Troubles With Tricare

June 1, 1998

Retired Air Force Lt. Col. Eddie O. Huckins signed up for Tricare Prime in 1995. At first, his experience with the United States military’s version of a cost-saving health maintenance organization was a positive one. Foundation Health Federal Services, Inc., the Tricare contractor for the region which included his Oregon home, featured courteous customer service representatives and trouble-free billing. Area physicians listed in his provider directory were helpful and willing to take military business.

Then, in 1996, things began to deteriorate, he says. Customer service slowed. He started receiving notices that his coverage was about to lapse due to lack of premium payment. The notices kept coming even after he had contacted Foundation Health three times to verify that they had indeed received his check.

Foundation Health last year notified Huckins that his Primary Care Manager-in essence, his family doctor-was dropping out of Tricare. The stated reason was that Tricare Prime payment schedules were too low. He plucked the names of eight other PCMs out of his Foundation Health provider directory and picked up the phone. Three of the eight were no longer accepting new patients. Two others were no longer participating in Tricare, they said, because the program’s allowable charges were unacceptable. Three of the PCMs had never heard of Tricare Prime at all.

“Since I will not compromise [on the] quality of [my] Primary Care Manager, I elected to transfer to another, more customer-oriented, health care system and forfeit my Tricare premium,” wrote Huckins in a December 1997 letter to the Air Force Association.

Long Road Ahead

If recent comments received by AFA are any indication, Huckins unfortunately is not alone. Many members wrote in to say that, if their experience is a guide, then Tricare has a long way to go before it becomes a smoothly running system.

Department of Defense health officials admit that implementing the huge changes associated with the Tricare system has proved to be very complicated. Among other things, schedules have slipped, administrative problems have cropped up, and payment schedules have proved controversial.

Even so, they say, fixes for many of the glitches have been put in place and a new management structure will help Tricare head off future problems. “I would like to see all of our beneficiaries cared for in our military facilities, but those days are gone,” Brig. Gen. Dan L. Locker, lead agent for DoD Health Services Region 4, told Congress earlier this year. “I believe the Tricare program is good, the concept is sound, the execution is well under way, and the successes are beginning to overtake the challenges.”

Tricare is a managed health care program modeled after civilian managed care standards. The manager in Tricare’s case is the military, in partnership with civilian contractors. There are now 11 designated health service regions (DoD combined Regions 7 and 8 in July 1997) in the United States, each headed by a lead agent who is a senior military health care officer. For most enrollees, day-to-day health care decision making is handled by a Primary Care Manager, with oversight provided by local Military Treatment Facility commanders.

The Tricare program offers beneficiaries three health care options. Tricare Standard is a fee-for-service program that is the same as standard CHAMPUS. Tricare Extra is a preferred provider system which is somewhat less expensive than Standard. Tricare Prime is a network of military and civilian hospitals and health care providers which is similar in scope to a civilian Health Maintenance Organization. It is the least expensive Tricare level.

All active duty US military personnel are automatically enrolled in Tricare Prime. Their beneficiaries-as well as military retirees up to age 65-may choose the health care level in which they wish to participate.

Tricare was established in an era when health care costs were escalating rapidly, yet the Department of Defense was moving to downsize its own Military Treatment Facilities. Due to Base Realignment and Closure actions some 35 percent of the MTFs that were open in 1987 were shuttered a decade later.

Yet the number of people eligible for military health care declined only 9 percent during that same period. And the makeup of the beneficiary pool continued a rapid change. Today, retirees account for half the military health care population.

Tricare today has many levels, varied objectives, and a wide array of stakeholders, from military retirees to active duty physicians. A large budget is involved, as well: The Department of Defense spent about $15.5 billion on its health care system in 1997. Given these complexities, it is perhaps not surprising that some critics believe Tricare implementation has proved to be a difficult undertaking.

“Much remains to be done before Tricare becomes the smooth-running and beneficiary-friendly endeavor envisioned by its developers,” Stephen P. Backhus, a General Accounting Office military health care expert, told a House panel this year.

Slow Start

Tricare has been slow off the mark, for one thing, according to GAO. More than four years after its founding, it is one year behind its nationwide implementation schedule, said Backhus. Defense Department officials must award large, complex, competitively bid contracts to supplement and support the health care provided by MTFs in the 11 Tricare regions. Virtually all these awards have been protested by losers at substantial cost to both DoD and the offerors.

Heavy enrollment in Tricare Prime-a key cost-saving aspect of the new program-has also lagged, claims GAO. DoD projections have assumed that, within each region, at least 90 percent of nonactive beneficiaries would sign up for Tricare Prime within one year of its implementation. At the beginning of Fiscal 1998 the actual figure was only about 57 percent.

But the largest share of Tricare problems might fall under the general category of “administrative difficulties.” GAO, a wide array of service member and retiree associations, and individual users have complained of everything from difficulty in reaching regional Tricare managers on the phone to a lack of physicians and unclear benefit information.

The Military Coalition, a group of organizations (including AFA) representing the views of some 5 million active duty and retired service personnel, plus their families, recently told Congress that its members are committed to making Tricare a better health plan for all participants. “Having said that, … there are still significant issues that need to be resolved,” said Sydney Tally Hickey, associate director of the National Military Family Association.

Among Tricare’s administrative problems, lack of access appears to be one recurring theme. Numerous responses to an Air Force Association request for comment on how Tricare implementation is proceeding talked about how hard it was to get representatives on the phone in some regions.

The experience of retired USAF Col. Alan C. Ray of Camas, Wash., is typical. There are “not nearly enough phone lines to provide reasonable service in my area,” he wrote AFA in December. “I have tried on occasion to get through with a speed dial for over 10 minutes, only to finally get through and be put on a 19-minute hold by the computer before I ever got to talk with a claims representative.

“Naturally, she assured me she would take care of the [disputed claim],” Ray continued, “but was apparently unable to deliver.”

Hard to Get

In some areas, obtaining needed appointments is no easier. Retired Air Force Col. Richard S. Greene of Reno, Nev., wrote AFA in December that, in his region, Tricare Prime enrollees who do have a Primary Care Manager are waiting “anywhere from two weeks to a month to get an appointment. The contract states seven days.”

Considering this background, it is not surprising that many beneficiaries have been beset by claims processing problems once they do establish contact with their care managers.

Air Force retiree Norman Courter’s claims problems began shortly after his wife was treated for a broken ankle. In early 1997, the hospital in which she received treatment began sending serious dunning notices to Courter for payments that he believed Foundation Health, his Tricare Prime manager, should have paid.

It took “dozens and dozens of telephone calls” to clear up the situation, Courter wrote AFA. The last bill settled involved $864 owed an anesthesiologist.

Or at least Courter thought it was settled. Then last fall, he received a note from Foundation Health demanding that he repay most of that money. The claim had been paid as “surgery,” not “anesthesia,” said the letter. Courter would have to remit $852, then turn around and resubmit a claim so that Foundation Health could redo their paperwork.

“Frankly, my financial situation is such that the amount was no great burden and I do expect some later recovery,” wrote Courter. “At the same time, I’m incensed that such a tactic is promoted against any service member, retired or active. Imagine what a blow this would be to a person or family just able to get by from month to month.”

Tricare officials admit that public interface in general and claims processing in particular have been their greatest challenges.

In the Tricare Central Region, for instance, 325,000 beneficiaries signed up in the first 10 months of the program-a larger number than the contract between the Pentagon and provider TriWest Healthcare Alliance projected for the first five years. Initially, average waiting times for phone calls were upwards of 45 minutes. The number of claims ran some 40 percent higher than anticipated, according to TriWest officials.

“The unexpected volume, … and the complexity of the claims processing requirements themselves, led to our claims processing falling behind,” said TriWest President and CEO David J. McIntyre Jr. before Congress.

Well-run private health plans typically have a complaint rate of 2 to 3 percent. Two to 3 percent of the number of beneficiaries expected to eventually take part in Tricare is a very large number, pointed out McIntyre.

“Thus the focus in my view has to be on constant improvement and aggressively tackling those problems that do arise,” he said.

Humana Military Healthcare Services, the contractor for Tricare Regions 3 and 4, faced similar numbers. Initial claims volume was 35 percent higher than predicted in its contract-which worked out to 8,000 extra claims every day.

Extra Help Needed

Building the extra staff needed to handle this overload took time, said Humana President and CEO Robert E. Shields. Since the height of the problem in January 1997, the claims backlog has been whittled down by 55 percent, according to Shields.

“The percent of claims processed within 21 days is consistently more than 80 percent compared to the contractual requirement of 75 percent,” Shields told Congress in February. “Currently, 100 percent of beneficiary calls to our claims representatives are answered within 20 seconds compared to the contract requirement of 90 percent in 120 seconds.”

Speaking for its active duty and military retiree members, the Military Coalition remains concerned about slow claims processing and care access in Tricare. If nothing else, the Department of Defense needs to establish a method of tracking access data in all Tricare regions, hold coalition members. Similarly, they urge the Pentagon to establish Tricare ombudsman programs, staffed by independent parties, wherever Tricare is in effect.

Furthermore the coalition holds that Tricare still does not provide uniform health care benefits. Take two Tricare Prime enrollees, one who lives near a big Military Treatment Facility and one who does not. The enrollee near the MTF will likely have a military physician assigned as Primary Care Manager. The enrollee outside the MTF catchment area likely will have a civilian PCM, instead-and have to pay copayments for all visits and services.

According to Hickey of the National Military Family Association, this may effectively create “two distinct Tricare Prime plans-an MTF Prime … and a civilian Prime.”

Then there is potentially the largest Tricare problem of all, one that deals directly with the quality of care: physicians in the system.

The Military Coalition and many Tricare participants are worried about the Pentagon’s ability to locate and retain quality health care providers. Directories of Tricare Prime providers are often not accurate, according to the coalition. Some providers are located in unsafe parts of town. “There have been reports of a dearth of Prime providers, especially specialists,” said Hickey.

The problem stems from the fact that most Tricare managed care support contractors have negotiated physician reimbursement rates that are even lower than those paid by Medicare. Unhappy with their fees, some major health care provider groups have simply dropped out of the system. Last year, a 250-doctor group in Colorado and the entire provider network of the Medical University of South Carolina walked away from Tricare Prime business, for example.


Low reimbursement rates and a high hassle factor may have caused a similar problem for Tricare Standard (CHAMPUS). “Some physicians are becoming disillusioned with Tricare,” notes GAO.

Tricare contractors admit that physician recruitment poses a challenge. As of early this year, TriWest was still 27 providers short of a complete network in its covered area, for instance.

The contractors hold that even 100 percent of the CHAMPUS Maximum Allowable Charge set by the government is not enough to attract providers in places where there are a limited number of doctors and a fairly small number of Tricare beneficiaries. In such areas providers argue “that it would take reimbursement at upwards of 140 percent [of current limits] to get them to participate,” said TriWest’s McIntyre.

Thus the complaint of retired USAF Lt. Col. Richard N. Doolittle of Littleton, Colo., is a too common one. “From the perspective of the intended recipients in Colorado, the system is not working,” he wrote AFA. “This is primarily due to the lack of acceptance of the program in the Colorado area. … My family physician states he was offered an opportunity to participate at 14 percent lower than Medicare rates and he could not afford to do that.”

Defense Department health officials say that any institutional change as massive as Tricare implementation will have its problems. They are doing their best to limit them, they say, pointing out that polls show a majority of Tricare participants are pleased with the system and feel it compares favorably to civilian counterparts.

To strengthen Tricare oversight and performance DoD has established one central Tricare Management Authority, acting Assistant Secretary of Defense for Health Affairs Dr. Edward D. Martin told Congress in February. The new TMA has been charged with developing methods to closely monitor system quality, health care outcomes, and cost.

This year Tricare will complete its initial round of contract acquisitions. All 11 regions in the US should have all three Tricare levels available by December, said Martin. In addition, the Pentagon is “energetically” trying to provide full Tricare benefits to US service personnel and their families stationed overseas.

Payment rates for all medical services under Tricare should soon be at least as high as those provided by Medicare, said Martin. And DoD officials are working to simplify contracts with the Pentagon’s managed care contractors, in an effort to help speed claims processing improvements.

Despite continued budget pressure, the medical portion of the defense budget is fully funded for 1998 at the Administration request of $15.6 billion. The money “will afford us the resources to ensure that health care continues to be a successful contribution to quality of life in the military,” said Martin.

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, “More Questions About Military Stores,” appeared in the April 1998 issue.