The Pentagon-appointed Task Force on the Future of Military Health will endorse higher Tricare fees, deductibles and co-payments for under-65 retirees and their families in an interim report to be sent to Congress on May 31.

It also will back other key features of the Tricare “reform” package first proposed last year by the Department of Defense. These include:

Raising beneficiary co-payments on prescriptions filled in the Tricare retail pharmacy network.Indexing Tricare fees and deductibles so that automatic annual adjustments keep them in step with rising health-care costs.Establishing tiers for the new Tricare fee structure, probably based on rank at retirement, so retirees with bigger annuities pay more for their health-care coverage and retirees with smaller annuities pay less.The task force won’t endorse every aspect of the “Sustain the Benefit” plan floated last year to raise beneficiary cost shares. For example, the task force wants higher fees and deductibles phased in over three to five years rather than over two years, as DOD initially proposed, or the single-year spike in fees unveiled, with a whiff of desperation, in DOD’s 2008 budget.

Also, the task force will propose that higher Tricare fees and deductibles be set so that, when fully phased in, they are no more burdensome for retirees and their families than fee levels set in 1996 when Tricare was launched.

The task force goes further than the DOD’s proposal in one area. It favors periodic adjustments to Tricare’s catastrophic cap, the maximum amount of out-of-pocket expenses beneficiaries face in any given year. The current cap is $1,000 for active-duty families and $3,000 for other Tricare-eligible families. The original DOD plan would have left the caps unchanged.

Co-chaired by economist Gail R. Wilensky and Air Force Vice Chief of Staff Gen. John D.W. Corley, the 14-member task force outlined its interim recommendations May 23 at a public meeting of the Defense Health Board.

The health board is a standing panel of experts who advise the secretary of defense. The task force functions as a subcommittee of the health board. But it was Congress that ordered it established last year to review Tricare costs and fees after lawmakers rejected the DOD proposals.

The task force’s interim recommendations fall into four areas, two of which would directly impact beneficiary cost shares: higher retail drug co-pays and higher Tricare fees. Specific levels of fees, deductibles and co-pays recommended won’t be detailed until a “final report,” Wilensky said. That report is due in December.

The task force, she said, wants pharmacy co-payments raised on prescriptions filled outside of military treatment facilities to encourage use of more cost-effective alternatives, particularly the Tricare mail order option.

The task force wants Tricare fees realigned for under-65 retirees so they are more “fair” to taxpayers yet still recognize retirees’ “years of demanding service” to the nation, she said. Again, the task force won’t unveil specific proposed fee levels until their final report.

Wilensky said Tricare benefits will remain generous compared to all other public or private plans. The higher fees, however, will take into account “very large expansions in benefits” since the mid-1990s while Tricare fees, deductibles and co-pays were left unchanged.

“The portion of the cost borne by beneficiaries should be increased to levels that are below” the Federal Employees Health Benefit Plan (FEHBP) or the most generous private sector plans, Wilensky said. They also should be set at or below inflation-adjusted fee levels beneficiaries paid back 1996.

To soften the blow of higher fees and of indexing them to inflation, Wilensky said Congress could consider a one-time increase in military retirement pay, if deemed appropriate. But Wilensky suggested it is past time to begin to reverse the ever-widening cost differential for health care paid by working-age military retirees versus other American workers.

Besides adjusting pharmacy co-pays and Tricare fees, the task force will endorse: “best practice” acquisition strategies for pharmacy drugs; spot audits of the Defense Enrollment Eligibility Reporting System (DEERS) to ensure enrollees truly are eligible for Tricare; closer screening of retirees and dependents for alternative health insurance which, by law, must reimburse Tricare for care provided to any dual-eligible beneficiaries.

Steve Strobridge, co-chair of The Military Coalition, an umbrella group of service and veterans association, urged the task force during the meeting’s public comment period, not to ignore factors that might have skewed the cost of military health care since 1996. For example, in measuring DOD cost growth compared to fee levels, he said, the task force should consider the downsizing and closing of many base hospitals and the cost today of sending military doctors to war and, therefore, many more beneficiaries to get care more costly care from Tricare civilian providers.

Wilensky said fees won’t be reset based on some percentage of overall military health care costs. But the task force will recognize that fees have been flat for 11 years, she said, and during that time the beneficiary’s cost share has slipped from about 11 percent down to four percent.

Over the same period, added another task force member, retired Army Maj. Gen. Nancy Adams, the value of the health benefit has improved greatly. For retirees, the promise of “space available care” first made in the 1950s has been replaced with “universal access” to care on base or, more often, through a network of civilian physicians. Adams called it a “highest-quality” benefit having few limitations.

Dr. Gregory A. Poland, Defense Health Board president, advised the task force that the board is “very supportive” of its interim recommendations.

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