On Monday, December 15, the Office of Personnel Management (OPM) published a notice of proposed rulemaking that would modify the framework within which OPM evaluates Federal Employees Health Benefits (FEHB) plan performance. For both experience-rated and community-rated plans, plan performance significantly impacts FEHB carriers’ profits. OPM describes the proposed framework as more consistent, objective, and transparent than the current framework. The proposed rule can be found here.

Currently, under the FEHB Acquisition Regulation (FEHBAR), OPM evaluates experience-rated plans and community-rated plans using different frameworks. Experience-rated plans are evaluated based on six categories of factors used to determine the amount of the service charge paid to the carrier: contractor performance, contract cost, federal socioeconomic programs, cost control, independent development, and capital investments. Community-rated plans are evaluated based on two performance elements that may lead to OPM withholding a percentage of plan premiums: customer service and contract compliance requirements.

Under the proposed framework, both experience-rated and community-rated plans would be evaluated using the same set of “profit analysis factors”—clinical quality, customer service, resource use, and contract oversight. The proposed regulatory text briefly describes each factor:

  1. Clinical quality would include elements like preventive care, chronic disease management, medication use, and behavioral health.
  2. Customer service would include communication, access, claims, and member experience.
  3. Resource use would include utilization management, administrative, and cost trends.
  4. Contract oversight would capture audit findings, fraud, waste, and abuse, responsiveness to OPM, benefits and network management, contract compliance, technology management, data security, and federal socioeconomic programs.

Although the text of this proposed rule does not specify the tools to be used to measure each of these factors, the preamble notes that the first three factors would be measured based on national or FEHB-wide metrics, and lists Health Effectiveness Data and Information Set (HEDIS), Consumer Assessment of Healthcare Providers and Systems (CAHPS), and other plan administrative data that OPM already collects as sources of information to be used in measuring the factors. The preamble also notes that the fourth factor will be measured using the judgment of the contracting officer. OPM anticipates applying the new performance assessment framework beginning in 2016 and promises to issue future technical guidance with greater detail on the measurement of each factor.


Joe Records is an associate at Crowell & Moring LLP. He is admitted in Maryland only.