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Office of the Secretary of Defense (Health Affairs)/TRICARE Management Activity

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Department of Defense.


Notice of a TRICARE demonstration project for the State of Alaska.


This notice is to advise interested parties of a Military Health System (MHS) demonstration project entitled TRICARE Demonstration Project for the State of Alaska. The delivery of health care services in the State of Alaska represents a unique situation that cannot be addressed fully by applying all of the at-risk standards that apply to the health services and support contractors who provide services in the other 49 states without some modification. Under this demonstration, the health services and support contractor who will be providing healthcare services for the Western Region Health Services and Support contract will be exempt from the underwriting provisions for the cost of civilian health care in the State of Alaska.


Effective with the start date of health care delivery for the current TRICARE Regions September 9, 10, and 12, 2004 within the TRICARE Management Activity Health Services and Support Contract for the Western Region.


TRICARE Management Activity (TMA), Regional Operations Directorate, 5111 Leesburg Pike, Suite 810, Falls Church, VA 22041-3206.

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Mr. Michael Talisnik, Office of the Assistant Secretary of Defense (Health Affairs)—TRICARE Management Activity, (703) 681-0064.

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A. Background

Alaska is a land of extremes and contradictions. It is the largest state in the United States, containing one-fifth of all United States land, yet is one of the least populated. It boasts both the highest mountain in North America and the longest coastline of any state. There are just a few major roads providing residents the ability to travel to the major cities in the state. Other means of transportation are by boat or plane which places severe hardships on beneficiaries attempting to access needed healthcare services. It has geography characterized by harsh ice islands and desert tundra, yet cradles lush meadows and rain forests. Alaska's citizens are no less diverse.

Alaska's population is just under 627,000. Of these, approximately 71,000 are Military Health System (MHS) beneficiaries. More than half of these beneficiaries reside in south-central Alaska in the state's largest city—Start Printed Page 28125Anchorage. Alaska's Military Treatment Facilities (MTFs) meet a large percentage of Alaska's beneficiary healthcare needs. The remaining is referred to local civilian providers or to the lower 48 states.

The TRICARE Western Region health services and support contract, which includes Alaska, requires the contractor to underwrite the costs of civilian health care services (also referred to as “purchased care”) which is defined as care provided to all Civilian Health and Medical Program of the Uniformed Services eligible beneficiaries residing in the Western Region. The following categories of care/beneficiaries are specifically excluded from the TRICARE Western Region contract: Outpatient retail and mail order pharmacy; active duty supplemental care including TRICARE Prime Remote for Service members only (family members are underwritten by the health services and support contractor); Continued Health Care Benefits Program; Foreign/Outside the Continental United States claims; Medicare dual-eligible TRICARE beneficiaries; and cancer/clinical trials.

The underwriting mechanism of TRICARE Western Region health services and support contract consists of an underwriting fee which may be considered to be an underwriting premium associated with the risk assumed by the contractor. It will be subject to a fee-adjustment formula which allows for increases or decreases inversely related to the actual costs. There is potential of creating a negative fee.

Predicated upon the foregoing mechanism, coupled with the environment in which healthcare services are delivered in Alaska, there is a concern that if health care is underwritten by the Western Region health services and support contractor, the contractor may experience increases in actual costs for healthcare outside the control of the contractor. This has the potential of creating an unwarranted negative fee.

Because of this concern, the purpose of this demonstration is to validate that the Western Region health services and support contractor can avoid the vagaries of Alaska healthcare and the potential negative effect that it may have on the contractor's fee, by not underwriting these healthcare costs for Alaska beneficiaries. Under the demonstration, the costs will be paid by the government from pass through funds.

B. Description of Demonstration Project

Under this demonstration, the Western Region health services and support contractor will not be responsible for the underwriting fee for healthcare costs for MHS beneficiaries residing in Alaska. The contractor shall provide all the Services required for Alaska as specified in the TRICARE Operations Manual, Chapter 23, but will not be responsible for the underwriting fee associated with providing those Services under that chapter. All other provisions contained in the TRICARE Health Services and Support Contract, TRICARE Operations Manual (6010.51-M), TRICARE Policy Manual (6010.54-M), TRICARE Systems Manual (7950.1-M), and TRICARE Reimbursement Manual (6010.55-M), shall apply in Alaska.

I. Implementation

This demonstration will operate for up to five years after the start of health care delivery for the TRICARE Management Activity Health Services and Support Contract for the Western Region unless extended by separate action. Following program evaluation, the Department of Defense will seek permanent authority to determine program continuation.

II. Exclusion to the Demonstration Project

Participation in this demonstration is limited to healthcare provided in the State of Alaska.

III. Evaluation

An independent evaluation of the demonstration will be conducted under a separate contract.

The evaluation will be designed to use a combination of administrative and survey measures of health care access to provide analyses and comment on the effectiveness of the demonstration in meeting its goal of improving beneficiary access to healthcare by maximizing the potential pool of healthcare providers in Alaska.

TRICARE beneficiaries will be asked to comment on the quality of their experiences getting the health care that they need. It is anticipated that the evaluation will compare the reports of TRICARE user-beneficiaries in Alaska to those from the TRICARE region under the administration of TriWest (West) where TriWest is responsible for provider network development and at risk for health care costs. The evaluation will begin at the time health care services are delivered under TriWest administration in both regions.

All analyses will be adjusted to account for demographic differences between these two geographic domains. It is also anticipated that analyses will develop measures of access from data developed in quarterly administration of the TRICARE Beneficiary Survey. Additional administrative claims based indicators of access to health care within the two study domains will also be considered.

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Dated: May 12, 2004.

L.M. Bynum,

Alternate OSD Federal Register Liaison Officer, Department of Defense.

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[FR Doc. 04-11205 Filed 5-17-04; 8:45 am]