and administration of the carrier's FEHB plan. Administration is defined as enrollment and eligibility determinations, adjudication and payment of benefits, and/or underwriting. § 16-4.152 Policies and procedures. § 16-4.152-1 Types of health benefits plan contracts. Chapter 89, Title 5, United States Code, authorizes the Office of Personnel Management to enter into contracts with health benefits carriers to provide health benefits coverage for Federal employees and annuitants. Contracts between OPM and health benefits carriers are of two principal types, community rated and experience rated. (a) Community rated contract. In a community rated contract: (1) The subscription charge per subscriber is fixed for the term of the contract and is not subject to redetermination; (2) The subscription charge consists of the community rate as defined in OPMPR 16-4.151-2, subject to recognized adjustments allowed by this paragraph. The adjustments represent (i) certain additional benefits above the basic package may be provided to Federal subscribers (the costs of these benefits are referred to as "benefit loadings"); and (ii) minor adjustments from the community rate may be made in the rate charged to Federal subscribers to cover unique requirements of the Federal Employees Health Benefits Program (these adjustments are referred to as "standard loadings" and in some cases may be cost reductions (negative loadings)). Where, because of lead-time requirements in rate negotiations, an estimated community rate is used, and subsequently the actual community rate turns out to differ from the estimated rate, some readjustment may be made. (b) Experience rated contract. (1) In an experienced rated contract, the subscription charge per subscriber is fixed at the beginning of the contract term, but is subject to redetermination based upon actual cost incurred. (See OPMPR 16-4.153) (2) If upon redetermination there is a surplus of the subscription charges collected by the carrier over the cost of providing the benefits, the surplus is carried forward to the next contract term as a positive balance in an account called the "special reserve." Conversely, if the cost of providing the benefits exceeds the subscription charges collected, the deficit is carried forward to the next contract term as a negative special reserve balance. The special reserve balance becomes a factor in determining subscription charges for the next contract term. (3) Subscription charges held by the carrier which are in excess of the funds needed to discharge promptly the obligations incurred under the FEHBP contract must be invested and the income derived from the invested funds must be credited to the special reserve. (See 5 CFR 890.201(a)(8)) § 16-4.152-2 Types of health plans. (a) Service Benefit Plan (c) Employee Organization Plans (d) Comprehensive Medical Plans A description of these plans is set out at 5 U.S.C. 8903. § 16-4.152-3 Applications to participate in the FEHB program. By regulation (5 CFR 890.203), applications from carriers seeking participation in the FEHBP shall be submitted not later than the last day of the tenth month preceding the contract period to which they refer. Benefit and rate proposals for new plans shall be submitted not less than seven months before the expiration of the then current contract period, unless the Director of OPM determines that a later submission date is acceptable. In its solicitation for new plans, OPM shall request detailed information of each carrier expressing interest in participating in the FEHBP. The Office of the Assistant Director for Insurance Programs shall evaluate the information received as set out in 5 U.S.C. Chapter 89, 5 CFR Part 890, and this Chapter 16, and the contracting officer shall notify carriers meeting these requirements of their approval to participate in the FEHBP during the fol lowing contract period. Since each application is considered on its own merits, there is no competition between offerors as is the case in other types of procurements. OPM shall seek to complete all benefit and rate negotiations no later than three months preceding the contract year to which they apply. [48 FR 16272, Apr. 15, 1983] § 16-4.152-4 Proposals of existing FEHBP carriers. Benefit and/or rate changes in health benefit plans will be considered at the discretion of OPM. If the Director of OPM determines that it is beneficial to enrollees and the FEHBP to consider health plan benefit and/or rate changes for a given contract period, a "call letter" shall be issued to the carrier approximately 9 months prior to the expiration of the current contract period. Any proposal for change shall be in writing, specifically describe the change proposed, and be signed by an authorized official of the carrier. OPM will review any requested proposal for change and will notify the carrier of its decision to accept or reject the change. OPM may make a counter-proposal or at any time propose changes on its own motion. Benefit changes and/or rate proposals, when invited by OPM, shall be submitted not less than 7 months before the expiration of the then current contract period unless the Director of OPM determines that a later date is acceptable. The negotiation period shall begin approximately 7 months before the expiration of the current contract period, and OPM shall seek to complete all benefit and rate negotiations no later then 3 months preceding the contract period to which they will apply. [48 FR 16272, Apr. 15, 1983] § 16-4.152-5 Program requirements-information required of participating FEHBP carriers. (a) At the times and in the form specified by OPM, participating carriers shall submit the following: enrollment data, utilization data, and a statement of program financial operations including the corresponding Certified Public Accountant's statement on carrier operations. (b) The Office of the Assistant Director for Insurance shall review the data to evaluate the management of financial and other resources. Information obtained in the analysis of these reports shall be used in determining the carrier's continuing ability to meet the statutory and regulatory requirements of 5 U.S.C. chapter 89, 5 CFR Part 890, and the requirements of this Chapter 16. § 16-4.153 Cost of benefits provided under experience rated contracts. In an experience rated contract, the cost of benefits provided represents the actual costs incurred under the contract. The actual costs of the contract consist of the benefit payments made or accrued, plus administrative expenses incurred in adjudicating benefit claims and in the general operations of the carrier, plus the service charge and less investment income earned. In the absence of specific contract terms to the contrary, contract costs will be classified in accordance with the following criteria: (a) Benefits. Benefit costs consist of payments made and liabilities incurred for covered health care services on the behalf of FEHBP subscribers, less any refunds, rebates, allowances or other credits received. If the FEHBP benefit costs must be determined on an indirect basis, the cost shall be determined in accordance with FPR 1-15.203. (b) Administrative expenses. Administrative expenses consist of all allocable, allowable and reasonable expenses incurred in the adjudication of subscriber benefit claims or incurred in the carrier's overall operation of the business. Unless otherwise stated in the contract, administrative expenses include, in part: all taxes including premium taxes, insurance and reinsurance premiums, medical and dental consultants used in the adjudication process, concurrent care review when not billed by a health care provider and other forms of utilization review, the cost of maintaining eligibility files, and legal expenses incurred in the litigation of benefit payments. The amounts charged to the contract shall be actual, necessary expenses incurred in connection with administration of the contract, determined on an equitable and reasonable basis, with proper justification and accounting support, and in accordance with FPR 1-15.2. Administrative expenses exclude the cost of carrier personnel, equipment, and facilities directly used in the delivery of health care services, which are benefit costs, and the expense of managing the FEHBP investment program which is a reduction of investment income earned. (c) Investment income. The carrier is required to invest and reinvest all funds on hand, including any in the special reserve or any attributable to the reserve for incurred but unpaid claims, which are in excess of the funds needed to discharge promptly the obligations incurred under the contract. Investment income represents the net amount earned by the carrier after deducting investment expenses as a result of investing the FEHBP funds. Consequently, the contracting officer shall insert the clause at OPMPR 16-7.503-6. The direct or allocable indirect expenses incurred in managing the investment program, such as, consultant or management fees are chargeable against the investment income earned. It is possible that a negative investment income earned figure can result if the costs of managing the investment program exceed the investment income earned. (d) Service charge. The charge is a negotiated sum OPMPR 16-3.808). service (see (e) Other items—(1) Mandatory statutory reserves. Charges for mandatory statutory reserves are not allowable unless specifically provided for in the contract. When the term "mandatory statutory reserve" is specifically identified as an allowable contract charge without further definition or explanation, it means a requirement imposed by State law upon the carrier to set aside a specific amount or rate of funds into a restricted reserve that is accounted for separately from all other reserves and surpluses of the carrier and which may be used only with the specific approval of the State official designated by law to make such approvals. The amount chargea ble to the contract may not exceed an allocable portion of the amount actually set aside. If the statutory reserve is no longer required for the purpose for which if was created, and these funds become available for the general use of the carrier, a pro rata share based upon FEHBP's contribution to the total carrier's set aside shall be returned to the FEHBP in accordance with FPR 1-15.201-5. (2) Premium taxes. When the term "premium taxes" is used in the contract without further definition or explanation, it means a tax imposed by State or local statutes upon the carrier's gross or net premiums received. PART 16-7-CONTRACT CLAUSES Subpart 16-7.50-FEHBP Contract Clauses Sec. 16-7.500 Scope of subpart. 16-7.502 Required clauses. 16-7.502-1 Definitions. 16-7.502-2 Disputes. 16-7.502-3 Equal opportunity. 16-7.502-4 Officials not to benefit. 16-7.502-5 Covenant against contingent fees. 16-7.502-6 Pricing of adjustments. 16-7.502-7 Employment of the handicapped. 16-7.502-8 Clean air and water. 16-7.502-9 Examination of records by the Comptroller General. 16-7.502-10 Confidentiality of records. 16-7.502-11 Convict labor. 16-7.502-12 Listing of employment openings. 16-7.502-13 Preference for U.S. flag air carriers. 16-7.503 Clauses to be used in experience rated contracts. 16-7.503-1 Price reduction for defective cost or pricing data. 16-7.503-2 Audit and records. 16-7.503-3 Subcontractor cost and pricing data. 16-7.503-4 Cost accounting standards. 16-7.503-5 Subcontracts. 16-7.503-6 Investment income. 16-7.504 Clauses to be used in community (a) This contract is subject to the Contract Disputes Act of 1978 (Pub. L. 95-563). (b) Except as provided in the Act, all disputes arising under or relating to this contract shall be resolved in accordance with this clause. (c)(i) As used herein, "claim" means a written demand or assertion by one of the parties seeking as a legal right, the payment of money, adjustment or interpretation of contract terms, or other relief, arising under or relating to this contract. (ii) A voucher, invoice, or request for payment that is not in dispute when submitted is not a claim for the purposes of the Act. However, where such submission is subsequently not acted upon in a reasonable time, or disputed either as to liability or amount, it may be converted to a claim pursuant to the Act. (iii) A claim by the contractor shall be made in writing and submitted to the contracting officer for decision. A claim by the Government against the contractor shall be subject to a decision by the Contracting Officer. (d) For contractor claims of more than $50,000 the contractor shall submit with the claim a certification that the claim is made in good faith; the supporting data are accurate and complete to the best of the contractor's knowledge and belief; and the amount requested accurately reflects the contract adjustment for which the contractor believes the Government is liable. The certification shall be executed by the contractor if an individual. When the contractor is not an individual, the certification shall be executed by a senior official in charge at the contractor's plan or location involved, or by having overall responsibility for the conduct of the contractor's affairs. (e) For contractor claims of $50,000 or less, the Contracting Officer must render a decision within 60 days. For contractor claims in excess of $50,000 the Contracting Officer must decide the claim within 60 days or notify the contractor of the date when the decision will be made. (f) The Contracting Officer's decision shall be final unless the contractor appeals or files a suit as provided in the Act. (g) The authority of the Contracting Officer under the Act does not extend to claims or disputes which by statute or regulation other agencies are expressly authorized to decide. (h) Interest on the amount found due on a contractor claim shall be paid from the date the claim is received by the Contracting Officer until the date of payment. (i) Except as the parties may otherwise agree, pending final resolution of a claim by the contractor arising under the contract, the contractor shall proceed diligently with the performance of the contract in accordance with the contracting officer's decision. § 16-7.502-3 Equal opportunity. Insert the clause set forth in FPR 112.803-2. § 16-7.502-4 Officials not to benefit. Insert the clause set forth in FPR 17.102-17. 816-7.502-5 Covenant against contingent fees. Insert the clause set forth in FPR 11.503. § 16-7.502-6 Pricing of adjustments. Insert the clause set forth in FPR 17.102-20. 816-7.502-7 Employment of the handicapped. Insert the clause set forth in FPR 60-741.4 (Temporary Regulation 38, 41 FR 22817, dated June 7, 1976) in all contracts and subcontracts of $2,500 or more: EMPLOYMENT OF THE HANDICAPPED (a) The contractor will not discriminate against any employee or applicant for employment because of physical or mental handicap in regard to any position for which the employee or applicant for employment is qualified. The Contractor agrees to take affirmative action to employ, advance in employment, and otherwise treat qualified handicapped individuals without discrimination based upon their physical or mental handicap in all employment practices such as the following: employment, upgrading, demotion or transfer, recruitment or recruitment advertising; layoff or termination, rates of pay or other forms of compensation, and selection for training, including apprenticeship. (b) The contractor agrees to comply with the rules, regulations, and relevant orders of the Secretary of Labor issued pursuant to the Rehabilitation Act of 1973, as amended. (c) In the event of the contractor's noncompliance with the requirements of this clause, actions for noncompliance may be taken in accordance with the rules, regulations and relevant orders of the Secretary of Labor issued pursuant to the Act. (d) The contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices in a form to be prescribed by the Director, Office of Federal Contract Compliance Programs, Department of Labor, provided by or through the contracting officer. Such notices shall state the contractor's obligation under the law to take affirmative action to employ and advance in employment qualified handicapped employees and applicants for employment, and the rights of applicants and employees. (e) The contractor will notify each labor union or representative of workers with which it has a collective bargaining agreement or other contract understanding, that the contractor is bound by the terms of section 503 of the Act and is committed to take affirmative action to employ and advance in employment physically and mentally handicapped individuals. (f) The contractor will include the provisions of this clause in every subcontract or purchase order of $2,500 or more unless exempted by rules, regulations, or orders of the Secretary of Labor issued pursuant to section 503 of the Act, so that such provisions will be binding upon each subcontractor or vendor. The contractor will take such action with respect to any subcontractor or purchase order as the Director, Office of Federal Contract Compliance Programs, may direct to enforce such provisions, including action for noncompliance. § 16-7.502-8 Clean air and water. Insert the clause prescribed by FPR 1-1.2302-2. § 16-7.502-9 Examination of records by the Comptroller General. Insert the clause set forth in FPR 17.103-3. § 16-7.502-10 Confidentiality of records. Insert the following clause in all FEHBP contracts. CONFIDENTIALITY OF RECORDS (a) The Carrier shall use the personal data on employees and annuitants which is provided it by Agencies and OPM, including social security numbers, for only those routine uses stipulated for the data and published annally in the FEDERAL REGISTER as a part of OPM's notice of systems of records. (b) The Carrier shall also hold all medical records, and information relating thereto, of Federal subscribers and family members confidential except as follows: (1) As my be reasonably necessary for the administration of this contract; (2) As authorized by the patient or guardi an; (3) As disclosure is necessary to permit government officials having authority to investigate and prosecute alleged criminal actions; (4) To make audits of the contract; (5) As necessary to carry out the coordination of benefits provisions of this contract; (6) For bona fide medical research or educational purposes. If the carrier uses medical records for the administration of the contact, or for bona fide medical research or educational purposes, it shall so state in the plan's brochure. § 16-7.502-11 Convict labor. Insert the clause set forth in FPR 112.204. § 16-7.502-12 Listing of employment openings. Insert the clause set forth in Temporary Regulation 39 (41 FR 33265-33267 dated Aug. 9, 1976). § 16-7.502-13 Preference for U.S. flag air carriers. Insert the clause set forth in FPR 11.323-2. 816-7.503 Clauses to be used in experi ence rated contracts. The clauses set forth in this 16-7.503 shall be attached, included in, or incorporated by reference in all experience rated contracts. 816-7.503-1 Price reduction for defective cost or pricing data. Insert the clause set forth in FPR 13.814-1(a). |