OPM Ousts Postmasters Benefit Plan From Health Insurance Program

By Stephen Barr
Tuesday, January 24, 2006

The Postmasters Benefit Plan has been dropped from the federal employee health insurance program, the Office of Personnel Management announced yesterday.

In a two-paragraph statement, OPM said the Postmasters plan "will no longer participate" in the Federal Employees Health Benefits Program. Last month, OPM launched an inquiry into the Postmasters plan because of concerns about its solvency and its handling of insurance claims.

OPM said steps are underway to move Postmasters enrollees into Blue Cross and Blue Shield's standard option. Postmasters enrollees who don't want the Blue Cross plan will have an opportunity to choose another, OPM said.

Postmasters was one of the smaller insurance carriers in the federal program, covering about 7,950 enrollees. It was a nationwide fee-for-service plan geared to postal employees. Nonpostal employees who enrolled in the plan paid a $45 fee to become associate members of the sponsor. The plan's most successful years were probably in the mid-1980s, when it had about 80,000 members.

Steve D. LeNoir , president of the National League of Postmasters, which sponsors the plan, said: "We are going to meet all of our claims obligations. No members will be left with any bills. We will take care of our members, and I apologize for any inconvenience that has been caused."

OPM officials have been monitoring the plan closely in recent years, and a recent audit by the OPM inspector general reported that Postmasters suffered operating losses from 1997 through 2001.

In early December, OPM essentially put the plan on probation, faulting it for failure to comply with OPM directives, failure to adjudicate claims in a timely and accurate manner and failure to ensure that the plan paid or denied claims properly.

Over the last month, LeNoir met with OPM officials several times in an effort to keep the plan in the federal program for at least another year. Although the league undertook changes to address OPM's concerns, it was not able to show that $10 million being held in a reserve could be quickly converted into cash or marketable assets, said David M. Ermer , an attorney for the league.

Medicure Plus Inc., the plan's manager, had set aside the $10 million and agreed to make it available to pay claims and benefits if the Postmasters plan was unable to meet its obligations. The guarantee was made as part of a contract agreement with the league.

But the OPM inspector general, in a report last month, contended that the league's contract with Medicure had not been approved by OPM. As a result, the inspector general said, the federal benefits program was inappropriately charged about $6.4 million for the contract from 2000 to 2003.

The inspector general also said it found "numerous expenses that were either explicitly unallowable or did not benefit the federal program." The audit report listed Medicure payments that went to family members, a Democratic campaign committee, a university and a kennel.

Medicure's chief executive, Thomas J. Ernst , said the audit wrongly included "private money" from records that were mistakenly provided to OPM for the inquiry. "We never charged a dime to the federal contract," he said.

He said Medicure had saved the Postmasters plan several million dollars through renegotiation of contracts for prescription drugs and preferred provider organizations and other services.

But the inspector general's report said, "We believe that Medicure paid these unallowable and/or unreasonable expenses using the funds from the monthly management fees that were charged to" the federal program.


Matthew Holt , deputy for employee benefits and financial services at the U.S. Senate, will retire Jan. 27 after 25½ years of service.

Than Lwin will retire the end of this month after 39 years of managing public diplomacy programs for the U.S. Information Agency and the State Department. Friends and colleagues will gather Friday for a luncheon in his honor.

Terri Rogers , associate director for children's products in the office of compliance at the U.S. Consumer Product Safety Commission, retired Jan. 3 after more than 38 years of federal service. She began her career at the CPSC when the independent agency was established by Congress in 1972.


© 2006 The Washington Post Company