Health Care Happenings

What exactly are the specifics of the President’s plan to cut military health benefits?

TRICARE For Life:

(a) Establish an annual enrollment fee of $200 per person, starting in FY2013

(b) Authorize the Secretary of Defense to increase that fee in subsequent years based on growth in health costs

TRICARE Pharmacy copays:

(a) Switch retail copays from a flat dollar amount to a percentage of DoD costs. For FY13, that would be 10% of cost for generics and 15% of cost for brand names. the White House plan envisions further increases in subsequent years to 20% of cost for generics and 30% for brand names.

(b) Leave generics at zero copay in the mail-order system, but increase the mail-order copay for brand names to $20 and non-formulary medications to $35 for FY13. The White House plan envisions increasing both of those to $40 in subsequent years.

MOAA strongly objects to these proposals. You can help by sending your legislators this MOAA-suggested message.

According to a new fact sheet about the Virtual Lifetime Electronic Record (VLER) project, the VA plans to expand its capabilities to exchange health care information with DoD and select private sector healthcare providers.  The ultimate goal of this Presidentially directed project, is to provide seamless communication of health records and benefits history between the DoD, VA and the private sector “from the day they first enlist to the day that they are laid to rest.”

Currently, 5 regions are covered in the exchange; however, this will increase to cover 6 additional ones.  Testing will begin in all of these 11 regions this month.  Performance data collected during a 6 month trial period will help determine whether the program will be expanded nation-wide in 2012.  The $53.4 million being used to fund this extension was approved by the Senate subcommittee on VA appropriations in June.

Data exchange between private health care providers and hospitals in San Diego California, plus additional test sites in Virginia, Washington State, Utah, and Indiana, have been used by the VA in conjunction with Health and Human Services (HHS) standards for the National Health Information Network.

In addition to the expansion of the data exchange program occuring this month, the VA plans to open a Web portal which will give veterans the ability to authorize the release of specific medical information, held by the VA, to designated providers.  Exchange capability for this function will be tested later this fall, allowing two health care providers to directly provide information to one another.

Progress is slow but sure!

Earlier this year, the House of Representatives and the Senate Armed Services Committee approved respective versions of the FY2012 Defense Authorization Bill that limited the 2012 TRICARE Prime fee hike to $5 a month and capped future Prime increases at the same percentage as the annual retired pay COLA.

Does that mean we’re out of the woods on the risk of the far larger ($1,000-$2,000 per year) increases DoD has previously proposed for both Prime and Standard beneficiaries? Unfortunately, the answer is “No.”

That’s because the recently approved budget deal will require an additional $350 billion in defense spending cuts….and the new budget law also requires a congressionally appointed panel of Hill budget-cutters to come up with another $1.2 trillion in cuts — of which $200 to $500 billion is likely to come from defense.

So it’s still entirely possible that these additional rounds of cuts could propose a new set of TRICARE fee hikes that could blow what Congress put in the Defense Authorization Bill out of the water.

See why we were saying earlier in the year that complaining about the $5 Prime increases was focusing on the molehill and ignoring the mountain?

The initial agreement on the nation’s debt limit is done, with the promise of more targeted reductions to come.  Now what does this mean? and more specifically how does, or will this, impact DoD’s healthcare program TRICARE?

There is more that we do not know at this point, than what we do know.  However, we can do some speculation on the matter.  Keep in mind that TRICARE physician payment rates are tied to Medicare payment rates, in other words, for example, DoD pays doctors the same amount for an office visit  as Medicare does.

This becomes important when you consider that based upon the Sustainable Growth Rate or SGR, ( a formula which calculates Medicare doctor payment rates )  is due to decrease the existing doctor payment rate by nearly 30% on January 1 2012.  This is a formula which already requires close to $300 Billion over a 10 year period to fix, and may be potentially compounded by another 2% “trigger” across the board reduction if the newly established debt “super committee” cannot meet agreement on spending reductions. 

While we hope that this bi-partisian committee will address and fix the SGR formula, but with the savings levels to be achieved, there will be significant challenges to getting there.  Any cut in provider reimbursement can adversely affect both TRICARE beneficiary and seniors access to care.

Therefore, a one or two year patch, as has been the recent norm, will probably occur once again.  We at MOAA will continue to educate Congress on the impact to beneficiary access as these debates start.

As of now, the future of healthcare in the US is still uncertain. We do know that demographics in the US point to an aging population,  but with deficit reduction a “Sisyphean sequestration”, healthcare spending will be in the cross hairs.

Many of the budget cap plans would require immediate reduction of spending on so-called “entitlement programs” — one of which is TRICARE For Life.

Some would specifically target either TFL itself or all Medicare supplement programs, which also would include TFL.

If those initiatives were put into law, we’d be looking at having to make changes that could include such options as:

• establishing a TFL annual enrollment fee
• establishing an annual deductible for TFL
• capping what TFL will pay (e.g., one plan would establish a $500 annual deductible and a 50% copay for the next $5,000 in costs…effectively shifting up to $3,000 to each beneficiary annually).

At least one proposal would exempt TFL from outlay cuts, but if you understand the budgeting process, that wouldn’t necessarily mean no changes.

That’s because the budget caps would limit spending in two categories: “mandatory” and “discretionary” spending.

For TFL, mandatory spending includes the current year outlays — the money TFL actually pays to doctors for beneficiaries’ care.

But it also has a discretionary spending piece — the money that DoD and the Treasury deposit in the TFL trust fund every year to build up the fund to pay for future care for future retirees.

In theory, anyway, a budget cap could exempt TFL mandatory spending but not discretionary spending.

As a practical matter, that would mean no cut in current-year outlays, but requiring cuts in the amounts deposited in the trust fund could mandate changes (including the ones mentioned above) for future retirees.

Two Congressional committees will be meeting next week to hear concerns both pro and con regarding the establishment of the new Independent Payment Advisory Board (IPAB).  This should make for lively debate!

Established as a provision in  last year’s healthcare law, the IPAB is given the authority to recommend proposals to limit Medicare spending growth.  The appointed 15 members (appointment is made by the President) will make recommendations to Congress to curb Medicare spending if the program grows at a rate of more than GDP plus 1 percent.  Under law, the IPAB’s recommendations are automatically implemented unless blocked by a congressional resolution of disapproval,  however Congress must still pass legislation that would reduce spending the same amount as IPAB recommendations.  

Implementation of the Board’s recommendations by the Secretary of Health and Human Services is not subject to administrative or judicial review.  The establishment of the Board represents the first time that the Medicare program will be subject to spending limits, with statutory requirements to achieve savings targets.

In creating the new Independent Payment Advisory Board, the Congress has established strict target growth rates for Medicare spending while ceding some of its authority over certain aspects of the Medicare program to an outside entitiy for the first time since the program was enacted in 1965.

Proponents claim that the structure and operations of the Board, as established by the healthcare law, will effectively curb the growth in Medicare spending, while maintaining protections for beneficiaries by prohibiting the Board from rationing care or reducing benefits.  Critics claim that explicit limits on Medicare spending growth are unrealistic given the overall growth in heal costs generally, and that over time the limits could jeopardize beneficiaries access to care, exacerbate the payment differences between Medicare and private payers, and make it harder for Congresses to find savings within Medicare to offset the costs of program improvements.

There are currently several bills in Congress which address a repeal of the IPAB.  Also, the hearings on the Board will be taking place next week and we will be monitoring these closely.  Regardless, if the Board gets underway as scheduled with the first set of recommendations in 2014, these spending reductions will have to be assessed for potential impact on beneficiaries to ensure quality and access to care are not diminished.