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TRICARE/The Civilian Health and Medical Program of the Uniformed Services (CHAMPUS); Pharmacy Redesign Pilot Program

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Information about this document as published in the Federal Register.

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Office of the Secretary, DoD.


Notice of two-site implementation of the Pharmacy Redesign Pilot Program.


This notice is to advise interested parties of a two-site implementation of the Pharmacy Redesign Pilot Program for certain military health system (MHS) beneficiaries who are 65 years of age or older, pursuant to the requirements in the Strom Thurmond National Defense Authorization Act for Fiscal Year 1999. Specifically, Section 723 of this act mandates the pharmacy redesign to incorporate private sector “best business practices” in providing pharmacy services in the MHS, including both military medical treatment facilities (MTFs) and the mail-order and retail pharmacy benefit under TRICARE. It is projected that participation in this pilot program will extend access to a system-wide drug benefit for approximately 6,000 over-age 65 DoD eligible beneficiaries that has not been available until now. In the past, Medicare-eligible MHS beneficiaries' access to pharmacy benefits has generally been limited to the MTFs; therefore, the purpose of this pharmacy redesign pilot program is to assess the feasibility and cost of a system-side pharmacy benefit for Medicare eligible MHS beneficiaries. The pilot program is limited to two sites where up to three thousand eligible beneficiaries will be enrolled at each site. A random selection process resulted in Fleming, Kentucky and Okeechobee, Florida as the pilot sites.

The pharmacy benefit under this demonstration will require an annual $200 enrollment fee. The TRICARE retail network pharmacies will provide up to a 30-day supply of medications for a 20% co-payment with each prescription. The beneficiaries will also have access to the National Mail-Order Pharmacy Program (NMOP) where quantities up to a 90-day supply will be dispensed for a flat fee of $8 for each prescription.

The pharmacy redesign pilot program is projected to last for three (3) years and will be evaluated by an independent entity outside the Department of Defense.


Enrollment in the demonstration is projected to begin by June 1, 2000 with Delivery of services by July 1, 2000.

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CAPT Charles Hostettler, Office of the Assistant Secretary of Defense (Health Affairs), TRICARE Management Activity, (703) 681-1740.

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A. Background

In June 1998, the General Accounting Office (GAO) testified before the Subcommittee on Military Personnel, Committee on Armed Services, House of Representatives, that over the past several years, concern about the costs and quality of DoD's pharmacy benefit has surfaced. GAO recommended that DoD establish a more system-wide approach to managing its pharmacy benefit by establishing a uniform, incentive-based formula across its pharmacy programs. Furthermore, GAO recommended that a system-wide pharmacy benefit be granted to Start Printed Page 18980Medicare-eligible retirees who are excluded from the contractor retail network and NMOP pharmacy systems.

B. Description of Project

In response to the June 1998 GAO report, the FY 1999 Strom Thurmond National Defense Authorization Act for Fiscal Year 1999 (Pub. L. 105-261) directed DoD to develop a system-wide pharmacy redesign plan to and implement the system-wide redesigned benefit at two sites for Medicare-eligible beneficiaries.

An eligible beneficiary for the pharmacy redesign pilot program is a member or former member of the uniformed services as described in section 1074(b) of title 10; a dependent of the member described in section 1076(a)(2)(B) or 1076(b) of title 10; or a dependent of a member of the uniformed services who died while on active duty for a period of more than 30 days, who meets the following requirements: (a) 65 years of age or older, (b) entitled to Medicare Part A, (c) enrolled in Medicare Part B, (d) resides in an implementation area, and (e) the requirement to be enrolled in Medicare Part B shall not apply in the case of an individual who at the time of attaining the age of 65 lived within 100 miles of the catchment area of a military medical treatment facility.

The pharmacy redesign implementation will be evaluated by an independent entity outside the Department of Defense. The evaluation shall include: (a) an analysis of the cost of the pharmacy redesign implementation under TRICARE, and also to the eligible individuals who participate in the pilot program, (b) an assessment of he extent to which the implementation of such system satisfies the requirements of the eligible individuals for the health care services available under TRICARE, (c) an assessment of the effect, if any, on military medical readiness, (d) a description of the rate of participation, and (e) an evaluation of any other matters that the Department considers appropriate.

The DoD component responsible for the conduct of this project is the TRICARE Management Activity.

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Dated: April 3, 2000.

L.M. Bynum,

Alternate OSD Federal Register Liaison Officer, DoD.

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[FR Doc. 00-8720 Filed 4-7-00; 8:45 am]