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[H.A.S.C. No. 109–65]








OCTOBER 19, 2005

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JOHN M. MCHUGH, New York, Chairman
JO ANN DAVIS, Virginia
JOHN KLINE, Minnesota
JIM SAXTON, New Jersey
WALTER B. JONES, North Carolina
JIM RYUN, Kansas
ROBIN HAYES, North Carolina

VIC SNYDER, Arkansas
MARTY MEEHAN, Massachusetts
SUSAN A. DAVIS, California
MARK UDALL, Colorado

JEANETTE JAMES, Professional Staff Member
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DEBRA WADA, Professional Staff Member
JENNIFER GUY, Staff Assistant




    Wednesday, October 19, 2005, Defense Health Program Overview


    Wednesday, October 19, 2005




    McHugh, Hon. John M., a Representative from New York, Chairman, Military Personnel Subcommittee

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    Snyder, Hon. Vic, a Representative from Arkansas, Ranking Member, Military Personnel Subcommittee


    Arthur, Vice Adm. Donald C., Medical Corps, Surgeon General, U.S. Navy

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

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

    Puritz, Dr. Holly S., FACOG, Mid-Atlantic Women's Care, Norfolk, VA

    Taylor, Lt. Gen. (Dr.) George P., Jr., Surgeon General, Department of the Air Force, U.S. Air Force

    Webb, Maj. Gen. Joseph G., Jr., Deputy Surgeon General, U.S. Army

    Winkenwerder, Hon. William, Jr., M.D., Assistant Secretary of Defense for Health Affairs

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

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Arthur, Vice Adm. Donald C.

Baker, David J.

McHugh, Hon. John M.

McIntyre, David J., Jr.

Puritz, Dr. Holly S.

Snyder, Hon. Vic

Taylor, Lt. Gen. (Dr.) George P., Jr.

Webb, Maj. Gen. Joseph G., Jr.L95, 108

Winkenwerder, Hon. William, Jr.

Woys, James E.


Senator McCain's Amendment

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Storeygard, Alan R., M.D., Diplomat and Fellow American Board of Family Practice, Chairman, Rebsamen Physician Hospital Organization, Jacksonville, AR

[There were no Questions submitted.]


House of Representatives,
Committee on Armed Services,
Military Personnel Subcommittee,
Washington, DC, Wednesday, October 19, 2005.

    The subcommittee met, pursuant to call, at 2 p.m., in room 2118, Rayburn House Office Building, Hon. John M. McHugh (chairman of the subcommittee) Presiding.


    Mr. MCHUGH. The hearing will come to order. Thank you for all being here.

    Today, the subcommittee meets to hear testimony on a wide range of health care topics, including the fiscal year 2006 Defense Health Program, medical and dental readiness of the reserves and efforts at collaboration sharing between the Department of Defense (DOD) and the Department of Veterans Affairs.
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    We will also explore access to care for our military beneficiaries and how it has affected the satisfaction rate among TRICARE providers.

    The Department continues to face significant challenges as it carries out its multiple health care missions in maintaining medical readiness capabilities, providing peacetime health care to eligible beneficiaries, providing battlefield medicine to our brave men and women in Iraq and Afghanistan, and caring for those warriors through the long recovery process when they become injured and wounded.

    What makes the challenge more complex is that it is rightly expected that the Department provide the highest quality of care in an environment where costs are rising dramatically. We have further complicated their tasks by both substantially increasing the health care benefits and expanding the population that is eligible for those benefits.

    During today's hearing, we will attempt to focus on the cost control initiatives implemented by the Department of Defense and, particularly, with the new TRICARE contracts and the Federal ceiling price for network retail pharmacies. We want to hear whether these programs have been successful in slowing the growth of the costs of the Defense Health Program, and the efforts that have been made to improve medical and dental readiness for the reserves. We are especially interested to learn that the new health care benefits enacted by Congress over the last few years have had the desired effect on reserve medical and dental readiness.

    During our recent hearing on mental health, we learned of a new program to reassess the physical and mental health of service members three to six months after returning from deployment. We would like to know how DOD is implementing this program, particularly for members of the reserves and the national guard.
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    We will also take this opportunity to review efforts to ensure military beneficiaries have access to health care, especially those who use the TRICARE standard benefit. We are concerned that the administrative requirements of TRICARE may be reducing the availability of TRICARE providers or inhibiting providers from participating.

    Finally, we will review efforts to create a seamless transition between DOD and VA and learn what remains to be done to ensure success in that area.

    I hope our witnesses will address these issues as directly as possible in their oral statements in response to the subcommittee members' questions.

    Before I turn to subcommittee's ranking member, Dr. Snyder, I would like to express my deep appreciation to all the witnesses for their steadfast dedication and hard work, with spirited leadership in delivering the highest quality health care to millions of the most deserving military beneficiaries. No other—no other—health care system contends with the extraordinary complexities of the Defense Health Program with the added challenge of supporting a war. And you have my—and I know, the entire subcommittee and full committee, in fact, the entire Nation's—sincere gratitude.

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

    [The prepared statement of Mr. McHugh can be found in the Appendix on page 61.]
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    Dr. SNYDER. Thank you, Mr. Chairman. Thank you for your courtesy.

    I notice Dr. Schwarz is down there. Do we need a unanimous consent agreement for him to participate in the committee.

    Mr. MCHUGH. I intended to do that, Doctor, after your remarks.

    Dr. SNYDER. Thank you all for being here.

    Thank you, Mr. Chairman, for holding this hearing.

    We are a little later in the year because of scheduling problems than we normally do it, but it is on everybody's mind. It is what a lot of members hear a lot about. And certainly one of the primary things families think about is the quality of care and their ability to get care and how to meet health needs not only for the service person, but as you know, for their families.

    So I look forward to these discussions on how to make the good things keep going on and how to improve the things that are not as good as we would like them. So thank you all for being here.
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    [The prepared statement of Dr. Snyder can be found in the Appendix on page 68.]

    Mr. MCHUGH. To the point of business raised by distinguished ranking member after consultation with the minority I would now ask unanimous consent that Dr. Schwarz, a Member of the Readiness and of the Strategic Forces Subcommittees, be authorized to question panel members at today's hearing. Dr. Schwarz will be recognized at the conclusion of questioning by Members of the Military Personnel Subcommittee.

    And, without objection, that would be so ordered.

    We have eight witnesses on two panels today. I would respectfully remind the witnesses that we would certainly encourage you to summarize to the greatest extent possible the high points of your written testimony. We do have all of your written comments, and they will be entered in their entirety into the record.

    Before I do welcome the first panel, I would ask also unanimous consent for a statement to be entered into the record regarding defense health matters from a Dr. Alan Storeygard. Without objection, so ordered.

    [The information referred to can be found in the Appendix on page 229.]

    Mr. MCHUGH. And let me now welcome the first panel:

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    The Honorable Dr. William Winkenwerder, Jr., Deputy Assistant Secretary of Defense for Health Affairs. Mr. Secretary, thank you, as always, for being with us.

    Major General Joseph G. Webb, Jr., Deputy Surgeon General, Department of the Army. General, thank you for being with us.

    Vice Admiral Donald C. Arthur, Surgeon General, Department of the Navy. This isn't a part of the formal process, but I would note that Vice Admiral Arthur is recovering from a very serious motorcycle accident—kind of the Top Gun motorcycle scenes. But this is his first week back to work, and we are truly appreciative of his being here and helping us to work through these very serious issues. And thank you of that, and we wish you very best for a speedy and continued recovery.

    Lieutenant General George G. Taylor, Jr., Surgeon General, Department of the Air Force. General, thank you so much for being here.

    I would tell the members, contrary to our normal practice, given the complexity of the issues today, we will be using the five-minute rule. We will, if at all possible, go to multiple rounds of questions but I think that is probably the fairest way. We have a briefing ongoing with the general membership of the House with Secretary Condoleezza Rice on the results of the recent Iraqi election. So I expect some of our members will be coming in a little bit later; therefore, I think the five-minute rule would be very efficacious.

    So with that, Dr. Winkenwerder, again thank you for being here. We look forward to your comments.
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    Dr. WINKENWERDER. Mr. Chairman, distinguished Members——

    Mr. MCHUGH. Mr. Secretary, I think we need to turn your mike on.

    Dr. WINKENWERDER. Mr. Chairman, distinguished Members of the committee, thank you for the opportunity to discuss the military health system. Thank you also for your kind comments about the men and women in the military that are supporting the mission overseas and here at home, the men and women of military medicine and the great job that they are doing. We are really proud, really pleased, of some terrific performances, even as recently as the last few weeks with Hurricanes Rita and Katrina.

    So let me just say that I have submitted broader comments for the record today, but I would like to take my time here to specifically address an issue of vital importance to the Congress, to our beneficiaries, to the Department, and to the future of the whole country. And this issue is the one of the rising costs of our health care program, the trends that we see taking shape within military medicine. And, candidly, the issue of the sustainability of our military health benefit, the increase in health care costs, is not unique to the military; the private sector, too, has had to face this very difficult challenge.
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    What is unique for us is the goal to provide world-class medical care for all those who have served and those who continue to serve our country. The Department is firmly committed to protecting the health of all service members and all of our beneficiaries. And those now number more than nine million people. We are determined that we will always have a superior health benefit relative to any standard and that we will continue to provide outstanding, quality care.

    Let me speak for a minute about the matter of our expenses and growing costs. Expenses for the Defense Health Program are growing rapidly. Our program has essentially doubled in size in just the past 4 years from about $18 billion 4 years ago to more than $36 billion today. Further, it now appears that our total budget will likely exceed $50 billion within the next 4 to 5 years. If current trends continue, we estimate that in fiscal year 2009, 75 percent of the budget—of our budget—will be spent on the costs of paying for retiree health care, and just 20 to 25 percent will be spent on active duty service members and their families.

    The facts show that the expansion of health benefits such as those for our senior retirees, which are terrific benefits—and let's not make any mistake about that; they are excellent benefits—but they are, in fact, the principal underlying factor of this growth, and it is growth that could put today's operations and sustainment at risk.

    The expansion of the benefit has also led to an increase in our pharmacy costs. Our total pharmacy program has increased in cost by 500 percent since 2001 to more than $5 billion this year.
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    We are now implementing the new TRICARE Reserve Select coverage for guardsmen, reservists and their families. This is a benefit that the Congress passed last year. We support this benefit. We believe it is a needed benefit that properly recognizes those who have served, who might require more support in transitions to and from civilian life, and who may need longer-term coverage. We urge the Congress to allow us to implement this new benefit before making further new changes in it.

    I will talk more about this later today and be glad to answer questions on it, but we have more than 16,000 guardsmen and reservists and family members now taking advantage of this new benefit in just the last few months. So it is growing and appropriately so.

    The Department is acting to better manage limited resources. We are implementing performance-based budgets, and a prospective payment system. We are improving our pharmacy program with a new formulary, and we have made some important decisions on that recently; and we are using—or attempting to use—Federal pricing for our retail pharmacy network as we already have been doing for our mail order and our military hospitals and clinics.

    Unfortunately, a number of large pharmaceutical companies have taken us to court regarding the retail discount. And we have not been able to realize the necessary and needed savings through the implementation of this program. In other words, they would prefer not to provide discounts to the military for this benefit; and I am troubled by that, particularly now with our service members and families experiencing the strain of war.

    We are doing other things to manage our costs and our program, our new TRICARE contracts; and we will hear from leaders of the principal contractors that we work with that are doing a great job. These contracts, we believe, are leveraging the best private-sector methods; and we also believe that they are helping to control our purchase care costs.
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    Still, dramatic actions alone, all the ones I have mentioned and others, will not stem the rapid growth in the Defense Health Program. Benefits expansion and rising utilization are driving up our costs.

    Our benefit structure has not kept pace with changes in the private sector, to be candid. Our enrollment fees and cost-sharing have not increased in over ten years. And differences, therefore, between what TRICARE offers and what one would find with employer-based health plans—or even the Federal Employee Health Benefit plan, which is an excellent benefit—the differences have grown significantly.

    For example, Federal employee costs during the period of 1999 to 2004 over that 5-year period, their costs have increased 57 percent for Kaiser Permanente here in this region and 87 percent for Blue Cross Standard, while those costs for TRICARE beneficiaries essentially have been unchanged. And because we have not had any sort of indexing component, the benefit today is, in effect, far richer than the legislation passed in 1995.

    What this has done is, it has persuaded a growing number, increasingly, making rational decisions among our beneficiaries, to drop their private coverage and rely fully upon TRICARE. The low cost and outstanding benefit lead us to believe that the use of the TRICARE benefit will increase such that nearly all retirees will rely on TRICARE rather than their employer plan in just a few years. In fact, some employers are paying our beneficiaries to use us rather than to use their employer plan.

    In addition, there are some State governments that have passed laws to do the same thing. It is our belief that this is not what the Congress had intended originally with this benefit.
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    So simply put, we face a tremendous challenge with a benefit designed that does not always reward the efficient use of care and it is somewhat out of step with the private sector. Some in the private sector have turned to health savings accounts or consumer-driven plans that reward individuals who manage spending as a possible solution.

    We too must find solutions that will allow us to sustain a fiscally sound health benefit for all our beneficiaries over the longer term. We are not predisposed to one approach or the other, but the bottom line is, we look to work with you, Mr. Chairman, and the Congress and this committee, as well as the leadership of the military services and the Secretary of Defense to come up with the best approaches.

    So, in conclusion, let me just say that the mission of the U.S. military has always been to defend our country and the freedoms that our Nation stands for. Many service members have devoted their entire careers to this country, 20, 30 years and more; and for some, that is including combat service and really significant sacrifices.

    We could never say thank you enough. What we can do is offer the best medical care possible to these service members and to their families. We made a promise to provide them exceptional care while on active duty and in retirement, just as they made the promise to defend our freedom. And we will deliver.

    Mr. Chairman, the Military Health System, in my judgment and I think it is fair to say in many others', is a real national asset, and it is important to preserve that for the future. I am very pleased and honored to have had the opportunity to lead this organization for the past four years, and I am confident that our mission has no greater calling or cause. And with that, thank you. And I will be happy to answer yours and the committee's questions.
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    [The prepared statement of Dr. Winkenwerder can be found in the Appendix on page 72.]

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

    That is a vote. It is about an hour earlier than what than we were told. But let us continue.

    As I introduced earlier, Major General Joseph Webb, Jr., Deputy Surgeon General, Department of the Army.

    General, thank you for being here.


    General WEBB. Mr. Chairman, Dr. Snyder, distinguished Members of the panel, I am pleased to be here today representing the Army Surgeon General. Dr. Kiley is in Guantanamo Bay today with a distinguished group, where we hope to once again demonstrate that our medical professionals are providing the highest quality of care in a compassionate and dignified manner.

    The performance of Army medicine over the last few years has been extremely remarkable. Today, we are able to take health care treatments that normally are only available in medical centers like Walter Reed or Bethesda and push them forward into the battlefield, and the results of this change has been remarkable. Ninety-one percent of wounded soldiers are saved and returned, and of those 91 percent, we have been able to return about 66 percent of those to duty.
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    These successes are a result of many things, investments in technology and people and training, and none of it would have been possible without the support of Congress, the Department of Defense and the civilian health care network.

    Today, we have nearly 12,000 Army medical department soldiers deployed worldwide. While we continue to support the war on terrorism in Iraq and Afghanistan, we have a unit, the 21st Combat Support Hospital from Fort Hood, still providing relief in New Orleans; we have the 212 Mobile Army Surgical Hospital forward-stationed in Germany that within a few days will be in Pakistan; and additional members spread throughout the world.

    We see Army medicine as an extremely important component of Army readiness, focused on ensuring that our soldiers have the medical, dental, behavioral health support necessary to withstand the rigors of today's combat environment, and a battlefield medical system that can maximize survivability with highly trained and motivated soldiers so that we can get them back to duty.

    TRICARE networks, civilian hospitals and the VA can and do enhance and support medical readiness, but they cannot replace the medical competencies that the medical departments of the services provide.

    The ultimate measure of how well we integrate our TRICARE and Veterans Affairs (VA) partners into our system of health care shouldn't be measured on workload or how much money we save. Success should be measured on the value that this integration brings to military readiness, and that could be measured in terms of individual soldier readiness, unit readiness, retention and recruitment of soldiers, and family members' and retiree satisfaction with military health care.
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    As you are aware, over the last two years we have transitioned to the next generation of TRICARE contracts. In my opinion, these contracts are a vast improvement over what we were dealing with under the first generation.

    The overriding premise—an overriding premise of the contracts is to help focus contractors and TRICARE regional offices on supporting the local military market managers. Their managers—their managers' job is to ensure the coordination of health care, at the same time making sure that we have maximum utilization of the military facilities and resources, and then finally ensuring military members, retirees and their families have access to timely and quality health care.

    That transition hasn't been extremely easy, but I don't think anybody expected that it would be a simple transition. But there have not been many major glitches. If I were to say the most notable glitch, it would probably be our inability to have yet deployed our enterprise-wide referral and authorization system. It has forced us and the contractors to work more closely together, develop manual processes, but we are making giant steps toward solving that.

    The robust TRICARE networks are a critically important part of our health care, particularly as we transform the Army, create additional brigade combat teams, re-station units within the Continental United States (CONUS) and eventually realign some of our overseas assets.

    In many instances, we have our population arriving at some of these new CONUS locations before we have the military health care personnel in place. And in these cases, we have had to rely heavily on our TRICARE networks. And I want to congratulate all three of the managed care network providers for doing such a fantastic job in our support.
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    More than 24,000 soldiers have returned from Operation Iraqi Freedom (OIF) and Operation Enduring Freedom (OEF) with injuries, illnesses, combat wounds. Our goal for them is simple. It is to help them recover as fully possible as we can and return as many as we can to duty again. And we need to do this as well as we can for those that were not able to return to duty; we need to expeditiously and compassionately manage their transition back to civilian life.

    The VA health care system plays a critical role in complementing our treatment facilities here, offering some specialized treatment in traumatic brain injuries and spinal cord injuries, for example, and their major mission of caring for soldiers after they are released from active duty. Recognizing the criticality of this partnership, our Surgeon General, General Kiley, has assigned four of our resources to the VA Polytrauma Care Centers to help coordination with some of these patients, and it has vastly improved the communication and transition for these patients. Originally, it was going to be a six-month pilot program, but it has been so successful that he has decided to extend that program.

    Despite the great cooperation and the desire to work together with the VA and other agencies, we do need to recognize that our missions are somewhat different. There is overlap and opportunity for greater cooperation, and we are looking for those avenues to enhance that cooperation so long as it does not degrade the primary mission of either organization.

    So Mr. Chairman, I thank you again for the opportunity to be here this afternoon, and I stand willing to respond to whatever questions you have. Thank you.

    Mr. MCHUGH. Thank you, General.
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    [The prepared statement of General Webb can be found in the Appendix on page 95, 108.]

    Mr. MCHUGH. Next, we are honored to have Vice Admiral Donald C. Arthur, Surgeon General, Department of the Navy.

    Admiral, thank you for being here.


    Admiral ARTHUR. Good afternoon.

    Thank you, Mr. Chairman and Ranking Member Snyder, thank you all for holding this hearing. I won't repeat, but would like to underscore Dr. Winkenwerder's testimony and his emphasis on fiscal responsibility and our need to hold down costs so our militaries may properly modernize.

    We are very proud in the Navy to have had another year of great successes, particularly in combat service support, as you have seen over in Operation Iraqi Freedom and Operation Enduring Freedom: the lowest non-battle injury rate in history, the highest survival rate in history, the collaboration between the Army, Navy, Air Force and Marine Corps, as we take casualties from the field, treat them in the field in whatever service's medical center, get them flown back to a place like Landstuhl, then get them back to Bethesda or Walter Reed in as short as 36 hours, and to marry up those casualties with their family members so that at our medical centers they get the very best care that is centered not only on the patient, but on the patient's entire family.
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    I think that is something that you would not get in a normal civilian hospital. Although the casualties would get good care, they wouldn't understand the family-centered part.

    We are proud to have participated in humanitarian missions throughout the world, the tsunami and Banda Aceh disaster relief of U.S. Naval Ship Mercy and the New Orleans relief with the Comfort and other ground units; and now as we deploy units, preventive medicine expertise to Pakistan to help them in their relief efforts.

    We are also proud of our VA collaboration. We just recently signed an agreement with the Great Lakes Veterans Administration Hospital that we are now a single facility, the Navy and the Veterans Administration will work in the same facility with the same staff, same equipment and under the same leadership. It will be one set of leadership between the Veterans Administration and the Navy.

    We have a other joint facilities, joint operation, joint construction going on at Charleston, Pensacola, Key West, and we are proud to have had benefits advisors from the Veterans Administration at Bethesda and other medical centers for the last three years. And for the last two years we have had active duty people in from the Navy and Marine Corps in Veterans Administration hospitals to ensure that the patients who are cared for in the VA hospitals have the right administrative support by their services.

    One of the things that I am interested in is how we can better collaborate among the three services. And the three Surgeons General are working very hard to look at issues where we have joint operations and where we can network better together.
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    Thank you very much, Mr. Chairman, pending your questions.

    Mr. MCHUGH. Thank you very much, Admiral.

    [The prepared statement of Admiral Arthur can be found in the Appendix on page 113.]

    Mr. MCHUGH. Our next panelist, Lieutenant General George P. Taylor, Jr., Surgeon General, Department of the Air Force.

    General, thank you for being here, sir.


    General TAYLOR. Thank you, Mr. Chairman, Dr. Snyder, Members of the committee. It is a pleasure and privilege to be here today. We are grateful for your interest and support in providing for America's heroes.

    I am proud to say that the men and women of the Air Force Medical Service have done an exceptional job throughout Operations Noble Eagle, Enduring Freedom and Iraqi Freedom in providing expeditious state-of-the-art health care for active duty and reserve component personnel in all our services. Our light, lean mobile expeditionary medical support, or E-Med, is the linchpin of our ground mission.
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    As part of a joint team we now have more than 600 medics to attend deployed locations, to include running a large theater hospital in Bilad, Iraq, and two smaller hospitals in Kirkuk and at the Baghdad international airport. Every day Air Force medics in these hospitals are saving the lives of soldiers, Marines, airmen, civilians, American, Coalition, Iraqi, friend and foe alike.

    Because our medical teams are operating closer to the front lines than ever before, patients are getting advanced medical care within hours, not days or weeks as they had in the past. The result is that we are seeing the lowest death rate of wounded troops in the history of warfare. Our approximately 400 air medical evacuation personnel, the majority of them guard and reserves, are doing incredible work and have carried more than 25,000 patients from the theater for medical care since the beginning of Operation Enduring Freedom followed by Iraqi Freedom.

    In addition, partnering with our critical care air transport teams, our air medical evacuation has made it possible to move extremely seriously injured patients in an astonishingly quick time, as short as 36 hours, from battlefield to stateside medical care. This was unheard of even a decade ago.

    Our capability continues to be tested and proven with our response to Hurricanes Katrina and Rita, where we worked with the Federal Emergency Management Agency medical teams to care for and transport over 2,500 ill patients in a three-day period of time.

    One senior physician at FEMA's disaster medical assistance team in New Orleans personally told me that one of the most impressive things about our Air Force people is that they treated every single patient during that chaotic, crowded and terrible time as if they were family, as if this person on this stretcher were their own father, mother, sister, brother or child pulled from harm's way.
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    That notion is at the heart of our motivation to provide the most modern expeditionary medicine known to our heroes abroad or, if needed, to our citizens at home.

    Caring for our troops also means ensuring they are healthy and fit before they are deployed, while they are deployed and when they return home. We have worked very, very hard on our employment health surveillance program. Since the 1st of January 2003, we have accomplished almost 213,000 post-deployment assessments for Air Force, active duty and reserve component personnel, with 7.4 percent of those requiring follow-up for deployment-related medical or health care concerns.

    As you are aware, we are also working on an extension of our post-deployment health assessment program to include a reassessment of general health with a specific emphasis on mental health. This will be administered within six months post-deployment and is scheduled to begin no later than this January for both active duty and reserve components.

    Since we met with you in July, as pushed by the chairman, we completed several in-theater assessments examining mental health issues. The details are in my written statement, but I would like to offer the highlights.

    The first assessment looked at Army and Air Force active duty and reserve components personnel deployed to Kirkuk, Talil—or Ali, they call it Ali now—and Baghdad during a 120-day rotation.

    The second study examined post-traumatic stress disorder (PTSD) symptoms in personnel deployed to Kirkuk. The personnel in both assessments exhibited quite low levels of PTSD.
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    The third assessment studied a high-risk group such as those in convoy duty, security forces, medics and embedded in-ground ops and others at Bilal Air Base. While PTSD symptoms were higher in this group than the others, the evaluation by mental health providers found the actual incidence of PTSD, by diagnosis, was low. We are encouraged by these results because of our far-forward mental health capability, but will continue to monitor all of our deployers after they leave the theater to address any symptoms as they emerge.

    Certainly one of the greatest tools we have to ensure the health of our troops is TRICARE. The TRICARE strategy is vitally important to us, and even more so in wartime. Perhaps recently you saw where Wilson Health Information, an independent consumer satisfaction research committee, announced the results of their 2005 health insurance satisfaction survey, which found TRICARE the number one rated health care insurer nationally for the third year. TRICARE had a 99 percent satisfaction rate among members polled. There is certainly room to improve, but our patients must think we are doing pretty well overall.

    We will continue to focus on these critical deployment and home-based issues to ensure our military health care system is one that is true to those who work in it every day and one that is deserving of the sacrifice and dedication of men and women in uniform.

    Thank you very much, Mr. Chairman.

    [The prepared statement of General Taylor can be found in the Appendix on page 127.]

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    Mr. MCHUGH. Thank you, General. Thank you all.

    Mr. Secretary, you mentioned in your testimony that your health care costs had grown to over 36 billion. And there is certainly no way to put a happy face on that in terms of budgetary challenges. It is money that I think many would argue that is positively spent because of what it does.

    But just so we are clear on the record, is my understanding correct that 36 million is not just strict health care costs? You have personnel costs in there, you have MILCON costs and there other factors; is that correct?

    Dr. WINKENWERDER. That is correct, Mr. Chairman.

    It is the aggregate costs of health care to pay for today's health care, as well as incremental contribution for future costs that must be paid for today. But—it is today's real dollars, but it is the aggregate. And we believe that is the appropriate way to look at our investment, which, as you well point out, is certainly creating great results.

    And we want to continue those results. But managing the long-term budgetary impact, not just for us, but the impact on the whole Department of Defense and its ability to invest in other important areas is a concern for us.

    Mr. MCHUGH. Well, it is true, and every dollar of that 36 billion is a dollar, no matter where the expenditure is assessed. I just think it is important to distinguish there are certain things we can do, or perhaps might do, in the actual health care costs versus a MILCON. It is a different set of challenges, all very real, all very appropriate, but slightly different.
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    Dr. WINKENWERDER. Absolutely right.

    Mr. MCHUGH. In that regard, as I noted in my opening comments, we have done a number of different things that have increased the challenges that you all face, and that is certainly expanding the benefits and expanding the pool of beneficiaries.

    One of the objectives we have had over the last several years, to include the reserves and TRICARE Reserve Select and give that eligibility 90 days prior to deployment and 180 days after leaving active duty, was to try to enhance medical readiness. We had some real problems, as you know, as all of you know, in terms of many of our reservists coming in and not being medically ready for deployment.

    Have you been able, at the Department, service by service or at the Department level, to look at what efficacy, if any, of this expansion has been demonstrated? Are we getting better readiness or pretty substantial expansion of the benefit?

    Dr. WINKENWERDER. It is a little too early to tell what impact that benefit change might have on the matter of readiness because it has been in effect for just a short period of time.

    We are approaching the matter of readiness through a variety of strategies, one of which—and I believe it is one of the most important—is to measure readiness and to hold each service and leadership within both active and guard and reserve accountable for the performance. Beginning about two years ago and building off of some very good work that the Air Force had done, we instituted a common set of measures so that we are looking at things like dental status.
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    There is a scheme for that: immunizations, laboratories. Do you have your lab tests, proper lab tests, done? Do you have any deployment limiting conditions? Have you had a health assessment? Do you need proper medications? Are you on them? Equipment and so forth.

    So there is this standardized approach that we now use and we are measuring across the board.

    What I can say from the results of that measurement system is, it appears that we are continuing to incrementally improve. And that is good news. We have some gaps, some areas where we need to focus, but at least at this point we have the data to focus those activities.

    So it is a variety of steps. It is certainly having the benefits available. It is measuring things, holding people accountable, and it has leadership and management taking the appropriate actions because we realize it is important.

    The latest figures that I have suggest that the numbers of people who are not deployable when they are called up, because of medical conditions, is in the low single digits in the range of two to three to five percent, but low single digits. When looked across the board again, it is a different figure for the Air Guard versus the Army Reserve versus the Navy Reserve and so forth, but we follow each of those; and those statistics look pretty good.

    But again it is something that requires constant management, and it does have our constant attention.
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    Mr. MCHUGH. It does. And I appreciate that.

    And I never want to try to foretell anybody's answer, particularly yours, Mr. Secretary, but I suspected very logically, the base answer would be, it is a little bit too early, and I think that is probably true. However, you are aware, GAO is completing a study that determines the issue of tracking medical readiness across the board is still highly problematic, and your answer indicated you are working on those indices, and I suspect that is going to be a continuing challenge, which we are obviously going to be very concerned about.

    We spent a lot of money to do, I think, the right thing, but we won't know that without measuring it; and to measure it, we have to know how to measure it. So this is a problem that is going to merit a lot of attention, and I am sure you are aware of that.

    Generals Taylor and Webb, both of you have written testimonies that indicate that you are going to face in your branches significant challenges in recruiting and retaining medical professionals. Can you help us understand beyond the obvious—which, I guess, is pay—but what some of those challenges might be?

    Are there ways in which this subcommittee, this Congress, can be more supportive? Because obviously, particularly in times of conflict, the ability to get the proper professional to that wounded soldier, sailor, airman, Marine, is the way you bring them back alive and the way you return them to duty. So what can we do to help? Or what are the challenges even if we can't help?

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    General WEBB. Mr. Chairman, we have noticed changes in recruiting recently. In fact, this year is the first year that our health professional scholarship program had scholarships available that were not taken for the Medical Corps and the Dental Corps. So we have a concern, trying to determine whether this is just a blip or whether it is the beginning of a trend.

    Obviously, pay is one of the factors that we have to keep track of to see how big a satisfier or dissatisfier base pay, some of the special pays may be. But beyond that I think there are a number of other factors that we have to consider.

    We have to consider, obviously, the quality of life that we can offer the soldier and his or her family. Are we deploying too many people too often, for example? Do we have the proper facilities for them to have a comprehensive practice in? Lots of other things that we have—that we have tried to begin to address. And the deployment issue, I think, has played in here more recently, both in terms of attracting people to the services and for retaining people.

    We have taken a number of steps to try to mitigate the impact of that, by lessening their length of rotation; and we hope to make that rotation deployment window a little more predictable. We have had to tap some of our specialists a little bit harder than we have wanted to. But that is more of an internal Army problem in my opinion, sir.

    Mr. MCHUGH. Well, it is an end-strength problem, which in the view of some us—and I am one—is a service-wide issue.

    But I won't drag you into that right now. I like you too much, General.
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    General Taylor, comment?

    General TAYLOR. We didn't have the recruiting problem with the Health Professions Scholarship Program (HPSPs) this year. We do have continued challenges, in certain areas, to round the force off properly. Nursing is an issue for us all, and recruiting nursing; and I know the Congress has given us the authorities to tackle that.

    It is probably three areas that make a difference, which are how much we pay people, at what point in time we pay them, and how much we can pay them to get them to stay in. There is probably—there is, in my opinion, a fair amount of uncertainty in the force now because of not only the warfight in the probability and chances of deployment, but also coming through the base realignment and closure process, what is the platform going to look like that I am practicing on? And finally, most importantly—and I have said this before—it is the environment of your practice. What is your practice like? What platforms am I operating on?

    You talked a little about MILCON that $37 billion. Well, less than something percent of that is spent on military construction. So our platforms are getting old. We are unable to invest in them in great amounts of money. And so we focus really hard to make sure that our providers have the biggest span of practice they can and offer the best resources we can.

    And in the Air Force, increasingly we are asking our providers to operate in a professional office building on base and then leverage the civilian community by practicing downtown. And I think that has great promise to open up the civilian communities' wealth of technological capabilities to our providers so they can practice a full—create a full practice for each of the providers.
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    There are going to continue, for all of us, to be huge challenges in nursing as the Nation faces a nationwide nursing shortage, and there is no doubt that is a precious asset we have to take care of. But we have recruiting challenges in certain specialty types across the board, based on the civilian market as well as the commitment folks have to the Air Force in terms of their training.

    Mr. MCHUGH. Thank you. I appreciate your final, your latter comments.

    Dr. Winkenwerder has been very instrumental in helping us in the 2003 Defense authorization bill to create some pilot programs to try and see what partnerships between the military and civilian communities might be explored to alleviate those kinds of pressures, recognizing always the first challenge has to be to provide for the military communities; and we have one of those going on in the Fort Drum community. We have a long path yet to travel, but it has been very encouraging thus far.

    Before I yield to Dr. Snyder, one quick question to Admiral Arthur. Admiral, you didn't mention recruiting and retention of military professionals. There is probably only so much one wants to say in a written report. Is the Navy in somewhat of a different position? Can you help us, your sister services, with a few tips? Or what are the circumstances in that for the Navy?

    Admiral ARTHUR. Actually, we are closer to the Army in that we have not filled our health professions scholarship program this year. We are finding our greatest challenges to retain the people who have the highest operational tempo. We have only deployed 40 percent of our medical force, but in that 40 percent all of our surgeons, our anesthetists, our OR technicians and those people are growing weary of the constant deployment two and three or more times. So our challenges are in recruiting those high resuscitation-intensive specialties.
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    We are also concerned that if we have more humanitarian missions, we might not have all the preventive medicine services and others that we need to take on those other missions. So we are working very hard, and the three services are working together to look at recruiting strategies.

    Mr. MCHUGH. Thank you, Admiral.

    Thank you all, Dr. Snyder.

    Dr. SNYDER. Thank you, Mr. Chairman. As you continue this discussion, I know—I was a family doctor in the olden days, and this issue of these scholarships going unfilled for medical school, that may be something that Members of Congress could help with. Most of us do some kind of a distribution of information about, you know, the academia points and that kind of thing, and we know how to get the college newspapers.

    And you ought to be free, you know, to call Chairman McHugh up and say, Here is a press release on openings. I suspect all members would be more than willing to do some type of press release to disseminate those opportunities.

    I am sure there are some good young men and women sitting in Arkansas that are going to be sorry to see these things went unfilled. You know, they are sitting out there; they just don't know where they are at. That may be a way that we can help.

    Secretary Winkenwerder, you have been, I won't say, ''a voice in the wilderness,'' but certainly have been a bit of a lonely voice over the last period of time—I think admirably so—talking about the costs of these good things we are trying to do for men and women in uniform.
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    One of the things we have heard in the last three weeks or so in the public media is, How are we going to pay for the Katrina damage and rebuilding? And my response is, we should be asking, How are we going to pay for everything else? Because paying for Katrina is obviously very important, but it is a fixed cost. And the kinds of things you are all discussing, Admiral Arthur talked about in his written statement, are ongoing costs forever that are escalating.

    And so we need to have very serious discussions about the fiscal health of this country and the deficits and what we can afford and not afford, because that is the big issue, how are we going to pay for everything else including military health care and veterans' health care?

    General Webb, I wanted to ask you—I will begin with a bit of a mini-editorial, but one of my dissatisfactions—not with this subcommittee, but with the full committee—is, I believe that we have really not done an adequate job of overseeing the issues that have occurred with regard to the mistreatment of our captured combatants overseas. And that is just my own opinion. So I am taking advantage of this panel today, because we have not had any kind of hearing at all on the amendment that was passed, Senator McCain's amendment that passed the Senate 90 to 9 a couple of weeks ago.

    My concern is this: You're a dentist, but you practiced a lot of years and did a lot of filling and drilling, I assume, in your time, so you have colorful stories that come in sometimes about how, exactly, people got hurt or the damage they had or whatever it was.

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    My question, Senator McCain, certainly with the support of a lot of other people like Senator Lindsey Graham, are concerned that we need to have a bright-line rule out there for everyone, civilian or in uniform, that works for the United States Government about how they treat people, and until we have a bright-line rule, we are going to have problems because people are going to get fuzzified about what to do or not to do or if what they are observing is correct or not correct.

    It seems to me in the medical corps for the Army that if I am in the field, it would be helpful to me as a medic or a doctor or a nurse, to have a bright line and know what that bright line is. And so my question is—I am going to give you two or three examples:

    Are you familiar with Senator McCain's amendment? It basically talks about a uniform standard for interrogating persons under the detention of the Department of Defense and basically says that people should be treated as outlined by the United States Army Field Manual on intelligence interrogation. It is a very bright-line rule about how to treat people; it has definitions and it has a section that deals with civilian aspects of it. I assume he is talking about other governmental organizations.

    So here is my question for you who practice medicine: If you have a treatment facility, and have someone come in, an opposing combatant that has some kind of injury inconsistent with—you know, this appears to you to be some kind of abuse—would it not be helpful to the treatment facility to have bright-line explanations of exactly what is or is not permitted?

    I am asking your personal opinion now as a practicing medical professional.
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    General WEBB. Yes, sir. You know, there has been a lot in press about detainee treatment, a lot of stories, some partially true, some untrue, so——

    Dr. SNYDER. We have limited time here. I am not talking about what is in the past.

    General WEBB. The bright lines.

    Dr. SNYDER. One reality we have today is, we have got a public relations disaster out there regardless of what the facts were about what occurred before. I am trying to look around.

    I think Senator McCain and the Senator are trying to look ahead. I am asking, would it not be helpful to have a bright-line rule like Senator McCain's amendment for when you are doing your training in dealing with people, with medics and nurses and physicians.

    General WEBB. The obvious answer is yes, sir, it would be nice to have a line that, when you come to it, you know this is the edge and you don't step over. I think that we have a lot of guidelines already out there. It is a matter of, how bright have we made those lines? How visible have we made those to our providers and to everybody in the military.

    I think part of our emphasis has to be on the education piece, just to have people know what those boundaries are, what their responsibilities are, what their options are when they think they see an injury inconsistent with something that you might expect in wounds. Much as we have rules for reporting child abuse, for example, I think that would be—it would be helpful if we have a mechanism to draw those bright lines and make them visible to everybody.
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    Dr. SNYDER. You know, General, you and I come from the same position.

    Mr. Chairman, for your information, as you may know, if a physician even suspects in Arkansas—I assume it is nationwide—if a physician even has a suspicion of child abuse, that is it, you are legally required to make the call. You don't sit around and evaluate. If you are suspicious, you are required legally to make the call.

    Let me give you a second anecdote, and you probably will have the same answer. And this happened to me as a physician. A policeman brought in an injured guy. He had a cut on his head and said he got bumped. Well, the guy told me he was in the back of a car handcuffed, and the policeman would slam on the brakes, back and forth, did that several times and finally broke his forehead. And I had to sew him up.

    Well, in the course of that discussion, I happened to circle around and come up behind him at some point, and I heard the policeman just taunting the guy saying, hi, how did your head get hurt? It was very obvious what had happened after that.

    So my question is, if you have a civilian U.S. Government employee who brings in some kind of captured combatant for treatment and you or a medic or a corps man or a doctor were to observe some kind of behavior of that civilian, would it not seem inappropriate, would it not be helpful to have some kind of a bright line regarding what is appropriate and not appropriate for somebody who is not even in the military, but bringing in people to be treated in a military treatment facility?
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    General WEBB. Yes, sir, it would.

    Dr. SNYDER. Mr. Chairman, I have other questions, but I think there are other members here.

    Dr. WINKENWERDER. Congressman, I know you didn't ask, but I would like to draw to your attention, if you were not aware, that we have issued a policy—I issued a policy in June of this past year, just a few months ago, and we are now implementing what is known as an instruction that goes into further details. But the policy is out there and has been broadly communicated that makes it absolutely unambiguous, to the extent that it was not clear to anyone, of the obligations that every medical professional, every medical provider has to treat every person under U.S. Custody with dignity and respect and humanely and to do the right thing. I don't know if you have seen our policy, but we would be glad to share it with you. It also makes absolutely clear the obligation to report any suspected abuse. And that, from my office, has been the message throughout, from the very first weeks of learning of allegations.

    And so we have done that. We have also developed an entire program to train, speaking to the issue of the training obligation, making sure—it is one thing to have a policy. It is another to implement it and make sure that everybody's aware of it. And that training policy makes it a requirement for a certain number of hours of training in all of these obligations, in Geneva Conventions and so forth, war manual, Army war manual, for every single person involved who is deploying into any setting where they might come into a position when they are in the custody of a detainee.

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    So it is our view that we—at times, I will be honest, we haven't felt as if either people have been willing to listen to what we have been doing or to recognize the fact that we have been taking some very serious, very honest steps to make clear exactly what our expectations are.

    Dr. SNYDER. I thank you, Mr. Secretary, for your last comment there. If people have been paying attention, I think you all have been trying to stay on top of this issue, particularly the medical area. If I understand some of the arguments Senator McCain has been making, that is one of the arguments, put this in statute, unambiguous, that anyone under Department of Defense control, these are the standards, there is no question about it.

    Thank you, Mr. Chairman, for your indulgence.

    Mr. MCHUGH. Gentlelady from Virginia, Mrs. Drake.

    Mrs. DRAKE. Thank you, Mr. Chairman.

    I would like to thank each and every one of you for being here today. This is an issue that we have been talking about all year, and we have been looking forward to this hearing.

    I think—and I know Members of Congress share my opinion that we made a promise to our military men and women. And healthcare is a very important part of that, and I think it plays into our retention and recruitment, how we provide those services.

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    I have visited Portsmouth Naval Hospital recently, not having been in there in over 20 years. I was absolutely amazed, Admiral Arthur, at what I saw there and the partnerships I learned about within our community with other medical facilities.

    Also, I was in Iraq recently, General Taylor, visited the hospital in Balad, and again was very impressed by the technology, by the spirit of the people who worked there. I was unaware that we also treat Iraqi citizens and insurgents as well until I made that visit. And even though it has plywood floors, it was very clean. And we were told a 96 survival rate, so I think they are doing a wonderful job there.

    There are three areas that I have concerns in, and one you have addressed when we had our hearing about mental health and making sure that we are following that very closely and that what we think and you think is happening is what is really happening for our young men and women as they come back.

    The second, in the area of the VA healthcare. There is no doubt in my mind they provide very quality care. What I hear about the most is the wait for people to get in. And what is your impression of that? If we are doing a better job to be able to reduce the wait and let the people get the care.

    And then, most importantly, are the comments that I hear about TRICARE. And what my concerns are is that my own family physician no longer takes TRICARE, so when I have friends who are retired military who can't each use the family physician that I use, that is very distressing to me. And what I am hearing is, number one, it is the rate of reimbursement. And I know that Dr. Snyder and Dr. Schwarz have both sent letters off asking the medical profession to please look at this as sort of an American duty to do this, but I think there is only so many patients you can have where you are paid below what the cost of that service is. So my questions are, the regulations, the policies and the reimbursements to our medical profession, if we are to do a better job at that—I know, Mr. Secretary, you have talked about cost, and I am sitting up here talking to you about raising reimbursements to doctors, but I think it is absolutely critical that we not feel good that we have developed a policy and a program but it can't be implemented because the doctors aren't accepting it, either because they can't get around the regulations and don't feel they are providing good healthcare to their patients, or because they can't afford to accept a certain number of patients. And I wonder if we can even look more at Medicare and those regulations and those reimbursements. Thank you.
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    Dr. WINKENWERDER. Congressman, thank you for your question. We wish we could talk your personal physician back into being a TRICARE provider and would certainly be interested to know more about that situation. We are glad to look into it.

    Our payment rates are attached to, if you will, to Medicare payment rates, and so they are effectively, that is the benchmark—they are effectively the same.

    Mrs. DRAKE. What we really hear is that they are not, that they are lower than Medicare and Medicaid reimbursements, and it is the lowest of the three. So am I wrong?

    Dr. WINKENWERDER. Well, I would question—I would say, that it is not the case that there is a gap between what we pay and what Medicare pays for the great majority of physicians and providers that are in our network; it is at about the same rate.

    Now, as you will hear from our contract partner companies, they may choose to—and we don't prohibit them certainly from doing this and establishing a network to negotiate a lower rate. And I am sure that they have done that, and they can describe in more detail that process. However, I would note to you that if we use a measure of how many physicians are participating in the entire TRICARE network nationally, it has grown. It has gone up significantly in the last couple of years. We had about 210,000 total physicians participating, so that is a huge, actually, network nationally. That is how many we had a couple of years ago. We now have almost 250,000, so we have actually picked up another close to 40,000 physicians.

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    Now, that is not to say that there might not be, in certain local or certain instances, problems, and we want to know about those problems. One of the problems, candidly, and we were having a discussion with our contractors, partners about this, is in the area of obstetrics, because, again, our payment schedule is attached to Medicare, and we want to look at that. I have told them that we want to look at that and to make sure that—because in some cases, Medicaid now is paying more, is our understanding, than the Medicare rate for OB, for deliveries. And so we want to make sure that we are not creating problems.

    So what I would pledge to you is that we will absolutely look into this, and we will get back to you on what our assessment and our investigation shows. But to be sure, we want to be a good plan to work with. We believe we are, on the basis of those increasing numbers. We are—our payment timeliness is very rapid. Our payment accuracy with our claims payer partner is very good, very accurate. And so we think we can eliminate a lot of the hassle factors.

    Now, there are some factors with the referral and authorization that might be a source of problems, but the bottom line is, we are working to make ourselves always a good partner to work with for physicians. We want the very best physicians in our network. That is an objective for us. And so—but we will look into this for you.

    Mrs. DRAKE. I thank you.

    Thank you, Mr. Chairman. I will ask my VA question later.

    Mr. MCHUGH. I appreciate that. I have to make a couple of comments.
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    First of all, and this is not necessarily your doing it as an ongoing problem, just because you are a TRICARE provider doesn't mean that you take TRICARE; it means that you filed a claim at had some point. And I think we have really got to do a job determining who actually is accepting TRICARE on a real-time basis. And also the distribution of TRICARE providers geographically is equally important; 45 percent, as I believe the data shows with respect to the State of California TRICARE providers: A, it doesn't mean they are currently taking it, but B, they could all be in San Francisco, L.A., and Oakland, and not have another one anyplace in the State. So I think those are some problems.

    And I would say, the secretary is absolutely right in terms of obstetrics and also pediatrics. Medicare did not respond effectively to those. We placed some language in our bill and assessment on that, but that is not necessarily the department's fault. That is something we are working on.

    With that, the gentleman from Texas, Mr. Conaway.

    Mr. CONAWAY. Thank you, Mr. Chairman.

    Good afternoon.

    General Taylor, you mentioned—made reference to a national survey that compared TRICARE to everybody else. Talk to us about internal customer satisfaction surveys that you run and the results there, and problems that may have been pointed out as you get away from transition period, any signs of improvements and the level of satisfaction that the men and women who are under these various programs have experienced. And maybe others have had satisfaction surveys, also.
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    General TAYLOR. For the record, I will be glad to provide our customer satisfaction data for the last few years. We are consistently in the mid–80's in terms of being very satisfied or highly satisfied with our healthcare, and it has been creeping in the 80's for most of the time.

    Satisfaction with health plan varies by what category you are in, so it becomes a complicated discussion of whether you are a retiree, an active duty member or active duty family member.

    We have been pretty comfortable that folks have been pretty happy overall with the case-by-case care when they come in our facilities. As we continue to field more clear and easy ways to build a network and sustain a network, particularly under the new contracts, we hope to see better care. I think Dr. Winkenwerder has a couple of things to add to that.

    Mr. CONAWAY. Secretary, you also answered you run a similar customer satisfaction survey instrument with your providers to get a clue as to where they are across the spectrum with dealing with you guys and working with you?

    Dr. WINKENWERDER. We do different kinds of surveys. We have an across-the-board beneficiary satisfaction, and we do that to look at the health plan characteristics, TRICARE health plan, as well as the experience with the medical care, kind of separating those different elements. We also are very interested in the provider perspectives. And there are various surveys, particularly involving the military physicians with respect to provider satisfaction.
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    Mr. CONAWAY. I guess I was more interested in the civilian. You have got the military guys trapped, but the civilian category——

    Dr. WINKENWERDER. We prefer not to think of it that way.

    Mr. CONAWAY. I understand. Poor choice of words, excuse me. But the folks who have more of a choice in the civilian arena that you are relying on heavily for these TRICARE——

    Dr. WINKENWERDER. We may well be doing that, and maybe one of our contracting partners can comment when they are here on any surveys they may be doing. We do follow metrics that we believe are highly related to that satisfaction. For example, a timeliness of claim payment. How quickly we answer the telephones? You know, that is a big satisfier or annoyer when it comes to dealing with healthcare, is, can you get in? Can you get through to people? And our standard is very high. It is over 95 percent of calls answered by a person within 30 seconds. And I was in industry before. We are running at very high rates on that. There is a cost to that, and it means manning phones and making sure that people answer them, but we think that is what we should be doing.

    Mr. CONAWAY. Given the change and the use of the reserves and the national guard during these very important battles, of active duty personnel and the array of healthcare options, have you taken a step back from that to make sure that we have got the right complement of healthcare benefit packages for—and I am aware of the TRICARE select for the folks that are in the reserves and coming and going out of active duty, but to make sure they have differences in the right spot and similarities in the right spot, given the greater emphasis on the guard and reserve these days than perhaps any time else previous to this?
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    Dr. WINKENWERDER. Well, it is our view that the current benefit, if I can use this terminology, hits the spot because—in terms of offering health benefit coverage for that community, that group, that element of the entire military service family. And the reason I say that is because it, as the chairman pointed out earlier, makes it easier to get onto our plan prior to deployment, provides a nice transition benefit, and then, in addition to that, if you need that additional ongoing coverage and you have served, you will have it. And for every 90 days, you have up to a year of that coverage at a very attractive rate. And so what we are finding is that people are taking advantage of that.

    One of the reasons we think this is a good concept the way it is structured now is that it ties the receipt of that benefit to having served, and for those who have not been called up, our data indicates that about 80 percent of them or more already have existing coverage. And that further, that there is not a relationship between having that coverage or not having that coverage and having any kind of problem in terms of medical readiness. We have actually done some analysis for that.

    And then, finally, Secretary Tom Hall, Assistant Secretary for Reserve Affairs, and his team have gone out and done a survey to ask people, what is most important to you in terms of benefits and pay? And the survey data that he shared with me showed that the health benefit was on down the line, it was like eighth or ninth or tenth. It was not among the top things that everyday people indicated was most important to them. They were much more interested in pay, and what can you do for me now and other things.

    So from all of that, I take that—personally, I take that we are doing the right thing right now, and we are tracked onto the right approach.
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    Mr. CONAWAY. Thank you, Mr. Chairman, I yield back.

    Mr. MCHUGH. I thank the gentleman.

    According to the list, I have the gentleman from North Carolina, Mr. Jones.

    Mr. JONES. Mr. Chairman, thank you very much.

    Dr. Winkenwerder, it is good to see you again. I had the pleasure of you visiting my office two or three years ago about an issue, and I appreciated your interest at that time.

    My question is going to deal with the dressings that are being used for our wounded soldiers. I know that the Army uses a product I think it is called—I might mispronounce it, chitosan, and the Air Force uses a product known as Quick Clot. Have you—has there been enough time that you have been able to evaluate the products being used by the Army and the Air Force as to which does the best job of trying to help save the life of our soldiers?

    Dr. WINKENWERDER. Boy, I hate to get between the Army and the Air Force on that debate. I am going to turn, actually, to General Webb and to General Taylor on that. It is my understanding to—just briefly say that it is my understanding that both of them are working pretty well, and the fact that these two are being used among others that are out there I think is an indicator that these have been proven in the field to work well. They work differently, the actual mechanism for them, but——
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    Mr. JONES. And that would be fine. I made reference to the July 2005, the Journal of Trauma, Injury, Infections and Critical Care, and there is a Dr. John D. Holcomb—I don't know if he is with you or not—and they came to a conclusion—and I look forward to hearing from the Army as well as the Air Force—that the chitosan dressing critically failed within two hours after application. There may be a risk of rebleeding for high-pressured arterial wounds treated with chitosan dressing, particularly if care is delayed substantially. And I look forward to hearing from the Army and would like to know if the Air Force, if they did a comparison of the products. I know there are more than just these two, but these are the ones selected by the Air Force and by the Army.

    Dr. WINKENWERDER. Would you like to hear that just now?

    Mr. JONES. Yes.

    Dr. WINKENWERDER. Let me turn to General Webb.

    General WEBB. Yes, sir. You know that bleeding is a major problem on the battlefield, so both of these are very good tools, innovative mechanisms that we now have available to us. Actual use in combat, we don't have really good data on, but we have done some preliminary evaluation on both products. There are pros and cons to each one. One seems to cause a little more exothermic burn than the other, but the Army has decided, on its experience and research so far, to take the chitosan bandage over the other. I think that we are all anxiously awaiting more data from theater to see how it actually works in combat situations. The limited data that we have back shows that that has worked very effectively.
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    Mr. JONES. I guess just as a follow up, because obviously you are studying data that is coming back and obviously that is how you determine what is the best and what is not the best, I guess what bothered me when this was sent to me was the conclusion. And would you—I did read that quickly, but are you familiar with the conclusion by this Trauma magazine about what it says about the chitosan not being able to do what is necessary?

    General WEBB. Sir, I think we took all of that into consideration when we made our decision. Obviously neither one of them is perfect, so that was a factor.

    General TAYLOR. Congressman, if I could just add, I note that we have established a substantial Joint Trauma Reporting System from Iraq and Afghanistan where all of this data from every injury is flowing into the Institute for Surgical Research down at Fort Sam Houston. And they are constantly looking at these are sort of things as they occur on the battlefield. Now, you know that a large majority of our soldiers wouldn't have to wait two hours to get to their first resuscitation. So there is that interesting part of that, because we may not end up with that much data on that length of time, but those are the sort of things where we figure out what we give to the Special Forces that may be further inland, that maybe some that may have occurred to an airman, the timing of the product and the packaging of the product and how we train, and then there was the difference between the services and how we look at that. But the key important thing is, we are gathering the data on every single person that is hurt in theater, whether they are returned to duty or brought back to Bethesda, Institute of Surgical Research, and they are constantly looking for what the best decision is, not only in bandages, but in tunicate use. Surgical procedures and wound healing in types of amputations, all of these things are in this group, and there will be a huge amount of research that will be in there in the very near future.
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    Mr. JONES. Mr. Chairman, I assume my time is expired. May I ask unanimous consent that I would submit questions in writing that I would like answered and appreciate the panel responding back to the committee with written response?

    Mr. MCHUGH. Without objection, that will be ordered. And we will be submitting written questions.

    Mr. JONES. Thank you, sir.

    Mr. MCHUGH. I thank the gentleman.

    The gentlelady from California, Mrs. Davis.

    Ms. DAVIS OF CALIFORNIA. Thank you, Mr. Chairman.

    Thank you to all of you for being here and for your service.

    I had a few questions in follow up to my colleagues, but I wanted to ask about one of the issues that is very much in the news today and that we have been having some hearings on as well, and I am wondering about the level of preparedness of the total force to protect itself from a pandemic. What kind of assumptions are made about the military, about mortality rates in the military versus the general population? And what kind of planning really is going on right now?

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    Dr. WINKENWERDER. Congresswoman, thank you very much for asking that question, and we are glad to talk about it because we believe that we have made very good progress, and we are glad to share it.

    We have been concerned about and working on the issue of preparedness and the ability to respond to a pandemic avian influenza-type circumstance for well over a year, actually, going back to the spring of 2004, and we have undertaken a number of different actions. The first of those was to assure that there was information distributed broadly to each of your combatant commands around the world providing awareness about this potential problem, but also to request that they begin to develop preparedness and response plans.

    You probably heard in the discussion here in Washington about the Health and Human Services plan. We have asked each of the combatant commands to develop a response plan. The Pacific Command has already completed its plan, the other combatant commands are due to have their plans completed within the next two or three weeks. And so there is a lot of planning. We will be beginning to do some exercises, so that is the first one.

    The second point is with respect to medication. We have contracted for almost 2.5 million treatment courses of Tamiflu, and they are expected—and it was just confirmed today—to begin receiving by contract that allotment of doses in the next 30 days, so will be receiving that.

    And then, third, with respect to vaccines, we have been working closely with the Department of Health and Human Services. We are in regular communication with them, literally every day, and have people working—actually detailed to work at the Centers for Disease Control at the central office here in Washington. But we are working on an agreement to dedicate for the military several million doses of the first available H5N1 vaccine.
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    So we, by agreement, have established that the military personnel needs to be right at the top of the priority list. There will be others probably in there, and there is discussion about that, but we want to be prepared. And our first obligation, in order to help in the situation, is to have our own people protected.

    In the final area, I would just mention is in the area of surveillance. We have pretty good medical surveillance. In fact, we have a surveillance component that is totally dedicated toward collecting samples for influenza around the world. And we have an overseas laboratory in Jakarta, Indonesia, and another one in Thailand, and not just for the military, but for the whole United States. And so we are working with the Center for Disease Control (CDC) in both of those labs to collect samples to get them back to the CDC and working with the World Health Organization, and we are ramping up that activity.

    And so we are working on all fronts, and I think we are making good progress. But thank you for that question. It is really important.

    Ms. DAVIS OF CALIFORNIA. Thank you. Anybody else want to respond to that? Okay. We certainly have concerns and would want to know that our service members were prepared for this as really our front line of defense. I appreciate that.

    I wanted to return to one question around TRICARE and the requirement for Medicare Part B enrollment. There has been a lot of confusion, I know, among some of our constituents regarding that, and I wonder if you can speak to that, and whether—what kind of tracking you are doing to see how great a problem that is for many of our service members.
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    Dr. WINKENWERDER. Well, it is my understanding that it is a requirement for people to enroll in that Medicare Part B in order to attach our TRICARE benefit to that so that we can become, as designed, the second part, Medicare picking up the principle part of the bill, and then things that Medicare does not cover, TRICARE pays for.

    Ms. DAVIS OF CALIFORNIA. Right. In a number of circumstances, though, I think that the constituents found that their TRICARE coverage was downgraded from prime to standard or it was dropped altogether, and part of that was because they didn't necessarily receive the notice that they had to enroll. And so there is a lot of confusion around that.

    Dr. WINKENWERDER. Well, if you have some specifics, please share those with us. I am not aware of any broad problem along that front, though I will say that there were, to my knowledge, some issues going back a couple years when we were having some difficulty between our administrative offices with TRICARE and with Medicare databases to get regular feeds from Medicare about those people that were then becoming eligible and to then do the coordination of benefits. We are now getting regular feeds of information, data files, on a monthly basis, so that problem should be minimized. It shouldn't—we really shouldn't have it. But we make every effort to notify our beneficiaries or people who will become beneficiaries at or about the age of 65 so that they know that they have to enroll in order to obtain our benefit.

    Ms. DAVIS OF CALIFORNIA. Thank you. I see my time is up. And the question is really over some of the delays, and a lot of our folks anyway have been experiencing that. Thank you.

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    Mr. MCHUGH. I thank the gentlelady.

    The gentleman from North Carolina, Mr. Hayes.

    Mr. HAYES. Thank you, Mr. Chairman.

    Gentlemen, thank you for being here. I have been in and out, so I apologize for any repetition.

    My concern continues to be—and before my concern, I want to say, you all are doing a great job. I appreciate the improvements that you are making in TRICARE. And my concern continues to be access. We had periodic meetings, and I thank you, Mr. Chairman, for keeping this out in front of us. We have talked about progress being made for particularly spouses or maybe a wife or a husband of deployed folks and their access to TRICARE. If each of you would just comment on what you see. Is progress being made? Are there areas that we need to work on? Just kind of update us on the access.

    Dr. WINKENWERDER. I would just say, Congressman, that we are taking every step that we know of to continually monitor that issue. We do ask our beneficiaries about the question of access and provider network. We do a regular survey for TRICARE standard; that tends to be the benefit plan that our retirees and their dependents are inclined to use. But with respect to the active duty or activated guardsmen and their families, we believe that our networks, as I spoke about earlier, are pretty robust. We are working to improve them where there are gaps. We are working to try to educate.

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    And there is more that we can do. I think there is a real opportunity to work with, actually, the Governors and the heads of the national guard in each State, particularly for the guard population. Dave McIntyre from TriWest may address this later, but for example, in the State of Idaho, there were some issues with participation, and Governor Kempthorn called together all the medical community and the guard. And we had people out there. It was a big meeting, and we cleared the air and got through a lot of confusion about some things. And I assume thereafter the number of doctors participating went up dramatically.

    So we would be glad to do something similar in the State of North Carolina or any other State, particularly those States that are deploying significant numbers of service members.

    Mr. HAYES. Did you have plenty of moms at that meeting or just generals and colonels?

    Dr. WINKENWERDER. I wasn't there. I hope there were some moms there.

    Mr. HAYES. We don't have a response from our local healthcare providers. They say TRICARE does not reimburse sufficiently, and I would like to help with that on the back end because that is important. I mean, those folks just deserve every ounce of appreciation and respect, and if they are not getting what they think they should have or should not have, my message to them is, just be glad they are there. And if you have to pay them to come in, that is a little bit of an extreme, but that is the attitude that we ought to have. So I appreciate you all keeping up with that from a mommy's perspective, and make sure that we can keep the heat on the providers and the docs.
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    I have got a doc and a nurse right down the street from me, and they are the only provider in our area, and folks are in their office five o'clock in the morning, which is good for them, but kind of bad for us that that has to happen so they can come in from everywhere.

    And I appreciate Dr. Snyder's interest in the prisoner situation, but dignity and respect is not owed to people who blow up women and children. Humane treatment, okay. But I don't want to hear anybody saying that they have to treat these people who behead and all those other things with dignity and respect. They don't deserve it, and we shouldn't give it to them.

    Mr. Chairman, I yield back the time.

    Mr. MCHUGH. I thank the gentleman.

    The gentleman from Colorado, Mr. Udall.

    Mr. UDALL. Thank you, Mr. Chairman.

    Mr. Secretary, General, Admiral, thank you for coming to the Hill today and to share your perspectives.

    I wanted to focus on the post-deployment health reassessment problems. I think the last time you were in front of us, we talked in part about what you had underway, some of the lessons you learned.
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    Mr. Secretary, you briefly commented about the program in your prepared statement. All of us here on the Hill are newspaper addicts, and I walked by a USA Today box and I think the headline—I didn't read the story, so forgive me, Mr. Secretary, but I think it said one in four Iraq vets need medical attention, so I think this is a time in which to focus.

    But I was interested in, how many soldiers, sailors, Marines and airmen we have taken through the program up to this point? And then more broadly, how are we prepared to complete this requirement, and do we have the funds in the 2006 and in the out budgets to carry throughout what I think is a well-intentioned and important program?

    Dr. WINKENWERDER. Thank you for that question. First of all, we have funds. We are fine in terms of the funding to support these activities.

    The headline was one in four Iraq vets ailing on return and noted that this number of individuals required medical or mental health treatment. And basically, what the data is that the story is built from is our post-deployment health assessment, which is done right at the time of redeployment or coming home, sometimes in theater, just before people get on boats or planes to come back or, sometimes, right after they return or at the time of return. And it is a very extensive questionnaire. I have a copy of it right here. And we, you know, ask and are seeking to find if people have been, had exposures or are coming back with coughs or headaches or fever or difficulty breathing. But then we go in to ask more questions about mental health types of symptoms, so nightmares, startle reactions; are you using alcohol more than you think you should? And we would be glad to share this with you.
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    So I think the number in the newspaper story, in my judgment anyway, is probably overstated a bit because you get a lot of people checking off one or the other boxes; it doesn't mean that all of those people have some sort of serious medical concern. It is actually a significantly smaller number that have a diagnosable problem.

    And we also ask them sort of the general question, how would you assess your health? And over 91 percent, I think, say it is good or very good, which is a pretty good finding. Some people will say that, but they still will note that they have a problem. Some people have problems and won't say that, you know, their health is good. So you have to sort through all this.

    But the bottom line from this assessment, the purpose of it is to make sure we identify those people who then need some follow-up care. And so—and they get referred on. And we track that number as well.

    And the good thing about all of this, in my judgment, is that we have a much better idea of what is happening to people during their deployment because we measure the same questions and the same people before they deploy, and now we have some sense of what the impact of the deployment was. And of course, with the next step of looking at people at six months after they return, we will have another sort of data point.

    But the whole point of this, I think, as General Webb sort of alluded to, is to make sure that we restore people to the best possible—if they have problems—condition, and for those that are doing fine and well, then that is good, and we are glad for that.
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    Mr. UDALL. Do you have any numbers, Mr. Secretary, on how many service members to date have gone through this process and then——

    Dr. WINKENWERDER. It is several hundred thousand. The article itself is based on 193,000, and I think that is just possibly this year, in the last 12 months, but it is several hundred thousand because we are going back to people who deployed as early as early 2003 or actually even late 2001 or early 2002, because it included the aggregate of all people who have gone through includes those that were in the initial deployments to go to Afghanistan as well as Iraq.

    Mr. UDALL. I see my time is expired. 140,000, 150,000 active duty personnel on the ground in Iraq, but the aggregate number is much larger because of the number of people cycling through. We should take note of that here across the committee, and in Congress in general. Thanks again to the panel.

    Dr. WINKENWERDER. Thank you.

    Mr. MCHUGH. I thank the gentleman.

    Before I ask if any of the members have a follow-up question, pursuant to the earlier agreement, we have gone through one round, we do have a distinguished Member of the full committee with us that, as mentioned earlier, not a Member of the subcommittee, however, someone who has been very involved with this issue, along with Dr. Snyder, and that is the gentleman from Michigan, Dr. Schwarz. So I would be happy to yield to him at this time.
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    Dr. SCHWARZ. Mr. Chairman, thank you for allowing me to participate in this hearing.

    I just happened to be thinking, as Mr. Jones asked his question, obviously not having the experience of having to deal with an arterial bleeder with no succors around, and I just happened to think about that. That conjured up some memories of previous times in my life. So I am going to talk to Mr. Jones, and we are going to explain to him what it is like when you have an arterial bleeder that you can't find, and all you can do is put pressure on it. It was amusing, but it wasn't.

    I am interested in TRICARE, obviously, and the problems in TRICARE and the problems that people who are eligible for TRICARE have in accessing the system, and the problems even more with my fellow physicians who have opted to be non-participants.

    As you know, my colleague, Dr. Snyder, and I wrote a letter to the American Medical Association (AMA), and I spoke personally with the Dr. Maves, the executive vice president of the AMA, and he was very kind to listen to me and to publish Dr. Snyder's and my letter. So what I want to do—and the good questions have been already asked, Mr. Chairman—what I want to do is work as closely as possible with Secretary Winkenwerder and his people to try to make certain that people who are eligible for TRICARE are able to get that care and that access in an appropriate way, not in populated areas of the United States like mine, and to access my specialty—120-mile drives just to find a physician who will accept TRICARE.

    The objections that I have heard and read have to do with quality of care issues where the specialty physicians, especially, don't feel because of limitations placed on them by TRICARE they can provide that care. Obviously, the administrative problems which always come up and reimbursement, the quality of care in one instance has to do with the availability of ultrasounds for women who are pregnant at the 20th week. It is routine to have an ultrasound. Other things have come up that would be routine, certain x-ray procedures, certain laboratory procedures where prior authorization is required, which shouldn't be.
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    So I really have no question, what I want to say is, I want to work with—and I know Dr. Snyder does, the committee does, the entire Congress wants to work with the department and with the various Surgeons General and make TRICARE as available as it possibly can be to those people who are eligible for it.

    And we are all in it together. There are a lot of problems that physicians have had. We are working on them to try to tell them that, basically, it is your patriotic duty at this juncture to accept TRICARE, but it is. And on your side, sir, let's make access as easy as possible, and if we can do that, we will have really made a giant step forward.

    Dr. WINKENWERDER. Congressman, let me just say, thank you very much for your support and that of Congressman Snyder, your willingness to write the letter, we really appreciate it. We believe it has an impact. We appreciate your ongoing support here, it is very helpful to us, particularly both of you speaking as physicians, to provide that encouragement to the medical associations and the leaders. And to the extent that you can help continue to identify problems or concerns and we can continue to address those and resolve some of those, then I think we all win. So thanks again. I appreciate it.

    Dr. SCHWARZ. Thank you very much, Mr. Secretary.

    Mr. Chairman, thank you very much. I yield back.

    Mr. MCHUGH. I thank the gentleman. And again, to repeat what Dr. Winkenwerder said, we are all in great appreciation of you and Dr. Snyder's efforts. You can have the best healthcare plan and stated benefits in the world, but if you don't have providers to render that care, it all becomes rather moot, so it is a critically important part of the equation, obviously.
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    Mr. Secretary, you mentioned both in our oral testimony and predominantly in your written testimony about the growth of your costs to provide healthcare. It is hard for any of us to argue that we want to do less, not measure more, but the challenge we have here in the political arena is, where do we draw the lines. The Senate has a proposal in its Defense Authorization Bill that would provide TRICARE for all guard and reservists, regardless of deployment status. We talked a little bit earlier about the 90-day prior and one hundred, you also have credit earnings, while you are in theater. You earn substantial TRICARE credits for when you return.

    The proposal that is in the Senate is about $3.8 billion over 5 years. They took out Federal employees, those with FEHBP, which is also paid for by the Federal Government. If they didn't, that would have been about $4.2 billion. But at nearly $4 billion, do you want to make a comment on that?

    Dr. WINKENWERDER. Yes, thanks for asking that as well. We don't support that provision, but it is for more than just the reason of cost. Clearly, the reason of cost is one that further exacerbates the challenge that I outlined in my testimony, but we also believe that it just doesn't—is not the right targeted benefit at this time and can't see that being the case even into the future.

    As I had indicated, we believe that the benefit that we have right now does properly target what is needed and is an incentive and a reward, if you will, for those that have served and that, incrementally, spending those important additional dollars—and it is not just a handful; it is several billions of dollars—is not the best expenditure of those dollars, to be just candid about it.
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    We need your help. We need your help in terms of working with us and with our military leadership, the line leadership, the Joint Chiefs and the Chairman and the Secretary to see what we can do to moderate this growth that we are experiencing because I know it is on more than one occasion the Chiefs have expressed to me their concern about how this has already begun to impact their ability to invest in all the important activities that they believe they need to invest in. And we are trying to look down the road.

    Our obligation, our most important goal we believe is to sustain a great benefit. That is our goal: Sustain this because it is a great benefit. We want it to be a great benefit 10 years, 15, 25 years down the road. But that requires prudent fiduciary management.

    Mr. MCHUGH. Thank you.

    Dr. Snyder.

    Dr. SNYDER. Secretary, you had mentioned or you were asked by Ms. Davis and others about the post-deployment health assessment. Remind me what the requirement is for assessments, and what is the status for reassessment?

    Dr. WINKENWERDER. The reassessment is a requirement for every service member. They do have the option to opt out, I believe, but it is placed in front of them or the process is placed in front of them as an expectation. It will be conducted slightly differently in the Air Force, Army and Navy because of, I think, the different circumstances of each, but the requirement is the same.
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    Dr. SNYDER. Are we meeting the timing of the requirement?

    Dr. WINKENWERDER. I am sorry?

    Dr. SNYDER. Is there a time requirement?

    Dr. WINKENWERDER. It is within six months after return. And we are just beginning to process through the first members. There was a group from Fort Hood, I believe, close to 2,000 individuals who just went through. Several hundred of just that group were identified for additional referral for mental health or other problems, and there have been some Marines out in Camp Pendelton. And then General Taylor spoke to the Air Force beginning to implement its program in December, January timeframe, starting with the reserves, so——

    Dr. SNYDER. You had sent us a couple of weeks ago, Secretary, post-deployment results. I think I will direct this to Admiral Arthur, too. And Secretary, you can make any comment you want.

    And you probably don't have it, but, on page two, this chart of the different services, general health services, mental health concerns, exposure health concerns, and every one of them, but particularly in the mental health concerns, there are dramatic differences between the Army and Navy versus the Marine Corps in terms of the rapidity in which people are getting care. For example, in the mental health concerns the Army referred, a little over 50 percent were referred for care. They were seen; 86 percent says they were seen within 90 days. For the Marines, 30 percent referred for care, but only 13 percent were seen within 90 days. That is a dramatic difference, Army versus Marines. The same is true under general health concerns. For exposure health concerns, the same. And there are discrepancies between the Navy personnel and the Marine Corps personnel. Why are there—maybe there is an explanation for this—but why are there such dramatic differences between what the people are seeing for follow-up care between 90 days Marine Corps versus Army and Navy?
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    Admiral ARTHUR. Dr. Snyder, what is the reference that you are using? What are you looking at?

    Dr. SNYDER. This is what Secretary Winkenwerder sent out to us. It is the letter of September 29, 2005. It is the final 2005 report to Congress for the requirement on DOD report on quality assurance.

    Admiral ARTHUR. I know that about 30 percent of the Marines have been referred for some level of care. It has not been just all mental health, but some has been family health. And if they are reporting only 13 percent have been seen in 90 days, I would view that as a very great concern. I am going to take that home and really take a look at that. That, to me, is us not following up on our obligation to them.

    Dr. SNYDER. It is fairly dramatic.

    My final——

    Admiral ARTHUR. I hope that is an error in the data because I would be very concerned about our obligation to the Marines.

    Dr. SNYDER. One of the big complaints we have heard with regard to TRICARE from the private providers is the referral process. And it has always been managed care, regardless of the plan, but it seems to have gotten worked out everywhere except with the TRICARE system. And so now you have providers out there saying, we don't have to do that for this company, why do we have to do it for our military families? And isn't that something that you can take control over? Why can't we just do it as a notification process?
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    Dr. WINKENWERDER. Well, you ask a very good question, and it is an issue that we are actively evaluating. We did make some changes within the past six months, relaxing what we came to conclude were unnecessary requirements for creating paperwork and a referral or an authorization for certain types of visits. But you are correct, other plans—I wouldn't say—not across the board, but I think there is no question there has been relaxation. And you know, looking at the role of the plan to be more along the lines of monitoring what happens at that referral and ensuring that the right care gets delivered once the patient is referred rather than some sort of check process as to whether a referral will take place.

    Dr. SNYDER. Please keep us informed on that, the committee or Dr. Schwarz. And thank you all for being here.

    Dr. WINKENWERDER. We will get back to you on that.

    Dr. SNYDER. I have referred to Senator McCain's amendment. It is one page. I would ask unanimous consent that it be included in the record.

    [The information referred to can be found in the Appendix on page 237.]

    Mr. MCHUGH. Without objection, so ordered.

    Dr. SNYDER. Thank you, Mr. Chairman.

    Mr. MCHUGH. I would encourage the other members that we should finish with this panel by 4 o'clock. Speaking of torture, we don't want to subject our own.
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    I know I have talked to Mrs. Drake. She has no further questions.

    I would ask the gentlelady from California, does she have any further questions?

    Ms. DAVIS OF CALIFORNIA. Just a very brief follow-up, Mr. Chairman. And thank you and really in appreciation for your efforts in mental health and recognizing and identifying. But I wanted you just to, if you could, mention whether or not the efforts to enhance the Web-based portal for mental health evaluation by families is—kind of a self-evaluation—is that something you feel does need further work and perhaps development and if it is a useful tool.

    Dr. WINKENWERDER. Which—can you go into a little more detail which portal you are talking about?

    Ms. DAVIS OF CALIFORNIA. It is the Mental Health Readiness System and portal for military veterans. It is being developed by the private sector actually and allows families to kind of self-assess their own needs at that particular time, and then to obviously seek the kind of referrals or health that they need.

    Dr. WINKENWERDER. I am not familiar with it, but we would be glad to look at it. I don't know if any of my colleagues here are, but we would be glad to comment on it if we can take a look at it. It sounds like a good idea.

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    Ms. DAVIS OF CALIFORNIA. Thank you.

    Mr. MCHUGH. The gentleman from North Carolina. He was hiding. I skipped over the gentleman from Texas, Mr. Conaway. No. Gentleman from North Carolina, I am sorry.

    Mr. HAYES. Just a quick comment. I was telling Dr. Schwarz I had a visit from one of the medical device providers yesterday, and given the orthopedic issues that we are running into, they are putting together a mobile operating room. And they offered to come to Walter Reed or wherever, and I will give you that information—doctors are so busy now it is hard for them to go to meetings, but all the latest devices and techniques. It seemed like a pretty good idea.

    Mr. MCHUGH. Thank the gentleman. I thank you all very much, particularly Admiral Arthur, for being here and suffering in more ways than one. But as I—I think I can—I know I can speak for all the Members of the subcommittee, full committee and the Congress, we deeply do appreciate the challenges you have taken up and for the great efforts you put forward. We share in that commitment, and we look forward to working with you in the future and trying to do the best job we can by some extraordinarily special men and women in uniform. Thank you.

    And as they are moving we would ask the second panel to make their way to their seats as we do the shift out.

    Thank you all for being here. Let me introduce the second panel in the order in which they are listed here. Mr. David Baker, President and Chief Executive Officer, Humana Military Healthcare; Mr. James Woys, President and Chief Executive Officer, Health Net Federal Services; Mr. David McIntyre, President and Chief Executive Officer, TriWest Health Care Alliance; and Dr. Holly Puritz, Mid-Atlantic Women's Care, Norfolk, Virginia.
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    And I would note that Dr. Puritz's practice is obstetrics and gynecology in Norfolk, Virginia, and she was kind enough to come here at the invitation of Ms. Drake, the vice chairman of the subcommittee.

    So welcome to you all; particularly welcome to Dr. Puritz. Doctor, I hope I am pronouncing your name correctly. I will try to do better.

    Thank you all, as I said, for being here. The three of the four of you are well known to this subcommittee and well known to this issue, and we appreciate your continuing involvement in the efforts of both you as individuals and the organizations that you represent and the joint challenge of providing health care to those who are in the TRICARE system here in this Nation. It has been some interesting times for all of you, some interesting challenges, and we look forward to hearing your comments on that.

    As I said to the first panel, we have all of your written testimony in there in its entirety. They will be entered into the record in their entirety, without objection, and that is so ordered. And we look forward to your comments as you may see fit.

    Let us begin with the way in which we started with Mr. David Baker, of Humana Military Health Care. David, welcome.


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    Mr. BAKER. Well thank you, Mr. Chairman.

    Mr. Chairman, distinguished Members of the subcommittee, on behalf of the dedicated men and women of Humana Military Healthcare Services, I appreciate the opportunity to update you today.

    For perspective, our company was awarded its first TRICARE contract in 1995, and we began serving TRICARE beneficiaries in 1996. We have been administering the current TRICARE program for 2.8 million TRICARE beneficiaries in the South Region since last fall.

    As we begin the new fiscal year, I believe the operational status of TRICARE is very good, thanks in large part to the oversight and tangible support of the subcommittee and the Department. Active Duty military personnel, retirees, and their families have exceptional access to a rich array of health care services. All available evidence indicates a high degree of satisfaction among the beneficiaries.

    However, we share your concern and those expressed by the earlier panel with regard to the cost growth and the funding for the coming year. And as we examine the TRICARE landscape, we note several factors that will put additional strain on the program.

    First, the cost trends that in our region we estimate will be somewhere in the range of 13 to 17 percent. Second, we have an issue of settlement of several outstanding change orders that must occur. And third, we have requests for equitable adjustment from all of the contractors related to significant financial harm sustained as a result of the Iraqi War. In short, we are operationally ready to discharge our responsibilities, and we trust that the Department has been adequately resourced.
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    Regarding the readiness status of the reserve and guard, we play an important supporting role. And my written statement highlights the current status of TRICARE Reserve Select and the proposed legislation mentioned earlier from the Senate side.

    Let me state in the interests of time that TRICARE Reserve Select is fully functioning. And with reasonable lead time, we could implement the expanded benefit if that is what the Congress determines is necessary.

    Now, you also asked us to address provider satisfaction and its effect on beneficiaries' access. At Humana, our network is large, it is growing, and it has been very stable over time.

    The rate of participation in TRICARE by non-network providers indicates that most are willing to support the men and women of the Armed Forces. To illustrate, approximately 90 percent of all licensed providers in the South have submitted a TRICARE claim in the past year. Taken together, we think the data reflect excellent access to care in the South. However, we do hear from providers on a very regular basis, and most often the comments involve TRICARE rates, or the hassle factor that has been alluded to earlier. We have worked hard to mitigate the latter by providing on-line tools, responsive telephone inquiry support and so forth, but they do continue.

    And finally, you asked us to comment on sharing and coordination with the Department of Veterans Affairs. At Humana, our TRICARE network includes agreement with eight veterans-integrated service networks located throughout the South. Those agreements offer TRICARE beneficiaries access to 40 different VA medical centers, 137 other health care delivery sites and more than 6,000 VA professionals.
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    So, in conclusion, Mr. Chairman, please allow me to thank you for the opportunity to be here today. Humana is committed to playing our role in ensuring the military community receives quality health care services. We are pleased with our past performance, and we look forward to working with the Congress, and with the Department, to achieve even greater successes in the future. I stand ready to answer your questions.

    Mr. MCHUGH. Thank you very much, sir.

    [The prepared statement of Mr. Baker can be found in the Appendix on page 156.]

    Mr. MCHUGH. As introduced previously, Mr. Jim Woys, President/Chief Executive Officer, Health Net Federal Services. Jim, thank you for being here.


    Mr. WOYS. Good afternoon, Mr. Chairman, Dr. Snyder and other distinguished Members of the committee. Thank you for allowing me to give my company's comments on where we stand with TRICARE.

    My company, Health Net Federal Services, serves as a managed care support contractor for the TRICARE North Region, which is comprised of the old Regions 1, 2 and 5, providing health care services to approximately 2.9 million TRICARE beneficiaries.
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    Before I begin, I would like to thank you, Mr. Chairman, and Dr. Snyder and all the distinguished Members of the committee on behalf of all the beneficiaries I 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.

    Since I last testified before this subcommittee, much has happened. As I related to you previously, my company and the companies of my colleagues at this table undertook one of the most ambitious tasks that DOD military health system has ever attempted during a period our customer was grappling with increased intensity on the Global War on Terrorism. We have collaborated with the government to achieve an unprecedented transition to TRICARE, the Nation's military health program, in record time and, my belief, great success. The extraordinary collaboration between DOD, Humana, TriWest and Health Net provide the facilitation and implementation support necessary to accomplish the task.

    In retrospect, the potential for adversity was considerable, and the partnership of DOD and the contractors effectively mitigated that risk.

    Projects of this magnitude do not come without difficulty and many lessons learned. I will provide here the principal lessons that Health Net observed that I believe can be applied to future program changes.

    First, we must have open and transparent collaboration between the contractors and between contractors and the Government, a true partnering effort.

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    Second, overall success in such a complex program is greatly influenced by the expertise of tenured contractors working with TRICARE.

    Third, all systems whether the contractor or the government must be tested and ready before the contract begins with appropriate contingencies for failure.

    Fourth, like the contractor, the Government must be prepared to administer this contract which requires clear accountability and governance at the place and time of direct award.

    Fifth, it is our belief that contract requirements must be realistic and economically practical. Unrealistic requirements lead to barriers to success.

    And finally, access to a full complement of quality health care providers must be ready day one. There are no more important issues for our TRICARE beneficiary who has been accessing health care in this program and was going through a transition such as the one we went through in 2004 than the continued linkage with their health care provider. The primary underpinning of the TRICARE program—or any health care program—is the beneficiaries' access to timely, appropriate health care, though on the whole, access to quality health care providers in the North Region continues to be very good.

    We do continue to experience pockets in either geographic or specialty types where challenges still exist. As evidenced with our distinguished copanel member, Dr. Puritz, issues still exist that cause good providers to either restrict their practice to a limited number of TRICARE patients or decide not to participate at all.
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    The number one reason we hear for lack of participation is reimbursement. As you know, TRICARE is usually toward the bottom of the reimbursement scale. We also hear that the hassle factor makes us administratively hard to deal with. While we don't control the majority of the reimbursement issues, we do take these challenges very seriously. We currently have more than 81,000 providers under contract in the North Region, grown by almost 10 percent over the last 12 months.

    The majority of our prime service areas have evidenced little difficulty in meeting access to care requirements. The expansion of Health Net's provider networks is never ending to continue to complement the dynamic nature of both the civilian community and the direct care delivery system.

    Perhaps the most remarkable statistic is less than one percent of our network providers annually elect to terminate their contract with Health Net and TRICARE. We attribute this success primarily to the following: The timely and accurate adjudication of claims remains the single most important factor.

    Health Net is processing more than 99.9 percent of claims within 30 days of receipt. More than 70 percent of our network claims received are electronic. The significance of electronic claims is more expedient payments for providers, enhancing provider satisfaction with TRICARE given the relatively low reimbursement rates. And as discussed earlier, we continuously look at the hassle factor, the referral and authorization procedures, and try to find ways to eliminate that. It is an ongoing process, something we look at day in and day out to improve the program.
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    Let me last turn my attention to an overall observation about the defense health program and its budgeting challenges looking forward into 2006 and beyond. The military health system continues to face tremendous challenges with the Global War on Terrorism. Congressionally mandated expansion of reserve component benefits will increase costs as well. Retirees are turning to TRICARE with its low premium and robust pharmacy benefit as they face increased out-of-pocket costs in the commercial sector. Improvement in the service delivery and quality of the TRICARE program has made the benefit a more attractive option for retirees and their families.

    During the past two years, Health Net has noticed an annual trend in at-risk health care costs in the TRICARE North Region in excess of 23 percent. Short of the national health care cost trend and pure advantageous economics to TRICARE benefit, the majority of these cost increases in the North Region can directly be tied to the Global War on Terrorism. Thus DOD must increasingly rely on the civilian sector to accommodate growing demands for services.

    Again, thank you, Mr. Chairman, Dr. Snyder, and I am happy to answer your questions.

    Mr. MCHUGH. Thank you very much.

    [The prepared statement of Mr. Woys can be found in the Appendix on page 172.]

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    Mr. MCHUGH. Next is Mr. David McIntyre, President/Chief Executive Officer, TriWest HealthAlliance. David, welcome.


    Mr. MCINTYRE. Thank you, sir.

    Mr. Chairman and Dr. Snyder and other Members of the committee, it is great to be with you today. It is an honor to be with you to discuss TRICARE in the 21-State West Region.

    TriWest Healthcare Alliance and our 16 non-profit Blue Cross Blue Shield plans and two university hospital systems owners—our business partners—nearly 100,000 providers in our network now, including the hospital system that first took care of Admiral Arthur when he got hurt in the Midwest, and our 1,800-some employees, 48 of whom currently have a spouse deployed as part of the Global War on Terrorism, have one goal, and that is to honor the service and sacrifice of those who serve all of us, and the families and those that preceded them, by supporting the uniformed services in the delivery of the highest quality care and customer service that can be delivered to our region's 2.7 million beneficiaries.

    We are now into the second year of our contract, and though it is a transition into a new contract, and it brought with it its share of challenges, it also brought opportunities for change, for innovation, and for a more collaborative approach to the business.

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    I believe that all in the West Region has gone fairly well and that we have much to be proud of. But as you know, TRICARE has been a work in progress, and there is much that remains to be done. I look forward to engaging in the dialogue around the provider issues, but I am going to pass on talking about that now because I addressed it in my written testimony.

    I would like to introduce Rear Admiral Nancy Lescavage, who is our regional director for our region. We are pleased to have her with us today. We are currently fine-tuning the measurement and reporting techniques in our region. We are working through governance issues. We are working together to effect—develop a more effective approach to business plan. Budgeting processes, as Dr. Winkenwerder indicated, are in the process of being modified.

    I believe that the new performance-based contracts keep all of us focused, and they are the right way to approach this business. And to enhance our focus on quality management of our processes in our region, we have developed an open-architecture, transparent process that we are sharing across the region.

    So as we continue to work at the refinement of this, the question that I often ask myself is, how are we doing? As General Taylor mentioned in his testimony, a national comparative study was recently done that rated TRICARE the number one health plan in America.

    In my role, I spend 85 percent of my time on the road. Everywhere I go, I ask people how the plan is going. They are grateful for the benefit that you have given them, especially for the enhanced services that have been provided particularly to the guard and reserve that have been in the Middle East.
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    No stronger and more meaningful expression of this gratitude has been encountered by myself than when I had the opportunity to spend two weeks in Iraq and Afghanistan. I encountered a common refrain particularly from the guard and reserve: We are very grateful for this benefit because it is allowing us to stay focused on what we need to be doing every day, because our family members at home are being taken care of.

    That is success, and that was music to my ears, frankly, but I have some concerns, because the reality is that many of those guard and reserve members are going to return home to small communities all across America. Idaho is a great example and we can talk about that. If you would like. How are we going to effectively deal with that issue?

    Admiral Lescavage and I recently spent time in the region talking to the guard and reserve units that were coming back to figure out how we can improve the outreach in the education and make sure that we were doing all that we needed to do.

    As General Taylor talked about, there are significant challenges around behavioral health, and while in Afghanistan I was very impressed with the combat stress teams and the concept of embedding them into the front lines and what is going on, and I think that concept is having a positive impact on minimizing PTSD. I'm also impressed with the work that Secretary Winenwerder and the surgeons have done on the post-deployment assessment tool.

    But my concern is how are we going to reach those guard and reserve members that are out there in the middle of nowhere when they get home? To this end, we are doing two things. First we have looked at the question and started to look more deeply at how do we provide networks in those really outlying remote areas? Only six percent of our population can't access a prime network, but that is six percent. Many of them may end up being guard and reserve members in those regional areas.
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    The second thing we have done is we have taken $3 million from our bottom line and put them into four prototype programs to come alongside of Congress and the Department of Defense to test out some concepts. The first is we are conducting PTSD training sessions across our region. The goal is to train them in how to identify the early warning signs. Second, in California, we are placing providers with the national guard to help them as people return. Third, we are working with the uniformed services in Hawaii to design a fully integrated med/surg behavioral health approach to identify the stressors and make sure the referral patterns are working correctly. And fourth, we are working with the Military Families Association to broaden their summer camps for those kids that are enduring the stressors.

    It is great to be with you today as always. I believe that the report card in the West Region is solid. We are not getting an A at this point. We have much to do to turn this into a well-oiled machine. But I believe that we are working together, we are going to be able to get there, and it is an honor to be part of the process of serving the greatest Americans that one could serve in the health care community.

    Thank you, Mr. Chairman.

    Mr. MCHUGH. Thank you, as always.

    [The prepared statement of Mr. McIntyre can be found in the Appendix on page 207.]

    Mr. MCHUGH. Dr. Holly Puritz. Welcome. We appreciate your being here and look forward to your comments.
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    Dr. PURITZ. Thank you very much, Mr. Chairman.

    Dr. Snyder and Members of the committee, obviously I greatly appreciate your willingness to hear from someone in the trenches and not from 35,000 feet up.

    I would like to just start by quoting to you from a letter that we received from a patient, and I will quote only a part it: I am extremely angry and disappointed after finding out that your doctors and practices will no longer accept TRICARE insurance. I have been a patient for over 26 years. You need to take this up with the folks at TRICARE, not your many loyal patients. This decision will have repercussions as well with the local hospitals where we get our care. It is just not easy to find a new gynecologist at my age, and I swear, 7 out of 10 women in Tidewater go to one of your groups. We are not adaptable to changing someone and something we trust and are comfortable with. Please help us.

    And it is in that spirit that I give you my comments today.

    To paraphrase a famous line, I would say to you, Washington, we have a problem, and the problem is that the group of physicians that I represent very much would like to take care of TRICARE patients, so we come to you with that first and foremost. And we have made the very difficult decision not to take care of TRICARE patients. And I want to outline that for you so you are clear as to how we reached that difficult decision.
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    I have been a practicing obstetrician/gynecologist since 1987, and when I go to work every day, I have a very simple responsibility, and that responsibility is to take care, the best care, of my patients with the standard of care that is in my community, regardless of their insurance. I don't take care of people differently because of what insurance they have.

    The problem is that TRICARE, right now, makes it very difficult for me to do that, and the way it makes it difficult for me to do that is the following.

    Number one, in terms of access and patients' ability to obtain routine care, the way that TRICARE Health Net now interprets the global payment to us for maternity care is not to include the 20-week ultrasound, which many of you have heard us speak about, which is a standard, routine part of all obstetric care. In the past that was covered as a separate payment under TRICARE, effectively increasing our reimbursement closer to other levels.

    Second, in our community, the Eastern Virginia Medical School has chosen to be non-participating with TRICARE. Maternal Fetal Medicine, which is the high-risk department of Eastern Virginia Medical School, is where we routinely send all of our high-risk patients, diabetic, hypertensive, many medical problems. We have a strong relationship with them. It is easy for us to get our patients in there. It is easy for our patients to be seen in a timely fashion. And we receive excellent communication back, which enables us to take good care of the patient.

    Because TRICARE does not—because the medical school, excuse me, does not participate with TRICARE, we are required and need to send our patients to the naval hospital. None of those things happen at the naval hospital in the same way that they do through the medical school. It is difficult to get patients in, we do not get reports back, and patients are not seen in a timely fashion. This does not allow me to take the same level of care for these patients as I do with my other patients.
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    The other responsibility that I have every day aside from being a physician is I am a small business owner. We own our practice. We need to be fiscally responsible. You have heard many other people mention the difficulty with claims, the hassle factor that everybody has referred to. Health Net has chosen, when they took over the contract, to not have provider representatives in our area. This sounds like a small item, but it is a very big item for people in our business office.

    As most of you know, it is much easier to do business when you have a name and a face who you can speak to. We used to have representatives who were in our local area, understood, and we had long-term working relationships with them. We no longer have that. We have to call an 800 number. We get a different person every time, and it greatly increases the difficulty to take care of our patients because of that.

    Many of you also know that our medical malpractice rates have risen exponentially; 30 physicians in the Tidewater area, 30 obstetricians have chosen to stop practicing OB/GYN. We have more patients to see than we have slots to see them in. When you are presented with that problem and that over demand, it makes sense to decrease those patients where you are running into problems, as I mentioned; that you cannot take the same care of those patients; that your business office is spending an inordinate amount of time. And that is what prompted our decision.

    We are talking about TRICARE patients in the abstract here most of the time. However, I just would like all of you to realize that these patients that we are talking about are women that we work with. They are women that are our children's schoolteachers. They are women that are employees. It has been a very, very difficult decision for us to not take TRICARE. We would very much like to work with everyone to resolve these problems so that we can continue to take care of those patients.
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    Many of those patients voiced to me a question. They wonder why they have to have less coverage or different coverage than Federal employees have or State employees have. They wonder WHY it is harder to care of them than a patient who qualifies for Medicaid during her pregnancy, but who otherwise has no insurance.

    You have certainly heard about the low reimbursement. That is an issue. But I don't want you to take away that that is that the main driver in our decision not to accept TRICARE, because if it is, and if it was, we would not accept Medicare. We would not accept Medicare. They are similarly low payers. However, they have removed much of those boundaries and problems I have spoken about and enable us to take care of our patients.

    I thank you for your time. I would be interested and happy to answer any questions, and I hope that you will help us enable us to return to the TRICARE program so that we continue to take care of our patients.

    Mr. MCHUGH. Well, again, thank you for being here. And clearly, people of the Norfolk area would love to have you back in, and I am sure all of us feel that way as well.

    [The prepared statement of Dr. Puritz can be found in the Appendix on page 222.]

    Mr. MCHUGH. Let's see what we can find out here.

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    Med mal, of course, is far beyond—med mal reform is far beyond the jurisdiction of this committee. For anyone who is interested in effecting a change in that, they might better spend their time in the other body, the other House. I think the House of Representatives has tried to do some things there, but it is a very important part of the challenge of having providers not just in TRICARE, Medicare, and Medicaid, but also in rural areas in general. When you are paying more and more as a part of your income for med mal protection, it makes certain practices less attractive. And it is a challenge that needs to be addressed.

    I would defer to Jim Woys to try to respond to some of those because he is the administrator for your region. I would say as a preamble to that, and I don't think Mr. Woys makes these decisions, all of them, but it is somewhat problematic to have a TRICARE system whereby local standards of care that really come into play in lawsuits and such, and are afforded, such as a 20-week ultrasound, and are routinely allowed under Medicare if that is appropriate, or Medicaid, are not so routinely allowed under TRICARE.

    What can we do to try to—and I should have been asking Dr. Winkenwerder, and we won't put those to him, but, Jim, let's start with you. What kind of comments do you have in return?

    Mr. WOYS. Well, let me first say state that—and I don't want to quibble with the doctor on some of her issues because we can go back and forth. The reality of the situation is that we have a provider group in an area, in Ms. Drake's area, that, quite frankly, is probably the largest area in the country. Ms. Drake probably has more TRICARE beneficiaries in her congressional district than any congressional district in the United States. So start there. You have the largest composition of TRICARE beneficiaries. And we have a large provider group providing very critical services to our patients who have decided not to participate in the program.
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    That is a failure. I mean, we can come up with all the reasons why that is a failure. It is a failure on our part as a the company to try to find a way fix the problem. It is a failure on the part of the TRICARE system to try to remove some of the barriers that are in place. And we need to find ways around that.

    We have policy issues about, you know, what is included in the global fee versus what is not in the global fee, and I know that Ms. Puritz's medical group before was compensated for that before, and we think we are applying the policy correctly. And we have a requirement to do that and in accordance with how we administer the contract. But that is probably something that needs to take a look at standard of care and how that is affecting how she treats her patients.

    We have a very unique situation in what we do in TRICARE, and we heard Dr. Snyder talked about why we do referrals, and the primary reason why we do referrals is because we are a parallel delivery system with the direct care system. And that parallel delivery system, our first obligation is to optimize that delivery system. So we get in the middle. We, quite frankly, get in the middle of the referral process to make sure that if we can move that patient to the military delivery system, that is kind of our first obligation. We have that requirement in our contract. We do that. That is probably the only reason the referral process is there.

    You said, very correctly, most managed care organizations today have completely eliminated the referral process. I know at Health Net we are, you know, a pretty large managed care company nationwide. There is no place in our commercial business that we have a referral process. So we have to understand the dynamics of what the TRICARE program is a little different than it is in the rest of the world.
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    The other comment I would make is that we do pay approximately or basically the same as Medicare. The rates are the same. The problem is that we pay the same as fee-for-service Medicare. And there is a difference. Fee-for-service Medicare didn't have the rules around it, so we are somewhat of a discounted fee-for-service plan where we try to get discounts in places we can't we give 100 percent, but we also then apply other requirements on top of that, referral process, authorization process. And TRICARE claims processing, I think we have made that so much better over the years. And we are, I think, really very fast payers and fairly accurate payers. It still has different rules than other places do.

    So this program is evolved, and we are getting better and better every day, and I would like to say I can solve all her problems overnight. We would like to have her group back in our network. We would like to have the quality of physicians back serving our patients. Though we have found other places for those patients, that is really not the answer. The answer is just because I can go find other places in the network or move them to the Navy facility doesn't—is really not the answer.

    So the answer is how do we solve some of the policy issues that we need to take care of and really understand what her problems are? And to that extent—and then I have failed.

    Mr. MCHUGH. Well, I appreciate that. And I am not a physician. I really ought to defer to our—the two folks here who are. But as someone who is somewhat familiar with the practice of medicine, I don't see how you expect an OB/GYN practitioner to waive a 20-week ultrasound when that is the standard of care and knowing they may end up in court. That is like signing your own conviction papers; is it not?
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    Mr. WOYS. We need to make a distinction here about whether we are saying you can't do it. What we say is it is embedded in the global fee. So what your are getting paid for includes that. Now, that may not be economically feasible for them, but I am not disagreeing with that——

    Mr. MCHUGH. That is a big—then you are not paying the same as Medicare and Medicaid because they pay it separately. So that is a big difference.

    Mr. WOYS. I don't disagree with you, Mr. Chairman. I guess I say we have to look at the policy that we are required to follow in TRICARE to make that determination.

    Mr. MCHUGH. Dr. Puritz.

    Dr. PURITZ. I appreciate you bringing up that distinction because I think it does get confusing. Health Net in their on-line site says that it is part of the global fee, so I don't want to say that they are not telling us that we can't do it. But as you have correctly noted, when you are paying 50 percent less on average than your private carriers, and you take away a $300 previously paid-for item, you are effectively decreasing your reimbursement very dramatically. They are not—absolutely correct that they are not telling us we cannot do it. And we still do it, because it is very important for the care of that patient. We can fiscally continue to take care of patients that way.

    Mr. MCHUGH. I understand. Thank you.
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    Let me turn to the other gentleman. You all in your oral statements referred to the T-Nex and the transition, and I can certainly agree what a monumental task. I would like to have you state on the record how you felt that went, but, most importantly, how, if at all, you viewed it as an improvement over the previous contract, and does it really enhance your ability to provide quality of care, which we all ought to be primarily about here, and any lessons you might have learned in that transition process either positively or negatively.

    Mr. MCINTYRE. I would say that this generation of the contract is vastly improved over the last one. It is not perfect. We are learning on both sides how to use all the tools that are at our disposal properly, as you would in any enterprise when you change the tools that are at your disposal.

    But it is a much more flexible outcomes-based contract. That is a good thing because what that does is it allows you to refine your processes and not be stuck with having to do change orders in order to change process.

    And so on balance I think it has been a marked improvement. We do have room to grow in terms of how we measure things, how we plan together, how we execute together, how we hold each other accountable in the processes. But we are making progress on those things. We are having an open dialogue about those issues.

    If I may, just for a second I would like to pick up on the dialogue with our physician colleague on the panel, because when the decision was made to connect the reimbursement rates with Medicare, it was done to try and end up with a national index so that TRICARE on its own didn't have to be out there doing an analysis every year, or every six months, of every single community in America and every provider type and the like. And so it got lashed together with Medicare. Probably not a bad decision for the most part.
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    As you know, Medicare rates ultimately are set by the budget that the President delivers and whether Congress makes a decision to adjust those recommendations or not. Currently there is a 4.4 percent recommended cut that goes into place in January of 2006 if Congress doesn't act. So, you know, we will see what happens with all of that. That is not my point.

    But when you connect it together with Medicare, there is two outlying populations. One is most over–65 women don't deliver babies. The second one is that most people on Medicare are kids. And what we have discovered is that in our 21-State region, there are some anomalies. And the anomalies unfortunately in those two critical areas of delivery of care where we have a lot of services being provided are that we are in a position that is not too different from the food stamps issue that was going on on Capitol Hill for a while, because we are paying providers given these rates, substantially under Medicaid.

    And we had a situation not too dissimilar to the one that Jim is faced with, one of his network providers up in Everett, Washington, near where I grew up. Lots of providers in the area. We had an OB practice that wanted to get out. We are currently analyzing that. But in the course of doing it, their concern was, we are getting paid less than Medicaid. We analyzed 11 States, and in 5 of those 11, TRICARE was 69 to 91 percent of Medicaid. In Wyoming, it is 69 percent of the Medicaid program for OB delivery, and that is where Dr. Winkenwerder said, and I appreciated the fact that he has wrapped his arms around this, we all need to take a look at this issue.

    And so I would submit to you that there is an anomaly as it relates to pediatrics, and there is an anomaly that relates to OB/GYN services that has got to be looked at because there is no parallel in Medicaid.
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    Mr. MCHUGH. That is absolutely true. And I tried to make that comment to the previous panel. Our DOD authorization bill this year has pediatric report language on that pediatric issue. You are correct. You don't have a lot of Medicare over–65 ladies, in spite of all the great advances in fertility drugs and such, giving birth. That may change someday. If it does, I am all for it—or pediatric care under 65 either. That is an oxymoron.

    But I think Dr. Puritz mentioned it is not just about the money. There are other problems as well that we need to address, and I know you are committed to that, and that is why I am really appreciative of her being here because it helps us all to better focus on that.

    Either Jim or David, do you want to comment?

    Mr. BAKER. I will be happy to.

    I think the comments that Dave McIntyre just made are absolutely true. They apply in our region as well. OB and pediatrics need a hard look. And I believe you heard Dr. Winkenwerder's commitment to do just that, and I think that is very, very positive.

    I would underscore the comments that Jim made with regard to the referral process. We have a history in the military health system of trying to—today we call it optimizing. But we have always had a history of trying to ensure that we made full use of all military capability that this Nation had paid for, that was available, and that is, in fact, what drives the majority of the referral processes that we have. And it is tough. It is cumbersome. It is tough. But I think at the end of the day it benefits the Nation.
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    But that is very difficult, and I understand in an area where you have a large facility like Portsmouth with lots of capability, to begin treating a patient under some circumstance and then have to ask permission to go forward without giving that military facility what in our vernacular is called the right of first refusal, and we all have a process that is set up to do all of that.

    So I appreciate that, and I think we are all committed in moving forward, frankly, to simplify some of the hassles with the program. I think every year we get better with that. I at least like to think that we get better, but we have still got a ways to go. No question about that.

    You asked about the transition of the new contracts, and I don't know if you care for us to address that now or circle back. And you asked whether we felt the current contract was good, and Dave indicates that it is his belief it is vastly superior.

    I will share with you that I agree with him from the standpoint of being an outcome-based contract. I think that was a good thing for us. I think there is some trade-offs, though, that took place in the current generation of contracts that we ought to be mindful of. As you know, we carved out certain elements of the contract. Retail pharmacy was a big one, but there were others. There was a program called resource sharing that was part of our contract that enabled us to not only identify opportunities that we could bring care back into a military facility, but also then locate the provider and furnish that. We made that a whole separate endeavor now. We carved out the patient appointing and marketing, and so we have gotten lots of little pieces here.
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    And one of the things that the old contract did was force us to be the integrators. We are no longer the integrators. We have got a part, but if there is an issue that one of General Taylor's commanders has with a pharmacy program, I am no longer his point of contact.

    And that has created some issues in terms of management and oversight, and that while there may be a benefit on the pharmacy side, there was a cost to have been paid for doing that. So we are not as integrated as we were before, and I would submit that that management integration responsibility has shifted to the services and to the individual commanders. It is no longer one-stop shopping.

    So I am not as overwhelmingly positive on this contract for that reason, among several others, but I think it is a very good vehicle. I think the three of us have gotten better at delivering the services that we provide. We don't provide as much as anymore.

    Mr. MCHUGH. Thank you.

    Dr. Snyder.

    Dr. SNYDER. Thank you, Mr. Chairman.

    I am—I consider myself a pretty patient man, but I find myself getting impatient here today. I feel like we are replaying a movie from three years ago. If you allow me to be sarcastic, Mr. McIntyre, it should not be new information to any of us that there are more women over the age of 65 on Medicare than TRICARE. These issues we have been hearing about a long time; three years ago I had Dr. Alan Storeygard here from Jacksonville. And you met him, Mr. Woys, when you were with him, and he talked about the low, slow, and the hassle, the inefficiencies in the payment system; the low reimbursement rates and the hassle factor, particularly in the referrals. And so when I hear you say we are going to move ahead, we are going to get a handle on this, Mr. Secretary, give us focus, well, that is what we heard three years ago.
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    I don't know if it was one of you, but a phrase that stuck in my mind, we are on the edge of a precipice because of reimbursement issues. So I am not buying this that somehow we are going to see this golden daylight six months, one year, two years from now. This is what we were told three years ago. And last time we were on the brink of losing Dr. Storeygard's group that has been in a military town for years. And they are at risk again because the contractors changed, and now they are getting squeezed again, the hassles are back. And we have got one here today that Dr. Puritz—the only good news in this is because there is scrutiny on you in daylight, you may find that there is a friendly voice at the end of that phone from here on out to help you out. I hope so. You certainly deserve it for being here today.

    So that confuses me. And also I notice from your statement and the written statement that was submitted by Dr. Storeygard, medicine has changed so dramatically, both of you yearn for the golden days of Medicare. You remember 30 years ago, all doctors talk about, don't give us any socialized medicine, and here you are yearning, why can't these folks be like Medicare? That is what you are saying. Why can't we be as efficient as Medicaid? When I was in practice, Medicaid was our most efficient payer, and you all are not. I don't get it.

    I want to ask specific questions. One of the things that happened with Dr. Storeygard, and I recognize that because he is my constituent, I am on this subcommittee, maybe that gave him special attention, but a study was done about referrals. It was done under you, Mr. Woys. It seemed to work that you just did a different system. Then the new contractor comes in, and now we are back to having to do referrals. And yet you just told me, no, we can't do that, we have this special—we are special. Well, it seemed to work just fine for two years until the contract changed.
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    And so now all across the country, these doctors are being told, no, we are special. We have to refer you to a military treatment facility. Well, why can't you just go out there and say, hey, by the way, your military treatment facility has physical therapy and occupational therapy, and they have a diabetes clinic; send them there first, will you? Okay. Do we have to get a preapproval for a surgery when you know what is out there?

    I am not buying a lot of this, frankly, gentlemen. This is the same stuff you told us three years ago. I know it was probably a different panel. I know some of you were here.

    Mr. MCINTYRE. Well, if I might, since you poked at me first, appropriately so, and I am the person who articulated that we stand at the edge of a cliff three years ago. You remember that well.

    We have in our region grown the provider network to almost 100,000 providers. That is how many providers we now have in the West Region; 21 States, very remote areas. And my dad was a doc. I understood what it was to make sure that people got paid. And we don't want to be an organization, nor do I believe my colleagues do, that are known for not paying their bills.

    The turnaround time on claims now is unbelievable compared to the rest of the industry. I have 18 private sector, non-profit owners who are all very well regarded in their fields, in their area, and they can't believe the standard that we are functioning to, because they don't function to that same standard. We are exceeding that.
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    And we have doctors that have come back in Idaho into our network saying, holy cow, you guys actually are paying the bills. You are not hassling us.

    Now what we have done in our region on the hassle side is to say, gee, maybe what we really ought to be doing is to look at the capabilities of each military treatment facility and do exactly what you are talking about. So we have been able to do that community by community.

    Dr. SNYDER. That is what we were told three years ago.

    Mr. MCINTYRE. We are doing that in our region today.

    Dr. SNYDER. Do you understand what I am saying?

    Mr. MCINTYRE. In the West Region we are doing that today.

    Dr. SNYDER. Are you doing that, Mr. Baker?

    Mr. BAKER. We are not doing that. I will tell you, however, that what our focus in the past year has been in transition and standing this up, standing this new contract up. That has been our overriding focus and very, very difficult to do, and like Mr. McIntyre and Mr. Woys have indicated, we grew the network in order to ensure that there would be access. And we grew it significantly. We are at the point now, however, where we need to try to refine our processes, and one of the things that we are looking at is the entire referral requirement, but we are not there yet. And so far as the practice in Jacksonville is concerned, I frankly did not know that there was a special arrangement with that practice.
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    Dr. SNYDER. It was a study that was being done, and it seemed to work.

    Mr. BAKER. I think it was done, was it not, Jim, with your company in that practice?

    And for whatever reason that information wasn't transferred to us, but we will certainly take a look at that. But more to the point, what we need to do——

    Dr. SNYDER. If it seemed to work, Mr. Baker, maybe Mr. Woys will say it didn't work at all, maybe the information was it was working just fine. You would think rather than closing them down and going back to the referral system, you would say, hey, in this transition process let's expand this to all our providers.

    I have gone over my time. Thank you for your time.

    Mr. MCHUGH. Mr. Conaway.

    Mr. CONAWAY. Thank you, Mr. Chairman. I would like to yield my time to Dr. Schwarz.

    Dr. SCHWARZ. Gentlemen, I will be very brief.

    And, Dr. Puritz, I read your testimony, and I understand completely what your problems are because they are not dissimilar to the problems that the multi-specialty group that I have been associated with for a number of years has as well. And I will repeat what I said at the previous panel: We are in this together. This is a system we truly want to work well. Some of its frailties, in fact many of its frailties, have come out yet again with the dependents of guardsmen and women and reservists who have been called to Active Duty and sent to Iraq or Afghanistan or the Horn of Africa or Kuwait or wherever. And I find it unconscionable not on your part, or DOD's part, but collectively probably on the part of physicians as well in areas who aren't seeing patients who have TRICARE that the thing is not working as well as it should.
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    So you have my pledge, and I know Vic Snyder feels the same way, and I know Chairman McHugh does. We want this to work, we want people who correctly are TRICARE recipients, potential TRICARE recipients, to be able to go to a physician, whether it is a primary care provider or a specialist, if referred to a specialist, in what would be generally considered their home area and get that care. And if there are studies that they need, which would be routine studies—and we mentioned them as we were having a conversation down here—for someone who has a presumptive pneumonia, they should not have to have prior approval to get a chest x-ray; for someone with a fever of unknown origin, they should not have to have prior approval to get appropriate lab studies done.

    We mentioned the ultrasonic studies for an intrauterine pregnancy at 20 weeks. For someone who comes to see me with a large lump in the neck, who is a heavy smoker, probably don't need to have prior approval to have a CT of their neck done.

    These are things that just make good sense, and it will make the system work. You will have, if not happy patients—I don't know if I have ever known any happy patients—but satisfied patients. You yourselves will be looked on and held in higher esteem, as will the Department of Defense, and we will feel like we have done our job.

    But here is a system that in many ways is broke but has great potential. And I will just end by saying, my heart sinks every time I see a young mother walk into my office—and I still give time in a federally qualified health center for virtually no compensation, so the Committee on Standards of Official Conduct says it is okay, go in a half a day a month and see some patients—to see a mother come in with a couple little kids, who has driven 100 miles in a very densely populated area of Michigan, Indiana, Ohio, and not be able to see an otolaryngologist, until they find me, because I was the guy from Battle Creek who accepts TRICARE.
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    So we want to get there, we want to help, we want to be positive. And any way that I can help, and I am sure any way the committee can help and the Congress can help, why let's get her done.

    Mr. CONAWAY. Mr. Chairman, reclaiming my time. We would like you to provide the committee with your customer service survey—customer satisfaction surveys on both sides of the aisle, your providers surveys that you run, as well as your patient beneficiary surveys, to show us the trends. I know you have said you have that, but I would rather have empirical data that says you are doing better at these various areas.

    Mr. BAKER. If I could address the question of beneficiary surveys. I think, sir, that needs to probably be posed to the Department. There are limitations that we have in terms of our ability to survey beneficiaries that I am—yes, sir.

    Mr. CONAWAY. You can't ask your patients if you are doing a good job?

    Mr. BAKER. We do, and we will share with you the information that we have. But I guess what I am trying to express here is that the kind of feedback that we get back from beneficiaries is not a truly random sample.

    Mr. CONAWAY. But you use that data to get better.

    Mr. BAKER. Oh, absolutely.
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    Mr. CONAWAY. Okay. Could you share with us the processes that you use, at least empirical data that you are getting better; we are getting less anecdotal evidence of X because we have done Y, that kind of thing, just to give us a sense—I hear you say you are getting better, but talk is cheap in west Texas. Thank you, sir.

    Mr. BAKER. Thank you, sir.

    Mr. MCHUGH. Gentlelady from West Virginia, Ms. Drake.

    Mrs. DRAKE. Thank you, Mr. Chairman. I apologize I had to leave.

    I would like to thank each and every one of you for being here, taking time out of your busy schedule to come and tell us about problems or about good news. So if I ask anything you have already answered, if you just tell me that, I will hear it from staff. I don't want to make you repeat. I know it has been a long afternoon for you.

    First of all, Mr. Chairman, I think it is pretty interesting, we have had eight panelists today, but we have really only had one who is telling us what is really happening to our patients. You know, I think that our military representatives think things are going okay, but maybe there are some problems, but okay. And certainly our other groups think things are going okay. But it doesn't sound like they are really going okay down to the individual patient who would be so distressed not to be able to see their doctor. That happened to me one time when I changed insurance. I could no longer see the doctor I had seen for many, many years, and that was a very, very upsetting thing.
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    So first, Dr. Puritz, not only did I hear from you it is an issue of reimbursement, you said that is a minor factor. In these days and times of doctors being very cautious of lawsuits, doesn't this also put you in a position of increased liability if you are not aware of what is going on with a patient once you refer them? Or you are not having that communication, or you are not able to provide services you feel you should be able to do?

    Dr. PURITZ. We had touched on it earlier, but I would like to reiterate because it is so important.

    There are two separate—like I said, I wear two hats in my office, and when I am taking care of that patient, honestly, I don't care what insurance they have. Whatever they need, we are going to try to do the right thing for that patient, because you can't take care of patients any other way. You can't take care of patients by looking at their encounter form and saying they are an Aetna patient, they get this list of care; they are a Medicaid patient, they get—you can't look yourself in the mirror at the end of the day if you do that.

    But, again, from a business standpoint, I have to be fiscally responsible and do that, and all of the things that you have mentioned are important.

    When I have to pay basically out of my own pocket to do that ultrasound, I am still going to do that ultrasound, because if that patient has a problem, first of all, it is indefensible, and second of all, again, it is not the right thing to do. And that governs us a lot of the time much more—not that my administrator may always want to hear that, but that is what governs how we take care of those individual patients. So when we make a big decision like this, it is because those individual right decisions are adding up to making us not have a fiscally responsible office and not being able to stay open to take care of all of our patients, and that is what drives us.
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    Mrs. DRAKE. Thank you.

    And Mr. Baker and Mr. Woys, I heard both of you say that you have a really good network of providers, but you also both said that reimbursement and hassle—in fact, one used rates, one used reimbursement—both of you used the term ''hassle.'' so are you making proposals or trying to find out a way that we can reduce those hassles for providers?

    And the other thing I would like to ask you, Mr. Woys, two things; number one, are you going after providers like Eastern Virginia Medical School to find out why they aren't using TRICARE or how you might encourage them to do it? And since you had met—the Second District of Virginia, our region has the highest number of TRICARE people, why we don't have someone assigned, even if they are not physically located in the Hampton Roads area, that by phone they may be the person that you talk to, so we are not always getting a different person when a doctor calls in.

    So that is about three questions in a row.

    Mr. WOYS. Let me discuss the last one first. When we have an ability we think to access a provider representative via the phone—which the representatives, actually, most of them live in Arlington, Virginia—but we actually do have provider reps. In fact, the largest part of my provider services team actually lives in the Hampton Roads area. So that they don't live there and the reps aren't local is misrepresentation. Now, it may be that when they call, they get a different rep along the way, and we will go look at that. But we do have, from director level, manager level, to service reps, they live in that area. They are part of the community. They are the ones who are working on the network. And I think Dr. Puritz has probably met with them. She didn't know they lived there, but they actually live in the community. So we do have provider representatives local.
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    But it is true on the phone side, because we try to meet certain phone standards and try to track all the phone calls. We do it through 1–800 numbers.

    Mrs. DRAKE. So you will look at that issue of how to——

    Mr. WOYS. On how they access our provider reps and so you get it more consistent and we get a more personal relationship; I promise do that.

    With regard to the hassle factor, I mean, that is a continuous process for us. And let me go back to Mr. Baker's comment. One of the things that has hampered us just a little bit is we have just stood up across the country a huge program, and for us—for example, we moved all our business from the West to take on a new region in the North. So we are new to the area. So to some extent, transition by itself causes us to take a slight step backwards in our progression in the TRICARE program.

    I think if you look for the number of years that we have been doing this business—we have been doing this business since 1998—that we got better and better and better every year. Unfortunately, when you go through a major transition like this it takes a stop, for example, to try and get yourself back to square one and to get our ability now to move forward.

    There are some things that we have done that we propose is different than the legacy contract. We don't require, for example, referrals in places where we don't have a military facility. So if you don't live within a 40-mile range of a military facility, I don't ask providers to do a referral process; only when they require because of the military facilities that intervene there.
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    So we need to do exactly what we did with Dr. Storeygard on a community-by-community basis, which is facility by facility, and look at if the military facility doesn't have the capacity or capability to do that procedure, then we ought to stop getting in the middle of that relationship. But where they do, we have to work out some agreement with our customer about how we are going to move that back and forth; and then also try to be the avenue for Dr. Puritz, for example, in getting those clear, legible special reports back from the military facility, back to her office, so she can treat the patient when they come back. If we have to move them to the military facility for that care, then we have got to figure out how to be an avenue for them to get that back and be that communication link. That is going to be a difficult task, but that is something we need to do.

    Mrs. DRAKE. Doctor.

    Dr. PURITZ. I was just going to say, respectfully, this question of provider reps—and I don't want to beat it into the ground, but we have 13 divisions within Mid-Atlantic Women's Care, which has 13 different business offices, and we queried all of them, and this is from Williamsburg down to North Carolina, and every one of those divisions are unaware of having provider representatives. So even if they exist, there is a disconnect in the system. If all of these practices don't know they exist, that is a problem in and of itself that has to be addressed. These are very capable people that we have in our business offices, with many years of experience, all of whom gave me the same name of Linda Caveness of our previous provider rep, who now is on the benefit side. She is still in the area, but she is not a representative for the issues of insurance; she is not meeting with the groups. This had happened before. They used to meet quarterly, she was a contact person. So if they exist, you can see what the disconnect is that we don't even know of them among 13 different divisions.
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    Mrs. DRAKE. Thank you, Mr. Chairman, I know my time is up. But I do think we need to be concerned about the other issue of making sure that we have specialists that patients can be referred to, and we don't have our doctors sitting there, knowing a person needs more care, and nowhere to send them. So thank you very much.

    Mr. MCHUGH. I thank the gentlelady. One of the unfortunate things about being in the room when complaints are made is that you become the subject of those complaints, gentlemen. And I suspect there are some complaints that have been levied here today that don't originate with you.

    So let me give you a chance to unload complaints about the structure of the program and/or how DOD is administering it. What do you think DOD might do or what this subcommittee and Congress might help DOD do to make your lives easier, so that you can pass that kind of benefit downstream to people like Dr. Puritz and ultimately, most importantly, to your beneficiaries? Any lessons learned that you would like to have us know about?

    Mr. BAKER. Gosh, that is a tough one because you ask us to share with you what our customer could do better, and that is a rather uncomfortable position to be in. Having said that, I think that there—I think we are maturing under the new contract, and I think we need to allow that maturation process to take hold.

    Jim made a comment here a moment ago, and all of our discussions this afternoon have dealt with hassles in terms of the referral and authorization process. I think we would be mistaken if we didn't understand that there are some other special requirements of this contract for network membership. One, for example, is the requirement that all claims be filed electronically; you have to be willing to do that. That is a hassle for some, I suspect, in Dr. Snyder's State in particular; that there are many providers who are willing to be in the network, but I would—I know for a fact don't have a fax machine. And so to require them to submit claims electronically is a bit of a stretch.
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    Dr. SNYDER. Would the Chairman yield on that? I mean, 10 or 12 years ago, what Arkansas Medicaid did was if they wanted you to file it electronically and you didn't have the ability, they brought out a computer terminal, hooked it up and said, here.

    Mr. BAKER. We have offered to do that.

    Dr. SNYDER. There you go.

    Mr. BAKER. There is another new requirement of this contract, the impact of which is yet to be seen, and that is a requirement to provide clear, legible consultation reports back to the referring medical facility. And I believe the requirement is 98 percent in 10 days. That is a requirement of network membership. And when that doesn't happen, each of us are hit with $100 per referral that fails to make the standard.

    We are not sure how that is going to play out, but I can tell you when the stakes are that high, we are going to hassle providers for those reports. We have to do that.

    And so I would submit that the comment I think that was in Dave's opening statement about the maturing of this process and unrealistic expectations, I think if there were one thing that I would pass on to this subcommittee, that perhaps we overreached in some of the requirements of the contract that are leading to some hassles for the providers.

    Mr. MCHUGH. Mr. Woys, Mr. McIntyre?

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    Mr. MCINTRYE. I think that we have a customer here, you heard Dr. Winkenwerder, we come to work every day trying to make the program better, and they are with us to do that. So I think to try to put legislation in place to try to legislate things that I think that we should be working out as a system and to try to require legislation.

    So, again, it is a maturation process. And we are now past the transition period, we are moving forward trying to, every day, trying to make processing better, make it easier for providers to do business with us, pay claims more quickly and timely, the whole process of being an effective use of the government's resources; at the same time, being mindful of what the economic consequences are if we—you know, some of the procedures that we have aren't in place to limit some of the health care cross-training.

    I would agree with Jim in that those dialogues are underway, and that is why I said things the way that I did. But I will tell you, I am in the State of Idaho, and I have been there since we started. We had 400 providers in the State of Idaho a couple of years ago. We have 1,600 today. We didn't get there without reengineering a whole lot of processes. And we took a look at our region in the same way. And we now have diagnose-and-treat opportunities for providers for certain illnesses, so that when it is a particular illness you say, look, don't come back and say ''mother, may I,'' it doesn't make any sense. Of course, the doctor needs to do the right thing. And so we put a fair amount of energy into that area.

    The reason why I focus on the Medicaid issue, the rate issue, is because I do agree that it is not all about the rates, but there are some things that make this program necessarily a little bit unique. We want to maximize the investment in the bricks and mortar of the large military treatment facilities in our regions because that was taxpayer investment. And to not do it, and buy it downtown rather than using that, doesn't use the resources wisely. We can make that choice, but then we are shutting those facilities down.
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    But in small communities, we shouldn't be referring to them for care that they can't deliver; we are trying not to do that in our region. We have made a whole series of changes. And so through my lens, what I look at is a region that has become more mature in this area because we had to, because we had a very remote area, and Idaho was the lead. And Governor Kempthorne, as you know, used to chair the subcommittee on the Senate side. He knows a whole lot about this program. He ripped me to shreds, and then we worked together. He got my attention, and we worked it. Dr. Winkenwerder sent people in, we worked this stuff together. And much like you physician Members of Congress are doing, he believed it needed to be a partnership. I had to step up on my side and change processes.

    We are not finished. We have a little bit more work to do. There are a few things that are policy related, most of which don't require government change. But at the end of the day when you get that done, are you finished?

    The one area we won't be finished in is the rate anomaly as it relates to Medicaid for OB and pediatrics, and that is why I raise it; because in this practice in Everett, Washington, yes, there is hassle, issues we are still working through. That is not the issue. The issue is why am I doing this for this population at a level that is so much lower than the impoverished patients in our community? That doesn't make any sense. Optically it is upside down, and that is why Dr. Winkenwerder is looking at that issue.

    Mr. MCHUGH. Gentlelady from Virginia.

    Mrs. DRAKE. And I thought I heard from the Secretary that he thought the scales were the same, and that he wanted to know—I sort of had the feeling that Hampton Roads, there was some sort of anomaly going on there. But you just said the same thing, that the rates are lower.
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    Mr. MCINTYRE. The rates were set up, as I was explaining, and I apologize for repeating—but the rates are tied to Medicare. The anomaly for Medicare is pediatrics and OB, because there is no equivalent reimbursement rate for those two categories of patients for the most part.

    What we are finding is that in some communities—I am in 21 States—we have just done an analysis of 11 States, we are going to do all 21 now; because what we found is that in 5 of the 11 States—and Wyoming had the biggest difference—there is a 69 to 91 percent relationship between TRICARE and Medicaid—not Medicare, Medicaid. And in Wyoming, what that means is that a provider in the OB area gets paid 69 percent under TRICARE of what they get paid under Medicaid. That is not a good thing.

    Mrs. DRAKE. No, that is not good.

    Mr. MCINTYRE. And Dr. Winkenwerder said to the panel, he is looking at that issue. We have got some more analysis to do. But I would suggest, Dr. Snyder, that most of the tools are in our hands. There are a few things that we still need to work policy-wise and process-wise, but ultimately when we get that all done, in a place like Washington State we are working pretty well. When it is the reimbursement rate, anomaly rate like that, it is a problem. And so I would suggest, at least from my own personal perspective, that we should never be paying under Medicaid for those kinds of services.

    Mr. MCHUGH. Well, thank you all very much. Obviously, you have come a long way, but we do have some areas of challenge and we need to continue to pursue those. I appreciate your invaluable role in this.
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    As I mentioned before, we can have a great plan, but you have got to have people to bring it and administer it and to provide under it. So you continue to be a vital component of this very important process. So we appreciate your good work.

    Doctor, thank you for journeying here today. Did we talk you back in yet? We will work on that. We will work on that. But thank you for being here. And with that, the subcommittee is adjourned.

    [Whereupon, at 5:25 p.m., the subcommittee was adjourned.]



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October 19, 2005      


Table 1