Does the New Tricare Shortchange Reservists? [Officer, The]

Benefit Changes Raise Concerns for Retirees

FACED WITH LITIGATION AND PUBLIC MUDSLINGING, Tricare has looked more like a soap opera than the military's health insurance provider over the past few years. Since 2009, a $20 billion contract to serve 21 western states has been hotly contested. After two separate protests, UnitedHealthcare was finally selected, and a new contract kicks in April 1.

The new contract terms could have much wider implications than just for western states, though Tricare claims that no insurance recipients will lose benefits.

TriWest vs. UnitedHealthcare

The battle for the lucrative contract between health care providers TriWest Healthcare Alliance and UnitedHealthcare has been intense, expensive, and protracted. TriWest held the contract for 16 years, but UnitedHealthcare filed protest with the Department of Defense based on the review and selection process. (UnitedHealthcare lost a similar appeal to Humana for Tricare South in July 2011.)

UnitedHealthcare said Tricare selected contractors that promised to negotiate discounts at levels below Medicare. That was apparently enough for the Pentagon to reevaluate the TriWest contract proposal.

Separate from the UnitedHealthcare protests, TriWest faced a whistle-blower lawsuit alleging the company overbilled the government for medical services. According to the suit, TriWest submitted claims at rates that were more expensive than the discounted rates it negotiated. An internal audit found that TriWest had indeed submitted about $3.5 million above negotiated rates, but argued that this amount was a mere fraction of the $15 billion in claims paid over six years.

Nonetheless, in September 2011, TriWest settled with the federal government to pay $10 million for failing to pass along government discounts. The four whistle-blower employees received $1.7 million in the settlement.

A few months later, the government agreed with UnitedHealthcare's protest, withdrew Tr iWest's contract and awarded it to UnitedHealthcare. TriWest quickly filed a protest of its own, claiming the new agreement disregarded millions of TriWest-guaranteed discounts and that UnitedHeath received the new contract based on reviews of its five largest accounts.

"Overall, we felt that our proposal and 16 -year track record serving military families was stronger, as evidenced by numerous independent evaluators, such as J.D. Power and Associates, who have praised the quality of our care and service and the cost savings we helped achieve for taxpayers," said Scott Celley, TriWest's vice president for external affairs. "TriWest has saved the taxpayers more than $1.2 billion during its current contract and in our proposal had committed to save more per year than in the current contract."

But, the Government Accountability Office upheld the UnitedHealthcare offer; TriWest chose not to take the matter to the U.S. Court of Federal Claims.

"We felt that continuing to challenge the government's decision would put in question the smooth transition that is necessary to ensure West Region military beneficiaries continue to access their earned Tricare benefits," Mr. Celley said.

The Impact on Beneficiaries

With the legal wrangling ostensibly resolved, the way was paved for the transition to UnitedHealthcare. The issues that have caused the most consternation for beneficiaries are the widely reported reduction to prime service areas (PSAs) and the loss of access to Tricare Prime coverage. According to Tricare, 171,000 of the 1.6 million retirees and family members currently enrolled in Prime are potentially affected across all three U.S. regions under the new contract. The Navy Times reported that among the 171,000 are 30,000 Tricare Prime members who will lose coverage in Iowa and Minnesota, as well as Reno, Nev., and Springfield, Mo.

Tricare says that's inaccurate. Kevin Dwyer, deputy chief, benefit information and outreach branch for Tricare Management Activity, sought to address the misreports, which have left many edgy and concerned about the future of Tricare coverage.

"Tricare benefits are not being taken away from any beneficiary, and no one's coverage is at risk," Mr. Dwyer said. "While access to Tricare Prime is changing, access to Tricare health care benefits is not going away for eligible beneficiaries."

Access to Tricare Prime is changing, he says, because of the reduction in PSAs. Since Tricare 's implementation in 1997, each region treated beneficiaries based on PSAs, which are a designated 40-mile catchment radius around military treatment facilities (MTFs). The reduction to PSAs has been in the works for years.

"The Department of Defense has planned to reduce prime service areas in the United States since 2007, when DoD requested bids for its third generation of regional health care support contracts," Mr. Dwyer said. "Since PSAs were created to ensure medical readiness of the active duty force by augmenting military treatment facilities, bidders were only required to establish PSAs around MTFs and areas affected by Base Realignment and Closure decisions."

The PSAs affected under the new contract are not close to the existing treatment facilities and have never augmented care around MTFs.

Under the new contract, Tricare 's Dwyer said, impacted Prime beneficiaries are automatically enrolled into Tricare Standard/Extra, which has no annual enrollment fees. For pay grades El through E4, the individual and family deductibles are $50 and $150 respectively. For E5s and above and retirees, deductibles are $150 for individual and $300 for family. (Individual and family deductibles for Prime coverage are $300 and $600 respectively.)

The downgrade in insurance also means eye exams are no longer covered, and there is a 25 percent copay for emergency room visits, urgent care visits, ambulance services, family therapy, and clinical preventive services.

Although these tweaks will likely be felt in the households, they aren't losing their Tricare coverage. Impacted Prime members are also eligible for Tricare Prime Remote (TPR) when they live and work between 40 and 100 miles from an MTF. TPR has no enrollment fees or out-ofpocket costs.

In addition to TPR, Mr. Dwyer said, retirees and their family members enrolled in Tricare Prime outside the 40-mile radius may transfer Prime enrollment to a more distant MTF if they sign a drive-time standard waiver. But, he said, beneficiaries should be aware that waiving drivetime standards may require them to drive long distances for primary and specialty care.

Uncertainty Continues

U.S. Sen. Dean Heller (R-Nev.) expressed concern about the PSA measuring, saying he fears northern Nevada veterans will be forced to make longer drives to receive medical care. That's why the senator introduced an amendment to the National Defense Authorization Act (NDAA) to require the DoD to issue a detailed report on the possible termination of Tricare Prime coverage.

"The men and women who served in the Armed Forces deserve the most comprehensive set of benefits we can provide," Heller said in a December 2012 statement. "For the Department of Defense to make any changes to these benefits without a full explanation is simply unacceptable. With this legislation, Nevada's heroes will finally get answers about any possible changes to their Tricare Prime coverage."

His amendment passed the Senate; President Barack Obama signed the NDAA into law Jan. 3. As per the law, Tricare has 45 days to respond. As of press time, the DoD has not published the report. But, according to the Nevada senator, it will:

* Identify areas where Tricare Prime will no longer be available;

* Describe transition and outreach plans for beneficiaries who no longer have access to the Tricare Prime benefits;

* Include the estimated increase in out-of-pocket expenses to affected beneficiaries;

* Include the estimated savings to DoD as a result of such changes;

* Describe how the department will continue to assess the impact on beneficiaries who can no longer access the Prime benefit; and

* Provide a report on the effects of potential cuts to Tricare Prime for these families.

Mr. Dwyer said those affected by the changes in Prime should have been contacted in late February; a Web-based ZIP code tool is available at www.tricare.mil/PSA.

"Tricare has carefully considered all options to find the best ways to reduce costs without impacting the health care," Mr. Dwyer said. "The Tricare benefit remains among the most affordable health care options available, and service members, retirees, and their eligible family members can use it regardless of existing health conditions."

Mr. Dwyer said the transition from TriWest to United Healthcare has gone smoothly and the contract saves the DoD an estimated $45 to $56 million per year. Celley added that TriWest has operated collaboratively and transparently with UnitedHealthcare.

"The Tricare benefit itself is relatively unchanged in the new contract. Beneficiaries impacted by the prime service area change may experience changes in out-of-pocket costs, which is a decision made by the Tricare Management Activity," Mr. Celley said. "It is the contractor's responsibility to implement the changes established through new policies."

ROA spokesperson Keith Weiler noted that the transition from TriWest to UnitedHealthCare is an enormous undertaking. It's going well, he said, "due to tremendous efforts from both companies, who put aside their differences to ensure a smooth transition for the sake of the patients involved."

Health Care Providers Affected As Well

Lost in the insurance drama has been the actual health care provider. With the implications of the Patient Protection and Affordable Care Act still not fully understood, hospitals face unprecedented challenges. By comparison, the Tricare changes are far less expansive; the new requirements are similar to those American hospitals regularly make to accommodate new health insurance plans.

"One of our major challenges is keeping up with the changes each insurance company makes every year," said Steve Welch, chief financial officer for the mental health provider Gracepoint Wellness, based in Tampa, Fla.

With an increased focus on mental health in the new health care law, Mr. Welch anticipates the potential of seeing more Tricare users, based on Gracepoint's proximity to Central and Southern Commands as well as the MacDill Air Force Base.

At least with Tricare, Mr. Welch notes, the transition and its impact has been clearly laid out. His hospital doesn't know what to expect with the health care law. "We serve thousands of people who may become Medicaid-eligible in 2014 under Obamacare," Mr. Welch said. "It's an opportunity and daunting at the same time because we don't know what the plan will be."

Tricare benefits are not being taken away from any beneficiary, and no one's coverage is at risk. While access to Tricare Prime is changing, access to Tricare health care benefits is not going away for eligible beneficiaries.

Fred Minnick is an international journalist based in Louisville, Ky. An Iraq veteran, he's the author of the Wall Street joumal-best-selling book, Camera Boy: An Army Journalist's War in Iraq (Hellgate Press, 2009).