Tricare Goes Nationwide

June 1, 1999

Four years after letting its first contract, Tricare is finally up and running nationwide. Defense officials say the new health care setup has done nothing less than revolutionize the peacetime delivery of military medicine. They insist that it has provided better access to high-quality care for a larger number of beneficiaries, more cost-effectively, than previous systems.

Those on Tricare’s receiving end do not always feel that way. Retired members of the military, in particular, contend that it does not always seem to meet their needs. From slow claims processing to access standards and billing limits, the complaints about Tricare just continue to pour in.

“There are still significant issues that must be resolved,” warned Cmdr. Virginia M. Torsch, USNR, an assistant director of The Retired Officers Association, at a Congressional hearing on military health programs early this spring. Echoing those words at the same hearing was Sydney T. Hickey, an associate director of the National Military Family Association, who, like Torsch, spoke on behalf of the Military Coalition, a group of organizations (including AFA) representing the views of some 5 million active duty and retired personnel, plus their families.

A sampling of their testimony:

Slow claims processing. “For beneficiaries, claims processing delays often result in dunning notices from providers or even having their accounts turned over to collection agencies-jeopardizing their credit ratings if they fail to pay the claims out of their own pockets. In fact, [Military Coalition] associations have been informed that beneficiaries are routinely paying bills sent by providers rather than spend the hours, and sometimes days, necessary to fight the Tricare claims process. As the chief of staff of the Army noted recently, a claims system that requires only 75 percent of claims to be paid within 30 days is inadequate protection for uniformed services members and their families.”

Rigid pre-authorization. “Requirements for pre-authorization for care for both Prime and Standard beneficiaries vary widely from Tricare region to region. For example, in Region 1, the managed care contractor requires pre-authorization for all inpatient care, regardless of the beneficiary’s enrollment status (Prime or Standard) or residence (in or out of the catchment area of a Military Treatment Facility). The coalition is also very dismayed that pre-authorization is even required for Tricare beneficiaries with other health insurance that pays first. This blanket requirement for pre-authorization is creating havoc among beneficiaries in this region. For example, the coalition just heard of a case where a Tricare Standard beneficiary residing in a noncatchment area in Region 1 almost had to cancel his wife’s surgery because he was unable to obtain pre-authorization in time. If a staff member from one of the coalition’s associations had not stepped in and asked a representative from the managed care contractor in this region to look into this situation, the surgery would have had to have been canceled. Another Standard beneficiary in Region 1 received care from her local Veterans Affairs hospital (under contract as a Tricare provider) which did not get pre-authorization, so now they are trying to charge her $3,000 for her inpatient care. Although we have been assured she will not have to pay this bill, both of these cases point to a breakdown in communication to providers about the requirement for pre-authorization, especially outside catchment areas.”

Point of service charges. “The coalition also continues to hear of a problem that it raised in last year’s testimony to this committee-the issue of Prime enrollees being unknowingly referred to an out-of-network provider and thus incurring point of service charges, which are much higher than Prime copayments. Again, this problem now appears to originate from military providers referring Prime enrollees to out-of-network providers, not the civilian contractors. The civilian managed care contractors appear to have set up mechanisms to help eliminate any mistaken referral to an out-of-network provider. However, military hospitals have failed to implement any such procedures. In fact, the coalition recently heard about a Congressional staff member who incurred major health care costs, while still on active duty, from an erroneous referral by a military physician to an out-of-network provider. This individual happened to be a base commander and asked the very obvious question that, if a base commander has such trouble with unplanned, and unrequested, point of service charges, how does the enlisted service member prevent this from happening?”

Triple Option

Tricare is a triple-option health benefits package. Beneficiaries have a choice of Tricare Prime, a managed care Health Maintenance Organization type of option; Tricare Extra, a preferred provider option; and Tricare Standard, the old CHAMPUS fee-for-service system.

The heart of Tricare is the existing network of military hospitals and clinics–what officials call “the direct care system.” This network has been augmented by managed care support contractors to provide health care and administrative services not available from military facilities.

“Approximately 75 percent of the health care is delivered in the direct care system, and nearly 87 percent of the 3.3 million people that are enrolled in the program are enrolled in the direct care system,” Dr. H. James T. Sears, executive director of the Tricare Management Activity, told the Senate Armed Services Committee subcommittee on personnel.

Even critics admit the system has made progress from a slow start-up in many parts of the country. For instance, it is easier to get service provider representatives on the phone in many Tricare regions. Claims processing has improved.

Last year, 83 percent of all Tricare claims were processed within 21 days, according to Dr. Sue Bailey, assistant secretary of defense for health affairs. The goal for contractors to hit was 75 percent of claims within the three-week time period.

“Not Good Enough”

“Although meeting the standard, it is not good enough,” Bailey told the Senate panel.

How true, say some recipient groups. Claims remain one of their biggest areas of concern.

A cumbersome and unresponsive claims process is a primary cause of frustration for both beneficiaries and civilian Tricare providers, said Torsch, representing the Military Coalition.

Providers often face months of delays in getting paid and have a difficult time even getting in touch with Tricare claims processors to discuss their problems, said Torsch. It is the single most frequently mentioned reason providers opt out of the system or decline to join it in the first place, she said.

It was a major cause, for instance, of the recent withdrawal of Group Health Cooperative of Puget Sound, Wash., as a network provider in Tricare Region 11.

“The loss of Group Health is particularly troublesome since GH has over 23,000 enrollees in Tricare Prime and moving these enrollees to other providers is no small task,” said the Military Coalition in a written submission to senators.

The Military Coalition believes that Tricare’s claims processing goals are not adequate to protect service members and their families. Some beneficiaries are routinely paying bills themselves rather than expend the energy needed to fight the claims process.

One big cause of these problems is that, in the entire nation, there are only two financial intermediaries familiar with the Tricare claims process, according to the coalition. With a virtual monopoly on the business, they have little incentive to invest in electronic claims processing or other new, efficient procedures.

Torsch recommended a complete redesign of Tricare claims processing in at least the two Tricare regions whose managed care contracts are being renewed next year. The aim is to streamline information flow and decision making.

“Adoption of such practices would likely save the government $300 million per year,” reported the Military Coalition, “because the $9 Tricare per-claim processing cost vastly exceeds the $2-per-claim cost of best private practices.”

Beneficiary concerns go beyond the well-known issue of claims, however. Other areas of worry include:

Overall funding. The Military Coalition and other groups remain concerned about the amount of money defense health programs receive in the budget. Although DoD added $445 million to the medical budget in Fiscal 1999, and allocated another $2 billion overall for the next five years, unanticipated medical costs from military operations could have an impact on the budget for the rest of the system.

Specifically, the coalition is calling for Tricare program funds to be based on the number of uniformed services beneficiaries who are eligible for the system, as opposed to being based on the number of beneficiaries who actually used the system the previous year.

Continuity of care. This does not exist under Prime, claim the critics. Depending on specialists and services that are available in local Military Treatment Facilities, patients can be shuffled back and forth between MTFs and civilian specialists. In civilian HMOs, the beneficiary’s primary care manager acts as a gatekeeper, overseeing and recording all treatments and medications, whatever their source. But in Tricare Prime there is no such gatekeeper with a fully informed overview–at least, not when the beneficiary receives both MTF and civilian care.

“Their primary care manager in that case is normally the clerk at the Tricare service center,” said Hickey.

Portability of enrollment and reciprocity of care are other particular Prime problems, said Hickey. It is DoD policy that Prime enrollees should be able to transfer their policy from region to region when they move and that a recipient from one region should be able to receive care in another when traveling. But this flexibility has yet to be implemented in all areas of the country, claims the coalition.

It can take weeks for Prime enrollees to transfer policies. “We have one case where it took five months to effect,” she said.

Reciprocity is scarcely more widespread. This situation hampers beneficiaries who live near the border between regions, for example. The closest specialist for a procedure they need may be just across the border–but getting approval for a visit can be difficult, if not impossible.

Seeking Seamlessness

“Tricare must become a seamless system to truly serve a beneficiary population that is probably the most mobile in the country,” said the coalition’s written presentation.

Such basic standards as ease of access are not being met for Tricare Prime in many regions. Critics continue to insist that they have many instances where standards for time of access and distance to treatment are not being met.

Interestingly, it is no longer civilian providers who are most often cited as the cause of these problems. “This is primarily at our Military Treatment Facilities,” said Hickey.

Even Tricare Standard, the fee-for-service military health option, does not escape unscathed from critics of the new system.

For one thing the Standard catastrophic cap–the total amount a beneficiary would have to pay in the event of an expensive, acute medical problem–is $7,500 for retirees. That is much higher than the $2,000 or $3,000 cap in many civilian fee-for-service plans.

Tricare Standard billing limits can also hinder beneficiaries. In 1995, the Pentagon unilaterally reinterpreted Standard’s 115 percent billing limit in cases where beneficiaries also had third party insurance. This has cost beneficiaries considerable money, complain critics.

This Much, No More

Providers can charge whatever they want for a given procedure, but Tricare Standard only recognizes amounts up to 115 percent of its preset “allowable charge” for any given procedure. Say a beneficiary with third party insurance goes to a favored provider who charges a high price, perhaps 200 percent of Standard’s allowable charge. The third party insurer pays first and antes up an amount equal to 115 percent of the allowable charge.

Under post-1995 rules, Tricare won’t kick in an extra dollar. The beneficiary has already received the 115 percent of allowable charge limit-even though it was not the military doing the paying. Under pre-1995 rules, Tricare would have paid the balance that the third party insurer did not cover, since in any case that sum would be less than what the military would have paid if the beneficiary didn’t have third party coverage.

“DoD’s shift in policy unfairly penalizes beneficiaries with other health insurance plans, by making them pay out-of-pocket what Tricare previously covered,” said the coalition.

Fixing all these problems in Tricare will be far from easy. But coalition spokesmen insist that it is necessary to keep faith with the current and retired military members, and their families, who feel they were promised quality health care as payment in part for serving their country.

“The coalition believes that each of these problems must be addressed in an expeditious fashion in order for Tricare to enter the 21st century as a fully functioning uniform health care benefit,” concluded Hickey.

Furthermore, it would be a mistake to think that Tricare’s problems center on treatment for military retirees and their families. Shortcomings in defense health programs for retirees are spilling over into the active force as well, insists the coalition.

In the spring, the Army’s 5th Recruiting Brigade held a Family Symposium in St. Louis. The meeting brought together military spouses to discuss matters of concern to recruiters, their families, and the Army. At the close of the symposium those present voted on their top five issues. According to Col. Charles C. Partridge, USA (Ret.), an official of the National Association for Uniformed Services, “Issue No. 2 was ‘Timeliness of Tricare Claims Payment.’ Issue No. 1 was ‘Lack of Tricare Providers.’ “

Pentagon and military service officials say that Tricare is a solid foundation on which to build. They are encouraged by surveys that show increasing satisfaction among Tricare users–93 percent of Prime users would re-enroll, according to a recent Pentagon poll.

However, the Defense Department does not insist that the system is perfect. Among the problems that Air Force Surgeon General Lt. Gen. Charles H. Roadman II identified for the Senate Armed Services subcommittee on personnel were claims processing difficulties, Tricare Standard maximum allowable charges, and improvement of beneficiary awareness.


“As with the civilian sector, we are frequently met with local resistance to managed care, from local medical societies, civilian providers, and our patients,” said Roadman. “This is all part of the education process with which we are challenged.”

The health care budget remains a challenge, too. From 1997 to 1999, the Air Force delayed needed health care infrastructure and equipment purchases to pay for patient care, according to Roadman. The 2000 budget has halted this slide, but it has not totally redressed the shortfall.

“Facilities are still funded at about 80 percent of requirement,” said Roadman. “Equipment replacement is funded at about 75 percent of requirement.”

Some Tricare regions are doing better than others, Pentagon officials admit. Some are on top of their claims and access scheduling delays, while some are not.

DoD is attempting to reverse this situation through enforcement of today’s standards and establishment of tougher ones. The current goal is to get 75 percent of bills processed within 21 days. This fall, the goal will rise to today’s Medicare standard, which is a 90 percent closure rate in 21 days.

Monetary incentives may help, too. “If claims are left for over 30 days, … there will be interest paid on those claims,” said the Pentagon’s top doctor, Bailey.

Phones will be monitored more assiduously. Training will be expanded. Phone systems will be added to help ease the access crunch. Confusion and out-of-pocket costs should be reduced for recruiters, ROTC members, active duty military personnel who support the Guard and Reserve, and other Tricare beneficiaries who work in areas remote from MTFs.

“We all know that we have tarnished the image of the military health care system through these [past problem] business practices, even though we give world-class delivery of health care on a regular basis,” said Bailey. “We need to restore confidence in Tricare and that’s what we’re actively trying to do at this time.”

Peter Grier, the Washington bureau chief of the Christian Science Monitor, is a longtime defense correspondent and regular contributor to Air Force Magazine. His most recent article, “Partners in Space,” appeared in the February 1999 issue.