Health Care Happenings

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.

Who would have thought the Department of Defense (DoD) would pit currently serving members against retirees in an effort to “control health care costs” by raising TRICARE fees? 

It’s rather sad when you think about it–one day you are in uniform, next day you are out–one day your service and contributions earned you the benefits of a grateful nation, and the next day, not so fast, we’ve changed the rules.

That’s what politics and budget pressures do to systems–they adjust, reset, compensate, and move on–and the rest of us hold our breath looking for signs of hope that all will be right with the world.

And just when you thought it was safe to go back into the water (remember the movie, Jaws 2), there’s another attack, this time, pitting military benefits against veterans benefits.

That’s right–the Senate Veterans Affairs Committee approved legislation last week that would provide health care and services for veterans and former military family members exposed to contaminated water at Camp Lejeune, N.C.

On the surface, S.277 sounds harmless enough, and taking care of veterans and their families when service caused their illness, injury or disability is certainly the right thing to do. 

But here’s the rest of the story. 

          To pay for the care of these veterans and family members, the Committee voted to eliminate the federal subsisidy for DoD commissaries and directs the consolidation of military commissisaries and exchanges into a single, world-wide system that is self-sufficient–that means no financial support through appropriated government funds.

This pitting of veterans benefits against the military is a clear sign of the political and budget pressures on Capitol Hill–also an indication of what lengths and creative manuevering strategies members of Congress will do to find offsets to pay for provisions they support.

In this case, the Senate Veterans Committee has no juristiction or knowledge over the DoD resale systems–that responsibility falls under the Armed Services Committee.

While MOAA supports expanding VA care to cover Camp Lejeune veterans, we believe the Veterans Affairs Committee should look elsewhere for the funds.

Commissary and exchange consolidation “is not something we would support, said Steve Strobridge, director of government relations for the Military Officers Association of America.  And certainly not without going through the armed services committee.  I hope it gets the kind of scrutiny it deserves.”  

Hmmmm, Pit for Tat–

So I wonder what’s next on the chopping block?

Read More in Last Week’s, July 1:   MOAA Legislative Update.

Neither the House-passed Defense Authorization Bill (H.R. 1540) nor the version adopted by the Senate Armed Services Committee (S. 1253) included a provision to block an increase in the current $535 per day TRICARE Standard inpatient copay for retired members and families.

What’s the issue?  Unless the law is changed to block it, the Pentagon will raise that inpatient copay by a whopping $110 per day to $645…or more.

I say “or more” because DoD used to raise that copay every year until 2006, when we convinced Congress to block them (which Congress has done every year since).   Annual increases before that averaged around 4% or 5%, but varied widely (e.g., from 1% for FY03 to 16% for FY05).

So if the last increase we knew about from two years ago was $110 per day, the change for FY12 could be $125 or more if the average annual increase holds true.

MOAA believes strongly that $535 per day is plenty high enough already.  The only reason there aren’t more complaints about it behing that high is that most people don’t have to pay it, so it doesn’t get much publicity.

MOAA already is talking with a potential Senate sponsor about offering an amendment to stop the inpatient copay hike when the defense bill comes to the Senate floor for action.