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![handle is hein.gao/gaobaawoh0001 and id is 1 raw text is:
DOCUMEIFT RESUME
0'4827 - (B0245108]
Civil Service Should Aldit Kaiser Plazst Premium Rates Uair t'u
Federal Employees HeaA.9 Benefits Prcqram To Protect tho
Government. HRD-78-4 ; B'16456e. January 23, 1978. 17 pp. + 2
appendices (5 pp.).
Report to Alan K. Ca~pbell, Chairman, Civil Service Com,&4sion;
by Gregory J. Ahart, flirector, Human Resources Div.
Issue hrea: Health Programs (1200); Health Programs:
Reimbursement Policies and Utilization Controls (1208).
Contact: Human Resources Div.
Budget Function: Healt : _Health Care Services (551).
Organization Concerned: kai xE-Pezmanente Medical Care Program.
Conq:essional Relevance; House Committee on Post Office and
Civil Service; Senate Committee cm Governmental Affairs:
Civil Service and General Services Subcommittee.
Authority: Federal Etp.loyees Health BeDefits Act of 1959 (5
U.S.C. 8901).
The Federal kiiloyees Health Benefi s (FEHB) program
provided health insur-tnce coverage for 9.5 sillion p rticipvr,.s
in 1976 and 9.7 mill'on oarticipants in 1STi. The
Kaiser-Permanente XV.dka Care Program (Kaiser) is the largest
prepaid group pr-;tiqe 1rograv in the United States. The Federal
Employees H--..th Beneflts Act requires that rates charged under
healti -Vlans' contracts shajl reasonably reflect the cc t of
benefits provided. It is impotant that the Civil Service....
Commissioa (CSC) determine whether rates of the Kaiser Flans of
northern and southern California are reasonable since they are
u&ed to calculate the Government's contribution to the FEHB
proqram. Findings/Conclusions. CSC has made only limited audits
of the Kaiser plans and has not follohed up on these audits. One
reason that audits have not been comprehensive was that CSC
lacked criteria for evaluating reasonatleness of rates. Kaiser
plans are community-rated with precius rates based on the
projected health care experience of all groups expected to be
enrolled in the pldn, in contrast to cther plans which are based
only on the experience of Federal participants. The inclusion of
non-Federal groups makes it more difficult to determine whethe.
rates are reasonable for Federal employees. Some characteristics
of the Kaiser plans which require evalucticn for their impact on
the Federal rate are:, Kaiser may use excess revenues as
management sees it and increase premiums to recover losses,
rates are designed to, meet not only current health benefit costs
bul also long-term capitl needs, and the plans consistently
underestimated revenues that would be derived from proposed
premium rates. Recomendations: CSC should: develop criteria to
evaluate the reasonableness and equity of rates of
community-rated, comprehensive health plans like the Kaiser
plaus and comprehensively audit the California Kaiser plans to
detezmine whether their FEHB program rates reasonably reflect](ViewImageLocal?handle=hein.gao/gaobaawoh0001&div=1&collection=&method=preview&ext=.png&size=3)