[Federal Register Volume 75, Number 186 (Monday, September 27, 2010)]
[Notices]
[Pages 59237-59238]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-24092]


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DEPARTMENT OF DEFENSE

Office of the Secretary


TRICARE Co-Pay Waiver at Captain James A. Lovell Federal Health 
Care Center Demonstration Project

AGENCY: Office of the Secretary, Department of Defense.

ACTION: Notice of TRICARE Co-Pay waiver at Captain James A. Lovell 
Federal Health Care Center demonstration project.

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SUMMARY: This notice is to advise interested parties of a demonstration 
project entitled ``TRICARE Co-Pay Waiver at Captain James A. Lovell 
Federal Health Care (FHCC) Demonstration Project.'' Under this 
demonstration, there would be no deductibles, cost shares, or co-pays 
for eligible beneficiaries seeking care at the FHCC. This demonstration 
would take place under the authority of 10 U.S.C. Section 1092(a)(1)(B) 
Cost-sharing by eligible beneficiaries. The effectiveness of this 
demonstration will be tested by comparing the volume of care for 
beneficiaries that would have paid co-payments to the prior year volume 
to determine if increased utilization actually occurred as a result of 
the elimination of co-payments. Increased utilization would be an 
indicator of what to expect in future Department of Defense (DoD)/
Department of Veterans Affairs (VA) mergers of this nature and would 
influence decisions regarding financial integration.

DATES: Effective Date: This five-year demonstration project will be 
effective October 1, 2010.

FOR FURTHER INFORMATION CONTACT: Mr. Kenneth E. Cox, Director, DoD/VA 
Program Coordination Office, Health Affairs, Telephone (703) 681-4258.

SUPPLEMENTARY INFORMATION:
    A. Background: The Captain James A. Lovell FHCC, which is scheduled 
to open in October 2010, will be the first Federal health care facility 
in the nation to be operated jointly between the VA and the Navy. New 
construction will be completed to combine the North Chicago VA Medical 
Center (NCVAMC) and Naval Health Clinic Great Lakes (NHCGL) into a 
single, fully integrated federal health care facility. The completely 
integrated medical center will be led by a VA Chief Executive Officer, 
and a U.S. Navy medical department officer as the Deputy.
    Title XVII of the National Defense Authorization Act (NDAA) for 
Fiscal Year 2010 authorized the Department of Defense and Department of 
Veterans Affairs Medical Facility Demonstration Project in North 
Chicago/Great Lakes, IL. Because the legislation did not address the 
issue of beneficiary cost sharing, it is being addressed through this 
notice.
    DoD and VA have carefully analyzed the impact of requiring co-pays 
by beneficiaries, and believe that the requirement may adversely impact 
the success of the integration. At this time, it is estimated that 
keeping the co-pays in place would result in at least a 50 percent 
reduction in DoD beneficiaries treated at the FHCC since those patients 
would see no added benefit to traveling to FHCC and will seek care at 
facilities closer to home. Furthermore, beneficiaries who had 
previously received care at the NHCGL when it was designated as an MTF, 
would be required to make a co-payment for medical care provided, 
including emergency, hospitalization, and behavioral health services. 
Since the VAMC will no longer be a separate authorized TRICARE 
provider, but will be under the integrated structure, there will be no 
health care claim prepared to bill TRICARE. The organizations are 
merged financially in accordance with the Executive Agreement. The 
Department will therefore test whether waiver of the co-pay by the 
beneficiary will impact the utilization and cost effectiveness of the 
demonstration.
    B. Details of the Demonstration: The April 23, 2010, Executive 
Agreement (EA) between VA and DoD reads ``Active

[[Page 59238]]

Duty members and Active Duty dependents enrolled in TRICARE Prime pay 
no co-payments for inpatient or outpatient health care services. DoD 
may establish special co-pay rules for the FHCC under demonstration 
project authority of 10 U.S.C. 1092 for other beneficiaries.'' Under 
this demonstration, co-pays will be waived for any eligible DoD 
beneficiary seeking healthcare at the FHCC. The waiver of cost sharing 
applies to all impatient, outpatient, and ancillary services and all 
outpatient prescription drugs provided at the FHCC. The waiver is 
consistent with current policies and procedures followed at all MTFs. 
According to an Independent Government Cost Estimate (IGCE), it is 
estimated that waiving the co-pays for all beneficiaries including 
Medicare-eligible beneficiaries will cost DoD an additional $101,518 a 
year. This cost assumes that the lack of co-pays would lead to a 20 
percent increase in utilization by the affected groups (i.e. induced 
demand) at this facility. Without this assumption, the waiver would 
cost DoD an additional $84,599 annually. The cost of additional 
staffing required to compute and collect co-payments could easily be 
more than $100,000 per year.
    The effectiveness of this demonstration will be tested by comparing 
the volume of care for beneficiaries that would have paid co-payments 
to the prior year volume to determine if increased utilization actually 
occurred as a result of the elimination of co-payments. Increased 
utilization would be an indicator of what to expect in future DoD/VA 
mergers of this nature and would influence decisions regarding 
financial integration. The final report on this demonstration will 
accompany the final report on the FHCC demonstration required by 
Section 1701, NDAA 2010.

    Dated: September 20, 2010.
Patricia L. Toppings,
OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2010-24092 Filed 9-24-10; 8:45 am]
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