TRICARE Reform, or Just Fee Increases?

February 12, 2016

In the FY16 Defense Authorization Act, House and Senate leaders signaled their intent to pursue significant military health care reforms for FY17. They made it clear their intent was to improve care access and delivery. While they said they expected higher fees would be part of the reform, their focus would be on improving the benefit, not just raising beneficiary fees.

MOAA hoped to see some specific proposals in the FY17 budget to address well-documented problems with access, continuity of care, referrals, National Guard and Reserve programs and other documented healthcare problems.

In the briefing accompanying the budget rollout, Assistant Secretary of Defense for Health Affairs, Dr. Jonathan Woodson, said the budget includes initiatives to: 

  • Allow options to obtain urgent care without a referral
  • Ensure “first-call resolution” on appointment requests
  • Improve telehealth and quality measures
  • Extend after-hours care at military facilities
  • Enhance care for special-needs beneficiaries

MOAA certainly supports all of those initiatives, but awaits more details and explanation of how they will be worked into the system under current contracts.

In contrast, the budget was very specific in detailing a wide variety of fee changes and increases, including:

  • Rebranding TRICARE Prime and TRICARE Standard as TRICARE Select and TRICARE Choice, respectively (for clarity purposes, we'll continue to refer to them as Prime and Standard in the discussion below)
  • Changing most copays for network provider visits to flat fees (out-of-network care would continue to have copays of 20 percent for active duty family members and 25 percent for retirees and family members),
  • Establishing new annual “participation fees” for all retired members and families, under which those who didn't pay the fee would be denied coverage for the year
    • $350/$700 (single/family) for TRICARE Prime
    • $450/900 for TRICARE Standard
    • .5 percent to 2 percent of retired pay for a TFL-eligible couple, phased in over 5 years, with a complicated system of separate caps for flag officers and lower grades
  • Establishing a zero deductible for Standard and Prime beneficiaries who use in-network providers, but a $300/$600 (single/family) annual deductible for care from out-of-network providers
  • Raising the catastrophic cap (maximum out-of-pocket expenses) to $1,500 per year for currently serving families and $4,000 for retired families (vs. current $1,000 and $3,000)
  • Roughly doubling most pharmacy copays via a 10-year schedule of increases
  • Increasing all flat-dollar fee amounts annually by medical inflation (via a measure currently projected to increase at 6.2% per year)
  • Exempting medical (Chapter 61) retirees and survivors whose sponsors died while on active duty from higher enrollment fees and copays paid by retired members
  • Implementing the means-tested TRICARE For Life enrollment fee as of Jan. 2017, and the other changes as of Jan. 2018.

These are selected highlights of the proposals. We'll provide additional details in next week's update.

In the meantime, MOAA has done some calculations to illustrate how the cumulative changes would affect various categories of beneficiaries:

Feb 12 TRICARE 1II

 

TFL beneficiaries would also be subjected to a means-tested enrollment fee, based on a percentage of retired pay. Means testing TFL beneficiaries is unprecedented and inappropriate for service-earned health coverage. It imposes financial penalties for longer and more successful service on a population that is already paying the highest fees of any military beneficiaries.

Current TFL beneficiaries would be grandfathered. Means-tested enrollment fees would be applied only to those attaining age 65 on or after January 1, 2017.

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Active duty servicemembers and their families do well under the proposed budget, especially if they remain in Prime, and would have no copays for receiving care in network with a referral. Seeing a non-network provider would still incur a 20 percent cost share of the TRICARE allowable charge.

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MOAA's initial concerns about the proposals, in addition to the disproportional fee hikes, include:

  • The focus on driving more care to military hospitals and clinics, when those facilities have been unable to accommodate current patient loads, as evidenced by appointment shortages and referral problems.
  • Tying all health care fees, including premiums and copays, to a medical inflation index that is projected to grow at more than 6 percent a year. MOAA continues to believe fee adjustments should be capped at the annual COLA percentage.
  • The continued effort to escalate pharmacy copays, which have already been doubled and tripled over the past 5 years.
  • Requiring an annual decision to enroll and pay the “participation fee” or be denied care for a year.
  • The failure to substantively address the need of Guard and Reserve members and families for more consistent and rational health coverage.

“It's important to appreciate the budget submission is just the first step in a long process,” said MOAA President Lt Gen Atkins, USAF (Ret). “MOAA and our partners in The Military Coalition will be working with leaders and staffs of the House and Senate Armed Services committees in the coming months in our ongoing efforts to improve access and other problem areas while doing our best to protect against imposing disproportional fee increases on those who earned their military health care coverage through decades of service and sacrifice.”

 

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