OPM releases FEHB final regulation

Posted on April 2, 2012 | No Comments

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Today the U.S. Office of Personnel Management (OPM) issued a final regulation amending the Federal Employees Health Benefits (FEHB) regulations and also the Federal Employees Health Benefits Acquisition Regulation (FEHBAR). This final regulation makes minor changes to an interim final regulation published June 29, 2011. The rule replaces the procedure by which premiums for community rated FEHB carriers are compared with the rates charged to a carrier’s similarly sized subscriber groups (SSSGs). The new procedure utilizes a medical loss ratio (MLR) threshold, analogous to that defined in both the Affordable Care Act (ACA), and in Department of Health and Human Services (HHS) regulations and replaces the outdated SSSG methodology with a more modern and transparent calculation while still ensuring that the FEHB Program is receiving a fair rate. This will result in a more streamlined process for plans and increased competition and plan choice for enrollees. The new process will apply to all community rated plans, except those required by their state to use traditional community rating (TCR). This new process will be phased in over two years, with optional participation for non-TCR plans in the first year.

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Today, the Office of Personnel Management (OPM) released a long-awaited final rule describing how Congressional Members and their staff will obtain coverage under the Affordable Care Act (ACA). OPM stated that Members and their aides, regardless of where they reside, will enroll in the DC Small Business Health Options Program (SHOP). In doing so, they will retain their employer contribution from the federal government, but will not be eligible for federal subsidies like those partaking in the individual insurance market. Members have until October 31st to determine which staff members are considered "official office staff" and are therefore required to enroll in SHOP. Committee staff will keep their coverage on the Federal Employees Health Benefits program. A fact sheet provided to Congressional Members and their staff succinctly explains the changes instituted by OPM. SHOP, designed to promote and facilitate the enrollment of small business employees into group health plans, will be fully operational tomorrow, October 1st.
Today, the Office of Personnel Management (OPM) released a proposed rule stating that the federal government may still contribute to the health plans Members of Congress and their staff are required to obtain through the Affordable Care Act's (ACA) health insurance Marketplaces. Pursuant to the infamous Grassley Amendment to the ACA, Senators and Representatives, including their personal staffs, are mandated to forgo their current Federal Employee Health Benefits (FEHB) plans and enroll in Marketplaces. In addition to amending FEHB regulations, the proposed rule also gives Members flexibility in defining which of their staffers officially work in his or her office, and are therefore expected to join the Marketplaces.
The Department of Health and Human Services Office of Consumer Information and Insurance Oversight (OCIIO) has released an interim final rule with request for comment implementing the medical loss ratio requirements for health insurance issuers under the health reform law. Along with the regulation, OCIIO released a fact sheet and Regulatory Impact Analysis Technical Appendix. For more, visit our updated Medical Loss Ratio Implementation Brief.
America's Health Insurance Plans offers its perspective in a letter to the Health Reform Solvency Impact (E) Subgroup, which is charged with developing definitions and methodology for calculating medical loss ratios under the health reform law. http://www.naic.org/documents/committees_lhatf_ahwg_100510_letter_ahip_mlr.pdf
In a letter to the Health Care Reform Solvency Impact Subgroup, the American Academy of Actuaries offers its opinion on medical loss ratios. http://www.actuary.org/pdf/health/aaa_mlr_rfi_response_051410_final.pdf
This is an updated version of a brief originally published on August 25, 2010. This brief is current as of November 22, 2010. A medical loss ratio (MLR) is the proportion of premium dollars that an insurer spends on health care services relative to health insurance premium paid by subscribers. Prior to the enactment of the health reform law, the federal government required Medicare supplemental insurance (or Medigap policies) to meet minimum federal loss ratio requirements, but did not establish federal standards to define how insurers should categorize losses, nor did those requirements apply to other types of private insurance policies.
A new Health Affairs brief examines medical loss ratio (MLR) requirements under the Affordable Care Act. The Department of Heath and Human Services is expected to issue regulations on MLR calculation soon.
A key issue for insurers, businesses and consumers in health reform is working its way through the regulatory process. Beginning January 1, 2011, insurers will be required to spend a minimum percentage of insurance premiums on medical expenses, as opposed to administrative and marketing costs or profits. Insurers that fail to meet these minimum percentages, called medical loss ratios, will be required to rebate the difference in premiums. Group policies will be required to spend 85 percent on medical expenses and individual policies must spend 80 percent on medical expenses.