This is the accessible text file for GAO report number GAO-06-271 
entitled 'Federal Employees Health Benefits Program: First-Year 
Experience with High-Deductible Health Plans and Health Savings 
Accounts' which was released on February 2, 2006. 

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Report to Congressional Requesters: 

United States Government Accountability Office: 

GAO: 

January 2006: 

Federal Employees Health Benefits Program: 

First-Year Experience with High-Deductible Health Plans and Health 
Savings Accounts: 

GAO-06-271: 

GAO Highlights: 

Highlights of GAO-06-271, a report to congressional requesters: 

Why GAO Did This Study: 

The Federal Employees Health Benefits Program (FEHBP) recently began 
offering high-deductible health plans (HDHP) coupled with tax-
advantaged health savings accounts (HSA) that enrollees use to pay for 
health care. Unused HSA balances may accumulate for future use, 
providing enrollees an incentive to purchase health care prudently. The 
plans also provide decision support tools to help enrollees make 
purchase decisions, including health care quality and cost information. 
Concerns have been expressed that HDHPs coupled with HSAs may attract 
younger, healthier, or wealthier enrollees, leaving older, less healthy 
enrollees to drive up costs in traditional plans. Because the plans are 
new, there is also interest in the plan features and the decision 
support tools they provide to enrollees. 

GAO was asked to evaluate the experience of the 14 HDHPs coupled with 
an HSA that were first offered under the FEHBP in January 2005. GAO 
compared the characteristics of enrollees in the 14 HDHPs to those of 
enrollees in another recently introduced (new) plan without a high 
deductible and to all FEHBP plans. GAO also compared characteristics of 
the three largest HDHPs to traditional FEHBP plans offered by the same 
insurance carriers, and summarized the information contained in the 
decision support tools made available to enrollees by these three 
plans. 

What GAO Found: 

FEHBP HDHP enrollees were younger and earned higher federal salaries 
than other FEHBP enrollees. The average age of HDHP enrollees (46) was 
similar to that of the other new plan (47) and younger than that of all 
FEHBP enrollees (59). These differences were largely due to a smaller 
share of retirees enrolling in the HDHPs and the other new plan. HDHP 
enrollees earned higher federal salaries compared to other enrollees. 
Forty-three percent of HDHP enrollees actively employed by the federal 
government earned federal salaries of $75,000 or more, compared to 14 
percent in the other new plan and 23 percent among all FEHBP plans. In 
addition, nonretired HDHP enrollees were more likely to be male and to 
select individual rather than family plans. 

The three largest FEHBP HDHPs generally covered the same range of 
services—including preventive services—as their traditional plan 
counterparts; however, enrollees’ financial responsibilities usually 
differed. Compared to the traditional plans, the HDHPs had higher 
deductibles. HDHP cost sharing was the same or lower for preventive 
services and prescription drugs, and all plans covered preventive 
services before the deductible. Prescription drugs in the HDHPs were 
subject to the deductible, while they were generally exempt from the 
deductible in the traditional plans. HDHP cost sharing varied with 
respect to nonpreventive physician office visits and inpatient hospital 
stays. Two of the three HDHPs had higher out-of-pocket spending limits, 
and HDHP premiums were lower on average than the traditional plans. 

The extent to which the three largest FEHBP HDHPs made available 
provider quality and health care cost information was limited and 
varied. Two of the three plans provided several hospital-specific 
measures of quality on their Web sites, including the volumes of 
procedures provided by the hospitals and the outcomes of those 
procedures, and the other plan provided links to other Web sites 
containing such information. Regarding physician-specific quality data, 
one plan provided a single measure. One of the plans provided average 
hospital cost estimates and two provided average physician cost 
estimates for selected services, but none provided the actual rates an 
enrollee would pay that the plan had negotiated with providers. 
Regarding prescription drugs, two of the three plans provided the 
average retail pharmacy drug costs, but none provided the actual 
negotiated rates an individual would pay at a particular retail 
pharmacy. 

In commenting on a draft of this report, the Office of Personnel 
Management (OPM) said that it would monitor enrollment trends over time 
to assess whether certain individuals—such as younger or healthier 
individuals—disproportionately enroll in HDHPs. OPM also said it would 
continue to encourage plans to expand the decision support information 
they provide to enrollees, including the pricing of health care 
services. 

www.gao.gov/cgi-bin/getrpt?GAO-06-271. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact John Dicken at (202) 512-
7119 or dickenj@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

FEHBP HDHP Enrollees Were Generally Younger and Earned Higher Federal 
Salaries Than Other FEHBP Enrollees: 

FEHBP HDHPs Generally Covered the Same Services as Traditional Plans, 
but Enrollees' Financial Responsibilities Usually Differed: 

FEHBP HDHPs Provided Online Access to Decision Support Tools, but Did 
Not Always Include Health Care Quality and Cost Information: 

Concluding Observations: 

Agency Comments: 

Appendix I: Comments from the Office of Personnel Management: 

Tables: 

Table 1: Average Age of HDHP and Other FEHBP Enrollees: 

Table 2: Gender and Plan Selection for HDHP and Other FEHBP Enrollees: 

Table 3: Key Plan Features of the Multistate HDHPs in the FEHBP 
Compared to Their Traditional Plan Counterparts, 2005: 

Table 4: Information Available through Online Decision Support Tools of 
the Three Multistate HDHPs, 2005: 

Figures: 

Figure 1: Age Distribution of HDHP and Other FEHBP Enrollees: 

Figure 2: Actively Employed FEHBP Enrollees Earning Annual Federal 
Salaries of $75,000 or More, 2005: 

Abbreviations: 

CDHP: consumer-directed health plan: 
FEHBP: Federal Employees Health Benefits Program: 
HDHP: high-deductible health plan: 
HMO: health maintenance organization: 
HRA: health reimbursement arrangement: 
HSA: health savings account: 
OPM: Office of Personnel Management: 
PPO: preferred provider organization: 

United States Government Accountability Office: 

Washington, DC 20548: 

January 31, 2006: 

The Honorable Henry A. Waxman: 
Ranking Minority Member: 
Committee on Government Reform: 
House of Representatives: 

The Honorable Pete Stark: 
Ranking Minority Member: 
Subcommittee on Health: 
Committee on Ways and Means: 
House of Representatives: 

The federal government provides health insurance coverage for over 8 
million federal employees, retirees, and their family members through 
health plans participating in the Federal Employees Health Benefits 
Program (FEHBP), the largest employer-based health insurance program in 
the country. Similar to many large employers, the FEHBP has recently 
begun offering a type of "consumer-directed health plan" (CDHP) that 
combines a high-deductible health plan (HDHP) with a tax-advantaged 
health savings account (HSA) that enrollees use to pay for a portion of 
their health expenses.[Footnote 1] (Throughout this report we refer to 
the FEHBP plans that are coupled with HSAs as HDHPs.) The higher 
deductibles typically result in lower premiums because the enrollee 
bears a greater share of the initial costs of care. The HDHPs provide 
decision support tools to help enrollees become more actively involved 
in making health care purchase decisions, such as information about the 
quality of health care providers and the cost of health care services. 

Proponents believe that HDHPs coupled with HSAs can help restrain 
health care spending. They believe enrollees have an incentive to seek 
lower-cost health care services, and to only obtain care when necessary 
because account funds can accrue from year to year. Enrollees may use 
these funds to pay for health care in subsequent years or for other 
purposes, such as retirement. However, some believe that these plans 
will attract a disproportionate share of wealthier enrollees who seek 
to use the HSA as a tax-advantaged savings vehicle. Some also express 
concern that HDHPs may disproportionately attract younger and healthier 
enrollees. If this occurred to a large extent, premiums for traditional 
plans could rise due to a disproportionate share of older and less 
healthy enrollees with higher health care expenses remaining in the 
traditional plans. Because HDHPs coupled with HSAs are a relatively new 
concept in health care benefits plan design, there is also interest in 
how the plans' features compare to traditional plans and the extent to 
which the plans provide decision support tools, such as provider 
quality and cost data, to help enrollees make informed and prudent 
health care purchase decisions. 

You asked us to evaluate the experience of the HDHPs coupled with HSAs 
that were offered under the FEHBP beginning in January 2005.[Footnote 
2] Because there is limited experience to date with these plans, we 
limited our review to the demographic characteristics of the enrollees 
and key features of the HDHPs.[Footnote 3] In particular, we examined 
(1) characteristics of HDHP enrollees compared to all FEHBP plan 
enrollees, (2) features of the HDHPs compared to traditional FEHBP 
health plans, and (3) the extent to which FEHBP HDHPs provide 
information to enrollees to assist them in making health care purchase 
decisions. 

To identify the demographic characteristics of HDHP enrollees, we 
analyzed FEHBP enrollment data provided by the Office of Personnel 
Management (OPM), the federal agency responsible for administering the 
FEHBP.[Footnote 4] We obtained data for each of the 14 HDHPs coupled 
with HSAs that was introduced in 2005. To determine how the enrollees 
in these plans compared to other FEHBP enrollees, we compared their 
demographic characteristics to two groups. First, we compared them to 
the characteristics of all FEHBP plan enrollees.[Footnote 5] Second, 
because characteristics of the HDHP enrollees may differ from the 
typical FEHBP enrollee primarily because these plans are new, we also 
compared HDHP enrollee characteristics to the characteristics of first- 
year enrollees of another FEHBP national preferred provider 
organization (PPO) plan that was recently introduced.[Footnote 6] For 
each group we examined enrollee age, income, gender, and whether the 
plan was for an individual or a family. Because our preliminary 
analysis found that retirees were much less likely to enroll in the 
FEHBP HDHPs and the other new plan, we excluded retirees from most 
comparisons to help ensure that differences were related to the plan 
design and not to the absence of retirees among the new plans. Our 
assessment of the demographic characteristics of HDHP enrollees 
reflects only the first year of plan enrollment and thus may not 
reflect future enrollment trends. We did not independently verify the 
data provided by OPM; however, we performed certain quality checks, 
such as determining consistency among the various data sets provided. 
We also evaluated information from OPM concerning how data are 
collected, stored, and maintained. We determined that the data were 
adequate for this report. 

To evaluate the features of the HDHPs, we reviewed plan brochures for 
the three HDHPs that operated in most or all states and comprised about 
96 percent of all FEHBP HDHP enrollment in 2005. Throughout this report 
we refer to these plans as multistate HDHPs. We compared key features 
of these plans to the features of other plans offered by the same 
insurance carrier, which we refer to as the HDHPs' traditional plan 
counterparts. We compared two of the HDHPs to two national PPO plans 
offered by the same carriers, and we compared the third HDHP to 22 
regional health maintenance organization (HMO) plans offered by the 
same carrier. The features we examined included covered services, 
coverage of out-of-network providers, deductibles, cost-sharing 
arrangements, out-of-pocket spending limits, and premiums.[Footnote 7] 

To evaluate the decision support tools that plans make available to 
enrollees, we reviewed the literature and interviewed experts to 
identify the information that experts believe is most helpful to 
consumers in assessing the quality of health care providers and the 
costs of health care services. We then reviewed the decision support 
tools that the three multistate HDHPs made available to enrollees on 
the plan Web sites to determine whether the information was present, 
but did not independently verify the accuracy of the information. 

We conducted our work according to generally accepted government 
auditing standards from July 2005 through January 2006. 

Results in Brief: 

FEHBP HDHP enrollees were generally younger, earned higher federal 
salaries, and were more likely to select individual rather than family 
plans than other FEHBP enrollees. The average age of HDHP enrollees was 
46, compared to 47 for the other new plan enrollees and 59 for all 
FEHBP enrollees. The age difference was largely due to a smaller share 
of retirees enrolling in the HDHPs compared to the other plans. 
Excluding retirees, the range in average ages narrowed to 44 for both 
the HDHPs and the other new plan and 47 for all FEHBP plans. HDHP 
enrollees also earned higher federal salaries compared to other FEHBP 
enrollees. Forty-three percent of actively employed HDHP enrollees 
earned federal salaries of $75,000 or more compared to 14 percent of 
the other new plan enrollees and 23 percent of all FEHBP plan 
enrollees. Finally, HDHP enrollees were more likely to be male and were 
more likely to select individual rather than family plans. Sixty-nine 
percent of HDHP enrollees were male, compared to 59 percent of 
enrollees in both the other new plan and all FEHBP plans. Forty-seven 
percent of HDHP enrollees had individual coverage, compared to 35 and 
37 percent of enrollees in the other new plan and all FEHBP plans, 
respectively. 

Each of the three multistate HDHPs generally covered the same range of 
health care services--including preventive care services--as its 
traditional plan counterparts; however, enrollees' financial 
responsibilities usually differed. Each of the HDHPs had higher annual 
deductibles for in-network care, ranging from $1,100 to $2,500 for 
individual plans and from $2,200 to $5,000 for family plans. This 
compared to deductibles among the traditional PPO counterparts of from 
$450 to $950 and from $900 to $1,900 for individual and family plans, 
respectively. Regarding cost sharing for preventive care services, HDHP 
enrollees paid the same or less than the traditional plan enrollees and 
always covered certain preventive care services before the deductible 
was met, whereas these same services were not always covered before the 
deductible by their traditional plan counterparts. For prescription 
drugs, all three HDHPs required that the deductible be met before 
prescription drug coverage began, whereas two of the traditional plans 
covered all prescription drugs before the deductible and the third 
covered generic drugs before the deductible. After the deductible, all 
three HDHPs had comparable or lower cost sharing for prescription drugs 
than their traditional plans. Cost sharing for physician office visits 
and hospital stays for the three HDHPs was mixed relative to the 
traditional plan counterparts--HDHP enrollees paid more in some 
instances, the same or less in others. Two of the HDHPs had higher out- 
of-pocket spending limits for in-network providers compared to their 
traditional plans: for individual coverage $4,000 and $5,000 compared 
to $1,500 and $4,450; for family coverage $8,000 and $10,000 compared 
to $3,000 and $5,400. Finally, the HDHPs typically had lower monthly 
premiums--the average employee premium was $91 for individual coverage 
and $208 for family coverage, compared to $99 and $243, respectively, 
for the traditional plans. 

Each of the three multistate HDHPs provided online access to account 
management tools and health education information, but the extent to 
which they made available provider quality and health care cost 
information was limited and varied. Regarding quality data, two of the 
three plans provided several measures on their Web sites to assess 
hospital quality, including the volume of procedures provided by the 
hospitals and the outcomes of those procedures, and the other plan 
provided links to other Web sites containing such information. None of 
the three plans provided similar measures to assess individual 
physician quality, although one plan provided information on 
physicians' medical board certifications. Experts we interviewed 
believed that physician-specific quality data were not yet widely 
available for most health insurance carriers to provide to their 
enrollees.[Footnote 8] Regarding cost data, one of the three HDHPs 
provided average hospital cost estimates and two provided average 
physician cost estimates for selected services, but none provided the 
actual negotiated payment rates enrollees would be charged by a 
specific provider.[Footnote 9] All three plans provided actual 
prescription drug prices available through their mail-order pharmacies, 
and two of the plans provided average retail pharmacy drug costs, but 
none provided the actual negotiated rates an individual would pay at a 
particular pharmacy. 

In commenting on a draft of this report, OPM said that it would monitor 
enrollment trends over time to assess whether certain individuals--such 
as younger or healthier individuals--disproportionately enroll in 
HDHPs. OPM also said it would continue to encourage plans to expand the 
decision support information they provide to enrollees, including the 
pricing of health care services. 

Background: 

CDHPs are relatively new health care benefits plan designs that are 
offered in various forms, including that of an HDHP coupled with an 
HSA. The FEHBP began to offer CDHPs in 2003 and first offered HDHPs 
coupled with HSAs in January 2005. 

The Consumer-Directed Health Plan Concept: 

While insurers and employers offer several variants of CDHPs, these 
plans generally include three basic precepts--an insurance plan with a 
high deductible, a savings account to pay for services under the 
deductible, and enrollee decision support tools. 

* An insurance plan with a high deductible. CDHP deductibles are about 
$1,900 on average nationwide for individual coverage and about $3,900 
for family coverage, compared to about $320 and $680, respectively, on 
average, for a traditional PPO plan.[Footnote 10] 

* A savings account to pay for services under the deductible. These 
savings accounts encompass different models, the most prominent being 
health reimbursement arrangements (HRA) and HSAs. Both HRAs and HSAs 
are tax advantaged, and funds from these accounts may be spent on 
qualified medical expenses--such as the plan deductible and payments 
for covered and noncovered services.[Footnote 11] Funds that are used 
for qualified medical expenses that are not covered by the health plan 
do not count toward meeting the plan's deductible or out-of-pocket 
spending limits. 

Important distinctions exist between HRAs and HSAs. HRAs are funded 
solely by the employer and are generally not portable once the employee 
leaves. These funds may accumulate up to any employer-specified 
maximums and may only be spent on qualified medical expenses. Although 
HRAs are generally coupled with health plans that include a high 
deductible, this is not a requirement for favorable tax treatment. 

An HSA is a new type of tax-advantaged savings account that, unlike 
HRAs, must be coupled with an HDHP that meets statutorily defined 
minimum deductibles and limits on out-of-pocket expenditures for 
enrollees. Contributions to an HSA may be made by both the employer and 
employee. The HSA account holder essentially owns the account and can 
transfer funds from one HSA account to another. Funds in these accounts 
may earn interest, are allowed to roll over from year to year, and may 
accumulate subject only to annual limits on contributions. HSA funds 
may also be withdrawn for purposes other than qualified medical 
expenses subject to regular taxes and an additional tax penalty, and 
may be used as retirement income subject to regular taxes.[Footnote 12] 
Certain individuals are not eligible for HSAs, including those eligible 
for Medicare or covered by another health plan in addition to the HDHP. 

* Decision support tools. CDHPs may provide decision support tools for 
consumers to help them become actively engaged in making health care 
purchase decisions. These tools may provide enrollees online access to 
their savings accounts to help them manage their spending. They may 
also provide enrollees with information to assess the quality of health 
care providers and the prices for health care services. 

While health insurance carriers may provide decision support tools to 
all enrollees, these tools may be more important to CDHP enrollees who 
have a greater financial incentive to take a more active role in their 
health care purchase decisions. To help enrollees choose a doctor or a 
hospital, experts suggest they need data to assess the quality of those 
providers. Such data may include the volume of procedures provided; the 
outcomes of those procedures, such as mortality and complication rates; 
as well as certain process indicators, such as the percentage of cases 
in which a provider followed established clinical practice guidelines 
for a particular procedure. To help enrollees manage their HSA account 
funds and evaluate the price competitiveness of various providers, some 
experts believe enrollees need information about the expected costs of 
services--such as an average or expected range of costs for a 
procedure, or the actual price a provider will charge based on the 
payment rates negotiated between the provider and the health insurance 
carrier. 

Insurance carriers have faced challenges in obtaining or presenting 
quality and cost data. For example, experts believe that it may be 
difficult for carriers to provide hospital-or physician-specific 
quality measures because such measures are not always readily 
available, particularly for physicians. They also believe that certain 
measures can be difficult for consumers to interpret, such as outcomes 
measures, and may not appropriately account for the poorer patient 
outcomes that may occur among providers who tend to treat sicker 
patients.[Footnote 13] Experts also believe that insurers have been 
reluctant to make negotiated provider payment rates available to 
consumers due to concerns over future provider contract negotiations. 
Therefore, the cost information insurers are willing to provide is more 
likely to reflect average rates or a range of costs within a geographic 
region rather than the actual negotiated rates. 

FEHBP and Consumer-Directed Health Plans: 

Federal employees have a choice of multiple health plans offered by 
private health insurance carriers participating in the FEHBP, with 19 
national plans and more than 200 local plans offered in 2005.[Footnote 
14] Plans vary in terms of benefit design and premiums.[Footnote 15] In 
2004, nearly 75 percent of those covered under the FEHBP were enrolled 
in national plans, with the remainder in regional or local HMOs. 
Mirroring the private sector, FEHBP carriers began offering CDHP 
options in 2003. 

The FEHBP offers two types of CDHPs--high-deductible plans coupled with 
an HRA or an HSA. The American Postal Workers Union offered the first 
HRA-based option under the FEHBP in 2003.[Footnote 16] This was 
followed by HRA-based plans offered by Aetna and Humana in 2004. In 
2005, 14 HDHPs coupled with HSAs were first offered.[Footnote 17] As of 
March 2005, 3,900 individuals were enrolled in these 14 HDHPs. 
Including retirees and family members, about 7,500 individuals were 
covered by the plans, with nearly all--about 96 percent--in the three 
multistate plans. 

All HDHPs offered by the FEHBP must include certain features. OPM 
requires that the plans cover preventive health services before the 
deductible has been met.[Footnote 18] In addition, because OPM is 
prohibited from contracting with plans that deny enrollment based on 
age, all must be offered with an HRA alternative of equivalent value 
for those who are ineligible for an HSA, such as Medicare enrollees. 
All HSAs and HRAs must be managed either by the insurance carrier or a 
trustee--such as a bank--which has received high ratings from a major 
financial rating service. OPM requires all HDHP carriers to offer 
health care decision support tools to enrollees.[Footnote 19] Finally, 
all HDHPs offered in the FEHBP must deposit a monthly contribution to 
the enrollee's HSA, which is a portion of the enrollee's premium 
payment, called the premium pass through. The premium pass through can 
be thought of as a required contribution to an employee's HSA, with the 
remainder of the premium going to the insurance carrier to pay for the 
insurance coverage. 

FEHBP HDHP Enrollees Were Generally Younger and Earned Higher Federal 
Salaries Than Other FEHBP Enrollees: 

HDHP enrollees were younger, earned higher federal incomes, were more 
likely to be male, and were more likely to have individual coverage 
than other FEHBP enrollees. The average age of HDHP enrollees was 
similar to that of another new plan, but was 13 years younger than that 
of all FEHBP enrollees. The share of actively employed enrollees 
earning federal incomes of $75,000 or more was 43 percent for HDHPs, 
compared to 14 percent for the other new plan, and 23 percent for all 
FEHBP plans. About 69 percent of HDHP enrollees were male, compared to 
59 percent in both the other new plan and all FEHBP plans, and about 47 
percent of HDHP enrollees had individual coverage, compared to 35 and 
37 percent for the other new plan and all FEHBP enrollees, 
respectively. 

HDHP Enrollees Were Younger and Included Fewer Retirees Than Enrollees 
in All FEHBP Plans: 

The average age of HDHP enrollees was younger than all FEHBP plan 
enrollees, but was similar to that of enrollees in another new FEHBP 
plan. The average age of HDHP enrollees was 46, compared to 47 for the 
other new plan, and 59 for all FEHBP plans. Differences were largely 
due to fewer retirees selecting the HDHPs. Eleven and 18 percent of the 
HDHP and other new plan enrollees were retirees, respectively, compared 
to 45 percent for all FEHBP plan enrollees. Excluding the retirees, the 
average age narrowed to 44 for both the HDHP and other new plan 
enrollees, and 47 for all FEHBP plan enrollees. (See table 1.) 

Table 1: Average Age of HDHP and Other FEHBP Enrollees: 

All enrollees; 
HDHP plans: 46; 
Other new plan: 47; 
All FEHBP plans: 59. 

Excluding retirees; 
HDHP plans: 44; 
Other new plan: 44; 
All FEHBP plans: 47. 

Source: GAO analysis of OPM data. 

Notes: The average ages are based on 2005 enrollees in the HDHPs, and 
are estimated for the first-year (2002) enrollees of the other new plan 
and 2004 enrollees of all FEHBP plans. Dependents are not included. 

[End of table] 

The distribution of enrollees by age group similarly illustrates the 
relatively younger ages of HDHP enrollees and enrollees of the other 
new plan. Relative to all FEHBP enrollees, the HDHP and other new plan 
enrollees comprise a larger share of enrollees in each age group under 
55 years and a smaller share of enrollees in each age group over 64. 
(See fig. 1.) 

Figure 1: Age Distribution of HDHP and Other FEHBP Enrollees: 

[See PDF for image] 

Notes: The age distributions are based on 2005 enrollees in the HDHPs, 
the first-year (2002) enrollees of the other new plan, and 2004 
enrollees of all FEHBP plans. Retirees are included, dependents are 
not. 

[End of figure] 

HDHP Enrollees Had Higher Federal Salaries and Were More Likely to 
Select Individual Plans Than Other FEHBP Enrollees: 

HDHP enrollees who were actively employed by the federal government 
earned higher federal salaries than other active federal employees in 
the FEHBP. The share of enrollees earning federal incomes of $75,000 or 
more in 2005 was 43 percent for HDHPs, compared to 14 percent for the 
other new plan and 23 percent for all FEHBP plans. These differences 
existed across all age groups. (See fig. 2.) 

Figure 2: Actively Employed FEHBP Enrollees Earning Annual Federal 
Salaries of $75,000 or More, 2005: 

[See PDF for image] 

Note: Dependents and retirees are excluded. 

[End of figure] 

Excluding retirees, HDHP enrollees were more likely to be male and to 
select individual rather than family plans than were enrollees in other 
plans. Sixty-nine percent of HDHP enrollees were male, compared to 59 
percent of enrollees in both the other new plan and all FEHBP plans. 
Forty-seven percent of HDHP enrollees selected individual plans, 
compared to 35 and 37 percent of enrollees in the other new plan and 
all FEHBP plans, respectively. (See table 2.) 

Table 2: Gender and Plan Selection for HDHP and Other FEHBP Enrollees: 

Percentage male; 
HDHP plans: 69; 
Other new plan: 59; 
All FEHBP plans: 59. 

Percentage enrolled in individual plans; 
HDHP plans: 47; 
Other new plan: 35; 
All FEHBP plans: 37. 

Source: GAO analysis of OPM data. 

Notes: The table is based on 2005 enrollees in the HDHPs, the first- 
year (2002) enrollees in the other new plan, and 2004 enrollees in all 
FEHBP plans. Dependents and retirees are not included. 

[End of table] 

FEHBP HDHPs Generally Covered the Same Services as Traditional Plans, 
but Enrollees' Financial Responsibilities Usually Differed: 

HDHPs generally covered the same services as those covered by their 
traditional plan counterparts; however, enrollees' financial 
responsibilities usually differed. The FEHBP HDHPs had higher 
deductibles than their traditional plan counterparts. In addition, 
relative to traditional plans, HDHP cost sharing after the deductible 
was comparable or lower for preventive services and prescription drugs. 
Cost sharing was mixed for physician office visits and hospital stays-
-higher than the carriers' traditional plans in some instances and the 
same or lower in others. Two of the HDHPs had higher out-of-pocket 
spending limits than their traditional plan counterparts, and in most 
cases the HDHPs had lower premiums. 

FEHBP HDHPs Generally Covered the Same Services as Traditional Plans: 

All three multistate HDHPs generally covered the same services as those 
covered by their traditional plan counterparts. These plans covered the 
same broad categories of services, such as preventive, diagnostic, 
maternity, surgical, outpatient, and emergency care, and all plans 
typically covered the same services within these categories. While each 
HDHP defined preventive services slightly differently, each plan 
covered certain core services: 

* routine physical exam, 

* routine immunizations, 

* cholesterol screening, 

* colorectal cancer screening, 

* routine pap test, 

* annual prostate-specific antigen test, 

* routine mammogram, and: 

* well-child care. 

These same services were also covered by the traditional plans. The few 
instances where covered services differed typically involved vision, 
dental, or chiropractic care benefits. For example, one HDHP did not 
include glasses or contact lenses in its vision care coverage, while 
its counterpart plan did. 

While the same services were typically covered by the three multistate 
HDHPs and their traditional plan counterparts, the plans sometimes 
imposed different restrictions and stipulations on the coverage of 
these services. For example, one HDHP allowed more frequent vision 
exams, but covered fewer days in skilled nursing facilities relative to 
the traditional plan. Another HDHP had no time restrictions for 
receiving emergency services following an accidental injury, while the 
traditional plan did. In addition, the HDHP for which the traditional 
plan counterparts were HMOs offered coverage for out-of-network 
providers for nonemergency care, while the HMOs did not. The other two 
HDHPs had similar restrictions as the traditional plans on obtaining 
coverage from out-of-network providers. 

Enrollees' Financial Responsibilities Usually Differed between FEHBP 
HDHPs and Traditional Plans: 

The three multistate HDHPs often differed from their traditional plan 
counterparts in terms of enrollees' financial responsibilities. All 
three HDHPs had higher deductibles, ranging from $1,100 to $2,500 for 
individual coverage and from $2,200 to $5,000 for family coverage, 
compared to $450 to $950 and $900 to $1,900 in their traditional PPO 
counterparts, respectively.[Footnote 20] Cost sharing also differed 
between HDHPs and the traditional plan counterparts. All HDHPs offered 
preventive care cost sharing for in-network providers that was the same 
or lower than the traditional plans. In addition, while all HDHPs 
covered preventive services before the deductible, those services were 
not always covered before the deductible by the traditional PPO plans. 
All HDHPs required that the deductible be met before prescription drug 
coverage began, whereas two of the traditional plans covered all 
prescription drugs before the deductible was met, and the third covered 
only generic drugs before the deductible was met.[Footnote 21] After 
the deductible was met, all HDHPs had comparable or lower cost sharing 
than the traditional plans for prescription drugs. Cost sharing for 
physician office visits for nonpreventive care and for hospital stays 
was mixed across plans--higher for the traditional plan counterparts in 
some instances, but the same or lower in others. Finally, two of the 
HDHPs had higher out-of-pocket spending limits for in-network providers 
of $4,000 and $5,000 for individual coverage and $8,000 and $10,000 for 
family coverage, compared to $1,500 and $4,450 and $3,000 and $5,400 
for their traditional counterparts, respectively. 

HDHPs more often had lower monthly premiums than their traditional plan 
counterparts. One HDHP had lower premiums than both of its traditional 
plan counterparts, another plan had lower premiums than one of its two 
counterparts, and the third HDHP had lower premiums than a majority of 
its 22 traditional plan counterparts. On average, enrollees' monthly 
premiums for the three HDHPs were $91 for individual coverage and $208 
for family coverage, compared to $99 and $243 for their traditional 
plan counterparts, respectively. (See table 3.) 

Table 3: Key Plan Features of the Multistate HDHPs in the FEHBP 
Compared to Their Traditional Plan Counterparts, 2005: 

Compared to its traditional plans, the HDHP's: Preventive care cost 
sharing (in-network) was the same or lower; 
HDHP 1: Yes; 
HDHP 2: Yes; 
HDHP 3: Yes. 

Compared to its traditional plans, the HDHP's: Generic drugs cost 
sharing was comparable or lower after meeting the deductible[A]; 
HDHP 1: Yes; 
HDHP 2: Yes; 
HDHP 3: Yes. 

Compared to its traditional plans, the HDHP's: Brand-name drugs cost 
sharing was comparable or lower after meeting the deductible[B]; 
HDHP 1: Yes; 
HDHP 2: Yes; 
HDHP 3: Yes. 

Compared to its traditional plans, the HDHP's: Primary care physician 
office visit cost sharing (in-network) was the same or lower[C]; 
HDHP 1: Yes; 
HDHP 2: Mixed; 
HDHP 3: Yes. 

Compared to its traditional plans, the HDHP's: Specialist office visit 
cost sharing (in-network) was the same or lower[D]; 
HDHP 1: Yes; 
HDHP 2: Mixed; 
HDHP 3: Yes. 

Compared to its traditional plans, the HDHP's: Hospital stay cost 
sharing (in-network) was the same or lower[E]; 
HDHP 1: No; 
HDHP 2: Mixed; 
HDHP 3: Yes. 

Compared to its traditional plans, the HDHP's: Out-of-pocket spending 
limits for in-network providers were the same or lower[F]; 
HDHP 1: No; 
HDHP 2: No; 
HDHP 3: Yes. 

Compared to its traditional plans, the HDHP's: Enrollee premiums were 
lower; 
HDHP 1: Mixed; 
HDHP 2: Mixed; 
HDHP 3: Yes. 

Source: GAO analysis of FEHBP plan brochures. 

[A] Based on GAO analysis of the average retail, in-network pharmacy 
prices published by two of the HDHP drug pricing tools for 20 generic 
drugs commonly prescribed to non-Medicare FEHBP enrollees in 2004. 

[B] Based on GAO analysis of the average retail, in-network pharmacy 
prices published by two of the HDHP drug pricing tools for 20 brand- 
name drugs commonly prescribed to non-Medicare FEHBP enrollees in 2004. 

[C] Based on GAO analysis of the average charges of 10 nonspecialist 
office visit services published by one of the HDHP pricing tools. 

[D] Based on GAO analysis of the average charges of five specialist 
office visit services published by one of the HDHP pricing tools. 

[E] Based on the median costs and length of stay for hospital patients 
covered by commercial insurers in 2003, published by the Healthcare 
Cost & Utilization Project. 

[F] Out-of-pocket spending limit for in-network providers includes plan 
deductible and cost sharing for covered services. 

[End of table] 

Another difference between the HDHPs and their traditional plan 
counterparts was the monthly contribution HDHPs made to the enrollee's 
HSA--the premium pass through--which was not a feature of the 
traditional plans. The average monthly pass through of the three 
multistate HDHPs was $82 for individual coverage and $165 for family 
coverage, representing 93 percent and 81 percent of the employee's 
share of the monthly premium on average, respectively. The annual sum 
of the monthly contributions represented an average of 53 percent of 
the annual deductible across the three plans. 

FEHBP HDHPs Provided Online Access to Decision Support Tools, but Did 
Not Always Include Health Care Quality and Cost Information: 

Each HDHP provided online account management tools and access to health 
education information on the plan's Web site. However, the extent to 
which they also included provider quality and health care cost data was 
more limited and varied across the plans. Moreover, the quality and 
cost information provided on the HDHP Web sites was available to both 
HDHP enrollees as well as to traditional plan enrollees. 

FEHBP HDHPs Provided Access to Online Account Management Tools and 
Health Education Information: 

Each of the three multistate FEHBP HDHP Web sites provided online 
access to account management tools and health education information. 
The plans allowed enrollees to view their progress toward meeting their 
deductibles and track their HSA balances online. They also provided 
online access to certain health education information, including 
information on general preventive care, common medical procedures and 
conditions, various treatment options for certain conditions, 
information concerning prescription drug alternatives, and a disease 
management program.[Footnote 22] Two plans also provided a health risk 
assessment tool, and one offered access to a health advice 
line.[Footnote 23] 

The Extent to Which FEHBP HDHPs Provided Online Access to Provider- 
Specific Quality and Cost Information Varied: 

The HDHPs provided varying degrees of provider quality data. Two of the 
three plans provided data on their Web sites for several measures to 
assess hospital quality, including outcomes data, procedure volumes, 
and patient safety ratings, and the other plan provided links to Web 
sites that contained this type of information. None of the plans 
provided similar process or outcome measures to assess individual 
physician quality, although one plan provided information on 
physicians' medical board certifications. Each of the plans provided 
certain general information about the physicians in the plan networks, 
such as their hospital affiliations, languages spoken, and 
gender.[Footnote 24] 

Cost information provided by the three multistate plans was limited. 
One of the plans provided average hospital cost estimates and two 
provided average physician cost estimates for a limited number of 
services. For example, one plan provided average cost estimates within 
certain geographic regions based on its own claims data for certain 
physician services, such as diagnostic tests and surgical procedures. 
It also provided estimated total annual costs to treat certain 
conditions, such as diabetes and heart disease. None of the plans 
provided the actual payment rates that would be charged to enrollees 
that the plan had negotiated with specific hospitals or 
physicians.[Footnote 25] Two of the three plans provided access to 
average retail prescription drug prices and estimates of out-of-pocket 
costs for drugs, and all three plans provided actual prices for drugs 
purchased through the mail-order pharmacy services offered by the 
plans. None of the plans provided the actual payment rate the plan had 
negotiated with particular retail pharmacies. (See table 4.) 

Table 4: Information Available through Online Decision Support Tools of 
the Three Multistate HDHPs, 2005: 

Member account access: 

Progress toward deductible; 
HDHP 1: Information provided; 
HDHP 2: Information provided; 
HDHP 3: Information provided. 

HSA account balance; 
HDHP 1: Information provided; 
HDHP 2: Information provided; 
HDHP 3: Information provided. 

Health education information: 

General preventive care; 
HDHP 1: Information provided; 
HDHP 2: Information provided; 
HDHP 3: Information provided. 

Common medical procedures and conditions; 
HDHP 1: Information provided; 
HDHP 2: Information provided; 
HDHP 3: Information provided. 

Treatment options for certain conditions; 
HDHP 1: Information provided; 
HDHP 2: Information provided; 
HDHP 3: Information provided. 

Disease management program[A]; 
HDHP 1: Information provided; 
HDHP 2: Information provided; 
HDHP 3: Information provided. 

Health risk assessment tool[B]; 
HDHP 1: Information provided; 
HDHP 2: Information not provided; 
HDHP 3: Information provided. 

Health advice line[C]; 
HDHP 1: Information provided; 
HDHP 2: Information not provided; 
HDHP 3: Information not provided. 

Hospital-specific quality data: 

Process indicators[D]; 
HDHP 1: Information provided; 
HDHP 2: Information not provided; 
HDHP 3: Information provided. 

Outcomes data[E]; 
HDHP 1: Information provided; 
HDHP 2: Information not provided; 
HDHP 3: Information provided. 

Procedure volumes; 
HDHP 1: Information provided; 
HDHP 2: Information not provided; 
HDHP 3: Information provided. 

Patient safety ratings[F]; 
HDHP 1: Information provided; 
HDHP 2: Information not provided; 
HDHP 3: Information provided. 

Patient satisfaction ratings; 
HDHP 1: Information not provided; 
HDHP 2: Information not provided; 
HDHP 3: Information not provided. 

Links to other Web sites that contain hospital quality data; 
HDHP 1: Information not provided; 
HDHP 2: Information provided; 
HDHP 3: Information not provided. 

Physician-specific quality data: 

Board certifications; 
HDHP 1: Information provided; 
HDHP 2: Information not provided; 
HDHP 3: Information not provided. 

Process indicators[D]; 
HDHP 1: Information not provided; 
HDHP 2: Information not provided; 
HDHP 3: Information not provided. 

Outcomes data[E]; 
HDHP 1: Information not provided; 
HDHP 2: Information not provided; 
HDHP 3: Information not provided. 

Patient volumes; 
HDHP 1: Information not provided; 
HDHP 2: Information not provided; 
HDHP 3: Information not provided. 

Patient satisfaction ratings; 
HDHP 1: Information not provided; 
HDHP 2: Information not provided; 
HDHP 3: Information not provided. 

Links to other Web sites that contain physician quality data; 
HDHP 1: Information not provided; 
HDHP 2: Information not provided[G]; 
HDHP 3: Information not provided. 

General physician-specific information: 

Medical education information (e.g., school, year of graduation); 
HDHP 1: Information provided; 
HDHP 2: Information not provided; 
HDHP 3: Information not provided. 

Hospital affiliations; 
HDHP 1: Information provided; 
HDHP 2: Information provided; 
HDHP 3: Information provided. 

Personal characteristics (e.g., language, gender); 
HDHP 1: Information provided; 
HDHP 2: Information not provided; 
HDHP 3: Information provided. 

Provider cost information on plan Web site: 

Actual negotiated, hospital-specific payment rates; 
HDHP 1: Information not provided; 
HDHP 2: Information not provided; 
HDHP 3: Information not provided. 

Average hospital payment rates[H]; 
HDHP 1: Information provided; 
HDHP 2: Information not provided; 
HDHP 3: Information not provided. 

Actual negotiated, physician-specific payment rates[I]; 
HDHP 1: Information not provided; 
HDHP 2: Information not provided; 
HDHP 3: Information not provided. 

Average physician payment rates[H]; 
HDHP 1: Information provided; 
HDHP 2: Information not provided; 
HDHP 3: Information provided. 

Actual pharmacy-specific prescription drug prices; 
HDHP 1: Information not provided; 
HDHP 2: Information not provided; 
HDHP 3: Information not provided. 

Average retail prescription drug prices; 
HDHP 1: Information provided; 
HDHP 2: Information provided; 
HDHP 3: Information not provided. 

Actual mail-order pharmacy prices; 
HDHP 1: Information provided; 
HDHP 2: Information provided; 
HDHP 3: Information provided. 

Estimated out-of-pocket prescription drug costs[J]; 
HDHP 1: Information provided; 
HDHP 2: Information provided; 
HDHP 3: [K]. 

Source: GAO analysis of HDHP decision support tools. 

[A] A disease management program is a voluntary program offered by 
health plans for those with certain high-risk conditions, such as 
diabetes, asthma, and congestive heart failure. Patients generally have 
access to a case manager who coordinates physician care and educational 
materials to help them learn how to effectively manage their disease 
and improve their quality of life. 

[B] A health risk assessment generally includes a questionnaire about 
health-related behaviors and risk factors that generates a report that 
provides guidelines on ways to reduce the risk of disease. 

[C] The plan offers on-call clinicians to answer health-related 
questions and provide medical advice. 

[D] Process data indicate whether providers follow certain guidelines 
for care, such as the share of patients for whom recommended treatment 
guidelines were followed. 

[E] Outcomes data are collected by hospitals and physicians to track 
patient outcomes following a treatment or procedure, such as mortality 
rates, complication rates, and average length of hospital stay. 

[F] Patient safety ratings include data on compliance with safety 
practices such as meeting certain staff-to-patient ratios. 

[G] The plan Web site did not specify a link to physician-specific 
quality data, although it did provide a link to the American Medical 
Association Web site, through which a physician's board certifications 
may be identified. 

[H] Average payment rates were available for a limited list of 
services. 

[I] One carrier had initiated a pilot project to provide physician- 
specific actual negotiated rates for physicians in one regional market 
for a limited list of procedures. 

[J] Estimates included enrollees' costs after the deductible was met. 

[K] No out-of-pocket estimates were provided for retail drugs. Mail- 
order drug pricing information was restricted to members, so specific 
information provided could not be assessed. 

[End of table] 

The quality and cost information provided on each plan's Web site was 
made available to the enrollees of both HDHP and traditional plans. In 
some instances, information was tailored to the specific plan in which 
an individual was enrolled. For example, one plan's out-of-pocket cost 
estimates for prescription drugs took into account plan-specific 
coverage and cost-sharing features. 

Concluding Observations: 

Like many large employers, the FEHBP has expanded enrollee health plan 
choices by offering HDHPs combined with HSAs. While first-year 
enrollment is modest, the number of carriers offering these products in 
2005 and expected to offer them in 2006 indicates that OPM and health 
insurance carriers anticipate continued interest in these new plans. 

Although the first-year enrollment in FEHBP HDHPs may not predict 
future trends, it does raise the possibility that individuals with 
certain demographic characteristics may be disproportionately attracted 
to these plans. For example, first-year HDHP enrollees had consistently 
higher incomes across all age groups than enrollees of another new plan 
and all FEHBP enrollees. This may suggest that aspects of HDHPs--such 
as the greater financial exposure coupled with the potential for tax-
advantaged savings--uniquely attract higher-income individuals with the 
means to pay higher deductibles and the desire to accrue tax-free 
savings. First-year enrollees were also younger on average than all 
FEHBP enrollees; however, they were not younger than enrollees in 
another new plan. Thus it is not clear whether younger individuals were 
uniquely attracted to HDHPs, or if younger enrollees are typical of 
recently introduced health plans in general. Additional years of 
enrollment data will be necessary to determine whether characteristics 
of first-year enrollees are predictive of future trends; to identify 
other important characteristics of HDHP enrollees, such as their health 
status; and to assess the implications of these enrollment trends for 
the FEHBP. 

HDHPs, like other CDHPs, are premised on the notion that enrollees will 
become more actively involved in making health care purchase decisions 
than enrollees of traditional health plans. To do so, enrollees need 
information to help them assess the cost and quality trade-offs between 
different health care treatments and providers. However, the extent to 
which FEHBP HDHPs made such information available to enrollees was 
varied and limited, and HDHP enrollees were not provided any more or 
different information than was provided to traditional plan enrollees. 
Most notably lacking was specific information to assess the quality of 
health care provided by particular physicians and the actual prices 
plans had negotiated with particular providers. Some of this 
information may become available in the future. Two of the three 
largest HDHPs were developing physician-specific patient satisfaction 
ratings to help enrollees assess physician quality, and one had 
initiated a pilot project to provide enrollees with the actual, 
negotiated prices they would pay for certain services performed by a 
particular provider. Until such provider-specific quality and cost data 
become more widely available, the CDHP goal of having enrollees make 
health care purchase decisions based on an informed assessment of the 
quality/cost trade-offs may not be fully realized. 

Agency Comments: 

We received comments on a draft of this report from OPM (see app. I). 
OPM expressed interest in our findings on the differences in 
characteristics of first-year HDHP enrollees compared to traditional 
FEHBP plan enrollees, and said that it would monitor enrollment trends 
over time to assess whether certain individuals--such as younger or 
healthier individuals--disproportionately enroll in HDHPs. OPM also 
said that it would continue to encourage plans to expand the decision 
support information they provide to enrollees, including the pricing of 
health care services. 

As agreed with your offices, unless you publicly announce the contents 
of this report earlier, we plan no further distribution of it until 30 
days after its issue date. At that time, we will send copies to the 
Director of OPM and other interested parties. We will also make copies 
available to others upon request. This report is also available at no 
charge on GAO's Web site at http://www.gao.gov. 

If you or your staffs have any questions about this report, please 
contact me at (202) 512-7119 or at dickenj@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. Randy DiRosa, Assistant Director; 
Gerardine Brennan; and Laura Brogan made major contributions to this 
report. 

Signed by: 

John E. Dicken: 
Director, Health Care: 

[End of section] 

Appendix I: Comments from the Office of Personnel Management: 

UNITED STATES OFFICE OF PERSONNEL MANAGEMENT: 
WASHINGTON, DC 20415-1000: 

JAN 13 2006: 

Mr. John Dicken: 
Director, Health Care: 
United States Government Accountability Office: 
Washington, DC 20548: 

Dear Mr. Dicken: 

Thank you for the opportunity to review your proposed report entitled 
FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM First Year Experience with 
High Deductible Health Plans and Health Savings Accounts (GAO-06-171). 

We read with interest the report which indicated the average age of 
High Deductible Health Plan (HDHP) enrollees was 47 years compared to 
59 years for the average age of FEHB enrollees. The report also 
indicated that 43 percent of HDHP enrollees actively employed by the 
Federal government earned salaries of over 575,000 per year as compared 
to only 23 percent in the FEHB overall. Your report also pointed out 
the possibility of risk selection occurring over time by enticing the 
young and healthy into HDHP plans at the expense of our traditional 
insurance plans. We will have to monitor this over time. 

As the report correctly points out, we recognize the need to provide 
consumer support tools to allow enrollees to maximize the benefits of 
high deductible health plans with Health Savings Accounts. We will 
continue to encourage these plans to expand support tools, including 
pricing data. 

Thank you for the opportunity to provide comments. 

Sincerely, 

Signed by: 

Linda M. Springer: 
Director: 

[End of section] 

FOOTNOTES 

[1] Many health plans require enrollees to pay a portion of their 
health care costs up to a certain threshold, known as the deductible. 
Once the deductible has been met, the plan pays most of the costs. A 
CDHP is a health plan with a higher-than-average deductible that is 
coupled with a spending account to pay for health care, such as an HSA. 
HSA-related tax advantages were authorized by the Medicare Prescription 
Drug, Improvement and Modernization Act of 2003 for individuals covered 
by health plans that meet minimum deductibles and maximum out-of-pocket 
spending limits, including spending on deductibles and cost sharing for 
covered services. Pub. L. No. 108-173, §1201, 117 Stat. 2066, 2469. The 
minimum deductible in 2005 was $1,000 for individual coverage and 
$2,000 for family coverage. The maximum out-of-pocket spending in 2005 
was $5,100 for individual coverage and $10,200 for family coverage. 

[2] We recently reported on the early experience with another type of 
CDHP first offered under the FEHBP in 2003. See GAO, Federal Employees 
Health Benefits Program: Early Experience with a Consumer-Directed 
Health Plan, GAO-06-143 (Washington, D.C.: Nov. 21, 2005). 

[3] Data to examine the first year of health care utilization and 
spending under the plans for 2005 will not be available before August 
of 2006. Health policy analysts believe that 2 or more years of such 
data are necessary to assess the cost savings potential of these plans. 

[4] In administering the FEHBP, OPM contracts with and regulates health 
insurance carriers and negotiates benefits and premium rates. OPM also 
receives and deposits health insurance premium withholdings and 
contributions from federal employees, and pays premiums to carriers. 

[5] Because comprehensive demographic data for all FEHBP enrollees in 
2005 were not yet available, we reviewed enrollment data from 2004. 

[6] FEHBP offers national plans to all enrollees who may work anywhere 
in the country and local plans that are offered in certain local 
markets. National plans are typically PPO plans that allow enrollees to 
choose their own health care providers, and reimburse either the 
provider or the enrollee for the cost of covered services. Enrollees' 
costs are generally lower if they obtain care from the plan's network 
of preferred providers rather than from providers not in the plan's 
network, referred to as "out-of-network" providers. Local plans are 
typically health maintenance organization plans that provide or arrange 
for comprehensive health care services on a prepaid basis, and require 
that care be coordinated through a primary care physician. 

[7] Cost-sharing arrangements refer to the enrollee's share of payments 
for covered services, such as co-payments--a fixed charge--and 
coinsurance--a percentage of the charges. We define out-of-pocket 
spending limits as the maximum amount enrollees may pay out of pocket 
under the plan, including the deductibles and cost sharing. Our 
analyses of deductibles, cost sharing, and out-of-pocket spending 
limits were limited to in-network care. 

[8] Two plans were in the process of developing physician-specific 
patient satisfaction ratings. 

[9] One plan has begun a pilot project to publish physician-specific 
negotiated rates for certain services in one market. 

[10] The Henry J. Kaiser Family foundation and Health Research and 
Education Trust, Employer Health Benefits: 2005 Summary Findings (Menlo 
Park, Calif.: 2005). This publication reports the results of a national 
survey of both public and private employers. 

[11] Both HRAs and HSAs were offered as tax-advantaged ways for 
employees to pay for unreimbursed medical expenses. The Department of 
the Treasury affirmed in 2002 the exclusion from taxable gross income 
of employer contributions to employee HRAs (I.R.S. Rev. Rul. 02-41; 
I.R.S. Notice 02-45 (June 26, 2002)). Itemized tax deductions for 
individual contributions to HSAs were authorized beginning in tax year 
2004 by the Medicare Prescription Drug, Improvement, and Modernization 
Act of 2003, Pub. L. No. 108-173, §1201, 117 Stat. 2066, 2469. 

[12] Use of these funds as retirement income is restricted to account 
holders who are eligible for Medicare. 

[13] Outcomes measures are routinely adjusted for the risks associated 
with each case. However, both providers and researchers have expressed 
concern over the adequacy of risk-adjustment processes currently in 
use. 

[14] Six of the 19 national plans were available only to certain groups 
of federal employees, such as Federal Bureau of Investigation 
employees. 

[15] All premiums include both employer and employee shares. Across the 
FEHBP, the employee's share of the monthly premium averages about 28 
percent of the total monthly premium paid to carriers. 

[16] See GAO-06-143. 

[17] OPM has announced that all 14 of these HDHPs will continue to be 
offered in 2006 along with 7 additional HDHPs. 

[18] OPM does not specify the preventive health services to be covered. 

[19] OPM did not specify the type of information that should be 
provided in the decision support tools. 

[20] For the HDHP for which the traditional plan counterparts were 
HMOs, there was no deductible for comparison purposes. 

[21] One traditional plan had a separate deductible for prescription 
drugs. 

[22] A disease management program is a voluntary program offered by 
health plans for those with certain high-risk conditions, such as 
diabetes, asthma, congestive heart failure, and coronary artery 
disease. Patients generally have access to a case manager who 
coordinates physician care and educational materials to help them learn 
how to effectively manage their disease and improve their quality of 
life. 

[23] A health risk assessment generally includes a questionnaire about 
health-related behaviors and risk factors that generates a report that 
provides guidelines on ways to reduce the risk of disease. A health 
advice line is an on-call clinician who can answer health-related 
questions and provide medical advice. 

[24] Experts we interviewed believed that physician-specific quality 
information, such as process and outcomes data or patient satisfaction 
ratings, were generally not available to health plans. Physician- 
specific patient satisfaction ratings were being developed for the 
online tools provided by two of the three plans. 

[25] One plan had begun a pilot project to publish physician-specific 
negotiated rates for certain services in one market. 

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