February 20, 2015

A new report by the Center for a New American Security (CNAS) says that TRICARE is in “dire” need for reform in order to sustain the program. The report coincides with recent proposals to transform pay and benefits by the Military Compensation and Retirement Modernization Commission (MCRMC).

Unlike the MCRMC’s proposals, which would be a seismic shift in benefits to servicemembers and their families, the CNAS report calls for modest reforms to TRICARE.

According to the report, “the core problem is that TRICARE’s fee-for-service approach is subject to the same perverse incentive structures that have driven up health care costs in the United States by explicitly connecting payment to volume of care, not value of care.”

TRICARE’s fee-for-service reimbursement model has created volume-over-value thinking that has driven up costs without improvements in outcome or quality.

The report calls for DoD to follow the direction of agencies like the Center for Medicare and Medicaid and private insurers by switching from a fee-for-service model to a value-based model. By rewarding providers based on quality outcomes instead of quantity, TRICARE would be able to control costs.

“We’ve seen fee-for-value programs work successfully elsewhere,” said MOAA’s deputy director of government relations, Kathy Beasley, USN (Ret). “The Department of Defense should be more receptive to changes being made within the health care industry.”

MOAA thinks that more can be done to reduce DoD’s health care costs without adversely affecting beneficiaries. MOAA’s put together 16 ways that DoD can save money in health care.

MOAA will be testifying on health care before the Senate Armed Services Personnel Subcommittee on February 25.