Tricare Choice: What’s in it for you?

By Patricia Kime, Staff writer

Washington policymakers will soon begin consideration of the biggest overhaul of the military health care system since Tricare replaced CHAMPUS in the early 1990s — changes that would shift millions of beneficiaries to commercial, private-sector health plans.

The Military Compensation and Retirement Modernization Commission, which proposed the radical changes in its recently issued final report, says the move would save the Pentagon billions of dollars while greatly enhancing health services for nearly 9.2 million active-duty family members, retirees and their dependents.

The Pentagon has not yet weighed in on the plan. In their fiscal 2016 budget request, defense officials have floated other proposals that would increase health care costs for retirees and their family members while providing incentives for beneficiaries to get care at military hospitals and clinics.

But Congress, which ultimately would decide how Tricare reform proceeds, is looking closely at the commission’s recommendations, with lawmakers on both sides of the aisle generally agreeing that something must change to rein in the Defense Department’s $49 billion annual health budget and provide more choice for military families.

“This idea of opening it up to provide more options is … very interesting and necessary, especially in some places,” said Rep. Tulsi Gabbard, D-Hawaii, speaking for her island constituents. “Our access really is an issue.”

“We’ve got to do something with the current system because it’s just unsustainable,” said Sen. Lindsay Graham, R-S.C. “We’ve been wrestling this alligator for five years. I just sort of lose faith that we can take the current construct, the single-payer system … [and] make it as efficient as the competitive model.”

Providing more choice

The blue-ribbon compensation commission was created by Congress to review military pay, retirement and quality-of-life programs and recommend improvements. Its final report, released in January, contained three health care recommendations.

The one that would have the biggest impact on currently serving troops and retirees under age 65 would be Recommendation 6: “Increase access, choice and value of health care for active-duty family members, reserve component members and retirees by allowing beneficiaries to choose from a selection of commercial insurance plans offered through a Department of Defense health benefit program.”

Under that proposal, beneficiaries would choose a health plan from a menu of programs compiled by the federal Office of Personnel Management, similar to the health plans offered to federal employees.

Available selections would include traditional fee-for-service plans; those offered by health maintenance organizations; and preferred provider network options from some of the biggest names in the industry, including Blue Cross/Blue Shield, United Healthcare, Kaiser Foundation and more.

Participants would have to provide the same services now covered by Tricare, including inpatient and outpatient services, medical and surgical care, mental health and substance abuse treatment, maternity care and pediatrics, preventive care and more.

But some plans could offer benefits that the current Tricare program doesn’t — chiropractic care, fertility treatments, acupuncture and more — at various costs.

The commission, whose members included six retired military officers, a Navy reservist and a Medal of Honor recipient, all with legislative and professional expertise in military pay-and-benefits issues, says the program, called Tricare Choice, would give families more choice of doctors, better access and improved treatment.

Shoring up networks

Citing results of a survey conducted as part of the commission’s fact-finding process, the panel said patients who use Tricare have trouble getting appointments with their primary or specialty care doctors if they’re on Tricare Prime and have issues finding doctors who take Tricare if they use Standard.

Many doctors, commission members said, will not take Tricare because its reimbursement rates are often lower than those of Medicare.

For example, in Fayetteville, North Carolina, near the Army’s Fort Bragg, there are 114 OB/GYN physicians who take Blue Cross/Blue Shield, but only 43 providers are in the Government Employees Health Association plan and just 36 take Tricare, said commission member Steve Buyer, a former congressman from Indiana.

“If you are a doctor, you look at your practice and say ‘OK, I can only take so much Medicare, so much Medicaid.’ You also may [decide to take Tricare because you] are a veteran or will do this because of the flag — a patriot. But you can only do that for so long,” Buyer said.

The commission argues that because civilian insurers offer doctors appealing rates and can adjust reimbursement rates in response to supply and demand — using them as incentive for doctors to provide treatment — those civilian insurers are better able to attract physicians to their networks and control costs.

The commission’s proposed Tricare overhaul also would provide beneficiaries with choices of type of plan, level of health care and costs, according to the commission.

“There are clear benefits to having alternatives among plans. When beneficiaries are able to pick their ideal plan from a selection of many offerings, they are empowered,” the members wrote in their 280-page report.

More than two-thirds of the annual $49 billion defense health budget goes to patient services and care, and a large portion of that money — $15.4 billion in 2012 — went to purchased care, treatment received by beneficiaries at nonmilitary facilities.

The commission estimates that its proposal could save the Pentagon $26.5 billion over four years, starting in 2016. The savings would stem from eliminating DoD’s large Tricare administrative costs and making most beneficiaries pay a larger share of their health costs.

In their fiscal 2016 budget request, Pentagon officials propose their own solutions to trim health costs, to include raising fees for nonmilitary care, increasing costs paid by working-age retirees and luring more patients back to military hospitals and clinics.

But commission members said this approach is unlikely to improve care for patients or keep personnel at military hospitals and clinics trained in cutting-edge medicine and trauma care — skills they need to ensure the wartime medical readiness of the force.

“As commissioners, we share the unequivocal belief that a high-quality health benefit is essential for all military constituencies and we find that the current Tricare program falls short of this aspiration,” commission chairman Alphonso Maldon Jr. said.

Retired Adm. Edmund Giambastiani, another commission member, put it more bluntly, saying the panel “believes that Tricare is in a death spiral.”

The White House and Defense Department have until April 1 to weigh in on the commission recommendations. Then it will fall to Congress to decide whether to act. Already, lawmakers have held four hearings on the recommendations, with more likely to come after the administration issues its views.

Advocates: mixed reaction

The Military Coalition, a group of military and veterans advocacy groups, has not presented a unified response to the recommendations. Reaction from some individual member groups has been mixed.

Representatives of the National Military Family Association and National Guard Association of the United States told senators Feb. 26 that they support the plan “in principle” but want more information on its proposals and a fuller understanding of the potential beneficiary costs before endorsing it.

The Military Officers Association of America has taken an opposite tack, maintaining that the current version of Tricare — and the military health system as a whole — needs reform and could save money by being made more efficient.

“Despite its current challenges and shortcomings, MOAA believes Tricare is not currently in a ‘death spiral’ as some have said, and it is not broken,” said retired Vice Adm. Norb Ryan, the group’s president.

If Congress were to include the Tricare Choice recommendation in the fiscal 2016 defense policy bill, the plan could be in play within two years, commission spokesman Jamie Graybeal said.

One thing seems clear: Tricare Choice would change health care services for 9.2 million military beneficiaries, including everyone now on Tricare Prime, Tricare Standard and Extra, Tricare Reserve Select, Tricare Retired Reserve and Tricare Young Adult.

Here’s a look at how the plan would affect you.

Active-duty members

Q. Would I see any changes?

A. Not for your own health care. Active-duty personnel would continue receiving medical care at unit facilities and through military hospitals and clinics. If service members need specialty care that’s unavailable in the military system, they would be referred to the private sector, with the Defense Department picking up the tab.

Q. What if I have a family?

A. See the active-duty family members section below.

Active-duty family members

Q. Who would provide my health care?

A. Active-duty family members would select a health plan from options compiled by the federal Office of Personnel Management under the Tricare Choice program.

The number of plans and services offered would depend on what’s available in a given geographic region. But all plans would have to offer coverage that at least matches what Tricare currently offers.

Q. What kinds of choices might I be offered?

A. Choices would include traditional fee-for-service plans, which would allow family members to choose their own doctors and pay premiums and co-payments; network-based plans that provide incentives to see doctors enrolled in that network; and health maintenance organizations similar to Tricare Prime or Kaiser Permanente, in which family members would see primary care physicians and specialists who work for a single organization.

Q. What will be covered?

A. Plans must offer benefits available in the commercial market, meeting or exceeding baselines for health plan quality.

In the federal employee health system, all plans cover medical and surgical care, mental health and substance abuse treatment, maternity care and pediatrics, preventive care, hospitalization and outpatient care, diagnostic and laboratory testing, physical, occupational and speech therapy, emergency and ambulance service, and prescriptions drugs.

Some plans could offer partial dental and vision coverage as well, although the compensation committee recommends retaining the Tricare Dental Program and Tricare Retired Dental programs as options.

Q. How will my costs change, and how will I cover them?

A. Costs would rise — a 28-percent premium cost share and higher out-of-pocket expenses — but the commission recommends that active-duty service members receive a basic allowance for health care, or BAHC, to cover premiums, cost-shares and co-payments incurred by their family members.

BAHC would be transferred directly to the insurance carrier to cover premiums, with the remainder going to the service member to cover the out-of-pocket costs.

“BAHC should be set at levels that sufficiently offset or completely cover costs or even afford families a surplus each month after costs are paid,” the commission said in its report.

Q. Can I still go to my military hospital or clinic?

A. The commission recommends that companies in Tricare Choice be required to include on-base military hospitals and clinics in their networks, so family members who want to get care at a military treatment facility may be able to do so as their plan allows.

Q. What if something catastrophic happens — a major accident, injury or chronic illness?

A. All plans would have “catastrophic caps,” but the commission also recommends that DoD establish a program to help family members or troops who are severely injured or fall seriously ill to pay related out-of-pocket expenses or help with other health-related costs.

Q. What if I choose a plan and I hate it? What if I move?

A. Beneficiaries would be allowed to change plans during annual open season or at a milestone such as a permanent change-of-station move or retirement.

Q. What happens if my sponsor is assigned overseas?

A. Plans would be available overseas.

Q. How will I figure out what plan might be best for me?

A. The commission recommends that DoD build an education program to help troops and families understand the impact of all its recommendations, especially health care.

“To ensure affected service members and beneficiaries can navigate the new insurance program with ease, DoD should institute a program of education and benefits counseling,” the commission report states.

Q. What happens to dependent children over age 21 who are using Tricare Young Adult?

A. TYA would simply vanish. Those adult dependent children would simply be covered under their parents’ Tricare Choice plan until age 26.

In fact, unlike the current TYA program, those dependent children could be covered under Tricare Choice even if they are married, not living with their parents, attending school, financially independent or eligible to enroll in their own employer’s health care plan.

Reserve components

Q. How would this work for me?

A. All reserve component members would be able to purchase a plan from Tricare Choice.

The commission recommends making Selected Reserve members eligible for plans with a reduced cost share to encourage them to purchase one, ensuring continuity in care and medical readiness when they’re mobilized.

Other reserve component members would pay cost shares corresponding to their category of service.

When called to active duty for more than 30 days, reservists and their family members would get the same level of care as their fulltime active-duty counterparts.

Q. Who would pay for it?

A. Reserve component members would pay premiums for a Tricare Choice plan, but when mobilized would get free care through the military health system. Those with families would receive the proposed Basic Allowance for Health Care while activated.

If a reservist had not previously picked a Tricare Choice plan, that allowance could be used to pay the premiums and cost-shares of their civilian plans.

Retirees and their family members

Q. How would I get health care?

A. Retirees and their families would select from the same list of health plans offered to active-duty family members under Tricare Choice. A variety of plans, with a variety costs and benefits, would be available in all geographic areas.

Q. How much would it cost?

A. All working-age retirees and families who want health coverage would be required to pay an annual enrollment fee, similar to Tricare Prime fees, currently $277.92 for an individual and $555.84 for a sponsor with family members.

Under the new plan, premiums would rise slightly the first year, by 1 percent, and would rise by the same amount for 15 years, reaching roughly $1,769 by 2030. Depending on the plan selected, co-payments, cost-shares and deductibles also may be required.The commission believes that retirees with families would see their average total out-of-pocket costs increase from about $2,000 a year to $3,500, according to panel estimates.

Q. What about retirees’ dependent children over age 21 using Tricare Young Adult?

A. Their situation would be the same as for active-duty family members using TYA.

That program would go away, and those adult dependent children could use their parents’ Tricare Choice plan until age 26, regardless of their life circumstances.

Q. Would anything change for “gray area” retirees?

A. Not really. The current Tricare Retired Reserve program that serves reserve component retirees under age 60 would disappear and be replaced by Tricare Choice.

As with the current TRR program, the government would not subsidize their health care costs.

Q. What happens to Tricare for Life beneficiaries?

A. Nothing. For retirees over 65, TFL would remain in place and operate as before, normally with Medicare as first payer and TFL acting as second payer if necessary.

A third-party administrator contracted by the Defense Department would pay and coordinate patient claims with Medicare as necessary.

Overseas, where Medicare does not operate, TFL would remain the primary payer, and DoD would have authority to contract with a third-party administrator to handle claims.

Q. Why is all this happening now? Is it related in any way to the Affordable Care Act?

A. No. Congress created the commission in 2013 to respond to growing concerns that military personnel costs — especially for retirement and health care — are escalating at a rate that threatens military training, readiness and operations.

While the commission was not tasked specifically with finding cost-savings in their proposals, the panel sought to adapt the current health benefit to preserve the medical readiness of the force and propose what they believe would be improvements to the military health care benefit that would continue to attract and retain quality recruits.

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