Military Health System Reform

Military Health System Reform

July 26, 2019
Military Health System Reform
The Department of Defense (DOD) administers a statutory
Congress Mandates MHS Reform
health entitlement (under Chapter 55 of Title 10) through
MHS reform was directed in the National Defense
the Military Health System (MHS). The MHS offers health
Authorization Act for Fiscal Year 2017 (NDAA; P.L. 114-
care benefits and services to approximately 9.6 million
328) and codified in 10 U.S.C. §§1073c-1073d. This reform
beneficiaries composed of servicemembers, military
includes:
retirees, and family members. Health care services are
 a transfer of MTF administration and management from
available through DOD-operated hospitals and clinics–
the Service Surgeons General to the Director of the
known as military treatment facilities (MTFs)–or through
DHA (§702);
civilian health care providers participating in TRICARE.
 reorganization of DHA’s internal structure (§702);
Currently, various DOD entities administer the MTFs and
 redesignation of the Service Surgeons General as
the TRICARE program. Those entities include the Defense
Health Agency (DHA) and the military services’ medical
principal advisors for their respective military service
and as service chief medical advisors to the DHA
departments (i.e., Army Medical Command, Navy Bureau
(§702); and
of Medicine and Surgery, and Air Force Medical Service).
 restructure or realignment of MTFs to best support
In 2016, the conference report accompanying the National
military medical readiness and the readiness of medical
Defense Authorization Act for Fiscal Year 2017 (H.Rept.
personnel (§703).
114-840) noted that “the current organizational structure of
Congress originally directed that MHS reform be completed
the military health system–essentially three separate health
by October 1, 2018. However, the FY2018 NDAA (P.L.
systems each managed by three Services–paralyzes rapid
115-91) and FY2019 NDAA (P.L. 115-232) provided
decision-making and stifles innovation in producing a
additional clarifications on the transfer of MTFs, the roles
modern health care delivery system that would better serve
all beneficiaries.”
and responsibilities of the DHA and the Service Surgeons
Subsequently, numerous reforms were
General, and an extension on implementing reform efforts
directed in law. An overview of the contributing factors,
to September 30, 2021. The reforms do not impact any
reform mandate, and DOD’s implementation efforts are
TRICARE health plan options or its cost-sharing features.
discussed below.
Implementing MHS Reform
Contributing Factors to MHS Reform
DOD submitted its implementation plan to Congress in
Over the past three decades, various committees,
June 2018, describing a “streamlined organizational model
commissions, and federal government entities have issued
that standardizes the delivery of care across the MHS with
reports highlighting a need to re-evaluate, or restructure, the
less overhead, more timely policy-making, and a
MHS, such as:
transparent process for oversight and measurement of

performance.” DOD later revised its plan to reflect certain

Final Report of the Military Compensation and
accelerated tasks and milestones, such as the transfer of
Retirement Modernization Commission (2015);

MTFs to the DHA. Changes are to occur through 2021.

MHS Modernization Study (2013);
 DOD Task Force on MHS Governance (2011);
MHS Governance and Financial Management
 Task Force on the Future of Military Health Care
Reform
(2007);
Since DHA and the service medical departments report to
 Medical Readiness Review of the Quadrennial Defense
separate senior defense officials, decisions on MHS policy,
Review (2006);
programs, processes, and resources are vetted in a variety of
 Comprehensive Study of the Military Medical Care
working groups, boards, and councils. DOD describes the
System (1993); and
current MHS governance as a “sclerotic decision-making
 various assessments by the Government Accountability
process” that often serves as a barrier to timely
Office (GAO).
improvements. The revised governance process delineates
who makes certain decisions. The Assistant Secretary of
Many of the reports have noted that MHS reform may
Defense for Health Affairs is to have primary authority and
bring opportunities to enhance medical readiness of the
oversight of the MHS. DHA is to make all decisions
armed forces, improve health care quality and access,
relating to health care delivery in MTFs. Meanwhile, each
increase patient satisfaction, reduce administrative burden
respective service medical department is to make decisions
on beneficiaries, and lower overall costs.
relating to “operational readiness matters.”
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link to page 2
Military Health System Reform
Figure 1. MHS Reform – Implementation Phases, 2018-2021

Source: CRS graphic based on DOD, “Plan 3: Implementation Plan for the Complete Transition of Military Medical Treatment Facilities to the
Defense Health Agency,” p. 5, June 24, 2019.
Notes: Yellow stars = DOD’s estimated completion date for each objective. Qtr 1 = January-March. Qtr 2 = April-June. Qtr 3 = July-
September. Qtr 4 = October-December.
Realign the MTFs
clarification on DOD’s reform efforts and support
DHA plans to assume control of certain MTFs and establish
congressional oversight of the MHS throughout this years-
health care market offices in three phases (see Figure 1).
long process.
Phase 1, which began on October 1, 2018, transfers seven
Status of Reform
MTFs to the DHA. This phase serves as DHA’s testing

period to ensure adequate support and infrastructure are in
What is the status of the transfer of MTFs from the
place prior to the next round of transfers. Phase 2 would
military services to the DHA?
transfer all remaining MTFs in the U.S. on October 1, 2019
 What best practices were discovered from the initial
and establish geographic health care markets–a group of
transfer of MTFs in 2018 and how will those practices
MTFs that operate as a health system. Newly formed health
apply to future implementation phases?
care market offices are to assist with MTF oversight,
Measuring Impacts of Reform
coordinate health services and resources across MTFs and

TRICARE providers, and provide technical assistance to
How are reform efforts impacting beneficiaries, health
MTFs. Phase 3 would transfer overseas MTFs on April 1,
care providers, medical readiness, military services,
2020 and establish similar health care market offices, called
combatant commanders, DHA, and non-DOD partners?
Defense Health Regions.
 What is DOD’s plan to reshape the size or composition
of the medical workforce?
Transform the Service Medical Departments
 How will DOD measure effectiveness or cost-savings
As MTFs are divested to the DHA, service medical
generated from MHS reform?
departments are to restructure to focus solely on medical

readiness and medical capabilities in support of military
How will DHA and the services’ medical readiness
operations. This includes the creation of “readiness
organizations measure its ability to support combatant
organizations,” respectively named the Army Medical
commander requirements for medical capabilities and
Readiness Command, Navy Medical Readiness and
forces?
Training Command, and the Air Force Medical Readiness
Additional Needs for Reform
Agency. The responsibilities of these organizations include
 DOD has suggested that changes to current law may be
manning, training, and equipping military medical
required to successfully implement MHS Reform. What
personnel; delivering clinical services in the operational or
statutory changes are needed?
non-MTF settings; and establishing and monitoring medical
 Are DHA and the services’ medical readiness
readiness standards.
organizations appropriately structured and resourced to
Considerations for Congress
carry out its revised responsibilities?
DOD provides periodic, informal briefings on MHS reform
to the congressional defense committees. To date, no formal
Bryce H. P. Mendez, Analyst in Defense Health Care
hearings have been convened. The following lines of
Policy
inquiry may assist Congress with receiving further
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Military Health System Reform

IF11273

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