Military urged to overhaul health care system

Witnesses criticized the slow and costly claims processing system of Tricare, the Defense Department's managed health care system, at a hearing Thursday before a House Budget Committee task force.

Panelists who appeared before the Budget Committee's Task Force on Defense and International Relations said increasing the use of electronic claims filing will help reduce the very high costs of claims reviews and will improve customer service.

The average cost to process a TRICARE claim is $7.50 to $8.00, according to an estimate by Palmetto Government Benefits Administration, a subsidiary of Blue Cross Blue Shield of South Carolina. All of the witnesses who testified were optimistic about eventually reducing Tricare's processing costs to between $2 to $4 per claim.

By comparison, it cost $1.78 on average to process a Medicare claim in fiscal 1999, according to the Health Care Financing Adminstration. More than 8.2 million active-duty personnel, retirees and their dependents are eligible to receive health care under Tricare, a $16 billion-a-year managed health care system.

"Complaints and frustrations stem from perceived inaccurate and late payments; complex program rules, processes and reporting requirements; and high costs. All agree that the claims adjudication system needs to be simplified and made more user-friendly, and that it could benefit from increased use of technology," said Stephen P. Backhus, director of veterans' affairs and military health care issues at the General Accounting Office.

Backhus said the complexity and size of the Tricare system contributes to the high cost of claims processing. Tricare offers three health care packages that include different benefits, copayments, and deductibles-resulting in different procedures for processing claims.

Beneficiaries are often baffled by the system's complexity, making Tricare claim inquiry rates four times higher than Medicare inquiries, Backhus said.

According to William J. Meyer, senior vice president of Palmetto, more than 80 percent of Tricare claims are filed on paper. Meyer agreed with Backhus that the complexity of Tricare is responsible for its high administrative costs.

Blue Cross Blue Shield of South Carolina, through its subsidiaries, is the largest claims processor in the country for both Medicare and Tricare.

Dr. James T. Sears, executive director of DoD's Tricare Management Activity, acknowledged the problems facing the health care system, but also noted the progress that Tricare has made in improving claims processing. New standards that took effect in October 1999 require contractors to process 95 percent of accurately submitted claims within 30 calendar days from the date of receipt. Seards said statistics from March and April 2000 show a 97.5 percent processing rate within the 30-day period.

Tricare is also moving toward streamlining its record database system and standardizing claims processing formats to make it easier for contractors to submit claims data, thereby reducing administrative costs.

Backhus said a partnership between DoD and the Department of Veterans Affairs in purchasing pharmaceuticals could also yield substantial savings.

"The expectation is that, as the two agencies buy more of a particular drug, their leverage-particularly under competitively bid contracts-would permit them to obtain even greater discounts from drug manufacturers and to save funds for both departments," Backhus testified.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.


When you download a report, your information may be shared with the underwriters of that document.