MILITARY UPDATE
TRICARE contracts now push direct military care
By Tom Philpott
TRICARE's next generation of support contracts, awarded last month to three of four current contractors, are designed to send more beneficiaries back into military hospitals and clinics, says Dr. William Winkenwerder, assistant secretary of defense for health affairs.
Customer satisfaction and optimizing the military's direct-care system are top priorities, Winkenwerder said.
Military doctors have complained in recent years of a fiscal "death spiral" within the direct-care system.
Underfinanced health budgets a few years back forced base hospitals and clinics to turn away patients to the contractor networks. Contractor costs rose, further tightening direct-care spending.
Financial incentives in the new contracts are better aligned to produce faster, more accurate claims processing, quicker telephone response and greater satisfaction overall.
But some incentives will encourage contractors "to send as many patients as possible to the military treatment facility rather than draw them out (to) the network," said Winkenwerder.
Using military medical staff saves defense dollars. It also keeps wartime medical skills sharp.
Current TRICARE contracts are criticized as complex and rigid. Patients can face burdensome paperwork and slow referrals for specialty care. They often grow frustrated with phones not answered promptly or at all.
Focus is on patients
The new contracts are built for customer service, Winkenwerder said.
Initial contracts are valued at more than $6 billion to cover a nine-month transition period plus a first-year option.
Total value could exceed $27 billion over five years.
Companies tapped so far to split the pie, if they perform satisfactorily, are Health Net Federal Services of Rancho Cordova, Calif.; Humana Military Healthcare Services of Louisville, Ky., and TriWest Healthcare Alliance Corp. of Phoenix, Ariz.
The new contracts will be phased in from June 2004 through November 2004. Eleven Mainland TRICARE regions will merge into three — West, North and South.
All three will operate under identical rules to ensure smooth transition in coverage for beneficiaries moving between assignments.
Hawai'i is in the West region. TriWest landed that $2.1 billion contract.
The other states in the region are Alaska, Arizona, California, Colorado, Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oregon, South Dakota, the western portion of Texas, Utah, Washington and Wyoming.
Health Net will run the North, under an initial $2.2 billion contract, to include Connecticut, Delaware, the District of Columbia, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, Vermont, Virginia, West Virginia and Wisconsin.
Humana Military Healthcare Services has been awarded $2 billion to run the South region: Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, South Carolina, Tennessee and the eastern portion of Texas.
Two losing bidders for the North region, Sierra Military Health Services and Aetna, have filed protests.
Winkenwerder said the protests were not a surprise, given the contract's size and importance. But he said he's confident that proper procedures and criteria were followed.
Costs soar
A new Congressional Budget Office study says spending on military medical care has almost doubled in the past 15 years, even after adjusting for inflation.
Military healthcare spending was $14.6 billion in 1988, using 2003 dollars. This year, it is $27.2 billion. Over the same period, active-duty forces declined by 38 percent, so "medical spending per active-duty service member nearly tripled," from $6,600 a year to $19,600.
Questions, comments and suggestions are welcomed. Write to Military Update, P.O. Box 231111, Centreville, VA 20120-1111, or send e-mail to: milupdate@aol.com. Or visit Tom Philpott's Web site.
