Federal Daily - June 2, 2008

Influx of TRICARE Users Nudges DoD Health Care Budget

DoD’s Fiscal Year (FY) 2009 health care budget request is $1.7 billion higher than last year—a 16 percent jump driven mostly by a larger number of TRICARE users and lower TRICARE enrollment fees, a Government Accountability Office (GAO) report said. The GAO report, released May 28, looked at the elements behind the FY 2009 request of almost $12.2 billion for DoD private sector care, which is significantly higher than the $10.5 billion requested for FY 2008. Of this hike, $995 million was due to increases in the number of users who are using the services more intensely—as well as escalating health care and administrative costs, the report said. The remainder of the increase was attributable to several factors—including a reduction in projected savings because DoD has proposed a smaller increase for TRICARE enrollment fees than it had in its FY 2008 request, the report said. On the up side, DoD was able to generate a projected $54 million in savings by negotiating favorable federal pricing arrangements for drugs purchased at retail pharmacies, the report said. To see more, go to: www.gao.gov/new.items/d08721r.pdf.

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Bill Would Phase Out Non-Foreign COLA for Feds

A new bill, introduced by Sen. Daniel Akaka, D-Hawaii, would phase-out the non-foreign cost-of-living allowance (COLA) for federal civilian employees living in Alaska, Hawaii, and U.S. territories, and replace it with locality pay. The non-foreign COLA is based on the cost of living in the non-foreign areas compared to the cost of living in Washington, D.C., and locality pay is based on a comparison between federal salaries and white-collar salaries in the private and public sectors in a given region. That difference produces a disparity in pay and retirement for workers in the non-foreign areas compared to those in the contiguous 48 states, Akaka said during a May 29 field hearing of the Senate federal workforce subcommittee. The bill, S. 3013, if it becomes law, would phase-in locality pay over three years and allow current employees a one-time option to receive frozen COLA rates or transition to locality pay. It also would give employees who will retire in the next three years the opportunity to pay into the federal retirement system and transition to locality pay before retirement, Akaka said. The National Treasury Employees Union (NTEU) supports the bill, which it said would ensure no loss in pay and improve retirement benefits for federal employees in outlying areas. “It has become increasingly clear that the non-foreign COLA is dated and in need of reform,” said NTEU President Colleen Kelley. To see more, go to: http://akaka.senate.gov/public/index.cfm?FuseAction=
PressReleases.Home&month=5&year=2008&release_id=2216.

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Portion of RetireEZ Contract Suspended

The Office of Personnel Management (OPM) on May 29 announced that it had suspended work by Hewitt Associates on its part of the agency’s RetireEZ effort, which is intended to modernize processing of federal employee retirements. Annuitants will not be adversely impacted by the OPM stop work order for the implementation of the RetireEZ calculation engine—one of the three components of the modernization project, the agency said. Progress on the other two components of RetireEZ—data conversion and change management—continue, OPM said. In addition, OPM has issued a show cause notice to Hewitt giving the company 10 calendar days to respond to the performance issues that OPM has raised. To see more, go to: www.opm.gov/news/opm-suspends-portion-of-retireez-contract,1400.aspx.

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