Legislation | Senate action still pending.

House Approves Defense Bill

The House of Representatives completed work on its version of the fy 2003 Defense Authorization Bill (H.R. 4546) May 9, approving the bill by a vote of 359 to 58. In the Senate, the Senate Armed Services Committee approved its version of the defense bill, S. 2514, also May 9. The bill now awaits action by the full Senate.

At press time, Senate leaders expected to bring this important legislation to the floor for action sometime in June.

Both bills contain many provisions of interest to the entire military community, including a pay raise of 4.1 percent to 6.5 percent for active, Guard, and Reserve forces (depending on grade and longevity) and a phaseout of the disability offset to military retired pay for retirees with 20 or more years of service and disability ratings of 60 percent or higher. Also, both bills require a Pentagon report to Congress on needed changes to Guard and Reserve personnel and compensation programs (including retirement) to better reflect the increased role of the Guard and Reserve in today's defense mission. Additional report language in both bills expresses concern over levels of commissary funding and staffing, and the House directs a General Accounting Office review of commissary operations and administration-proposed manpower and funding reductions.

One major difference between the two bills is that the House version raises military manpower by 12,650, the biggest single-year growth since 1985. This action reflects continuing congressional concern over stretching the force too thin in order to meet worldwide commitments and fight the war on terrorism. The Senate bill approves only the administration request for 2,400 more Marines. But it would allow the secretary of Defense to exceed statutory manpower limits by 2 percent during the year if needed to meet military requirements.

When the full Senate takes up its version of the Defense bill, we expect to see three important amendments included. The Armed Services Committee and Sen. Harry Reid (D-Nev.) will offer a "full concurrent receipt" amendment that would completely eliminate any disability offset to retired pay for all disabled retirees with 20 or more years of service, regardless of disability rating, effective Oct. 1, 2002. We're gratified by this very important show of support. With 82 percent of senators on record in support of full concurrent receipt, there is little doubt that the full Senate will endorse the proposed amendment. Then, it will be up to a House/Senate conference committee to decide between the House and Senate proposals.

As this article went to press, TROA was preparing to contact 28,000 TROA members who are constituents of House Armed Services Committee members - providing suggested letters (and prestamped, pre-addressed envelopes) to urge their legislators to support the Senate full concurrent receipt provision.

Additional amendments expected on the Senate floor include one from Sen. Strom Thurmond (R-S.C.) to increase Survivor Benefit Plan (sbp) annuities for survivors age 62 and older. Thurmond's amendment, based on his bill, S. 145, would phase in a series of increases that would raise the age-62 sbp annuity to 55 percent of the member's retired pay. (The minimum age-62 sbp annuity is now 35 percent of retired pay.)

Sen. Bill Nelson (D-Fla.) likely will introduce an amendment to eliminate the current dollar-for-dollar sbp reduction for any amount a survivor receives in Dependency and Indemnity Compensation payments from the Department of Veterans Affairs (va). This offset now affects thousands of widows whose military retiree spouses died of service-connected causes.

TROA and The Military Coalition will be in the fight to seek inclusion of these and other initiatives in the final Defense bill. A comparison of selected provisions of the House and Senate versions of the bill begins on page 22.

Health Care | Congress needs to increase payments to doctors.

Medicare Cuts Drive Providers Away

There is growing discontent among Medicare providers over the declining amounts the government pays them for treating Medicare patients. But too often it's those patients who end up paying through the nose.

Doctors are angry that Medicare reimbursement rates often are not sufficient to meet their office operating expenses. In recent years, increasing numbers of physicians have been declining to accept new Medicare patients.

This has serious implications for tricare beneficiaries as well, because tricare reimbursements are tied by law to what Medicare pays. While Department of Defense (DoD) figures show record numbers of doctors participating in tricare, those figures hide the reality that many of those doctors no longer accept any new tricare patients. This poses an obvious problem for relocating or retiring military families.

Doctors' frustration was compounded earlier this year, when Medicare reimbursements were cut by an average of 5.4 percent based on provisions in the 1997 Balanced Budget Act (bba). The bba requires annual adjustments in Medicare reimbursements based on trends in inflation and the national economy, aimed at reining in what Congress perceived as excessive increases in Medicare outlays. That formula has been driving Medicare rate cuts, with further cuts expected in coming years.

In a March report to Congress, the Medicare Payment Advisory Commission recommended repealing the formula as inappropriate for setting provider payments because it doesn't adequately account for expected cost increases.

The administration has expressed its willingness to revisit the issue but insists that any fix must be budget-neutral - that is, it must be paid for by cutting payments to other provider groups. That poses an obvious problem, because other groups have been complaining, too.

Lawmakers are responding to doctors' discontent, at least by some measures. Sen. Jim Jeffords (I-Vt.) and Rep. Mike Bilirakis (R-Fla.) have introduced bills in the Senate and House, respectively, that would set a more realistic fee schedule. Jeffords' S. 1707 has 80 cosponsors, and Bilirakis' H.R. 3351 has 343. But this overwhelming cosponsorship support needs to be translated into action.

We urge TROA members and others to contact their legislators to urge them to back up that cosponsorship with action by passing this important legislation right away. TROA offers two ways to do this:

• Visit http://capwiz.com/troa/home/ and click on the "Increase Medicare Reimbursements" Action Alert link at the top of the page, then enter your zip code to view a TROA-prepared message to your senators and representative.
• Use TROA's toll-free hot line to Capitol Hill, (877) 762-8762. Ask the Capitol operator to connect you to your legislator's office and tell the legislator's staffer that you want your senator or representative to make sure Congress passes S. 1707 and H.R. 3351 to provide fairer Medicare payments to doctors and reverse the cuts that have driven so many to turn away Medicare and tricare patients.

Health Care | Nelson urges broad formulary, lower copayment.

TROA Speaks on Drug Plan

In the June "Washington Scene," we reported that TROA was concerned about the fair and balanced implementation of newly proposed federal rules governing the tricare uniform formulary (uf) for prescription medications.

Now, TROA President Lt. Gen. Mike Nelson, USAF-Ret., has written to the tricare Management Activity on behalf of the membership expressing TROA's significant concerns over the proposed rule for the uf. Nelson noted that proposing this change right after implementation of the tricare Senior Pharmacy (tsrx) program implies that DoD is backing down from its previous glowing statements of support for that new plan, which has no copayment above $9. He expressed concern that making the new formulary excessively restrictive will set back retirees' trust in a program Defense and congressional leaders have touted as an earned and well-deserved benefit. He also asserted that the increase from $9 to $22 for nonformulary drugs is excessively high.

Nelson's letter urged that:

• the UF must include a broad range of the medications most often prescribed, offering choices within each "therapeutic class";
• the Basic Core Formulary at military pharmacies must be robust to provide a more user-friendly way for beneficiaries to obtain medications without cost;
• procedures for documenting and approving "medical necessity" for doctors should be streamlined, without posing unnecessary administrative hassles for providers, patients, and pharmacists;
• patients already receiving prescriptions for medications should be "grandfathered" at current copayment levels if their pharmaceuticals end up being removed from the UF; and
• DoD must ensure doctors have educational materials on the program, uncomplicated and immediate access to formulary lists, and the ability to identify and fulfill medical-necessity documentation requirements in real time via the Internet.

The full text of Nelson's letter can be viewed on TROA's Web Base at www.troa.org/Legislative/HealthCare/Pharm_UniFormLetter.pdf.

At press time, The Military Coalition was in the process of coordinating a similar letter.

Benefits | Senate action still pending on veterans' bills.

House OKs Benefits Upgrades

On May 21, the full House voted unanimously to increase certain veterans' and survivors' benefits endorsed earlier by the House Veterans' Affairs Committee (hvac). The Veterans' and Survivors' Benefits Expansion Act, H.R. 4085, would allow surviving spouses of veterans who died of service-connected causes to keep their va survivor benefits if they remarry at age 65 or older.

These benefits include a va survivor annuity (Dependency and Indemnity Compensation, or dic), eligibility for the Civilian Health and Medical Program for the va medical care, and education and housing loan benefits. Surviving spouses who remarried after age 65 prior to enactment of the bill would have one year from the date of the new law to reapply for benefits.

Perennial dic champion Rep. Mike Bilirakis (R-Fla.) sponsored a bill last year (H.R. 1108) that would have allowed dic continuance if the remarriage occurred after age 55. But the committee could not identify enough funds to pay for the age-55 remarriage dic. It elected to pursue the age-65 initiative as a first step and work in the future to cover survivors remarrying at a younger age.

In all other federal agencies' survivor annuity programs, widows remarrying at age 55 or older do not suffer termination of their survivor benefit.

H.R. 4085 also authorizes a full-inflation cost-of-living adjustment (cola) for all va disability compensation and dic annuitants, effective Dec. 1; equalizes va home loan fees for National Guard and Reserve servicemembers with other va home loan fees; and increases va home mortgage life insurance coverage, among other benefit improvements. In the Senate, S. 1090 authorizes the same cola increases for va disability compensation and dic but does not include the remarriage and other benefit provisions. S. 1090 awaits Senate floor action.

Pay | Quadrennial review recommends targeted pay raises.

DoD Releases Compensation Study

The Department of Defense (DoD) has released its ninth Quadrennial Review of Military Compensation (QRMC), which affirms DoD's compensation strategy to "target" larger basic pay increases for certain career enlisted members and officers. The QRMC report focuses on three areas: basic pay and allowances, special and incentive pays and bonuses, and other measures of financial well-being (e.g., education benefits and junior enlisted family living standards).

Considering recruiting and retention challenges of the past decade, the QRMC studied whether basic pay was adequate to sustain a "quality" all-volunteer force in the future. The report concludes that although the past benchmark - pay comparability with high school graduates in the civilian workforce - remains valid for younger enlistees, today's career enlisted force is much better educated than in the past.

The QRMC recommended tying mid-grade enlisted pay to that of private workers with some college education. For senior enlisted personnel, the comparison group would be workers with college degrees. Based on these new standards, DoD expects to continue recent trends of targeting larger pay raises for mid- and senior enlisted grades.

Warrant officers also are better educated, and the majority of them come from the enlisted ranks. Thus, the QRMC recommended further warrant officer raises to ensure proper incentives and bridge the gap between technical and managerial work.

The QRMC noted that officers' education levels also have risen and recommended tracking their pay with civilian professionals/managers with advanced degrees.

The QRMC urged enhancements to special pays and allowances, especially for reservists, who are shouldering a greater share of operational missions. Unfortunately, it did not address the overall adequacy of the Guard and Reserve compensation package in light of the increased reliance on these components. But both the House and Senate direct such a study in their versions of the fy 2003 Defense Authorization Act.

Additional recommendations in the QRMC report included:

• a more voluntary assignment system for career personnel, using incentive pay to attract volunteers for hard-to-fill locations;
• deployment pay and additional tax relief for members deployed overseas;
• skill and capability pay to relieve large differences between military and private-sector pay in various skill areas and to encourage high performers to stay;
• an aviation career savings fund, with contributions coming from the services, to attract more pilots to the 15-year point; and
• additional support for military spouses, as frequent moves and other circumstances cause higher spousal unemployment and lower spousal earnings compared to their civilian peers.

FY 2003 Defense Authorization Bill Provisions

Selected Health Care Issues