OPM gives health insurance carriers new acquisition rules

But now, those providers often take on larger contracts. "Because of the impact of these costs on the FEHB program, we are expanding our oversight in this area," said OPM.
Contracts between providers and carriers now will be governed by the FEHB Acquisition Regulation, which sets audit requirements and determines what information carriers must give to OPM, such as costs and the reason providers are selected. The FEHB Acquisition Regulation supplements the Federal Acquisition Regulation, which sets rules for government contracting.
When OPM first proposed this rule in August 2003, an unnamed association that represents fee-for-service health plans complained that the requirement forced them to abide by the Federal Acquisition Regulation, which it said should only be applied to federal agencies. OPM said it disagreed.
In another section of the new regulations, OPM said it would not add cost accounting requirements for carriers.
The American Federation of Government Employees has backed such requirements. Jacque Simon, director of the AFGE's public policy department, said the fact that OPM does not require cost accounting standards to be applied to contracts in the FEHB program will lead to overpayments for health insurance by taxpayers and federal employees.
Without accounting standards, Simon said health insurance carriers can charge federal employees for costs that are not directly related to health care, such as corporate retreats.
Cost accounting standards, which are required by the FAR except in certain circumstances, specify how contractor costs must be calculated. FAR allows agencies to waive cost accounting standard requirements when they deem it necessary.
"We determined that there are sufficient reasons and granted waivers for certain health plans under the FEHB program," OPM said in the Federal Register.
OPM added that the FEHB Acquisition Regulation requires carriers to file annual financial statements and submit to audits from OPM's Inspector General's office. Moreover, it said that "because OPM has contracted with carriers for 20 to 40 years, it has been able to collect extensive data on each carrier, thus making disclosure statements superfluous."
The regulations already in place, OPM said, are sufficient and "much less burdensome" than cost accounting standards.
"It is nonsense to say that OPM has adequate safeguards in place without cost accounting standards ... The application of CAS is the kind of regulation that prevents Enron-style fraud -- allocating huge costs or losses from one business to another unrelated account," said Simon.
OMB said it was not involved in the rule and declined to comment. OPM could not immediately provide a comment.

OMB officials seek repeal of anti-outsourcing laws

The Bush administration is pressing lawmakers to repeal laws aimed at curtailing the possible outsourcing of federal jobs.
In recent years, Congress has peppered various appropriations bills with provisions to shield jobs at the Veterans Affairs, Homeland Security, Commerce, Agriculture and other departments from possible outsourcing.
But administration officials at the Office of Management and Budget, who have steadily pressed agencies to open up thousands of jobs to contractor competition, are fighting back.
“A-76 helps improve performance,” OMB procurement policy chief David Safavian said in a May 27 interview, referring to OMB Circular A-76, the government’s process for pitting federal employees against contractors for federal work.
“We want to see the A-76 concept used in every corner of the federal government to address commercial functions.”
VA, for example, told OMB it can save $1 billion over five years if the Veterans Health Administration is allowed to hold competitions on its 52,000 commercial jobs — jobs that could be done by the private sector, Safavian said.
Jobs such as lawn maintenance, pest control, laundry services and food services are clearly commercial jobs and should be competed, he said.
“Does it make sense to insulate all of these federal employees from competition? We don’t think so,” he said. “We think it makes good sense to allow competitions to see where the best values are.”
VA would be able to use the $1 billion savings from competing these 52,000 jobs to improve health care for veterans, he said.
Safavian also cited a provision in Homeland Security’s 2005 appropriations bill that prohibits it from using funds to compete positions of immigration information officers. He said immigrants have to wait in long lines at immigration offices because the immigration information officers have not changed the way they do business for years. He said competition could force the department to come up with better ways to do its business.
There are more than 1,000 immigration information officers working in district offices and service centers across the country. They provide information about immigration and nationality law and help people with information needed to complete required forms and explain procedures.
As OMB presses lawmakers to repeal those laws, unions are lobbying them to expand the limits they’ve placed on job competitions.
The Homeland Security provision, for example, will protect the jobs of its immigration information officers because they are important in the fight against terrorism, said John Threlkeld, an official with the American Federation of Government Employees.
The provision got overwhelming bipartisan support last year.
“Why OMB wants to re-fight this whole war is a mystery,” Threlkeld said. “But it just shows how determined they are to help their contractor constituents.”

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