Military Medical Care: Questions and
Answers
Don J. Jansen
Analyst in Defense Health Care Policy
Katherine Blakeley
Analyst in Defense Policy
July 24, 2013
Congressional Research Service
7-5700
www.crs.gov
RL33537
CRS Report for Congress
Pr
epared for Members and Committees of Congress
Military Medical Care: Questions and Answers
Summary
The primary objective of the military health system, which includes the Defense Department’s
hospitals, clinics, and medical personnel, is to maintain the health of military personnel so they
can carry out their military missions and to be prepared to deliver health care during wartime. The
military health system also covers dependents of active duty personnel, military retirees, and their
dependents, including some members of the reserve components. The military health system
provides health care services through either Department of Defense (DOD) medical facilities,
known as “military treatment facilities” or “MTFs” as space is available, or through private health
care providers. The military health system currently includes some 56 hospitals and 365 clinics
serving 9.7 million beneficiaries. It operates worldwide and employs some 58,369 civilians and
86,007 military personnel.
Since 1966, civilian care to millions of dependents and retirees (and retirees’ dependents) has
been provided through a program still known in law as the Civilian Health and Medical Program
of the Uniformed Services (CHAMPUS), but more commonly known as TRICARE. TRICARE
has four main benefit plans: a health maintenance organization option (TRICARE Prime), a
preferred provider option (TRICARE Extra), a fee-for-service option (TRICARE Standard), and a
Medicare wrap-around option (TRICARE for Life) for Medicare-eligible retirees. Other
TRICARE plans include TRICARE Young Adult, TRICARE Reserve Select and TRICARE
Retired Reserve. TRICARE also includes a pharmacy program and optional dental plans. Options
available to beneficiaries vary by the beneficiary’s duty status and location.
This report answers several frequently asked questions about military health care, including
• How is the military health system structured?
• What is TRICARE?
• What are the different TRICARE plans and who is eligible?
• What are the costs of military health care to beneficiaries?
• What is the relationship of TRICARE to Medicare?
• How does the Affordable Care Act affect TRICARE?
• What are the long-term trends in defense health care costs?
• What is the Medicare Eligible Retiree Health Care fund, which funds TRICARE
for Life?
The Government Accountability Office (GAO) and the Congressional Budget Office (CBO) have
also published important studies on the organization, coordination, and costs of the military
health system, as well as its effectiveness addressing particular health challenges. The Office of
the Assistant Secretary of Defense for Health Affairs Home Page, available at
http://www.health.mil/, may also be of interest for additional information on the military health
system.
This report does not address veterans or the Veterans Health Administration. Veterans’ health
issues are addressed in CRS Report R42747, Health Care for Veterans: Answers to Frequently
Asked Questions, by Sidath Viranga Panangala and Erin Bagalman.
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Military Medical Care: Questions and Answers
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Military Medical Care: Questions and Answers
Contents
Background ...................................................................................................................................... 1
Questions and Answers .................................................................................................................... 1
1. How is the Military Health System Structured? .................................................................... 1
TRICARE Regional Managed Health Care Support Contracts .......................................... 2
2. What is the Unified Medical Budget? ................................................................................... 3
3. What is the Medicare Eligible Retiree Health Care Fund (MERHCF)? ................................ 5
4. What is TRICARE? ............................................................................................................... 5
5. Who Is Eligible to Receive Care? .......................................................................................... 6
6. What are the Different TRICARE Plans? .............................................................................. 6
TRICARE Prime ................................................................................................................. 6
TRICARE Standard ............................................................................................................. 7
TRICARE Extra .................................................................................................................. 7
TRICARE Reserve Select ................................................................................................... 7
TRICARE Retired Reserve ................................................................................................. 8
TRICARE Young Adult....................................................................................................... 8
TRICARE for Life .............................................................................................................. 8
7. How Much Does Military Health Care Cost Beneficiaries? ................................................. 9
8. What is the Pharmacy Benefits Program? ........................................................................... 12
9. What is the Extended Care Health Option (ECHO) Program? ............................................ 15
10. How Are Priorities for Care in Military Medical Facilities Assigned?.............................. 16
11. What are the Long-Term Trends in Defense Health Costs? ............................................... 17
12. How Does the Patient Protection and Affordable Care Act Affect TRICARE? ................ 18
13. How Are Private Health Care Providers Paid? .................................................................. 19
14. What Is the Relationship of DOD Health Care to Medicare? ............................................ 19
TRICARE and Medicare Payments to Providers and the Sustainable Growth Rate ......... 19
Medicare and TRICARE for Life ...................................................................................... 20
15. What Medical Benefits are Available to Reservists? ......................................................... 21
16. Have Military Personnel Been Promised Free Medical Care for Life? ............................. 22
17. What is the Congressionally Directed Medical Research Program? ................................. 22
18. Other Frequently Asked Questions .................................................................................... 24
Does TRICARE Cover Abortion? ..................................................................................... 24
Does DOD Use Animals in Medical Research or Training? ............................................. 24
Figures
Figure 1. Organization of Health Care Services Provided by DOD ................................................ 2
Figure 2. FY2014 Unified Medical Budget Request ($billions) ...................................................... 4
Figure 3. Military Health System Eligible Beneficiaries (millions) ................................................ 6
Tables
Table 1. Selected TRICARE Fees for Active Duty Personnel, Eligible Reservists, and
Dependents ................................................................................................................................... 9
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Military Medical Care: Questions and Answers
Table 2. Selected TRICARE Fees for Retirees Under Age 65 and Their Dependents................... 10
Table 3. Selected TRICARE Fees for Reserve Select and TRICARE Retired Reserve ................ 10
Table 4. Selected TRICARE Fees for TRICARE Young Adult ..................................................... 11
Table 5. TRICARE for Life Fees and Payment Structure .............................................................. 12
Table 6. Appropriation Levels by Fiscal Year (FY) for Selected CDMR Programs,
FY2007-FY2013 ......................................................................................................................... 23
Contacts
Author Contact Information........................................................................................................... 24
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Military Medical Care: Questions and Answers
Background
Since 1966, civilian healthcare to millions of service members’ dependents and retirees (and
retirees’ dependents) has been provided through a program still known in law as the Civilian
Health and Medical Program of the Uniformed Services (CHAMPUS), but more commonly
known as TRICARE. TRICARE has four main benefit plans: a health maintenance organization
option (TRICARE Prime), a preferred provider option (TRICARE Extra), a fee-for-service option
(TRICARE Standard), and a Medicare wrap-around option (TRICARE for Life) for Medicare-
eligible retirees. Other TRICARE plans include TRICARE Young Adult, TRICARE Reserve
Select, and TRICARE Retired Reserve. TRICARE also includes a pharmacy program and
optional dental plans. Options available to beneficiaries vary by the beneficiary’s duty status and
location.
The Government Accountability Office (GAO) and the Congressional Budget Office (CBO) have
also published important studies on the organization, coordination, and costs of the military
health system, as well as its effectiveness addressing particular health challenges. Another source
of information is the Office of the Assistant Secretary of Defense for Health Affairs Home Page.1
Questions and Answers
1. How is the Military Health System Structured?
The Military Health System (MHS) is undergoing a process of restructuring. Figure 1 illustrates
the planned (as of June 20132) organizational structure to be implemented in October 2013. The
Defense Health Agency (DHA) will be designated as a Combat Support Agency in order to
ensure that the DHA remains focused on the primary mission of medical readiness, and will be
responsive to the Combatant Commanders through a formal oversight process established by the
Chairman, Joint Chiefs of Staff. The Plan for Reform of the Administration of the Military Health
System report also states that by July 1, 2013, the Assistant Secretary of Defense for Health
Affairs (ASD(HA)) will provide the Deputy Secretary of Defense with a detailed plan for
implementing a shared services model within the military health system. A “shared services
model” means that the DHA will assume responsibility for shared services, functions, and
activities in the military health system, including the TRICARE program, pharmacy programs,
medical education and training, medical research and development, health information
technology, facility planning, public health, medical logistics, acquisition, budget, and resource
management. The current Joint Task Force National Capital Region Medical (JTF CAPMED) will
be assigned to an organization subordinate to the DHA that will be known as the National Capital
Region.
1 http://www.health.mil/
2 Department of Defense, “Plan for Reform of the Administration of the Military Health System” June 10, 2013.
http://www.tricare.mil/tma/congressionalinformation/downloads/Plan%20for%20Reform%20of%20the%20Administra
tion%20of%20Military%20Health.pdf
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Figure 1. Organization of Health Care Services Provided by DOD
Source: From “Response to Congressional Defense Committees – Second Submission under Section 731 of the
National Defense Authorization Act for Fiscal Year 2013 - Plan for Reform of the Administration of the Military
Health System “ Department of Defense, June 10, 2013, page 4.
http://www.tricare.mil/tma/congressionalinformation/downloads/Plan%20for%20Reform%20of%20the%20Adminis
tration%20of%20Military%20Health.pdf
Note: USD(P&R) = Under Secretary of Defense (Personnel & Readiness), CJCS = Chairman Joint Chiefs of Staff,
CAE/PEO =Component Acquisition Executive/Program Executive Officer, DHA OGC = Defense Health Agency
Office of General Counsel, NCR = National Capital Region, WRRNMC = Walter Reed National Military Medical
Center,
The military health system includes 56 hospitals and 361 clinics serving approximately 9.58
million beneficiaries. It operates worldwide and employs approximately 68,000 civilians and
86,000 military personnel. Direct care costs include the provision of medical care directly to
beneficiaries, the administrative requirements of a large medical establishment, and maintaining a
capability to provide medical care to combat forces in case of hostilities. Civilian providers under
contract to DOD have constituted a major portion of the defense health reconstruction in recent
years.
TRICARE Regional Managed Health Care Support Contracts
TRICARE is administered through managed care support contracts in three regions:
• TRICARE North Region covering Connecticut, Delaware, the District of
Columbia, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts,
Michigan, New Hampshire, New Jersey, New York, North Carolina, Ohio,
Pennsylvania, Rhode Island, Vermont, Virginia, West Virginia, Wisconsin, and
portions of Iowa, Missouri, and Tennessee. The TRICARE North regional
contractor is currently Health Net Federal Services.
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• TRICARE South Region covering Alabama, Arkansas, Florida, Georgia,
Louisiana, Mississippi, Oklahoma, South Carolina, and most of Tennessee and
Texas. The TRICARE South regional contractor is currently Humana Military
Health Services.
• TRICARE West Region covering Alaska, Arizona, California, Colorado, Hawaii,
Idaho, most of Iowa, Kansas, Minnesota, most of Missouri, Montana, Nebraska,
Nevada, New Mexico, North Dakota, Oregon, South Dakota, portions of Texas,
Utah, Washington, and Wyoming. The TRICARE West regional contractor is
UnitedHealthcare.
These three contracts were re-competed in 2009, and after resolving bid protests, the new
contracts known as “TRICARE Third Generation (T-3) Support Contracts” became operational
between 2011 and 2012. Health care delivery under the new T-3 Contracts began April 1, 2011,
for the North region with Health Net Federal Services. Humana Military Healthcare Services
began health care delivery for TRICARE South region April 1, 2012. UnitedHealthcare began
delivery of services to the TRICARE West region April 1, 2013.
More information is available at http://www.TRICARE.mil/tma/AboutTMA.aspx.
2. What is the Unified Medical Budget?
ASD(HA) prepares and submits a unified medical budget, which includes resources for the
medical activities under his or her control within the DOD. The unified medical budget includes
funding for all fixed medical treatment facilities/activities, including such costs as real property
maintenance, environmental compliance, minor construction, and base operations support. Funds
for medical personnel and accrual payments to the Medicare Eligible Retiree Health Care Fund
((MERHCF)—see question “3. What is the Medicare Eligible Retiree Health Care Fund
(MERHCF)?”) are also included. The unified medical budget does not include resources
associated with combat support medical units/activities. In these instances the funding
responsibility is assigned to military service combatant or support commands.
Unified medical budget funding has traditionally been appropriated in several sources:
• The defense appropriations bill provides Operation and Maintenance (O&M),
Procurement, and Research, Development, Test and Evaluation (RDT&E)
funding under the heading “Defense Health Program.”
• Funding for military medical personnel (doctors, corpsmen, and other health care
providers) and TRICARE for Life accrual payments are generally provided in the
defense appropriations bill under the “Military Personnel”(MILPERS) title.
• Funding for medical military construction (MILCON) is generally provided
under the “Department of Defense” title of the military construction and veterans
affairs bill.
• A standing authorization for transfers from the MERHCF to reimburse
TRICARE for the cost of services provided to Medicare eligible retirees is
provided by Section 1113 of title 10 , United States Code (10 U.S.C. 1113).
• Costs of war-related military health care are generally funded through
supplemental appropriations bills.
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Other resources are made available to the military health system from third-party collections
authorized by 10 U.S.C.1097b (b) and a number of other reimbursable program and transfer
authorities. The President’s budget typically refers to the unified medical budget request as its
funding request for the military health system but only includes an exhibit for the DHP in the
“Department of Defense—Military” chapter and exhibits for the MERHCF in the “Other
Defense—Civil Programs” chapter of the Appendix volume. Medical MILCON and MILPERS
request levels are generally found in DOD’s budget submissions to Congress.
As illustrated in Figure 2 below, the Obama Administration’s FY2014 unified medical budget
request3 totals $49.4 billion and includes the following:
• $33.1 billion for the Defense Health Program (not including “Wounded, Ill, and
Injured” funding);
• $8.5 billion for military personnel;
• $1.1 billion for medical military construction; and
• $6.7 billion for accrual payments to the MERHCF.
Much more detailed breakouts are available in budget exhibits published by the Department of
Defense at http://www.budget.mil.
Figure 2. FY2014 Unified Medical Budget Request ($billions)
Source: Department of Defense FY2014 Budget Request Overview. Adapted by CRS Graphics.
3 Department of Defense, FY 2014 Budget Request Overview, April 2013, pp. 5-3, Figure 5-1,
http://comptroller.defense.gov/defbudget/fy2014/FY2014_Budget_Request_Overview_Book.pdf
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3. What is the Medicare Eligible Retiree Health Care Fund
(MERHCF)?
The Floyd D. Spence National Defense Authorization Act for FY2001(FY2001 NDAA),4 directed
the establishment of the Medicare-Eligible Retiree Health Care Fund to pay for Medicare-eligible
retiree health care beginning on October 1, 2002, via a new program called TRICARE for Life.
Prior to this date, care for Medicare-eligible beneficiaries was space-available care in Military
Treatment Facilities (MTF). The MERHCF covers Medicare-eligible beneficiaries, regardless of
age.
The FY2001 NDAA also established an independent three-member DOD Medicare-Eligible
Retiree Health Care Board of Actuaries appointed by the Secretary of Defense. Accrual deposits
into the Fund are made by the agencies who employ future beneficiaries (DOD and the other
uniformed services including the Public Health Service, the Coast Guard, and the National
Oceanic & Atmospheric Administration) based upon estimates of future TRICARE for Life
expenses. Transfers out are made to the Defense Health Program based on estimates of the cost of
care actually provided each year. As of September 30, 2011, the Fund had assets of over $163.6
billion to cover future expenses.5
The Board is required to review the actuarial status of the fund, to report annually to the Secretary
of Defense, and to report to the President and Congress on the status of the fund at least every
four years. The DOD Office of the Actuary provides all technical and administrative support to
the Board. Within DOD, the Office of the Under Secretary of Defense for Personnel and
Readiness, through the Office of the Assistant Secretary of Defense (OASD) for Health Affairs
(HA), has as one of its missions operational oversight of the defense health program including
management of the MERHCF. The Defense Finance and Accounting Service provides accounting
and investment services for the Fund.
4. What is TRICARE?
The Dependents Medical Care Act of 19566 provided a statutory basis for dependents of active
duty members, retirees, and dependents of retirees to seek care at MTFs. Prior to this time,
authority for such care was fragmented. The 1956 act allowed DOD to contract for a health
insurance plan for coverage of civilian hospital services for active duty dependents. Due to
growing use of MTFs by eligible civilians and resource constraints, Congress adopted the
Military Medical Benefits Amendments in 1966,7 which allowed DOD to contract with civilian
health providers to provide non-hospital-based care to eligible dependents and retirees. Since
1966, civilian care to millions of dependents and retirees (and retirees’ dependents) has been
provided through a program still known in law as the Civilian Health and Medical Program of the
Uniformed Services (CHAMPUS), but since 1994 more commonly known as TRICARE.
4 P.L. 106-398
5 Department of Defense, Fiscal Year 2011 Medicare-Eligible Retiree Health Care Fun Audited Financial Statements,
November 7, 2011, p. 5, http://comptroller.defense.gov/cfs/fy2011/12_Medicare_Eligible_Retiree_Health_Care_Fund/
Fiscal_Year_2011_Medicare_Eligible_Retiree_Health_Care_Fund_Financial_Statements_and_Notes.pdf.
6 P.L. 84-569.
7 P.L 89-614.
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TRICARE has four main benefit plans: a health maintenance organization option (TRICARE
Prime), a preferred provider option (TRICARE Extra), a fee-for-service option (TRICARE
Standard), and a Medicare wrap-around option (TRICARE for Life) for Medicare-eligible
retirees. Other TRICARE plans include TRICARE Young Adult, TRICARE Reserve Select, and
TRICARE Retired Reserve. These plans are described below. TRICARE also includes a
Pharmacy program and optional dental plans. Options available to beneficiaries vary by the
beneficiary’s relationship to a sponsor, sponsor’s duty status, and location.
5. Who Is Eligible to Receive Care?
Eligibility for TRICARE is determined by the uniformed services and reported to the Defense
Enrollment Eligibility Reporting System (DEERS). All eligible beneficiaries must have their
eligibility status recorded in DEERS.
TRICARE beneficiaries can be divided into two main categories: sponsors and dependents.
Sponsors are usually active duty servicemembers, National Guard/Reserve members, or retired
servicemembers. “Sponsor” refers to the person who is serving or who has served on active duty
or in the National Guard or Reserves. “Dependent” is defined in 10 U.S.C.1072 and includes a
variety of relationships, for example, spouses, children, and certain unremarried former spouses.
Figure 3 illustrates the major categories of eligible beneficiaries.
Figure 3. Military Health System Eligible Beneficiaries (millions)
Source: The President’s Budget for FY2013, Appendix, “Department of Defense–Military Programs,” p. 271.
Adapted by CRS.
6. What are the Different TRICARE Plans?
TRICARE Prime
TRICARE Prime is a managed healthcare option similar to a health maintenance organization.
Like such civilian arrangements, the plan’s features include a primary healthcare provider (either
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a military or a civilian health care provider) who manages care and provides or facilitates
referrals to specialists. Referrals generally are required for such visits. To participate,
beneficiaries must enroll and pay an annual enrollment fee, which is similar to an annual
premium. Eligible beneficiaries may choose to enroll at any time. Enrollees receive first priority
for appointments at military health care facilities and pay less out of pocket than do beneficiaries
who use the other TRICARE plans. TRICARE Prime does not have an annual deductible.
Active duty servicemembers are required to use TRICARE Prime. Both they and their family
members, as well as surviving spouses (during the first three years) and surviving dependent
children, are exempt from the annual enrollment fee. Retired servicemembers, their families,
surviving spouses (after the first three years), eligible former spouses, and others are required to
pay an annual enrollment fee, which is applied to the annual catastrophic out-of-pocket-limit.
TRICARE Prime annual enrollment fees for military retirees were increased in FY2012 for new
enrollees for the first time since the program began. Moving forward, under 10 U.S.C. 1097(e)
TRICARE Prime enrollment fees will be subject to increases each fiscal year based on the annual
retirement pay cost-of-living adjustment for the calendar year. For FY2013 (October 1, 2012–
September 30, 2013) this enrollment fee is $269.28 for an individual and $538.56 for individual
plus family coverage.
TRICARE Standard
TRICARE Standard is a traditional fee-for-service (FFS) option that does not require
beneficiaries to enroll in order to participate. TRICARE Standard plan allows participants to use
authorized out-of-network civilian providers, but it also requires users to pay higher out-of-pocket
costs, generally 25% of the allowable charge for retirees and 20% for active duty family
members. TRICARE Standard requires an annual deductible of $150/individual or $300/family
for family members of sponsors at pay grades E-5 & above and $50/$100 for pay gradesE-4 &
below. Beneficiaries who use the Standard option must pay any difference between a provider’s
billed charges and the rate of reimbursement allowed under the plan.
TRICARE Extra
TRICARE Extra is also available to TRICARE Standard beneficiaries. It also has no formal
enrollment requirement and mirrors a civilian preferred provider network. Network providers
agree to accept a reduced payment from TRICARE and to file all claims for participants. By
using network providers under TRICARE Extra, beneficiaries reduce their copayments, in
general, to 20% of the allowable charge for retirees and 15% for active duty family members.
TRICARE Reserve Select
The TRICARE Reserve Select program was authorized by Section 701 of the Ronald W. Reagan
National Defense Authorization Act for FY2005 (P.L. 108-375), which enacted 10 U.S.C. 1076d.
TRICARE Reserve Select is a premium-based health plan available worldwide for qualified
Selected Reserve members of the Ready Reserve and their families. Servicemembers are not
eligible for TRICARE Reserve Select if they are on active duty orders, covered under the
Transitional Assistance Management Program, or eligible for or enrolled in the Federal
Employees Health Benefits Program (FEHBP) or currently covered under the FEHBP through a
family member. TRICARE Reserve Select provides benefits similar to TRICARE Standard. The
government subsidizes the cost of the program with members paying 28% of the cost of the
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program in the form of premiums. For calendar year 2012, TRICARE Reserve Select premiums
are $54.35 per month for member only coverage, and $192.89 per month for member and family
coverage. For calendar year 2013, premiums are $51.62 per month for member only coverage,
and $195.81 per month for member and family coverage.
TRICARE Retired Reserve
Section 705 of the National Defense Authorization Act for FY2010 (P.L. 111-84) added a new 10
U.S.C. 1076e to authorize a TRICARE coverage option for so-called “gray area” reservists, those
who have retired but are too young to draw retirement pay. The program established under this
authority is known as TRICARE Retired Reserve. Previously, such individuals were not eligible
for any TRICARE coverage. This is a premium-based health plan that qualified retired members
of the National Guard and Reserve under the age of 60 may purchase for themselves and eligible
family members. It is similar to TRICARE Reserve Select, but differs in that there is no
government subsidy as there is with TRICARE Reserve Select. As such, retired Reserve
Component members who elect to purchase TRICARE Retired Reserve must pay the full cost of
the calculated premium plus an additional administrative fee. Retired Reserve Component
personnel who elect to participate in TRICARE Retired Reserve become eligible for the same
TRICARE Standard, TRICARE Extra, or TRICARE Prime options as active component retirees
when the servicemember reaches age 60. Calendar year 2012 premiums for member only
coverage are $419.72 per month and member-and-family premiums are $1,024.43 per month.
Calendar year 2013 premiums for member only coverage are $402.11 per month and member-
and-family premiums are $969.10 per month.
TRICARE Young Adult
Section 702 of the Ike Skelton National Defense Authorization Act for Fiscal Year 2011 (P.L.
111-383) added a new 10 U.S.C. 1110b, allowing unmarried children up to age 26, who are not
otherwise eligible to enroll in an employer-sponsored plan, to purchase TRICARE coverage. The
option established under this authority is known as “The TRICARE Young Adult Program.”
Unlike insurance coverage mandated by the Patient Protection and Affordable Care Act (P.L.
111-148), the TRICARE Young Adult Program provides individual coverage, rather than
coverage under a family plan. A separate premium is charged. The law requires payment of a
premium equal to the cost of the coverage as determined by the Secretary of Defense on an
appropriate actuarial basis. For calendar year 2013 the monthly premium for a TRICARE Young
Adult (TYA) Prime enrollment is $176 and $152 for a TYA Standard enrollment.
TRICARE for Life
TRICARE for Life was created as supplemental coverage to Medicare-eligible military retirees
by Section 712 of the Floyd D. Spence National Defense Authorization Act for FY2001 (P.L. 106-
398). TRICARE for Life functions as a secondary payer to Medicare, paying out-of-pocket costs
for medical services covered under Medicare for beneficiaries who are entitled to Medicare Part A
based on age, disability, or end-stage renal disease (ESRD). The beneficiaries are also eligible for
medical benefits covered by TRICARE but not by Medicare. Prior to creation of the TRICARE
for Life program, coverage for Medicare-eligible individuals was limited to space available care
in military treatment facilities. In recognition of the requirement to enroll in Medicare Part B,
TRICARE for Life cost-sharing for beneficiaries is limited and there is no enrollment charge.
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In order to participate in TRICARE for Life, these TRICARE-eligible beneficiaries must enroll in
and pay monthly premiums for Medicare Part B. TRICARE-eligible beneficiaries who are
entitled to Medicare Part A based on age, disability, or ESRD, but decline Part B, lose eligibility
for TRICARE benefits.8 In addition, individuals who choose not to enroll in Medicare Part B
upon becoming eligible may elect to do so later during an annual enrollment period; however, the
Medicare Part B late enrollment penalty may apply.9
7. How Much Does Military Health Care Cost Beneficiaries?
Active duty servicemembers receive medical care at no cost. Other beneficiaries pay differing
amounts depending on their status, the TRICARE option enrolled in, and where they receive care.
The tables below illustrate the costs to beneficiaries.
Table 1. Selected TRICARE Fees for Active Duty Personnel, Eligible Reservists, and
Dependents
Prime
Extra & Standard
Annual Deductible
None
$150/individual or $300/family for pay grades E-5 and above;
$50/ individual or $100/family below pay grades E-5
Annual Enrollment Fee
None None
Annual Out-of-Pocket
$1,000/family per
$1,000/family per fiscal year
Limit
fiscal year
in-network (TRICARE
out of network (TRICARE
Fees for Medical Services
Extra)
Standard)
Civilian Outpatient Visit
None
15% of negotiated rate
20% of al owable charge
Emergency Room Visit
None
15% of negotiated rate
20% of al owable charge
Hospitalization
None
Greater of $25 per admission
Greater of $25 per admission
or $17.05/day.
or $17.05/day.
Civilian Inpatient
None
Greater of $25 or $20/day.
Greater of $25 or $20/day.
Behavioral Health
Source: TRICARE website. Beneficiary costs current as of October 1, 2012.
For out-of-pocket limits, please see http://www.tricare.mil/mybenefit/home/Costs/HealthPlanCosts.
For ful beneficiary cost tables for TRICARE Standard and Extra, please see http://www.tricare.mil/mybenefit/
home/Costs/HealthPlanCosts/TRICAREStandardExtra?.
8 10 U.S.C. §1086(d).
9 CRS Report R40082, Medicare: Part B Premiums, by Patricia A. Davis
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Table 2. Selected TRICARE Fees for Retirees Under Age 65 and Their Dependents
Prime
Extra & Standard
Annual Deductible
None
$150/individual or $300/family
Annual Enrollment $269.28/individual or
None
Fee
$538.56/family
Annual Out-of-
$3,000/family per fiscal
$3,000/family per fiscal year
Pocket Limit
year
Fees for Medical
in-network (TRICARE
out of network (TRICARE
Services
Extra)
Standard)
Civilian Outpatient $12/visit
20% of negotiated rate
25% of al owable charge
Visit
Emergency Room
$30/visit
20% of negotiated rate
25% of al owable charge
Visit
Hospitalization
Greater of $11/day or
Lesser of $250/day or 25% of
Lesser of $708/day or 25% of
$25
billed charges for institutional
billed charges for institutional
services, plus 20% of
services, plus 25% of
separately billed services
separately billed services
Civilian Inpatient
$40/day, no charge for
20% of total charge plus 20%
High-Volume Hospital: 25% of
Behavioral Health
separately billed
of allowable charge for
hospital-specific per diem
professional services
separately billed professional
services
Low-Volume Hospital: Lesser
of $208 per day or 25% of
billed charges
Source: TRICARE website. Beneficiary costs current as of October 1, 2012.
For out-of-pocket limits, please see http://www.tricare.mil/mybenefit/home/Costs/HealthPlanCosts.
For full beneficiary cost tables for TRICARE Prime for non-active duty families, please see http://www.tricare.mil/
mybenefit/home/Costs/HealthPlanCosts/TRICAREPrimeOptions/Enrol mentFees? and http://www.tricare.mil/
mybenefit/home/Costs/HealthPlanCosts/TRICAREPrimeOptions/NetworkCopayments?.
For ful beneficiary cost tables for TRICARE Standard and Extra, please see http://www.tricare.mil/mybenefit/
home/Costs/HealthPlanCosts/TRICAREStandardExtra?.
Table 3. Selected TRICARE Fees for Reserve Select and TRICARE Retired Reserve
Reserve Select
Retired Reserve
Annual Deductible
$150/individual or $300/family for pay
$150/individual or $300/family.
grades E-5 and above; $50/$100 under
pay grades E-5.
Monthly Premium
$54.35/individual or $192.89/family
$419.72/individual or $1,024.43/family
Annual Out-of-
$1,000/family per fiscal year
$3,000/family per fiscal year
Pocket Limit
Fees for Medical
in-network
out of network
in-network
out of network
Services
Civilian Outpatient
15% of
20% of negotiated
20% of al owable charge
25% of al owable charge
Visit
negotiated rate
rate
Emergency Room
15% of
20% of negotiated
20% of al owable charge
25% of al owable charge
Visit
negotiated rate
rate
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Reserve Select
Retired Reserve
Hospitalization
Greater of
Greater of
Lesser of $250/day or
Lesser of $708/day or
$17.05/day or
$17.05/day or $25
25% of billed charges for
25% of billed charges for
$25
institutional services, plus
institutional services, plus
20% of separately billed
25% of separately billed
services
services
Civilian Inpatient
Greater of
Greater of $20/day
20% of total charge plus
High-Volume Hospital:
Behavioral Health
$20/day or $25
or $25
20% of al owable charge
25% of hospital-specific
for separately billed
per diem
professional services
Low-Volume Hospital:
Lesser of $208 per day
or 25% of billed charges
Source: TRICARE website. Beneficiary costs current as of October 1, 2012.
For out-of-pocket limits, please see http://www.tricare.mil/mybenefit/home/Costs/HealthPlanCosts.
For ful beneficiary cost tables for TRICARE Reserve Select, please see http://www.tricare.mil/mybenefit/home/
Costs/HealthPlanCosts/TRICAREReserveSelect?.
For ful beneficiary cost tables for TRICARE Retired Reserve, please see http://www.tricare.mil/mybenefit/home/
Costs/HealthPlanCosts/TRICARERetiredReserve?.
Table 4. Selected TRICARE Fees for TRICARE Young Adult
Prime
Standard
Children of Active Duty
All Others including Children of Sponsors
Servicemembers and Sponsors
Using TRICARE Retired Reserve
Using TRICARE Reserve Select
Annual
None $150/individual
or $150/individual or $300/family
Deductible
$300/family
Monthly
$201 $176
$176
Premium
Annual Out-of-
$3,000/family
$3,000/family per fiscal year
$3,000/family per fiscal year
Pocket Limit
per fiscal year
Fees for Medical
out of
Services
in-network
network in-network
out
of
network
Civilian
$12/visit 15%
of
20% of
20% of negotiated
25% of al owable
Outpatient Visit
negotiated
allowable
rate
charge
rate
charge
Emergency
$30/visit 15%
of
20% of
20% of negotiated
25% of al owable
Room Visit
negotiated
allowable
rate
charge
rate
charge
Hospitalization
Greater of
Greater of
Greater of
Lesser of $250/day
Lesser of $708/day
$11/day or $25
$17.05/day
$17.05/day
or 25% of billed
or 25% of billed
or $25
or $25
charges for
charges for
institutional
institutional
services, plus 20%
services, plus 25%
of separately billed
of separately billed
services
services
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Prime
Standard
Children of Active Duty
All Others including Children of Sponsors
Servicemembers and Sponsors
Using TRICARE Retired Reserve
Using TRICARE Reserve Select
Civilian
$40/day, no
Greater of
Greater of
20% of total charge
High-Volume
Inpatient
charge for
$20/day or
$20/day or
plus 20% of
Hospital: 25% of
Behavioral
separately billed
$25
$25
allowable charge
hospital-specific
Health
professional
for separately billed per diem
services
professional
services
Low-Volume
Hospital: Lesser of
$208 per day or
25% of billed
charges
Source: TRICARE website. Beneficiary costs current as of October 1, 2012.
For out-of-pocket limits, please see http://www.tricare.mil/mybenefit/home/Costs/HealthPlanCosts.
For ful beneficiary cost tables for TRICARE Young Adult Prime, please see http://www.tricare.mil/mybenefit/
home/Costs/HealthPlanCosts/TRICAREYoungAdult/PrimeOption.
For ful beneficiary cost tables for TRICARE Young Adult Standard, please see http://www.tricare.mil/mybenefit/
home/Costs/HealthPlanCosts/TRICAREYoungAdult/StandardOption?.
Table 5. TRICARE for Life Fees and Payment Structure
What TRICARE for
Type of Medical Service
What Medicare Pays
Life Pays
What Beneficiary Pays
If covered by TRICARE
Medicare’s authorized
and Medicare
amount
Remainder $0
If covered by Medicare but
Medicare’s authorized
$0
Medicare deductible and
not TRICARE
amount
cost-share
If covered by TRICARE
$0
TRICARE’s authorized
TRICARE deductible and
but not Medicare
amount
cost-share
If not covered by
$0 $0 Ful
amount
TRICARE or Medicare
Source: TRICARE, “TRICARE Choices at a Glance,” Feb. 2013, http://www.humana-military.com/library/pdf/
cost-summary.pdf.
8. What is the Pharmacy Benefits Program?
The Pharmacy Benefits Program is an adjunct to the various TRICARE plan options. Under this
program, TRICARE beneficiaries are able to obtain prescription drugs through military treatment
facilities, retail drug stores, and a national mail order plan. The Pharmacy Benefit Program is
authorized under 10 U.S.C. 1074g.
The Pharmacy Benefits Program is required to maintain a formulary of pharmaceutical agents
(herein also referred to as “drugs” or “medications”) in the complete range of therapeutic classes.
This is known as the “Uniform Formulary.” Selection of drugs for inclusion on the formulary is
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based on the relative clinical and cost effectiveness of the agents in each class.10 The law further
specifies that the formulary is to be maintained and updated by a Pharmacy and Therapeutics
Committee whose members are composed of representatives of both military treatment facility
pharmacies and health care providers.11 The Pharmacy and Therapeutics Committee meets at least
quarterly and its minutes are publicly available.12 A Uniform Formulary Beneficiary Advisory
(UFBA) is required to review and comment on formulary recommendations presented by the
Pharmacy and Therapeutics Committee prior to those recommendations going to the Executive
Director of TRICARE for approval. The UFBBA is composed of representatives of
nongovernmental organizations and associations that represent the views and interests of a large
number of eligible covered beneficiaries, contractors responsible for the TRICARE retail
pharmacy program, contractors responsible for the national mail-order pharmacy program, and
TRICARE network providers.13
Prescriptions Filled through Military Treatment Facilities
At a military treatment facility pharmacy, TRICARE beneficiaries may fill prescriptions from any
provider, civilian or military, without a copayment. Military treatment facilities are required to
stock a subset of the Uniform Formulary known as the “Basic Core Formulary.” Additional
pharmaceutical agents on the Uniform Formulary may also be carried by individual military
treatment facilities in order to meet local requirements. Non-formulary drugs are generally not
available through military treatment facilities. Certain Uniform Formulary covered
pharmaceuticals, however, may not be carried due to national contracts with pharmaceutical
manufactures.14 DOD’s Pharmacoeconomics Center collaborates with the Defense Supply Center
Philadelphia (DSCP) in coordination with the Department of Veterans Affairs (VA) Pharmacy
Benefits Management Strategic Health Group and the VA National Acquisition Center in Hines,
Illinois, in developing contracting strategies and technical evaluation factors for national
pharmaceutical contracting initiatives.
Prescriptions Filled through Retail Pharmacies
TRICARE beneficiaries also may fill prescriptions through retail pharmacy drug stores. DOD
contracts for a TRICARE pharmacy benefit manager to administer both the retail and mail order
options. The services provided by this contractor are known as “TPharm.” The current contract,
awarded in 2008, is with Express Scripts, Inc. (Express Scripts). Among other things, Express
Scripts maintains a national network of retail pharmacies for DOD that beneficiaries may use
without having to file a claim for reimbursement. Beneficiaries may also use non-network
pharmacies. However, at non-network pharmacies, beneficiaries pay the full price of the
medication up front and then file a claim for reimbursement.
DOD requires prescriptions to be filled, when available, with generic drugs. These are defined as
those medications approved by the Food and Drug Administration that are clinically the same as
10 10 U.S.C. 1074g(a)(2)(A).
11 10 U.S.C. 1074g(b).
12 Available at the Department of Defense Pharmacoeconomic Center web site: http://www.pec.ha.osd.mil/.
13 ibid.
14 Office of the Assistant Secretary of Defense (Health Affairs), Memorandum subject “TRICARE Pharmacy Benefit
Program Formulary Management” dated December 22, 2004. Accessed February 27, 2013, at
http://pec.ha.osd.mil/P&T/PDF/04-032.pdf.
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brand-name medications. Brand-name drugs that have a generic equivalent are only dispensed
after the prescribing provider completes a clinical assessment that indicates the brand-name drug
should be used in place of the generic medication and approval is granted by Express Scripts.
Currently, the copayments for non-active duty beneficiaries for a 30-day supply of medicine filled
through a network pharmacy are $5 for generic formulary medications, $17 for brand-name
formulary medications, and $44 for non-formulary medications, unless medical necessity is
established. Copayments for prescriptions filled at non-network pharmacies vary based on the
TRICARE plan covering the beneficiary and the type of prescription:
• Active duty service members receive full reimbursement after they file a claim.
• All others enrolled in a TRICARE Prime option pay a 50% cost share after a
deductible is met. This deductible is $50 per person and $100 per family per year
for service members in pay grades E1–E4 and $150 per person and $300 per
family for all other beneficiaries.
• After annual deductibles of $150 per person and $300 per family are met,
beneficiaries using Standard/Extra, TRICARE Reserve Select, TRICARE Retired
Reserve or TRICARE Young Adult for a 30-day supply pay $17 or 20% of the
total cost, whichever is greater, for formulary generic or brand name drugs, and,
$44 or 20% of the total cost, whichever is greater, for non-formulary
medications.15
• Under recent legislation,16 pharmaceuticals paid for by DOD that are provided by
network retail pharmacies to TRICARE beneficiaries are subject to federal
pricing standards. These pricing standards were established under the Veterans
Health Care Act of 1992.17 This act established federal ceiling prices for covered
pharmaceuticals, which require a minimum 24% discount off non-federal average
manufacturing prices. As a result, the overall growth of retail prescription drug
costs for DOD has slowed.18
Prescriptions Filled by Mail Order
TRICARE beneficiaries may arrange for home delivery of prescription drugs through the mail by
registering with Express Scripts. The copayments for a 90-day supply of medication filled by
mail order are currently $13 for brand-name formulary medications, and $43 for non-formulary
medications, unless medical necessity is established. Copayments for home delivery of generic
drugs were eliminated effective October 1, 2011, as an incentive for beneficiaries to use the home
delivery service. DOD negotiates prices with pharmaceutical manufacturers for the drugs
dispensed by mail order that are considerably lower than those for drugs dispensed through retail
pharmacies. In November 2009, DOD launched a campaign to educate beneficiaries on the
15 TRICARE web site accessed February 26, 2013, http://www.tricare.mil/pharmacycosts.
16 Section 703 of the National Defense Authorization Act for Fiscal Year 2008 (P.L. 110-181).
17 P.L. 102-585, codified at 38 U.S.C. 8126.
18 Department of Defense, “Evaluation of the TRICARE Program, Fiscal Year 2012 Report to Congress,” March 19,
2012, p. 75. Accessed February 26, 2013, at
http://www.tricare.mil/tma/congressionalinformation/downloads/TRICARE%20Evaluation%20Report%20-
%20FY12.pdf.
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benefits of home delivery services. Use of home delivery by TRICARE beneficiaries increased by
17% from FY2009 to FY2011.19
Copayment Adjustments
The Secretary of Defense is authorized to set and adjust copayment requirements for the
pharmacy program under 10 U.S.C. 1074g; however, Section 712 of the National Defense
Authorization Act for FY2013 amended this provision to limit any copayment increases in
FY2014 to FY2022 to the percentage by which retirement pay is increased that year.
9. What is the Extended Care Health Option (ECHO) Program?
The Extended Care Health Option (ECHO) is a program for qualified beneficiaries that
supplements TRICARE. It provides benefits that are not covered by TRICARE, such as assistive
services, equipment, in-home respite care services and special education for qualifying mental or
physical conditions. Qualifying conditions include:
• Diagnosis in an infant or toddler of a neuromuscular developmental condition or
other condition expected to precede a diagnosis of moderate or severe mental
retardation or serious physical disability;
• Extraordinary physical or psychological conditions causing the beneficiary to be
homebound;
• Moderate or severe mental retardation;
• Multiple disabilities, and;
• Severe physical disability.
Access to ECHO benefits requires registration. To use ECHO, qualified beneficiaries must be
enrolled in the Exceptional Family Member Program (EFMP) as provided by the sponsor’s
branch of service and be registered through the ECHO case manager in the applicable TRICARE
region. There are no enrollment fees, but there is a monthly cost share based on the sponsor’s pay
grade. For 2013, monthly costs range from $25 for pay grades E-1 through E-4 to $250 for pay
grade O-10. The total TRICARE cost share for all ECHO benefits combined, excluding the
ECHO Home Health Care (EHHC) benefit, is $36,000 per covered beneficiary per fiscal year.20
EHHC provides medically-necessary skilled services to those ECHO beneficiaries who are
homebound and generally require more than 28 to 35 hours per week of home health services or
respite care. The EHHC benefit is only available in the United States, District of Columbia,
Puerto Rico, the U.S. Virgin Islands, and Guam. Coverage for the EHHC benefit is capped on an
annual basis. The cap is limited to the maximum fiscal year amount TRICARE would pay if the
beneficiary resided in a skilled nursing facility. This amount is based on the beneficiary’s
geographic location.
19 Department of Defense, “Evaluation of the TRICARE Program, Fiscal Year 2012 Report to Congress,” March 19,
2012, p. 74. Accessed February 26, 2013, at
http://www.tricare.mil/tma/congressionalinformation/downloads/TRICARE%20Evaluation%20Report%20-
%20FY12.pdf.
20 For additional information please see the ECHO web page at http://www.tricare.mil/echo.
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ECHO qualified beneficiaries include:
• Active duty family members;
• Family members of activated National Guard/Reserve members;
• Family members who are covered under the Transitional Assistance Management
Program;
• Children or spouses of former service members who are victims of abuse and
qualify for the Transitional Compensation Program, and;
• Family members of deceased active duty sponsors while they are considered
“transitional survivors.”
ECHO is authorized under 10 U.S.C. 1079.
10. How Are Priorities for Care in Military Medical Facilities
Assigned?
Active duty personnel, military retirees, and their respective dependents are not afforded equal
access to care in military medical facilities. Active duty personnel receive top priority access and
are “entitled” to health care in a military medical facility (10 U.S.C. 1074).
According to 10 U.S.C. 1076, dependents of active duty personnel are “entitled, upon request, to
medical and dental care” on a space-available basis at a military medical facility. 10 U.S.C. 1074
states that “a member or former member of the uniformed services who is entitled to retired or
retainer pay ... may, upon request, be given medical and dental care in any facility of the
uniformed service” on a space-available basis.
This language entitles active duty dependents to medical and dental care subject to space-
available limitations. No such entitlement or “right” is provided to retirees or their dependents.
Instead, retirees and their dependents may be given medical and dental care, subject to the same
space-available limitations. This language gives active duty personnel and their dependents
priority in receiving medical and dental care at any facility of the uniformed services over
military members entitled to receive retired pay and their dependents. The policy of providing
active duty dependents priority over retirees in the receipt of medical and dental care in any
facility of the uniformed services has existed in law since at least September 2, 1958 (P.L. 85-
861).
Since the establishment of TRICARE and pursuant to the Defense Authorization Act of FY1996
(P.L. 104-106), DOD has established the following basic priorities (with certain special
provisions):
Priority 1: Active-duty servicemembers;
Priority 2: Active-duty family members who are enrolled in TRICARE Prime;
Priority 3: Retirees, their family members and survivors who are enrolled in TRICARE
Prime;
Priority 4: Active-duty family members who are not enrolled in TRICARE Prime;
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Priority 5: All other eligible persons.
The priority is given to active duty dependents to help them obtain care easily, and thus make it
possible for active duty members to perform their military service without worrying about health
care for their dependents. This is particularly important for active duty personnel who may be
assigned overseas or aboard ship and separated from their dependents. As retirees are not subject
to such imposed separations, they are considered to be in a better position to see that their
dependents receive care, if care cannot be provided in a military facility. Thus, the role of health
care delivery recognizes the unique needs of the military mission. The role of health care in the
military is qualitatively different, and, therefore, not necessarily comparable to the civilian sector.
The benefits available to servicemembers or retirees, which require comparatively little or no
contributions from the beneficiaries themselves, are considered by some to be a more generous
benefit package than is available to civil servants or to most people in the private sector. Retirees
may also be eligible to receive medical care at Department of Veterans Affairs (VA) medical
facilities.
11. What are the Long-Term Trends in Defense Health Costs?
Even as the number of active duty personnel in DOD declines over the next few years, costs
associated with the military health system are expected to grow. Total military health system costs
(excluding TRICARE for Life) increased between FY2009 and FY2011 for inpatient and
outpatient services but declined for prescription drugs, due to the FY2008 NDAA requirement
that the TRICARE retail pharmacy program be subject to the same pricing standards as other
federal agencies.
DOD’s FY2013 appropriations request for the Defense Health Program and the Medical Eligible
Retiree Health Fund is approximately 7.4% of DOD’s total FY2013 appropriations request.21 The
Congressional Budget Office (CBO) projects that the cost of the military health care system will
grow from $51 billion in FY2013 (higher than DOD’s FY2013 budget request of $47 billion) to
$65 billion by FY2017 and $95 billion by FY2030.22 Over the Future Years Defense Plan (FYDP)
period from FY2013 to FY2017, CBO’s projection has average annual growth of 6.0%, compared
with 2.6% in DOD’s projection. Over the entire FY2013-FY2030 period, CBO estimates the real
(inflation-adjusted) growth rates in cost per user in the military health system would average
5.5% per year for pharmaceuticals, 4.7% for purchased care and contracts, and 3.3% for direct
care and administration. Overall, DOD forecasts expect Defense Health Program costs to increase
by 3.4% in FY2014, 3.35% in FY2015, 3.6% in FY2016, and 3.9% in FY2017, in constant
FY2013 dollars.23
21 Comptroller, Department of Defense. National Defense Budget Estimates for FY2013, March 2012. Table 3-1,
Reconciliation of Authorization, Appropriation, TOA and BA, by Program, by Appropriation. pp. 36-44,
http://comptroller.defense.gov/defbudget/fy2013/FY13_Green_Book.pdf.
22 Congressional Budget Office, Long Term Implications of the 2013 Future Years Defense Program, p. 21,
http://www.cbo.gov/sites/default/files/cbofiles/attachments/07-11-12-FYDP_forPosting_0.pdf.
23 Comptroller, Department of Defense. National Defense Budget Estimates for FY2013, March 2012. Table 5-5,
Department of Defense Deflators–TOA. p. 60, http://comptroller.defense.gov/defbudget/fy2013/
FY13_Green_Book.pdf.
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This cost growth stems in part from general inflation in the cost of health care, as well as an
increasing percentage of care being provided to retirees and their dependents. DOD estimates that
care provided to retirees and their dependents will make up over 65% of DOD health care costs
by 2015, up from 43% in 1999.24 A recent CBO analysis concludes that this increasing proportion
of retirees participating in TRICARE is driven by “low out-of-pocket expenses for TRICARE
beneficiaries (many of whose copayments, deductibles, and maximum annual out-of-pocket
payments have remained unchanged or have decreased since the mid-1990s), combined with
increased costs of alternative sources of health insurance coverage.”25 In addition, CBO found
that TRICARE beneficiaries use both inpatient and outpatient care at rates significantly higher
than people with other insurance, due to low out-of-pocket costs and other factors.
DOD proposed new fees and cost-sharing increases for retiree TRICARE plans in their FY2013
budget submission. The new fee proposals were generally based on recommendations by the 2007
Task Force on the Future of Military Health Care. This congressionally created task force found
that, “because costs borne by retirees under age 65 have been fixed in dollar terms since 1996,
when TRICARE was being established, the portion of medical care costs assumed by these
military retirees has declined by a factor of 2-3.”26 Overall, “military health care premiums paid
by individual military retirees under age 65 utilizing DOD’s most popular plan (TRICARE
Prime) have fallen from 11% to 4%” of total health care costs.27 These proposed cost-sharing
increases and new fees were not adopted by the 112th Congress; however, as discussed in question
7 above, some increases to pharmacy copayments were provided for in the National Defense
Authorization Act for Fiscal Year 2013. The President’s 2014 Budget also proposes new fee
increases.
12. How Does the Patient Protection and Affordable Care Act
Affect TRICARE?
In general, the Patient Protection and Affordable Care Act (ACA)28 does not directly affect
TRICARE administration, health care benefits, eligibility, or cost to beneficiaries.29
Section 3110 of the ACA did open a special Medicare Part B enrollment window to enable certain
individuals to gain coverage under the TRICARE for Life program.30 The ACA also waived the
Medicare Part B late enrollment penalty during the 12-month special enrollment period (SEP) for
military retirees, their spouses (including widows/widowers), and dependent children who are
24 Department of Defense, Report of The Tenth Quadrennial Review of Military Compensation: Volume II Deferred
and Noncash Compensation, July 2008, p. 45.
25 Congressional Budget Office, Long Term Implications of the 2013 Future Years Defense Program, p. 21,
http://www.cbo.gov/sites/default/files/cbofiles/attachments/07-11-12-FYDP_forPosting_0.pdf. p. 22.
26 Department of Defense, subcommittee of the Defense Health Board, “Report of the Task Force on the Future of
Military Health Care,” December 2007, p. ES10, http://www.dcoe.health.mil/Content/Navigation/Documents/103-06-
2-Home-Task_Force_FINAL_REPORT_122007.pdf.
27 Department of Defense, subcommittee of the Defense Health Board, “Report of the Task Force on the Future of
Military Health Care,” December 2007, p. 92, http://www.dcoe.health.mil/Content/Navigation/Documents/103-06-2-
Home-Task_Force_FINAL_REPORT_122007.pdf.
28 P.L. 111-148 .
29 CRS Report R41198, TRICARE and VA Health Care: Impact of the Patient Protection and Affordable Care Act
(ACA), by Sidath Viranga Panangala and Don J. Jansen.
30 §3110 of PPACA, P.L. 111-148.
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otherwise eligible for TRICARE and are entitled to Medicare Part A based on disability or end-
stage renal disease, but have declined Part B. The ACA required that the Secretary of Defense to
identify and notify individuals of their eligibility for the SEP; the Secretary of Health and Human
Services (HHS) and the Commissioner for Social Security support these efforts administratively.
Section 3110 of the ACA was amended by the Medicare and Medicaid Extenders Act of 201031 to
clarify that Section 3110 applies to Medicare Part B elections made on or after the date of
enactment of the PPACA, which was on March 23, 2010.
13. How Are Private Health Care Providers Paid?
By law (P.L. 102-396) and Federal Regulation (32 CFR 199.14), health care providers treating
TRICARE patients cannot bill for more than 115% of charges authorized by a DOD fee schedule.
In some geographic areas, providers have been unwilling to accept TRICARE patients because of
the limits on fees that can be charged. DOD has authority to grant exceptions. Statutes (10 U.S.C.
1079(h) and (j)) also require that payment levels for health care services provided under
TRICARE be aligned with Medicare’s fee schedule “to the extent practicable.” Over 90% of
TRICARE payment levels are now equivalent to those authorized by Medicare, about 10% are
higher, and steps are being taken to adjust some to Medicare levels.
For institutional providers of outpatient services, TRICARE published a final regulation32 that
became effective on May 1, 2009, implementing the TRICARE outpatient prospective payment
system (OPPS). Under 10 U.S.C. 1079(j)(2), DOD is required to use Medicare’s reimbursement
payment system for hospital outpatient services to the extent practicable. Under the OPPS,
hospital outpatient services are paid on a rate-per-service basis that varies according to the
Ambulatory Payment Classification (APC) group to which the services are assigned. Group
services identified by Health Care Procedure Coding System (HCPCS) codes and descriptors
within APC groups are the basis for setting payment rates under the hospital OPPS. To receive
TRICARE reimbursement under the OPPS, providers must follow all Medicare specific coding
requirements, except in those instances where the TRICARE Management Activity (TMA)
develops specific APCs for those services that are unique to the TRICARE beneficiary
population. For inpatient services, TMA regularly publishes reimbursement schedules through the
Federal Register.
14. What Is the Relationship of DOD Health Care to Medicare?
TRICARE and Medicare Payments to Providers and the Sustainable Growth
Rate
TRICARE is required to pay healthcare providers “to the extent practicable, in accordance with
the same reimbursement rules as apply to payments for similar services”33 under Medicare. This
31 §201, P.L. 111-309.
32 Department of Defense, “TRICARE: Outpatient Hospital Prospective Payment System (OPPS); Delay of Effective
Date and Additional Opportunity for Public Comment,” 74 Federal Register 6228, February 6, 2009.
33 10 U.S.C. 1079.
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requirement was added by Section 731 of the National Defense Authorization Act for Fiscal Year
1996.34
The Sustainable Growth Rate (SGR) is the statutory method for determining the annual updates to
the Medicare physician fee schedule, created in the Balanced Budget Act of 1997.35 Under the
SGR formula, “if [Medicare] expenditures over a period are less than the cumulative spending
target for the period, the annual update [to the provider fee schedule] is increased. However, if
spending exceeds the cumulative spending target over a certain period, future updates are reduced
to bring spending back in line with the target.”36 In other words, if Medicare costs are greater than
expected, the provider fees are reduced to bring overall Medicare expenditures down towards
expected levels.37
Each year since 2002, the SGR system has produced a formula result, “conversion factor” that
would reduce reimbursement rates. With the exception of 2002, when a 4.8% decrease was
applied, Congress has overridden the SGR formula-driven reductions to provider fee rates
through a series of temporary postponements known as “doc fixes.”
Most recently, when President Obama signed the American Taxpayer Relief Act (P.L. 112-240),
the implementation of the SGR formula-driven reimbursement rates was again delayed until
January 1, 2014. Absent legislation, the Medicare reimbursement rate reduction on January 1,
2014, has been estimated by the Department of Health and Human Services to be 24.4%.38
Although the law requires TRICARE reimbursement rates to be equal to Medicare rates “to the
extent practicable,” it does permit TRICARE to make exceptions to ensure an adequate network
of providers or to eliminate a situation of severely impaired access to care.
Medicare and TRICARE for Life
Active duty military personnel have been fully covered by Social Security and have paid Social
Security taxes since January 1, 1957. In 1965, Congress created Medicare under Title 18 of the
Social Security Act to provide health insurance to people age 65 and older, regardless of income
or medical history. Social Security coverage includes eligibility for health care coverage under
Medicare at age 65.
In establishing CHAMPUS in 1966, it was the legislative intent of Congress that retired members
of the uniformed services and their eligible dependents be provided with medical care after they
retire from the military, usually between their late-30s and mid-40s. However, Congress did not
intend that CHAMPUS should replace Medicare as a supplemental benefit to military health care.
For this reason, retirees became ineligible to receive CHAMPUS benefits when, at age 65, they
become eligible for Medicare.
34 P.L. 104-106.
35 P.L. 105-33.
36 See §1848 of the Social Security Act codified at 42 U.S.C. 1395w–4.
37 For more information on the SGR please see: CRS Report R40907, Medicare Physician Payment Updates and the
Sustainable Growth Rate (SGR) System, by Jim Hahn and Janemarie Mulvey.
38 Centers for Medicare and Medicaid Services, “Estimated Sustainable Growth Rate and Conversion Factor, for
Medicare Payments to Physicians in 2014,” Table 5, p. 8, http://www.cms.gov/Medicare/Medicare-Fee-for-Service-
Payment/SustainableGRatesConFact/downloads/sgr2014p.pdf.
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Military Medical Care: Questions and Answers
Many argued that the structure was inherently unfair because retirees lost TRICARE/CHAMPUS
benefits at the stage in life when they were increasingly likely to need them. It was argued that
military personnel had been promised free medical care for life, not just until age 65. After
considerable debate over various options for ensuring medical care to retired beneficiaries,
Congress in the Floyd D. Spence National Defense Authorization Act for Fiscal Year 200139
provided that, beginning October 1, 2001, TRICARE would pay out-of-pocket costs for services
provided under Medicare for beneficiaries over age 64 if they are enrolled in Medicare Part B.
This benefit is known as TRICARE for Life (TFL). Disabled persons under age 65 who are
entitled to Medicare may continue to receive CHAMPUS benefits as a secondary payer to
Medicare Parts A and B (with some restrictions).
The requirement for enrollment in Medicare Part B, which has typical premiums of $104.90 per
month in 2013,40 is a source of concern to some beneficiaries, especially those who did not enroll
in Part B when they became 65 and thus must pay significant penalties. Some argue that this
requirement is unfair since Part B enrollment was not originally a prerequisite for access to any
DOD medical care. On the other hand, waiving the penalty for military retirees could be
considered unfair to other Medicare-users who did not enroll in Part B upon turning 65. The
Medicare Prescription Drug, Improvement, and Modernization Act41 (P.L. 108-173), passed in
December 2003, waived penalties for military retirees in certain circumstances during an open
season in 2004.42 More recently, the ACA created another special enrollment period. (See
question #12).
15. What Medical Benefits are Available to Reservists?
Reservists and National Guardsmen (members of the “Reserve Component”) who are serving on
active duty have the same medical benefits as regular military personnel. Reserve personnel while
on active duty for training and during weekly or monthly drills also are covered for illnesses
incurred while on training or traveling to or from their duty station. In recent years, especially as
members of the Reserve Component have had a larger role in combat operations overseas,
Congress has broadened the medical benefits available for Reservists. Those who have been
notified that they are to be activated are now covered by TRICARE up to 180 days before
reporting. Reservists who have served more than 30 days after having been called up for active
duty in a contingency operation are eligible for 180 days of TRICARE coverage after the end of
their service under the Transitional Assistance Management Program (TAMP). In addition, the
TRICARE Reserve Select (TRS) program is an optional program available to Reserve
Component members while not activated. To be eligible for TRS, the member must not be on
active duty orders, not covered under the Transitional Assistance Management Program, and not
eligible for or enrolled in the Federal Employees Health Benefits Program. TRS coverage
requires payment of monthly premiums (in 2013, $51.62 for individual coverage, $195.81 for
member and family coverage).
39 P.L. 106-398.
40CRS Report R40082, Medicare: Part B Premiums, by Patricia A. Davis.
41 P.L. 108-173.
42 See out-of-print CRS Report RS21731, Medicare: Part B Premium Penalty, by Jennifer O’Sullivan, available upon
request.
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16. Have Military Personnel Been Promised Free Medical Care for
Life?
Some military personnel and former military personnel maintain that they and their dependents
were promised “free medical care for life” at the time of their enlistment. Such promises may
have been made by military recruiters and in recruiting brochures; however, if they were made,
they were not based upon laws or official regulations, which provide only for access to military
medical facilities for non-active-duty personnel if space is available as described above. Space
was not always available and TRICARE options could involve significant costs to beneficiaries.
Rear Admiral Harold M. Koenig, the Deputy Assistant Secretary of Defense for Health Affairs,
testified in May 1993: “We have a medical care program for life for our beneficiaries, and it is
pretty well defined in the law. That easily gets interpreted to, or reinterpreted into, free medical
care for the rest of your life. That is a pretty easy transition for people to make in their thinking,
and it is pervasive. We [DOD] spend an incredible amount of effort trying to re-educate people
[that] that is not their benefit.”43
Dr. Stephen C. Joseph, Assistant Secretary of Defense for Health Affairs in April 1998, however,
argued that because retirees believe they have had a promise of free care, the government did
have an obligation. Joseph did not specify the precise extent of the obligation. The FY1998
Defense Authorization Act (P.L. 105-85) included (in Section 752) a finding that “many retired
military personnel believe that they were promised lifetime health care in exchange for 20 or
more years of service,” and expressed the sense of Congress that “the United States has incurred a
moral obligation to provide health care to members and [retired] members of the Armed
Services.” Further, it is necessary “to provide quality, affordable care to such retirees.”
17. What is the Congressionally Directed Medical Research
Program?
Many different entities within the Department of Defense request appropriations for and are
funded to conduct a wide range of medical research. Over the last 17 years, Congress has
supplemented the DOD appropriations to include additional unrequested funding for specific
medical research funding. In 1992, Congress appropriated $25 million for breast cancer research
to be managed by DOD’s U.S. Army Medical Research and Materiel Command (USAMRMC).
The following year, Congress appropriated $210 million to the DOD for extramural, peer-
reviewed breast cancer research.
Following this, DOD established the Congressionally Directed Medical Research Programs
(CDMRP) within USAMRMC. The Program now manages congressionally directed
appropriations totaling $6 billion through FY2010 for research on breast, prostate, and ovarian
cancers; neurofibromatosis; military health; chronic myelogenous leukemia; tuberous sclerosis
complex; autism; psychological health and traumatic brain injury; amyotrophic lateral sclerosis;
Gulf War Illness; deployment-related health research; and other health concerns.44 This
43 U.S. Congress, House of Representatives, Committee on Armed Services, Military Forces and Personnel
Subcommittee, 103rd Congress, 1st session, National Defense Authorization Act for Fiscal Year 1994—H.R. 2401 and
Oversight of Previously Authorized Programs, Hearings, H.A.S.C. No. 103-13, April 27, 28, May 10, 11, and 13, 1993,
p. 505.
44 Department of Defense, Congressionally Directed Medical Research Program: FY 2008 Annual Report, September
(continued...)
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additional, unrequested funding now appears in the Defense Health Program RDT&E
appropriation. Conference report language usually includes a table instructing DOD on how to
allocate the additional funding to specific diseases and research areas. This guidance is not
considered to be an earmark because the funding is used for peer-reviewed, competitively
awarded research grants.
Table 6 depicts appropriations for selected CDMRP programs.
Table 6. Appropriation Levels by Fiscal Year (FY) for Selected CDMR Programs,
FY2007-FY2013
(in millions of current dollars)
FY2007a FY2008b FY2009c FY2010d FY2011e FY2012f
FY2013
Amyotrophic Lateral
5 0 5 7.5 8 6.4
7.5
Sclerosis
Autism
7.5 6.4 8 8
6.4 5.1 6.0
Bone Marrow Failure
0
0
5
3.75
4
3.2
3.2
Breast Cancer/Breast
127.5
138 150 150 150 120 120
Cancer Research
Gulf War Illness
0
10
8
8
8
10
20
Lung Cancer
0
0
20
15
12.8
10.2
120
Multiple
Sclerosis
0 0 5 4.5 4.8
3.8
5
Neurofibromatosis
10 8 10 13.75 16 12.8
15
Ovarian
Cancer 10 10 20 18.75 20 16 20
Peer-Reviewed
Cancer
0 0 16 15 16 12.8
15
Peer-Reviewed
Medical
0 50 50 50 50 50 50
Peer-Reviewed
0 0 51 22.5 24 30 30
Orthopedic
Prostate
Cancer 80 80 80 80 80 80 80
Psychological
150 0 165 120 100 135.5
135
Health/Traumatic Brain
Injury
Spinal Cord Injury
0
0
35
11.25
12
9.6
30
Tuberous
Sclerosis
0 4 6 6 6.4
5.1
6
Source: Congressional y Directed Medical Research Program, Annual Reports FY2007–FY2012,
Recommendations accompanying the Defense Appropriations Acts.
Notes:
a. Funds appropriated by P.L. 110-5 (see H.Rept. 109-676 to H.R. 5631, September 25, 2006, pages 248-250),
http://www.gpo.gov/fdsys/pkg/CRPT-109hrpt676/pdf/CRPT-109hrpt676.pdf.
(...continued)
30, 2008, pp. 1-2, http://cdmrp.army.mil/annreports/2008annrep/default.htm.
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b. Funds appropriated by P.L. 110-116. See Congressional Record, November 6, 2007, p. H13119.
c. Funds appropriated by Division C of P.L. 110-329. See Congressional Record, September 24, 2008, pp.
H9725–H9726.
d. Funds appropriated by P.L. 111-117. See Congressional Record, December 16, 2009, p. H15319–H15320,
http://www.gpo.gov/fdsys/pkg/CREC-2009-12-16/pdf/CREC-2009-12-16-pt1-PgH15007-2.pdf#page=314.
e. Funds appropriated by P.L. 112-10. See House Rules Committee’ tables accompanying H.R. 1473, pp. 53-54,
http://rules.house.gov/Media/file/FY11-Defense-Department-Base-tables.pdf.
f.
Funds appropriated by P.L. 112-74 (H.R. 2055). See House Rules Committee’s tables accompanying H.R.
2055, 92A, p. 282, http://rules.house.gov/Media/file/PDF_112_1/legislativetext/
H.R.2055crSOM/psConference%20Div%20A%20-%20SOM%20OCR.pdf.
g. Funds appropriated by P.L. 113-6 (H.R. 933). Figures not adjusted for sequestration if any. See Senate
Explanation Statement, p. S1515 at http://www.gpo.gov/fdsys/pkg/CREC-2013-03-11/pdf/CREC-2013-03-11-
pt1-PgS1287.pdf#page=1 .
The CDMRP website (http://cdmrp.army.mil/) also provides specific descriptions and funding
histories of the different research programs.
18. Other Frequently Asked Questions
Does TRICARE Cover Abortion?
10 U.S.C. 1093 provides that “Funds available to the Department of Defense may not be used to
perform abortions except where the life of the mother would be endangered if the fetus were
carried to term or in a case in which the pregnancy is the result of an act of rape or incest.”45
Does DOD Use Animals in Medical Research or Training?
Yes. DOD policy is that live animals will not be used for training and education except where,
after exhaustive analysis, no alternatives are available. Currently approved uses include pre-
deployment training for medical personnel and include infant intubation (ferrets); microsurgery
(rodents); and combat trauma training (goats and swine).
Author Contact Information
Don J. Jansen
Katherine Blakeley
Analyst in Defense Health Care Policy
Analyst in Defense Policy
djansen@crs.loc.gov, 7-4769
kblakeley@crs.loc.gov, 7-7314
45 The clause “or in a case in which the pregnancy is the result of an act of rape or incest” was added by Section 704 of
the National Defense Authorization Act for Fiscal Year 2013.
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