Medicare Subvention Demonstration: DOD Start-Up Overcame Obstacles, Yields Lessons, and Raises Issues Page: 3 of 56
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Accountability * Integrity * Reliability
United States General Accounting Office General Government Division
Washington, D.C. 20548
September 28, 1999
This report conveys our findings on the early implementation of the
Department of Defense (DOD) Medicare Subvention Demonstration.' The
demonstration is designed to test whether DOD, by forming Medicare
Health Maintenance Organizations (HMO) at six sites, can provide
accessible and quality health care to military retirees and their survivors
and dependents, while not increasing federal costs for either Medicare or
Military health care and Medicare share a sizable service population. There
are 1.3 million military retirees (including their dependents and survivors)
who are 65 and older. Most of them are eligible for Medicare as well as for
military health benefits-dual eligibles-and many of these dual eligibles
are enrolled in traditional fee-for-service Medicare or a Medicare HMO.
Some of these Medicare enrollees obtain Medicare-covered health services
at military treatment facilities (MTF) as well as from their private
physician or HMO. However, legislation prior to this demonstration
prohibited Medicare from reimbursing DOD, which had paid for these
services from appropriated funds. DOD's 1999 appropriation for military
health care was almost $16 billion, of which about $1.2 billion was spent
on those 65 and older.
Although retirees 65 and older have historically received some care at
MTFs, prior to this demonstration DOD could not offer them
comprehensive care.3 DOD had a managed care program (TRICARE
Prime), but only for service members on active duty, retirees under 65, and
their respective dependents and survivors. However, once they reached 65,
retirees were no longer eligible for TRICARE Prime. The demonstration
program, called TRICARE Senior Prime, extends DOD-provided managed
care at the six sites to these older retirees.
1 "Subvention" means a transfer of money from one federal department to another.
2 For the names of the six sites and summary information about them, see table 1. More detailed
information about the sites is included in appendixes I through VI.
3 We will use the term "retirees" in this report when referring to retirees and their dependents and
GAO/GGD/HEHS-99-161 Medicare Subvention Demonstration DOD Start-up
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United States. General Accounting Office. Medicare Subvention Demonstration: DOD Start-Up Overcame Obstacles, Yields Lessons, and Raises Issues, report, September 28, 1999; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc290877/m1/3/: accessed November 19, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.