Elderly beneficiaries of military health care suffered a stinging defeat in the final days of the 104th Congress when a key lawmaker backed away from a deal to test Medicare subvention. The action so frustrated military health officials that they decided by year’s end to launch a subvention demonstration of their own, without benefit of legislation.
Subvention refers to Medicare reimbursing the military for the cost of treating Medicare-eligible beneficiaries, those age 65 and older, in service clinics and hospitals. Without the infusion of cash. Defense officials warn, in-service care of the elderly virtually will disappear by 2001. Many military hospitals and clinics already deny them routine care. Those turned away are expected to use Medicare or private health insurance. Subvention not only would reverse the exodus from military facilities, say proponents, but also would save Medicare dollars by providing care more cheaply than Medicare providers in the private sector.
The Defense Department pressed Congress hard in 1996 to authorize a funded subvention test at six U.S. sites over three years. Representative Joel Hefley (R-CO), who led the subvention fight in the House, said Republican congressional leaders met days before Congress adjourned with chairmen of the committees having jurisdiction over the military and Medicare. All had agreed to support a subvention test. But when proponents tried to insert the plan in an omnibus appropriations bill. Representative William Thomas (R-CA) blocked the move. Representative Thomas, who had attended the leadership meeting, chairs the House Ways and Means Subcommittee on Health, which has oversight responsibility for Medicare.
Representative Thomas earlier in the session had refused to endorse a subvention test until the Congressional Budget Office (CBO) said it posed no financial risk to the Medicare trust fund. The Pentagon maintains Medicare would save money, or at least break even, if it reimbursed the military only 93% of what it pays to managed-care programs in the private sector.
When CBO said a 7% discount was not enough, the Pentagon began to make concessions. The scheme CBO finally declared “cost neutral” had Medicare reimbursing the Pentagon only half the rate it pays to civilian care programs. At the last minute, however, Representative Thomas “got skittish” about passing any sort of Medicare bill in final hours before adjournment, Representative Hefley said. The deal was killed.
Representative Thomas later said he supports subvention if “structured in a way that does not add costs to the Medicare fund.” He blamed the demise of a military subvention test in 1996 on "complications" created "when the Veterans Committee attempted to attach a Veterans Affairs subvention proposal to the Department of Defense legislation." Representative Thomas probably felt that "this whole thing had bypassed him, and he wanted his imprint on it," Representative Hefley said. He promised to reintroduce subvention legislation this year
The Pentagon intends to back that effort, but meanwhile it's moving ahead with plans to jury-rig its own subvention test That means Medicare eligibles living near selected military medical centers will be invited as early as February to enroll for a year in Tricare Prime, the military's new managed care program. The size of enrollment is expected to be limited to less than half the number of elderly able to access the selected medical centers on a space-available basis. Enrollment will be oil a first-come, first-served basis, but won't begin until the program is announced in each area. Sites selected for the test were; Madigan Army Medical Center, Fort Lewis, Washington; San Diego Naval Medical Center, California; Keesler Medical Center, Biloxi, Mississippi; Wilford Hall Medical Center at Lackland Air Force Base and Brook Army Medical Center at Fort Sam Houston, both in San Antonio, Texas; Eisenhower Army Medical Center, Fort Gordon, Georgia; and the Army Hospital at Fort Sill, Oklahoma.
The drawback of a subvention test not approved by Congress is that there will be no Medicare reimbursements flowing into Defense coffers. That also means Medicare eligible enrollees won't get the full benefit of low-cost care under Tricare Prime. Here is how the plan will work: Only persons with Medicare Part B coverage will be allowed to enroll but will not pay the Tricare annual enrollment fee of $230 per individual, $460 for family coverage. Medicare eligibles would agree to seek all their care through a military primary-care manager.
"The benefit is they will have priority access to the military treatment facility, not just space-available care," a Defense health official said. The rub will come when care managers can no longer find space in a military facility and refer patients to civilian care providers in the network. Unlike other Tricare participants, Medicare eligibles won't face only a small copayment. The care provider will bill Medicare at regular fee-for-service rates, and patients who lack supplemental health insurance will pay all costs not covered by Medicare.
The number of enrollees will be constrained by the availability of primary-care managers. Still, the test should serve its main purpose, which is to track and compare military costs in treating Medicare eligibles with costs reported by Medicare for similar care given to private sector patients in the same area.
"We'll actually have real data rather than saying 'Trust us.” We hope to show we can operate more efficiently," said the Defense official. "That's our big gain."