April 2006

ARMED FORCES NEWS
 

MOAA PROPOSES TRICARE COST SAVINGS
March 31, 2006

The Military Offices Association of America has proposed a list of 15 items that could make Tricare more cost-effective, as alternatives to the Defense Department's idea of raising Tricare fees and other medical costs for military retirees under age 65:
  • Make Tricare a second payer to other insurance. 
  • Reduce or eliminate mail-order copayments to encourage use of this lowest-cost pharmacy service.
  • Negotiate with drug manufacturers for discounts at retail pharmacies. 
  • Streamline the electronic claims system. 
  • Educate beneficiaries and providers about the advantages of mail-order pharmacy.
  • Change the law to limit incentives private firms can offer employees to shift to Tricare, or require such matching payments to Tricare.
  • Eliminate DoD-unique administrative requirements that make DoD pay higher overhead fees.
  • Reduce Tricare Reserve Select costs by allowing service members the option of a government subsidy (at costs capped below that of Tricare) of civilian employer premiums during periods of mobilization.
  • Promote programs to offer special care management services to beneficiaries with chronic or unusually expensive conditions.
  • Change the law to mandate federal pricing for the retail pharmacy network (rather than charging beneficiaries more if drug companies don’t).
  • Establish one central DoD facility to order and fill all prescriptions for exceptionally high-cost drugs.
  • Centralize the military treatment facility pharmacy budgeting and funding process, emphasizing accountability and cost-shifting.
  • Increase efficiency via a single contract for all claims processing.
  • Test voluntary participation in Medicare Advantage Regional PPO to foster chronic care improvement and disease management.
  • Size military facilities (least costly care option) to reduce reliance on civilian providers. 

DAILY BRIEFING
April 13, 2006 

Bill to limit Tricare fee hikes gains support in Senate
From CongressDaily 
 
By Megan Scully, CongressDaily

Concerned that the Pentagon's plans to increase out-of-pocket healthcare costs would place financial burdens on military retirees, six senators have signed onto a bipartisan bill to curb the proposed fee hikes.
Sens. Frank Lautenberg, D-N.J., and Chuck Hagel, R-Neb., introduced the legislation shortly before Congress began its spring recess late last week, despite repeated arguments from Pentagon officials that raising fees for military retirees under age 65, effective Oct. 1, would save $11 billion over the next five years. Under the legislation, the Pentagon could not raise fees for participants in its TRICARE military health system beyond the rate of growth in retiree pay.

A vocal coalition of military organizations opposing the Pentagon plan estimates it could cost some retirees an additional $100 a month.

"Especially in a time of war, it is unthinkable that the administration would even consider dramatically increasing healthcare costs for those who have sacrificed for our country," Lautenberg said in a statement.

Sen. Mike DeWine, R-Ohio, one of the bill's co-sponsors, said on the floor last week that "it is essential that we honor our commitment and investigate all available options for funding our military health care system, rather than strap the bill on the backs of those who already have paid for their health insurance with their blood, sweat and tears."

The Senate bill differs slightly from legislation introduced in the House last month that would essentially thwart the Pentagon's plan to raise fees and require Capitol Hill's blessing before further increasing TRICARE costs. The House bill has 171 Republican and Democratic co-sponsors.

A Lautenberg aide called the Senate bill a more reasonable approach that would still help offset the military's burgeoning healthcare bills. But John Class, deputy director of government affairs at the Military Officers Association of America, said the Senate's measure "makes it a little too easy for DOD to go ahead and automatically raise [fees] each year."

Nonetheless, MOAA and three other organizations have written Lautenberg expressing their support for his bill. "We were extremely happy that at least there's something in both the House and Senate on this," said Class.

The National Military Family Association wrote recently that: "The proposal to raise TRICARE fees by exorbitant amounts has resonated throughout the beneficiary population. Families see the proposals as a concentrated effort by DOD to change their earned entitlement of healthcare into an insurance plan."

But Pentagon officials have defended their TRICARE proposal at a slew of public hearings and in private meetings with lawmakers. The military has not raised TRICARE premiums and other fees in 11 years, despite hefty increases in healthcare costs.

"We worked together to develop what we believe is a thoughtful proposal that has great merit," William Winkenwerder, assistant Defense secretary for health affairs, said in a recent interview. "We look forward to working together with the Congress to move forward."

Winkenwerder added that the military has to make substantial changes in TRICARE fees now, before health care costs escalate any further. "The problem will not get any easier a year from now or two years from now," he said. The "magnitude of change that would need to take place would be even greater."

This document is located at http://www.govexec.com/dailyfed/0406/041306cdpm1.htm
 

DAILY BRIEFING
April 25, 2006

Lawmaker plans to gut TRICARE fee-hike proposal
 
BBy Megan Scully, CongressDaily

House Armed Services Military Personnel Subcommittee Chairman John McHugh, R-N.Y., plans to gut an unpopular Defense Department cost-saving proposal to raise fees for many of the 1.9 million military retirees eligible for TRICARE healthcare coverage.
During a markup Wednesday of his panel's portion of the fiscal 2007 defense authorization bill, McHugh will propose barring any increases to premiums and enrollment fees until at least Dec. 31, 2007, buying Congress time to study the effects and savings generated by the Pentagon plan.

McHugh also wants to create a commission, possibly consisting of defense health officials and outside experts, to review the military's healthcare structure, costs and benefits, he said in a telephone interview Monday. And he will recommend Government Accountability Office and Congressional Budget Office studies on the matter.

"We're not going to burn retirees with more costs at this time," McHugh said.

But McHugh also acknowledged Congress needs to begin to "take a hard look" at how to preserve the TRICARE system for future beneficiaries.

"None of what I'm proposing is intended to say there's not a challenge here," he added "There is a very serious one."

Healthcare costs are quickly becoming a dominant portion of the Pentagon budget. In fiscal 2006, the military will pay $37 billion for healthcare programs, which amounts to 8 percent of the Defense budget and $18 billion more than the department paid in 2001.

Without any major changes to the program, the military is on track to spend $64 billion annually on health care by 2015 -- nearly twice this year's entire Homeland Security Department budget.

The Pentagon's TRICARE proposal, which would affect retirees under age 65, would save $735 million in fiscal 2007 and $11 billion over the next five years, defense officials say. And it would be the first increase in TRICARE cost shares in more than a decade.

But Republicans and Democrats alike have battled the Pentagon over the proposal at public hearings and private meetings since the plan for higher fees was disclosed with the Bush administration's fiscal 2007 defense budget request in February.

Lawmakers have been joined by a vocal and persistent coalition of military organizations that has protested increased fees as an undeserved financial burden on some recent veterans of U.S. military operations in Iraq and Afghanistan. Higher fees, distributed on a sliding scale based on rank at retirements, could cost some families an additional $100 a month, opponents say.

While he wants to punt most of the Pentagon plan during the subcommittee markup, McHugh said he will defer debate on proposed increases to retail pharmacy co-payments to the full committee markup scheduled for next week. Those increases are considered mandatory spending and would require offsets.

The full committee likely will keep intact Pentagon plans to increase pharmacy co-pays to encourage retirees to use cost-saving mail-order prescription services, congressional aides said. Mail-order prescriptions would be free under plans now being developed by committee aides and lawmakers.

That proposal would be easier to swallow for affected retirees, but military organizations still will oppose any increases to pharmacy co-payments. They prefer keeping pharmacy fees static, while decreasing the cost of mail-order prescriptions.

"The best way to do that is to make people happy about shifting rather than driving them toward it with higher co-pays," said Steve Strobridge director of government relations at the Military Officers Association of America. "The real key is the behavior change."

Strobridge estimates that using mail-order services can save the department $58 to $157 per prescription, largely because of better pricing and lower overhead costs.

Last year, the Defense Department's drug expenditures were slightly more than $5 billion, up from $798 million in 1995, according to January 2006 Defense Department briefing slides. Roughly 6 percent of prescriptions were ordered by mail last year.

This document is located at http://www.govexec.com/dailyfed/0406/042506cdam1.htm

ARMED FORCES NEWS
LEGION COMMANDER FLAYS VA CARES
April 28, 2006
Eighteen VA medical facilities nationwide have been tagged by the VA Capital Asset Review for Enhanced Services (VA CARES) for possible shutdown or realignment. VA Secretary James Nicholson has said his announcement about the installations is imminent. American Legion Commander Thomas L. Bock asserted that veterans in the communities involved were excluded from the decisionmaking process last fall when VA suspended meetings with them. "Everything went into limbo for half a year and now suddenly the secretary says he is prepared to make a unilateral decision that affects the lives of millions of America's veterans" said Bock. Now is certainly not the time to reduce VA facility capacity when there are more than 500,000 newly discharged veterans from active duty after service in Iraq and Afghanistan, he said.

ARMED FORCES NEWS
PANEL CHAIRMAN TO COUNTER TRICARE RATE HIKES
April 28, 2006
House Armed Services Military Personnel Subcommittee Chairman John McHugh, R-N.Y., plans to block a Defense Department scheme to double and triple the costs of Tricare for military retirees under age 65 and boost pharmacy costs for all military retirees. During a markup of the subcommittee's part of the fiscal 2007 authorization bill, he is expected to insert a provision to prevent increases in premiums and enrollment fees until at least Dec. 31, 2007. This would give time for studies by the Congressional Budget Office and the Government Accountability Office, as well as for creation of a commission to review the entire military health care structure. The full committee likely will retain the DoD plan to raise retail pharmacy co-pays in order to influence retirees to use mail-order prescriptions that are less costly to the government, according to sources.
 

ARMED FORCES NEWS
PANEL CHAIRMAN TO COUNTER TRICARE RATE HIKES
April 28, 2006
House Armed Services Military Personnel Subcommittee Chairman John McHugh, R-N.Y., plans to block a Defense Department scheme to double and triple the costs of Tricare for military retirees under age 65 and boost pharmacy costs for all military retirees. During a markup of the subcommittee's part of the fiscal 2007 authorization bill, he is expected to insert a provision to prevent increases in premiums and enrollment fees until at least Dec. 31, 2007. This would give time for studies by the Congressional Budget Office and the Government Accountability Office, as well as for creation of a commission to review the entire military health care structure. The full committee likely will retain the DoD plan to raise retail pharmacy co-pays in order to influence retirees to use mail-order prescriptions that are less costly to the government, according to sources.
 

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