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TRICARE: Is the military program turning around?

From the March ACP Observer, copyright © 2005 by the American College of Physicians.

By Bonnie Darves

Faced with a booming number of patients and a potential shortage of participating doctors, the government's military health plan is facing a critical juncture.

At issue is TRICARE, the Department of Defense's decade-old managed care-style program. The program is being stretched thin due to a growing number of uniformed service members and reservists being called to serve. At the same time, military members are staying in service longer, leading to a larger retiree population. Those greater numbers may find too few participating physicians.

TRICARE picks up where the military health system's 500 military hospitals, medical centers and clinics leave off, caring for more than 9 million active-duty members of the military and their families, retired uniformed service members and their families, and other eligible beneficiaries.

Growth trends were compounded in October when legislation was passed to permanently extend TRICARE eligibility to National Guard and members of military reserves and their families. Under the new policy, benefits can now start up to 90 days before a member's activation date and remain in effect 180 days following deactivation. Reservists who commit to additional service requirements after active duty can also purchase TRICARE standard coverage for themselves and their families.

Those booming numbers, combined with base realignments and closures that have taken place over the past 15 years, mean that TRICARE is short of facilities in some regions of the country. Some beneficiaries find it tough to find physician services because the program's provider networks are overburdened or inadequate. In areas like Alaska, Idaho, and parts of Missouri and Minnesota, program officials have asked physician organizations and state governors to encourage physicians to participate. (See Online TRICARE resources.)

Some physicians say they don't participate because of their previous and negative experiences with the program's low reimbursement and administrative hassles. But TRICARE officials point to the system's recent major overhaul they say has led to a more physician-friendly program.

Troubled times

TRICARE first ran into problems in the 1990s, when a Congressional mandate required the program—formerly the Civilian Health and Medical Program for the Uniformed Services, or CHAMPUS—to operate like private-sector HMOs. The program was transformed into an 11-region network managed by individual contractors.

"In the old days, we provided all health care in our facilities," explained Rear Admiral Richard Mayo, MD, deputy director of TRICARE management activity. "But that changed," he added, because of both growing numbers of beneficiaries and the increased mobility of military families to areas where no facilities existed.

For physicians, the restructuring meant a frustrating mix of managed care hassles, stringent federal regulations and, in some cases, poor reimbursement rates and slow payment.

"We had access problems and payment problems, and because each region was contracted separately, it was difficult to administer," said Mark Friend, Director of Operations at ACP's Washington office and a former medical service corps officer who oversaw TRICARE benefits during that time. "It was difficult for us to attract physicians." In 1997, when claims processing problems hit their roughest period, Mr. Friend recalled, payment delays of 120 days were not uncommon.

In addition, confusion reigned regarding who was covered by TRICARE and how the program's three options—standard, extra and prime—operated for referrals, authorizations and benefits. (For more, see "The three service levels of TRICARE.")

Such confusion also led many physicians to mistakenly think they could see TRICARE beneficiaries only by being part of formal networks. As a result, many were reluctant to enter into contracts. (A fact sheet on physician participation options is available.)

TRICARE eventually resolved payment delays and other issues by weeding out poor-performing contractors, improving its computer systems, and streamlining and speeding up some aspects of the referral and authorization processes. It also installed dedicated ombudsmen in its regional offices to address provider and beneficiary problems and impose more stringent claims payment schedules.

But TRICARE's reputation had suffered a blow, with the program still trying to overcome physician frustration and misconceptions.

Massive overhaul

Today, TRICARE has emerged from a massive overhaul that whittled those 11 regions down to three regional offices—North, South and West—and gave those three contractors more flexibility in provider arrangements. The program has also carved out contracts for pharmacy and local support services to reduce what officials call "administrative bulk."

And TRICARE officials are asking physicians to give it another chance—or to try it anew. "There are many physicians who don't know of TRICARE, and another group who did accept TRICARE patients but had misadventures and passed that word on," Dr. Mayo said. "We need to reach out to physicians and correct these old myths."

TRICARE officials say the program's claims processing and payment times now rival those of the best commercial plans. They also say that referrals and authorizations have been similarly streamlined.

According to Dr. Mayo, recent reports indicate that 90% of the more than 2 million claims TRICARE receives each week are paid within 15 days, while 99% are paid within 30 days, in part because most claims are now processed electronically.

Referrals also have been streamlined. TRICARE now requires that 85% of referrals and 90% of authorizations be processed within two days—a standard that Dr. Mayo said contractors are meeting for the most part.

A range of reviews

Today, TRICARE has approximately 53,000 contracted network primary care providers, but thousands of other TRICARE-authorized providers also participate. (Physicians can see beneficiaries on a case-by-case basis if they meet Medicare participation standards.)

Among internists and subspecialists who currently or formerly worked with TRICARE, reports and opinions are mixed. Some physicians say they feel compelled to care for members of the military and their families, regardless of business issues.

"I don't have issues with TRICARE because as far as I'm concerned, whoever walks in the door is welcome here," said David Kessler, FACP, a Washington nephrologist and retired Navy captain who happily cares for any TRICARE patient who seeks him out. "I'm a retired military fellow and this is my family, in a way."

For colleagues reluctant to work with TRICARE because of what they've heard—or experienced—Dr. Kessler has a simple message: Do it anyway. "[Participating in TRICARE] really is supporting your troops because you're supporting their families, who are under great duress."

Few physicians take issue with the TRICARE for Life program, the Medicare wraparound coverage plan enacted by Congress in 2001. The program makes TRICARE a second payer to Medicare and relieves beneficiaries of all but negligible costs for prescription drugs.

But when it comes to the basic TRICARE program, critics claim that payment rates may be as much as 40% below Medicare's. They also say that referrals and authorizations can be unwieldy, affecting continuity of care.

TRICARE officials note that the program cannot by law pay more than the TRICARE fee schedule, which is similar to Medicare's. In fact, they point out, the TRICARE fee schedule follows Medicare's for 98% of all codes and is exactly the same for E&M codes, although the program can pay less in negotiated contracts.

"When we go to negotiate a contract, we try to pay what the market will bear," said Steve Anderson, network development director for TriWest Healthcare Alliance, the West Region contractor whose provider network includes more than 21,000 internal medicine physicians. "In some competitive markets, we are able to pay below those fee schedules."

According to Frank Maguire, FACP, TriWest's senior vice president of provider and health care services,"I would encourage people to come back and try the program. In terms of reimbursement, it's very much like Medicare. There's some variation, but it's not significant."

While the TRICARE program has improved, according to Paul Speckart, FACP, a San Diego general internist and former College Regent, his five-internist group is reluctant to take on new patients unless they're enrolled in TRICARE for Life or are established patients who have converted to military coverage.

The program's rates are not the key issue, Dr. Speckart said. (Because San Diego has some of the country's lowest Medicare rates, TRICARE's fees are comparable.) Instead, his practice dislikes the program's cumbersome authorization and referral processes.

Dee Bertussi, the group's referral coordinator, said that when the staff completes the requisite forms to refer a patient to a cardiologist or dermatologist in the TRICARE network, the referral frequently "bounces back" with instructions to direct the patient "to go to the nearest military treatment facility."

Norfolk, Va., rheumatologist Alfred E. Denio, FACP, used to have similar problems. Being geographically situated in the midst of what Dr. Denio describes as "a massive population of TRICARE participants," opting out totally isn't an option.

His six-physician group, Center for Arthritis & Rheumatic Diseases, accepts TRICARE standard, the PPO-style option. But it left the TRICARE prime negotiated contract plan last June because of both reimbursement and patient-care concerns. Reimbursement for certain procedures was a full 10% below Medicare, he said, and excessive documentation was often required to justify procedures.

But he said his real beef was with the way beneficiaries were shuttled back and forth between his practice and the local military treatment facility, depending on the availability of rheumatologists there. His group would be asked to take on TRICARE patients when the military subspecialists were called up for service--but when the subspecialists returned home, patients "would be jerked back" to the naval hospital, Dr. Denio said. "That left fragmented care and often we were not informed that the patients were leaving."

In December 2004, however, the situation improved as the result of negotiations between the group and TRICARE, according to practice administrator, John E. Schalk. TRICARE sorely needed the rheumatologists in its network, so the group was able to command both better rates and, more importantly, the assurance that HMO patients established with the practice would remain there.

"Our story came out well, so we decided to stay in the network," Mr. Schalk said. "It shows that most any difficulty can be negotiated."

Bonnie Darves is a freelance writer in Lake Oswego, Ore.

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The three service levels of TRICARE

The Department of Defense health care program, which covers more than 9 million beneficiaries, is offered in three options:

Standard
Formerly CHAMPUS, an indemnity-type plan that enables beneficiaries to seek care from any civilian physician who meets Medicare provider standards.

Extra
A PPO-type plan that provides a slight cost-sharing discount to beneficiaries who go to preferred providers. Providers in turn give claims filing assistance.

Prime
An HMO-type plan that contracts on a fixed-fee or capitated basis with provider groups.

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Online TRICARE resources

You can find additional information on TRICARE at these Web sites:

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