v) to read as 

follows: 

§ 890.806 When can former spouses 

change enrollment or reenroll and what are 

the effective dates? 

* * * * * 

(j) * * * 

(4) * * * 

(ii) If the whole plan is discontinued, 

a former spouse who does not change 

the enrollment within the time set will 

be enrolled in the lowest-cost 

nationwide plan option, as defined in 

§ 890.301(n); 

(iii) If one or more options of a plan 

are discontinued, a former spouse who 

does not change the enrollment will be 

enrolled in the remaining option of the 

plan, or in the case of a plan with two 

or more options remaining, the lowestcost remaining option that is not a High 

Deductible Health Plan (HDHP); 

(iv) If the discontinuance of the plan, 

whether permanent or temporary, is due 

to a disaster, the former spouse must 

change the enrollment within 60 days of 

the disaster, as announced by OPM. If 

a former spouse does not change the 

enrollment within the time frame 

announced by OPM, the former spouse 

will be enrolled in the lowest-cost 

nationwide plan option, as defined in 

§ 890.301(n). The effective date of 

enrollment changes under this provision 

will be set by OPM when it makes the 

announcement allowing such changes; 

(v) A former spouse who is unable, for 

causes beyond his or her control, to 

make an enrollment change within the 

60 days following a disaster and is, as 

a result, enrolled in the lowest-cost 

nationwide plan as defined in 

§ 890.301(n), may request a belated 

enrollment into the plan of his or her 

choice subject to the requirements of 

paragraph (c) of this section. 

* * * * * 

■ 5. Amend § 890.1108 by revising 

paragraphs (h)(4)(ii), (iii), and (iv) and 

adding paragraph (h)(4)(v) to read as 

follows: 

§ 890.1108 Opportunities to change 

enrollment; effective dates. 

* * * * * 

(h) * * * 

(4) * * * 

(ii) If the whole plan is discontinued, 

an enrollee who does not change the 

enrollment within the time set will be 

enrolled in the lowest-cost nationwide 

plan option, as defined in § 890.301(n); 

(iii) If one or more options of a plan 

are discontinued, an enrollee who does 

not change the enrollment will enrolled 

in the remaining option of the plan, or 

in the case of a plan with two or more 

options remaining, the lowest-cost 

remaining option that is not a High 

Deductible Health Plan (HDHP); 

(iv) If the discontinuance of the plan, 

whether permanent or temporary, is due 

to a disaster, the enrollee must change 

the enrollment within 60 days of the 

disaster, as announced by OPM. If the 

enrollee does not change the enrollment 

within the time frame announced by 

OPM, the enrollee will be enrolled in 

the lowest-cost nationwide plan option, 

as defined in § 890.301(n). The effective 

date of enrollment changes under this 

provision will be set by OPM when it 

makes the announcement allowing such 

changes; 

(v) An enrollee who is unable, for 

causes beyond his or her control, to 

make an enrollment change within the 

60 days following a disaster and is, as 

a result, enrolled in the lowest-cost 

nationwide plan as defined in 

§ 890.301(n), may request a belated 

enrollment into the plan of his or her 

choice subject to the requirements of 

paragraph (c) of this section. 

* * * * * 

[FR Doc. 2014–30636 Filed 1–6–15; 8:45 am] 

BILLING CODE 6325–63–P 

OFFICE OF PERSONNEL 

MANAGEMENT 

5 CFR Part 890 

RIN 3206–AN14 

Federal Employees Health Benefits 

Program; Subrogation and 

Reimbursement Recovery 

AGENCY: Office of Personnel 

Management. 

ACTION: Proposed rule. 

SUMMARY: The United States Office of 

Personnel Management (OPM) is issuing 

a proposed rule to amend the Federal 

Employees Health Benefits (FEHB) 

Program regulations to clarify the 

conditional nature of FEHB Program 

benefits and benefit payments under the 

plan’s coverage as subject to a carrier’s 

entitlement to subrogation and 

reimbursement recovery, and therefore, 

that such entitlement falls within the 

preemptive scope of the U.S.C. FEHB 

contracts must include a provision 

incorporating the carrier’s subrogation 

and reimbursement rights and FEHB 

plan brochures must explain the 

carrier’s subrogation and reimbursement 

policy. 

DATES: Comments are due on or before 

February 6, 2015. 

ADDRESSES: Send written comments to 

Marguerite Martel, Senior Policy 

Analyst, Planning and Policy Analysis, 

U.S. Office of Personnel Management, 

Room 4312, 1900 E Street NW., 

Washington, DC; or FAX to (202) 606– 

4640 Attn: Marguerite Martel. You may 

also submit comments using the Federal 

eRulemaking Portal: http://

www.regulations.gov. Follow the 

instructions for submitting comments. 

FOR FURTHER INFORMATION CONTACT: 

Marguerite Martel at Marguerite.Martel@

opm.gov or (202) 606–0004. 

SUPPLEMENTARY INFORMATION: The FEHB 

Act, as codified at 5 U.S.C. 8902(m)(1) 

provides: ‘‘The terms of any contract 

under this chapter which 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 health insurance or plans.’’ 

This proposed regulation reaffirms that 

a covered individual’s entitlement to 

FEHB benefits and benefit payments is 

conditioned upon, and limited by, a 

carrier’s entitlement to subrogation and 

reimbursement recoveries pursuant to a 

subrogation or reimbursement clause in 

the FEHB contract. This proposed 

regulation also reaffirms that a FEHB 

carrier’s rights and responsibilities 


asabaliauskas on DSK5VPTVN1PROD with PROPOSALS
932 Federal Register / Vol. 80, No. 4 / Wednesday, January 7, 2015 / Proposed Rules 

pertaining to subrogation and 

reimbursement relate to the nature, 

provision and extent of coverage or 

benefits and benefit payments provided 

under title 5, United States Code 

Chapter 89, and therefore are effective 

notwithstanding any state or local law 

or regulation relating to health 

insurance or plans. This interpretation 

comports with longstanding Federal 

policy, lowers the cost of benefits, and 

creates greater uniformity in benefits 

and benefits administration. 

Currently, and consistent with 

longstanding practice, FEHB Program 

contracts and the applicable statement 

of benefits (brochures) generally require 

carriers to seek reimbursement and/or 

subrogation recoveries, and covered 

individuals to reimburse the plan in the 

event of a third party recovery, in 

accordance with the terms of their FEHB 

contracts. The funds received by 

experience-rated carriers from these 

recoveries are required to be credited to 

the Employees Health Benefits Fund 

established by 5 U.S.C. 8909, held by 

the Treasury of the United States. For 

experience-rated carriers and most 

community-rated carriers, subrogation 

and reimbursement recoveries serve to 

lower subscription charges for 

individuals enrolled in the Federal 

Employees Health Benefits Program. 

These recoveries occur when an 

enrollee who is injured obtains benefits 

from his or her FEHB Program plan and 

either (1) the carrier recovers payment 

for those benefits from a third party as 

a subrogee of the enrollee or (2) the 

enrollee recovers payment for those 

benefits from a third party and the terms 

of the plan require the enrollee, as a 

result of recovery, to reimburse the 

carrier for benefits initially paid. 

As OPM explained in carrier letter 

2012–18 (June 18, 2012), and as this 

proposed regulation would reaffirm, the 

carrier’s right to subrogation and/or 

reimbursement recovery is a condition 

of the payments that enrollees are 

eligible to receive for benefits, and a 

limitation on their entitlement to the 

provision of these benefits. Subrogation 

and reimbursement clauses in turn 

relate to the nature, provision, and 

extent of coverage or benefits (and the 

payment of benefits) by making those 

payments conditional upon a right to 

subrogation or reimbursement of 

equivalent amounts, either from a thirdparty, or from the enrollee, in the event 

a third party is obligated to pay for the 

same injury or illness. The carrier’s right 

to pursue these recoveries therefore falls 

within the purview of 5 U.S.C. 

8902(m)(1), and supersedes state laws 

that relate to health insurance or health 

plans. 

Interpreting subrogation and 

reimbursement clauses to fall within 

Section 8902(m)(1) is consistent with 

the definition of subrogation and 

reimbursement described above and 

their relationship to benefits and the 

payment of benefits. This interpretation 

also furthers Congress’s goals of 

reducing health care costs and enabling 

uniform, nationwide application of 

FEHB contracts. The FEHB program 

insures approximately 8.2 million 

federal employees, annuitants, and their 

families, a significant proportion of 

whom are covered through nationwide 

fee-for-service plans with uniform rates. 

The government pays on average 

approximately 70% of Federal 

employees’ plan premiums. 5 U.S.C. 

8906(b), (f). The government’s share of 

FEHB premiums in 2014 was 

approximately $33 billion, a figure that 

tends to increase each year. OPM 

estimates that FEHB carriers were 

reimbursed by approximately $126 

million in subrogation recoveries in that 

year. Subrogation recoveries translate to 

premium cost savings for the federal 

government and FEHB enrollees. These 

cost savings are consistent with 

Congress’s intent as expressed in the 

legislative history of the 1998 

amendment to 5 U.S.C. 8902(m)(1), 

indicating that Congress intended 5 

U.S.C. 8902(m)(1) to ‘‘prevent carriers’ 

cost-cutting initiatives from being 

frustrated by State laws,’’ H. Rept. No. 

105–374 at 9, 105th Cong., 1st Sess. 

(1997), and with uniform administration 

and cost-savings principles first 

envisioned as major goals of Congress as 

it initially enacted the FEHBA in 1959. 

See, H.R. Rep No. 86–957, 86th Cong. 

1st Sess. (1959). 

In addition to its cost-savings goals, 

OPM recognizes a strong federal interest 

in national uniformity in coverage and 

benefits to include uniform 

administration of the FEHB program 

across state lines. This principle 

encompasses the need to apply uniform 

rules that affect the rights and 

obligations of enrollees in a given plan 

without regard to where they live. 

Disuniform application of FEHB 

contract terms as they apply to enrollees 

in different states is administratively 

burdensome, gives rise to uncertainty 

and litigation, and results in treating 

enrollees differently, although enrolled 

in the same plan and paying the same 

premium. It is OPM’s understanding 

that Congress enacted the preemption 

provision to avoid such disparities, and 

to enhance the ability of the Federal 

Government to offer its employees a 

program of health benefits governed by 

a uniform set of legal rules. 

This proposed rule also clarifies that 

where a covered individual challenges a 

carrier’s right of subrogation and 

reimbursement, that challenge is not a 

‘‘claim,’’ which current OPM 

regulations define as ‘‘a request for 

payment of a health-related bill’’ or the 

‘‘provision of a health-related service or 

supply.’’ 5 CFR 890.101. Because 

subrogation and reimbursement 

challenges are not claims, they are not 

subject to the disputed claims process 

set forth at 5 CFR 890.105, 890.107. 

The proposed rule adds definitions of 

subrogation and reimbursement to 5 

CFR 890.101. In addition, the regulation 

replaces the current section 890.106, 

which is no longer needed due to 

creation of the Civilian Board of 

Contract Appeals. The proposed section 

890.106 defines an FEHB carrier’s right 

to subrogation and reimbursement in 

accordance with this part. As the 

Federal agency with regulatory 

authority over the FEHB Program, OPM 

has consistently taken the position that 

the FEHB Act preempts state laws that 

restrict or prohibit FEHB Program 

carrier reimbursement and/or 

subrogation recovery efforts, and we 

continue to maintain this position. 

OPM is issuing proposed rule-making 

that further clarifies this provision of 

law. 

Regulatory Impact Analysis 

OPM has examined the impact of this 

proposed rule as required by Executive 

Order 12866 and Executive Order 

13563, which directs agencies to assess 

all costs and benefits of available 

regulatory alternatives and, if regulation 

is necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public, health, and 

safety effects, distributive impacts, and 

equity). A regulatory impact analysis 

must be prepared for major rules with 

economically significant effects of $100 

million or more in any one year. This 

rule is not considered a major rule 

because there will be a minimal impact 

on costs to Federal agencies. 

Regulatory Flexibility Act 

I certify that this regulation will not 

have a significant economic impact on 

a substantial number of small entities 

because the regulation only affects 

health insurance benefits of Federal 

employees and annuitants. Executive 

Order 12866. 

Regulatory Review 

This rule has been reviewed by the 

Office of Management and Budget in 

accordance with Executive Orders 

13563 and 12866. 


asabaliauskas on DSK5VPTVN1PROD with PROPOSALS
Federal Register / Vol. 80, No. 4 / Wednesday, January 7, 2015 / Proposed Rules 933 

Federalism 

We have examined this rule in 

accordance with Executive Order 13132, 

Federalism, and have determined that 

this rule restates existing rights, roles 

and responsibilities of State, local, or 

tribal governments. 

List of Subjects in 5 CFR Part 890 

Administrative practice and 

procedure, Government employees, 

Health facilities, Health insurance, 

Health professions, Hostages, Iraq, 

Kuwait, Lebanon, Military personnel, 

Reporting and recordkeeping 

requirements, Retirement. 

U.S. Office of Personnel Management. 

Katherine Archuleta, 

Director. 

Accordingly, OPM proposes to amend 

title 5, Code of Federal Regulations, part 

890 as follows: 

PART 890—FEDERAL EMPLOYEES 

HEALTH BENEFITS PROGRAM 

■ 1. The authority citation for part 890 

continues to read as follows: 

Authority: 5 U.S.C. 8913; Sec. 890.301 also 

issued under sec. 311 of Pub. L. 111–03, 123 

Stat. 64; Sec. 890.111 also issued under 

section 1622(b) of Pub. L. 104–106, 110 Stat. 

521; Sec. 890.112 also issued under section 

1 of Pub. L. 110–279, 122 Stat. 2604; 5 U.S.C. 

8913; Sec. 890.803 also issued under 50 

U.S.C. 403p, 22 U.S.C. 4069c and 4069c–1; 

subpart L also issued under sec. 599C of Pub. 

L. 101–513, 104 Stat. 2064, as amended; Sec. 

890.102 also issued under sections 11202(f), 

11232(e), 11246 (b) and (c) of Pub. L. 105– 

33, 111 Stat. 251; and section 721 of Pub. L. 

105–261, 112 Stat. 2061; Pub. L. 111–148, as 

amended by Pub. L. 111–152. 

■ 2. In § 890.101(a), add definitions for 

‘‘Reimbursement’’ and ‘‘Subrogation’’ in 

alphabetical order to read as follows: 

§ 890.101 Definitions; time computations. 

(a) * * * 

Reimbursement means a carrier’s 

pursuit of a recovery if a covered 

individual has been injured and has 

received a payment from a responsible 

third party and the terms of the plan 

require the covered individual, as a 

result of recovery, to pay the carrier out 

of the recovery to the extent of the 

benefits initially paid or provided. 

* * * * * 

Subrogation means a carrier’s pursuit 

of a recovery from a responsible third 

party as successor to the rights of an 

injured covered individual who has 

obtained benefits from that health 

benefits plan. 

* * * * * 

■ 3. Section 890.106 is revised to read 

as follows: 

§ 890.106 Carrier entitlement to pursue 

subrogation and reimbursement recoveries. 

(a) All health benefit plan contracts 

shall provide that the Federal 

Employees Health Benefits (FEHB) 

carrier is entitled to pursue subrogation 

and reimbursement recoveries, and shall 

have a policy to pursue such recoveries 

in accordance with the terms of this 

section. 

(b) In any health benefits plan that 

contains a subrogation or 

reimbursement clause, including 

contracts entered into before the 

effective date of this regulation, benefits 

and benefit payments are extended to a 

covered individual on the condition that 

the FEHB carrier may pursue and 

receive subrogation and reimbursement 

recoveries if such benefits or benefit 

payments are for an injury or illness that 

is the responsibility of a third party. 

FEHB carriers’ right to pursue and 

receive subrogation and reimbursement 

recoveries constitutes a condition of and 

a limitation on the nature of benefits or 

benefit payments and on the provision 

of benefits under the plan’s coverage. 

(c) Contracts shall provide that the 

FEHB carriers’ rights to pursue and 

receive subrogation or reimbursement 

recoveries arise upon the occurrence of 

the following: 

(1) The covered individual has 

received benefits or benefit payments as 

a result of an illness or injury; and 

(2) The covered individual has 

accrued a right of action against a third 

party for causing that illness or injury; 

or has received a judgment, settlement 

or other recovery on the basis of that 

illness or injury; or is entitled to receive 

compensation or recovery on the basis 

of the illness or injury, including from 

insurers of individual (non-group) 

policies of liability insurance that are 

issued to and in the name of the 

enrollee or a covered family member. 

(d) A FEHB carrier’s exercise of its 

right to pursue and receive subrogation 

or reimbursement recoveries does not 

give rise to a claim within the meaning 

of § 890.101 and is therefore not subject 

to the disputed claims process set forth 

at § 890.105. 

(e) Any subrogation or reimbursement 

recovery on the part of a FEHB carrier 

shall be effectuated against the recovery 

first (before any of the rights of any 

other parties are effectuated) and is not 

impacted by how the judgment, 

settlement, or other recovery is 

characterized, designated, or 

apportioned. 

(f) Pursuant to a subrogation or 

reimbursement clause, the FEHB carrier 

may recover directly from the covered 

individual all amounts received by or 

on behalf of the covered individual by 

judgment, settlement, or other recovery 

from any third party or its insurer, or 

the covered individual’s insurer, to the 

extent of the amount of benefits that 

have been paid or provided by the 

carrier. 

(g) Any contract must contain a 

provision incorporating the carrier’s 

subrogation and reimbursement rights 

as a condition of and a limitation on the 

nature of benefits or benefit payments 

and on the provision of benefits under 

the plan’s coverage. The corresponding 

health benefits plan brochure must 

contain an explanation of the carrier’s 

subrogation and reimbursement policy. 

(h) A carrier’s rights and 

responsibilities pertaining to 

subrogation and reimbursement under a 

FEHB contract relate to the nature, 

provision, and extent of coverage or 

benefits (including payments with 

respect to benefits) within the meaning 

of 5 U.S.C. 8902(m)(1). These rights and 

responsibilities are therefore effective 

notwithstanding any state or local law, 

or any regulation issued thereunder, 

which relates to health insurance or 

plans. 

[FR Doc. 2014–30638 Filed 1–6–15; 8:45 am] 

BILLING CODE 6325–63–P 


asabaliauskas on DSK5VPTVN1PROD with PROPOSALS