48 C.F.R. § 1632.170

1632.170 Recurring premium payments to carriers.

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(a)(1) Recurring payments to carriers of community-rated plans. OPM will pay to carriers of community-rated plans the premium payments received for the plan less the amounts credited to the contingency and administrative reserves, amounts assessed under paragraph (a)(2) of this section, and amounts due for other contractual obligations. Premium payments will be due and payable not later than 30 days after receipt by the Federal Employees Health Benefits (FEHB) Fund.

(2) The difference between one percent and the performance based percentage of the contract price described at 1615.404-4 will be multiplied by the carrier's subscription income for the year of performance and the resulting amount (performance adjustment) will be withheld from the net-to-carrier premium disbursement during the first quarter of the following contract period unless an alternative payment arrangement is made with the carrier's Contracting Officer. Amounts withheld from a community rated plan's premium disbursement will be deposited into the plan's Contingency Reserve.

(3) Any subsidization penalty levied against a community rated plan as outlined in 48 CFR 1615.402(c)(3)(ii)(B) must be paid within 60 days from notification. If payment is not received within the 60 day period, OPM will withhold from the community rated carriers the periodic premium payment payable until fully recovered. OPM will deposit the withheld funds in the subsidization penalty reserve described in 5 CFR 890.503(c)(6).

(b)(1) Recurring payments to carriers of experience-rated plans. OPM will make payments on a letter of credit (LOC) basis. Premium payments received for the plan, less the amounts credited to the contingency and administrative reserves and amounts for other obligations due under the contract, will be made available for carrier drawdown not later than 30 days after receipt by the FEHB Fund.

(2) Withdrawals from the LOC account will be made on a checks-presented basis. Under a checks-presented basis, drawdown on the LOC is delayed until the checks issued for FEHB Program disbursements are presented to the carrier's bank for payment.

(3) OPM may grant a waiver of the restriction of LOC disbursements to a checks-presented basis if the carrier requests the waiver in writing and demonstrates to OPM's satisfaction that the checks-presented basis of LOC disbursements will result in significantly increased liability under the contract, or that the checks-presented basis of LOC disbursements is otherwise clearly and significantly detrimental to the operation of the plan. Payments to carriers that have been granted a waiver may be made by an alternative payment methodology, subject to OPM approval.

[57 FR 14360, Apr. 20, 1992, as amended at 63 FR 55338, Oct. 15, 1998; 64 FR 36272, July 6, 1999; 65 FR 36386, June 8, 2000; 70 FR 31382, June 1, 2005; 76 FR 38286, June 29, 2011; 80 FR 37180, June 30, 2015]

Notes of Decisions

Cited in 8 cases (2 in the last 5 years), 1995–2024 · leading case: Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677 (2006).

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Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677 (2006). · cites it 2× “; see also 48 CFR § 1632.170 (b) (2005). The contract between OPM and the BCBSA provides: "By enrolling or accepting services under this contract, [enrollees and their eligible dependents] are obligated to all terms, conditions, and provisions of this contract.”

In Re Consol. Hosp. Surcharge Appeals of GILLETTE Child.’S SPECIALTY HEALTHCARE, St. Luke’s Hosp., North Mem'l Health Care, HealthEast Care Sys., Park Nicollet Health Servs., Fairview Health Servs., & Child.’s Hospitals & Clinics of Minnesota, 883 N.W.2d 778 (Minn. 2016). · cites it 3× “48 C.F.R. § 1632.170 (a). -Premiums'paid to experience-rated carriers, on the other- hand, are based on historical data of the actual expenses incurred by the carrier.”

Helfrich v. Blue Cross & Blue Shield Assoc, 804 F.3d 1090 (10th Cir. 2015). · cites it 2× “BCBSA, like other experience-rated carriers, draws from the Fund as necessary to pay for benefit claims and administrative expenses, see 48 C.F.R. § 1632.170 (b); id. § 1652.216-71(b), and the government pays a negotiated fee for its services, see id.”

St. Charles Surgical Hosp., L. L.C. v. La. Health Serv. & Indem. Co., 935 F.3d 352 (5th Cir. 2019). “§ 8909 (a) ; 48 C.F.R § 1632.170 (b) ). The funds are not owned by Blue Cross-OPM owns the funds, and OPM decides how to use any excess monies.”

Health Maint. Org. of New Jersey, Inc. v. Whitman, 72 F.3d 1123 (3rd Cir. 1995). · cites it 3× “§ 8909 (a)(1) (premium contributions to the Fund are available for all payments to approved health benefits plans); 48 C.F.R. § 1632.170 (a) (“OPM will pay to carriers of community-rated plans the premium payments received for the plan.”

Mentis El Paso, LLP v. Health Care Serv. Corp., 58 F. Supp. 3d 745 (W.D. Tex. 2014). “2007) (internal citation omitted) ("The government and the enrollees are responsible for the premiums and Blue Cross draws its funds directly from the Federal Employees Health Benefits Fund.”

Ray v. Blue Cross & Blue Shield Ass'n (N.D. Ill. 2023). “§ 8909 (a) and 48 CFR § 1632.170 (b) (2005)). Since the beginning, BCBSA has maintained a contract with OPM that provides healthcare to millions of federal employees (making BCBSA the largest federal healthcare carrier).”

Bryant v. Blue Cross Blue Shield (BCBS)-Fed. (S.D. Miss. 2024). “48 C.F.R. §§ 1632.170 (b), 1652.216-71(b).”

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