TRICARE Prime Update 17: With the presidential election over, Defense officials are expected to
announce soon that military retirees and their dependents living more than 40 miles from a military treatment facility
or base closure site will lose access to TRICARE Prime, the military’s managed care option. These beneficiaries
would be expected to shift to TRICARE Standard, their fee-for-service insurance option, which would mean an
increase in out-of-pocket costs for beneficiaries who are frequent users of health services. A total of 171,000 retirees
and dependents are expected to have to shift coverage when remote Prime networks go away. Tentative plans are
for this to occur 1 APR in the West Region, which would coincide with UnitedHealth Military and Veterans
Services taking over the region’s support contract from TriWest Healthcare Alliance after 16 years. The North and
South TRICARE regions are expected to close down Prime service areas beyond 40-mile catchment areas of bases
or base closure sites by Oct. 1, 2013, the date when current Prime enrollment periods expire for most beneficiaries.

Active duty members and their families generally would not be impacted. Drilling National Guard members and
reservists living far from military bases could see small increases to health costs. This would occur if they have
been taking advantage of modest discounts available under TRICARE Reserve Select when network providers are
used. Such discounts would end in areas far from bases if the Prime option goes away. Under TRICARE Prime,
beneficiaries get managed care through providers in the network. They pay an annual enrollment fee of $269.28 for
individual coverage or $538.56 for family coverage. Retirees and family members also are charged co-pays of $12
for each doctor visit. Under TRICARE Standard, beneficiaries can choose their own physicians and pay no annual
enrollment fee. But when they need care, retirees must cover 25 percent of allowable charges. Retirees also have an
annual deductible of $150 for the individual or $300 per family. Total out-of-pocket costs, however, are capped at
$3000 per family.

In most Prime service areas, about half of eligible retirees already choose to use Standard rather than enroll in the
network. The end of Prime outside of 40-mile “catchment” areas of military treatment facilities has been anticipated
since 2007, when Defense officials drafted the third generation of TRICARE support contracts. It called for
returning the managed care option to its original concept of being a backup network to military clinics and hospitals
when they can’t provide managed care to all beneficiaries living nearby or in areas where bases have been closed and
military health facilities shuttered. Through the first two TRICARE contracts, on the assumption that managed care
saved money for the government, contractors had financial incentive to establish networks beyond 40-mile
catchment areas. In the South Region, for example, the contractor has offered Prime everywhere. But experience
has shown that providing Prime far from bases can add costs to the system, TRICARE officials concluded. Though
they wrote the new generation of support contracts to constrict Prime service areas, health officials wanted the shift
to occur across all regions simultaneously. That hasn’t been possible until now because of delays in finalizing
contract awards, the result of multiple protests and even a few reversals of original contract awards.

Contracts for every region are now settled. Health Net Federal Services has been running the North Region
under the new contract since April 2011. Humana Military Healthcare Services has operated the South Region
under the new contract since April this year. But all Prime service areas have been maintained with contract
modifications, awaiting final word from Defense that Prime area restrictions are to be implemented. The new
contracts were drafted during the Bush administration and are intended to be more comprehensive and efficient. But
sensitive to how a change in Prime eligibility might be used by politicians this fall, Defense officials ordered plans
to end Prime for retirees living outside catchment areas, including draft notification letters, shelved until after the
election. Plans for implementation have not changed, congressional and health sources said. But they also have not
been announced officially yet. “The Department is considering whether to maintain the same number of PSAs
(Prime service areas) as it has now,” said Cynthia O. Smith, a spokeswoman for the Department of Defense. Until a
decision is final on reducing PSAs, the department won’t confirm the number of beneficiaries potentially impacted
or the likely dates for executing the changes.

Some members of Congress already are concerned. Sen. Dean Heller (R-NV.) told Dr. Jonathan Woodson,
assistant secretary of defense for health affairs, in recent letter he was “dismayed” by news reports that Prime “will
be cut for many of the military families and constituents I represent, not only in Reno but also throughout the
northern part of the state.” Heller said the plan would cause “more out-of-pocket expenses and longer drive times…I
am very troubled by these changes and am concerned that these alterations are not being made in a transparent
manner. If changes are made, I hope you will notify those affected immediately.” A spokesman for Heller said
Woodson had not yet answered the letter. Given the nation’s debt crisis and the budget cuts looming for defense
programs, Congress is not expected to block this long-standing plan to tighten access to Prime if the intent is to hold
down costs. Doing so likely would require lawmakers to find equivalent budget savings elsewhere. [Source:
Military.com | Tom Philpott | 8 Nov 2012 ++]