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TESTIMONY OF
THE MILITARY COALITION
PRESENTED BY

ROBERT WASHINGTON, SR.
FLEET RESERVE ASSOCIATION
CO-CHAIRMAN, HEALTH CARE COMMITTEE

AND

SUE SCHWARTZ, DBA, RN
MILITARY OFFICERS ASSOCIATION OF AMERICA
CO-CHAIRMAN, HEALTH CARE COMMITTEE

BEFORE THE
SUBCOMMITTEE ON TOTAL FORCE
HOUSE ARMED SERVICES COMMITTEE
UNITED STATES HOUSE OF REPRESENTATIVES

REGARDING
DEFENSE HEALTH PROGRAMS

 March 18, 2004

EXECUTIVE SUMMARY

Full Funding For The Defense Health Budget. The Military Coalition strongly recommends the Subcommittee continue its watchfulness to ensure full funding of the Defense Health Program, including military medical readiness, needed TRICARE Standard improvements, and the DoD peacetime health care mission. It is critical that the Defense Health Budget be sufficient to secure increased numbers of providers needed to ensure access for TRICARE beneficiaries in all parts of the country.

Pharmacy Cost Shares for Retirees. The Military Coalition urges the Subcommittee to continue to reject imposition of cost shares in military pharmacies and oppose increasing other pharmacy cost shares that were only recently established. We urge the Subcommittee to ensure that Beneficiary Advisory Groups' inputs are included in any studies of pharmacy services or copay adjustments.

Permanent ID Card for Dependents Over the Age of 65. The Coalition strongly urges the Subcommittee direct the Secretary of Defense to authorize issuance of permanent military identification cards to uniformed services family members and survivors who are age 65 and older, with appropriate guidelines for notification and surrender of the ID card in those cases in which eligibility is ended by divorce or remarriage. 

Access to TSRx for Nursing Home Beneficiaries.  The Military Coalition urges the subcommittee to direct DoD to take action to provide outreach and education for beneficiaries attempting to deem nursing homes as TRICARE authorized pharmacy services.  In those instances where the residential facility will not participate in the TRICARE program, DoD must be directed to reimburse pharmacy expenses at TRICARE network rates to uniformed services beneficiaries who cannot access network pharmacies due to physical or medical constraints.

Initial Preventive Physical Examination. The Military Coalition requests that the Subcommittee take steps to authorize the initial preventive physical examination (Sec 611 of PL 108-173) as a TRICARE benefit for over 65 Medicare-eligible uniformed services beneficiaries.

The President's Task Force to Improve Health Care Delivery for Our Nation's Veterans. The Military Coalition asks the Subcommittee to work with the Veteran's Affairs Committee and the Departments of Veterans Affairs and Defense to ensure action on the PTF recommendations including a seamless transition, a bi-directional electronic medical record (EMR), enhanced post-deployment health assessment, and implementation of an electronic DD214.

TRICARE Standard Improvements. The Military Coalition urges the Subcommittee's continued oversight to ensure DoD is held accountable to promptly meet requirements for beneficiary education and support, and particularly for education and recruitment of sufficient providers to solve access problems for Standard beneficiaries.

Provider Reimbursement. The Military Coalition requests the Subcommittee's support of any means to raise Medicare and TRICARE rates to more reasonable standards and to support measures to address Medicare's flawed provider reimbursement formula. 

Healthcare for Members of the National Guard and Reserve.  The Military Coalition urges permanent authority for cost-share access to TRICARE for all members of the Selected Reserve-those who train regularly-and their families in order to ensure medical readiness and provide continuity of health insurance coverage. As an option for these servicemembers, the Coalition urges authorizing the government to pay part or all of private health insurance premiums when activation occurs, a program already in effect for reservists who work for the Department of Defense.

Disproportionate Share Payments.  The Military Coalition urges the Subcommittee to further align TRICARE with Medicare by adapting the Medicare Disproportionate Share payment adjustment to compensate hospitals with larger populations of TRICARE beneficiaries.

Administrative Burdens. The Military Coalition urges the Subcommittee to continue its efforts to make the TRICARE claims system mirror Medicare's, without extraneous requirements that deter providers and inconvenience beneficiaries.

TRICARE Prime (Remote) Improvements.  The Military Coalition requests that the Subcommittee authorize family members who are eligible for TRICARE Prime Remote to retain their eligibility when moving to another Prime remote area when the government funds such move and there is no reasonable expectation that the service member will return to the former duty station.

Coordination of Benefits and the 115% Billing Limit Under TRICARE Standard.  The Military Coalition strongly recommends that the Subcommittee direct DoD to eliminate the 115% billing limit when TRICARE Standard is second payer to other health insurance and to reinstate the "coordination of benefits" methodology.

Nonavailability Statements under TRICARE Standard.  The Military Coalition requests the Subcommittee's continued oversight to assure that, should the Department of Defense choose to exercise its authority and reinstate NAS requirements, beneficiaries and their providers receive effective, advance notification.

TRICARE Next Generation of Contracts (TNEX).  The Military Coalition recommends that the Subcommittee strictly monitor implementation of the next generation of TRICARE contracts and ensure that Beneficiary Advisory Groups' inputs are sought in the implementation process.

Prior Authorization under TNEX. The Military Coalition urges the Subcommittee's continued efforts to reduce and ultimately eliminate requirements for pre-authorization and asks the Subcommittee to assess the impact of new prior authorization requirements upon beneficiaries' access to care.

Portability and Reciprocity.  The Military Coalition urges the Subcommittee to monitor the new contracts to determine if the new system facilitates portability and reciprocity to minimize the disruption in TRICARE services for beneficiaries.

Health Care Information Lines (HCIL). The Military Coalition urges the Subcommittee to direct DoD to modify the TNEX contract to make HCIL access universal for all beneficiaries and to develop a plan to provide for uniform administration of HCIL services nation-wide.

Uniform Formulary Implementation.  The Military Coalition urges the Subcommittee to ensure a robust uniform formulary is developed, with reasonable medical-necessity rules and increased communication to beneficiaries about program benefits, pre-authorization requirements, appeals, and other key information.

TRICARE Benefits for Remarried widows.  The Military Coalition urges the Subcommittee to restore equity for surviving spouses by reinstating TRICARE benefits for otherwise qualifying remarried spouses whose second or subsequent marriage ends because of death, divorce or annulment, consistent with the treatment accorded CHAMPVA-eligible survivors.  

TRICARE Prime Continuity in  Base Realignment and Closure (BRAC) Areas. The Military Coalition urges the Subcommittee to amend Title 10 to require continuation of TRICARE Prime network coverage for uniformed services beneficiaries residing in BRAC areas.

TRICARE Retiree Dental Plan.  The Military Coalition urges the Subcommittee to consider providing a subsidy for retiree dental benefits and extending eligibility for the retiree dental plan to retired beneficiaries who reside outside the United States.

Pre-Tax Premium Conversion Option.  The Military Coalition urges the Subcommittee to support HR 1231 to provide active duty and uniformed services beneficiaries a tax exclusion for premiums paid for TRICARE Prime enrollment fees, TRICARE dental coverage and health supplements, and FEHBP.

Extended Care Health Option (ECHO). The Military Coalition recommends the Subcommittee's continued oversight to assure that medically necessary care will be provided to all custodial care beneficiaries; that Congress direct a study to determine the impact of the ECHO program upon all beneficiary classes, and that beneficiary groups' input be sought in the evaluation of the program.

HEALTH CARE TESTIMONY 2004

The Military Coalition (TMC) is most appreciative of the Subcommittee's exceptional efforts over several years to honor the government's health care commitments to all uniformed services beneficiaries.  These Subcommittee-sponsored enhancements represent great advancements that should significantly improve health care access while saving all uniformed services beneficiaries thousands of dollars a year. The Coalition particularly thanks the Subcommittee for last year's outstanding measures to address the needs of TRICARE Standard beneficiaries as well as to provide increased access for members of the Guard and Reserve components.

While much has been accomplished, we are equally concerned about making sure that subcommittee-directed changes are implemented and the desired positive effects actually achieved.  We also believe some additional initiatives will be essential to providing an equitable and consistent health benefit for all categories of TRICARE beneficiaries, regardless of age or geography.  The Coalition looks forward to continuing our cooperative efforts with the Subcommittee's members and staff in pursuit of this common objective.

FULL FUNDING FOR THE DEFENSE HEALTH BUDGET

Once again, a top Coalition priority is to work with Congress and DoD to ensure full funding of the Defense Health Budget to meet readiness needs -- including graduate medical education and continuing education, full funding of both direct care and purchased care sectors, providing access to the military health care system for all uniformed services beneficiaries, regardless of age, status or location. A fully funded health care benefit is critical to readiness and the retention of qualified uniformed service personnel. 

The Subcommittee's oversight of the defense health budget is essential to avoid a return to the chronic underfunding of recent years that led to execution shortfalls, shortchanging of the direct care system, inadequate equipment capitalization, failure to invest in infrastructure and reliance on annual emergency supplemental funding requests as a substitute for candid and conscientious budget planning.

We are grateful that last year, Congress provided supplemental appropriations to meet growing requirements in support of the deployment of forces to Southwest Asia and Afghanistan in the global war against terrorism. 

But we are concerned by reports from the Services that the current funding level falls short of that required to meet current obligations and that additional supplemental funding will once again be required.  For example, we have encountered several instances in which local hospital commanders have terminated service for retired beneficiaries at military pharmacies, citing budget shortfalls as the reason.  Health care requirements for members returning from Iraq are also expected to strain the military delivery system in ways that we do not believe were anticipated in the budgeting process.

Similarly, implementation of the TRICARE Standard requirements in last year's Authorization Act - particularly those requiring actions to attract more TRICARE providers -- will almost certainly require additional resources that we do not believe are being budgeted for.

Financial support for these increased readiness requirements, TRICARE provider shortfalls and other needs will most likely require additional funding.

The Military Coalition strongly recommends the Subcommittee continue its watchfulness to ensure full funding of the Defense Health Program, including military medical readiness, needed TRICARE Standard improvements, and the DoD peacetime health care mission. It is critical that the Defense Health Budget be sufficient to secure increased numbers of providers needed to ensure access for TRICARE beneficiaries in all parts of the country.

Pharmacy Cost Shares for Retirees.  Late last year, the Office of Management and Budget (OMB) and the Defense Department considered a budget proposal that envisioned significantly increasing retiree cost shares for the TRICARE pharmacy benefit, and initiating retiree copays for drugs obtained in the direct care system.  While the proposal was put on hold for this year, the Coalition is very concerned that DoD is undertaking a review that almost certainly will recommend retiree copay increases in FY 2006.

Thanks to the efforts of this Subcommittee, it was less than three years ago that Congress authorized the TRICARE Senior Pharmacy Program (TSRx) and DoD established $3 and $9 copays for all beneficiaries.  Defense leaders highlighted this at the time as "delivering the health benefits military beneficiaries earned and deserve."  But the Pentagon already has changed the rules, with plans to remove many drugs from the uniform formulary and raise the copay on such drugs to $22.

Now, there are new proposals to double and triple the copays for drugs remaining in the formulary - to $10 and $20, respectively.  One can only surmise that this would generate another substantial increase in the non-formulary copay - perhaps even before the $22 increase can be implemented.

Budget documents supporting the change rationalized that raising copays to $10/$20 would align DoD cost shares with those of the VA system.  This indicates a serious misunderstanding of the VA cost structure, unless the Administration also plans to triple VA cost shares.  At the present time, the VA system requires no copayments at all for medications covering service-connected conditions, and the cost share for others is $7.

The Coalition believes Congress will appropriate the funds needed to meet uniformed services retiree health care commitments if only the Administration will budget for it.  The Coalition is concerned that DoD does not seem to recognize that it has a unique responsibility as an employer to those who served careers covering decades of arduous service and sacrifice in uniform.  Multiple administrations have tried to impose copays in military medical facilities, and Congress has rejected that every time.  We hope and trust that will continue.

The Coalition vigorously opposes increasing retiree cost shares that were only recently established.  Congress's recent restoration of retiree pharmacy benefits helped restore active duty and retired members' faith that their government's health care promises would be kept.  If implemented, this proposal would undermine that trust, which in the long term, can only hurt retention and readiness.

The Military Coalition urges the Subcommittee to continue to reject imposition of cost shares in military pharmacies and oppose increasing other pharmacy cost shares that were only recently established. We urge the Subcommittee to ensure that Beneficiary Advisory Groups' inputs are included in any studies of pharmacy services or copay adjustments. 

TRICARE FOR LIFE (TFL) IMPLEMENTATION

The Coalition is pleased to report that, thanks to this Subcommittee's continued focus on beneficiaries, TMC representatives remain actively engaged in an OSD-sponsored action group, the TRICARE Beneficiary Panel.  This group was formed initially to deal with TFL implementation.  Subsequently the group has broadened its scope from refining TFL to tackling broader TRICARE beneficiary concerns. We are most appreciative of the positive working relationship that has evolved and continues to grow between the Beneficiary Panel and the staff at the TRICARE Management Authority (TMA). This collegiality has gone a long way toward making the program better for all stakeholders. From our vantage point, TMA continues to be committed to implementing TFL and other health care initiatives consistent with Congressional intent and continues to work vigorously toward that end.

The Coalition is concerned that some "glitches" for TFL beneficiaries remain. The Beneficiary Panel has provided a much-needed forum to exchange DoD and beneficiary perspectives and identify corrective actions. However, some issues are beyond the policy purview of the department and require Congressional intervention. The Coalition has identified certain statutory limitations and inconsistencies that we believe need adjustment to promote an equitable benefit for all beneficiaries, regardless of where they reside.

Permanent ID Card for Dependents Over the Age of 65. With the advent of TFL, expiration of TFL-eligible spouses' and survivors' military identification cards -- and the threatened denial of health care claims -- has caused our frail and elderly members and their caregivers significant administrative and financial distress. 

Previously, many of them who lived miles from a military installation or who resided in nursing homes and assisted living facilities simply did not bother to renew their ID cards upon the four-year expiration date.  Before enactment of TFL, they had little to lose by not doing so.   But now, ID card expiration cuts off their new and all-important health care coverage. 

A four-year expiration date is reasonable for younger family members and survivors who have a higher incidence of divorce and remarriage, but it imposes significant hardship and inequity upon elderly dependents and survivors.

The Coalition is concerned that many elderly spouses and survivors with limited mobility find it difficult or impossible to renew their military identification cards.   A number of seniors are incapacitated and living in residential facilities, some cannot drive, and many more do not live within a reasonable distance of a military facility.  The threat of loss of coverage is forcing many elderly spouses and survivors to try to drive long distances - sometimes in adverse weather, and at some risk to themselves and others -- to get their cards renewed. 

 

Renewal by mail can be confusing, and obtaining information on service- and locality-specific mail-order renewal requirements can be very difficult for beneficiaries or their caregivers.  Those who cannot contend with the daunting administrative requirements now face a terrible and unfair penalty.

 

The Coalition strongly urges the Subcommittee direct the Secretary of Defense to authorize issuance of permanent military identification cards to uniformed services family members and survivors who are age 65 and older, with appropriate guidelines for notification and surrender of the ID card in those cases in which eligibility is ended by divorce or remarriage. 

 

Access to TSRx for Nursing Home Beneficiaries.  Once again, the Coalition would like to bring to the Subcommittee's attention the plight faced by TRICARE Senior Pharmacy (TSRx) beneficiaries residing in nursing homes who continue to encounter limitations in utilizing the TSRx benefit.  The Coalition is most grateful for report language contained in House Armed Services Committee Report PL 107-436 regarding waiver of the TSRx deductible for such beneficiaries. The Subcommittee directed the Secretary of Defense to implement policies and regulations or make any legislative changes to waive the annual deductible for these patients, and report to the Armed Services Committees by March 31, 2003.

By way of review for the Subcommittee, because of state pharmacy regulations, patient safety concerns and liability issues, the vast majority of nursing homes have limitations on dispensing medications from outside sources. In rare cases where the nursing home will accept outside medications, some beneficiaries have been successful in accessing medications via a local TRICARE network pharmacy or the TRICARE Mail Order Pharmacy (TMOP). These fortunate individuals use the TSRx program with the lower cost shares designated for participating pharmacy services.

However, the vast majority of nursing home residents must rely on the nursing home to dispense medications.  As a result, these beneficiaries must seek TRICARE reimbursement for these medications and in most cases, this is treated as a non-network pharmacy -- which means the individual is responsible for a $150 deductible ($300 if there is a family), plus higher copayments per prescription. The TRICARE non-network pharmacy deductible policy was intended to create an incentive for beneficiaries to use the TMOP or retail network pharmacies. However, this policy unintentionally penalizes beneficiaries in nursing homes who have no other options.

One solution is to work with the nursing home to have them to sign on as a network pharmacy.  But experience indicates that few if any nursing homes are willing to become TRICARE authorized pharmacies, thus subjecting helpless beneficiaries to deductibles and increased cost shares - as if they had voluntarily chosen to use a non-network pharmacy.

A Pentagon report to Congress last May states "the use of non-network pharmacy services by TRICARE beneficiaries residing in nursing homes in not widespread." The Coalition strongly disagrees.  In fact, because no effort has been made to educate beneficiaries or nursing homes about this problem, the vast majority of beneficiaries residing in nursing homes are not even aware that they have the ability to file paper claims for reimbursement.

The report further states,

"When such occurrences have been brought to our attention, we have consistently been able to deal with this issue on a case-by-case basis and have been universally successful in either identifying a network pharmacy that can serve the nursing home beneficiary, or bringing the non-network pharmacy used by the nursing home into the TRICARE network."

The Coalition takes great exception to this unfounded assertion. Our experience with actual members indicates a nearly universal lack of success in resolving this issue.

Pharmacy cost shares were established to direct beneficiaries to a more cost effective point of access. However, many of our frail and elderly beneficiaries are now residing in institutions where circumstances preclude them from accessing the TRICARE pharmacy at network cost shares.  The Coalition asks the Subcommittee to take action to end this financial burden to those whose circumstances are out of their control.

The Military Coalition urges the subcommittee to direct DoD to take action to provide outreach and education for beneficiaries attempting to deem nursing homes as TRICARE authorized pharmacy services.  In those instances where the residential facility will not participate in the TRICARE program, DoD must be directed to reimburse pharmacy expenses at TRICARE network rates to uniformed services beneficiaries who cannot access network pharmacies due to physical or medical constraints.

Initial Preventive Physical Examination. The Coalition is grateful that Sec 611 (PL 108-173), the Medicare Prescription Drug Improvement, and Modernization Act.. Sec 611 authorizes an initial preventative physical examination for Medicare-eligible beneficiaries turning 65.  We are most appreciative of this effort to address preventive care for seniors.  This one-time examination is not a covered TRICARE benefit.

Because this is a Medicare benefit and not a TRICARE benefit, TFL beneficiaries are liable for all Medicare co-payments. The billed charge may not exceed 115% of the Medicare Maximum Allowable Charge (MMAC).  If the beneficiary's provider charges the maximum allowed by law (115% of the MMAC), Medicare would pay 80% and the beneficiary would be liable for co-payments of up to 35% of Medicare Maximum Allowable Charge.  If the provider accepts Medicare assignment, the TFL beneficiary would be responsible for a 20% cost share.

Therefore, in order to prevent TFL beneficiaries from incurring this out of pocket cost, the Coalition requests that the TRICARE benefit package be modified to mirror this new Medicare enhancement.

The Military Coalition requests that the Subcommittee take steps to authorize the initial preventive physical examination (Sec 611 of PL 108-173) as a TRICARE benefit for over 65 Medicare-eligible uniformed services beneficiaries.

The President's Task Force to Improve Health Care Delivery for Our Nation's Veterans

The Coalition has endorsed the final report of the President's Task Force (PTF) to Improve Health Care Delivery for Our Nation's Veterans.  It is the Coalition's hope that this Subcommittee will take action on many of the PTF recommendations and work with the Veteran's Affairs Committee, the Defense Department, and the Department of Veterans Affairs to move forward with greater collaborative efforts to enhance health care delivery for those who have earned these benefits through service to their country in uniform.

A significant goal is a seamless transition to veteran status for retirees or for those separating -- relying on collaboration for success.  As soon as an individual enters the armed services, both agencies have a stake in their health status. Therefore, in order to provide quality health care, that information must be shared between the VA and DoD. 

Lessons learned from the 1^st Gulf War taught us that a better job must be done to collect, track and analyze occupational exposure data.  Without this information, benefits determinations cannot be fairly adjudicated, nor can the causes of service related disorders be understood.  Last year, DoD initiated an enhanced post-deployment health assessment process for service members deployed in support of Operation Iraqi Freedom.  The outcome of this project will be a marker to determine if this PTF recommendation is being implemented effectively.

To do so, both agencies must share this exposure information and any other health status data electronically.  VA and DoD will have to complete development of an interoperable bi-directional electronic medical record (EMR) -- the lynchpin to a seamless transition. The technology exists but the will must be found to move forward to completion. 

Another important recommendation is "the one-stop physical" upon separation or retirement. Offering one discharge physical, providing outreach and referrals for a VA Compensation and Pension examination, as well as following up on claims adjudication and rating is not just more cost effective in terms of capital and human resources; it is the right thing to do -- to ensure that servicemembers receive the benefits they have earned and deserve.

The government has been talking about developing an electronic DD 214 for years, yet the document remains in paper format.  Initial start-up costs would be paid back many times over in efficiencies gained. This is not just a matter of conserving resources.  It is essential to remove barriers that hamper the benefits determination process.

Other commissions have worked to the same effort in the past, only to have their recommendations sit on the shelf.  Successful implementation will require congressional authority and additional funding. 

The Military Coalition asks the Subcommittee to work with the Veteran's Affairs Committee and the Departments of Veterans Affairs and Defense to ensure action on the PTF recommendations including a seamless transition, a bi-directional electronic medical record (EMR), enhanced post-deployment health assessment, and implementation of an electronic DD214.

TRICARE IMPROVEMENTS

 

TRICARE Standard Improvements. The Coalition is most grateful for the Subcommittee's extraordinary efforts in the FY 2004 NDAA to improve the TRICARE Standard program.  This legislation goes a long way toward addressing the number one concern expressed by our collective memberships -- access to care for Standard beneficiaries. 

Benefits already have been significantly enhanced for Medicare-eligibles, and for active duty beneficiaries in Prime and the Prime Remote program.  This new legislation will address the needs of the 3.2 million TRICARE Standard beneficiaries, many of whom find it difficult or impossible to find a Standard provider. The Coalition is firmly committed to working with Congress, DoD and the Health Services Support Contractors (HSSCs) to facilitate prompt implementation of these provisions.

DoD will be required to track provider participation (including willingness to accept new patients), appoint a specific official responsible for ensuring participation is sufficient to meet beneficiary needs, recommend other actions needed to ensure the viability of the Standard program, develop an outreach program to help beneficiaries find Standard providers, educate them about the benefit, and provide problem resolution services for beneficiaries experiencing access problems or other difficulties.  

The Coalition is well aware that DoD has a full plate this year managing the transition of many new TRICARE contracts and implementation of major legislative initiatives, including those for the Guard and Reserve components.  We are concerned that DoD's resources may be stretched thin, and the Standard enhancements may take a low priority while other issues are addressed. 

The Military Coalition urges the Subcommittee's continued oversight to ensure DoD is held accountable to promptly meet requirements for beneficiary education and support, and particularly for education and recruitment of sufficient providers to solve access problems for Standard beneficiaries.

Provider Reimbursement. The Coalition appreciates the Subcommittees efforts to address provider reimbursement needs in the FY 2004 NDAA (P.L. 108-136).  We recognize that part of the problem is endemic to the Medicare reimbursement system, to which TRICARE rates are tied.

The Coalition is greatly troubled that a flaw in the provider reimbursement formula led the Centers for Medicare and Medicaid (CMS) to cut Medicare fees 5.4% in recent years, and would have generated additional cuts in 2003 and 2004 if not for last-minute legislative relief. 

Cuts in Medicare (and thus TRICARE) provider payments, on top of providers' increasing overhead costs and rapidly rising medical liability expenses, seriously jeopardizes providers' willingness to participate in these programs.  Provider resistance is much more pronounced for TRICARE than Medicare for a variety of social, workload, and administrative reasons. Provider groups tell us that TRICARE is the lowest-paying program they deal with, and often causes them the most administrative problems. This is a terrible combination of perceptions if you are a TRICARE Standard patient trying to find a doctor.

The situation is growing increasingly problematic as deployments of large numbers of military health professionals diminish the capacity of the military's direct health care system. In this situation, more and more TRICARE patients have to turn to the civilian sector for care - thus putting more demands on civilian providers who are reluctant to take an even larger number of beneficiaries with relatively low-paying TRICARE coverage.  

The Coalition believes this is a readiness issue.  Our deployed service men and women need to focus on their mission, without having to worry whether their family members back home can find a provider.  Uniformed services beneficiaries deserve the nation's best health care, not the cheapest.

Congress did the right thing by reversing the erroneous proposed provider payment cuts due to be implemented March 1, 2003 and January 1, 2004 and instead provided 1.6 % and 1.5% payment increases, respectively. But the underlying formula needs to be solved to eliminate the need for perennial "band-aid" corrections. 

The Coalition is aware that jurisdiction over the Medicare program is not within the authority of the Armed Services Committees, but the adverse impact of depressed rates on all TRICARE beneficiaries warrants a special Subcommittee effort to find a way to solve the problem. 

The Military Coalition requests the Subcommittee's support of any means to raise Medicare and TRICARE rates to more reasonable standards and to support measures to address Medicare's flawed provider reimbursement formula. 

Healthcare for Members of the National Guard and Reserve.  The Military Coalition is most appreciative to Congress for ensuring that the Temporary Reserve Health Care Program was included in the FY 2004 National Defense Authorization Act.  This program will provide temporary coverage, until December 2004, for National Guard and Reserve members who are uninsured or do not have employer-sponsored health care coverage.  TRICARE officials plan to build on existing TRICARE mechanisms to expedite implementation; however, no one is certain how long this will take.  Immediate implementation is required. 

The Coalition is grateful to the Subcommittee for their efforts to enact Sec 703 and 704 of the FY 2004 NDAA. Sec 703 -- Earlier Eligibility Date for TRICARE Benefits for Members of Reserve Components provides TRICARE health care coverage for reservists and their family members starting on the date a "delayed-effective-date order for activation" is issued. Sec 704 --Temporary Extension of Transitional Health Care Benefits changes the period for receipt of transitional health care benefits from 60 or 120 days to 180 days for eligible beneficiaries.

Congress recognized the extraordinary sacrifices of our citizen-soldiers, by enacting extending this pre- and post-mobilization coverage. .   Now it's time to recognize the changed nature of 21st century service in our nation's reserve forces by making these pilot programs permanent.

The Military Coalition urges the Subcommittee to take action to make permanent  all provisions of the Temporary Reserve Health Care Program (Sec 702, 703, and 704 P.L. 108-136) to support readiness, family morale, and deployment health preparedness for Guard and Reserve servicemembers. 

Health insurance coverage varies widely for members of the Guard and Reserve: some have coverage through private employers, others through the Federal government, and still others have no coverage.  Reserve families with employer-based health insurance must, in some cases, pick up the full cost of premiums during an extended activation.  Guard and Reserve family members are eligible for TRICARE if the member's orders to active duty are for more than thirty days; but, many of these families would prefer to preserve the continuity of their health insurance.  Being dropped from private sector coverage as a consequence of extended activation adversely affects family morale and military readiness and discourages some from reenlisting.  Many Guard and Reserve families live in locations where it is difficult or impossible to find providers who will accept new TRICARE patients.  Recognizing these challenges for its own reservist-employees, the Department of Defense routinely pays the premiums for the Federal Employee Health Benefit Program (FEHBP) when activation occurs.  This benefit, however, only affects about ten percent of the Selected Reserve.

The Military Coalition urges the authority for federal payment of civilian health care premiums (up to the TRICARE limit) as an option for mobilized service members. 

Dental readiness is another key aspect of readiness for Guard and Reserve personnel.  Currently, DoD offers a dental program to Selected Reserve members and their families.  The program provides diagnostic and preventive care for a monthly premium, and other services including restorative, endodontic, periodontic and oral surgery services on a cost-share basis, with an annual maximum payment of $1,200 per enrollee per year.  However, only five percent of eligible members are enrolled.

During this mobilization, soldiers with repairable dental problems were having teeth pulled at mobilization stations in the interests of time and money instead of having the proper dental care administered.  Congress responded by passing legislation that allows DoD to provide medical and dental screening for Selected Reserve members who are assigned to a unit that has been alerted for mobilization in support of an operational mission, contingency operation, national emergency, or war.  Unfortunately, waiting for an alert to begin screening is too late. During the initial mobilization for Operation Iraqi Freedom, the average time from alert to mobilization was less than 14 days, insufficient to address deployment dental standards.  In some cases, units were mobilized before receiving their alert orders. This lack of notice for mobilization continues, with many reservists receiving only days of notice before mobilizing.

The Military Coalition recommends expansion of the TRICARE Dental Plan benefits for Guard and Reserve servicemembers. This would allow all National Guard and Reserve members to maintain dental readiness and alleviate the need for dental care during training or mobilization. 

Disproportionate Share Payments.  The Coalition is grateful for report language contained in the Senate Armed Services Committee Report 108-046 encouraging DoD to review and consider alignment of the TRICARE payment schedule with Medicare's disproportionate share payment adjustment to children's hospitals. The Subcommittee expressed concern about access when children's hospitals provide care to TRICARE beneficiaries with high-cost, complex medical needs where TRICARE reimbursement rates do not cover the cost of care provided.

Authorizing increased payments to hospitals that serve a disproportionately large number of TRICARE beneficiaries based on Medicare's Disproportionate Share (DSH) payment adjustment makes great sense.  It is every bit as important that DoD safeguard access to care for uniformed services beneficiaries as for Medicare beneficiaries, and we need to encourage facilities to continue to serve this high-priority (but relatively low-revenue-generating) population.

The Military Coalition urges the Subcommittee to further align TRICARE with Medicare by adapting the Medicare Disproportionate Share payment adjustment to compensate hospitals with larger populations of TRICARE beneficiaries.

Administrative Burdens. Despite significant initiatives designed to improve the program, providers continued to complain of low and slow payments, as well as burdensome administrative requirements.  Once providers have left the TRICARE system, promises of increased efficiencies do little to encourage them to return.  Only by easing the administrative burden on providers and building a simplified and reliable claims system that pays in a timely way can Congress and DoD hope to establish TRICARE as an attractive program to providers and a dependable benefit for beneficiaries.

Lessons learned from TFL implementation demonstrate the effectiveness of using one-stop electronic claims processing to make automatic TRICARE payments to Medicare-providers.  TFL dramatically improved access to care for Medicare-eligibles by relying on existing Medicare policies to streamline administrative procedures and claims processing, making the system simple for providers, and paying claims on time.

The Coalition is grateful to the Subcommittee for its actions in the FY 2003 NDAA designating Medicare providers as TRICARE authorized providers and requiring DoD to adopt claims requirements that mirror Medicare's, effective upon implementation of the new TRICARE contracts (TNEX).

The Coalition remains concerned with the caveat under Sec. 711 of the FY2003 NDAA that claim information is limited to that required for Medicare claims "except for data that is unique to the TRICARE program."  This provision allows TRICARE claims to be more complex than that of private sector practices.  One example is the requirement to provide a TRICARE specific claim data element identifying a provider by the physical location where service was provided (geography). This can be problematic for medical practices with many providers delivering services in numerous localities.  Medicare is much simpler requiring only one identifier. The Coalition is hopeful that the HIPPA requirement for a national provider indicator (NPI) will alleviate this issue, but the implementation of the NPI has been pushed back to 2007.

We do not know how these unique data elements enhance TRICARE claims processing, but we do know that both Medicare and the private sector adjudicate claims more cost effectively and efficiently without such additional requirements.  We also know that the more requirements the TRICARE claims system imposes on providers, the less willing they are to put up with it.  The claims system should be designed to accommodate providers' and beneficiaries' needs rather than compelling them to jump through additional administrative hoops for TRICARE's convenience.

The Military Coalition urges the Subcommittee to continue its efforts to make the TRICARE claims system mirror Medicare's, without extraneous requirements that deter providers and inconvenience beneficiaries.

TRICARE Prime (Remote) Improvements.  The Coalition is grateful for the FY 2003 NDAA provision (Sec. 702) that addresses continued TRICARE eligibility of dependents residing at remote locations when their sponsor's follow on orders are an unaccompanied assignment.

This provision allows these families to retain the TRICARE Prime Remote benefit (TPR) and will go a long way to provide support for families remotely assigned who face a period of time living without their sponsor. But one problem remains.

As written, TPR benefits are authorized only if the dependents remain at the former duty site. When the member is assigned away from the family, there can be many good reasons why the family left behind may wish to relocate to another area while awaiting the end of the sponsor's unaccompanied tour.  Many dependents wish to relocate to be with their families or other support groups while waiting for the servicemember to return.  In those cases where the government is willing to pay for the family's relocation for this purpose, it seems inappropriate to force the family out of the Prime Remote program if TRICARE Prime is not available at the location where the family will reside.

It is in the government's interest to ensure family members left behind receive the best support they can.  We should not write the TRICARE Prime Remote rules in punitive ways that penalize family members who use a government-authorized move to their most appropriate location during the member's absence.

The Military Coalition requests that the Subcommittee authorize family members who are eligible for TRICARE Prime Remote to retain their eligibility when moving to another Prime remote area when the government funds such move and there is no reasonable expectation that the service member will return to the former duty station.

Coordination of Benefits and the 115% Billing Limit Under TRICARE Standard.  In 1995, DoD unilaterally and arbitrarily changed its policy on the 115% billing limit in cases of third party insurance.  The new policy shifted from a "coordination of benefits" methodology (the standard for TFL, FEHBP and other quality health insurance programs in the private sector) to a "benefits-less-benefits" approach, which unfairly transferred significant costs to servicemembers, their families, and survivors.

Although providers may charge any amount for a particular service, TRICARE only recognizes amounts up to 115% of the TRICARE "allowable charge" for a given procedure.  Under DoD's pre-1995 policy, any third party insurer would pay first, and then TRICARE (formerly CHAMPUS) would pay any remaining balance up to what it would have paid as first payer if there were no other insurance (75% of the allowable charge for retirees; 80% for active duty dependents).

Under its post-1995 policy, TRICARE will not pay any reimbursement at all if the beneficiary's other health insurance (OHI) pays an amount equal to or higher than the 115% billing limit. (Example: a physician bills $500 for a procedure with a TRICARE-allowable charge of $300, and the OHI pays  $400.   Previously, TRICARE would have paid the additional $100 because that is less than the $300 TRICARE would have paid if there were no other insurance.  Under DoD's new rules, TRICARE pays nothing, since the other insurance paid more than 115% of the TRICARE-allowable charge.)  In many cases, the beneficiary is stuck with the additional $100 in out-of-pocket costs.

DoD and Congress acknowledged the appropriateness of the "coordination of benefits" approach in implementing TRICARE For Life and for calculating OHI pharmacy benefits. TFL pays whatever charges are left after Medicare pays, up to what TRICARE would have paid as first payer, just as they reimburse cost shares for OHI pharmacy claims. The Coalition believes this should apply when TRICARE is second-payer to any other insurance, not just when it is second-payer to Medicare or with pharmacy claims.

Current policy is contrary to best business practices in the private sector.  When a beneficiary has two insurance plans, the secondary pays the beneficiary liability as long as the services are allowed under the rules of the secondary plan.

DoD's shift in policy unfairly penalizes beneficiaries with other health insurance plans by making them pay out of pocket for what TRICARE previously covered.  In other words, beneficiaries who are entitle to TRICARE benefits, but are saving the government a substantial amount of money by using their OHI, may forfeit their entire TRICARE benefit because of private sector employment or by virtue of having private health insurance.  In practice, despite statutory intent, these individuals have no TRICARE benefit.

The October, 2003 GAO Report, TRICARE Claims Processing Has Improved, but Inefficiencies Remain states "..when beneficiaries have other health insurance is the claims processing area that causes the most confusion for providers and beneficiaries."  Providers and beneficiaries frequently misunderstand OHI claims adjudication. The confusion often arises because the OHI payment is equal to or greater than the TMAC, so there is no TRICARE payment.  The result is increased customer service demand as contractors must answer complex inquires from both providers and beneficiaries.

In addition to increasing demand for customer service, the GAO states that the procedures for calculating OHI result in inefficiencies as well. Not only are these rules unfair, they are also just about impossible to understand or explain to beneficiaries and their providers.

The Military Coalition strongly recommends that the Subcommittee direct DoD to eliminate the 115% billing limit when TRICARE Standard is second payer to other health insurance and to reinstate the "coordination of benefits" methodology.

Nonavailability Statements under TRICARE Standard.  The Coalition is grateful to the Subcommittee for the provision in the FY2002 NDAA that has substantially eliminated the requirement for non-enrolled TRICARE beneficiaries to obtain a nonavailability statement (NAS) or preauthorization from an MTF before receiving certain services from a civilian provider.  However, except for maternity care, the law allows DoD broad waiver authority that could diminish the practical effects of the intended relief from NAS.  NAS's can be required if:

 

• The Secretary demonstrates that significant costs would be avoided by performing specific procedures at MTFs;
• The Secretary determines that a specific procedure must be provided at the affected MTF to ensure the proficiency levels of the practitioners at the facility; or
• The lack of an NAS would significantly interfere with TRICARE contract administration

In addition, the Department must provide notification to affected beneficiaries of any future intent to require an NAS under this authority, and must provide at least 60 days' notice to the Armed Services Committees of any such intent, along with the reasons and intended implementation date.

The Coalition is pleased that, at present, there is no requirement for NAS other than for inpatient mental health services in the TRICARE program.

The Coalition has urged DoD, in the event any future NAS requirement is contemplated, to go beyond a mere Federal Register notification and make a good-faith effort to contact beneficiaries likely to be affected. The Coalition has urged the department to develop a formal program to inform Standard providers and beneficiaries in any such event.

The Military Coalition requests the Subcommittee's continued oversight to assure that, should the Department of Defense choose to exercise its authority and reinstate NAS requirements, beneficiaries and their providers receive effective, advance notification.

TRICARE Next Generation of Contracts (TNEX).  Over the next several months, the long awaited transition to the new contracts will be implemented.  The Coalition agrees that this is a critically important step, both for the Department and for beneficiaries. We acknowledge the complexity of this process and remain firmly committed to working with Congress, the Department, and the HSSCs to make implementation as effective as possible.  Above all, we intend to be vigilant that the current level of service is not compromised. The Coalition applauds the new contracts' increased focus on performance, customer satisfaction and quality care. 

As these contracts are implemented, a seamless transition and accountability for progress are the Coalition's primary concerns.  The Coalition is sensitive that massive system changes are being implemented at a time of great stress for uniformed services beneficiaries, especially active duty members and their families. Transitions to new contractors, even when the contract design has not dramatically changed, have historically been tumultuous for all stakeholders, especially beneficiaries. The Coalition believes systems must be put in place that will make the transition to the new contracts as seamless as possible for the beneficiary.

One concern with awarding different contract functions to a variety of vendors is that beneficiaries should not be caught in the middle as they attempt to negotiate their way between the boundaries of the various vendors' responsibilities. DoD must find ways to ensure beneficiaries have a single source of help to resolve problems involving the interface of multiple contractors.

The Coalition will be closely monitoring our member feedback concerning customer service.  Specifically, we are concerned that the outgoing HSSCs avoid any fall-off of service as their contracts wind down and that the handoff between the old and new contractors goes smoothly.

Another important area of concern is provider churn.  Contracts were re-awarded in four regions, therefore those beneficiaries should experience minimal turnover. But in the other seven regions, beneficiaries may have to find new physicians willing to contract with the new HSSC.  The Coalition hopes that beneficiaries who are currently receiving care will be able to continue with their current provider through their course of treatment.

Despite all the changes, the Coalition is hopeful that TRICARE beneficiaries will benefit from the new contract structure. By streamlining administrative requirements and being less prescriptive, we hope DoD will be able to improve service delivery and enhance access. The Coalition intends to be closely involved in the transition and implementation process.

The Military Coalition recommends that the Subcommittee strictly monitor implementation of the next generation of TRICARE contracts and ensure that Beneficiary Advisory Groups' inputs are sought in the implementation process.

There are three areas of concern the Coalition has identified in the past that we hope will be addressed by the new contracts: Portability/Reciprocity, Prior Authorization, and Health Care Information Lines (HCIL).  We would like to briefly state our concerns and ask the Subcommittee's due diligence to provide continued oversight of these issues.

Prior Authorization under TNEX.  While the TNEX request for proposals purportedly removed the requirement for preauthorization for Prime beneficiaries referred to specialty care, the TRICARE Policy Manual 6010.54-M August 1, 2002, Chapter 1, Section 7.1, and I., G belies that, stating:

"Each TRICARE Regional Managed Care Support (MCS) contractor may require additional care authorizations not identified in this section.  Such authorization requirements may differ between regions. Beneficiaries and providers are responsible for contacting their contractor's Health Care Finder for a listing of additional regional authorization requirements."

The Coalition believes strongly that this regulation undermines the long-standing effort of this Subcommittee to simplify the system and remove burdens from providers and beneficiaries.  It is contrary to current private sector business practices, the commitment to decrease provider administrative burdens, and the provision of a uniform benefit.

Since each contractor has been given great leeway in this area, it is too soon in the implementation process for the Coalition to assess the impact upon beneficiaries of the new prior authorization requirements in each of the three regions.  We will reserve judgement at this time but will monitor the implementation of these requirements from the beneficiary's perspective.

The Military Coalition urges the Subcommittee's continued efforts to reduce and ultimately eliminate requirements for pre-authorization and asks the Subcommittee to assess the impact of new prior authorization requirements upon beneficiaries' access to care.

Portability and Reciprocity.  Section 735 of the FY 2001 NDAA required DoD to develop a plan, due March 15, 2001, for improved portability and reciprocity of benefits for all enrollees under the TRICARE program throughout all regions. DoD has since issued a memorandum stating that DoD policy requires full portability and reciprocity. Despite the efforts of this Subcommittee, in the current system with 12 regions, enrollees routinely experience enrollment disruption when they move between regions and are still not able to receive services from another TRICARE Region without multiple phone calls and much aggravation.

The Coalition is eager to see if reducing the number of contracts from 12 to three will address this problem.

The lack of reciprocity presents particular difficulties for TRICARE beneficiaries living in "border" areas where two TRICARE regions intersect.  In some of the more rural areas, the closest provider may actually be located in another TRICARE region, and yet due to the lack of reciprocity, beneficiaries cannot use these providers without great difficulty.  The problem also arises when a member has a child attending college in a different TRICARE region.

Our government requires nationwide mobility of military families, and it is essential to ensure they are provided seamless continuity of health coverage.  The Coalition believes three years is more than long enough to have waited for this basic quality of life problem to be fixed.

The Military Coalition urges the Subcommittee to monitor the new contracts to determine if the new system facilitates portability and reciprocity to minimize the disruption in TRICARE services for beneficiaries.

Health Care Information Lines (HCIL). The Coalition is concerned that the TNEX request for proposals did not contain any requirement for Health Care Information Lines (HCIL), leaving each of the three military services to piecemeal these support services to beneficiaries in their service areas.   The Coalition believes this is a grave mistake, works against the interests of the beneficiaries, and interferes with cost-effective management of the TRICARE program.

Over 100 million civilian health plan beneficiaries nation-wide have access to telephonic nurse advice services. HCIL services offered under existing TRICARE contracts played a critical role in the health care process for military beneficiaries. This information service is even more valuable when combined with a triage service that not only suggests a proper plan for care (self care at home, acute care, routine appointment with provider, or emergency room visit), but also schedules an appointment if necessary.

The Coalition has seen data indicating military members and their spouses use HCIL services at twice the rate of the civilian population. No matter where the individual or family is stationed, a HCIL program can provide a convenient and cost-effective point of access to safe, trustworthy decision support and health information.

HCILs can provide peace of mind to spouses who may have to make decisions without the support of their partner. These informed decisions help optimize effective use of MTF and purchased health care resources, while improving clinical and financial outcomes.

HCIL services provide access to nurses 24 hours a day, seven days a week, including times when good care is not always easily accessible. In many cases, children and adults who otherwise may not have received timely care have been assessed and directed to what turned out to be life-saving care.

The Coalition believes that nurse triage programs are a win-win proposition as they have the potential to help control costs by directing patients to the appropriate level of care, while improving access to care and MTF appointments for those who need them.

The Coalition fears that the omission of HCIL guidance from TNEX will result, at best, in a patchwork of HCIL programs implemented locally at the MTF level - to the extent Commanders even choose to do so. The Coalition firmly believes that the popularity of the current regional HCIL services and the single HCIL contract for all OCONUS locations indicates the need for continued availability of a consistent level of HCIL services for all beneficiaries.

The Military Coalition urges the Subcommittee to direct DoD to modify the TNEX contract to make HCIL access universal for all beneficiaries and to develop a plan to provide for uniform administration of HCIL services nation-wide.

Uniform Formulary Implementation.  The Coalition is committed to work with DoD and Congress to develop and maintain a comprehensive uniform pharmacy benefit for all beneficiaries mandated by Section 701 of the FY 2000 NDAA.  We will particularly monitor the activities of the Pharmacy and Therapeutics (P&T) Committee.  The Coalition expects DoD to establish a robust formulary with a broad variety of medications in each therapeutic class that fairly and fully captures the entire spectrum of pharmaceutical needs of the millions of uniformed services beneficiaries.

The Coalition is grateful to this Subcommittee for the role it played in mandating a Beneficiary Advisory Panel (BAP) to comment on the formulary. Several Coalition representatives are members of the BAP and are eager to provide input to the program. While we are aware that there will be limitations to access for some medications, our efforts will be directed to ensuring that the formulary is as broad as possible, that prior authorization requirements for obtaining non-formulary drugs and procedures for appealing decisions are communicated clearly to beneficiaries; and that the guidelines are administered equitably.

The Coalition is particularly concerned that procedures for documenting and approving "medical necessity" determinations by a patient's physician must be streamlined, without posing unnecessary administrative hassles for providers, patients, and pharmacists. The Coalition believes the proposed copayment increase from $9 to $22 for non-formulary drugs is very steep and could present an undue financial burden upon beneficiaries if there is a restrictive formulary bias. Beneficiaries' trust will be violated if the formulary is excessively limited, fees rise excessively, and/or the administrative requirements to document medical necessity are onerous.

DoD must do a better job of informing beneficiaries about the scope of the benefit -- to include prior authorization requirements, generic substitution policy, limitations on number of medications dispensed, and processes for determining medical necessity. The Coalition is pleased to note that the department has improved its beneficiary education via the TRICARE website. However, we remain concerned that many beneficiaries do not have access to the Internet, and this information is not available through any other written source.  As DoD approaches the uniform formulary implementation, it will be critical to make this information readily available to beneficiaries and providers.

The Military Coalition urges the Subcommittee to ensure a robust uniform formulary is developed, with reasonable medical-necessity rules and increased communication to beneficiaries about program benefits, pre-authorization requirements, appeals, and other key information.

TRICARE Benefits for Remarried widows.  The Coalition believes there is a gross inequity in TRICARE's treatment of remarried surviving spouses whose subsequent marriage ends because of death or divorce.  These survivors are entitled to have their military identification cards reinstated, as well as restoration of commissary and exchange privileges. In addition, they have any applicable Survivor Benefit Plan (SBP) annuity reinstated if such payment was terminated upon their remarriage. In short, all of their military benefits are restored - except health care coverage.

This disparity in the treatment of military widows was further highlighted by enactment of the Veterans Benefits Act of 2002. This legislation (38USC 103(g)(1)) reinstated certain benefits for survivors of veterans who died of service-connected causes. Previously, these survivors lost their VA annuities and VA health care (CHAMPVA) when they remarried, but the Veterans Benefits Act of 2002 restored the annuity - and CHAMPVA eligibility - if the remarriage ends in death or divorce.

Military survivors merit the same consideration Congress has extended and the VA has implemented for CHAMPVA survivors.

The Military Coalition urges the Subcommittee to restore equity for surviving spouses by reinstating TRICARE benefits for otherwise qualifying remarried spouses whose second or subsequent marriage ends because of death, divorce or annulment, consistent with the treatment accorded CHAMPVA-eligible survivors.

TRICARE Prime Continuity in BRAC areas.  In addition to our concerns about current benefits, the Coalition is apprehensive about continuity of future benefits as Congress and DoD begin to consider another round of base closures.

Many beneficiaries deliberately retire in localities close military bases, specifically to have access to military health care and other facilities.  Base closures run significant risks of disrupting TRICARE Prime contracts that retirees depend on to meet their health care needs.

Under current TRICARE contracts and under DoD's interpretation of TNEX, TRICARE contractors are supposed to continue maintaining TRICARE Prime provider networks in Base Realignment and Closure (BRAC) areas.  However, these contracts can be renegotiated, and the contracting parties may not always agree on the desirability of maintaining this provision.

The Coalition believes continuity of the TRICARE Prime program in base closure areas is important to keeping health care commitments to retirees, their families and survivors, and would prefer to see the current contract provision codified in law.

The Military Coalition urges the Subcommittee to amend Title 10 to require continuation of TRICARE Prime network coverage for uniformed services beneficiaries residing in BRAC areas.

TRICARE Retiree Dental Plan.  The Coalition is grateful for the Subcommittee's leadership role in authorizing the TRICARE Retiree Dental Plan (TRDP).  While the program is clearly successful, participation could be greatly enhanced with two adjustments.

Unlike the TRICARE Active Duty Dental Plan, which enjoys a substantial federal subsidy to keep premiums low, there is no government subsidy for retiree dental premiums.  This is a significant dissatisfier for retired beneficiaries, as the program is fairly expensive with relatively limited coverage. The Coalition believes dental care is integral to a beneficiary's overall health status.  Dental disease left untreated can lead to more serious health consequences and should not be excluded from a comprehensive medical care program.  As we move toward making the health care benefit uniform, this important feature should be made more consistent across all categories of beneficiaries.

The Coalition understands that consideration is being given to establishing a subsidized dental benefit covering active and retired federal civilians as an adjunct to the Federal Employees Health Benefits Program.  If so, similar consideration should be provided for retired military beneficiaries.

Another shortcoming of the TRDP is that it is not available overseas, but, according to the TRDP website: "You can receive covered treatment anywhere in the 50 United States, the District of Columbia, Puerto Rico, Guam, the U.S. Virgin Islands, American Samoa, the Commonwealth of the Northern Mariana Islands and Canada."

The Military Coalition urges the Subcommittee to consider providing a subsidy for retiree dental benefits and extending eligibility for the retiree dental plan to retired beneficiaries who reside outside the United States.

Pre-Tax Premium Conversion Option.  To meet their health care requirements, many uniformed services beneficiaries pay premiums for a variety of health insurance, such as TRICARE supplements, the active duty dental plan or TRICARE Retiree Dental Plan (TRDP), long-term care insurance, or TRICARE Prime enrollment fees. For most beneficiaries, these premiums and enrollment fees are not tax-deductible because their health care expenses do not exceed 7.5 % of their adjusted gross taxable income, as required by the IRS.

This creates a significant inequity with private sector and some government workers, many of whom already enjoy tax exemptions for health and dental premiums through employer-sponsored health benefits plans. A precedent for this benefit was set for other Federal employees by a 2000 Presidential directive allowing federal civilian employees to pay premiums for their Federal Employees Health Benefits Program (FEHBP) coverage with pre-tax dollars.

The Coalition supports HR 2131, which would amend the tax law to allow Federal civilian retirees and active duty and retired military members pay health and dental insurance premiums on a pre-tax basis.   Although we recognize that this is not within the purview of the Armed Services Committee, the Coalition hopes that the Subcommittee will lend its support to this legislation and help ensure equal treatment for all military and federal beneficiaries.

The Military Coalition urges the Subcommittee to support HR 1231 to provide active duty and uniformed services beneficiaries a tax exclusion for premiums paid for TRICARE Prime enrollment fees, TRICARE dental coverage and health supplements, and FEHBP.

Extended Care Health Option (ECHO).    Once again, the Coalition thanks the Subcommittee for its continued diligence in support of those beneficiaries who fall under the category of "Custodial Care" We are most appreciative of the generous enhancements this Subcommittee has endorsed in Section 701 of the FY 2002 NDAA (PL 107-107) providing additional benefits for eligible active duty dependents by amending the Program for Persons with Disabilities (PWFPD), now termed the Extended Care Health Option (ECHO).  Once implemented, ECHO will provide extended benefits not available through the Basic Program to assist in the reduction of the disabling effects of a qualifying condition. Implementation is scheduled as the new contracts roll out this year.

While the ECHO program will provide a tremendous benefit to active duty families, offering enhanced services and respite care, the Coalition is concerned about families transitioning to retirement status when benefits will terminate.  The Coalition expects DoD, through both the Exceptional Family Member Program and the military health system, to provide clear education and guidance to families regarding the termination of ECHO benefits at retirement.

Further, the Coalition expects that adequate and timely transition assistance to community-based support services be provided these families. The Coalition will be monitoring this transition process to determine whether legislation is needed to provide a benefit "bridge" for disabled family members of retiring servicemembers as until needed services can be secured in the local community.

The Military Coalition recommends the Subcommittee's continued oversight to assure that medically necessary care will be provided to all custodial care beneficiaries; that Congress direct a study to determine the impact of the ECHO program upon all beneficiary classes, and that beneficiary groups' input be sought in the evaluation of the program.

CONCLUSION

The Military Coalition reiterates its profound gratitude for the extraordinary progress this Subcommittee has made in advancing a wide range of personnel and health care initiatives for all uniformed services personnel and their families and survivors.  The Coalition is eager to work with the Subcommittee in pursuit of the goals outlined in our testimony. Thank you very much for the opportunity to present the Coalition's views on these critically important topics.

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