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By: FEDweek StaffAn inspector general report has said that tighter management in several areas of the FEHB program could help hold down growth in premiums for enrollees and the government—a report that comes as enrollees face an average 8.7 percent increase, the largest in more than a decade.
“The increasing cost of health care, especially the cost of prescription drugs, is a national issue affecting not only OPM but the entire United States health care system. It is a challenge for OPM to keep premium rate increases in check while not affecting the level of benefits offered,” the report says.
However, it notes that prescription drugs account for nearly a third of the cost of the program, that most carriers report carriers report an increase in drug costs per member each year, and that the “average age of FEHBP members is climbing, and prescription drug utilization and costs will continue to increase as a result.”
OPM is not directly involved with negotiating drug prices but rather leaves that to carriers, most of which use pharmacy benefit managers. However, the report noted that a previous audit found that “the discounts and other financial terms differed significantly among carriers, with those that have higher enrollments receiving the best deals, reducing the likelihood that the FEHBP is maximizing prescription drug savings in an annual $59 billion program.”
It said that while OPM has favored a study of potential ways to reduce those costs—such as having a program-wide negotiation for prescription drugs—it “has not been able to obtain full funding for this study.”
The IG also noted that it has raised multiple prior warnings about fraud and waste from ineligible persons being enrolled, which “can occur for years before discovery.” OPM has issued guidance tightening oversight, it said, but with no central enrollment database, verification is still left up to the carriers and individual agencies.
It added that agencies may, but are not required to, verify family member eligibility during the annual open seasons, when most enrollment changes are made. “This verification exception stops employing offices from being overwhelmed by the volume of changes, but it also creates an obvious gap in OPM’s safeguards for ensuring that ineligible beneficiaries are not enrolled in the FEHB,” it said.
Further, individual carriers are responsible for combatting fraud, waste and abuse and while they are in general compliance with OPM’s standards, creating a central a program integrity unit in OPM “would help OPM take a more global approach to coordinating fraud, waste, and abuse activities.”
However, it added that while OPM acknowledges that issue as well, it has said it cannot create such an office due to “constraints on its existing resources.”
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