The subcommittee recommends that the Department of Defense pursue these and other recommendations of the study on a priority basis and that the Department be prepared to recommend legislation for increasing the level of earnings of military physicians and increasing the general/flag officer billets at least to achieve comparability with Public Health Service and Veterans' Administration physicians.

III. CARE OF DEPENDENTS AND RETIREES

Program Presently Available in Military Facilities

The dependents of active duty members of the uniformed services, retired members and their dependents, and the surviving dependents of deceased, retired and active duty members are all eligible for comprehensive health care on a space-available basis at uniformed services facilities.

Dependents pay $1.75 per day for inpatient care. There is no charge for inpatient care for retired enlisted members. Retired officers pay $1.40 per day for subsistence when hospitalized. There is no charge for outpatient care for any of these groups.

The following table illustrates the extent to which the foregoing groups use military medical facilities:

The language of the statute which covers the entitlement to care for the foregoing groups (ch. 55 of title 10, United States Code) has the effect of creating a priority system.

Under that system, first priority for care in uniformed services facilities goes to active duty members. The second priority covers the dependents of active duty members and the surviving dependents of deceased active duty members. The third priority covers retired members and their dependents and the surviving dependents of deceased retired members.

While all of these groups are presently accommodated in most military facilities most of the time, as the subcommittee indicated earlier, the dependent and retiree population is increasing constantly and making ever heavier demands on the services of military facilities. The subcommittee would also point out that dependents and retirees having access to military facilities are able to get care at somewhat less personal cost than those who are cared for in civilian facilities. While the subcommittee supports the long tradition of providing care for dependents and retirees in military facilities on a spaceavailable basis, it would point out that some inequity does exist in the level of charges for care between those cared for in military facilities and those who get care from civilian sources.

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It would appear that some demand pressure could be taken off military facilities and equity served if consideration were given to more closely equating the cost to dependent as between using military or private facilities. This could involve a slight patient charge when using military facilities on a space available basis and possibly a lowering of the deductible or coinsurance when the dependent uses private facilities. The subcommittee believes the Department of Defense should review this matter and be prepared to make recommendations to the Congress for changes if such prove feasible.

Program Presently Available From Civilian Sources

CHAMPUS is the acronym for the civilian health and medical program of the uniformed services.

The CHAMPUS was the Government's pioneer program in the health insurance field, having started in 1956. It was originally known as the dependents' medical care program. In the early days of the program, it was commonly referred to as medicare. That term was abandoned, however, when the public and the general press preempted the term by applying it to the new social security program of health benefits for the aged.

The subcommittee considers this an unfortunate development. While it might be too late to change it now, the acronym CHAMPUS lacks the considerable advantage of medicare of making its meaning immediately apparent to the uninitiated beneficiary. The subcommittee considers it very regrettable that the Department of Defense did not adopt a more appropriate name, and it would recommend, if the Department determines it is too late to choose a new name, a vigorous program be instituted to make military personnel and their families better acquainted with the meaning of the word CHAMPUS-perhaps by using it with some readily identifiable symbol of medical care.

The Committee on Armed Services played a vital role in fashioning the original Dependent Medical Care Act as well as the modifications enacted in 1966.

The original program, established in 1956, was limited to civilian health care for active duty dependents. With few exceptions, it was also limited to hospital care.

At the time, it was one of the most forward-looking pieces of legislation that had ever been enacted in the medical care field, and it led the way for improvements in medical care programs for other segments of our society.

In subsequent years, however, the Federal employees' health benefits program for civilian Government employees and their families was established and, as time went on, the program was improved. In addition, the programs of labor and industry in general were greatly expanded. By 1966, it became apparent that from a benefits standpoint the program for military dependents was lagging behind.

This led Congress to the enactment in 1966 of Public Law 89-614. which expanded the health benefits program to its present comprehensive status, covering both inpatient and outpatient care and including all types of care except dental care.

The 1966 law broadened the program to cover retired members and their dependents and the survivors of deceased active duty and retired personnel. This action almost doubled the number of eligible beneficiaries.

There are now approximately 6.2 million persons who are eligible for benefits under CHAMPUS. On an average day in fiscal year 1969, there were 6,590 beds in civilian hospitals in the United States, Canada, Puerto Rico, and Mexico occupied by CHAMPUS beneficiaries.

COST SHARING

There are several different cost-sharing formulas prescribed for the program.

Active duty dependents pay a total of $25 for a period of civilian hospitalization that is 14 days or less in duration. For periods of hospitalization that are 15 days or longer, they pay $1.75 per day. For civilian outpatient care there is an annual deductible which must be met before any cost sharing starts. If benefits are only being claimed for one member of the family, the annual deductible is $50. If benefits are being claimed for two or more family members, the annual deductible is $100. After the annual deductible has been met, the dependent pays 20 percent of the remaining charges for the rest of the year and the Government pays 80 percent.

Retired members and their dependents and the surviving dependents of deceased members must pay 25 percent of the total cost of hospitalization, with the Government paying the remaining 75 percent. The outpatient cost-sharing arrangements for these groups are the same as for active duty dependents, except that after the annual deductible has been met the sharing is a 25-75 percent basis. These beneficiaries lose their eligibility for care under the CHAMPUS when they reach age 65 if at that time they become entitled to hospital insurance benefits under title I of the Social Security Amendments of 1965.

CARE OF HANDICAPPED AND RETARDED

The CHAMPUS also covers special benefits, such as institutional care, training, rehabilitation and special education, for the mentally retarded or physically handicapped spouses and children of active duty members. The monthly cost to the member is based on a sliding scale which, in turn, is based on the member's pay grade. For example, those in the lowest enlisted pay grades pay $25 for each month during which their dependents receive benefits under this section of the program. Those in the highest commissioned pay grade must pay $250 per month. Members in the other pay grades pay varying amounts between $35 and $200 per month. The Government pays up to $350 per month toward the cost of care for retarded or handicapped dependents.

CHAMPUS-Administrative Shortcomings

The subcommittee's study constituted the first congressional review made of the program since the important changes of 1966 went into effect. The complex problems associated with 1966 additions to the CHAMPUS program took the greater portion of the subcommittee's time during its study.

The subcommittee found a number of serious shortcomings in the administration of the CHAMPUS program which have prevented it from being as much of a benefit to the military families as Congress intended.

These include inadequate advance planning, unnecessarily complex claims forms, and grossly inadequate information programs.

These will be discussed individually below, although it will be seen that they are interrelated and basically shortcomings in the adminis tration of the program.

The subcommittee believes that many of these problems can be successfully attacked by better organization and adequate staffing and by giving medical care problems the priority they deserve.

The CHAMPUS program has been the subject of a number of comprehensive studies in the past few years which have addressed themselves to the problems which have developed as a result of the major extension of the medical care program in 1966. These include a study by the School of Public Health and Administrative Medicine at Columbia University under a contract with the Department of Defense, a management survey by the Army Surgeon General's office, and a study by the Army Audit Agency (Audit Report WE 69-31).

One of the things which is most disturbing to the subcommittee is that the problems identified by these studies remain unsolved and worthwhile solutions recommended have not been instituted.

The subcommittee will refer to these studies from time to time in its discussion of these problems.

Quality of Care

The subcommittee would note that the problems CHAMPUS has encountered are related to the administration of the program, to the processing of claims, confusion and red tape for service families, and inadequate information to beneficiaries. All evidence available to us would indicate that the quality of care provided from civilian sources is very good.

It is noted that the Columbia University study indicated that enough information was not available to make a sound conclusion on the quality of care itself and recommended that a study be initiated to get an informed analysis of the quality of care. The subcommittee believes such a study could be useful not just to verify the quality of care but to get a better picture of the quality of care in relation to the cost and assurances that charges being made are legitimately related to the care.

The subcommittee would note, however, the indications that the quality of care itself is outstanding.

The spokesman for the Fleet Reserve Association, an organization of 75,000 active duty and retired enlisted Navy and Marine Corps personnel (which would have about twice that number of dependents). told the subcommittee: "I feel that it speaks well of the program and the medical profession that I cannot recall having received a single complaint about the quality of medical care provided under CHAMPUS."

Similarly, all of the other spokesmen for military groups who in toto represent more than 200,000 personnel, active and retired, officer and enlisted, said they also receive no complaints about the quality of care.

Likewise, an analysis of complaints coming to the Committee on Armed Services about the CHAMPUS program show that they do not concern the quality of care but are related to other matters.

Inadequate Early Planning

The Surgeon General's management study of 1968 observed that the 1966 legislation "was implemented without the benefit of detailed prior planning" such as had preceded the implementation of the 1956 act. The study attributed this lack of planning to the fact that portions. of the new legislation became effective within a matter of hours after the law passed. During the hearings, it was implied that this was part of the cause of the administrative problems of CHAMPUS that a whole new program went into effect quickly without sufficient time for setting up orderly procedures. It was implied that CHAMPUS problems in the past were a shaking down after the start of a new program. The subcommittee does not believe, however, that this excuse is valid.

More than 5 months before the new law was enacted, the Assistant Secretary of Defense for Manpower stated in a memorandum to the Under Secretary of the Army:

Appropriate plans should be developed for carrying out these responsibilities. and functions in the likely event that the legislative authority to expand the dependent program is granted. Such plans should include any necessary augmentation of the staff element in the Surgeon General's office which deals with these matters, and the staff of the Office of Dependents' Medical Care in Denver. Such plans should also consider the methods and scheduling which could be employed if it should become necessary to implement the expanded program on an expedited basis rather than on the effective date of July 1, 1967 presently contained in H.R. 14088.

Even though the basic structure of the new legislation was clear for many months before it was enacted, and notwithstanding the clear instructions on this point issued by the Assistant Secretary of Defense for Manpower, the "detailed prior planning" necessary to avoid problems apparently never took place. As a result, problems soon developed. The Columbia University CHAMPUS report of 1969 summarizes the impact of the new legislation on CHAMPUS operations as follows: The impact of these changes was to increase the volume of business under the program from 650,000 claims and $70 million in fiscal 1966 to more than 1.5 million claims and $160 million two years later. It also imposed severe logistical and administrative burdens upon the system. Problems were encountered both at CHAMPUS headquarters and among the local fiscal agents in the development of new programs and in the hiring of personnel. At the Office of the CHAMPUS, new claims forms had to be designed, new processing and information manuals developed, and new contracts drawn up with the fiscal agents. Among many of the fiscal agents, the expanded CHAMPUS was competing for priority with Medicare, Medicaid, and revised private insurance programs, imposing a bewildering series of adjustments upon existing operating procedures. There were new benefits to be assimilated, new claims forms (two additional ones under the CHAMPUS alone) to be understood, new groups of beneficiaries to be reckoned with, new cost-sharing formulas (four additional ones under the CHAMPUS alone) to be applied, new computers to be installed, a new physician-payment method ("reasonable charges") to be developed, and new government agencies with which to conduct business.

These changes were more than certain of the fiscal agents could comfortably sustain, and the consequence was a serious backlog in claims payment and correspondence in several areas of the country. Predictably, this led to floods of complaints from frustrated beneficiaries to the fiscal agents themselves, to Congress, and to the Department of Defense.

The fiscal agents visited by the staff described the problem variously, but usually in strong terms. Said one plan director, 'It was like an avalanche-everything coming at once!' He was referring to the combined impact of the expanded CHAMPUS, Medicare Part B, and, in the case of his own plan, the federallysponsored Medical Assistance Program (title 19). For the fiscal agents, the major