reports

Comparing the costs and use of services for military care in military and civilian facilities

Orlando, FL, USA: AcademyHealth Annual Research Meeting.

NORC at the University of Chicago, Bethesda, MD, USA

RESEARCH OBJECTIVE: The objective is to compare the cost and use of medical services of non-elderly TRICARE Prime beneficiaries with comparable beneficiaries from the civilian population enrolled in employer-sponsored health insurance (ESI), and to provide evidence based findings to guide policymakers with the task of adjusting future Department of Defense health care budgets.

STUDY DESIGN: TRICARE Prime is a managed health care benefit for active and retired U.S. military. The analysis is built around a comparison of a 5% sample of TRICARE administrative data for FY2006-FY2008 with a corresponding sample of privately insured persons from the Thomson Reuters MarketScan claims database. The samples were propensity score matched. Episodes of care were constructed using the MEG grouper from Thomson Reuters, and case-mix and risk-adjustment scores were constructed using the ACG system developed by Johns Hopkins. The study entailed both descriptive and multivariate analysis.

POPULATION STUDIED: TRICARE Prime beneficiary sponsors under age 65 and their dependents residing in the U.S. who were continuously enrolled in FY2007 (n=146,564). Comparable civilian beneficiaries under age 65 enrolled in ESI and their dependents who were continuously enrolled for the same time period defined by the TRICARE data (n=718,478).

PRINCIPAL FINDINGS: Comparing per capita costs, TRICARE overall and outpatient costs were 6% and 23% greater than ESI. Removing patient cost-sharing from costs, TRICARE overall and outpatient payments were 17% and 38% greater than ESI. Similarly, TRICARE beneficiaries had 50% more outpatient visits and 28% more episodes of care. However, TRICARE costs per outpatient visit and per episode were 22% and 20% less than ESI while TRICARE payments per outpatient visit and per episode were 8% and 9% less than ESI. TRICARE beneficiaries are healthier on average than comparable civilian beneficiaries enrolled in ESI with a 10% lower average ACG case-mix score. Holding other characteristics constant, TRICARE beneficiaries incur the greatest adjusted payments regardless of beneficiary acuity level, and as acuity scores increase the relative difference in per capita adjusted insurance payments also increases. The same findings hold when the comparison group is employer-sponsored HMO plans.

CONCLUSIONS: TRICARE Prime beneficiaries tend to incur greater costs and payments per capita versus civilian beneficiaries with ESI, and have greater use per capita despite having lower levels of acuity. As acuity scores increase, the relative difference in expected costs and payments between TRICARE beneficiaries and civilian beneficiaries enrolled in ESI continuously increases. Implications for Policy, Delivery, or Practice: TRICARE provides rich benefits with little cost-sharing. However, much of the per-unit cost savings relative to civilian beneficiaries enrolled in ESI are lost due to higher levels of utilization. Changing the habits of TRICARE beneficiaries by enhancing utilization management and exploring changes in patient cost-sharing in the direct care sector of TRICARE might induce lower levels of utilization and increase overall cost savings.