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Shuffled from one health-care facility to another, would a military beneficiary agree that “the Navy takes care of its own”? Not likely.
It’s time to stop applying bandaids and start a long-term cure.
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^98
today’s crisis in dependent and retired health care bene- stems directly from their history. For 145 years, from
the
The importance of quality-of-life considerations to our forces’ morale and effectiveness is reflected in many initiatives, none of them more important than ltle provision of high-quality health care services. Military Personnel have identified their health benefit as being sec- 0tl^ in importance only to their retirement benefit as an lriCentive to stay on active duty in the armed services, but there is widespread dissatisfaction among actively and retired service members, and their dependents, Vv,th the health care being offered. In a private letter to the aj*thor in February 1987, retired Navy Rear Admiral Ste- Barchet, Medical Corps, remarked on military health pSre in the Seattle area. He stated that military treatment acilities (MTFs) lack staffing and effective financial in- ^entives. “The many Navy folk in this area,” he said, deserve better than what they are getting—mostly space- available attitudes and space-available practices.”
~J^2.rical Background _____________ to 1943, the Navy deducted 20 cents per month from Pay of every active-duty and retired member of the ( • S. Navy, Coast Guard (before 1915, the Revenue Cut- £er Service), and Marine Corps. This money went to the J^gressionally mandated Naval Hospital Fund to pay for 1 itary medical care.
Y Pfi® legislation creating the Naval Hospital Fund pro, cd that monies from the Fund should purchase “suite sites” on which to erect “suitable hospitals.” It anted “any officer, seaman or Marine entitled to a penn admission to Navy hospitals, thus recognizing the
eligibility of retired members for medical benefits. Subsequently, the Navy hospitals at Portsmouth, New Hampshire; Chelsea, Massachusetts; and Newport, Rhode Island, were constructed from these monies. In 1943, Congress abolished the fund and the provision for deducting the 20 cents per month.
For years, it was widely acknowledged that retired military families had no statutory rights to medical care. The Dependents Medi-Care Act of 1956, however, gave them “space-available” care in military hospitals. But retirees of the Navy, Coast Guard, and Marine Corps, who had made monthly contributions to the Navy Hospital Fund from their active-duty and retired pay, generally believed that they deserved more care in MTFs than the space- available privileges afforded to families. Two factors, however, contributed toward making medical care for retirees and their dependents a fading benefit: the rising numbers of military dependents and retirees, and the later congressional belief that the space-available concept prohibited programming non-active duty beneficiary bed space into newly constructed military hospitals.
The controversy over legitimatizing the direct care benefit for dependents and retirees within MTFs has remained a chronic source of discontent. The Defense Guidance of 1980 stipulated that only if medical resources needed to meet wartime requirements exceed those of the active- duty medical forces’ primary peacetime mission would MTF resources be used to provide care for dependents and retirees. Such care, it was emphasized, would not be permitted to interfere with the primary mission of the direct- care system. In recent years, the Assistant Secretary of Defense for Health Affairs ruled that some of the substantial non-active-duty treatment that MTFs have tradition-
ments and, once there, long periods spent waiting.
In contrast, in most communities, CHAMPUS provides comprehensive benefits, covering most health care, sap' plies, maternity care, and services required to diagn°s^ and treat an illness or injury. CHAMPUS is not a t°ta benefit program, however, and recipients of its benefit’ by congressional edict, assume substantial financial ie sponsibility, compared to the negligible costs under tde space-available program at MTFs. Benefits and out-0 pocket expenditures vary according to beneficiary cate
ally provided may no longer belong in military facilities. He has suggested that this form of professional activity does not properly challenge wartime-relevant personnel, sorely strains resources, and detracts from the military’s readiness.
In September 1964, foreseeing such difficulties, a special subcommittee of the House Armed Services Committee prophetically concluded that the U. S. Government had a “moral obligation” to provide alternative sources of medical care to dependents of active-duty personnel, retirees, and their dependents and directed the Defense Department (DoD) to draft legislation to guarantee medical care to these groups.
In 1966, another subcommittee, chaired by Representative F. Edward Hebert (D-LA), drafted a bill that guaranteed retirees and their dependents care in military hospitals or in civilian hospitals at minimal costs. Furthermore, the bill gave dependents of active-duty service members increased health coverage, including outpatient care in civilian medical facilities. After a long and arduous legislative process, President Lyndon B. Johnson signed the Military Health Benefits Act of 1966 into public law, establishing the Civilian Health and Medical Program for the Uniformed Services (CHAMPUS). CHAMPUS became effective for dependents of active-duty personnel on 1 October 1966, and for retirees and their dependents on 1 January 1967. Covered under the current beneficiary health care package are the Army, Air Force, Navy, Marine Corps, Coast Guard, Public Health Service, and National Oceanic and Atmospheric Administration.
The statutory basis for the benefit mission of the Mil1' tary Health Services System (MHSS) now resides with111 public law (10 USC 1071). The MHSS’s purpose is “t0 create and maintain high morale in the uniformed services by providing an improved and uniform program of med1' cal and dental care for members and certain former men1' bers of those services, and for their dependents.” The la", provides authority for the secretaries of Defense and 01 Health and Human Services, in consultation, to “contract for such insurance, medical service, or health plans as they might deem appropriate.” These mechanisms were to be used to provide care that MTFs could not. Thus the intent was to complement, rather than duplicate, the direct-care system. .
The types and quality of benefits available through direct care at an MTF and those . available throug CHAMPUS can differ. Active-duty service members are always eligible for inpatient and outpatient care at an MTF. Active-duty dependents, retired service member8 and their dependents, as well as parents and parents-in-l3^ of dependents may receive MTF care on a space-availahle basis. The medical benefits that any given MTF can Pr°' vide are determined as much by access to treatment as hy an MTF’s specific capabilities. MTFs are often ovef' crowded, resulting in long delays in obtaining app°int' gory (See Table 1).
CHAMPUS is administered by the Office of the Civl ian Health and Medical Program of the Uniformed Sef vices (OCHAMPUS) under the policy guidance and °p°r ational direction of the Assistant Secretary of Defense f° Health Affairs. CHAMPUS contracts with a group of cl vilian fiscal intermediaries to process and adjudicate claims for designated geographic regions. .
CHAMPUS projects inflation factors, popular0 ^ growth, use rates, and costs before sending to Congress • funding request. Fiscal intermediary administrative cos and office costs account for 4% of CHAMPUS’s dollarS^ leaving 96% for benefit payments. DoD requested $2- _ billion for fiscal year 1988 and $2.4 billion for fiscal ye:a 1989. The proportion of the total DoD medical approp1'3
Table 1 Beneficiary Cost Sharing Under CHAMPUS1
Inpatient4
Outpatient
Active-Duty
dependents2
► Small fee per day, or $25, whichever is more
► Non Availability Statement (NAS)5
Deductible of $50 per person or $100 per family each government fiscal year.
CHAMPUS pays 80% of allowable charges by physicians.
Beneficiary responsible for 20%3
Retirees, their families, a°d survivors2
CHAMPUS pays 75% of allowable charges. Beneficiary responsible for any charges exeeding CHAMPUS payments to hospital and physician3 NAS5
Deductible of $50 per person or $100 per family each government fiscal year.
CHAMPUS pays 75% of allowable charges by physicians.
Beneficiary responsible for 25%3
j^ith the exception of mental health care, CHAMPUS imposes no maximum limits on any of its benefits.
Applies unless patient qualifies for Medicare (Part A).
If a physician is not a participating CHAMPUS provider, he is not bound by CHAMPUS’ allowable charges. Consequently, a beneficiary’s financial responsibility may exceed the maximum allowable charges.
An active-duty service member or dependent who receives care at a civilian hospital pays only a daily subsidy fee (currently $7.55). Retirees and their dependents must pay 25% of all hospital and doctor fees, plus charges exceeding the maximum allowable charges. There is no out-of-pocket maximum for retirees and their ^pendents.
Before seeking inpatient care at a civilian hospital, all active-duty dependents, and all retirees, their families, and survivors for whom CHAMPUS is the primary ■nsurer, must obtain an NAS from an MTF if they live within designated zip codes near an MTF.
| Table 2 CHAMPUS (DoD only) | CHAMPUS Budget ($ in Thousands) Total DoD | CHAMPUS as a percent of total DoD |
pY 1982 | $1,088,575 | $6,931,189 | 15.7% |
PY 1983 | $1,190,515 | $7,051,632 | 16.9% |
PY 1984 | $1,254,130 | $7,187,980 | 17.5% |
FY 1985 | $1,371,354 | $9,211,862 | 14.9% |
pY 1986 | $1,734,239 | $9,850,215 | 17.6% |
j'°n that these rising program costs consume is likewise Creasing (See Table 2).
Already higher than their civilian equivalents, ^ AMPUS hospital costs per admission continue to rise
uch faster than health care costs in the United States laterally. From 1983 to 1986, CHAMPUS had an annual ^erage growt[j rate m0re than 50% higher than that ob- t^rVed nationally. Several fundamental factors influence lese major military health care expenditures: t)|nfettered Use: There have been steadily increasing ,0^ of CHAMPUS claims submitted annually. Under % ■ ^ 1079, Congress authorized, presumably to re-
k a!n excessive beneficiary demands, that defined charges a1IT1Posed for outpatient care with defined deductibles m cost-sharing responsibility imposed upon the users. f JCtheless, CHAMPUS outpatient use still increased, l<w 585,647 in fiscal year 1979 to 959,472 in fiscal year gja The rate of cost increase was even greater: in Geor- Ihe' *°r example, the number of outpatient visits during Past year increased 17%, while the cost of this care
Table 3 Comparison of FY 1985 Inpatient Care
Direct Care CHAMPUS System
Average Length of | 7.6 | 5.5 |
Stay in Days |
|
|
Average Government |
|
|
Cost per Day | $ 496 | $ 366 |
Average Government |
|
|
Cost per Admission | $3,808 | $2,003 |
rose 31%. Under the current CHAMPUS system there is also no incentive to guard against unnecessary use of inpatient care. The use rates and lengths of hospital stays of active-duty dependents are not only greater than those of their civilian counterparts, but have been rising.
► Innovative Payment Methods: CHAMPUS has not adopted any of the innovative payment methods that other
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CHAMPUS patients tend to go to the hospital more often and stay longer, driving costs in excess of military and civilian equivalents. To cut these expenses, CHAMPUS adopted several cost-saving measures, including contracting with civilians to provide fixed-price care at Uniformed Services Treatment Facilities, such as the Pacific Medical Center (right).
government and private sector health care programs have successfully implemented. CHAMPUS is practically the only federal program that continues to buy health care primarily on the basis of simply paying providers’ billed charges. Under this system, alleged to lack any prospectively directed management, critics claim that there are no incentives for cost efficiency. Other federal medical programs and private insurance companies have already instituted various cost-saving measures and have offered discounts for efforts made to curb costs for inpatient care.
Cost-saving Measures
There have been several test initiatives to cut costs. ► It is less expensive to treat a patient at an MTF than to pay for the hospital stay through CHAMPUS (Table 3). More than three-fourths of MHSS beneficiaries reside within a designated area near an MTF—a “catchment area.” But studies have demonstrated that costs of care provided for these beneficiaries account for about 64% of CHAMPUS’s dollars.
As a result, DoD’s focus in the early 1980s was concentrated upon bringing more of the CHAMPUS workload back into the direct-care system by restricting the issuing of nonavailability statements (NASs) for those residing within MTF catchment areas. (Before seeking inpatient care at civilian hospitals, all CHAMPUS beneficiaries who live within designated zip codes near an MTF must first seek inpatient care at an MTF and obtain an NAS certifying that the military hospital cannot provide the care.) On 1 July 1983, the rules for issuing NASs were tightened, and the effects were immediately visible. In
fiscal year 1981, 106,361 NASs were issued; the num^ dropped to 84,669 in fiscal year 1983. The intent was10 reduce CHAMPUS losses.
The impact of the additional workload upon the profc* sional staffs at many major Navy health-care facilities ^ devastating. Forced to attempt to simultaneously satis') the competing imperatives of both maintaining reading for military contingencies and increasing in-house care 0 beneficiaries to reduce CHAMPUS costs—using the sal"3 resource base—the situation was what one Navy medic3 officer described as “blatant irrationality.” Paradoxical')'; recent downturns in Navy health manpower availabil'1’3* have again led to large shifts of beneficiary health ca'e back to the private sector.
Other mechanisms have also been developed to prov'" more beneficiary care within the less expensive direct-ca'’ system: The Joint Health Benefits Delivery Program lows civilian physicians, under prior negotiated fee ar' rangements, to provide care for beneficiaries in Ml* The MHSS may thus circumvent the costs of civilian h°^ pitalization when an MTF has all the resources requ'r3 for a beneficiary’s hospital care except a physician- T DoD Authorization Act of fiscal year 1984 allows the retary of Defense to contract with health-care providers f°| personnel services. It was recently reported that in f'sCl1 year 1988 the Navy expects to spend $23 million for c"1^ trading out emergency room services, and $25 millin'1 0 other civilian medical-support services.
► Contractor-operated Primary Care Facilities'. To prove access to primary care in civilian communities,' ^ ; armed services have contracted with private health c3^ practitioners, who will supply medical services at cli"|C^ at no cost to active-duty and retired military personnel a11 their dependents. The first operational prototype is 3( Army PRIMUS (primary care for the uniformed service ^ clinic in Northern Virginia. It is anticipated that the an"3 services will create 29 clinics by fiscal year 1989, and'
by fiscal year 1992, the Army (PRIMUS) and the Na[1]^ (NavCare) will each have 26 such walk-in clinics. ^
► Uniformed Services Treatment Facilities (USTFs)- fiscal year 1981, at the urging of the late Senator H"11 •
•hr(
►
that
Us,
%
k , a patient turns for treatment
effi
Usualiy determined by factors related to neither system >$ !!;'ency nor the patients’ best interests. Care at an MTF
^Ci
essary medical professionals, but because of selective
ackson (D-WA), Congress designated ten former public ea'th service facilities (eight hospitals, and two clinics) ^ USTFs. The USTF program, administered directly by since 1984, involves these now civilian-run facili- es> operating with a network of community providers, on 'Xed-payment agreements. It has been found that fixed- Plce agreements, as the Pacific Medical Center USTF in eattle demonstrated, had appreciably greater control over °st and use of facilities than did fee-for-service agree- >ts. Two USTFs have had their contracts renewed
°ugh 1990.
er Fees: Under 10 USC 1078 (b), Congress declared
■^izational Problems [2] v staff shortages, especially among support personnel. Beneficiaries who must then turn to the civilian sector are faced, however, with substantial out-of-pocket cost-sharing requirements.
Recently, DoD gave each military service greater control over its share of the CHAMPUS budget. This should stimulate each service to assume greater fiscal responsibility for its beneficiaries’ health care.
The Beneficiary’s Perspective
The cost of using the MTF is nominal when and if the care is available. Unfortunately, and increasingly, the MTF door is closing—at times slowly, at times abruptly, at other times erratically, but always unpredictably for both provider and patient.
For beneficiaries older than 65, their loss of access to MTFs is compounded by their greater dependence upon Medicare, which imposes a larger cost-sharing burden.
This highlights a seeming inequity within DoD personnel policies—namely, inferior health benefits for retired military members in contrast to retired federal employees. Retired federal civil servants who are Social Security annuitants may participate in any one of numerous approved prepaid federal employee health benefit plans (FEHBPs) for themselves and their spouses. By law, the government pays as much as 75% of some plans’ monthly premiums. Also, by law, Medicare is the primary payer and the private prepaid plan is secondary payer. For all practical purposes, participation assures the older civil service annuitant and his enrolled spouse virtual free choice of a health care provider, free choice of a perceived high-value prepaid FEHBP, and minimal out-of-pocket personal cost beyond the monthly contributions of 25% of the premiums. In essence, DoD contributes substantially to the premium for those electing to participate in FEHBP, an effective and generous government-paid supplement to the Medicare benefit. But for the uniformed service community, the DoD health benefit policy provides only space- available care in MTFs and USTFs.
The guarantee of specific health care entitlements to uniformed service beneficiaries therefore appears uncertain. Budgetary priorities are continuously shifting. Services at MTFs are often unavailable. The variability in the regulation of NASs also creates uncertainty, both personally and financially, for MHSS constituents.
New Initiatives
Within the National Defense Authorization Act for fiscal year 1987, Congress directed DoD to test the feasibility of improving CHAMPUS’s effectiveness through the competitive selection of contractors to underwrite the delivery of health care services. This demonstration project, called CHAMPUS Prime, is mandated to begin in fiscal year 1988. The contractors, whether insurance companies, health maintenance organizations, or hospital chains, will, for a set fee, assume responsibility for providing health care to those qualified beneficiaries who agree to join the plan for the test year.
A Patient’s Bill of Rights
Military health care should provide:
► Respect for, and genuine concern for both the health care and the personal needs of patients.
► An opportunity for patients to freely choose reasonable, appropriate, quality, and affordable care without unreasonably punitive personal financial liability.
► Clear statements about, and knowledge of, the health benefit package and coverage.
► An understanding of personal choices that may be available.
► Confidence in the competence of the health care provider and managing system.
► To the extent that health care
is not free, or requires only nominal payment, that clear details be provided about likely out-of-pocket cost, and that this be done in advance.
► A clear understanding of the patient’s responsibility to pay for noncovered, nonavailable services.
► Consistent and known providers and facilities for care, both routine and emergency.
► Assurance that the health care setting is appropriate to the conditions, problems, or illnesses.
► Assurance that health care will intrude only to the extent of clear need.
► Responsiveness to and availability of appointments.
► Continuity of care.
► Effective assistance in accessing noncovered services, including referral assistance to government and nongovernment sources-
► Assurance of a minimum of paperwork, submission of insurance forms, and prompt reimbursements.
Rear Admiral Stephen Barcheh Medical Corps. U. S. Na')
(Retired)
Editor’s Note: The above is excerpt from a private letter tho1 Admiral Barchet sent to Dr' Smith that is reprinted with both parties’ permission■
The CHAMPUS Prime program hopes to address several critical issues: lack of access, quality of benefits, affordability of services, ease of administrative procedures, and coordination between the health care network’s military and civilian sectors.
The enrollees would receive any civilian care required from a preferred provider network, if care at MTFs is not available. DoD expects CHAMPUS Prime to cost the government less than existing CHAMPUS, because contractors can secure discounts from civilian physicians and hospitals in exchange for directing patients to them. It would be financially advantageous to the contractor if as much care as possible were rendered at the MTFs. Accordingly, the arrangement encourages the contractor and the MTF staff to share staff—including physicians and support staff. By supplying qualified civilian personnel to fill in the gaps at the MTFs, the contractors will keep the MTFs functioning in the face of periodic staff shortages. The civilian contractor’s incentive will be to assist MTF commanders in providing military medical care rather than paying for more expensive civilian care.
Unfortunately, increasingly constrained budgetary outlays allocated to defense have now become a bone of contention between the perceived entitlements of beneficiaries and the demands of the military establishment with increasingly expensive equipment and personnel. The expanding population of eligible beneficiaries, as well as increased use rates and increased lengths of hospital stays, have placed heavy demands upon health-care providers. Increasingly, expensive technology has led to advances in medical science. The perceived “right” of all our citizens to the “best” that our society has to offer has thus created a very costly health-care responsibility for our government. Problems have mounted as this burgeoning entitle
ment juggernaut consumed those resources that were cre" ated primarily to facilitate combat readiness to defend th|S country. This has led to entitlement inequities that oc& sionally defy logic. Provider and consumer have becofl*e understandably displeased with the result.
Many well-meaning individuals have attempted to b*1 ance these conflicting imperatives and to remedy the s)'s tern’s injustices. To date, regrettably, natural and cosw forces of medical progress and unfettered economic vie'5 situdes have joined forces to oppose all of their efforts'
Programs to deliver military beneficiary health care in a state of turmoil, and the confusion will only gro"' the months ahead. We cannot yet assess the consequent5 of changing the entitlements (or the perceptions of ^ entitlements) heretofore considered inviolate by the *n creasingly frustrated Military Health Services System bel1 eficiaries. Time will judge the value of these efforts-
Captain Smith is Professor of Surgery (Urology) at the Medical Col*0-, of Georgia in Augusta, Georgia, where he is also a medical school l*3, son officer for the Navy Recruiting Command. He received his med,c degree from the University of Maryland School of Medicine in Baitin’0! and did his internship and residency in surgery at the New York Hosp'ta Cornell Medical Center. After a residency in urology at the Colui”^ Presbyterian Medical Center in New York City, he was a fellow in ^ logical cancer surgery at Memorial-Sloan Kettering Cancer Center ^ New York. Captain Smith entered the Navy in 1965 and served n5 surgeon on board the USS Randolph (CVS-15), followed by a tour on surgical service of the U. S. Naval Hospital, Memphis, Tennessee- served as commanding officer of Naval Reserve Medical Contingen. f Response Unit 507 in Charleston and as senior medical officer on ^ staff of Naval Reserve Readiness Command Region Seven in Charles*0. South Carolina. He is currently assigned to the Uniformed Services u versity of the Health Sciences in Bethesda, Maryland, in the depart”'0 of Surgery and Military Medicine. Captain Smith is a previous contf* tor to Proceedings.
[1]'ces system—the military component, comprising the chospitals and clinics, and the civilian component, t0 ^PUS—operate largely independently. Mechanisms •^coordinate their activities effectively are still absent. 0r *S ’Management arrangement is inefficient and weakens £anizational strength, preventing any one level of com- t'un^ ^rom bearing responsibility for both policy and fi- Ces- As a result of this management void, the facility to : ci Dati^nt tnmc for trpQtmpnf CHAMiPUS Of MTF
°ften not available, not because of a lack of space or
sCrUrrently, the two components of the military health