Federal Employee Program® and Medicare

A provision of the Omnibus Budget Reconciliations Act (OBRA) of 1993 applies the Medicare participation and physician payment rules and requirements to all retired individuals covered under the Federal Employee Program (FEP), which includes both Federal Employee Health Benefits (FEHB) and Postal Service Health Benefits (PSHB) members. These payment rules include CMS-approved demonstration projects.  

OBRA affects FEP reimbursement when the patient:

• Is 65 years of age or older,
• Does not have Medicare Part A, Part B, or both, 
• Is a former spouse (or family member of a former spouse) who is entitled to receive benefits, and,  
• Is not employed in a position that offers FEP coverage. 

FEP policies are not Medicare supplemental policies. Be sure to submit claims directly to Blue Cross and Blue Shield of Nebraska (BCBSNE), as they may not cross over directly from Medicare. 

Professional Reimbursement

OBRA bases physician services reimbursement on the lesser of the Medicare-approved amount or the actual charge. Member liability is dependent on the physician’s participating status with Medicare and/or the physician’s NEtwork BLUE contracting status.

Institutional

When a patient is age 65 or over and does not have Medicare Part A, Part B or both:

Under the Federal Employees Health Benefits (FEHB) and Postal Service Health Benefits (PSHB) programs, payments for inpatient hospital care and physician care are limited to those benefits the patient would have received if they had Medicare. The physician and hospital must follow Medicare rules and cannot bill the patient for more than they would bill if the patient had Medicare. Outpatient hospital care is not covered by this law.

OBRA bases inpatient care reimbursement on an amount that is equivalent to Medicare’s payment amount unless the charge is less than the Medicare equivalent amount. FEP members are NOT responsible for any charges greater than the Medicare equivalent amount. The law prohibits a hospital from collecting more than the Medicare equivalent amount. FEP members who have Standard Option coverage are responsible for deductibles, coinsurance and/or co-payments.