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News Release


Release No: 065-98
February 12, 1998


Health and Human Services Secretary Donna E. Shalala and Department of Defense Secretary William S. Cohen today announced the TRICARE Senior Project, a demonstration project that will allow Medicare-eligible military retirees to receive comprehensive health care services through military health care facilities.

"I am pleased that the Departments of Defense and Health and Human Services have reached agreement to implement the Medicare Subvention demonstration that my Administration has supported over the last several years, and that Congress authorized as part of the historic Balanced Budget Act of last summer," said President Clinton. "It is my hope that this project will help us reduce medical costs and expand health care options for military retirees, who have selflessly risked their lives for our nation."

The goal of the demonstration is to provide accessible, quality care to Medicare-eligible military retirees and their family members through military treatment facilities while achieving cost effectiveness, and to allow both HHS and DoD to optimize resources. Under Medicare Subvention, for the first time, DoD will be able to enroll its Medicare-eligible retirees into the Department's TRICARE Prime program and receive Medicare reimbursement. Medicare-eligible military retirees will receive comprehensive health care services at a lower cost to Medicare. TRICARE Senior Demonstration enrollees will have better access to care in the military treatment facilities.

"This project provides Medicare and the Department of Defense an opportunity to work together to increase choices available to military retirees who have served their country so well," said Shalala.

"This is a very significant step forward in our efforts to care for all military beneficiaries," said Cohen, "and, with our partners at the Department of Health and Human Services, I believe we can achieve a successful demonstration that will benefit everyone."

The Balanced Budget Act of 1997 authorized this demonstration to include two components. The first, TRICARE Senior Prime, will allow military health facilities in six sites to be treated as Medicare+Choice plans such as HMOs and provide a full range of comprehensive health care benefits to enrolled retirees. These military facilities must meet the same terms as HMOs serving Medicare.

Under TRICARE Senior Prime, DoD will continue to spend as much for the care of retirees in this demonstration as it now spends for these retirees. If DoD spends this amount, then Medicare will pay DoD an amount equal to 95 percent of what Medicare pays HMOs, less the cost of medical education, special payments to hospitals that serve large numbers of low-income patients, and some capital payments that will be excluded because these are included in DoD's appropriations, minus the amount DoD is obligated to spend .

The second component, Medicare Partners, permits military retirees enrolled in a limited number of Medicare+Choice plans to receive Medicare services through military health care facilities. This demonstration allows Medicare+Choice plans to contract with DoD military facilities to provide specialty and inpatient care to military retirees in those plans.

The demonstration will be conducted at the following sites:

  • Keesler Air Force Base, Biloxi, Miss.;
  • Brooke Army Medical Center and Wilford Hall Medical Center, San Antonio, Texas; Fort Sill, Lawton, Okla.; and Sheppard Air Force Base, Wichita Falls, Texas;
  • Fort Carson and the Air Force Academy, Colorado Springs, Col.;
  • Madigan Army Medical Center, Fort Lewis, Wash.;
  • Naval Medical Center San Diego, San Diego, Calif.;
  • Dover Air Force Base, Dover, Del.

Military retirees in these areas may start to enroll in the TRICARE Senior Program after the military health care facilities apply and are accepted into Medicare under the rules that apply to all other health plans serving Medicare. Enrollment at each site will not begin until it is approved as a Medicare+Choice plan. The target date for enrollment to begin at the first sites is summer, with healthcare delivery at the sites beginning 60 days after enrollment starts. The other sites will be phased in to ensure smooth implementation.

Military retirees enrolling in the demonstration must have received some care from military providers in the past or become Medicare-eligible after December 31, 1997. Also, they must be in the Medicare fee-for-service program or switch from a Medicare HMO, continue to pay monthly Medicare Part B premiums, and agree to receive all their care through the demonstration. To participate in Medicare Partners, a military retiree must be enrolled in a Medicare+Choice plan that contracts with one of the participating military facilities. Beneficiaries in TRICARE Senior Prime will not pay the annual TRICARE Prime enrollment fee.

The two Departments are working together to conduct a comprehensive evaluation of the results of this demonstration.

The Administration has also proposed a similar demonstration for the Department of Veterans Affairs.


Editor's Note: Questions concerning the HHS role in the demonstration can addressed at the HCFA Press Office at (202) 690-6145.

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