Spe­cial re­port: Tri­care pro­gram not shielded from bud­get hawks

Health plan for mil­i­tary per­son­nel and their fam­i­lies be­comes vul­ner­a­ble in fight over SGR, ef­forts to curb fed­eral spend­ing

Modern Healthcare - - FRONT PAGE -

The ris­ing cost of Tri­care, the mil­i­tary’s health­care cov­er­age pro­gram, has brought in­creas­ing scrutiny from law­mak­ers and an ad­min­is­tra­tion in­tent on re­duc­ing the fed­eral bud­get deficit. How­ever, some provider and ben­e­fi­ciary ad­vo­cates worry that ef­forts to con­trol the pro­gram’s spend­ing are un­der­min­ing a sep­a­rate push to ex­pand ac­cess to care.

The nine types of man­aged-care plans in Tri­care—which was im­ple­mented na­tion­wide in 1997—cover nearly 10 mil­lion uni­formed ser­vice mem­bers, re­tirees and their de­pen­dents, and pay for care through both mil­i­tary health­care fa­cil­i­ties and civil­ian providers.

Those pri­vate providers have seen a range of cost-cut­ting moves di­rected at them in re­cent years, even as Tri­care has si­mul­ta­ne­ously pushed to in­crease the num­ber of civil­ian providers who will treat its ben­e­fi­cia­ries. And the ten­sion be­tween those sep­a­rate ini­tia­tives is in­creas­ing as the pro­gram’s over­all spend­ing draws fire as a driver of ris­ing fed­eral health­care spend­ing.

Former De­fense Sec­re­tary Robert Gates sounded the loud­est re­cent alarm about the costs of Tri­care when he de­scribed its cur­rent spend­ing as “sim­ply un­sus­tain­able” in Fe­bru­ary tes­ti­mony be­fore the House Armed Ser­vices Com­mit­tee. Changes were needed, he said, to con­trol spend­ing in mil­i­tary health­care, which had grown to a pro­jected $52.5 bil­lion in the cur­rent fis­cal year from $19 bil­lion in fis­cal 2001 (See chart).

The bal­loon­ing costs have pro­duced a range of spend­ing re­duc­tion pro­pos­als, many of which have fo­cused on in­creas­ing the rel­a­tively low cost-shar­ing for Tri­care ben­e­fi­cia­ries com­pared with other fed­eral health in­sur­ance pro­grams. For ex­am­ple, the $3 tril­lion deficitre­duc­tion plan Pres­i­dent Barack Obama pre­sented in Septem­ber would in­crease phar­macy cost-shar­ing by re­plac­ing fixed-dol­lar co­pay­ments with per­cent­age-based charges for the fam­i­lies of ac­tive-duty mem­bers and re­tirees. Ad­di­tion­ally, it would es­tab­lish first-ever an­nual fees in the Tri­care pro­gram geared to­ward re­tired ben­e­fi­cia­ries also el­i­gi­ble for Medi­care.

But two loom­ing cuts would fo­cus on low­er­ing the pro­gram’s spend­ing on providers. The first is a 27.4% cut in the physi­cian pay rate known as the sus­tain­able growth-rate for­mula, which is used by both Medi­care and Tri­care; the cut is re­quired un­der a fed­eral cost-con­trol fund­ing for­mula that dates from 1997 and sched­uled to go into ef­fect at the be­gin­ning of 2012. The sec­ond pos­si­ble cut is a deficitre­duc­tion plan that would slice Medi­care and Tri­care provider pay­ments start­ing in 2013 if a $1.2 tril­lion deficit re­duc­tion pack­age is not ap­proved by Congress by Dec. 23.

Both types of cuts would have a larger im­pact on Tri­care providers, ac­cord­ing to pa­tient ad­vo­cates. That is be­cause Tri­care gen­er­ally treats Medi­care rates as a ceil­ing, while pay­ing many in­di­vid­ual ser­vice cat­e­gories at lower rates. Con­versely, Tri­care of­fi­cials have em­pha­sized that there are some other cat­e­gories of ser­vices for which the pro­gram pays more than Medi­care to some providers in cer­tain re­gions.

Steve Stro­bridge, a re­tired Air Force colonel and di­rec­tor of govern­ment re­la­tions for the Mil­i­tary Of­fi­cers As­so­ci­a­tion of Amer­ica, says the provider cuts that most con­cern his or­ga­ni­za­tion come un­der the planned 27.4% rate re­duc­tion. “That will dra­mat­i­cally af­fect their will­ing­ness to par­tic­i­pate,” he says about pri­vate physi­cians.

What’s next for the SGR?

The loom­ing cut to the SGR is highly un­likely to oc­cur, ac­cord­ing to many mem­bers of Congress. How­ever, it re­mains un­clear whether leg­is­la­tors will agree to a per­ma­nent fix to the costly prob­lem or sim­ply ap­prove an­other tem­po­rary patch that freezes the rates or pro­vides a to­ken in­crease.

Physi­cians’ ad­vo­cates have main­tained that con­tin­u­ing the pat­tern of re­cent years in which Congress tem­po­rar­ily waives the physi­cian pay cuts af­ter months of brinkman­ship, or even brief im­ple­men­ta­tions of the cuts, is caus­ing hard­ships for providers and lead­ing some to re­con­sider their par­tic­i­pa­tion in Tri­care and Medi­care.

“Ac­cess to health­care for mil­i­tary fam­i­lies is in se­ri­ous jeop­ardy,” Dr. Robert Wah, chair­man of the Amer­i­can Med­i­cal As­so­ci­a­tion, said in a re­cent writ­ten state­ment about the im­pact of the loom­ing SGR cut.

Vet­er­ans and provider ad­vo­cates also are con­cerned about cuts to Tri­care providers that would come through the so-called con­gres­sional su­per­com­mit­tee. If that panel fails to reach bi­par­ti­san agree­ment on $1.2 tril­lion in deficit re­duc­tions over 10 years—a prospect that ap­pears in­creas­ingly likely, ac­cord­ing to con­gres­sional sources—then cuts of that size will au­to­mat­i­cally come from the mil­i­tary bud­get and from fed­eral health­care pro­grams. Any cuts to Medi­care—whether au­to­matic or part of a ne­go­ti­ated deal—also would af­fect Tri­care providers, ad­vo­cates say, be­cause they would

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