[Federal Register Volume 69, Number 96 (Tuesday, May 18, 2004)]
[Notices]
[Pages 28124-28125]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-11205]


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DEPARTMENT OF DEFENSE

Office of the Secretary

[RIN 0720-ZA05]


Office of the Secretary of Defense (Health Affairs)/TRICARE 
Management Activity

AGENCY: Department of Defense.

ACTION: Notice of a TRICARE demonstration project for the State of 
Alaska.

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SUMMARY: This notice is to advise interested parties of a Military 
Health System (MHS) demonstration project entitled TRICARE 
Demonstration Project for the State of Alaska. The delivery of health 
care services in the State of Alaska represents a unique situation that 
cannot be addressed fully by applying all of the at-risk standards that 
apply to the health services and support contractors who provide 
services in the other 49 states without some modification. Under this 
demonstration, the health services and support contractor who will be 
providing healthcare services for the Western Region Health Services 
and Support contract will be exempt from the underwriting provisions 
for the cost of civilian health care in the State of Alaska.

EFFECTIVE DATE: Effective with the start date of health care delivery 
for the current TRICARE Regions September 9, 10, and 12, 2004 within 
the TRICARE Management Activity Health Services and Support Contract 
for the Western Region.

ADDRESSES: TRICARE Management Activity (TMA), Regional Operations 
Directorate, 5111 Leesburg Pike, Suite 810, Falls Church, VA 22041-
3206.

FOR FURTHER INFORMATION CONTACT: Mr. Michael Talisnik, Office of the 
Assistant Secretary of Defense (Health Affairs)--TRICARE Management 
Activity, (703) 681-0064.

SUPPLEMENTARY INFORMATION:

A. Background

    Alaska is a land of extremes and contradictions. It is the largest 
state in the United States, containing one-fifth of all United States 
land, yet is one of the least populated. It boasts both the highest 
mountain in North America and the longest coastline of any state. There 
are just a few major roads providing residents the ability to travel to 
the major cities in the state. Other means of transportation are by 
boat or plane which places severe hardships on beneficiaries attempting 
to access needed healthcare services. It has geography characterized by 
harsh ice islands and desert tundra, yet cradles lush meadows and rain 
forests. Alaska's citizens are no less diverse.
    Alaska's population is just under 627,000. Of these, approximately 
71,000 are Military Health System (MHS) beneficiaries. More than half 
of these beneficiaries reside in south-central Alaska in the state's 
largest city--

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Anchorage. Alaska's Military Treatment Facilities (MTFs) meet a large 
percentage of Alaska's beneficiary healthcare needs. The remaining is 
referred to local civilian providers or to the lower 48 states.
    The TRICARE Western Region health services and support contract, 
which includes Alaska, requires the contractor to underwrite the costs 
of civilian health care services (also referred to as ``purchased 
care'') which is defined as care provided to all Civilian Health and 
Medical Program of the Uniformed Services eligible beneficiaries 
residing in the Western Region. The following categories of care/
beneficiaries are specifically excluded from the TRICARE Western Region 
contract: Outpatient retail and mail order pharmacy; active duty 
supplemental care including TRICARE Prime Remote for Service members 
only (family members are underwritten by the health services and 
support contractor); Continued Health Care Benefits Program; Foreign/
Outside the Continental United States claims; Medicare dual-eligible 
TRICARE beneficiaries; and cancer/clinical trials.
    The underwriting mechanism of TRICARE Western Region health 
services and support contract consists of an underwriting fee which may 
be considered to be an underwriting premium associated with the risk 
assumed by the contractor. It will be subject to a fee-adjustment 
formula which allows for increases or decreases inversely related to 
the actual costs. There is potential of creating a negative fee.
    Predicated upon the foregoing mechanism, coupled with the 
environment in which healthcare services are delivered in Alaska, there 
is a concern that if health care is underwritten by the Western Region 
health services and support contractor, the contractor may experience 
increases in actual costs for healthcare outside the control of the 
contractor. This has the potential of creating an unwarranted negative 
fee.
    Because of this concern, the purpose of this demonstration is to 
validate that the Western Region health services and support contractor 
can avoid the vagaries of Alaska healthcare and the potential negative 
effect that it may have on the contractor's fee, by not underwriting 
these healthcare costs for Alaska beneficiaries. Under the 
demonstration, the costs will be paid by the government from pass 
through funds.

B. Description of Demonstration Project

    Under this demonstration, the Western Region health services and 
support contractor will not be responsible for the underwriting fee for 
healthcare costs for MHS beneficiaries residing in Alaska. The 
contractor shall provide all the Services required for Alaska as 
specified in the TRICARE Operations Manual, Chapter 23, but will not be 
responsible for the underwriting fee associated with providing those 
Services under that chapter. All other provisions contained in the 
TRICARE Health Services and Support Contract, TRICARE Operations Manual 
(6010.51-M), TRICARE Policy Manual (6010.54-M), TRICARE Systems Manual 
(7950.1-M), and TRICARE Reimbursement Manual (6010.55-M), shall apply 
in Alaska.

I. Implementation

    This demonstration will operate for up to five years after the 
start of health care delivery for the TRICARE Management Activity 
Health Services and Support Contract for the Western Region unless 
extended by separate action. Following program evaluation, the 
Department of Defense will seek permanent authority to determine 
program continuation.

II. Exclusion to the Demonstration Project

    Participation in this demonstration is limited to healthcare 
provided in the State of Alaska.

III. Evaluation

    An independent evaluation of the demonstration will be conducted 
under a separate contract.
    The evaluation will be designed to use a combination of 
administrative and survey measures of health care access to provide 
analyses and comment on the effectiveness of the demonstration in 
meeting its goal of improving beneficiary access to healthcare by 
maximizing the potential pool of healthcare providers in Alaska.
    TRICARE beneficiaries will be asked to comment on the quality of 
their experiences getting the health care that they need. It is 
anticipated that the evaluation will compare the reports of TRICARE 
user-beneficiaries in Alaska to those from the TRICARE region under the 
administration of TriWest (West) where TriWest is responsible for 
provider network development and at risk for health care costs. The 
evaluation will begin at the time health care services are delivered 
under TriWest administration in both regions.
    All analyses will be adjusted to account for demographic 
differences between these two geographic domains. It is also 
anticipated that analyses will develop measures of access from data 
developed in quarterly administration of the TRICARE Beneficiary 
Survey. Additional administrative claims based indicators of access to 
health care within the two study domains will also be considered.

    Dated: May 12, 2004.
L.M. Bynum,

Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 04-11205 Filed 5-17-04; 8:45 am]
BILLING CODE 5001-06-M