TRICARE increase stuns retirees

By Tom Philpott: Military Update

Defense health officials didn’t do the Obama administration any favor last week when they announced a “small” increase in the daily fee that military retirees under 65, their families and covered survivors must pay for inpatient care in civilian hospitals under TRICARE Standard starting Oct. 1.

The jump, in fact, for working age retirees and their families is $110 per day, a 20.6 percent increase.

TRICARE Standard is the military’s fee-for-service insurance option. The inpatient cost share for retirees under 65 and their family members was increased to $645 a day from $535. The actual formula for beneficiaries is $645 a day, or 25 percent of total hospital charges, whichever is less.

Families of active duty members who use Standard for civilian hospital stays will see a more modest increase in their daily charge, from $15.65 a day to $16.30, or $25 per admission, whichever is greater.

The increase for retirees stunned and angered at least one service association.

“This shocking announcement is extremely disappointing, given your public assurances earlier this year that the Defense Department would not be proposing any TRICARE fee increases for (fiscal) 2010,” retired Navy Vice Adm. Norbert R. Ryan Jr., president of the Military Officers Association of America told Defense Secretary Robert Gates. Ryan’s protest letter was sent hours after TRICARE officials unveiled their new inpatient fees for Standard.

Austin Camacho, spokesman for TRICARE Management Activity in Falls Church, Va., said the increase results from a regulation requiring the Standard “inpatient per diem cost share be calculated so that, in the aggregate, the total cost-sharing amount is equivalent to 25 percent of the CHAMPUS-determined allowable costs for covered services or supplies provided” during inpatient stays in civilian hospitals.

“The regulation also requires that we publish the rates annually, Camacho said. “About three years ago Congress froze the per diem at $535 and later extended the freeze to September 30, 2009. Hence, there is a large increase now that the freeze is no longer in effect.”

MOAA’s criticism, likely to be echoed by other service associations, centers on Gates statements earlier this year that the department wouldn’t be seeking TRICARE fees increases for fiscal 2010. It’s unclear now whether he meant that the department wouldn’t seek any new legislative authority to raise retiree TRICARE fees, as the Bush administration did for the past three years, or whether he meant DoD would keep all fees frozen through the year.

Service associations presumed, from Gates’ statements, that they would not have to lobby Congress again this year to insert language in the defense bill to block fee increases for Standard users through 2010.

“We believe that the only reason the Armed Services Committees didn’t include a similar prohibition in their mark-ups of the FY2010 Defense Authorization Act was that they took Administration assurances on this subject at face value,” Ryan told Gates.

“They believe, as we do, that the current $535 per day retiree inpatient co-pay is already far larger than inpatient co-pays under most civilian insurance plans,” said Ryan, urging Gates to reverse the decision. “We don’t understand how a further 21 percent increase to $645 meets any standard of equity or reasonableness for the most seriously ill and injured beneficiaries to whom it would apply.”

The unexpected increase also caught White House political operatives by surprise. It comes amid an emotional debate over national health care reform. The fee increase, and service association criticism, almost certainly will be used by Republicans to deepen doubts about the president’s intentions regarding his health care initiatives.