[HEALTH.MIL] TRICARE Rx Fee Hike Planned for February and Other Info

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  • Date: Tue, 25 Dec 2012 12:51:34 -0600

TRICARE Rx Fee Hike Planned for February, CRSC 'Glitch,' Enhanced SERB,
Time-In-Grade Waivers, and Compensation Commission
Tom Philpott
December 20, 2012

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House-Senate conferees have agreed to the more modest House-passed plan for
raising drug co-payments on military family members and retirees who fill
prescriptions at TRICARE retail outlets or through mail order.

The fee increases are scheduled to take effect Feb. 1, TRICARE officials said as
the fiscal 2013 defense authorization bill, with many other provisions impacting
the military community next year, moved toward final passage.

The new pharmacy fee plan includes a requirement that beneficiaries 65 and older
have all maintenance drugs for chronic conditions refilled, for at least one
year, through TRICARE mail order or at base pharmacies, rather than through
retail outlets where the cost to TRICARE is a third higher.

TRICARE likely will need to publish a draft regulation, solicit public comment
and launch an education effort for elderly beneficiaries before it begins to
enforce home delivery for seniors. That could delay starting that portion of the
pharmacy plan until April or later.

It is a matter "under review and as yet we do not have an implementation time
frame established," said Kevin J. Dwyer, deputy chief of benefit information and
outreach for the TRICARE Management Activity.

Conferees were persuaded to embrace the House plan, supported by advocates for
military beneficiaries, over more aggressive fee hikes sought by the Obama
administration. The Senate version of the defense bill was silent on the issue,
which was a nod for the administration to proceed.

But over the past two weeks, a House-Senate conference ironed out differences
between separate versions of the defense bill and the House plan prevailed. So
after January, at TRICARE retail outlets, the current $12 co-pay for brand name
drugs on the military formulary will rise to $17. The $25 co-pay for
non-formulary drugs will jump to $44. The co-pay for generic drugs at retail
will stay at $5. Drugs will stay free at military pharmacies.

For mail order, the current $9 co-pay for brand names on formulary will increase
to $13. The $25 co-pay for brand names off formulary will jump to $43. Generic
drugs will continue to be dispensed by mail at no cost.

For fiscal 2014 and beyond, the plan directs that drug fees be raised annually
by the same percentage as retiree cost-of-living adjustments. In years when a
COLA increase applied to pharmacy fees would total less than a dollar, it will
be delayed a year and combined with the next adjustment. So that drug fee
increases, when executed, are always a dollar or more.

The administration wanted drug fees reset substantially higher in 2013 and to
grow by $2-a-year through 2016. It then wanted annual adjustments to match
medical inflation, not retiree COLAs.

Mail order users of brand name drugs save two-thirds on co-pays automatically
because refills are for 90 days versus 30 days at retail. Given those savings
and the convenience of home delivery, backers of the House plan expect most
elderly beneficiaries, once forced to use mail order, to stay with it, saving
TRICARE hundreds of millions of dollars year after year.

The projected savings allowed the House to roll back the drug fee increases
sought by the administration without raising the budget's top line. In fact, so
many TRICARE dollars will be saved that conferees used some of that money to fix
a "glitch" in Combat-Related Special Compensation (CRSC).

CRSC 'GLITCH' -- Effective Jan. 1, several thousand retirees forced from service
short of 20 years due to combat-related disabilities will see their compensation
pop by an average of a few hundred dollars a month. These folks became eligible
for CRSC in 2008 when Congress expanded the program to cover these so-called
"Chapter 61" retirees. But the formula for calculating payments had a flaw,
which some disabled retirees noticed when the VA raised their disability rating
but their take home pay didn't change.

Whether and how individuals are impacted depends on a mix of factors including
original service disability rating, length of service, rank and the VA rating
for combat-related conditions.

ENHANCED SERB -- Other personnel-related provisions in the defense bill (HR
4310) will give the services new authority to hold Enhanced Selective Early
Retirement Boards for paring ranks of retirement-eligible officers during the
force drawdown. The enhanced SERB allows the services to be more selective in
retiring senior officers. It was used effectively after the Vietnam War. Current
SERB authority is more limited. For example, an officer now can be screened for
early retirement only every five years. It also is difficult to target specific
year groups or job specialties when services need to pare a sizable number of
officers in grades O-5 and O-6.

TIME-IN-GRADE WAIVERS - The defense bill also will double the number of
time-in-grade waivers the services can use to reduce excess senior officers.
These waivers lower from three years to two the time O-5s and above must serve
in current grade to retire at that rank. It's another force shaping tool sought
by the services as force strength falls.

COMPENSATION COMMISSION - The bill establishes a special nine-member commission
to review military pay and retirement changes that will preserve "viability of
the all-volunteer force," starting with a package of reforms being drafted by
the Department of Defense. The commission is to deliver a report to Congress
within 15 months, recommending any changes to the DoD or "president's" plan that
at least five commissioners support.

The commission, by law, will not propose changes to retirement for the current
force. But it can propose enticements to current serving members to switch
retirement plans voluntarily. Presumably the offer would include some
lower-value package with earlier vested and portable benefits, which also would
deliver long-term retirement savings to the government.

Conferees rejected the president's request that recommendations from the pay
commission have the sanctity of recommendation from base closing commissions,
which Congress could accept or reject but not modify them.

Write Military Update, P.O. Box 231111, Centreville, VA, or email
milupdate@xxxxxxx or twitter: Tom Philpott @Military_Update. 

SOURCE:  Military.Com article at

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