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July 31, 2007:
Congressional Committees:
Subject: TRICARE: Changes to Access Policies and Payment Rates for
Services Provided by Civilian Obstetricians:
About 111,000 women covered by the Department of Defense's (DOD)
TRICARE program gave birth during 2006.[Footnote 1] During their
pregnancies, about half of these women received obstetric care from
physicians and other providers practicing at military hospitals and
clinics called military treatment facilities (MTF), while half received
their care from civilian physicians and other civilian
providers.[Footnote 2] In recent years, the use of civilian obstetric
care has increased among TRICARE beneficiaries. In 2004, 51 percent of
TRICARE beneficiaries delivered their babies at civilian hospitals; by
2006, 54 percent delivered at civilian hospitals. However, through
2005, some TRICARE beneficiaries reported difficulties obtaining
obstetric care from civilian physicians.[Footnote 3]
At the same time, some civilian physicians contended that TRICARE
payment rates for obstetric care were too low.[Footnote 4] TRICARE
reimburses physicians for most obstetric care using two global
payments, one for uncomplicated vaginal delivery and the other for
uncomplicated cesarean delivery, each of which is a single amount that
covers a defined set of related services. In the case of obstetrics,
these global payments cover a woman's prenatal visits, the physician's
assistance at delivery of the baby, and postnatal care after the
delivery of the baby.
Under the TRICARE program, which is administered by DOD's TRICARE
Management Activity (TMA), beneficiaries may obtain care through three
different options. Beneficiaries enrolled in TRICARE's HMO-like option,
called TRICARE Prime, generally obtain health care from physicians at
an MTF. TRICARE Prime beneficiaries also may obtain care from a network
civilian physician when the MTF does not have sufficient capacity to
provide care. Beneficiaries who have not enrolled in Prime receive care
under TRICARE Extra or TRICARE Standard.[Footnote 5] These options
allow beneficiaries to receive care either from civilian physicians who
belong to the TRICARE network or from civilian nonnetwork physicians,
who do not belong to the TRICARE network but have agreed to accept
TRICARE beneficiaries as patients on a case-by-case basis. TRICARE
Extra and Standard beneficiaries may also receive care from a physician
at an MTF on a space-as-available basis.
TRICARE's civilian provider networks are developed by three managed
care support contractors. Each managed care support contractor is
responsible for the delivery of care to TRICARE beneficiaries in one of
three geographic locations--North, South, and West. The managed care
support contractors, among other things, establish targets for the
number of physicians required to ensure a sufficient supply of
providers to TRICARE patients in civilian provider networks. In
developing these targets, each contractor estimates the percentage of
each physician's practice that will likely be made up of TRICARE
patients. The contractors also monitor progress in meeting targets to
ensure network adequacy and periodically make adjustments to the
targets to account for changes that occur in the availability of
civilian physicians and demands for care of TRICARE
beneficiaries.[Footnote 6]
The National Defense Authorization Act (NDAA) for Fiscal Year 2006
directed us to evaluate the effectiveness of DOD's TRICARE program in
achieving adequate access for beneficiaries to high-quality obstetric
care.[Footnote 7] As discussed with the committees of jurisdiction,
this report (1) describes changes TRICARE has made to obstetric
coverage policy and payment rates since late 2003 to address concerns
about access to civilian outpatient obstetric care and about the
adequacy of payments to civilian physicians for obstetric care and (2)
examines the extent to which TRICARE's managed care support contractors
achieved targeted numbers of obstetric care providers in their civilian
provider networks in 2005 and 2006, and potential implications for
access to care. In addition, we provide information on the change in
TRICARE payment rates for obstetric care compared to inflation; this
information is shown in enclosure I.
To provide information on TRICARE changes to policies regarding access
to obstetric care and payment rates, we reviewed relevant coverage and
payment policies implemented in late 2003 through 2006. We interviewed
officials from TMA, the office with responsibility for ensuring that
DOD health policy is implemented for the TRICARE program. We also
interviewed representatives of the American College of Obstetricians
and Gynecologists and the National Military Family
Association.[Footnote 8]
To provide information on the extent to which TRICARE's managed care
contractors met targets for the number of obstetricians[Footnote 9] in
their civilian provider networks, and implications for access to care,
we analyzed data provided by the managed care support contractors for
TMA-defined service areas called prime service areas (PSA).[Footnote
10] The managed care support contractors provided us with periodic
reports on the targeted and actual number of network obstetricians
participating in the civilian provider networks during 2005 and 2006.
For each reporting period, in each PSA, we determined whether the
actual number of network obstetricians fell short of the targeted
number of network obstetricians by one or more. Across the entire
reporting period of calendar years 2005 and 2006, we identified the
number of PSAs that had fewer obstetricians than were targeted for four
or more reporting periods. We considered these PSAs to have "frequently
fallen short" of the targets set by the managed care contractors. We
also interviewed representatives of the three managed care support
contractors, the American College of Obstetricians and Gynecologists,
and the National Military Family Association about TRICARE
beneficiaries' access to obstetric care during 2006.
Our analysis of the number of obstetricians participating in TRICARE's
civilian provider networks was limited by the data available. We asked
the managed care support contractors to provide monthly data for
January, April, July, and October 2005 and 2006. The North and West
regions' managed care support contractors provided periodic data
reports for calendar year 2005 and most of calendar year 2006, while
the South region managed care support contractor provided monthly data
as we requested. The North region was unable to report until March
2005, which resulted in slightly different reporting periods for the
North and West regions. The data provided by the managed care support
contractors were sufficient to illustrate the extent to which each of
the three managed care contractors met its own targets for the number
of network obstetricians during the period for which data were
provided, which generally covered early calendar year 2005 through late
calendar year 2006.
Through our review of relevant documentation and discussions with TMA
officials and representatives of managed care support contractors, we
determined that the data presented in this report were sufficiently
reliable for our purposes. We did not assess the soundness of TRICARE's
policy changes, nor did we evaluate the criteria used by the managed
care support contractors for determining the targeted number of network
obstetricians. Although we did not verify the managed care support
contractors' data on the number of network obstetricians, we reviewed
the data for implausible values and internal consistency. Because TMA
made several changes to its payment rates for obstetric care that took
effect during 2006, at the time of our review data were not yet
available to draw conclusions about the effect of these changes on
beneficiaries' access to civilian obstetric care.[Footnote
11]
We conducted our work from December 2006 through June 2007 in
accordance with generally accepted government auditing
standards.
Results in Brief:
Since late 2003, TMA has made several changes aimed at addressing
concerns about TRICARE beneficiaries' access to civilian obstetric
care. TMA's nationwide changes began in late 2003; the most recent
changes took effect in 2006. In late 2003, TMA loosened controls over
access to civilian obstetric care nationwide by permitting TRICARE
Extra and Standard beneficiaries to obtain obstetric care from civilian
physicians without first receiving approval from the local MTF. In
2006, TMA made two nationwide changes to its physician payment rates
for obstetric care. First, TMA began paying separately for maternity
ultrasounds--outside of TRICARE's two global payments for obstetric
care--performed during an uncomplicated pregnancy, which is likely to
result in increased total payments to physicians.[Footnote 12] Second,
TMA increased payment rates for obstetric care in geographic areas
where TRICARE payment rates were lower than the Medicaid payment rates
for obstetrics, to match the Medicaid payment rates.[Footnote 13] In
addition, in response to localized concerns about severe physician
shortages, TMA increased payment rates for specialized obstetric care
in Alaska and raised payment rates for obstetric care in a South Dakota
PSA to improve access and network capacity in these
locations.
In 2005 and 2006, managed care support contractors met most of the
targets--77 percent--they set for numbers of obstetricians in TRICARE's
regionally based networks. Of the 175 PSAs in the civilian provider
networks, 24 PSAs (14 percent) fell short of obstetrician supply
targets for four or more reporting periods during 2005 and 2006, while
another 16 PSAs (9 percent) fell short of these targets for one to
three quarters. The contractors' achievement in meeting the majority of
their targets in 2005 and 2006 serves as an indicator that access was
not likely a problem for most TRICARE beneficiaries seeking obstetric
care. However, we could not be conclusive about access from these data
alone because of other factors that can influence access. For example,
in PSAs where targets were consistently met, access could have been a
problem if the contractors overestimated the percentage of TRICARE
patients that network civilian obstetricians were willing to treat.
Conversely, in PSAs that frequently fell short of established targets,
network civilian obstetricians may have been willing to absorb more
TRICARE patients than had been estimated by the contractors.
Representatives of the American College of Obstetricians and
Gynecologists and the National Military Family Association told us that
they had not heard significant concerns from their members in 2006
about the adequacy of TRICARE's payment rates for obstetric care or
access to civilian obstetricians. In commenting on a draft of this
report, DOD agreed with our findings.
Background:
To supplement health care provided in MTFs, TMA requires managed care
support contractors to develop civilian provider networks. To
accomplish this, managed care support contractors develop comprehensive
network plans that include physician targets for each specialty,
including the number of obstetric care providers required for each PSA.
A key factor for civilian obstetricians in deciding whether to
participate in TRICARE has been the payment rate for obstetric care,
which has undergone significant changes over the past decade as part of
an overall effort to reduce military health care costs. In geographic
locations where the TRICARE program is experiencing shortages of
providers or access to health care is severely impaired, TMA has the
authority to approve payment rate increases to encourage civilian
physicians and other providers to participate in TRICARE.
TRICARE Provisions for Extra and Standard Beneficiaries to Use Civilian
Care:
TRICARE Standard is designed to provide TRICARE beneficiaries maximum
flexibility in selecting civilian providers. Under Standard, TRICARE
beneficiaries may obtain care from TRICARE-authorized nonnetwork
civilian providers of their choice.[Footnote 14] TRICARE beneficiaries
using this option do not need a referral for most specialty care.
Network civilian physicians enter a contractual agreement with the
regional managed care support contractors to provide health care to
TRICARE beneficiaries. However, network civilian physicians do not have
to accept all TRICARE beneficiaries seeking care if the physician's
practice does not have sufficient capacity. Nonnetwork civilian
physicians do not have a contractual agreement with a managed care
support contractor, and may accept TRICARE beneficiaries as patients on
a case-by-case basis. They also have the option of charging up to 15
percent more than the TRICARE payment rate. The beneficiary must pay
the additional 15 percent, along with their required
copayments.
TMA Oversight of TRICARE Program:
TMA, in DOD's Office of the Assistant Secretary of Defense for Health
Affairs, establishes TRICARE policy and payment rates for services. To
help administer the program, TMA uses managed care support contractors
to develop networks of civilian providers and perform other customer
service functions, such as claims processing. Currently, there is one
managed care support contractor for each of TRICARE's three
regions.[Footnote 15] For each PSA within the regions, managed care
support contractors are required to maintain civilian provider networks
that are large enough to provide access to care for all TRICARE
beneficiaries living in the area. To do so, each contractor, using its
own methodology, determines the number of civilian physicians required
for each PSA in its region, based on the number of TRICARE
beneficiaries in the PSA and other factors, such as the estimated
percentage of each physician's practice likely to be made up of TRICARE
patients.[Footnote 16] Separate targets are set for each specialty,
including obstetrics, and these targets along with other information on
the network size are updated by the contractors in monthly or quarterly
reports.
For each region, TMA has established a TRICARE regional office and has
designated the office directors as health plan managers for their
regions with responsibilities for monitoring provider network adequacy,
overseeing the managed care support contractors, and monitoring
customer satisfaction. In 2006, about 9,600 obstetricians participated
in TRICARE's civilian provider network, representing about 26 percent
of all civilian obstetricians in the United States.[Footnote
17]
TRICARE Payment Structure for Civilian Obstetric Care:
TMA pays civilian physicians for most obstetric care using global
obstetric payments. Under a global payment, physicians are not
reimbursed separately for every office visit or individual service
provided. Rather, the physician receives one payment for a defined set
of related services. TRICARE's most frequently used global obstetric
payments include payment for prenatal care, the physician's attendance
at delivery, and postnatal care.[Footnote 18] Although TMA also pays
physicians for obstetric care through 59 other billing codes,
approximately 68 percent of TRICARE's obstetric payments are made under
the 2 billing codes that we refer to as global payments--the payments
for the set of obstetric services related to uncomplicated vaginal
deliveries and the set of services related to uncomplicated cesarean
deliveries. The other 59 billing codes used to reimburse for obstetric
care are for such obstetric-related services as amniocentesis, a
diagnostic procedure sometimes performed during pregnancy, or delivery-
only services for cases in which the physician does not provide
prenatal or postnatal care.
TRICARE's payment rates for obstetric care have been in transition for
over a decade. In the early 1990s, under DOD's former health care
program, DOD's payment rates to civilian physicians were based on
historical charges--an annual calculation of physicians' charges for
services claimed the previous year.[Footnote 19] Using this approach,
DOD's payment rates were, on average, 50 percent higher than those paid
for identical treatment under the Medicare program.[Footnote 20]
Beginning with fiscal year 1991, in response to concerns about rising
costs of military health care, Congress required that DOD's physician
payments gradually be brought in line with payment rates under the
physician fee schedule for the Medicare program. Each year, the payment
rate for a particular service was to be reduced by no more than 15
percent of the amount allowed during the previous year for that
service.[Footnote 21]
As DOD implemented these payment revisions, however, civilian
obstetricians expressed concerns that the revised payment rates were
too low. In response, in July 1998, TMA returned payment rates for
obstetric billing codes to 1997 levels after having reduced those rates
earlier in the year. TMA then decided to freeze obstetric payment rates
at 1997 levels until Medicare payment rates for obstetric care caught
up to TRICARE's 1997 payment rates.
Thus, TMA allowed inflation to gradually reduce the value of TRICARE's
obstetric payments.[Footnote 22] As shown in figure 1, from July 1998
through 2006, TRICARE's global payments for the set of services related
to uncomplicated vaginal deliveries and uncomplicated cesarean
deliveries have remained relatively constant at about $1,600 and
$1,800, respectively.
Figure 1: Payment Rates for TRICARE's Most Frequently Used Billing
Codes for Obstetric Services, Known as Global Payments, 1997 through
2006:
[See PDF for image]
Source: GAO analysis of TRICARE payment data.
Note: In 2006, the two global obstetric payments represented 68 percent
of TRICARE's total physician payments for obstetric care. This figure
shows that TRICARE's global payments for obstetric care services have
remained relatively constant since July 1998, when TMA restored payment
rates to 1997 levels in response to physicians' concerns that payment
rates were too low.
[End of figure]
TMA Has Authority to Adjust Payment Rates under Certain
Conditions:
TMA has the authority to adjust TRICARE payment rates under certain
conditions to increase beneficiaries' access to care. Under TMA's
locality-based waiver authorities, TMA may approve increases in
TRICARE's payment rates for both network and nonnetwork providers in
locations where access to care is impaired. For example, TMA may
approve payment rate increases for network providers when it has
determined that it is necessary and cost effective to approve higher
rates to ensure an adequate number and mix of qualified health care
physicians in a specific locality. In such instances, payment rates can
be raised to a maximum of 115 percent of rates set in the TRICARE
physician fee schedule.[Footnote 23] TRICARE payment rates for specific
services can also be adjusted for both network and nonnetwork providers
in localities where access to care has been severely impaired.[Footnote
24] In such instances, one method that may be used to establish the
higher payment rates is to adopt the payment rates of other government
health care programs, such as Medicaid. If this method is used, TMA
would adopt the applicable state Medicaid rate if TRICARE's payment
rate is lower in a specific location.[Footnote 25]
Recent Changes Loosened a Restriction on Access to Civilian Obstetric
Care and Increased Some Obstetric Payment Rates:
Since late 2003, TMA has made several changes aimed at addressing
concerns about TRICARE beneficiaries' access to civilian obstetric
care. One change loosened a restriction on access to civilian providers
of obstetric care, and other changes raised payment rates for obstetric
care in some geographic areas and for specific obstetric
services.
In December 2003, in response to provisions in the NDAAs for fiscal
years 2001 and 2002, TRICARE loosened restrictions on Standard and
Extra beneficiaries' access to civilian obstetricians and other
civilian providers of obstetric care.[Footnote 26] Prior to that time,
Standard and Extra beneficiaries who resided within a 40-mile radius of
an MTF had been expected to receive their obstetric care from military
physicians at the local MTF. Civilian obstetric care was permitted for
those beneficiaries only when the beneficiary lived more than 40 miles
from the MTF or when the local MTF provided a written statement of
nonavailability, stating that the MTF did not have sufficient capacity
to provide obstetric care. This limitation caused concern among some
Standard and Extra beneficiaries who received other medical care from
civilian physicians. On December 28, 2003, TMA revised its regulations
to allow Standard and Extra beneficiaries who lived within a 40-mile
radius of an MTF to access obstetric care from civilian physicians
without first obtaining a nonavailability statement.[Footnote
27]
Payment changes include the following:
* TRICARE changed the way it paid for obstetric ultrasounds. Effective
April 1, 2006, to help address concerns among civilian obstetricians
about payment rates for obstetric care, TMA began paying for
ultrasounds related to uncomplicated pregnancies outside the global
obstetric payment. This additional payment is likely to result in
overall higher payments for physicians who perform one or more
ultrasounds during the course of pregnancy.[Footnote 28] Prior to this
change, TRICARE included ultrasounds performed for uncomplicated
pregnancies in the global obstetric payment.[Footnote 29] However,
after an analysis of historical TRICARE claims data, TMA officials
determined that the global obstetric payment was not sufficient to
cover the physicians' payments for ultrasounds, and that its policy to
include ultrasounds in the global obstetric payment may have
inadvertently discouraged physicians from doing as many ultrasounds as
might be needed.[Footnote 30]
* TRICARE matched state Medicaid payment rates for physician-provided
obstetric care. Effective May 1, 2006, TMA increased payment rates for
obstetric care to ensure that TRICARE's payment rates were at least
equal to Medicaid payment rates in each state. For a locality to
qualify for increased obstetric payment rates under this policy change,
TRICARE had to have been paying an amount below the state's Medicaid
payment rate.[Footnote 31] Specifically, TMA identified states where at
least one locality was below the state's Medicaid payment rate for any
of the six most frequently billed codes for obstetric care. In those
localities, TMA increased TRICARE payment rates to match the state's
Medicaid payment rates for a broader range of obstetric care that
includes services provided under 14 billing codes.[Footnote 32] For
2006, this policy affected TRICARE's payment rates in 12 states,
primarily in the West region, as shown in figure 2. Under this change,
TRICARE's payments for the 14 obstetric billing codes increased an
average of 19 percent in the affected states.[Footnote 33],[Footnote
34]
Figure 2: States Receiving TRICARE Payment Rate Increases for Obstetric
Care Services to Match State Medicaid Rates, 2006:
[See PDF for image]
Source: GAO analysis of DOD data.
[End of figure]
* Under the locality-based waiver authority, TRICARE increased payment
rates for perinatology services in Alaska. On November 21, 2005, TMA
approved a locality waiver request to raise payment rates for
perinatologists in Alaska in response to obstetric specialist supply
problems.[Footnote 35] TMA raised TRICARE payment rates to 140 percent
of the obstetric payment rates set in the TRICARE physican fee schedule
in response to physician concerns that the TRICARE payment rate was too
low. TMA officials noted that there were only three perinatologists in
the state at that time; these providers had agreed to continue
participating when the payment rate was raised to 140 percent. On
February 1, 2007, under a 3-year demonstration program, TMA began
paying all physician services in Alaska at 135 percent of the rates set
in the TRICARE physician fee schedule, including nonspecialty obstetric
care services.[Footnote 36] As a result, the gap in payment for
services provided by perinatologists and other physicians providing
obstetric care in Alaska narrowed substantially.[Footnote
37]
* Under the locality-based waiver authority for network providers,
TRICARE increased payment rates for physicians providing obstetric care
in the Ellsworth Air Force Base PSA, South Dakota. On May 16, 2006, TMA
approved a locality waiver request to increase payment rates for
obstetric services provided by a group practice of 12 obstetricians in
the Ellsworth Air Force Base PSA, South Dakota.[Footnote 38] Stating
that TRICARE's payment rates for obstetric care were too low, the group
practice had decided to leave the TRICARE network. In its review of the
waiver request, TMA found that obstetric care was not offered at the
local MTF. Furthermore, there were no other civilian obstetricians
practicing in the area to accept the TRICARE beneficiaries that were
receiving care from the group practice. TMA concluded that its payment
rates should be increased due to severely limited access to network-
based obstetric care in the PSA. TMA set its obstetric payment rates at
115 percent of the established payment rate and the group of physicians
agreed to remain in the civilian provider network. In the event that
other obstetricians located in the area were willing to join the
TRICARE network, TMA officials indicated that they would consider
whether the increased payment rate was still necessary to ensure
beneficiary access to care from network physicians.
In 2005 and 2006, Managed Care Support Contractors Met Their Targets
for Network Civilian Obstetricians in Most TRICARE
Localities:
In 2005 and 2006, managed care support contractors met most of their
targets for the number of obstetricians in TRICARE's civilian provider
networks. Of the 175 PSAs subject to TRICARE's standards for network
adequacy, 135 PSAs (77 percent) met targets for network civilian
obstetricians during all reported periods during 2005 and 2006.
Relatively few localities frequently fell short of the contractor-set
targets, with "frequently" defined by us as missing targets during four
or more reported periods during 2005 and 2006. Across the three
contractors' regions, 24 PSAs (14 percent) frequently fell short of
targets for obstetricians. Nineteen of these 24 PSAs were still short
of their targets as of late calendar year 2006, the last reporting
period for which we obtained data. Another 16 PSAs (9 percent) fell
short of targets during one to three reporting periods in 2005 and
2006.
The 24 PSAs where contractors frequently fell short of targets for
civilian obstetricians include a mixture of urban and rural counties.
Sixteen of the 24 PSAs are made up of predominately urban counties
while 8 PSAs are predominately rural counties.[Footnote 39] Some of the
locations may have been affected by overall shortages of practicing
civilian obstetricians. In 2004, nationwide, there were 12.5 practicing
obstetricians and gynecologists per 100,000 population.[Footnote 40] In
that year, 15 of the 24 PSAs were below this national average, whereas
8 of the 24 PSAs exceeded the national average.[Footnote
41]
The North region had the greatest number of localities--17 PSAs--that
frequently fell short of targets for civilian obstetricians. (See fig.
3.) The South region had 5 PSAs and the West, 2 PSAs, which frequently
did not meet targets for civilian obstetricians during the review
period.
Our finding that more than three-fourths of PSAs met their physician
supply targets for all reported periods is an indicator that access was
not likely a problem for most TRICARE beneficiaries seeking obstetric
care. However, we could not be conclusive about access from the
contractors' data alone because of other factors that can influence
access. For example, in PSAs where targets were consistently met,
access could have been a problem if managed care support contractors
overestimated the percentage of TRICARE patients that network civilian
obstetricians were willing to treat. Alternatively, in PSAs that
frequently fell short of established targets, network civilian
obstetricians may have been willing to take on more TRICARE patients
than had been estimated by the managed care support
contractors.
Figure 3: Number of PSAs That Met or Fell Short of Targets for Civilian
Obstetricians by TRICARE Region, 2005 and 2006:
[See PDF for image]
Source: GAO analysis of TRICARE managed contractor data.
Note: Data for the North region are quarterly from March 2005 through
November 2006. Data from the West region are quarterly from January
2005 through September 2006, and data from the South region are monthly
for January, April, July, and October 2005 and 2006. Managed care
contractors use different models to set targets for the number of
physicians in the civilian provider network.
[End of figure]
In separate discussions with national associations representing
obstetricians and military family members, association officials
indicated that, in 2006, their members did not relate substantial
concerns about the adequacy of TRICARE's payment rates or access to
civilian obstetricians. The representatives of managed care support
contractors also told us they had received a minimal number of concerns
from beneficiaries and network civilian obstetricians about obstetric
care matters.
Agency Comments:
We provided a draft of this report to DOD for comment. DOD's comments
are reprinted in enclosure II. In its comments, DOD stated that it
agreed with our findings and provided technical comments. We
incorporated DOD's technical comments as appropriate.
- - - --:
We are sending copies of this report to the Secretary of Defense and
other interested parties. In addition, this report will be available at
no charge on GAO's web site at [hyperlink, http://www.gao.gov]. We will
also make copies available to others upon request. If you or your staff
have any questions about this report, please contact me at (202) 512-
7114 or ekstrandl@gao.gov. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last
page of this report. Phyllis Thorburn, Assistant Director; Alexander
Dworkowitz; Hannah Fein; Jenny Grover; and Darryl Joyce made key
contributions to this report.
Signed by:
Laurie E. Ekstrand:
Director, Health Care:
Enclosures - 2:
List of Committees:
The Honorable Carl Levin:
Chairman:
The Honorable John McCain:
Ranking Member:
Committee on Armed Services:
United States Senate:
The Honorable Daniel K. Inouye:
Chairman:
The Honorable Ted Stevens:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations:
United States Senate:
The Honorable Ike Skelton:
Chairman:
The Honorable Duncan Hunter:
Ranking Member:
Committee on Armed Services:
House of Representatives:
The Honorable John P. Murtha:
Chairman:
The Honorable C.W. Bill Young:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations:
House of Representatives:
The Change in TRICARE Payments for Obstetric Care as Compared to
Inflation:
Table 1 shows the change in TRICARE's payment rates for six common
obstetric billing codes that include payment for childbirth, relative
to the change in inflation, from 1997 to 2006.
Table 1: Percentage Change in TRICARE Payment Rates for Six Obstetric
Care Billing Codes Compared to the 2.7 Percent Average Annual Change in
Medical Inflation, 1997 through 2006:
Services billed under six obstetric codes: Set of obstetric services
related to an uncomplicated vaginal delivery;
Average annual change (percentage): 0.3;
Services billed under six obstetric codes: Vaginal delivery only;
Average annual change (percentage): 0.0;
Services billed under six obstetric codes: Vaginal delivery and
postpartum care;
Average annual change (percentage): 0.0;
Services billed under six obstetric codes: Set of obstetric services
related to an uncomplicated cesarean section;
Average annual change (percentage): 0.3;
Services billed under six obstetric codes: Cesarean delivery only;
Average annual change (percentage): 0.0;
Services billed under six obstetric codes: Cesarean delivery and
postpartum care;
Average annual change (percentage): 0.0;
Source: GAO analysis of TRICARE payment data.
Note: Together, the six billing codes accounted for about 90 percent of
TRICARE's total payments for obstetric care in 2006. The rate of
inflation is measured by the Medicare Economic Index (MEI). The MEI is
a measure of inflation relative to physicians' practice costs and
general wage levels. The MEI includes a set of inputs used in
furnishing services such as a physician's own time, nonphysician
employees' compensation, rent, and medical equipment. The MEI measures
year-to-year changes in prices for these various inputs based on
appropriate price proxies. TRICARE payment rates for four of the six
obstetric care billing codes were above Medicare payment rates in 2006:
vaginal delivery only; vaginal delivery, including postpartum care;
cesarean delivery only; and cesarean delivery, including postpartum
care.
[End of table]
Comments from the Department of Defense:
he Assistant Secretary Of Defense:
1200 Defense Pentagon:
Washington, D.C. 20301-1200:
Department of Defense Health Affairs:
July 18, 2007:
Ms. Laurie Ekstrand:
Director, Health Care:
U.S. Government Accountability Office:
441 G Street, N.W.:
Washington, DC 20548:
Dear Ms. Ekstrand:
This is the Department of Defense (DoD) response to the Government
Accountability Office's (GAO) draft report, GAO-07-94IR, "TRICARE:
Changes to Access Policies and Payment Rates for Services Provided by
Civilian Obstetricians," dated July 2, 2007 (GAO Code 290602).
Thank you for the opportunity to review and provide comments on the
Draft Report. We have reviewed the report for technical accuracy and
agree with the findings. I have attached several technical comments in
reference to effective dates for TRICARE changes for payment rates and
services. In addition, I concur with the Draft Report's conclusions.
DoD is pleased the GAO found that the TRICARE managed care support
contractors met most of the targets for the number of physicians in the
provider network for 2005 and 2006 and that is an indicator that access
was not likely a problem for most TRICARE beneficiaries seeking
obstetric care.
My points of contact are Ms. Reta Michak (Functional) at (303) 676-3440
and Mr. Gunther Zimmerman (Audit Liaison) at (703) 681-3492.
Sincerely,
Signed by:
S. Ward Casscells, MD:
Enclosure:
As stated:
Footnotes:
[1] TRICARE offered health care to approximately 9.1 million active
duty personnel, retirees, and their dependents in 2006.
[2] Obstetrics is the branch of medicine that addresses the care of
women during pregnancy, childbirth, and the recuperative period
following delivery. In addition to obstetricians, other physicians may
provide obstetric care. In this report, we generally refer to
physicians as the providers of obstetric care, but obstetric care may
also be delivered by other types of providers such as nurse midwives
and nurse practitioners.
[3] In general, TRICARE beneficiaries have shifted to civilian
providers for outpatient care in recent years. From fiscal year 2004 to
fiscal year 2006, use of civilian providers increased from 37 percent
to 43 percent of total outpatient care provided. The trend toward
increasing use of civilian providers may partially reflect changes in
TRICARE beneficiaries' place of residence. Because of military base
closures and shifts in the mix of TRICARE beneficiaries (such as
additional reservists and their family members) the percentage of
TRICARE beneficiaries who lived near an MTF declined between 2000 and
2006 from 55 percent to 48 percent.
[4] In fiscal year 2006, TRICARE paid $82 million to civilian
physicians for outpatient obstetric care, which represented about 4
percent of the program's total outpatient payments of $1.9 billion to
civilian physicians that year. The total TRICARE budget for fiscal year
2006 was about $39 billion.
[5] When TRICARE beneficiaries who have not enrolled in Prime choose to
receive care from a network physician, they do so under the rules of
TRICARE Extra, which resembles a preferred provider organization. In
contrast, TRICARE Standard resembles a traditional fee-for-service
program. Nonenrolled TRICARE beneficiaries cannot be categorized as
belonging to either Extra or Standard because each time they seek care,
they can choose to see a network or nonnetwork civilian physician, and
this choice determines whether they receive coverage under Extra or
Standard.
[6] The managed care support contractors have a financial incentive to
ensure that they develop and maintain an adequate supply of physicians
in the civilian provider network. TMA requires, on a monthly basis,
that not less than 96 percent of all referrals of TRICARE beneficiaries
who reside within 40 miles of an MTF be made to a physician at an MTF
or a physician in the civilian provider network. If this standard is
not met, TMA imposes a monetary penalty that reduces its payment to the
contractor.
[7] See Pub. L. No. 109-163, § 734, 119 Stat. 3136, 3353-
55.
[8] The American College of Obstetrics and Gynecologists is a national
professional society that represents 90 percent of U.S. board-certified
obstetrician-gynecologists. The National Military Family Association
represents members of the armed forces and their families.
[9] TRICARE's managed care support contractors set targets for
specialists in obstetrics and gynecology, which may include providers
other than obstetricians.
[10] PSAs typically include a 40-mile radius around MTFs and thus can
include multiple counties. PSAs are also established for other areas
where TMA has determined that networks would be cost
effective.
[11] TRICARE claims data offer information about trends in service use
and the number of physicians providing care to TRICARE beneficiaries,
but complete data have a lag time of about 1 year behind program
changes as physicians and other providers may take up to 1 year to
submit claims for payment. Only after claims are submitted for payment
are the records of service use and physician participation included in
the claims database.
[12] Ultrasound is a type of imaging used by health professionals in
many types of examinations and procedures. A standard maternity
ultrasound creates a picture that helps a provider determine a baby's
gestational age and evaluate a baby's growth and
development.
[13] Medicaid is the joint federal-state program that provides health
care coverage for certain low-income individuals. In fiscal year 2005,
the last year for which data were available, about 60 million low-
income children, families, and aged or disabled individuals were
covered by Medicaid.
[14] For more information about access to civilian health care
providers for TRICARE beneficiaries who have not enrolled in Prime see
GAO, Defense Health Care: Access to Care for Beneficiaries Who Have Not
Enrolled in TRICARE's Managed Care Option, GAO-07-48 (Washington, D.C.:
Dec. 22, 2006).
[15] Each TRICARE region has about the same number of TRICARE
beneficiaries.
[16] In developing civilian provider networks, managed care support
contractors also consider historical medical needs, availability of
existing services in MTFs, and the availability of civilian providers
to deliver care within the PSAs.
[17] According to the 2005 Area Resource File published by the National
Center for Health Workforce Analysis, Bureau of Health Professions,
Health Resources and Services Administration, Department of Health and
Human Services, in 2004 there were about 37,200 civilian obstetricians
in the United States. The Area Resource File provides data on county-
level demographics and health systems.
[18] Hospitals bill TRICARE separately for the hospital
stay.
[19] DOD replaced its Civilian Health and Medical Program of the
Uniformed Services (CHAMPUS), which had been administered as a fee-for-
service type health care program, with TRICARE, a triple-option benefit
type program, in 1994. CHAMPUS payments were based on an annual
calculation of the 80th percentile of physicians' charges
statewide.
[20] DOD is now required by law to follow Medicare's reimbursement
rules to the extent practicable. See 10 U.S.C. § 1079(j)(2). Since
1992, Medicare--the federal program that pays for health care services
and items on behalf of more than 42 million elderly and disabled
beneficiaries--has paid physicians using a fee schedule with payment
rates for more than 7,000 services. The physician community is involved
in setting the relative differences in payment rates for these
services, including payment rates for services not commonly used by the
Medicare population, such as obstetric care.
[21] See Department of Defense Appropriations Act for Fiscal Year 1991,
Pub. L. No. 101-511, § 8012, 104 Stat. 1856, 1877 (1990). This
provision was codified at 10 U.S.C. § 1079(h).
[22] By 2006, 30 of the 61 obstetric billing codes were still paid at
TRICARE's 1997 payment rate levels.
[23] See 10 U.S.C. § 1097b(a); 32 C.F.R.
§199.14(j)(1)(iv)(E).
[24] See 10 U.S.C. § 1079(h)(5); 32 C.F.R. §
199.14(j)(1)(iv)(D).
[25] Medicaid payment rates are consistent across all geographic areas
within a state, whereas TRICARE rates are locality based. There are 89
TRICARE payment rate localities for the United States and Puerto
Rico.
[26] See Pub. L. No. 106-398, § 728, 114 Stat. 1654, 1654A-189 (2000);
Pub. L. No. 107-107, § 735, 115 Stat. 1012, 1171-72
(2001).
[27] TRICARE's Prime enrollees are not affected by this change. They
are expected to receive obstetric care from physicians at the local
MTF, unless the local MTF lacks sufficient capacity, in which case
enrollees are referred to civilian physicians for care.
[28] TMA estimated that program costs would increase by about $1.5
million annually as a result of this change.
[29] TRICARE's policy has always been to pay separately--outside the
global obstetric payment--for ultrasounds performed during complicated
pregnancies.
[30] We did not review TMA's analysis of the claims data.
[31] State Medicaid payments for obstetric care varied widely in 2006.
In its comparison of TRICARE payment rates and state Medicaid payment
rates, TMA found that state Medicaid payments for the set of obstetric
services related to an uncomplicated vaginal delivery (or the closest
equivalent set of services under the state's payment system) ranged
from $616 in Ohio to $2,859 in Connecticut.
[32] In 2006, the 6 billing codes used to identify states for the
Medicaid-related payment increase together accounted for about 90
percent of TRICARE's total payments for obstetric care, while the 14
billing codes together accounted for over 97 percent of payments for
obstetric care.
[33] In implementing this change across the 12 states, TMA made a total
of 118 distinct payment increases by adjusting its payment rates for
any of the 14 billing codes that were paid below the Medicaid payment
rate in the state. The average payment increase in 2006 was $142, with
a median payment increase of about $69. TMA estimated that program
costs would increase by about $2 million annually as a result of this
change.
[34] Annually, TMA compares TRICARE payment rates and Medicaid state
payment rates for obstetrics. According to TMA, 11 of the 12 states
that received the increase to the Medicaid payment rate in 2006
(Arizona, Connecticut, Massachusetts, Montana, Nebraska, Nevada,
Oregon, South Carolina, Washington, West Virginia, and Wyoming) also
received matching rates in 2007. Alaska did not receive a Medicaid
matching rate increase for 2007 as its payment rates were raised above
the Medicaid rate in February 2007 by a TRICARE demonstration
project.
[35] Perinatologists are obstetric specialists who provide care for
women in high-risk pregnancies. They generally receive the same global
obstetric payment level as obstetricians and other physicians who focus
on patients who are not high risk.
[36] See 71 Fed. Reg. 67112-13 (Nov. 20, 2006).
[37] TMA officials indicated that the payment rate increase for Alaska
was necessary due to an overall scarcity of providers, their reluctance
to accept TRICARE payment rates, transportation issues, and other
factors. Through the demonstration project, TMA expects to obtain
information about how increased payment rates affect provider
participation in TRICARE, beneficiary access to care, and the cost of
health care services.
[38] The waiver also included payment for gynecology, which focuses on
reproductive health care services for women.
[39] The 24 PSAs with recurring shortfalls of civilian network
obstetricians include a total of 1,580 counties, of which 1,022
counties (65 percent) are urban and 558 (35 percent) are
rural.
[40] These figures are based on 2005 data from the Bureau of Health
Professions, Health Resources and Services Administration, Department
of Health and Human Services.
[41] Two of the PSAs are located within the same county and thus the 24
PSAs collapse into 23 PSAs when reporting on county-level statistics.
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