On Thursday, March 22, the U.S. Office of Personnel Management (OPM) and America’s Health Insurance Plans (AHIP) hosted the annual Federal Employees Health Benefits (FEHB) Program Carrier Conference. The conference featured OPM’s policy and contracting priorities for the FEHB Program for 2018. It followed and discussed OPM’s FEHB Program Call Letter (available here), which provides a high-level outline of its intentions for contract negotiations for plan year 2019.

This year’s Carrier Conference included three key highlights for FEHB carriers:

  1. OPM will re-open the Indemnity Benefit Plan to contract with either a nationwide carrier or a consortium of carriers to begin offering coverage in 2020.
  2. OPM is seeking legislative changes to apply the Anti-Kickback Statute to the FEHB Program.
  3. OPM is interested in Plans improving value by offering Accountable Care Organization or other innovative models

Indemnity Benefit Plan

OPM will solicit proposals for an Indemnity Benefit Plan (IBP) to begin plan year 2020.

Although the IBP has long been authorized by the FEHB Act, OPM has not had a contract with a carrier to offer the IBP since the end of 1989. Although OPM has solicited proposals for the IBP as recently as the 2008 FEHB Program Call Letter (available here), OPM has not been successful in its efforts to enter into a contract for the IBP. It was not clear why OPM believes its efforts this time may be more successful.

The FEHB Act and its implementing regulations call for the IBP to be a nationwide plan with two levels of benefits (plus a high deductible health plan) “under which a carrier agrees to pay certain sums of money, not in excess of the actual expenses incurred,” for benefits. Speakers at the conference identified this as a potential opportunity for either a single nationwide carrier or a consortium of carriers that would assemble to offer nationwide coverage. OPM speakers also noted the agency’s intention that the IBP provide a meaningfully different set of plan options from those currently available under the program, but did not provide any details.

We anticipate OPM’s release of further details for IBP proposals over the coming months.

Application of the Anti-Kickback Statute

The Anti-Kickback Statute (AKS), a fraud and abuse law with both civil and criminal penalties, applies to federal health care programs, but expressly excludes the FEHB Program from its scope. OPM announced at the Carrier Conference that it has submitted a legislative proposal to Congress to modify the AKS to allow OPM discretion to apply the AKS or to incorporate its provisions under the FEHB Act to prohibit certain arrangements as necessary.

OPM’s Office of the Inspector General (OIG) announced the legislative request in its Spring 2017 Semi-Annual Report to Congress by (available here), in which the OIG bemoaned the FEHB Program’s exclusion from investigations and settlements under the AKS.

Speakers at the conference identified specific cases where application of the AKS could reduce program costs. For example, OPM has identified circumstances where pharmaceutical manufacturers offer “coupons” to reduce member cost-sharing responsibilities for expensive, name-brand drugs. These coupons may incentivize the use of such drugs by FEHB members without reducing drug costs for the carriers, and ultimately to the government. Under federal health care programs that are subject to the AKS, routine waivers of patient cost-sharing responsibilities are subject to scrutiny under the AKS as potentially prohibited remuneration. The requested change would allow the FEHB Program authority to apply the same prohibition.

It is not yet clear how OPM would exercise discretionary authority to apply the AKS or how regulated entities would be on notice as to the circumstances under which it would apply.

Accountable Care Organizations and Innovative Models

As it generally does every year, OPM highlighted the ongoing need to improve health outcomes while driving down the cost of care. This year’s Call Letter emphasized the point by noting that OPM’s Strategic Plan for fiscal years 2018 – 2022 includes an objective to improve health care quality and affordability in the FEHB Program.

Several speakers at the conference discussed the potential applicability of Accountable Care Organizations (ACOs) or similar population-based models to achieve quality improvement and cost savings. These presentations echoed the Call Letter, which flagged the utility of population health models to aid in the management of chronic diseases including diabetes and hypertension. The Call Letter and the presentations did not lay out specifics, but instead invited carriers to come to OPM with ideas for innovative ways to deliver care. Recognizing that proposals for plan year 2019 will be due shortly, OPM offered to open a dialogue to discuss more sweeping changes for future years, even if such changes are in the early stages of development.

Overall Takeaways

Overall, the presentations at the Carrier Conference highlighted OPM’s goals for the FEHB Program. The agency intends to increase competition in the program by introducing an IBP for the first time in decades, implement more thorough oversight by requesting that the AKS apply to the Program, and contract with carriers to provide increasingly innovative care models that improve quality and drive down costs.