[Federal Register Volume 71, Number 223 (Monday, November 20, 2006)]
[Notices]
[Pages 67112-67113]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-19553]


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DEPARTMENT OF DEFENSE

Office of the Secretary


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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[[Page 67113]]

SUMMARY: This notice is to advise interested parties of a Military 
Health System (MHS) demonstration project entitled TRICARE Provider 
Reimbursement 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 strictly applying 
the same reimbursement rules that apply to TRICARE programs in the 
other 49 states without some modification. Typically, provider payments 
are the same as under Medicare, unless the Department has taken 
specific action to increase payment rates in response to a particular, 
severe access problem in a location. Under this demonstration, payment 
rates for physicians and other non-institutional individual 
professional providers in the State of Alaska will be set at a rate 
higher than the Medicare rate. The demonstration project will test the 
effect of this change on provider participation in TRICARE, beneficiary 
access to care, cost of health care services, military medical 
readiness, morale and welfare. In particular, the demonstration will 
test whether the increased costs of provider payments are offset in 
whole or part by savings in travel costs, lost duty time, and other 
factors. This demonstration will be conducted under statutory authority 
provided in 10 U.S.C. 1092.

EFFECTIVE DATE: January 1, 2007. This demonstration will remain in 
effect for a period of 3 years.

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

FOR FURTHER INFORMATION CONTACT: CAPT Cynthia DiLorenzo, Office of the 
Assistant Secretary of Defense (Health Affairs)--TRICARE Management 
Activity, telephone (619) 236-5304.

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 health care services. It has geography 
characterized by harsh ice islands and desert tundra. 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--Anchorage. Alaska's military treatment facilities (MTFs) 
meet a large percentage of Alaska's beneficiary health care needs. 
Those remaining are referred to local civilian providers or to the 
lower 48 states. Access to health care services in Alaska is often 
severely limited by the overall dearth of providers, their reluctance 
to accept TRICARE payment rates, transportation issues, and other 
factors. In response TRICARE has taken steps to increase payment rates, 
as detailed below.

B. Past Efforts to Address Access Issues

    In 2000, TRICARE created a new payment locality encompassing all of 
Alaska except Anchorage, and increased payment rates by 28 percent in 
the new locality. In 2004, pursuant to specific Congressional action, 
Medicare increased its payment rates in Alaska by 50 percent, and 
TRICARE rates were increased to match the new Medicare rates. The 
higher Medicare rates continued though the end of 2005, when the 
special Congressional provision expired; the Medicare rates reverted to 
former levels. TRICARE rates reverted to their former level, 28 percent 
higher than Medicare rates.

C. Other Payers in Alaska

    As noted, TRICARE payment rates in Alaska are 28 percent above 
Medicare rates. It is estimated that commercial rates in Alaska are 
about 70 percent above TRICARE rates. The Department of Veterans' 
Affairs purchases some health care services for Veterans in Alaska, 
using a specially developed rate schedule. Most rates are higher than 
TRICARE rates, and a few are lower; on average, the VA rates are 
approximately 35 percent higher than TRICARE rates.

D. Current Status of Access

    Large numbers of providers in Alaska are considering no longer 
treating military beneficiaries owing to low payment rates. Over 70 
providers or provider groups in a wide range of specialties are of 
concern, some of them the sole provider in Alaska for their specialty.
    The alternatives to local purchase of services for military 
officials are to transport patients to Seattle or another location for 
treatment, or to relocate scarce military medical assets to Alaska to 
provide services. The first is an expensive proposition that brings 
with it considerable lost duty time and other complications; the second 
approach is untenable in wartime, and as a practical matter medical 
practice in Alaska would not provide sufficient opportunity for 
military medical specialists to maintain their skills.
    Under a recent policy change, TRICARE limits its payment in cases 
where Medicare providers ``opt out'' of Medicare and enter into private 
contracts with Medicare patients. This may be problematic in Alaska, 
with the very small number of providers available.

E. Description of Demonstration Project

    Under this demonstration, DoD will waive, for services provided in 
the State of Alaska, the provisions of 10 U.S.C. section 1079(h) that 
require TRICARE payments for physicians and other individual 
professional, non-institutional providers to be the same as under 
Medicare. Instead, TRICARE will adopt a rate that is 1.35 times the 
current TRICARE allowable rate. In addition, DoD will be the primary 
payer for services obtained from providers who have opted out of 
Medicare by Medicare-eligible uniformed services beneficiaries.
    This action will directly increase reimbursement levels for 
providers, and is expected to result in increased access to care for 
military beneficiaries; reduced travel to Seattle, accompanied by a 
reduction in lost duty days; and improved morale for military members 
and families as a result of increased access and reduced separation.

F. Implementation

    The demonstration will go into effect on January 1, 2007.

G. Evaluation

    An independent evaluation of the demonstration will be conducted. 
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 health care by maximizing the 
potential pool of health care providers in Alaska.

     Dated: November 14, 2006.
L. M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
 [FR Doc. E6-19553 Filed 11-17-06; 8:45 am]
BILLING CODE 5001-06-P