Office of Personnel Management's Comprehensive Medical Plans Network Experiment

Gao ID: HRD-80-89 May 30, 1980

The Office of Personnel Management's (OPM) administration of the Blue Cross and Blue Shield Comprehensive Medical Plans Network experiment in the Federal Employees Health Benefits (FEHB) program was reviewed. The Network, operated by the Blue Cross and Blue Shield Associations (Associations), was intended to provide new options for health benefits coverage to Federal employees and to relieve OPM of the administrative costs associated with contracting with a number of comprehensive plans.

There is no specific reference in the FEHB Act to a network of comprehensive plans; OPM has not sought specific legislative guidance for conducting the Network experiment, but has amended its Health Benefits Plan regulations to provide for admission of comprehensive plan networks into the FEHB program. OPM failed to enforce certain basic statutory and other requirements of the FEHB program to permit new developing comprehensive plans to participate in the Network experiment. A 1978 OPM preliminary review of the 18 Network comprehensive plans indicated that 10 of the 18 did not meet one or more of the requirements of the FEHB Act, FEHB program regulations, or OPM admissions criteria. OPM did not adequately monitor the Associations' administration of the Network to ensure that individual plans conformed with FEHB program requirements, and the Associations did not advise OPM that two Network plans in one State did not have State certificates of authority required by the State to legally operate and thus were not eligible under Federal regulations to participate in the Network. The uniform premium rate has resulted in marketing problems for low-cost Network plans, subsidization of high-cost Netwok plans, and an expressed desire by some plans to disengage from the Network and apply individually for the FEHB program. Because the uniform premium rate is inconsistent with the community-rating concept, Network enrollees in low-cost areas pay higher premiums than they would if the plans had been offered individually through the FEBH program.


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