Office of Personnel Management's Comprehensive Medical Plans Network Experiment

GAO discussed its review of the Office of Personnel Management's (OPM) administration of the Blue Cross and Blue Shield Associations' Comprehensive Medical Plans Network experiment in the Federal Employees Health Benefits (FEHB) program. The experiment 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. One problem with the plan was that OPM did not apply FEHB program entry requirements to individual plans admitted to the Association network. This could have resulted in the admission of some group plans which were obligated to refer patients at added costs to outside specialists, lack of commitment to cost containment objectives, avoidance of OPM experience and service capability requirements, and avoidance of OPM minimum enrollment potential requirements. OPM needs to improve monitoring of Network administration. During 1980, two of the Network's comprehensive medical plans expanded their service areas or added new medical centers or other service providers without OPM approval. The Associations did not alert OPM to the comprehensive plans' certification problems. The uniform Network premium rate has resulted in marketing problems for low-cost Network plans, subsidization of high-cost Network plans, and an expressed desire by some plans to disengage from the Network and apply for individual FEHB participation. Network enrollees in low-cost areas pay higher premiums than they would if plans had been offered directly through the FEHB program. In a previous report, GAO recommended that the Director of OPM: improve the monitoring to insure that FEHB program requirements are applied to all comprehensive plans in networks; develop an alternative to the present uniform rate system that is more closely tied to prevailing local costs in individual plans' service areas; terminate from the Network plans that do not individually qualify for admission to the FEHB program; and arrange for the orderly transfer of enrollees in terminated plans to other FEHB program plans.