Report to Congressional Committees

United States General Accounting Office

GAO

October 2001 DEFENSE HEALTH

CARE

Disability Programs

Need Improvement

and Face Challenges

GAO-02-73
Page i GAO-02-73 DOD Disability Programs

Letter 1

Results in Brief 2

Background 5

Number of Program Participants and Program Costs Differ

Significantly 10

Programs Differ in Guidance; TRICARE Changes Will Affect

Caseloads 12

Questions Remain About the Adequacy of PFPWD’s Monthly

Maximum 19

ICMP-PEC and PFPWD Benefits Are Better Than or Comparable to

Other Programs and Plans 21

Conclusions 25

Recommendations 26

Agency Comments and Our Evaluation 27

Appendix I Scope and Methodology 30

Appendix II TRICARE Cost-Shares, Deductibles, and Copayments 32

Appendix III PFPWD Monthly Cost-Share Is Guided by Pay Grade 33

Appendix IV PFPWD Exclusive Benefits and PFPWD Benefits Also

Available in TRICARE Basic 34

Appendix V Comments From the Department of Defense 35

Appendix VI GAO Contacts and Staff Acknowledgments 38

GAO Contacts 38

Staff Acknowledgments 38

Contents
Page ii GAO-02-73 DOD Disability Programs

Tables

Table 1: PFPWD Program Costs and Estimated Beneficiary Costs

by Fiscal Year 12

Table 2: TRICARE Cost-Shares, Deductibles, and Copayments for

Active Duty Family Members 32

Table 3: TRICARE Cost-Shares, Deductibles, and Copayments for

Retirees, Their Family Members, and Others 32

Table 4: PFPWD Exclusive Benefits and PFPWD Benefits Also

Available in TRICARE Basic 34

Figure

Figure 1: Numbers of PFPWD Beneficiaries Grouped by Fiscal Year

and Number of Participants per Family 11
Page iii GAO-02-73 DOD Disability Programs

Abbreviations

ADFM active duty family member(s)

ADL activities of daily living

CHAMPUS Civilian Health and Medical Program for the Uniformed

Services

DME durable medical equipment

DOD Department of Defense

EPSDT Early and Periodic Screening, Diagnostic and Treatment

FEHBP Federal Employees Health Benefits Program

HCBS Home and Community Based Services

HHD Home Health Demonstration

HMO health maintenance organization

ICMP-PEC Individual Case Management Program for Persons with

Extraordinary Conditions

MCSC Managed Care Support Contractor

OPM Office of Personnel Management

PFPWD Program for Persons with Disabilities

PTFH Program for the Handicapped

REM Rare and Expensive Case Management Program

SNF skilled nursing facility

TFL TRICARE For Life

TMA TRICARE Management Activity
Page 1 GAO-02-73 DOD Disability Programs

October 12, 2001

Congressional Committees

The Department of Defense (DOD) health program—TRICARE—provides

medical care for about 8.3 million active duty service members and retired

beneficiaries and their respective dependents and survivors. As

supplements to TRICARE, DOD provides benefits for persons with

extraordinary disabling physical or mental disorders through its Individual

Case Management Program for Persons with Extraordinary Conditions

(ICMP-PEC) and for less severely disabled active duty dependents through

its Program for Persons with Disabilities (PFPWD). Recently, military

families and advocacy groups have raised concerns about problems

accessing ICMP-PEC benefits. Also, the DOD Authorization Act for fiscal

year 2001 entitled all 1.4 million military retirees age 65 and older and their

dependents and survivors to TRICARE benefits for life (TFL)1

 effective

October 1, 2001, which may have caseload and cost effects on ICMP-PEC.2

The 2001 Defense Authorization Act required that we review DOD’s

supplemental disability programs—ICMP-PEC and PFPWD.3

 As agreed

with your offices, our objectives were to determine each program’s

number of participants and benefit costs; whether the programs are

generally meeting their purposes, accessible to their target groups, and

adequately administered; the extent to which PFPWD’s monthly maximum

benefit limit may affect beneficiaries’ ability to obtain services; how the

programs’ selected benefits generally compare to Medicare, Medicaid, and

Federal Employees Health Benefit Program (FEHBP) plan benefits; and

whether and, if so, what program improvements may be needed.

In doing the work we interviewed and obtained program records from

TRICARE Management Activity (TMA) officials, TRICARE Managed Care

Support Contractors (MCSC) representatives, DOD Regional Lead Agent

Medical Directors and case managers, and military beneficiary advocacy

groups. We reviewed the programs’ legislative histories and policies,

 1

The Floyd D. Spence National Defense Authorization Act for 2001, hereinafter cited as the

2001 Defense Authorization Act.

2

P.L. 106-398, Section 712.

3

P.L. 106-398, Section 701(d).

United States General Accounting Office

Washington, DC 20548
Page 2 GAO-02-73 DOD Disability Programs

ICMP-PEC case files, an ICMP-PEC database installed during our review

aimed at providing needed ICMP-PEC management data, TMA’s proposed

ICMP-PEC rule published in the Federal Register in August 2001,4

 and

PFPWD claims data. We reviewed Medicare, Medicaid, and FEHBP plan

documents. Also, we discussed illustrative ICMP-PEC and PFPWD cases

and the general comparability of program and plan benefits with officials

and representatives from California, Maryland, and Alabama Medicaid

programs and three FEHBP plans. Further methodological details are

given in appendix I. We conducted our work from December 2000 through

August 2001 in accordance with generally accepted government auditing

standards.

As of June 2001, there were 38 ICMP-PEC participants whose total

services for fiscal year 2001 were projected to cost about $6 million with

annual per-case costs projected to range from about $13,000 to $382,000.

Also, 10 participants from earlier demonstration programs were granted

continued care coverage under ICMP-PEC with projected fiscal year 2001

costs of about $2.5 million. Despite record system and database

improvements made during our work, TMA managers still cannot track

ICMP-PEC’s actual case-by-case costs. Regarding PFPWD, for fiscal year

2000, the most recent year for which data were available, there were 3,843

participants whose services cost about $12 million.

Currently ICMP-PEC lacks a clearly enunciated purpose, well-defined

eligibility criteria and benefits, and an efficient application process. This

complicates regional program managers’ ability to identify potentially

qualifying cases and makes TMA’s case acceptance/denial and benefit-level

decisions seem arbitrary. Also the program’s ambiguities obstruct efforts

to inform potential participants of its availability. Some regional program

managers told us that as a result they believe ICMP-PEC’s caseload is

lower than the actual number of eligible patients. Further, some ICMPPEC regional managers told us that the application process is complex and

administratively burdensome, involving many clinical reviews of a

patient’s condition before final approval or denial. However, given the high

average cost per beneficiary, clearly defined eligibility criteria and an

effective eligibility determination process are critical. Recently enacted

 4

The ICMP-PEC proposed rule explains legislative changes made to the program and makes

amendments to clarify specific policies that relate to the program. Federal Register, Vol. 66,

No. 148, August 1, 2001, pp 39699-39705.

Results in Brief
Page 3 GAO-02-73 DOD Disability Programs

TRICARE changes, effective October 1, 2001, entitling senior retirees to

lifetime DOD health benefits, potentially including ICMP-PEC benefits,

further underscore the need to address ICMP-PEC’s problems before

expected caseload increases occur. In this respect, TMA’s proposed rule

for ICMP-PEC does not clearly enunciate its purpose nor does it

substantially change eligibility criteria; therefore current problems may

persist. And, while the rule attempts to clarify ICMP-PEC’s services and

would extend service priority to active duty family members (ADFM)

before retirees and their dependents, the rule and its accompanying

operating policies and procedures are not expected to be completed until

the end of 2001.

PFPWD is an established program with well defined criteria and benefits

that assist thousands of ADFMs with their special health care service and

equipment needs. Potential participants have clear expectations of

whether they qualify and, according to regional program managers, have

ready access to the program. Further, PFPWD’s application process is

relatively straightforward and, for the most part, is managed and operated

at regional levels. Case managers told us, however, that they need to do a

better job and lack procedures for communicating across regions about

PFPWD patients leaving and entering their jurisdictions. Because patients

changing jurisdictions must reapply for the program in their new location,

managers said they need to better facilitate and help expedite PFPWD

patients’ reapplications.

Prior to April 2001, PFPWD provided many services and equipment items

at modest cost-shares to ADFMs with severe disabilities that were also

available at higher copayments to less seriously disabled ADFMs under

TRICARE Basic.5

 The 2001 Defense Authorization Act, however, effective

April 1, 2001, eliminated the copayments for ADFMs under TRICARE

Prime6

 but not under PFPWD. As a result, PFPWD families can now buy

many of the services and equipment they need under TRICARE Prime at

 5

In 1995, with TRICARE’s introduction, some PFPWD services and equipment also became

available under TRICARE Basic, although PFPWD patients were required until 1997 to

obtain all services related to their disability from PFPWD. TRICARE—also referred to as

TRICARE Basic—is a triple-option benefit program designed to give beneficiaries a choice

among a health maintenance organization, a preferred provider organization, and a fee-forservice benefit.

6

TRICARE Prime, a health maintenance organization benefit, is one of three benefit options

under DOD’s health care program referred to as TRICARE Basic.
Page 4 GAO-02-73 DOD Disability Programs

no cost. And, as some regional case managers have told us, PFPWD

caseloads may decrease and the program may no longer be needed.

Data are not available on how many PFPWD participants are affected by

the program’s $1,000 monthly benefit limit. Regional program managers

we spoke with differed on whether the limit was keeping beneficiaries

from obtaining needed services and thus should be increased. Some

officials told us the limit has not kept pace with medical service and

equipment cost increases because the limit has not changed materially in

the last 15 years. However, other officials told us they are able to schedule

services and buy equipment by spreading costs over several months so

that the PFPWD $1,000 monthly limit is rarely an obstacle. Some

participants may use Medicaid to obtain services above the monthly limit

and others may rely completely on Medicaid due to the $1,000 monthly

limit. Other officials told us that the recent TRICARE Prime copayment

changes would cause PFPWD families to meet some of their needs under

TRICARE Basic and thus reduce PFPWD’s caseload costs. This could

obviate the need to raise the limit. The effect of eliminating TRICARE

Prime’s copayments on PFPWD service use and caseloads may need to be

reviewed before attempting to assess the monthly limit’s adequacy.

Comparing ICMP-PEC’s home care benefit—up to 24 hours of skilled

nursing care per day, 7 days per week—and unlimited skilled nursing

facility (SNF) coverage with Medicare and selected Medicaid programs

showed that ICMP-PEC’s benefits are more generous. Medicare’s home

health benefit is intermittent7

 and its SNF coverage is limited to 100 days

following at least a 3-day hospital stay. The selected Medicaid programs

we reviewed cover unlimited SNF care, but in-home services may be

limited, especially for persons over age 21. The FEHBP plans reviewed

have limited in-home and SNF coverage, but each also offers extended

coverage for patients with unusual medical needs who may qualify based

on individual case-by-case assessments. Plan representatives could not

elaborate on such coverage, citing the need for complete case information

and examination by a plan physician. PFPWD services are comparable to

Medicare services and also the reviewed Medicaid services available to

those under age 21.8

 Services available to patients over age 21, however,

 7

Skilled nursing care on an intermittent basis means services on fewer than 7 days per

week or for fewer than 8 hours per day for periods of 21 days or fewer. There are no limits

on the number of visits or length of coverage, and no copayments or deductibles apply.

8

About 85 percent of PFPWD patients are under age 21.
Page 5 GAO-02-73 DOD Disability Programs

are limited under Alabama’s Medicaid program and somewhat so under

California’s Medicaid program—unlike Maryland’s program and PFPWD

which provide the same services to patients regardless of age. For the

plans we reviewed, FEHBP coverage for care needs, such as hearing aids

and wheelchair maintenance, is less than PFPWD coverage for the same

needs.

We are recommending that DOD clarify ICMP-PEC, explain how its

legislative changes are to be implemented, and improve its case-by-case

cost-data tracking. Also, DOD needs to develop procedures to facilitate the

transfer of PFPWD cases from region to region and reassess PFPWD after

the effects of eliminating TRICARE Prime copayments on its costs and

caseload are known. In commenting on a draft of this report, DOD

concurred with our recommendations.

DOD’s health care program—TRICARE—provides health care services to

active duty military members and their dependents and military retirees

and their dependents. Health care for eligible beneficiaries is managed on

a regional basis at military hospitals and clinics supplemented by

contracted civilian services. Five Managed Care Support Contractors

(MCSC) administer the TRICARE health benefit in 11 TRICARE regions in

the contiguous United States through provider networks. TRICARE—also

referred to as TRICARE Basic—is a triple-option benefit program designed

to give beneficiaries a choice among a health maintenance organization

(TRICARE Prime), a preferred provider organization (TRICARE Extra),

and a fee-for-service benefit (TRICARE Standard).9

 Cost sharing varies

among the three options from low per-service costs for active duty

families under TRICARE Prime to a percentage of allowable charges under

TRICARE Standard. (See appendix II for a list of TRICARE cost-shares,

deductibles, and copayments.)

In 1999, DOD implemented ICMP-PEC. The program was an outgrowth of

DOD’s Home Health Demonstration (HHD) projects established to test

DOD’s ability to provide home health care in lieu of hospital care to

patients with exceptionally serious, long-term, costly, and incapacitating

 9

TRICARE Standard was formerly called the Civilian Health and Medical Program for the

Uniformed Services (CHAMPUS).

Background

ICMP-PEC Program
Page 6 GAO-02-73 DOD Disability Programs

physical or mental conditions.10 ICMP-PEC provides qualifying patients

with care and equipment not available under TRICARE Basic by waiving

TRICARE Basic’s restrictions on such services or supplies.11 The National

Defense Authorization Act for fiscal year 2000 (2000 Defense

Authorization Act)12 eliminated the program’s original 365-day benefit limit

and made ICMP-PEC first payer to Medicaid.13 The 2001 Defense

Authorization Act imposed a $100 million annual spending cap on ICMPPEC.

ICMP-PEC requires that a qualifying patient be determined to be

“custodial” under TRICARE or require continuing extensive services. A

custodial patient must be disabled mentally or physically for a prolonged

period; require assistance with the activities of daily living (ADL), which

include eating, bathing, dressing, toileting, and transferring; not be under

active medical, surgical, or psychiatric treatment that would reduce the

disability such that the patient could function outside a protective,

monitored, and controlled environment; and require a protected,

monitored, or controlled environment whether in an institution or a home.

Alternatively, a qualifying patient must have high TRICARE service costs

in the year preceding his or her ICMP-PEC eligibility or require clinically

appropriate services or supplies from various providers and be able to be

treated more appropriately and cost effectively at a less intensive level of

care under ICMP-PEC.14

Patients who qualify for ICMP-PEC predominantly receive skilled nursing

services. Such services can only be furnished by a registered nurse,

 10The first HHD project began in July 1986 for dependents of active duty service members

and members who died in the service. The second HHD project began in July 1988 and

expanded coverage to military retirees and dependents of retirees. For additional

information, see DOD Health Care: Further Testing and Evaluation of Case-Managed Home

Care is Needed (GAO/HRD-93-59, May 21, 1993) and Evaluation of the Champus Home

Health Care-Case Management Program, Office of the Secretary of Defense, June 1992.

1110 U.S.C. §1079(a)(17).

12P.L. 106-65, §703(b).

13Any Medicaid expenses incurred by ICMP-PEC beneficiaries are fully reimbursable by

ICMP-PEC to the extent such services are available under ICMP-PEC.

14TMA’s August 2001 proposed ICMP-PEC rule would eliminate as one of the qualifying

criteria the alternative that a qualifying patient must have high TRICARE service costs in

the year preceding ICMP-PEC eligibility or require clinically appropriate services or

supplies from various providers.
Page 7 GAO-02-73 DOD Disability Programs

licensed practical nurse, or licensed vocational nurse and are required to

be performed under a physician’s supervision. Once a patient is deemed

custodial he or she can receive 1 hour per day of skilled nursing care in the

home under TRICARE Basic. Through ICMP-PEC, up to an additional 23

hours per day in the home is available if medically necessary. As an

alternative, skilled nursing care in a facility may be authorized through

ICMP-PEC if medically necessary. ICMP-PEC does not cover assistance

with ADLs. Cases undergo review periodically and, in particular, on a

family’s movement to another region.

MCSC program managers identify potentially eligible cases and, with

regional lead agent concurrence, submit them to the TMA office in

Colorado (TMA West), which until May 2001 had final acceptance or

denial authority. The National Program Director, located at TMA

headquarters in Falls Church, Virginia, has general oversight and program

policy and procedure development responsibilities but had not been

directly involved in final case decisions. In May 2001, however, final case

decision responsibilities and functional program oversight were

transferred to TMA headquarters.15

Also, over the past year TMA has been working to develop a final ICMPPEC rule to implement legislative changes to ICMP-PEC made in fiscal

years 2000 and 2001 and to concurrently amend the TRICARE operations

and policy manuals. Both actions are expected to be completed by the end

of 2001. The proposed rule was entered into the Federal Register on

August 1, 2001, and TMA was accepting public comments until October 1,

2001. Once comments have been reviewed, the rule, as appropriate, will be

amended, its contents translated into operating policies and procedures in

the TRICARE manuals, and the information made available to regional

program managers and lead agents. Subsequently, contract modifications

incorporating the program changes will need to be drawn up and

negotiated with the MCSCs who help administer ICMP-PEC.

PFPWD provides services and equipment to ADFMs who have moderate or

severe mental retardation or serious physical disabilities.16 Prior to

 15TMA West’s Contracting Officer remains responsible for providing ICMP-PEC case files

for independent peer review.

16The program originally did not have a separate name. It was named the Program for the

Handicapped (PFTH) in 1977 and was renamed the Program for Persons with Disabilities

(PFPWD) in 1997.

PFPWD Program
Page 8 GAO-02-73 DOD Disability Programs

October 1997, PFPWD patients were required to obtain all services related

to their disability from PFPWD and all other needed care from TRICARE

Basic. Now, PFPWD patients may receive services related to their

disability through TRICARE Basic. Currently, PFPWD requires that before

PFPWD benefits are provided, a determination be made that the patient’s

needed care cannot, with the exception of Medicaid covered care, be met

using other public resources and facilities. Examples of PFPWD qualifying

disabilities are epilepsy, cerebral palsy, multiple sclerosis, muscular

dystrophy, and hearing or vision loss. Services covered include speech and

physical therapy, durable medical equipment (DME), transportation to and

from medical appointments, and hearing aids. Upon the family’s

movement to another TRICARE region, the patient is required to reapply

for program services there.

Beneficiaries are responsible for a cost-share each month they receive a

service. The cost-share amount, ranging from $25 to $250, is based on the

sponsor’s rank (see appendix III). Also, the program has a monthly benefit

cap of $1,000 per family. Beneficiaries are responsible for costs beyond the

limit. In families with more than one PFPWD participant, only the least

expensive participant in a given month is subject to the monthly limit,

while the family’s other participants are not subject to the limit for that

month nor a cost-share requirement.

Recently, significant legislative changes were made to TRICARE Basic. As

of April 1, 2001, copayments under TRICARE Prime were eliminated for

active duty beneficiaries but not under PFPWD. Currently, about 67

percent of PFPWD claims are for persons enrolled in TRICARE Prime.

Also, Medicare-eligible uniformed services retirees age 65 and over and

their spouses, dependents and survivors are entitled to TRICARE benefits

as of October 1, 2001—referred to as TRICARE For Life (TFL).17 Eligible

beneficiaries who receive care from Medicare providers will have

TRICARE as their secondary payer. Also, those who qualify for ICMP-PEC

will have access to benefits—such as up to 24 hours per day of skilled

nursing care in the home—that are not covered by Medicare.

 17Section 712(a)(2)(A) of the 2001 Defense Authorization Act requires that all Medicareeligible beneficiaries be enrolled in Medicare Part B (which covers physician, outpatient

hospital, laboratory and other services) to receive the TRICARE benefit.

Recent Legislative

Changes
Page 9 GAO-02-73 DOD Disability Programs

Medicare, the nation’s largest federal health insurance program, provides

health insurance to people age 65 and over and to those who have endstage renal disease, (permanent kidney failure requiring regular dialysis or

a transplant) and certain people with disabilities. There is a 24-month

waiting period for Medicare coverage based on disability. Medicare part A

covers inpatient hospital, SNF, certain home health, and hospice care.

Enrollment in part A (Hospital Insurance) is automatic at age 65 for all

workers who paid the hospital insurance payroll tax during their working

years or whose spouse is covered. Beneficiaries generally pay no premium

for part A coverage, but they are liable for required deductibles,

coinsurance, and copayment amounts. Medicare-eligible beneficiaries may

elect to purchase part B (Supplemental Medical Insurance), which covers

physician, outpatient hospital, laboratory, and other services. Beneficiaries

must pay a premium for part B coverage, currently $50 per month, and are

also responsible for part B deductibles, coinsurance, and copayments.

Most of Medicare’s 40 million beneficiaries are enrolled in both part A and

part B.

Certain TRICARE beneficiaries are also eligible for Medicaid, a joint

federal-state, means-tested entitlement program that provides medical

assistance to certain individuals and families with low income and

resources. Under broad federal guidelines, each state establishes its own

eligibility standards, benefits package, and program administration. As a

result, there are essentially 56 different Medicaid programs—one for each

state, territory, and the District of Columbia. Nonetheless, under the Early

and Periodic Screening, Diagnostic and Treatment (EPSDT) program, all

state Medicaid programs are required to cover any service or item

medically needed for qualifying persons under the age of 21. Also,

Medicaid programs often cover a variety of supportive services for persons

with long-term needs.

Established in 1959, FEHBP is an employer-sponsored program for federal

civilian employees and annuitants and certain of their dependents.

Participation is voluntary. The Office of Personnel Management (OPM) has

overall administrative responsibility for contracting with private health

insurance carriers and plans sponsored by federal employee and postal

organizations. The contracts provide—for fixed, predetermined plan

premiums—benefits that OPM judges affordable and appropriate for the

needs of federal workers and retirees. The FEHBP law does not require

plans to offer a particular benefit package, although OPM requires that

they cover such services as child immunizations, cancer screening,

Medicare

Medicaid

FEHBP
Page 10 GAO-02-73 DOD Disability Programs

prescription drugs, mental health, and organ transplants. Plans are

required to limit enrollees’ annual out-of-pocket expenses for deductibles

and coinsurance but can vary with regard to availability of high and low

options, deductibles, coinsurance, and copayment requirements.

As of June 2001, there were a total of 38 participants in ICMP-PEC whose

services for the fiscal year were projected to cost about $6 million. Also,

the care costs of 10 other participants from earlier HHD programs that

preceded ICMP-PEC were transferred to ICMP-PEC. The projected costs

for such services for this fiscal year are $2.5 million. TMA managers lack

the ability to track actual program costs during the year despite their

efforts to improve data collection made during our review. Regarding

PFPWD, for fiscal year 2000 there were 3,843 participants whose services

cost about $12 million.

Thirty patients are dependent children, 6 are dependent spouses, and 2 are

retired military members. About 80 percent of the patients are less than

age 22 and the rest are between 22 and 64 years of age.18 Thirty-six are

receiving skilled nursing services in the home and 2 are receiving

occupational and physical therapy. Demographic information was not

available on the 10 patients transferred to the ICMP-PEC from the HHD.

However, these patients were receiving skilled nursing and one of them

was also receiving occupational and physical therapy. Early in our review

we observed that TMA’s ICMP-PEC records were incomplete, contained

inconsistent data, and were not kept current. In July 2001, TMA officials

described to us their recently installed ICMP-PEC data system aimed at

addressing such problems. While significantly improving the automated

compilation of needed data, still lacking is their ability to compile actual

case-by-case cost data as it accrues during the fiscal year. Among other

management uses such data are needed to track progress against ICMPPEC’s spending cap.

For fiscal years 1998, 1999, and 2000 the annual number of PFPWD

participants has ranged from about 3,714 to 3,843 (see figure 1). Most such

participants have been dependents under age 21. Most services provided

have been therapeutic in nature, such as medically supervised speech,

 18Ages were recorded for all but 1 patient.

Number of Program

Participants and

Program Costs Differ

Significantly

ICMP-PEC Participant

Data

PFPWD Participants,

Services, and Costs
Page 11 GAO-02-73 DOD Disability Programs

language, and hearing therapy. Most participating families have one

member in the program, but 2 percent to 3 percent of families have more

than one member in the program.

Figure 1: Numbers of PFPWD Beneficiaries Grouped by Fiscal Year and Number of

Participants per Family

a

Fiscal year total.

Source: GAO analysis of PFPWD claims data provided by TMA.

3400

3500

3600

3700

3800

3900

1998 1999 2000

800

600

400

200

0

Beneficiaries

(1 per family)

(2 per family)

(3 per family)

(4 per family)

Fiscal years

PFPWD beneficiaries

3714a

 3472

214

24

4

3807a

3600

176

27

4

3843a

3606

210

27
Page 12 GAO-02-73 DOD Disability Programs

Since fiscal year 1998, PFPWD total program costs have ranged from about

$11 million to $12 million per fiscal year, with DOD paying about 85

percent of the service and equipment costs and the remaining potentially

paid either out-of-pocket or by Medicaid, other health insurance, or other

means (see table 1).

Table 1: PFPWD Program Costs and Estimated Beneficiary Costs by Fiscal Year

Cost to DOD

Estimated

beneficiary costa Total costs

1998 $9,436,918 $1,906,206 $11,343,124

1999 9,710,398 1,654,673 11,365,071

2000 10,389,500 1,538,434 11,927,934

a

Data may not include beneficiary cost-shares above the $1,000 monthly limit.

Source: September 2000 TRICARE Statistical Phaseback Report for fiscal year 1998 and March

2001 TRICARE Statistical Phaseback Report for fiscal years 1999 and 2000.

ICMP-PEC has operated for about 3 years with frequent changes and

without clear policy guidance, a situation that has lead to confusion about

the program’s purpose, eligibility criteria, and benefits. The program’s lack

of clarity may further exacerbate such problems now that the age-65-andover military retiree population has become entitled to participate.

PFPWD, on the other hand, has clearly defined regulations with specific

eligibility and benefit criteria. Qualifying cases can be readily identified

using program guidance. However, in April 2001, copayments were

eliminated under TRICARE Prime,19 so PFPWD families may opt to obtain

many services and equipment they now receive under PFPWD with a costshare through TRICARE Prime for free. Thus, PFPWD’s caseloads may

decrease.

 19Prescription medication copayments were not eliminated.

Programs Differ in

Guidance; TRICARE

Changes Will Affect

Caseloads
Page 13 GAO-02-73 DOD Disability Programs

Among DOD and MCSC managers we interviewed, the general consensus

is that ICMP-PEC’s overall purpose is unclear and that it lacks clear policy

guidance largely because it has been in a state of change since

implementation. Also generally agreed is that ICMP-PEC lacks clearly

defined eligibility criteria and benefits such that program specifics cannot

be adequately communicated to potential participants. While a patient’s

access to such an expensive benefit needs to be carefully determined, the

ICMP-PEC application process involves several clinical reviews of a

patient’s condition before final approval or denial and may be too complex

and administratively burdensome. Recently enacted TRICARE changes

entitling military retirees aged 65 and over and their dependents and

survivors to lifetime DOD health benefits, including ICMP-PEC benefits,

further underscore the need to address ICMP-PEC’s problems before

potential caseload increases occur. In that regard, DOD is working to

complete ICMP-PEC’s final rule and operating procedures, and efforts

have recently begun to develop legislative proposals to improve ICMPPEC.

Since March 1999, when ICMP-PEC was first implemented, the program

has been legislatively and administratively changed each year—and final

regulations have yet to be promulgated. For example, the 2000 Defense

Authorization Act eliminated the program’s 365-day benefit limit.20 This

converted the program from one of temporary assistance while qualifying

patients transitioned to other care resources, including Medicaid, to

permanent assistance of potentially unlimited duration. The 2000 Defense

Authorization Act made ICMP-PEC primary payer to Medicaid. This

changed the program from one that relied on Medicaid and other public

resources before providing services into a qualifying beneficiary’s first

resort for care. These changes had the potential for increasing ICMP-PEC’s

costs.21

In an effort to explain the new changes and how the program should

operate, in March and November 1999 and March and April 2000, TMA

issued informal guidance to regional program managers. However, DOD

regional and MCSC officials told us that the successively changing

guidance did not adequately address the program’s lack of clear eligibility

 20P.L. 106-65, §703(b).

21The 2001 Defense Authorization Act did impose a $100 million program spending cap.

However, current spending is less than $10 million, so the cap will likely constrain services

only if the number of enrollees expands significantly.

ICMP-PEC Purpose and

Operating Rules Need

Clarification Before

Expected Caseload Hikes

Occur

Program Changes and Limited

Policy Guidance
Page 14 GAO-02-73 DOD Disability Programs

criteria and benefits or issues that the legislative changes had raised, such

as the effects of transforming the program into a long-term benefit.

Eliminating the 365-day benefit limit, for example, potentially opened the

program to unlimited care for those among the over-age-65 population

who would qualify under TFL. MCSC officials also told us that they viewed

the guidance as nonbinding because it was not the subject of a formal

contract modification. According to regional program managers, the net

effect of the program changes and unclear guidance is general confusion

about the program’s fundamental purpose. In seeking to provide further

guidance on how legislative changes to the program are to be

implemented, TMA’s proposed rule sets forth, among other things, that

ICMP-PEC’s purpose is not to provide long-term care, thus reiterating

TMA’s interim guidance. But, under the proposed rule, ICMP-PEC’s perpatient benefit would remain potentially unlimited and ICMP-PEC would

remain first payer to Medicaid. Thus, the program would appear to

continue to provide a potentially long-term care benefit contrary to the

proposed rule’s statement about ICMP-PEC’s purpose. As mentioned,

however, the proposed rule is subject to change based on public comment

and subsequent translation into operating policies and procedures.

Regional program managers told us that ICMP-PEC eligibility criteria are

confusing and have not been specified to the level where they can readily

identify patients that qualify for the program. For the most part, ICMPPEC’s custodial care definition is DOD’s way of screening from TRICARE

Basic, patients with high-cost, prolonged, nonremedial, disabling

conditions. The definition generally requires that a patient must have a

severe mental or physical disability and that the disability must be

prolonged. Also, the patient must require assistance to support the

essentials of daily living and not be under active medical, surgical, or

psychiatric treatment that would reduce the disability such that the patient

could function outside a protective, monitored, and controlled

environment. Each case must be separately and comprehensively

reviewed before care-level and duration decisions can be made. Some

program managers told us that because the criteria are subjective and

open to interpretation there is resulting confusion about which cases may

qualify. Coupled with the multistep application reviews, this confusion

may result in an ICMP-PEC caseload that is lower than the actual numbers

of eligible patients.

Regional case managers also cited many instances in which TMA would

approve cases for the program but then deny similar cases with no clear

justification for the decisions. The TMA West officials responsible for

approving and denying cases told us they agreed that the ICMP-PEC

ICMP-PEC Eligibility and

Benefits Are Unclear
Page 15 GAO-02-73 DOD Disability Programs

criteria are too vague and need more specificity and that as a result their

decision-making has been impeded.

Regional program managers also told us ICMP-PEC’s benefits have not

been clearly defined or set forth. They told us that, as a result, decisions

about each eligible patient’s services appear arbitrary. Decisions to assign

different hours of skilled nursing care or to approve or deny other in-home

services for apparently similar cases without reference to some commonly

understood benefit criteria confuse regional program managers and

beneficiaries about ICMP-PEC’s case-by-case coverage. For example, a 1-

year-old patient requiring 24-hour ventilator-related care was denied

ICMP-PEC coverage by TMA West because the care was viewed as

potentially temporary (meaning the patient likely would improve) because

it would be needed for an estimated 5 to 10 years. In contrast, a 4-year-old

patient requiring the same services was approved for 16 hours a day by

TMA West, later increased to 24 hours, 2 days a month. The services were

approved despite similar expectations that the patient would no longer

need ventilator care after about 3 years.

Also, regional program officials told us that due to ICMP-PEC’s eligibility

and benefit ambiguities, they are unable to adequately explain its coverage

to potential beneficiaries. Some officials questioned why they would

attempt to inform potential clients about the program if they cannot

answer their clients’ most basic questions about it. As a result, they told

us, ICMP-PEC is not well known to potential beneficiaries nor to their

service providers. In this regard, TMA’s proposed rule reiterates ICMPPEC’s custodial definition and, for the most part, reiterates the interim

guidance with respect to eligibility criteria so that the current problems

may persist. On the other hand, the proposed rule attempts to clarify

ICMP-PEC’s services with examples and more explicit service definitions,

which may better equip regional program managers in understanding

ICMP-PEC’s coverage in the future.

While access to such an expensive benefit as ICMP-PEC needs to be

carefully determined, TMA and regional program managers told us that the

current process is complex and burdensome. The ICMP-PEC application

process is managed centrally by TMA, although some regional program

managers told us they believe the process should be decentralized. Upon

receipt of an ICMP-PEC application package, TMA preliminarily

determines whether the case may be eligible, sends a letter to regional

program managers authorizing 60 days of ICMP-PEC coverage, continues

to review the case, and sends it for external peer review. Regional

ICMP-PEC Application Process

Necessary but Burdensome
Page 16 GAO-02-73 DOD Disability Programs

program managers told us that 60 days is the minimum period for a TMA

case decision and that many cases take longer.

Along with being administratively burdensome, regional program

managers told us, the process is costly, requiring an estimated 20 to 40

hours at registered-nurse pay rates to complete the application alone. The

estimates include the need to respond to frequent TMA requests for added

case data such that regional program managers told us they often question

TMA’s ability to make the approval/denial decisions. While agreeing that

the process is complex, TMA and peer review contractors, however, told

us that many application packages provided by MCSC case managers lack

sufficient clinical information needed for a thorough review.

TMA requests for added data are generally made after the patient’s

primary provider, regional MCSC medical director and case managers, and

the lead agent’s medical director and case managers have diagnosed the

patient’s condition, made their prognoses, and filed the application. After

these reviews, TMA makes its separate review followed by a full,

independent review by a peer-review organization. This review may be and

has been, overturned by TMA upon its final case review. While

acknowledging the importance of an effective eligibility process, some

regional MCSC medical directors and case managers questioned the need

for so many reviews, pointing to their redundancy and questioning their

cost effectiveness and the value added to the process. These officials also

told us that if decision-making were de-centralized in the regions—in

much the way PFPWD operates—the approval process could be markedly

shortened and streamlined. Other regional program officials, however, told

us that because of the open-ended nature of ICMP-PEC’s benefit and high

per-case costs, managing eligibility centrally can improve control.

On October 1, 2001, the newly enacted TFL became effective. TFL entitles

the estimated 1.4 million age-65-and-over military retirees and their

dependents and survivors to DOD health care including ICMP-PEC. The

TMA officials we interviewed also expect the new entitlement to increase

ICMP-PEC’s caseload and costs, but they told us that the number of ICMPPEC eligibles and their care costs are difficult to reliably estimate and

have not been determined.

In anticipation of TFL, TMA proposed an ICMP-PEC rule that would

extend service priority to ADFMs before retirees and their dependents and

survivors. Under the proposed rule, should current or projected service

demand exceed available funding—currently capped at $100 million—for

the fiscal year, termination notices would be issued to affected

TFL’s Potential Effects on

ICMP-PEC Are Unknown
Page 17 GAO-02-73 DOD Disability Programs

participants. The order of coverage termination would be non-ADFM

patients from last to first authorized and then ADFM patients in the same

order. The proposed rule is not expected to be complete until the end of

calendar year 2001 followed by a period within which MCSC contract

change orders will need to be negotiated.

In view of the program’s current policy and definitional problems,

however, DOD may face unforeseen financial risks and operational

difficulties should it delay in addressing ICMP-PEC’s problems.

Meanwhile, efforts were recently begun to develop legislative proposals to

restructure ICMP-PEC to address such problems, but proposal details are

not yet available.

Regional program managers generally agreed that PFPWD is meeting its

goal of financially assisting disabled ADFMs with their special health care

service and equipment needs. Also general agreement exists that PFPWD

eligibility and benefit criteria, for the most part, are clear and that the

program is known to users and program administrators. Further, PFPWD’s

application process is relatively straightforward and, except for TMA’s

appeals and general oversight responsibilities, managed and operated at

the regional level. The 2001 Defense Authorization Act eliminated

copayments for TRICARE Prime but not for PFPWD participants, effective

April 1, 2001. As a result, many services and much of the equipment that

beneficiaries obtained under PFPWD with a cost-share can now be

obtained under TRICARE Prime at no cost. Thus, PFPWD’s caseloads may

decrease.

PFPWD in various forms has been in operation for about 35 years. The

need for the program sprang from the military’s normal geographic

reassignment of active duty families. Members with disabled children

needing special services and equipment not available through the military

health care system might obtain them through Medicaid but sometimes

had difficulty obtaining them due to Medicaid’s state-by-state residency

and other eligibility requirements. Thus, PFPWD, in its earlier forms, was

established to provide financial assistance for special services and

equipment that Medicaid otherwise would have provided. Today, Medicaid

residency requirements, eligibility factors such as income level, and

benefits continue to vary widely across the states so that PFPWD remains

an important option for active duty members with disabled children.

Regional officials told us that PFPWD administrators, providers, and

beneficiaries are aware of the program and how it operates and fits within

PFPWD Is Accessible but

Changes May Reduce

Caseloads

Role Unchanged and Familiar

to Users
Page 18 GAO-02-73 DOD Disability Programs

TRICARE. They told us this is due to the program’s many years of

operations and efforts to educate potential beneficiaries about PFPWD’s

availability, eligibility criteria, and benefits. On the other hand, regional

officials told us that some qualifying families may choose Medicaid instead

of PFPWD because they believe that participating in PFPWD may cause

the active duty member to be viewed as less deployable, thus limiting

promotion potential. However, regional officials said that other families

view participating in Medicaid as stigmatizing because it is considered a

welfare program, and thus they choose PFPWD.

PFPWD is governed by rules and regulations that were last promulgated in

October 1997 and that set forth the program’s eligibility and benefit

criteria. For example, the guidelines make clear that, except for Medicaid,

public programs, such as those in schools, and other resources must be

used when available before accessing PFPWD. In addition to reducing

PFPWD costs, regional program managers told us this requirement causes

their case managers to remain knowledgeable about the related resources

in their jurisdictions so they can provide timely advice about service

availability. These managers also told us that their case managers are able

to identify qualifying PFPWD patients and access needed services and

equipment through the program. Moreover, regional program managers

told us that because PFPWD is well established, its eligibility criteria and

benefits can be communicated to potential beneficiaries.

PFPWD’s application process is designed to make case determinations

quickly without successive levels of review. Once identified and physicianapproved, a potential PFPWD case is promptly screened by case managers

to determine if other public resources (with the exception of Medicaid)

could be used; if not, the person is enrolled in the program. The average

processing time for such cases is 2 to 4 weeks. Unless appealed to TMA,

eligibility and benefit decisions are made at the regional level and are not

subject to TMA or independent peer review. Case managers told us that

some beneficiaries have one-time equipment or service needs, such as for

a hearing aid, and leave and reenter the program intermittently. They told

us they track such beneficiaries and can readily close and reopen their

cases and not delay service delivery.

Case managers also told us that when PFPWD patients and their families

move to different TRICARE regions, the receiving MCSC normally requires

that the patient reapply there. While this has caused service delays and

inconvenienced some patients, the receiving jurisdiction may have other

public resources or services available to substitute for PFPWD services

that the patient had been receiving in the previous jurisdiction. In this

Defined Eligibility and Benefits

and Straightforward

Application Process
Page 19 GAO-02-73 DOD Disability Programs

regard, case managers told us they need to do a better job and formalize

their communications with other region’s MCSC case managers when

PFPWD cases leave and enter their jurisdictions. Currently, there are no

procedures requiring case managers to do so.

A possible consequence of the 2001 National Defense Authorization Act is

that qualified beneficiaries who obtained services and equipment under

PFPWD with cost-shares can now obtain many of them for free under

TRICARE Prime. Effective April 2001, active duty beneficiary copayments

are no longer required under TRICARE Prime but still are under PFPWD.

PFPWD’s caseload may be reduced to only ADFMs needing services that

are only obtainable under PFPWD and not TRICARE Prime such as

hearing aids, assistive services such as interpreters for the deaf, and

special education services for disabled patients (see appendix IV).

To illustrate, if a $6,000 wheelchair were obtained under PFPWD, the

participant would have a cost-share ranging from $25 to $250, depending

on the active duty member’s rank. An E-5, for example, would pay $25 a

month for the 6 months over which the $6,000 cost could be prorated.22

Prior to April 2001, obtaining the same wheelchair under TRICARE Prime

would have cost the family a 15 percent cost-share, or $900. Today,

obtaining the wheelchair under TRICARE Prime would cost the family

nothing. Thus, PFPWD patients who can obtain the services and

equipment they need through TRICARE Prime—about 70 percent of

PFPWD’s caseload—will likely do so at no cost.

PFPWD has had a monthly benefit limit that has not changed materially in

the last 15 years. Data are not available, however, on how many PFPWD

participants are affected by the program’s $1,000 monthly benefit limit.

Regional program managers we spoke with had differing views about

whether the limit was keeping beneficiaries from obtaining needed

services and thus should be increased. Some officials told us that the limit

was not reflective of current higher medical service and equipment costs

so that some beneficiaries may be reaching the limit. Other officials told us

 22Because the program has a $1,000-per-month benefit limit, participants are allowed to

prorate such equipment costs over as many months as the monthly limit and the program’s

prorating formula allows. The PFPWD prorating formula is used to calculate the longest

period of time over which an item can be prorated. The allowable cost is divided by 1,000

and the quotient is multiplied by two. For example, a $10,000 wheelchair may be prorated

for a maximum of 20 months.

Likely Reduction of Caseloads

With TRICARE Changes

Questions Remain

About the Adequacy

of PFPWD’s Monthly

Maximum
Page 20 GAO-02-73 DOD Disability Programs

that the recent copayment changes to TRICARE Prime will reduce PFPWD

caseload costs and may obviate the need to raise the limit. Still other

regional program officials told us that they can schedule services and buy

equipment to spread costs over several months so that the $1,000 monthly

limit is rarely an obstacle.

At issue in weighing the adequacy of PFPWD’s monthly benefit are the

questions—to what extent are participants incurring costs at or in excess

of the monthly limit; to what extent are they using Medicaid and or other

means to obtain services that exceed the limit; and how many otherwise

eligible beneficiaries exclusively use Medicaid to avoid the $1,000 benefit

limit? Data to address such questions are currently unavailable.

When first established in 1967, the program’s monthly benefit limit was

$350. In 1985, the limit was increased to $1,000, where it has remained to

this day. Some regional program officials told us that the limit has not kept

pace with the rising medical goods and services costs. Such costs have

increased by about 130 percent over the same period, which if applied to

the current PFPWD monthly limit would increase it to about $2,300.

Regional program managers told us that the elimination of TRICARE

Prime copayments enables PFPWD participants to obtain many of their

needed services and equipment under TRICARE Prime at no cost to

themselves. For this reason, the managers said that the $1,000 monthly

limit may be sufficient to cover the services and equipment that are now

obtainable only under PFPWD. However, they were unable to provide data

to support that position.

Some regional program managers told us they have worked with the

$1,000 cap for many years and have become experienced in planning and

scheduling services and equipment purchases so that needed care is

delivered and the monthly cap is not exceeded. Because PFPWD

equipment costs can be prorated at $500 per month over the months

needed to amortize the costs, the patient can use up to $500 per month for

other services such as therapies. For example, an $8,000 wheelchair can be

prorated over 16 months, leaving $500 per month over that period for

other services. A case manager told us that to ensure that costs were kept

within a family’s monthly cap, she could negotiate lower costs with the

local providers, search for alternative providers, or consider purchasing

the services under TRICARE Prime—which if done before April 1, 2001,

would have entailed added beneficiary copayments. Currently, however,

the example wheelchair and other services can likely be obtained under

TRICARE Prime at no cost. As a result, none of the program managers we
Page 21 GAO-02-73 DOD Disability Programs

spoke with could provide examples of PFPWD cases whose services were

interrupted or who otherwise were adversely affected by the monthly

limit.23

Further experience with the effects of eliminating TRICARE Prime’s

copayments on PFPWD costs and caseloads may suggest that the services

and equipment exclusively obtained under PFPWD could as appropriately

be obtained under TRICARE Prime. If so, the need for PFPWD could

become the issue.

Comparing ICMP-PEC’s unlimited home health and SNF benefits with

Medicare and Medicaid showed that ICMP-PEC’s benefits are more

generous.24 Medicare provides limited home health and SNF benefits. And,

while the state Medicaid programs we compared provide unlimited

coverage for under-age-21 patients, older patients’ benefits have varying

limits. The FEHBP plans we reviewed had home care and SNF benefits

that also have more limitations, but patients with special medical needs

may qualify for extended coverage determined through individual case-bycase assessments. PFPWD services are comparable to those available

under Medicare and to Medicaid services for patients under age 21 in the

states reviewed.25 Unlike PFPWD and one of the state Medicaid programs,

two state Medicaid programs limit services for patients over age 21.

FEHBP services for the same care needs for all ages were less available

than PFPWD services.

Medicare has an intermittent in-home benefit and posthospital SNF

benefit. Most ICMP-PEC cases need more than the intermittent care

Medicare’s home health benefit provides. ICMP-PEC’s home benefit is up

to 24 hours a day of skilled nursing care, 7 days a week.

 23In families with two or more PFPWD participants, the monthly limit only applies to the

participant whose service or equipment costs for a given month are lowest among the

family’s participating members. The other members’ costs for that month would not be

subject to the monthly limit, but in subsequent months such members may be the lowestcost user and be subject to the limit. Multiple PFPWD participants from the same family

are about 6 percent of the current caseload.

24ICMP-PEC’s requirement that qualifying beneficiaries’ conditions not be expected to

improve may significantly affect the comparable number of beneficiaries eligible for the

program. Moreover, those military beneficiaries with serious physical or mental disabilities

that are expected to improve may receive in-home or SNF coverage under TRICARE Basic.

25About 85 percent of PFPWD patients are under age 21.

ICMP-PEC and

PFPWD Benefits Are

Better Than or

Comparable to Other

Programs and Plans
Page 22 GAO-02-73 DOD Disability Programs

Regarding SNF care, Medicare covers up to 100 days of such care for those

needing daily skilled nursing or rehabilitative care following a hospital

stay of at least 3 days. And, for the first 20 SNF care days, Medicare pays

all the costs, but for the 21st through the 100th day, the patient is

responsible for a daily copayment that currently equals about $99. Even if

ICMP-PEC patients were qualified for Medicare, which is the case under

TFL beginning October 2001, their Medicare coverage would end after 100

days—while their ICMP-PEC SNF coverage would be unlimited.

Medicaid program benefits vary among states with respect to service type,

duration, and limits, and the family’s income and resources are taken into

account in determining eligibility. Generally, Medicaid programs cover all

necessary services for persons under age 21 and certain federally required

services and state-selected options for persons over age 21. All Medicaid

programs provide children a special entitlement to needed services

through the provision of Early and Periodic Screening, Diagnostic and

Treatment (EPSDT) services.26 Established in 1967, EPSDT mandates that

states cover any service or item medically needed to ameliorate a child’s

condition, regardless of whether the service or item is otherwise covered

under the state Medicaid program.27

ICMP-PEC’s in-home skilled nursing benefit appears equal to or better

than the three state Medicaid programs—California, Maryland, and

Alabama—with which we compared it. California’s Medicaid program

includes two Home and Community Based Services (HCBS) waivers28 that

provide in-home skilled nursing services to medically fragile children and

adults who would otherwise be receiving care in a licensed health care

facility. In our view—and California Medicaid officials generally agreed—

these patients were categorically most like ICMP-PEC patients. Qualifying

pediatric patients may receive from 16 hours to 22 hours and adult patients

 26EPSDT requires that the patient’s total family meet state Medicaid income and asset

requirements.

27Children With Disabilities: Medicaid Can Offer Important Benefits and Services

(GAO/T-HEHS-00-152, July 12, 2000). The statutory requirements of EPSDT are in 42 U.S.C.,

Section 1396d(r).

28One of the waivers, the Nursing Facility waiver, requires that the family meet state

income and asset requirements whereas the other waiver, the Model waiver, only measures

the patient’s income against the requirements. Generally, Home and Community Based

Services waivers allow states to develop and implement alternatives to placing Medicaideligible individuals in hospitals, nursing facilities, or intermediate-care facilities for persons

with mental retardation.
Page 23 GAO-02-73 DOD Disability Programs

up to 16 hours per day of licensed-nurse care in the home. Patients and

providers can decide to take fewer than the available number of skilled

nursing hours and apply the difference to such supplementary services as

respite care or home health aides.

Since 1985, Maryland has had a Model HCBS waiver that targets medically

fragile individuals including technology-dependent individuals who, before

age 22, would otherwise be hospitalized and are certified as needing a

hospital or nursing-home level of care. Under the waiver all medically

needed services including up to 24 hours of skilled nursing care can be

provided to enable medically fragile children to live and be cared for at

home rather than in a hospital. Model waiver services include private duty

nursing, home health aide assistance, and medical equipment and supplies.

For persons over age 21 who meet the income, asset, and other criteria,

ICMP-PEC patients would likely qualify for Maryland’s Rare and

Expensive Case Management Program (REM). REM patients also receive

all the medically necessary care they need either at home or in a

community setting but not in an SNF. Thus, Maryland’s Medicaid program

and ICMP-PEC services are the same in what they offer in each age group.

The Alabama Medicaid program does not have an HCBS waiver for a

population similar to the ICMP-PEC cases. However, like ICMP-PEC, all

medically necessary in-home skilled nursing services up to 24 hours per

day would be provided through the Private Duty Nursing benefit for

individuals under the age of 21. Unlike ICMP-PEC, however, patients over

age 21 needing skilled nursing services would have to be admitted to a

nursing facility for their care.

According to the three selected FEHBP plans’ representatives and the

documents they provided, patients with conditions like those of ICMPPEC patients may receive in-home or SNF benefits, but such benefits are

limited. For example, one plan reported that for qualified beneficiaries the

plan would cover intermittent home health care and pay 100 percent of the

first 30 visits. Subsequent visits would be covered with the patient’s paying

$20 per visit. Also, a patient would be eligible for 100 days of SNF care per

calendar year. Thus, ICMP-PEC’s benefit is more extensive.

Each of the plans also has an extended benefit or case management option

for caring for patients with unusual medical and condition-related needs.

Under such an option, the plans generally

• determine the most effective way to provide services;
Page 24 GAO-02-73 DOD Disability Programs

• may identify medically appropriate alternatives to traditional care and

coordinate other benefits as a less costly alternative;

• conduct an ongoing review of granted alternative benefits;

• may withdraw an alternative at any time and resume regular contract

benefits; and

• offer or withdraw alternative benefits without OPM review under the

normal disputed claims process.

Plan representatives told us that qualifying patients could be referred to

case management for individual assessments of the most appropriate

service venues, supplies; equipment; skill needs, if any; and coverage

authorization. However, without complete case information and

examination by a plan physician, the plan representatives could not

elaborate on the extent nor on the duration of possible coverage referring

to the need for case-by-case assessments.

Most PFPWD-type services, including therapies and equipment, are

available under Medicare. Medicare does not cover hearing aids, however,

and for DME, such as wheelchairs, it requires a 20 percent patient costshare. Under PFPWD the cost-share would likely be less and the item’s

cost could be spread over a period of months, depending on its cost, to

manage the purchase within PFPWD’s monthly benefit cap.

In general, most states’ Medicaid programs offer an array of services

needed by children with special health care needs similar to those covered

by PFPWD. Medicaid services in the three states we reviewed are

comparable to PFPWD’s services for patients under the age of 21. Such

services offered at the states’ option can include private duty nursing; case

management; physical, occupational, or speech therapies; and prosthetic

devices including hearing aids and DME. Officials in each state reported

that the PFPWD example cases we provided, all of which involved persons

under age 21, would be provided with virtually all the physical,

occupational, and speech therapies; hearing aids; orthotics; and

wheelchairs they now receive.

Services available to patients over age 21, however, are limited under

Alabama’s and California’s Medicaid programs—unlike Maryland’s

program and PFPWD, which provide the same services to patients

regardless of age. California, for example, limits some therapies for older

patients, and Alabama does not provide hearing aids or prosthesis

services.
Page 25 GAO-02-73 DOD Disability Programs

The types of services available in the example PFPWD cases varied among

the FEHBP plans we consulted. Unlike PFPWD, for example:

• The plans had considerable limitations in their speech, physical, and

occupational therapy coverage. (For example, two plans restricted the

number of therapy visits per year, while another plan only covered therapy

lasting 2 months if, during that period, significant improvement was

expected. None of the plans covered long-term therapy.)

• None of the plans covered hearing aids.

• The plans covered standard wheelchairs and replacements due to normal

growth and development but not all plans covered maintenance and

repairs.

Changes and challenges are on the horizon for DOD’s supplemental

disability programs. Currently, efforts are under way to revamp ICMP-PEC

now that TFL became effective October 2001, and age-65-and-older

military retirees, their dependents and survivors are eligible for TRICARE

and ICMP-PEC. Also, PFPWD faces potential reductions in caseload due to

the April 2001 elimination of copayments under TRICARE Prime. This is

because many of the medical services and much of the equipment bought

under PFPWD with a cost-share and a $1,000-per-month benefit limit can

now be gotten for free under TRICARE Prime—which may lead to

questions about the need for PFPWD. Now, about 67 percent of PFPWD

claims are from TRICARE Prime enrollees.

Currently, ICMP-PEC lacks a clearly enunciated purpose, well-defined

eligibility criteria and benefits, and an efficient application process

thereby impeding beneficiary access. Lead agent officials and MCSC

representatives believe the program is too confusing to administer

effectively and that it needs restructuring. A related problem is the lack of

readily available case-by-case cost data needed to properly manage the

program and track its spending limit under TFL. Clearly, DOD needs to

clarify ICMP-PEC’s purpose, eligibility criteria, benefits, and operating

rules and disseminate the guidance to regional program managers who

told us they do not sufficiently understand the program nor do they

understand how it should be implemented. The need for such clarification

is also made evident by the program’s major legislative changes since its

inception.

However, TMA’s current proposed rule for ICMP-PEC does not clearly

enunciate the program’s purpose nor does it further clarify its eligibility

criteria, so current problems may persist. The rule does attempt to clarify

Conclusions
Page 26 GAO-02-73 DOD Disability Programs

ICMP-PEC’s services and would extend service priority to ADFMs in

anticipation of increased service demand now that retirees age 65 and over

and their dependents and survivors are potentially eligible for the program

due to TFL. Yet, the draft rule and its accompanying operating policies and

procedures are not expected to be finalized until the end of 2001,

whereupon contract change orders would need to be negotiated with

MCSCs.

While PFPWD is an established program serving thousands of

beneficiaries with clear eligibility criteria and benefits, certain actions

would likely improve PFPWD’s performance, including better

communication among program managers when program participants

leave and enter their respective jurisdictions to arrange for care

continuity. Also, once enough is known about the effects on PFPWD of

eliminating TRICARE Prime copayments, PFPWD’s purpose and structure,

including its cost-share and monthly limit may need to be reassessed and,

if appropriate, modified.

To ensure that DOD’s active duty and retired beneficiaries and dependents

with seriously disabling conditions can readily access needed services and

equipment,we recommend that the Secretary of Defense direct the

Assistant Secretary of Defense for Health Affairs to take the following

actions aimed at improving ICMP-PEC:

• clarify ICMP-PEC’s purpose, eligibility criteria, and service coverage and

provide guidance to better equip regional program managers in

administering the program and target groups in understanding it;

• provide guidance on how the legislative changes made to ICMP-PEC since

its inception are to be implemented; and

• make needed improvements to TMA’s ICMP-PEC records to ensure that

they capture the actual case-by-case cost data needed to properly plan and

manage the current program.

Also, we recommend that the Assistant Secretary of Defense for Health

Affairs be directed to take the following actions to improve PFPWD:

• develop procedures for PFPWD program managers to communicate with

one another across regions about active patients leaving and entering their

respective jurisdictions to facilitate and expedite their reapplication for

PFPWD, and

Recommendations
Page 27 GAO-02-73 DOD Disability Programs

• reassess PFPWD’s purpose and structure, including its cost-share and

monthly benefit limit once the effects of eliminating TRICARE Prime

copayments on PFPWD’s cost and caseload are better known.

In its comments on a draft of this report, DOD concurred with each of our

recommendations and without providing specific details highlighted

improvements planned or already in progress. DOD said, for example, that

it has begun to clarify ICMP-PEC’s legislative changes and eligibility

criteria and to significantly streamline the program’s administrative

processes. Also, DOD said that, as we recommended, it was now devising

methods to provide actual ICMP-PEC patient level cost data.

With respect to facilitating service continuation for PFPWD families who

transfer to other regions, DOD said that it is considering a policy change

that would require a MCSC gaining a PFPWD-eligible beneficiary to honor

an existing PFPWD authorization issued by the losing MCSC. Also, DOD

said it would design policy and operating procedures to implement the

change. Lastly, DOD said that the entire PFPWD program is being

reviewed for potential changes and that this review would be on-going to

support future program changes. DOD also suggested technical report

changes which we incorporated, as appropriate. DOD’s comments are

included in appendix V.

We are sending this report to the Secretary of Defense, relevant

congressional committees, and others who are interested. Copies will be

made available to others on request.

Agency Comments

and Our Evaluation
Page 28 GAO-02-73 DOD Disability Programs

If you or your staff have any questions about this report, please contact me

at (202) 512-7101. Other contacts and major contributors are included in

appendix VI.

Stephen P. Backhus

Director, Health Care—Veterans’

 and Military Health Care Issues
Page 29 GAO-02-73 DOD Disability Programs

List of Committees

The Honorable Carl Levin

Chairman

The Honorable John Warner

Ranking Minority Member

Committee on Armed Services

United States Senate

The Honorable Daniel K. Inouye

Chairman

The Honorable Ted Stevens

Ranking Minority Member

Subcommittee on Defense

Committee on Appropriations

United States Senate

The Honorable Bob Stump

Chairman

The Honorable Ike Skelton

Ranking Minority Member

Committee on Armed Services

House of Representatives

The Honorable Jerry Lewis

Chairman

The Honorable John P. Murtha

Ranking Minority Member

Subcommittee on Defense

Committee on Appropriations

House of Representatives
Appendix I: Scope and Methodology

Page 30 GAO-02-73 DOD Disability Programs

As agreed with the cognizant committees’ offices, our objectives were to

determine the number of ICMP-PEC and PFPWD participants and benefit

costs; whether the programs are generally meeting their purposes,

accessible to their target groups, and adequately administered; the extent

to which PFPWD’s monthly maximum benefit limit may affect

beneficiaries’ ability to obtain services; how the programs’ benefits

compare to Medicare and selected Medicaid and FEHBP plan benefits; and

what program improvements may be needed.

We obtained and analyzed program data from TMA to determine the

number of individuals receiving services in the two programs and the costs

of those services. We reviewed available ICMP-PEC case files at TMA to

obtain information on the services being provided, and from TMA, we

obtained and analyzed PFPWD claims data from 1998 through February

2001.

To determine whether the programs are generally meeting their purposes,

accessible to their target groups, and adequately administered, we

reviewed program guidelines and discussed program coordination with

TMA officials, MCSCs, program case managers, and military beneficiary

advocacy groups.

We requested data from TMA to determine how PFPWD beneficiaries are

affected by the monthly maximum benefit, how many participants use

Medicaid or pay out of pocket for services above the limit, and the number

that use Medicaid due to the $1,000 monthly cap. However, TMA’s

databases do not contain information on the number of beneficiaries

experiencing costs in excess of the $1,000 monthly maximum limit or

PFPWD participant’s use of Medicaid. TMA program officials told us they

were unaware of any database that could be used to address these issues.

To compare these programs’ benefits with Medicare, Medicaid, and

FEHBP plans, we (1) reviewed Medicare and Medicaid program

requirements and eligibility criteria and (2) provided ICMP-PEC and

PFPWD actual case examples without identifiers to selected Medicaid

program officials in California, Maryland, and Alabama and FEHBP plan

representatives in California and Alabama. The state Medicaid programs

were chosen to reflect, respectively, higher, moderate, and lower state

Medicaid spending and the resulting potential mix of available services. In

each of the three Medicaid states, we selected one of the top three health

maintenance organizations (HMO) with the highest number of enrollees.

We also chose an FEHBP national fee-for-service plan that had the highest

number of enrollees. We asked the Medicaid officials and FEHBP plan

Appendix I: Scope and Methodology
Appendix I: Scope and Methodology

Page 31 GAO-02-73 DOD Disability Programs

representatives to provide a list of services for which the cases would

qualify. The case examples included information on the patient’s age and

services currently received. We also interviewed the state Medicaid

officials and the selected FEHBP plan representatives about the case

examples and services, and we interviewed OPM representatives and

obtained and reviewed FEHBP plans’ brochures of covered services.

We also reviewed TMA’s proposed ICMP-PEC rule which was published

August 1, 2001, in the Federal Register. We conducted our work from

December 2000 through August 2001 in accordance with generally

accepted government auditing standards.
Appendix II: TRICARE Cost-Shares,

Deductibles, and Copayments

Page 32 GAO-02-73 DOD Disability Programs

Table 2: TRICARE Cost-Shares, Deductibles, and Copayments for Active Duty Family Members

TRICARE

Prime

TRICARE

Extra

TRICARE

Standard

Annual deductible None $150 per individual or $300 per family

for E-5 and above;

$50 per individual or $100 per

individual or for E-4 and below

$150 per individual or $300 per family for

E-5 and above;

$50 per individual or $100 per individual

or for E-4 and below

Civilian outpatient visit None 15 percent of negotiated fee 20 percent of allowable charge

Civilian inpatient visit None Greater of $25 or $10.85 per day Greater of $25 or $10.85 per day

Civilian inpatient mental health None $20 per day $20 per day

Note: Copayments under Prime were eliminated for active duty members as of April 1, 2001.

Prescription medication copayments, however, were not eliminated.

Source: TRICARE Standard Handbook, May 19, 2000.

Table 3: TRICARE Cost-Shares, Deductibles, and Copayments for Retirees, Their Family Members, and Others

TRICARE

Prime

TRICARE

Extra TRICARE Standard (Champus)

Annual

deductible

None $150 per individual or $300 per family $150 per individual or $300 per

family

Annual enrollment fee $230 per individual

$460 per family

None None

Civilian provider

copayments:

outpatient visit

emergency care

mental health visit

$12

$30

$25

($17 for group visit)

20 percent of negotiated fees 25 percent of allowed charges

Civilian inpatient cost-share $11 per day

($25 minimum

charge per admission)

Lesser of $250 per day or 25 percent

of negotiated charges plus 20 percent

of negotiated professional fees

Lesser of $390 per day or 25

percent of billed charges plus 25

percent of allowed professional

fees

Civilian inpatient mental health $40 per day 20 percent of institutional and

negotiated professional charges

Lesser of $144 per day or 25

percent of institutional and

professional charges

Source: TRICARE Standard Handbook, May 19, 2000.

Appendix II: TRICARE Cost-Shares,

Deductibles, and Copayments
Appendix III: PFPWD Monthly Cost-Share Is

Guided by Pay Grade

Page 33 GAO-02-73 DOD Disability Programs

Pay grade Cost-share amount

E-1 to E-5 $25

E-6 30

E-7, O-1 35

E-8, O-2 40

E-9, W-1, W-2, O-3 45

W-3, W-4, O-4 50

W-5, O-5 65

O-6 75

O-7 100

O-8 150

O-9 200

O-10 250

Note: E=enlisted, W=warrant officer, and O=officer.

Source: TRICARE Standard Handbook, May 19, 2000.

Appendix III: PFPWD Monthly Cost-Share Is

Guided by Pay Grade
Appendix IV: PFPWD Exclusive Benefits and

PFPWD Benefits Also Available in TRICARE

Basic

Page 34 GAO-02-73 DOD Disability Programs

Some services and equipment available through PFPWD are also

obtainable through TRICARE Basic, while other program services and

equipment can be acquired only through PFPWD.

Table 4: PFPWD Exclusive Benefits and PFPWD Benefits Also Available in TRICARE Basic

PFPWD covered services and equipment

PFPWD services also

covered in TRICARE Basic

Assistive services such as interpreters and translators for the deaf and readers for the blind

Training to allow use of assistive technology or to acquire skills that are expected to reduce the

disabling effects of a qualifying condition

Durable medical equipment (DME) including wheelchairs and walkers √

Equipment repair for DME; DME coverage includes fitting to accommodate the disability √

Durable equipment, which is defined as a device or apparatus that does not qualify as DME but which

is essential to the efficient arrest or reduction of functional loss resulting from a qualifying condition.

This includes hearing aids.

Equipment repair for durable equipment. This includes fitting to accommodate the disability.

Institutional care for the purpose of providing the beneficiary with protective custody or training in a

residential environment

Orthotic devices as well as orthopedic braces and appliances √

Prostheses including limbs, eyes, certain surgical implants, and some types of voice enhancement

devices

√

Special education designed to accommodate the disabling effects of the qualifying condition (when

appropriate public facilities are not available)

√a

Transportation of patient and medical attendant to and from a provider in order to receive therapies or

other authorized PFPWD services

Medical or rehabilitative treatment, including physical therapy, occupational therapy, and speech

therapy

√

a

Special education is provided under TRICARE Basic only in an institutional setting if not available

from a public entity.

Source: GAO analysis based on information provided through (1) PFPWD Final Rule, Federal

Register, June 30, 1997, (2) C.F.R. Title 32 (National Defense), Part 199.5, effective October 28,

1997, (3) TRICARE/Champus Policy Manual 6010.47-M, Chapters 1,7,8, June 25, 1999, (4)

discussions and correspondence with the PFPWD program director, March through July 2001, and

(5) TRICARE Conference, PFPWD briefing, Washington, D.C., June 2001.

Appendix IV: PFPWD Exclusive Benefits and

PFPWD Benefits Also Available in TRICARE

Basic
Appendix V: Comments From the Department

of Defense

Page 35 GAO-02-73 DOD Disability Programs

Appendix V: Comments From the

Department of Defense
Appendix V: Comments From the Department

of Defense

Page 36 GAO-02-73 DOD Disability Programs
Appendix V: Comments From the Department

of Defense

Page 37 GAO-02-73 DOD Disability Programs
Appendix VI: GAO Contacts and Staff

Acknowledgments

Page 38 GAO-02-73 DOD Disability Programs

Dan Brier (202) 512-6803

Lesia Mandzia (202) 512-7188

Other major contributors to this report were Donald Morrison, Janice

Raynor, Mary Reich, and Wayne Turowski.

Appendix VI: GAO Contacts and Staff

Acknowledgments

GAO Contacts

Staff

Acknowledgments

(290014)
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