Friday, March 27, 2015
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171,000 retirees likely to lose Tricare Prime option

By
From page B10 | November 11, 2012 |

With the presidential election over, Defense officials are expected to announce soon that military retirees and their dependents living more than 40 miles from a military treatment facility or base closure site will lose access to Tricare Prime, the military’s managed care option.

These beneficiaries would be expected to shift to Tricare Standard, their fee-for-service insurance option, which would mean an increase in out-of-pocket costs for beneficiaries who are frequent users of health services.

A total of 171,000 retirees and dependents are expected to have to shift coverage when remote Prime networks go away. Tentative plans are for this to occur April 1, 2013, in the west region, which would coincide with UnitedHealth Military and Veterans Services taking over the region’s support contract from TriWest Healthcare Alliance after 16 years.

The North and South Tricare regions are expected to close down Prime service areas beyond 40-mile catchment areas of bases or base closure sites by Oct. 1, 2013, the date when current Prime enrollment periods expire for most beneficiaries.

Active-duty members and their families generally would not be affected. Drilling National Guard members and reservists living far from military bases could see small increases to health costs. This would occur if they have been taking advantage of modest discounts available under Tricare Reserve Select when network providers are used. Such discounts would end in areas far from bases if the Prime option goes away.

Under Tricare Prime, beneficiaries get managed care through providers in the network. They pay an annual enrollment fee of $269.28 for individual coverage or $538.56 for family coverage. Retirees and family members also are charged co-pays of $12 for each doctor visit.

Under Tricare Standard, beneficiaries can choose their own physicians and pay no annual enrollment fee. But when they need care, retirees must cover 25 percent of allowable charges. Retirees also have an annual deductible of $150 for the individual or $300 per family. Total out-of-pocket costs, however, are capped at $3000 per family.

In most Prime service areas, about half of eligible retirees already choose to use Standard rather than enroll in the network.

The end of Prime outside of 40-mile “catchment” areas of military treatment facilities has been anticipated since 2007, when Defense officials drafted the third generation of Tricare support contracts. It called for returning the managed care option to its original concept of being a backup network to military clinics and hospitals when they can’t provide managed care to all beneficiaries living nearby or in areas where bases have been closed and military health facilities shuttered.

Through the first two Tricare contracts, on the assumption that managed care saved money for the government, contractors had financial incentive to establish networks beyond 40-mile catchment areas. In the South Region, for example, the contractor has offered Prime everywhere. But experience has shown that providing Prime far from bases can add costs to the system, Tricare officials concluded.

Though they wrote the new generation of support contracts to constrict Prime service areas, health officials wanted the shift to occur across all regions simultaneously. That hasn’t been possible until now because of delays in finalizing contract awards, the result of multiple protests and even a few reversals of original contract awards.

Contracts for every region are now settled. Health Net Federal Services has been running the North Region under the new contract since April 2011. Humana Military Healthcare Services has operated the South Region under the new contract since April this year. But all Prime service areas have been maintained with contract modifications, awaiting final word from Defense that Prime area restrictions are to be implemented.

The new contracts were drafted during the Bush administration and are intended to be more comprehensive and efficient. But sensitive to how a change in Prime eligibility might be used by politicians this fall, Defense officials ordered plans to end Prime for retirees living outside catchment areas, including draft notification letters, shelved until after the election.

Plans for implementation have not changed, congressional and health sources said. But they also have not been announced officially yet.

“The Department is considering whether to maintain the same number of PSAs (Prime service areas) as it has now,” said Cynthia O. Smith, a spokeswoman for the Department of Defense. Until a decision is final on reducing PSAs, the department won’t confirm the number of beneficiaries potentially affected or the likely dates for executing the changes.

Some members of Congress already are concerned. Sen. Dean Heller, R-Nev., told Dr. Jonathan Woodson, assistant secretary of defense for health affairs, in recent letter he was “dismayed” by news reports that Prime “will be cut for many of the military families and constituents I represent, not only in Reno but also throughout the northern part of the state.”

Heller said the plan would cause “more out-of-pocket expenses and longer drive times. . . . I am very troubled by these changes and am concerned that these alterations are not being made in a transparent manner. If changes are made, I hope you will notify those affected immediately.”

A spokesman for Heller said Woodson had not yet answered the letter. Given the nation’s debt crisis and the budget cuts looming for defense programs, Congress is not expected to block this long-standing plan to tighten access to Prime and hold down costs. To do so likely would require lawmakers to find equivalent budget savings elsewhere.

Write Military Update, P.O. Box 231111, Centreville, VA, or email [email protected] or twitter: Tom Philpott @Military_Update.

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