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[H.A.S.C. No. 106–41]



FOR FISCAL YEAR 2001—H.R. 4205






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FEBRUARY 25, 28, MARCH 8, 15, AND 17, 2000




STEVE BUYER, Indiana, Chairman

J.C. WATTS, Jr., Oklahoma
LINDSEY GRAHAM, South Carolina
JIM RYUN, Kansas
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MARY BONO, California
JOSEPH PITTS, Pennsylvania
ROBIN HAYES, North Carolina

MARTIN T. MEEHAN, Massachusetts
JOHN B. LARSON, Connecticut

John D. Chapla, Professional Staff Member
Thomas E. Hawley, Professional Staff Member
Michael R. Higgins, Professional Staff Member
Edward P. Wyatt, Professional Staff Member
Debra S. Wada, Professional Staff Member
Nancy M. Warner, Staff Assistant



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    Friday, February 25, 2000, Fiscal Year 2001 National Defense Authorization Act—Removing the Barriers to TRICARE


    Friday, February 25, 2000



    Buyer, Hon. Steve, a Representative from Indiana, Chairman, Military Personnel Subcommittee

    Curl, Sr. MSgt. David, U.S. Air Force (Ret.)

    Drudge, Sergeant First Class Dennis, Army National Guard
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    Huff, MSgt. Ted, U.S. Air Force (Ret.)

    Kelley, Brig. Gen. Joseph E., U.S. Air Force, Lead Agent, Region Five, TRICARE

    Mouse, Raymond L., Regional Vice President Anthem Alliance Health Insurance Company

    Ryan, Col. Joseph D., U.S. Army (Ret.)

    Stiers, Technical Sergeant Kathleen E., U.S. Air Force Reserve Technician


[The Prepared Statements submitted for the Record can be viewed in the hard copy.]

Buyer, Hon. Steve

Curl, Sr. MSgt. David (Ret.)

Mouse, Raymond L.

Mutter, Lt. Gen. Carol A., U.S. Marine Corps (Ret.)
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Mutter, Col. James M., U.S. Marine Corps (Ret.)

Ryan, Col. Joseph D. (Ret.)

Stiers, Technical Sergeant Kathleen E.


[There were no Documents submitted for the Record.]

Mr. Buyer
Mr. Hostetler


House of Representatives,
Committee on Armed Services,
Military Personnel Subcommittee,
Washington, DC, Friday, February 25, 2000.

    The Subcommittee met, pursuant to call, at 10:59 a.m. at the Consolidated Club, Building 325, Liberator Street, Grissom Air Reserve Base, Marshall County, Indiana, Hon. Steve Buyer (Chairman of the Subcommittee) presiding.
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    Mr. BUYER. This hearing of the Military Personnel Subcommittee of the House Armed Services Committee will come to order. This is a first of three hearings of the Subcommittee on Military Personnel conducted on the subject of TRICARE in this fiscal year. All the hearings will be focused on the final ways to remove the barriers to TRICARE for our military personnel and families, both active and retired. The first of two hearings will be field hearings, during which we will receive testimony from individuals involved in the system as users, providers, troop leaders, and TRICARE managers. Today we will first hear from the active, reserve and retired personnel who use the system. During the first—excuse me—during the final panel here today at Grissom Air Reserve Base, we will receive testimony from individuals responsible for implementing, supporting and managing the TRICARE system here in the Heartland of Region Five.

    By way of opening, I want to thank Colonel Christopher Joniak, Commander of the 434th Air Fueling Wing for hosting this field hearing and providing all of the on-site support here today; I know a lot of individuals operated to bring this together, and I want to especially thank Captain Cecilie Bredehoeft and Major Linda Harlan for their excellent support. I also want to thank my colleagues, Jim Ryun of Kansas and our Indiana own, from southern Indiana, Mr. John Hostetler, both are members of the Armed Services Committee, for being with us today, and travelled considerable distance, and I thank you.

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    Few services are more important to our service personnel men and women than health care available to them and their families. When soldiers, sailors, airmen and Marines are deployed away from their families, the last thing they need on their mind is whether or not their families are going to get the health care services they need. Now, this just isn't just a question of quality care; in fact, the quality of care in military treatment facilities among the TRICARE civilian providers is generally considered to be quite good. Obtaining access to that care, however, can be more than a little frustrating. A vast majority of TRICARE complaints I receive in my Congressional office are from individuals who cannot get an appointment with a medical professional that they thought they needed to see in a reasonable amount of time. They also have great concerns over access to providers.

    Our objective today is to better understand how TRICARE is operating here in the field. The perspective we get back in Washington sometimes can be very different from outside the Beltway. It is—pause here for a moment, and share with you. It was very helpful to the Subcommittee when, last year when we took on the issues of the pay and retirement reforms, sometimes in Washington you get a little eager and they get a little excited. And the President had some ideas in his budget; the Senate had some ideas in a bill; and they tried to rush a lot of things on us. We decided to exercise a little prudence. We went out into what we call the field. We went out and visited military bases and installations, and I think the product that the Subcommittee delivered, which the Senate then accepted and the President signed, was how we took limited available resources and spread them out. And I think the final product ended up being a good-quality product to the men and women who serve in the military. We are taking the very same approach this year on health care. The President has got his ideas on health care reform within the military health delivery system; the Senate has some of their ideas; and before we jump on anything, what we would want to do is, we're going to go out and talk to individuals who are operating within the system. And so we're exercising the same level of prudence that we've had in the past.
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    I'm particularly pleased that we're going to hear testimony of several retired military personnel; some of whom use Medicare instead of TRICARE for their health care. As you know all too well, the right sizing of the military health system is squeezing retired personnel out of the, quote, ''space-available care'' that was available at many Military Treatment Facilities at which many of our retirees and their families depend for their health care. The Department of Defense's efforts to relieve this pressure caused by closing Military Treatment Facilities included implementing TRICARE through several regional contracts for managed care support. In some parts of the country, this managed care approach had some success. Unfortunately, that same measure of success could not be found throughout the country, especially in places here in TRICARE Region Five. Like managed care in general in this part of the country, TRICARE appears to have enjoyed only limited success. We have two panels of witnesses here today, and I note each of my colleagues and I have several questions to ask. But first let me yield to my colleagues for any opening comments that they would make. Mr. John Hostetler, you are recognized.

    Mr. HOSTETLER. Mr. Chairman, I just want to say thank you for the invitation and the opportunity to hear from these panels about this very important issue. As we consider the commitment to our national security, we need to understand that we need to keep our commitment to our men and women in uniform, as well as retirees. And this discussion today will be, as you point out, the beginning in that process of how we can better recruit and retain the quality personnel in the United States military, the greatest in the world. We have likewise heard tremendous concerns from people that are adversely affected by the barriers, and your work last year to deal effectively with the pay, and with retirement issues, and this year to deal with medical issues like medical care, are going to be vital in recruiting and obtaining the highest quality military personnel in the world. And I want to thank you for this opportunity to share with you and Congressman Ryun.
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    [The prepared statement of Mr. Buyer can be found in the Appendix.]

    Mr. BUYER. Thank you. Mr. Ryun.

    Mr. RYUN. Mr. Chairman, first of all, let me say thank you again for what you're doing in bringing this most important issue up and putting it in the form of a field hearing. I know I have a number of retired veterans in the Second District of Kansas very concerned about this issue. I appreciate the testimony of those that will be speaking today and I will be listening closely. I know it's a very important commitment that we have made and is an opportunity to follow through on promises. I appreciate your approach and that you want to do it in a sound way in terms of making sure you have the hearings, and I look forward to the results. Thank you very much for holding the hearing.

    Mr. BUYER. Mr. Ryun, you have Fort Riley in Kansas; what else?

    Mr. RYUN. I have Fort Leavenworth and Fort Riley, and we have a very large number of retirees in that area. In fact, at one point we were like 15th of all Members of the House who actually have retirees in the area. So this is very, very important for me.

    Mr. BUYER. Thank you, gentlemen. Our first panel of witnesses is comprised of military retired personnel, some of whom are now using Medicare as their main source of medical care. I thank you all very much for coming here today. Your willingness to provide testimony shows that, even though you might not have worn the uniform in a while, you continue to serve this country and the men and women of the armed forces. Your testimony is important in helping us better understand just what the problems are and how to best fix them. Of course, we also want to hear about the parts of the TRICARE that are working. So, if there's something that is working, I need to know that, too, not just that which is not.
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    And before I turn to the first panel, I would like to take leave of the chair to recognize someone here today. Her name is Lieutenant General Carol Mutter, retired. Ladies and gentlemen, perhaps you may not realize, she was the highest ranking female in the Marine Corps on active duty. But I don't believe that is what she should be recognized for. I think what she should be recognized for is she's one of the most outstanding Lieutenant Generals who was in charge of personnel for the United States Marine Corps that I've had the pleasure to work with. And I hope you're enjoying your retirement, and we do miss your leadership.

    The first panel will also include two active reserve component individuals. And I will now turn to the first panel, and we'll move it over from your right to left, and we will begin with Colonel Ryan. Each of you are recognized for five minutes.


    Colonel RYAN. Chairman Buyer, members of the committee. My name is Joseph Ryan. I'm proud and pleased to have been selected to testify today because health care is one of the most important issues facing the local retired members of the active force. Not only does it impact the health care of the force, and the health of the nation, it also affects enlistment and retention of force members. As a 28-year, six-month career soldier who had the privilege of troop command, and the job of Chief of Staff of the Mayflower, and is one who has raised three daughters in the military environment through 23 different homes, and one right now who is indirectly raising three grandsons in the military environment, I feel that I'm as qualified as the normal, non-technical expert to voice opinions about the military health care system. At present, I'm President of the Indiana Council of Chapters of Retired Officers Association; a member of the Military Coalition of Indiana; a working member of the Fort Knox Midwestern Regional Retiree Council; and a state contact person for retirees and veterans who are having or have experienced health care problems. In addition, I serve as a board chairperson in the American Red Cross; I'm a member of the Board of the American Red Cross of Central Indiana. I mentioned this last position because of transportation and veterans' assistance programs administered by the Red Cross places me weekly in contact with veterans and retirees who are experiencing health care problems.
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    Don't let my youthful appearance deceive you. This young-looking face has gone well past its 65th year, and it's on its way to rounding 69. In my view, this is an important consideration in any health care plan, especially one for retirees, whatever their age. What's convenient for a spry 70-year old, becomes an agonizing experience for an 85-year-old veteran retiree. And this holds true, not only in a geographical sense of time and distance; key factors in considering care are Military Treatment Facilities (MTF), support at Patterson Air Force Base. It should also be a key consideration of, in reviewing the complexity of the billing, reimbursable and other administrative tasks you provide or looked upon from the standpoint of an aging patient. This makes my personal experience with TRICARE limited, because, as you well know, my Medicare eligibility puts me beyond the limits of TRICARE eligibility. In addition, the base closures in Indiana took with them any reasonably convenient resource formerly available as an MTF. In brief, Indiana retirees over the age of 65 constitute an excellent market for Medicare supplemental insurance. If I may, I'd like to integrate—interject some TRICARE stories garnered as a result of recent contact visits at Fort Leonard Wood, and discussion with some younger retiree families. For example, one of our retiree members insured under TRICARE has, over the past three years, been diagnosed with prostrate cancer, urinary and bladder cancer, and just recently received the bad news that he has Lou Gehrig's Disease, all of which have been treated under the TRICARE program.

    First, if there's been any one universal success under TRICARE Senior Prime adapted for those areas affected by base closures, it's the pharmacy program administrated throughout the area through Kroger and Wal-Mart. It works; it's convenient; it maintains excellent inventory of brand name and generic drugs. For example, out-of-pocket costs for my family in this particular case under the program in 1999 was $253.67; a savings—really, the retail cost would have been $1,268.43, a saving to my family at $1,014, an excellent benefit. The only disadvantage to the retiree of this program is: Number one, it's not universally available to all retirees. And two, the program is poorly publicized; there is not a month that goes by where one or two retiree families contact me and discover it for the benefit program for which they are eligible but did not know about it.
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    Close to high in convenience and improving efficiency is the quality of the Department of Defense (DOD), Mail Order Pharmacy Program—.

    Mr. BUYER. Excuse me. You're referring to the Base Realignment and Closure (BRAC) pharmacy benefit? Is that what you're referring to?

    Colonel RYAN. The BRAC, mail order pharmacy. And then there's a BRAC TRICARE-supported.

    Mr. BUYER. I understand.

    Colonel RYAN. Locally. That's two kinds of different things.

    Mr. BUYER. Thank you.

    Colonel RYAN. BRAC was instituted in 1997. Although registered, I haven't used the program myself, but the mail order program, per discussion with many users, indicates that the service is excellent and responsive. I recommended that DOD consider adoption of the universal pharmacy program for retirees over and under the age of 65, and/or active duty personnel; that, in addition to those administered through the MTFs, they will seriously enhance programs administered through local outlets, and, second, the expense of the mail order system.

    Younger retirees in central Indiana are generally satisfied with their experience in TRICARE and TRICARE Prime. The availability of providing primary care practitioners and specialists is satisfactory. And I use that word closely, ''satisfactory.'' Not excellent, not unsatisfactory. But ''satisfactory'' in central Indiana. With most clustered in the vicinity of the Indianapolis. It's outside of the populated areas where the system becomes less responsive. For example, although there's a MTF at Fort Leonard Wood, Missouri, an appointment with a TRICARE-approved dermatologist involved a 180-mile-round-trip for one consult. This particular specialist would only consider one consult per visit, resulting in four round trips, or four days off duty, and 720 driving miles to clear up a simple rash. In addition, additional hardships placed on the patient, absent from work, school and so on, we may assume experienced unnecessary billing and possible overcharging.
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    In addition, if you're moving to another geographical area, you're fortunate to switch to a new regional contract and with all the usual problems associated with that change. You're on your own to find a doctor near your new home. TRICARE does provide an expansive list, a large booklet that lists doctors and specialists who are signed up with military TRICARE. It's up to the member to call, and in many cases long distance, those doctors to see if they're still signed up with TRICARE and if they are, are they taking on more TRICARE patients? If they're not very familiar with the area you're moving to, it won't always be clear whether that doctor's office is close or convenient to your home. Let alone, is this the doctor that you'll be comfortable with. You'll probably have other questions for the doctor, like, What hospital might you be associated with? Do you handle special situations, like children with disabilities, or do you have associates that will take care of me when I visit and if you're not available?

    Locally, the assignment of a contract person to assist the patient within TRICARE is an excellent move. My test case in Indianapolis—That's back to our patient that has been diagnosed with Lou Gehrig's Disease—involves an under-65 retiree who experienced problems more of an administrative nature than the quality of service. These include lengthy delays in the billing cycle between the physician provider and the patient and of the TRICARE agency, often resulting in duplicate billing with the patient being dunned for payment during the delay. In addition, this patient has received notice of nine bills which were initially disapproved, mainly because the practitioner had not been registered as a TRICARE provider, even though the clinic, hospital or consortium where the practitioner was employed had been registered. The patient, after—who had to, and after submitting an application to have the practitioner registered, in some cases, had to be reimbursed as other cases are pending. The point is here, that this should not be an administrative responsibility of the patient. It results in an unnecessary expenditure of funds by the patient, possibly a non-reimbursement and needless delays in the payment for the practitioner. On the average, for this patient, the payment cycle takes from four to 10 months.
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    The only grave concern expressed by active duty personnel is about the practices overseas of using foreign national practitioners is the inability and low level of confidence when communicating a serious health problem to the foreign nationals through an interpreter. I speak of right now of Germany and that area over there at this time.

    Making TRICARE Prime available to retirees over the age of 65 in central Indiana will be considered a major improvement, but that's because there's nothing here. That's because, considering the time, distance to the MTFs, and the possibility of rejection, or them not being able to provide care for a particular ailment, there is now no realistic alternative to TRICARE other than Medicare. Civilian Health and Medical Program-Veterans Administration (CHAMPVA), has improved, but care, depending on income and VA priority, is selective and inconsistent. More VA facilities are needed if the program CHAMPIVA is expected to work. The VA facilities are good distances apart and cannot get people to a considered reliable source for the aged or infirm retiree.

    At this point, however, I cite as an outstanding operating example of a combined VA/MTF, and that's Arland Arlington Community Hospital at Fort Knox. Within that attachment area, they service a population of 56,766 active duty, dependents, and retirees. There are 10,937 retirees in the Fort Knox attachment area with an 8,237 population hospital record. Over 1,550 are over the age of 65, and it's more than 6,000 under the age of 65.

    A special note: At Fort Knox is the recent realignment, or consolidation, of VA and MTF's staffs in accordance with demand of two primary care clinics into a single clinic, staffed with family practice and pediatric physicians, internists and physicians assistants. This clinic is known as the Silver Clinic, provides primary care for 5,000 beneficiaries to include 212 Medicare-eligible retirees. If there is one shining example, in our opinion, of MTF/VA cooperation and efficiency, I recommend just as many or some of this membership visit the Arlington Community Hospital at Fort Knox, if they wish to look at an excellent operation.
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    Although TRICARE expansion covers retirees over the age of 65, might be a reasonable solution to what's now a vexing problem, in the opinion of Indiana, it's definitely not the best. Inclusion of retirees in the Federal Employees Health Benefit Program (FEHBP), would open four nationwide options for the retiree, plus a selection of 13 different options throughout the state. It would allow the retiree the flexion or the selective plan, tailored to his or her family size, age, personal health, geographic location, mobility and income. In our view, the present TRICARE offerings cannot approach FEHBP options for individual service. The infrastructure—.

    Mr. BUYER. This is the longest five minutes I think I've ever heard. Ladies and gentlemen, each of your statements are submitted for the record. So they will be in the record of the transcript. And what is best is for you to summarize so we can participate in a dialogue; and the longer you go on, Colonel Ryan, the more you take the time from others. So, if you could please—.

    Colonel RYAN. Mr. Chairman, will you indulge me about a minute and a half, and I'll wrap it up?

    Mr. BUYER. Yes, sir, I will.

    Colonel RYAN. Basically, FEHBP should be available to military retirees to fill, not only a long-lasting promise, but to realign the hodgepodge of health care systems with a choice through a reliable plan. I must comment quickly on the FEHBP testing that took place in Fort Knox. I don't know who designed it, but a allocated goal of signing up 7,500 retirees to a catch-bin area of a total number of retired, 10,000, bombed. With the exception of Louisville, the area around Fort Knox is made up of sparsely populated tobacco and pig farms, and a good number of retirees are members of FEHBP plans, including resulting from other types of employment. Others refused to part with their Medicare supplements or health care insurance, not believing that the government would meet its commitment, and that they could be reinstated after the test period. Requests to expand the catch-bin area were not approved, and we feel strongly that those test results will be rather unusual. We strongly urge the members of this Committee to cancel the remaining FEHBP testing, endorse House Bill 2966, the ''Keep Our Promise To Military Retirees Act;'' join with 276 House co-sponsors, and approve enrollment for FEHBP for retirees over the age of 65 with the TRICARE total enrollment as an option. Ladies and gentlemen, this is my testimony. I'm sorry I had to cut it short.
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    Mr. BUYER. No, that's fine.

    Colonel RYAN. But I thank you for the opportunity to be with you today and will be pleased to answer any question you might have.

    Mr. BUYER. Thank you.

    [The prepared statement of Colonel Ryan can be found in the Appendix.]


    Sergeant CURL. Chairman Buyer and members of the Committee, thank you for having me here today. I don't think the system is broke yet, but I think if there's not some action taken to take care of the system, the way it's going at the present time, I think it's going to be broke in the near future. I'm only speaking on some of the comments and some of the problems that I have, and my problems are minor compared to some of the other people out there that have problems with TRICARE. One of the questions I have is, Why do we have different TRICARE plans, Prime and et cetera? I believe most retirees don't know the difference between the type of plans and the type of programs. Many retirees have started another career, and they have additional medical coverage through their new employers. It still doesn't negate the need to protect the benefits that we have as retirees. I personally have a TRICARE supplement through my employer, which I work for Civil Air Patrol. It becomes a nightmare when TRICARE will not allow a specific item or procedure to be covered, then in turn my supplement insurance will not pay anything either.
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    I believe if there was one TRICARE system or Civilian Health and Medical Program of the Uniformed Services (CHAMPUS), system, whatever you want to call it, that pays 75 to 80 percent of it. When I went to the hospital, it was a $2,000 bill. If I knew I had to pay $200 out of my pocket, that would simplify things and eliminate the bureaucracy that we have today. Many physicians will not even accept TRICARE patients anymore. My physician, about six months ago, told me he wasn't accepting any more TRICARE patients. He kept me and my family on because we've been with him for about four or five years. The retiree I worked with, his physician he had been with for 12 years said he was not accepting TRICARE any longer, so he had to go find another physician.

    Many pharmacies will not accept TRICARE. Walgreen's, for example. We used them for years for TRICARE for prescriptions. I went in one day; they said they no longer accept TRICARE. I drove by there about two weeks ago, they've got a big sign, ''We accept TRICARE again.'' And my daughter recently—.

    Mr. BUYER. Where is that?

    Sergeant CURL. Walgreen's in Peru.

    Mr. BUYER. In Peru?

    Sergeant CURL. Yes, sir. My daughter was embarrassed at a pharmacy recently, and I believe it's Revco, I'm not sure. But she went in; they were reluctant to fill her prescription because she had TRICARE. They—she was told TRICARE is slow and it takes too long for them to get their money. She was very embarrassed; she was standing in a line and they embarrassed her in front of a lot of people standing there.
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    I recently spent an entire year attempting to get a laboratory claim paid for my daughter. It was OB/GYN laboratory. TRICARE claimed that it was an unnecessary test. They advised, unless the doctor stated that the tests were a medical necessity and critical to the care of my daughter, they would not pay any—any part of the claim at all. So I ended up paying $247 out of my pocket.

    I think the specific amount—It gets real confusing. Because while they say they're going to pay 75 percent, it depends on what the allowable amount is. Say TRICARE pays 75 percent of $75, which is about $56, but the actual visit costs $90, meaning you pay about $38 out of your pocket, not $25, or 25 percent. The TRICARE administration needs to be more understanding about miscoding of procedures. And I constantly have problems with that; the hospital doesn't know what coding to use; they send the coding in; TRICARE sends it back three or four times before they ever get it right. I'm not blaming TRICARE for the entire problem. Some of it's the medical community, also.

    This also leads to a lot of time in between the provider getting paid and collection agencies calling you, and it just creates a nightmare. One system with one covered amount would be much easier for everyone to understand; and it will be a whole lot cheaper. You might want to ask a limited number of physicians, hospitals and pharmacies that still accept TRICARE what problems they have experienced with the TRICARE system. But for my experiences, the delay in payments frustrate the providers until they decide to just opt out of the whole system.

    As a Congressman or Congresswoman, how does your retirement health coverage compare to the military retirees? For that matter, how about Federal employees and the health plan they receive? Military members, retirees and dependents should not have health care that is any less than any other segment of the Federal Government. The bottom line is the retirees are willing to make a fair share helping hand to reduce Federal expenditures, but we still need reasonable health care, whether or not actual promises were ever made to us or not when we came in the Air Force or other branches of the service. Just don't leave us out in the cold wondering about the health care or other segments of the Federal Government and many sectors of the private sector have the care that they need and the care that we need. Thank you for your time.
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    [The prepared statement of Sergeant Curl can be found in the Appendix.]

    Mr. BUYER. Thank you very much. Sergeant.


    Sergeant HUFF. My name is Ted Huff from Fort Wayne. I entered the military in 1944, and I retired in 1968. I belong to several military organizations in the area. I hold offices in several of 'em. I do volunteer work at the VA, and I also work at the Retirement Activities Office at Air Guard Base in Fort Wayne, and I would like to remind you, this is the only Retired Activity Office in the State of Indiana. I am on Medicare. My dependents are on TRICARE Standard. There is no Military Treatment Facility for 100 miles, Wright-Patterson Air Force Base being the closest. We do receive adequate care of civilian doctors, pediatrics and family care, but my biggest problem with TRICARE, which is the old CHAMPUS, is the 200 percent increase in deductibles. Originally it was $50 per patient per year, $100 per family. With no explanation, it went to $150 per patient, $300 for family. I will not use the term ''lucky,'' but my family is fortunate because we don't have a whole lot of medical problems. But we cannot possibly, unless there is a catastrophic event, reach anything above the deductible every year. And not even the doctors increase in their increases, their price, 200 percent. CHAMPUS claims are being submitted by caregivers, but most will not accept their allowable. They're authorized 150 percent of the chargeable, and most of the time, they don't even know that because they do not even get a bill until I get my bill, and the last one I got was over 30 percent of the excess, which when I informed them, they said, ''Well, we will give you the difference.'' There is an awful lot of people that don't know what goes on with TRICARE, or CHAMPUS, at all. But the basis for TRICARE, I understand, is the same as it is for Medicare for billing.
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    Not only that, but with the TRICARE, you can't travel from one area to another unless you notify and have to get a new—new program or new provider. This should be a network; you should be able to go without and have the same type of insurance, no matter where you go. Claims processing does not seem to be excessive for myself. But I do know of several instances where people said the process was slow and was inaccurate. And for some reason, it comes out of Palmetto government benefits, which is Camden, South Carolina. Being from Fort Wayne, northeast Indiana, in that area, retirees and their dependents feel that they've been cut out of the program. We're not authorized anything, even when there's a base closing, such as Grissom, because we were outside the 40-mile radius, which does qualify you for certain benefits. We're not allowed to participate in the TRICARE mail order pharmacy program and any other program that might be available. What difference does that make where you live? You certainly should be able to participate in something that you're going to pay for when it comes due, drugs. I will not repeat the other people here, but I do think that the FEHBP administrator apparently wasn't getting too much publicity because it was a very successful program in some areas.

    I would like—I have some reservations about this closing comment, but I think it needs to be said. Perhaps the responsibility of instigating a medical program is too complicated for the Defense Department. Maybe it should be given to another agency who has more experience. It has to allocate a lot of the budget and its time to set up and monitor a medical or a TRICARE program. This takes away from its basic mission. And the basic mission of the Defense Department is to defend the United States and to win wars when it is committed. And I would like to say that the latter object, as history will record, has not been too successful, and not since World War II. Thank you.

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    Mr. BUYER. Sergeant First Class Drudge.


    Sergeant DRUDGE. I am an active Guard Reservist for 26 years of military experience in Indiana. I became a full-time guardsman in 1983. At that time, we had CHAMPUS. I had to survive with CHAMPUS. Today I'm not sure I can survive with TRICARE. I began with TRICARE in June of 1980—excuse me, 1998, when I tried to see my first doctor. They assigned me to St. Louis, Missouri; that's where they assigned me to. They assigned my wife Valparaiso. You understand that St. Louis is approximately 300 miles away and Valpo is 60 miles from my home. On or about December of '98, we were asked to enroll again when TRICARE lost our initial form for enrollment. We knew we never received the correct insurance card until August of '99. The first few my wife received either had wrong spelling of a name, wrong Social Security number, hers or my Social Security number. When you show that TRICARE card to most professionals, they don't understand. They say, What kind of coverage is this? Both my wife and I received primary care managers in Rensselaer, which is 33 miles from our home; the only problem was, in July of '99, while I was gone, my wife received a certified letter. I'll quote what they said, ''We will not see you anymore under TRICARE because we are professionals and we expect to receive a professional fee.'' So, once again, I had to try and find a process to the primary care manager. In November of '99, I hurt my elbow—.

    Mr. BUYER. Excuse me. It would help us a lot. In your own community you do not have a provider?

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    Sergeant DRUDGE. I do have one now, sir.

    Mr. BUYER. So you went 33 miles and they cancelled out on you, and you've come back and now someone in your community does provide?

    Sergeant DRUDGE. Yes, sir. When we initially started, the closest thing to TRICARE told me when I tried to call the 800 number was, they gave me a phone number. And I asked the lady, ''Well, what's the area code?'' She told me. I said, ''Can you tell me where they are located?'' And she said, ''St. Louis.'' So, there was nothing initially in my area. They published this book; it was this thick, telling you where everybody is at. Monticello, the average distance time was 60 to 70 miles. Fort Knox is 248 miles to my home. Wright-Patterson Air Force Base, 212 miles. They got Great Lakes Naval Base, at the time it's easier to drive to Knoxville, rather than going through Chicago instead of driving in traffic, and there is no way we can do that, sir. Now we have one. The only reason we have one is, we went and begged some doctors in Monticello; Please accept TRICARE; you used to accept CHAMPUS, why don't you accept TRICARE now? Now they're starting to become reluctant because of the payments made.

    I initially started to say I hurt my elbow in November; took shots and therapy for over eight months trying to work it out. Finally got TRICARE to set me up with a specialist in Logansport, a surgeon. Pediatric surgeon—orthopedic surgeon. Finally, I went and had my surgery. This past October he called me into his office while I was there; and his office manager come out and said, ''We're not going to accept TRICARE anymore. The only way we operate on your elbow is if you pay up front, because we're not getting enough money.'' So, once again, I had to start and go out and find someone to operate. I finally found a doctor in Lafayette, another surgeon. They operated on me in November. Yesterday I went back to see the specialist again. They wanted me to pay cash up front, because his follow-up office visit of $70, and they're paying him $21. Of all the stages I've had Prime, and all the primary care providers, I'm down to just one in Monticello, Indiana. My wife has nightmares, and TRICARE—.
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    Mr. BUYER. What is his name?

    Sergeant DRUDGE. Pardon?

    Mr. BUYER. What is the doctor's name in Monticello?

    Sergeant DRUDGE. Fields. He's the only one that takes us now. I have a bill from White County Memorial Hospital, my wife where she had an MRI in November of 1999; total bill for her to go in was 1,680-some dollars. TRICARE paid $121. We are still fighting, still fighting because of the codes because he entered into the system. I paid $600 out of my pocket. What's going to happen is they're going to turn me over to a collection agency, or take me to small claims court. And this is running almost every time I got a bill. I know the Federal law and TRICARE pamphlet shows you're going to have to pay 15 percent above. A lot of hospitals don't know this. There's a lot of communities themselves. I tried to tell them this, and they say, ''We don't care.'' And I said, ''Well, you signed up to provide for TRICARE, did you not?'' And they will say, ''Well, yes, we did.'' Then I said, ''You need to brush up, because by Federal law, I don't have to pay.'' ''We don't care. We're going to take you to court. We'll fight it out.''

    Mr. BUYER. In the end, though, what may happen is, they don't fight it out in court, but you end up with bad credit.

    Sergeant DRUDGE. Yes, sir. That's the bottom line, bad credit. I'm only 53 years old. I don't need my credit ruined. I'm sure there's other people the same way. You know, other examples on my wife. You know, she fell while I was gone. Hurt her elbow. She went directly to the hospital. Well, because it wasn't previously approved, they're still going to fight me to pay the bills. And I asked them, ''If she has a heart attack, do I have to call you?'' You know. Subsequently, they wouldn't pay the hospital bill, the emergency room, and then when the claims come in for the x-ray department, they wouldn't pay those, that wasn't prior approval, and then they wouldn't pay the technician that read the x-rays, because it wasn't prior approval. Well, for right now, I've got close to $20,000 outstanding in TRICARE bills, in over a two-year period. They're getting better. Claims used to take five months on the average, everything I went through, the packet I have, five months before I get an initial response, and TRICARE what they would do. Now it's averaging 60 days to administer a claim. A big problem on their behalf, also something, else, wife works. I try and help her out calling, because I got more access to more free time I guess than she does, and do the job. Called the 800 number, and I can't get an answer to help her because of the Privacy Act. But yet my name is on; Social Security number is on the sponsor card.
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    On the base, reserves I've got coming up, is through the Guard; my traditional soldiers are now in TRICARE. I'm the one being the full-time person at the Armory trying to help try and answer some of these questions, and if I can't check, I don't know what's going to happen. But Colonel Spice, Director of Human Resources for the Military Department of Indiana, is in the audience, and so is the Major; and they're more qualified to answer what is going to happen in the future. I wish I had a lot of answers. Better efficiency, denying claims, somehow—Once again, it's the Privacy Act. I, as a husband of a sponsor, have to be able to help figure out what's going on. I just can't. They keep telling me, ''I can't help ya.'' That just delays the procession further.

    Too many codes. That's the biggest problem. To me, an MRI is an MRI. You know, x-ray of an elbow is an x-ray of an elbow. When I get my claims back from CHAMPUS, I may have seven reasons why I was denied. That's all I have, gentlemen. I want to thank the panel for inviting me.

    Mr. HOSTETLER. Just hold on. One real quick question, if I may. What TRICARE program is this, TRICARE Prime?

    Sergeant DRUDGE. TRICARE Prime, yes, sir.

    Mr. HOSTETLER. And you can't find out from the folks at TRICARE about your wife because of the Privacy Act?

    Sergeant DRUDGE. That's right, sir.
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    Mr. HOSTETLER. Even though you're the responsible one?

    Sergeant DRUDGE. Yes.

    Mr. BUYER. She can waive that. She can sign a form and waive that. Did you request it?

    Sergeant DRUDGE. What's going to guarantee the paper is not going to get lost again, sir? I understand what you're saying.

    Mr. BUYER. You're at the bottom of the barrel when it comes to the faith. I understand. I would be, too.

    Sergeant DRUDGE. Trying, sir.

    Mr. BUYER. Ma'am.


    Sergeant STIERS. Good morning, gentlemen. Thank you for inviting me to this panel. I really appreciate this opportunity. My name is Technical Sergeant Kathleen Stiers. My experience with TRICARE Prime is limited to one claim and it dates back three years. And after hearing the other testimony, I feel that it's really pretty minor, but I'll share it with you anyway because it was extremely frustrating at the time. My husband is also a Reservist and was assigned to Keesler Air Force Base in Mississippi for six months to go to technical school. And due to the length of time on active duty, we were eligible the same as active-duty Air Force, which is TRICARE Prime. Our daughters, who at the time were one and two, were here in Indiana visiting their grandparents. And I had sent their TRICARE cards with them when they came up here, so they—should they need medical care, they would be able to get it, never thinking anything about it. The younger one got sick and was scheduled to see her regular pediatrician that she had been seeing in Anderson. My mother-in-law took her to the doctor; presented the TRICARE card, because we didn't have any other insurance at the time, and the doctor never heard of it; didn't know what to do with it, so my mother-in-law went ahead and paid the bills up front. The doctor's appointment and the prescription that she received all together came to about $70. Not a whole lot of money, but she paid it up front. When my husband and I moved back to Indiana after his school was over, I got the receipts from my mother-in-law; called Palmetto, and got the claim forms; submitted the claim, and that was in about April of '97. I don't honestly remember how long it was later, but we got the rejection notice from CHAMPUS. And I didn't have a clue why CHAMPUS had gotten the then claim to begin with, so I called them, and they said, ''Well, I don't know.'' So I submitted the claim again to TRICARE, and eventually received another rejection from CHAMPUS. I called TRICARE and said, ''Why is CHAMPUS in any of this?'' And they said, ''Because you're in Indiana.'' I said, ''So what?'' We were assigned Keesler down in Region Three and Four at the time. And that's who was covering us, was Regions Three and Four. There was no TRICARE here in Indiana at the time. So, because of the Indiana address on the claim form they automatically sent it to CHAMPUS, assuming we were covered by CHAMPUS and not TRICARE.
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    So, I questioned them and said, ''What do I do now? How do I get this claim form? Or how do I get the claim filed?'' And they said, ''Well, you have to put your Mississippi address on it.'' I said, ''We haven't lived there for eight months.'' ''Well,'' they said, ''you have to put your Mississippi address on there or it's going to keep getting sent to CHAMPUS.'' So, I thought it was a little ridiculous but I did it anyway. Then I asked the TRICARE people, ''Where is the check going to be sent?'' They said, ''We'll send it to Mississippi.'' I said, ''But I haven't lived there, my mail is no longer forwarded, I'll never get it.'' So, they said to attach a cover letter. And I want to add that every time I resubmitted the claim I attached a cover letter explaining why I was resubmitting the claim again. And, apparently, the cover letters were ignored or missed or something, I don't know. So, I was real hesitant about attaching another cover letter. But I did.

    So, I submitted it for the third time, including copies of these two previous submissions, showing that I had done this before. Then eventually, it was about a year after the incident, I received notification from TRICARE. Actually it was about 13 months. I received notification from TRICARE that the claim would be denied completely because I had waited more than a year. Or it had been more than a year since the incident occurred. So I was extremely agitated now.

    I called TRICARE, and I said, ''Did you not see the two previous submissions, the cover letters, everything that I have sent to you?'' ''Oh'', and they said, ''Well, we've showed that you submitted it one time before so we'll go ahead and pay it.'' So, basically, it took me 15 months to get a $40 check. And it got to the point where, they owed me, and I was going to make them pay; it got down to the matter of principle.
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    But what scares me now is, if it had been something major, such as a surgery, or an accident, or something where she required on-going treatment, my husband and I would have gone bankrupt trying to get reimbursed for anything that we paid for up front, because the lack of TRICARE in this area was apparently the problem at the time. They did not recognize any providers in Indiana. And so, if we wanted to be covered, we would have had to have taken her back to Mississippi, or down in Regions Three and Four. So, it was very aggravating. But I understand why the other members of this panel are upset. And honestly, I hope I never have to rely on TRICARE the way it is now. Thank you.

    [The prepared statement of Sergeant Stiers can be found in the Appendix.]

    Mr. BUYER. Thank you very much for your testimony. I have a couple of questions before I yield to my colleagues. Sergeant First Class Drudge, have you recently attempted to run a credit report on yourself?

    Sergeant DRUDGE. I didn't, sir, but yesterday when I got to my doctor's appointment, Arnett Clinic had to run one on me; I'm good, but they're saying with what I owe on my home and the money I make in the military, there's another reason they want me to pay cash up front. My credit is good. As of now.

    Mr. BUYER. Is Arnett Clinic out of Lafayette?

    Sergeant DRUDGE. Yes, sir.

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    Mr. BUYER. In their administration, are they treating you any differently than they treat any other similarly situated member of the armed services?

    Sergeant DRUDGE. Sir, I can't honestly answer that, you know.

    Mr. BUYER. I didn't know if you knew of anyone else that was being seen by Arnett.

    Sergeant DRUDGE. No, sir.

    Mr. BUYER. You don't know whether if it's a policy that they decided they would do this to all TRICARE beneficiaries; that they would charge them up front?

    Sergeant DRUDGE. I can't answer that, sir.

    Mr. BUYER. Master Sergeant Huff, you ended your statement with a comment, and I want to make sure I completely understand this. You weren't sure whether DOD could handle this delivery of military health care, and you wondered whether it should be taken out of DOD. And then you made a comment that said about ''takes away from basic mission''—.

    Sergeant HUFF. Basic mission of the Defense Department, sir, is to guard the shores of the United States, and to win wars when they are committed. And then I made the statement that, history will show that we haven't been too committed in winning any wars since World War II. Winning wars, sir. Not the peacekeeping.

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    Mr. BUYER. All right. I just want to make this comment. There are individuals that would love to move retirees out of the population, the DOD military health system, move them out. When you think about the mission of the military health delivery system to take care of those on active duty, may have been injured in a training exercise during peace; more in particular, their mission to provide health care during war. If we move populations away, if your recommendation is to us to move this population out and away from military health delivery systems, we then have infrastructure without beneficiaries.

    Sergeant HUFF. May I comment, sir?

    Mr. BUYER. Sure.

    Sergeant HUFF. The military has changed dramatically in the last 30 or 40 years. At one time, there were very few dependents; so the military took care of those very, very well. Now, the tendency to be is families; some even in the same family of service. When they move away or go to another area, I understand if you're on active duty, the Government takes care of you very well. But I do not believe that the Defense Department can adequately handle and fund people who are no longer in the military and who are not being transferred around; and, if they do move, they can still have a health care program that would be wherever they're at. This funding comes from the Defense Department, and the Defense Department shouldn't have to do that. They have the Veterans Administration; they have a Health and Services Administration; they may do a good job, but at least people griping about the big budget that the Defense Department has and they're spending that money for health care and the public doesn't know that. They think they're buying airplanes and wasting it on $50 hammers.

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    Mr. BUYER. All right. Mr. Hostetler.

    Mr. HOSTETLER. Thank you, Mr. Chairman. I just have a couple of questions. Sergeant Drudge, you said that, ''We got together and influenced the doctor in Monticello to start taking TRICARE patients.'' Who is the ''we?''

    Sergeant DRUDGE. My wife and I went to the doctor we had previously seen for, like, nine or 10 years.

    Mr. HOSTETLER. All right. I didn't know if there were other service personnel or other guard personnel, for example, that had gone with you to that.

    Sergeant DRUDGE. No, sir, but I know that there are a lot more retirees in Monticello who have probably done the same thing, because I've seen them in the office.

    Mr. HOSTETLER. Very good. It seems like coding is a common theme that is running through this testimony from several members that have spoken to the issue. Your physicians have obviously addressed this issue personally about something you necessarily have to deal with. Have they said they're just not being given the codes, or the codes change, or what? Have they related to you their concern? Anyone address that, I guess.

    Sergeant CURL. I think they're just confused. I mean, I was trying to get, like this one bill, paid for my daughter when she went in the hospital up in South Bend, and the hospital said, ''Don't worry about it. We'll take care of it with TRICARE. You know, we'll do everything.'' I got four different things with four different codes; the hospital changed the code that TRICARE told them to change; each time they told them they had the wrong code. And it was just, you know, it's frustrating for me, because I don't know what the codes are anyway. I know it's got to be frustrating for the hospital. So, after awhile they just say, ''Hey, your insurance isn't gonna pay, so you gotta pay.'' So what do you do? You gotta pay, or get bad credit or whatever. I mean, you come to a point where you just say, ''Hey, I'm tired of it.'' Either pay. I'll pay five dollars a month or whatever.
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    Mr. HOSTETLER. Thank you. I think this is kind of an unfortunate fire hose approach, and I apologize for that, but I thank you for your testimony.

    Mr. BUYER. Mr. Ryun.

    Mr. RYUN. Mr. Chairman, thank you. First of all, let me say thank you for all the panel for coming today, and in many respects you have answered most of my questions generated by evidence in my district of having had difficulties with appointments; and having had difficulties with payments; having credit been put at risk; and I think we all recognize that there's a problem here, and it needs to be fixed.

    It seems, Master Sergeant Curl, you said you'd like to have a program that's available that's at least as good as what Federal employees have, and I'd like to turn to what Colonel Ryan had suggested that perhaps maybe what we need to do, and although I recognize your earlier statement, is to give the FEHBP program some time to establish some credible numbers. I recognize that within that there are going to be some problems. Again, at the same time, we've just got the test going. I know that one of the concerns that a lot of those who are potentially available for this program have is, ''What happens if I sign up? What eventually happens later when the program test ends?'' You know, there are a lot of those questions out there, and I think what we are concerned about is giving this program an opportunity to at least be tested. So, if you at least allow us to indulge in that. If you want to make another comment on that. I know I'm concerned. One of the concerns that I have, too, and I see this from all problems, is that we have a difficult time making things happen in Washington; it's very slow. And yet, one of the things that we need to deliver on is making sure that you have a good health program, for not only you, but your family, especially, if you serve our country. But I'd like to maybe get any further comments you would like to make on the program, and yet I ask if you might not consider at least some time to allow the program to continue to be tested.
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    Colonel RYAN. All I can say in answer to that is, under FEHBP, after I retired and went to work and I ran a college for 10 years, and I was a member of a program which was also under the FEHBP Mail; and these programs have been tested, proven, costed, probed, and that is available, as far as the numbers go, so on, within those particular programs. There is also the factor that—we had talked about this for some time. We do feel that there is something here, because we're the only Federal Government retiree that's been left out of this program. So the numbers could relate to the Federal retirees, civilian types that are in, and it could be that the equation is wrong. And, finally, I'm told, I don't know if it's a good number, but they're dying at the rate of a thousand a day. And these are people that need that health care now. And we should consider it and expedite it as fast as we can.

    Mr. RYUN. Well, you answered part of it; you're one of the few groups that's been left out of it. I would like to present, perhaps, you be given the opportunity to at least be a part of it, as we go through this test program and see if we cannot help provide some relief, hopeful advantages, if something is available there. Thank you for being here.

    Sergeant HUFF. If I can interject something on that. I'm also a member of the National Association of Retired Federal Employees. It's a very powerful lobbying element in Washington. I get the magazine every month. They are very, very afraid that if the military is taken into the program, that their rates will go up. I think what they're doing is blowing smoke, but they have a very powerful lobby, and it would pay you to pay attention to what they have to say, because they feel if the military is taken in, then naturally, their rates will go up, too.

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    Mr. RYUN. Okay.

    Mr. BUYER. Well, you've peaked my curiosity a bit, Mr. Ryan. I got two Mr. Ryans. I'm going to call you ''Colonel.'' We will call him '''Sir'' (laughing).

    Mr. RYUN. Maybe you should discuss the spelling of that last name, figure out the origin at some point.

    Mr. BUYER. Maybe we should have a race, and then decide.

    Mr. RYUN. That's past.

    Mr. BUYER. When you said, ''dying at a thousand per day,'' that's military veterans, not military retirees.

    Colonel RYAN. That's correct.

    Mr. BUYER. Colonel Ryan, Reserve Officers Association (ROA), and other associations, have not only been in my office, but I'm sure Mr. Hostetler's, Mr. Ryun's and others, requesting the FEHBP test. For over three years. That was a very difficult process to go through in cooperation with the Ways and Means Committee and the House and the Senate; and we negotiated this out. And we get the test, and it is in its infancy. Infancy. We're not getting retirees to even sign up into the test. And for you to now give testimony that, ''Oh, just do away with the test; let's immediately implement,'' is not clicking with my Hoosier common sense. So, please explain to me how three years you can come in and say, ''All right, do the test,'' and now, you say, ''Do away with the test, implement.'' On behalf of the association you represent, will you please state this rationale?
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    Colonel RYAN. I can say this: The fact that retirees aren't signing up, other than test, should be an indicator itself that it is possibly not going to be as expensive as the initial projections. Second, we have to look at why the retirees aren't signing up. And my only area that I'm working fairly close to is at Fort Knox. Fort Knox received a quota of 7,500 people to sign on for this particular test. They only have 10,000 retirees. Of that number, more than 3,000 are covered by other health plans, which they joined, you know, a second kind of employment, so on so forth. The others live out of the area. And I think I mentioned a lack of trust, saying that your private health insurance would be restored if this test—if you weren't carried forward and become a permanent member of the FEHBP. So they came up, I don't know what the final figure was, but I think it was less than four thousand signatories for that particular test. If that same draft would hold true in the other areas, other areas, it may or may not, I don't know. But I do know that the test is undersubscribed and these possibly are some of the reasons. Therefore, I say it may not be valid data, and have to be looked at.

    Mr. BUYER. Wouldn't prudence call that, if you've requested for us to do the test, that we work on the fine points to make sure that the results are credible, rather than just saying, ''Oh, let's not even pay any attention to the test now, let's just move to implementation,'' because that isn't clicking with me.

    Colonel RYAN. Well, I'm sure, Mr. Chairman, we'd probably buy into that, if you worked out the fine points to be sure that the test is credible; that if it were modified, as I mentioned, the area's expanded and so on, so we can get good coverage and get some valid numbers.

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    Mr. BUYER. Mr. Ryun, is that what you—in your testimony, is that what you're referring to?

    Mr. RYUN. We need the time to be able to go through the process.

    Mr. BUYER. To work this out?

    Mr. RYUN. Yes. In fact, that's why I'm encouraging you to reconsider your—And I recognize there's not a lot to stand on in terms of confidence, in terms of the health care that you would like to have, but to give some time to this program to allow some of these fine points to be worked out, and to provide something that would, not be only immediately beneficial, but for the future as well.

    Colonel RYAN. I can't help but agree with you, if a reasonable amount of time of the program to make sure.

    Mr. BUYER. Well, a reasonable amount of time is that this Subcommittee will take action in this year's bill that is coming up here real soon. Do you have any recommendation to us? Or, Mr. Ryun?

    Mr. RYUN. Any recommendations you would like to see put into this year's bill?

    Colonel RYAN. I feel comfortable what we put in this year.
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    Mr. BUYER. We are going to do it this year.

    Colonel RYAN. I would like to see that the testing area from Fort Knox be extended to the Indianapolis area, where they would pick up a market of about seven or eight thousand more retirees; keep the same objective, and then see if we get the 7,500 number.

    Mr. RYUN. Mr. Chairman, if I may say, what I hear from the panel is a lot of confusion as to exactly what's available and what's not available. Perhaps better communication with an understanding of the benefits that you have, that you would lose certain things by being part of the programs; simplification as much as possible.

    Colonel RYAN. Key point. Very good.

    Sergeant HUFF. Mr. Ryun, I have an argument here that tells about the last demonstration, if I may read it. ''The Department of Defense has begun to enroll eligible retirees in a demonstration program to receive health care through the Federal Employees Health Benefit Program; the health care plan used by Federal civilian employees and Members of Congress. The initial enrollment period ended on December the 13th, 1999, and though up to 66,000 retirees may participate, only 533 people had signed up. DOD is sending eligible persons more information through the month of January, and extending the enrollment deadline. Participants may enroll in FEHBP and pay all applicable premiums, which are based on a separate pool for military beneficiaries. As in the case of other Federal workers, the cost will be partially offset by government contributions of about 71 percent.'' Now, this is the last one that gets me. Who selects these sites? ''The eight sites selected are: Dover Air Force Base, Delaware; Roosevelt Roads Naval Hospital, Puerto Rico; Fort Knox, Kentucky; Goldsboro, Winston-Salem, High Point, North Carolina; Dallas, Texas; Humboldt County, California; the Naval Hospital, Camp Pendleton, California; and, New Orleans, Louisiana.'' I wish a few would come up to Fort Wayne.
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    Mr. RYUN. Let me just make a quick comment. I don't know the particular reason for the selection of those sites, but I think part of what you're dealing with, just based upon the panel that we've heard from today, is a lack of confidence that people wouldn't want to sign up for another program because they're not sure it's going to work; why waste the time and the energy. I'm hoping, perhaps, with some time we truly can get to provide something that would be beneficial. And I want to remind everyone again, like Sergeant Curl said, that it is something we'd like to have, something Federal employees and Congress have. This is what we have. But it takes time to get it implemented and, perhaps, some source of confidence in our active and retirees. Mr. Chairman?

    Mr. BUYER. What I'm taking from this is recommended modifications in this year's mark, just from your recommendation and discussion, would be additional sites, more beneficiaries, insurance—keeping insurance after it's finished, and more time for the test. I mean, those are sort of the recommended parameters, am I accurate?

    Colonel RYAN. And plus the extended testing areas, for this purpose, for test purposes.

    Mr. BUYER. All right. I don't know if I can say I'll include it unanimous. We'll have to see what distances are. We'll have to see what the distances are.

    Colonel RYAN. Just hesitate to expand maybe 50 miles to take in some of those back farms.

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    Mr. BUYER. Oh, no.

    Sergeant DRUDGE. Mr. Chairman.

    Mr. BUYER. Yes.

    Sergeant DRUDGE. May I?

    Mr. BUYER. Yes.

    Sergeant DRUDGE. I know there are panels and panels and panels and panels. Why couldn't the Retired Association or my state headquarters for human resources have someone sit on a panel that would be nationwide? Maybe it would help the Armed Forces Committee on some of the problems we are having. Because in my division alone using their TRICARE, it's going to be about 14,000 more people just alone in the State of Indiana. I'm not saying they're all going to use it. It's just going to get worse and worse.

    Mr. BUYER. Well, First Class Drudge, we've got a multitude of issues here. We have TRICARE issues; we have portability from one region to another that you just discussed, ma'am. So, we have those who are on active duty for a full-time manning of the Reserve, or the Guard; providing that insurance benefit health care to you and your dependents; we have the military retirees and their dependents; and then we have the over-65 population; and then we have the issue with the over-65 military retiree, the issue is keep the faith. Because they've—Obviously, it's a pretty tough one to say, Yes, the country has kept the faith with you.
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    So, how we devise a system out there that, quote, keeps the faith? That's tough, because each individual will define it through their own personal interests. The one that has concerned me for several years when I first introduced this idea of extending the FEHBP is that the officer corps wants it, but the NCO corps that's retired, wait 'til you take a look and see how this one impacts them, on that—on the retired pay; on the deductibles and the premiums. It has to be judged inequitably. In the arena of equity, not inequitably, but in the arena of equity and fairness.

    Gentlemen, do you have any further comments you'd like to make? Your testimony today is valuable and important to us, and we appreciate your contribution. This panel is now excused.

    Mr. BUYER. We now have our second panel of witnesses, including the Lead Agent for TRICARE, Region Five, Brigadier General Joseph Kelley, and the Vice President, Anthem Alliance Health Insurance Company, Region Five, Managed Care Support Contract, Mr. Mouse. Gentlemen, thank both of you for coming here today.

    Before we receive your testimony, I would like to recognize and enter into the record statements by Lieutenant General Carol A. Mutter, United States Marine Corps, retired, and Colonel James M. Mutter, United States Marine Corps, retired. Your statements will be entered into the record, and I appreciate and thank you for your appearance here today.

    [The prepared statements of General Mutter and Colonel Mutter can be found in the Appendix.]
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    Mr. BUYER. We're happy to hear any opening statement you may have; your statements—formal statements will be submitted into the record, and Brigadier General Kelley you may begin.


    General KELLEY. Good afternoon, Mr. Chairman, and other distinguished Members of the Committee. I am Brigadier General Joseph Kelley, Commander of the 74th Medical Group, Aeronautical Systems Center, Air Force Materiel Command, Wright-Patterson Air Force Base, Ohio, and the Lead Agent for the Department of Defense Health Service, Region Five, also known as TRICARE, the Heartland region.

    I'm honored and grateful, to have been asked to speak to you today. I wish I could express my appreciation to each of you for the work you're doing to help and support the men and women who are currently and who have formerly been in the armed services of our country and their families. It's hearings like this which help to identify and improve areas of concern. Thank you again for your efforts.

    Now let me describe our region, which spans seven states; Ohio, West Virginia, Kentucky, Indiana, Illinois, Wisconsin, and Missouri. It consists of five major military medical facilities, five BRAC sites, over 650,000 beneficiaries, 14,000 individual providers, and processes an annual average of over three million claims. The military units we support, range and mission, operation Tempo in Fort Campbell, rapid deployment to Great Lakes Naval Training Base. I thank you for this opportunity to address your concern for pertaining to the removal of the barriers to TRICARE. To begin this session, I'd like to make a few statements on the subject of removal of barriers to TRICARE, which focuses specifically on access to TRICARE. Our region's made major accomplishments in resolving the past issues, to contract modifications, relaxation of procedures, and other initiatives; some of these recent accomplishments include telephone access. During the first three months of the contract, only 58 percent of the telephone calls were answered within the first two minutes. Today, 90 percent of all calls are answered within that time. Continuous enrollment. The Heartland region was the forerunner in implementing this initiative. This eliminated the annual requirement to reapply for TRICARE Prime. Portability. Eliminating enrollment transfer problems during Permanent Change of Station (PCS), moves and family relocation, through the national enrollment database, are progressing; and this would be in place by the end of the summer this year. Health care information line. We've added the ability to speak with registered nurses at any hour of the day and night, should health care questions arise. Provide directly, as of November, 1998—excuse me, correction, November 1999, the contractor provides an on-line provider directory, that has a Web address, www.AnthemAlliance.com, which is updated monthly. This information is also available through a toll free line at 1–800–941–4501. Out-of-area and emergency care. We have made changes so that authorization is now available through a single phone call to the health benefits advisor at the same toll free number.
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    In addition to contractor's personnel available at the same 1-800 number, our local TRICARE service centers, each military medical treatment facility has established a patient relations monitor, and the regional office has a customer contact representative to resolve issues and problems. Pharmacy benefits. Established pharmacy benefit for the active duty members assigned to geographic separated units, who are enrolled in TRICARE Prime Remote. The National Mail Order Pharmacy is now available to active duty service members, CHAMPUS and TRICARE-eligible beneficiaries, including military retirees age 64 and younger. The Lead Agent's office has not received complaints from the Grissom area for almost a full year. And most recently CVS has been added to the pharmacy network. System-wide, we have revised the claims processes standard. The previous standard was that 75 percent of all claims—adjusted claims processed, completed within 21 calendar days from the date of receipt. The current standard is now that 95 percent of retained and adjusted claims processed to completion within 30 days, and 100 percent retained and adjusted claims processed and issued in 60 days of receipt. Failure to meet the 30-day processing standard will now result in interest accrual on the authorized payment, which is then provided to the provider. The TRICARE maximum allowable charge is now the Medicare rate in all cases.

    We have worked and developed an early warning report to assist the contractor in developing proactive management tools to identify potentially dissatisfied providers and weaknesses in provider education. We made a comment about Indiana's network adequacy. All areas have met the contract adequacy for provider networks. This was not true at the time of our contract start up. In the Grissom area, we needed to extend that area for Prime coverage 60 miles because of the limited number of providers in the local area. This is not an exhaustive list. The Department of Defense has several on-going initiatives, some of which you've already heard discussed. FEHBP demonstrations; TRICARE Senior Prime; Medicare supplements, to name a few. Please note that each change in modification comes at a price. Financial resources are steadily increasing. Our region, in fact, all of TRICARE, has dedicated vast resources to identifying and resolving barriers to TRICARE. With your comments and support we will continue to make great strides forward. I stand ready for your questions.
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    Mr. BUYER. Mr. Mouse.


    Mr. MOUSE. Mr. Chairman and distinguished Members of the Armed Services Subcommittee on Military Personnel, thank you for inviting me to Grissom Air Force Base today to appear before you to discuss the state of TRICARE in our Region Five. My name is Raymond Mouse, and I am the TRICARE Heartland regional vice president for Anthem Alliance Health Insurance Company, the prime contractor for the TRICARE Heartland region.

    I would like to talk about TRICARE today. Mr. Chairman, I'm happy to report to you today that I believe TRICARE is working very well in Region Five. This is not to say there are not problems that have not surfaced or improvements that cannot be made, as we have heard from our panel members previously. But the vast majority of beneficiaries who live in Region Five, I'd like to make a point that they have ready access to health care provided by a comprehensive network of providers, at an affordable cost to both beneficiary and the government. I can personally tell you, as a military retired officer with 12 years' experience in the old CHAMPUS program, that access to health care has greatly increased with the TRICARE contract.

    Anthem Alliance is in the second year of its contract to provide a network of care. We are currently delivering health care to more than 400,000 active duty members, retirees and their family members in Region Five. As of January 31st, 2000, Region Five has 158,142 beneficiaries enrolled in TRICARE Prime. Of these, 78 percent are assigned to the military's health care direct system, the Military Treatment Facilities, and 22 percent are assigned to a network primary care manager. This level exceeds the projected enrollment level for Region Five contained in our contract with DOD.
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    To effectively service these enrollees, Anthem Alliance has built a strong infrastructure over the past two years that supports the administration of this contract. We have more than 100 associates, staffing some 20 TRICARE service centers throughout the region, and they're located in our seven-state region, as well as a Regional Operational Center located in Dayton, Ohio, and that Regional Operational Center is staffed by over 200 associates. These service centers and the Regional Operation Center are the very heart of our organization. Every day they help beneficiaries make appointments; they process referrals for specialty care; they answer questions, both the simple and complex, about benefits; and they help process claims payments for both beneficiaries and our providers. These people are TRICARE, and they are the ones who make it work. Indeed, many of them bring a dual perspective to their job since they are also TRICARE beneficiaries.

    Our network of care—one of Anthem Alliance's key responsibilities as prime contractor is to supplement the care provided in the military's direct health care system, with the solid network of civilian physicians and hospitals. Since the start of health care delivery in May of 1998, we have delivered more than 800,000 office visits; 25,000 in-patient admissions; and filled more than 1.5 million prescriptions in Region Five alone. And we have also processed to completion more than nine million claims.

    Our network in Region Five is strong. We believe it includes nearly—or 4,000, excuse me, primary care managers, better than 11,000 specialists and nearly 350 hospitals. Three of those hospitals are in the Grissom area. We have also nearly one thousand mental health providers and 50 mental health hospitals. We meet the adequate standards in all major geographic areas. As you might expect, we are short a few specialties in a small handful of rural locations, such as Chanute, Illinois, and the Upper Peninsula in Michigan.
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    Throughout the years, we have successfully worked with the Department to implement a number of program changes and benefit enhancements. With each one, our constant focus has been to implement these changes with minimal disruption to the beneficiary. It is important to note, Mr. Chairman, that while TRICARE offers significant improvements to the old CHAMPUS fee-for-service system, it is also a very different program and so can at times, be very confusing to our beneficiaries, and also to our providers. Anthem Alliance is acutely aware of this dynamic and commits to significant time and resources to on-going beneficiary and provider education programs.

    Our partnership with the DOD is an absolutely critical ingredient in the success and stability of TRICARE in Region Five, and has been a partnership that exists between our Lead Agent office, the commanders and the staffs at the Military Treatment Facilities and Anthem Alliance. We are all committed to a team approach in dealing with program changes and issues in this region. We have a well-written Memorandum of Understanding with each Military Treatment Facility and the Lead Agent, that clearly delineates the roles and responsibilities of each partner in each program. Hardly a day goes by without some interaction between the staff of the Military Treatment Facility and Regional Operation Center and the staff and Lead Agent. Beyond the paper and formal procedures, we understand our duty and responsibility to our beneficiaries, and we state that they are beneficiaries. And share commitment to address future issues head-on to develop and implement a win-win solution. Anthem Alliance is committed to this approach in all aspects of our contract. As we look to the future over the past several months, Secretary Cohen, Chairman Shelton, and Assistant Secretary Bailey and many of your colleagues in Congress have indicated an increasing interest in TRICARE; how it works, and how it can be improved. Whether looking for ways to expand access to retirees, lowering out-of-pocket expenses, or simplifying how the benefit is administered, this increased attention is good news for all stakeholders in TRICARE—beneficiaries, providers, the Congress, and our contractors.
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    All stakeholders in TRICARE are asking for improved access and improved claims processing. While each stakeholder group may identify the same issues, their definitions of access and claims processing and their recommendations for improvement are often very different. Access can involve problems with enrollment, transfers between regions, inability to get timely appointments, or the unavailability of network physicians, as was described earlier this morning. Claims issues on the other hand can involve the complexity of the claims process, timeliness of payment, and more often than not, the level of reimbursement to the providers.

    During this debate our primary focus at Anthem Alliance will continue to be on providing the best service we can to our beneficiaries. That said, though, we sincerely hope that our knowledge, experience and understanding of the world of health insurance—both specific to TRICARE and in the commercial world—will be tapped by policymakers as you proceed.

    Mr. Chairman, thank you for inviting me to participate today in this productive forum. I would be happy to answer any questions that you or your panel may have.

    [The prepared statement of Mr. Mouse can be found in the Appendix.]

    Mr. BUYER. One of the reasons we chose Grissom, yes, it's in my backyard, but it's highly representative of some of the base closures that have occurred around the country. And when you do not have a Military Treatment Facility and you have a large population, not only you're trying to serve—I don't know whether it's recruiters to the full-time manning positions, to the military retirees—perhaps we get to see more problems, than if the fact we were sitting in Charleston—can't—yeah, you can do Charleston—Charleston, South Carolina. Even though they closed the Naval base, but they still have the Air Force base.
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    This claims processing and reimbursement is of concern to me. I'm holding one of the TRICARE payment vouchers here. Individual goes and is a patient to see the doctor; charge for a visit by the doctor is $50. The allowable charge by TRICARE is $31. And I suppose the doctor's even $19. Lab, $61. Allowable charge is $18.51 from TRICARE; so the doctor is eating $42.49. I mean, it goes on. It goes on down the line. My question here is on the reimbursements. I mean, there are reimbursements under TRICARE that are even lower than Medicare; so I suppose I should—none of us should be surprised as we listen to, not only the testimony, but as we listen to our constituents, about the ''access'' to health care for the beneficiaries. Mr. Mouse, you just testified that, ''Oh, the region is great; the things are fine; the access to care is there;'' but is it really?

    Mr. MOUSE. Well—.

    Mr. BUYER. It's hard for me to—.

    Mr. MOUSE. If I may comment, Mr. Chairman.

    Mr. BUYER. Please.

    Mr. MOUSE. The requirements for our network we have met per our managed care contract, and that's evidenced by General Kelley, as well as to what I've told you this morning. I can't say to you that adequacy necessarily means that access is good. We have a problem because the reimbursement rate, as you just described, makes it very difficult for us to negotiate contracts with health care providers. We don't set the rates; those rates are based upon Medicare rates, and in the TRICARE maximum allowable charge. We are given those rates.
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    Mr. BUYER. How is it you end up—how come TRICARE, for example, pays around $31 on a routine office exam/evaluation, Medicare would pay $48; how can there be such differences between TRICARE and Medicare?

    Mr. MOUSE. Sir, I don't set the rates. I'm sorry, Mr. Chairman, I can't answer that question, except to tell you that the rates are given to us to load in our system each year through our fiscal intermediary by the Government, and those rates are not established by the contractor. And so, those rates are what we have to charge. You know, what we have to reimburse to those providers.

    Mr. BUYER. I'm right at ya.

    Mr. MOUSE. Okay.

    Mr. BUYER. What is very clear here is this Subcommittee is providing oversight, Congressional oversight, our responsibility, because we are examining a system that isn't working. No, it is working. It has some hiccups. Serious hiccups. Burps. You just provided testimony that said, No, it's not me, it's the Government. All right. Now, let me turn to you, General. If it's the contract—Is it the contract?

    General KELLEY. Mr. Chairman, let me make some statements that address those issues, and maybe it will provide a different light on that in some areas. The maximum allowable charge, so you need to look at that specific bill to analyze why there are differences. The billed amount, which you cited we're paying less than the billed amount, is standard throughout the medical community. That billed amount's important because the billed amount goes into the factor which next year determines Medicare reimbursement rates. So, there is an importance to where that billed amount is. Second, Medicare—there's a Medicare-established rate, and the TRICARE allowable rate is the Medicare rate. There are a couple of caveats that can happen. One of those caveats is that the contractor can negotiate up to a hundred and fifteen percent of that rate, if needed.
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    Mr. BUYER. Has that been done in this region?

    General KELLEY. It has not been done in this particular area. There have been some areas that we've negotiated up some.

    Mr. BUYER. But not in this region?

    General KELLEY. In this region, but not—.

    Mr. BUYER. In high-cost areas within the region?

    General KELLEY. Yes, sir, most of it has to do with poor access within the region.

    Mr. BUYER. Oh. Then, is that to the benefit of individuals around Grissom, or here in the rural areas?

    General KELLEY. Sir, it's in the rural areas, but it is not in this particular area right here.

    Mr. BUYER. Well, where?

    General KELLEY. Primarily in Michigan.

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    Mr. BUYER. Michigan? Why—why—why—explain to me the criteria; why do you extend this benefit into Michigan when we got hammered here?

    General KELLEY. That's part of the negotiating process that the contractor has with the network; we're not involved on the active duty side, the Government side, of negotiating the rates.

    Mr. BUYER. Let me ask you this: Between contractor and Lead Agent, are there any outstanding requests for equitable adjustments in the contract?

    Mr. MOUSE. Yes, sir, there are.

    Mr. BUYER. There are? What are they? And in dollar amount. What are we talking about?

    Mr. MOUSE. Sir, I don't have that information, but I would be glad to provide that.

    Mr. BUYER. Give me a ballpark; how much in millions?

    Mr. MOUSE. I would—.

    Mr. BUYER. It's your claims to the—.

    Mr. MOUSE. I would be happy to provide you with that information, but I don't have that available today.
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    Mr. BUYER. Big number?

    Mr. MOUSE. I would be happy to provide you with that information.

    [The information referred to can be found in the Appendix.]

    Mr. BUYER. Little number? My senses tell me it's a pretty good-sized number, then.

    Mr. MOUSE. I will say that there are significant dollar amounts out there in request for equitable interests that have been forwarded to the Government but have not been paid.

    Mr. BUYER. As Lead Agent, big number?

    General KELLEY. [No verbal response.]

    Mr. BUYER. It's all relative?

    General KELLEY. It's all relative, sir. The request for equitable adjustments are actually before we get to the TRICARE Management Activity, and we comment on the—and have some comments on those. In terms of other regions, I would say that is a small number compared to other regions.
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    Mr. BUYER. When you—gentlemen, as you sat there and you listened to testimony from the first panel about the claims processing, that definitely couldn't have left you with a good feeling—right? I mean, those are not—that's not good if I were in your shoes.

    Mr. MOUSE. Those were not good examples, Mr. Chairman. That is true.

    Mr. BUYER. And if I wanted to, we could have had panels all day. Now, we could have also, to be fair with you, we could have put on panels of some very good cases. So, I'll be very fair with you. When you have processed nine million claims, yeah, you're going to find some horror stories in nine million claims, but you also have maybe eight million, five hundred thousand success stories, too. But there are some things that are very clear. I think that's very clear. What's very clear is, is that, when you have poor processing claims procedures, and reimbursement rates, that are so low that we really don't get access to health care that they deserve. Which means, maybe there needs to be renegotiations in contracts; maybe we need to look at the reimbursement rates? How do we get these providers? How do we encourage the providers to participate in the program? Doctor Fields from Monticello agrees to participate in the program because he's a good patriot himself. But, you know, they can only do that for so long. And one thing has always concerned me. I suppose if I were a Lead Agent, if I had your job, I probably wouldn't be invited to the—I wouldn't be on the Christmas list of the contractor. I wouldn't be on your Christmas list because it has always really just gotten me when you get into these battles over the request of equitable adjustments in the contracts, you want to make demands on lots of money then back to the Government on the contract, yet, you don't—the system isn't treating the beneficiary the way they should be treated. It just, oh, just gets me. You want more money out of us, but you're not treating our beneficiary the way they deserve to be treated. That really bothers me.
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    I'm going to turn it over to Mr. Hostetler for any questions he may have.

    Mr. HOSTETLER. Thank you, Mr. Chairman. And one of the interesting parts of this job, as you and Mr. Ryun are well aware, that you get a tremendous lesson every day in civics and government; and that is, as the Chairman pointed out, we are a oversight process now. The Constitution of the United States of America says, in Article II, actually, ''The President shall take care that the laws shall be faithfully executed.'' So, it is the obligation of the Congress to legislate, to propose policy that would do the right thing in this particular case as regards to providing health care for—health care access for men and women in uniform and who have served in uniform and their dependents. We don't get the obligation Constitutionally to make sure that it works right. And so, that's why we're here today. And that's why we have these gentlemen, and we've heard the testimony before you, because we would like to enact a policy that makes this work appropriately. And that's—these gentlemen get the state obligation of trying to work through what we try to do, nobody intended, and possibly with not enough money from time to time, or most of the time, all the time, as the General will probably tell you. But we really do covet your input, and not in an adversarial way, but we want to make sure that—you know, General, as you and I discussed, and you made an excellent point, there are policy issues and then there are performance issues. And to be quite honest, the Legislative Branch according to the Constitution, is not empowered to deal with performance issues. But if those performance issues are hampered by policy barriers, then we want to make sure that we clear those barriers on the legislative side. And that's why we're here today.

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    And so, with regard to the performance questions that we're asking you two gentlemen, at any time, please let us know, policy-wise, what needs to be done to clear that; to clear those barriers, because that's all that we can do. That's all that we've been given, the obligation, according to Article I of the Constitution, to deal with. And so, General, first of all, I would like to ask you, as a result of the testimony from Technical Sergeant Stiers, how do the regions communicate with one another? Within your region, you have the obligation, the power, to make changes so that within that region, Region Five, can be the best region that there is. But how do the regions communicate with one another, and is there a barrier there that can be reduced so that whenever she and her husband are in Mississippi and the children are in Indiana; that issue is portability, I guess.

    General KELLEY. I think that was a tragic story for the effort that she had to go through to get that claim processed. And one of the comments that the panel has made, that we need to make sure that the system is similar throughout the entire country. At the period of time where she described, three years ago, TRICARE Prime was not instituted in this region. And so, that caused, in and of itself, a distinct problem because there was not a contractor to deal with that. And so, today, the contractor is given the responsibility to resolve those issues between the contractors. So that, if that is an issue that comes up that there is a problem where a issue between different regions and who's responsible, then they have an appeal that goes beyond that. But the contractors work that out to make sure that only one region is paying. Perhaps Mr. Mouse could describe that, if you like.

    Mr. HOSTETLER. The contractors, not necessarily the agents.

    General KELLEY. The Lead Agents, but on a claims processing issue, it's the contractors that resolve the issue between them.
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    Mr. HOSTETLER. Mr. Mouse, if you could.

    Mr. MOUSE. Yes, sir. Portability has been a problem when they're—when people were assigned to regions where there were TRICARE Prime contracts, and in our case with—with the Technical Sergeant, we did not have a contract here; we were not the contractor, and it became a real problem for her to try to get that claim processed to find out who could help her. In our Regional Operations Center, as required by the Managed Care Support Contract, we have a portability agreement. And that portability agreement is staffed by people who understand the process, who work very closely with the other 11 regions that are out there, because—and it is a problem. I won't state that it's not, because when people move from one region to the other, they have to enroll in our region and then they're disenrolled in the other region so that there's not a loss of benefits.

    Mr. HOSTETLER. Very quickly. Who does the disenrolling?

    Mr. MOUSE. The disenrolling comes from losing the contractor.

    Mr. HOSTETLER. The contractor?

    Mr. MOUSE. The losing contractor. And when it arrives at our region, they don't disenroll 'em until they arrive to our region. Then they fill out a enrollment form, and then we contact the losing contractor, and we work with them to disenroll them, so that there's not a stoppage in start dates of health care. That way there's a continuity through. And General Kelley, in our region, worked with us to institute a policy that, if a person came from another region, an active duty member, to Region Five, his policy was to trust the patient. And so when they called our centers for appointments, we made an appointment for them, based upon his memorandum to us. That ensured that there was access to care and no loss or an intermission between their benefits period. That has worked very well in our region. And we have, to this date, met all the requirements in the contract in order to ensure that the portability is done. We've created a database on our own outside the contract to track those; we deliver management reports to the Lead Agent to show that we're doing that. But General Kelley's memorandum and his policy, and what we're doing with people coming into our region, we have been very successful in ensuring that they're not falling through the cracks in health care, and to the military treatment centers.
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    Mr. HOSTETLER. So, you have a portability group. And I don't want to build a wall between the two of you, but, General Kelley and Mr. Mouse, could you—is that something when our men and women in uniform are moved around, it's part of the contract, I understand. Should that be part of the contract? Shouldn't we—shouldn't the military or a Government agent of some sort be the one that really works that out? Because don't—and I'm going to just ask the question. I don't know. These folks are into delivering health care, covering health insurance; we are the Government, I think is in charge of making sure that the personnel that are employed by the taxpayers are in transitions are made for them. Is it—.

    Mr. MOUSE. Sure. If I might comment on that. We also, our requirement is to implement health care within the region, and set up a health care delivery system to supplement the Military Treatment Facilities. But there are also certain parts of that contract that are administrative; this being one of them. Now, the Government is working very hard on the—I believe it's the TRICARE 3.0 Program. And that TRICARE 3.0 Program will eliminate this portability issue eventually.

    Mr. HOSTETLER. But who will deal with the portability issue?

    Mr. MOUSE. That comes out of DOD.

    Mr. HOSTETLER. I mean, whenever the Technical Sergeant has their superior, and they've got a problem with health care, are they going to go to a superior, or are they going to go to an outside contractor who really has no vested interest? And I don't mean this adversarial, but they really don't have a vested interest in the total satisfaction level of that individual. I mean.
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    General KELLEY. Mr. Hostetler, if I may comment. What you're asking the question about is, is the enrollment process an inherently Governmental process? Does it need to be done by the military? Or, can it be privatized or outsourced? And that's part of what this is. There is nothing—It has been determined, on a policy level, that there is nothing inherently Governmental to the process of enrollment, and so, in terms of drawing down the active duty force, that is something that's been added into the contract; the contractor can do that administrative function.

    Mr. HOSTETLER. Policy level legislatively or within the DOD?

    General KELLEY. Sir, I'd have to look back through for the exact source.

    Mr. HOSTETLER. Because we were talking about policy earlier, and people think that Congress somehow removed this from, and we don't. We don't have that authority. Sometimes we delegate that authority to agencies such as the Pentagon. I don't want to take a lot of time. Thank you for that.

    General KELLEY. Sir, if I could comment on one other thing. We talked about the contractor responsibility. But there is a piece, a big piece, that's governmental responsibility, and that has to do with the national enrollment database, which I mentioned in my earlier statement, which is a government-run program where the enrollment, instead of being totally the contractor's responsibility, the prime source of documentation would be the Defense Eligibility Enrolling and Reporting System (DEERS), and so it would be a personnel function, with the contractor responsible for making those entries in the DEERS system. So, it is becoming more governmentally oriented in terms of who owns the enrollment. But the processes would still be done by the contractor.
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    Mr. HOSTETLER. I see. I see. Also, toll free number for clearing doctors. You spoke about a toll free number where individuals can obtain names of doctors.

    General KELLEY. Yes, sir. There's a toll free number for patients; there is a toll free number for physicians. Providers. So, and part of that is the claims answering. One of the areas, and what we try to do is to identify providers that have more than their fair share of claims problems. That can be a variety of issues. We've heard earlier mention of coding. That is not something that we do. That's talking about Common Procedural Terminology (CPT), coding, which is the standard billing procedure throughout the medical community. The common procedural terminology. It's updated periodically. That's the same coding that's used for the TRICARE claims. There are some issues. You've heard the Staff Sergeant talking about the issues about families and not getting information about their families. One of the distinct features about the military system is that we are entered under a sponsor Social Security number and then there's an individual who is receiving care has a different Social Security number. How that works has been a problem with a number of providers. And the contractor has sent in teams, where we've identified those issues, to work with the provider. We have made available, although we haven't had a large number of people accept, it's made available, electronic claims processing so that that whole procedure can carry on faster. One of the reasons that we have been given back from providers as to why they did not want to do that is they wanted to wait until after the Y2K issue was resolved before they instituted another computer program, and so we expect that coming in March and beyond, that more of the providers will switch to an electronic system.

    Mr. HOSTETLER. How did the folks, for example, at TRICARE Prime, how did they clear with TRICARE? How did they clear going to another physician outside of the—outside of the network, say, if you're in another location? The reason I'm asking is because, or an emergency, or anything like that. United Health Care a few months back, I believe it's United Health Care, recently dropped the requirement of the gatekeeper. In a survey they did, I think it was in the state of Tennessee, they found that nationally they could make savings of about eight percent. I don't know if that's right, but they can make savings by eliminating the gatekeeper provision of their HMO, which is something a lot of people have a problem with, in that it's probably a fundamental issue with HMO reform. Has any special—.
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    General KELLEY. Yes, sir. In fact before that was announced, we had done a similar system within our region. And we have looked at that over approximately the first year of our contract and realized that we very rarely had any denials here that were for emergent or urgent out-of-area care. And so we went to the system where it does need to get entered in if this care is authorized into the system. If it's urgent care, you can call. We will refer you to another TRICARE provider, because the TRICARE Service Center in that 1-800 number, has a list of other providers from other regions, so we can provide you someone who will know the system. If it's an emergency, we use a prudent lay person standard. If you thought that it was an emergency, it's—we will pay that as an emergency. And so, that is all done by the health benefits advisor with just a simple phone call so that can be approved right there at that time.

    Mr. HOSTETLER. General, do you know if that's being done anywhere else in the country or in any other regions?

    General KELLEY. I don't believe that it's being done throughout the country yet.

    Mr. HOSTETLER. I have some more questions, maybe I'll set on them, Mr. Chairman. Thank you.

    Mr. BUYER. Mr. Ryun?

    Mr. RYUN. Mr. Chairman, thank you. I'd like to go back to something General Kelley said in the beginning. You know, as I listened to one of your responses, you gave a report saying that there are all these help lines you mentioned, CVC—CVS, pardon me, was a pharmacy that was available, and yet you couldn't see over your shoulder. I'm looking at some of the members that are in the audience here. I'm not an expert lip reader or can read all the body signs, but they were giving me indication that they didn't know anything about that. So, I'm simply saying, if there's a better way to communicate some way. I know that would be very helpful, and maybe that would solve some of the problems that we are faced with here today. I would like to go on from there, though, and simply say that I know the first panel gave a report that was one that was undermining yours in many respects giving their perspective that they had some serious problems; and Sergeant Drudge indicated that there was a potential for him to lose his credibility and his credit ratings, and I know once you lose it, it becomes a very, very serious issue to regain that credit rating in the future. So, I'm saying all that because I want to pose a question or two questions. First one is this, and I hope you will understand in line of things we don't have a lot of time. But if your job depended on this tomorrow, what changes could you make to improve the system? And I know we've already talked about Mr. Mouse mentioned reducing complexity of the claim forms. Let's take that one off the table. And just a moment. Another was portability. Go beyond those. Give us maybe two or three other changes that could be made that would help improve the system.
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    Mr. MOUSE. Do you want me to go first?

    Mr. RYUN. Yes.

    Mr. MOUSE. Well, I put a lot of thought into this, and we've talked to the President of our company this morning before we came in here because we feel that there are some changes that would benefit the members that we serve. And one of those changes, as we talked about, is the complexity of the claims system.

    Mr. RYUN. You said that now. But can you submit something that would show an improved claim system? Maybe not at this moment, but at some point through the—.

    Mr. MOUSE. There is undergoing or underway a process called Work Simplification throughout the Department of Defense. And the TRICARE Management Activity (TMA) is working with us and our fiscal intermediary who processes those claims to simplify that process, because it is the most complex system for payment in any claims payment system in the United States.

    Mr. BUYER. Mr. Ryun, may I? One moment.

    Mr. RYUN. Yes.

    Mr. BUYER. Since most of the Medicare claims processing is electronic, do you have it also electronic and, if so, by what percentage electronic claims processing would you provide?
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    Mr. MOUSE. Sir, I don't know the exact percentages in this region, but I can tell you it's small. It is a very rural area. The providers of—and we've done a number of training programs, provider education programs, to explain how electronic claims processing works, and admittedly they even went to provide the software to do it. There is a cost to that to them, and they're reluctant to do that. We are working very hard with our claims processor to implement that. And, in fact, trying to incentivize them to come up with a percentage of that cost.

    Mr. BUYER. Thank you. Thank you, Mr. Ryun.

    Mr. RYUN. You're welcome. If we could move on beyond the complexity of the claims form. Let's see what else you have that might be beneficial.

    Mr. MOUSE. One of the other things that I think that we have a problem with is the non-standardization of the computer programs that we work with. And as an example, the Composite Health Care System, or CHCS, where we do enrollment, of where we do all of our provider loads. Our system, the PIMS system, Provider Information Management System, at our fiscal intermediary, is not attached in any way to the government system. So, when we load several thousand providers into our claims system, where they have to be in order to process claims correctly, we then have to move that database manually, each one of those several thousand providers, over to CHCS. There is no electronic interface. The potential for error is there. And it increases every time someone enters that. So we don't have that interface. And I think, if we can work with the government, and I believe that TRICARE 3.0 is going to correct some of that. That has been a problem. We were the first—Region Two, Region Five, and Region One, were the first ever to use the CHCS system for enrollment and for provider.
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    Mr. RYUN. Let me interrupt you. If I can ask you maybe to move on to some more of a bullet point instead of getting into the fine points.

    Mr. MOUSE. All right.

    Mr. BUYER. Mr. Ryun, the point he's making, though, is very good because Medicare is costing us one dollar per beneficiary when they submit that claim. One dollar per claim to process it. This contract is like nine—what is it?

    General KELLEY. Five to nine dollars.

    Mr. BUYER. Five to nine dollars?

    General KELLEY. Yes, sir.

    Mr. BUYER. Per claim?

    General KELLEY. Yes, sir.

    Mr. BUYER. So, the point you just touched on, is very good.

    Mr. MOUSE. Is a significant impact to our operation. And it does cause problems. Because, if they're not loaded correctly on either system, then the claims don't get paid, or the enrollment doesn't occur, and that creates problems for the member who has submitted an enrollment form and doesn't understand why they don't have that completion and their cards aren't mailed. So that does create problems, and that's the point I wanted to point out to you.
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    Mr. RYUN. One or two points, then I'll ask Mr.—General Kelley.

    Mr. MOUSE. Okay, just one other point I would like to talk about. TRICARE 3.0, I know the government is moving rapidly towards implementation of that. In fact, the implementation is in August. We believe as a contractor, and strictly as a contractor speaking, that it's an untested program, and that we feel that it's moving too soon and too fast. And that that program needs to be tested in at least one region to work the bugs out and work through the issues.

    When we took over this program using CHCS as a contractor and being one of the first to do that, we did a tremendous amount of work to the system, which created problems for access for us; answering the telephones, getting the patient's access standards met; simply because this system was very complicated. It was never tested prior to that. All we're asking, from the contractor's standpoint, is that look at that. That is the program that is being moved forward very quickly, and I believe it will create problems and I think we need to review that process.

    Mr. RYUN. General Kelley, but, Mr. Mouse, may I offer that if you have other suggests, I know this Committee will appreciate your input. General Kelley?

    General KELLEY. Well, sir, let me address your preliminary comments first. As you talked of Staff Sergeant Drudge and his concern with his credit rating, we have worked on that and we have prepared some letters which we are prepared to send to anyone who is involved in one of those issues that states the laws; the hundred and fifteen percent law; the different types of things that the providers need to realize are applied; and that, if it's a claim against the government, which a TRICARE claim is, the individual should not be involved in that. It should be the government who's listed in the claims. And so we've done some things for those particular issues about credit.
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    I think that one of the things that Sergeant Drudge has a problem with is that he can be—he's in TRICARE Prime, can be in TRICARE Prime Remote, but his family cannot, this year. And so that is an issue that I think needs to be addressed so that the active duty families that we have assigned at other than Military Treatment Facilities, where they do not have access to a Military Treatment Facility, we need to provide them with the same level of benefit that they would have if they were assigned at a place with a Military Treatment Facility. And I think that would solve a lot of the problems that we see with the active Guardsmen and active Reservists who are at the various locations around the country.

    I think that one of the issues that we need to work on from the whole program is, we need to have standardized contracts benefits and procedures. Mr. Mouse talked about his concerns about starting the new TRICARE 3.0 contracts, but that's the issue because some are TRICARE 2.0; we're at TRICARE 2.5; and now we are bringing in TRICARE 3.0. And so, when you go between different regions, that magnifies any problem because the benefits are a little bit different, and the procedures are a little bit different, and so that hasn't been standardized, and that needs to be standardized.

    I think that Mr. Mouse's comment about the computers and the old architecture where all the computers speak the same language, I think one of the issues in terms of computerization, that we were not doing, we didn't write it into the contract, but the fiscal intermediaries and contractors are not providing the same level of service that commercial contractors are providing. For insurance, programs in terms of claims—claims, complaints, and resolution of complaints. In the commercial sector, the claims, if you have a complaint, all of that is scanned into the system, and so it's available on a computer, throughout the entire system; whereas, now if you call, you don't talk to the same person; they don't have the entire file; you may be need to talk to somebody who is a fiscal intermediary who is in Charleston, who is in the office in Indianapolis, and they don't have the same pieces of paperwork. Today we can do that with computers, and scan everything in so everybody could have the availability of the entire file. And so, resolution can come faster in any of those issues.
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    And I think that one of the other things that we need to work on, I think you pointed it out again in your preliminary comments, that improved information. This program started in and didn't have adequate information when it started. I think we're doing a very good job in the catch-bin areas around the military facilities of getting the information out, what needs to be done. But that ability to get good information to everybody that needs it is not as good for people who are away from where we have our fixed facilities.

    Mr. BUYER. I'm going to jump into the numbers here real quick. I'm going to do this little exercise, because bringing business practices and principles to the Federal Government should not be a radical concept.

    General KELLEY. Yes, sir. Absolutely.

    Mr. BUYER. Quote me to the bank forever on this, all right?

    General KELLEY. Yes, sir.

    Mr. BUYER. In the—so, as a recap, he comes from Kansas; he comes from southern Indiana; I drove an hour. I want to sit here. Why? Something is not—something doesn't look right, smell right, feel right. Why? Because beneficiaries aren't getting treated the way they should be covered. All right? Okay. What's wrong? Well, we go, ''Okay, we got some reimbursement rates we ought to look at. How do you get money into the system?'' You go, ''Ah-ha,'' you testify and say, ''Okay, five to nine dollars is what that cost.'' If it's costing Medicare a dollar, whoa, we are way in our exorbitant—on average, seven times what it is costing in the Medicare system. On claims processing. All right? So, okay, Steve, what's the Subcommittee faced with this year? In the Departments fiscal year 2001 budget request that the President submitted, it seeks $17.2 billion for the military health care, including $11.2 billion for the operation and maintenance and $5.4 billion in military personnel costs. The balance of the rest goes to medical procurement, research and development and military construction accounts within the Defense Health Program; about three-fourths of the requested operation maintenance dollars go directly to providing of purchasing health care services; care in Military Treatment Facilities represents nearly four billion dollars of the request, and about $4.7 billion purchases health services in the private sector. Seventy-two percent of the private sector funds, or approximately $3.4 billion, are allocated to the Managed Care Support Contracts in 12 regions. That's a lot of money we are sitting on, and how it gets divided out there.
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    So, Mr. Hostetler's comment is right. We can look at these things; we examine the policy; we allocate and authorize these funds to be used; and then today we receive the testimony, I'm sure there's a rumbling in the field, and then we get the direct testimony. So, all right. Let's do the simple math. Twelve regions. You had average three million claims. Right? Is that what your testimony was, three million? So, you go, all right; five to nine dollars? Well, I'm just going to say seven dollars per claim is the cost. That's 21 million times 12 regions; that's 252 million dollars. Now we're talking real money, huh? Two hundred and fifty-two million. So, when I look at this, you bring up, Well, we've discussed these different issues of, how do we even provide more moneys into the system whereby health care providers are willing to even accept or participate in the program? I know where I can get 252 million dollars. Hey, being a conservative penny-pincher now ain't such a bad thing, is it? I think it's a great concept. So, I am more than happy and willing to work with you, Mr. Mouse.

    Mr. MOUSE. Okay.

    Mr. BUYER. And, General Kelley, let me ask you this question: Obviously, the Lead Agents here, you guys get together and talk about these things. Yes?

    General KELLEY. Yes, sir.

    Mr. BUYER. Maybe we ought to get these Lead Agents in the same room and have a good conversation with everyone and figure out what is the best way to do it. Because I tell you what, I'm willing to make whatever investment is necessary. I'll be very up front with you. I'll make whatever investment is necessary to stop the complaining out there. We will address. We have an opportunity here to address the portability issue that Mr. Hostetler brought up; we can address these issues. You know, if I have to spend a little extra money to break it and do it up front, I recognize that just in five years alone, I'll save a billion dollars. I'm willing to make that investment up front. And then that policy change—as a matter of fact, 18 to 24 months out, affects real lives of people. So let's—let's engage. Let's do this, all right? We only have about three or four weeks to do it, but what we can do with the Committee, let's make that investment. I also, General Kelley, I'd like for you to come see me.
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    General KELLEY. Yes, sir.

    Mr. BUYER. I want you to you come see me, because I like to tease Jim Ryun here who's in Kansas; they've got tumbleweeds and all kinds of things out there we don't have in here in Indiana. My Congressional district's 20 counties. His is almost—all the parts of 23 counties. Well, my Congressional district, yours is—how many have you got?

    Mr. HOSTETLER. Just 13.

    Mr. BUYER. Just 13. Well, they talk different down there. But my Congressional district is one of the largest from the Mississippi east. So, you definitely got my attention when you said you altered the provider—I don't know what your provider profile is, if you provide extended benefits to providers up to a hundred fifteen percent in Michigan, when, in fact, I've got one of the most rural districts east of the Mississippi, I want you to explain this one to me. So I want you to come see me. Because we're going to take care of the beneficiaries.

    General KELLEY. Yes, sir.

    Mr. BUYER. All right?

    General KELLEY. If I could make another comment. We really didn't finish discussing it, I don't know if I even want to.

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    Mr. BUYER. Well, you can either do it on the record or in my office, because it's gonna happen.

    General KELLEY. Just, it's up to you.

    Mr. MOUSE. Mr. Chairman, I would just like to point out it is not three million, it's nine million claims that we processed last year, so your number would be affected.

    Mr. BUYER. Nine million? Incredible. So, it's $700 million—.

    Mr. MOUSE. I just thought I'd point that out to you.

    Mr. BUYER. Seven hundred million dollars; this is going to turn into billions quickly.

    Ms. WINN. (Ms. Tracy Winn, Anthem Alliance Health Insurance Company) That nine million is for two contracts. Region Two and Region Five. And it is from contractor to date.

    Mr. BUYER. I just did some quick—it's going to be money, you know.
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    Mr. MOUSE. If it's happening.

    Mr. BUYER. It's real money. It's a lot of commas and zeros. And I think the point is well made. I think there are some things that we can definitely do here to deliver better care, health care, to the beneficiaries. That's what this is—that's what we want to do.

    Mr. MOUSE. Yes, sir. We are committed to do that.

    Mr. BUYER. That's our role. We are committed to help you do that.

    General KELLEY. Sir, I need to clarify one issue that when did—we were talking about negotiating rates, for the TRICARE Prime patients, for the TRICARE Prime providers, you can't negotiate above the Champus Maximum Allowance Charge (CMAC), rate, or the Medicare level; you can negotiate lower. For the standard patients or the standard providers, you can't. I don't think that statement came out when I was discussing it.

    Mr. BUYER. Mr. Hostetler.

    Mr. HOSTETLER. Very briefly. One of the issues that come up with regard to Medicare reform and providers dealing with Medicare, is an issue that has come up here today, the panelists, actually the patients, the members have addressed, and that's the issue of coding, which deals with provider education. I can tell you whether you're dealing with TRICARE or Medicare, or anything, coding, or health providers, or doctors, or ambulance drivers, or any health care provider at all, the issue of provider education is vitally important. And I would just assert to you that sometimes the money is secondary to a lot of these providers. I don't mean that we're going to address the issue, but providers just get fed up with the bureaucracy of dealing with this whole program. And so they decide it's not worth the headache. They need to get a higher reimbursement rate. But they have to hire someone to go over the 12 changes in codes that have taken place in this quarter for the same procedure that they dealt with last quarter. And so, I would just say that any comment is that the frustration that I see from providers in dealing with these programs is tremendous and sometimes that has a lot to do with, you probably realize, as to why they decide not to take care of the people with which we wish to give benefits to. So, provider education is vitally important. Any of you like to address that issue? Is there any effort to improve that or—.
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    Mr. MOUSE. Sir, if I may, Congressman Hostetler. Yes, we agree because, if the providers aren't informed and if they don't provide the claim forms, we can correct CPT codes or Diagnosis Related Group (DRG), codes to our claims processor; that simply creates more workload on my staff because people start calling and it's backed up into the queue. And so we have a very intensive provider relation education program. We can't always touch all of them all the time, but, as General Kelley pointed out, we have morning reports that we have developed in conjunction with Lead Agents to identify where their high-dollar providers, where their high-claim denials; all of those come out in a lengthy report that we look at and we give to our representatives in the field to go talk to those providers and find out. Now, those are normally network providers. In the TRICARE Standard and TRICARE Extra area, we do have providers that we call CHAMPUS providers which are rollover from the old CHAMPUS program, that go out and meet with non-network providers, and they also do education. Are we doing everything we can? No, sir, and I'll commit to you that we're trying very hard. In the two-plus years that we've been in this business, we've done a tremendous job of doing that, but we have a ways to go. We really do. And we are committed to making it a better system for our providers. Because that's where it starts. And if we're going to convince the providers to get into our network, we certainly want to be able to provide them with the right information on how to file claims. That's very important.

    Mr. HOSTETLER. Do you have any idea how many of those codes there are?

    Mr. MOUSE. Most—there's a CPT code book, sir, that's about two inches thick that has all the codes, depending on the procedure that the patient walks in the room for.
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    Mr. HOSTETLER. Approximately how many is that? I know it's thick, but approximately? I mean, as an engineer must—.

    Mr. MOUSE. I'll go back to my statement. I'll be happy to provide that for the record.

    Mr. HOSTETLER. If you could. Thank you.

    [The information referred to can be found in the Appendix.]

    Mr. BUYER. Mr. Ryun.

    Mr. RYUN. I just have a very brief comment. We found so much money on that last question, I wanted to go through the second part of what I had attempted to, and that is with regard to providers. First of all, there needs to be a means, I think, of restoring confidence to the providers, the doctors, the pharmacies and others that you can perform services involved. Is there something, anything, that you can pinpoint that might be a reduction in cost without cutting services that would streamline the system, and potentially free up some more money? One other way, you looked at what you have been doing throughout the district, but what about going back to the providers and doctors, or sort of something, that you can streamline in terms of dollars and cents there, as well? And if you don't have anything, if you think of something later, you can always submit that for the record. That's fine.

    General KELLEY. Sir, I think standardization of the claims processing of TRICARE, Medicare, the local insurance companies; if they're all filled out the same way, then it's very easy for the office staff to do it.
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    Mr. MOUSE. Yes, because there are a number of managed care organizations working with these providers. We are only one. And each one of them may have different methods, and the business managers are somewhat confused because we come in with the complex system.

    Mr. BUYER. Thank you. If I were the contractor, I would be very frustrated and challenged in dealing with systems that are outdated; if you like driving a sports car, but they make you also drive a Model T; I wouldn't be too happy. I mean, I'd get a little frustrated. Because you're in the health care delivery business, and you don't do just the military health delivery system, so you end up dealing in private industry, doing it one way; and all of a sudden you got to do it DOD, and it is a little different, isn't it?

    Mr. MOUSE. There are challenges, Mr. Chairman.

    Mr. BUYER. Yeah, there are challenges. Very tactful. You want to keep the contract, huh?

    Mr. MOUSE. Well, we are in agreement of a procurement system.

    Mr. BUYER. I understand. I want to thank my colleagues for coming a great distance. This has been very productive. As I look into this bill that we're going to be marking up here relatively soon, there's really some major issues we are going to take on. We are in our third year of the pharmacy redesign. The purpose of that was to derive savings so we could then extend the pharmacy benefit to the over-65 military retiree.
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    One thing about politicians, you know, they always love to run out there and grab claim for different things, and now it's all of a sudden it's the extension of pharmacy benefits, all of a sudden is a vogue idea. It was something that we started working on three years ago. And we are most hopeful that we're going to deliver this one. So that's a huge issue. I am more solidified in my beliefs about the FEHBP test and some amendments and modifications are necessary. We'll work through those, and I'll work with—Mr. Ryun?

    Mr. RYUN. Mr. Chairman, I ask that this be submitted for the record. I'd like to see extension of that program, and I think a wonderful test area is Fort Leavenworth. I'm just putting it in. I honestly think it's a great opportunity, as we extend that program to see its credibility; how we are going to do.

    Mr. BUYER. Thank you, Mr. Ryun. Each year we make some recommendations on TRICARE, it seems, in the budget. And looks like—I want to take this one on the claims processing, but there's some DOD reluctance, some institutional, cultural things; we need to break through those and we are willing to make those investments to do that. Because, just upon easy math, probably isn't necessarily accurate, we know that it's hundreds of millions of dollars that translate into billions rapidly that we should make enough of an investment on to capture those savings, and we can then in turn provide that into the system that derives real benefits to people. And I'm willing to do that.

    I'll share with my two colleagues, I continue to remain very challenged by the modeling that's being used by DOD in the estimated cost of the Defense Health Program. The President's budget that he just sent over to us for 2001, contains the supplemental, the recisions, and reprogramming request for the supplemental that we're going to take up here in a month, and it's—what's the number? About 280 million dollars of that is for health care. That didn't get covered, that we thought we did when we passed this thing back this last fall. So we're going to come back again. We do this every year. So, I'm not blowing you in the wind here. This modeling that's being used in the Department of Defense has massive errors. If every year you provide testimony, we just received testimony, that the medical budget, they give us a number and they call it executable. What's the difference between fully funded and executable? Curious to me. If it's executable, then you, in turn, have to come to us on the Subcommittee and say, ''Oh, by the way, what I told you I needed ten months ago, I'm $300 million short.'' Something's not right with the modeling. What we would like to do is get this done and taken care of up front, so we are not continuously doing this reprogramming and supplemental appropriations. Do you guys agree? So, if you can carry the message back. I know you got some DOD individuals here. This one is challenging me and frustrating me over the years, all right?
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    I want to thank you for your testimony, and I appreciate it. If you have any recommendations, again, Mr. Hostetler and Mr. Ryun asked for, please provide that and follow-up. I appreciate continuing working with you. And this hearing is now concluded.

    [Whereupon, at 1:40 p.m., the Subcommittee was adjourned.]


    Mr. BUYER. Between contractor and Lead Agent, are there any outstanding requests for equitable adjustments in the contract? And if so what are they? And in dollar amount. What are we talking about?

    Mr. MOUSE. Anthem Alliance has been required to implement more than 200 changes to our contract since its award in September of 1997. Some are a result of program design changes while others are due to changes in such things as population or MTF workload. All have a direct impact on our contract, some more than others. Anthem Alliance has submitted a number of Requests for Equitable Adjustments (REAs) and Bid Price Adjustments (BPAs) to the government. We are currently in detailed discussions with the Department of Defense and are hopeful that a resolution will come quickly. However, we are unwilling to make these amounts part of the public record because they constitute commercial and proprietary information which is entitled to protection under the Freedom of Information Act.

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    Mr. HOSTETLER. Approximately how many codes are in the CPT code book?

    Mr. MOUSE. There are currently 7 different sets of codes with approximately 116,175 actual codes that providers, facilities, and pharmacies generally use when filing claims. To help clarify their purpose and differences, below is a definition of each code set.

    Current Procedural Terminology, Fourth Edition (CPT–4) is a listing of descriptive terms and identifying codes for reporting medical services and procedures performed by physicians. CPT–4 codes and descriptions are copyrighted by the American Medical Association. There are approximately 9,350 of these codes (including separate codes for professional and technical components of some laboratory and radiology services).


    Health Care Financing Administration Common Procedure Coding System (HCPCS), National Level II Medicare Codes. HCPCS (pronounced Hic-Pics) is a listing of codes and descriptive terminology used for reporting the provision of supplies, materials, injections, and certain services and procedures to Medicare and other payers. Services are frequently performed by ''ancillary providers'' - Home health agencies, durable medical equipment suppliers and prosthetic suppliers. However, services can also be rendered by physicians or hospitals. There are approximately 4,100 of these codes. A sub-set of the HCPCS system is the DMEPOS, Durable Medical Equipment, Prosthetics/Orthotics, and Supplies (DMEPOS). There are approximately 1,500 codes included in this sub-set.
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    Ambulatory Surgery Center (ASC) is a reimbursement system used by Medicare and other payers to pay hospitals/Surgery Centers for facility services furnished in connection with a covered procedure. There are approximately 2,250 of these codes. ASC codes mirror CPT–4 codes.

    ICD–9 CM Procedure
    International Classification of Diseases, 9th Revision Clinical Modification (ICD–9 CM) is a listing of codes to pay surgical, investigative, and therapeutic procedures billed by a hospital. There are approximately 4,300 of these codes.

    Diagnostic Related Groups (DRG) is a hospital inpatient reimbursement system developed by HCFA/Medicare. There are more than 500 DRG codes used for the TRICARE program.

    Revenue Codes
    Revenue codes are used by hospitals to bill for outpatient services. There are approximately 675 revenue codes used for the TRICARE program.

    National Drug Codes (NDC) are used to identify prescription drug products. There are over 95,000 NDC codes used for the TRICARE program.

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February 25, 2000
[This information is pending.]