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i 

99–628 2016

[H.A.S.C. No. 114–97] 

DEFENSE HEALTH AGENCY: BUDGETING 

AND STRUCTURE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON MILITARY PERSONNEL 

OF THE

COMMITTEE ON ARMED SERVICES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

HEARING HELD 

FEBRUARY 24, 2016 
(II) 

SUBCOMMITTEE ON MILITARY PERSONNEL 

JOSEPH J. HECK, Nevada, Chairman 

WALTER B. JONES, North Carolina 

JOHN KLINE, Minnesota 

MIKE COFFMAN, Colorado 

THOMAS MACARTHUR, New Jersey, Vice 

Chair 

ELISE M. STEFANIK, New York 

PAUL COOK, California 

STEPHEN KNIGHT, California 

SUSAN A. DAVIS, California 

ROBERT A. BRADY, Pennsylvania 

NIKI TSONGAS, Massachusetts 

JACKIE SPEIER, California 

TIMOTHY J. WALZ, Minnesota 

BETO O’ROURKE, Texas 

JEANETTE JAMES, Professional Staff Member 

CRAIG GREENE, Professional Staff Member 

COLIN BOSSE, Clerk 
(III) 

C O N T E N T S 

Page 

STATEMENTS PRESENTED BY MEMBERS OF CONGRESS 

Davis, Hon. Susan A., a Representative from California, Ranking Member, 

Subcommittee on Military Personnel ................................................................. 2 

Heck, Hon. Joseph J., a Representative from Nevada, Chairman, Subcommittee on Military Personnel .................................................................................... 1 

WITNESSES 

Bono, VADM Raquel C., Medical Corps, USN, Director, Defense Health Agency ........................................................................................................................... 4

Woodson, Jonathan, M.D., Assistant Secretary of Defense for Health Affairs, 

Department of Defense ........................................................................................ 3 

APPENDIX 

PREPARED STATEMENTS: 

Heck, Hon. Joseph J. ........................................................................................ 25 

Woodson, Jonathan, M.D., joint with VADM Raquel C. Bono ...................... 26 

DOCUMENTS SUBMITTED FOR THE RECORD: 

Statement of The Fleet Reserve Association .................................................. 53 

Statement of The Military Coalition ............................................................... 59 

WITNESS RESPONSES TO QUESTIONS ASKED DURING THE HEARING: 

Mr. O’Rourke .................................................................................................... 73 

Ms. Stefanik ...................................................................................................... 74 

QUESTIONS SUBMITTED BY MEMBERS POST HEARING: 

Mr. O’Rourke .................................................................................................... 77 

(1) 

DEFENSE HEALTH AGENCY: BUDGETING 

AND STRUCTURE 

HOUSE OF REPRESENTATIVES, COMMITTEE ON ARMED SERVICES, SUBCOMMITTEE ON MILITARY PERSONNEL, Washington, DC, Wednesday, February 24, 2016. 

The subcommittee met, pursuant to call, at 5:01 p.m., in room 

2212, Rayburn House Office Building, Hon. Joseph J. Heck (chairman of the subcommittee) presiding. 

OPENING STATEMENT OF HON. JOSEPH J. HECK, A REPRESENTATIVE FROM NEVADA, CHAIRMAN, SUBCOMMITTEE ON 

MILITARY PERSONNEL 

Dr. HECK. Let me go ahead and call the subcommittee meeting 

to order. Today the subcommittee meets to continue our discussions 

on the military healthcare system, to help inform our efforts to reform military health care. I know the timing of our hearing is a little unusual for the Military Personnel Subcommittee. I appreciate 

everyone’s participation even at this late hour. Just too much to get 

done and not enough time to get it done in. 

The Defense Health Agency [DHA] was established in October 

2013 to manage the activities of the Military Health System 

[MHS], which includes integrating clinical and business processes 

across DOD [Department of Defense] and the military services. A 

key element was establishing shared services to eliminate the need 

for each of the military medical services to manage functions that 

are common across the MHS. 

At the time the DHA stood up, DOD estimated that the shared 

services would generate significant savings by eliminating redundancy and variability. I am interested in hearing how much the 

DHA has saved DOD since 2013. I am also interested in hearing 

about the DHA’s role in medical readiness, and in particular, how 

the DHA assists the Army, Navy, and Air Force medical services 

to provide a medically ready force and ready medical personnel to 

combatant commands. 

In the fiscal year 2017 budget the Department of Defense has 

proposed several measures aimed at reducing the cost of the defense health program by reforming TRICARE. While I appreciate 

the Department’s efforts to simplify the health benefit, the proposal 

still shifts the cost burden through TRICARE fee and cost share increases to our Active Duty family members and our retirees. 

What is not clear from the Department’s proposals is how this 

reform addresses the concerns we have heard from our beneficiaries. Does it improve access to care and reduce the hassles of 
2 

the referral process? Will the anticipated savings generated by the 

reforms be used to improve the beneficiary’s experience? 

Lastly, I am interested to hear your views on the MHS structure 

and function especially as it compares and contrasts with civilian 

hospital systems. I hope that our witnesses will address these important issues as directly as possible in their oral statements, and 

in response to member questions. 

Before I introduce our panel, I would like to offer our ranking 

member, Mrs. Davis from California, an opportunity to make her 

opening remarks. 

[The prepared statement of Dr. Heck can be found in the Appendix on page 25.] 

STATEMENT OF HON. SUSAN A. DAVIS, A REPRESENTATIVE 

FROM CALIFORNIA, RANKING MEMBER, SUBCOMMITTEE ON 

MILITARY PERSONNEL 

Mrs. DAVIS. Thank you, Mr. Chairman. I also want to welcome 

our witnesses, especially Admiral Bono. I believe that this is your 

first hearing before our subcommittee in this capacity. 

And Dr. Woodson, I hope that this will certainly not be the last 

time we are able to hear from you this year. And I look forward 

to working with you on these reform efforts. And I know that you 

have worked very hard on this for quite some time. 

The committee has held several roundtables and hearings over 

the past several months to try and better understand the Military 

Health System. And our goal is to find the most appropriate way 

to reform the military healthcare benefit in order to provide the 

best, the most cost-effective benefit, while maintaining, of course, 

the appropriate level of medical readiness for the force. 

Your written statement details the initiatives that you have 

taken on your own as well as the legislative reform proposals that 

you have submitted once again for our review. 

And I look forward to discussing how we can move forward together to continue to provide access to quality health care for your 

beneficiaries as well as ready and capable providers to care for our 

force. 

Thank you very much, Mr. Chairman, and I know we have a 

number of objectives with this hearing today, and I hope that we 

are able to work through those. Thank you. 

Dr. HECK. Thank you, Mrs. Davis. I would respectfully remind 

the witnesses that we desire that you just summarize, to the greatest extent possible, the high points of your written testimony in 5 

minutes. As a reminder, you see the lighting system in front of you. 

At 4 minutes gone it will turn yellow and when your time is up, 

it will turn red. 

At this time without objection, I ask unanimous consent that additional statements from The Fleet Reserve Association and The 

Military Coalition be included in the record of this hearing. Without objection, so ordered. 

[The information referred to can be found in the Appendix beginning on page 53.] 

Dr. HECK. Let me welcome the panel. I am pleased again to welcome back the Honorable Dr. Jonathan Woodson, Assistant Secretary of Defense for Health Affairs, and for the first time wel-
3 

coming Vice Admiral Raquel Bono, Medical Corps, United States 

Navy, Director of the Defense Health Agency. 

With that, Dr. Woodson, you are recognized for 5 minutes. 

STATEMENT OF JONATHAN WOODSON, M.D., ASSISTANT SECRETARY OF DEFENSE FOR HEALTH AFFAIRS, DEPARTMENT 

OF DEFENSE 

Secretary WOODSON. Thank you very much. Chairman Heck, 

Ranking Member Davis, members of the committee, thank you for 

placing the issue of Military Health System reform high on your 

agenda for 2016. 

The Military Health System takes great pride in its performance 

in combat medicine over the last 14 years, with a greater than 95 

percent survival rates for those wounded in battle. Our ability to 

prevent disease through exceptional primary care and preventive 

medicine services produced equally historic outcomes and reduction 

of disease and non-battle injuries. The challenges we face in medicine and national security, however, continue to evolve and require 

new approaches so that we are prepared for the future. 

We have undertaken a number of initiatives to strengthen the 

Military Health System in all facets of its responsibilities, and they 

have been organized around six principal lines of effort which we 

have spoken about in previous testimony. I was, therefore, encouraged that last year’s Military Compensation and Retirement Modernization Commission reviewed and supported many of the initiatives that we had already set in motion in the Department. 

Let me briefly describe those efforts. First, we have modernized 

our management system with an enterprise focus. We established 

the Defense Health Agency that Vice Admiral Bono leads. The 

Agency is entrusted with providing common business processes and 

standards in support of the military departments and the combatant commanders, an approach that provides greater operational efficiency and ensures joint solutions to our customers. We identified 

multiservice markets and developed 5-year business plans to promote common solutions and optimize the use of the military treatment facilities, while providing required care to beneficiaries in the 

purchased care sector. 

In addition, we have acquired and are now preparing to deploy 

a new electronic health record using commercial off-the-self products. Together with the Surgeons General and Vice Admiral Bono 

we have established an enterprise-wide dashboard to actively manage our performance in readiness, access to care, quality, safety, 

patient satisfaction, and cost. The Defense Health Agency achieved 

a milestone of full operating capability on 1 October 2015 and in 

its first 2 years saved over $700 million. 

Second, we are defining and delivering the medical capabilities 

and manpower needed in the 21st century. With the services the 

Department has embarked upon a thorough process to define essential medical capabilities and metrics to monitor readiness. 

Third, as a result of the modernization study, we have analyzed 

infrastructure needs and rightsized several military treatment facilities, as well as made adjustments to move skilled medical personnel to markets where the MTFs can recapture care, they can 

maintain their skills, and reduce overall costs. 
4 

The fourth line of effort is perhaps the main focus of today’s discussion. That is our plan for reforming TRICARE. We are appreciative of the input from the beneficiaries and the service organizations that in recent testimony have expressed their support for 

TRICARE. The TRICARE benefit was named the number one 

health plan in the country for customer experience by Temkin in 

2015, owing in no small part to the comprehensive coverage and 

low costs to the beneficiaries. But we also heard loud and clear 

from our beneficiaries that access to both primary and specialty 

care needs attention, particularly in the MTFs. 

In response, we have implemented a number of access improvements last year to open up appointments and resolve appointment 

issues on the first call. We are improving access to after-hours care, 

particularly childcare, whether that is through evening clinics, 

weekend clinics, the ability to email providers with questions 

through secure messaging, the availability of a 24/7 nurse advice 

line that is integrated into our appointment system, streamlining 

the referral process, and implementing urgent care demonstration 

programs that Congress requested in last year’s Defense Authorization Act. Our T2017 contract which will be awarded in 2016 includes provisions that further improve upon the experience of care 

for our beneficiaries. The PB17 [President’s budget for 2017] proposal provides choice and incorporates the feedback of our stakeholder groups. 

The fifth line of effort has been to expand the strategic partnerships with the civilian health organizations to enhance our ability 

to meet and exceed our responsibilities in readiness, quality, safety, 

and satisfaction. Partnerships with the organizations such as the 

American College of Surgeons and the Institute for Healthcare Improvement are providing tangible benefits that offer us ways to 

sustain our trauma system, improve clinical quality, and become a 

high reliability organization. 

Finally, the sixth line of effort is about the global health engagement where DOD is deeply engaged with other partners in reducing threats posed by emerging infectious diseases and building 

bridges through health care around the world. We have contributed 

to surveillance, prevention, diagnosis, and treatment strategies to 

combat well-known outbreaks of Ebola and now Zika, as well as ongoing efforts to prevent outbreaks in other areas. 

We enter 2016 confident that the reforms in the MHS and health 

benefits can be further strengthened through a combination of legislative and operational reforms. 

I am grateful for this opportunity to be here today, and look forward to your questions. 

[The joint prepared statement of Secretary Woodson and Admiral 

Bono can be found in the Appendix on page 26.] 

Dr. HECK. Thank you. Admiral Bono. 

STATEMENT OF VADM RAQUEL C. BONO, MEDICAL CORPS, 

USN, DIRECTOR, DEFENSE HEALTH AGENCY 

Admiral BONO. Chairman Heck, Ranking Member Davis, and 

members of the subcommittee, thank you for the opportunity to appear here today. I am pleased to represent the Defense Health 

Agency and explain how the DHA is contributing to the moderniza-
5 

tion of the Military Health System. In November, I was honored to 

become the Defense Health Agency’s second director. Only a month 

earlier the Agency had reached full operating capability. After 2 

years of collaborative work with Army, Navy, Air Force, medical 

leaders, and the Joint Chiefs of Staff, it established the concept of 

operations for many of the functions of the Agency. 

Our responsibilities center on supporting the military departments and the combatant commanders in the execution of their 

missions. The Defense Health Agency was created in the recognition that most healthcare delivery is common across the Army, 

Navy, and Air Force; what we need, what we buy, and what a best 

practice entails in both the clinical and administrative environment. The Defense Health Agency helps bring together common 

support functions into a new enterprise-focused organizational 

structure. 

We are able to help Dr. Woodson and the Surgeons General see 

and manage across the MHS in a more unified way. One of the 

principal ways in which we deliver the support is through this operation of shared services. Critical enterprise support activities include TRICARE, pharmacy operations, health information technology, medical logistics, public health, medical R&D [research and 

development], education and training, health facilities, contracting, 

and budget resource management. 

In addition to the 10 shared services that have been implemented, the DHA has also brought in joint activities that had previously been distributed to the services that acted as executive 

agencies. These include the Armed Forces Health Surveillance Center, the Armed Forces Medical Examiner System, the DOD Medical 

Examination Review Board, the Defense Center of Excellence for 

Psychological Health and Traumatic Brain Injury, and the National 

Museum of Health and Medicine. 

The DHA offers value, however, to more than our COCOMs [combatant commanders] and services. We serve as a single point of 

contact for many intra-agency, interagency, and external industry 

matters, simplifying the process for our partners and outside colleagues to work with the Department of Defense in support of a 

number of our imperatives: research, global health engagement, 

adoption of emerging technologies, healthcare interoperability, and 

more. 

The existence of the DHA has streamlined engagement with the 

Defense Logistics Agency, Defense Information Systems Agency, 

and other field agencies. External to the Department, the DHA provides a single point of contact for operational matters with the VA 

[Department of Veterans Affairs], a number of agencies within 

HHS [Department of Health and Human Services], to include the 

Centers for Medicare and Medicaid Services, the Food and Drug 

Administration, the Centers for Disease Control and Prevention, 

the Public Health Service, and more. We have successfully collaborated with the Justice Department on the prosecution of healthcare 

fraud cases, most recently with highly suspect activities around 

compound medications. 

We work with Treasury, State, and the GSA [General Services 

Administration] on a number of critical functions that directly support our healthcare mission. I would like to focus on one shared 
6 

service in particular, the operation of TRICARE, the military’s 

health plan. TRICARE modernization is part of the MHS modernization plan that Dr. Woodson just outlined. We have a number 

of TRICARE initiatives already underway in 2016. Later this year, 

we will award the next round of TRICARE contracts known as 

T2017, which is when health care will become operational under 

the new contracts. 

We are simplifying the contracts, reducing management overhead in both government and contractor headquarters by moving 

from three regions to two regions. We are expanding the means by 

which we manage the quality of our networks to ensure that they 

meet the expectations for quality and safety that we expect for our 

beneficiaries whether in the direct care system or in private sector 

networks. 

We also will introduce innovative models for value-based purchasing in the coming year. My staff, in close collaboration with the 

services, is also crafting the contract amendments to permit 

TRICARE enrollees to use urgent care centers without preauthorization. And our analytics team provides the Department’s civilian, 

military, and medical leadership at the headquarters and field level 

with the ability to assess enterprise-wide performance of the Military Health System using agreed upon joint measures for readiness, health, quality, safety, satisfaction, and cost. 

The DHA is now an integral and integrated part of the Military 

Health System. We are proud to contribute to the modernization of 

this system through a joint collaborative solution and responsible 

management approach. 

I am honored to represent the men and women of the Defense 

Health Agency and I look forward to answering any questions you 

may have. 

[The joint prepared statement of Admiral Bono and Secretary 

Woodson can be found in the Appendix on page 26.] 

Dr. HECK. I thank you both for your testimony. So, my first question is how does DHA relate to, and interact with, the service Surgeons Generals in carrying out shared services and in the relationship of facility management, staffing of facilities, and things along 

those lines? 

Secretary WOODSON. Thanks for that question. And there are two 

parts, of course, to the revised enterprise management scheme, if 

you will, that we have outlined and carried out over the last few 

years. 

So first is the Defense Health Agency that has the 10 shared 

services. And so in regards to your question about facilities, the Defense Health Agency provides the common business processes for 

managing those facilities. As it relates to governance and how the 

DHA interacts with the services, there is a governance system that 

is made up of medical operations group, and most importantly, the 

medical deputies advisory group, which looks at the enterprise priorities and helps set those priorities with Admiral Bono. 

Dr. HECK. So then can you provide some examples of how DHA 

has achieved integration of clinical and business processes at the 

MTFs, across the services, and what are the additional opportunities for expanding common activities and functions across the 

MTFs? 
7 

Secretary WOODSON. So maybe I will start and then certainly Admiral Bono will want to chime in. I think the biggest example is 

in health information technology. Prior to the DHA separate activities in the three services, a lot of money goes into health IT [information technology], whether it is in DOD or it is in any private 

health system. Bringing it into enterprise focus, you can reduce the 

redundancy. You can actually develop the enterprise tool. I don’t 

think we could field a new electronic health record without an enterprise focus on health IT. It is allowing us to make changes in 

the network, at lower cost, that will save billions of dollars going 

into the future. 

Admiral BONO. A couple of additional areas, they would also be 

in pharmacy, where jointly working with the services we can create 

a uniform formulary that makes that available to all of our patients. We can also through this pharmacy shared services and 

working with the military services, have been able to move to almost 100 percent electronic ordering, order entry, not only within 

the MTFs, but from our providers, or from providers that are seen 

out in the network in the civilian world. 

One other area is in medical logistics, in ordering the equipment 

that we use in the MTFs, and what we use even down range. So 

being able to collaborate and consolidate some of those purchases 

has saved us money as well as created less variability, or more 

standardization in the acquisition of those products. 

Dr. HECK. So is all purchasing for durable equipment then purchased through DHA for the individual MTFs, or is there like a 

blanket purchase order that an MTF can buy off of at DHA-negotiated rates? 

Admiral BONO. Yes, sir. We work very closely with the Defense 

Logistics Agency and so they have created an e-catalog which contains all that and all MTFs can order off of that catalog. 

Dr. HECK. My next question is probably going to take longer to 

answer then a minute-30, so I am going to yield back my time and 

wait for the second round and recognize the ranking member. 

Mrs. DAVIS. Thank you, Mr. Chairman, and I think we all recognize there are a lot of layers to this. And at the same time, I think 

you have made an attempt to simplify the proposals from what we 

had seen initially. And I am very pleased to see that. I think that 

is great. 

But I am also wondering as we boil it down a little bit, I think 

the chairman mentioned earlier about shifting the cost, and the 

perception at least, and the reality for some, that there is a shifting 

of cost from the DOD to the beneficiary. 

So I wanted to, you know, I guess to just echo, perhaps, what 

constituents might be asking. I am paying more for my health care, 

but what do I get in return? 

Secretary WOODSON. Well, that is a great question, and so let me 

see if I can explain this from a number of perspectives. PB17 really 

offers a simpler system. We have boiled down a lot of different programs into basically a managed care variety which is the HMO 

[health maintenance organization] variety, and a self-manage 

which is preferred provider organization variety, or fee for service, 

which is the ability to go anywhere, any time to receive health 

care. 
8 

The issue brings into sharp focus, then it gives choice, because 

if you want to use the PPO [preferred provider organization] product or the fee-for-service product, you have the ability to go and see 

physicians that you want, when you want to see them. And particularly with the PPO product, no longer are you paying a percentage 

of the fee, but you are paying a fixed amount so you can predict 

your costs better. 

We did the analysis, let’s say, for a family of four. The actual rise 

in total out-of-pocket costs rises from about 8 percent to about 10.4 

percent. And this needs to be seen in the context of when 

TRICARE was originally put forth where the cost share was 27 

percent. So it modestly increases that cost, but it gives greater freedom. And of course, with the PPO product, the referrals go away, 

which was a major dissatisfier for many of our constituents. 

There is no change for Active Duty. There is this participation 

fee, but again, because we have moved to a fixed copay, the actual 

increase in out-of-pocket expenses is only from about 8 percent to 

10.4 percent. Notably also, is that our catastrophic caps are low. So 

your expenses will accrue against your catastrophic cap, and the 

issue really is that this is a major benefit of TRICARE versus other 

commercial products where the catastrophic cap is much, much 

higher. 

So although there is a slight rise in that catastrophic cap, remember, those caps were reduced back in 2001 and have not risen 

over a decade and nearly a half. There is also the second payer option that we have put forward which lowers the fees for those who 

have other health insurance. We have also set the fee structure so 

that it incentivizes for those who are around MTFs really to receive 

care at very low cost or no cost if they receive care in the MTFs. 

So I think there is great value there. There is a very modest increase in cost, again, to this average family of four, but it is in the 

context of having had a diminished cost share that has progressively gone down over the years. 

Mrs. DAVIS. I don’t know, Admiral Bono, if you want to—I actually wanted to sort of throw something else in there about an 

FEHBP [Federal Employee Health Benefits Program] option that 

might be along a continuum in terms of what people could look at. 

I would suspect that that would only be for people who would 

choose to have increased costs that would, you know, have a higher 

share of that option, but it would be possibly part of a continuum. 

And I think that folks have thought about that a little bit. We will 

probably have a chance to get into that in terms of whether you 

think it would be a good idea or not. 

But it certainly would continue to do that. I think that my time 

is up. But I think what you had to say is very helpful. I think we 

also have to find ways of doing it in a quicker elevator speech, so 

that people have an understanding immediately of what it means 

to their family. And maybe that additional percentage is the best 

way to talk about that. 

But I know that there is a lot of concern out there that nevertheless, people are going to be paying a little bit more. And when you 

think in terms of the benefit, they want to know that they are really getting something for that. So thank you. 

Dr. HECK. Mr. Knight. 
9 

Mr. KNIGHT. Thank you, Mr. Chair. So I just have a couple of 

questions on kind of the timing of this. I know this was established 

in 2013. Can you give me an idea of what happened before that, 

why we have had these problems, why it has taken a little bit long 

to figure out these problems? And because we are doing this kind 

of this purchasing power of getting the three services together, are 

there any audits that are going on out there that we can figure out 

if this is actually everything that we can do, or if there are other 

issues that we can handle? 

Admiral BONO. So part of the evolution of the DHA was when 

we identified these shared services which were brought together 

and designed by the services. And the conditions for successful performance was identified there. What we realized was in bringing 

the services together, that in many times we each had different 

business processes to accomplish similar end goals. And so being 

able to standardize that, and understand what nuances or what 

specific service concerns were being addressed took some time to do 

that. 

In addition, as we brought people together, we also had to understand what our own infrastructure had available to support some 

of this. And so it has been an adjustment but we have been able 

to watch that and look at it. 

I think at FOC now, full operating capability, we now have the 

ability after 2 years of actually measuring what our baseline performance is, and now being able to measure our progress towards 

goals. So I think that was probably the primary issue in standing 

up the DHA, was bringing three services with different business 

processes. 

Mr. KNIGHT. Do either of you believe that this might be a model 

to move forward with other services that the branches are doing, 

that maybe at some point they are going in three different directions, and they have to go in three different directions in certain 

aspects because they do certain missions. But in other missions 

they don’t because, you know, a hurt soldier is the same as a hurt 

marine or sailor. So could we use this as a model to help in other 

situations in the military? 

Secretary WOODSON. So the short answer is yes. If you look at 

medical as you have suggested in your statement, 85 percent of 

what the services do in regards to delivering care is alike. As a surgeon, I always say that the outcomes you want when you do a procedure, the resources you bring to having to do that procedure, the 

standards you want to apply are all the same no matter whether 

you are wearing an Army uniform, a Navy uniform, or an Air Force 

uniform. So 85 percent is alike. And that relates to the operational 

environment as well as the garrison environment. 

There is that 15 percent which is service unique. So what Navy 

brings to a float platform and undersea medicine, what Air Force 

brings to aerial platforms, needs to be respected because they made 

great advances, and what Army brings to land-based projection of 

force, but the majority is alike, and so that is the underlying concept. 

And I would remind the committee members that prior to the 

DHA establishment we had 19 studies that suggested that we 

needed to come together. And when we conducted the task force 
10 

back in 2011, it was pretty clear that we could achieve economies 

of scale and efficiencies, and so I think the issue is that we really 

have delivered on that at this point. 

Mr. KNIGHT. Thank you. Thank you, Mr. Chair. I yield back. 

Dr. HECK. Mr. O’Rourke. 

Mr. O’ROURKE. Thank you, Mr. Chairman. Dr. Woodson, what do 

we know about available or excess capacity at military treatment 

facilities since this proposal would drive more customer use? Maybe 

I will just start there and I might have some other questions based 

on your answer. 

Secretary WOODSON. A great question. So we need to look at it 

in two ways: outpatient capacity and inpatient capacity. Inpatient 

capacity we clearly have excess capacity particularly in many specialty areas. And we need to be able to utilize the MTFs more effectively. 

In the outpatient, as is true throughout the country, there is less 

of a capacity in primary care. However, having said that, we have 

done analysis through the modernization study and we do have a 

significant capacity there, particularly if we drive up productivity. 

If we increase panel size, if we create capacity by use of telehealth 

and other mechanisms to interface with patients who don’t require 

a face-to-face appointment, and just better management strategy. 

So there is capacity there. 

Mr. O’ROURKE. And have you measured that capacity and is that 

a number that you have at the top of your head or one that you 

could get to the committee? 

Secretary WOODSON. So I can get that to you, and I would rather 

take that for the record in terms of numbers, but let me just tell 

you that we conducted this modernization study which looked at 

just that. So I think we do have substantial data. 

[The information referred to can be found in the Appendix on 

page 73.] 

Mr. O’ROURKE. Okay. And then if I heard you correctly, part of 

the capacity will be developed by forcing efficiencies and modernization, or were you saying that that has already happened and 

it has created the capacity? 

Secretary WOODSON. So that is in progress and as I mentioned 

in my opening statement, things like secure messaging, streamlining the referral process, increasing panel size, urgent care, things 

that increase our ability. You know, weekend and night clinics, preschool clinics for children, all of these things increase your capacity. So we are carrying out those reforms as we speak. 

Mr. O’ROURKE. Great. So when you provide those numbers for 

the committee, I would love to know what established capacity we 

have and then the capacity we project forward if we are able to follow through on these great initiatives that you talk about. 

So one of the concerns that I hope your numbers will answer is 

whether there is any threat to current, you know, service members, 

Active Duty service members receiving care at military treatment 

facilities in terms of compromising capacity for their priorities and 

their care. And then I have another question related to that. 

Secretary WOODSON. So I don’t believe there will be any compromise to the services. 
11 

Mr. O’ROURKE. Because that capacity exists, great. And then the 

other question, Admiral Bono brought up care for veterans. Does 

the capacity then also exist to complement care provided at the VA 

where you have unacceptable wait times, especially in specialties 

like behavioral health and mental health, and should we avail ourselves of that capacity within military treatment facilities for veterans who may not be TRICARE beneficiaries? 

Secretary WOODSON. So the short answer to that is yes. The 

longer answer is that we already have a number of sharing agreements with the VA around the country. And the issue really needs 

to be analyzed on a local level because all of the markets are different. And the capacity to take care, of particularly, behavioral 

health individuals, will be somewhat market dependent. 

So the short answer is yes. But the more involved answer and 

we have got data to look at the distribution of the facilities and 

what is available in each market. 

Mr. O’ROURKE. Great. I look forward to seeing that and to the 

degree that you can localize that capacity, I would love to know, 

for example, William Beaumont Army Medical Center in El Paso 

at Bliss, what we have and what we project going forward. Maybe 

other members would like to know that for their districts as well. 

Thank you very much. I yield back. 

Dr. HECK. Ms. Stefanik. 

Ms. STEFANIK. Thank you, Mr. Chairman, and thank you to the 

panelists for testifying today and for your service. I wanted to direct my question to Admiral Bono. I want to discuss the General 

Temporary Military Contingency Adjustment Program which, as 

you know, exists to offset the lower reimbursement levels provided 

under the Medicare payment model to sole community hospitals 

that provide care to large volumes of service members and military 

families. 

In my district Fort Drum does not have a full MTF on post so 

soldiers and their families depend on community hospitals, one of 

which is the Carthage Area Hospital. Outpatient services to our 

military and their families represent anywhere from 30 to 35 percent of this hospital’s outpatient services and unfortunately, 

Carthage is still being reimbursed at the Medicare levels. And although they have applied, they have not received relief from the 

General Temporary Military Contingency Adjustment Program. 

And this appeals process has been going on for 2 years, since September of 2013. 

So my question is, what is DHA doing to alleviate these bureaucratic challenges facing facilities like Carthage Area Hospital? 

Admiral BONO. Thank you for the opportunity. I confess that 

something like that is something I am still getting a better understanding. But your broader question about what DHA is doing to 

address some of these bureaucratic or these administrative challenges is something that I am taking into real strong consideration 

as we are going forward in the modernization of our healthcare 

plan. 

In looking and in arriving at the DHA one of the first things that 

I realized is that many times we have policies or operations in 

place that need to be brought into a more modern approach, to be 

a little bit more agile, and to look at some of the processes we are 
12 

doing. This was particularly evident with some of our referral management operations and our processes there. 

So I would like to take that for the record, and look at it a little 

bit more closely so that I can better understand where the opportunities are. But I share your concern on that that administratively, 

part of what I feel my responsibility to do is to make sure that the 

DHA is looking at our administrative processes and streamlining 

them to the best of our ability. 

[The information referred to can be found in the Appendix on 

page 74.] 

Ms. STEFANIK. Great. I appreciate that and I look forward to 

working with you to alleviate those bureaucratic challenges. But I 

would also like you to take for the record the specific case of 

Carthage Area Hospital, the uncertainty for 2 years since September of 2013. 

[The information referred to can be found in the Appendix on 

page 74.] 

Ms. STEFANIK. We are working with their office. We are trying 

to work with DHA, and we need to get more understanding of the 

decision, which brings me to my next point. 

What actions have been taken to ensure that these reimbursement levels are determined in a transparent manner, so bringing 

more transparency to the decisionmaking process? Have you put 

any thought into that from your position? 

Admiral BONO. I have, as a matter of fact, and I realize that 

being able to be more transparent is more helpful to everybody. So 

you will see that in many of our discussions. We are bringing that 

to the table, being more transparent about our conversations, being 

more transparent about our analysis as well. 

Ms. STEFANIK. Okay, great. Bringing greater transparency would 

not only help this specific case of Carthage Area Hospital, but in 

terms of who qualifies for this program because there has been an 

independent audit of Carthage that basically says that they are beyond the 10 percent requirement; that outpatient services make up 

30 to 35 percent, so they should qualify for this program. So we 

need transparency and clarification. And I am sure this isn’t the 

only hospital that is facing this issue. 

And I yield back the rest of my time. 

Dr. HECK. Thank you. Mr. MacArthur. 

Mr. MACARTHUR. Thank you, Mr. Chairman. I applaud you for 

thinking through how to simplify the TRICARE plans and I think 

the intended move to an HMO and a PPO makes some sense. 

But the PPO, which is where I want to focus, still relies on your 

current networks. And as I read and I just read it again last week, 

the Military Compensation and Retirement Modernization Commission’s overall assessment, they were pretty critical of the adequacy 

of the provider networks within the TRICARE system. 

So I want to get into the weeds on this a little bit, but for starters, I would like to ask if you agree with their assessment of your 

networks. And if not, where do you differ? And I will, maybe I will 

start with you, Mr. Secretary. 

Secretary WOODSON. Thank you very much for that question. 

And I don’t agree with the assessment that the Commission made 
13 

about the adequacy of the network. There are several things I 

think that they considered in making that assessment. 

So first of all, let’s start with some big numbers. We have 

424,000 physicians in the TRICARE network. And we have got virtually all of the 5,000 hospitals that are available to take care of 

our patients. But the issue is that, some of the assessments that 

were made relative to, let’s say the Fort Bragg or the Fayetteville 

area, didn’t take into account that when we considered the network 

development, we consider what is available in the MTF as well as 

what is required. So we have formulas that we use for trying to decide the adequacy of the network. 

And the issue is that you may not need as many orthopedic surgeons in your network if you have got a lot of orthopedic surgeons 

in the MTF, particularly in that 30-mile area around the MTFs. 

You know, there are some other formulas that every insurance 

company uses to determine adequacy. It turns out that the average 

insurance company will have a ratio of particularly primary care 

providers to population of about 1 to 528. TRICARE’s is 1 to 24. 

Mr. MACARTHUR. If I can stop you there, though, because it is 

an interesting comparison. The difference is when you are talking 

about private insurers, if they are wrong, if their formula might be 

right overall, but in particular communities around the country 

there are gaps, their beneficiaries can walk. And they can go to a 

different insurer, a different plan, and remedy their own situation. 

The difficulty is under TRICARE, that remedy doesn’t exist. 

So let me just finish, my question then because I have only got 

another moment to try to unpack this, if we made the networks in 

the FEHBP available to our military personnel, what would that 

do in your opinion? Pro and con, what would that do? 

Secretary WOODSON. So first of all, probably many of those physicians that are in these other plans are in our network. I mean, because physicians are in multiple plans. But to the issue of if there 

is inadequate, let’s say, specialty in one area, two things: one, if 

you have a private insurance program, you are going to have to 

travel to get that care because the providers are not there. 

TRICARE has to pay for you to travel to get that care because we 

have a requirement to provide the care. 

So one of the issues that you are addressing is very real, but it 

is a ubiquitous issue that in certain rural communities there aren’t 

enough providers of a variety of specialties. But TRICARE must 

pay for that beneficiary to travel, which is not true in other plans. 

Mr. MACARTHUR. But is it possible that there might be a closer 

service provider in a different network other than yours that perhaps they wouldn’t have to travel quite as far? 

Secretary WOODSON. And so, conceivably that could be a case, 

and certainly for Active Duty and Active Duty family members, 

they can actually go and see those providers without the added 

costs. So for the retiree, they may have to get a waiver, basically, 

but we have a requirement to provide care, so either there, or have 

them travel. 

Mr. MACARTHUR. I thank you. I yield back. 

Dr. HECK. Mr. Coffman. 

Mr. COFFMAN. Thank you, Mr. Chairman. I am on health care on 

both sides of VA and DOD. Can you tell me, I know that the Vet-
14 

erans Administration would certainly like to do more DOD work. 

To what extent is that occurring? 

Secretary WOODSON. Thanks again for that question. We, too, 

would like to do more business with Veterans Administration. And 

as I mentioned before we have a number of sharing agreements 

and we are looking more closely how we can craft more mutually 

beneficial sharing agreements across the country. 

One of the interesting things that has happened with the rollout 

of the VA Choice product, is that the way it was, I guess, outlined, 

it put in conflict our ability to, in fact, operate under the sharing 

agreements and we are actually trying to unpack that right now 

and resolve those conflicts so that we can be at liberty to do more 

work with the VA. 

Mr. COFFMAN. Well, let me just say, I have had, obviously, problems with the VA in my district in the building of a hospital that 

happened to be $1 billion over budget. And so during the process 

before I didn’t know whether I could get funding for it, and obviously, we stripped the VA’s ability to build another hospital again. 

But I remember going to the University of Colorado Health System and saying, would you take over this project and work with the 

VA and somehow purpose this for veterans? And I remember during those discussions that were occurring when I was concerned 

about not getting funding and what I was going to do with this 

half-built building, they said something very interesting. They said, 

you know what, we will not have VA employees in this hospital because we have got two separate cultures and it would result in a 

separate standard of care. And I believe that the military medicine 

and the VA, I believe is two separate cultures. And I am very concerned. 

We need to reform the VA. But until it is reformed, as a veteran 

of 21 military years of service, I don’t want to see them taking care 

of our Active Duty. And I don’t want to see them taking care of our 

Active Duty families. And I think that is absolutely important. And 

so I am going to push back the other way. And in fact, we had flag 

officers from other branches of the service that testified before us 

in an earlier hearing and essentially said the same thing: different 

standard, two different cultures, different standard of care, and 

they were not supportive. And so I would ask you to relook at that. 

And I think I am going to visit it for the National Defense Authorization Act coming up. 

It would be wrong for our military personnel to subject them to 

that system. I want to clean it up. We owe it to our veterans to 

do that. But until we do, it would be wrong. My father was in military medicine and I can remember during Vietnam how those soldiers that came home from Vietnam severely wounded, were stabilized in the military system and were transferred to the VA for 

their rehabilitation. Thank God we don’t do that right now. We 

keep our military personnel in the military system throughout the 

rehabilitation; only if they opt for the VA do they go to the VA. And 

so I want to caution you on the direction that you are taking. Do 

you have a response to that? 

Secretary WOODSON. No, I appreciate your concern, and I appreciate your service and certainly your commitment to ensuring quality care. 
15 

And we will take that under advisement. I think the issue is that 

we will be absolutely certain. Some of these sharing agreements 

have been in place for a while, but we will relook at the quality 

of care in the organizations that we have the sharing agreements 

with. 

Mr. COFFMAN. Thank you, Mr. Chairman. I yield back. 

Dr. HECK. Thank you. We will continue with a second round of 

questioning. If you could, you know, compare and contrast the differences between the Military Health System and its MTFs with civilian hospital systems and the best practices that are perhaps on 

the civilian side. I think you have alluded to some of them and how 

you try to increase capacity by increasing operational hours, increasing panel size, increasing productivity. 

How is that going to go? I mean, having worked in an MTF, certainly during my time there we did not have a taxing schedule of 

patient flow. Whereas if you were in a civilian hospital, you were 

expected to see many more patients in the same period of time. 

And as we have heard, you know, one of the issues that we hear 

from beneficiaries is the difficulty in getting an appointment slot. 

So I understand, you know, you have alluded to implementing 

some of those things. How do you expect those to roll out and what 

is the role being pushed by DHA or does that have to be pushed 

by the Surgeons Generals? How does that actually get down to the 

MTF and implemented? 

Secretary WOODSON. So the Surgeon Generals have a real role to 

play in this because under the current system they actually operate 

the hospitals. But I think the issue is that the leadership with Admiral Bono and the Surgeon Generals have made it clear that we 

need to pivot to a full patient-centric, customer-focus delivery system. So in answer to your question about compare and contrast, 

there are many things that are the same. 

So we have to do hospitalization, we have to ensure access, quality, patient safety. We have to provide trained specialists. We have 

to organize and equip the hospital to provide those services and 

pay attention to all of those metrics that are important. 

The contrast is, again, that the MTFs are medical force readiness 

platforms. They are soldier-focused readiness platforms, and the 

people who are in those MTFs tonight, or tomorrow, may be called 

to deploy somewhere in the world. 

And so there is going to be some difference in operations and 

maybe some cost to the efficiency. Now, you can rightly push back 

at me and say, well, what is that cost? And I wouldn’t have an answer for you today, but I can tell you that that is what we are 

working on now to define what is the readiness cost so that we can 

produce the efficiency and the productivity to the highest level it 

can be at. 

Dr. HECK. And I appreciate it and I have said in just about every 

hearing that we have had on this issue that there is a cost to readiness and we have to be ready to assume that cost if we want to 

have a ready, deployable medical force and then a ready deployable 

combat force. So there is that intangible cost that the civilian sector does not have to deal with. 

So transitions to the readiness issue as you just alluded to, as 

well as in your written testimony about how TRICARE supports 
16 

the readiness mission of the MHS with the military treatment facilities as a readiness training platform for medical forces. So how 

does DHA expand choice to the beneficiaries with their ability to 

choose either a military or civilian provider while making sure we 

recapture the right mix of patients to ensure that we do have that 

medically ready force as you mentioned, incredible strides in combat casualty care, but we have also got to be ready to do the humanitarian mission and take care of that elderly patient with CHF 

[congestive heart failure] in some far-off land? So how does DHA 

look at getting that patient mix. 

Secretary WOODSON. Let me start the answer and then maybe 

Admiral Bono can chime in. So the issue, again, at a basic level is, 

we need to have a good flow of patients through the hospitals to 

ensure that we keep the skills current. And that is not only for the 

docs, but it is for the nurses, it is for the OR [operating room] 

teams, the medics, the x-ray techs, the pharmacy folks, you know, 

the respiratory therapist. We need to have flow. 

And as you have indicated that when we get into the fight and 

particularly the medical fight, it is more than just trauma care. We 

actually have to take care of disease and non-battle injuries. And 

one of, again, our great statistics is the reduction in disease and 

non-battle injuries. So we need full-service platforms. 

Now, to answer your last question about the issue of the right 

flow. First of all, let me just pivot a little bit to PB17 because I 

think what we have done in PB17 is set a fee structure that encourages folks to use the MTF. We have got to deliver on the customer care, the experience of care, clearly, but we have set a fee 

structure that that is the lowest cost option, and incentivizes individuals to use the MTFs. 

But again, a lot of the detailed analysis relates to the geographic 

areas and what is available. So we can’t put every subspecialist at 

every camp, post, and station, but we have got great centers and 

we have got great community hospitals that can be used more effectively. I don’t know if the admiral wants to comment. 

Admiral BONO. I think just to piggyback on that, by making sure 

that the direct care system is the more attractive option, we 

incentivize patients to come in, but that also means that we need 

to be prepared to take them. And so working with the Surgeons 

General we realize that we have to be able to make sure that it 

is easier for our patients to get in. 

And some of the things that we have also put in place are single 

appointing centers, where the patient only has to call once, and 

also putting a first call resolution so with that first call the patient 

gets their appointment that they need. 

What we have also put in place is the nurse advice line and this 

is something that we have implemented across all of the MTFs 

with the services. And so patients can receive that advice from the 

nurses, and be able to get some counsel on whether or not they 

need to go in to see somebody, or whether they can take care of 

that. 

And then of course, Dr. Woodson mentioned asynchronous type 

of care through telehealth and secure messaging. All of that kind 

of combines to making sure that we have that capacity and that 

flow for our patients. 
17 

Dr. HECK. Mrs. Davis. 

Mrs. DAVIS. Thank you, Mr. Chairman. I know, Dr. Woodson, 

you responded to Mr. MacArthur and trying to, what would, you 

know, is it even feasible to think about having an additional option 

for constituents? And I know that that was what the Commission 

brought to us, and they were interested and I think that you have 

done a good job of trying to lay out the piece as it relates to MTFs. 

I raise it just because I think that there might be a very small 

percentage of people that would have an interest in it. I can’t imagine that there would be a great deal because it would be more costly. 

No other constituent should subsidize that interest on the part 

of someone who perhaps has some special needs for some reason 

or other within the family that they would choose to do that, just 

like people would choose more expensive options within, you know, 

their company plan. 

Does, does that play a role somewhere? And I think partly what 

we are dealing with, of course, there is all of these regions whether 

urban, rural, I mean, so that people don’t always experience the 

same health care where they go because it is a more limited ability 

of the community to respond, at least within a very short time 

span. 

Secretary WOODSON. So thanks again for that question. So within the realm of possibilities, it is possible. The question is whether 

or not it is feasible and makes sense to do. 

Because here is the issue: Number one, you would have to decide 

which benefits are going to be assigned to the health plan that they 

are going to get in the commercial market. So if you take the Commission’s outline, they had OPM [Office of Personnel Management] 

setting up sort of a special exchange market where people could go 

and pick from 250 plans. 

But the Department of Defense was still responsible for dental, 

vision, pharmacy, and many other aspects of the program. And so 

there were going to be many more touchpoints that any beneficiary 

would have to coordinate on their own in order to get their full set 

of benefits. 

The biggest issue is, what would be the incentive? So TRICARE 

is a very robust comprehensive benefit. We have the best autism 

coverage, bar none, in the country. The question is, who would go 

and pay now a $6,000, $7,000 premium with maybe total out-ofpocket costs of $9,000 as opposed to the $1,700 that exists today? 

And then what would be our responsibilities if they are not happy 

with that insurance product about coordinating their care? 

So, in the realm of possibility? Yes. Feasibility for a small percentage, frankly, they have that right, right now. They can do that. 

Right? Because all you have to do is not use your TRICARE benefit, and you can buy a commercial product or if your husband or 

wife works for an employer and they offer other health insurance, 

you can take that. So that option is there right now. 

Mrs. DAVIS. I wondered about that. And part of the, I guess, 

transparency of this may be that it is helpful for people to see that. 

Even alongside the options that they have so that they know that, 

in fact, they really are getting great, great care at certainly a reduced cost. 
18 

And people, you know, might know that. They might go on the 

Net [Internet] and see that. But there might be some reasons, and 

I guess it is just part of trying to say to people, we want you to 

be sure that you have all of the information. And part of the process that we will be going through is providing people with good information. 

So do you think that that would be information that would be 

important to people as in part of this education process? And I 

know my time is up. How are we going to go about making sure 

that people do get good information so they can make those decisions? 

Secretary WOODSON. So that is an excellent point. We need to 

communicate effectively. We can certainly make people aware that 

as things stand today, they can exercise their option not to use 

TRICARE and buy commercial insurance and provide cost estimates so that they have a basis of comparison. 

Mrs. DAVIS. Yeah, that might be helpful to do. Okay. Thank you, 

Mr. Chair. 

Dr. HECK. Mr. MacArthur. 

Mr. MACARTHUR. Thank you. I am going to actually continue 

that for a moment. I think we have to be careful when we talk 

about this because in that discussion I think we were conflating 

the Commission’s recommendation of a private healthcare model 

with 250 plans, with what I started with, and what Mrs. Davis 

started with which was FEHBP [Federal Employee Health Benefits 

Program], which was not a, you know, such an involved and dizzying, frankly, set of options. 

Personally, I don’t think moving to a commercial system is advisable. I don’t think it is necessary. And I was asking a much more 

directed question about a single option FEHBP which is currently 

run by the Federal Government and includes many networks which 

have been less criticized, frankly, than the Commission certainly 

was of yours. So I think we have to be careful. 

And I also think complex systems are difficult to manage. You 

have got 9.8 million lives in TRICARE. It is a $50 billion system. 

It is difficult to manage. And you have got the MTFs and the private contracts you have, but they are even more difficult to predict. 

And that is why I raise the question because I don’t know whether 

people would opt for it. I have no idea. 

All I know is the Commission was critical of the current networks. And I heard you, Secretary, that you have a large number 

of physicians in the network, 424,000, 5,000 hospitals, but this may 

be a problem of geography more than volume. 

You may have plenty of providers. I am sure you do. The question is, do you have them where the beneficiaries have the need? 

And it is hard to predict that. And that is why I ask about whether 

another option allows people to make that judgment for themselves 

instead of all of us trying to make it for them, which is impossible 

to do. 

That is a comment. I am going to ask another question, though, 

and that is, Admiral, you mentioned the plan to go from three to 

two regions in TRICARE. So I am going to take a little different 

direction now. I am always concerned that when we talk about a 

change we don’t confuse motion for progress. And I would like to 
19 

ask you why is two better than three? These are still massive service providers, now each one gets even larger. How does that improve either service or cost? 

Admiral BONO. With going from three to two, I think this is a 

great question and something that bears fleshing out a little bit. 

What we realized is we needed to be able to offer a more standardized benefit across all of our MTFs and across our services. And in 

looking at our geography and our current configuration where we 

had three, we realized that we could already, geographically, work 

with two main contractors and be able then to kind of standardize 

and reduce some of the variability that we saw in having three 

plans. 

And so that was why we went ahead. We also looked at the overhead costs, not only within the contractors, but also within managing those from the DHA. And so we saw some great efficiencies 

by doing that by going to two. 

Mr. MACARTHUR. I need you to be a little more specific. Because 

economies of scale can be deceptive. You have already got massive 

scale on all three of your regions today. So what further economies 

do you expect to get out of just two? 

Specifically, I mean, you can’t unpack all of that, but give me 

three, four very specific things that will be less costly in two regions than they are in three? 

Secretary WOODSON. Administrative process, setting up the contracts, two versus three. You are going to have more standardized 

processes, easier flow as our beneficiaries move from one region to 

the other. We can standardize the automating process. We can 

standardize the communications to the beneficiaries and providers. 

We can leverage the use of their data systems without having to 

go to more data systems to do population management, quality 

management. So there are actually multiple benefits to moving 

to—— 

Mr. MACARTHUR. Then if that is true from three to two, why not 

go to one? 

Secretary WOODSON. Well, that is a good question. I think it is 

about the issue of risk if you put all of your eggs into one basket. 

But that is a good question. But I would also make this historical 

note. You know, we didn’t arrive at this overnight. Remember, 

there was a time when we had 12 and then 6, and then 4. And so 

we have been progressively getting here. 

The ability to coordinate when you have four, five, six contracts 

is just a nightmare. The updates in the manual when these contracts roll out, so they are always out of sequence, administratively 

it is just a lot easier. 

Mr. MACARTHUR. I would stay all night if I could, but my time 

has expired. Thank you. 

Dr. HECK. Thank you. I got one last question because I didn’t see 

it addressed in PB17. The fate of TRICARE Reserve Select [TRS]. 

So what happens to Reserve members? Are they going to be moved 

into either a TRICARE Choice or TRICARE Select plan, or do we 

maintain TRS? 

Secretary WOODSON. So as a product it will be TRICARE Choice. 

But I think the larger question you are asking has to do with what 

are the optimum products for the Reserve Components? And that 
20 

is really under study because there are a couple of different, there 

are several different solutions that might be applied to the Reserve 

Component. 

The real issue with the Reserve Component is that when they 

are mobilized, how do you prevent turbulence in terms of families 

having to switch doctors and insurance plans. The answer for the 

Reserve Component might be one of several options. One would be 

if everybody took TRICARE Reserve Select or now TRICARE 

Choice, they would have that PPO product and then they could use, 

and of course the member comes on Active Duty and nobody has 

to change doctors. 

Another solution might be something similar to the Commission 

recommendation, which is to give BAHC [basic allowance for health 

care] when the reservist comes on Active Duty, and then they don’t 

have to switch their insurance plan, but you just give them a basic 

allowance for health care. 

Another solution might be to offer TRICARE Choice into the employer insurance plans, which might work for the employer and 

might work for the reservist because it might be a lower-cost option 

and get greater acceptance of TRICARE Reserve Select. 

So there are many options, and we need to really poll and assess 

the Reserve community about what they are doing for insurance 

now and what the options are. Because we don’t have the right answer. We don’t have enough data to make the right answer now. 

Dr. HECK. I appreciate that. Three very great options, I believe. 

Do you believe that you will have data in time to make a suggestion through this NDAA [National Defense Authorization Act] process that is going to probably wind up before June? 

Secretary WOODSON. We will not have enough data for this cycle. 

We certainly will have for the next. 

Dr. HECK. Okay. I appreciate that. Again, I thank both of you for 

being here so long at this late hour and answering the questions 

as effectively as you did. 

There being no further business, I will adjourn the subcommittee. 

[Whereupon, at 6:05 p.m., the subcommittee was adjourned.] 
A P P E N D I X 

FEBRUARY 24, 2016 

PREPARED STATEMENTS SUBMITTED FOR THE RECORD 

FEBRUARY 24, 2016 

(25) 

Opening Remarks - Chairman Heck 

Military Personnel Subcommittee Hearing 

Defense Health Agency: Budgeting and Structure 

February 24, 2016 

Today the Subcommittee meets to continue our discussions on the Military Health 

System to help infmm our efforts to reform military health care. [know the timing of our 

hearing is a little unusual for the Military Personnel Subcommittee and I appreciate 

everyone's participation even at this late hour. 

The Defense Health Agency was established in October 2013 to manage the 

activities of the Military Health System, which includes integrating clinical and business 

processes across DOD and the military services. A key element was establishing shared 

services to eliminate the need for each of the military medical services to manage 

functions that are common across the MHS. At the time the DHA stood up, DOD 

estimated that the shared services would generate significant savings by eliminating 

redundancy and variability. I am interested in hearing how much the DHA has saved 

DOD since 2013. 

I'm also interested in hearing about the DHA's role in medical readiness and in 

particular, how the DHA assists the Army, Navy, and Air Force medical services to 

provide a medically ready force and ready medical personnel to Combatant Commands. 

In the FY 17 budget, the Department of Defense has proposed several measures 

aimed at reducing the cost of the Defense Health Program by refotming TRICARE. 

While l appreciate the Department's efforts to simplify the health benefit, the proposals 

still shift the cost burden, through TRICARE fee and cost share increases, to our active 

duty family members and our retirees. What is not clear from the Department's proposals 

is how this reform addresses the concerns we have heard from our beneficiaries. Does it 

improve access to care and reduce the hassles of the referral process? Will the anticipated 

savings generated by the reforms be used to improve the beneficiary's experience? 

Lastly, I am interested to hear your views on the MHS structure and function, 

especially as it compares and contrasts with civilian hospital systems. 

I hope that our witnesses will address these important issues as directly as possible 

in their oral statements and in response to Member questions. 

Before I introduce our panel, let me offer Ranking member Susan Davis, from 

California, an opportunity to make her opening remarks. 
26 

Prepared Statement 

of 

The Honorable Jonathan Woodson, M.D., 

Assistant Secretary of Defense (Health Affairs) 

V ADM Raquel C. Bono 

Director, Defense Health Agency 

BEFORE THE 

HOUSE ARMED SERVICES COMMITTEE 

SUBCOMMITTEE ON MILITARY PERSONNEL 

February 24,2016 

1 
27 

Chairman Heck, Ranking Member Davis and members of the Committee, I am pleased to 

discuss the Department of Defense's multi-year plan tor modernizing military medicine in 

service to the 9.4 million Americans who rely on DoD tor the delivery and coordination of 

healthcarc around the world. lam honored to have Vice Admiral Raquel Bono, Director of the 

Defense Health Agency (DHA), join me in presenting this plan. 

I want to thank the leadership of the Committee tor placing military health care reform 

high on the agenda tor action this year. There are a number of interconnected features of the 

Military Health System (MHS) that influence how we are organized, how we deliver and 

coordinate care, and how we interact with the broader American health system. 

Over the last two and half years, the MHS has li.Jlly embraced an enterprise management 

approach to our work. Together with the Service Medical Departments and the Defense Health 

Agency, we have crafted strategies, policies, enterprise support activities, and leadership 

development programs that benefit the system as a whole. Our approaches to access, quality and 

safety are executed in a collaborative, interdependent manner. Operationally, where we work 

together in deployed environments or in multi-service markets, we increasingly ensure there is an 

integrated operating model that facilitates support to line commanders, to service members and 

to our patients. 

For our beneficiaries, we recognize TRICARE is an essential and valued piece of that 

health system. Both military medicine and the US health system are in a period of profound 

change driven by new discoveries, technological advances, and integrated delivery models aimed 

at increasing quality and controlling costs. Our proposals for modernization include both 

operational actions that we are undertaking right now, as well as legislative proposals that we 

have included in the President's budget. 

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TRICARE is essential to recruiting and retention and is an integral part of our 

overarching strategy for the MHS -the Quadruple Aim: Ensure Readiness, Improve Health, 

Improve Healthcare, and Lower Cost. 

As we institutionalize the lessons leamed from fourteen years of conflict, and as we 

implement a series of actions emerging from the Secretary's Review of the MHS, we must 

modernize our TRICARE program to better align with how medicine is delivered in 2016, and 

how patients expect to receive timely and high quality care. 

DoD is taking a new approach to om· reform efforts in 2016 and 2017. We are focused 

on defining value from the perspective of the patient. Emerging from the internal MHS Review, 

we have invested a great deal of time in understanding and evaluating our performance in access 

to care, clinical quality, and efliciency trom our perspective as provider, insurer, and employer. 

In 2016, we are looking at healthcare delivery through the patient's lens, and developing systems 

and processes that are responsive to their needs. 

Our starting point in our modernization plan is the recognition that TRICARE is a good 

health benefit that supports an exceptional group of Americans. Recent testimony by beneficiary 

organizations to Congress reinforced the view that TRICARE is one of the most comprehensive 

health benefits offered by any employer in the United States. While valuing the TRICARE 

bene lit, beneliciaries voiced to Congress and to DoD that they particularly want to see 

improvements in access to care. We have heard their concems and our reform strategy upholds 

the sacred promise we make to those who serve their country and to their families. 

Congress and DoD have expanded eligibility, benefits and services under TRTCARE over 

the 22 years it has been in existence. The most notable expansions include: TRICARE For Lifeextending TRICARE benefits as second payer to Medicare for dual-eligible beneficiaries, 

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29 

TRICARE Prime Remote~ offering Prime-like benefits to active duty families when they are 

stationed far from military installations; and TRICARE Reserve Select~ offering certain 

Reservists with the opportunity to enroll in TRICARE with a modest premium payment. 

We have tied our MHS modernization plan to our overarching strategic plan. Our MHS 

strategy continues to use the Quadruple Aim as our north star~ Improved Readiness, Better 

Health, Better Care, Lower Cost. This is the framework I will use to describe the actions 

underway and those we have proposed. 

The Military Health System: Readiness at the Center of our Strategy 

Over the last decade, the MHS performed superbly in providing combat casualty care 

and life-saving treatment, achieving historic outcomes in saving lives and preventing injuries 

and illnesses. Lessons from fourteen years of battlefield medicine, along with transfonnative 

changes in the practice of medicine in the United States, require new approaches to how we 

ensure medical readiness and how we best meet the expectations of our beneliciaries. We are 

continuously reevaluating and improving our approach to maintaining the health of the force, 

sustaining a ready medical force, and delivering quality healthcare to our beneficiaries ~on the 

battlefield, on military installations, or in civilian healthcare settings 

The MHS is unique in our national health system. DoD operates a global system of 

hospitals, clinics, and health team~ both lixed and deployable~ to meet the health needs of 

our military force, and to maintain the ability of our MSH to meet the readiness needs of the 

force as we continue to assess reform strategies to improve this primary mission. 

Wizen we say "readiness" is at the center of our strategy~ we mean: the medical 

readiness of individual service members, the readiness of medical forces~ and the need to build 

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and sustain the clinical skills of the entire medical team so they are best prepared for whatever 

mission they are called to perform. Readiness also refers to family readiness. The health and 

wellness of our military families affects service member readiness in direct and indirect ways. In 

2016, we look at readiness from this broader perspective -- with consideration for the family 

members' viewpoint of whether our health system supports their own health goals. 

TRJCARE directly supports this readiness mission. In 2015, the Military Compensation 

and Retirement Modernization Commission (MCRMC) acknowledged the important role that 

MTFs have in sustaining the readiness of our medical forces. We have accepted a number of 

recommendations from the MCRMC and have launched a process to identify the essential 

medical capabilities needed to support the full spectrum of military operations. 

One of the most impmtant actions that we undertook during the Iraq and Afghanistan 

conflicts was the establishment of the Joint Trauma System (JTS). This system contributed 

significantly to the MHS' ability to produce historic survivability rates for those wounded in 

action, and accelerated our ability to continuously improve combat casualty care research, 

training and practice. JTS will be embedded as an enterprise-wide system that provides essential 

support to our combatant commanders around the world. 

Of course, not all MTFs include the full spectrum of medical or surgical capabilities. This 

requires that we augment MTF-provided care by purchasing health services lrom civilian 

healthcare networks managed though the TRICARE program. 

In 2016, we plan to expand choices for our beneficiaries allowing them the opportunity 

to more freely seek care from either military or civilian providers. There are a number of ways 

by which we can expand our service offerings. For example, retirees who are Medicare eligible 

can receive care in MTFs. Caring lor these types of patients helps ensure military medical 

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provider readiness. Likewise, resource sharing agreements with the Department of Veterans 

Affairs allow Veterans to receive care within MTFs, giving our military medical providers 

exposure to a more complex set of patient health needs. Other unique arrangements, such as 

civilian access to our Levell Trauma System and bum center at San Antonio Military Medical 

Center, ensure that our providers remain current with best practices in trauma and burn careimportant skills to maintain for military operations. In other external resource sharing 

arrangements, military providers obtain admitting privileges at nearby civilian institutions, where 

they can provide a wider range of care for our beneficiaries, also allowing for clinical skills 

maintenance. 

Although the MHS is an indispensable element of national security, the TRICARE 

feature of beneficiary choice also includes the choice of beneficiaries to receive all of their care 

from civilian providers. In some circumstances, this choice is driven by necessity where 

beneficiaries reside in areas not near a military installation. In other circumstances, beneficiaries 

simply elect to receive civilian care even when military medical facilities are nearby. Some 

military retirees use other systems of care beyond TRICARE: the health care afforded to 

Veterans through the VA, the health insurance product provided through their employer, or the 

Medicare program. For those beneficiaries who elect to receive all of their care from civilian 

sources, whether by choice or circumstance, we are interested in exploring ways to direct 

beneficiaries to accessible, high quality providers. 

The MHS is a complex web of relationships that extend beyond DoD to include other 

federal health partners as well as the civilian community. This integrated system of care requires 

relentless attention to the development ofleaders with skills to operate in the joint environment. 

We recently reviewed our leadership development programs and identified the need to better 

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integrate and sequence these programs. I have directed our leadership team to put together a 

revised curriculum for leadership development in the joint environment that focuses on the 

development of management skills that further ensure readiness, improve health, access, and 

quality and responsibly manage cost. 

MHS Modernization: Better Health 

MHS modernization recognizes that our health system can be made even better; and that 

the delivery of accessible, high quality care, matched with exceptional customer service, is part 

of our mission, not secondary to it. 

Our multi-year modernization plan otTers a significant advancement in how the MHS will 

be a leader in healthcare delivery and customer service in the country. Our modernization plan 

raises customer service performance levels; improves health; further expands choice; simplifies 

the process of getting care and offers additional new ways to access care; ensures access to the 

latest healthy technology; helps direct patients to the highest quality of care; and continues to 

otTer value at an out-ot:pocket cost to our people that is lower than virtually any health plan in 

the country. 

DoD has already begun its multi-year modernization of the TRTCARE program. First, we 

will continue our e1lorts to prioritize health ahead ofhealthcare. 

TRICARE has always had excellent coverage of important preventive services and 

we're making it better. Most of our preventive services are available without any cost share. For 

example, any beneficiary (Prime I Extra I Standard I TRICARE For Life) can get required 

immunizations from any provider, to include retail clinics. We are going to expand the ease and 

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coverage of even more services in the coming year, and ensure our preventive services plan is 

fully aligned with the Affordable Care Act provisions. 

TRICARE Modernization: Better Care 

There are a number of components of health care delivery that are focused on better care. 

Access, quality and safety are among the predominant components in which we will dedicate our 

energy and resources in the coming year. 

Access- Easier, Patient-Centered. We are overhauling every aspect of our how our 

patients get care- whether primary or specialty care. 

Our patients deserve high quality care delivered safely and expeditiously. Yet, we 

frequently hear about problems accessing health care within the MHS. In our internal review, we 

heard that patients are concerned about being told to call back for an appointment, and 

dissatistied with delays in getting care because of a cumbersome pre-authorization and referral 

system. 

During the MHS Review, we found that MTFs generally meet delined access to care 

standards on average. However, there was a great deal of variation there were MTFs that did 

not meet these standards and others who consistently performed better than the standard. In 

2015, we incorporated two measures of access into an enterprise-wide, "Partnership tor 

Improvement" dashboard, which is reviewed monthly by me and the other MHS leaders present 

today. 

The same access standards apply to both MTF provided care and TRICARE Prime care 

delivered in the private sector. Assessment of purchased private sector primary care access is 

largely determined Ji·om patient experience surveys. According to survey data, individuals who 

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use TRICARE Standard or Extra are more satisfied with the care provided when compared to 

those who use TRICARE Prime. In2016, we will be exploring beneficiary concerns more deeply 

by engaging focus groups on specific subjects. 

Recent Congressional testimony from beneficiary groups suggests that the lower 

satisfaction with TRICARE Prime is related to the inability to get an appointment at an MTF and 

to the associated referral and authorization processes. NDAA 2016 called for improving access 

in the following ways: 1) make it easier for beneficiaries to move among the identified 

TRICARE managed care support contract regions; 2) allow TRICARE Prime beneficiaries 

access to urgent care centers without a preauthorization requirement under a pilot project; and 

3) expand the public transparency of quality, safety and satisfaction information. 

We have taken a number of steps to improve access to care. We implemented "first call 

resolution" policies ensuring that the appointment or referral will be completed during the initial 

call for beneficiaries enrolled to our patient-centered medical homes. I issued initial guidance for 

simplified appointing and first call resolution on June 2, 2015. We have already begun to see the 

positive etTect of these changes lrom the patients' perspective. Performance monitoring will 

ensure compliance and survey data is letting us know if our beneficiaries are satisfied with the 

results. 

We are not simply monitoring our performance from this one action. We have put a 

number of policy and operational actions into motion already this year, 

The Services and DHA undertook a listening tour to MTFs and with beneficiaries around 

the country. We learned a great deal from these visits. The Services and DHA have identified 

that peak hours of physician supply do not always match patient demand. ln response, we are 

extending hours to evenings and weekends in a number of our MTFs. We have increased the 

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number of urgent appointment by 32% since May 2015, and we have expanded the overall 

number of appointments by more than II%. 

Part of our enterprise approach is to effectively use the demonstration authority that 

Congress has provided us and pilot new approaches to patient care delivery. We recognize that 

patients, particularly those with complex or chronic medical conditions, require ongoing services 

tl·om a mix of primary care and specialty providers. I am directing demonstration projects in 

which we evaluate the use of"integrated practice units (!PUs)" into our medical homes. The 

most important feature of the IPU is that it organizes medical services around the patient's needs 

and medical condition rather than organizing medical services from the health system's 

perspective. 

Contemporary access to healthcare is no longer confined to the four walls of a doctor's 

office or dictated by drive time standards. Instead, information technology offers a variety of 

opportunities for patients to engage the medical system. Providers can extend their reach to treat 

or advise their patients beyond the clinic's open hours or without requiring distant travel. 

Furthermore, many of these modalities otTer new opportunities to support the war fighter 

wherever they are deployed. In January 2016, I expanded our policies to encourage greater use of 

telehealth, and permit its connection to the patient's home. The new policy will enhance our 

abilities to provide telemedicine services and expand access for our beneficiaries. 

In 2014, we established aN urse Advice Line (NAL) for all of our beneficiaries. This new 

capability now fields 1,800 calls per day (significantly higher than we projected, and higher than 

most commercial health plans). Call volumes are increasing each month. Many patients, after 

engaging with the NAL, do not subsequently seek emergency care, but wait to be seen at their 

Primary Care Medical Home at the MTF. For those whose symptoms suggest a true emergency, 

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the NAL activates the emergency medical system and stays on the phone until help arrives. 

Additionally, the 24/7 NAL is integrated with our appointing and referral systems, ensuring 

beneficiary have round-the-clock access to healthcare advice and appointing services. We plan to 

expand the services offered by the NAL in the next year to increase convenient access. 

The TRICARE program has leveraged web-based technologies to provide beneficiaries 

with information, secure ways to enroll for health care services, review claims, pay bills, and 

even make appointments. Patients can communicate with their providers using secure messaging 

services and download their medical records using Blue Button technology. We are ensuring that 

all primary care providers and most specialists use and promote the secure messaging capability 

with their patients. The new electronic medical record will add even more functionality for 

patients. 

In 2016, the MHS will begin to deploy smart phone applications that will make it easy for 

our patients to contact their providers, access all of the TRICARE Online capabilities, and find 

useful information about the nearest MTF. We will also launch new telehealth capabilities that 

will allow providers to consult with their patients using video technology, along with capabilities 

for providers to securely monitor their patients' health remotely (e.g. blood pressure monitoring 

or other biometric data). 

DoD will also implement a pilot program that allows enrollees to access urgent care 

centers without requiring a preauthorization, consistent with NDAA 2016. I am confident that 

these additional means of access- both virtual and physical- will have a significant, positive 

affect on satisfaction with accessibility and customer service among our Prime population. 

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For patients who receive referrals from their primary care providers, we are also 

streamlining reterral processes so that patients will be advised of referral approval in a more 

timely way. 

We are also proposing to allow beneficiaries who live more than one hour away from an 

MTF to enroll for care at those facilities. While we believe that patients should live in close 

proximity to their primary care provider, we also believe that patients should be able to choose 

their provider, even if the provider is more than an hour's drive away. However, we will retain 

contract provisions that require the civilian network to be constructed in such a way as to ensure 

easy geographical access, to the extent possible, for our beneficiaries, using existing drive time 

standards. 

In our FY17 proposed budget, we introduce a new approach to the DoD health benefit 

that further simplifies the program for beneficiaries. Patients would be able to choose between a 

managed benefit that prioritizes care in the MTFs (and continues to offer MTF care at no cost to 

beneficiaries), and an unmanaged option that sustains the freedom of choice for beneticiaries to 

seek civilian care without restriction. 

Our initiatives are intended to ensure retention of our existing enrollees as well as 

increase use of military treatment facilities for all beneficiaries. Our customer service 

enhancements are intended to encourage our beneficiaries who live near a military hospital or 

clinic to come back to the MTF. 

Finally, in 2016, we will also award the TRICARE-2017 (T-2017) contracts, with 

healthcare delivery slated to begin in 2017, allowing for a 12-month transition period between 

contractors. T -2017 is another element in our efforts to simply program management, reduce 

administrative costs, incentivize value and ensure quality with our network providers. We have 

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also streamlined processes for portability, helping ease beneficiary transition as they move from 

installation to installation. We will reduce TRICARE regions from three to two, eliminating 

unnecessary administrative overhead for both the government and contractors. 

Quality of Care. The MHS is proud of the quality ofcare we deliver. The MHS Review 

found that the MHS performed well along the quality and safety parameters studied. However, 

similar to our findings on access, we found wide variation across MTFs and across safety and 

quality measures. Like health systems everywhere, we know we can improve further. And we 

will. 

We have implemented a number of important measures to achieve that objective. In 

2015, we standardized quality and safety measures across the enterprise and can now compare 

performance across all MTFs. We are now amending our TRICARE contracts to establish 

similar reporting for private sector care. Senior leaders monitor perfonnance on a monthly basis. 

MTF commanders are being provided with tools to both educate their staffs and monitor 

their performance. We are expanding participation in the American College of Surgeons (ACS) 

National Surgical Quality Improvement Program (NSQIP) to all MTFs with surgical capabilities. 

This partnership provides these MTFs with insights into improving surgical mortality and 

morbidity. In the coming months, we will provide the Institute for Healthcare Improvement's 

(IHI) Global Trigger Tool (GTT) to all MTFs to proactively assist in identilying potential safety 

concerns. 

When serious chronic illness, medical conditions, special needs or injuries require a 

comprehensive coordination of care across multiple providers, beneficiaries will be assured of a 

personal case manager who will assist with coordinating care wherever it is provided- with 

other military hospitals, in the civilian sector, or with the VA. 

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The Department is going to adopt or introduce value-based payment demonstration 

projects in 2016. In 2015, we opened discussions with the Centers for Medicare and Medicaid 

Services (CMS) to explore how we can participate in several of the innovative payment reform 

initiatives that CMS has introduced over the past several years. By aligning efforts with other 

federal initiatives focused on value-based payment, we can leverage the extensive research that 

led to these demonstrations. And, the complex rules related to payment formulas have been 

incorporated into contractor-operated, federal claims processing systems. Several of the bundled 

payment demonstration projects - such as the recent CMS demonstration around bundled 

payments for joint replacements -- hold the most promise for the populations that we serve. We 

will provide the Committee with regular updates on our progress in this area. 

Comprehensive infonnation on service delivery- access, quality, safety and satisfaction is 

available online to the public for the military health system as a whole with some limited 

information visible at the MTF level. Additional infonnation will soon be available at the MTF, 

consistent with the direction from the Secretary of Defense and the NOAA 2016. We have 

engaged and will continue to engage our military and veteran beneficiary organizations in how 

we might present this infonnation in ways that make the information more relevant and easier to 

understand. And, we encourage our patients to ask us questions about our quality and safety 

record, and to engage in questions about their own plan for health. And, the DHA is working 

with CMS to place MHS performance information on Hospital Compare to provide another 

outlet where our performance information will be publicly shared. We are incorporating 

beneficiaries into our quality management activities. 

The MHS has identified six communities where there is a significant military medical 

presence by more than one Service Medical Department. We refer to these communities as 

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"multi-service markets." Collectively, over 40% of all care we deliver in DoD medical facilities 

occurs in these markets and an equally significant amount of care is purchased from the private 

sector in these markets. We have provided senior medical leaders in these markets with 

enhanced authorities to coordinate service delivery; standardize appointing and referral policies; 

and reallocate local resources to best meet beneficiary needs. We have achieved some early 

successes in these markets relative to access to care and patient satisfaction. 

These multi-service markets are major deployment platfonns, and we similarly plan to 

use them as platforms for innovation. They reach across Service-specific populations and the 

lessons we leam from innovating in these markets can be more rapidly shared across the 

enterprise. 

Health Benefits and Technological Advances- Leaning Forward. Healthcare is 

changing fast. And, with the generous support of Congress, TRJCARE has been made more 

flexible and more adaptive to the changes in technology to advance health. DoD now has greater 

authorities to approve emerging technologies tor coverage. We have already started this process 

-for laboratory-developed tests and tor other promising medical procedures. Where the medical 

evidence is present, we will look to do more. 

We are ensuring that TRJCARE's mental health and substance use disorder benefit meets current 

standards of care and- like our preventive services benefits-- align with the Affordable Care 

Act, Mental Health Parity Act and other federal health legislation. We have already eliminated 

the limit on inpatient behavioral health bed days, and we will finalize policies to ensure parity in 

other areas in 2016. 

One of the most important advances we will introduce in2016 is the first phase of 

deployment of our new Electronic Health Record (EHR) in the Pacilic Northwest. This multi15 
41 

billion acquisition represents a major milestone for the Depmiment. Our decision to purchase a 

commercial, oft~the-shelf product provides DoD with a system that will support our journey to 

high reliability, allow ongoing private sector innovation to be incorporated into future releases, 

and support our interoperability objectives in sharing information with both the VA and with 

private sector providers. The EHR will also feature an advanced patient pmial, providing our 

patients with easier access to their own health data and improve their ability to manage their 

care. 

Support for Children with Special Needs. Over the last several years, we have 

modernized TRICARE and the Extended Care Health Options (ECHO) program, expanding 

services to retiree families and eliminating financial caps on services. We are continuing to 

improve our complex case management services, with a particular focus on the unique needs of 

military families and frequent relocations. 

TRICARE for Reservists. Issues regarding continuity of care, and continuity of 

coverage, for Reserve Component families have been raised by both the Reserve community and 

in the Military Compensation and Retirement Modernization Commission repmi in 2015. 

Although the TRICARE Reserve Select program has been well received and offers an excellent 

health benefit, the Department continues to explore opportunities that can accommodate those 

Reserve members and families who would prefer to retain their existing provider relationships. 

TRICARE Support. In October 2015, the DHA reached f'ull Operating Capability. The 

TRICARE Health Plan is one of the principal enterprise support activities- or shared servicesfor which the DHA is responsible. Working closely with the Service Medical Departments, we 

are better able to coordinate policy and operational decisions in support of TRICARE changes in 

a more agile and transparent manner. Our other enterprise suppmi activities- pharmacy 

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operations, health intom1ation technology, medical logistics, health facilities, public health, 

medical research and development, medical education and training, contracting, and budget & 

resource management also provide essential support services to both combatant commanders 

and the Services. 

I would like to highlight just one element of how this enterprise support better enabled 

critical support in a crisis. In 2015, the MHS witnessed an alarming escalation in prescription 

drug costs, largely related to increased utilization of compound medications. The DHA 

monitoring system identified potential fraudulent activity; recommended and concurrently 

implemented a series of enterprise-wide screening procedures in our military pharmacies, mail 

order and retail network that precipitously and safely reduced inappropriate fills of compound 

drug prescriptions; and coordinated with the Department of Justice in the prosecution of 

fraudulent actors and the recovery of funds. 

Cost-- Responsible, Moderate Changes in Beneficiary Cost-Sharing. The full 

complement of improvements and services that we have put forward also requires investment. 

Most of these additional costs will be borne by the Depa1iment. For example, the implementation 

of shared services led the Department to reduce defense health costs by $3.5 billion over five 

years, savings that have already been decremented from our proposed budget. 

Since TRICARE and then TRICARE For Life were introduced, the percentage of care 

delivered in the private sector rather than in DoD medical facilities has grown. Today, over 60% 

of all DoD-funded health care is delivered in civilian settings through TRJCARE. The 

integration of care delivered in military and civilian settings is- and will remain --a necessary 

feature of military medicine. We will continue to assess our partnership with our civilian 

network and the impact of its prominence upon our direct care facilities, recognizing cost 

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43 

efficiencies where possible. Over the last several years, overall defense health program costs 

have been well managed, with actual costs coming in less than projected at the beginning of the 

year. 

Although costs have stabilized in recent years through both management actions on the 

part of the Department and a general slowdown in US health care inflation, National Health 

Expenditure projections, a product of the Centers tor Medicare and Medicaid Services, anticipate 

a gradual increase in per capita health care costs to roughly 5 percent in coming years. 

The Department has submitted several reform plans since 2005, largely to control health 

care costs. Last year, the submission of the President's Budget (PB) 2016 benefit reform 

proposal was relatively well received. The PB 2017 health benefit retonn proposal leverages the 

PB 2016 proposal but makes some important adjustments. Following are the attributes of the PB 

20 17 proposal. 

• A simpler system provides beneficiaries with two care alternatives and overall less 

complexity in their health plan. TRICARE Select is an HMO-Iikc (managed) option that 

is MTF-centric and TRICARE Choice is a PPO-like (unmanaged) option offering greater 

choice at a modestly higher cost. 

• Economically emphasizes TRTCARE Select leveraging MTFs as the lowest cost option 

for care to make full usc of Direct Care capacity and also provides needed workload tor 

military providers for readiness training. 

• No change tor active duty- who would maintain priority access to health care without 

any cost sharing but would still require authorization for civilian care. 

• Copays- will depend on beneficiary category (excluding active duty) and care venue; it 

is designed to minimize overutilization of costly care venues. There would be no copays 

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44 

in MTFs to facilitate the effective use of military clinics and hospitals and thereby 

improve the efliciency of DoD's fixed facility cost structure. There would be fixed 

network copays for the TRICARE Choice option without a deductible. 

• Participation fee- for retirees (not medically retired), their families, and survivors of 

retirees (except survivors of those who died on active duty). They would pay an annual 

participation fee or forfeit coverage for the plan year. There is no participation fee for 

active duty members or their family members. There is a higher participation fee for 

those retirees choosing the TRICARE Choice option ($200 higher). 

• Open season enrollment- similar to most commercial plans, participants must enroll for 

a !-year period of coverage or lose the opportunity. 

• Catastrophic caps- which have not gone up in I 0 years would increase slightly but still 

remain sufticiently low to protect beneficiaries from tinancial hardship. The participation 

fee would no longer count towards the cap. 

• Medically retired members and their families and survivors ofthose who died on active 

duty would be treated the same as Active Duty family members (ADFMs), with no 

participation fee and lower cost shares. 

• To ensure equity among ADFMs, the proposal offers all ADFMs a no cost 

medical/surgical care option regardless of assignment location and zero copays for 

ADFM emergency room use, including in the network. 

• The Department will offer a second payer option with a lower fee for those with other 

health insurance. 

• Fees and copays will be indexed at the National Health Expenditures (NHE) per capita. 

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There have been no changes to most cost-sharing elements of the TRICARE Program 

since it was established in 1994. At the time TRICARE was introduced, retiree family 

beneficiary out-of~pocket payments accounted for approximately 27% of total TRICARE health 

care costs. Today, retirees and their families only bear 8% of the costs, and our proposal raises 

that share to I 0.5% of total costs. For active duty families, the changes are even smaller, moving 

out-of-pocket costs from 1.4% of total costs to 1.6%. By any measure, these changes are 

modest, responsible adjustments that place the Department's health program on a stable, longterm financial footing and preserve the foundation of the health system and its platforms for 

ensuring a medically ready and ready medical force. 

We enter 2016 confident that an excellent health benefit can be further strengthened 

through a combination of legislative, policy, and operational reforms. Our health benefit plays 

an important role in readiness as well as recruiting and retaining the men and women in uniform 

who serve this nation. 

The MHS continues to serve as a unique and indispensable national security asset. It 

supports our active duty force and it retains its clinical skills through an active clinical practice 

in both peace and war. Jt offers a ready asset to respond to humanitarian assistance needs and 

disaster response. The full complement of preventive, public health, primary care, specialty and 

specialty care services that we offer are necessary components for meeting the national security 

obligations of the United States. 

Our health benefit must continue to ensure a ready medical force of military providers 

and support staff able to deploy anywhere, anytime with skills that support combatant 

commander requirements; provide access, choice and value of the health care benefit, and be 

liscally sustainable for the Department. 

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The MHS reforms we have outlined today will help us meet the appropriately high 

expectations that beneficiaries have for us. Service members, military retirees and their families 

are right to expect affordable, accessible quality health care is available to them from both 

military or civilian providers, wherever they reside. We are committed to increasing value from 

their vantage point. 

Our proposal represents a balanced, comprehensive package of reforms that are directly 

aligned with and address each element of our Quadruple Aim. We have initiatives that will 

improve readiness, improve health, improve care, and lower cost. We look forward to working 

with you over the coming months to fwiher refine and miiculate our objectives in a manner that 

improves value for everyone- our warfighters, our combatant commanders, our patients, our 

medical force, and the American taxpayer. 

Thank you for inviting Admiral Bono and me here today to speak with you about the 

essential linkage between our readiness mission and our health benefit, and about our plans to 

further improve benelits and services for the long tenn. 

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Jonathan Woodson 

Assistant Secretary of Defense (Health Affairs) 

Dr. Jonathan Woodson is the Assistant Secretary of Defense for Health Affairs. In this role, he 

administers the more than $50 billion Military Health System (MHS) budget and serves as principal 

advisor to the Secretary of Defense for health issues. The MHS comprises over 133,000 military and 

civilian doctors, nurses, medical educators, researchers, healthcare providers, allied health professionals, 

and health administration personnel worldwide, providing our nation with an unequalled integrated 

healthcare delivery, expeditionary medical, educational, and research capability. 

Dr. Woodson ensures the effective execution of the Department of Defense (DoD) medical mission. He 

oversees the development of medical policies, analyses, and recommendations to the Secretary of 

Defense and the Undersecretary for Personnel and Readiness, and issues guidance to DoD components 

on medical matters. He also serves as the principal advisor to the Undersecretary for Personnel and 

Readiness on matters of chemical, biological, radiological, and nuclear (CBRN) medical defense 

programs and deployment matters pertaining to force health. 

Dr. Woodson co-chairs the Armed Services Biomedical Research Evaluation and Management 

Committee, which facilitates oversight of DoD biomedical research. In addition, Dr. Woodson exercises 

authority, direction, and control over the Defense Health Agency (DHA); the Uniformed Services 

University oft he Health Sciences (USUHS ); the Armed Forces Radiobiology Research Institute 

(AFRRI); the Defense Center of Excellence for Psychological Health and Traumatic Brain Injury 

(DCoE); the Armed Forces Institute of Pathology; and the Armed Services Blood Program Office. 

Prior to his appointment by President Obama, Dr. Woodson served as Associate Dean for Diversity and 

Multicultural Affairs and Professor of Surgery at the Boston University School of Medicine (BLJSM), 

and senior attending vascular surgeon at Boston Medical Center (BMC). Dr. Woodson holds the rank of 

brigadier general in the U.S. Army Reserve, and served as Assistant Surgeon General for Reserve 

Affairs, Force Structure and Mobilization in the Otlice ofthe Surgeon General, and as Deputy 

Commander of the Army Reserve Medical Command. 

Dr. Woodson is a graduate of the City College of New York and the New York University School of 

Medicine. He received his postgraduate medical education at the Massachusetts General Hospital, 

Harvard Medical School and completed residency training in internal medicine, and general and 

vascular surgery. He is board certified in internal medicine, general surgery, vascular surgery and 

critical care surgery. lie also holds a Master's Degree in Strategic Studies concentration in strategic 

leadership) from the U.S. Army War College. 

In 1992, he was awarded a research fellowship at the Association of American Medical Colleges Health 

Services Research Institute. He has authored/coauthored a number of publications and book chapters on 

vascular trauma and outcomes in vascular limb salvage surgery. 

His prior military assignments include deployments to Saudi Arabia (Operation Desert Storm), Kosovo, 

Operation Enduring Freedom and Operation Iraqi Freedom. He has also served as a Senior Medical 

Oftlcer with the National Disaster Management System, where he responded to the September II th 
48 

attack in New York City. Dr. Woodson's military awards and decorations include the Legion of Merit, 

the Bronze Star Medal, and the Meritorious Service Medal (with oak leaf cluster). 

ln 2007, he was named one of the top Vascular Surgeons in Boston and in 2008 was listed as one of the 

Top Surgeons in the U.S. He is the recipient of the 2009 Gold Humanism in Medicine Award from the 

Association of American Medical Colleges. 
49 

Vice Admiral Raquel C. Bono 

Director, Defense Health Agency 

Medical Corps, United States Navy 

Commissioned in June 1979, Vice Adm. Raquel Bono obtained her baccalaureate degree from the 

University of Texas at Austin and attended medical school at Texas Tech University. She completed a 

surgical internship and a General Surgery residency at Naval Medical Center Portsmouth, and a Trauma 

and Critical Care fellowship at the Eastern Virginia Graduate School of Medicine in Norfolk. 

Shortly after training, Bono saw duty in Operations Desert Shield and Desert Storm as head, Casualty 

Receiving, Fleet Hospital 5 in Saudi Arabia from August 1990 to March 1991. Upon returning, she was 

stationed at Naval Medical Center Portsmouth as a surgeon in the General Surgery department; surgical 

intensivist in the Medical/Surgical Intensive Care Unit and attending surgeon at the Burn Trauma Unit at 

Sentara Norfolk General Hospital. Her various appointed duties included division head of Trauma; head 

of the Ambulatory Procedures Department (APD); chair of the Laboratory Animal Care and Use 

Committee; assistant head of the Clinical Investigations and Research department; chair of the Medical 

Records Committee and command intern coordinator. She has also served as the specialty leader for 

Intern Matters to the surgeon general of the Navy. 

[n September 1999, she was assigned as the director of Restorative Care at the National Naval Medical 

Center in Bethesda, Maryland, followed by assignment to the Bureau of Medicine and Surgery from 

September 200 l to December 2002 as the Medical Corps career planning officer for the chief of the 

Medical Corps. She returned to the National Naval Medical Center in January 2003 as director for 

Medical-Surgical Services. 

From August 2004 through August 2005, she served as the executive assistant to the 35th Navy Surgeon 

General and chief, Bureau of Medicine and Surgery. Following that, she reported to Naval Hospital 

Jacksonville, Florida, as the commanding officer from August 2005 to August 2008. Sbe then served as 

the chief of stat1~ deputy director Tricare Management Activity (TMA) of the Office of the Assistant 

Secretary of Defense, Health Affairs (OASD(HA)) from September 2008 to June 2010. She later served 

as deputy director, Medical Resources, Plans and Policy (N093), chief of Naval Operations. From 

November 2011 to June 2013, she served as the command surgeon, U.S. Pacific Command, Camp ll.M. 

Smith, Hawaii. From July 2013 to September 2013, she served as acting commander Joint Task Force 

National Capital Region Medical. From September 2013 to October 2015, she served as director, 

National Capital Region Medical Directorate of the Defense Health Agency, and as the lith Chief, 

Navy Medical Corps. She currently serves as director, Defense Health Agency. 

Bono is a diplomat of the American Board of Surgery and has an Executive MBA from the Carson 

College of Business at Washington State University. Her personal decorations include Defense Superior 

Service Medal (three), Legion ofMerit Medal (four), Meritorious Service Medal (two) and the Navy and 

Marine Corps Commendation medal (two). 

Updated: 4 November 2015 

DOCUMENTS SUBMITTED FOR THE RECORD 

FEBRUARY 24, 2016 

(53) 

Statement of 

The Fleet Reserve Association 

on 

Defense Health Agency: Budgeting and Structure 

Submitted to: 

House Armed Services Committee 

Military Personnel Subcommittee 

By 

John R. Davis 

Director, Legislative Programs 

February 24, 2016 
54 

TheFRA 

FRA was established in 1924 and its name is derived from the Navy's program for personnel 

transferring to the Fleet Reserve or Fleet Marine Corps Reserve after 20 or more years of active 

duty, but less than 30 years for retirement purposes. During the required period of service in the 

Fleet Reserve, assigned personnel earn retainer pay and are subject to recall by the Navy or 

Marine Corps. 

The Fleet Reserve Association (FRA) celebrated 91 years of service last November II, and is the 

oldest and largest enlisted organization serving active duty, Reserves, retired and veterans of the 

Navy, Marine Corps, and Coast Guard. It is Congressionally Chartered, recognized by the 

Department of Veterans Affairs (VA) as an accrediting Veteran Service Organization (VSO) for 

claim representation and entrusted to serve all veterans who seek its help. In 2007, FRA was 

selected for full membership on the National Veterans' Day Committee. 

FRA is a leading advocate on Capitol Hill for enlisted active duty, reserve, retired and veterans 

of the Sea Services. FRA's mission is to act as the premier "watch dog" group in maintaining 

and improving the quality oflife for Sea Service personnel and their families. The Association is 

also a founding member of The Military Coalition (TMC), a 31-member consortium of military 

and veteran's organizations. FRA hosts most TMC meetings and members of its staff serve in a 

number ofTMC leadership roles. 

For more than nine decades, dedication to its members has resulted in legislation enhancing 

quality of life programs for Sea Services personnel, other members of the uniforn1ed services 

plus their families and survivors, while protecting their rights and privileges. CHAMPUS, (now 

TRICARE Standard) was an initiative of FRA, as was the Uniformed Services Survivor Benefit 

Plan (USSBP). FRA led the way in reforming the REDUX Retirement Plan, obtaining targeted 

pay increases for mid-level enlisted personnel, and sea pay for junior enlisted sailors. FRA also 

played a leading role in advocating recently enacted predatory lending protections and absentee 

voting reform for service members and their dependents. More recently the Association played a 

leading role in abolishing legislation requiring current retirees to get a one-percent reduction in 

their annual cost-of-living-adjustment (COLA) until they reach age 62. 

FRA's motto is: "Loyalty, Protection, and Service." 
55 

Certification of Non-Receipt 

Of Federal Funds 

Pursuant to the requirements ofl1ouse Rule XI, the Fleet Reserve Association has not received 

any federal grant or contract during the current fiscal year or either of the two previous fiscal 

years. 

Defense out of Sequestration 

Before commenting on Defense Health Agency (DHA) budgeting and structure, FRA wants to 

note with growing concern the long-term impact of sequestration on budgeting. Budget cuts 

mandated by the Budget Control Act of20ll pose a threat to national security and will 

substantially impact member pay and benefits. These automatic cuts, known as Sequestration, 

require that 50 percent come from Defense, even though Defense only makes up 17 percent of 

the federal budget. FRA appreciates last year's budget deal eliminates a sequestration mandated 

$38 billion cut in the FY 2016 Defense budget, and smaller cuts for FY 2017. However, without 

additional changes to the law, more sequestration cuts are scheduled for FY 2018 thru 2021 

remain, continuing to place national security at risk. 

Former Secretary of Defense (SecDcf) Chuck Hagel warned in 20 II that future sequestration 

budget cuts will create a "hollow force." The Services have already canceled deployment of 

ships, slashed flying hours, renegotiated critical procurement contracts, temporarily furloughed 

civilian employees, and are in the process of reducing force structure, giving America the 

smallest military force since before World War II. If sequestration is not ended, additional force 

reductions will likely go deeper and training and modernization levels will be further impacted. 

Nearly 86 percent of retirees that participated inFRA's online survey (January/February 2016) 

are "Very concerned" (the highest rating) about continuing sequestration cuts. 

TRICARE Fee Increases 

For several years now the Administration has included in their annual budget request fee 

increases for many TRICARE beneficiaries, and this year is no different. The FY 2017 budget 

request includes enrollment fee increases for TRICARE Prime far beyond the cun·ent mandated 

fee increases. It includes a new "participation" fee for TRICARE Standard, and a new fee for 

new enrollees for TRICARE-for-Life. The plan also includes higher phannacy co-pays and 

higher deductibles. FRA opposes these proposed fee increases because the Association believes 

that a military retiree's health care premium, is at least in part, paid for with 20 or more years of 

arduous military service. InFRA's online survey retirees were asked, "Do you believe that 

retired service members have, at least in part, earned their TRJCARE services through 20-plus 

years of military service?" More than 99 percent of retirees said "Yes.'' Many of these 

beneficiaries targeted by fee increases will tell you that they were told that they would have free 
56 

health care for life if they endured low pay and arduous service. InFRA's online survey 

(January/February 20 16) retirees where asked "When you joined the military. were you led to 

believe that you would have.free health care for life if you stayed in long enough to retire?" 

Exactly 96 percent answered "Yes." 

Nearly 94 percent of retirees see TRTCARE benefits as very important inFRA's most recent 

online survey. FRA advocates that the Defense Department (DoD) must sufficiently investigate 

and implement other options to make TRICARE more cost-efficient as alternatives to shifting 

costs to TRICARE beneficiaries, and the Association opposes any indexing of future TRICARE 

Fee increases beyond CPI indexed to COLA increases. InFRA's online survey of retirees 

(January/February 20 16) finds that more than 81 percent see the cost ofTRICARE premiums as 

"Very important." 

TRICARE Reform 

The House and Senate Armed Services Committees want to reform the TRICARE program and 

plan to craft legislation this year to achieve this objective. It seems that the starting point will be 

the health care recommendations from the Military Compensation and Retirement Modernization 

Commission (MCRMC) that suggests that TRJCARE be replaced with a plan similar to the 

Federal Employee Health Benefit Program (FEHBP). Beneficiaries would be switched to a plan 

similar to the FEHBP, except that Military Treatment Facilities (MTF) would be included in the 

network. Like the FEHBP, beneficiaries could choose from a selection of commercial insurance 

plans. The plan would be administered by the Office of Personnel Management (OPM) rather 

than the DoD. Beneficiaries would be required to pay 20 percent of all health care costs. 

Beneficiary family members would not be covered under the plan and would be provided a Basic 

Allowance for Health Care (BAHC) to cover the cost of premiums and deductibles tor an 

average health care plan. Reserve Component (RC) members who are mobilized would also 

receive a BAHC in lieu ofTRICARE coverage. 

Although there are similarities between the BAHC and the Base Allowance tor Housing (BAH), 

the big difference between the two is that housing costs are predictable but health care costs are 

not. FRA will oppose this provision. The MCRMC proposal recommends that "Non-Medicare 

eligible retirees should continue to have full access to the military health benefit program at cost 

contributions that gradually increase over many years ... " These retirees under age 65 would 

eventually be required to pay 20 percent of all health care costs, and premiums would be 

increased every year to ensure that beneficiaries keep paying 20 percent. The FY 2013 National 

Defense Authorization Act (H.R. 4310- P.L. 112-239) established the MCRMC. FRA notes that 

no enlisted personnel were appointed to serve on the Commission. More than 75 percent of the 

current active force is enlisted and therefore should have been represented on this Commission. 
57 

FRA believes that a military retiree's health care premium, is at least in part, paid f(Jr with 20 or 

more years of arduous military service. FRA advocates that military bene1iciaries incur 

distinctive and extraordinary physical and mental stresses that are completely different to the 

service conditions offederal civilian employees, and their health benefits should be significantly 

better than civilian programs. The military health care system is also called upon to provide 

combat casualty care, and in recent years has proven to be an efficient system that saves 

countless number of service member's lives, who would have died in earlier conflicts. So the 

Association would question the use of the FEHPB as a good model for reforming the Defense 

Health Agency (DHA). The Association welcomes the review and rcf(Jrm, but is not convinced 

that TRICARE cannot be 1ixed. InFRA's current online survey (January/February 2016) 

retirees where asked "It has been asserted in Congress that TRJCARE is irrevocably broken. 

Would you support replacing TRJC"'ARE with a program that costs more but offers a selection of 

benefits?" Nearly 90 percent (89.94) responded "No." 

No one should assume that FRA is opposed to changing and improving DHA. The Association 

has supported the HASC-MP proposals to create a unified medical command that would have 

substantial cost savings for the system. FRA would also point-out the failure of DoD and VA to 

create a joint interoperable electronic health record as a major disappointment. FRA welcomes 

MCRMC recommendation 8 that attempts to improve collaboration between DoD and the 

Department of Veterans Atiairs (VA). FRA supports a joint electronic health record that will 

help ensure a seamless transition from DoD to VA for wounded warriors, and establishment and 

operation of the Wounded Warriors Resource Center as a single point of contact for service 

members, their family members, and primary care givers. The Association is concerned about 

shifting of departmental oversight from the Senior Oversight Committee (SOC) comprised of the 

DoD and VA secretaries per provisions of the FY 2009 National Defense Authorization Act 

(NOAA), to the lower echelon Joint Executive Council (JEC). This change is perceived by many 

as diminishing the importance of improving significant challenges faced by service membersparticularly wounded warriors and their families- in transitioning from DoD to the VA. The 

recommendation to provide additional authority to the JEC is a step in the right direction. 

further FRA members have expressed frustration with TRTCARE Prime referrals. The MCRMC 

report notes that TRICARE Prime beneficiaries in some locations that have half of the referrals 

for purchased care network waited longer than the 28-day standard for purchased care network. 

Even in locations with the highest access to care, 16 percent of refeiTals still do not get 

appointments within the 28-day standard. Perhaps a pilot program in a limited geoe,rraphic 

location, not currently served by TRICARE Prime, could demonstrate the efficiency of the plan. 

The Association supports MCRMC recommendation 7 that seeks to improve support for service 

members with special dependents. These improvements to the Extended Care Health Option 

(ECHO) include expanded respite care hours, and consumer directed care. FRA wants to make 

sure that U.S. Coast Guard personnel are also covered by this program. FRA represents the Sea 

Services and wants to ensure that the Coast Guard benefits have parity with DoD benefits. 
58 

FRA's membership appreciates the following Sense of Congress (SOC) in the FY 2013 National 

Defense Authorization Act (NDAA): (1) DoD and the Nation have a committed health benefit 

obligation to retired military personnel that exceeds the obligation of corporate employers to 

civilian employees; (2) DoD has many additional options to constrain the growth of health care 

spending in ways that do not disadvantage beneficiaries, and (3) DoD should first pursue all 

options rather than seeking large fee increases or marginalize the benefit for beneficiaries. 

The whole purpose of a unique military health care benefit is to offset the extraordinary demands 

and sacrifices expected in a military career. FRA advocates that to sustain a first-class, career 

military force requires a strong bond of mutual commitment between the service member and 

his/her employer. 

CONCLUSION 

FRA is grateful for the opportunity to present these recommendations to this distinguished 

Subcommittee on the important issue of military health care budgeting and structure of the 

Defense Health Agency (DHA). 
59 

201 North Washington Street 

Alexandria, Virginia 22314 

{703) 838-8143 

STATEMENT OF 

THE MILITARY COALITION (TMC) 

Submitted to the 

HOUSE ARMED SERVICES 

SUBCOMMITTEE ON MILITARY PERSONNEL 

concerning 

FY2017 DoD Budget Proposals on Military Healthcare 

February 24, 2016 

1 
60 

CHAIRMAN HECK, RANKING MEMBER DAVIS, AND DISTINGUISHED MEMBERS OF THE 

SUBCOMMITTEE. On behalf of The Military Coalition (TMC), a consortium of nationally 

prominent uniformed services and veterans' organizations, we are grateful to the committee 

for this opportunity to express our views concerning the FY2017 budget proposals on military 

healthcare reform. This statement for the record provides the collective views of the following 

military and veterans' organizations, which represent approximately 5 million current and 

former members of the seven uniformed services, plus their families and survivors: 

Air Force Sergeants Association 

Air Force Women Officers Associated 

AM VETS 

Army Aviation Association of America 

Association of Military Surgeons of the United States 

Association of the United States Army 

Association of the United States Navy 

Chief Warrant and Warrant Officer Association, U.S. Coast Guard 

Commissioned Officers Association of the U.S. Public Health Service, Inc. 

Fleet Reserve Association 

Gold Star Wives, Inc. 

Iraq and Afghanistan Veterans of America 

Jewish War Veterans of the United States of America 

Marine Corps Reserve Association 

Military Chaplains Association of the United States of America 

Military Officers Association of America 

Military Order of the Purple Heart 

National Association for Uniformed Services 

National Military Family Association 

Naval Enlisted Reserve Association 

Non Commissioned Officers Association 

The Retired Enlisted Association 

United States Army Warrant Officers Association 

United States Coast Guard Chief Petty Officers Association 

Veterans of Foreign Wars 

The Military Coalition, Inc. does not receive any grants or contracts from the federal 

government. 

2 
61 

We are very appreciative that you and the Subcommittee are seeking to ensure military health 

programs sustain medical readiness; deliver timely, top-quality care; and sustain benefit and 

cost-share levels for active duty, Guard and Reserve, and retired members and their families 

and survivors that are consistent with their extended and arduous service and sacrifice in 

uniform. 

The Military Coalition understands the current and future national security situation requires us 

to maintain a balance of investment in equipment, training, operational capabilities, as well as 

the personnel requirements which have been the cornerstone of the success of our allvolunteer force. There are finite resources for these competing demands and we strongly agree 

the Military Healthcare System (MHS) needs to evolve beyond what it is today, into a modern, 

high-performing integrated system, delivering quality, accessible care safely and effectively to 

its beneficiaries- while simultaneously meeting international health crises and national 

disasters, and honing its readiness capabilities. No other health care entity in the country is 

charged with these dual, yet mutually interdependent, mandates. 

In our collective pursuit of needed military health care reforms, our guiding principle should be 

the first principle of medical ethics- first, do no harm. 

We all share the common goals of sustaining medical readiness, delivering top-quality care, and 

avoiding damage to the career retention value of the military healthcare benefit. 

In that context, we offer this statement for the record, which provides you with our views on 

the FY2017 DOD budget request. 

FY2017 DOD Budget Request Health Care Reform Proposals 

The Coalition is disappointed the FY17 defense budget provides only vague statements on 

planned program improvements, but focuses specifically on adding several new fees and raising 

a wide array of others, especially for the retired community. 

In addition, it would require formal enrollment for DoD care, or coverage would be denied for 

the year. 

The proposal does appear to offer somewhat lower costs for currently serving beneficiaries, but 

would significantly complicate healthcare programs by renaming them, creating a new network 

system, and instituting a complex system of different co pays for different kinds of services, with 

different charges for in-network and out-of-network services. 

The budget proposals do nothing to resolve inconsistent programs for Guard and Reserve 

members and families, do not address the dis-continuity of care between mobilization and demobilization, and places them at risk for even higher out-of-network fees for those who don't 

live near military installations or heavily populated areas. 

3 
62 

The proposals would require retirees to pay more for care, and more rapidly escalate those 

charges in the future, without any assurance of improved access, quality, or wait times. The 

proposals offer very little specifics, or committed resources, on how the Department will 

improve military health care or increase its value. 

Proposed Reforms That are Favorable 

Aspects of the proposed budget which appear favorable in concept center on the issues of 

access to care and ease of referrals. The budget itself does not indicate much detail, or offer 

additional resources, but indicates MHS leaders have pledged to bridge gaps and fix problems 

by instituting and changing existing structures through: 

• Issuing MTF appointments on the first call by the beneficiary 

• Streamlining the specialty referral process 

• Working to improve continuity of care with providers 

• Increased Telehealth capabilities 

• Improving services for military children 

• Reforms to the Patient Centered Medical Home, to include extending hours 

• Monitoring beneficiary satisfaction with access to care as the metric for success 

Additionally, the proposed lower inpatient copays for TRICARE Standard/Choice and a fee 

structure which supports active duty military families are improvements. Active duty service 

members and their families do well, especially if they choose the MTF centric option, and would 

have no copayment for receiving care in network with a referral, and will have no charge for 

utilizing an urgent care center or an emergency room. 

Areas of Concern on FY17 Budget Proposals 

The budget proposes reconstituting TRICARE into two renamed options: TRICARE Select 

(currently the HMO-MTF centric option, TRICARE Prime) and TRICARE Choice (currently 

TRICARE Standard and Extra). 

TRICARE Select beneficiaries would pay reduced fees and co-payments, and would use 

primarily military hospitals and clinics. Enrollees in this option would have no cost sharing for 

care received in those locations. DoD hopes to drive down expenses with this option because it 

costs DoD less when beneficiaries use military treatment facilities (MTF) compared to receiving 

civilian care. The reduced cost structure is also designed to incentivize beneficiaries to obtain 

their care in the MTFs with the goal of maximizing MTF use and enhancing training/professional 

skills of military providers. 

The Coalition concurs with the goal but remains deeply concerned regarding the MTFs' ability 

to absorb new beneficiary demand with existing capacity. Inflexible appointing processes, 

readiness requirements and provider un-accountability for open appointing practices all serve 

4 
63 

to undermine a MTF or clinic's capacity. It's one thing to say those chronic problem areas will 

be fixed; it's another thing entirely to ensure those fixes are implemented successfully. The 

Coalition is very concerned these proposals are built upon so-far-unfulfilled commitments to fix 

them. 

The second option, TRICARE Choice, would provide an un-managed plan for the largest share of 

beneficiaries. It proposes to arrange for PPO-style provider networks, with the stated goal of 

establishing networks sufficient to provide care for 85% of participating beneficiaries. This 

arrangement poses the most risk for those in rural areas, including many Guard and Reserve 

members and families. 

In regard to fee and co-payment adjustments, DoD's budget hits retirees under age 65 the 

hardest, by charging steep enrollment fees for participating in either TRICARE option. 

Retirees would be charged an annual enrollment fee of $350 for an individual or $700 for a 

family using TRICARE Select, a 24% increase from the current fee. TRICARE Choice- or 

Standard, which currently has no enrollment fee- would require a $450 fee for individual 

coverage and $900 for families, and still would provide no guaranteed access to care. Of 

particular concern, the TRICARE program has had a long history of providers reluctant to accept 

TRICARE's lower reimbursements. This poses significant questions regarding how robust the 

PPO networks would be. 

TRICARE for LIFE (TFL) beneficiaries would also see controversial increases under the budget 

proposal. For the first time, new TFL entrants as of 1 January 2017 would be required to pay an 

enrollment fee. The Coalition believes enrollment fees should be reserved for programs like 

TRICARE Prime, which guarantees access. 

Of particular concern, TFL beneficiaries would also be subjected to means-testing, with fees 

initially set at 0.5% of retired pay, rising to 2% of retired pay for a TFL-eligible couple, to be 

phased in over 5 years. It would be accompanied by a complicated system of fee caps, one for 

flag officers and one for lower grades. The Coalition does not support means-testing, which 

imposes financial penalties for longer and more successful service on a population that is 

already paying the highest fees of any military beneficiaries. The Coalition believes strongly in 

the original intent of Congress, which expressly prohibited a separate enrollment fee for TFL, 

acknowledging this group already incurs higher costs than other military beneficiaries by 

virtue of being required to pay Medicare Part 8 premiums. The proposed new fee is 

particularly inappropriate since DoD's costs for TFL have declined precipitously, from $11 

billion in FY11 to an estimated $6.4 billion in FY17. 

Raising the catastrophic cap (maximum out-of-pocket expenses) to $1,500 per year for 

currently serving families and $4,000 for retired families (vs. current $1,000 and $3,000) 

Pharmacy co-payments would double over ten years. The budget proposal creates a multi-year 

schedule which would double most pharmacy copays, which have increased five-fold over the 

5 
64 

recent few years. In many cases, current copayments already are at or above corporate 

insurance medians. 

Indexing fees to medical inflation is another key component of the DoD proposal. It would 

provide for annual adjustments of the aforementioned fees and co-payments to the national 

health expenditure index, which is projected to rise at 5.2% per year. This is noted in the 

budget in small print- but has very large ramifications for beneficiaries. It would result in both 

active duty family and retiree co-payment increases of nearly 50% by 2025. This growth rate is 

significantly faster than the growth in TRICARE payments to providers, which means 

beneficiaries paying flat fees (rather than the current 20% or 25% ofTRICARE-approved 

charges) likely would end up paying ever-increasing shares of TRICARE-approved charges. 

The following charts illustrate how the new proposals would not only impose a significant fee 

increase immediately, but would rise dramatically in the future compared to current COLAbased adjustments. 

TRICARE Prime fees (In-Network): 

COLA vs. National Health Expenditure 

$2,300 

$2,100 

$1,900 

$1,700 

$1,500 -Increased by COLA 

$1,300 

$1.100 

$900 

$700 

$500 

2016 201.7 2018 2019 2020 2021 2D22 2023 2024 2025 2026 2027 2028 

6 
65 

TRICARE Standard fees (Out-of-Network): 

COlA vs. National Health Expenditure 

$3,000 

$3,000 

$2,500 

-Increased by COLA 

$2,000 

$1.500 

$1,000 

$500 

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 

The Coalition believes strongly that military beneficiary fees should not grow faster than their 

military compensation does. We agree with the methodology previously approved by this 

committee that annual increases should not exceed the percentage growth in military retired 

pay (i.e., inflation as measured by the Consumer Price Index). 

The Coalition also is concerned that many cost-shares that are now expressed as a percentage 

of the TRICARE-approved provider payment would be converted to flat fees, and then adjusted 

annually by the 5.2% annual health index. 

The reality is that Medicare-based payments to providers have increased very modestly over 

the years as Congress has sought to keep Medicare costs down. Assuming this trend will 

continue, the proposed schedule would steadily increase the patient's relative share of the 

payment. 

The chart on the next page shows how this would happen, assuming a 5.2% increase in the flatfee cost-share vs. a 1.5% annual increase in TRICARE payments to providers (which is actually 

more than payments have increased over the past decade). 

7 
66 

TRICARE Patient 

2018 

Pays Dr ~ 

$ 100 $ 25 

2019 $ 102 $ 26 26% 

2020 $ 103 $ 28 

2021 $ 105 $ 29 

2022 $ 106 $ 31 29% 

2023 $ 108 $ 32 30% 

2024 $ 109 $ 34 

2025 $ 111 $ 36 

2026 $ 117 $ 40 

2027 $ 120 $ 43 

2028 $ 122 $ 46 

*If adjusted by annual National Health Expenditures index (5.2%/year) as FY17 budget proposes 

Imposing an annual enrollment requirement and denying care to those who don't enroll is a 

key element of the FY17 proposal. According to DOD, failure to explicitly opt in during an 

annual open enrollment would eliminate coverage for the beneficiary and family for that year. 

The Coalition strongly opposes this requirement, which effectively would deny a service-earned 

healthcare benefit. As outlined above, some members may find it preferable to use VA facilities 

for certain care, but use their earned TRICARE benefit for family care. Others may use spousal 

or employer insurance for certain care, but TRICARE for things the other insurance doesn't 

cover. The DoD argument that it needs to be able to plan for who will use DoD care is spurious. 

DoD knows every claim and every penny spent on each eligible TRICARE beneficiary, and has 

full capacity to track trends and make future projections. The fact DoD healthcare costs have 

been flat and DoD is typically able to reprogram funds at the end of the year provide ample 

evidence of that. The practical reality is Standard beneficiaries are used to just showing their ID 

card as proof of eligibility. Many would discard notices of a requirement to enroll, especially in 

the first year, assuming it was junk mail. The consequences in some cases would be far worse 

than being told at a medical appointment they are not covered. The first time some sponsors 

could learn of the requirement is upon having a family member suffer a potentially lifethreatening injury/illness or require an extended hospital stay, and find they are denied 

coverage for failure to enroll. That should be an intolerable scenario for DoD as well as the 

beneficiary. In the Coalition's view, no eligible beneficiary should be denied their serviceearned healthcare coverage. If there is to be an enrollment requirement, any eligible 

beneficiary should be enrolled automatically upon seeking care. As it has for decades, the 

military ID card should serve as proof of enrollment. 

Net Impact of DoD-Proposed Fee Changes on Military Families 

The complexity of the proposed fee changes can be bewildering, especially since all of the 

program names would be changed as well. The actual impact of the changes on military 

families could vary widely, depending on the family's usage of various kinds of care. 

8 
67 

The following charts show how the changes would affect typical currently serving, retired 

families under age 65, and Medicare-eligible families compared to the fees they pay in 2016, 

assuming a specific set of provider visits and prescriptions. For the sake of simplicity and 

transparency, the charts use the current program names. 

In general, the changes would be financially beneficial for active duty families, but far less so for 

Selected Reserve families. 

The changes hit retired families under age 65 the hardest, imposing increases of 50% or more 

for those using in-network providers and 100% increases for those who don't- or can't-- use 

network providers. The Coalition believes these fee increases are disproportionally high, 

especially when there are no guarantees of improved access or service. 

mai!-ord-er) 

Source: FY17 President's Budget Request 

9 
68 

' Assumes 6 primary c"'"e visits, 3 specialty care visits, and 1 outpatient surgery. 

'Assumes 2 brand name and 2 generic prescriptions per month (initial fill retail; refills by mail-order) 

Source: FY17 President's budget request 

'Assumes 1% annual COLA Medicare based on lowest locome bracket fee, many pay more. 

'0-5 with 20 years of service turning in 2018 (fee would FY2021) 

Assumes 4 brand name and 4 generic prescriptions per month refills by mail-order) 

Source: FY17 President's budget request 

10 
69 

Mr. Chairman, Madam Ranking Member, and members of the Subcommittee, thank you for this 

opportunity to present our inputs on these important issues. We stand ready to work with you 

and your staff in any way that would be helpful. 

11 

WITNESS RESPONSES TO QUESTIONS ASKED DURING 

THE HEARING 

FEBRUARY 24, 2016 

(73) 

RESPONSE TO QUESTION SUBMITTED BY MR. O’ROURKE 

Secretary WOODSON. Primary Care: Current MHS capacity targets for primary 

care are for enrollment of 1,100 per adjusted full time equivalent (FTE) primary 

care managers (PCMs). Services standardize adjustments per FTE PCM in order 

maximize clinic provider availability. Current average enrollment per adjusted FTE 

PCM is 1,053; therefore, Services are open to enrollment overall as long as the MTF 

is able to provide access to care within MHS standards. The Services are working 

to increase capacity as follows: • Reducing the Utilization Rate/Demand: The major variable in increasing capacity size is utilization [(number of duty days per year x 21 encounters per day]/ 

utilization rate). Current MHS utilization or demand is over 4.1 visits per year, 

which is 187% higher than the national average of 1.43 visits per year in an 

insured population, per the CDC. If utilization/demand can be reduced, capacity 

will increase; conversely, if demand increases, primary care capacity will decrease. Numerous utilization/demand reduction efforts are underway. The MHS’ 

main strategy to reduce unnecessary utilization is through optimization of the 

Patient Centered Medical Home (PCMH) model of care. The primary utilization 

reduction initiative is PCM continuity; a patient’s continuous relationship with 

his/her PCM reduces demand because the PCM is aware of and can proactively 

address patient demand for care without multiple unnecessary appointments. In 

addition, PCMH uses team-based workflow to maximize PCMH teams’ ability 

to meet patients’ needs; the Services are ensuring teams have 3.1 support staff 

per PCM. The PCMH model also includes embedded behavioral health specialists, physical therapists and clinical pharmacists to provide high quality comprehensive care to enrollees. PCMH is also maximizing the use of virtual health 

opportunities, such as telephone visits, secure messaging and the nurse advice 

line to meet patients’ demand for care beyond face-to-face appointments with 

the PCM. The direct care system’s most mature PCMHs have reduced demand 

for face to face appointments by using the strategies identified above and have 

increased capacity above 1,100 enrollees per PCM. 

• Increasing number of direct care appointments: Simplified Appointing guidance 

increased the number of appointments available per duty day by 24% (an additional 11K appointments per duty day.) In addition, the Services hold MTFs accountable to schedule the target number of appointments based on an analysis 

of demand. 

• Expanding Operating hours: MTFs are analyzing demand by day of week and 

hour of day to determine whether a positive business case exists to expand or 

implement extended hours in PCMH and/or MTF urgent care. Many MTFs currently offer extended and weekend hours (see below). All Services are exploring 

extended hours, based on an analysis of patient demand. 

• Telehealth: Additional efforts are underway to deploy telehealth initiatives to 

increase capacity. For example, a pilot is underway to allow virtual PCM appointments using telehealth technology. In addition, a pilot is underway to 

allow remote home monitoring for patients with chronic disease; remote home 

monitoring will provide quality are using telehealth technology and increases 

convenience to the patient who does not need a face-to-face appointment. 

• Provider Distribution: The Services are moving primary care managers (PCMs) 

from areas where no additional enrollment demand exists or where there is excess primary care capacity to areas where there is insufficient capacity to meet 

appointment or enrollment demand. 

• Community Based Medical Homes (CBMHs): The Army is expanding its successful CBMH program, which implements stand-alone primary care clinics in 

population centers where beneficiaries live. For example, Harker Heights 

CBMH is located in a town near Ft Hood, Texas, where many beneficiaries reside; referrals generated support the specialty care base at Darnall AMC. The 

Army has implemented 20 CBMHs and has plans to implement 3 more in FY16 

as well as to expand eight existing CBMHs due to their popularity with beneficiaries in FY17. Staffing CBMHs after hours, with overtime GS or active duty 

rotations, has increased additional capacity, as well (see below). 
74 

Specialty Care: The process to standardize specialty care to improve processes and 

increase capacity is underway through the new Tri-Service Specialty Care Advisory 

Board (TSSCAB). The TSSCAB is responsible for executing MHS Review Action 

Plan 2, which outlines MHS requirements to develop standard processes for specialty care in MTFs. Based on the MHS Modernization study, which compared specialty care productivity to 40% of the MGMA standards, there currently is capacity 

in MTF specialty care; however, making this capacity available will require standard processes and supporting guidance be developed, similar to what was previously 

done in the MTF primary care product line. Specialty care plans to further increase 

available capacity include: Deployment of enhanced access tools such as telehealth 

and secure messaging in specialty care clinics 

• Development and implementation of Tri-Service manpower standards for support staff and support staff protocols to increase the product lines’ ability to 

meet the needs of more patients through team-based workflow 

• Development and implementation of Simplified Appointing Guidance for specialty care product lines, which will identify the number and types of appointments expected per full time equivalent per day/year. Simplified Appointing 

Guidance in primary care has increased the number of available appointments 

per duty day by over 20%. 

• Implementation of Specialty Appointing and Referral Guidance, in collaboration 

with primary care. The guidance is in final coordination with MHS governance; 

implementation is expected in CY2016. The goal of the guidance is to provide 

the patient with a confirmed specialty appointment date and time before the 

beneficiary departs the MTF after receiving a referral from a primary care manager. The guidance includes requiring the use of Tri-Service referral guidelines 

in primary care, to reduce unnecessary referrals, which will further increases 

specialty care capacity. [See page 10.] 

RESPONSES TO QUESTIONS SUBMITTED BY MS. STEFANIK 

Admiral BONO. By law, TRICARE is required to adopt Medicare’s reimbursement 

system to the extent practicable. TRICARE adopted the Outpatient Prospective Payment System in order to comply with this statutory requirement to reimburse like 

Medicare. However, TRICARE did create a General Temporary Military Contingency Payment Adjustment (GTMCPA) for those hospitals that served a disproportionate share of Active Duty Service Members and Active Duty Family Members. 

The process to apply for a GTMCPA is transparent and available to the public 

through the TRICARE web site at http://manuals.tricare.osd.mil/pages/Search.aspx, 

as well as, education from the facility’s respective Manage Care Support Contractor 

(MCSC). There are no bureaucratic challenges preventing facilities like Carthage 

from navigating through the process. 

Per the TRICARE regulation, 32 CFR 199.14, a GTMCPA is ‘‘available at the discretion of the Director. . . .’’ Carthage submitted their initial GTMCPA request in 

September 2013. DHA provided a response in December of 2013. While there are 

no official appeals of the GTMCPA decision, TRICARE has shared detailed claims 

data on which the decisions are based with hospitals who fail to meet the GTMCPA 

criteria. DHA met with Carthage and the MCSC in January 2014 to resolve any 

discrepancies. In addition, on two separate occasions DHA shared the detailed 

claims data with Carthage and provided an opportunity for feedback. There was no 

communication/feedback from Carthage for a time period of approximately 18 

months. [See page 12.] 

Admiral BONO. The process is very transparent. It is outlined in the TRICARE 

Reimbursement Manual (TRM) that is available to the public. The starting site for 

the TRM is at http://manuals.tricare.osd.mil/pages/Search.aspx. 

Hospitals who serve a disproportionate share of Active Duty Service Members 

(ADSMs) and Active Duty Family Members (ADFMs) may qualify for the discretionary payment. The exact numbers/requirement is found in the TRM language. 

Upon request by the facility, TRICARE will provide detailed claims data that was 

used to evaluate the hospital’s GTMCPA request. Further, the TRICARE Regional 

Office also serves as a liaison between the requesting facility and the MCSC in the 

event the facility expresses concerns, has questions regarding the process, and needs 

any assistance regarding the qualifying criteria or their application for a GTMCPA. 

The hospital has assistance from start to finish if they have questions about the 

process. [See page 12.] 
QUESTIONS SUBMITTED BY MEMBERS POST HEARING 

FEBRUARY 24, 2016 

(77) 

QUESTIONS SUBMITTED BY MR. O’ROURKE 

Mr. O’ROURKE. During questioning, the Honorable Jonathan Woodson stated that 

patient capacity at military treatment facilities (MTF) is market-dependent and differs based on whether the care is inpatient or outpatient in nature. Based on this, 

we have the following questions: First, what is the current inpatient capacity for 

each MTF? 

Secretary WOODSON. The Army has 1,810 current beds. Army inpatient capacity 

by MTF is provided below: 
78 

Navy: Navy Medicine currently has 842 beds. Navy inpatient capacity by MTF 

is provided below: 
79 

Air Force: Air Force currently has inpatient capacity of 664 beds, which includes 

staffing 166 beds at Walter Reed and San Antonio Military Medical Center. Air 

Force inpatient capacity (staffed beds) by MTF is provided below. The second columns reflects the results of the Air Force’s staffed beds’’ analysis. Also, highlighted 

in ‘‘green’’ are the non-AF MTFs where the Air Force Medical Service staff beds and 

the quantity. The analysis is based upon the AFMS FY17 PB MPPT file. 

DHA (NCR MD): Current NCR MD inpatient capacity is 390 beds. The NCR MD 

current bed capacity by MTF is listed below. 

Mr. O’ROURKE. How do you expect the inpatient capacity to change for each MTF 

in the event that the Department of Defense’s proposed FY 2017 TRICARE reforms 

were to be implemented in their entirety? 

Secretary WOODSON. Army: The Army expects capacity to decrease by 150 beds 

in FY17. Three MTFs are transitioning to outpatient facilities, representing a loss 

of 69 beds (Ft Knox, Ft Sill and Ft Jackson). Whether additional capacity will be 

available for new patients will be based on a confluence of both the Choice Act (pulling people away from the MTFs) and TRICARE Reform, which if approved, financially incentivizes beneficiaries to seek care at the MTFs. 
80 

Navy: Since the FY17 TRICARE reforms would primarily impact the delivery of 

private sector care, Navy Medicine anticipates minimal effects to MTF inpatient capacity. MTFs will continue to utilize its eligible beneficiary population enrolled in 

a managed care option, self- managed option, or TRICARE for Life, to optimize its 

inpatient and outpatient capacities to sustain critical medical skills and capabilities. 

The proposed reforms attempt to support military readiness and funnel beneficiary 

care to the MTF while balancing beneficiary choice, access to care, and cost containment. The proposal expands choice for non-active duty beneficiaries to choose a 

health benefit option that best meets their needs. The co-pay/cost-sharing structure 

is also modified to provide incentives to select the managed care option and highlights the MTF as a preferred place of care. Implementing an enrollment fee to participate in TRICARE for Life will also have minimal impact to MTF inpatient capacity and can continue to utilize the TRICARE Plus program and other recapture of 

care mechanisms to support military medical staff readiness and training. 

Air Force: Enacting PB17 would not change inpatient capacity at AF MTFs. If 

fully enacted, the plan would maintain current workload levels at our facilities by 

preserving TRICARE Prime as a healthcare option for retirees and their family 

members. The plan would also continue the practice at not charging copays at for 

care provided at our MTF to incentivize patients to seek their care at the military 

facility. 

DHA (NCR MD): PB17 should not impact inpatient capacity at Walter Reed National Military Medical Center (WRNMMC) or Fort Belvoir Community Hospital 

(FBCH) 

Mr. O’ROURKE. In what MTFs does the capacity currently exist to potentially accept non-TRICARE Veteran’s Affairs patients? 

Secretary WOODSON. DHA: Currently 97 MTFs (hospitals and clinics) provide care 

to (have capacity for) VA patients under DOD/VA sharing agreements. Further, 

Army Medical Winn Ft. Stewart, GA, and Air Force Medical Travis, CA, are examples of 2 hospitals that have provided VA patients mental healthcare through the 

sharing agreement program. FY17 TRICARE reforms are not the only influencers 

of VA patients being seen in DOD hospitals. VA is experiencing a budget shortfall 

in non-VA purchased care funding currently used to pay for DOD hospitals’ provided 

care. Due to this shortfall, VA Directors are making the choice to re-direct VA patients downtown. VA is not authorized to use Choice dollars to pay for DOD provided care unless DOD MTFs become VA Choice (network) providers or legislative 

relief is given to allow Choice dollars to pay for DOD care. Since implementation 

of the Veterans Choice Act and VA’s funding shortfalls in accounts used to pay DOD 

MTFs, DOD saw a decrease of referrals to DOD in summer 2015 and in 2016. 
81 

Army: The Army currently provides capacity to and $50M in inpatient, outpatient 

and/or specialty care to VA beneficiaries. The Army does not anticipate having additional capacity for VA patients beyond current levels. If the VA pulls its referrals 

from Army MTFs, similar to what is occurring in Air Force and Navy MTFs, inpatient and specialty care capacity will be available, which there Army will fill by inviting DOD retirees back into the MTFs. Army MTFs currently providing care to 

VA beneficiaries are: • Tripler AMC • William Beaumont AMC • Eisenhower AMC • Basset ACH • Womack AMC • McDonald AHC • Ireland ACH (Transitioning to an AHC in FY17) • Keller ACH • Martin ACH • Moncrief ACH (Transitioning to an AHC in FY17) • Reynolds ACH (Transitioning to an AHC in FY17) • Lyster AHC • Evans ACH • Gen Leonardwood ACH • MEDDAC Korea • Guthrie AHC • Landstuhl RMC 

Navy: Excess capacity to see VA patients varies based on Navy MTF: • Navy MTFs seeing the most VA patients include Naval Medical Center San 

Diego, Naval Medical Center Portsmouth, U.S. Naval Hospital Guam, Naval 

Hospital Pensacola and have capacity in clinical specialties that support graduate medical education and/or readiness. • Within the last year, Naval Hospital Bremerton and Naval Hospital Lemoore 

began seeing VA patients. • Naval Hospital Camp Lejeune treats small amount of VA patients, while Naval 

Hospital Camp Pendleton and Naval Hospital Jacksonville have expressed interest and explored the topic, but not yet signed agreements. • Naval Health Clinic Charleston, Naval Hospital Beaufort, and Naval Branch 

Health Clinic Key West have entered joint ventures where the Navy provides 

space and equipment and VA brings in providers and staff who then sees both 

VA and DOD beneficiaries. Workload generated at joint venture sites are recorded in each agency’s respective Electronic Health Record. 

Air Force: Currently there are 48 active DOD/VA sharing agreements involving 

6 inpatient and 20 ambulatory care facilities. Included in the 48 are 9 Master Sharing Agreements that cover all available services at those sites allowing them to see 

veterans throughout the available clinical services based on capacity and capability. 

With the exception of the ambulatory surgical centers most of the sharing agreements at the 20 ambulatory care facilities are for education and training, laundry 

services, or other administrative requirements. Available clinical services at most 

ambulatory care facilities are generally for primary/family care and rarely include 

specialty care clinics. Based on the availability of clinical services, there are at least 

nine sites that provide significant levels of care to the VA and have capacity to see 

more. The nine sites include: 10th Medical Group (MDG) at the USAF Academy, 59 

MDG (San Antonio Military Medical Center) at Lackland AFB, 633 MDG at Joint 

Base Langley-Eustis, 673 MDG at Joint Base Elmendorf-Richardson, 60 MDG at 

Travis AFB, 81 MDG at Keesler AFB, 96 MDG at Eglin AFB, 88 MDG at WrightPatterson AFB, and 99 MDG at Nellis AFB. The seventeen other sharing agreement 

sites may see small numbers of veterans but have only minimal capacity to see more 

with the exception of 779 MDG at Joint Base Andrews who appears to have additional capacity as an ambulatory surgical center. 

DHA (NCR MD): Both WRNMMC and FBCH currently provider care and have 

capacity to accept non-TRICARE Veteran’s Affairs patients. NCR MD is actively engaged with VISN 5 to best determine how NCR MD facilities can assist the VA in 

meeting demand for specialty care and inpatient services. 

Mr. O’ROURKE. Highlight specifically as it pertains to capacity in mental 

healthcare treatment. 

Secretary WOODSON. Army: The Army does not anticipate having additional mental health inpatient capacity for VA beneficiaries 

Navy: Currently, within Department of the Navy, there is limited excess capacity 

in mental health that could be offered to VA beneficiaries based on current access 

to care priorities. 
82 

Air Force: Information is provided on two MTFs participating in the current 

DOD/VA agreement: 

• Travis—Currently capped at 8 beds due to a temporary nurse shortage (anticipate expanding to full 12-bed capacity by early Apr 2016). There is a VA sharing agreement already in place. Capacity would not change without manning 

solutions, particularly provider staff. Demand exceeds current capacity. Travis 

accepts AD and VA patients on a first come, first served basis. 

• JBER—Capacity of 10 beds; limited by current provider manning. This capacity 

exceeds current demand of 2–3 inpatients; therefore, potential exists to provide 

beds to VA patients. This is also a DOD–VA Joint Venture hospital. 

DHA (NCR MD): In the NCR MD, there is little excess capacity in mental health 

available and would need to be prioritized based on current beneficiary demand. 

Mr. O’ROURKE. What, if any, additional facilities would have this capacity in the 

event that the Department of Defense’s proposed FY 2017 TRICARE reforms were 

to be implemented in their entirety? 

Secretary WOODSON. Army: Enacting PB17 would not change inpatient mental 

health capacity at Army MTFs 

Navy: Should the proposed FY17 TRICARE reforms be implemented, Navy Medicine anticipates very little impact to current mental health capabilities and capacity. 

There are currently 62 Navy MTFs with dedicated outpatient or inpatient mental 

health services. 

Air Force: Enacting PB17 would not change inpatient mental health capacity at 

AF MTFs. 

DHA (NCR MD): Implementing PB17 would not have a significant impact on 

NCR MD capacity. 

Æ