Medicare Subvention Demonstration:

DOD Start-Up Overcame Obstacles, Yields Lessons, and Raises Issues

GGD/HEHS-99-161: Published: Sep 28, 1999. Publicly Released: Sep 28, 1999.

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Pursuant to a legislative requirement, GAO provided information on the Department of Defense's (DOD) implementation of its Medicare Subvention Demonstration program, focusing on: (1) progress in establishing the ground rules for program operation, receiving Health Care Financing Administration (HCFA) approval, attracting enrollment, and starting to deliver health services; (2) the useful practices and operational difficulties that emerged during program start-up; and (3) issues for the future.

GAO noted that: (1) the start-up period of the Medicare Subvention demonstration was successful; (2) despite unanticipated delays, the six demonstration sites met the requirements for Medicare managed care plans, enrolled substantial numbers of beneficiaries, and began delivery of health care services by January 1, 1999; (3) the sites' experience in dealing with the difficulties that arose along the way has yielded valuable lessons and has also pinpointed issues that remain to be resolved; (4) while the successful start-up of the demonstration is encouraging, it will be some time before the results of its mature operation can be assessed; (5) establishing the ground rules for the demonstration took longer and HCFA approval process was more demanding than anticipated; (6) as a result, the demonstration will cover 24 to 28 months of service rather than 3 years; (7) the initial demand for enrollment overall was not as great as expected, in part because retirees were wary of a temporary program and feared that they might be unable to obtain affordable supplementary insurance at the demonstration's end; (8) enrollment also reflected site-specific factors, such as prospects for getting space-available care at a military treatment facility (MTF) without joining Senior Prime, the breadth of services available at the MTF, and options for care elsewhere in the community; (9) preparing for the start-up of the demonstration brought some useful new senior health care and management practices to the MTFs, but also revealed operational difficulties; (10) the fact that this demonstration program operates within two bureacracies--DOD and HCFA--caused some points of strain; (11) being new to Medicare, demonstration sites had to devote substantial DOD staff and consultant time learning HCFA requirements; (12) the dual organizational structures within DOD carry with them the potential for conflict; (13) additionally, dual DOD and HCFA procedures may result in duplication of effort; (14) experience in the start-up phase of this demonstration raises issues for the future of this or other similar demonstrations; and (15) enrollees will need to know several months in advance of the end of this demonstration whether service will continue so that they can plan for their continued health care.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: After the end of the demonstration December 30, 2001, DOD will no longer enroll Medicare recipients in TRICARE Prime. Its new plan, TRICARE Plus, will enroll them only for primary care, and only at military facilities that have primary care capacity not occupied by TRICARE Prime enrollees or medical readiness demands. (Seniors will continue to receive specialty care when needed to support graduate medical education or to sustain readiness-related readiness skills.) Specialty care services needed by TRICARE Plus enrollees under Medicare will be obtained from private providers. Since DOD will be providing a smaller portion of seniors' care, readiness activities will be less likely to disrupt that care.

    Recommendation: The Secretary of Defense should direct the Assistant Secretary of Defense (Health Affairs) to review plans for the provision of health care to seniors during times of military deployment and either: (1) ensure that staffing at participating MTFs is sufficient to provide seniors with primary care; or (2) provide for primary care to be delivered through some other means.

    Agency Affected: Department of Defense

  2. Status: Closed - Not Implemented

    Comments: GAO's site visits during a later phase of the demonstration revealed that the division of roles between sites and central offices was still an issue. However, subsequent events made clarification irrelevant. The Floyd D. Spence National Defense Authorization Act of 2001 authorized a new approach to combining Medicare with TRICARE. In view of this new approach, DOD decided not to continue with the approach that was the subject of this demonstration.

    Recommendation: The Secretary of Defense should direct the Assistant Secretary of Defense (Health Affairs) to determine (in advance, whenever possible) which HCFA directives and operational matters will be handled centrally and will be uniform across the Senior Prime program and which matters will be handled at the site level.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: The Floyd D. Spence National Defense Authorization Act of 2001 authorized a new approach to combining Medicare with TRICARE. In view of this new approach, DOD decided not to continue with the approach that was the subject of this demonstration. It issued a policy statement that describes how participants in the demonstration will transition to the new plan.

    Recommendation: The Secretary of Defense should direct the Assistant Secretary of Defense (Health Affairs) to work with HCFA to determine conditions for transitioning out of the demonstration into other coverage (including Medicare options, access to Medigap insurance, and care at the MTF) and to notify enrollees of these conditions as soon as possible.

    Agency Affected: Department of Defense

  4. Status: Closed - Not Implemented

    Comments: DOD and HCFA discussed the need for waivers as Medicare+Choice regulations took shape and issued an expanded list of waivers in the spring of 2000. GAO's recent site visits suggested that potential duplication remained an issue. However, conditions have since changed. The Floyd D. Spence National Defense Authorization Act of 2001 authorized a new approach to combining Medicare with TRICARE, one that does not involve DOD in Medicare+Choice. In view of this new approach, DOD decided not to continue with the approach that was the subject of this demonstration. The recommendation, which sought to improve the demonstration approach, is thus no longer relevant.

    Recommendation: The Secretary of Defense should direct the Assistant Secretary of Defense (Health Affairs) to work with HCFA to examine Medicare and DOD procedures, measurement, and reporting systems with an eye toward seeking waivers (where warranted) and eliminating duplication to the extent possible.

    Agency Affected: Department of Defense

  5. Status: Closed - Not Implemented

    Comments: DOD and HCFA discussed the need for waivers as Medicare+Choice regulations took shape and issued an expanded list of waivers in the spring of 2000. GAO's recent site visits suggest that potential duplication remained an issue. However, conditions have changed. The Floyd D. Spence National Defense Authorization Act of 2001 authorized a new approach to combining Medicare with TRICARE. DOD decided not to continue with the approach that was the subject of this demonstration, so this portion of the recommendation is no longer relevant. DOD issued a policy statement describing the new approach, called TRICARE Plus. This statement provides for transition of demonstration participants into the new program.

    Recommendation: The Administrator, HCFA, should work with the Assistant Secretary of Defense (Health Affairs) to: (1) examine Medicare and DOD procedures, measurement, and reporting systems with an eye toward granting waivers where warranted and eliminating duplication as previously discussed; and (2) determine or clarify the conditions for transitioning out of the demonstration into other Medicare coverage and notify enrollees of these conditions as soon as possible.

    Agency Affected: Department of Health and Human Services: Health Care Financing Administration

 

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