Tricare changes on horizon

More than 168,000 Tricare Prime enrollees those in managed care networks set up more than 40 miles from a military base could lose access to those networks and therefore pay higher out-of-pocket costs in 2009.

Advocates for retirees say a proposed change to the next generation of Tricare contracts would encourage contractors to make more cost-competitive bids by dismantling provider networks that aren’t near military treatment facilities or closed base sites.

Cutting the number of Prime service areas would save the government money, but it would hit thousands of beneficiaries in the wallet. Retirees, their spouses and survivors living more than 40 miles from base would lose access to Tricare Prime and also to Tricare Extra, the military’s preferred provider option. They would have to shift to Tricare Standard, which for beneficiaries, is the most costly of Tricare’s three options. The number of doctors willing to accept Tricare patients also could tighten in some areas.

Tricare officials declined to comment on the potential effect of the draft proposal, which was released for review by potential bidders and other interested parties a few months ago. Officials said they don’t want to risk influencing any comments they receive. An official did emphasize that the proposal is only a draft, but the comment period closed July 19 with few responses.

The new contracts likely will be awarded in 2008, will take effect in March 2009 and will run for six years. Such contracts are vital to Tricare, the health plan of 9.2 million military beneficiaries. More than half of all beneficiaries, about 5 million, are enrollees in Prime, the managed-care option. Service members get care at no charge. Other Prime enrollees pay an annual fee of $230 for individual or $460 for family coverage, and modest co-payments for doctor visits, lab tests and hospital care.

Beneficiaries who prefer to chose their own doctors, or who don’t have access to Prime coverage where they live, use Tricare Standard, a fee-for-service plan. Standard users pay an annual deductible of up to $150 for individuals or $300 for families, plus a hefty share of all medical bills 20 or 25 percent of “allowed charges” depending on patient category. Standard users can be stuck with additional costs if doctors won’t accept Tricare’s allowable rates, but total medical costs per family cannot exceed a $3,000 a year.

A third option is Tricare Extra, also for patients not enrolled in Prime. Extra provides a 5 percent discount on co-payments set under Standard because beneficiaries agree to use a Prime network provider.

Because the military only has hospitals, clinics and staff to treat a fraction of its beneficiary population, it partners with large private-sector companies to run robust networks of health-care providers. Support contracts for Prime alone cost the Department of Defense an estimated $6 billion a year.

Health Net Federal Services, of Rancho Cordova, Calif., has the north region contract. TriWest Healthcare Alliance of Phoenix services the western region. Humana Military Health Services, headquartered in Louisville, Ky., has the managed-care contract for the south region.

When these current contracts were let, companies were allowed to add millions of dollars to their offers by promising to establish service areas for beneficiaries living far from any base. Contractors were rewarded, or at least not punished, for such initiatives. Even if they could not claim to be the lowest bidder, they could still win the contract by claiming best value.

The draft proposal for the next generation of contracts says specifically that bids will be judged on providing Prime networks only for government mandated service areas, those near military treatment facilities and base closure sites.

No representative for any of the three current contractors agreed to speak on the record about the potential impact on beneficiaries if the next support contracts adhere to Tricare’s draft guidance.

Tricare Prime Remote coverage would be unaffected by the new contracts. This special program allows active-duty members and their families assigned away from military treatment facilities to get whatever care they need, from whatever doctor they choose, without paying more out of pocket than they would if they were enrolled in Prime.

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