Some increase coming to Tricare drug co-pays

Defense Secretary Leon Panetta has urged House-Senate conferees negotiating final details of the 2013 defense authorization bill to support the Obama administration’s “full proposal” for increasing drug co-pays on military family members and retirees.

The higher fees, which would nearly triple out-of-pocket costs for brand-name prescriptions at Tricare retail outlets, are to encourage greater use of less costly options — the Tricare mail order program and base pharmacies, Panetta explained. He did so in a Dec. 11 letter to Rep. Howard “Buck” McKeon, R-Calif., chairman of the House Armed Services Committee.

The Senate-passed defense bill, by staying silent on the pharmacy issue, would allow Tricare officials to carry out their plan to raise beneficiary co-pays at retail outlets over several years and then to adjust them annually to keep pace with medical inflation. Part of that plan is to raise the current $12 co-pay on brand-name drugs filled at Tricare network drug stores to $26 in 2013 and to $34 by 2016.

House bill language, if adopted, would soften that blow. It would allow the brand name co-pay at retail to climb only to $17 next year and then adjust it thereafter by the percentage increase in retired pay annually. But the House plan also would require beneficiaries 65 and older to have all maintenance drugs for chronic conditions filled by mail order only.

Referring to “spiraling health care costs,” Panetta told McKeon the department “is pleased” to see that either bill will “permit some increases in pharmaceutical co-pays” to save money “by providing incentives to use mail order and generic drugs.” Most of the savings, he said, would not come from beneficiaries but from greater use of more efficient pharmacy choices.

Free vaccines: While conferees press to reach compromise on drug co-pays, Rear Adm. Thomas McGinnis, chief of Tricare pharmacy operations, is urging beneficiaries, especially the elderly, to take advantage of a line of cost-free vaccines at Tricare retail outlets.

It used to be a hassle to get a flu shot or vaccine for shingles or other preventable ailments. Patients needed a doctor’s appointment and often faced a co-payment. The process today is easy and cost-free through Tricare retail outlets but many beneficiaries don’t know this, McGinnis said.

Retail druggists are primed to offer vaccines, in part, because they get paid for supplying the medicine and for administering the shot. The higher cost to Tricare, McGinnis said, is more than offset by savings from preventing common illnesses. Vaccines mean fewer doctor visits and fewer medicines dispensed for ailments now avoided.

“If flu is prevented you don’t need to get an office appointment with your primary care manager. You don’t need an antibiotic or antihistamine or some other drug. The direct cost savings are substantial because these vaccines are cheap and very cost effective,” McGinnis said. Then there are the indirect costs of military folks not missing work.

Vaccines given on base are still the most cost-effective for Tricare. But the retail network began offering them in November 2009, and since then more than 707,000 beneficiaries have received almost 1.1 million vaccines off base.

Though Tricare last month passed the 1 million mark for vaccines at retail outlets, McGinnis said “that number probably should be much higher because many beneficiaries don’t live close to military treatment facilities.” They need to know, he said, “that this is convenient, easy and free.”

Compensation “glitch”: A key issue conferees on the defense bill are considering is the fate of a Senate-passed fix to a “glitch” in Combat-Related Special Compensation for some military retirees forced from service short of 20 years because of combat-related conditions.

Congress in 2008 extended special compensation eligibility to so-called Chapter 61 retirees with combat-related disabilities. But the calculation formula approved for the compensation extension leads, in some circumstances, to little or no additional compensation due when a retiree’s disability rating rises. Whether an individual is affected, and by how much, by this glitch depends on several factors including original service disability rating, length of service, Veterans Administration rating and rating tied to a member’s combat-related condition.

After years of trying, Sen. Harry Reid,D-Nev., the majority leader, saw his amendment to correct the glitch adopted last week in the Senate version of the defense bill. If House conferees accept it, retirees uniquely affected by the glitch would see compensation increase starting Oct. 1, 2013. Reid couldn’t find a budget offset to make the change any sooner.

Thomas LaRock, a spokesman for the Defense Finance and Accounting Service, said the number of retirees affected by the glitch is hard to estimate given the complexity of calculations required. But it could be dampening pay an average of a few hundred dollars a month for as many as 5,000 to 6,000 retirees, he said. That estimate of the population affected is expected to fall as individual case files are examined.

Officials with Military Officers Association of America, which began to lobby for a compensation fix four years ago, said some retirees probably aren’t even aware their compensation has been held down by a flawed formula.

Write Military Update, P.O. Box 231111, Centreville, VA, email or twitter: Tom Philpott @Military_Update.

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