House Armed Services Subcommittee on Military Personnel Hearing
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Mr. Chairman and distinguished members of the subcommittee, thank you for the opportunity to appear before you today on behalf of the men and women who comprise the
We enter 2012 now having over ten years of experience in preparing for and responding to the consequences of war. We have seen the end of one major conflict and the implementation of a concrete timeline for the drawdown of the other. Yet, even with these milestones in our sights, we have many challenges to address in the coming year, both operational and fiscal.
I am proud of the performance of our military medical personnel on the battlefield and here at home. Last year, I provided this Committee with some of the accomplishments achieved in combat - the lowest levels of disease, non battle injury (DNBI) rates in warfare; the highest survival from wounds rate; the safety and speed of an aeromedical evacuation system that has no peer; and the treatment and rehabilitation of wounded warriors that is allowing ever greater numbers of our severely wounded to return to their units, or to pursue careers in the civilian sector.
These accomplishments bear repeating. I do this not simply to honor the men and women who made them happen, but also to point out that the actions and lessons that led to these outcomes are now being replicated in trauma centers, surgical suites, and rehabilitation centers around the country and around the world. The MHS is transferring our medical knowledge gained from battlefield medicine to the rest of society.
As we share our experiences with our colleagues in American medicine, we are also mindful of the need to look internally and assess what lessons we have learned - and consider how we should be organized to meet our future missions. In
The Department has proposed a
Figure 1: FY2013 Defense Health Program (DHP) Summary
$ in Millions
Appropriation Summary FY 2011/1 Actual Price Growth Program Growth FY 2012/2 Enacted Price Growth Program Growth FY 2013/3 Estimate
Operation & Maintenance 29,953.5 721.7 -89.0 30,586.2 859.6 -96.6 31,349.3
RDT&E 1,205.8 22.9 38.1 1,266.8 22.8 -616.6 673.0
Procurement 546.7 12.4 73.4 632.5 14.2 -140.2 506.5
Total, DHP 31,706.0 757.0 22.5 32,485.5 896.4 -853.4 32,528.7
MERHCF Receipts/4 8,600.0 9,470.6 9,727.1
Total Health Care Costs 40,306.0 41,956.1 42,255.8
Numbers may not add due to rounding
1 FY 2011 actuals include Operation and Maintenance (O&M) funding of
2 FY 2012 enacted (base), excludes O&M funding of
3 FY 2013 estimate excludes O&M funding of
4
Our proposal includes realistic cost growth for pharmacy,
I will outline the major elements of our strategy for 2013, using the Quadruple Aim -- the MHS strategic framework -- to discuss our initiatives. This framework captures the core mission requirements of the MHS: Assure Readiness;
Assuring Readiness
The MHS continues to closely monitor the health and medical readiness of the military force. We have consistently witnessed improvements in the medical preparedness of our service members, both active and Reserve Component.
We have ensured that our medical forces are also ready through sustained investments in our enlisted and officer training programs, through our comprehensive Graduate Medical Education (GME) programs conducted at a number of our MTF training platforms throughout the MHS and with select civilian partners; at the
We also assess the health of the force upon their return from deployment. In our continued commitment to ensuring the mental health of our service-members, the Department has issued policy that Service members deployed in connection with a contingency operation receive a person-to-person, privately-administered mental health assessment before deployment, and three times after return from deployment. These person-to-person assessments are conducted by licensed mental health professionals or by designated individuals trained and certified to perform the assessments.
As part of our monitoring of the medical readiness of the force, we also assess our performance in ensuring that those service members who are identified as needing behavioral health services receive a referral and seek treatment. In this area, we have also witnessed improvement each year in both the referral for behavioral health services, and the rate at which service members seek ongoing treatment.
Senior leaders, both officer and enlisted, have led the effort to reduce the stigma associated with seeking mental health care. A DoD Mental Health Advisory Team (MHAT) survey from
Together with the
We have increased the number of behavioral health care providers over the past 3 years and embedded more in front line units. Along with providing care, we have undertaken the largest study of mental health risk and resilience ever conducted among military personnel. This study will identify risk and protective factors as well as moderators of suicide-related behaviors by 2014.
The Department continues to improve access to behavioral health services through a number of initiatives. In FY12, we have begun the process of embedding, over a four-year period, over 400 behavioral health providers into our patient-centered medical homes. We enhanced confidential, non-medical counseling through the
Recent legislation now permits mobile VA Readjustment Counseling Services to provide outreach and readjustment counseling to active duty service members.
We have also made efforts to ensure continuity of behavioral health care for members in transition - to a new installation, from active to reserve status, or to the VA. We offer a diverse set of services to reach those military members seeking greater support. One notable program -- "inTransition" - was developed in response to the
Just as the Department has established a comprehensive approach to its mental health destigmatization efforts, we have employed the same model for our suicide prevention programs. The Deputy Assistant Secretary of Defense for Readiness is standing up the Defense Suicide Prevention Office that will be staffed and resourced to develop, implement, integrate, and evaluate suicide prevention policies, procedures, and surveillance activities across the Department. This action specifically addresses a key recommendation contained in the
Our FY13 program sustains the significant investments we have made in all of our medical research and development programs, and in particular in the area of TBI and Post-Traumatic Stress (PTS).
Within the readiness area, the health of our service members is also protected through sound occupational health practices. This past fall, the
Finally, at the core of our medical readiness posture is our people. Our recruitment of medical professionals - physicians, dentists, nurses, ancillary professionals and administrators - remains high. With the support of
Improving Population Health
Closely linked with our readiness mission are our efforts to improve the health of the entire MHS population. We are going to engage in a multi-year effort on two of the greatest contributors to ill health --- tobacco use and obesity in our population.
Our service members use tobacco and tobacco products at a much higher rate than their peers; we have started to reduce tobacco use, but we plan to do more. In addition to the existing suite of smoking cessation pharmaceuticals available at MTFs, and counseling services, we will soon offer the pharmaceutical benefit through our mail order program, and allow for a 24/7 smoking cessation line with counseling services over the phone.
In the area of obesity and overweight persons, in some circumstances we reflect what is occurring within the larger society. Our active-duty service members - as you would expect -do well in maintaining their weight and their fitness, and exceptionally well when compared to their peers. However, the influence of nutritional habits in the larger society is having effects on the military population and particularly on entry-level candidates. When those in uniform leave active service, too many reverse the physical fitness habits and discipline of military service. There is a financial cost to this; one DoD study found that
We have worked across the Services to develop and launch both adult and childhood obesity management and prevention guidelines, emphasizing the provider's role and positive steps to take in assisting and advising patients. We have also implemented a demonstration project to determine whether monetary incentives can be used to improve the overall health and wellness of the MHS population. We do not yet have the results of this demonstration project, but will report interim findings to the
Enhancing the Patient Experience of Care
As the MHS moves into 2012, we will re-evaluate our efforts and mission through the lens of enhancing the patient experience of care by focusing on maximizing the value we provide to our beneficiaries.
The MHS is continuing the implementation of the Patient-Centered Medical Home (PCMH), a program with the principle focus of developing a cohesive relationship between the patient and the provider team. The PCMH is a transformative effort within our system, with the potential to positively affect all aspects of our strategic focus - readiness, population health, patient experience and per member cost. Begun in 2009 as a strategic initiative, the MHS has formalized through directive and accreditation our PCMH program. In 2011, 44 of our facilities were formally recognized by the
The Department has long been a national leader in developing and deploying a global, electronic health record (EHR). Our first EHR was put into the field in the late 1980s. We are now on the cusp of developing our third generation EHR - and the first to be co-developed with the
The DoD/VA Interagency Program Office has been rechartered to give them more responsibility and authority as the program execution office for the iEHR. In addition, the VA has signed an agreement with the
As we expand the amount of health care information that we collect and share, we remain vigilant about the security of this sensitive health information. In the last year, a DoD contractor responsible for the maintenance of aspects of our electronic health record experienced a serious security breach in which 4.9 million medical records were potentially compromised. In the wake of that incident, we have conducted a critical review of the contractor's performance, as well as a review of our existing policies and procedures, and we have strengthened our guidance and future contract requirements for a number of security and encryption standards.
Our work with the VA on the iEHR is only one element of a comprehensive strategy to further partner with the
As budgets and force structure are reduced in the Department, we recognize that there is a need to reassess the size and scope of major construction projects, as we are currently doing with the
Responsibly Managing Cost
We are proud of our achievements in combat and peacetime medicine. We offer a superb benefit to our 9.7 million beneficiaries, no matter where they live, through our direct health care system and through our managed care support contracts. This health care benefit is justifiably one of the finest and most generous in the county and is an appropriate benefit for those who serve our country. However, the costs of providing this care continue to increase more rapidly than overall inflation. For a number of years, and through several Administrations, there have been continuous, incremental steps taken to reduce the rate of growth in the costs of healthcare.
In addition, the requirements of the Budget Control Act of 2011 compelled the Department to identify
This Administration is pursuing a four-pronged approach by which all stakeholders share responsibility for improving the health of our population and the financial stability of the system of care.
Our four approaches - moving from a system of healthcare to one of health; continuing to improve our internal efficiencies; implementing provider payment reform; and rebalancing cost-sharing - are further described below. In some instances, they reflect efforts already underway, or new initiatives that the Department is implementing within existing legislative and regulatory authorities.
Moving from Healthcare to Health
Central to this effort are the Department's investments in initiatives that keep our people well; that promote healthy lifestyles; and that reduce inappropriate emergency room visits and unnecessary hospitalizations. These initiatives have been addressed in earlier parts of my testimony and include the Patient-Centered Medical Home (PCMH) initiative; the embedding of behavioral health staff within these medical homes; the introduction of a 24/7 nurse advice line; and our many population health initiatives. We have also taken a number of steps to support preventive services. Our
The "Healthcare to Health" element of our strategy will not produce immediate cost savings. Nonetheless, based on knowledge of well-constructed wellness programs in the private sector, we are confident that these, and other ongoing enhancements to the
Internal Efficiencies
The Department has instituted internal cost reduction efforts by decreasing headquarters administrative overhead; jointly purchasing medical supplies and equipment; and directing patients to lower cost venues for medications. The cumulative savings from all of these internal efforts for FY2013 are estimated at
I have also previously noted the proposed reorganization of the MHS, following the work of the
Implementation of any organizational efficiencies resulting from this
Provider Payment Reform
We are committed to identifying greater efficiencies and cost savings in all areas of our operations. In addition to internal efficiencies, we are also seeing significant savings through a number of provider payment reforms that we have introduced in the last several years. These include the implementation of the outpatient prospective payment system; the policy changes we made for reimbursement to select hospitals and health plans in the
The Department has undertaken a broad-based, multi-year effort to ensure all aspects of our provider payments for care purchased from the civilian sector are aligned with best practices in
OPPS is modeled after the payment process that
Our provider payment reform for Sole Community Hospitals (SCH) was also phased-in over time, and will provide a projected
In the area of purchasing prescription drugs, in 2009 we instituted a process for obtaining discounts on drugs distributed through retail network pharmacies, pursuant to authority provided in the 2008 National Defense Authorization Act. Known as Federal Ceiling Prices (FCP), prescriptions purchased under FCP are at least 24 percent less than non-Federal Average Manufacturer prices. In 2012, the FCP program will save the Department over
Beneficiary Cost-Shares
In addition to the focus on internal and external efficiencies, our proposed budget introduces changes to the health care out-of-pocket costs for our beneficiaries.
I want to make three critical points related to these proposals. First, even accounting for these proposed fee changes, the
Second, as mentioned earlier in my testimony, these proposals were developed within the Department, and represent the input and consensus of our uniformed leadership, both officer and enlisted.
Third, we recognize that some beneficiary groups should be insulated from increases in out-of-pocket costs. We propose to exempt those service members, and their families, who were medically retired from military service, as well as the families of service members who died on active duty. We also propose to establish cost-sharing tiers, with lower increases for retirees based on their military retirement pay. More junior enlisted retirees, for example, will experience the lowest dollar increases in out-of-pocket costs. Finally, we have also avoided any changes in cost-sharing for active duty families with the exception of prescription drug co-payments obtained outside of our MTFs. Prescription drugs distributed within MTFs will continue to be free of charge for all beneficiaries.
For over fifteen years, the Department had not increased patient out-of-pocket costs for any beneficiary. In fact, the
Although last year's changes were a necessary step, the Department has proposed further cost reduction efforts in 2013 as an element of our strategy to meet the requirements of the 2011 Budget Control Act. All of these changes are phased in over time. For select fees the Department has proposed "tiers" of co-pays based on the retirement pay of the beneficiary. Fee changes are distributed across the various
The following sections provide a high-level overview of the proposed changes in beneficiary out-of-pocket costs. Figure 2 summarizes the proposed fees:
. Fee increases for
o TRICARE Prime Enrollment Fees. We propose to raise the enrollment fees in 2013 for retired service members and their families from between
o TRICARE Deductibles. We propose to increase deductibles for the TRICARE Standard program for retired service members and their families beginning in FY13.
o TRICARE Pharmacy Co-Pays. We propose to increase pharmacy copayments for generic, brand name and non-formulary prescriptions in both the retail and mail order settings, although we will continue to offer significant incentives for beneficiaries to elect mail order over retail pharmacy networks. Additionally, non-formulary prescription drugs will no longer be available in the retail network.
These changes are proposed for all non-active duty beneficiaries, to include active duty family members. Prescription drugs obtained in military hospitals and clinics will continue to be provided without co-pay for any beneficiaries.
. New fees for
o TRICARE Standard/Extra Enrollment Fee. We propose to introduce an annual enrollment fee in TRICARE Standard for retired service members and their families. The proposed fee for 2013 will be
o TRICARE For Life (TFL) Enrollment Fee. When TFL was introduced in 2002, there was no enrollment fee in the program, only a requirement that beneficiaries be enrolled in Medicare Part B to enjoy their TFL benefit. Medicare Part B was always a step that we recommended our retirees elect, and prior to 2002, over 95% of eligible military retirees were enrolled in Medicare Part B. The TFL benefit has reduced beneficiary out-of-pocket costs by thousands of dollars per year in co-payments or
o Exclusion of Enrollment Fees from the Catastrophic Cap. We propose that enrollment fees, which had previously accumulated toward a retiree's catastrophic cap limit, will not be counted toward the cap beginning in 2013.
o In addition to the indexing of the TRICARE Prime enrollment fee, which is already indexed, we propose to index other beneficiary out-of-pocket costs identified in this set of proposals, to include the TRICARE Standard deductible, TRICARE Standard enrollment fee, TRICARE For Life enrollment fees, pharmacy co-payments, and catastrophic caps.
Figure 2. Summary of TRICARE Proposals
. TRICARE Prime for Working Age Retirees (under Age 65)
. As part of the FY 2013 President's Budget, the Department will seek additional increases in the TRlCARE Prime (
. Table 1 displays the proposed fees by fiscal year for the three tiers of retired pay. After FY 2016, the enrollment fees will be indexed to increases in National Health Expenditures (NHE). The retired pay tiers will also be indexed to ensure beneficiaries are not pushed into a higher tier as a result of annual cost-of-living (COLA) increases. The construct and tiering are generally based on recommendations of the 2007
Table 1 - TRICARE Prime Annual Family Enrollment Fees (Individual Fees = 50%)
Retired Pay FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017
Tier 1:
Tier 2:
Tier 3:
. * Indexed to medical inflation (National Health Expenditures) after FY 2016
. TRICARE Standard and Extra for Working Age Retirees (under Age 65)
. The TRICARE Standard and Extra (fee-for-service type) benefit programs currently have no enrollment fees and modest annual deductibles of
Table 2 - TRICARE Standard/Extra Fees/Deductibles
Annual Enrollment Fees FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017*
Individual
Family
Annual Deductibles
Individual
Family
. * Indexed to medical inflation (National Health Expenditures) after FY 2017
.
. Like almost all Americans, upon reaching age 65,
Table 3 -
Retired Pay FY 2012 FY 2013 FY 2014 FY 2015 FY 2016* FY 2017
Tier 1:
Tier 2:
Tier 3:
. * Indexed to medical inflation (National Health Expenditures) after FY 2016
. Pharmacy Co-Pays
. This proposal will adjust pharmacy co-pay structure for retirees and active duty family members to incentivize the use of mail order and generic drugs. Prescriptions will continue to be filled at no cost to beneficiaries at Military Treatment Facilities (MTFs). No fees would continue to apply to prescriptions for active duty service members.
. Table 4 displays the proposed co-pays for prescriptions filled through the TRlCARE retail and mail order pharmacy programs.
Table 4 - Pharmacy Co-Pays
Retail - 1 month fill FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017
Generic
Brand
Non-Formulary*
Mail-Order - 3 month fill
Generic
Brand
Non-Formulary*
Military Treatment Facilities
No Change - Still
. * Non-Formulary pharmaceuticals will have limited availability in retail pharmacies
. Catastrophic Cap
. In order to maintain the adjusted beneficiary cost share, the annual catastrophic cap
. Finally, to protect the most vulnerable, these proposals exempt survivors of members who die on active duty and medically retired and their family members from these increases. However, it should be noted that even once the proposal is fully implemented, the TRICARE Prime program remains a very generous benefit with the average beneficiary cost share well below the original 27 percent of health care costs when the program was fully implemented in 1996.
These proposed changes continue to be modest by historic standards of cost-sharing in the
These adjustments are an important step to setting the
We are cognizant of the strains placed on our economy and the government by federal budget deficits and long-term debt. We recognize that the
I am honored to represent the men and women of the
Read this original document at: http://www.armedservices.house.gov/index.cfm/files/serve?File_id=230d592b-43b6-4334-9574-97312bc37444
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House Armed Services Subcommittee on Military Personnel Hearing
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