TRICARE Update for Navy Medicine January 21, 2011 RADM C.S. Hunter, MC, USN Deputy Director TRICARE Management Activity

TRICARE Beneficiaries: Who We Serve Nearly 9.7 million beneficiaries (2.8M Navy/Marine Corps) TRICARE Prime enrollees: −3.7 million in direct care system 1.1M Navy/Marine Corps −1.7 million in contractor networks 540,000 Navy/Marine Corps Others are TRICARE Standard/Extra, TRICARE Reserve & TRICARE for Life TRICARE annual cost per retired beneficiary Prime: $4,202 Standard: $3,584 TRICARE For Life (age 65+): $3,874 (does not include Medicare contribution) 2

A Week in the Life of TRICARE 2.6 million prescriptions (730,000 Navy/MC) –924,000 direct care –1.44 million retail pharmacies –228,000 home delivery 231,000 behavioral health outpatient services –52,000 direct care –179,000 purchased care 23,300 inpatient admissions –5,100 direct care (1,600 Navy/MC) –18,200 purchased care (5,100 Navy/MC) 1.8 million outpatient visits –810,000 direct care –1.0 million purchased care 2,400 births –1,000 direct care (350 Navy/MC) –1,400 purchased care (420 Navy/MC) 3.5 million claims processed 12.6 million electronic health record messages Behavioral Health Outpatient Visits Active Duty Family Active Duty

Quadruple Aim as an Enduring Construct for Care Aligning Behind the Quadruple Aim Readiness –Pre- and Post-deployment –Family Health –Behavioral Health –Professional Competency/Currency Population Health –Healthy service members, families, and retirees –Quality health care outcomes A Positive Patient Experience –Patient and Family centered Care, Access, Satisfaction Cost –Responsibly Managed –Focused on value

To improve performance, commands should focus on completing delinquent PHAs & dental exams New for 2011: Examining impact of ‘retained but not deployable’ Individual Medical Readiness Target: 80% 5 Approaching Readiness Goals Fully Ready Partially Ready Indeterminate Not Ready 82% 74% 80% 62%

Behavioral Health, FY07-FY10 ServicesPatients Direct careUp 47%Up 26% Purchased careUp 84%Up 40% PTSD “Engaged in Treatment” Rate Reserve Total Force Active Enhancing Readiness: Behavioral Health TRICARE is assisting with: –TRIAP: Counselors available for confidential, private discussions using video chat and instant messaging –USMC DSTRESS Line: Callers speak with counselors and clinicians with specialized training and/or exposure to USMC culture Challenges: –31.5% of MTF referrals for network outpatient behavioral health aren’t activated (improved from 39.1% in 2008) –More military children reporting problems (Nat’l. Military Family Assn. study) –Reserve health coverage continuum –Caregiver behavioral health Annual investment in BH increased from $500M in 2005 to over $1B in

New Benefit Contributes to Family Readiness Flu Case Data Source: Google Flu Trends Weekly Flu Case Estimate National Flu Cases First Available December 29,

8 Enrollee Preventive Health Quality Index (HEDIS) How Are We Doing in Population Health? Good Sum of Asthma Medication Sum of Diabetes Index Sum of Colorectal Cancer Sum of Cervical Cancer Sum of Breast Cancer * Display contains rounded index points for each respective screening component. Index Points >90 th Percentile5 75 th Percentile4 50 th Percentile3 25 th Percentile2 =10 th Percentile1 <10th Percentile0 To improve, recommend focus on A1c screening and A1c control measures in diabetes index Navy is slightly below the 75 th percentile for both A1c screening and A1c control (<9mg/dL) Control should improve as screening improves

At over 50% of MTF primary care clinics, patients calling for an acute appointment will be offered at least 3 options within 24 hours MTF Enrollees Contractor Enrollees Emergency Room Utilization Benchmark Patient Centered Medical Home emphasizes: –Access –Coordination of care –Preventive care –Disease management To reduce ER utilization, practices must address after hours care in 2011 –TRICARE is now affiliated with: > 2000 urgent care facilities 530 convenience clinics –Secure messaging available in many locations How Are We Improving? Patient is the Center of the Medical Home

10 Expanding Medical Home to Improve Performance 2.5M 1.25M 500K 250K250K Emergency Room (ER) Utilization ↓24% Primary Care Manager (PCM) Continuity ↑16% Getting Timely Care ↑14% Beneficiary Satisfaction ↑10% Beneficiary Satisfaction Getting Timely Care PCM Continuity ER Utilization R Y R Y Beneficiary Satisfaction Getting Timely Care PCM Continuity ER Utilization Y R Y Y Beneficiary Satisfaction Getting Timely Care PCM Continuity ER Utilization Y G G G Beneficiary Satisfaction Getting Timely Care PCM Continuity ER Utilization Y Y G Y 655K Actual 2010 Projected 2011 Which Patients Benefit Most?

Linked to Secure Messaging in 2011 TRICARE Online: A Personal Health Portal Meaningful Use of Health IT Get started with secure messaging

Introducing New 2011 Health Plan Quality Measures Congrats! Well child visits include routine newborn care, immunizations, eye screenings, etc. LDL Control regarded as <100 mg/dL 12

Patient Satisfaction with Military Health Care Active Duty Satisfaction Family Member Satisfaction Top Customer Service Issues: Getting appointments, Clinic wait times, Specialist availability, Finding parking Active Duty Satisfaction Family Member Satisfaction Jul 03 Aug 05 Aug 07 Aug 09 Percent Satisfied Percent Satisfied Jul 03 Aug 05 Aug 07 Aug 09 13

Using Our Benefits Wisely Please Encourage Use of Mail Order Pharmacy 2009 Growth 2010 Growth Home Delivery 3.9%12.3% Retail7.5%4.2% Network Enrollee Cost Retail Pharmacy 22% Home Delivery Growth Trend – Year over Year

Where Else Does the Data Point Us? Should We Adopt New Models for On-Base Care? Contractors routinely authorize greater than 20 PT visits per referral What is readiness impact? –Visit cost is modest, but lost work time is significant Purchased Care Direct Care

Increases in new eligible beneficiaries –Increase of 400,000 beneficiaries since 2007 Expanded benefits –TRICARE For Life, Prescription benefits, Reserve coverage Increased utilization –Existing users are consuming more care (ER, Orthopedics, Behavioral Health) Healthcare inflation –Higher than general inflation rate Why are Healthcare Costs Growing in TRICARE? Annual Cost Breakdown (TRICARE Prime) InpatientAmbulatoryPharmacy FY05 FY06 FY07FY08FY Beneficiaries (millions)

Redesign direct care with Patient-Centered Medical Home Re-engineer purchased care −Negotiate best possible pricing −Reduce administrative costs −Design new approach to future TRICARE contracts (T4) Address TRICARE program issues −Redirect pharmacy to lower cost venues −Reduce ER utilization Streamline TRICARE Management Activity −Decreasing by 780 contractors Addressing Cost Growth Secretary Gates (1/6/11): Anticipate Modest Increases in Retiree Fees in Target: 6.1% -2.7% Bending the Cost Curve: Annual Cost Growth Per Equivalent Life 2.9% Navy Purchased Care

Major TRICARE Contractors North ~ $17B South ~ $22B West ~ $17B Overseas ~ $5.3B Pharmacy ~ $42B (Using FY10 actual costs) Contract Value Over 5 Years Costs include health care, drugs, supplies, and administration 18

TRICARE Contract/Benefit Updates Health care delivery goes live under T3 North Region 1 April 2011 −ICDB/RMSTR to manage referrals and authorizations (Clear & Legible Reports) −Greater emphasis on prevention −Medical Home Pilot with State of Maryland anticipated Includes care management fees New family member dental contract announced 1/7/2011 −Better coverage for orthodontia, ‘natural’ fillings Overseas −Health care delivery began 1 September 2010 −Referrals greater than anticipated (2,800 per week), backlog now addressed T3 South/West −Getting closer to protest resolution 19

Premium-based TRICARE Standard coverage available Spring 2011 Offered to eligible dependents who: −Are unmarried −Age out of TRICARE at age 21, or age 23 if in college full-time −Are not eligible for their own employer-sponsored coverage TRICARE Standard/Extra health coverage on a month-to-month basis Retroactive to January 1, 2011, provided premiums are paid back to January 1 ID cards can be obtained after purchasing TRICARE Young Adult TRICARE Prime benefit anticipated later in 2011; will have separate premium Estimated 233,000 will qualify for TRICARE Young Adult Offers excellent coverage at a competitive price –Respects fiscal constraints on DoD healthcare TRICARE Young Adult 20

21 Posing strategic questions: –Alternate delivery and finance models –Leveraging national health reform –Individual choice and financial responsibility –Need for global coverage and products for diverse populations –Rapid adoption of best practices, knowledge management –Scope of benefit, ease of use Ensuring we maintain: –Focus on Quadruple Aim –Patient and family centered care ethos –Robust direct care system for force projection –Coordination of care for individual and family readiness Designing the Way Ahead “T- 4 Study Group”

How Can T4 Achieve the Quadruple Aim? 22 Study group assessment: –High quality care reduces cost –High quality care requires systems –Primary care is key to improving quality and cost, but shortage is imminent –Policy makers will resort to price cutting to manage cost if providers do not deliver quality and control cost themselves Four courses of action being examined: –TRICARE (with incremental improvements) –FEHBP / Insurance exchanges / Medicare-like product –MTF-managed regional systems of care –Purchase systems of care from integrated provider groups

Supporting Change in the Right Direction Learning & Continuous Improvement What Skill Sets do Navy Medicine Leaders Need to be Successful in 2015? Military Strategic Operational Business Financial Communications Quality Process Flow Systems Integration Feedback Innovation / R&D Technology Assessment Incentivizing Performance 23

We Are All Part of the Solution 24

TRICARE Beneficiaries by Category 1.5 million active duty service members 2.1 million active duty family members 139,000 eligible dependent survivors (under age 65) 3.0 million retirees and family members (under age 65) 1.9 million TRICARE For Life (age 65+) 642,000 Guard/Reserve and families (active) 324,000 Guard/Reserve and families (inactive) 9.6 Million Eligible Beneficiaries 25

Trauma Care Outcomes in Theater Navy Hospital Corpsmen Contribute Significantly to Unprecedented Survival Rates Observed vs. Expected Survival Rate Observed Survivors Predicted Survivors