DoD Tricare 'Reforms' Call For Higher Retiree Fees, Co-Pays

With congressional leaders vowing this year to overhaul TRICARE, the military's health insurance benefit, the Department of Defense on Tuesday delivered to Capitol Hill revised recommendations to get that job done.

The TRICARE reform packet, Defense officials maintain, would simplify insurance options, improve access to managed care, and incentivize greater and more efficient use of military medical staffs and treatment facilities.

It also would save TRICARE about $1 billion annually, starting in 2018, by raising beneficiary fees and co-pays, particularly for retirees, their family members and their survivors.  And once fees and co-pays are reset, they would climb automatically, year after year, to keep pace with inflation in health care industry, just like most commercial health insurance plans.

The TRICARE reforms are part of the department's fiscal 2017 budget request and very similar to proposals offer last year. Those ideas were poorly timed, however, as they were overshadowed by the final report of the Military Compensation and Retirement Reform Commission.

The commission called for TRICARE to be replaced with a menu of commercial health insurance plans, like the one offered to civilians through the Federal Employees Health Benefit Plan.  But the commission would have given military beneficiaries a new health care allowance too that would have covered most of their commercial health insurance premiums.

After months of review, both Congress and Defense officials rejected the commission ideas as going too far. TRICARE, they decided, need not be discarded.  The Senate Armed Services Committee in particular signaled it was much more inclined to support Pentagon reform proposals.

By fall, House-Senate conferees on the defense authorization bill decided to embrace one-time pharmacy fee increases and make changes to ensure more timely appointments when using TRICARE network providers.

But conferees vowed to work with DoD this year on more comprehensive reforms to "improve access, quality and the experience of care for all beneficiaries; maintain medical readiness of military health professionals; and ensure the long-term viability and cost effectiveness" of the military health system.  Conferees also agreed "increases to fees and co-pays will be a necessary part of such a comprehensive reform effort."

In that quest, the revised budget package hits the mark. In reshaping fees, TRICARE says it also will drive more patients into managed care, with the added efficiency goal of using military facilities to maximum capacity.

The higher fees are targeted at non-medical retirees and their families. Active duty members and their family members still would face no co-pays for services on base or through TRICARE civilian provider networks.

The package asks Congress to streamline and more clearly defined TRICARE options. Prime, the managed care option now available on base or through primary care civilian providers, would be renamed TRICARE Select and become a military treatment facility or MTF-centric managed care option.

TRICARE Standard, the fee-for-service insurance plan, would be renamed TRICARE Choice to emphasize that users can choose to get care from network providers or pay more to use non-network providers. 

Currently only users of Prime (Select) pay an annual enrollment fee, now set at $282.60 for individual and $565.20 for family coverage.  Effective in 2018, if Congress agrees, those fees would jump but only for retirees under 65, their families and survivors.  Renamed "participation" fees, they would be $350 for individual and $700 for family coverage.  They also would continue to be adjusted annually, but based on medical inflation and not, as now, linked to retiree cost-of-living adjustments.

A bigger surprise is that younger retirees and family members also would face a participation fee to use Standard (Choice). That annual fee, starting in 2018, would be $450 per individual and $900 for family coverage.

Retirees who decline to pay the participation fee would forfeit coverage for the plan year.  Indeed all TRICARE beneficiaries after 2017 would have to enroll in their health benefit annually or lose access to coverage.

Also for the first time, Medicare-eligible retirees using TRICARE for Life as supplemental insurance would pay an annual enrollment fee too.  This one would be means based.  For 2018, it would be set at one percent of gross retired pay, but not to exceed $300. It would climb to two percent of gross retired pay, not to exceed $600, by 2020. General and flag officer retirees using TRICARE for Life would face slightly higher fee ceilings.  

Catastrophic caps on total out-of-pocket health costs, which haven't been raised in a decade, would be reset to $1500 a year, from $1000, for active duty families and to $4000 a year, from $3000, for retiree families. The new participation fee paid by retirees would not count toward the caps.

The proposed fees are too steep, said Steve Strobridge, director of government relations for Military Officers Association of America.

A typical retiree under age 65 with a spouse and two children who used Standard (Choice) would see more than a 50 percent increase in out-of-pocket costs, to roughly $1325.  That assumes six visits per family during the year to network doctors and four monthly drug prescriptions, he said.

Out-of-pocket costs would jump at least 100 percent, to $1760, if that same family used non-network providers.  Strobridge said retiree families using Prime (Select) would see similar pops in medical costs, he added.

"We do like that under Standard, or Choice as they would call it, there would be a lower inpatient co-pay than charged now.  They also say they will resolve appointments on first calls [and] improve their referral process and have more consideration of children's needs …We'd like to see these better services before the higher fees," Strobridge said.

"Congress has said TRICARE reform is not just about raising fees.  It's about making sure it's a world class benefit," he added.  And yet the DoD proposals appear to be "pretty much about raising fees."

For example, one glaring omission of the DoD reform packet is any improvement in TRICARE for Guard and Reserve members and families.

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