TRICARE Publishes New Changes: Beneficiaries could see increased costs next year

October 5, 2017

Timing is everything- and we are now into the fall, and marching ever closer to the Jan. 1, 2018, start date for anticipated changes to the TRICARE program. As part of this process, TRICARE late last week announced its formal requirements for implementing portions of last year's National Defense Authorization Act (NDAA).

The Interim Final Rule (IFR) guides the implementation of TRICARE Select, the new preferred provider organization option, which combines the current TRICARE Standard and Extra plans. Other significant changes are forthcoming as well, many of which are addressed in the MOAA TRICARE questions and answers series you may have seen before: 

Part 1: Who's affected by the new TRICARE changes?

Part 2: How will TRICARE's new enrollment rules work?

Part 3: Will TRICARE changes affect my access to care?

But shockingly, the story took an unanticipated twist.

Along with implementation of the new TRICARE Select option, and without any prompting or open discussion, a new set of cost shares and fees unexpectedly appeared in the IFR. These new fees are targeted at existing beneficiaries who currently, by law, are grandfathered into the current TRICARE Standard/Extra program fee structure. 

Recall that a key feature of last year's package of sweeping TRICARE reforms was that all those currently serving, as well as those retiring prior to Jan. 1, 2018, would be grandfatheredinto the existing fee structures. New entrants into the services after Jan. 1, 2018, would be subject to newer, much higher fees. The whole goal of the grandfathering was to keep fees where they currently are, at what we believe to be a reasonable level, for beneficiaries in the service prior to Jan. 1, 2018. Now this commitment seems to be slipping away.

Many of these new TRICARE Select fees water down any benefit of grandfathering. In most cases, there will be higher fixed fees and cost shares for both retirees and active duty families who choose the new Select option. 

In many instances, new entrants who join after Jan. 1, 2018, will be paying less than current beneficiaries, who should be grandfathered into the previous, lower fee structure.

To focus on a few of the most glaring TRICARE Select examples under the IFR guidance:

  • A current, would-be grandfathered, active duty family member's cost for a primary care visit will be $27 for a network provider. Contrast this with a new entrant family member after Jan. 1, 2018, who will pay $15.
  • The same grandfathered member above would pay $34 for a specialty care visit, while a new entrant family member would pay $25.
  • Grandfathered retirees under age 65 would pay $35 for an in-network primary care visit. Future retirees who entered after Jan. 1, 2018, would pay $25.
  • Grandfathered retirees under age 65 will pay quite a bit more for inpatient hospitalizations than future entrants - $250 a day, versus $175 per admission.

This new structure leaves us scratching our heads, with more questions than answers. 

How can it be that existing grandfathered beneficiaries will pay more for their health care than those newly entering the service? Are grandfathered beneficiaries being saddled with disproportional increases as to cover costs of other programs? Why would DoD unveil these new fees, couched as necessary to stabilize costs, before a defense bill is resolved and presented to the president? 

Not to mention the Senate's version of the pending defense bill, which has its own designs on increasing TRICARE pharmacy copayments. What led DoD and the Senate to change their level of support to currently serving and retired sevicemembers? 

MOAA is concerned these changes will result in cost increases for many beneficiaries, increases which bypassed open dialogue among military service organizations. 

As the Armed Services committees begin to take on their annual defense bill negotiations in conference committee, these fee changes muddy the waters, as noted above. Adding to the confusion, a provision in the FY18 NDAA would repeal the grandfathering clause from last year's defense bill, subjecting all beneficiaries to the fee structure for new entrants. But according to the IFR, the fee structure for new entrants after Jan. 1, 2018 is marginally better than what would be put in place should grandfathering remain.

MOAA hopes beneficiaries aren't being coaxed into picking between two bad choices: leave grandfathering alone and take disproportional fee hikes anyway, or repeal grandfathering and take on newer, smaller - but still disproportional - fee hikes. The latter also would achieve one of DoD's objectives: to have only one fee system for all beneficiaries, old and new. It seems this strategy of two choices ensures DoD wins either way.   

A peculiar and frustratingly confusing strategy should be concerning for all TRICARE beneficiaries. As MOAA has said from the beginning, timing is everything. We will be using the comment period following the IFR release to demand clarification that will reveal the underlying intent of these changes. 


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