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ACTING EXECUTIVE ASSOCIATE ADMINISTRATOR
HEALTH CARE FINANCING ADMINISTRATION
HOUSE ARMED SERVICES MILITARY PERSONNEL SUBCOMMITTEE
TRICARE - PRESERVING HEALTH CARE FOR
OUR NATION'S MILITARY RETIREES
March 14, 2001
Good morning, Chairman McHugh, Representative Meehan, and
distinguished members of the Subcommittee. Thank you for
inviting me to discuss our role in supporting the Department
of Defense (DoD) as it administers health benefits for Medicare-eligible
military retirees and their families. We are dedicated to
ensuring that all of our beneficiaries receive the high
quality care that they deserve, and that includes U.S. military
Last year, Congress enacted new benefits for military retirees
and their families in the National Defense Authorization
Act for Fiscal Year 2001 (NDAA). This law allows the retirees
to continue to receive the same benefits they received before
turning 65 by supplementing Medicare benefits with coverage
by TRICARE, the Department of Defense's (DoD) health coverage
We are working together with the DoD to ensure that we
are ready to exchange the data they will need to process
claims for these retirees once the new TRICARE benefits
become effective. While our role primarily will be that
of sharing data with DoD, we recognize that this is an important
aspect of administering the new benefit. We look forward
to continuing to work with DoD to ensure that these new
benefits are implemented efficiently, and that military
retirees have the care they are entitled to receive.
The Health Care Financing Administration (HCFA) is the largest
health insurer in the nation, covering some 74 million Americans
through Medicare, Medicaid, and the State Children's Health
Insurance Program. Until 1991, once a military retiree reached
the Medicare eligibility age of 65, Medicare became the
retiree's primary health insurer. However, Medicare benefits
are not as extensive as those offered to military personnel
through TRICARE. The DoD Authorization Act of 1991 extended
TRICARE coverage as secondary payer to Medicare for military
retirees under age 65 who were entitled to Medicare because
they had End Stage Renal Disease (ESRD) or a disability.
Last year, under the NDAA, Congress required that the DoD
provide the same level of benefits for retirees over age
65 as it does for military personnel under age 65.
In order to meet this new requirement, Medicare will remain
the primary payer for the retirees' care. TRICARE will pay
for the retirees' out-of-pocket cost, including deductibles
and coinsurance, for services covered under Medicare, plus
any additional TRICARE benefits not covered by Medicare,
such as medical services delivered overseas, and certain
categories of home health and skilled nursing facility care
that currently are not Medicare benefits. Military retirees
will have TRICARE to supplement Medicare beginning on October
1, 2001, as long as they are eligible for Part A Medicare
benefits and enrolled in Part B of the Medicare program,
which requires a premium payment from the beneficiary.
The new law also provides a prescription drug benefit,
administered by DoD, for the retirees and their families.
Beginning April 1, 2001, the law allows them to continue
to use the DoD's pharmacy program after they become eligible
for Medicare. For this benefit, retirees who are already
age 65 as of April 1, 2001, will be considered "grandfathered"
into the program, and will not need to be enrolled in Part
B. However, those retirees who have not yet reached age
65 by April 1, 2001, must enroll in Medicare Part B to receive
the DoD drug benefit.
While we act as a primary payer for more than 39 million
Medicare beneficiaries, 11 million of these patients also
have supplemental insurance, commonly referred to as Medigap,
which is sold by private insurance companies to cover and
pay for some additional items not covered by Medicare. We
regularly exchange claims information with private sector
Medigap insurers so they know what Medicare has covered
and paid for and can determine what they are responsible
for paying. In administering the new TRICARE benefits, DoD
will have a role very similar to a Medigap insurer, and
will cover and pay for some services that Medicare does
not. And like any Medigap plan, TRICARE will want specific
claims information about Medicare services provided to its
There are two types of information that we will share with
DoD to assist it in successfully implementing these new
benefits. First, we will share Medicare enrollment data.
Because Congress has tied eligibility for the additional
TRICARE benefits to an individual's entitlement to Medicare,
DoD will need to know which retirees are entitled to Medicare
benefits, and enrolled in Part B. Second, we will share
paid claims data. Since Medicare remains the primary payer
for many retiree health services, DoD will need accurate
claims data to determine when Medicare has already paid
for retiree benefits, so that TRICARE can determine its
appropriate supplemental payments. We regularly share this
claims data, commonly referred to as "crossover"
claims, with Medigap plans.
We maintain an extensive record of everyone who has ever
been entitled to receive Medicare benefits on our Enrollment
Data Base (EDB). The EDB is HCFA's single resource for managing
Medicare entitlement data, and contains the names of entitled
individuals and ties their Medicare entitlement history
to them by using a unique health insurance claim number.
The release of this data is governed by the Privacy Act
of 1974. In certain circumstances, and for limited purposes,
we share this data with outside parties such as Federal
and State agencies, contractors, and insurance companies.
We will share this enrollment data with DoD, and we have
been working diligently with DoD to ensure our respective
systems will be able to exchange the data. We fully expect
to be able to share this data by October 1, 2001. In the
interim, when the pharmacy benefit begins in April 2001,
we understand that the DoD will allow military retirees
to confirm their eligibility for the new pharmacy benefit
by showing their Medicare card, which indicates the cardholder
is a Medicare beneficiary, as well as the beneficiary's
Part B enrollment status.
Crossover Claims Data
By law, we contract with private sector insurance companies
to process and pay Medicare claims. Currently, we contract
with about 50 insurance companies for this purpose, and
each has Trading Partner Agreements (TPAs) with numerous
entities, including State Medicaid Agencies and Medigap
plans, that need access to claims data to ensure that they
pay only what Medicare does not cover. Private insurers
that operate Medigap plans in multiple States generally
execute a separate agreement with each Medicare contractor
to obtain the Medicare processed claims data for all of
their beneficiaries throughout the country.
We are working with DoD and each of our contractors to
arrange TPAs. Our goal is to establish one standard TPA
document that TRICARE can use with all of our contractors.
Additionally, we soon will instruct our contractors to enter
into TPAs with DoD, and we will continue to work with our
contractors and the DoD to expedite this process and ensure
its success. We fully expect the TPAs to be in place well
in advance of the October 1, 2001, effective date of the
TRICARE benefits. We are committed to improving customer
service through standardizing and streamlining the TPA process.
Our work with DoD will give us good experience to move forward
with this effort.
Medical records privacy is an important issue, and we are
working with DoD to ensure beneficiary data is exchanged
securely. When we share data with outside entities, the
Privacy Act of 1974, as amended by the Computer Matching
and Privacy Protection Act of 1988 (CMPPA), requires that
these entities prepare written agreements specifying the
terms of the data exchange. This type of agreement provides
safeguards against unauthorized use and redisclosure of
such information by an outside organization. All agreements
must contain specific details, including: the purpose and
legal authority for the disclosure, the expected results,
a description of the records to be used, how the records
are to be used, and how the data will be secured.
We have met with DoD representatives, established key points
of contact for them within our Agency, and are drafting
a Computer Matching Agreement to safeguard the data to be
exchanged. Once the agreement has been finalized, the CMPPA
requires us to report the Computer Matching Agreement to
Congress and the Office of Management and Budget, and to
publish the agreement and an explanation in the Federal
Register 30 days prior to its activation. We fully expect
to fulfill these obligations and to complete the agreement
in time to exchange beneficiary information appropriately,
so retirees can receive their new benefits efficiently and
securely by October 1, 2001.
We are committed to serving our beneficiaries, and we are
very pleased that our Medicare beneficiaries who are military
retirees will receive the expanded benefits mandated by
Congress. We have been working cooperatively with the DoD
to make sure our respective systems are well prepared to
facilitate the exchange of beneficiary enrollment and crossover
claims data that will allow these retirees to receive their
new benefits. We have the required agreements under development,
and we expect to be fully prepared to share the appropriate
data with DoD in an efficient and secure way by October
1, 2001. I appreciate the opportunity to discuss these preparations
with you today, and I am happy to answer your questions.