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[H.A.S.C. No. 108–25]



FOR FISCAL YEAR 2005—H.R. 4200






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MARCH 18, 2004




JOHN M. McHUGH, New York, Chairman
TOM COLE, Oklahoma
JIM SAXTON, New Jersey
JIM RYUN, Kansas
ROBIN HAYES, North Carolina
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VIC SNYDER, Arkansas
MARTY MEEHAN, Massachusetts
JIM COOPER, Tennessee

Lynn W. Henselman, Professional Staff Member
Elizabeth McAlpine, Staff Assistant



    Thursday, March 18, 2004, Fiscal Year 2005 National Defense Authorization Act—Defense Health Program: Current and Future Issues

    Thursday, March 18, 2004

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    McHugh, Hon. John M., a Representative from New York, Chairman, Total Force Subcommittee

    Snyder, Hon. Vic, a Representative from Arkansas, Ranking Member, Total Force Subcommittee


    Baker, David J., President and CEO, Humana Military Healthcare Services

    Buck, Alfred S., MD, FACS, Partner, Edward Martin and Associates, Inc. and Chairman of the Department of Defense Health Care Quality Initiatives Review Panel

    Cowan, Michael L., Vice Adm., Medical Corps, Surgeon General of the Navy

    McIntyre, David J. Jr., President and CEO, Triwest Healthcare Alliance

    Peake, James B., Lt. Gen., Surgeon General of the Army

    Stanish, Kimberly Ann, Health Care Committee, Co-Chair, National Military Veterans Alliance

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    Swartz, Sue, DBA, RN, Co-Chair, The Military Coalition's Health Care Committee

    Taylor, George Peach Jr, Lt. Gen., Surgeon General of the Air Force

    Winkenwerder, William Jr., MD, MBA, Assistant Secretary of Defense for Health Affairs

    Woys, James E., President, Health Net Federal Services Inc.



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

Baker, David

Buck, Alfred

Cowan, Michael L.

McIntyre, Jr., David J.

Peake, James B.
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Stanish, Kimberly Ann

Swartz, Sue

Snyder, Hon. Vic

Taylor, Jr., George Peach

Winkenwerder, William Jr.

Woys, James

[The Documents submitted can be viewed in the hard copy.]

    Executive Summary from Alfred Buck, MD
    GAO Report

[The Questions and Answers can be viewed in the hard copy.]
Dr. Snyder

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House of Representatives,
Committee on Armed Services,
Total Force Subcommittee,
Washington, DC, Thursday, March 18, 2003.

    The subcommittee met, pursuant to call, at 9 a.m. in room 2212, Rayburn House Office Building, Hon. John M. McHugh (chairman of the subcommittee) presiding.


    Mr. MCHUGH. We will call the subcommittee to order.

    With someone whose name is John Patrick McHugh, I want to start by saying to that anonymous staff person who felt a 8 o'clock a.m.—which I just came from, as Dr. Snyder and others did—and then a 9 a.m. subcommittee hearing the morning after St. Patrick's Day was a good idea, I just want to say——

    But I certainly want to welcome you all here today this morning, and we are meeting to hear testimony on current and future issues of the Defense Health Program from the perspective of the Department of Defense beneficiary groups and private industry. And as I said, I want to welcome all of our witnesses, all three panels.

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    The Department faces significant challenges today as it carries out its dual mission of maintaining medical readiness capabilities for wartime, while providing peacetime health care for an estimated 8.9 million eligible beneficiaries. What makes the challenge more, shall we say, interesting is that it is rightly expected that the Department provide the highest quality of care in an environment where health care costs continue to rise.

    This subcommittee has already held two hearings this year to examine health matters related to the global war on terrorism, and during today's hearing we will attempt to focus on the adequacy of the Defense Health Program budget for fiscal year 2005, especially in light of the increasing number of beneficiaries utilizing the military health system, the national phenomenon of rising health care costs, and the significant growth of $1.6 billion in the annual contribution to the Medicare eligible retiree health care accrual fund to support TRICARE for life. We will also look at the status of the transition efforts to the next generation of TRICARE contracts.

    By the end of 2004, the Defense Health Program (DHP) will have undergone really a colossal effort, during a time of war of course, of transitioning billions of dollars worth of existing contracts into new and very different contracts, and I think it is important we ensure that the transition to those new contracts in no way negatively impacts beneficiary health care and that hopefully it improves optimization of military treatment facilities while providing and preserving high quality accessible health care.

    I also want to review the efforts that have been made to improve access to health care both in the direct care system and through civilian health care providers. We will also take this opportunity to review efforts to enhance collaboration and sharing of health care resources between the Department of Defense (DOD) and Veterans Affairs (VA), especially those recommendations made last year by the President's task force to improve health care delivery for our Nation's veterans.
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    We also want to hear DOD's progress in implementing the enhanced health care benefits for the Reserve components enacted in the 2004 National Defense Authorization Act and the Department's response to recommendations made by Dr. Alfred Buck and his colleagues in the 2001 report to DOD regarding defense health care reforms.

    Before I refer to the subcommittee's ranking member and our partner in this effort, Dr. Snyder, I want to express my deep appreciation to all of the panelists, but certainly the first panel and witnesses for their steadfast dedication and spirited leadership in caring for millions of military beneficiaries, and no other single health care system has ever experienced the incredible complexities as that of the Defense Health Program, especially with the added challenges, as I noted, in supporting a war. And you have all of our expressions of gratitude and support. So thank you for that.

    And with that, I would be happy to yield to the ranking member, the distinguished gentleman from Arkansas, Dr. Snyder.


    Dr. SNYDER. Thank you, Mr. Chairman, and I look forward once again to going through this series of panelists today on these very important topics.

    First of all, looking at four doctors there, I knew I would be distracted. I had things frozen here yesterday. I know that you all are trying to figure out what the hell did he have done there. I was trying to be a good patient.
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    As we go through this today, I hope that you all will look on these hearings—and speaking to all panelists now—as an opportunity to tell us what the problems are. I mean, you have, I think, some of the most complex stuff that any system the military can deal with, and we can help you all best do your jobs if you let us know where the problems are. In my view, this should not be an opportunity just to tell us all the good things going on, but we want to know what is next for dealing with things.

    The whole issue that the next generation of TRICARE contracts is one of those things, if it doesn't—if it is not done right, we will hear about it. I mean, we will be spending, all our staff will be spending time on the phone trying to work through these problems. So we certainly want an update on that.

    The whole issue of medical readiness, some of us have heard about that as we have had so many guys, particularly from Guard and Reserve forces, concerns about was everybody ready to go.

    The issue of the transition when our folks come back, the ones that have had illnesses and injuries overseas and how they are working on down the system as their life is going to go on dealing with these wounds and injuries that they received.

    And, finally, I particularly want to hear the reaction of everyone of the report from Dr. Buck but also from the report that was put out. As you know, Dr. Buck chaired the Federal Advisory Committee on the Department of Defense Health Care Quality Initiative's review panel. It was established in response to concerns that the quality of care in the military health care system was not up to the same standards as the civilian sector, that its mission was to determine whether the military health care system is consistently delivering quality, professional health care services, which is I know your all's goal and mission.
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    This report, as you all may know, came out right around the time, shortly I believe it was, September 11th, 2001. And while some in the Congress had asked it be done in response to some negative press—lengthy press investigation has been done in the military health care, obviously attention went elsewhere after September 11th, 2001. And so Congressman Cooper had brought this to our attention and Dr. Buck. And so we hope you all respond to where we are at with that now.

    But thank you all for being here, and I look forward to spending the weekend here with you and—I am sorry—spending the morning here with you and Mr. McHugh.

    Mr. MCHUGH. I hope that doesn't become a prophetic statement, Doctor, but we will see.

    And in that regard, before we begin, let me just state we do have three panels comprising of 10 witnesses. That will undoubtedly take some time. These are important matters, and certainly we want to give them our full attention. But we would certainly appreciate the witnesses who do come doing their best to try to summarize their testimony. We do have their written statements in their entirety. Without objection, those will be ordered into the record in their entirety. Hearing no objection, so ordered.

    And as I said, we want to make sure we do justice to this very important issue, but by the same token the weekend does approach.

    Let me with that welcome our first panel. And first of all, I am proud to introduce Dr. William Winkenwerder, Jr., who is the Assistant Secretary of Defense for Health Affairs, Department of Defense. Mr. Secretary, thank you for being here.
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    Lieutenant General James Peake, Surgeon General, Department of the Army. General, good to see you again. I should note that General Peake will retire this summer, I am told. It is not my desire, but I am told you will after some 38, almost 38 years in military service, and grand service it has been. And as an American citizen, I thank you, but as a subcommittee chairman, someone who has been involved in the issues over which you have purview, I want to thank you for your leadership and for your invaluable contributions and wish you all the best in the future, and thank you for being here today as well.

    Vice Admiral Michael L. Cowan, Surgeon General of the Navy. Admiral, good to see you. And Admiral Cowan, we are going to have a tough time replacing these two gentlemen. Admiral Cowan is going to retire after only a mere 32 years of service. And Admiral, as with General Peake, you too depart with our Nation's and my personal gratitude for all of your sacrifices, contributions on behalf of your Nation but in your capacity, more importantly, to the men and women under your command whose every day has benefited from that service. Thank you, sir.

    And Lieutenant General George P. Taylor, Jr., Surgeon General of the Air Force, who I don't believe is retiring. Are you?

    General TAYLOR. No, sir.

    Mr. MCHUGH. Good.

    General TAYLOR. Not until after the hearing.

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    Mr. MCHUGH. So I appreciate all of your being here.

    Now, I have two little red lights staring at me. I have never in my years of chair used those red lights and I would like to resist that today. So even though they are on, we are not going to start with those on but if it becomes a problem we may have to go to the five-minute rule. But for the moment you can ignore those.

    So, gentlemen, again thank you for being here. And Mr. Secretary, we are honored to start with you and our attention is yours, sir.


    Dr. WINKENWERDER. Thank you, Mr. Chairman, members of the subcommittee. Thank you for the opportunity to discuss the Department of Defense military health system. I have submitted a more detailed written report, but let me share some highlights now.

    Over the past year the military health system has performed superbly on all fronts: Supporting operations in Iraq and Afghanistan, ensuring troop readiness, supporting activated Reserve component members and their families, and, as you noted, awarding a full set of new TRICARE contracts. There has been significant and really great progress on all fronts.

    Despite serving in some of the toughest environments imaginable, disease and nonbattle injury rates among our deployed personnel are the lowest ever. The services have improved medical screening to ensure forces are healthy, and they have increased emphasis on theater surveillance, allowing commanders and medics to identify health hazards. The services evaluate all members pre and post-deployment, and permanent health records are maintained.
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    There is some good news from our service members returning. Over 90 percent of 300,000 redeploying service members have reported to us that their health status is good, very good, or excellent.

    In January, we initiated a quality assurance program to monitor the service health assessment progress, and that includes periodic visits to military bases to assess compliance.

    The services continue to immunize troops from disease and agents that could be used as biological weapons, including anthrax and smallpox. To date, we have vaccinated over one million service members against anthrax and more than 580,000 against smallpox. Both programs are built on safety and effectiveness, and they are both validated by outside experts.

    Ensuring medical readiness of activated reservists and providing full coverage for their families is one of our highest priorities. As we proceed, we believe that we must carefully review the cost of providing increased entitlements and benefits to reservists who have not been activated, and perhaps to think about a demonstration program to test the feasibility and effectiveness of such benefits. I will be happy to talk about that more in the question and answer period.

    To support combat operations in Afghanistan and Iraq, medical care was deployed far forward, available within minutes of injury. Over 98 percent of casualties who arrived at medical care survived their injuries, a remarkable statistic, and over one-third were returned to duty within 72 hours.
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    Far forward medical care, improved personnel protection, and solid procedures are saving lives. For those seriously ill or injured, we rapidly evacuate to definitive care using intensive care teams to treat patients during transit. I am sure all of our surgeons will be able to talk about that, and specifically General Taylor.

    Specialized programs are available at our larger medical centers, particularly at Walter Reed Army Medical Center and the National Naval Medical Center at Bethesda. Walter Reed, I might note, has a world-class amputee management program, and I am sure General Peake can talk about that.

    Mental health is integral to overall health, and the services have full mental health service programs at home and for our deployed. These include suicide prevention and stress management programs that are supported by our leadership and tailored to the operation. I know there has been a lot of interest in the issue of mental health, rightly so, and again General Peake and I both will be glad to answer questions about that.

    Improved predeployment screening created a backlog of activated reservists awaiting clearance to be deployed. We learned about that problem in the late summer and early fall. The Army has worked diligently to alleviate this backlog, and the number of troops in this status is declining. We are committed to deploying healthy and fit forces and to providing comprehensive post-deployment health evaluations and care where that is needed.

    The Department has improved the transition of care for service members to the VA. VA counselors today advise the seriously injured on benefits, disability ratings, and how to file claim forms before the members discharge from the hospital. That is a very good new system. We have implemented the first stage of our computerized medical record, and we are pursuing full sharing of information, health information with the VA today.
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    To improve TRICARE, as you note, we have reduced the number of TRICARE regions from 11 to 3, and reduced the number of contracts from 7 to 3. We have markedly improved claims processing, and we now enjoy what we believe is industry leading performance. In 2003, for example, we processed over 104 million claims. That is a lot of claims. And over 99 percent were processed within 30 days. That is an excellent record.

    Beneficiaries are seeing continued improvements to customer service, quality, and access to care. Certainly there is more to do, but there has been really nice progress.

    The new TRICARE governance plan will streamline management and enhance customer service. The new TRICARE regional directors will integrate military facilities and civilian networks to ensure adequate beneficiary support.

    We are employing another new position, and that is the senior market manager, to optimize resources in each of the 13 multi-service markets where we have more than one service with a military treatment facility.

    Satisfying beneficiary health care needs is a key objective for the new TRICARE contracts. We actively monitor the quality of care within the military health system. We use today a series of metrics, measures, survey data, and other health care industry standards to monitor care in both the direct care system as well as in the purchase care sector.

    Defense Health Program costs continue to rise. In 2003, we saw a seven percent increase in new users, and we expect the same this year in 2004. This growth we believe is due to increased use of TRICARE by our military health system eligible beneficiaries, principally retirees, who are it appears dropping private insurance and using TRICARE full time.
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    To fund this growth, the fiscal year 2005 operation and maintenance appropriations submission is 15 percent more than this year. That is a big jump. Not reflected in this request, I might add, are the costs of the Medicare Eligible Retiree Health Care Fund, which, as you noted, is going up as well, which pays for the TRICARE for Life benefit and funds for the global war on terrorism requirements.

    The Department has taken several actions to better manage our resources. We are implementing performance-based budgeting and we are introducing a new pharmacy benefits program starting in June of this year. Let me note that Federal pricing of pharmaceuticals and the new TRICARE Retail Pharmacy Program we believe will significantly restrain growing costs and help us in the management of pharmaceutical cost rise, that whole issue.

    We need your help in restoring the flexibility to manage Defense Health Program resources. With the new contracts and our new prospective payment system, we need flexibility to move funds between direct and private sector care. Currently, the military treatment facility revised financing funds are in the private sector budget, requiring—as we have now, the requirement to obtain reprogramming approval limits our flexibility. We appreciate the Congress' desire to protect military facility funding. However, the current restrictions are having an adverse effect. We urge that you allow us to manage the Defense Health Program as an integrated system so that funds can flow in the year of execution to where the health care is delivered.

    I have been on the job now for two and a half years and I have had the opportunity to visit military medical units worldwide. I am extremely proud of the men and women who serve their country in the military health system. They are courageous, dedicated, and caring professionals. They are really America's best, and I am proud to serve with them.
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    With your support, we will continue to offer world class health care to the men and women serving in our military, and I thank you for the opportunity to be here. And with that I am happy to, after the others, to take questions.

    [The prepared statement of Dr. Winkenwerder can be viewed in the hard copy.]

    Mr. MCHUGH. Thank you very much, Mr. Secretary.

    General Peake.


    General PEAKE. Mr. Chairman, Congressman Snyder, distinguished members, what a great Army you have. I cannot be more proud of the institution or more proud of the most important element in that institution, and that is its people, and serving those people is what Army medicine is really all about. It is our obligation to give them the best care, technically the best, with focus on prevention, with access when it is needed, with dignity and respect that demonstrates to them the value that America places in their service, their service as a soldier, as a family member, supporting that soldier as a soldier who has served its country through retirement. It is not adequate but austere kind of care they deserve, but the very best they can be given and to the same high standard regardless of the location around the world where we might send them in service of the Nation.
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    I know from my many times before you and from your unwavering support that this committee expects nothing less than that from us.

    Many of you have visited our returning wounded at Walter Reed. You have seen the team of teams kind of effort that gives these soldiers the opportunity to return to maximum functionality despite serious injuries. It comes from great clinical leaders like D.J. McCleric during the physical therapy clinic, the wraparound psychological counseling, the partnership with the VA to have the best of prosthetics and orthotics, And it takes the orthopedic excellence that has been recognized by the American Orthopedic Association leadership. But it is more than that. It is the 24 by 7 family support center that deals with the whole spectrum of the human dimension in these soldiers as they are integrated back into their families, who work hard to smooth the transitions, who provide the phone cards, who help with the travel arrangements, who assist with the distribution of the many gifts that have poured in from a grateful America, from frequent flier miles to luggage. And if you have seen it at Walter Reed, you can also see the same thing at Eisenhower or Brooke Army Medical Center, for example, where we have our Institute For Surgical Research that is continuing the tradition of great burn care and accommodation of the serious injuries that often are going with it.

    And this is just the tip of the iceberg. Really, it is not the tip of the iceberg, it is more correctly, I guess, the base of the iceberg. Those medical centers and our community hospitals are the platforms that allow us to launch the real tip of the iceberg, and that is the medical system that we insert into combat zones whenever and wherever we put soldiers in harm's way.

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    It is an integrated system that is much more joint and interdependent than it has ever been and it is on an access of advance to be more so. Its depth allows to quickly deploy teams that can address issues, such as leishmaniasis or a clustering of soldiers with pneumonia, and put world class experts into the field linked with world class researchers in our labs who have the expertise and the credentials to work military unique issues with institutions like the Federal Drug Administration (FDA) and the Center for Disease Control (CDC). It is having resources like the Center for Health Promotion and Preventive Medicine that has teams in and out of theater all the time sampling the environment, archiving the results, characterizing the battlefield in ways that we have never done before.

    It reaches into our Reserve components, who really are twice the citizen. More than 25 percent of my medical force overseas have been reservists, tremendous service from forward surgical teams in Iraq to augmenting Landstuhl, our hospital in Germany, to supporting our mobilization and demobilization with medical support units that are power projection platforms.

    While we are always looking for ways to be better, we began upgrading our combat medic training several years ago, increasing the time for training and increasing the hands-on through the use of simulation. We have embraced technology to get out of paper processes. We are processing, for example, electronically the post-deployment screening in Kuwait and Iraq to digitally feed the important information into our central data banks right overnight. We have used venture capital dollars when we had them to invest in the great ideas and initiatives of our people in the field. Such things as investing in liquid-base cytology for Pap smears that reduce repeat visits, allows chlamydia to be screened and to be done concurrently and reducing cytology centers; like hiring four midwives, nine nursing personnel, two clerical staff at a place like Fort Hood, 50,000 soldiers, lots of babies born, lots of family members, saving in excess of $3 million of health care costs, above our costs now, that would have been expended over a 26-month period.
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    The innovative direct hire authority that we have had for a couple of years now has allowed us to reduce time to hire from well over 100 days down to the 20-day range, a hiring practice that has really allowed us to attract quickly and get good people on board, the kind of hiring practices we need to be able to have your assistance in continuing.

    We are really good, but we can be better. And we really need to move forward with the fielding of our Composite HealthCare System II (CHCS II), that computerized patient record, a joint system that will be promulgated against all three of our services over the next 30 months. It offers structured notes, a longitude acquirable patient record that will give us the population health kind of information that we need to be better. It takes investment to keep that kind of a program going.

    The measurement of individual medical readiness that we are promulgating as a military health standard is a real step forward and will give commanders and the medics the tools to ensure both our active and our reserves have the right medical status for deployment or a plan to fix it on a real-time basis accountability.

    Dental readiness of the reserves has been a big issue for us. We have piloted a program recently that we want to expand across all of our advanced individual training sites, bringing all soldiers, active and reserve, up to deployable status before the return to their first unit, either active or reserve. We believe this is not only good for deployability, but it starts to set the right culture about the importance of dental wellness. And maybe even when they have insurance back home, they will actually use it. And the warfighter trainer has not only recognized the importance but carved time out for us to do it at this critical junction in their career.
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    We get better because we look at ourselves critically. We want to know our faults, And so we look and we listen and we find them and we fix them.

    What is so terribly more important than these corporate solutions, however, are those great soldiers, those armies of one out there that make up this great Army of ours. It is those men and women in those trenches that really breathe life into anything that those sitting here at this table would want to do. It is their values and their competence and their enthusiasm for what they do that humbles me every day.

    I am going to read you a note from one of our clinic commanders about the reception of an airborne brigade that is coming back from Iraq. And Dr. Snyder, I think it gets at some of the things that you said we should be doing. And this is his words:

    I have attached the model we use for our reintegration process. We have made several adjustments, to include adding the clinical practice guideline to one station and going all electronic by preloading the 2796, the post-deployment form, the night before. Almost all of the ideas for improvement are coming from my soldiers who see something that could be done better. I have a great group, sir. Jim Montgomery produced the model; K.P. McCrory is the mastermind behind the setup; Sergeant Stanton is the data quality person. She has a team that loads 100 percent of the data every night. Tamara Baccanelli, a civilian, codes every post-deployment encounter by 1400 hours daily. The soldiers are prescreening med pros and filling out the checklist to ensure that every soldier receives the immunization they need. The stress management team sees every returning warrior also. They produce a list of soldiers daily that they have concerns about, and we see them the same day.
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    Major General Turner is very pleased with this asset, the warfighter who is engaged in the medical care of his soldiers.

    During the reintegration, ortho and physical therapy are available for the soldiers, and they like that.

    We are doing all of this and maintaining a walk-in clinic for the community. To date, I can think of only one patient that we sent downtown because of the reintegration process. The community has been great. They know what is going on, and they are waiting a little longer to be seen and doing it gladly. The Red Cross has dressed up my lobby so it looks like a World War II Welcome Home canteen. The soldiers love it and sit and talk and eat for hours. Personally, I have never enjoyed myself more.

    It is the grass roots leaders like this, leaders so proud of their own folks that make the difference. It is frontline soldiers like Specialist Billie Grimes, a 26-year-old female reservist with a Bachelor's degree, a reserve medic who joined the active duty to serve in Iraq and who is the middle person in the trio of soldiers on the cover of Time magazine.

    You do have a great Army. I thank you and this committee for your constant support of these men and women and the thousands more like them across this military, and I look forward to answering your questions.

    [The prepared statement of General Peake can be viewed in the hard copy.]
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    Mr. MCHUGH. Thank you very much, General. We have a great Army and a great military, and we are very proud and very grateful for that.

    I have a very, very intelligent, bright Ph.D. Seated to my left; next to her is an M.D., so we are pretty well accommodated up here. But just for the heck of it, why don't you tell the rest of us what leishmaniasis is?

    General PEAKE. It is a disease, a parasite disease that is spread by sandfly. The form that we are seeing is one that is a cutaneous form that creates a sore that is scarring. Right now we have two centers that we bring these soldiers back to if it is significant and severe and treat them with an FDA IND - Investigation New Drug protocol. That is at Brooke Army Medical Center and here at Walter Reed. And we are looking at other treatments to be able to spread that out so we can treat them at home station.

    Mr. MCHUGH. Cutaneous as in skin?

    General PEAKE. Yes, sir.

    Mr. MCHUGH. Some of us didn't go to medical school.

    Admiral Cowan, welcome, sir. We look forward to your comments.

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    Admiral COWAN. Thank you, Chairman McHugh, Dr. Snyder, distinguished members. Having had only 32 years vice 38 years, my remarks won't be as eloquent as General Peake, but the similarities between our services and our experiences are far greater than our differences.

    I am very grateful for your invitation to appear here today, and I welcome the opportunity to talk about naval medicine and address issues and discuss issues of interest to this committee.

    For those of us in naval medicine, it has been a year of maturing programs that we undertook in the wake of September 11th and the bioterrorism attacks that followed. The global war on terrorism has been going on for the last 2–1/2 years and has required a great deal of innovation and adaptation on our part, and I am pleased to be able to tell you a little of how we have achieved successes in that mission.

    Naval medicine has also been beside our Marines and sailors since the beginning of this war, providing force self-protection to our forces, and achieving the lowest recorded disease and combat casualty rates in the theater of operations.

    The lessons that have been learned from previous conflicts and wars have taught us that agility is what saves lives. And as a result, we are now researching, developing, and fielding innovative, compact, lightweight mobile units that are easily airlifted, moved on site within days, and moved around within hours to follow the flow of the battlefield.

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    Another challenge has been to defend against bio attacks not only against deployed forces but against our Nation. We have moved toward developing better and more rapid analyses, diagnoses, and confirmation of dangerous diseases and pathogens, whether these diseases are indigenous to where we deploy, or used as weapons by terrorists either against the United States or deployed forces. This is a big important step in protecting both service members and America as we fight a war that is often going to be fought in our own backyard.

    Within our treatment facilities, naval medicine has opened an Office of Homeland Security that has made measurable progress in hardening our Medical Treatment Facility (MTF)s, training our staffs in emergency response, coordinating with local communities, and hardening these communities both for prevention, mitigation, and response to attacks against the community.

    And these are just a few examples of specific things that we have done to accomplish our mission. And our mission is for self-protection, which has in our mind four elements: To first prepare a healthy and fit force that can go anywhere; second, to go with them and protect them from all the hazards of the battlefield; third, to restore health and to care for them and their families; and, fourth, to help a grateful Nation thank our retirees with TRICARE for Life.

    And while we have had many successes in the last year, and I am very proud of them, we do also face challenges. Rapidly escalating medical costs that are caused by new and expanding benefits, the growing use of TRICARE by retirees, the fencing of sector funds that can inhibit the use of those funds, and our continued struggles to fully man critical communities within naval medicine all remain concerns and all have potential to impede our mission.
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    The challenge is to meet those health care needs of our beneficiaries within the realities of our budget, and as health care inflation continues to accelerate faster than other sectors of the economy and as utilization continues to increase, as technological advances result in more effective but also more costly new treatments, they also result in longer life spans.

    As the word of TRICARE's quality and effectiveness spreads and as the cost of other insurance programs rise, more and more retirees under 65 are dropping other health insurance plans and relying on TRICARE. As Dr. Winkenwerder said, this year we estimate a seven percent increase in the returning population.

    We have been successful in accomplishing our mission over the years in step with our sister services, and thanks in large part to you and your fellow members, the military benefit has become one of the most respected health care programs in the world. We know from Navy's quality of life surveys that among enlisted personnel and female officers, the highest regarded quality of life reason for staying in the military is the health care benefit. You have allowed us to provide our service members, our retirees, and our families health care that is worthy of their sacrifices and clearly articulates the thanks of a grateful Nation for their selfless service. With your continued support, we have opportunities for continued success both in the business of health care and in our mission of supporting the deployed forces and protecting our citizens throughout the United States.

    I thank this committee for its support, and I thank the committee personally for their support to me during my time as Navy Surgeon General. It has been a privilege to serve.
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    [The prepared statement of Admiral Cowan can be viewed in the hard copy.]

    Mr. MCHUGH. Well, it has been our honor to have the opportunity to work with you and General Peake, and both of your terms of service have been quite remarkable and we appreciate that.

    General Taylor.


    General TAYLOR. Mr. Chairman, Dr. Snyder, and the committee, it is a pleasure and a privilege to be here today. Much has happened since we met here a year ago when we had just embarked on Operation Iraqi Freedom. A year later, we have found that most of our concepts were validated. Some require more work, but most importantly the men and women of the Air Force Medical Service have again served their country with phenomenal talent, capability, and dedication. The lessons we have learned in Afghanistan, Iraq, or wherever we have deployed and even at home have helped us hone our four central capabilities: One, ensuring a fit and healthy force; two, preventing illnesses and injuries; three, providing care to casualties; and, four, sustaining and enhancing human performance.

    We are doing many things to ensure our force is fit and healthy before they deploy. Our preventive health assessment and individual medical readiness program ensures all health requirements and screenings have been met before deployment. This is the program that has been adopted DOD-wide and is clearly responsible in great part for the four percent non-disease battle injury rate across the DOD you have been hearing about, the lowest in history. I would add there are post-deployment health assessments, equally important, are going extremely well. Of our active and reserve component personnel who have returned from deployments, 99 percent have completed these assessments with the medic and the other 1 percent we are on the hunt for.
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    Our people are coming back in better health because of individual disease prevention efforts, but also because of the incredible deployment health surveillance program we fielded. From our preventive aerospace medical teams to our biological augmentation teams, we are helping to protect the area of responsibility from biological and environmental threats. We are using amazing technology, such as our Real-Time Automated Personnel Identification System (RAPIDS), which can determine the identity of pathogens in only a few hours. In the future we hope to reduce the time even further through renewed, more advanced, indeed breakthrough genome-based technologies.

    We have shared with you before the success of our lean light, and mobile expeditionary medical system, known as Expeditionary Medical Support (EMEDS). But before we left for Iraq a year ago, we realized our EMEDS didn't have the protection we needed from chemical weapons. Within 30 days, brilliant Air Force medics in the field developed a mature NBC treatment module that could care for 100 radiological, biological, or chemical casualties. This is the level of ingenuity we have in our Armed Services, in all the services.

    Your staff has had the opportunity to view other technical marvels that are saving lives in the battlefield, like laptop size ultrasound machine, a ventilator unit that is the size of a football, and a complete surgical package that fits a backpack.

    Air medical evacuation continues to be the linchpin of our deployed medical operations. In addition to the critical care air transport teams you have heard about, we continue to field patient support pallets that allow us to use all available airlift and have added an aeromedical evacuation center to our air operations center to allow smooth integration with all DOD and even allied air operations in theater.
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    From our perspective, the story of Private Jessica Lynch's rescue is an excellent example of the near seamless integration of the Air Force and our sister services. Following her rescue from the Iraqi hospital, Army medics and Air Force aeromedical evacuation troops and Special Operations members transported her thousands of miles using three different aircraft, and provided care in the air during her entire journey until she safely reached the Army hospital in Landstuhl, Germany, all accomplished in less than 15 hours. And this same scenario has saved the lives of many, many others, less famous but equally courageous young heroes.

    Combat medicine is an ever evolving art, and we cannot afford to coast for one minute on these successes. We recognize the critical value of developing new, better technology and enhancing human performance. Our human performance initiatives cross the spectrum from battling combat fatigue to enhancing vision through corneal refractive surgery to creating systems that will protect our pilots and our sensors from laser damage.

    While all these exciting high-tech programs are taking place, we are also quietly caring for our members and families back home. We anticipate the promising next care generation TRICARE contracts to be a smarter way of doing business. As revised financing methodology is fielded throughout all the U.S. Base military treatment facilities, we are working hard with Health Affairs and the Congress to ensure that our incentives and accountability are properly aligned for this increased and more flexible local responsibility for patient care funds.

    While we prepare for the next generation TRICARE and for the enhancement of the relationship of the civilian medical community and Department of Veterans Affairs, we are always aware of the direct connection between this peacetime health care and the readiness of our troops.
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    The Air Force Medical Service has answered the call and will continue to do so. We will work hard to resolve the tough issues, from the financial hurdles you have heard about to the challenges and recruiting and retention. And wherever we go to perform our mission, you can see the results of your support for our troops. I thank you for this.

    Finally, as the last witness in this group, I would like to take a moment to focus on my two comrades in arms. Jim Peake and Mike Cowan are two of the finest Americans I have had the pleasure to meet and work with. Each has sacrificed fortune and family to serve their Nation. There are no finer examples of the American medic than these two, spanning the profession of arms and the profession of the healing arts. They have dedicated the heart of their adult lives to the men and women of our Armed Forces. I will miss our weekly roundtables, our common views of medicine and in the Department. Your Air Force wishes you well, Godspeed, and fair tailwinds.

    Thank you, Mr. Chairman.

    [The prepared statement of General Taylor can be viewed in the hard copy.]

    Mr. MCHUGH. Thank you very much, General. This subcommittee, indeed this full committee, works very well together across party lines. But it is still a rare occasion when I feel I can speak for all members, but I feel I can now; and we all agree with your assessment of your two colleagues, and I am sure they appreciate, as we all do, your very gracious comments.

    I mentioned in my opening remarks about the really extraordinary challenge that the medical health care, military medical health care system is facing. Mr. Secretary, you have mentioned a critical part of that is the new generation of TRICARE contracts got a change from 11 regions to 3, as you noted, 7 contracts to 3, and other structural changes below that. By every measure, a hard, hard job.
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    You also talked about in your comments the importance, and I fully agree, of regional directors in that process to work seamlessly together. We only have one of those three regional directors appointed, and I am curious when we might expect some progress on those other two so that the importance I think you very accurately noted can be fulfilled.

    Dr. WINKENWERDER. Mr. Chairman, you are exactly right that those are important positions, and we have been working with the services to fill those positions. I just announced a couple of days ago that outside of this week that Major General Nancy Adams, Retired Army, will be assuming the role on an acting basis for the North region. So that would put us at two out of three. And then we are working to fill the third position and hope to have that filled in the very near future.

    Mr. MCHUGH. I appreciate the response, and the gentlelady you mentioned has been routinely resoundingly praised in the discussions I have had about her with those folks who have worked with her and who are looking forward to working with her again. So this next comment is in no way meant to demean her ability. But acting is not full time. There is a cache difference, if you will. I think it is important, if I might, that we make sure we take every step, as we have in the western region, to have full-time directors. I think that is critical.

    Dr. WINKENWERDER. Yes, sir, and we will I believe with that position. It is a matter of personnel, trying to secure the personnel slot, the appropriate slot, and sort of working its way through the system. I expect that to happen very soon.

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    Mr. MCHUGH. Thank you very much.

    There are so many different dimensions to this health care challenge it is difficult to narrow them down in any reasonable amount of time, and we have my colleagues here and I don't want to take up a lot of time; I want to defer to them. But one of the areas of which I have been particularly concerned, and we saw some reflections of it in the medical hold issue and in another means, is that of providing for the reserve component. In the 2004 authorization bill, Congress limited total expenditures to provide for reserve health care at $400 million. We would like to think that everything we do is based on cold calculation and hard evidence, but I am not sure that is exactly the case. But I am wondering what your gentlemen's perception is as to the adequacy of that 400 million. Is that going to be enough? Is it going to be in excess? How are we doing in terms of those dollars and the need that you see out there?

    Dr. WINKENWERDER. Maybe I will.

    Mr. MCHUGH. You have the overview.

    Dr. WINKENWERDER. I will take a shot at that. It does present some challenges, both because of the time limited nature of the temporary provision as well as the dollar limit. But let me tell you where we are, and we are making real and significant progress.

    With respect to the 701 provision, which provided physicals and screenings to be done or overseen by the reserve community, I am told by our reserve chiefs that that is already being done today. It is being implemented. So that is in play.

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    With respect to the 704 provision, which has to do with extending TRICARE eligibility for 180 days versus the 60 or 120 days, I am—we couldn't get it out before the hearing today, but I expect to announce that today or tomorrow.

    Mr. MCHUGH. You just did.

    Dr. WINKENWERDER. I just announced it.

    Mr. MCHUGH. Whether you know it or not, you just did, which is good news.

    Dr. WINKENWERDER. Well, to get it out broadly to all our beneficiaries so that they know it is now being implemented for that population of people. As I recall and as I understand, we encourage them to save whatever receipts or records so that they could be reimbursed for that care.

    The 703 provision, which has to do with the preactivation benefit for up to 90 days, there is work that has been going on. The principal delay relates to getting the information from the reserve units into the defense eligibility system, Defense Eligibility Enrollment Reporting System (DEERS), so that we can identify the persons and their families in order to create the benefit. And there is active work, there has been very vigorous active work going on. I expect that to be implemented within 30 days. So we will have implemented three of the four main provisions.

    Now, the provision that has to do with extending health insurance to the uninsured or those without eligibility for employer-based insurance, that is a much more difficult, complicated program. I would just say for someone who is in the private sector in health insurance typically it takes a year to 18 months to implement a new benefit like that for a population of people. There is a lot of work that needs to be done in terms of setting up the eligibility. And in our case, because of all the transition of the contracts we have just described, part of our challenge is setting up and making contract modifications with all of our contractors of the existing contracts and, because they are all going to turn over in the next six months, to take that all down and then restart it again.
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    So between that and the dollar limits, it is very complicated. We believe that this is an issue that is important that we need to understand. The impact that offering such a new benefit may or may not have on retention, recruitment, and readiness is something we would like to study and understand better and have a longer period of time. So we are thinking about and would like to work together with you on a concept of a longer demonstration type of study so we can understand this and do it the right way, because we are kind of caught in a box, so to speak, at this point in trying to do something that is effective and large-scale because of the limits that I have just described.

    Mr. MCHUGH. I appreciate that, and it is a challenge. We have a tendency on this Hill to pontificate, and our intentions are always noble, but I am not always sure we always think out to the possible extent what our dictates mean in terms of implementation and such. And I wanted to provide a chance to define those challenges, and I appreciate it. And clearly, while we think that the provision of health care to all of our military, active and reserve, is an important matter, the aspects of retention and recruiting, at least in my mind, are a critical component of that. And I think it is more than reasonable, I think it is very desirable that we understand exactly what that is doing either to the betterment or to the detriment of that initiative. So we will certainly look forward to talking to you on that.

    I don't know if any of our Surgeons General have any comments on that, any portion of that? Admiral.

    Admiral COWAN. I might just echo Dr. Winkenwerder's observation. In looking at recent history, when we had the Nation Defense Authorization Act (NDAA) of 2001, of all of the benefit changes, the pattern of behavior that our patients took was to pretty much look at it for a while to make sure we meant it. We did not see the initial migration to the benefit that we thought, and then two or three years later then saw the growth. So I think anything that we do, the early estimates based on the initial behaviors of the population groups are probably not long-term, and I think the time lag needs to be taken into consideration.
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    Mr. MCHUGH. Thank you.


    General PEAKE. I reference 701 in the prescreening. I know that General Helmly is trying to work $10 million right now to get into that pot to be able to do that predeployment screening. It also talks about care. We are really not doing the care. Part of the issue is when they are alerted and how long you actually have to be able to do those kinds of interventions. As I talked about the individual medical readiness, getting that kind of data reliably over a long haul and then making sure that the readiness is taken care of on a more routine basis is really where we, I think, will ultimately serve our readiness needs in the future. It is hard to say what that cap of money is going to do.

    The other thing is these all expire in a year, and we are already halfway through the year. So those are other issues I think will probably need to be addressed somewhere along the way.

    Mr. MCHUGH. Welcome to the wonderful world of budget scoring.

    General TAYLOR. The same from the Air Force perspective, we would echo that a change of benefit of this magnitude needs to be very clearly thought through, and a demonstration project certainly is an interesting idea of a way to gather the data and see what the impact is on recruitment, retention, and readiness of the services. It is not like the services are not operating along congressional intent as well. Both the guard and the reserves for the Air Force have activated health care advisers in all our organizations to make sure that these people that are new to TRICARE understand what the benefit is like and have a good transition into the program and out of the program on deactivation. And all of us have been working very hard to make sure that each individual guardsman and reservist knows what the program is about. As critical as what it is is knowing what the services are and what the extent of the services are, and each of us have worked really hard with our line counterparts to make sure that we have people in place to answer those questions and to reach out to those activated guardsmen and reservists.
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    Mr. MCHUGH. Thank you. Thank you all.

    Before I yield to Dr. Snyder, with respect—and I am not going to ask a question, but just a comment here. But General Peake mentioned about individual readiness status and the reserve component. Translating that into unit medical readiness has been a real challenge, and I am not sure, and we need to explore that and we are going to have the reserve folks in here in a couple of weeks and we will talk to them about it. I am not sure we are incentivizing unit commanders enough to make sure that what they are saying about the medical readiness is actually the case. And if you have thoughts on that—not now, but thoughts on that in the future, I personally would welcome them very much so. Thank you again for being here. And I am happy to yield to Dr. Snyder.

    Dr. SNYDER. Thank you, Mr. Chairman. Just a comment. This issue of the medical readiness of our reserve and guard forces of course, this is an example to me where the military is being asked to make up for the problems that we are having in society at large, which is we both—all of us talk about it from our different perspectives of the problems of the uninsured. And if everyone had insurance that they liked and could afford and wasn't causing them to go broke, we would probably have less of this kind of discussion. But that is another aspect of it, too, that we have to work on.

    But what I want to do, I think all of you are aware of Dr. Buck's report that came out a few years ago. And I don't know if you have seen his written statement or not, but on page 3 of his written statement he lists 10 questions. I am going to read those 10 questions, and I am entering them in the record and I would like you all to respond to them for the record. Perhaps, if you have any questions today, you can, but they are detailed questions, but I am going to read them. And these are his questions that I would like you all to respond to for the record, please, in a timely fashion.
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    Number one, has a level playing field been achieved in providing comparable oversight and accountability for the purchase care as well as the direct care components of TRICARE?

    Number two, have data systems been implemented that can be audited for accuracy and that can measure and monitor quality outcomes, resource utilization, and health care costs?

    Number three, have demonstration projects been designed and implemented that will provide policy guidance to enable consolidation and safer performance of high-risk procedures such as organ transplantation, joint replacement, cardiac surgery?

    Number four, has a streamlined tri-service risk management process been implemented that achieves review of specified adverse outcomes and all closed malpractice cases, manages pertinent summary data, produces analyses of experience, and assures uniform identification reporting of practitioners not meeting the standards of care to the MPDB?

    Number five, does the Centralized Credentials Quality Assurance System (CCQAS) periodically provide updated reports at the military treatment facility and command levels listing unlicensed physicians on staff and license expiration dates for those licenses?

    Number six, can any portion of the annual quality of management report now be prepared with supportive data automatically?

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    Number seven, are reports being developed or tested for the promulgation of beneficiaries of data based objective system and clinical progress?

    Number eight, has a standard resource methodology been achieved through TRICARE that is flexible and responsive to clinical needs and quality of management?

    Number nine, is CCQAS now used to manage the credentials of all laboratory professionals?

    Number 10, is a longitudinal electronic patient record now available for all active duty patients and other beneficiaries?

    And if you all would respond for the record to those questions.

    [The information referred to can be viewed in the hard copy.]

    Dr. SNYDER. I wanted to ask a specific question—we have so many written statements here, Mr. Chairman, I am having trouble keeping my statements straight.

    Dr. Winkenwerder, in your opening statement you say in your written statement on page nine, under individual medical readiness, you say: Among the performance measures we track is the individual medical readiness status of all service members. For the first time, the Medical Health Service (MHS) has a common tool to track individual medical readiness for health and dental assessments, immunizations, laboratory tests, required medical equipment and limiting medical conditions. This tool allows unit commanders to monitor the readiness of their members and units.
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    And then, General Peake, in your written statement on page three, you say: We are working on uniformed metrics to inform commanders on the state of medical readiness of their troops.

    Now, those to me seem to be statements in conflict. You, Dr. Winkenwerder, are saying the tools are there, that I should be able to ask you—and maybe I will: By noon today could you give me the immunization percentage for the 101st Airborne that has just come back or the 1st Cav (Cavalry) that is just going over or has already gone over? I read your statement to say, boom, push a button, here is the immunization record. General Peake's statement says: No, we are working on it. Now, where is the accuracy? What is right? Where are we at?

    Dr. WINKENWERDER. Well, not to give you the politically correct answer, but I think we are both right.

    Dr. SNYDER. Oh, no. That is the politically incorrect——

    Dr. WINKENWERDER. It is. But let me explain. The tool has been developed, the standard has been agreed upon. There is no disagreement about that. And it is being populated and it is being used. It is not—and I will allow General Peake and Admiral Cowan and General Taylor to talk about the filling in of the data and how it is being increasingly used by commanders. And so I don't want to leave—if I have left the perception from this comment that every unit commander has a report on his or her desk today, no, that is not correct. Some do, and our shared vision is that all will in the near future and all will be using it. And I will turn to my colleagues here to comment on that.
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    General PEAKE. Sir, as he said, we are using—and I mentioned it in the comment about the young officer in the vignette I read. He talked about MED-PROS. That is what we are using. It is a Web-based system that allows us to enter at the individual level. You can drill down. The issue is disciplining it and populating it. And we have used it for anthrax immunizations. And what we are doing is using that now for the whole category of individual medical readiness data. I can show you the national guard brigades by—because we have now a choke point where we are capturing it, and present that to the Vice Chief of Staff of the Army so he understands where we stand.

    General TAYLOR. A very powerful tool, but it is one that we are promulgating. We are going to make it part of our unit status reporting system in the Army. It is a work in progress, but we are using it on a daily basis, and we are able to now capture information about the 101st, as an example, and have the medical people and the division commander understand where they are and what they need to do to improve our stats.

    Dr. SNYDER. So if I am the unit commander, this statement in Dr. Winkenwerder's statement, ''This tool allows unit commanders to monitor the readiness of their members and units,'' how soon will it be before every Army unit commander will have the ability to say, you know, this afternoon I want you to give me an update, whoever they are talking to, on what is our immunization status, which, I think, is Dr. Winkenwerder's vision, in his words? How soon will that vision be a reality for 100 percent of our Army?

    General PEAKE. They have a Website, a portal, a computer and the Internet, and they can get a password, and they can do it today. What they will find is, the data is not necessarily entered. So it is the issue of disciplining the system of getting the data entered. What we are trying to do is, as I said, get out of the paper process so that what we want is, one of our very fundamental principles is get the data entered at the closest point to the business process that creates the data, which is the immunization portal, if you will.
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    Dr. SNYDER. Not to be argumentative, are we talking three months? Are we talking three years? When is the system going to have the data? When will the data be entered? When will everybody recognize this is important, or whatever it is, and the data is going to be there?

    So Chairman McHugh, if the staff wants to do it, we could get in the system, in the portal, we could punch in the unit. But we don't want to punch in those numbers if it comes out the data is not entered or this is inaccurate or we get information back that we rely on that says actually, we only had 50 percent of the paper records that we ever entered. When is Dr. Winkenwerder's vision that all the information is going to be there and we have it the way we want it?

    General PEAKE. Sir, my view is, until we get commanders to start looking at that data, giving them the tool out there and forcing them to use it, the data will never get entered appropriately, because it won't be disciplined.

    I am not trying to be circular about it, but I think what we have right now is a letter and staffing from the Vice Chief of Staff out to the commanders saying, get with it, this is a tool available to you. So we are moving forward in the Army to make this our way of doing business.

    Dr. WINKENWERDER. I might ask General Taylor as well.

    General Taylor, sir, we have been pursuing this for a few years now, and every month, every wing commander in the Air Force gets a report on the status of his troops in terms of their rates for each of the classes, immunizations, have they had their physical. We are adding the medical equipment, which a new twist we added this year. Every unit gets that every month, every wing commander and then the details behind it. You can push it in any form you want.
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    The Air Force is also working on something called the (DRS), the Deployment Readiness System. Air Mobility Command (AMC) fielded the first unit, as an example this spring, and the chief has ordered it fielded worldwide. It grabs all of the data, personnel, medical information, displays it in one form for the unit readiness monitor—this is the staff sergeant in the squadron—to know the status of his troops, from legal through personnel function, through medical function, and they can push the list and get the list of their people who need immunizations for whatever—for a hepatitis A immunization, they are short, they need this. This is fielded in the Air Force today.

    The reason I have been pushing this, not only to the MedGroup commanders, because they have to chase after the people to get them to come in, but I have also been pushing it to the wing commanders and the major command vice commanders to tell them the status. We have a slot that says you are the best in the command and you are the worst in the command.

    We have been doing that over the last two or three years, and it increased from about 50 percent. That means about 50 percent of the people would have to have a last-minute something done before they deploy to over 75 percent and nearing 80 percent. So only 20 percent of the people have to have some intervention, whether it is their dental exam needs to be worked on or they need to have an immunization.

    Dr. SNYDER. The Chairman is being generous with his time.

    So, General Taylor, I am getting the impression that you think the Air Force, your commanders are more responsive in using the system than in the Army?
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    General TAYLOR. We have had the system in place for longer than the other services. This is an example of where we shared this a year or so ago—it is an important example—and we agreed to field a common system, and the Army and Navy are in the middle of fielding a system like this.

    Dr. WINKENWERDER. It is a great example, if I might just say, of joint effort here. The Air Force was a little bit ahead. We took that system, we built it, standardized it, working together, have created a common single standard.

    General TAYLOR. Part of the reason, clearly, is the Air Force is on a much tighter timeline—go now, get in the airplane and go now. We don't marshal and come to home ports and sail out. We have a very short time to get our people out, whether it is active duty or guard and reserve. The airplane is landing tomorrow, get on, go. We don't have time to waste, so we have been working hard to shorten the time frame and leverage the information systems and put it in one form and push it down.

    Dr. WINKENWERDER. I do get a report every month. Of course, we have data right now. The question is, the degree to which it is representing a fully populated report, or I will get an asterisk that says still coming in or data still being filled out or still collected in written way versus electronic.

    The bottom line is, we are on it; we are pursuing it very hard. I think everybody agrees it is a valuable tool. We think the commanders, where they are using it, it is a valuable tool, and I fully expect it to be in play in the months ahead.
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    Dr. SNYDER. I thank you.

    Dr. Winkenwerder, your statement could have probably been a little more complete in terms of what the reality is.

    Thank you, Mr. Chairman.

    Mr. MCHUGH. If I might have the opportunity just to place an editorial comment, I mentioned earlier about incentivizing reserve component commanders. The reputation amongst many is that active component commanders are somewhat cavalier at times with respect to these issues, and perhaps, we have to incentivize them as well.

    I know in my family, my dad was like the vice chief of staff; my mom was the chief of staff, no question. But, boy, when I got an order from the vice chief, I listened. So we have to do something, I think, to help those commanders realize the importance of this and, therein, assist you gentlemen in your efforts, because I have no doubt you understand the importance of the efficacy of this.

    The gentleman from North Carolina, Mr. Hayes.

    Mr. HAYES. Thank you, Mr. Chairman, for holding this hearing, and thank you, gentlemen, for coming. This is such an important issue, not only day-to-day, but in terms of recruitment, retention and family health and overall mental well-being.

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    If you will indulge me just a minute to kind of develop this question, Chairman McHugh has taken us to a number of installations abroad where we have talked with reservists and guard. I represent Fort Bragg and Pope Air Force Base, the epicenter of the universe. We have the heaviest guard deployment since World War II in North Carolina. I have seen your hospital in Landstuhl and have been to the field hospital in Kuwait, an incredible job you are doing providing day-to-day medical care.

    We were in a hearing yesterday about how information has gotten to Transportation Security Administration (TSA) about security. The reason I make the point is the illustration was used that we have ways of driving information, in this case, services, upward. You have all done a fabulous job driving those services upward to your facilities and through your highly-trained professionals. The other end of the spectrum is how you pull those services out if you are a family, if you are a wife, if you are not on post.

    Where I am going to is, with all of these huge Guard deployments, we have remotely located wives and husbands and children, 70 percent of whom are not within 50 miles of one of these incredible facilities. So at that point, to give you just a little bit more, three houses on our right is a doctor who provides TRICARE service and his wife, his chief of staff, is the head nurse, and they open at 4 o'clock in the morning so these folks can come from far and wide to access that service.

    Down the street to my left is an Army reserve colonel who has been in Afghanistan. He is a urologist. He is part of your great system. I hear about things from him as well. The National Military Family Association works very closely with me. My wife and I have been to Fort Bragg and other locations talking to wives. I talked to deploying groups, families. They kind have gotten used to talking to me about that.
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    So with all that background—just to make a point, it is not a casual encounter on the street—I want you to be encouraged to think about what and how we can move forward so that the folks who are these 70 percent can extract those health care services.

    And I gave you a letter, Dr. Winkenwerder, which I know you will respond to.

    If you just would comment a little bit about that. The 800 number is okay, but how can we again provide these services and give a higher level of comfort and support, which is about retention, to these families who are located?

    This a great chart, I know you cannot see it from there, but it shows the new regional structures. And if you see, in North Carolina, it is concentrated from Fort Bragg, east, to Camp Lejeune, Cherry Point, where those military facilities are. The majority of the State where all these guardsmen are coming from is not located near the regional structures. Womack is a great facility.

    With that, Mr. Chairman, if you all would comment on how we can do a better job there?

    Dr. WINKENWERDER. Thank you very much, Congressman, for those comments. We share that concern, and we believe the issues that you have noted are very important. These individuals and their families deserve the very best. They deserve access to care. We need to reach out, and we are doing that. I am quite sure we need to do even more than we are doing today.
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    Within the new governance structure with TRICARE, we have specifically, as Congress wrote into the law, beneficiary counselors for reservists, and we are mobilizing those individuals. We have information out on the Website. We have other kinds of communication.

    I think communication is really key, so that people understand how to utilize our benefits. I can just say, we are committed to it, we are working on it. We appreciate any ideas or suggestions that you or others might have so that we can incorporate that into our efforts.

    Mr. HAYES. A couple live bodies centrally located in North Carolina would be wonderful.

    I failed to mention, General Peake, that your facility at Walter Reed, I haven't been there. I have been to Landstuhl. I have been to other facilities. There are incredible things being done for families. Anyone who hasn't seen that, should.

    Would anybody else like to comment on what you might, from your perspective, add into this equation of how we can——

    General TAYLOR. Sir, a couple points I mentioned earlier, what we did, to give you specifics, in the Reserve command, at every non-collocated base—a large portion of our Reserve component is collocated with an active unit. Where that does not exist, there are 13 of those, and they stood up a wing, TRICARE full-time Point of Contact (POC) to reach out and reach the families.
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    In the Air National Guard, they activated two members, one officer and one enlisted, for each international guard medical squadron to handle those same transitional benefits and issues. We all worked very diligently with our contractor support to make sure that we have an adequate network around all our folks.

    A huge part, I think, of what you are getting to is what is the adequacy of the network? Are the payments done in a timely fashion? And can we convince the providers to stay in the network and see our patients? We all worked diligently on that, and I think we are all very impressed with what is in the contract, the incentives as well as the quality of the contractors we have, that this will be less of an issue and the network will even be deeper and more able than it is today.

    Mr. HAYES. I apologize for failing to mention Seymour Johnson. That was not done on purpose.

    You have touched on a point there, getting more providers of services. That would be very helpful. Dr. Winkenwerder lives in Asheville, or is originally from Asheville, which, again, is a long way from Seymour or Womack. I would like to have him back some day.

    General PEAKE. Sir, let me tell you one other thing. There is a big VA hospital in Asheville, and the VA is a part of this team in many ways. So it is not just the military facilities, but these soldiers will have availability of VA services for two years after, according to Secretary Principi. So that is another avenue.

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    Your issue of provider networks and people taking TRICARE is one that we continue to wrestle with at every single location, because this is one we have to keep our eye on. Maybe the last panel is going to address that more than us.

    Dr. WINKENWERDER. If I might, let me build on General Peake's points. We have been working with the VA. This gets into the issue of what we like to call the seamless transition, as seamless as we can make it, with the VA.

    I have had discussions with Undersecretary Roswell, and he tells me the Veterans Administration is deploying individuals, hiring a whole new group of people—I don't know how many it, it is many dozens—I believe, to staff VA sites all over the country, and then we communicate with them. This is post-deployment, all of those who have just served and are deactivated.

    And we also plan to look at any additional resources we might add to actually appear at some of those reserve and guard units in the locales, away from the main military bases, to counsel and advise people.

    I have appointed a task force about a month ago to work on this whole issue, and I am expecting some recommendations from them sometime here in about the next month. So we are working on it.

    Mr. HAYES. Thank you, gentleman.

    Thank you, Mr. Chairman.
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    Mr. MCHUGH. I thank the gentleman.

    The Vice Chairman of the Subcommittee Mr. Cole, the gentleman from Oklahoma.

    Mr. COLE. Thank you very much, Mr. Chairman.

    Let me start out with a couple of points, because I find as I reflect on it, I have had more experience with the military health care facility than I might have first thought.

    I was born in an Air Force Hospital. My dad was career military. He got all of his care in the military and then through the VA for all of his life. My mom uses TRICARE now.

    My brother is a disabled vet and got terrific service, both in the service and through the VA system, and I have a cousin who is in the Air Force Medical Service and who has been deployed to Afghanistan and to Iraq during the recent situations and really set up medical facilities in both of those places.

    I tell you, frankly, while there are always things to complain about, I think you guys do an unbelievable job, and the progression and improvements in the quality of care that I have seen over the course of a lifetime are really, really dramatic. I can't think of a private-sector equivalent.
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    And I would like to ask if any of you know of any that takes and spends as much time thinking about how to take care for its people and their broader family throughout their life, throughout their service and frankly beyond in many cases?

    There is nobody else that does it. First of all, thank you for what you do. We ask the people you serve to do extraordinary, dangerous and difficult things, and you make it possible for them to do that and have some high level of confidence that they are going to be looked after and their families are going to be taken care of. You do a very good job.

    Let me ask you this, if I may, because I need some very general information. Could you give me, over the course of let's say the last decade or so, the experience of what military health care costs are per person versus a comparable or a private corporation providing good health services for its people or good insurance programs for its people? Give me some idea of the difference in the cost.

    Dr. WINKENWERDER. Congressman, I appreciate that question. That is a very—it sounds like a simple and—it is—straightforward question. Getting a precise and accurate answer is not so easy.

    We are seeking to try to get an answer or get answers to questions like that. Without going into too much detail, what makes that difficult to understand is that embedded in the cost structure of our entire system are many costs that are associated with medical readiness, the capability to do all the things we do, to deploy worldwide on a moment's notice, to have airplanes and medics and all kinds of capabilities, and all that costs something, quite a lot, actually, but appropriately so, to do.
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    Right now, that is all embedded in our cost structure. So to pull out, what does it cost just to do—the cost of care for every day medical care, to compare that with the private sector, is difficult. We are trying to do that, and we think we are roughly comparable.

    We know that, in some areas, the analysis we have done is in some sites and locations, particularly at our medium-sized to larger military hospitals and treatment facilities, that our costs are very comparable from what we understand, trying to sort out and untwine the ball of yarn, as I have described.

    At some of our smaller and outlying places where we have a lot of fixed infrastructure, just to operate, our cost structure is higher. So I think this is an issue that we are looking at, because in the final analysis we want to have this incredible capability to deploy and support medical readiness, and at the same time, we want to operate as cost-effective as we can as an everyday health care system.

    Obviously, we do that by providing the care within our military facilities but also increasingly to purchase that care. So, it is a balance. But we would be glad to try to pull together, if you would like, more data to try to do that type of analysis.

    Mr. COLE. If you could do that without any undue difficulty, it is an interesting question.

    Another related question that might be easier to address, simply, I would be very interested in the rate of increase or, number one, the proportion of the DOD budget that goes, in a sense, for medical care for service people and their families and your broader obligations and how that has changed over the course of time. Has it been constant? Is it a larger percentage of the DOD budget than it was a decade ago?
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    Dr. WINKENWERDER. Yes, on that, we do have better figures. As I recall, it was in the four to five percent range—these are not exact figures—in the early 1990's. As the total force drew down in constant dollars, the DOD top line stayed level. We were also coming down during the 1990's.

    Now, what has happened at the end of the 1990's and going forward, we have had an increase, obviously, in overall top line DOD budgets over the last couple of years, but we have also had, as we talked about, significant increases, even on a percentage basis greater, within the defense health program.

    As we look out, unless the defense top line continues to grow at a very rapid and high rate—I will not speculate that, but I would say, it would be surprising if it could. On the other hand, health continues to go up, so our projections are that that percentage is likely—health as a percentage of all DOD is likely to continue to rise, and I think it is in the six to seven percent, eight percent, range, somewhere in there.

    But if the top line stays roughly equal or goes up two or three percent, obviously health care is going up much faster than that. So it is going to consume a larger part of the overall DOD budget.

    Mr. COLE. One last question, if I may, Mr. Chairman. You are very kind in terms of time.

    If you would, too, give me just some overview. One of the points my cousin who is in the Air Force makes to me—he is now in his 15th year—is how much more contracting out is done now, of which he is a big proponent. It has really enormously increased the range of options he has when he is dealing with a set of problems, and he is providing much better care for the people in uniform.
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    I would like to know, number one, how much contracting out we do now as a percentage of our total care that we provide, and any thoughts you have on the challenges and the costs associated with that and the efficiencies that come with that.

    Dr. WINKENWERDER. It is roughly 50 percent, maybe a little bit greater, of our total purchase of care, is in the private sector, in the community, through contracted care, through our major contractors and with the new pharmacy contract, through the retail pharmacy, for example.

    We expect that to continue to grow. Obviously, our retiree population is a greater user of that contracted and communities care, but personally, I accept we need to direct care, obviously, to maintain readiness and to have the platform to train people and to do all of the great things we do.

    Other than meeting that requirement, I think we are indifferent to where care can be delivered. It needs to be cost-effective, the most cost-effective site and the site and the manner in which we can provide the greatest customer service. But an important first priority is ensuring our medical readiness requirement, what do we need to deploy, how many people do we need, their training and so forth.

    Mr. COLE. Well, just again, in closing, thank you for what you do. We will always push and always have questions and you will always want to get better, but the reality, at least based on my experience, it is quite remarkable service and it looks after its people very well, and with an unusual sense of dedication and compassion, even beyond what you see normally, because it is associated with such an important mission.
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    Again, gentleman, thank you very much. Thank you for being here.

    Thank you, Mr. Chairman.

    Mr. MCHUGH. I am happy to yield to the gentleman from Tennessee, Mr. Cooper.

    Mr. COOPER. Thank you, Mr. Chairman.

    A listener to the hearing so far would probably think, well, everything is fine with military health care or about to be fine in the near future. I think it is important that we remember that health care is about people. These are literally life and death issues. I would like to focus my remarks not on combat related care, which, from all I can tell, is superb, but regular health care, because you gentlemen run one of the largest, if not the largest, health care systems in the world.

    Real people. The most patriotic person I know is a fourth or fifth generation soldier currently in active duty. He is a colonel. His wife attempted to deliver a baby at a military base. The pregnancy was not diagnosed as high risk. The attending was incompetent. At the time, the baby died a slow and agonizing death during the delivery. The wife is unable to bear any more children.

    These are folks who had complete trust in our Nation and in our military health care system. Now that trust is permanently breached, not only by the incompetent care they received but also by the subsequent response of our Nation's military. You can say, well, that is one tragic instance.
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    A physician came up to me—called up to active duty, he is a pediatric heart surgeon. He told me that Landstuhl does—what—five stints a week now because of the older nature of Guardsmen and Reservists. He was ordered by his commanding officer to operate on an adult heart, which he had not seen in 10 or 20 years apparently.

    You start hearing stories like these when you are a member of this committee, you start getting worried. When I hear testimony like I have heard today, with no reference to the fact that a congressionally authorized DOD study on health care quality that was completed in 2001, apparently, has escaped the notice of the Pentagon until we basically insisted that it be included in this hearing, three years later, you start saying, well, the DOD study on health care quality, who paid attention to this? Why does it take congressional intervention to have it looked at?

    Other instances: GAO reports. I don't represent Fort Campbell, but my district is very close. The GAO concluded last year that folks who participated in Afghanistan's Operation Enduring Freedom (OEF), 46 percent of our troops, do not have complete immunization records, almost half; 68 percent are lacking one or more of their health assessment records.

    I don't hear any of this from your all's testimony. I don't want to just look at the glass of water as half empty; it is also half full, too. But we need to work on the half-empty part because, to me, the standard to which you all should be mentioning is perhaps a higher one, even than the private sector.

    I don't want to burden you too much, especially during a time of war, but you have an ability to control your subordinates that is not available in the private sector. And when I hear talk like, we have to incentivize our commanders to do this or that, I thought there was a line of command. If our chiefs make this a priority, then what is more important than the health of our troops? Can't we do more than incentivize them to obey orders, to fill out those beautiful Internet health records that are currently unfilled-out, so that I don't have to look at a Fort Campbell soldier and say ''Well, there is a 50–50 chance whether we will even know whether you got your shots''? Can't we do better than that?
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    I realize our private-sector system has a number of problems, and the Institute of Medicine, as I am sure you gentlemen saw, indicates there are between 50,000 and 100,000 unnecessary deaths in America every year due to the inadequacies of our health care delivery system. But you all have an opportunity to do so much better than that.

    Pentagon schools are apparently better because there is greater control that can be exercised, more parental involvement. Kids are more likely to do their homework and things like that. I find that element of quality missing from what I have seen so far in military health care.

    I don't think quality studies should languish for three years without being looked at. I don't think beautiful Internet forms should go unfilled-out for years, and I don't think we should have to tell our troops, active duty troops, from the 101st, there is probably an even chance we are not going to be able to monitor their health care at all because we don't even have their records. They are going to be highly skeptical of testimony such as we heard today.

    I don't want to be too hard on all of you, but this is a hearing, not a pep rally. We shouldn't be guilty of any whitewash or cover-up here. We need to see the problem for what it is. Accurate diagnosis, I thought, was key to medicine. And then let's have appropriate treatment and follow-up. But right now, I am not seeing a very accurate diagnosis.

    Mr. MCHUGH. Will the gentleman yield to me for an initial response, because I think it is important?
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    Mr. COOPER. I would rather hear from the witnesses, Mr. Chairman.

    Mr. MCHUGH. Are you going to deny me that? It is up to you. I asked the gentleman to yield.

    Mr. COOPER. I yield to the gentleman.

    Mr. MCHUGH. I thank him for his courtesy. Just as a matter of information—and it is in no way meant to demean or belittle what he said or make it less important than it is—but in fairness to the witnesses, on one point, not all your points, but on one point, I would suggest why there was no concentration on the reports you cite is because Dr. Winkenwerder, General Peake and others were here when we had a specific hearing on those reports on the 25th (February 25, 2004). The gentleman wasn't able to be here; I don't know why that was.

    So we have probed those. I don't think they whitewashed those. I just think it would be a reasonable assumption on their part that the subcommittee already covered those in a specific hearing.

    I thank the gentleman for yielding. I yield back to him.

    Mr. COOPER. In all deference to the Chairman, I think the hearing you are referring to was some three years after the completion of the report.
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    Mr. MCHUGH. Well, it was sooner than today.

    Mr. COOPER. Well, I think American troops and their families want to know that we are being appropriately concerned about their health care needs. Any health care system is going to have problems, but maybe I have just been unlucky in the few I have run across in the time I have been on this committee.

    So I welcome a response from any of the panelists.

    Dr. WINKENWERDER. Let me begin, and then I am sure each surgeon would like to comment as well.

    We don't rely on reports, important or accurate or as good as they may be, to take actions. From the very moment, certainly, that I stepped into my position, making quality and customer satisfaction, which includes a lot of aspects of access to care and ease of getting in, getting treated and the like, has been a top priority, if not the top priority, and we regularly measure ourselves against civilian benchmarks.

    We will have terrible outcomes in individual cases, like the ones that you described. Do we seek to prevent those? Absolutely. Do we do everything that we can to ensure that there are no medical errors or that patient safety is not lacking? Absolutely.

    But at the end of the day, I believe what is the best and the fairest way to look at quality, is to take a look at what you can measure, whether it is clinical satisfaction, joint commission, accreditation scores, HETUS scores, which is a generally accepted population health measure, the new ORIX measures for in-patient care, and how do we do versus the benchmark in the private sector in the civilian population.
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    What I can tell you is, we do very well. There are some areas that we are much better in than the private sector. There are other areas where we are about the same. There are some areas where we are not as good. We are focusing today on those areas where we are not as good.

    I agree with you that we have the opportunity to be the very best, and I have shared that—I think we all share that—vision. Part of the reason that we do is not just its command structure, because, with all due respect to the notion that you can command people and because you command them they will do it, is not always true. I think what incentivizes people is being part of a team that has a mission that they recognize and care about, that people feel rewarded and respected, and they get feedback, good feedback, about the value that they bring to the organization. That is what really incentivizes people to do great things. I think we have that ingredient within the military health system.

    What we also have in addition to that is that an advantage for us that I don't think we quite yet realize is this whole area of information technology—the electronic health records that are being rolled out, the ability to capture information out in the field with handhelds—because of the investments we have made.

    So I am very optimistic, very bullish, on the direction. Are we there? No, we are not. We cannot claim that we are absolutely at the pinnacle. But I think we can say that our commitment to be there is deep and that we do in fact want to be the very best. We are working hard on it. We have a lot to say that we are doing very well with.

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    With that, I will turn to my colleagues.

    Mr. COOPER. Could I ask that we see the HETUS and the ORIX information for each military hospital?

    Dr. WINKENWERDER. We are glad to share that. We have that information. We look at it as a team.

    [The information referred to can be viewed in the hard copy.]

    Mr. COOPER. I have been unable to receive that so far, at least my staff has been unable to see it.

    Dr. WINKENWERDER. There is nothing to hide here. This is public information, as far as I am concerned.

    Mr. COOPER. When I mentioned chain of command, I in no way meant we didn't have a vision to inspire the troops.

    But surely health care professionals are already aware of the need to have the best possible outcomes. When it comes to paperwork like filling out forms, no one likes to do it, but perhaps there is a greater ability to control subordinates along that line.

    General PEAKE. Congressman, I know the case you are referring to, at least one of them, and met with the family myself to go over the things that we found and corrected in that instance. It is tragic, as these are individuals and human beings. And he is a great soldier, and it is a great family, and I understand that. We take every one of those very personally, and it is not cavalier in any way, shape or form. I know you know that.
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    The issues of—you talk about trying to make a better quality assurance system. We have gone with CCQUAS, made it a Web-based system so that we can reach out and be more real-time with our data about providers and credentials and so forth.

    I went out, and we brought back into the service a physician to head our Quality Assurance (QA) program who had been trained from the VA's Quality Scholars Program up at Dartmouth. We are doing things to try to make ourselves better.

    We put, four years ago, near-misses reporting up on our balanced scorecard as the kind of thing we wanted to do. We sent out a survey to try to change the culture so we become a learning organization. Every tragic case affects us, not only at the senior leadership level but down at the grassroots level, because nobody wants to see those kind of outcomes. I mean, we are not in it for the money here; we are in it because we care about these people. If you go visit any of our facilities and talk to the individuals, they care about what they are doing.

    This issue, I agree with you, frankly—I am 'fessing up here—we need to do a better job in the recording of the data, and we have the tool in place that we can do that with, and we are pushing forward on it, not only through the medical channels but through the line leadership channels as well.

    The GAO report, that is awhile ago. That went down to Campbell. We have invited them to go back again. As a matter of fact, the GAO, I think, this week is out at Fort Lewis.

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    Our teams have gone out. We still have some issues with paper not being in the record, but what we are finding is, the numbers are in the central database, the forms are in the central database that people can access. So it is almost that the paper is irrelevant in some ways anymore. I know we are still graded on it.

    But I think you would find a much different picture at Fort Campbell if you go down there again, because we focused on it. I have a good commander; Steve Jones down there is a great Medical Activity (MEDAC) commander who works with the leadership at those installations.

    I don't dispute anything you said, either about its importance or the facts, but I would tell you, we are not being cavalier about it; we take it seriously. As I said in my opening statement, we look to see what we are doing wrong, and we try to fix it.

    Mr. COOPER. Let me congratulate you, I understand you have been working with Dr. Winberg at Dartmouth to help control inexplicable, indefensible variations in care, which exists in the private sector and probably exists in military facilities as well. I hope you can share that knowledge with your colleagues.

    General PEAKE. We brought Jack Winberg down to work with all of our medical consultants, because that is the kind of culture we want to promulgate, and he is working individually with some of them now.

    Mr. COOPER. What specific measures are now in Army or Special Forces medicine so that a young Army wife knows that she is less likely to have a bad outcome like the case I described earlier?
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    General PEAKE. We can go into detail about that case off line, if you prefer, sir.

    Mr. COOPER. I am interested in the general reforms like, are low-volume hospitals going to be weeded out? You have to see an adequate number of cases if you are going to retain minimal professional competence. You should be a licensed physician. You should have a number of credentials and other qualifications so that you are at least minimally qualified. Are those guarantees in place now?

    General PEAKE. I think they are, sir. I think our credentialing process is a good one. We have had a fair amount of scrutiny in the past on those kinds of things. It wasn't an issue of credentialing, in that particular case, that was the problem. The problems had to do with, I think, handoff and continuity of care and gaps in communication. Those are some of the kinds of issues that we are working very hard to deal with and to make sure they don't occur. That wasn't a small, low-volume hospital.

    So we have closed—you go to Fort Leavenworth, Kansas, you go to Fort Lee, Virginia, you go to Fort Wachuka, you no longer have hospitals in those places.

    You get to some of the things Mr. Cole was talking about, too. It is not only economics; it is how do you do the best quality. We are engaged in it. The world has changed. Many of the locations where our people work, at Fort Rucker, there used to be nothing down there. Now there are two really world-class hospitals. That allows us to reshape our stuff.

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    So, sir, it is a continuous learning organization, continually trying to improve.

    Admiral COWAN. If I could offer a response, too, I think we would all be unanimous in completely agreeing with you that delivering consistent high-class quality for everything we do is the ultimate goal, and that has been the centerpiece of our philosophy and doctrine for, frankly, as long as I can remember, enduring times when we were having difficulty delivering the benefit, and people had long waiting times and we triaged by frustration tolerance. We maintained the quality.

    When I look at the report of the DOD Quality Initiative Review Panel, the report and the recommendations, Dr. Buck provided four main recommendations and nine specifics. They are, uniformity of health care processes—I am just quoting some snippets—error reduction, refining credentials management, enhanced oversight and accountability and career management, install comprehensive data systems, monitor quality, upgrade education, establish Centers of Excellence, make sure providers are properly licensed and have proper credentials, ensure laboratory work meets standards, and so on.

    Congressman, this reads like my calendar and has been my calendar since I have been in executive medicine. We push forward on all of these things all of the time, and it has been increasingly clear to me over my career that this is a journey, not a destination, and that these are the things that our successors 10 or 20 years from now will still be working on and working to improve, because health care is a complex, difficult business. We are driving out unneeded variation. We are driving toward standards and toward quality. And, frankly, sir, this is our core business.
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    General TAYLOR. Congressman, I would like to emphasize again, quality is a journey, not a destination.

    Dr. Buck did a tremendous service working with the services and with health affairs in developing this report that centers in the 1999–2000 timeframe.

    It is interesting to read the document to see again how far we have come, and I think when you see the responses to Dr. Snyder's 10 questions, you will see how far we have come since that report.

    If you look at how we train and recruit and retrain providers, providers are brought on and they are privileged. Their credentials are meticulously checked, and they are privileged for a one-year period of time. If they don't meet standards, we have the ability to separate them from the service.

    You have to reprivilege yourself every two years. Your peers take a look at you. We look at your credentials to determine you have the span of capabilities that you had, and these are performance-based requirements.

    The young people we bring up are meticulously trained. The documentation of their educational status is well maintained in unit forms of advancement, whether they are enlisted or officer.

    From the process standpoint, we have worked real hard in all of our processes and facilities to determine that we do exactly the right care that we can at the facilities. The Air Force has moved from a primarily small hospital-based organization to a few larger hospitals and, primarily, clinics.
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    Not 14 years ago, there were more in-patients at Wolford Hall Medical Center than there existed beds in the United States Air Force today. The majority of our providers that are working at small hospitals for surgical capabilities actually do their more complicated surgeries downtown in partnership with our civilian institutions, so any high-risk case can do that.

    Also, it gives the provider a chance to continue a continuity of care to do a hip replacement or do a more complicated internal medical procedure downtown.

    From the outcomes perspective, even yesterday, we were going over our neonatal mortality rates. We were going over our ability, how long, from antibiotic administration to knife incision in surgical operations. We were looking at the time from admission to first dose of antibiotics among pneumonias. Every month we have a board that looks at the cost spent per patient, what the productivity is for our providers.

    In the end, we look at customer satisfaction rates in multiple different categories, derived from an annual survey, a survey for the clinics, which is done centrally, and each of us have other systems to check patient satisfaction at the closest point of time.

    All of that is put together in sheets that each of the commands, each of the MedGroups report on their quality—as well as detailed provider handbooks, so that patients know the qualifications of the providers they are dealing with. This is a journey.

    Dr. Buck's report, a brilliant report that demonstrates the high quality of the work we have done, this is all vectored into what we have been doing the last four years since the report has been in place. To my understanding, this has not been ignored; it is in the web of what we do.
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    I was talking to one of my folks on the work team that developed this. When you go through the report, you can see the remarkable distance in the last 4 years we have come, and we look forward to responding to the 10 questions to detail how far we have come in the last 4 years.

    Mr. COOPER. I know I have strained the Chairman's patience.

    Mr. MCHUGH. As I said at the beginning, we try not to put any time limits on it. I think the gentleman is asking some very pertinent questions. If he wants to continue, he is free to.

    Mr. COOPER. Thank you.

    Mr. MCHUGH. Mr. Gingrey—Dr. Gingrey, actually. The gentleman from Georgia.

    Dr. GINGREY. Thank you, Mr. Chairman.

    Again, I want to thank each of you for taking the time to visit with us today. Admiral Cowan and General Peake, it is certainly good to see you again.

    If I may reflect for a moment on my colleague's comments, the previous line of questioning by Representative Cooper. My experience has always been on the private side. As most of the members know, I spent 27-plus years in clinical practice, but always on the private side. Might say, meat-and-potatoes Ob-Gyn practice.
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    It was mentioned, of course, statistics suggest that 50,000 to 100,000 deaths occur every year because of medical error. While I may question that, certainly the 100,000 figure at the top-end estimate, certainly, too many occur. If one occurs, it is too many.

    But most of them are occurring on the private side. I would think that the cases like Representative Cooper was referring to, hopefully are few and far between on the military side. I think that these things do occur, regrettably.

    Someone mentioned the issue of a hand-off, one person is coming off of duty and the other person is coming on, and there are just traps where these things can occur. I have certainly seen them occur way too many times in the private sector. But occasionally, a really horrendous outcome and tragic story will occur, and it is absolutely nobody's fault. But anecdotally, when you hear about it, you think the whole system is going to hell in a hand basket.

    I will relate to you one recent experience that happened in my district. A very strong supporter of mine down in Columbus, Georgia, and a young wife, 36 years old, delivered her third child, had a 6-year-old and a 4-year-old, delivered her third child—her husband was a very prominent attorney in the community—and three weeks after the birth, dropped dead while breast feeding her child. It was through no-fault of anybody's. But a story like that, if it gets told and repeated enough times in the community and embellished maybe a little bit, all of a sudden the perception is, my God, somebody did something terribly wrong. And maybe this is one of those 100,000 estimated unnecessary deaths that occur by medical errors each year that really couldn't have been prevented.

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    But I think, Mr. Cooper, I really enjoy serving with him, because he does stimulate and has made me come to understand that these hearings aren't pep rallies, and indeed, it is a time to stimulate us to ask these kinds of questions to make sure that we get better at what we do.

    I do believe as I look at the physicians here, the witnesses, and looking through their bios, you have a specialist in aerospace medicine, you have a cardiothoracic surgeon, you have two internists, and definitely, what you are doing now, you are not in it for the money, as General Peake said, and that is really obvious.

    And my colleague, Representative Cole, mentioned in his remarks, too, how appreciative we are of the job you are doing.

    I am convinced that you will take very seriously the points that Mr. Cooper made in regard to making sure that these tragic things don't occur because of somebody screwing up. They can occur, sometimes, because it is just simply a bad outcome, but I think, overall, you are doing a great job.

    Mr. Chairman, of course as a physician, I consider the issues we are discussing today of utmost importance. Protecting the health and well-being of our brave men and women who have dedicated their lives to protecting us is crucial. I am glad that we are taking the time to take a close look at the health care that we provide for them.

    The growing cost of health care is a national concern, and it is not a phenomenon, of course, unique to the Department of Defense. It is growing astronomically on the private side, and you are facing some of those same costs.
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    But also, you have a dual challenge, because of the huge increase in new military health system users and the rise in the private sector health care costs.

    You mentioned, someone said, I think, that in the last year or so, the amount of spending on health care as a part, as a percentage of the overall Department of Defense budget, is now up to seven or eight percent. I hope that is a skewed percentage because of Operation Iraqi Freedom (OIF) and OEF and the tremendous expense involved with trying to make these brave men and women whole again in things like prostheses and this sort of thing and long-term rehabilitation.

    In my meetings with a few of you, it has become clear you are working hard to provide the best care you possibly can within very tight budgetary constraints, and we thank you for that.

    Now, here is my question. I would like to know what types of services you wish you could provide if the budgetary situation were a little different. So, if you don't mind commenting on which specific programs that you would like to see funded currently that are not funded because we just simply don't have the money.

    Maybe this is a wrong perception on my part, and you can comment on this, but it seems like within a discretionary spending item, you have a mandatory spending cost, and that mandatory part of a discretionary amount of funding, hopefully $401 billion and a few dollars in the 2005 budget, how do you deal with that?

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    Dr. WINKENWERDER. Congressman, thank you for that question. The whole issue of the way our budget process or our budget works within DOD and the way we are established is an interesting question.

    We are mandatory spending. We cannot not provide medical care, not do a life saving procedure, turn people away, and we would never want to. But according to the rules, we are discretionary spending. So that creates some particularly, I think, at times difficult issues to deal with.

    One of the things we are trying to do better, as we manage our program over the long term, is to project and predict our costs and to be realistic about them.

    If I might say, in the past, I think there was at times no realism with respect to these future cost trends. That doesn't help anybody if we are not realistic within the Department or in partnership with our colleagues at the Office of Management and Budget (OMB) or with you here in Congress.

    We need to be honest. We need to give you our best estimate of what we think the growing costs will be, what the trends are. We are not going to be perfect, but we like to think we can predict within a percentage or two. But with $30 billion being spent, 2 percent is $600 million. So it is a lot of money.

    Having come from the private sector in insurance, we could adjust. When we were going over, so to speak, our budget, we would raise our premiums. We can't do that.

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    So, we have a unique set of challenges, and I think we have to think about that as we go forward in managing this practice, managing it cost-effectively.

    I will touch on one other item, and that is just the whole notion that we have a tremendous benefit, a great benefit. I think we do have to keep in mind as we lookout into the future a sense of comparability with benefits in the private sector, particularly for our retiree population. And I think that is important to do, because should we not do that, then we are sort of out of whack, so to speak. So I think we need to be mindful of that. It needs to enter into our thinking.

    Dr. WINKENWERDER. I believe that our benefit always should be better, and it should be better because of the sacrifice that our men and women who are in uniform today as well as our retirees have made to their country. But there is the issue of how much different can it affordably be. So I just offer that as something for us to think about.

    With respect to your specific question about the types of services we wish we could provide if there was funding, I cannot think of a category of something that we don't cover that we should or that we don't because of budgetary reasons. I know there are issues year to year within each of the services because of the constraints of—whether it is in capital spending or certain facility improvements that they would like to do and, frankly, I would like to do.

    But that is why I made the point earlier about flexibility is so important in managing this type of large program, that we have the flexibility to move dollars so that we can make and not be fixed on, you know, because of the rules or because of the law. We have to, I think, be given as much flexibility as possible under your oversight and, at the same time, be held accountable. And if we are not doing the good job that is required, then you need to hold us accountable.
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    But I think with something that is as large and as changing as health care is, we need that flexibility. And that was part of the reason to, maybe, comment about the restrictions on reprogramming that we currently deal with that, I think, makes it harder for us.

    But with that, maybe I will let our colleagues speak.

    Admiral COWAN. We have, over the past decade, Congressman, changed our concept of who we are. A decade ago, we were a reactive health care delivery system.

    We feel that we have evolved to become a health system as we have increasingly invested parts of our portfolio over to the maintenance and the preservation of health rather than concentrating more strongly on waiting until people got sick and treating them and then sending them back.

    In that same period of time we have seen changes in American society that confound those efforts. One of them, in particular, is the increasing epidemic of obesity. CDC has been measuring the prevalence of obesity, which is not just being overweight but really clinically obese, and found that skyrocketing until, I think, it is fair to say in round numbers almost 25 percent of Americans are clinically obese and subject to those diseases of obesity and inactivity, severely driving health care costs up and now rivaling cigarette smoking in America as a cause of morbidity and mortality.

    I think our benefit is quite good, and I think that we cover all of the reactive things that we should. And if there were opportunities for greater investments in this important and demographically changing health population profile, that would be where I would invest. And we are particularly uniquely suited to be effective in that.
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    Health care plans in American medicine, in general, keep their patients four to five years, is it? Dr. Winkenwerder is the expert on that, and he said, yes, about four to five years on average. And it makes it very difficult for them to justify the economics of investing in long-term health payoffs that come 20 or 30 or 50 years later.

    We, on the other hand, essentially every 60-year-old that is in our system was in our system when they were 20 and were developing the adult health habits—smoking, drinking, inactivity, obesity—that we then have to provide care for as they develop the predictable diseases of hypertension, heart disease, congestive failure, arthritis and so on when they reach their 50's and 60's.

    We have really come a long way. We are very proud of our approach to family-centered health and population health. But it is, Congressman Cooper, another journey, not a destination, and we are not there yet, either. And that would be my comment.

    General TAYLOR. Just to be specific for you, we have a very fine benefit. I think everybody agrees, the benefit that—you go to actuarial, it is actually difficult to price out because the benefit is so rich. And we have wonderful providers and wonderful staff members that we hire, whether they are contractor, civil service, or active duty or guardsmen and reservists.

    The environment of care is something we all work very hard to do. We have a military construction project that has a 50-year recapitalization, which means we replace our medical treatment facilities every 100 years.
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    Right now, 4 percent of the Air Force facilities are more than 40 years old, and 20 at 40 percent if we maintain that rate. So everybody here, I think, wishes that we could refresh our hospitals in a more timely fashion than we have been able to, all our medical treatment facilities.

    And when you work in a difficult financial environment, with skyrocketing costs, it makes it very difficult to make optimization choices and place advancements in medical practice in early because we get squeezed for funding.

    And so certainly in the past, we have had some advances in medical practice money that we have been able to use not only to advance the clinical practice but also the surveillance and the preventive medicine practice. Those optimization and advances in medical practice dollars that the Congress has provided in the last few years have helped us take the revolutionary jumps that the Air Force has taken in many of these systems.

    So I would say, my focus would be on the environment of care. It is a better way to maintain our people, it makes you proud to walk into the facility. I am sorry Mr. Hayes went—I was going to get his comment about the Pope Clinic, which is one of the facilities that we are desperate to replace here shortly. But having a replacement cycle that is 50 years when the industry standard is 21 is something that eventually we are going to be more and more noncompetitive. And folks are going to walk into a facility and say this is not what I deserve and the providers are not going to work there. So there is a focus, and my attention would be in the recapitalization rate of our heart, our facilities.

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    General PEAKE. Sir, I would agree with all that has been said with Mike in terms of moving forward, in terms of the prevention aspects, with General Taylor in terms of the recapitalization issues, with Dr. Winkenwerder in terms of the—well, the fact is, over 19 years we have had—what—17 years of major reprogramming or supplementals to make the health budget what it is. What that means is the money comes late, doesn't get used as effectively.

    So from an operator perspective, the venture capital that we have had has been absolutely essential. It has changed the culture of Army medicine to be more business-like and appropriate, and I gave some examples in my opening statement about how good that has been for us.

    Advances in medical practice have given us the opportunity to go out and do (PET-CT) so that—and put it in a logical way and stay up with what is going on in the civilian sector. And we are starting to see changes in the staging of cancer by using this technology. Those kinds of things are important to us.

    Service Life Maintenance (SLM) is the maintenance of those facilities that are old, and you know, every year, that becomes my cushion of where I have to take money on if I am going to do the right thing for patient care kinds of programs.

    I think the notion of appropriately funding where we are going with the electronic patient record is important to us so that we get the right training and really get it out there as a system, instead of you know, sort of—if I had extra dollars, it is in those kinds of things, sir, where I would start to put them as well as push them out to the local level where they can actually use them and be incentivized by what they can save in their system, which goes to Dr. Winkenwerder's point, this barrier between direct-care money and purchase-care money.
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    I mean, this year, I don't have money to give him. He doesn't have money to give me, is the way it looks. But in the long run, if you have an appropriate fund, then that starts to say, we ought to really have the ability to make the best quality choices with the metrics, sir, that gives us the readiness so we know we are fully funding the readiness piece as we are, which is what we exist for.

    Dr. GINGREY. Thank you all.

    Thank you, Mr. Chairman.

    Mr. MCHUGH. Before I yield to the gentlelady from Guam, I would just note, Dr. Winkenwerder has referenced that, understandably, a couple times about flexibility, that fencing, which I think was well-intended when the appropriators put it in, was an appropriations initiative. The subcommittees are very aware of your concerns about that, and we are engaged with our subcommittee colleagues on seeing what we can do to make that work better for you.

    Dr. WINKENWERDER. We appreciate that.

    Mr. MCHUGH. The gentlelady from Guam, Ms. Bordallo.

    Ms. BORDALLO. Thank you very much, Mr. Chairman.

    If we could turn our attention to the Pacific area for a few minutes where it is nice and warm and beautiful. A question goes to, I think, Dr. Winkenwerder and also to the Admiral, since we have a naval hospital in Guam. This is a longstanding concern to the provision of health care in the Pacific Command.
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    Late last year, Congress reauthorized the U.S. law implementing the recently renegotiated Compact of Free Association between the United States Government, the governments of the Federated States of Micronesia, the Republic of the Marshall Islands, the Republic of Palau and the affected jurisdictions. A particular provision was renewed so that it specifically requires the use of DOD medical facilities on a space-available and reimbursable basis for treatment of these citizens who migrate to the United States under the terms of the Compact and who are properly referred to the facilities by Government authorities.

    The civilian hospitals, gentlemen, in Guam and Hawaii, are already overwhelmed with this particular problem and are unable to be reimbursed for their expenses.

    Now, the new law, which I have right here, mandates that DOD medical facilities, in this case the U.S. Naval Hospital in Guam and Tripler Army Medical Center in Hawaii, be made available to help in the treatment of Freely Associate States (FAS) citizens migrating to the United States. The conditions of this mandated DOD medical facility availability are that it be on a space-available and reimbursable basis.

    Speaking of space availability, the Navy hospital doesn't have anything to worry about in that area. That is one underutilized hospital. I would like for you to inform me of what action, if any—and I realize that this law is only three-months-old—any one of the services has taken since enactment of the new law to ensure its effective implementation?

    Have any guidelines, protocol or Memorandum of Understanding (MOU)s been drafted and issued that clarify who appropriates referral authorities and who they are within the local government and under what conditions space availability would be determined?
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    I served as a local government official for a number of years, and this has been a perennial problem. Our civilian hospital is small compared to the naval hospital, and we are overcrowded, underfinanced, and you name it, we have the problem. And each time we ask the naval hospital to assist us, the answer is a definite no.

    Now, the new law states that DOD medical facilities—the Secretary of Defense shall make available on a space-available and reimbursable basis the medical facilities of the Department of Defense for use by these citizens.

    So I was wondering, what kind of a reimbursement process from the Federal Government would work? I don't want the Department of Defense footing a bill like we had to for many years. So I just wonder, what action has been taken in that respect, Doctor?

    Dr. WINKENWERDER. Congresswoman, thank you for your question.

    We are complying with the requirements of the Compact of Free Association Amendment Act of 2003. One challenge, as I understand it, in implementing this act is the requirement that care, in order to be provided at such facilities, needs to be properly referred by government authorities responsible for the provision of medical services. So on the referring end, from some of these states, the referral needs to generate there with something authorizing that.

    So as I understand it, the approach has been to require a letter signed by an appropriate government official authorizing the DOD medical facility to provide the medical care and to bill the countries for the cost. And as I understand it, the treatment for these patients, for the most part, as you noted, has been at Tripler, and Guam has had some increase in visits.
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    But I will let—maybe, Admiral Cowan might have more details on this. We are certainly committed to implementing the law.

    Admiral COWAN. I think, Congresswoman, I think there are two questions that are pertinent, particularly important. One is, we have been doing pay-for-treatment for some time, and I honestly don't understand fully the implications of the new law. And the second is that the referral, as we have understood it to this point, is referral from the governmental authorities—properly referred to such facilities by government authorities responsible for provision of medical services. And so I believe that would be the——

    Ms. BORDALLO. You are requesting a letter now from the citizen who arrives from Palau or FAS or a letter from our hospital saying that we cannot accommodate them. Which is it?

    Dr. WINKENWERDER. That is the letter from the Minister of Health.

    Admiral COWAN. Letter from the Minister of Health asking for that service.

    Ms. BORDALLO. From Guam?

    Admiral COWAN. Yes.

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    Ms. BORDALLO. Stating that we, under certain circumstances, cannot take the patient in?

    Admiral COWAN. Yes.

    Ms. BORDALLO. Because you see, our hospital is about a fourth of the size of yours, and so many times, we are just overcrowded, and we cannot accept the patients. But when I served as an official with the government there, the military always just said, ''No, we are not allowed to take them.'' but this law now has changed slightly, and it says it shall make available.

    You don't have an availability problem, Admiral. You know, the naval hospital is truly underutilized in Guam, and I understand they are going to build a new one in several years. So I just wanted clarification. Is there something on the table like an MOU or some guidelines or protocol that you have developed?

    Admiral COWAN. I think that I would serve you much better by taking that question and getting back to you.

    Ms. BORDALLO. Very good. Thank you.

    Thank you very much, Mr. Chairman.

    Mr. MCHUGH. Dr. Snyder, you indicated you had a quick question.

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    Dr. SNYDER. Thank you, Mr. Chairman.

    Admiral Cowan and General Peake, this is your all's last time to testify here, so this is kind of the speak-now-or-forever-hold-your-peace time. This may be similar to Art Linkletter and his Kids Say the Darndest Things. His best question or most productive question always used to be: Is there anything your mommy and daddy told you not to tell us about?

    You all have a—coming from the perspective of having been in this business a long time, are there areas of problems or challenges that you think we ought to, that the Congress and the military ought to be paying more attention to than we are right now or things we haven't talked about? Are there specific areas that you think we ought to work on or the medical health service ought to work on?

    Admiral Cowan.

    Admiral COWAN. I think, fundamentally, we are—we, the medical services, are on the right track. The things that have kept me up at night over the last years have been the execution through this huge system, trying to implement a health care benefit worldwide that is a uniform benefit for highly different categories of people and to maintain the capability to go to war at the same time. So it has been a real walking-and-chewing-gum kind of experience.

    The thing that would have—the single thing that would have done the most for having fewer sleepless nights would have been if we had had the same amount of resources that were budgeted in a more consistent way, if the money we typically made up in mid-year had come earlier, if the estimates of the cost of this expanding benefit had been more congruent with what the cost actually turned out to be as we went through the year.
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    And I think General Peake said that, again, more fluently than I just have: A dollar at the first of the year is worth a whole lot more than a dollar that comes in May or June of that year.

    I think that it has been a struggle for us all, particularly since 2001, because of the rapid change in the benefit. I don't know another health plan anywhere that adds 3.5 million people to its beneficiary category overnight as we did when TRICARE for Life became a part of our program. It has been spectacularly and rapidly changing.

    And I suppose, if I could just personally—if I were to be here longer and I would ask a personal favor, I think it would be to help us let this benefit hold still for a while. There are certainly more improvements, there are things that we can and should do better or different for populations. But if we could have a time to allow these oscillations of our patient behavior and our funding predictions to get in a more stable environment, then I think that we would all be much happier with our performance, our projections, our expectations and our ability to care for our patients.

    Dr. SNYDER. Thank you.

    General PEAKE. Well, sir, it is sort of a two-part question. I guess one of the things I would—you say, what could you all do that I would like to see? And I guess I would like to see more of an opportunity to tell our story to you, not here but out where our people are really doing the work.

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    We are an incredibly complex organization, with our research, with our varieties of organizations that do really much more than just support that soldier who is kicking down a door and shooting somebody. I mean, it really, when you start looking at the depth of what we offer in this issue of homeland defense or in looking at things that the rest of the commercial world isn't interested in, like malaria vaccines in the United States, I mean, we are the ones who do that.

    So there is a whole other section that we hardly ever talked about in here that is important to us as an integrated system to be able to do the things you want us to do, which is fundamentally make sure that we as a nation are ready to answer the call wherever and whenever we go.

    I think we do have the kind of opportunity, sort of, that Congressman Cooper alluded to, the opportunity to be the very best.

    I think you are absolutely rightfully our prodders and our watchdogs. And frankly, you know, in the Army we talk about, if it ain't inspected, it's neglected. You all are part of our inspection program. And I accept that and understand it. And it doesn't necessarily always make me comfortable, but the fact is, I think it is a good thing.

    What I think we ought to do is not take our eye off of the ball of why we really exist. I mean, it is really fundamentally important to deliver the benefit in the best way we can, in the most cost-effective way we can, from a taxpayer dollar perspective.

    But fundamentally, we are about serving the Nation and serving our soldiers and our sailors, airmen, and Marines who really as patients are purple. It is not a—you know, it doesn't make a hoot of difference to me what uniform that soldier or sailor, airman, or Marine wears. When they come through our facility, they are our family. And I think that family piece is not an unimportant thing.
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    So it is not just, well, you know, we can knock it down and define readiness as somebody that is going to go to war. It is broader than that. It is having the culture to wrap our arms around so they know that we are taking care of them when they come back. It is a bigger issue than that.

    Now, that doesn't mean that we shouldn't—with the benefit we have and with the population we serve, we clearly need to work with this third panel that you are going to be talking to, who are in terms of our contractors and so forth. It is absolutely important. We have to leverage the medical industrial complex out there to be able to do the right thing by our patients. But we don't want to take our eye off of the ball of why we have a military health system, Army, Navy, and Air Force, as we move through this.

    Dr. SNYDER. Thank you, Mr. Chairman.

    Mr. MCHUGH. The gentleman from North Carolina. Before I yield to him, I will just note to the members of the subcommittee, we are working on 2.5 hours on this panel. We have two more panels to go. I think, another reason, in fairness to the other panels, we have to start being a little more reasonable in our demands on these panels' times.

    I am still going to resist using the clock, but we have votes coming up, and there are other members. And these are important issues, and I don't mean this to suggest otherwise. But I want to yield to the gentleman from North Carolina, the gentlelady from Guam, who would like other questions.

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    We will go as long as it takes until the vote is called, and then we are done. And then I would suggest—and the other reason I am interjecting—if other members have questions, we will be submitting written questions for the record to not just this panel but the other two, and perhaps we could accommodate your questions in that way.

    So, with that, the gentleman from North Carolina.

    Mr. HAYES. Thank you, Mr. Chairman. I know you weren't talking to me.

    Back to my earlier question, the wife of a deployed spouse in North Carolina who can't take her child with the croup to the VA hospital, what is she coming away from this hearing today saying, ''What is this August panel doing to help me with my child with the croup?'' Just a question to answer. You may not have it all today, but help me follow up with that as we go forward.

    Dr. WINKENWERDER. With our benefit, she should be able to go to her local community hospital and, hopefully, see the same physician she has been seeing.

    Mr. HAYES. Get us some more physicians.

    Thank you, Mr. Chairman.

    Mr. MCHUGH. Bad news for the first panel. I just received an e-mail from the floor, and they have postponed the vote until 2:30.
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    The final yield for this panel, I promise you. The gentlelady from Guam.

    Ms. BORDALLO. Thank you, Mr. Chairman. I will make it very quick. It has to do with a different kind of a patient called the Brown Tree Snake.

    Dr. Winkenwerder, for roughly the past 10 years as you know, thanks to Congress, the need to control the Brown Tree Snake from spreading to Hawaii and the United States' mainland has been addressed, although somewhat inadequately, but primarily through an annual $1 million appropriation in the Defense Health Services Operations and Maintenance Account.

    It is my understanding that this funding to tackle this invasive species threat is transferred each year from Army Medical Command (MEDCOM) to U.S. Department of Agriculture (USDA) Wildlife Services via the Tripler Army Medical Center in Hawaii. While we have DOD and the Senate to thank for this critical interdiction work, I believe that the roundabout method for funding this work is not helping the cause and should be readdressed.

    I am interested in learning your views on how DOD views this funding and their role in managing its pass-through to USDA. Is Brown Tree Snake Control viewed as an environmental or a base operations responsibility? And do you believe that this funding can be better provided elsewhere and outside of health services?

    Dr. WINKENWERDER. For the life of me, Congresswoman, I do not understand why we are funding a snake control programs through the Defense Health Authorization or through the Defense Health Program. We pay for all kinds of things, but snake control is not one that I would have thought of. I have been made aware of this.
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    I think, to cut to the point, we believe that this would be better funded directly through the Department of Agriculture so that the money could be efficiently distributed to the Fish and Wildlife Service.

    Ms. BORDALLO. Thank you.

    Thank you, Mr. Chairman.

    Mr. MCHUGH. I thank the gentlelady.

    And, gentlemen, thank you all so much.

    And a particular final word of appreciate to General Peake and Admiral Cowan for your service.

    Dr. WINKENWERDER. Mr. Chairman, may I make one other comment, if I might?

    I too, I wanted to recognize, just for the record, General Peake and Admiral Cowan for their great work and to say that it has been a pleasure to work with them. We have several more months, obviously, working together.

    But they are outstanding medical and administrative leaders, and just the highest accolades should go to them in terms of their professionalism, their competency, their commitment, caring for people. And it has been a real pleasure to work with them, and I appreciate all that they have done.
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    Mr. MCHUGH. And we share in your very gracious and eloquent comments. And so, gentlemen, thank you for your service. Good luck. You are dismissed, adjourned. Run like hell before somebody thinks of a question.

    If I could have the next panel please join us at the table.

    Let me welcome our second panel and commend them on their patience, which will only be exceeded by the third panel's patience, assuming the third panel stays with us, which I hope they will.

    But let me introduce the distinguished second panel, if I might, in the order—I am not sure it will be in the order in which you are seated; if it is not, I apologize, but let us hope.

    First, we have Dr. Sue Schwartz, co-chair of the Military Coalition's Health Care Committee.


    She is accompanied by Robert Washington, Sr., who is also co-chair of the Military Coalition's Health Care Committee. As I understand it, Dr. Schwartz will be presenting the testimony and Mr. Washington is available as well for answering any questions the subcommittee may have.

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    Next, Kimberly Stanish, who is co-chair of the National Military Veterans Alliance Health Care Committee.

    Welcome. There you are over there.

    And she is accompanied by Ben Butler, United States Marine Corps, Retired, who is the co-chair of the National Military Veterans Alliance and legislative director of the National Association for Uniformed Services.

    Welcome, sir.

    And also, Dr. Alfred Buck, chairman of the Department of Defense Health Care Quality Initiatives Review Panel and partner in the firm of Edward Martin & Associates, Incorporated.

    And welcome to you, sir. Thank you all for joining us. As I said, thank you for your patience.

    Mr. MCHUGH. And, with that, why don't we begin with you, Dr. Schwartz.


    Dr. SCHWARTZ. Good morning, Mr. Chairman, Dr. Snyder, and distinguished members of the subcommittee. It is an honor to have the opportunity to address you today concerning the Military Coalition's view under the Defense Health Program. I am joined today by my colleague Mr. Bob Washington who co-chairs the Health Care Committee with me.
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    I want to reiterate our deep appreciation to the entire subcommittee for your leadership in sponsoring a wide range of landmark health care initiatives over the past few years, particularly for Medicare eligibles and active duty families. We are most grateful for the subcommittee's leadership last year directing DOD to take specific action to address chronic access problems for TRICARE standard beneficiaries under the age of 65 and to begin to address health care needs for the Selected Reserve.

    We ask the subcommittee for continued emphasis in ensuring these enhancements are implemented promptly and effectively.

    DOD officials speak of, quote, ''funding shortfalls in the out years,'' but there are current problems as well. Bases are turning away retirees from their pharmacies saying this is due to budget cuts. Last year, OMB even considered increasing retiree pharmacy cost-share significantly, even going so far as to propose charging retirees for medications obtained in military pharmacies.

    We ask the subcommittee's continued support in authorizing sufficient amounts for both the direct- and purchase-care systems so that the defense health budget doesn't have to be balanced on the back of beneficiaries.

    This year, the new TRICARE contracts will greatly impact the program and our members, and with change always comes challenges. We are firmly committed to working with Congress, the Department, and the contractors to make implementation as smooth as possible.

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    However, the Coalition's concerns are that the transition be seamless for the beneficiary, that service by the previous contractors must not be compromised as contracts are phased out, that provider churn must be kept to a minimum so that beneficiaries don't have to change doctors, not just in the civilian contractor networks but also with resource-sharing personnel and military hospitals and clinics.

    Beneficiaries must receive timely information on the new contracts, provider networks and where they can get help when needed and also balancing the need for a uniform benefit with three contractors' interpretations of what is their best business practices.

    Sometime later this year, DOD will be implementing the uniform formulary. Coalition concerns about creating a third tier of non-preferred drugs include the need for a robust formulary that includes the most frequently prescribed medications. The program must be streamlined as much as possible to avoid unnecessary hassles for both providers and patients.

    Beneficiaries and providers shouldn't have to jump through hoops just to meet medical-necessity, prior-authorization or appeals procedures, and that ongoing beneficiary education be readily available.

    This subcommittee has gone a long way to address daunting and significant problems. Many have been around for decades, and it is going to take continuous monitoring and follow-up to ensure that actions are taken with intended effects.

    In the last session of Congress, you took the first steps to extend the guard and reserve additional TRICARE coverage, before and after mobilization, and to provide TRICARE on a cost-share basis for members without access to employer-sponsored care.
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    Mr. Chairman, it is disturbing that four months have passed, and DOD has not implemented all of these provisions. The Coalition is most pleased to learn today that the Defense Department will be enacting Section 704 to extend the Transition Assistance Management Program (TAMP) program.

    However, as you also heard this morning, the Defense Department cannot tell us if or when they will be able to implement access to TRICARE on a cost-share basis for those without health care.

    These programs are temporary, and the clock is ticking. The authority and funds for this legislation expire at the end of the year, but, Mr. Chairman, the call-ups will not.

    How can we expect to have a valid test when the time is running out? The Coalition urges you to send a strong message that health care for guard and reserves and their family members is a priority. We ask you to take steps to make these provisions permanent.

    In addition, we ask that reservists, when mobilized, who elect to remain in their other health insurance programs are given the option to have part of their civilian insurance premiums paid up to the value of the TRICARE benefit. DOD already offers this benefit to its own reservist employees.

    The Coalition believes that we need to enhance health care for guard and reserve families because it is a readiness issue; it is a quality of life issue to provide affordable health care to reserve families. It will stimulate recruiting and retention efforts, and it gives employers of mobilized members financial incentives. Dependence on guard and reserve personnel will not decrease and will most likely grow. Making these health care enhancements permanent demonstrations that we appreciate the service and sacrifice of our citizen soldiers and their families.
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    We deeply appreciate the subcommittee's ongoing leadership and commitment to those who are in uniform today and those who have served our nation in the past. I look forward to answering your questions.

    [The joint prepared statement of Dr. Schwartz and Mr. Washington can be viewed in the hard copy.]

    Mr. MCHUGH. Thank you very much. Doctor, as always, we appreciate your leadership and your willingness to help us address these issues, and it is good to see you again.

    I am trying to figure out how we introduce—why don't we just go down the table. I know I had Ms. Stanish next. But Dr. Buck, if you would be so kind, we would be anxious to hear your testimony, sir.


    Dr. BUCK. Thank you, sir.

    Mr. Chairman and members of the subcommittee, it is an honor for me to appear before you today. I understand that the prepared statement is before you, the entire report is available for your review and that the executive summary of the report will also be entered into the record.
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    In considering the written statement submitted to you, I would like to emphasize three aspects.

    First, the questions posed. Have the recommendations of the panel been addressed? And are there residual priorities?

    Second, the problem areas presented—as the bulleted list presents challenges of an ongoing nature, and I think we had that reinforced earlier this morning.

    These areas will continue to require commitment, direction, and oversight for the foreseeable future for the direct as well as the contracted care components of the Defense Health System. All areas will remain relevant to system improvement.

    Third, I have crafted some examples or questions listed on the last page of the statement that could be useful in an assessment of progress, and I would like to expand on two of them, Item 3 and Item 4.

    Item 3 states: Have demonstration projects been designed and implemented, et cetera, et cetera?

    The need to explore ways of maintaining and improving the clinical management of high-risk, resource-intense, diagnosis-related groups and procedures was and still remains a crucial one. With few exceptions, this is not made easier by a lack of uniform comparative metrics among DOD entities and among potentially collaborating VA, university and civilian contracted entities.
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    In addition, volume criteria, how many cases per annum per team constitute, credible safety-enhancing experience, case acuity measures and issues of the position and scope of graduate medical education in the military remain a vexing mix of policy matters inextricably pertinent to improving management of predictably high-risk patients.

    Consolidation of high-risk, resource-intense clinical activities, if addressed with well-designed pilot demonstrations as recommended, can offer the benefit of policy refinement that is supportive of a single standard of care, uniform cost and resource methodologies, and the utilization of process and outcome measures that enable helpful analyses across organizations, services, agencies and regions.

    Item 4: Has a streamlined tri-service risk management process been implemented, et cetera, et cetera?

    Enlightened safety management is based on enhanced communication, root-cause analysis, process redesign, education and responsive resource management.

    These important capabilities depend on a risk-management process that offers a strong alternative path for dealing with the very much smaller incidences of neglect, incompetence or worse. The tools for enhanced risk management seemed readily available at the time of the panel's review, hence the follow-up question or example.

    Finally, what should a recommendation be for your consideration at this time?
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    On behalf of the panel, I suggest that an assessment of progress in addressing the recommendations of the panel be undertaken. Any residual priorities, of course, would be of particular interest.

    In closing, on behalf of each of the panel members, I want to express my respect to the subcommittee and my appreciation for its interest and consideration, and I would later welcome any comments or questions.

    [The prepared statement of Dr. Buck can be viewed in the hard copy.]

    Mr. MCHUGH. Thank you very much, Doctor. We do appreciate that, and appreciate your being here as well.

    Next, Ms. Stanish, welcome.


    Ms. STANISH. Thank you, Mr. Chairman, Dr. Snyder, distinguished members, thank you for giving me my first opportunity to present testimony.

    On behalf of the National Military Veterans Alliance, I would like to express our appreciation for the subcommittee's recent initiatives in military health care and thank you for the opportunity to present testimony on two issues highlighted from our written testimony, those affecting our service members and their families, the TRICARE standard program, and health care for our national guard and reserves.
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    First, while the Alliance would like to thank the committee for the improvements to the TRICARE Standard benefit contained in Section 723–724 of the fiscal year 2004 National Defense Authorization Act, we ask the committee to, again, examine the continued lack of provider participation due to the low reimbursement rates, slow claims-processing, and administrative hassles. The Alliance firmly believes that raising the TRICARE payment level is a critical step to enhancing the standard benefit.

    We were very pleased with the corrections and the Medicare reimbursement rates Congress provided this year and hope that this is one more step toward correcting the problem of low participation in TRICARE Standard. However, the lack of provider education is another reason for the low participation in the TRICARE Standard program.

    Currently, DOD's managed care support contractors are not required to educate providers or potential providers of the Standard program while setting up a network, nor are they required to create networks outside of the military treatment catchment areas. We understand this.

    The Alliance urges the subcommittee to require DOD to establish a mechanism to educate all providers about the Standard benefit and to actively recruit providers outside of the catchment areas.

    Mr. Chairman, the Alliance would also like to express our gratitude for the subcommittee's efforts toward expanding the military health care for our national guard and reserve components and their families. The war on terrorism has gone from a short-term endeavor to being described as a multi-generational, prolonged engagement.
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    Assistant Secretary of Defense Rear Admiral Thomas Hall stated at the Senate Reserve Caucus meeting on March 4th that 37 percent of the Guard and Reserve forces have already been called up to duty. However, studies have shown that between 20 and 25 percent of these national guard and reserves are currently uninsured.

    Uninsured individuals are more likely to neglect their current and preventive health care needs because of the overwhelming expense of self-insurance—being self-insured or pay-as-you-go. Health care readiness remains the number one problem when mobilizing the reserve component.

    Therefore, the Alliance strongly urges the subcommittee to expand full health care coverage in order to support full medical, physical and emotional readiness for the Guard and Reserve.

    The fiscal year 2004 NDAA authorized temporary TRICARE coverage for unemployed and uninsured Guard and Reserve ending December 31, 2004. Due to the administrative difficulties expressed in the earlier panel, the TRICARE Management Activity has yet to implement this new program.

    While the Senate has already taken steps to making this a permanent benefit, the Alliance urges you to encourage DOD to implement the program as soon as possible.

    We would also like for you to fulfill the original intent of the program, therefore extending the program to cover the proposed full year from the date of implementation. This would allow the guard and reserve to actually use the benefit and DOD to fully test the program for participation and cost.
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    Members of the committee, as I end, I did want to mention one issue we are watching very closely. The Alliance is seeking a seamless transition from the old to the new contracts, which, as you are well aware, have already begun. Seamless transition means that health care services are not disruptive to the beneficiary. Over 600 current resource-sharing agreements provide multiple services to these patients.

    These agreements are set to end at the start of the new contract. The Alliance is greatly concerned that the same high-quality services might not be replaced in a timely manner. We will continue to monitor the situation and hope that you do the same.

    Mr. Chairman, members of the committee, again, thank you for your continuous work to improve health care for the uniformed services and their families. We look forward to working with you in the coming year to develop the health care benefits that our active duty, guard and retirees have earned and deserve. And I look forward to answering any questions.

    [The joint prepared statement of Ms. Stanish and Mr. Butler can be viewed in the hard copy.]

    Mr. MCHUGH. Thank you very much. And welcome.

    Let me start with an area that I had mentioned to the previous panel as an area of great concern to me, and Ms. Stanish mentioned it in her comments as did others. And that is the medical readiness of the reserve component.

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    Clearly, one of the ways by which you answer that is to provide insurance to the reserve component on a permanent basis. And the discussions on that are going to continue, costs and other factors, philosophical factors as well as to the division of benefits between the active and reserve component.

    But in any event, beyond that, do any of you have any thoughts as to, number one, how the Department is doing and the military branches themselves in ensuring medical readiness of the reserve component? And do you have any thoughts about what we can do to incentivize or what needs to be done to ensure that that readiness issue is at least significantly decreased?

    And I start with Ms. Stanish because you ended up in that area. If you have any additional thoughts—you made some.

    Ms. STANISH. My concern has always been, with 701, is with the funding. We all know that the funding for the dental and medical screening is to come out of the Reserve pot itself, not out of the DHP.

    But if there is already a lack of funding for within the reserve care, it is piece-meal. It depends if that unit is going to be able to find the funding, create an MOU with a local doctor to be able to do the screening. That is one step in having a ready unit, a ready force, is knowing that their teeth are healthy, and that there isn't a heart murmur before they get deployed. So finding funding and making sure that it is there is something that to me is a no-brainer.

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    Mr. MCHUGH. Thank you.

    Dr. Schwartz.

    Dr. SCHWARTZ. You are going to be having a hearing on the 25th. Correct?

    Mr. MCHUGH. I am looking for tidbits.

    Dr. SCHWARTZ. You are looking for tidbits. Well, you know, I think it is kind of what General Taylor said. You know, the Air Force brought things up quickly because they need to go quickly, and they need to have checklists and things like that the way aviators do. Well, you know, your group cannot go. And commanders need to be held accountable for, quote, ''that metric'', just like they are held accountable for their equipment being ready.

    I mean, you know, the helicopters can't go if there is corrosion. Well, if your helicopters can't go because there is corrosion, then your men and women can't go if there is corrosion. So be—in the terms of the same standards for their personnel as they are held to for their equipment. And that would be my tidbit.

    Mr. MCHUGH. I agree.

    Dr. Buck, do you have any thoughts on that?

    Dr. BUCK. Well, at the risk of digging too far back into my own personal career, I would just offer an observation. And that was—and I can't advise you whether it is still true or not. But I had the perception years ago that the command structure of the reserves, both Army, Navy, and Air Force, was so disparate from the—I should say, different in terms of location and some organizational aspects, that it perhaps created part of this disconnect in communication. Just offer that as an observation. It may not even be pertinent today.
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    Mr. MCHUGH. I thank you for that.

    Mr. Washington or Mr. Butler, any additional thoughts?

    Mr. BUTLER. Just, Mr. Chairman, that we have this opportunity to provide the uninsured reservists a program that they can use. And we have heard comments about, should the reserves get the same benefit as the active duty, and I know you have heard that, too.

    It is not the same benefit. It is going to be more expensive, first of all. But the reservists—in the last two wars, the reservists have played a substantial role, and they should be rewarded for their part in our Nation's defense, much different than prior to the first Gulf War.

    I spent eight years as a recruiter in upstate New York, in your stomping grounds. And when a young man came in and talked about going into the reserves, I said, ''Well, you know, here is the way it works. They send the active duty folks over, and then they activate the reserves to take care of the things back in the States. And if things ever got bad enough to where they needed more people, then the reserves would go.''

    Obviously, that is definitely not the case now, so we need to take care of them.

    Mr. MCHUGH. I appreciate that. And I should clarify—and thank you for reminding me that maybe I need to do this— that concern of a philosophical nature is not something I hold. I mean, I do think there have to be distinctions, but I am not sure you draw the bright line on medical care and medical readiness. I just think there are other places that, perhaps, we could better determine the differences between the active component and the reserve component.
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    For the record as well, unfortunately, I haven't stomped in a long time. And I don't say that with any glee, I assure you. Thank you.

    Mr. Washington, I didn't know if you had anything.


    Mr. WASHINGTON. Yes, sir. I think my biggest concern would be the fact that, as was mentioned earlier about Section 701, 703 and 704 being in place, those sections cover the individuals themselves.

    Section 702, the portion that they are having the difficulty with, covers the family members as well. And I think that the law has already been laid out to temporarily extend those benefits to those guard and reserves and their family members for a one-year period. And I think they should stand fast to the law and implement their processes so at least those folks that fall under the guidelines of that law are protected.

    And then the possibility of a long-term study—and I say study because I am afraid of demonstrations because the Department doesn't have a very good track record in demonstrations. And I can refer to two or three years ago with the Federal Employee Health Benefit Program (FEHBP) demonstration process that was, I thought, believed to be destined for failure, and it did fail.

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    So I think that the law is written. A promise made is a promise kept, and I think they should immediately implement the program at least to take care of those folks who do not have any health care insurance and protect those folks.

    [The joint prepared statement of Mr. Washington and Dr. Schwartz can be viewed in the hard copy.]

    Mr. MCHUGH. You make a good point, and it has been noted by others that the clock is ticking. And although an extension of that is not provided in the President's budget, it is certainly something we are going to have to take a look at very carefully.

    I will yield to Dr. Snyder.

    Dr. SNYDER. Thank you, Mr. Chairman.

    Mr. Washington, Dr. Schwartz, and Mr. Butler and Ms. Stanish, I have your written statements and appreciate your contributions. They are very specific and thorough.

    I just have one question, Dr. Buck. You heard the discussion today I think—I don't know. You were here the whole time. But as I recall, Congress asked you to participate in this study. Was it 1999? When was the legislation?

    Dr. BUCK. The funding and the standing up the committee occurred in 1999.
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    Dr. SNYDER. And then in 1999 and 2000 did the work, and then finished up early 2001, and then the report formally came out in July of 2001.

    Dr. BUCK. That is correct, sir.

    Dr. SNYDER. And then we had September 11th occur of that year, and that is when things got bogged down. But it has been now almost three years since the report came out.

    What has been your involvement with the different services or with the Pentagon, military health services since that time or with your people on your committee? Has there been an ongoing intense relationship, or what has been the involvement?

    Dr. BUCK. I wouldn't describe it as an intense relationship. I did work, as I indicated, on the disclosure statement for a period of months as the interim director of the safety program based at Armed Forces Institute of Pathology (AFIP). And in that capacity, I did have some contact, ongoing contact, with people in health affairs and in various offices of health affairs. But it was not specifically focused on the content of this report.

    Also, I have had, just because Washington, I guess, is the town it is, some ongoing but very intermittent updates of sorts which have suggested to me that a serious look was being given to the report and yet confirmed my view, as I have tried to convey in the statement, that these are huge areas of importance and are very complex, as was certainly, I think, emphasized this morning earlier, and will require ongoing work.
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    Dr. SNYDER. I think, in your written statement, you don't use the same language, but the phrase is similar to our surgeon general: It is a journey, not a destination, in terms of quality.

    Dr. BUCK. Exactly.

    Dr. SNYDER. Thank you, Mr. Chairman.

    Mr. MCHUGH. I thank the gentleman.

    The gentleman from North Carolina.

    Mr. HAYES. Thank you again, Mr. Chairman.

    And Nurse Schwartz—and I use that title with all respect since nurses are closer to the patient in many instances. No offense to the docs.

    Back to my question about the mom with the child with the croup. How are we specifically or can you add anything to this discussion about how we are going to get more access for her to TRICARE?

    And then, specifically, we have deployed spouses or we have spouses whose husbands and wives are deployed, and they have never used TRICARE before. And now it becomes somewhat of a challenge and an opportunity to educate them as to how to do that. If you would address both of those issues from your perspective, it would be very helpful.
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    And Ms. Stanish, you, too.

    Dr. SCHWARTZ. Well, first of all, if a baby is in an acute croup situation, you could go to any emergency room and I am sure VA physicians are capable to give pediatric care, but that wouldn't be my first choice for a pediatric emergency, hopefully. Because in an emergency, a TRICARE patient can go to any hospital whatsoever.

    Mr. HAYES. Right. This is more of a——

    Dr. SCHWARTZ. Yes. But, I mean, I just wanted to clarify that. I am not being disparaging of the VA, but that just—that came up in the President's Task Force literature, anyway.

    The problem with access for our guard and reserve families, there are two issues. Number one, understanding the benefit, which is a challenge. And that is going to fall upon TRICARE Management Activity to work through the managed care support contractors who will then be tasked to then educate the beneficiaries.

    And one of the things we did, and we are most appreciative for last year's initiatives to address the TRICARE Standard access issues, is to educate, get out there and educate the family members, get out there and educate the doctors.

    So hopefully, if what was done in last year's National Defense Authorization Act is done effectively, then the answer to your question will be, it will be resolved, because beneficiaries will be contacted, physicians will be, quote, ''encouraged to be standard providers,'' to get more doctors out there into what you are calling the white spaces, the places where the guardsmen and reservists—we are having problems for retirees out there as well. The argument you made for the reservists can be made the same for the retirees.
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    So we are hoping that the report—DOD is supposed to give a report to Congress on the 31st of March on how they are going to implement Sections 723 and 724. So if that is done effectively, it will apply to all beneficiaries, not just to the guardsmen, and the reservists as well.

    But I am very empathetic to guardsmen and reservist family members. It is a stressful time. You are not used to being a military spouse. Your husband or wife is gone, and now you have to deal with this program, and it is a very complicated program. So I look to TMA for their leadership, and I look to the managed care support contractors to deliver the message. And I hope I answered your question.

    Mr. HAYES. Very helpful.

    Ms. STANISH. It boils down to communication, it does, both to the beneficiary and the provider. I think some of the onus also falls on the services to educate through the reserve unit directly, ''These are your benefits, please bring them home and give the information to your wife,'' prior to any idea of being activated. It is a two-pronged ordeal.

    My father is a reservist. I know that, growing up, not once did we ever hear anything about CHAMPUS. And I am sure he had information, but it needs to be stressed that it has to be brought home. It needs to come from TRICARE as well as the services directly.

    Mr. HAYES. Anyone else?

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    Thank you, Mr. Chairman.

    Mr. MCHUGH. Thank the gentleman.

    The gentleman from Tennessee, Mr. Cooper.

    Mr. COOPER. I thought Admiral Cowan made an excellent point in the previous panel when he pointed out that the military VA system is treating someone who is 60 years old, chances are they have been treating that same person since they were about 20 years old, 40 years of health care.

    And my conclusion, hearing testimony like that, is we probably have been underinvesting in our troops relative to some of our weapons systems. Because I know all of us who fly regularly on C130 airplanes, that is a plane that was designed before I was born, perfectly maintained. It is still the war horse in Iraq and other theaters.

    And somehow, we don't view our people with the same care and diligence. Because if you just think of 20, 30 years of Physical Training (PT) requirements, that is an ability to shape behavior that we simply do not have in the private sector. So obesity and other endemic social problems in our society should not be as prevalent in our military and our retirees as perhaps they are.

    So I would love for us to be ambitious enough so that we would have a health care system where we would see 40 years of opportunities to serve our troops so they could live longer, happier, better, instead of perhaps 40 years of lost opportunities.
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    And we all regret the decision years ago when cigarette smoking was prevalent, to foist them on our troops, addict the population. And you can't blame folks for that because that was society at the time.

    But there are so many things we know now that we are simply not offering to our troops that could help them and their families. And that is why I would love to see our ambition be to have a better system. So, join the Army, live longer, unless you are shot in combat or something.

    But the potential seems to be there. And that is one reason I appreciate all of your efforts but, in particular, Dr. Buck's study.

    I am sorry it was overlooked for a time. Because to me, your central message is jointness, and that should be very popular with this Pentagon, because health care should apply to all of our troops, and quality health care should be available.

    If we have to centralize certain rare operations, let us do that. Fly our troops to the best place, whether it is the Mayo Clinic or whatever, so they get the top-quality care instead of the parochialism we often see, not only in our services but with each provider.

    And certainly, that plagues the private sector. Every good hard doctor in America wants his own heart, you know, operation at his own heart hospital, whether they are any good at it or not.

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    And we have an opportunity for efficiency and centralization and quality that simply exists nowhere else. So I would love to see that happen.

    I don't want to emphasize the negative again, but Dr. Buck and I had the chance to talk several months ago, and pointed out, one of the more disturbing findings as he did his report was that—I think there was one commanding officer that had stuffed medical records in a closet somewhere. And you see things like that and you think an inexcusable lapse.

    And I hope it is a rare incident. But things like that should be eminently controlled but, you know, probably go unreported, undocumented. And then meanwhile, probably 600 Congressman around the country have to piece together medical records for their veterans that are simply not available.

    So hopefully, we can work together to solve these problems. But I appreciate the contributions of everyone on this panel. Any comments would be welcomed.

    Mr. WASHINGTON. I would just like to say that I had the opportunity to serve on that distinguished panel with Dr. Buck, so I sympathize and understand everything that he is here to represent and, basically, the report itself. So, again, I served on the panel with Dr. Buck as well, too, sir.

    Mr. COOPER. Neither of you gentlemen would want to disclose the facility where the 600 missing records were found, would you? We don't want that degree of accountability, do we?

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    Dr. BUCK. We do, though, again, on behalf of the panel, those, almost all I have been able to keep track of, do appreciate very much your interest and continued oversight.

    Mr. COOPER. Thank the Chairman.

    Mr. MCHUGH. Thank the gentleman.

    Dr. Gingrey.

    Dr. GINGREY. Thank you, Mr. Chairman.

    And I thank you, ladies and gentlemen, for taking the time to come visit with us today and discuss these issues. I believe they are vitally important.

    And during the previous panel, I had asked the admiral, the generals to outline some specific programs that didn't receive funding this year. And maybe each one of you could elaborate on the testimony you have already given and share some specific ideas about where the military health system could stand more attention, particularly with regard to the reserves and guard component and this readiness issue.

    Dr. SCHWARTZ. We sound like a broken record, but it would be education. Reaching out to beneficiaries.

    I know there is a plan now—with the new TRICARE contracts, every beneficiary has to get a mailing, every household will get a mailing. And within that information, they are going to try to include the TRICARE Standard education piece. But that is one check in the box for 2004.
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    Every year—I am in Blue Cross/Blue Shield through my employer-sponsored insurance, with TRICARE as second payer. Every year I get a booklet from Blue Cross/Blue Shield, just a small booklet. I would like to see, every year, just like the prime beneficiaries get information, the TRICARE Standard beneficiaries get information as well that gives them phone numbers of where to go for help, a basic outline of the program and how it works for them.

    Dr. GINGREY. So you get nothing from TRICARE?

    Dr. SCHWARTZ. I have been an active duty—I have been a spouse for 18 years, and I have never gotten one piece of information from TRICARE, because I have always been a Standard beneficiary. The only things I ever got was through the spouse club when they were passing out TRICARE books and things like that. Now, my husband gets information periodically because he is in Prime.

    Dr. GINGREY. Others.

    Mr. WASHINGTON. I would say the provider reimbursement problem. I think this is one of the biggest problems we have with our Standard beneficiaries, is that no one wants to accept a TRICARE patient for the simple fact because of the low reimbursement rate. And I think we seriously need to look into that area and try and at least bring the reimbursement rate up to a much more comfortable level to where a provider would be interested in becoming a TRICARE network provider to service a beneficiary. But I think we really and truly need to look into the area of provider reimbursement.
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    Dr. GINGREY. Dr. Buck.

    Dr. BUCK. Yes, sir. I would echo what Mr. Washington has just said, because in my own personal experience talking with leaders of civilian community hospitals in position to establish some relationship of support with military hospitals and other clinics in their region, the issue of reimbursement rates has come up repeatedly.

    And it has also been suggested to me—I can't give you dollar figures—but that the reimbursement rates that are offered through the TRICARE mechanism are, in fact, well below Medicare reimbursement rates. So at least, that is what I have been told.

    If I may, I would like to respond to your question, which I appreciate a great deal also, in one other area. It is to do with, as you asked, you know, if you—I guess, if you had new money or something, what would you consider? And the reason I picked the two examples that I did from the prepared statement offered was to suggest that the well-designed demo is an opportunity that might benefit if funds were to become available.

    Good demos—I am sure you realize, but good demos cost money. And often, it is seen by people of action as, you know, not another study, their hands go up, and that kind of thing. But a good demo is valuable, and I think it is worth presenting to you in this context as opposed to the other item which I cited, which, frankly, in most ways to me is a reorganization of current resources, would not involve much money, in fact, might actually produce savings.

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    Thank you.

    Dr. GINGREY. Thank you, Dr. Buck.

    Mr. BUTLER. One idea that hasn't come up today, and this is—you asked about the perfect world and if we had funding, and I don't think this would cost a lot of money, but it is permanent dependent ID cards for those over 65. With TRICARE for Life, of course, you need to take out Part B.

    You know, we have a small core of dependents, maybe widows, who are at nursing homes and other places, and right now the requirement is for them to have to renew their ID card every four years. And because of mobility problems and things like this, it is very difficult for them to do that. So we would like to recommend that ID cards be made permanent for those over age 65.

    Dr. GINGREY. Good point.

    And Ms. Standish.

    Ms. STANDISH. Back to education. Provider education and recruitment. There have been a lot of war stories back from the CHAMPUS era about just how bad reimbursement rates are, but also just the administrative hassles and low or slow payments.

    And there have been numerous improvements in the TRICARE Standard program on the provider side, but a lot of providers don't know about it. And it is not—it shouldn't be up to a beneficiary who lives in a catchment area, who has to find a specialist, to go to the specialist who is not taking TRICARE and try to recruit him in so that he can get his care.
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    And I have had to work through this program, this policy of bringing in a specialist into the TRICARE system on a couple of occasions in the two years that I have been here, and it seems to me that it is not up to me or my beneficiary, that it is up to the Department of Defense to make sure that at least the education is out there.

    They have said that the TRICARE Standard program has improved. Let them go out there and show the providers. And that would help a lot. Yes, low reimbursement rates, but there are enough providers out there that would overlook that to help the—you know, for patriotic duty. And I think that is—- education and recruitment—is important.

    Dr. GINGREY. Thank you.

    And thank you, Mr. Chairman.

    Mr. MCHUGH. Thank the gentleman.

    Just to comment on one of the things that Mr. Butler said, that over–65 card is a great idea. We are looking at that very carefully so we hope to help out, and we certainly appreciate your organization's leadership on that.

    It just came to my attention, you went to Oswego?

    Ms. STANISH. Yes.

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    Mr. MCHUGH. Go Lakers. I won't ask you if you voted for me, but it is in my district.

    As I mentioned in my opening comments and as we will hear far more about on our third panel, we are in a transition now on the TRICARE contracts, and it is an enormous change. And I have had a chance to meet with some of the folks from the three new regions, and it is, so far so good. Everybody is working hard and hopeful this can come off smoothly.

    But I wonder if you had any general comments or specific concerns on this as it goes forward. Anything we ought to be keeping in mind or perhaps the next panel ought to have the opportunity to hear you say?

    Dr. SCHWARTZ. Well, Mr. Chairman, if they hadn't named the acting TriCare Regional Officer (TRO) for the North Region, I would have dwelt more on that. And we are really pleased that they at least put General Adams in place. Because we were very concerned.

    You know, colonels are good people, but colonels aren't the ultimate leaders. And the train was leaving the station, as I said earlier about some other things, and at the end of the day, that is the person that has the ultimate responsibility and the governance for the region.

    So we are very pleased, but we are still concerned that the South doesn't have a TRO either. And that decision has to be made quickly to help those folks in that region make their transition, because when that leader comes in, they are still going to want to do it their way. That is what happens, ultimately. So I hope that they look to nominating the person for the South as well.
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    Mr. MCHUGH. And, acting, as I said, no disrespect.

    Dr. SCHWARTZ. No. General Adams is fantastic.

    Mr. MCHUGH. Absolutely. And came with rave reviews.

    Dr. SCHWARTZ. She is excellent.

    Mr. MCHUGH. Make it permanent as far as I am concerned. But that is my own opinion. But it is really important, I think, to have a full-time acting.

    Dr. SCHWARTZ. Absolutely. So we appreciate that, two down and one to go. Well, one and a half down to go.

    Mr. MCHUGH. Well, we are going in the right direction.

    Mr. Washington.

    Mr. WASHINGTON. The only concern I would have would be continuity of care and a smooth transition. And from what I can see and understand, that the three contractors are working well together to try to bring about a smooth and seamless transition. And I would like to applaud them for their teamwork effort in working together to bring us one uniform contract across the board instead of different policies and different regions.

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    But I am glad to see that they are working as a team, and I hope that when the new contract is stood up, that we do have a smooth transition and no interruption in the beneficiary service. So I applaud them for that.

    Mr. MCHUGH. I agree. Those contractors that will no longer be participating, by and large have done a good job trying to be of assistance in that transition. So I am glad to hear that you feel that way as well.

    I don't know, Dr. Buck, if you had any thoughts on that, sir?

    Dr. BUCK. No.

    Mr. MCHUGH. Mr. Butler.

    Mr. BUTLER. We had mentioned it in our testimony, but there are 600 current resource-sharing agreements, and we would like to ensure that those—they end with the current contracts. So we would like to ensure that those 600 slots, those 600 physicians, those 600 people that provide health care to our beneficiaries, that that goes smoothly as well when we transition to the new contracts.

    Mr. MCHUGH. Ms. Stanish.

    Ms. STANISH. One thing that we haven't mentioned is the appointment setting. When they decided—they, being the Department of Defense—created the new TRICARE program, they carved out the appointment-setting portion and took that out of the managed care support contractor's hands. And at this moment, I don't think we have a contract yet in place.
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    And at the end of the day, for that mother who has a croupy child who is crying, the number one thing in her mind is a phone number to call to be able to get in to see a doctor. And we really would like to be able to have something in place before the contracts go live. That is right around the corner. That is June.

    Mr. MCHUGH. It is quick. Close. You are absolutely right.

    Dr. Snyder.

    Dr. SNYDER. Thank you all for being here. Appreciate you.

    Mr. HAYES. Mr. Chairman, of interest on the reimbursement. My nurse down the street brought me a form that came back from somewhere in the Government that said, ''Your reimbursement may be affected by the budget problems in Washington.'' that was the last line. I don't know where in the world that came from.

    Mr. MCHUGH. You live on a busy little street. When I was down visiting you, you didn't take me to your home.

    Dr. SNYDER. Mr. Hayes and I are going to relate that specifically to the Chairman of the Total Force Subcommittee, the problems they are having.

    Mr. HAYES. Thank you, Mr. McHugh.

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    Dr. Gingrey, I don't know if you have——

    Dr. GINGREY. No.

    Mr. MCHUGH. Well, again, thank you all. And we are going to have—I am going to have and I am sure the other members are as well, a number of written questions that we would appreciate your assistance in getting written responses so that we can get those as part of the record.

    [The information referred to can be viewed in the hard copy.]

    Mr. MCHUGH. For a personal note, I deeply appreciate your individual and your organizations' leadership and concern for those who rely upon you to carry the call forward and to help us better understand the challenges and the need and your partnership in this issue. And God bless you for that.

    Dr. Buck, thank you so much. A resurrection of sorts—in no small part due to Mr. Cooper and others—of a very important report. And I was pleased to have the distinguished ranking member get those 10 points that were in your report into the record, and we are going to continue to try to focus on that. So thank you for your service as well.

    So, with that—I am going to recommend, and I hope nobody will object, that between this panel and the next, we take about a 10-minute break. So with that, thank you all so much.

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    Mr. MCHUGH. If we could have everybody find their places. I am guessing that is 10 minutes, or as close as we are going to get.

    As I mentioned to the second panel as I thanked them—and meant it sincerely—for their patience, the third panel is even more deserving in that regard. And, gentlemen, we do appreciate your sticking with us, and we look forward your comments.

    Before I introduce this panel, I do want to mention that we received an additional statement from the General Accounting Office, and it deals with the status of the fiscal year 2004 requirements for reservists benefits and monitoring beneficiaries access to care. And without objection, I would like to have that GAO statement entered into the hearing record in its entirety. Without objection, so ordered.

    [The information referred to can be viewed in the hard copy.]

    Mr. MCHUGH. Our next panel is comprised of three individuals, three gentlemen, no stranger to this subcommittee, no stranger to the field in which we are endeavoring here today. And let me introduce them. And they are seated as I have them here, so that is a good start.

    Now, David McIntyre, Jr., President and CEO of TriWest Healthcare Alliance.

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    James Woys, who is President of Health Net Federal Services.


    And David Baker, President and CEO of Humana Military Healthcare Services.

    Gentlemen, welcome. You know the drill. You have been here before. It is good to see you again.

    Mr. MCHUGH. David McIntyre, you are on, sir.


    Mr. MCINTYRE. Good afternoon, Mr. Chairman, Dr. Snyder, and distinguished member of the subcommittee. It is a pleasure again to appear before you.

    I would like to begin by saying that everyone associated with TriWest, from our Blue Cross/Blue Shield and University Hospital System owners to our staff and subcontractors, consider it a high honor to be part of the team serving the health care needs of those who wear the cloth of our Nation in defense of our freedom, their families and those who have gone before them. We are proud of their accomplishments. We are humbled by their sacrifices, and we are grateful to be part of the team entrusted to serve their health care needs.
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    I also personally consider it a great privilege to be able to collaborate with the two gentlemen that are on the panel with me, Jim Woys and David Baker. Each of these guys and their companies are first rate.

    Individually, I believe that we are going to deliver on the promise of TRICARE in our own regions, but together, I think that we are going to succeed in supporting the entire TRICARE team in delivering on this program's promise.

    I would also like to associate myself with the remarks that were made previously about the services' surgeon generals. We have a great group of people with which to work and a great team in this program.

    And we are going to miss General Peake and Admiral Cowan and appreciate the sacrifices that they have made and the contributions that they have made to the success of this program. And I have confidence that those two services will find equally capable people to replace them.

    As we prepare to go live with the new set of contracts, we have a great opportunity to delight our customers and enhance the efficiency and effectiveness of the program on which so many rely and on which the taxpayers have invested so much.

    As with any new opportunity, however, comes some challenges. From my personal vantage point, I see three critical imperatives to success: Effective Coalition building, accomplishing a seamless transition and sufficient funding and flexibility.
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    This program, particularly in the new paradigm, cannot be effectively managed at the local level without the construction of an effective and focused coalition. It is for that reason that I so strongly supported the creation of the regional director role. This has been reinforced over the past several months as I have worked closely with the West Region's director, Rear Admiral Jim Johnson, and I thank Vice Admiral Cowan for stepping out so smartly and so quickly to assign him to this role.

    As a result of Jim's leadership, not only is the coalition being formed but we have already developed the framework for a joint strategic plan. We and our senior teams meet once a month to review status and discuss critical issues and shortly will begin to gather the members of the newly created Regional Advisory Board, which is a forum for all of the major stakeholders to discuss and work on critical issues and strategies for the region's success. This group is also going to include the VA, which is going to be important to the work that we are going to continue to proffer in the West Region.

    We in the West believe that the prime directive for the early days of the next generation of TRICARE is accomplishing a seamless transition. This requires a plan, focus and adaptability.

    We in the West have a clear plan. It is a compilation of 47 plans that cover every component critical to success. I am pleased to say, sitting here this afternoon, that we are on track, we have focus and that all of the operational stakeholders are reviewing the same information through our extensive balance scorecard that is available through the Internet. It covers the status of implementation of the plans across the enterprise and is updated on a regular basis.
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    Having said all that, however, we are going to encounter areas where contingencies are going to be required. Thus, we also have a set of contingency plans that grow as we find areas of risk.

    From the vantage point of myself and my team at TriWest, the collective operational risks that we face at this point are four: One, the inability of the services to effectively transfer the current resource-sharing workload; two, the lack of availability of promised systems or the population of those systems with the necessary data; three, the lack of ability to implement the carveout appointing contracts on time; and, four, the sufficiency of funding and flexibility.

    I am pleased to report, however, that there is a lot of focus on these four areas of risk, but nonetheless, they are areas of risk.

    While all of us would be more than enough busy if we just had to focus on the task at hand, we also have the responsibility to support the services as they are engaged in conflict across the world, the re-engineering of the system to make it more efficient and effective and the implementation of the new benefits. By anyone's standard and measure, this is a full plate.

    All this takes me to the third imperative, the sufficiency of funding and flexibility. As many of you have said today, we find ourselves in unchartered water with a lot of variables that are simultaneously at play. Cost estimating for programs of this size and complexity are complicated under the most normal of circumstances, yet these are not such times. And we are not just dealing with cost; we are also dealing with spend. And it is really important to understand the difference.
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    I am pleased that Dr. Winkenwerder and his team are focused on this issue as full funding of the DHP is critical to delivering on the promise.

    As we have heard today, this topic is also foremost on your minds in order to make sure that you have sufficient information from which to weigh policy options as well as knowing where you need to help if there are shortfalls.

    One of the critical pieces of this is tearing down the fence. If action is not taken to tear down the artificial fence—that was created through the appropriations process—to effective fiscal management in favor of flexibility and transparency regarding how resources are being expended, I believe we will witness a fiscal and access-to-care crisis before the close of this fiscal year.

    Again, it is a pleasure to be with you today. Eight years ago, as the founder and creator of TriWest, we started a journey to open up a new contract in the 16 States of the Central Region. I sit here today prepared to engage in the successful implementation of Washington and Oregon starting on June 1; Alaska, California and Hawaii starting on July 1; and the convention of the 16 State Central Region on October 1. I believe we are going to be successful, and that is because of the common and collective focus that we have with the entire team that is engaged in this effort.

    As I said earlier, it is a real honor to have the opportunity to serve this population. From my perspective, there is no population more worthy of the best that the health care delivery system has to offer than those who wear the uniform of the United States, their families and those who have preceded them in service. Thank you.
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    [The prepared statement of Mr. McIntyre can be viewed in the hard copy.]

    Mr. MCHUGH. Thank you. And thank you for all that you do for all of those important men and women in uniform. We deeply appreciate that and, as always, appreciate your being here.

    Mr. James Woys.


    Mr. WOYS. Good afternoon, Mr. Chairman, Dr. Snyder, distinguished members of the subcommittee. Thank you for the opportunity to address you on the status of the TRICARE program. It is always an honor to be invited back to share with you my company's perspective.

    My company, Health Net Federal Services, serves as the current managed-care support contractor for five TRICARE regions and the State of Alaska, covering approximately 2.5 million TRICARE beneficiaries.

    Last year, Health Net was awarded the newly-formed North TRICARE contract, which is comprised of the current Region One and Regions Two and Five, providing health care services to approximately 2.7 million TRICARE beneficiaries.

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    Before I begin, I would like to personally thank Mr. Chairman and Dr. Snyder and all of the distinguished members of the subcommittee on behalf of all of the beneficiaries who I serve and all of the beneficiaries who I will serve for your efforts to continuously improve the TRICARE program and for fighting to keep the promise for our retirees and for supporting our troops abroad.

    The past seven months and the next seven months have been and will be the most challenging months my company has ever experienced. As a result of the north award last year, we are encountering substantial transformational changes. I try to explain this transformation as the wind-down and closing of a $2 billion-a-year business and the simultaneous startup of a $2 billion-a-year business in less than a one-year time span.

    In addition, while we are going through this transformation, we are bound to maintaining a high level of operational performance in our existing contracts.

    As I said, we are committed to maintaining exceptional performance throughout the term of our existing contracts. The current operational performance of my contracts and the entire TRICARE program has never been better, as mentioned by Dr. Winkenwerder this morning.

    As the system continues to mature and stabilize, the success of the TRICARE program increases. Within the scope of my three current TRICARE contracts during 2003, we have all-time levels, high levels, of beneficiary satisfaction demonstrated by the almost 1 million members who enrolled in TRICARE Prime.

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    We had over 7.2 million customer contacts via phone or face-to-face, well within contact standards, achieving first-contact resolution substantially north of 95 percent.

    We have industry-best claims-processing performance. In our contracts, we process almost 27 million claims, 99.98 percent of those processed within 30 days.

    We have optimized the access to military facilities, we recaptured over 3.5 million outpatient visits and over 65,000 hospital missions in the past 3 years through the resource-sharing program.

    And we have maintained a comprehensive civilian network of providers that meets the needs of our beneficiaries.

    As we phase out of our existing contracts, we are focused on two major areas in addition to maintaining the high level of operational performance: First, an unwavering collaboration and partnering with both TriWest and Humana to ensure their success and, second, a laser focus on ensuring a seamless transition for our beneficiaries, our providers, and our associates.

    This collaboration and focus will ensure that all of our valued beneficiaries will have continued access to high-quality health care, day one, and that those beneficiaries who are in need of special help or course of treatment will not fall between the cracks.

    As we turn our attention to the implementation activities in the new North Region, we have focused our efforts in the following major areas: One, make sure that we are, day one, ready; second, that we have minimal disruption to our new customers; and third, that we continue building strong collaborative relationships with all of the stakeholders.
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    I believe the most important facet to a successful transition, besides a lot of hard work and attention to detail, is building strong collaborative and partnering relationships with all key parties.

    Everyone involved in a very successful program understands it takes teamwork, collaboration and general partnerships to achieve excellence. It is no different in our current efforts leading up to the transition of the contracts this summer. There must be participation and cooperation among all stakeholders at all levels in order to achieve this success.

    I want to take this opportunity to express my appreciation for the dedicated efforts of the TriCare Management Activity (TMA) Administration, from Dr. Winkenwerder to the surgeon generals, General Peake, Admiral Cowan, and General Taylor; to Admiral Mayo and Captain Barry Cohen of the TRICARE Regional North Office; Captain Graham Innins and Mr. Don Calleel of the TMA award office; and the scores of personnel in regional and local government operations who are working closely with us to ensure a successful effort.

    Mr. WOYS. Also, a special debt of gratitude to the beneficiary groups who serve as a true sounding board for our activities and play such a vital role in the communication to hundreds of thousands of our beneficiaries.

    I also want to express my particular appreciation for the 1,800 current associates of my company who are undergoing a significant period of change from their current work to a new future in the North Region.
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    Finally, I want to express a special appreciation to my colleagues here today, Mr. Dave McIntyre, Mr. Dave Baker, as well as Mr. Nelson of Sierra. They have and their teams have truly stepped up together with my team in an unprecedented manner to collaborate closely in the transition activities to ensure that we deliver a seamless transition for our beneficiaries. I would like to call them our great American heroes.

    In summary, our current operational performances are doing well. Our transition efforts both in and out are on schedule, and a collaboration in partnering across the system by all stakeholders could not be better. We still have a lot of work to do, but we are all working together to ensure that this evolution of the TRICARE program is done with a focus on our valued beneficiaries with little to no disruption to their ability to access the highest quality health care that they deserve.

    Thank you, Mr. Chairman. I will be happy to answer any questions.

    Mr. MCHUGH. Thank you very much. I appreciate your comments, as always.

    [The prepared statement of Mr. Woys can be viewed in the hard copy.]

    Mr. MCHUGH. Mr. Baker, welcome sir. We look forward to your comments.

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    Mr. BAKER. Thank you, Mr. Chairman, Dr. Snyder, distinguished members of the subcommittee.

    On behalf of Humana Military Healthcare Services, I am honored to be here today to update you on our support of the military community through TRICARE. As our country wages its war on terrorism, our company's thoughts and prayers are with our troops and their families. We are extremely grateful for their sacrifices on our behalf.

    As President and CEO of Humana Military Healthcare Services and as a retired military officer, I want to thank the committee for its ongoing support of the Defense Health Program. Your actions have created a health care system that is second to none, and your support is very much appreciated by the beneficiaries we jointly serve.

    Humana Military Healthcare Services is a wholly-owned subsidiary of Humana Incorporated, one of the Nation's largest health benefit companies. Formed in 1993, we have delivered TRICARE services since 1996. Today, we are responsible for two managed care contracts; and we are the largest of the four current TRICARE contractors. Going forward, our company has been selected to implement TRICARE in the new South Region, and we were recently chosen to administer a limited TRICARE program in Puerto Rico.

    Now, as a life-long military beneficiary, I can personally attest that today's TRICARE is serving the military community better than at any time in our history. I am indeed honored to be a contributing partner in making today's TRICARE such a success.

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    In its quest for continuous improvement, this year the Department elected to make significant changes to TRICARE; and, as you have heard from my colleagues, these changes are not without risk. In my written statement I have provided some detail on the following risks as I see them.

    First, the transition from twelve TRICARE regions to three means that nearly two-thirds of the country will change contractors this year.

    At the same time, several programs, as you have heard this morning, including retail pharmacy, resources sharing, military appointment making, claim processing for TRICARE-for-Life beneficiaries are being carved out of the basic contracts.

    Third, a lot of new government systems, processes and procedures are being implemented and yet unprecedented new contractor performance standards are being established.

    Finally, the new program in Puerto Rico is being implemented in an extremely short 60-day period driven by the recent closure of military facilities.

    Implementation of each of these initiatives involves a degree of risk, but by working together with the Congress, the Department, the services, the advocacy groups and the other TRICARE contractors, as we have always done, I am optimistic we will be successful.

    While I am pleased to be a part of the new generation, I have provided several recommendations for your consideration, many you have already heard this morning.

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    First and foremost, the Congress must continue to fully fund the Defense Health Program. This is essential to meeting both readiness and peacetime service needs.

    I also recommend that Congress refrain from further fencing of the Health Program (HP) dollars.

    Third, I urge full implementation of the expanded program of TRICARE eligibility for Reserve and Guard personnel authorized by the Congress last year.

    Finally, at Humana, we hope to advance new cutting-edge industry concepts to further improve the TRICARE program in a manner that allows beneficiaries to more actively manage their own health care needs. I urge your consideration and support.

    In conclusion, Mr. Chairman, let me thank you for the opportunity to be here today and for the chance to serve America's military community. Notwithstanding the risks, I am confident in our ability to provide outstanding TRICARE service during this period of profound change.

    Thank you again, Mr. Chairman. I will be happy to respond to your questions.

    Mr. MCHUGH. Thank you, Mr. Baker.

    [The prepared statement of Mr. Baker can be viewed in the hard copy.]

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    Mr. MCHUGH. Again, to all three of you, I appreciate your being here.

    As you are well aware, you are the third of three very distinguished panels. I think in each of the capacities that the witnesses served I admire all of them, and I certainly admire all three of you, but I am not sure I envy the three of you at this moment.

    As I indicated, you have an enormous challenge in front of you and you are a part—a critical part but just part of that challenge of making it work. But you are the ones that are going to hear about it first, I suspect, if things do not work out the way we all hope they do; and as you are laboring very hard to ensure they do.

    It is kind of like a golf swing—and I am saying that as an absolutely horrendous golfer. There are so many things that can go wrong in that golf swing and just one little thing can make the shot go God knows where.

    This is so large and there are so many things that are potential for taking us off track, it is almost unfathomable. I was wondering, given the opportunity for those of us who do not have your unique and professional perspective, can kind of watch, can you name one or two things that you are most concerned about of those many things that may go wrong and if they do will have significant impact?

    As a subset of that, what would you—and David McIntyre had mentioned the regional administrators and directors. We have talked about those a couple of times today. It was one example of something that the government needs to be doing, the Department needs to be doing. Any of you endorse that or do you have additional thoughts as to what do you think maybe the Department could be doing to maybe step out a little bit more smartly, if that is a sensible phrase?
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    I will be happy to hear from whoever chooses to go first, as they are all writing.

    Mr. WOYS. Let me first talk about the challenges that we all worry about, I think, as we turn these contracts live and give them to each other and move our business around.

    I have less concern about the collaboration I have with these two gentlemen, that we are working closely together, that we have teams that meet every week together both on the phase-in and phase-out.

    Mr. Baker and I have some reciprocity that is really important. I am giving him Region six, and he is giving me Regions two and five. We have a lot of common interest, and that goes well in those activities. We are working very close together to try to ensure that the associates we all have that are departing our current regions have opportunities to work with the follow-on contractor, which maintains a lot of stability in the program when that occurs.

    The things—and you heard some of those today—that I think are challenges that everybody is working hard toward but if they miss a beat, we could cause problems—the TRICARE program has now been carved up, not only a manager's contract but a multitude of carve-out contracts; and they are all being implemented kind of simultaneously.

    When we turn the switch on, everybody has to be operating at the same level. That is not only what we do in the managed care port side, but there is an appointing function. There is a research-sharing activity that needs to occur, the claims processing for the over 65 population that needs to occur at the same time as well as my customer on the direct care side needs to prepare for all those things that he used to buy from me that he needs to staff up for. There is some direct utilization management activities they do.
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    So all parties have to work together to make sure that we are providing the same level of service we did on the last day of our contracts as we did on the first day so there is a seamless transition. So there is a multitude of variables that have to come off at the same time.

    The good part is everybody is aware of those variables. There is no hidden variables there. Our customers are working toward resolution of all of those.

    You heard Mr. Baker and Mr. McIntyre say there are multiple systems that we are reliant upon as well in order to turn this thing live. There is referral and authorization systems that are occurring within the direct care system and some other software that has to happen. Those type of things, again, all have to happen at the same time, and any one of those in the breakdown makes us a little nervous. So we all have to plan contingencies and make sure if something happens we are able to cover it.

    The focus for us, and I am sure it is true for all three of us, is we need to make sure that no beneficiary is left behind, that we do not allow any beneficiary to fall through the cracks, that everyone has access to quality health care on the last day of the contract as well as the first day of the contract. We can work out all the contingency stuff and work behind the scenes, but we need to make this as seamless as possible for our beneficiaries, especially those who are in a course of treatment or need special help. Those are the ones that end up on your desk if we fail to take care of those people.

    So those are my biggest worries, that we have a lot of things going on in parallel and everybody is focussed on that, but those are concerns.
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    Mr. MCHUGH. A lot of balls in the air, to use a cliche.

    Mr. BAKER. I think, if I could jump in, I would echo those comments; and I will share with the committee what I have indicated to our company back in Louisville. Thank goodness we are not first. Because there are a lot of balls if the air here and a lot of interdependencies. I have absolutely no doubt that we will get through them, but simultaneous implementation of multiple changes in this system just is very, very risky, and we need to recognize that at the front end.

    Mr. Woys mentioned the new systems and the carve-outs, and that is really where we need to have our laser-like focus. I would share with you, though, that the Department I think has done some good things, some very good things in this regard.

    There is upcoming a summit that will involve all of the three of our companies as well as a number of the carve-out companies that will be responsible for new customer service so that we can ensure that the customer hand-offs are handled as smoothly as possible and none of us are surprised in the process. So I really applaud that kind of an effort.

    I would also share with you that, on a weekly basis, as I know my colleagues are, we are in touch with the DOD people who are implementing these new systems and processes. So, as Mr. Woys indicated, there are no surprises. Things do not always go according to schedule, but if you know that far enough in advance and can plan for it, then that is a good thing.

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    I would say that now we are coming down to the end here. When the implementation starts, we cannot delay any further. It is one thing in January and February and March to put things off 30 days when we have not started, but we are going to be starting in June, and we cannot put off that. So it is just very, very critical that we understand all of that and continue to work together, not only the three of us but all of the interested parties.

    Mr. MCINTYRE. As the one who has the distinguished privilege of being at the tip of the spear for 30 days on their own, from June 1 to July 1, and having gone through this personally 8 years ago, we know a lot more than we knew then and we have a lot more sophistication today in terms of how we are doing this together. The leadership team in the Department is seasoned. They are focused. They have heard your messages again echoed today. There are no rocks to hide under.

    The fact of the matter is we all have to do this together, and there is a lot of lift involved. You know, it is not only moving components parts, but we are reengineering the parts while we are trying to assemble the machine, and that makes it complicated.

    I guess I would just say personally that the thing that we need to commit to you is that we will be transparent and we will be proactive in letting you understand where we are facing challenges and what those are, because we are going to have them. Then we need to tell you what we are going to do about them and when they are going to be fixed, and you need to tell us whether it is sufficient. Then you need to keep us honest in the process of making sure that we have fixed the things that are going to need to be fixed.

    I think that the big rocks will successfully move. They are going to be small ones that will creates some ripples in the pond.
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    The thing that I have learned over the last eight years is where you are transparent and you are vulnerable, and you say, look, I have an issue. Here is what I think I will do to fix it. Does this work? Now watch with me and make sure I am doing this right. Most people will give you the space; and I think on our side, on the beneficiary association side, in the Department, out of your offices, we are all trying to do this as best we can.

    We need to sensitize the populations that are going to rely on us to the fact that there may be some bumps, but we need to manage them together, and we are certainly committed to that.

    I think it requires education, it requires communication, it requires collaboration, and it requires flexibility. I have been very impressed, particularly over the last week as we have confronted some pretty major systems issues, of the level and degree of focus and willingness to look at not only the source of the issue but what we are going to do as contingency plans. So that gives me great hope for where we are headed.

    Plans are not flawlessly executed, and that is why you have to be nimble. But it is also why you have got to have good communication and you need to be focused, and I think everyone is focused.

    Mr. MCHUGH. Thank you, gentlemen.

    You heard Mr. Baker specifically mention some of the thoughts he had with respect to the carve-outs. I know in conversations I have had with our other two distinguished panelists there are concerns that you have about those as well. Would you like to at this point for the record just kind of expand upon those or do you feel it has been stated?
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    Mr. MCINTYRE. As the one who starts first on June 1, I will start off on that issue.

    I think that if people knew yesterday what we now know today, that we will be in conflict and that we would have other things going on taxing the system, I think certain things that were carved out would never have been carved out. I also think that if one studies this and looks backwards they would say perhaps, if they were honest with themselves, that maybe we took the wrong approach and that we did not design greater accountability and keep accountability. We actually solved certain problems by taking a totally different course and that brings with it risk.

    The appointing thing is probably the biggest concern to me from a customer perspective. The resource sharing issue concerns me fiscally, and it concerns me with regard to what is going to happen with certain pieces of infrastructure, but I think we will muddle our way through some of that, but there will be some fiscal consequences.

    The appointing carve-out I think will end up being a very serious mistake in the long term. The reason for it is that you want less moving parts, not more. You want less actors, not more. What we have done by separating out appointing is we have taken one of the two major customer service complaints—historically, with this system, one was claims and the other one was the ability to get an appointing clerk—and we have now run the risk that that function may end up not with the MTF, not with the party that exists to support the MTF as part of the integrated system, but some third party from somewhere else who has no vested interest in the successful outcome of the overall program and does not have a major stake in its outcome.
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    I think, ultimately, we will look back and reach the conclusion that we either have to redo what we were headed toward doing or that we fix the problem but we wasted a lot of energy in the process. They are working to try and bridge the gap, but we are hearing that they are as much as 6 months behind, and it is going to be a real serious challenge.

    Fortunately, Jim Woys manages the appointing center in the Northwest. I have full confidence that he will be very focused on that as we go forward.

    But it is the outgrowth of what is going to happen once these contracts ultimately get awarded 6 months from now, where they go, because there is no self-interest in those organizations in the full outcome of the system because they are not invested in the same way we all are.

    Mr. MCHUGH. Mr. Woys.

    Mr. WOYS. Let me echo a little bit with Dave on the appointing side.

    One of the major objectives of the contracts that we were just awarded had to do with optimization, the focus of the optimization—really, the focus of optimization and how are we really going to optimize the brick and mortar that exists within the direct care system.

    Appointing is such a key component of that activity that you are really trying to make sure you get to the point within the standard, within the facilities and make sure you fill every bed and fill every appointment. If it is carved out, we risk that the person who has got the contract will not have the same objectives that we will have of truly optimizing the facility. We get judged upon that. That is one of the outcomes that is part of this contract that we are supposed to achieve, and that is the optimization and appointing is a big function of that.
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    I worry that someone else will have a different objective and we do multiple awards, we will have multiple contractors with varying degrees of capabilities, and there are bound to be some that will fail in the process. That will only harm our ability to continue with this optimization objective.

    The other one I am probably most concerned about is really resource sharing, probably more for the sake of these two gentlemen than myself.

    You heard my testimony. The resource-sharing activity that we do in our current contracts enables about a million and a half visits a year within the facilities and about 25,000 admissions. We have about 3,000 full-time equivalents who just work on my current contracts in the military facilities today. Those people have to be—either they have to transition those same people, put them in the chair—there is a lot of continuity of care there. Some of those physicians may have been sitting at MTF doing that work for the last 8 or 9 years. They have developed relationships with patients. Now we have to carve that, go get someone else to go do that if they cannot keep the same person in place.

    There are some restrictions that some of the current research providers that we subcontract with, if they do not win the business they will not allow their physicians or their nurses, because they have noncompete clauses to continue on. That is part of their business activity.

    So we are bound to have some disruption there. We are not pushing care off to the civilian sector, because we can probably handle that. I am more concerned about, really, the continuity of the care for the patient. For example, up in Miramar Medical Center, a prime example of a base taken over, the pediatrics clinic there is run completely on resource sharing, from the receptionist to the nurses to the docs. All those people have to go away in theory on the last day of my contract, and someone else has to step in the very next day.
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    The question is, will that happen? Everybody is working hard on it, and I believe that they are very focused, but those are the risks I worry about, is really the continuity of care for our patients. At the end of the day, I think we can solve that if it gets kicked out. We can find a place to put it in the civilian even though it does cost more money, I believe.

    But those are my two big concerns, are appointments and resource sharing.

    Mr. MCHUGH. Thank you, gentlemen. I appreciate it.

    Dr. Snyder.

    I'm sorry, Mr. Baker. Do you want to make another comment?

    Mr. BAKER. I did. I would like to echo the comments of the—particularly Mr. Woys, the two areas that are most risky at this point involving the appointing and the resource sharing. The appointing because of its obvious interplay with the beneficiaries on a day-to-day basis. Resources sharing, we heard today about maintaining continuity and that sort of thing, and that is within the walls of the MTF. Most of the comments on continuity earlier involved our networks, but this is right inside of the individual facilities, and I worry about both of those quite a bit.

    I worry on the appointing—Jim is right from the standpoint of optimization. I also worry, however, from the standpoint of beneficiary satisfaction. One of the things that the new contracts do is provide incentives for us to ensure high levels of beneficiary satisfaction, and yet many of the processes and programs of the new contract are now going to be with someone else. So I am concerned about that when those appointing—when that first touch point is with someone else and yet I am going to be judged on how well we satisfy. I am very concerned about that.
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    On the resource sharing thing, I mentioned the continuity. I would I think be remiss if I did not point out that the Department has very recently issued a change called the Clinical Support Agreement Program that I think both of my colleagues are aware of that would allow commanders to very quickly transition agreements that are in place. So I think the issue has been recommended, and we should not go away here thinking that the Department has not done something about it. They have provided commanders a tool.

    Now if the commanders have sufficient funding—and that is, I think, one of the reasons why the three of us have addressed that issue in our statement—that is an issue that we cannot really tell at this point, but there is a tool there.

    Mr. MCINTYRE. Just so you know, the reason why I did not have resource sharing on the list is because of the change order. I also went out with a personal letter after and put every MTF in the 21-State region on notice we will help them with this issue if they come to us at least 75 days in advance of when we are supposed to start. Because we believe that it is going to take about that much time for us to do the conversion.

    That will force a collision over the funding issue if there is a funding challenge with their own folks within their comptroller shops within the services. But it will also ensure that we are going to know and be able to tell you whether there are gaps in where the problems are.

    So that is why we feel we are in pretty good shape in that regard and we will have a pretty good warning scheme as to whether there is a problem.
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    Mr. MCHUGH. Are we within the 75 days?

    Mr. MCINTYRE. We are awfully close.

    Mr. MCHUGH. Thank you gentlemen. I appreciate it.

    Dr. Snyder.

    Dr. SNYDER. I think I am like every other human being. When you hear the word ''risk'' you get kind of jumpy.

    Mr. Baker, in your written statement, you have the phrase ''extremely high risk,'' which I appreciate your candor and you talk about the things you are concerned about. If I am a beneficiary currently, say, over the last year, let us suppose I go to boot camp, I have my family there at Parris Island, and then I am transferred to Camp Pendelton. Those are different contractors. What would my family notice or if I was a retiree what currently would I notice? Would I notice anything different?

    I am asking, when I get there, am I given a new card and someone saying, by the way, you are lucky you are coming to this region and you left that region? The beneficiaries do not notice much of anything. Is that a fair statement or not?

    Mr. WOYS. I think there are more all the time. I think the commands are educating their beneficiaries more and more as they start moving from one location to another during outprocessing or inprocessing. The responsibility for their health care resides with where they came from until they have actually enrolled into the new location. So if we had someone coming from the East Coast to the West Coast, the person who has the responsibility on the East Coast will manage until they officially enroll, get out to the West Coast. Then at that point that contractor would take that responsibility on and they would get new ID cards.
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    In theory, some things are different from one contractor to another, I think that will be unavoidable, and there is some variability in how we all do our business.

    I do think that the portability of our benefit over the years has gotten much better. One, I think the three of us as well as Sierra have worked closer together in assuring that portability of the benefit is more seamless than it has been in the past.

    Dr. SNYDER. I have not had my constituents through the years say—well, they always come up and say, I am with TRICARE. They do not say, I am with TRIWEST or Sierra. They do not say, gee, the worst thing that ever happened to me is when I changed contractors. My impression is that it is all seems to be the same benefit.

    Mr. WOYS. There is one standard benefit. We administer that benefit.

    I think some of our processes are a little bit different. If you went out and looked, I think people do say we are part of TRICARE because TRICARE is not the contractor. TRICARE is the system.

    Dr. SNYDER. Processes for the provider or processes for the beneficiary are different?

    Mr. WOYS. Probably on both. Probably there is some variations in how we deal with our providers.
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    Prime examples of what we have done with Dr. Storygard and our group up there where we have done some of the special processes to eliminate some of the burden on his group. Those are some of the special things we do in some places and might not do in other places because we are more effective on how we manage care.

    But that sort of activity should really be blind to the beneficiary. The beneficiary should understand that they have a benefit. Now, where they get that benefit is different depending on where they live, within a catchment area where there is prime coverage, coming from a place where only standard is available. Those things are different across the country, those variations. But the benefit is standardized and with TMA, who tries to make sure that we appropriately deliver that benefit correctly across the board and there are not variations in how we deliver that benefit. That is really key.

    Mr. MCINTYRE. Jim has done a good job of explaining the process. I would not encourage you to think about enacting this it this point in time because we all have plenty to do.

    But what you probably recognize in this explanation is that we treat beneficiaries when they move as though they changed employers. Long term, that is probably not the right solution.

    One of the things we ought to be looking at is a system, from my perspective, long term, several years from now, is to be at a place where we have identified what things would have to be done to allow for the seamless transition of someone from one place to the next, where we really do have no burden to them. Those things are transferred behind the veil, and they do not really have to deal with it, and what we do is we have things populated and ready to go. The new information goes out to them. They do not have to disenroll and reenroll and those type of things. They could certainly elect to opt out of prime if they wanted to do that. There is a variety of things you could do.
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    I would say forcing that on us now would be really hard, probably not accomplishable. There are systems issues. There are some stability things, but I think, long term, that is a change that needs to be looked at.

    Mr. BAKER. I would like to jump in on that as well.

    I am the only guy at the table who is a beneficiary. Since my retirement from active duty, I have lived in three TRICARE regions. Now, admittedly, two of them were ones that were managed by my company, so I had some influence, but the truth of the matter is that there was not a great deal of difficulty in transitioning from a Health Net region to a Humana region.

    It certainly was not any more complicated than it was for me as a retiree to figure out what the new rules were on drivers' licenses and where you would go to vote, and all of the things that are part of a transition from one duty station to another or one location to another. It really was not all that complex.

    Frankly, the real issue is trying to figure out who the network providers were and who were the ones that were recommended and all of that. But you go through the same sort of thing when you move, trying to figure out which are the best stores to shop in and where do you buy furniture and all of that kind of thing.

    I think we sell the military short if we assume that making a move is going to create so many problems in this program that they are never going to be able to take care of, but the truth of it is that military people adapt very, very quickly.
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    Dr. SNYDER. I want to talk about the turnover. Mr. McIntyre and I talked about this earlier in terms of what is your retention of physicians and what percentage of your doctors see new patients. Do you all have that information? What is that?

    Mr. MCINTYRE. You asked my this question last week when we were together, and I appreciated the questions. I had the heads-up. I did not warn my colleagues because I did not know that this might be lodged to their direction. I had to go back to look for it, so they may have to do the same.

    We have in our region—across the last number of years, our turnover has been about 4.5 percent; and that is taking small areas, large areas and the like, taking all providers. The percentage of PCMs that are accepting new patients in the 16 States that we are currently responsible for is 92 percent, and we monitor that pretty carefully.

    Mr. WOYS. In our three contracts we are just under 3 percent annual turnover of our providers. It is pretty low. It has been that way for the last couple years.

    Dr. SNYDER. What percent accept new patients?

    Mr. WOYS. I do not know. We do have a process where—I can get you that information—where we call out to our providers on a pretty constant basis to ensure that they are taking new patients.

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    Dr. SNYDER. I would like to have that.

    Mr. WOYS. Absolutely.

    [The information referred to can be viewed in the hard copy.]

    Mr. BAKER. In our case, the turnover rate has been about the same, between 3 or 4 percent. I do not have good figures for you on the PCMs that are accepting new patients, and I will get those.

    The issue really often is the specialists, though; and that is more difficult, because the acceptance can vary over time. PCMs tend to enroll up to a level and then stop, and unless there is a precipitous drop-off in the number of patient enrolled, they stay closed for a longer period of time. Specialists tend to, it has been our experience, kind of wax and wane. So that would be a much more difficult figure for, I think, any of us to wrap our arms around.

    Dr. SNYDER. Were you all here this morning?

    Mr. MCINTYRE. Yes.

    Mr. BAKER. Yes.

    Dr. SNYDER. I thought you were.

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    Do you all have any comments about Dr. Buck and the discussions about quality—and part of the mandate or goal is to have comparable quality in the private sector versus the military treatment facility. Do you have any comments about what that means for you all and how you all reach that same level of quality?

    Mr. WOYS. Let me comment. I took a look at this before this last night. A little bit of comment about quality.

    I think people, when they look at us as managed care support contractors or managed care companies, they lose the focus of all of the stuff we do behind the scenes to ensure quality. Quality is really focus number one for our companies, to make sure we do provide high-quality care for our beneficiaries. We truly believe that quality is cost-effective. So if you deliver quality care, you will eventually have the lowest cost of care, if you put it in the right place at the right time with the right physician.

    Things that generate quality—we spend a lot of time, all three of us—requirements in contract, appropriate credentialing of all our network providers and make sure they are credentialed in the specialty they are providing. We do spend a lot of time profiling physicians and hospitals to look at their practice, the patterns. We do that all the way from our bush program all the way to the medical management arena and quality management to make sure our providers do not have aberrant patterns.

    We have a very extensive process of identifying potential quality incidences and following up on those incidences with providers and doing sanctions against providers if necessary as far as kicking them out of the network or counseling those providers for those type of activities.
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    With regard to the new contracts as we move forward, one of the things we heard I think from Dr. Buck is really going back to the Institute of Medicine's report, the 100,000 potential medical errors where people have died, which as you know has generated this Leapfrog group. We have taken that in the new contract and used one of the three intermediaries' areas for that data, a company called Health Share, and we are making that hospital information available to our beneficiaries.

    We will also use it as we approve authorizations into facilities and make sure that there is no—for a hospital, for that procedure that we are actually admitting them for, that they are going to have it done, that there is no aberrant historical perspective on whether that hospital is performing well or not with regard to that particular procedure. They may be in a whole bunch of other procedures, but that one may not.

    We will not admit or approve an authorization if we find that there is a statistical difference with regard to how that hospital performs with mortality rates, etc.

    So we are actually using that information. We put it on the Web. We allow all of our beneficiaries to look at it to help them make informed decisions on where they want to get their care.

    We also use the data openly with the hospitals that we contract with to make sure that they understand, and we talk to them about it. This is not something that is a mystery.

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    So we are trying to find ways to really improve the quality of care with data.

    If there is one thing that keeps me up at night and sitting in my chair is have I made decisions or my company has made decisions about bringing hospitals or physicians into our networks primarily just based upon price. Because price is not a determinate of quality. So to the extent that I am referring patients to facilities that have a poorer outcome than other facilities just based upon price without knowledge of data, that is the thing that keeps me up. Has my company really harmed people because of our practices of focusing on price? We are trying to change that focus more on outcomes and quality. It is one that allows me to sleep a little better and morally what we should be doing.

    Mr. MCINTYRE. When we started TRIWEST, the idea was to draw off of the quality and service reputation of Blue Cross/Blue Shield plans across the country. So we built a platform that would draw on the nonprofits, and they are our owner. The reason for that was to try and make sure that we were able to leverage the best quality networks in the country.

    We have got rigorous credentialing processes. They manage the front end. We review all of it. We have extensive quality programs throughout the company. The reports go directly to our board every quarter as a full board item, and we are inviting regional representatives to join us in our internal processes on the quality side.

    We did that in the Central Region. We will be doing it in the West Region, like Jim's area.

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    We are looking at the kinds of things that we want to make available on the Internet. The Blue Cross/Blue Shield system has been focused in the same type of area, and we are looking at potentially leveraging that information and make it available as Health Net is doing.

    Mr. BAKER. I think we are all pretty close on this one. Though I must say that Mr. Woys' idea of posting information is one that I am not personally aware of where we are, but we will take that back and determine its applicability in our space as well.

    Dr. SNYDER. Thank you, Mr. Chairman.

    Mr. MCHUGH. We have six votes. That will take us about an hour and a half. You all can stay. I am not coming back.

    Seriously, we do have six votes, so there is no reasonable way in which we can expect you gentlemen to stay over.

    We thank you so much, all three panel members, for your input. Thank you for your service. As with the first two panels, we will probably have some written questions; and as you have been so cooperative and helpful in the past, we know you will try to continue that. So I appreciate that.

    With that, the subcommittee stands adjourned.

    [Whereupon, at 1:20 p.m., the subcommittee was adjourned.]
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