
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 5USC8902]

 
             TITLE 5--GOVERNMENT ORGANIZATION AND EMPLOYEES
 
                           PART III--EMPLOYEES
 
                   Subpart G--Insurance and Annuities
 
                      CHAPTER 89--HEALTH INSURANCE
 
Sec. 8902. Contracting authority

    (a) The Office of Personnel Management may contract with qualified 
carriers offering plans described by section 8903 or 8903a of this 
title, without regard to section 5 of title 41 or other statute 
requiring competitive bidding. Each contract shall be for a uniform term 
of at least 1 year, but may be made automatically renewable from term to 
term in the absence of notice of termination by either party.
    (b) To be eligible as a carrier for the plan described by section 
8903(2) of this title, a company must be licensed to issue group health 
insurance in all the States and the District of Columbia.
    (c) A contract for a plan described by section 8903(1) or (2) of 
this title shall require the carrier--
        (1) to reinsure with other companies which elect to participate, 
    under an equitable formula based on the total amount of their group 
    health insurance benefit payments in the United States during the 
    latest year for which the information is available, to be determined 
    by the carrier and approved by the Office; or
        (2) to allocate its rights and obligations under the contract 
    among its affiliates which elect to participate, under an equitable 
    formula to be determined by the carrier and the affiliates and 
    approved by the Office.

    (d) Each contract under this chapter shall contain a detailed 
statement of benefits offered and shall include such maximums, 
limitations, exclusions, and other definitions of benefits as the Office 
considers necessary or desirable.
    (e) The Office may prescribe reasonable minimum standards for health 
benefits plans described by section 8903 or 8903a of this title and for 
carriers offering the plans. Approval of a plan may be withdrawn only 
after notice and opportunity for hearing to the carrier concerned 
without regard to subchapter II of chapter 5 and chapter 7 of this 
title. The Office may terminate the contract of a carrier effective at 
the end of the contract term, if the Office finds that at no time during 
the preceding two contract terms did the carrier have 300 or more 
employees and annuitants, exclusive of family members, enrolled in the 
plan.
    (f) A contract may not be made or a plan approved which excludes an 
individual because of race, sex, health status, or, at the time of the 
first opportunity to enroll, because of age.
    (g) A contract may not be made or a plan approved which does not 
offer to each employee, annuitant, family member, former spouse, or 
person having continued coverage under section 8905a of this title whose 
enrollment in the plan is ended, except by a cancellation of enrollment, 
a temporary extension of coverage during which he may exercise the 
option to convert, without evidence of good health, to a nongroup 
contract providing health benefits. An employee, annuitant, family 
member, former spouse, or person having continued coverage under section 
8905a of this title who exercises this option shall pay the full 
periodic charges of the nongroup contract.
    (h) The benefits and coverage made available under subsection (g) of 
this section are noncancelable by the carrier except for fraud, over-
insurance, or nonpayment of periodic charges.
    (i) Rates charged under health benefits plans described by section 
8903 or 8903a of this title shall reasonably and equitably reflect the 
cost of the benefits provided. Rates under health benefits plans 
described by section 8903(1) and (2) of this title shall be determined 
on a basis which, in the judgment of the Office, is consistent with the 
lowest schedule of basic rates generally charged for new group health 
benefit plans issued to large employers. The rates determined for the 
first contract term shall be continued for later contract terms, except 
that they may be readjusted for any later term, based on past experience 
and benefit adjustments under the later contract. Any readjustment in 
rates shall be made in advance of the contract term in which they will 
apply and on a basis which, in the judgment of the Office, is consistent 
with the general practice of carriers which issue group health benefit 
plans to large employers.
    (j) Each contract under this chapter shall require the carrier to 
agree to pay for or provide a health service or supply in an individual 
case if the Office finds that the employee, annuitant, family member, 
former spouse, or person having continued coverage under section 8905a 
of this title is entitled thereto under the terms of the contract.
    (k)(1) When a contract under this chapter requires payment or 
reimbursement for services which may be performed by a clinical 
psychologist, optometrist, nurse midwife, nursing school administered 
clinic, or nurse practitioner/clinical specialist, licensed or certified 
as such under Federal or State law, as applicable, or by a qualified 
clinical social worker as defined in section 8901(11), an employee, 
annuitant, family member, former spouse, or person having continued 
coverage under section 8905a of this title covered by the contract shall 
be free to select, and shall have direct access to, such a clinical 
psychologist, qualified clinical social worker, optometrist, nurse 
midwife, nursing school administered clinic, or nurse practitioner/nurse 
clinical specialist without supervision or referral by another health 
practitioner and shall be entitled under the contract to have payment or 
reimbursement made to him or on his behalf for the services performed.
    (2) Nothing in this subsection shall be considered to preclude a 
health benefits plan from providing direct access or direct payment or 
reimbursement to a provider in a health care practice or profession 
other than a practice or profession listed in paragraph (1), if such 
provider is licensed or certified as such under Federal or State law.
    (3) The provisions of this subsection shall not apply to 
comprehensive medical plans as described in section 8903(4) of this 
title.
    (l) The Office shall contract under this chapter for a plan 
described in section 8903(4) of this title with any qualified health 
maintenance carrier which offers such a plan. For the purpose of this 
subsection, ``qualified health maintenance carrier'' means any qualified 
carrier which is a qualified health maintenance organization within the 
meaning of section 1310(d)(1) \1\ of title XIII of the Public Health 
Service Act (42 U.S.C. 300c-9(d)).
---------------------------------------------------------------------------
    \1\ See References in Text note below.
---------------------------------------------------------------------------
    (m)(1) The terms of any contract under this chapter which relate to 
the nature, provision, or extent of coverage or benefits (including 
payments with respect to benefits) shall supersede and preempt any State 
or local law, or any regulation issued thereunder, which relates to 
health insurance or plans.
    (2)(A) Notwithstanding the provisions of paragraph (1) of this 
subsection, if a contract under this chapter provides for the provision 
of, the payment for, or the reimbursement of the cost of health services 
for the care and treatment of any particular health condition, the 
carrier shall provide, pay, or reimburse up to the limits of its 
contract for any such health service properly provided by any person 
licensed under State law to provide such service if such service is 
provided to an individual covered by such contract in a State where 25 
percent or more of the population is located in primary medical care 
manpower shortage areas designated pursuant to section 332 of the Public 
Health Service Act (42 U.S.C. 254e).
    (B) The provisions of subparagraph (A) shall not apply to contracts 
entered into providing prepayment plans described in section 8903(4) of 
this title.
    (n) A contract for a plan described by section 8903(1), (2), or (3), 
or section 8903a, shall require the carrier--
        (1) to implement hospitalization-cost-containment measures, such 
    as measures--
            (A) for verifying the medical necessity of any proposed 
        treatment or surgery;
            (B) for determining the feasibility or appropriateness of 
        providing services on an outpatient rather than on an inpatient 
        basis;
            (C) for determining the appropriate length of stay (through 
        concurrent review or otherwise) in cases involving inpatient 
        care; and
            (D) involving case management, if the circumstances so 
        warrant; and

        (2) to establish incentives to encourage compliance with 
    measures under paragraph (1).

    (o) A contract may not be made or a plan approved which includes 
coverage for any benefit, item, or service for which funds may not be 
used under the Assisted Suicide Funding Restriction Act of 1997.

(Pub. L. 89-554, Sept. 6, 1966, 80 Stat. 601; Pub. L. 93-246, Sec. 3, 
Jan. 31, 1974, 88 Stat. 4; Pub. L. 93-363, Sec. 1, July 30, 1974, 88 
Stat. 398; Pub. L. 94-183, Sec. 2(43), Dec. 31, 1975, 89 Stat. 1059; 
Pub. L. 94-460, title I, Sec. 110(b), Oct. 8, 1976, 90 Stat. 1952; Pub. 
L. 95-368, Sec. 1, Sept. 17, 1978, 92 Stat. 606; Pub. L. 95-454, title 
IX, Sec. 906(a)(2), (3), Oct. 13, 1978, 92 Stat. 1224; Pub. L. 96-179, 
Sec. 3, Jan. 2, 1980, 93 Stat. 1299; Pub. L. 98-615, Sec. 3(2), Nov. 8, 
1984, 98 Stat. 3203; Pub. L. 99-53, Sec. 2(a), June 17, 1985, 99 Stat. 
94; Pub. L. 99-251, title I, Secs. 105(b), 106(a)(3), Feb. 27, 1986, 100 
Stat. 15, 16; Pub. L. 100-202, Sec. 101(m) [title VI, Sec. 626], Dec. 
22, 1987, 101 Stat. 1329-390, 1329-430; Pub. L. 100-654, title II, 
Secs. 201(b), 202(a), Nov. 14, 1988, 102 Stat. 3845; Pub. L. 101-508, 
title VII, Sec. 7002(a), Nov. 5, 1990, 104 Stat. 1388-329; Pub. L. 101-
509, title IV, Sec. 1, Nov. 5, 1990, 104 Stat. 1421; Pub. L. 102-393, 
title V, Sec. 537(a), (b), Oct. 6, 1992, 106 Stat. 1765; Pub. L. 105-12, 
Sec. 9(g), Apr. 30, 1997, 111 Stat. 27; Pub. L. 105-266, Secs. 3(c), 8, 
Oct. 19, 1998, 112 Stat. 2366, 2370.)

                      Historical and Revision Notes
------------------------------------------------------------------------
                                                    Revised Statutes and
     Derivation                U.S. Code             Statutes at Large
------------------------------------------------------------------------
                     5 U.S.C. 3005.                Sept. 28, 1959, Pub.
                                                    L. 86-382, Sec.  6,
                                                    73 Stat. 712.
                     ............................  Mar. 17, 1964, Pub.
                                                    L. 88-284, Sec.
                                                    1(7)-(9), 78 Stat.
                                                    165.
------------------------------------------------------------------------

    Standard changes are made to conform with the definitions applicable 
and the style of this title as outlined in the preface to the report.

                       References in Text

    Section 1310(d)(1) of title XIII of the Public Health Service Act 
(42 U.S.C. 300c-9(d)), referred to in subsec. (l), probably is intended 
as a reference to section 300e-9(d) of Title 42, The Public Health and 
Welfare. Section 300e-9(d) of Title 42 was redesignated section 300e-
9(c) of Title 42 by Pub. L. 100-517, Sec. 7(b), Oct. 24, 1988, 102 Stat. 
2580.
    The Assisted Suicide Funding Restriction Act of 1997, referred to in 
subsec. (o), is Pub. L. 105-12, Apr. 30, 1997, 111 Stat. 23, which is 
classified principally to chapter 138 (Sec. 14401 et seq.) of Title 42, 
The Public Health and Welfare. For complete classification of this Act 
to the Code, see Short Title note set out under section 14401 of Title 
42 and Tables.

                          Codification

    Another section 1 of title IV of Pub. L. 101-509, 104 Stat. 1416, 
enacted sections 2701 to 2706 of Title 44, Public Printing and 
Documents, and provisions set out as a note under section 2102 of Title 
44.


                               Amendments

    1998--Subsec. (k)(2), (3). Pub. L. 105-266, Sec. 8, added par. (2) 
and redesignated former par. (2) as (3).
    Subsec. (m)(1). Pub. L. 105-266, Sec. 3(c), added par. (1) and 
struck out former par. (1) which read as follows: ``The provisions of 
any contract under this chapter which relate to the nature or extent of 
coverage or benefits (including payments with respect to benefits) shall 
supersede and preempt any State or local law, or any regulation issued 
thereunder, which relates to health insurance or plans to the extent 
that such law or regulation is inconsistent with such contractual 
provisions.''
    1997--Subsec. (o). Pub. L. 105-12 added subsec. (o).
    1992--Pub. L. 102-393 amended subsec. (k) generally. Prior to 
amendment, subsec. (k) read as follows:
    ``(1) When a contract under this chapter requires payment or 
reimbursement for services which may be performed by a clinical 
psychologist, optometrist, nurse midwife, or nurse practitioner/clinical 
specialist, licensed or certified as such under Federal or State law, as 
applicable, or by a qualified clinical social worker as defined in 
section 8901(11), an employee, annuitant, family member, former spouse, 
or person having continued coverage under section 8905a of this title 
covered by the contract shall be free to select, and shall have direct 
access to, such a clinical psychologist, qualified clinical social 
worker, optometrist, nurse midwife, or nurse practitioner/nurse clinical 
specialist without supervision or referral by another health 
practitioner and shall be entitled under the contract to have payment or 
reimbursement made to him or on his behalf for the services performed.
    ``(2) The provisions of this subsection shall not apply to group 
practice prepayment plans.''
    1990--Subsec. (k)(1). Pub. L. 101-509 substituted ``performed by a 
clinical psychologist, optometrist, nurse midwife, or nurse 
practitioner/clinical specialist'' for ``performed by a clinical 
psychologist or optometrist'' and ``qualified clinical social worker, 
optometrist, nurse midwife, or nurse practitioner/nurse clinical 
specialist'' for ``qualified clinical social worker or optometrist''.
    Subsec. (n). Pub. L. 101-508 added subsec. (n).
    1988--Subsecs. (g), (j), (k)(1). Pub. L. 100-654 substituted 
``former spouse, or person having continued coverage under section 8905a 
of this title'' for ``or former spouse'' wherever appearing.
    1987--Subsec. (k)(1). Pub. L. 100-202, Sec. 101(m) [title VI, 
Sec. 626(1), (2)], inserted ``or by a qualified clinical social worker 
as defined in section 8901(11),'' after ``as applicable,'', and ``, 
qualified clinical social worker'' after ``such a clinical 
psychologist''.
    Subsec. (k)(2), (3). Pub. L. 100-202, Sec. 101(m) [title VI, 
Sec. 626(3)], redesignated par. (3) as (2) and struck out former par. 
(2) which read as follows: ``When a contract under this chapter requires 
payment or reimbursement for services which may be performed by a 
qualified clinical social worker, an employee, annuitant, family member, 
or former spouse covered by the contract shall be entitled under the 
contract to have payment or reimbursement made to him or on his behalf 
for the services performed. As a condition for the payment or 
reimbursement, the contract--
        ``(A) may require that the services be performed pursuant to a 
    referral by a psychiatrist; but
        ``(B) may not require that the services be performed under the 
    supervision of a psychiatrist or other health practitioner.''
    Subsec. (m)(2)(A). Pub. L. 100-202, Sec. 101(m) [title VI, 
Sec. 626(4)], struck out ``This paragraph shall apply with respect to a 
qualified clinical social worker covered by subsection (k)(2) of this 
section without regard to whether such contract contains the requirement 
authorized by clause (i) of the second sentence of subparagraph (A) of 
such subsection (k)(2).''
    1986--Subsec. (k). Pub. L. 99-251, Sec. 105(b), designated existing 
provisions as par. (1), struck out last sentence providing that the 
provisions of this subsection shall not apply to group practice 
prepayment plans, and added pars. (2) and (3).
    Subsec. (m)(2)(A). Pub. L. 99-251, Sec. 106(a)(3), inserted last 
sentence relating to applicability of this paragraph with respect to a 
qualified clinical social worker covered by subsection (k)(2) of this 
section.
    1985--Subsecs. (a), (e), (i). Pub. L. 99-53 inserted reference to 
section 8903a of this title.
    1984--Subsec. (g). Pub. L. 98-615, Sec. 3(2)(A), substituted 
``employee, annuitant, family member, or former spouse'' for ``employee 
or annuitant'' in two places.
    Subsecs. (j), (k). Pub. L. 98-615, Sec. 3(2)(B), substituted 
``family member, or former spouse'' for ``or family member''.
    1980--Subsec. (m)(2)(A). Pub. L. 96-179 substituted ``in a State 
where 25 percent or more of the population is located in primary medical 
care manpower shortage areas designated pursuant to section 332 of the 
Public Health Service Act (42 U.S.C. 254e)'' for ``who is a member of a 
medically underserved population (within the meaning of section 1302(7) 
of the Public Health Service Act (42 U.S.C. 300e-17))''.
    1978--Subsecs. (a), (c) to (e), (i), (j), (l). Pub. L. 95-454 
substituted ``Office of Personnel Management'' for ``Civil Service 
Commission'' and ``Office'' for ``Commission'' wherever appearing.
    Subsec. (m). Pub. L. 95-368 added subsec. (m).
    1976--Subsec. (l). Pub. L. 94-460 added subsec. (l).
    1975--Subsecs. (j), (k). Pub. L. 94-183 redesignated subsec. (j), 
added by Pub. L. 93-363 and relating to services performed by a clinical 
psychologist or optometrist, as (k).
    1974--Subsec. (j). Pub. L. 93-363 added subsec. (j) covering 
services performed by a clinical psychologist or optometrist.
    Pub. L. 93-246 added subsec. (j) requiring the carrier to pay for or 
provide a health service or supply in specified cases.


                    Effective Date of 1997 Amendment

    Amendment by Pub. L. 105-12 effective Apr. 30, 1997, and applicable 
to Federal payments made pursuant to obligations incurred after Apr. 30, 
1997, for items and services provided on or after such date, subject to 
also being applicable with respect to contracts entered into, renewed, 
or extended after Apr. 30, 1997, as well as contracts entered into 
before Apr. 30, 1997, to the extent permitted under such contracts, see 
section 11 of Pub. L. 105-12, set out as an Effective Date note under 
section 14401 of Title 42, The Public Health and Welfare.


                    Effective Date of 1992 Amendment

    Section 537(c) of Pub. L. 102-393 provided that: ``The amendments 
made by this section [amending this section] shall be effective with 
respect to contract years beginning after the date of enactment of this 
Act [Oct. 6, 1992].''


                    Effective Date of 1990 Amendment

    Section 7002(g) of Pub. L. 101-508 provided that: ``Except as 
provided in subsection (f) [set out as a note under section 8904 of this 
title], the amendments made by this section [amending this section, 
sections 8904, 8909, and 8910 of this title, and provisions set out as a 
note under section 8906 of this title] shall apply with respect to 
contract years beginning on or after January 1, 1991.''


                    Effective Date of 1988 Amendment

    Section 203 of title II of Pub. L. 100-654 provided that:
    ``(a) In General.--The amendments made by this title [enacting 
section 8905a of this title and amending this section and sections 8903, 
8905, and 8909 of this title] shall apply with respect to--
        ``(1) any calendar year beginning, and contracts entered into or 
    renewed for any calendar year beginning, after the end of the 9-
    month period beginning on the date of the enactment of this Act 
    [Nov. 14, 1988]; and
        ``(2) any qualifying event occurring on or after the first day 
    of the first calendar year beginning after the end of the 9-month 
    period referred to in paragraph (1).
    ``(b) Definition.--For the purpose of this section, the term 
`qualifying event' means any of the following events:
        ``(1) A separation from Government service.
        ``(2) A divorce, annulment, or legal separation.
        ``(3) Any change in circumstances which causes an individual to 
    become ineligible to be considered an unmarried dependent child 
    under chapter 89 of such title [section 8901 et seq. of this 
    title].''


                    Effective Date of 1986 Amendment

    Amendment by section 105(b) of Pub. L. 99-251 effective with respect 
to contracts entered into or renewed for calendar years beginning after 
Dec. 31, 1986, see section 105(c) of Pub. L. 99-251, set out as a note 
under section 8901 of this title.
    Section 106(b) of Pub. L. 99-251 provided that: ``The amendments 
made by subsection (a) [amending this section and provisions set out as 
notes under this section] shall take effect with respect to services 
provided after December 31, 1984.''


                    Effective Date of 1984 Amendment

    Amendment by Pub. L. 98-615 effective May 7, 1985, with enumerated 
exceptions, and applicable to any individual who is married to an 
employee or annuitant on or after that date, see section 4(a)(2) of Pub. 
L. 98-615, as amended, set out as a note under section 8341 of this 
title.


                    Effective Date of 1980 Amendment

    Section 5(b) of Pub. L. 96-179, as amended by Pub. L. 99-251, title 
I, Sec. 106(a)(2), Feb. 27, 1986, 100 Stat. 16, provided that: ``The 
amendments made by section 3 [amending this section] shall apply to 
services provided after December 31, 1979, under any contract entered 
into or renewed after December 31, 1979.''


                    Effective Date of 1978 Amendments

    Amendment by Pub. L. 95-454 effective 90 days after Oct. 13, 1978, 
see section 907 of Pub. L. 95-454, set out as a note under section 1101 
of this title.
    Section 3 of Pub. L. 95-368, as amended by Pub. L. 99-251, title I, 
Sec. 106(a)(1), Feb. 27, 1986, 100 Stat. 16, provided that: ``The 
provisions of section 8902(m)(2) of title 5, United States Code, as 
added by the first section of this Act, shall apply to services provided 
under any contract entered into or renewed after December 31, 1979.''


                    Effective Date of 1976 Amendment

    Amendment by Pub. L. 94-460 effective Oct. 8, 1976, see section 118 
of Pub. L. 94-460, set out as a note under section 300e of Title 42, The 
Public Health and Welfare.


                    Effective Date of 1974 Amendments

    Section 2 of Pub. L. 93-363 provided that: ``The amendment made by 
this Act [amending this section] shall become effective with respect to 
any contract entered into or renewed on or after the date of enactment 
of this Act [July 30, 1974].''
    Section 4(c) of Pub. L. 93-246 provided that: ``Section 3 [amending 
this section] shall become effective with respect to any contract 
entered into or renewed on or after the date of enactment of this Act 
[Jan. 31, 1974].''


                Full Disclosure in Health Plan Contracts

    Pub. L. 105-266, Sec. 5, Oct. 19, 1998, 112 Stat. 2368, provided 
that: ``The Office of Personnel Management shall encourage carriers 
offering health benefits plans described by section 8903 or section 
8903a of title 5, United States Code, with respect to contractual 
arrangements made by such carriers with any person for purposes of 
obtaining discounts from providers for health care services or supplies 
furnished to individuals enrolled in such plan, to seek assurance that 
the conditions for such discounts are fully disclosed to the providers 
who grant them.''


         Rate Reduction for Medicare Eligible Federal Annuitants

    Pub. L. 100-360, title IV, Sec. 422, July 1, 1988, 102 Stat. 810, 
which directed the Office of Personnel Management to reduce the rates 
charged medicare eligible individuals participating in health benefit 
plans by a prorated amount, was repealed by Pub. L. 101-234, title III, 
Sec. 301(a), Dec. 13, 1989, 103 Stat. 1985.


Authority of Carrier To Contract for Comprehensive Medical Services From 
                  a Group Practice Unit or Organization

    Pub. L. 91-515, title IV, Sec. 401, Oct. 30, 1970, 84 Stat. 1309, 
authorized Secretary of Health, Education, and Welfare to permit any 
carrier which is a party to a contract entered into under this chapter 
or under the Retired Federal Employees Health Benefits Act, or which 
participates in carrying out of any such contract, to issue in any State 
contracts entitling any person as a beneficiary to receive comprehensive 
medical services from a group practice unit or organization with which 
such carrier has contracted or otherwise arranged for the provision of 
such services.

                  Section Referred to in Other Sections

    This section is referred to in sections 8902a, 8910, 8913 of this 
title.
