Tricare on the Rise

Oct. 1, 2004

Last spring, many older Americans found themselves struggling to make sense out of a new Medicare benefit designed to pay at least part of the cost of their medications. They were expected to choose among a number of complex options, none of which were easy to understand.

At the same time, military retirees were enjoying a number of recent improvements in their medical program. Today, it not only provides pharmacy benefits but also makes health care cheaper than it is for most civilians.

Col. Charles Wolak is chief of the Health Benefits Division in the Office of the Air Force Surgeon General. Asked to comment on the changes in the services’ Tricare system in the past few years, he replied, “Probably the most significant change was extension of the medical benefits to our senior population with our Tricare for Life program … also, the Tricare senior pharmacy benefit.”

The new retiree coverage, which began in October 2001, is only one of several improvements made in recent years in the benefits and administration of the military health care system. Wolak said that other changes have been made in response to experiences with previous contracts and input from the health care industry best-practices rules.

“Under the next generation of Tricare contracts,” said Wolak, “we have moved from very prescriptive, requirements-based contracts to performance- or outcome-based contracts. This allows the contractor to use the industry’s best practices to improve the Tricare program while leaving the basic benefits structure—Tricare Prime, Extra, and Standard—unchanged.”

Additionally, Tricare has added contractor incentives for superior and measurable performance in customer service, quality of care, and access to care. There are quarterly awards fees based on input from beneficiaries, commanders, and regional directors.


In another move to make health care more accessible, Wolak said, Tricare has simplified its structure from 12 regions to just three—the North, South, and West. Rather than having seven Tricare contracts, DOD has gone down to three. This makes the benefit more portable and reduces administrative and overhead fees. “So I think it is a major improvement,” said Wolak.

Yet another change relieves the strain on major contractors by passing some chores to others. Wolak explained that DOD has carved out several of the contracts from the big managed care contract so that the managed care support contracts can focus on their core competencies.

“One such carve-out is dual-eligible fiscal intermediate contract,” he said. “This [group] does claims processing and customer service for beneficiaries who also are eligible for Medicare.”

Then there are two pharmacy contracts. The first provides a national mail order service that replaces the old mail order contract. The second integrates all the retail pharmacies under one contract, which should solve many of the portability problems seen under the old contract. It should also reduce administrative costs.

“Another carve-out is the marketing and education contract,” Wolak continued. “This is to create a national suite of Tricare marketing and education products that will provide a uniform message and reinforce the fact that Tricare is a single, portable benefit.”

The final carve-out covers local support contracts. This is where commanders of military treatment facilities (MTFs) will be able to contract for services. They will have more control over utilization, management, and resource-sharing agreements.

Despite the changes in administration, the basic Tricare options remain much the same.

Tricare Standard is the modern version of the original military health care program known as CHAMPUS. It allows beneficiaries to see the providers of their choice. This is a good deal for people pleased with the coverage they get from their current civilian providers. Those covered also may be treated at military treatment facilities if space is available after Tricare Prime patients have been served.

Under Standard, the individual pays a deductible, co-payments, and the balance of the bill if it exceeds allowable charges and the provider does not participate in the program. The beneficiary also may have to file his or her own claims.

Nonavailability Statements

In a change made in 2003, most Standard beneficiaries no longer need to obtain nonavailability statements. The change was approved in the 2002 National Defense Authorization Act.

Until that change, families covered by Standard could not receive care from civilian providers until they received statements from their MTFs saying that they could not be treated there. Nonavailability statements still are required, however, for nonemergency inpatient mental health care.

Even though nonavailability statements are not required, officials urge beneficiaries to check with their nearby MTFs to compare services and answer any questions. Although an MTF was unable to provide services in the past, it may be able to do so now.

Tricare Prime resembles the civilian world’s health maintenance organizations, in which enrollees are assigned to primary care managers (PCMs) who coordinate their care. Beneficiaries receive most of their care from military treatment facilities augmented by the contractor network.

There is no enrollment fee for active duty family members, but retirees under age 65 must pay $230 annually for individual coverage, or $460 for a family. The PCM manages all the person’s care, which means the choice of providers is limited and specialty care is by referral only.

Tricare Extra allows beneficiaries to pick the doctors, hospitals, and other medical providers of their choice from those listed in the Tricare Provider Directory. Beneficiaries must be CHAMPUS eligible, which mean that active duty members do not qualify.

There is no enrollment fee for this option and no deductible for using the retail pharmacy network. However, the patient pays deductibles for other services and is responsible for co-payments.

Members may switch from one plan to another where they are eligible, but they may not want to do so.

“If you wanted to use Tricare Standard or Tricare Extra,” said Wolak, “the only advantage would be that you would have your choice of physicians. If you wanted to go to a particular physician without a referral or anything, you could do that. The downside of that is that it would cost a lot more.”

Under Tricare Prime, one is assigned to a primary care manager and he or she takes care of all health care needs such as referral to a specialist.

“Of course, we try to tell people that the most cost-effective system is Tricare Prime,” said Wolak, “because there are no co-pays for active duty folks, and it is the least expensive of all the options.”

Unlike some civilian health care plans, Tricare apparently now has little trouble getting health care providers to work with the programs.

Wolak said, “The participation rate by providers has really improved over the years. We have queried the Tricare management activities and the overall provider participation rate is currently at 97 percent. All the specialty services are at 97 percent except surgery, and that is at 96 percent. It’s pretty high and we think participation now is generally static with the rates similar to last year, on the average, although there was a slight increase in participation rates of one percent overall from last year.”

Maintaining a Network

According to the Air Force, most of the Tricare contracts have reached maturity, although there still may be small upward increases. More important, however, is the percentage of beneficiaries receiving specialty care referrals within the Congressionally mandated access standards. Today, it is rare that these standards are not met. The contractors are required to maintain a network of participating providers in sufficient numbers to meet these standards.

“That’s working out very well,” said Wolak.

Wolak conceded that, in the past, there had been some dissatisfaction about the health care system, but attitudes toward the program have improved.

“For instance,” he said, “at the annual Tricare conference last January, there was a panel discussion with some of the Congressional staffers and legislative assistance personnel. These are the folks who have the pulse of their constituencies. They are the health care experts. The consensus of the panel was that the Tricare complaints were no longer a big issue. Generally, the beneficiaries were very satisfied with the program. So, we were very glad to hear that.”

That was not the case early in the program, years in which the very system seemed flawed.

Wolak said, “Complaints within the last two years have generally focused on individual problems rather than the kind of systemic issues we encountered when Tricare first began.”

For more than a year, Tricare has processed 99.9 percent of clean claims within 30 days and responded to more than 99.9 percent of correspondence within 30 days. It is meeting or exceeding its own self-imposed standards. This is significant and impressive when you consider that Tricare processes more than 100 million claims annually.

As the Tricare program has grown, satisfaction rates of providers and beneficiaries have held at over 95 percent.

Wolak credits the combination of incentives and penalties for improvements such as reductions in wait times for care. He said, “That’s improved quite a bit, and I think it is due largely to the incentives for superior customer service and access to care. The contractors are actually motivated to provide high-quality customer service.

“Also, we have standards for wait time and so forth, and, if the providers do not meet those standards, there are penalties. So, there is incentive and there are penalties.”

The standards also require contractors to maintain enough health care providers. Wolak said that the contractor within the region has to have a very robust network of providers. If it does not meet those standards, they are penalized.

The Cost Issue

Despite the improvements, the services have not escaped the cost increases in medical care generally.

Wolak said that the military health system, like any other health care system in the United States, continues to experience significant growth in care costs. The good news is that the cost to the beneficiary—particularly the active duty members and their families—actually has gotten less because Tricare has dropped all co-pays.

“The Tricare for Life program is one of the strongest health care plans in the nation,” Wolak claimed. “The costs [of enrollees] have gone down dramatically when you look at the amount of money that some of them were paying for these Medicare supplement plans. They were quite high. Now, they no longer need those because the Tricare for Life plan covers everything.

“They have to enroll in Medicare Part B,” said Wolak, “but Tricare then is the second payer to Medicare. So, where they used to buy these insurance plans to cover whatever Medicare didn’t cover, now Tricare covers that, and they no longer have to pay these high premiums for those supplemental Medicare plans.”

Not all changes have worked so well. For example, problems plagued the new pharmacy coverage when it was first adopted.

“Unfortunately, we did have some issues,” Wolak said. “The new contractors apparently didn’t anticipate the number of claims they were going to receive, and they were inundated with claims. They were unable to keep up with that and the phone lines became saturated with calls from both patients and pharmacies during the transition, for about the first 72 hours.”

Problems continued intermittently until early June, but most now have been solved and prescription claims are being processed in record numbers, said Wolak. More than 3.5 million prescriptions were filled in June. The government has been monitoring call wait times, which now fall below 30 seconds.

Under the Prime, Extra, and Standard options, students also may be covered until they turn 21. After that, they must be enrolled full-time in an accredited educational institution and their sponsors must be providing more than half their financial support. They also may be covered by either the Tricare Dental Program or the Tricare Retiree Dental Program, depending on the sponsor’s status.

For college students, the best Tricare choice depends on availability in their school areas.

Like all dependents, college students must be registered in the Defense Enrollment Eligibility Reporting System (DEERS). Eligible categories of people include active duty and retired service members from any of the uniformed services, their spouses, and unmarried children (including stepchildren).

Enrolling in DEERS is not handled by Tricare or medical officials, however.

“It’s a personnel matter,” said Wolak, “so you have to go to your base personnel shop. You put in your proof, such as your birth certificate, to show that you are related to the … sponsor and they will register you into DEERS, which allows you to get the health care that you need.”

For the Reservists

A few years ago, Tricare coverage was limited to the families of members on extended active duty. With the increased use of reserve forces in the war effort, however, participating reservists have been authorized benefits.

Wolak noted that one recent provision temporarily authorizes Tricare medical and dental coverage for the reserve components if the sponsors are activated for more than 30 days. They just have to show orders that they are activated for more than 30 days and then both they and their family members become eligible.

A second provision extends eligibility for Tricare benefits to 180 days under the transitional assistance program. This is for reserve-component sponsors who separated or will separate from active duty in the period Nov. 6, 2003, through Dec. 31, 2004.

A third provision extends eligibility for Tricare benefits for reserve-component sponsors who are either unemployed or are employed but not eligible for employer-sponsored health coverage.

When retired reservists reach retirement eligibility (usually at age 60), they and their families also become eligible for Tricare. Later, when they qualify for Medicare, they come under the Tricare for Life program.

In early 2001, the Defense Department launched a new Tricare dental care program combining the plans for active duty and reserve members. A separate plan for retirees remained in effect.

Enrollment in the plan is voluntary and portable. As with health care, eligible beneficiaries must enroll in DEERS and, in the case of dental care, pay monthly fees for participation. The rate for a single enrollment is $9.07 per month and family premiums are $22.66 a month.

Under another recent change, Tricare Prime enrollees moving from one region to another now take their enrollment with them. The new rules allow two changes a year for Prime enrollees other than active duty family members, as long as the second transfer is back to the original region. Active duty family members have no limit on the number of times they may transfer.

Officials advise such enrollees to stay enrolled in the region from which they are departing, and, after making the move, ask the Tricare Service Center to transfer the enrollment.

While Tricare beneficiaries still must pay for part of their care, there are limits to how much they must pay in serious or long-term treatments. The maximum for an active duty family, for example, is $1,000 per fiscal year. Tricare pays the rest.

Retirees and their family members and survivors may pay up to $7,500 per fiscal year but those in Tricare Prime have a cap of $3,000 per 12-month enrollment period.

In emergencies that threaten life, limb, or sight, and require immediate treatment, beneficiaries can go directly to an emergency room at the nearest hospital. For less serious conditions or long-term care, they must contact their primary care managers.

Like most military programs these days, the health program has its own Website.

On July 20, the Tricare Smart Website was improved to give customers quicker and easier access to medical information. It allows them to see, print, e-mail, and download available Tricare brochures, booklets, handbooks, and other materials. Users also may subscribe to receive e-mail alerts when programs are changed.

Organizations that need printed Tricare materials can order from the site once they have registered. The site’s address is:

Besides the more routine care, medical beneficiaries are eligible for a number of special programs.

Baby care, for example, is paid as part of maternity care for the first three days. After that, the baby begins separate cost sharing as an individual at the normal rate. For the first 120 days, the baby is automatically covered if the family is in Tricare Prime. After 120 days the baby will convert to Tricare Standard unless specifically registered in DEERS and enrolled in Prime.

Under recent changes in Standard and Extra programs, eligible children under six years now receive well-child care from authorized civilian providers. This already was the case under Tricare Prime. Tricare also will share costs for immunizations up to midnight of the day before the child turns six years old.

Chiropractic care also is available but only to a limited degree. Active duty members may receive it at a few MTFs (Offutt AFB, Neb., Scott AFB, Ill., and Wilford Hall Medical Center in San Antonio). Their family members may be referred to the traditional health care services in the military health system (physical therapy, family practice, or orthopedics), but if they want chiropractic care in the local community they have to pay for it.

Bruce D. Callander is a contributing editor of Air Force Magazine. He served tours of active duty during World War II and the Korean War and was editor of Air Force Times from 1972 to 1986. His most recent article for Air Force Magazine, “Force Shaping,” appeared in the July issue.