Issue Briefs fehb premium sharing

Following is a section from a supplemental budget document issued by the Trump administration explaining its proposed changes to the FEHB premium sharing formula and to the medical liability provisions of that program among other health insurance programs.

Government Contribution Adjustment Based on Plan Performance Assessment

Effective with the plan year beginning no earlier than 18 months after enactment, this proposal would revise the calculation of the Government contribution to premium so that the contribution is adjusted based on a plan’s score from the FEHB Plan Performance Assessment (PPA). All FEHB health plans are required to participate in the PPA, which includes measures of quality, customer service, and resource use pursuant to 48 CFR 1615.404-70.

Currently, the Government contribution that a health plan option receives for an annuitant or non-Postal employee is the lesser of 72 percent of the weighted average premium of all health plans or 75 percent of that plan option’s individual premium. Under this proposal, FEHB plans will be divided into two groups representing higher performing plans and all other plans. The base Government contribution would be established as 71 percent of the weighted average of all plan premiums up to 75 percent of an individual plan’s premium. For higher performing plans, the Government contribution would be raised by 5 percent, up to a maximum of 80 percent of the plan’s premium. Health plans not categorized in the high performing group would receive the base contribution amount. OPM would support informed decision making by designating the plans receiving the additional Government contribution on plan informational material.

OPM estimates this proposal would result in a savings of about 1.1 percent of the Government share of premium for annuitants and non-Postal employees, who represent nearly 90 percent of those enrolled in FEHB. This estimate was calculated using 2019 premium amounts and enrollment and 2017 Clinical Quality, Customer Service and Resource Use (QCR) PPA scores. The U.S. Postal Service’s contribution toward premiums for Postal employees would continue to be subject to collective bargaining pursuant to the Postal Reorganization Act of 1970 (39 U.S.C. §1005(f)).

This proposal aligns with OPM’s strategic goal 1.4 to improve healthcare quality and affordability in the FEHB Program with 75 percent of enrollees in quality, affordable plans.

OPM is currently drafting legislative language for this proposal.

Medical Liability Reform

The Administration’s medical liability reform proposal would:

1. Cap awards for noneconomic damages at $250,000 indexed to inflation;

2. Allow evidence of a claimants’ income from other sources such as workers compensation and auto insurance to be introduced at trial;

3. Provide for a three-year statute of limitations;

4. Establish a fair-share rule to replace the current rule of joint and several liability;

5. Provide safe harbors for providers based on clinical standards;

6. Authorize the Secretary of Health and Human Services to provide guidance to States to create expert panels and administrative health care tribunals;

7. Allow courts to modify attorney’s fee arrangements;

8. Exclude provider expressions of regret or apology from evidence; and

9. Require courts to honor a request by either party to pay damages in periodic payments for any award equaling or exceeding $50,000.

If enacted, the Administration’s medical liability reform proposal would affect the FEHB Program beginning in 2023. Capping awards and shortening the statute of limitations could potentially reduce costs for malpractice insurance carriers. Additional costs to carriers are reflected in malpractice insurance premiums. Therefore, this proposal has the potential to lower malpractice insurance premiums, which in turns lowers healthcare costs overall. In addition, these reforms have the potential to reduce unnecessary healthcare utilization, or ‘defensive medicine,’ also reducing healthcare costs.

OPM Tells FEHB Carries to Focus on Controlling Costs

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