Money worries spur mixed signals on Tricare for Life

If Defense Department health officials have sent mixed signals in recent weeks over whether the new TRICARE for Life benefit for Medicare-eligible beneficiaries will include an offer of enrollment in TRICARE Prime, the military’s managed care program, David J. McIntyre Jr. believes he might know why.

Defense officials, he said, are worried over how they will pay for the benefit, and over the strain it might put on the health system if the entire benefit takes effect, as scheduled, on Oct. 1, 2001. Defense officials would prefer to bring the benefit to life in phases.

House and Senate staff members have cautioned these officials that TRICARE for Life has specific start dates and the law doesn’t authorize a phased approach.

McIntyre is president and chief executive officer of TriWest Healthcare Alliance of Phoenix, Ariz., one of five managed-care support contractors who administer networks of civilian health care providers. TRICARE relies on these networks to care for patients who can’t be treated at nearby military clinics and hospitals because of limits on space or staff.

Defense health officials, he said, “are in a very, very difficult position.”

“They understand the importance of bringing out the (TRICARE for Life) benefit. They’re working at doing that,” said McIntyre. “But the timelines are very short, the expectations are high and the amount of money available may be insufficient to bring it all out at the same time, unless or until more dollars are added to the DoD health care budget.”

The expanded benefit for 1.4 million Medicare-eligibles will arrive in two parts. The TRICARE Senior Pharmacy Program, to begin April 1, 2001, will be identical to pharmacy benefits available to under-65 retirees and spouses, including access to the National Mail Order Pharmacy Program and to the TRICARE retail pharmacy benefit.

Part two, TRICARE for Life, will take effect Oct. 1, 2001. The scope of this benefit is in dispute. At a minimum, it will allow beneficiaries enrolled in Medicare Part B to use TRICARE Standard as a second payer insurance plan to Medicare.

Congressional staff members say Congress intended, and the law directs, that the services’ elderly be allowed another option, to enroll in TRICARE Prime, the managed care program. If enrollment isn’t possible with a military clinic or hospital, they should be able to enroll with a primary care provider in the TRICARE civilian provider network.

“Enrollment is clearly to be an option for these folks, just like anybody else,” said a congressional staff member who has met with Defense officials to reinforce that point.

Dr. J. Jarrett Clinton, acting assistant secretary of defense for health affairs, told reporters a few weeks ago that the new TRICARE benefit should be viewed primarily as government-paid Medigap insurance. Not many more elderly, he suggested, will be able to enroll in TRICARE Prime. Spaces are limited, he said, and DoD has no plan to expand military hospital staffs or TRICARE civilian provider networks to accommodate an influx of Medicare eligibles.

But McIntyre said senior health officials continue to grapple with how to offer Prime enrollment to Medicare-eligibles. Such an offer by Oct. 1, 2001 might be impossible, he said, given current funding levels and the amount of analysis and planning required.

“A plausible first step,” he said, would be to allow the 30,000 elderly enrolled in the TRICARE Senior Prime demonstration at 10 sites to move into TRICARE Prime, probably by Jan. 1, 2002. DoD also could allow current Prime enrollees, as they turn 65, to retain their enrolled status.

The final phase, McIntyre said, could be to offer enrollment to any Medicare-eligible beneficiary living near a military base. A logical point to open that gate, he said, might be Oct. 1, 2002, when funding for TRICARE for Life shifts from the Defense Department’s budget to a new accrual accounting fund under the Department of the Treasury.

Still to be determined is whether military treatment facilities will be paid from the fund for services delivered to Medicare-eligibles in excess of a hospital’s “current level of effort” in treating the elderly and disabled. If not, McIntyre doubts that the typical military facility will be able to shoulder the cost of providing more such care.

Defense health officials haven’t articulated their own schedule for phasing in TRICARE Prime for older beneficiaries, McIntyre said, probably because battles still must be fought internally and with the White House’s Office of Management and Budget and Congress. Also, he suggested, the Defense health affairs staff is swamped with work on the new benefits. They also are worried about how to cover the potential cost of TRICARE for Life and the new pharmacy benefit. McIntyre has heard estimates of $4 billion to $5 billion from when the pharmacy benefit begin in April 2001 through the shift to an accrual accounting fund in October 2002.

Defense health budgets already are underfunded, McIntyre said. His company, TriWest, and the other four TRICARE support contractors are still working with DoD to get paid for costs tied to benefit and program changes over the past several years. Congress appropriated more than $700 million for this purpose but, McIntyre said, it still might not be enough.

The cost of TRICARE for Life will be even more formidable. To launch the new benefits successfully, the next administration and Congress better be ready to raise DoD’s health budget by billions of dollars, McIntyre said. If they don’t, and TRICARE for Life begins next October as both an enrollment benefit and a Medigap supplement, the cost “will crush” the defense health program, he predicted.

Clinton, the acting assistant defense secretary, has rescinded an order to his staff to stop referring to the expanded TRICARE benefit as “TRICARE for Life.” Clinton had worried the title might mislead beneficiaries into believing it included long-term or hospice care. When military associations failed to find an alternative, they successfully urged Clinton to restore the title.

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