The Medicare-DoD Subvention Demonstration tests the feasibility of making cost-effective, Medicare-covered health care services available to Medicare-eligible DoD beneficiaries through the military TRICARE health insurance program and military treatment facilities (MTFs). The Health Care Financing Administration (HCFA) and the Department of Defense (DoD) are implementing the demonstration at six sites in response to the Balanced Budget Act of 1997 (BBA).

The Secretaries of the Department of Health and Human Services (DHHS) and DoD executed a Memorandum of Agreement (MOA) in 1998 that specifies how to establish and operate the Medicare-DoD Subvention Demonstration, in accordance with the BBA provisions. Two distinct...

Medicare-eligible DoD beneficiaries are free to choose where they get their health care, either through the military or through Medicare health plans serving their local markets. Under current law, however, when these dually eligible individuals obtain health care services at treatment facilities operated by the DoD or by the Department of Veterans’ Affairs (VA), Medicare cannot reimburse either organization for those services.⁶ As a result, the health care costs of this elderly population are shared by Medicare, DoD, and VA, according to the mix of service sectors that beneficiaries use.

Medicare-eligible DoD beneficiaries who prefer to get their care at...

This Evaluation Report presents findings regarding the first-year effects of the Medicare-DoD Subvention Demonstration. The report also provides an update on the current status and activities of the demonstration sites. Our analysis focuses on changes in patterns of utilization and on costs for dually eligible beneficiaries during FY1999, the first year of Senior Prime operation. We also updated our enrollment analysis with more current data and evaluated factors contributing to beneficiaries’ health plan choices. In this chapter, we describe the methods used for each of these analyses.

The process evaluation of the Medicare-DoD subvention demonstration is designed to:

document the...

Medicare-eligible DoD beneficiaries have a diversity of benefit options available to them. They can be covered under the Medicare+Choice plans, fee-for-service Medicare with private supplemental insurance (“Medigap” plans),²² non-DoD employer-sponsored retiree health benefits, and in rare cases, Medicaid. In addition, they are eligible to obtain direct care services from DoD treatment facilities, although access to MTF care is lowest priority for this population and has declined with the reduction in space- available care capacity. The introduction of Senior Prime provides these dually eligible beneficiaries with elevated priority for MTF services and a range of supplemental benefits not covered by fee-for-service...

The introduction of TRICARE Senior Prime in the demonstration sites stimulated a migration of Medicare-eligible DoD beneficiaries. Many beneficiaries chose to enroll in the new program, while others remained with their existing coverage arrangements. In the previous chapter we described enrollment trends and estimated models to examine which factors contributed to demand for Senior Prime. In this chapter we examine changes in service utilization by dually eligible beneficiaries resulting from the introduction of Senior Prime, looking at effects on both the Medicare and DoD health care sectors. Changes in service use patterns translate into changes in health care costs for...

We designed our analysis of cost impacts for this first year report to gain an understanding of the shifts in spending by Medicare and DoD for dually eligible beneficiaries in the demonstration sites. These costs are dominated by spending on health care services for the dually eligible beneficiaries, but administrative costs also are a substantial share of total costs that must be acknowledged. We first address the health care costs, followed by a summary of estimates of administrative costs that have been provided by TMA and the demonstration sites.

The evaluation population for these cost analyses is the Medicare-eligible DoD...

We continue to monitor the activities and experiences of the demonstration sites, both to document the successes and challenges involved in operating Senior Prime and to help interpret observed effects of the subvention demonstration on service utilization and costs. We also have examined the effects of TRICARE Senior Prime on two major groups of participants in the local markets of the demonstration sites: other Medicare managed care plans and Veterans Affairs (VA) health facilities.

We begin this chapter begin with a discussion of the current status of the Senior Prime sites as of April 2000. Next, we examine trends in...

With data for one full year of operation of the Medicare-DoD subvention demonstration, it has been possible to develop substantial insights into the responses of beneficiaries to Senior Prime and into the associated effects on utilization patterns and costs in the Medicare and DoD health care sectors. We summarize in this chapter the key findings from this year’s evaluation cycle. We also discuss several issues that were identified as needing further consideration during the remainder of the demonstration, including the establishment of a permanent Senior Prime program, if mandated by the Congress.

Sources of Senior Prime enrollments.Beneficiaries switched at...

We initiated our examination of facility selection issues in our Interim Report last year, being aware that the Congress was considering several pieces of legislation that would extend or expand Senior Prime plans as a permanent component of the Military Health System. In this chapter, we have extended our analytic work to gather and summarize some of the data that would be used by DoD and HCFA to guide selection of the regions and MTFs for an expanded Senior Prime program. Such a selection process should balance the goals and strategies of HCFA and DoD, and it should weigh several...