CAMP FOSTER, Okinawa — Two key Angeles City hospitals have dropped out of a Department of Defense pilot project aimed at creating a closed-network health insurance system for retirees in the Philippines.

The Angeles University Foundation Medical Center said it quit the Tricare closed network last week because the United States was behind on medical claim reimbursements. Tricare’s overseas program website reported Sacred Heart Medical Center dropped out Oct. 15.

The loss of the major network providers around the former Clark Air Base left aging U.S. military beneficiaries and covered family members worried over their health insurance and questioning the future of a Tricare experiment started in January.

Ken Fournier, a retired sailor living in the Philippines who has pressed for improvements in Tricare coverage for years, said the agency and its contractors fell short of notifying beneficiaries that Angeles City — the heart of the retiree population in the country — has lost its closed-network providers.

“Most beneficiaries will arrive at the hospital and be told they must pay up front for care when they were not prepared to foot the full bill,” Fournier wrote in an email. “This places beneficiaries in a very untenable situation and may very well cause a beneficiary not to receive medical care, endangering their health or life.”

On its website, Tricare called the loss of Sacred Heart a “temporary unavailability” and directed beneficiaries to email a local contractor.

“Services for assistance and specialty waivers will be put in place to cover the specialty gaps identified,” according to the notice.

The Angeles University Foundation Medical Center confirmed Wednesday that it is no longer participating. The Defense Health Agency, which took over Tricare this month for the DOD, did not immediately respond to requests for comment.

Tricare decided to test a closed-network health insurance model on about 11,000 retired military beneficiaries in the Philippines, because the system there has struggled for years with complaints of poor service, ballooning costs and fraud.

In the past, beneficiaries were required to fill out claims for medical services and send them to a Tricare contractor in the U.S. before being reimbursed. The closed network allows hospitals and doctors to directly bill Tricare and only charge beneficiaries their copay amounts.

The experimental system will be tested for three years and could become a model for beneficiaries elsewhere overseas. A second phase of the network is scheduled to open Dec. 1 in Cavite, with the final rollout in Iloilo City in July.

The new network opened to a rocky start in January. Frustrated beneficiaries reported confusion among providers over covered services and filing claims. Some predicted the network would fail; the loss of providers this month has fueled criticism.

Jim Houtsma, a retiree beneficiary living in Angeles City and longtime critic of Tricare, said he warned the agency early on that differences in billing practices between the United States and the Philippines would make the timely processing and reimbursement of provider claims a major problem for the network.

“I even addressed the specific issue of breaking out claims in accordance with the U.S. standards and how the local providers have no idea how to do it as it is a system unique to the U.S. and [used] nowhere else in the world,” Houtsma wrote in an email.

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