Detailed Information on the
Federal Employees Health Benefits Assessment

Conduct an independent program evaluation of sufficient scope and quality. OPM will use this information to demonstrate that program is effective and is achieving results.

Establish ambitious targets for the newly developed long-term goals and demonstrate adequate progress in achieving these performance goals.

Hold program managers and partners accountable for cost, schedule and performance results, and demonstrate that the program and its partners are achieving its annual goals.

Improve future budget requests to effectively link resources to program performance and results/outcomes.

Measure: Overall customer satisfaction scores with FEHB plans versus industry standard.

Explanation:Data source: CAHPS (HRPS)

Measure: Enrollee satisfaction with OPM website (content and usability)

Explanation:Website Open Season feedback (target will be set upon receipt of baseline data) (HRPS)

Measure: Enrollee satisfaction with health insurance benefits (FEHB)

Explanation:Data source: Federal Human Capital Survey (SHRP)

Measure: Quality of care: % of accredited FEHB plans

Explanation:Data source: NCQA, URAC, JCAHO (HRPS)

Measure: Health outcome: Cholesterol Management after Acute Cardiovascular Events (This measure covers only enrollees in HMO plans; in FY05 OPM will develop an appropriate and feasible health outcome measure covering all FEHBP enrollees).

Explanation:Data source: NCQA HEDIS data (measures the percentage of members 18 through 75 who were discharged for acute myocardial infarction, coronary artery bypass graft, or percutaneous transluminal coronary angioplasty and had evidence of LDL-C screening) (HRPS)

Measure: Benchmarking results demonstrate that health benefits are comperable/competitive with other employer benefits

Explanation:Data source: Benchmarking Study (under development)

Measure: Health outcome: Cholesterol Management after Acute Cardiovascular Events. (This measure covers only enrollees in HMO plans; in FY05 OPM will develop an appropriate and feasible health outcome measure covering all FEHBP enrollees).

Explanation:Data source: NCQA HEDIS data (measures the percentage of members 18 through 75 who were discharged for acute myocardial infarction, coronary artery bypass graft, or percutaneous transluminal coronary angioplasty and had evidence of LDL-C screening)

Measure: Improper Payment Rate

Explanation:(HRPS)

Measure: % of new hires who say FEHB Program health benefits are competitive, a fair value, and important in their decision to accept a job with the Federal Government.

Explanation:Data source: Federal Benefits Survey (SHRP)

Measure: % of employees who say FEHB Program health benefits are competitive, a fair value, and important in their decision to remain in the Federal Government.

Explanation:Data source: Federal Benefits Survey (SHRP)

Measure: Timely claim processing: FEHB Program carriers' medical claims processing timeliness versus industry standard of 95% or more within 30 working days.

Explanation:% of claims adjudicated (denied, paid or request for additional info) within 30 working days. (HRPS)

Measure: Claims Processing Accuracy: FEHB Program carriers' medical claims processing accuracy versus industry standard of 95% or more.

Explanation:(HRPS)

Is the program purpose clear?

Explanation: The FEHB Program was created by the Federal Employees Health Benefits Act of 1959 (P.L. 86-382) to make hospital and major medical health insurance available to active Federal employees and their families. The purpose of the FEHB Program is to provide Federal employees, retirees and their families with health benefits coverage meeting their individual health needs as well as the Federal Government's recruitment and retention needs. Coverage is provided for major medical, hospital and catastrophic care to protect Federal enrollees and their families in the event of illness or injury. The FEHB Act prescribes, in general, the types of benefits to be provided under various plans. It authorizes the Office of Personnel Management (OPM) to contract with qualified carriers to provide the benefits without regard to competitive bidding, subject to any limitations or exclusions considered necessary or desirable. It also authorizes OPM to prescribe, through regulation, the manner and conditions under which employees will be eligible to enroll in plans under the program. The FEHB law is codified in chapter 89 of title 5, U.S. Code.

Evidence: The Federal Employees Health Benefits Act of 1959 (P.L. 86-382), codified in Chapter 89 of Title 5, U. S. Code, created the FEHB Program and prescribes, in general, the types of benefits to be provided under various plans, authorizes OPM to contract with qualified carriers to provide these benefits, and to prescribe, through regulation, the manner and conditions under which employees will be eligible to enroll in plans under the program. The Report of the Committee on Post Office and Civil Service, July 2, 1959, indicates that it was the intent of the Congress that the FEHB Program be comparable with health insurance benefits offered by other large employers. Excerpts from the Report are as follows: 'Principles related to Government as an employer' As an employer concerned with attracting and retaining the services of competent personnel, the Federal Government should offer employee-benefit programs comparable to those of other large employers."

Does the program address a specific and existing problem, interest or need?

Explanation: The Program was designed to provide enrollees with health benefits coverage meeting their individual health needs as well as the Federal Government's recruitment and retention needs. For instance, the FEHB law requires basic medical and hospital insurance. Other major benefits - maternity, emergency care, prescription drugs, and mental health and substance abuse, are also offered. Also, all enrollees (active employees, retirees under age 65, and Medicare eligibles) have the same health plan choices, and level and scope of benefits. The Program offers a broad range of competing plan designs and delivery systems so that enrollees can choose the coverage that best meets their needs. Over the years, many plans have refashioned their Standard Option package to meet market demands. Consumer driven options have become available in the last two years, and High Deductible Health Plans, and Health Savings Accounts will be offered in 2005.

Evidence: The FEHB Program provides health benefits to an employee group that is the largest among all employers in the nation. At the end of FY 2003, enrollment was 4.1 million, or about 86% of the eligible population ' 2.2 million enrollees are active employees and 1.9 million are annuitants. Including dependents, the Program covers approximately 8.5 million individuals. Enrollment in the Program has remained relatively constant since 1998. In terms of meeting the Federal Government's recruitment and retention needs, there are several data sources showing the prevalence and importance of health insurance benefits offerings for employers. MEPS 2002 data show that the percent of all private sector employees who work where health insurance is offered is 88.3%; the % of eligible employees who enroll is 81%. In an October 2003 National Federation of Independent Business survey of private sector employees, 80% of the employees said health insurance is a major factor in their decision to accept or keep a job.

Is the program designed so that it is not redundant or duplicative of any other Federal, state, local or private effort?

Explanation: The FEHBP is not generally redundant or duplicative of other Federal, state, local or private effort. It is the only employer-sponsored health benefits program for Federal employees. The Program addresses potential duplicative coverage administratively, as carriers are required by contract and regulation to coordinate the payment of benefits with other group health benefits, and the payment of medical and hospital costs under no-fault or other automobile insurance that pays benefits without regard to fault (the most common instances of duplicative coverage are spouse coverage, other group coverage, TriCare and CHAMPVA, Medicaid, Medicare, and No-Fault coverage). Benefits coordination with Medicare is facilitated by data matching that identifies enrollees with Medicare to ensure that claims are paid correctly. Also, OPM allows retired and former spouse enrollees to suspend FEHB coverage to enroll, if eligible, in a Medicare HMO, Medicaid, TriCare, or CHAMPVA; eliminating the FEHB premium. Generally, the individual may later re-enroll in the FEHB Program. However, one area of concern is the duplication of benefits for a segment of the FEHBP population--Medicare-eligible individuals--which comprise roughly 20% of FEHBP participants. The duplication of FEHBP and Medicare coverage is believed to increase the government's overall expenditures for medical care. The duplication of these benefits should be evaluated to ensure that the program is able to balance the interest of the employees with that of the government.

Evidence: For information on how the FEHB Program addresses potential duplicative coverage administratively, see FEHB plan health benefits brochures 'Section 9, Coordinating Benefits With Other Coverages and FEHB carrier contracts ' Appendix D.

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: The financing of post-retirement health benefit costs for civilian employees are currently funded on a pay-as-you-go basis. In 2003, the ratio of active employees to retirees in the FEHBP was 1.19; in the next two decades the size of the FEHBP retiree population will outpace the size of the active workforce. The Administration has proposed legislation to require agencies to amortize the cost of post-retirement health benefits as they are earned.

Evidence: Managerial Flexibility Act of 2001; FY03 budget

Is the program effectively targeted, so that resources will reach intended beneficiaries and/or otherwise address the program's purpose directly?

Explanation: The FEHB law and regulations set eligibility requirements for enrollment in the Program that Federal agencies must follow. Enrollees generally sign up through their HR office, and agencies verify the validity of the enrollment. Carriers and agencies participate in an OPM-led systemized reconciliation effort (the Centralized Enrollment Reconciliation Clearinghouse) to make sure that enrollments are accurate and up-to-date. FEHB provides immediate coverage to all eligible Federal employees who choose to enroll - including those who would not be covered by private sector insurers because they represent a high risk. Enrollees continue to be covered into retirement. A few eligible groups are not current Federal employees. Most often, these groups once were Federal employees who were allowed to keep coverage when their agency's coverage status changed. FEHB is part of the benefits package described to prospective employees in OPM's USAJOBS web site. Coverage information is provided to new employees and annually by agencies and carriers during open season, and is also available year round on the OPM and carrier web sites.

Evidence: USAJOBS web site. (Federal Employment Benefits page is at www.usajobs.opm.gov/ei61.asp. OPM's benefits survey. The FEHB web site (www.opm.gov/insure/health) has the FEHB Open Season Guides, all FEHB plan brochures (current and past), the FEHB Handbook, forms, Frequently Asked Questions, laws and regulations, and links to other related sites, such as the Long-Term Care page.

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: OPM has established long-term measures that assess the FEHB's purpose to provide Federal employees, retirees and their families with health benefits coverage meeting their individual health needs as well as the Federal Government's recruitment and retention needs.

Evidence: See measures tab.

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: OPM has targets and timeframes for its long-term measures; however they must also be ambitous. Several of the targets will be revised with new collection activities.

Evidence: See measures tab for targets and timeframes.

Does the program have a limited number of specific annual performance measures that can demonstrate progress toward achieving the program's long-term goals?

Explanation: OPM has established annual measures to demonstrate progress toward achieving the FEHB's long-term goals of providing Federal employees, retirees and their families with health benefits coverage meeting their individual health needs as well as the Federal Government's recruitment and retention needs.

Evidence: See measures tab.

Does the program have baselines and ambitious targets for its annual measures?

Explanation: OPM has baselines and ambitious targets for its annual FEHB Program measures.

Evidence: See measures tab for targets and timeframes.

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) commit to and work toward the annual and/or long-term goals of the program?

Explanation: OPM's primary partners in the FEHB Program are the participating health carriers. All such partners are held accountable through contractual requirements to meet performance standards OPM has set. Carriers applying for program participation are not subject to competitive bidding, but must meet financial and other participation standards required by law and regulation. Contracts contain performance clauses outlined in regulation, on which the carriers' negotiated service charge is based. Carriers also must meet quality assurance standards as specified by contract and administrative policies. Carrier accreditation status and performance in claims processing timeliness and accuracy directly impact our long term indicators, including customer satisfaction, improper payment rates, and percent of accredited FEHB plans and enrollees in those plans. Federal agencies also are OPM's partners, since they perform some of the Program's administrative tasks ' handling enrollments, changes in enrollments, answering enrollee questions, and providing them information. OPM maintains on-going relationships with the agencies to ensure that they carry out these tasks in support of the Program's annual and long-term goals. For example, Agency Benefits Officers partner with OPM in education efforts to increase employees' knowledge of the various health insurance options available through the Program. Agencies conduct open season fairs for their employees where information is provided about health benefits and the various health plans from which to choose. OPM provides annual training on the FEHB Program and conducts quarterly meetings to the Agency Benefits Officers who in turn educate their employees.

Evidence: OPM's contracts with health benefit carriers, including Section 1.9 on Quality Assurance requirements. Service charge regulatory provisions-48 CFR Ch 16, Subpart 1615.902 and 1615.905. FEHBAR.

Are independent evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: In FY 2005 OPM will issue a Request for Information (RFI) to the academic community to solicit information on how to best design independent evaluations to assess the performance of each of OPM's benefits programs, including FEHB, against the program purposes. OPM then will contract with a third party to conduct such evaluations.While there have been no independent program evaluations of sufficient scope conducted, Program has been evaluated from a number of perspectives in recent years by the Government Accountability Office as part of their oversight assistance to Congress, including cost and premiums, preventing and detecting fraud and abuse, and pharmaceutical benefits. Other evaluations addressing quality and service issues of the FEHB are conducted by FEHB carriers, other Federal agencies, (Dept of Health and Human Services), nonprofits (National Committee for Quality Assurance), and private contractors (annual Consumer Assessment of Health Plans Survey). OPM's Inspector General (IG) regularly audits carrier business practices and charges to the Program, and reports its findings to the OPM Director and Congress in its Semi-Annual Reports. The IG, contracting with KPMG, reviews the FEHB's internal controls and trust fund financial management every year during audits of OPM's annual Financial Statements. OPM's Quality Assurance Group also evaluates the FEHB periodically, including such topics as contract administration, the disputed claims function, and sharing of data with other Federal agencies.

Evidence: OPM will submit a program evaluation plan for the benefits programs, including FEHB, in FY 2005 Q1. Also, see "GAO Audits Health Insurance Premium Conversion," GAO-04-168R October 20, 2003; "Federal Employees' Health Benefits: Effects of Using Pharmacy Benefit Managers on Health Plans, Enrollees, and Pharmacies," GAO-03-196 January 10, 2003; "Federal Employees' Health Plans: Premium Growth and OPM's Role in Negotiating Benefits," GAO-03-236 December 31, 2002; "Office of Personnel Management: Health Insurance Premium Conversion," OGC-00-53 August 7, 2000; "Federal Health Care: Comments on H.R. 4401, the Health Care Infrastructure Investment Act of 2000", T-AIMD-00-240 July 11, 2000; "Federal Employees' Health Program: Reasons Why HMOs Withdrew in 1999 and 2000," GGD-00-100 May 2, 2000; "Pharmacy Benefit Managers: FEHBP Plans Satisfied with Savings and Services, but Retail Pharmacies Have Concerns," HEHS-97-47 February 21, 1997; "Blue Cross and Blue Shield: Change in Pharmacy Benefits Affects Federal Enrollees," T-HEHS-96-206 September 5, 1996; "Blue Cross FEHBP Pharmacy Benefits," HEHS- 96-182R July 19, 1996; "Long-Term Care: Support For Elder Care Could Benefit the Government Workplace and the Elderly," HEHS-94-64 March 4, 1994; "Federal Health Benefits Program: Analysis of Contingency and Special Reserves," GGD-93- 26 December 4, 1992. GGD-92-122BR July 8, 1992; "Federal Health Benefits Program: Stronger Controls Needed to Reduce Administrative Costs," T-GGD-92-20 March 11, 1992; "Fraud and Abuse: Stronger Controls Needed in Federal Employees Health Benefits Program," GGD-91-95 July 16, 1991.

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: Future OPM budget requesst should be improved to better link resources with the accomplishment of the program's long-term and annual goals.

Evidence:  

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: OPM has revised its performance measurement strategy, including new performance indicators that better address the FEHB Program purpose. To collect data for these long term measures, OPM implemented a survey of new and existing employees (Federal Benefits Survey). Also, OPM is contracting for a benckmarking study to assess how OPM's benefits programs, including health insurance, compare with those benefits offered by private sector employers. OPM also will issue an RFI to the academic community to solicit information on how to best design independent evaluations to assess the performance of each of OPM's benefits programs, including FEHB, against the program purposes. OPM then will contract with a third party to conduct such evaluations.

Evidence: See: Measures tab, Federal Benefits Survey, and Benchmarking SOW.

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: OPM collects performance data related to long-term and annual measures to manage the program and improve performance. The Program's key partners are the health insurance carriers--the FEHB has over 200 health plan choices for the delivery of health benefits services. OPM collects financial and performance data from participating health plans including claims processing timeliness and accuracy data (see measures tab for baseline and target data for these indicators). Program managers use this data to assess health plan performance, monitor and prevent fraud and abuse, and improve contract management. Through the Consumer Assessment of Health Plan Surveys (CAHPS), OPM gauges members' satisfaction with their health plans, and communicates this information to enrollees via the OPM Web Site and other materials. On a broader level, every agency is an FEHB Program partner--our Program cannot be operated without their active cooperation and assistance. We have extensive programs to ensure that we work together with employing agencies to achieve both short- and long- term goals. OPM provides training annually and also conducts quarterly meetings with Agency Benefits Officers to keep them up to date on current issues. Agencies then conduct health fairs and other education & information sessions for their employees based on OPM's training and information. The impact of OPM's work with agencies can be seen in the improvement of indicators such as enrollee satisfaction with health insurance benefits and the percentage of new hires/ employees who say FEHB Program health benefits are competitive, a fair value, and important in their decision to accept a job or remain in the Federal Government.

Evidence: OPM collects and analyzes information from the following organizations to determine annual performance measurements on accreditation--National Committee for Quality Assurance (NCQA); URAC formerly known as American Accreditation Healthcare Commission, Inc ; Joint Commission on the Accreditation of Healthcare Organizations (JCAHO); Accreditation Association for Ambulatory Health Care, Inc. (AAAHC). OPM collects and analyzes information from the Consumer Assessment of Health Plans Surveys to determine annual performance measurements on customer satisfaction among FEHBP Plans. See Section 1.9 of contracts: Quality Assurance Reports and Fraud and Abuse Reports. Carrier Patient Safety information.

Are Federal managers and program partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) held accountable for cost, schedule and performance results?

Explanation: OPM has a quarterly reporting system that holds managers accountable for spending, schedule and performance. Managers must report planned versus actual data for financial and performance information. Executives' and managers' performance plans are aligned with the agency's strategic goals and objectives and their performance appraisals provide consequences for not meeting OPM's goals and objectives. In terms of program partners, OPM has performance standards in carrier contracts and bases its contractors' service charge on contractor performance (including data for the indicators claims processing timeliness and accuracy). Health plans must submit annual financial information as a requirement of participation in the FEHB. OPM requires that health plans submit annual Quality Assurance Reports to address customer service and contract compliance issues, semi-annual Fraud and Abuse Reports, debarrment/suspension reports, annual customer satisfaction surveys, annual data on clinical quality of care, and paid claims reports. In terms of Agency partners, OPM has implemented an electronic system to hold both health plans and Agencies accountable for accurate enrollment records. The FEHB Electronic Enrollment Reconciliation Clearinghouse (CLER) is a quarterly electronic computer match of data submitted by individual Federal Agency payroll offices and FEHB health benefits carriers. The computer match identifies discrepancies, which are reported back to the individual Agency payroll offices. The employing Agencies are then to resolve the discrepancies and give the carriers whatever corrective data the carriers need to amend their records. Using CLER, OPM can monitor the error rate for each Agency payroll office, and bring higher error rates to the attention of the affected Agencies. CLER permits reconciliation of the carrier's records so that eventually the premiums the carriers actually receive will be close to what they anticipate receiving.

Evidence: Quarterly Financial and Performance Reports. Performance appraisals. Performance standards in health insurance carrier contracts. Section 1.9 of health plan contracts: QA and F&A Reports, HEDIS, and CAHPS. See Carrier Letter on annual Routine Reporting Requirements.

Are funds (Federal and partners') obligated in a timely manner and spent for the intended purpose?

Explanation: OPM's Trust Fund Accounting System is a transaction driven system that permits both budgetary and proprietary accounts to be recorded in a timely manner. Contractors draw on letter of credit accounts (LOC) at Treasury to pay claims and administrative expenses. The system, which became effective January 1, 1989, gives OPM financial stewardship of the Health Benefit Fund and ensures that OPM's accounting is more accurate and timely. Instead of making large premium payments directly to carriers, the LOC methodology makes funds available to carriers for draw down based on their expenses incurred.

Evidence: Health insurance carrier contracts require timeliness in claims processing (see Section 1.9 of carrier contracts: 95% of claims must be adjudicated within 30 working days.) Periodic OPM IG audits and annual independent financial audits serve to verify that funds are spent for the intended purpose. OPM's IG and FEHB program offices work both independently and collaboratively to investigate allegations of fraud, waste and abuse and take corrective action where necessary.

Does the program have procedures (e.g. competitive sourcing/cost comparisons, IT improvements, appropriate incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: The FEHB Program has a number of performance measures and targets set out in carrier contracts, such as claims processing accuracy, call answer timeliness, and claims processing timeliness, that assess the efficiency and cost effectiveness of FEHB carriers and the FEHB Program. In addition, OPM pays a service charge to experienced-rated carriers that awards them a payment above and beyond claims and administrative expenses based on specified criteria (Contractor Performance and Contract Cost Risk) as spelled out in their contracts.

Evidence: See carrier contracts and QA Reports. See service charge computation formulas.

Does the program collaborate and coordinate effectively with related programs?

Explanation: As required by contract with OPM, carriers are obligated to follow standard coordination of benefit (COB) rules established by the National Association of Insurance Commissioners (NAIC) in order to make sure that payments to providers and customers do not duplicate payments of other health benefits coverages the member may have. OPM's contracts contain COB provisions, and well as subrogation clauses. Carrier performance in this area is subject to IG audit. OPM allows retired and former spouse enrollees to suspend FEHB coverage to enroll in any one of the following programs if eligible, thus eliminating the FEHB premium: a Medicare HMO, Medicaid, TriCare, or CHAMPVA. OPM does not contribute to any applicable premiums. If the individual later wants to re-enroll in the FEHB Program, generally they may do so only at the next Open Season unless they have involuntarily lost the other coverage. The most common instances where OPM coordinates with other programs are the following: 1) TriCare and CHAMPVA. FEHB carriers coordinate TriCare /CHAMPVA benefits according to their statutes. TRICARE is the health care program for eligible dependents of military persons and retirees of the military. TRICARE includes the CHAMPUS program. CHAMPVA provides health coverage to disabled Veterans and their eligible dependents. When TRICARE or CHAMPVA and FEHB cover the enrollee, FEHB pays first. 2) Medicaid. When the enrollee has Medicaid and FEHB, FEHB pays first, according to the Medicaid statute. 3) Medicare. Retirees are eligible for Medicare at age 65. FEHB carriers coordinate with Medicare according to Medicare statute and Medicare makes the final determination regarding who is primary. The most common situation is when the enrollee or spouse is age 65 or over and has Medicare. Generally, in that case, if the person is an active Federal employee, FEHB pays first and, if retired, Medicare pays first. Of course, there are other situations. The full range of Medicare's rules for coordinating benefits is laid out in enrollees' FEHB plan brochures. To facilitate benefits coordination with Medicare, OPM and carriers work closely with Medicare, including through an OPM-Medicare data matching agreement whereby enrollees with Medicare are identified so that Medicare and FEHB claims payment systems will be set up to pay claims correctly. 4) Spouse coverage. Benefits of enrollees (whether active employees or retirees) with coverage both through FEHB and through a spouse's private sector employer are coordinated according to the NAIC Guidelines (National Association of Insurance Commissioners) as provided in the FEHB carriers' contracts. The NAIC guidelines are used by all group health plans in the country. Generally speaking, an enrollee's own coverage is primary to coverage through a spouse. (The NAIC Guidelines are appended to the FEHB Carrier contracts with OPM.) 5) Other group coverage. Benefits of enrollees who have other of their own, such as coverage as a retiree from private employment, are coordinated according to the NAIC Guidelines, described above. Generally speaking, the plan that covers a person as a current employee pays first before the plan that covers the person as a retiree. 6) No-Fault coverage. FEHB Carriers coordinate the payment of medical and hospital costs under no-fault or other automobile insurance that pays benefits without regard to fault according to the NAIC Guidelines.

Evidence: As cited in item 1.5 above, FEHB collaborates wtih related programs to ensure that benefits are effectively targeted and reach the intended beneficiaries: the erroneous payment rate for the FEHBP in FY 2003 was extremely low '0.09% ($28.2 million) out of total payments of over $31.5 billion. OPM has had a long standing computer match with SSA to provide information on Medicare enrollments for the purpose of obtaining accurate pricing for FEHBP rate-setting. OPM has developed a new computer matching agreement with the Center for Medicare and Medicaid Services that routinely matches both agencies' enrollment records and carrier identification records to better assure the proper coordination of benefits and payment of claims.

Does the program use strong financial management practices?

Explanation: The FEHB trust funds are audited annually by an independent auditing firm, KPMG, as a component of the OPM financial statements review, including internal controls. In addition, OPM's IG reviews FEHB carrier claims payments, administrative expenses and controls on a scheduled basis.

Evidence: Since 1998, the KPMG auditors have issued unqualified audit opinions on the health benefits trust funds. The auditors have continually reported no material internal control weaknesses.

Has the program taken meaningful steps to address its management deficiencies?

Explanation: OPM has a system for identifying and correcting program management deficiencies. OPM adheres to the requirements of the Federal Managers Financial Integrity Act, and assesses annually internal controls and identifies any material weaknesses related to its benefit programs, including the FEHB program. No material weaknesses have been identified through the internal review in this area. OPM has processes in place to make sure that the terms of contracts with carriers are being adhered to and to mitigate failure by bringing needed corrective action(s) to managers' attention. This is accomplished through standard contract administration and through changes to the contract to take corrective action. For example, OPM changed its 2005 contracts to increase oversight of carrier's PBM arrangements. Additionally, the agency receives a list each year from our Inspector General of the top management challenges facing OPM. The IG issued a management challenge in the 2004 PAR to the FEHBP for "determining and implementing the program changes that allow for maximizing resources and obtaining the flexibilities that produce the most cost beneficial benefits package to a population that is aging overall.' As OPM continues to review the legislation and regulations governing the FEHB Program, and undergoes the annual contracting process, it is considering avenues to address this issue.

Evidence: See FY 2004 PAR, Financial Statements, IG management challenge.

Has the program demonstrated adequate progress in achieving its long-term performance goals?

Explanation: OPM is assessing whether the FEHB Program is meeting its long-term goal of providing Federal employees, retirees, and their families with health benefits coverage meeting their individual health needs as well as the Federal Government's recruitment and retention needs as follows: a) A survey of new and career employees (Federal Benefits Survey--conducted in Q1 FY 2005) to measure their perception of the extent to which health insurance benefits are competitive, a fair value, and important in their decision to accept a job with/remain in the Federal Government. b) OPM is contracting for a benckmarking study to assess how OPM's benefits programs, including health insurance, compare with those benefits offered by private sector employers. OPM also will issue an RFI during FY 2005 to the academic community to solicit information on how to best design independent evaluations to assess the performance of each of OPM's benefits programs, including FEHB, against the program purposes. OPM then will contract with a third party to conduct such evaluations. c) OPM is focusing on the quality of health plan choice and the integration of comprehensive health plan offerings, such as consumer driven health plans and high deductible health plans.

Evidence: See: The "Measures" tab, Benefits Survey, study design and timeline, and FY2004 PAR. Eighty-six percent of our eligible population is covered by the program. OPM continues to keep premium increases lower than the national average while at the same time incurring little if any decrease in health care benefits. The administrative expenses paid to the carriers are low, calculated for percentage of income and for percentage of premiums per enrollee. A profit factor is calculated based on customer service and plan performance. The disputed claims are handled in a timely and efficient manner as well as timeliness on correspondence.

Does the program (including program partners) achieve its annual performance goals?

Explanation: OPM's annual Performance and Accountability report continues to validate that the annual goals set for the FEHB Program have been achieved.

Evidence: See FY2004 PAR.

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program goals each year?

Explanation: As OPM's evidence shows, the FEHB Program has demonstrated improved efficiency and cost effectiveness over the last several years .

Evidence: See QA Reports from carriers; Annual PARs; Annual CBJ/PB's.

Does the performance of this program compare favorably to other programs, including government, private, etc., with similar purpose and goals?

Explanation: As part of OPM's Research and Evaluation Plan implemented in FY2004, OPM is contracting for a benckmarking study to assess how OPM's benefits programs, including health insurance, compare with those benefits offered by private sector employers. OPM also will issue an RFI during FY 2005 to the academic community to solicit information on how to best design independent evaluations to assess the performance of each of OPM's benefits programs, including FEHB, against the program purposes. OPM then will contract with a third party to conduct such evaluations.

Evidence: See Benchmarking SOW. OPM will submit a program evaluation plan for the benefits programs, including FEHB, in FY 2005 Q1.

Do independent evaluations of sufficient scope and quality indicate that the program is effective and achieving results?

Explanation: During FY 2005 to the academic community to solicit information on how to best design independent evaluations to assess the performance of each of OPM's benefits programs, including FEHB, against the program purposes. OPM then will contract with a third party to conduct such evaluations.

Evidence: Independent Program Evaluation Plan