The Clinton administration is proposing legislation that would allow HCFA to reimburse military managed-care plans for covering Medicare-eligible military retirees in five pilot projects in the South and the Northwest.
The proposal, if enacted, would force private-sector providers and health plans to compete with military health plans for up to 20,000 beneficiaries, a number that could increase if the Pentagon decides to take the demonstration nationwide. Those retirees now cannot join the Defense Department's Tricare health plans.
Government officials say military retirees like Defense Department hospitals and prefer to be treated there.
"I think people will be breaking down the doors" to enroll in Tricare, said Stephen Joseph, M.D., assistant defense secretary for health affairs. "Maybe that's dead wrong. They will vote with their feet."
Under the administration proposal, projects demonstrating Medicare reimbursement of Tricare managed-care plans would be established in Seattle, San Antonio and three other locations in the South.
Those Tricare managed-care plans will be treated somewhat like Medicare risk HMOs, although the Tricare plans would be reimbursed at 93% of Medicare's fee-for-service costs for each enrollee. Medicare risk HMOs are reimbursed at 95% of fee-for-service costs.
The House National Security Committee unanimously approved and sent to the House floor a measure that would establish a similar demonstration project.
The administration's military Medicare-reimbursement proposal follows by about a month a separate proposal to allow HCFA to pay veterans hospitals for treating Medicare-eligible veterans. The Pentagon also is responding to congressional demands for development of a demonstration project to cover Medicare-eligible retirees.