Air Force retiree Walter Graue recovers in the Philippines following an emergency heart operation in 2009. Graue was unconscious for much of his life-saving treatment but later discovered his military Tricare health insurance would not cover the operation's physician fee because the doctor had not been certified, a measure put in place by Tricare to cut down on rampant health care fraud.

Air Force retiree Walter Graue recovers in the Philippines following an emergency heart operation in 2009. Graue was unconscious for much of his life-saving treatment but later discovered his military Tricare health insurance would not cover the operation's physician fee because the doctor had not been certified, a measure put in place by Tricare to cut down on rampant health care fraud. (Photo courtesy of Walter Graue)

CAMP FOSTER, Okinawa - Retired Master Chief Bruce Wright began having severe stomach pains in September. After two trips to a Philippine hospital near his home in Angeles City, doctors gave him a troubling diagnosis.

His gallbladder had grown polyps and could become cancerous. Filipino doctors wanted to remove it the next day.

Wright, 50, said he signed a waiver and refused to have the operation because he could not afford to pay the upfront surgery costs - a practice Tricare requires only in the Phillippines - despite having earned medical coverage after 26 years in the Navy.

"I live month to month. It's the reason I'm over here; I can live month to month," he said. "I have to put that [operation] off until I can collect enough money."

The demand for upfront payment -- part of Tricare's attempt to crack down on rampant fraud -- has led to a dangerous burden for veteran retirees, they say.

"A lot of guys know they're sick but they won't go to the hospital because their money is slated for other things," said Jim Tyler, director of the Subic Bay Retired Activities Office in Olongapo, which supports local veterans. "They won't find out what's wrong and they die."

Tricare acknowledges that the Phillipines system is one of its most dysfunctional and troubled - so much so that the agency decided in September to scrap the program and start over, according to interviews with beneficiaries, a Department of Defense investigation and Tricare's own assessments.

Most of the current problems are rooted in fraud that began to surface more than a decade ago when 11 beneficiaries and providers were convicted of bilking Tricare and U.S. taxpayers out of $1.2 million. Then, in 2008, a Philippine hospital was shut down after cashing in more than $100 million in fake Tricare claims.

Today, the Philippines remains the top focus of Tricare's fraud department, which has seen billed health care services balloon from $15 million in 1999 to $59 million in 2009, even as the number of beneficiaries remained the same, according to the agency.

The system is also hampered by out-of-date provider lists, access issues and repeated Tricare rejection of routine claims, including emergency care, according to some among the 8,000 retirees and dependents who are covered.

Michael O'Bar, deputy chief of Tricare policy and operations, said the Philippines has been particularly challenging because it has one of the largest overseas retiree populations spread across remote areas and a wide array of health care providers that are difficult to monitor.

"We have had an ongoing, large volume of communication with beneficiaries in the Philippines," he said. Tricare views the experimental system "as a significant means for us to address a number of those concerns."

In the coming months, Tricare will hire a contractor to create the network of hospitals that will charge the standard 25 percent co-pay to retirees and bill the agency for the remaining 75 percent of Tricare-covered medical care.

Retirees will be required to use those facilities before claiming benefits, although O'Bar said the agency would offer waivers in some cases, including emergency care and treatment that began before the network's creation.

O'Bar said the network should be up and running by next spring. It will remain in place for a three-year trial period and then be reviewed by Tricare.

It is unclear which hospitals will be included and which areas of the Philippines will have providers, according to O'Bar, and that concerns some retirees.

Chad Clark, a retired 1st class petty officer who lives in Jaen, said retirees are concerned that remote areas such as Cebu, Davao and Mindanao could be too far outside a closed network to access providers.

Clark lives about 60 miles north of Manila. He said he also worries the new system will not provide a practical way to get covered treatment for his insulin-dependent diabetic wife, who is a Tricare dependent.

"I need something relatively close that I can use," Clark said. "If they go to this closed system, I think it is going to be the biggest mistake they will ever make."

Outdated lists

Tricare has tried to crack down on fraud but the effort has often fallen short or come at the expense of retirees.

Around the former U.S. Navy base at Subic Bay, scammers often attempt to recruit dependents or widowed spouses to file fraudulent Tricare claims, and clinics offer retirees free health care in return for filing inflated claims, said Jerry Minor, a retired Navy corpsman and volunteer administrator at a small clinic that serves some veterans.

"They are trying to fight the fraud and I understand that. I see it day after day," he said. Retirees "don't know who to trust or where to go."

The Philippines is the only place in the world where Tricare requires all doctors to be certified through an on-site visit and anti-fraud background check before paying out claims, according to the agency.

But its overseas contractor, International SOS, failed to conduct proper checks on Filipino doctors - medical credentials were overlooked and physical addresses not confirmed - in nearly 45 percent of examined cases, according to a September report by the Department of Defense Inspector General.

"As a result … they do not have adequate assurance that ‘certified' medical providers actually exist or that beneficiaries always receive medical care from licensed medical professionals at accredited facilities," the report found.

Tricare said it modified its contract with ISOS in February to improve the certification process and now requires proof that doctors are educated on Tricare policy and anti-fraud measures.

The agency "has also established regular site visits to the contractor's office to conduct performance reviews of the certification files," it said in a written statement to Stars and Stripes.

The agency's list of certified providers posted online is outdated, inaccurate and lacks telephone numbers and, in some cases, medical specialties, said Ken Fournier, a retired chief petty officer with 20 years of Navy service who lives in Palawan.

"We get a lot of claims denied because the provider is not certified," said Fournier, who worked as a private investigator before retiring and has since helped other retirees with Tricare claims. "We were working off an outdated provider list at all times."

Jim Houtsma, a retired Army 1st sergeant in Naga City, spent 41 years working in military health care management and now helps fellow retirees works through a private online support group to help fellow retirees struggling to get Tricare benefits.

He said the certified provider list and other attempts by Tricare to eliminate fraud created a separate and unequal system of military health coverage in the Philippines.

Even when retirees use certified doctors, they are routinely required to provide multiple proofs of payment for medical bills - well beyond what is normally required of Tricare beneficiaries elsewhere, Houtsma said.

"We are the only beneficiaries that are required to provide not only receipts to show we paid for the care but also that we had enough money to pay for the care by showing we withdrew the money from a bank, or proof we borrowed the money," he said.

Rejected claims

The doctor certification requirement has also caused Tricare to reject claims made by retirees for emergency care in the Philippines - an unstated practice that appears to conflict with the agency's global policy on emergency medical treatment, according to Houtsma.

"We have addressed the issue of emergency care in the Philippines [with Tricare], pointing out that normal restrictions on providers are waived in the rest of the world, including the U.S. and overseas, and should apply here as well," Houtsma said. "The best we have gotten from them is they will take our recommendation under advisement, but that was some time ago and probably intended to put us off with the hope we would forget it."

Walter Graue, who retired from the Air Force after 21 years of service, said he never saw the Filipino emergency room doctor working to save his life at Our Lady of Mount Carmel Medical Center near his home in the Angeles City.

Graue, 73, was rushed to the hospital in an ambulance with a blocked artery in December 2009 and was unconscious when he was wheeled into the ER.

It was only later, following his recovery, that he discovered Tricare refused to reimburse the emergency room doctor's fee. Medical documents provided by Graue show the agency's Wisconsin-based contractor, which reviews all beneficiary claims, rejected the claim a year after the hospital visit because the doctor had not been certified.

"It was an emergency - I was near death," Graue said.

When questioned about the denial of emergency claims in the Philippines, Tricare said emergency care "never requires preauthorization" and "waivers for emergency care rendered by non-approved providers or facilities" will be considered after the fact.

Meanwhile, the many difficulties with Tricare have left retirees disillusioned and uncertain about future fixes.

Bruce Wright said the health coverage he was supposed to get with his Navy retirement has not materialized. In 2010, before his gallbladder condition, he broke a collarbone and fought with Tricare over $1,000 in medical expenses, which he said has never been reimbursed.

"You're frustrated, disgusted," Wright said. "Now, not only do I have to pay for [medical care], I can't get back my fair share."

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