February 23, 2007Initial enrollments in the Federal Employees Dental and Vision Insurance Program late last year far exceeded expectations. Now the Office of Personnel Management is under pressure to leverage the popularity of the program to ensure participants are receiving the best products and services at the lowest cost.
When Congress passed legislation in 2004 authorizing the creation of FEDVIP, first year enrollments were projected to be about 200,000 for the dental program, with significantly lower numbers for vision. But interest far exceeded expectations, with more than 400,000 enrolling in the dental program and more than 300,000 signing up for vision benefits, according to the most recent OPM data.
The dental and vision benefits are not subsidized by the government, but employees can pay for them using pretax dollars. And OPM officials said they were able to use the massive number of federal employees to negotiate low rates for the program's first year.
Rep. Tom Davis, R-Va., ranking member of the House Oversight and Government Reform Committee, sent a letter to OPM Director Linda Springer last week, urging her to build on the agency's success in the initial enrollment period in future negotiations.
"Based on this unexpected response, I encourage you to identify ways that the federal government can leverage this large pool to ensure that participants are receiving the best dental and vision products and services at the lowest cost," Davis wrote.
OPM will begin negotiations for 2008 premiums on May 31 and wrap them up by Aug. 15. Because the program is only a year old, the agency faces some challenges in the discussions, said Nancy Kichak, associate director for strategic human resources policy at OPM.
"At this point, we really have no information on how the expenses the carriers are incurring compare to the premiums they're charging," Kichak said. "Anti-selection" is a potential problem, she noted. Because the program was well-publicized before its launch, many employees may have put off significant dental or vision care until after it started, driving costs up and in turn making it harder to argue for lower premiums in 2008.
But on the upside, Kichak said the program's high volume of enrollment may make anti-selection less of a problem in negotiations.
OPM experienced some technical problems during its open season enrollment period. The program's phone lines and its Web site, Benefeds.com, flooded with traffic, preventing some employees from getting through. These technical glitches caused OPM to extend its deadline twice, from Dec. 11 to Dec. 22.
"I know that most people tended to enroll at the end of the open season, so we had a huge drain on our enrollment portal," Kichak said.
OPM awarded 10 contracts to dental and vision benefit providers, selecting MetLife, GEHA, United Concordia, Aetna, GHI, CompBenefits, and Triple-S for dental coverage and Vision Services Plan, BCBS Vision and Spectera for vision.
Of the dental insurance, MetLife was by far the most popular, with more than 250,000 enrollees. BCBS took the lead for vision insurance with more than 198,000, according to OPM data.
David Marin, Republican staff director for the House Oversight and Government Reform Committee, said Rep. Davis plans to work with OPM to determine the administrative tools needed to ensure the best quality services and costs. He said discussions with OPM officials could yield legislation, but the issue is not a legislative priority.
Enrollments are not expected to be as high for 2008 as they were for the first season, even though history has shown that more employees sign up as more become educated about benefit programs, Kichak said. "My best guess is that people who wanted it are already enrolled in it," she said.
She also said OPM will be working on improving the delivery of services. The agency is hoping to establish an electronic transfer of data on dental payments between dental and health plans and flexible spending accounts, she said.
"This year, it's going to be a focus on improving the service," she said, "not changing the benefits."
February 23, 2007