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DoD Moves Closer to Over-65 Health Care

By Douglas J. Gillert
American Forces Press Service

WASHINGTON, May 29, 1996 – DoD could begin a test as early as Oct. 1 to provide health care to Medicare-eligible patients over age 65, a senior DoD official said.

Legislation is on Capitol Hill to conduct a three-year demonstration, according to the official.

Under current law, DoD medical facilities cannot be reimbursed for care they provide to Medicare-eligible beneficiaries. As a result, the official said, these patients still can get health care from DoD on a space-available basis, but may be required to seek care elsewhere.

For the past several years, DoD has advocated changing the law to receive what it calls "Medicare subvention" -- financial reimbursement for elderly patients. Until now, however, the department failed to satisfy Medicare that the change wouldn't deplete its trust fund, the official said.

In July 1995, DoD and Medicare began discussing the current proposal, which would piggyback somewhat on TRICARE, DoD's managed care health plan. DoD proposes to demonstrate Medicare subvention in two TRICARE regions (probably Regions 6 and 11) and Alaska, the official said.

Throughout the test, DoD medical facilities in those areas would operate essentially as Medicare health maintenance organizations. Key differences: The subvention plan provides beneficiaries Medicare plus pharmacy reimbursements. Medicare would also cover nursing home and home health care expenses currently unavailable through TRICARE.

A key provision of the proposal is the "level of effort," or cost, DoD is willing to bear. DoD proposes spending its own money before seeking Medicare trust fund dollars, the official explained.

Once DoD reaches the level-of-effort cost, Medicare would pay a per-enrollee fee -- traditionally 95 percent of annual per capita costs. As an additional incentive, DoD proposes Medicare pay just 93 percent.

DoD believes both DoD and Medicare win. In fact, the head of the Medicare trust fund has told Congress he expects the subvention demonstration to go forward within the next six to eight months, the official said.

If Congress authorizes the demonstration, DoD health affairs, Medicare and the General Accounting Office will evaluate progress, the official said. If the demonstration succeeds, he said, legislation to make subvention permanent has already been written and could pass into law within one year.

If Medicare subvention becomes law, it probably would be phased in by TRICARE region, the official said.

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