Military Health System (MHS) reform, directed by Congress via the FY 2017 National Defense Authorization Act (NDAA), touches almost every element of the system. While MOAA has most recently been fighting for increased reporting requirements and congressional oversight of military treatment facility (MTF) restructuring and medical billet cuts, we have also been monitoring potential changes to TRICARE since discussions on the next generation of TRICARE contracts, known as T-5, began last year.

There is still time to influence T-5. The draft request for proposal (RFP) was just released, and T-5 requirements are still being shaped. The current TRICARE T-2017 contracts run through Dec. 31, 2022.

The key takeaway: While we appreciate congressionally-directed TRICARE reforms are intended to improve access and quality of care, as well as the Defense Health Agency’s ability to address contractor performance issues,  they must be carefully coordinated with other MHS reforms and consider the impact on TRICARE program costs. Otherwise, beneficiaries could face inadequate TRICARE network availability in some areas, pressures for higher out-of-pocket costs, and a rocky transition to the new contractors.

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The FY 2017 NDAA directed DoD to implement TRICARE reforms designed to improve access to health care, health outcomes, and health care quality; enhance the beneficiary’s experience of care; lower per capita health care costs; incorporate innovative ideas and solutions; and develop and continuously refresh high-performing networks of health care providers at the national, regional, and local levels.

The Senate Armed Services Committee (SASC) has expressed concerns that the T-5 acquisition strategy will continue the East/West two-region approach and may not incorporate reforms directed by the FY17 NDAA. In its report for S. 4049, the Senate version of the FY 2021 NDAA, the SASC noted the existing contract structure “limits the [Defense Health Agency] and does not comport with the reforms directed by this committee.”

The SASC report directed DoD to “review the legislative reforms enacted over the past several years and report to the committee on how the acquisition strategy for the next set of TRICARE managed care support contracts incorporates those reforms in a manner that increases competition and beneficiary choice.” The committee went on to say that keeping a two-region setup “will neither provide the DHA with options to swiftly address contractor performance issues or shortfalls nor will it incentivize contractors to comport with the most high quality, innovative, and cost-effective industry best practices to improve quality of care for TRICARE beneficiaries and to maximize returns on DHA investment.”

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In response to the SASC report request, DoD released the Report to the Committee on Armed Services of the Senate: TRICARE Managed Care Support Contract Structure earlier this month.

In the report to the SASC, DoD recommended maintaining the two-region construct in T-5 but incorporating phased demonstration projects to test and evaluate multiple contract/network offerings, as well as other health care innovations.

The first phase will require the two managed care support contractors (MCSCs) to conduct demonstrations, similar to the Kaiser Permanente pilot in Atlanta, designed to increase beneficiary choice and test health plan innovations.

In later demonstrations, DHA would award limited local or market-based contracts in each region directly to health care organizations, including plans or providers. First, DHA will need to compete a separate contract to satisfy TRICARE’s unique administrative needs related to eligibility, enrollment, and encounter data.

MOAA's Position

MOAA’s top priority is protecting beneficiary access to high quality care and the value of the military health care benefit. We support congressionally directed TRICARE reforms aimed at better serving beneficiary needs, improving integration with MTF leadership, and facilitating a more agile, cost-effective approach. Reforms that provide DHA with options to swiftly address contractor performance issues are particularly important.

However, since the FY 2017 NDAA was passed, MOAA has had concerns about simultaneously increasing demand for TRICARE network care (via MTF restructuring and rightsizing) while also changing the TRICARE supply of network care (via a transformed TRICARE construct).

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We also suspect the new approach may result in higher TRICARE program costs that will create pressure for higher beneficiary out-of-pocket costs. In its report to Congress, DoD cites possible cost increases related to potential reductions in provider discounts and the cost of a back-end administrative contract to handle eligibility/enrollment/encounters.

MOAA believes the approach outlined in DoD’s report to the SASC has merit. It is important to test and evaluate TRICARE changes before rolling them out program-wide. It is also critical to allow time to integrate TRICARE reforms with MTF restructuring and rightsizing efforts that could dramatically increase demand for TRICARE network care. Instability in the civilian medical system resulting from COVID-19 is also likely to impact TRICARE reform efforts and must be considered.

All TRICARE changes being discussed as part of T-5 are still just under consideration – nothing is definite. MOAA will continue to monitor T-5 efforts and advocate for beneficiaries throughout the process. Regardless of eventual T-5 specifics, we urge DoD and Congress to ensure any TRICARE changes and pilots/demonstrations are monitored closely using robust metrics to assess impact on beneficiary access to care, the quality of that care, and the cost to beneficiaries and DoD.