TRICARE Contracts Overview: Briefing to Task Force on Future of Healthcare

TRICARE Management Activity February 6, 2007 Version 9.3

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What is TRICARE? TRICARE is a comprehensive health benefits program comprised of the military medical treatment facilities and health care received from private sector health care providers and institutions, worldwide.

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TRICARE at a Glance TRICARE Facts and Figures

A Week in the Life

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TRICARE Beneficiaries: 9.2 million* TRICARE Prime Enrollees: 5.0 million Direct Care Facilities: • 65 Military Hospitals/Medical Centers • 412 Medical Clinics • 414 Dental Clinics Military Health System Personnel: 132,700 • 46,300 Civilian • 86,400 Military

FY06 Budget • • •

Unified Medical Program: $39.32 billion $28.16 billion Defense Health Program $11.16 billion Medicare Eligible Retiree Accrual Fund

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Inpatient Admissions: 19,600 • 5,000 Direct Care • 14,600 Purchased Care Outpatient Workload (Direct care only): • 642,400 Professional Encounters • 102,900 Dental Seatings Prescriptions: 2.22 million (Includes retail, direct care and mail order) Births: 2,100 • 1,000 Direct Care • 1,100 Purchased Care Claims processed: 3.5 million Weekly Bill: $754 million

*The number of beneficiaries eligible for DoD medical care fluctuates based on changes in retirees, active duty, Guard/Reserve, and their family members.

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TRICARE Contracts CONTRACT

ESTIMATED VALUE ANNUAL 5-YEAR

CONTRACTOR

CORPORATE EXECUTIVE & LOCATION

Mail Order Pharmacy *

$ 55M

$ 276M

Express Scripts International (ESI)

George Paz, CEO / Maryland Heights, MO

Retail Pharmacy *

$ 57M

$ 285M

ESI

TRICARE Global Remote Overseas (TGRO) *

$ 10M

$47M

International SOS

Sandy Johnson, Sr. VP / Philadelphia, PA

Puerto Rico Healthcare *

$ 2M

$12M

Humana Military Health Services

David Baker, CEO / Louisville, KY

Uniformed Services Family Health Plan (Designated Providers)

$ 820M

$4,162M

Sole Source with 6 Existing Plans

(See List Next Slide)

Managed Care Support

$6,000M

$32,000M

Humana Military Health Services (South) TriWest Healthcare Alliance (West) Health Net Federal Services (North)

David Baker / Louisville, KY David McIntyre / Phoenix, AX James Woys / Rancho Cordova, CA

TRICARE Dual Eligible Fiscal Intermediary Contract (TDEFIC) *

$ 181M

$906M

Wisconsin Physicians’ Services (WPS) Insurance Corporation

William Bathke / Madison, WI

TRICARE Dental Program

$285M

$1,423M

United Concordia Companies, Inc. (UCCI)

Lawrence D. McKinley, DDS / Harrisburg, PA

Retiree Dental **

$59M

$297M

Delta Dental

Lowell G. Daun, DDS / Rancho Cordova, CA

National Quality Monitoring

$ 3M

$15M

Maximus, Inc.

Lynn Davenport / Reston, VA

* Healthcare cost not included * * Self funded

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TRICARE Mail Order Pharmacy • Scope: Operation of a full-service mail order pharmacy available to TRICARE eligible beneficiaries worldwide. • Awarded to Express Scripts, Inc. Sep 10, 2002 • Start of health care delivery Mar 1, 2003 • Comments: – Dedicated distribution center in Tempe, AZ – Over 26 Million prescriptions filled – CY06 monthly averages • 670,041 prescriptions shipped • 117,546 beneficiary telephone inquiries handled

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TRICARE Retail Pharmacy • Scope: Provide comprehensive retail pharmacy services to all DoD beneficiaries living in the U.S., Guam, Puerto Rico, U.S. Virgin Islands, Northern Mariana Islands and American Samoa. • Awarded to Express Scripts, Inc. Sep 26, 2003 • Start of health care delivery Jun 1, 2004 • Comments: – – – –

National contract eliminates portability issues Implements uniform formulary Implemented online coordination of benefits Apr 1, 2006 CY06 monthly averages: • Processes electronic claims – 7.6 Million • Processes paper claims – 390,000 • Beneficiary call center telephone inquiries – 47,000

– CY06 average claims processing timeliness • Electronic claims – 99.94% processed within 5 seconds • Paper claims – 97.71% processed within 10 business days 6

TRICARE Global Remote Overseas • Scope: Provide coverage to enrolled active duty and active duty service members and their eligible family members who are permanently assigned to designated remote locations overseas, and for active duty service members who are on temporary orders, liberty, or leave. • Awarded to International SOS Dec 2002 • Start of health care delivery Sep 2003 • Comments: – Covered Countries: Latin America 31; Europe 91; Pacific 23 – Call Centers: Philadelphia (Latin America and Canada), London (Europe), Singapore/Sydney, Australia (Pacific) – Over $12.6M in healthcare claims paid in CY05 – Active duty/active duty family members enrollment: Europe 3,898/3,882; Pacific 1,063/1,447; Latin America and Canada 1,177/1,082 – 144 air medical evacuations between Jan – Sep 2006 7

TRICARE Puerto Rico •

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Scope: Provide ongoing health care services and support through enrollment in TRICARE Overseas Program Prime for active duty service members and their families permanently assigned to the Commonwealth of Puerto Rico, and for active duty service members who are on temporary orders, liberty, or leave. Awarded to Humana Military Health Services Feb 2004 Start of health care delivery May 2004

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Comments: – Subcontract with International SOS for air medical evacuations – Rodriquez Army Medical Center only sees active duty as of Sep 2004; future status uncertain – Coast Guard Stations Borinquen and San Juan Coast Guard Clinic are only other military medical installations in Puerto Rico. – Establishes networks in locations on the island – Provides call center and referral assistance – Provides medical evacuation coverage – Over $9M in healthcare claims paid in CY05 – Enrollment: Active duty 1,933 Active duty family members 4,041 8

Uniformed Services Family Health Plan (Designated Provider ) • Scope: Provide all primary and specialty care to an enrolled population of active duty dependents, retirees, and retiree family members residing within the designated provider service area. The designated provider shall be fully at risk for providing the TRICARE Prime benefit for a fixed annual capitated payment, based upon gender, age, geographically adjusted. • Awarded Six individual contracts May 2003 to – Pacific Medical Clinics; Seattle – CHRISTUS Health; Houston – Johns Hopkins Medical Services Corporation; Baltimore – St. Vincent Catholic Medical Centers of New York; New York City – Brighton Marine Health Center; Boston – Martin’s Point Health Care; Portland, Maine • Start of health care delivery Jun 1, 2003 • Comments: Designated provider contracts are awarded as statutory sole source commercial item contracts.

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Designated Provider Program David Chicoine USFHP Program Director Brighton Marine Health Center 77 Warren Street Boston, MA 02135-9862 617-562-5506

Paul Goebel USFHP Program Director Saint Vincent Catholic Medical Centers of New York 450 West 33rd Street New York, New York 10011 212-356-4902

David Howes, MD, President Martin's Point Health Care 331 Veranda Street Portland, ME 04104-5040 207-774-5801

Mary Cooke USFHP Program Director Johns Hopkins Medical Services Corporation 6704 Curtis Court Glen Burnie, MD 21060 410-424-4977

Marshall Bolyard USFHP Program Director CHRISTUS Health 2600 North Loop West Houston, TX 77092 713-680-4853

Kate Ryan USFHP Program Director Pacific Medical Clinics 1200 12th Ave South Seattle, WA 98144-2790 206-621-4121

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Managed Care Support • Scope: Provide full range of healthcare service on a regional basis to eligible beneficiaries. • Awarded Aug 21, 2003 to: – Health Net Federal Services (North) – Humana Military Health Services (South) – TriWest Healthcare Alliance (West)

• Start of health care delivery: Apr 2004 – Nov 2004* • Comments: – – – – – –

Three regional contracts vs. seven Performance-based contracts At risk contracts Emphasis on customer service Provider networks Emphasis on electronic medical claims

* Health care delivery start dates were staggered as part of the transition from 7 contracts to 3

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Current Managed Care Support Structure Puget Sound WA

Chicago IL

San Fr ancisco Bay Area

McGuire/Dix NJ

Dayton OH

National Capital Tidewater VA

Colorado SpringsCO LosAngelesCA

ClarksvilleTN/KY

Las Vegas NV V

Texoma San Diego CA El Paso TX/NM Honolulu, HI

Ft Hood, TX

Augusta GA Colu Columbus, GA

Mississippi Delta

San Antonio, TX

FayettevilleNC Sumter SC South Carolina Coast JacksonvilleFL

Orlando FL Tampa,FL FL

AREAS

ELIGIBLES

CLAIMS__

North

North South West

2,084,300 2,238,774 2,070,671

13.2 M/yr. 16.8 M/yr. (Includes OCONUS Claims) 10.9 M/yr.

South West

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TRICARE Dual Eligible Fiscal Intermediary • Scope: Provide a single, separate vehicle for claims processing, customer service and administrative services for individuals who are eligible for both TRICARE and Medicare. This contract replaced the practice of the managed care support contractors providing these services. • Awarded to Wisconsin Physicians Service, Inc. Jul 25, 2003 • Start of health care delivery beginning Apr 1, 2004 • Comments: – National performance-based contract – Includes under age 65 with cross-over claims from Medicare – Primarily secondary payer after Medicare – about 2% of claims paid with TFL as primary – Provide claims processing and customer services – Maintain beneficiary and provider satisfaction at highest level possible – Incorporate commercial practices when practicable 13

TRICARE Dental Program • Scope: Worldwide comprehensive dental insurance coverage for active duty family members, National Guard/Reserve members and/or their families • Awarded to United Concordia Companies, Inc. Apr 6, 2005 • Start of dental health care delivery Feb 1, 2006 • Comments: – Government contributes 60% of premium for ADFM and Guard/Reserve sponsors, 100% of the 3-year survivor plans – Enhanced benefit package to include dental implants – 1.7 Million covered lives

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TRICARE Retiree Dental Program • Scope: Provide comprehensive dental insurance coverage for all Uniformed Services retirees and their family members, unremarried surviving spouses of retirees, certain surviving family members of deceased active duty sponsors, and Medal of Honor recipients and their immediate family members and their survivors. • Awarded to Delta Dental of California Nov 2002 • Start of health care delivery May 1, 2003 • Comments: – – – –

Current TRDP is not worldwide Smooth transition Enhanced benefit package Reprocurement is in process; will include OCONUS coverage 15

National Quality Monitoring Contract • Scope: Provide an independent, impartial evaluation of care provided to MHS beneficiaries • Awarded to Maximus Inc. Oct 20, 2003 • Start of delivery of services May 1, 2004 • Comments: – Covers managed care support and designated provider contracts – Responsible for mental health facility certification – Provides focused studies on quality of care

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Solicitations in Process • TRICARE Managed Care Support Contracts (MCSCs) • TRICARE Dual Eligible Fiscal Intermediary Contract (TDEFIC) • TRICARE Pharmacy Contract (T-Pharm) • TRICARE Retiree Dental Program (TRDP) • National Quality Monitoring Contract (NQMC) • OCONUS Medical Support

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Questions?

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