How Feds Could Soon Receive Better Quality Health Care

Carriers providing health coverage to federal employees and retirees will soon be subject to new performance metrics, with quality of care becoming the most important measure in the government’s assessments. Their performance will affect their profitability.

Health insurance companies with plans in the Federal Employees Health Benefits Program are assessed each year by the Office of Personnel Management and, depending on how they do on those assessments, OPM withholds or pays out a certain amount of money from enrollees’ premiums. A proposed rule from OPM would streamline the assessments for the two types of FEHBP plans -- community rated and experience rated -- while attempting to reward those companies that provide the best care to participants.

OPM currently evaluates experience-rated plans -- which consider the medical costs of individuals participating in the plan when setting overall premiums -- using five metrics, weighted most heavily toward contractor performance. OPM assesses community-rated plans -- which factor the larger geographic area for premium-setting purposes -- on just two metrics, contract compliance and customer service.

Under the proposed new regulations, OPM would assess both types of plans on four factors: Clinical quality, customer service, resource use and contract oversight. In a carrier letter sent out to providers earlier this month, OPM spelled out exactly how the plans would be measured in each of the categories.

Federal statute requires that all nationwide plans be experienced based. Carriers in that group adjust the premiums they charged based on what they ended up paying in years past. As a payment for that flexibility, 4 percent of the money that comes in from FEHBP enrollees in experience-based plans goes to the federal government. Depending on how well they do on their assessments, OPM pays some of that money back to providers.

Health Maintenance Organizations, or HMOs, can use community-based plans. For every $100 those plans raise from FEHBP enrollees, $1 goes to OPM. OPM then assesses how the plans did and pays a certain amount of the funds collected back to each plan.

Under the proposed rule, OPM would rely more heavily on enrollee surveys to evaluate customer service and quality of care. While the changes may incentivize carriers to provide better care, one FEHBP expert said it would not affect enrollees’ premiums.

“It’s not a move the needle type thing,” said David Ermer, a managing partner at Washington-based Ermer Law Group who represents the Association of Federal Health Organizations, a trade group of FEHBP plans. “It’s important to the carrier because it’s their margins.”

OPM said by creating “quantifiable measures” to assess the FEHBP plans, the proposed rule would “create a more objective performance standard and provide more transparency for enrollees.”

Ermer took issue with the transparency of the rule, noting it does not provide insight into how each metric would be weighted.

“It’s a black box,” Ermer said. “They had said this is supposed to be more transparent and objective, but it’s going in the opposite direction.”

In the carrier letter sent earlier this month, OPM’s Director of Healthcare and Insurance said the agency was “engaging independent experts to further develop our methodology for scoping and weighting,” adding he plans to provide additional information in the future. 

(Image via Dmitry Kalinovsky/Shutterstock.com)