In a demonstration project unveiled late last week, the Defense Department next year will allow Medicare-eligible military retirees to join military managed-care plans in six cities.
The project could set the stage for Medicare reimbursement to military health plans.
The Pentagon will pay to enroll Medicare-eligible retirees in Tricare managed-care plans until its spending on retirees' premiums equals past expenditures to treat retirees in military hospitals in those locations.
The project aims to evaluate costs, utilization, access and quality if Medicare-eligible retirees join Tricare plans, providing the data that HCFA could use in developing a reimbursement formula for Tricare plans.
Medicare-eligible military retirees now cannot join the military's Tricare managed-care plans but can receive treatment at military hospitals when space and resources are available. Otherwise, they must seek Medicare-covered care at other providers.
The issue has turned into a hot political issue for Congress and President Clinton. Members of Congress and the Clinton administration proposed legislation that would have allowed HCFA and the Defense Department to experiment with partial Medicare payment of retirees' Tricare enrollment fees.
A version of that legislation nearly became part of a broad spending package for federal fiscal year 1997, which began Oct. 1, but was pulled because Republican leaders didn't want Medicare-related legislation in the budget bill.