[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
[H.A.S.C. No. 110-131]
HEARING
ON
NATIONAL DEFENSE AUTHORIZATION ACT
FOR FISCAL YEAR 2009
AND
OVERSIGHT OF PREVIOUSLY AUTHORIZED PROGRAMS
BEFORE THE
COMMITTEE ON ARMED SERVICES
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
__________
MILITARY PERSONNEL SUBCOMMITTEE HEARING
ON
BUDGET REQUEST ON THE FUTURE OF THE MILITARY HEALTHCARE SYSTEM
__________
HEARING HELD
MARCH 12, 2008
U.S. GOVERNMENT PRINTING OFFICE
45-478 WASHINGTON : 2009
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MILITARY PERSONNEL SUBCOMMITTEE
SUSAN A. DAVIS, California, Chairwoman
VIC SNYDER, Arkansas JOHN M. McHUGH, New York
LORETTA SANCHEZ, California JOHN KLINE, Minnesota
NANCY BOYDA, Kansas THELMA DRAKE, Virginia
PATRICK J. MURPHY, Pennsylvania WALTER B. JONES, North Carolina
CAROL SHEA-PORTER, New Hampshire JOE WILSON, South Carolina
NIKI TSONGAS, Massachusetts
David Kildee, Professional Staff Member
Jeanette James, Professional Staff Member
Rosellen Kim, Staff Assistant
C O N T E N T S
----------
CHRONOLOGICAL LIST OF HEARINGS
2008
Page
Hearing:
Wednesday, March 12, 2008, Fiscal Year 2009 National Defense
Authorization Act--Budget Request on the Future of the Military
Healthcare System.............................................. 1
Appendix:
Wednesday, March 12, 2008........................................ 35
----------
WEDNESDAY, MARCH 12, 2008
FISCAL YEAR 2009 NATIONAL DEFENSE AUTHORIZATION ACT--BUDGET REQUEST ON
THE FUTURE OF THE MILITARY HEALTHCARE SYSTEM
STATEMENTS PRESENTED BY MEMBERS OF CONGRESS
Davis, Hon. Susan A., a Representative from California,
Chairwoman, Military Personnel Subcommittee.................... 1
McHugh, Hon. John M., a Representative from New York, Ranking
Member, Military Personnel Subcommittee........................ 3
WITNESSES
Casscells, Hon. S. Ward, M.D., Assistant Secretary of Defense for
Health Affairs................................................. 3
Goetzel, Dr. Ron Z., Research Professor and Director, Institute
for Health and Productivity Studies, Emory University Rollins
School of Public Health, Vice President, Consulting and Applied
Research, Thomson Healthcare................................... 10
Wilensky, Dr. Gail R., Co-Chairman, Defense Task Force on the
Future of Military Healthcare.................................. 6
APPENDIX
Prepared Statements:
Casscells, Hon. S. Ward, M.D................................. 43
Davis, Hon. Susan A.......................................... 39
Goetzel, Dr. Ron Z........................................... 77
McHugh, Hon. John M.......................................... 41
Wilensky, Dr. Gail R......................................... 69
Documents Submitted for the Record:
Chart on Proposed Fee Changes based on Task Force on the
Future of Military Healthcare Recommendations.............. 96
Memo, UMWA Health & Retirement Funds to Lorraine Lewis,
Outline of Mail Order Savings and Explanatory Notes........ 89
Review of Task Force Report, Relative to Pharmacy Mail Order. 91
Witness Responses to Questions Asked During the Hearing:
Mrs. Boyda................................................... 99
Mr. McHugh................................................... 99
Ms. Shea-Porter.............................................. 100
Questions Submitted by Members Post Hearing:
Mr. McHugh................................................... 105
FISCAL YEAR 2009 NATIONAL DEFENSE AUTHORIZATION ACT--BUDGET REQUEST ON
THE FUTURE OF THE MILITARY HEALTHCARE SYSTEM
----------
House of Representatives,
Committee on Armed Services,
Military Personnel Subcommittee,
Washington, DC, Wednesday, March 12, 2008.
The subcommittee met, pursuant to call, at 9:02 a.m., in
room 2118, Rayburn House Office Building, Hon. Susan Davis
(chairwoman of the subcommittee) presiding.
OPENING STATEMENT OF HON. SUSAN A. DAVIS, A REPRESENTATIVE FROM
CALIFORNIA, CHAIRWOMAN, MILITARY PERSONNEL SUBCOMMITTEE
Mrs. Davis of California. The meeting will come to order.
Good morning everybody. Thank you all for being here.
The purpose of today's hearing is to look at the short-and
long-term challenges facing the Defense Health Program. In
2007, total health expenditures of approximately $33 billion
accounted for just under 8 percent of the overall Department of
Defense (DOD) budget.
By 2015, the Department projects that total health
expenditures will rise to over $64 billion accounting for just
over 11 percent of the total Defense budget. All of this
assumes a steady, modest and potentially optimistic annual rate
of inflation in healthcare expenses.
Without controlling the growth in healthcare costs, both
the Department of Defense and Congress will face some very
difficult choices: Do we fully fund healthcare or operations;
maintain medical readiness or procure all of the new equipment
the services will require; keep our promises to retirees, or
resource all of the research and development needed to keep our
technological edge? Tough questions.
The Department's 2009 budget submission marks the third
straight year that the Department has proposed their Sustain
the Benefit program. In basic terms, Sustain the Benefit
proposes to raise beneficiaries' co-payments, deductibles and
enrollment fees to both offset and avoid costs.
The increase in fees will result in modest sums returned to
the Department. Beneficiaries will be discouraged from seeking
care both necessary and unnecessary, again, due to higher co-
payments for visits. And the Department's own budget materials
clearly state that they intend to realize savings by raising
the costs of TRICARE so much that family members and retirees
will seek health insurance coverage outside the DOD system
because it will be cheaper.
These steps are likely to reduce costs over the short term.
People are simply less likely to seek the same amount of care
that they receive today. However, what are the long-term
implications of these actions? What will the costs be if
beneficiaries wait too long to seek care and the underlying
conditions worsen or become untreatable?
Now is not the time to exacerbate existing long-term
problems or create new ones with programs that provide only
short-term relief. When TRICARE was envisioned in its current
form back in the 1990's, assumptions were made without clear
evidence that private sector care was cheaper than the care
provided in military treatment facilities.
Risk was taken by dramatically shrinking the size,
staffing, and number of military treatment facilities to save
both money and end-strength personnel authorizations, and as a
result, we now have great difficulty fully supporting our
combat forces as the medical practitioners that support them
are pulled from the very military treatment facilities that we
downsized.
Some military hospitals and clinics have had to close down
entire departments for months at a time due to deployed
providers, and consequently, many beneficiaries who received
their care in military facilities now must receive their care
in the civilian sector.
With most of our beneficiary care, in terms of dollars, now
provided in the civilian system, we are at the mercy of
inflationary pressures affecting the Nation's healthcare
system. Our beneficiary pool is simply not big enough to move
the market in a positive direction. These are the problems we
face with a military at war supported by a healthcare system
designed with just barely enough capacity to function during
peacetime. Again, we must not repeat such shortsighted
thinking. So what is the way forward?
To help us answers these questions today--we have a great
burden that we have put on you--we have before us today Dr.
Ward Casscells, the Assistant Secretary of Defense for Health
Affairs. We also have Dr. Gail Wilensky, co-chair of the
Defense Task Force on the Future of Military Healthcare.
And finally, Dr. Ron Goetzel of Emory University's
Institute for Health and Productivity Studies, who is also a
Vice President for Consulting and Applied Research with Thomson
Healthcare. Dr. Goetzel is a leading voice on the issues of
wellness and prevention having authored or co-authored numerous
studies on the subject not to mention advising many of our
Nation's top companies.
Welcome to you all. We are delighted to have you with us.
And we will begin with Dr. Casscells.
[The prepared statement of Mrs. Davis can be found in the
Appendix on page 39.]
Dr. Casscells. Thank you Madam Chairwoman, Ranking Member
McHugh, Dr. Snyder, Semper Fi, Mr. Kline. On behalf of----
Mrs. Davis of California. I am so sorry, Dr. Casscells----
Dr. Casscells. Sorry.
Mrs. Davis of California [continuing]. If I can interrupt
you. I was so anxious to hear what you had to say, that I
forgot to turn to my colleague, Mr. McHugh, on my side.
Mr. McHugh, I am so sorry. You see what happened----
STATEMENT OF HON. JOHN M. MCHUGH, A REPRESENTATIVE FROM NEW
YORK, RANKING MEMBER, MILITARY PERSONNEL SUBCOMMITTEE
Mr. McHugh. No, it is all right. I am anxious to hear Dr.
Casscells, as well, and that is probably the more important
part of it. Thank you, Madam Chair. I will just submit my
comments for the record in their entirety.
I want to welcome our guests here this morning.
Dr. Casscells, you have been very open and quite willing to
engage us in discussion as to the way forward. We appreciate
that leadership.
And Dr. Goetzel, I certainly think that your perspective
holds some very positive tabs for us as to how we can better
contain costs than just relying upon burdening further the
beneficiaries with that.
And last, but certainly not least, Dr. Wilensky, thank you
for your great service as co-chair on the Defense Task Force on
the Future of Military Healthcare. I had--as did the chair--a
chance to chat with you previously, and your reputation
precedes you. And certainly, your work on this task force only
adds to that illustrious reputation, and we are greatly
enriched by your participation, and we appreciate it.
That having been said, as the chair noted, the third year
in a row we are discussing significant increases to the costs
to the beneficiaries of the TRICARE system. And quite frankly,
I remain concerned--as I have in the past--that the place we
start, particularly in time of war, in trying to put the
healthcare system on a better path is on the backs of the
beneficiaries.
I am not sure that is either the most effective or
certainly the most equitable way to approach it, and in fact, I
am pretty convinced it is not, but this is a very important
hearing and a very serious challenge.
The Department, I think, has very fairly described the
effects of the increased costs, and the chair, I think, equally
fairly described the tradeoffs that we are already having to
make. And as time goes forward, without some kind of action to
contain these costs or certainly to accommodate them more
effectively, we are going to have to face more of those
choices.
So your input today is going to be very, very important to
us as we continue to try to find a way to ensure that we
continue to provide the best possible healthcare for those in
uniform, their families, and of course, equally important, the
retirees that have served this Nation so honorably.
So welcome, and I look forward to your comments.
And thank you, Madam Chair.
[The prepared statement of Mr. McHugh can be found in the
Appendix on page 41.]
Mrs. Davis of California. Dr. Casscells, please.
STATEMENT OF HON. S. WARD CASSCELLS, M.D., ASSISTANT SECRETARY
OF DEFENSE FOR HEALTH AFFAIRS
Dr. Casscells. Thank you, Mr. McHugh.
We appreciate this opportunity to come before you and tell
you what help we need and where we are in this one-year
progress report, and I want to say how helpful the members of
the committee and the staff have been as we have had a
challenging year.
I think you know I am not an Master of Business
Administration (MBA) or a professional manager, and my military
career is short and recent. So I don't have the great Pentagon
experience that many do. So I have needed, more than most, the
advice that we have gotten from the committee members and
staff, and from the task forces--seven in number--particularly,
General Corley and Dr. Wilensky and former Secretary Shalala
and former Senator Dole.
These task forces have been great beacons for us, and we
have embraced them, and we have already begun to implement the
vast majority of those recommendations. There are a few that
may need some help from this committee.
We had a challenging year. We have made progress in almost
every aspect of the things that we talked about when I came
before you--not in the oversight hearing but in a hearing about
combat casualty care and combat stress--some 9 or 10 months
ago. So I won't brag about the progress--just to say that in
almost all of these areas, we still have work to do--combat
care; preventive medicine; safety issues in theater--making
progress. Got more to do; Post-Traumatic Stress Disorder
(PTSD); concussions or traumatic brain injury (TBI)--a lot of
progress. We could talk about that at great length, and we have
more to do. We have got a good clear roadmap on that as well.
The frustrating disability system: We have a pilot, which
we are beginning to evaluate. We hope that--as the Government
Accountability Office (GAO) pointed out two weeks ago--that we
are on the right track with that and getting a disability
system that is faster, fairer or at least as fair, but
certainly simpler and faster. And those returns are just coming
in. The GAO has reminded us we need more metrics before we roll
it out. So that is the interim report on that.
We have had a lot of people working on patient advocacy and
family support--kind of programs. And the Army and we at Health
Affairs and the Navy have put a lot of people in place to care
for injured soldiers and Marines and their families, and we
have created some mechanisms in parallel to the chain of
command by which they can get help.
DOD-Veterans' Administration (VA) relations: night and day
compared to a year ago; clear roadmap on that. I don't think we
need help from you on that, but we would be glad to talk about
that in some detail.
Information technology: We appeared before you about six
months ago. Mr. Kline had plenty of advice for us at that time,
and we have taken that to heart. And I am really pleased to say
that we are scoring runs in information technology now, and
this is being recognized increasingly around the country. We
are really pleased with that, but we have got a ways to go.
There are a number of issues in the theater, which relate
to combat care, particularly stress and long deployments. We
would be willing to talk about these. These are areas of
ongoing discussion in the Pentagon, and we hope that we can
make progress on those.
Humanitarian assistance: You all know that this has been a
big focus for us, for the Navy, for Admiral Mullen, and we, of
course, plan to continue this in this vain--African command
(AFRICOM), pandemic flu, these kinds of services, which we
consider will be bridges to peace. We don't plan to belabor
that this morning, but would be glad to answer any questions.
We hope that our Uniformed Services University will
increasingly become a global educator, a force for peace, a
force to bring people together through healthcare, through
telemedicine, distance learning and the like. And we are making
a lot of plans in this regard. We would be glad to share them
with you.
TRICARE and cost: Let me talk about them since that was the
main focus of the opening remarks. Very briefly--and Dr.
Wilensky will talk about it more--we have expanded the benefits
in this long war on our own and with congressional guidance--
reservists, Guard, family members--increasing benefits and
increasing duration of benefits, so the number of eligible
beneficiaries has increased.
The usage of these services has increased, because they are
increasingly high quality. TRICARE is the most popular health
plan. It has the highest satisfaction of any health plan in the
country. Now, service members increasingly, particularly
reservists, for example, will drop their private coverage and
exclusively use TRICARE. It is cheaper, and they like the
quality. So this, of course, is increasing the costs.
We have retirees who fortunately are doing well, living a
long time, liking their TRICARE for Life. We have doctors who
are coming up with new ways of treating things, so the
intensity of care continues to ramp up. That is a factor, as
Dr. Snyder can tell you, in healthcare inflation broadly.
So there are lots of factors here, and we are hopeful that,
in a general sense, competition and choices will drive
innovation; innovation will drive quality; people will compete
on the basis of quality, satisfaction, and eventually cost.
But that is sort of a long-term mantra. In the meantime, I
would say I personally feel it is critical that we begin to
endorse the findings of this Corley-Wilensky task force. And I
believe that the veterans I have spoken to, including the
leaders of the Veterans Service Organizations (VSOs), are
willing to see a gradual increase in fees, co-pays and
deductibles as long as it is not more expensive than the
private sector, because they don't want to rob theater care for
garrison care or retiree care, so I would endorse that.
At the same time though, we are moving away from the more
simplistic and draconian discussions of things like efficiency
wedges and Military to Civilian (MILCIV) conversions in favor
of agreed upon metrics between our surgeons, our TRICARE people
and using pay for performance techniques--and Dr. Goetzel can
probably talk about those, because he has studied this a lot--
to incentivize prevention and to reward units and reward
individuals, both clinicians and patients, who are taking good
care of themselves and taking good care of each other.
And this sort of pay for prevention is, in the long run,
the best way to reduce costs, but there are other things we are
working on too. And I am proud to say that, you know, we
invited inspectors general to come in, and they have lived with
us and gone over these plans like hawks. And I am proud about
the ethical performance of our caregivers and our
administrators.
So, you know, we have got a great team. As Dr. Wilensky
says, ``you got a great bench,'' and it is true, I do. We are
going to be ready for the transition next winter in January,
because we do have a good bench, and we get a lot of help from
you all.
So with that, let me stop and say, thanks again for this
opportunity and this year of advice and the coming year of
advice. We look forward to working with you. Thank you.
[The prepared statement of Dr. Casscells can be found in
the Appendix on page 43.]
Mrs. Davis of California. Dr. Wilensky.
STATEMENT OF DR. GAIL R. WILENSKY, CO-CHAIRMAN, DEFENSE TASK
FORCE ON THE FUTURE OF MILITARY HEALTHCARE
Dr. Wilensky. Thank you, Madam Chair and distinguished
members of the committee. I am pleased to have this opportunity
to appear before you representing the Department of Defense
Task Force on the Future of Military Healthcare.
During this past year, I have had the opportunity to work
with my very able co-chair, General John Corley of the Air
Force and 12 other members, half from the Department of Defense
and half from the outside, so to speak.
During that same time, I had the privilege of serving as a
commissioner on the Dole-Shalala Commission and thus spent a
good portion of my last year trying to help focus on how to
improve healthcare in both the military and the Veterans'
Administration. I am a health economist by day--Project HOPE
sometimes wonders if I am still a senior fellow with them--but
I am here not to represent my own views as a health economist
but rather to represent the views of our task force.
What I would like to do is to very briefly review what it
is that we have recommended in our task force. And while I
understand and appreciate that much of your concern has been
with regard to changes in the financing arrangements--and I am
pleased to discuss that in whatever detail you would like--I
think it is very important to understand that of the 12
recommendations--10 and then two follow on recommendations--two
of them deal with changes in fees, and eight of them deal with
how to make military healthcare more effective and efficient in
its delivery. And we think that is a very important signal as
to how we approached our duties.
We want to help make the military healthcare system more
fiscally sustainable. We think that means making it a more
efficient and effective healthcare system, and in addition,
making some changes in the fiscal arrangements. But it is not
only changing in the fiscal arrangements, and we are going to
do as much as we can to dissuade people from looking at our
recommendations only in that light. I think it misses what we
spent a lot of time thinking about, and it will miss the point
of the changes that we believe need to occur.
We recognize that you have a difficult task, and that we
had a difficult task, which is attempting to balance the needs
for military medical readiness--the most important single
function of healthcare in the military--recognizing that there
has been commitments to those in the military and to their
families for the sacrifices they have made. And we want to make
sure that there is a healthcare system in the future that will
be sustainable for them and for their families.
We also recognize that military healthcare system--as you
said Madam Chair--operates within a much broader healthcare
environment. You are big, but you are not that big. There are
approximately nine million people on the TRICARE system,
broadly defined. There are 44 million in Medicare, and there
are 300 million in the country. So, while you are significant,
it is not easy for military healthcare to influence the
healthcare system at large, and some of the difficulties that
military healthcare is facing is broadly reflective of the
challenges of healthcare in the country today.
I am going to review quickly these recommendations. And I
have said, while I am more than happy to discuss the financial
ones in any detail you wish, I do think it is important to
consider the other recommendations we are making, because it
will make, we believe, the military healthcare system more
efficient and effective.
The first and the most overarching recommendation has to do
with developing strategies to better integrate the direct and
purchased care, particularly at the level where the care is
actually provided--that means at the local level.
You mentioned, Madam Chair, that early on there had been a
decision to blend purchased care in the private sector with
direct care provided in the Military Treatment Facility (MTF).
I personally believe that is a great strength of the military
healthcare system, not so much as to whether one provides more
efficient or less efficient healthcare, but because it allows
the military to respond better to surges and demand, to the
effects of deploying large numbers of people in theater and to
shifts in geography.
However, it represents a challenge and that is to integrate
the purchased care and direct care, and we think that is not
yet occurring in an optimum way. People who are running these
systems need to be empowered, and they need to be held
accountable. Metrics need to be developed so it is clear how
they are progressing.
We have several recommendations that focus on implementing
best practices both in a business and in a clinical sense. We
don't say this to suggest that there is something fundamentally
wrong with the military healthcare system. We have found no
indication that it does not run generally well or with high
quality. We just think there are several areas where it is not
necessarily following the best of what exists in the private
sector, and it could. And those are the sense in which we have
made recommendations.
We think there needs to be more collaboration with other
payors on best practices, both in the private sector and in the
government--the VA, Department of Health & Human Services
(HHS), et cetera. There needs to be more of an attempt to have
cost and quality more transparent. There needs to be a
strengthening of incentives. Dr. Goetzel, I am sure, will cover
some of these issues with regard to pay for results and other
strategies being used in the private sector.
We would like to see more systematic use of pilots and
demos with the results being evaluated. Interesting pilots
aren't helpful if you don't have a clear set of expectations at
the front and well-developed metrics at the back. We think that
the Department needs to have an audit of the financial controls
done by an outside group.
We would like to see the processes with regard to
eligibility, second payor, et cetera, examined with changes
being suggested as needed. We would like to see more in the way
of wellness and prevention guidelines. It is not that none of
this is done, but we think that it is not done at the state of
the art, and it is not done in a uniform way across the
military.
We think there are ways that there can be efficiencies in
the procurement system. We think it is important that the
acquisition in terms of TRICARE management be elevated in terms
of the characteristics of the individuals who are running these
processes making sure that they are certified, and that best
practices be used in procurement, which is not always
occurring.
And also, in this area, we think that there needs to be an
examination of existing requirements. We heard from contractors
and from family members that there are some of the areas that
are stipulated in the contracting language that do not allow
for the best use of disease management or of other strategies,
and that they need to be examined to see whether or not more
flexibility can be provided in the system.
We would like to see an assessment as to how the changes
with regard to Reserves, particularly the TRICARE Reserve
Select program works. We think it is too soon to have such an
assessment, but we encourage the department to do that over the
course of the next two or three years and to make any changes
that are necessary.
In the two areas where we have suggested changes with
regard to fees, one has to do with modifying the pharmacy
benefit to use more cost-effective care. We have suggested
different types of tiering and co-payments to use so that there
is more of an incentive to use preferred meds and also the more
cost-effective points of service.
And we have also suggested that there be a pilot where the
pharmacy function itself is integrated into the direct delivery
of care. There is some debate both within the military and
outside the military whether you get the best care by
integrating pharmacy services directly within the provision of
the rest of healthcare or whether you can get the best cost
efficiency by keeping it outside, separate and having direct
contracting. This is an area that we think can best be settled
by having a serious pilot in one of the three TRICARE areas
evaluating the results and then using that information going
forward.
We have, as you have referenced, suggested that there be a
revision to the cost sharing that occurs. I think you are aware
that we have focused on the retiree. We do not suggest
increasing the fees with regard to active duty or their
families. We have primarily focused on the under 65 retirees,
the majority of whom--but not all of whom--are working. And
that is to phase in over a four-year period--changes in
enrollment fees and deductibles that go back to the cost
sharing arrangements that existed when the Congress introduced
the TRICARE program in the mid 1990's.
Even more importantly than going back to what that was is
how you go forward. And that is to continue indexing the
relationship between what is paid by the beneficiary and what
is paid by the military, so that this relationship--which is
approximately 91:9 on the part of the military versus the
beneficiary--is maintained going forward. Changes need to occur
in a predictable way--small changes in each year rather than
attempting to make large changes in any type of a make up
arrangement.
Finally, we have two recommendations that go toward
monitoring in the way going forward. We think that it would be
better for the beneficiary and better for the military if
individuals who have multiple choices, particularly employer-
sponsored insurance and TRICARE, would choose one or the other
of those two systems, whichever they prefer, and bring some of
the other money with them to have a unified benefit.
Having individuals use healthcare in multiple settings
without any communication between those multiple settings is
very expensive care and very poor care, medically. We have
suggested that a pilot be demonstrated to see whether or not it
is possible to have such an arrangement, again, at the choice
of the beneficiary as to whether it is the TRICARE program that
is chosen or the employer-sponsored program that is chosen with
a contribution being made by the other payor.
And, finally, we were asked to look at command and control
issues with regard to the military health system. We think it
is too early to do so given the changes that are being put in
place. We think it is important that metrics be developed so
that it is clear what the Department and the Congress is
expecting from these changes, and that several years hence in
the future, it will be possible to assess whether or not the
changes that are already on the books have occurred as
anticipated.
Thank you for allowing me to participate. We recognize that
even if all of our proposals are introduced, it will not
resolve the future budgetary problems that will be produced by
healthcare costs that are increasing faster than the Department
of Defense budget, whatever that will be, and faster than the
economy as a whole. We understand that that is a problem to be
addressed by the Congress, broadly speaking. But we think that
it is still important that changes that can be introduced, be
introduced, that will allow the healthcare system in the
military to be as efficient and effective as possible and to be
in a financially stable position. These conditions do not
presently exist.
Thank you.
[The prepared statement of Dr. Wilensky can be found in the
Appendix on page 69.]
Mrs. Davis of California. Thank you, Dr. Wilensky.
Dr. Goetzel.
STATEMENT OF DR. RON Z. GOETZEL, RESEARCH PROFESSOR AND
DIRECTOR, INSTITUTE FOR HEALTH AND PRODUCTIVITY STUDIES, EMORY
UNIVERSITY ROLLINS SCHOOL OF PUBLIC HEALTH, VICE PRESIDENT,
CONSULTING AND APPLIED RESEARCH, THOMSON HEALTHCARE
Dr. Goetzel. Yes. Good morning. Thank you, Madam Chairwoman
and distinguished members of the subcommittee. I would like to
thank you for inviting me to testify this morning on the
subject of the health and financial benefits of health
promotion programs, and I have some prepared statements, but I
won't read them directly. I will just summarize and synthesize
some of the main points.
My background and my work over the last 20 years has been
in the private sector. So I have not done work with the
military. My work has involved doing large scale evaluations of
corporate health promotion, disease demand programs, and the
companies that I have worked with include Dow Chemical and
Johnson & Johnson and Motorola, Chevron, IBM--a long list of
Fortune 500 companies.
I have also, in the last five or six years, been a
principle investigator on federally funded health promotion
programs for Centers for Medicare & Medicaid Services (CMS),
for Medicare and for the Centers for Disease Control and
Prevention (CDC) and for the National Institute for
Occupational Safety and Health (NIOSH). So, my experience
bridges the gap between the public and private sector, and my
main emphasis is on looking at--from a research perspective--
the benefits of providing prevention programs to workers, to
employees--in this case the military being the workers of the
government.
First though I want to, very quickly, make a distinction
between different categories of prevention, because oftentimes
that is confused. Prevention is primary, secondary and tertiary
prevention. And primary prevention is essentially focused on
keeping healthy people healthy. So getting people not to start
smoking, being physically fit, maintaining a healthy weight,
eating healthy, managing their stress, managing their blood
pressures, cholesterol, glucose levels, and essentially
remaining well, remaining healthy. And that is primary
prevention, and there is very little being done in that arena
in general, not just in the military.
Secondary prevention essentially involves screening
programs to detect diseases or detect risk factors before they
get out of hand, before people become patients, and those
involve screenings for blood pressure, cholesterol, glucose
levels, but also people who are overweight, people who smoke
and getting them to manage those risk factors.
And tertiary prevention is what we typically consider
disease management--people already have disease. They already
have cardiovascular disease, diabetes, depression, asthma and
so forth. And the intent there is to prevent further
exacerbation of those conditions.
Now, that can be done medically, but there is also a very
important behavioral component associated with that. As you can
imagine, people with diabetes need to manage their weight; they
need to exercise; they need to eat healthy and get preventive
screenings on a regular basis.
Fundamentally, if you think about health promotion, disease
prevention and the logic flow behind it, it can be boiled down
to the following points. Many of the diseases and disorders
from which people suffer are preventable. In fact, if you look
at the deaths in the United States over past many decades, it
is really heart disease and cancers that constitute over 50
percent of all deaths in the United States.
And if you flip it around and ask what causes heart disease
and cancer, it is tobacco, overweight, sedentary behavior and
not eating right. Those are really the main factors
contributing to the chief deaths in the United States--
preventable deaths in many cases.
Many modifiable health risk factors have been associated
with increased healthcare costs and reductions in productivity.
Now, we have done a series of studies in the private sector
where we have looked at the relationship between 10 modifiable
health risk factors and subsequent healthcare expenditures and
productivity impacts and found a clear relationship, short
term, between having these risk factors and increased costs and
reduced productivity.
There is also strong evidence that you can actually change
the risk profile of a population. Even though it is very, very
hard to get people to quit smoking, start exercising, eat
healthy, manage stress and so forth, there is growing
evidence--in fact, the CDC's Community Guide Task Force has
just done a literature review of worksite health promotion
programs and came to the conclusion that there is strong,
sufficient, and in many cases strong evidence to support the
notion that you can actually reduce risks in many of the risk
factors and also have a positive impact on healthcare
utilization and worker productivity.
And then, finally, our research over the past 20 years has
focused on the notion of return on investment. We have been
funded by companies and other sources to look at whether these
programs actually save money above and beyond what they cost.
And our analyses done in private sector with increasingly
proved methods overtime have shown that many of these programs
due actually produce a positive return on investment--medium
value, somewhere around 3:1, but if you use better methods,
more rigorous methods, the ratios are closer to 1.5:1 to 2:1.
And what that means is that for every dollar you invest, you
get somewhere around $1.50 to $2 back on that investment over a
two-to four-year period.
In fact, we just published a study in last month's issue of
the Journal of Occupational and Environmental Medicine using
better methods to evaluate the return on investment in a
worksite program--this is with Highmark, a health plan in
Pennsylvania--and our conclusions were that that program
achieved a $1.65 return on investment for every dollar that
Highmark invested in the program.
So to summarize, I think there is a growing body of
evidence that prevention and health promotion in all three
categories--primary, secondary and tertiary prevention--more so
though in primary and secondary--can not only improve the
health and well-being of the population, in your case the
military, but also have a positive financial impact on
healthcare utilization, healthcare costs--in our terms,
productivity, but in your terms, readiness.
And again, I want to thank you very much for giving me the
opportunity to testify this morning.
[The prepared statement of Dr. Goetzel can be found in the
Appendix on page 77.]
Mrs. Davis of California. Thank you very much. We
appreciate your being here.
Dr. Casscells, let me just start with you. We talked about
the fact--and you mentioned as well--that in the 1990's we
began moving beneficiaries out of the military treatment
facilities and into a TRICARE program.
I am wondering if you were to build that program today--if
we were to just try and erase the slate and think of how you
would do that today, things being different than they are--what
would you do? How would you build that? Is that the direction
that you would go? Or is there something quite different, if
you can think out of the box, if you will, about how we would
go about doing that?
Dr. Casscells. Madam Chairwoman, thank you for the
opportunity. We, in fact, have taken a white sheet of paper--
clean sheet of paper and, with support from Dr. David Chu, the
Under Secretary for Personnel and Readiness, our TRICARE
director, Elder Granger, has gathered a number of experts and
the first meeting to redesign the system is, in fact, coming in
a few weeks. And we appreciate Mr. Kildee's coming to that and
giving us his thoughts about it, but the opportunities there
are to do many of the things that Dr. Wilensky addressed.
For example, information sharing: We all know that there
are many mistakes in medicine. There are, you know, maybe close
to 100,000 preventable deaths. The military is not perfect, and
while we have people working hard and trying diligently to use
ATA--a not very responsive health informatics system--we need
to do better in that, and we need better remote decision
support in our routine care.
In the prevention aspects, you know, we are pleased that we
exceed the civilian sector now in colonoscopy and pneumonia
vaccine and influenza, but influenza--we had to order people to
take it. And pneumonia vaccine--the Army is paying people cash
to take the pneumonia vaccine, because there was resistance to
it.
So, we are seeing some flexibility and some innovation.
This is the kind of thing we call ``pay for prevention,'' which
we hope to get in a redesigned system. Pay for performance, of
which pay for prevention would be a part, as we redesign this,
should have incentives for the commander, for the team, for the
patient, for the nurse and doctor so that everyone has the same
goals and everyone has some extra reason to perform besides the
sense of duty, which drives so much of what, you know, military
personnel do.
Mrs. Davis of California. Can I interrupt for a second? Are
you seeing that it is more in the military treatment facilities
or something that integrates more with TRICARE? I mean is it,
because there are things we can't control----
Dr. Casscells. Yes, ma'am.
Mrs. Davis of California [continuing]. In that arena.
Dr. Casscells. Starting with the local issues and backing
up just the way Dr. Wilensky's saying, we need an integrated
system where at least there is bi-directional information
exchanged that is transparent between our purchased care and
our military treatment facilities, and we know that that has to
occur locally. Central guidance is awfully important, and a
nudge from this committee in this direction would have a
significant impact in accelerating this work.
Because we in the military tend to be cautious--when we are
not sure, we become cautious. So this is a hallmark of the way
we do things, so a nudge would be helpful. But I think I will
not get into details such as whether we should make people
choose between the MTFs and purchased care and whether they can
go back and forth. My hope would be that once the incentives
are aligned and the metrics are aligned--the outcome measures,
as Dr. Wilensky mentioned--that, in fact, people could go back
and forth between private care and military treatment facility
care with their portable records with a clear sense that they
are the owner of their care; that they have some responsibility
for their care; that they have choices in their care.
This kind of opportunity is possible in this system where
97 percent of our enlisted have a high school degree or
equivalent degree now. All of our people are computer literate.
They have a great sense of responsibility, and so I believe we
can be in the lead in patient accountability, doctor
accountability, nurse accountability, alignment of incentives,
but your guidance on this would accelerate this.
Mrs. Davis of California. Thank you. I am going to go ahead
and move on.
Mr. McHugh? I know we have a number of members here, and I
want to be sure that they all have a chance to ask some
questions.
And Dr. Wilensky? I know I have a number for you and also
for Dr. Goetzel.
We will move on and, hopefully, come back and have a few
rounds. Thank you.
Mr. McHugh.
Mr. McHugh. Thank you, Madam Chairman.
Dr. Casscells? I heard you reference the VSOs. I want to
make sure I understood what you said. Are you telling this
panel that the VSOs support the fee increases that are
contained in the DOD budget proposal?
Dr. Casscells. Sir, the VSO leaders I have spoken with are
not in favor of an abrupt increase of fees, co-pays or
deductibles, cost sharing of any kind that would catch up to
the past 12 years where they have been flat or that would make
military care more expensive than the private sector. But all
the ones I have spoken with have said they recognize that you
can't go for another 10 years without some increase in fees and
co-pays and deductibles, because they know at some point this
will eat into theater care, combat casualty care and force
readiness.
So they are in favor of a cost-of-living--what they tell
me, sir, is they would accept a cost-of-living index, gradual
increase in co-pays and deductibles----
Mr. McHugh. If you could get any of that in writing, I
would love to see it. And I am not questioning. I didn't mean
it quite the way it sounded. I am not questioning that, but I
think they are an important part of this equation----
Dr. Casscells. Sure.
[The information referred to can be found in the Appendix
begnning on page 99.]
Mr. McHugh [continuing]. And you understand that, and I
think it is important to go forward with a precise
understanding of what their tolerances are and what they
believe is correct--not to say they are absolutely correct one
way or another--but that is an important part of the
discussion.
So, to the extent we can have that formalized, that would
be helpful.
Dr. Wilensky? As I read your report, and as we had
discussions, the fee increases for the under 65 retirees does
not really demonstrably add to the bottom line of the defense
healthcare system. In other words, it is not the revenues that
is the factor here, it is the avoidance of utilization. Is that
correct?
Dr. Wilensky. There are two purposes: One is if you do not
start having gradual increases in the enrollment fees and some
changes in the deductibles, because of the growth in healthcare
spending, you will gradually approach the point that the
military pays everything. Period.
So you have frozen in an absolute dollar sense all of these
contributions since the program was--I don't mean you the
Congress----
Mr. McHugh. I understand.
Dr. Wilensky [continuing]. But these have been frozen since
1995 when the program was introduced. Because of the growth in
healthcare spending, the contribution by the individual will
approach zero over time if you don't start that clock.
Mr. McHugh. But the net positive in terms of a budgetary
perspective is not the income that is received through the
increased costs, it is the cost avoidance and nonutilization of
the program. That is the Department's assumption. I am just
trying to----
Dr. Wilensky. I want to make very clear, the Department
does what the Department is doing, and we----
Mr. McHugh. Do you agree with the Department's assumption?
Dr. Wilensky. We agree with some of the issues they have
raised. We have not mimicked their proposals. What we are
looking at is partly to restructure the benefit. The reason I
am hesitating is enrollment fees do not affect utilization. Co-
payments affect utilization and deductibles. Only when you get
within the range of where you are crossing the deductible
affect utilization.
Enrollment fees, like premiums paid in the private sector,
affect the relative shares of who pays the bill. It doesn't
affect behavior. When you want to affect behavior, you do it by
affecting co-payments or co-insurance rates or the pharmacy
tiering that we talked about.
So we are recommending two different types of changes in
the financial arena: one is to try to bring back some of the
original share between the military and the beneficiary as to
how this benefit should be financed--overwhelmingly by the
military, but not 100 percent by the military. We are also
trying to use financial incentives to change behavior.
Part of that is why we have introduced changes in the
pharmacy benefit where we are incenting by spreading the
differential costs between using preferred drugs then other
drugs and between using the lowest cost place to get them,
which is mail order and other places to get drugs and also co-
pays.
So we are both changing the financial arrangements to try
to put the military health program in a little better financial
state. Otherwise, what is going to happen is this benefit will
basically be funded entirely by the military. It is largely
funded by the military. It will always be largely funded but it
is going to be 100 percent effectively funded if you don't
start having the beneficiaries' contribution increase.
That is not to change behavior. With all due respect to the
Department, there is nothing they are going to do which is
going to make TRICARE more expensive than what goes on in the
private sector. So I know they have used that argument. I don't
know what they are thinking. I don't agree with it.
Mr. McHugh. Well, that is--okay.
Dr. Wilensky. Okay. And I have----
Mr. McHugh [continuing]. Don't agree with it.
Dr. Wilensky. I don't agree that it will make TRICARE more
expensive and, therefore, less attractive than what goes on in
the private sector. Nothing that I see being talked about
begins to approach that. I do think you can make the TRICARE
benefit more financially sustainable, which is what we have
suggested doing and also incent better behavior in the sense of
how you would like to see the beneficiaries choose the
pharmaceuticals or, in general, engage in the use of
healthcare. That is generally why you have co-insurance and co-
payments.
Mr. McHugh. I thank the chair for her patience, because
that was the crux of the question, because that is a
fundamental assumption of the Department's proposal, and if it
is valid, it is important to know. If it is, in your opinion,
not valid, it is important to know, and I appreciate your
comments.
Thank you, Madam Chair.
Mrs. Davis of California. Thank you. Mr. Kline has left.
Ms. Drake, you are next.
Mrs. Drake. Thank you, Madam Chairman.
Well, first of all, thank you all for being here. And I
just want to get a few things straight in my mind, because I
think the population we are having this discussion about and
the people that approach us and are so emotional about this
issue, are our retirees who aren't able to get in TRICARE for
Life yet--in that age bracket.
First of all, everyone agrees that military offers
wonderful medical care. People I talk to love TRICARE for Life.
They think that is an excellent program. So just a couple
questions that I have, because the time I have been in Congress
we have this discussion year in and year out on this committee
about the cost and how we deal with the cost.
So, and I have asked before, what are we telling new
enlistees? Because I think the real problem here are the people
in that middle bracket not old enough for TRICARE for Life who
believe they went into the service with the understanding their
benefits would be taken care of, and that is why they are such
a key component. This is really, really emotional for them,
because they feel like the rules are being changed.
So, is there a cutoff point where people who came in after
that were told something different and were told to expect
these types of fees, deductibles and co-pays, because it is
really a matter of expectations and what people thought they
were doing and what they thought they were getting.
And I know we are treating everybody the same, but my
question revolves around is there a way to separate them into
two categories: people who truly had the expectation their
healthcare would be paid for and newer people coming in who
don't have that expectation? So that is one question.
I thought it was great when we went to the reservists being
able to be in TRICARE, because this idea of going in and out of
a healthcare system based on whether you are activated or not
made no sense to me.
My second question would deal with is what they are paying
for TRICARE when they are not activated--when this is optional
for them--is that an appropriate amount, or are we looking at
that amount--and there again not to make it more than or even
the same as healthcare in the private sector. And then just the
last issue that hits me, and it sort of backs up the
chairwoman's question, is about the military treatment
facilities. Because I also hear from people that they are very
offended they have to go into the private sector.
They would like to be able to be treated at Portsmouth
Naval Hospital, and they aren't able to do that. So, going back
to 1995 and looking at what was done then, would it have been
better to have given people the option of remaining in military
health treatment facilities or making a choice to go into the
private sector and paying for that, you know, for that option
if they want to use a civilian doctor? Because I can't imagine
that the costs are less by going into the civilian population
with what our doctors are paying for today in liability costs
and all the fees that are associated with even being reimbursed
by TRICARE.
I mean, as a former realtor, when I walk in any medical
facility, I say, I cannot believe the square footage and number
of people just to get reimbursed and so much of that is
government reimbursement that we don't have an easier way to do
it.
So I know that is a lot of questions, but I will stop
there.
But Dr. Casscells? I haven't been talking to the people you
have been talking to who want their premiums raised.
Dr. Casscells. Congresswoman, thank you. A couple general
points and then more specifically--first, thanks for the kind
words about the military treatment facilities. Not everyone
realizes, as you do, that the inpatient care has generally been
superb despite the demands of the longest war in our Nation's
history and the frequent deployment of one's favorite doctor
overseas, and your appreciation of that--like the patience of
our service members and their families--is very appreciated.
There are still areas where we are not able to provide
adequate care. A small facility may have their only
psychologist and psychiatrist deployed, and they may have to
drive, you know, 40 miles to see someone if they are in need of
counseling. So there are issues about, you know, understaffed,
skeleton-staffed facilities, which we are struggling with.
Certainly, you, from your constituents, will hear from a
different subset than we hear from. We are actively canvassing
asking for complaints of all kinds. We hear relatively few. We
post every one on our Web site, and I am out there walking the
deck, trooping the line every day trying to solicit more,
because of this tradition in the military where people tend not
to complain until they just can't take it any longer.
And you see a different part of the elephant. You are going
to get the constituent complaints, and that is important, so we
need to hear them from your staff, and thank you for when you
have sent those over. We appreciate those. We follow up every
one. And if you don't hear back from us, let me know right
away.
As regards to the cost issue, overall, you know, the
chairwoman alluded to the 7.8 percent of the DOD budget, which
is healthcare. This compares favorably to the 17 percent of
Gross Domestic Product (GDP), which is healthcare in the U.S.
But we are trying to prevent this from becoming a runaway train
here, and so, we are trying to be careful with these costs.
Certainly, the people--to get more specific with your
question--the guys and gals who served 20 and 25 years ago, 30
years ago for a much lower salary and far inferior benefits--
many of them, you know, on a draftee basis--certainly feel that
they got a promise, explicit or implicit, that they would get
care for life. And many of them will say this promise is not
being kept. You can refer them to the fine print, and they
don't appreciate that.
So if there is a way that we can do more for them in this
valley between active duty service or Reserve service--as a
reservist, I know exactly the issue, and before you get TRICARE
for Life, we would like to hear about that. It is a weak spot
and some assistance in this area would be appreciated.
So the answer is yes.
Mrs. Davis of California. Thank you.
Dr. Snyder.
Dr. Snyder. Thank you all for being here.
Is it Dr. Goetzel?
Dr. Goetzel. Yes.
Dr. Snyder. I think you are all here today as primarily
talking about health promotion, and I appreciate your
perspective, but I thought you might be a good person to ask--
do you think investing in medical research through military
medicine, through the Pentagon--is that a good investment of
taxpayer dollars?
Dr. Goetzel. I am a proponent of research----
Dr. Snyder. I am too.
Dr. Goetzel [continuing]. Because I am a researcher myself,
and I am a proponent of conducting research in applied
settings--in real life settings. So I agree with Dr. Wilensky
when she talks about doing pilots and demonstrations to test
out some of these ideas in real world settings. So, yes, I
would be a proponent of doing that kind of research with the
military----
Dr. Snyder. Now, I took Dr. Wilensky to be pilots kind of
in healthcare delivery, not necessarily basic science research,
although I think we underfund healthcare delivery models too,
but I agree with her on that.
I wanted to ask--and this will be your softball question
for today, and maybe I will start with you Dr. Wilensky.
We always like to hear from you, because you have such a
long history of experience and a varied background. But, am I
wrong--it seems to me that Dr. Casscells' job is really one of
the toughest ones with regard to healthcare. When you look at
other things--the Medicare program--right away we all have a
sense of mind, what is the typical Medicare patient? Well, they
are generally older. You think about, okay, Medicaid, we have a
sense most of it is poor children or nursing home people, but
Dr. Casscells literally has to run a worldwide program dealing
with all ages. I mean, he has to come here prepared today for
me to say, ``I have an 87-year-old military retiree that this
happened to. I have a young couple just enlisted and they have
a five-year-old child with autism.'' I mean, just this huge
perspective, and yet, we want the system to be almost perfect
because we care so much about our military families and
retirees.
Am I correct to say--and it is not much of a question, but
I mean it really is a challenge that we are laying on Dr.
Casscells here because of the breadth and quality that we
expect out of the system. Is that a fair statement?
Dr. Wilensky. It is, and you have used some good examples.
If you think about the VA, the VA tends to concentrate on
certain age groups. It has been heavily male in its focus--it
will be less so in the future, but still--and it has tended to
be heavily focused with populations that have certain kinds of
service-connected disabilities and now an aging population at
that.
The military, because it is both active duty and retiree,
does cross the age span. For the over 65--most of the TRICARE
for Life is primarily driven by what goes on in Medicare. The
military becomes a wraparound, a very generous wraparound, but
a wraparound to Medicare. So it is mostly--as I look at it--in
the under 65 population, but it includes active duty and
retirees.
Dr. Snyder. This was----
Dr. Wilensky. It is one of the reasons why this integration
is such a good idea, in my mind, between direct care and
purchased care, because you have so many varied experiences.
People shift where they live, bases change, et cetera.
Dr. Snyder. You can't do it without having some kind of
blend like that. I think this has really brought home to me--I
was talking some years ago now with a family who had a child
with some fairly severe psychiatric problems--a fairly major
diagnosis--and so Dr. Casscells and his folks can set up this
perfect healthcare system for that family and patient and then
two years later, they are transferred, or the next year one of
the parents is mobilized for 18 months, and then you have the
whole issue of the family dynamic.
And I think it is a challenge for us sometimes, I think, to
get a handle on all the specific issues. Maybe a lot of Members
of Congress--we get a feel for it because we hear from families
about what happens, but I think it is hard to judge this
program with how we do other programs because there is not the
typical military patient.
I wanted to ask one specific question, Dr. Casscells. What
is the status of military-to-civilian conversions now in the
different branches?
Dr. Casscells. Dr. Snyder, as you know we are trying to get
everybody over there who hasn't had a chance to serve, and this
does require to backfill at the military treatment facilities.
To this end, there has been a multi-year effort to shift some
positions to be permanent civilian positions, you know,
radiation therapy for cancer, for example--or to purchase that
downtown in the private sector.
Having said that, our surgeons feel that has gone far
enough--the military-to-civilian conversion of billets. In
going through the detailed analysis with them, I feel we are
about at the point where we have done what we should be doing
in that, and there is not a lot of savings to be got by pushing
that much harder.
We are trying to get some of that done this year. We may be
at about the right balance now, this year.
Mrs. Davis of California. Ms. Tsongas.
Ms. Tsongas. Thank you very much.
Secretary Casscells? I have a question. This committee
recently traveled to Camp Lejeune, and I had an opportunity to
visit the Marine Corps Wounded War Battalion along with many
others and sat with a young Marine who had been hit by an
improvised explosive device and was going to be medically
retired from the Marine Corps.
This young man had been classified 85 percent disabled, and
he was still suffering from his injury. He was about 20 years
old. So, my question is, in considering the future of our
military healthcare system, what long-term strategy is
beginning to evolve for the care of these young medical
retirees.
We can imagine that his needs may go well into his
adulthood and beyond. The cost could be tremendous, and I think
particularly in light of the discussion we have been having
about preventive care--how do we anticipate and plan for and
prevent sort of worst case scenario around these kinds of
situations?
Dr. Casscells. Congresswoman Tsongas, thank you. You know,
the Marines have borne an extraordinary burden in this war, and
it is to their everlasting credit that the Marine family has
embraced them and nurtured them to recovery, and they feel
like--even as they retire medically--they are Marines for life.
But esprit de corps doesn't help you get to the lavatory or
hold a job. So we are watching this very closely, making sure
that all of our medically retired personnel have had all of the
vocational rehabilitation opportunities they can have, because
the most important single thing is to have a job.
It is better than having an inheritance. It gives you a
reason to get up in the morning, and it keeps families
together. It keeps people from drinking, and so this is the
key. And of course, they get healthcare; their family gets
healthcare when they are 85 percent disabled, but the main
thing is to have a mission still.
And while they are recovering, their mission is to recover,
and they stay in, and they put the uniform on. They go to
formation. They have their disciplined routine, and they have
their standards. And it is when they transition to the civilian
sector we have a special obligation--I think that is what you
are alluding to--to follow up on them, and we have new
procedures in place to do that so that we don't have any lost
sheep.
An example on the Army side, which I am, is the people who
go home as an Army Reservist, even without an injury but with,
you know, combat stress, and they are not close to a VA, and
there is no TRICARE provider in their neighborhood or their
TRICARE runs out, and some of those people are lost sheep.
There are a lot of them out there. So we are actively
looking to bring them home and to make sure that they are
getting the counseling and particularly the job assistance that
they need so that--as Secretary Gates said, we owe them the
best facilities, the best care and the help they need to move
on to the next step in their life if that is what they choose
to do.
So we have no higher priority. We can't give great
inpatient healthcare and then say, you know, send me a
postcard. You have an obligation to follow up. So we certainly
intend that, and I know you will hold us to it.
Ms. Tsongas. I would like to ask Dr. Goetzel the same
question, because I can imagine that the cost will be great if
we don't engage and seriously think through how to provide
preventive care. This young man, for example, had lost his
sense of balance. He had to walk with a cane. Long term it is
hard to know. It is hard to know how quickly, if ever, he will
fully recover, so a job alone may not--obviously, it is very
important, but as a country, we really don't know yet the long-
term medical costs of this. And I don't know if you have any
thoughts about how we should be thinking about this for our
medical retirees as we go forward given how very young they
are.
Dr. Goetzel. I agree with Dr. Casscells that the disability
management and rehabilitation services that are being provided
are essential and especially in terms of providing purpose and
mission. And one of the most important things psychologically
is to give people, soldiers in particular, who have been hurt
the sense of the duty that they have to fulfill, and that they
have to continue working, and that they are complete citizens
and complete contributors to society.
So the work that is being done in rehabilitation is
essential. My focus is much more upstream in terms of just
basic day-to-day health habits that people have even before
they enter the military. Things that, in the long term, may
have very detrimental effects on their health and well-being.
Things like smoking, being sedentary, not eating properly,
being overweight--doing many things, drinking too much and so
forth--many things that potentially may harm them whether or
not they are affected by combat directly.
And in many ways that is a significant burden. It is kind
of a silent burden on the military that is not as apparent as
somebody who is injured in battle.
Ms. Tsongas. Thank you.
Mrs. Davis of California. Ms. Boyda.
Mrs. Boyda. All right. Thank you.
Thank you so much. This is just the number one issue
whether it is private healthcare, military healthcare, so I
have a number of questions, and I am going to try to go
quickly.
Just for the record, I would like to just know what the
satisfaction levels are for TRICARE, and I would like to see a
comparison among the three regions. I will just ask that for
the record, please.
Real quickly, because I have another--when you say we are
7.8 percent of--we spend on healthcare, what does General
Motors (GM) spend? Not GM, bad example. What does Motorola
spend on healthcare? What is their percentage, generally?
Dr. Goetzel. I am not sure I can translate it directly as a
percent, because there are many other benefits, but I can give
you a dollar value for that. Today, the average American
company is spending roughly $9,000 for every employee in
healthcare benefits, and----
Mrs. Boyda [continuing]. Seventeen percent GDP, and that
just didn't seem like an apples-to-apples. If you have
something for the record--if you could just get back, I would
be curious about that. It is not a have to do, just more
curiosity.
The real question that I have is very specific, and if I
have another chance, I would love to come back and talk about
broader issues, but the issue of mail order pharmacy has been
something--my background is coming from the pharmaceutical
industry from a research and development standpoint, and just
mail order pharmacy is something that has always kind of
concerned me.
When I look at your recommendations here, you have got a
30-day retail supply up against a 90-day mail order supply, and
I wondered from an economic standpoint, have you evaluated--
people tell me that mail order is cheaper. You know, and I am
going, wait a minute, you have got apples-to-kumquats or
apples-to-something else, but why do we think that 90-day mail
order--you know, we are losing--I represent a rural, rural
district, and of course, I am coming from we are losing that
person who is part of our healthcare team.
What data do you have to suggest that this is cheaper?
Dr. Wilensky. We can provide or have the task force staff
give you the information that is available, but in a more
intuitive, common sense way, the reason it is cheaper is
because what you need for mail order is basically a big
warehouse facility with minimal staffing----
Mrs. Boyda. And minimal interaction with human beings as
well.
Dr. Wilensky [continuing]. As opposed to what you need for
a retail distribution site. This is an issue, and I am going to
encourage you because you are rural--one of my many other hats
is that I am a trustee for the United Mine Workers Health and
Retirement Fund, and they are quite substantial users of mail
order for maintenance drugs.
Mail order does not make sense for all drugs, but for
maintenance drugs where either once you are on you are on for
life or you are on for three or five years until your
healthcare professional wants to try to some other combination,
really are drugs that you need to have on a regularized basis.
Chronic disease being the issue it is, those are really where
you have just the savings, but again, the savings come from not
having the support structure you need----
Mrs. Boyda. My question is if you had a chronic drug that
was filled at a retail pharmacy, do you have the data to--how
much does that cost? Because we have got 30 days--clearly you
are filling a prescription three times as often. But for
chronic drugs--obviously, we are talking chronic drugs--do you
know that it is that much cheaper?
Dr. Wilensky. The cost, again, is cheaper because of the
support structure that it takes will have provided what it is.
We did not try to assess the cost as a task force. We used the
information that was available elsewhere.
Mrs. Boyda. Right, and I would suggest that there may be a
great deal at stake for the person--for the one or two mail
order facilities that are around. I would very, very, very much
like to see an analysis of how that actually works. And again,
we are also talking about, you know--as you well know, if my
pharmacy from Chanute actually talks to my pharmacy from
Parsons to get a better price, that is considered anti-trust.
So we are, in fact, trying to do something about that to say
that our small community pharmacies can, in fact, come together
to get better pricing as well.
So you are kind of doubly at a disadvantage. Your retail
has to fill every 30 days, and then they clearly don't get a--
the other question that I would have too is when we are looking
at mail order--and I have seen degradation curves of what
happens at high temperature in literally 24 and 48 hours. Do we
take that into consideration?
Dr. Wilensky. I will, in addition to have the staff, see
whether I can have the executive director from the UMWA Fund
provide the information--because again, as I have indicated,
they are, because of where their retirees are, primarily rural
and come up with some of the same questions where, for their
populations, you have the tradeoff between a social visit as
well as a medical need being filled and the mail order--but
provide you with the information that they have in terms of why
they are encouraging on a fixed budget the use of mail order
where appropriate, which is maintenance.
Mrs. Boyda. I think we are out of time, but yes. And I
would also appreciate anything that DOD has regarding that,
actually that is my bigger concern. Thank you very much.
Dr. Wilensky. I will ask them.
[The information referred to can be found in the Appendix
beginning on page 99.]
Mrs. Boyda. All right. Thank you.
Mrs. Davis of California. Thank you. We have an adjournment
vote coming up. I think we can get in one more question.
Mr. Jones? If you could ask a question quickly. We have
about 11 minutes left to go.
Mr. Jones. Just two or three points. First of all, Dr.
Casscells, I appreciate you and your associates being here, and
I couldn't help to remember three or four years ago when Dr.
Winkenwerder came to my office and said, ``Congressman, we have
got a balloon that is about to explode. We can't continue this
process as it is,'' as it relates to the issues we are talking
about today.
And I said to him--the somewhat of a line that Mr. McHugh
was talking on--I told him, I said, ``Let me tell you, I hope
you have got a great public relations staff, because once the
word gets out,''--in fact, two years ago, it was Congressman
Chet Edwards and myself put in the bill, and we had over 300
people to join us in the House to say, ``No increase in fees.''
This is a huge problem. Our Nation is in very bad financial
shape. We all know that. We know you have answered my
colleagues, and I listened very intently that the problem is
growing and you have got to somehow deal with it. But I will
tell you truthfully--Mr. McHugh was so right--you have got to
reach out to these VSOs.
They have the contacts that we don't have, even though we
go in our district and we know our veteran's groups; we meet
with them; we listen to them, but when you really come down to
it, if there is going to be any movement one way or the other,
I am telling you, you have just got to really reach out.
And, Dr. Wilensky, this issue that Congresswoman Boyda was
talking about, I hear from pharmacists all the time. I have a
rural district. I have Camp Lejeune down in my district, Cherry
Point Marine Air Station, and from time to time, they will call
me or I might go into the drug store, and they will say, you
know, ``What in the world is the Federal Government doing? Are
they trying to put me, the local pharmacist, out of business?''
I want to work with you. I am not trying to be against you.
I want to make that clear, but this is going to be a tremendous
job of convincing those men and women who wore the uniform that
this is not a Washington, D.C. game. This is reality. And I
will tell you that I have them say to me all the time, ``How in
the world--you can do nothing about this, but how in the world
do you all find the money to send overseas? And yet you can't
take care of my medical needs.''
And I really, as this moves forward--and I know we will
have more hearings, and I thank the ranking member, and I thank
the chairman, but I really think that this country--the White
House down to the Congress--better understand when you increase
foreign aid three or four percent every year, send it overseas,
and then you tell the retirees you are going to have an
increase in your fees, it just doesn't wash. It just does not
wash.
Now you can't do anything about what this Congress votes
on, at least I know that part, but I am just saying that this
is going to be extremely important that you inform that this is
a critical situation. I don't mind telling you I have spent
much of my time in my district recently telling people that
when you have to borrow money from foreign governments to keep
your doors open as a government, it won't last long.
And I think that with this issue that those who wore the
uniform for this country--they want to be patriots just like
they were when they went overseas for America--but they have
got to be told the true story. And they don't need to be seeing
in 2005 where we sent money to Switzerland--you can't do
anything about it, but how in the world does this country send
money to countries who have a surplus and we have a debt. It
doesn't make any sense, but we are in the minority--can't do
anything about it, but maybe the majority can.
But again, I really can't add anymore than what my
colleagues have said more articulate than I have, but I can
just tell you that we know it is a problem. We know there has
got to be a fix to the problem, but you better bring in the
VSOs to sit down with your people before you even come back to
Congress and say, ``This is where we are. What can you do to
help us sell the American retiree and the veterans on the fact
that we don't have the luxury of time to take care of their
needs,'' and they deserve to be taken care of.
Thank you for letting me preach for just about three
minutes. I appreciate it.
Thank you, Madam Chairman. Thank you.
Mrs. Davis of California. Thank you, Mr. Jones.
We are going to go vote and come back. There is only one
vote, so it shouldn't take too long. I would ask people to
please come back. We would like you to come back with
questions. And staff can help out if you need phones or any
place to go, please. We should be back shortly. Thank you.
[Recess.]
Mrs. Davis of California. Thank you, everybody, for being
back. We will resume.
Ms. Shea-Porter.
Ms. Shea-Porter. Thank you very much. I just have two short
questions here. I know that is what we all say, but it really
will be short.
And this one is for Dr. Casscells, please. I want to know
why Wal-Mart and other companies can offer prescriptions for $4
co-pay and the proposed co-pay is $15 here, and what are they
doing that we could do differently?
Dr. Casscells. Mrs. Shea-Porter, thanks for that. We have
got to learn more about that. It is as big a surprise to me as
it is to you. Obviously though they are talking about generics.
Obviously, they are talking about a program that they are
rolling out, and they may be able to sustain a loss on that for
a while.
I am not sure that they can sustain that. We do, thanks to
the Congress, have Federal pricing now. And this ought to
enable us to reduce our pharmacy costs, and in combination with
incentives for mail order pharmacy, we may be able to compete
with Wal-Mart.
Whether we can compete with $4, even on a generic, that is
a real challenge. I am still not sure----
Ms. Shea-Porter. Well, do you think we should be asking
them or at least looking to see if it is a model that we could
use considering the cost that we incur yearly in prescriptions?
Dr. Casscells. Yes. I think that is very reasonable. And I
think the other thing is I hope they will invite us to go over
there and learn from some of the things they are doing well.
They obviously have found some efficiencies, and you know, this
business they have now with ready clinics and minute clinics in
the Wal-Marts and the Walgreens, this is very popular with
people.
So there are things we can learn, and we intend to try to
learn from them.
Ms. Shea-Porter. Yes. I would say instead of hoping they
invite us, I hope that we call up and check, because this is
difficult, and every dollar that we can save a retiree or
anybody related to the military, I think we have to make the
effort.
The other question I wanted to ask you was, I am aware of a
case because it is a relative of mine actually who had to leave
one state to go to another state because she needed some
surgery, and the hospitals around her were not either accepting
TRICARE or would not reimburse in full, and so, she was forced
to travel, not the 40 miles that you talked about earlier for a
psychologist, but literally hundreds of miles for medical care.
And I know that you have heard these stories before, and I
wondered what you were doing to address that, because basically
what happened was she found a hospital that was a teaching
hospital, and the taxpayers of another state picked up the
cost. How much of that cost for our military veterans and their
families are we shifting onto, you know, other taxpayers?
Dr. Casscells. Mrs. Shea-Porter, I don't have the answer to
the last part. We will have to get back to you about that if we
can. I am sure we can. As regards to this commonly encountered
problem where there is no care locally--and everyone wants top
quality care around the corner, naturally, and they want it
covered as a military health benefit.
And what I can say is that thanks to the efforts of General
Granger and the governors who have been very good about urging
their doctors to take TRICARE, we now have--in most states
about 90 percent of doctors are willing to take TRICARE or at
least they are signed up.
Now, they may not be actively recruiting TRICARE patients.
They may not be doing cartwheels when a TRICARE patient comes
in the door, but most of them have enough patriotism, that they
are willing to surmount the paperwork. TRICARE is a bit onerous
still. We are working to reduce the paperwork burdens, and
General Granger has authority, thanks to you all, to go above
Medicare by 5 or 10 percent if that is what is needed to
persuade people to sign up for TRICARE.
So all these have to be done locally, and every one of
these situations, we follow up. So, ma'am, if you will give me
the patient's name, we will follow that up today, and we
usually can get that resolved.
[The information referred to can be found in the Appendix
beginning on page 100.]
Ms. Shea-Porter. Yes. It was resolved, because she was
willing to travel, and her husband was willing to travel and
stay with her and people in the next state were willing to take
care of her, but it was onerous obviously, and a lot of steps
involved--childcare--everything was too much of a strain, I
think, to ask for somebody who has cancer.
So, I do want to thank you for the work that you are all
doing and for paying such attention to this and for coming
today, and I think that if we work together and we hear these
stories and we concentrate on them, we can improve the level of
care. So thank you.
Mrs. Davis of California. Thank you, Ms. Shea-Porter. And
we are going to go back to our rounds. I wanted to go back to
an issue to clarify, because I think that it has certainly been
touched on.
But looking at the structural implications of raising fees:
Will the additional fees that are generated or the funds that
are generated by raising fees go back into the military health
system, or will they go someplace else?
If the fees have some of the effect of reducing demand--
which I am not sure that that basic assumption necessarily
holds water--for care in the military treatment facilities and
driving beneficiaries out of TRICARE toward other insurance, is
this then going to reduce the funding and the resource
allocation that is going to our military treatment facilities?
And if the beneficiaries are as fond of TRICARE as your
survey suggests, then what makes you think that they would
leave TRICARE even if the costs increase? If they like it that
is a calculus that they have to entertain.
So what happens to this money? And it seems like we are
going to enter into a spiral here in terms of being able to
actually do what is appropriate by the military treatment
facilities.
Dr. Casscells. Madam Chairwoman, we see eye-to-eye on this.
I think it is critical that savings that are realized stay in
the system. More particularly, we need to guarantee that the
people who achieve these savings on a local level--which is the
commander, the doctor or nurse practitioner and the patient--
are beneficiaries either in cash or some other recognition of
what they have done.
Because, you know, for example, one of the things we
learned in TRICARE is that when we asked commanders to collect
the third party payments from patients who had that, no monies
were collected until it became, you know, clearly believed that
these would come back to the facility that collected those
third party payments, and now that is actually working. So it
is a local issue that needs central support from you.
As regards the last part of your question, I agree with you
that we are not going to have people leaving TRICARE for
civilian care. That should not be a goal. The goal should be
that people get high quality, cost-effective care that is
convenient for them, and that they have some sense of choice
and control because then they are more likely--you know, like
they say in Texas, no one washes a rent car, you know. You take
ownership of something where you have a stake in it.
So if it just stays where it is now, without driving
patients to private sector, I would be delighted, because we
have to have a volume of care, particularly in the MTFs, to
maintain excellence.
Mrs. Davis of California. Right, to justify those
facilities as well.
Dr. Casscells. Yes, ma'am. If a cardiac surgeon does one
case a week, he or she is not going to be as good. Same with a
pediatric endocrinologist or whatever, that is why we put
Walter Reed and Bethesda together--not to save money, but to
have a critical mass to be excellent.
Mrs. Davis of California. Dr. Wilensky? Can I ask you too
then, whether that is consistent with the idea put forth in the
task force report it said, ``military healthcare benefit must
be reasonably consistent with broad trends in the U.S.
healthcare system.'' Is that really our goal to have it
reasonably consistent? Or is there something else that we are
trying to achieve in the military healthcare system?
Dr. Wilensky. Well, it needs to be reasonably consistent in
the sense that individuals are providing services frequently in
both settings the military and the private sector. Individuals
are moving back and forth between the military and the private
sector, and unless you think there is something fundamentally
wrong with the trends that are going on in the private sector,
you would want to have some kind of consistency.
The attention in the private sector has been in trying to
focus on clinical outcomes, quality improvements, improving
patient safety measures, moving to pay for results--all of
these being driven by the same factors that make our current
position unsustainable in the broad sense both in terms of
financial pressures and in terms of the value that we are
getting. So it is within that kind of context that you want
them consistent.
I have already stated quite forcefully that with my
knowledge of the Medicare benefits, my knowledge of the private
sector benefits and my knowledge of the military healthcare
benefits, there is no way that the TRICARE system on average is
going to look less attractive than what is available in the
private sector. So I don't think that is really a relevant
issue. What I do worry about is whether or not it is going to
be sustainable in the sense of not having major spillover
affects on the rest of the Department of Defense.
I have used the term--which I believe is that because of
the differential growth rates that we see in healthcare versus
everything else--that the same way the Medicare budget is going
to become the PacMan of the Federal budget unless we can find a
way to moderate healthcare spending growth, the health benefit
is going to become the PacMan of the Department of Defense not
because of gross inefficiencies going on in Defense relative to
anywhere else, but because the rate of growth in healthcare
spending for the Department of Defense is much greater than I
foresee the growth in any other part of the Defense budget. It
is just going to put a huge pressure.
We are trying to help find ways to get as an efficient and
effective system and a somewhat more sustaining financial
system, but we can't solve that other broader problem that I
just laid out, which is signaling; we recognize that it is
there.
Mrs. Davis of California. Yes. I appreciate that. I
certainly appreciate the goals, but I think what we would all
feel is that it does respond to a higher system in the sense of
making certain that the care is there for the people who have
served and perhaps does take a different mindset in some way.
Dr. Wilensky. And we agree and we recognize and we try to
be very clear in the report. We recognize the commitment and
the sacrifice that people have made. The kinds of benefits that
are being provided--we estimate, that we are talking in the
90th percentile of the largest employers in the country. So,
you know, you could say, well, it ought to be better than the
best that exists anywhere, and if that is what the Congress and
the American public want to fund, they can have it that way.
It is already among the very best benefits that we were
able to find described among the large employers who
traditionally provide the best benefits, so we think that is
appropriate. We just didn't think Congress meant to have zero
or very close to zero beneficiary contributions to the program,
which is why we made some of the changes, but again----
Mrs. Davis of California. Can I ask you--just very quickly,
Dr. Casscells mentioned trying to keep that local so that we
don't bring the costs down to such an extent that a few years
even henceforth that we would be in the same position that we
are in today, essentially--that we brought the cost down, but
we don't have the system to respond.
Is that reasonable to bring those costs back locally,
because then you are not being able to respond to other
concerns in the DOD budget at all?
Dr. Wilensky. I do think to bring it back locally makes
sense. It is why we wanted to see the local commander medically
empowered--to bring the purchased care and the direct care
together in a more integrated way. Empower the local commander,
give the person incentives and hold them accountable for
showing what they have produced.
Mrs. Davis of California. Thank you very much. We have
about eight minutes left--another vote--Motion to Table
Resolution, and so we should be back, barring another vote,
immediately thereafter. We should be back in about 15 minutes.
Mrs. Boyda. [OFF MIKE]
Mrs. Davis of California. Sure.
Mrs. Boyda. Thank you. I don't want to sound like a broken
record but back to the pharmacy. How long do you think it would
take to get that sort of an analysis done?
Dr. Wilensky. I spoke to Colonel Bader, who is the
executive director. We think the information exists, and you
should have it within the week. I will call the executive
director of the UMWA Fund and ask her to send the information.
It is an issue, as you can imagine, as a former Medicare head
and as a trustee, I have heard raised by the local pharmacy
community of ``show me.''
Mrs. Boyda. Right. Let me just add too, in our last
National Defense Authorization Act (NDAA), we also said that
retail pharmacies can get the same pricing as the mail order
too. So, I certainly am hoping that that is going to be taken
into a scenario that says with the current pricing, but the
NDAA said retail gets the same benefit.
Dr. Wilensky. Obviously, none of the analysis will have
done that because of the timing.
Mrs. Boyda. Well, I would like to then--that is what I
would like to look at.
Dr. Wilensky. Okay, if you are going to ask someone to do
additional analysis, I can't commit to when that will be.
Mrs. Boyda. Okay. I would like to ask, for the record, that
that analysis be done, and I would be interested seeing in the
short term what the current one is. All right. Thank you very,
very much. I appreciate it.
[The information referred to can be found in the Appendix
beginning on page 96.]
Mrs. Davis of California. We are going to come back after
this next vote, but then we certainly are very aware of your
time restraints, and after that, if there is another vote, we
won't do this again. But we would like to have a few more
minutes with you. Thank you.
[Recess.]
Mrs. Davis of California. Thank you all for staying with us
today. We are very sorry for the interruptions. I wanted to go
back a little bit to some of the recommendations and the ideas
that you expressed in terms of some pilots that we might look
at in terms of the integration.
And I wondered, Dr. Wilensky, especially, could you be a
little more specific? What would that look like? If we were to
try and begin to really assess how this better system can work,
where would you go first? What kind of a community would you go
to? What would that look like?
Dr. Wilensky. I will speak off the top of my head, but I
would be glad to also give it some more thought and get back to
you with some more specifics. At least three or four different
areas we have suggested pilots.
And, we have done this--I was both, as a researcher
promoting the idea, but also from the experience of running
Medicare of not wanting to introduce change everywhere until
you have had a chance to see that it does what it think you
will do and not raise other problems that you haven't focused
on. So I think it is wise when you have a program as spread as
TRICARE in the military direct system, that you try some of
these so you know what you are doing.
There are three different areas that come to mind right
away: one of them has to do with this issue about should you
integrate the provision of pharmacy care with the direct
provision of care? I happen to think it is likely that you will
have a better clinical outcome and better use of resources if
these are part of the same strategy.
Now at some level it is easier in the MTF--in the direct
care system, it is easier to have that be regarded as part of
an integrated delivery system with the people practicing in the
facility right there. It is much less obvious how that happens
in the purchased care part of TRICARE when you have the
separate contracts as to how you have physicians prescribing in
the smartest way in terms of the pharmaceuticals and
therapeutics they are using.
So what we had suggested is in one of the three TRICARE
areas, there ought to be a portion--you don't have to do the
whole contract--where there is an integration so you have much
more of a real integrated delivery system, the way the Kaisers
or other delivery systems would operate. That is one kind of
pilot.
There is a second pilot that I referenced, And I mentioned
it, and it is a little more complicated, so I want to try to
explain it, and it had to do with the layering of insurance or
the multiple insurance holdings. General Corley and I had heard
very clearly from the Congress that the Congress had strong
negative feelings about the notion of pushing people out of
TRICARE. So we took that into account.
But we are concerned that in the current world, too often
people have both employer-sponsored insurance and TRICARE, but
they don't know about each other or, in some cases, they can
have all of that and Medicare as well or access to the VA as a
priority.
The pilot we are suggesting there is to allow somebody who
is eligible for multiple insurance plans, particularly
employer-sponsored and TRICARE, to choose one of those,
whatever they think gives them the best benefits, and to drag
some of the other financial contribution over to the plan that
is chosen.
So if it is going to TRICARE, it is having the employer pay
a portion of what they would otherwise pay to TRICARE to have
an augmented benefit, or--I recommended this being able to go
either direction--if the person chooses the employer-sponsored
plan, to be able to take some of the money TRICARE would have
spent on their behalf and pull it over to paying some of the
premiums or the co-pays for the employer-sponsored.
Right now, the world we are in is expensive because people
don't know what the other is doing. Sometimes you get tests re-
done because people don't know. So that is a different kind of
pilot. So we had--some of the pilots had to do with doing
better disease management; doing better preventive health like
Dr. Goetzel had recommended.
We were surprised that in a place like the military, there
isn't more proactive work routinely going on in terms of
obesity prevention, smoking cessation, other types of
preventive care--again, not that it is not going on at all,
just not state-of-the-art some of the work he is recommending.
Those kinds of pilots you can pick and choose a few areas,
try to have--the biggest problem you get is self-selection. So
trying to either have it in a large enough place that you can
have a sample that you can match to the people that you do or
you have a treatment facility nearby.
Mrs. Davis of California. I wondered, Dr. Casscells, do you
think there is anything inherent within the military system
that would make it difficult to do that kind of a pilot where,
in fact, you are sending the military benefits elsewhere?
Dr. Casscells. Mrs. Davis, it would be doable once we have
shared metrics, measures of process and measures of outcomes
including patient satisfaction that we have agreed upon those
with the services and health affairs, and we are now going to
be asking the purchased care bidders to abide by that same
standard and then begin to share this data transparently.
Now in such a system--and a nudge from your committee would
help in that regard--pilots like this would be feasible across
the system. Right now--as Dr. Wilensky says correctly--this
would only be possible really in the MTFs. But with some
further standardization of the outcomes and some requirements
that the data be shared in real time or nearly real time, we
could certainly do that.
Mrs. Davis of California. But today, that sharing of data
continues to be problematic?
Dr. Casscells. Yes, ma'am.
Mrs. Davis of California. We would probably need an entire
hearing just to try and sift that through, so I appreciate
that.
Mr. McHugh.
Mr. McHugh. Thank you, Madam Chair. I want to apologize for
my late return to this dais. The governor of the state of New
York was just resigning, and as someone from New York, I
thought I should listen to his words--not that your words are
any less important to us today, they are not, and hopefully, in
a more positive way.
Dr. Goetzel? You heard Dr. Casscells talk about some of the
prevention programs that the military has instituted. I would
tend to agree that certainly within the active component, there
are strong efforts for smoking cessation programs and
responsible consumption of alcohol, et cetera, et cetera, et
cetera--maybe you have a different perspective.
I am not so sure that we can see the same kind of
achievement amongst the retired community on a programwide
basis. Have you had a chance to look at that? And just
generically, what kind of opportunities do you see we have
within the military setting to implement some of the programs
you have spoken about and hopefully contain costs?
Dr. Goetzel. First, let me address the retiree community.
There is very strong evidence that it is never too late; that
you can improve health and lifestyle habits even for the
elderly population--those 65 and older.
In fact, I was telling Dr. Wilensky that Medicare is
starting a 3 1/2-year demonstration right now, actually in the
next month, to test out private sector programs and services
that have been effective in the corporate world--trying those
out with the Medicare beneficiary population--doing a
demonstration--a very rigorously implemented experiment in
which people will be randomized into different treatment and
control conditions to test the notion that you can improve
health and also at the same time save money and produce a
positive return on investment.
And so there is a lot of literature out there to support
that it is not only a possibility to improve health and well-
being but also to have a very significant cost impact. For
example, in the Medicare system, approximately 5 percent of
beneficiaries generate close to 50 percent of the dollars, but
50 percent of the beneficiaries only generate only 2 percent of
the dollars.
So there is a huge opportunity not only to go after people
who have disease and chronic-disease conditions, which a large
proportion do, but actually a large segment of the population
are still fairly well and to keep them well, because it is a
lot cheaper to keep people well then it is to bring them back
from illness back to wellness.
In terms of the kinds of programs that might be put into
place. There is a lot of science out there that has been
developed over the past 20 years on better ways to get people
to change their behavior because it is very, very, very hard to
get people to change their behaviors, but there is a lot of
social behavioral psychological theories out there put together
by Bandura, by Straker, by Kate Lorig, by Prochaska and others
that have shown that their methods are actually a lot more
effective than handing someone a brochure saying, you know,
``Be healthy.'' Those really don't work very well.
But there are new advances in behavior-change technology
and theory and application that may not be tried and applied as
broadly as you might think in the military.
Mr. McHugh. Would you view the potential--for lack of a
better phrase--return on investment that you spoke about
earlier--I guess about $1.50 to $2--would that be your
expectation within the military health system----
Dr. Goetzel. I think that is a reasonable expectation. I
mean there are two sides to a cost-benefit analysis. The
benefit, of course, is what you save, and the saving is in
medical, but you also, I think, can save it in disability and
readiness to monetize those. But the other side is how much you
spend on the program.
And you have got to be very efficient and evidence based in
the spending so that you don't go overboard.
Mr. McHugh. Dr. Wilensky? Would you like to comment on
that?
Dr. Wilensky. We had been having sidebar conversations
while you were off voting, and I am very pleased at the
additional work that has been done since, Dr. Goetzel and I
have had earlier conversations at the CDC, about the ability to
try to be sure you are comparing relevant populations. And the
kind of numbers that he has talked about in the timeframe he is
talking about are at least intuitively credible.
The area I think the military has a substantial potential
savings on is not just the retiree, although certainly the
retiree population, but it is the dependent population because
of the nature of the military's being able to reach out to the
active duty--although weight control is a problem even in the
active duty--although there are a variety of ways in terms of
promotion to try to pressure people to be responsive.
So even in the active duty, there may be more that can be
done in savings in terms of readiness as well as future
disability expenses, but there is a lot of potential with
regard to the dependent population that is not being achieved,
and they are, as you know, the responsibility of the military
in any case.
So, I would encourage you to set your sights higher than
only the retiree population, and especially because of the
additional work that is been done in the last three to five
years to work with behavior modification in areas where, if you
go after obesity and smoking, you hit a huge amount of the
preventable illness.
Mr. McHugh. I would imagine just intuitively the dependent
population families would be a lot easier to get to than many
of the retirees, because they tend to disburse more widely.
Dr. Wilensky. Right. Harder than the active duty, but
definitely easier than the retiree.
Dr. Goetzel. There is also one more segment--civilian
workforce--that also is affected by your program, and they have
not been at all targeted or involved in these kinds of
prevention programs.
Mr. McHugh. Just, if I might, Madam Chair, one quick
question to Dr. Wilensky, and she may not choose to respond,
but when the question was posed about Wal-Mart--and I would
note other corporations like Wegmans and Hannaford Markets in
the northeast have instituted similar generic $4 prescription
policies--I thought I detected a reaction of some sort on your
face.
Dr. Wilensky. You did.
Mr. McHugh. Would you like to add to that?
Dr. Wilensky. Yes. I have been told never to play poker.
[Laughter.]
Dr. Wilensky. There is something called loss leaders. We
have no idea whether Wal-Mart is able to provide the generic
for $4 or not. And, in fact, I have heard it referenced that
the most important thing for a company like Wal-Mart to do, is
to get people in the store, and I assume for Wegmans as well.
So, I would regard--I mean, the answer is, I really don't
know whether they are able to provide it at $4. I would think
that the positive publicity that Wal-Mart has received as a
result of the $4 generic after two or three years of being
beaten up in every place imaginable and subject to legislation
in the state of Maryland, et cetera, combined with the loss
leader notion may be as much an explanation as to the $4
generic as to their being able to actually have a $4 generic,
although there probably are some generics that are sufficiently
low cost that you can at least break even or do a low-margin
business with a $4 generic.
So, I wouldn't dismiss it. I would just caution you to
assume they are actually able to cover their costs. Businesses
only need to cover their costs on average--plus a return to
equity--not on every single item.
Mrs. Davis of California. Thank you, Mr. McHugh, and I
really appreciate your being here. I wonder if there are just a
few questions, and we will have a chance to get together again,
but I continue to be concerned about the physician bench,
essentially, in the military, and how we will develop that.
Now that we are where we have said in law, that there can
no longer be these military-civilian conversions, that means
there has to be a lot of planning about how that corps is
developed, and how are we going to get there, I think is--I
would think, a big concern to the services.
You have raised the issue that about 90 percent of doctors
will take TRICARE patients, but I know in the community that I
serve, physicians are not too eager to do that any longer, and
so I think there are gaps in that service. As we move forward,
it would be interesting to see--as we really try to focus on
how we integrate these systems better--the role that our
providers are going to play, because we know that in a number
of specialties today--not just in the military system, but in
the system as a whole--that is a concern and plays a role in
how we are able to move forward.
Did you want to comment just very briefly, Dr. Casscells,
because I know we need to finish up? I wanted to express those
concerns.
Dr. Casscells. Just to say thank you for that guidance and
for the fact that your staff have been so proactive, and
Jeanette James and Dave Kildee have consistently seen this not
as a contest of wills here but as a year-long dialogue. I
particularly appreciate their coaching. The fact that they
have, on your behalf--they are not only holding us accountable,
but they also are helping us innovate.
And so you asked about a clean sheet approach, how we would
redesign the system. We are just starting out on that process
now, and so having the committees active engagement in that is
very much appreciated.
Dr. Wilensky. This is also an area where we as a task force
recognized we were not able to spend time to try to develop
recommendations. We think it is a very serious issue in terms
of recruitment and retention of the appropriate number of
medical personnel, and the best use of Reserve and active duty
medical personnel going in the future, particularly in the time
of future military engagement.
So we most definitely recognize that it was not an issue we
were able to deal with, but it is a serious one.
Mrs. Davis of California. Thank you very much.
And Dr. Goetzel? I know a lot of my colleagues asked
questions. I didn't have a chance to ask specifically, but the
areas of prevention, of course, are very critical. And the
extent to which we can really document those cost savings is
helpful, because I happen to believe they are there, but
ordinarily, we don't plan long term as well as we plan on the
short term, and so it is an ongoing concern.
Thank you all so much for being here. Appreciate it. We
look forward to seeing you again.
Meeting is adjourned.
[Whereupon, at 12:02 p.m., the subcommittee was adjourned.]
?
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A P P E N D I X
March 12, 2008
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PREPARED STATEMENTS SUBMITTED FOR THE RECORD
March 12, 2008
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DOCUMENTS SUBMITTED FOR THE RECORD
March 12, 2008
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WITNESS RESPONSES TO QUESTIONS ASKED DURING
THE HEARING
March 12, 2008
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RESPONSE TO QUESTION SUBMITTED BY MR. MCHUGH
Dr. Casscells. Thank you for your follow-up question regarding
Veteran Service Organization (VSO) support of TRICARE fee increases.
You asked for VSO support in writing. Below, I have provided citations
from the VSO websites in which they concede that TRICARE fee increases
may be necessary but should not exceed increases in military
compensation or should be tied to true healthcare costs. As for my
personal conversations with members of the Coalition and Alliance and
other VSOs, we do not record minutes for these meetings, as we feel it
would discourage the free exchange of ideas that make our interactions
so valuable. Thank you for your follow-up question. The Military Health
System does understand that knowing the tolerances of fee increases is
an important part of the discussion.
``Percent Fee Increase in Any Year Shouldn't Exceed % Increase in
Military Compensation.''
MOAA fee-increase briefing, ``Health Care Cost-Shifting to Military
Beneficiaries,'' MOAA, accessed August 15, 2008. http://www.moaa.org/
lac/lac_resources/siteobjects/published/
B40B0C69836F0E9D9744C384897CE90C/41BB16DC
1E9E71D48DE23BE6A8B7E2EC/file/TRICAREFeeBrief.pdf
``While understanding fee increases may be necessary in the future,
NMFA believes all decisions regarding fee increases should be put on
hold until the Congressionally-mandated study is completed to determine
what efficiencies DOD can implement.''
Joyce Wessel Raezer, Kathy Moakler, ``NDAA Conference Committee
Debates Many Provisions,'' NMFA, accessed August 15, 2008, http://
www.nmfa.org/site/PageServer?pagename=ndaa_conference_provisions
``Adjustments to the enrollment fee are acceptable if tied to true
healthcare cost.''
CAPT Michael P. Smith, ``Statement by CAPT Michael P. Smith, USNR
(Ret) National President, Reserve Officers Association of the United
States Before the Task Force on the Future of Military Health Care
March 7, 2007,'' ROA, accessed August 15, 2008, https: / /
secure2.convio.net/roa/site/SPageServer?pagename=TaskForce
HealthCareTestimony&JServSessionsIdr011=cj0uzoxbq1.app5a
``Prevent DOD plans to significantly increase annual TRICARE Prime
enrollement fees for military retirees.''
2007-2008 AFSA Legislative Platform, AFSA, accessed August 15,
2008, https://www.hqafsa.org/AM/Template.cfm?
Section=Top_Issues&Template=/CM/HTMLDisplay.cfm&ContentID=2610 [See
page 13.]
______
RESPONSES TO QUESTIONS SUBMITTED BY MRS. BOYDA
Dr. Goetzel. TRICARE uses several metrics to determine beneficiary
satisfaction with the services we provide to eligible beneficiaries.
Our primary method of gathering information is through telephone and
mail surveys. The information presented to you today represents results
from three core surveys that depict beneficiary satisfaction with
medical services from the TRICARE network of civilian providers.
The Health Care Survey of DOD Beneficiaries (HCSDB) measures the
healthcare experiences of eligible Military Healthcare System (MHS)
beneficiaries around the world during the previous 12 months. For
comparison, 61 percent of civilian health plan users rated their health
plan eight or higher (on scale of 0-10 (0=worst, 10=best)). Among MHS
beneficiaries, 60 percent of those enrolled to a civilian primary care
manager (PCM) in the North Region rated their health plan eight or
higher. Sixty-five percent of those enrolled to a civilian PCM in the
South Region rated their health plan eight or higher and 66 percent
enrolled in the West Region rated their health plan eight or higher.
The TRICARE Outpatient Satisfaction Survey provides a monthly
assessment of beneficiary satisfaction with ambulatory care. For
comparison, 72 percent of civilian health plan users rated their
healthcare eight or higher (on scale of 0-10 (0=worst, 10=best)).
Sixty-four percent of MHS beneficiaries enrolled to a civilian PCM in
the North Region rated their healthcare eight or higher. Sixty-six
percent of those enrolled in the South Region rated their healthcare
eight or higher and 65 percent of West Region enrollees rated their
healthcare eight or higher.
The TRICARE Inpatient Satisfaction Survey provides an annual
assessment of beneficiary satisfaction with their inpatient experience.
For comparison, 60 percent of civilian health plan users rated their
inpatient care nine or higher (on scale of 0-10 (0=worst, 10=best)).
Among MHS beneficiaries, 59 percent of those enrolled to a civilian PCM
in the North Region rated their inpatient care nine or higher. Sixty
percent of enrollees in the South Region rated their inpatient care
nine or higher, and 60 percent of West Region enrollees rated their
satisfaction with a score of nine or higher.[See page 99.]
Dr. Wilensky. Independent Government Estimate of TRICARE Retail
Pharmacy (TRRx) Costs to the Government versus TRICARE Mail Order
Pharmacy (TMOP) Costs to the Government
------------------------------------------------------------------------
------------------------------------------------------------------------
Prior to implementation of the National Defense Authorization Act for
Fiscal Year 2008.......................................................
(FY 2008 NDAA) granting DOD authority to access Federal Pricing
discounts in TRRx......................................................
------------------------------------------------------------------------
TRRx TMOP
(Retail) (Mail)
------------------------------------------------------------------------
Average cost to the Government for a 90 day $476.86 $232.47
supply of brand-name prescription*
------------------------------------------------------------------------
After implementation of FY 2008 NDAA Government cost estimates..........
------------------------------------------------------------------------
Average cost to the Government for a 90 day $304.55 $232.47
supply of brand-name prescription*
------------------------------------------------------------------------
*Includes overhead, dispensing fees, administrative fees, mailing
(in TMOP), and co-pays
DISCUSSION: Based on this analysis, it is estimated that passage of
the FY 2008 NDAA will reduce Government retail prescription costs
significantly. This analysis also estimates that after initial
implementation of FY 2008 NDAA, retail prescription Government costs
will remain approximately 24% higher when compared to TMOP.
The prices the Department of Defense (DOD) pays in TMOP are based
on Federal Ceiling Price (FCP), which is the maximum price that
manufacturers can charge the Big Four (DOD, VA, Public Health, and
Coast Guard) for brand-name drugs. The non-federal average manufacturer
price (non-FAMP) is the average price paid to the manufacturer by the
wholesaler for drugs distributed to non-federal purchasers (such as
retail pharmacies). FCP equals 76% of the previous fiscal year's non-
FAMP. In retail, after implementation of the FY 2008 NDAA, the refund
due to the Government from pharmaceutical manufacturers will be based
on the difference between the non-FAMP and the FCP subtracted from the
actual retail price paid by the Government. The retail price, before
the FY 2008 NDAA mandated refund is applied, reflects the additional
costs associated with the retail distribution model. In addition, the
DOD Pharmacy and Therapeutics process has obtained prices lower than
FCP for some drugs dispensed via mail, which accounts for a portion of
the price differential between the retail and mail points of service.
[See page 22, and supporting documentation on page 89.]
______
RESPONSE TO QUESTION SUBMITTED BY MS. SHEA-PORTER
Dr. Casscells. We are not aware of shifting any costs to other
taxpayers for providing healthcare to military veterans and their
families. By law, title 42 United States Code (U.S.C.), section
1395cc(a)(1)(J), acute care hospitals accepting Medicare beneficiaries
must also accept TRICARE beneficiaries, and we pay for care covered by
the TRICARE benefit, which covers all medically necessary treatments
for injuries or illnesses (title 10, U.S.C., section 1079(a)(13)).
TRICARE is the primary payer for care provided by the States through
their Medicaid programs.
While we cannot positively rule out the possibility that one or more
States have other taxpayer-funded programs that would pay for the
healthcare for patients with a federal health benefit, we are not aware
of such programs. [See page 25.]
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QUESTIONS SUBMITTED BY MEMBERS POST HEARING
March 12, 2008
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QUESTIONS SUBMITTED BY MR. MCHUGH
Mr. McHugh. Assistant Secretary Casscells, your testimony tells us
that because of the influx of troops with complex war wounds,
deteriorating medical facilities and deployed care givers, you rewrote
the MHS mission because the MHS needed a new focus. The new mission is
to ``sustain a medically ready military force and provide world-class
health services for those injured and wounded in combat.'' That coupled
with your stated focus of the MHS on combat care, humanitarian
assistance and disaster readiness makes me wonder about your commitment
to your title 10 responsibilities to provide healthcare to all 9.2
million beneficiaries. Where do retirees fit in your new mission and
focus particularly in light of your plan to raise TRICARE fees for this
group?
Dr. Casscells. Retirees are a key element to the MHS mission. They
are so for two reasons. First, in delivering care to retirees and their
families, military providers develop and maintain the skills necessary
to provide those world-class health services to the injured and wounded
in combat. Second, they have earned a benefit. After serving a career
in the military, the nation owes these warriors a first-class health
benefit. It is incumbent for the MHS to see that they get that benefit.
Our need to raise TRICARE fees, based on the recommendations of the
Task Force on the Future of Military Health Care, restores to some
extent the cost-sharing relationship between the Government and the
retirees that existed when TRICARE began in 1995. Those benefits will
still be significantly more generous than the vast majority of
employer-sponsored health plans and we are committed to ensuring that
the care delivered continues to be first-rate.
Mr. McHugh. Assistant Secretary Casscells, the President's budget
reflects an estimated $1.2 billion cost savings generated by these
behavior changes in the beneficiary behavior. How much of the estimated
savings is based on the beneficiaries opting out of TRICARE or using
healthcare less?
Dr. Casscells. Of the $1.2 billion estimated cost savings (if the
fee changes that the task force proposed are adopted), $398 million was
based on the beneficiaries' behavioral response in choosing what health
insurance to use. We estimate that, instead of the number of retirees
who use TRICARE increasing from 2.36 million to 2.41 million with the
current enrollment fees and deductibles, the new enrollment fees an
deductibles will result in only 2.32 million retirees using TRICARE. In
addition, we estimate a savings of $42 million based on lower
utilization in response to the higher deductibles.
Mr. McHugh. DOD's proposals to increase TRICARE fees were based in
part on the principle that beneficiaries would opt out of TRICARE and
decrease the amount of healthcare they use as a result of having to pay
more. The estimated $1.2 billion cost savings reflected in the present
budget includes savings generated by these behavior changes. The task
force report dies not specifically mention either change in beneficiary
behavior and you have testified that you do not agree with this
strategy. With that, do you agree that DOD can save $1.2 billion in the
fiscal year 2009 by implementing the task force recommendations? How
much do you think they can save?
Dr. Casscells. We did not make an estimate of how much TRICARE
would save based on the task force recommendations. Our objective was
to reverse the trend of the increasingly small share of the cost borne
by the beneficiary of the Military Health System (MHS).
I do not accept the Department's estimates of the number of
beneficiaries who would drop TRICARE because of the fee increases. As
long as TRICARE is substantially more generous than other health
insurance in terms of benefits and cost sharing, retirees will continue
to rely on TRICARE.
Better coordination of benefits among retirees who are eligible for
private health insurance as well as TRICARE may help slow the growth of
DOD medical costs while providing better care coordination for
retirees. The task force recommended a study, and then possibly a pilot
program, aimed at better coordinating insurance practices among those
retirees who are eligible for private health insurance as well as
TRICARE. This study and pilot program could reveal a harder number for
projections.