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News Release


Release No: 523-96
September 10, 1996


This afternoon, President Clinton announced the Medicare Demonstration of Military Managed Care, a demonstration that will give military retirees improved access to military treatment facilities.

DoD and the Department of Health and Human Services have reached agreement on implementation details for this new initiative that has the potential for multiple benefits. Such benefits include: expanded health care options for military Medicare-eligibles, an improved way for DoD to care for older retirees and their family members, continued medical readiness support, and savings for the Medicare Trust Fund by providing health care to military Medicare-eligibles at a lower cost in the Military Health Services System.

The demonstration's goal is to implement a cost-effective alternative for delivering accessible and quality care to these beneficiaries while not increasing the total federal cost for either agency. Our Medicare and DoD dual-eligible beneficiaries have long asked that they be able to use the Military Health Services System as their Medicare provider. This demonstration will help to establish whether this is a workable, affordable option, stated Stephen C. Joseph, the assistant secretary of Defense for Health Affairs.

Under the demonstration, the Medicare program will consider the Military Health Services System similarly to a risk-type health maintenance organization (HMO) for dual-eligible Medicare and DoD beneficiaries. Medicare will pay for dual-eligibles enrolled in DoD's managed care program, TRICARE Prime, after DoD meets its current level of effort. That level of effort is measured in terms of health care expenditures for the dual- eligible population. Medicare will reimburse DoD at a discounted Average Adjusted Per Capita Cost (AAPCC) rate, and the maximum total Medicare reimbursement to DoD for any year will not exceed $65 million.

This demonstration will cover four sites (San Antonio, Texas, because of its two medical centers, plus three other sites) in DoD TRICARE Region 6 and the Tacoma-Bremerton, Washington, area in DoD TRICARE Region 11. Three additional sites in Region 6 will be identified to serve as comparison sites.

Eligibility for participation in this demonstration will include people who meet all of the following criteria:

-- are eligible both for care from DoD and through

Medicare's aged program,

-- enroll in TRICARE Prime,

-- are covered by Medicare Part B,

-- agree to receive covered services only through


-- are residents of the geographic areas covered by the

demonstration and where enrollment in the demonstration is


-- as dual-eligibles, used a military treatment

facility before July 1, 1996, or became dual-eligible

starting after June 30, 1996.

Enabling legislation is expected from the Congress this year; and the demonstration will begin either 60 days following enactment or January 1, 1997, whichever is later. Joseph remarked that This is a giant step in the right direction for us to be able to care for our older beneficiaries. It is a great day for military medicine.

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