Legislation | Bill covers pay raise, concurrent receipt, health care.

Key Committee Approves Bill

The first week in May, the House Armed Services Committee (HASC) approved its version of the fy 2003 Defense Authorization Bill (H.R. 4546), including a January pay raise, a plan to phase out retired pay penalties for severely disabled retirees, and several health care upgrades.

At press time, the full House was scheduled to address the bill by mid-May. In the Senate, the Armed Services Committee envisioned drafting its version of the defense bill by May 10.

HASC Chairman Bob Stump (R-Ariz.) and Military Personnel Subcommittee Chairman John McHugh (R-N.Y.) indicated the House bill includes the following initiatives.

Active duty:

• Increase military manpower by 12,650, the biggest single-year growth since 1985.
• Enact a January 2003 raise of at least 4.1 percent for all active, National Guard, and Reserve troops, with raises up to 6.5 percent for certain midcareer ncos and officers.
• Direct a General Accounting Office (gao) review of commissary operations and administration-proposed commissary funding reductions. The subcommittee urges the secretary of Defense to moderate the pace of commissary manpower reductions pending receipt of the gao report.
• Continue the five-year plan to raise allowances to cover average housing costs by grade; allowances will cover nearly 93 percent of housing costs in 2003 (vs. 89 percent in 2002).

Retired pay:

• Implement a five-year plan (starting January 2003) to phase out the disability offset to retired pay for uniformed services retirees with at least 20 years' service and disability ratings of 60 percent or higher. McHugh said this was a "very significant step forward," but added, "I would be the first to agree, [the decision] leaves a lot of people unhelped." He described the subcommittee's action as a "minimum, as a base from which we can build for the future."

National Guard and Reserve:

• Extend the time period (to 14 years vs. 10 years) for reservists to use their Montgomery gi Bill Education Benefits.
• Direct the Department of Defense to review reserve personnel and compensation (including retirement) programs and report to Congress by March on changes to recognize their increased commitments.

Health care:

• Expand TRICARE Prime Remote coverage (which limits out-of-pocket costs for families assigned where TRICARE Prime is not available) to cover active duty family members who are unable to reside with the military sponsor.
• Eliminate a separate TRICARE credentialing process for providers who already participate in Medicare. (Eliminating administrative hassles is one way to encourage more providers to participate in TRICARE.)
• Eliminate the requirement for TRICARE For Life (TFL) beneficiaries to obtain prior authorization for inpatient mental health care. (Medicare already has authorized this care before TFL pays.)
• Direct the gao to examine TRICARE claims-processing problems and recommend possible actions to reverse the decline in the number of TRICARE providers.

Once both the House and Senate have passed their respective versions of the defense bill, Armed Services Committee leaders from both chambers will meet in a conference committee to iron out their differences. Congressional leaders say they hope to finish this by early August, but final negotiations typically drag into September or beyond.

July's "Washington Scene" will have more details of the House and Senate defense bills.

Personnel | Coalition testifies before Senate.

People Programs Defended

Representatives of TROA and The Military Coalition (TMC) presented TMC's personnel and compensation priorities before the Senate Armed Services Personnel Subcommittee April 11.

Sen. Max Cleland's (D-Ga.) Armed Services Personnel Subcommittee heard testimony from five TMC witnesses as well as senior officials of the Department of Defense (DoD) and the General Accounting Office.

TMC witnesses, including troa's Sue Schwartz, dba, deputy director of Government Relations, expressed gratitude for recent major progress in improving active and retired members' quality of life - especially TRICARE Senior Pharmacy and TRICARE For Life (TFL) coverage.

But the witnesses also stressed that much remains to be done, including the need to restore military pay comparability, upgrade housing and relocation allowances, increase staffing to relieve overdeployed members and units, upgrade TRICARE for both beneficiaries and providers, eliminate the disability offset to military retired pay, provide health care and tax relief for Guard and Reserve members, upgrade survivor benefits, and protect commissaries, among other issues.

The hearing provided both some reassurances and a warning note. Assistant Secretary of Defense (Force Management Policy) Charles Abell observed that "smart weapons are worthless unless enhanced by smart soldiers, sailors, airmen, and Marines," and that "people are our highest priority." But he also noted, "Our most expensive weapon system is the individual servicemember, and it's possible to make people too expensive. We need to ensure the taxpayer is served and ask ourselves when considering new initiatives whether they are things we really need to do to recruit and retain or whether they're just ‘nice to do.' "

Therein lies the potential bone of contention. Too often DoD - regardless of the political party in the White House - uses the latter assessment to dismiss the need to address serious equity issues for retired servicemembers and survivors. This shortsighted approach led past administrations to oppose TFL and even a minimum survivor annuity for "forgotten widows." Now, it's leading the current administration to oppose concurrent receipt of retired pay and veterans' disability compensation. The reality is that unfair treatment of retirees and survivors is transparent to today's force, and it has a definite impact on recruiting and retention over the long term. Fortunately, Congress has proven more attuned to this than the executive branch.

Cleland and Sen. John McCain (R-Ariz.) expressed concern about the uncertain duration of National Guard and Reserve call-ups and the need to avoid excess reliance on them. "It's not wise to commit reserves in war for too long," said Cleland, "or you have no reserves to commit."

Cleland also noted TMC's objections to proposed cuts in the commissary subsidy. "We need to retain families, and the commissary is a very visible, family-friendly institution," he said. "It's a tremendous value for the government, and this is not the time to be cutting commissary funding."

TMC's written testimony can be found on TROA's Web Base, www.troa.org/Legislative/Testimony/Default.asp.

TRICARE | House panel hears health testimony.

TRICARE Upgrades Urged

TROA's Sue Schwartz, DBA, deputy director of Government Relations, and other witnesses testified before the House Armed Services Military Personnel Subcommittee April 10 concerning defense health needs. The subcommittee is chaired by Rep. John McHugh (R-N.Y.).

In his opening remarks, McHugh noted that the nation has been at war since Sept. 11, and he underscored the importance of the Defense Health Program. "It is incumbent upon this subcommittee and the entire Congress," he said, "to ensure our active and reserve military forces, their dependents, and the retirees who have contributed to the great military history of this country are properly supported at home and abroad. No single aspect of this support is more important, valued, or indicative of the nation's commitment than health care."

Schwartz, who also serves as cochair of The Military Coalition's Health Care Committee, noted that TRICARE rates are tied to Medicare fees, which are declining. As more providers are refusing to take new Medicare patients or dropping out of the program, they are more reluctant to be TRICARE providers as well.

Schwartz thanked subcommittee members for enacting landmark health and pharmacy benefits implemented last year for Medicare-eligible and active duty beneficiaries, as well as for fully funding health programs. She urged the subcommittee's added action to:

• increase TRICARE provider participation by raising TRICARE reimbursements, reducing TRICARE administrative requirements, and increasing electronic claims processing;
• improve coordination between TRICARE and other health insurance (OHI) to pay the copayments for beneficiaries with OHI in the same way TFL pays Medicare copayments;
• fix the claims-processing system for disabled Medicare-eligibles under age 65, who still cannot submit their claims electronically;
• provide TRICARE Prime Remote benefits for active duty and reserve family members who are unable to reside with the servicemember; and
• authorize TRICARE coverage options for National Guard and Reserve servicemembers.

Pharmacy | Plan proposes $22 copayment for nonformulary drugs.

DoD Recommends Uniform Formulary

On April 12, the Department of Defense (DoD) announced a new proposal for a uniform formulary for TRICARE pharmacy programs. Currently, the TRICARE pharmacy system has two tiers of copayments: $3 for generics and $9 for brand-name drugs. A prescribed list of drugs is available in the less-expensive mail-order system, but almost any drug is available through the retail pharmacy system for $9 a month. The new rule proposes establishing a uniform formulary, with a new, third copayment tier of $22 for drugs that aren't included in that uniform formulary (see chart, page 28).

Because of the lengthy period required for public comment, coordination, and contract renegotiations, the new plan can't be implemented before spring or summer 2003 at the earliest.

By law, the uniform formulary must include medications across the full range of "therapeutic classes" of drugs authorized under the TRICARE benefit. The DoD Pharmacy and Therapeutics Committee will recommend which drugs should be excluded from the formulary. It can do so only if it judges a drug as not having a "significant, clinically meaningful therapeutic advantage in terms of safety, effectiveness, or clinical outcome" - or as not cost-effective relative to other drugs in a class, considering safety, effectiveness, or outcome. DoD will have to consider the comments and recommendations of a Uniform Formulary Beneficiary Advisory Panel (including representatives of TROA and other associations) before implementing the committee's recommendations.

If a doctor appropriately documents that a nonformulary drug should be prescribed for reasons of medical necessity (e.g., other medications in the class aren't effective, have adverse side effects, or aren't available), that drug would be made available to the affected patient for the regular $9 copayment. (The patient would be refunded the difference if the documentation is approved after the fact.) Beneficiaries can appeal any disapproval of a "medical necessity" request.

While TROA recognizes that the law requires a uniform formulary to provide reasonable cost controls, TROA has told DoD we have significant concerns about the new proposal:

• We're disappointed that DoD did not discuss the specifics of the new initiative in advance with beneficiary associations.
• We want reassurance that the uniform formulary will provide broad coverage of frequently prescribed medications that offer a range of choices within each therapeutic class, recognizing that the "lowest common denominator" drug isn't the right fit for all beneficiaries.
• We need assurances that procedures for documenting and approving "medical necessity" determinations by a patient's physician will be streamlined, without posing administrative hassles for providers and patients.
• We believe the jump from $9 to $22 for nonformulary drugs is too great.
• We believe that patients already receiving prescriptions for medications should be "grandfathered" at current copayment levels should their drug end up on the nonformulary list.

Pentagon and congressional leaders authorized, built, and implemented the current pharmacy system (with its $3 or $9 copayment structure) and touted it for the last 18 months as having been earned and deserved by military members, retirees, and families. It was cited as "keeping promises" to beneficiaries, and no mention was made of possible near-term cutbacks. Beneficiaries, too, have greeted the new system with words of praise. But those promises and praises - and trust - will be tarnished if the new uniform formulary turns out to be excessively restrictive and imposes 100-plus-percent copayment increases on large numbers of beneficiaries.

TROA and other military associations represented on the Uniform Formulary Beneficiary Advisory Panel will push hard on these issues. In the meantime, members of the public can comment on the proposed rules. We urge TROA members and others to let DoD know what you think.

Mail comments before June 11, 2002, to: Medical Benefits and Reimbursement System, TRICARE Management Activity, 16401 East Centretech Parkway, Aurora, CO 80011-9066. Alternatively, e-mail comments to uniformulary@tma.osd.mil.

Visit TROA's links page, www.troa.org/magazine/links.asp, for a TROA-suggested letter on this subject.