For second time this year, OPM warns of scam targeting federal annuitants

The Office of Personnel Management is warning federal annuitants of a second scam this year. This time, companies are offering cash payments in exchange for all...

The Office of Personnel Management is warning federal employees of a second scam this year. This time, the scheme is an “aggressive marketing push” by companies offering cash payments in exchange for all or part of beneficiaries’ annuity payments.

These companies are offering cash payments typically worth less than the long-term value of federal employees’ annuities, and they’re often charging high interest rates and fees, OPM said.

“We have specifically received numerous phone calls from one company in particular asking us to not just verify annuity amounts but also banking information, including routing numbers and account numbers,” Ken Zawodny, associate director of retirement services for OPM, wrote in a June 15 blog post.

This company in particular, which OPM did not mention by name, is currently under investigation at the Consumer Financial Protection Bureau (CFPB), OPM’s Office of the Inspector General learned.

OPM is encouraging annuitants who receive these calls or others to report them to the agency’s Office of Inspector General hotline or online complaint form.

CFPB listed three ways federal annuitants can protect their retirement benefits. For example, CFPB suggests that annuitants don’t sign over control of their benefits.

“Companies sometimes arrange for monthly payments to be automatically deposited in a newly created bank account so the company can withdraw payments, fees and interest charges from the account,” the blog post said. “This leaves you with little control.”

This isn’t the first time federal employees and retirees have been the target of a scam, and this is the third time in two years that OPM is dealing with such a scheme. After the 2015 massive data breach, the Homeland Security Department issued a warning to federal employees and retirees that DHS was aware of “suspicious domain names that may be used in phishing campaigns masquerading as official communication” from OPM or their identity protection firm.

OPM warned annuitants in March of another government imposter scam, which threatened to end an annuitant’s retirement unless the retiree immediately sent a payment.

The IRS, the U.S. Citizenship and Immigration Service, the General Services Administration and many others have also dealt with scams in recent years.

A 30-year fight over kickbacks

OPM’s Office of Inspector General will also continue its push to Congress to include the Federal Employee Health Benefits Program (FEHBP) within the limits of the current law that prevents doctors and health providers from taking advantage of its patients.

It’s a fight that the agency’s IG has been battling for 30 years now.

“As we enter the third decade of the FEHBP’s exclusion from the Anti-Kickback Statute, I would like to assure all FEHBP enrollees that that this office remains steadfastly committed to continue working with Congress to amend this provision so that we may more effectively pursue our statutory mission of rooting out fraud, waste and abuse against OPM programs,” Norbert Vint, the agency’s acting inspector general said in a message in his semi-annual report to Congress.

The basic premise of statute protects participants in certain “federal health care programs.” It prevents doctors and health care providers from accepting cash, gifts, trips or other benefits in exchange for making a medical referral, prescribing a medication or making other medical decisions that are unnecessary.

The FEHBP’s exclusion from the statute has been a source of long-held frustration for the OIG. OPM can typically recover payments for medically unnecessary claims on behalf of the federal employee health program, but FEHBP is left out of major investigations and settlements because of certain provisions in the current anti-kickback law, Vint said.

The problem, in the IG’s eyes, goes back to a “misunderstanding of the program’s makeup,” Vint said.

The Anti-Kickback Statute protects participants in federal health care programs such as Medicare, Medicaid or TRICARE. But the law does not apply to the more than 8 million federal employees, retirees and their families in the FEHBP, but Congress, when reexamining the statute in 1996, said the Federal Employee Health Benefits Program isn’t considered a “federal health care program.”

The anti-kickback law was designed to protect health care programs that operate on a “fee-for-service” or “experience-rated” model. But Congress determined the FEHBP had more health maintenance organizations (HMOs) than fee-for-service plans.

“Congress was not cognizant that in 1996 HMOs accounted for only 26 percent of FEHBP enrollees,” Vint wrote. “The overwhelming majority of FEHBP enrollees — 74 percent — were actually in the very same fee-for-service plans that Congress believed needed protection, and in fact the percentage of FEHBP beneficiaries enrolled in fee-for-service plans has increased since then, accounting in 2016 for roughly 87 percent of total enrollment.”

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