[Federal Register Volume 63, Number 137 (Friday, July 17, 1998)]
[Notices]
[Pages 38558-38619]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-19041]


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DEPARTMENT OF DEFENSE

Office of the Secretary


TRICARE Senior Demonstration of Military Managed Care

AGENCY: Office of the Assistant Secretary of Defense (Health Affairs).

ACTION: Notice of demonstration project.

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SUMMARY: This notice is to advise interested parties of a demonstration 
project in which the Department of Defense (DoD) will provide health 
care services to Medicare-eligible military retirees in a managed care 
program, called TRICARE Senior, and receive reimbursement for such care 
from the Medicare Trust Fund. The program is authorized by section 1896 
of the Social Security Act, amended by section 4015 of the Balanced 
Budget Act of 1997 (P.L. 105-33). The statute authorizes DoD and the 
Department of Health and Human Services (HHS) to conduct at six sites 
during January 1998 through December 2000, a three-year demonstration 
under which dual-eligible beneficiaries will be

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offered enrollment in a DoD-operated managed care plan, called TRICARE 
Senior Prime. The legislation also authorizes Medicare HMOs to make 
payments to DoD for care provided to HMO enrollees by military 
treatment facilities (MTFs) participating in the demonstration. This 
part of the demonstration, to be called Medicare Partners, will allow 
DoD to enter into contracts with Medicare HMOs to provide specialty and 
inpatient care to dual-eligible beneficiaries currently provided on a 
space-available basis. Additional legal authority pertinent to this 
demonstration project is 10 U.S.C. section 1092.
    Under TRICARE Senior Prime, Medicare-eligible military retirees who 
enroll in the program will be assigned primary care managers (PCMs) at 
the MTF. Enrollees will be referred to specialty care providers at the 
MTF and to participating members of the existing TRICARE Prime network. 
TRICARE Senior Prime enrollees will be afforded the same priority 
access to MTF care as military retiree and retiree family member 
enrollees in TRICARE Prime.
    DoD will receive reimbursement from HCFA on a capitated basis at a 
rate which is 95 percent of the rate HCFA currently pays to Medicare-
risk HMOs, less costs such as capital and graduate medical education, 
disproportionate share hospital payments, and some capital costs, which 
are already covered by DoD's annual appropriation. However, under the 
authorizing statute, DoD must meet its current level of effort for its 
Medicare-eligible beneficiaries before receiving payments from the 
Medicare Trust Fund. That is, DoD must continue to fund health care at 
a certain expenditure level for its Medicare-eligible population before 
it may be reimbursed by HCFA for care provided to TRICARE Senior Prime 
enrollees.
    The Balanced Budget Act of 1997 required DoD and HHS to complete a 
memorandum of agreement (MOA) specifying the operational requirements 
of the demonstration project. That MOA was completed on February 13, 
1998, and is published below. Except as provided in the MOA, TRICARE 
Senior Prime will be implemented consistent with applicable provisions 
of the CHAMPUS/TRICARE regulation, particularly 32 CFR sections 199.17 
and 199.18.

EFFECTIVE DATE: July 15, 1998.

FOR FURTHER INFORMATION CONTACT: Larry Sobel, Office of the Assistant 
Secretary of Defense (Health Affairs/TRICARE Management Activity), 
telephone (703) 681-1742.

    Dated: July 10, 1998.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.

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Attachment A--Benefits for Enrollees; Medicare Demonstration of 
Military Managed Care

    DoD will provide or arrange for the provision of a defined 
benefit package for enrollees in the Demonstration. The benefit 
package will include all services and supplies covered by the 
Medicare program, plus some additional services not covered by 
Medicare. The TRICARE Prime program will be the vehicle for delivery 
of the benefit package, except that standard Medicare coverage of 
skilled nursing facility care, home health care, and chiropractic 
services will apply. Additional services in the TRICARE Prime 
program that are not covered by Medicare include outpatient pharmacy 
services and preventive services. In brief, the benefit package 
includes coverage of medically necessary care as follows:

Medical Services

    <bullet> Physician's services;
    <bullet> Medical and surgical services and supplies;
    <bullet> Outpatient hospital treatment;
    <bullet> Mental health outpatient services;
    <bullet> Physical and speech therapy;
    <bullet> Clinical laboratory services and diagnostic tests;
    <bullet> Durable medical equipment and supplies;
    <bullet> Blood;
    <bullet> Clinical preventive services;
    <bullet> Outpatient pharmacy services.

Institutional Services

    <bullet> Hospitalization: semiprivate room and board, general 
nursing and other hospital services and supplies;
    <bullet> Skilled nursing facility care: semiprivate room and 
board, skilled nursing and rehabilitative services and other 
services and supplies;
    <bullet> Home health care;
    <bullet> Hospice care.
    Cost sharing for services is described in the attached charts. 
It is anticipated that most services will be provided in military 
treatment facilities, at no charge to enrollees. When enrollees use 
a civilian provider, a copayment schedule will apply, featuring a 
$12 per visit copayment, an $11 per diem charge for most inpatient 
services, and a $9 per prescription charge.

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Attachment C--Reimbursement

Overview

    This attachment, and figures 1 through 19, describe the specific 
process for Medicare Program reimbursement to the Department of 
Defense (DoD) and for the end-of-year reconciliation.

Medicare Interim Payments to DoD

    Under the demonstration, DoD may receive interim payments for 
the enrollment and treatment of its dual-eligible beneficiaries. 
During the execution of the demonstration project during any 
demonstration year, the department may receive a monthly per-member 
per-month capitated amount for TRICARE Senior Prime enrollees when 
the site's enrollment is above a specified threshold. These payments 
are interim, or provisional, payments. At the end of each 
demonstration year, a reconciliation will be conducted to determine 
whether DoD is entitled to keep any of its interim payments, and to 
determine if the amount of reimbursement was appropriate. This 
appendix describes the threshold mechanism that triggers the interim 
monthly payments. Then it describes the reconciliation process.

Thresholds for Reimbursement and Reconciliation

    For each demonstration year and each demonstration site, DoD and 
HCFA will establish a threshold that will determine whether HCFA 
will reimburse DoD for enrollment at the site and determine the size 
of the reimbursement. The triggering threshold derives from each 
individual site's historical level of expenses for its dual eligible 
beneficiaries, termed the site's ``level of effort''. Calculation of 
the site's baseline level of effort is described in Appendix D.
    The threshold for triggering interim payments from Medicare will 
be calculated from a portion of each site's level of effort. The 
portion will be 30 percent of the site's level of effort for the 
first demonstration year, 40 percent in the second demonstration 
year, and 50 percent in the third. The 30 percent portion for the 
first demonstration year will be scaled, or prorated, to the number 
of months of care delivery at each site. For example, if a site's 
level of effort was $90 million and delivered care for 5 months of 
the first demonstration year, the portion used to calculate a 
reimbursement threshold would be $11.25 million (\5/12\ths of 30 
percent of $90 million).
    The monthly threshold that triggers payments will be calculated 
by dividing the total dollar portion determined in the previous 
paragraph by the months of care delivery for the site. Continuing 
the example above, the monthly threshold will be $2.25 million 
($11.25 million divided by 5 months).
    HCFA will calculate the amount that it would pay for all of 
DoD's enrollees under the demonstration program at a modified per 
capita Medicare+Choice reimbursement rate (described in the next 
section), and compare its calculated amount to the site's monthly 
threshold. If the calculated amount exceeds the monthly threshold, 
then HCFA will reimburse DoD for the difference as an interim 
payment. If the calculated amount is below the monthly threshold, 
HCFA will not make a payment to DoD for that month. Failure to 
enroll up to the threshold in a month will also result in an 
adjustment to interim payments from other months (described under 
Annual Reconciliation below). Payments for all demonstration sites 
combined are subject to a global cap for each demonstration year. 
The caps are $50 million for the first demonstration year, $60 
million the second year, and $65 million the third. No more than 50 
percent of the cap in each year shall be available for Medicare 
Partners.

Per Capita Reimbursement Rate

    To calculate how much it would pay for TRICARE Senior Prime 
enrollees in the reimbursement mechanism (described in the previous 
section), HCFA will use the following rate. The reimbursement rate 
by Medicare to DoD is 95 percent of the applicable Medicare+Choice 
rate as determined under the Balanced Budget Act of 1997 (P.L. 105-
33) . In accordance with the authorizing legislation, the 
Medicare+Choice rate for each county will be adjusted to remove 
payments for graduate medical education (GME), indirect medical 
education (IME), and disproportionate share hospital (DSH). In 
accordance with the agreement by both Secretaries, 67 percent of 
capital will be removed.

Annual Reconciliation

    At the end of each demonstration year, DHHS and DoD will conduct 
a formal reconciliation and evaluation to determine whether (1) all 
site's are entitled to retain the reimbursements they received from 
Medicare and (2) whether the amount of reimbursement were 
appropriate. The reconciliation consists of four steps:
    1. Accumulate DoD's Expenses. The first step will be to 
determine the total amount of DoD expenditures across all six 
demonstration site for all dual-eligible beneficiaries residing in 
the service area. Two categories of expense will be accumulated: (1) 
expenses for care provided on a space-available basis to non-
enrolled dual eligible beneficiaries (termed ``space-available level 
of effort''), and (2) expenses for care provided to enrollees.
    Expenses for providing outpatient pharmacy services will not be 
included in any of the categories; nor will expenses incurred 
providing services under a Medicare Partners contract for services 
covered by the contract. Expenses incurred providing services not 
covered by a Medicare Partners agreement will be counted as space-
available care.
    Expenses for space-available care are capped at a maximum of 70 
percent of the combined level of effort across all six sites during 
the first demonstration year, 60 percent of the combined level of 
effort during the second, and 50 percent during the third. Because 
sites will be starting care delivery at varying time during the 
first demonstration year, the demonstration-wide cap on space-
available expenses will be prorated during the first demonstration 
year as follows. Each individual site's level of effort will be 
prorated according to the number of months of care delivery during 
that first demonstration year. Then, the prorated level's of effort 
will be added across all six sites. Finally, 70 percent of the six 
site total will be used for the first year space-available cap.
    2. Determine Eligibility for Reimbursement. The second step will 
be to determine whether the demonstration sites are eligible to 
retain any reimbursements from Medicare. There are two tests; both 
must be passed. The first compares total expenditures for all six 
sites, both for enrolled and for space available care, to DoD's 
combined level of effort for all sites. For any site to be eligible 
to retain reimbursements from HCFA, DoD must reach its combined 
level of effort.
    The second test compares DoD's expenditures for enrolled care 
across all demonstration sites against a minimum threshold that 
varies by demonstration year. The threshold is 30 percent of the 
combined six-site level of effort during the first demonstration 
year, 40 percent during the second, and 50 percent during the third. 
Again, the first year threshold on expenses for enrolled care will 
be prorated by the number of months of care delivery during that 
year in the manner similar to the way the threshold for space-
available care is prorated (described in 1. above).
    3. Determine Amount of Reimbursement. If DoD has met its level 
of effort for all demonstration sites, reimbursements from HCFA are 
subject to two adjustments. First, gross monthly payments from HCFA 
to a site will be summed over all months of a demonstration year 
(months of care delivery for the first demonstration year). The 
difference between this sum and the level of effort target will be 
the annual reimbursement that DoD is entitled to keep at each site. 
If the difference is negative, DoD will return all payments received 
to HCFA. This adjustment is performed at each site.
    Second, total reimbursements from HCFA may be adjusted upwards 
or downwards during reconciliation if there is compelling evidence 
of adverse or favorable risk selection in DoD's enrollment, when 
compared with the HCFA population upon which the Medicare+Choice 
rates are based. The determination will be made analytically during 
as part of the reconciliation process and will be based upon 
submitted claims for covered services.
    Third, DoD is only entitled to retain reimbursement above the 
aggregate level of effort. The level of effort will be prorated 
during the first demonstration year on the basis of months of care 
delivery at the various sites.
    4. Provide Access to Data. The final step will be to provide 
HCFA auditors and the DHHS IG with access to DoD's records and data 
for demonstration sites. HCFA and DoD will develop a mutually 
acceptable process for settling any disputes that arise over the 
data.

Maximum Ceiling on Total Annual Medicare Reimbursement

    For the demonstration project, the maximum total Medicare 
reimbursement to DoD for all six demonstration sites in any 
demonstration year shall not exceed $50

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million in calendar year 1998, $60 million in calendar 1999, and $65 
million in calendar year 2000. The cap for the first demonstration 
year will be prorated as described below. All reimbursements 
received by DoD for dual-eligible enrollees from Medicare or from 
Medicare Partners will count towards the annual ceiling. Should 
Medicare reimbursement to DoD meet the statutory cap in any of the 
project's three years, DoD will remain obligated to continue to 
provide the full range of services under the TRICARE Senior Prime 
benefit to all project enrollees. DoD will be financially liable for 
all care provided under TRICARE Senior Prime once the annual 
reimbursement cap is reached. No more than 50 percent of the cap in 
each year shall be available for Medicare Partners.
    For 1998, the $50 million ceiling shall be prorated based on the 
estimated enrollment at each site and the number of months that each 
site is operational during 1998. The ceiling for 1998 will be 
determined when the last site to begin in 1998 becomes operational.
    At the end of each month, DoD will report to HCFA all revenue 
that it has received during that month from Medicare+Choice plans. 
HCFA will track payments for TRICARE Senior Prime enrollees. If the 
annual cap for that year was exceeded in a prior month, DoD will 
remit all such revenue for each succeeding month to HCFA.

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Attachment D--Level of Effort

Introduction

Purpose

    This attachment describes the methodology that the Department of 
Defense (DoD) will use to compute the FY96 ``level of effort'' (LOE) 
for each Medicare Demonstration site.

General Principles for Establishing Medicare Level-of-Effort

    DoD will compute the FY96 level-of-effort (historical 
expenditures for its Medicare eligible beneficiaries) separately for 
the service area of each Medicare Demonstration site. Service areas 
will be defined by lists of specific zip-codes for each site. 
Expenses will be accumulated from a population perspective; they 
will be the sum of all applicable DHP expenses for all dual eligible 
beneficiaries living in the zip-codes defining the site, regardless 
of where in the Military Health System those expenses were 
incurred.\1\
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    \1\ By contrast, a ``facility view'' of a demonstration area 
would accumulate the selected DHP expenses for beneficiaries treated 
by facilities operating within the service area, regardless of where 
such beneficiaries reside.
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    The LOE will include most direct expenses for inpatient and 
outpatient care provided by military Medical Treatment Facilities 
(MTFs), with some additional burdening (explained in detail below) . 
It will also include the government's costs of care for Medicare 
eligibles referred to providers in networks operated by the 
Department's Managed Care Support Contractors. The FY96 LOE excludes 
any DoD expenses comparable to those removed from the 
Medicare+Choice rates as a result of the Balanced Budget Act of 1997 
(e.g., expenses for Graduate Medical Education), or any types of 
care specifically excluded by agreement between DoD and HCFA 
(outpatient pharmacy costs). The FY96 LOE will also exclude DoD's 
monthly payments for dual-eligible enrollees of Uniform Services 
Treatment Facilities (USTFs) residing in the service area, unless 
they participate.
    It is the agreement of the administering Secretaries that FY96 
will be the baseline.

Detailed Methodology

    This section presents the separate methodologies used to 
estimate inpatient and ambulatory expenses.

Terminology

    Medicare Demonstration Sites. In accordance with current 
legislation, six sites will be picked for the Medicare 
Demonstration. A service area for each site will be defined 
geographically by a specific list of zip-codes.
    IDA Add-on. In an analysis performed for the ``733 Study,'' the 
Institute for Defense Analysis (IDA) determined that certain 
expenses should be added to the clinical expenses reported in the 
Medical Expense and Performance Reporting System (MEPRS). Based upon 
their analyses, they estimated the amounts that should be added to 
inpatient and outpatient clinical expenses as a percentage add-on to 
the expenses routinely reported in the clinical accounts. Their 
recommended adjustments are presented in Table 1.
    Patient-Level Cost Allocation. The methodology that DoD is 
evolving to estimate expenses at the level of the individual patient 
encounter. That methodology is described in a separate document to 
be provided by DoD.

Inpatient Care

Data Sources

Direct Care

    Clinical Data: Standard Inpatient Data Record (SIDR) for each 
hospital discharge. Maintained in the Corporate Executive 
Information System (CEIS).
    Expenses: Estimated from the Medical Expense and Performance 
Reporting System--Central (MEPRS), part of the Defense Medical 
Information System or from the MEPRS Executive Query System (MEQS), 
depending on military department.

MCSC Provider Network

    Expenses: Government paid expense on Health Care Summary Records 
(HCSRs) provided by the TRICARE Support Office (TSO) to the CEIS.

Methodology

    Estimates of total inpatient expenses in each service area are 
determined by the following process:
    1. Estimate inpatient expenses for care in Military Treatment 
Facilities (MTFs) for all Medicare eligibles in the service area.
    a. From the CEIS, isolate the electronic summary discharge 
records for all non-active duty DoD beneficiaries age 65 and older 
living in the service area.
    b. For each record isolated in step (1), estimate the cost of 
each discharge.
    (1) Estimate the cost for each individual discharge using the 
Patient Level Costing Allocation (PLCA) methodology, as described in 
a separate document to be provided by DoD.
    (2) Apply the IDA add-ons appropriate to the treating facility.
    (a) Burden the cost of each record using IDA's percentages for 
DMSCC, Mgmt HQ, and Reference Labs, using the percentage developed 
for the Military Department of the hospital in which the care 
occurred (see Table 1). By agreement of the two administering 
Secretaries, burden the cost on each record with \1/3\ of the IDA 
adjustment for Construction (see Table 1).
    (b) Burden each record for Continuing Health Education (MEPRS 
Account FAL) and Patient Transportation/Movement (FEA/FEB/FEC) by 
allocating the actual expenditures in these accounts for treating 
facilities in the demonstration service area, and by the IDA 
percentage add-on (Table 1) for treating facilities outside the 
demonstration area. Since these accounts support all patient 
categories, as well as both inpatient and outpatient services, only 
a portion of their expenses will be allocated to the inpatient 
treatment of Medicare beneficiaries. The amount of each account 
allocated to Medicare inpatient expenses will be in the same 
proportion as MEPRS A Expenses (Inpatient Clinical Expenses) for the 
Medicare population are to the total of all MEPRS A and MEPRS B 
(Outpatient Clinical Expenses) in FY96. The amount allocated to 
Medicare inpatient expenses will be uniformly distributed across all 
Medicare inpatient records.
    c. For records from teaching facilities, deflate the amount 
using HCFA's adjustment for Indirect Medical Education (IME) based 
on that facility's count of beds and of interns and residents.
    d. Sum the estimated costs for the service area.
    2. Estimate inpatient expenses for care provided by the MCSC 
provider networks.
    a. Isolate all Health Care Summary Records for all non-active 
duty DoD beneficiaries, age 65 and older, living in the service 
area.
    b. Total the government paid portion for all claims. [DHA1]

Outpatient Care

Data Sources

Direct Care

    Clinical Data: Monthly outpatient visits by patient age and 
third-level MEPRS from CHCS, as well as outpatient visits reported 
by third-level in MEPRS-Central or MEQS.
    Expenses: Dollars by third-level MEPRS from MEPRS-Central or 
MEQS.

MCSC Provider Network

    Expenses: Government paid expense on Health Care Summary Records 
(HCSRs) provided by the TRICARE Support Office (TSO) to the CEIS.

Methodology

    The following steps will be used to estimate outpatient expenses 
in each region:
    1. Estimate the outpatient expenses for Medicare eligibles at 
all MTFs in the service area using the following steps.
    a. Reconcile CHCS and MEPRS visit data.
    (1) Annualize the CHCS data.
    (2) Scale CHCS visit accounts to MEPRS or MEQs, if necessary.
    b. From the rescaled CHCS visit data, determine the proportion 
of visits in each workcenter (third-level MEPRS) that are for non-
active duty beneficiaries age 65 and older.
    c. Apply the proportion of non-active duty beneficiaries age 65 
and older to the MEPRS workcenter costs, excluding outpatient 
pharmacy expenses from the stepdown to ambulatory workcenters.
    d. Sum the costs for the beneficiaries under consideration 
across all MEPRS workcenters to get total outpatient visit expenses 
at the facility level.
    e. Apply the IDA add-ons for outpatient care.
    (1) Inflate each record using IDA's percentages for DMSCC, Mgmt 
HQ, Reference Labs, and Clinical Investigation, using the percentage 
developed for the Military Department of the hospital in which the 
care occurred. By agreement of the two administering Secretaries, 
burden the cost on each record with \1/3\ of the IDA adjustment for 
Construction (see Table 1).
    (2) Burden the total expenses from d. by expenses in Continuing 
Health Education (MEPRS Account FAL) by allocating actual 
expenditures in the FAL account of the

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treating facility. The amount of each account allocated to Medicare 
outpatient expenses in the same proportion as MEPRS B Expenses 
(Outpatient Clinical Expenses) for the Medicare population are to 
the total of all MEPRS A (Inpatient Clinical Expenses) and MEPRS B 
in FY96. The amount allocated to Medicare outpatient expenses will 
be uniformly distributed across all Medicare outpatient records.
    f. Sum the estimates for all MTFs within the service area.
    2. Estimate ambulatory expenses for care provided by the MCSC 
provider networks.
    a. Isolate all Health Care Summary Records for all non-active 
duty DoD beneficiaries, age 65 and older, living in the service 
area.
    b. Total the government paid portion for all claims.

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Attachment E--Medicare Demonstration of Military Managed Care

Evaluation

    Medicare Demonstration Sample Evaluation Questions--These 
questions are among those which may be addressed in either the GAO 
report required by the demonstration project's authorizing statute 
or in a separate evaluation conducted jointly by the Department of 
Defense and the Department of Health and Human Services.
    <bullet> Can DoD and Medicare implement a cost-effective 
alternative for delivering accessible and quality care to dual-
eligible beneficiaries?
    The Medicare Demonstration should be able to answer the basic 
question of whether DoD and Medicare can meet its objective of 
implementing a cost-effective alternative for delivering care to 
dual-eligible beneficiaries through MHS. The answer to this question 
can be found by answering questions in four basic areas: enrollment 
demand, enrollee benefits, cost of the program, and impact on other 
DoD and Medicare beneficiaries for TRICARE Senior Prime and Medicare 
Partners. In each there should be a question about whether the 
demonstration succeeded and a set of analyses that examines the 
details within that area.

(1) Benefits for Enrollees

    <bullet> Do dual-eligible beneficiaries benefit from Medicare 
reimbursement and enrollment in terms of quality, satisfaction, 
health status, access, or out of pocket costs?
    <bullet> Will individual patients have better outcomes if 
treated as a DoD enrollee?
    <bullet> Will beneficiaries as a whole evince better health and 
higher satisfaction when DoD enrollment is an option?
    <bullet> Will beneficiaries have wider managed care choices?
    <bullet> Will beneficiaries experience improved access to health 
care in general?
    By definition, enrollees will have at least as generous a 
benefit as Medicare beneficiaries. The basic question will be: does 
DoD fulfill this promise and what if any additional benefits accrue 
to enrollees? However, the question will go much deeper than the 
structure of the prime benefit. Will beneficiaries as a whole 
experience better health, experience improved access, report higher 
satisfaction and encounter lower out of pocket costs when DoD 
enrollment is an option? In this case, we should examine the levels 
of satisfaction, health status, and access between those enrolled 
versus those not enrolled and between those in the demonstration 
areas versus those outside the demonstration areas.
    As one measure of quality, DoD facilities are JCAHO accredited 
and the grid scores received will give us information on whether the 
MHS is maintaining its high standard of care. Data from the Health 
Care Survey of DoD Beneficiaries can be used to assess levels of 
satisfaction, access, and health status.

(2) Cost of Program

    <bullet> Does Medicare reimbursement and enrollment occur 
without increasing the costs to either the Department of Health and 
Human Services and the Department of Defense?
    <bullet> Will the Medicare Trust Funds experience losses or 
savings?
    <bullet> Will the government as a whole experience losses or 
savings?
    <bullet> What impact would Medicare reimbursement and enrollment 
have on the budgets of the Department of Health and Human Services 
and the Department of Defense?
    Again, by definition, the demonstration must be budget neutral. 
However, the demonstration should provide an accounting that budget 
neutrality was achieved and that no cost were shifted from DoD to 
Medicare, i.e. that the Medicare trust funds did not experience any 
losses. This should include an analysis of the level of effort that 
DoD expends for the Medicare eligible as well as any reimbursements 
from Medicare that may be triggered during the demonstration. 
Analyses should also determine if DoD can in fact live within the 
Medicare payment, and whether its ability to live within it is 
determined by the level of the Medicare payment for different areas. 
In addition, the demonstration should highlight any cost shifting 
within the DoD to accommodate care for prime enrollees, both between 
regions and among medical programs. For Medicare Partners payments, 
analyses should estimate to what extent graduate medical education 
(GME), indirect medical education (IME), and disproportionate share 
hospital (DSH) amounts are included in those payments. It should 
also be able to forecast future budget impacts if the demonstration 
is continued or expanded.
    Data for this section will be obtained in the same way that we 
estimated level of effort for reimbursement purposes. Sources 
include inpatient, ambulatory, and ancillary medical records and 
MEPRS accounting data. Because of the concern of shifting between 
regions and among medical programs, some level of aggregate data 
will need to be analyzed from outside the demonstration regions. 
Changes in Medicare expenditures to dual eligible beneficiaries 
could be accomplished with merged DoD and HCFA files similar to 
those being used for the initial level of effort analysis.

(3) Impact on Other DoD and Medicare Beneficiaries

    <bullet> What impact (access, quality, cost) does Medicare 
reimbursement and enrollment have on medical care for DoD 
beneficiaries (active duty, active duty dependents, retirees and 
their dependents) other than the dual-eligible beneficiaries?
    <bullet> Will the demonstration affect local health care 
providers or non-dual-eligible Medicare beneficiaries access to 
quality care?
    The effect of the Medicare Demonstration may go beyond the 
effects on those who are Medicare eligible. Providing all inclusive 
care for Medicare eligibles may have effects on the access and 
priority of other beneficiaries in getting quality health care. The 
demonstration should provide answer to whether such a new benefit 
can be established without negatively impacting other classes of 
beneficiaries. In particular, the main focus of this question should 
be if access to non-Medicare eligible individuals has declined as a 
result of the demonstration. This should be examined for the 
different classes of beneficiaries and especially for active duty 
personnel and their dependents. The demonstration should also 
examine the effects of enrolling these individuals on CHAMPUS costs 
if they are displacing other beneficiaries in the direct care 
system.
    Similar to (1) but for the remaining beneficiary categories, we 
propose using the Health Care Survey of DoD Beneficiaries to examine 
trends in access for non-Medicare eligible individuals.

(4) Enrollment Demand

    <bullet> Is there sufficient demand to justify enrollment of and 
reimbursement for dual-eligible beneficiaries in TRICARE Senior 
Prime and/or Medicare Partners?
    <bullet> What impact does Medicare reimbursement and enrollment 
have on the use of the Military Health System by dual-eligible 
beneficiaries?
    <bullet> Will the Medicare Demonstration fare differently in 
different areas?
    Up to this point, we do not know the degree to which Medicare 
eligibles are interested in participating in TRICARE Senior Prime 
and Medicare Partners. The demonstration should allow us to gauge 
the demand for such services. If few beneficiaries sign up, then one 
would question the need for such a program. Therefore, the basic 
question will be the number of Medicare Prime enrollees. We will 
also be interested on the total usage of the DoD system including 
space available use. Prior to the demonstration, beneficiaries fall 
into three categories: those who use the military system 
exclusively, those who use it for some of their health care, and 
those who rely exclusively on civilian care. With the demonstration, 
the first category will be split into two, those who enroll and 
those who use space available care for all their health care. The 
demonstration should seek the answer to who enrolls (e.g. are they 
prior exclusive users of DoD), what shifts between categories 
occurs, and does DoD continue to support at least as many 
beneficiaries as prior to the demonstration. It will also be of 
interest in projecting future enrollment to measure differences in 
enrollment between sites. Do those with greater military health care 
capability attract more enrollees than those with limited 
capability? Do civilian capabilities and alternatives influence the 
beneficiaries decision to enroll?
    Data for this part of the evaluation will be from three sources. 
First, the enrollment files themselves will give us information on 
the number and kinds of beneficiaries who sign up for TRICARE Senior 
Prime. Second, the MHS User Survey can estimate the proportion of 
dual eligibles in each of the three categories. This data will also 
answer the questions as to what extent access of non-enrollees to 
space available care and pharmacy benefits are affected. Finally, 
the merging of utilization files from DoD and HCFA will give another 
look at what proportion of care is seen between the two systems.

[[Page 38619]]

DOD Performance Measures Attachment F--

Enrollment Systems

    Performance: DoD provides appropriate enrollment information to 
HCFA; applications are handled according to HCFA requirements.
    Criteria DoD can effectively interface with HCFA systems; 
applications are dated when received, handled first-come, first-
served.

Grievance and Appeals

    Performance: Process exists to handle beneficiary and provider 
complaints.
    Criteria: DoD keeps an accurate log of complaints and addresses 
them promptly and appropriately.

Marketing

    Performance: Process exists for assuring that beneficiaries are 
well-informed (beneficiaries are not misled, misrepresentations 
about the Medicare program are not made).
    Criteria: DoD assures that beneficiaries are well informed, 
marketing materials are reviewed by HCFA before DoD distributes 
them.

Access/Capacity

    Performance: DoD has adequate capacity and enrollees have 
adequate access to services.
    Criteria: DoD demonstrates that TRICARE Senior Prime enrollees 
are getting the same priority and the same access as other military 
retirees who enroll in TRICARE Prime.

Paying Providers

    Performance: Systems exist for processing payment to providers.
    Criteria: DoD demonstrates ability to pay providers timely and 
accurately.

Reimbusement/Level of Effort

    Performance: DoD has systems that receive and track payments 
from HCFA, and DoD can track actual costs for both space-available 
and enrollee care.
    Criteria: DoD receives payment without problems; DoD 
demonstrates ability to track/allocate costs for space-available and 
enrollee care.

Encounter Data

    Performance: DoD submits ``test'' data to fiscal intermediaries/
carriers.
    Criteria: DoD demonstrates successful data transmission.

[FR Doc. 98-19041 Filed 7-16-98; 8:45 am]
BILLING CODE 5000-04-P