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MEDICARE-ELIGIBLE RETIREE HEALTH CARE FUND (MERHCF) April 2006 PowerPoint Presentation
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MEDICARE-ELIGIBLE RETIREE HEALTH CARE FUND (MERHCF) April 2006 - PowerPoint PPT Presentation


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MEDICARE-ELIGIBLE RETIREE HEALTH CARE FUND (MERHCF) April 2006. What is it?. Established by Congress (2001 NDAA) to provide mandatory funding for a health care entitlement ( Title 10, Subtitle A, Part II, Chapter 56, United States Code )

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Presentation Transcript
slide2

What is it?

  • Established by Congress (2001 NDAA) to provide mandatory funding for a health care entitlement (Title 10, Subtitle A, Part II, Chapter 56, United States Code)
  • Covers certain Medicare-eligible DoD beneficiaries (military retirees, retiree family members and survivors - not simply “over-65s”)
  • Pays for MTF care, purchased care and pharmacy
  • Recognizes DoD’s accrued and future liability for cost of retiree/survivor health care for military service members and their family members

Implemented 1 October 2002 (FY03)

slide3

What is “accrual?”

Accrual is an accounting concept that recognizes the cost of a future liability that is earned now, but paid in the future, normally beyond the current accounting period (such as a Fiscal Year in the Federal Government); health care is a retirement benefit that accrues with uniformed service.

The DoD Medicare Eligible Retiree Health Care Board of Actuaries determines funding requirements based on actuarial analyses and assumptions, including population characteristics such as:

Rates of retention to retirement eligibility, tendency to remain on active duty beyond retirement eligibility, life expectancy, family size, age-related demand for health care, etc.

slide4

TFL/TSRx ≠ MERHCF

TSRx

TFL

MERHCF

TRICARE for Life (TFL) – Age 65 or over, Medicare eligible, enrolled in Part B, not Active Duty

TRICARE Senior Pharmacy (TSRx) - Age 65 or over, Medicare eligible, enrolled in Part B (unless age 65 or older as of 1 April 2001), not Active Duty

MERHCF – Medicare eligible retirees, retiree family members and survivorsonly, regardless of age or Part B enrollment status

Other key differences include:

The MERHCF pays for Military Treatment Facility (MTF) care; TFL and TSRx do not

The MERHCF pays for Uniformed Services Family Health Plan (USFHP) costs; TFL and TSRx do not

slide5

Where will the money come from?

Annual DoD actuarial “Normal Cost” contribution

Dept of Treasury unfunded actuarial liability (UAL) - $477.6B amortized over 50 years (16.6B FY06)

($10.8B FY06)

Accrual fund investment earnings

FY06 Estimated Outlays $7.1B

($1.7B Direct Care; $5.4B Purchased Care)

slide6

Normal Cost Contribution

Paid by Treasury on behalf of Service MILPERS accounts

  • FY06 per capita rates:
    • Full time $471 per month ($5,652 annually)
    • Part time $277 per month ($3,324 annually)
  • Multiplied by annual budgeted Service end strength
  • FY06 actual total DoD contribution - $10.8B
  • Pays for future health care costs of current military personnel once they retire and they and their family members/survivors become eligible for Medicare
slide7

Simultaneous Reconciliation

Purchased Care

TRICARE for Life* - Medicare primary payor, TRICARE supplemental (last) payor (must be enrolled in Medicare Part B) plus TRICARE unique benefits (OCONUS purchased care)

Managed Care Support (MCS) Contracts* - network at-risk costs (under 65 Medicare eligibles – must be enrolled in Part B)

TRICARE Senior Pharmacy* - retail, TMOP costs (must be enrolled in Part B, unless “grandfathered” – age 65 or older as of 1 April 2001)

USFHP - enrollees x capitation rate

* Includes claims processing and other administrative costs

Funds flow: Daily transactions against accrual fund for appropriate charges

slide8

Direct (MTF) Care

Inpatient Care - Relative Weighted Products (RWPs) x MTF-specific rate (Medical Expense and Performance Reporting System (MEPRS) cost/RWP)

Outpatient Care - Ambulatory Patient Group (APG) weights x MTF-specific rate (MEPRS cost/APG weight)

Outpatient Pharmacy -

“Ingredient cost” - purchase costs from Pharmacy Data Transaction Service (PDTS)

“Non-ingredient cost” – MTF-specific MEPRS cost/script

PDTS data captures vendor cost of pharmaceutical procurement

Move to market prices when feasible

slide9

MTF Funds Flow

Prospective/interim annual payment at beginning of FY (distributed quarterly)

Defense Health Program O&M

Fund > USD(C) > TMA > Services > MTFs

MILPERS

Fund > Treasury Appropriation > Services

slide10

MTF Reconciliation

The plan…

Results used to adjust future prospective payment amount

SIDR completion timeliness delays Execution Review to 3d Qtr of following year

Execution Review

FY03 - Year of Execution

FY04 - 1 Year Post Execution

FY05 - 2 Years Post Execution

Use results of the Execution Review to adjust prospective payment amounts in the next available budget year under the PPBS cycle; do not transfer money to or from the fund based on execution year under/over execution

Provides stable business environment for MTFs

slide11

Management Controls

  • Center for Medicare and Medicaid Services (CMS) Medicare eligibility data merged with Defense Enrollment Eligibility Reporting System (DEERS) (system change request (SCR) added Medicare eligibility to Standard Inpatient Data Record (SIDR) and Standard Ambulatory Data Record (SADR))
  • MTF earnings calculations automated based on SIDR/SADR weighted workload reported in MHS Data Repository (MDR); final results subject to Service and TMA review at reconciliation
slide12

Agency Responsibilities

DoD Office of the Actuary:Provide support to the Medicare Eligible Retiree Health Care Fund Board of Actuaries; provide annual normal cost contribution rates to USD(Comptroller), Service MILPERS appropriation managers and TMA

DFAS-Denver:Fund management; coordination with Treasury, OUSD(C), Service MILPERS appropriation managers and TMA for transaction processing

Service MILPERS appropriation managers:Manage that portion of appropriation paid by accrual funds

Service Medical Departments:Control distribution of DHP O&M paid by accrual funds to MTFs; manage execution

USD(Comptroller):Manage distribution of funds to Service MILPERS and DHP O&M appropriations

TMA:Proponent for Medicare Eligible Retiree Health Care Fund operations; establish policy and procedures for payments for direct (MTF) and purchased care; conduct execution reviews