HOUSE OF REPRESENTATIVES,

COMMITTEE ON ARMED SERVICES,

MILITARY PERSONNEL SUBCOMMITTEE,

Washington, D.C., Thursday, June 5, 1980.

The subcommittee met, pursuant to notice, at 9:30 a.m., in room 2212, Rayburn House Office Building, Hon. Richard C. White (chairman of the subcommittee) presiding.

Mr. WHITE. The subcommittee will come to order.

Good morning.

This morning we will start a series of hearings to consider several proposals concerning the Civilian Health and Medical Program of the Uniformed Services, known as CHAMPUS, and to inquire into other aspects of our military health care delivery system.

This committee, in exercising its oversight responsibility for military health care delivery, has long been interested in improving health care delivery for our military personnel and their dependents by enhancing existing medical and dental benefits. Improvements in the CHAMPUS program are important if we are to improve health care across the board. I might also add that at long last the administration is reacting to the problems we are experiencing in providing acceptable health care delivery for our military personnel.

As you know, CHAMPUS, which was enacted into law in 1966, authorized an expanded program of civilian inpatient and outpatient health care for dependents of active-duty and retired personnel.

As seen against the prevailing view that military benefits are continuously eroding and, thus, seriously affecting morale, retention and recruiting, the proposals which we will be considering today take on added importance.

We will receive testimony on specific legislative proposals:

H.R. 2547, to reduce the cost-sharing required of retired participants in CHAMPUS for inpatient health care on an emergency basis, H.R. 3351, to authorize CHAMPUS participants to use inpatient cost-sharing rates for certain ambulatory surgical procedures,

A bill to be submitted by the Administration which would provide to dependents of active-duty personnel a comprehensive dental care program.

A bill to be submitted by the Administration which would authorize certain well-baby health care benefits, and increase the maximum allowable Government cost-sharing for mentally or physically handicapped dependents to $1,000 per month.

Also we have asked the Assistant Secretary for Health Affairs, Dr. John H. Moxley III, to discuss military health care delivery as it relates to the utilization of military medical facilities and the military medical profession. Specifically, the subcommittee would like Dr. Moxley to outline the objectives and scope of the Medical Centers Utilization Study he has initiated. We understand the projected com

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pletion date for the study to be April 1981, and the subcommittee is concerned that the study may not be broad enough in scope to incorporate the many facets of health care delivery which might impact on a decision to retain or discontinue medical services at a military medical facility.

The subcommittee plans to conduct more comprehensive hearings than may be possible today on the CHAMPUS dental proposal, to include well-baby health care and the cost-sharing for handicapped dependents. Tentatively, the followup hearings are scheduled for the week of June 16, but we have asked Dr. Moxley to introduce these issues today.

In addition to Dr. Moxley, I would also like to welcome Mr. Theodore Wood, Director, Office of CHAMPUS, and Mr. Robert Nolan from the Fleet Reserve Association, and I see there are other back-up witnesses. General Pixley is here, I believe.

Before hearing from the remaining witnesses, I would like to ask our ranking member, Mrs. Holt, who is our leading witness and the sponsor of H.R. 2547, which will reduce cost-sharing for emergency inpatient medical care, for her comments.

STATEMENT OF HON. MARJORIE S. HOLT, A REPRESENTATIVE FROM MARYLAND

Mrs. HOLT. Thank you, Mr. Chairman.

Just briefly, I would like to thank you for having these hearings. I am delighted to have the opportunity to comment on the proposals, and I am especially delighted to have the opportunity to sponsor one of these proposals.

I think that we are all aware of the erosion of military benefits. In my district I constantly hear the impact of the things that are happening to my people in letters and telephone calls, particularly in health care. I think that that has impacted more than any other loss of benefits. Of course, everybody wants to "bring back the good old days" when there was good military medical facilities available to everybody. They are aware of the fact that we are having problems staffing our military medical facilities, they know that doctors and dentists are leaving in large numbers, they are aware that the inpatient cost of providing health care has increased by 70 percent over the past 10 years; and they know that they are no less deserving than the activeduty members and their dependents, but they also know that this Nation is really breaching the pledge that we made to them for the service that was given.

I had it brought home very vividly to me a couple of years ago when the Naval Academy hospital was closed. Here was a facility that provided care for 15,000 retirees. It was an attractive place to bring doctors. Several of them have retired simply because that facility is no longer available in which they can practice. It was all of the things that the Surgeons General say that we need to attract good people into the service and keep them there, and it was closed.

After that, one of my constitutents had to go into a civilian hospital because of a medical emergency. She stayed in the hospital 30 days

for a cost of $10,000. Her share of the $10,000 was $2,500, 25 percent of the total. However, the cost-sharing for an active-duty dependent receiving the same medical treatment would have been $150. That's based on the $5 per day rate. In this case, the retiree had to pay $2,350 more than the active-duty dependent.

As you know, Mr. Chairman, I have been a strong proponent of improving the health-care delivery system for the military, including our retirees and their dependents. So I am really glad that you are having these hearings and I hope that it will mean that we can do something about it.

My bill is a proposal to reduce the inpatient cost-sharing for emergency treatment to retired members and their dependents participating in CHAMPUS.

Specifically, my proposal is designed to redress some of the problems retirees are having in acquiring emergency health care under CHAMPUS by:

Eliminating the 25 percent copayment required for emergency inpatient care for retired members and their dependents.

Establishing a $25 per patient fee, or the daily rate for a military medical facility, which is currently $5, whichever is greater, for emergency inpatient care for retired members and their dependents. This copayment scheme is currently available to all active duty dependents on a nonemergency and emergency basis.

Retaining the current copayment rate of 25 percent for nonemergency inpatient care for retired members and their dependents.

The Department of Defense has estimated the cost of my proposal to be approximately $5 million per year, while the CBO (Congressional Budget Office) has estimated the annual cost at about $15 million. So I guess it's somewhere within those figures.

It's really time for us to stop the erosion of military benefits, and with the Congress and the administration working together, we can begin to reverse this dangerous trend.

I keep hearing that we are going to do the whole thing in a big, comprehensive approval. But I really get upset about that because we are tearing it down piece by piece, and I don't see why we can't build it back up piece by piece.

So I think that the enactment of this bill into law will help send a strong signal to our military people that the Congress does care and is appreciative of the service they have given and are giving to our country.

Thank you, Mr. Chairman.

Mr. WHITE. Thank you, Mrs. Holt.

We are now going to call on Hon. John H. Moxley III, Assistant Secretary for Health Affairs, Department of Defense.

I'm going to suggest that Mr. Theodore D. Wood, Director of the Office, Civilian Health and Medical Program of the Uniformed Serv. ices, OCHAMPUS, also sit at the table. Questions will probably be directed to both of you on the same subject.

Mr. Secretary, we're delighted to have you this morning. You may refer to your notes verbatim, or you may summarize and then we will put your entire statement in the record, as you desire.

Dr. MOXLEY. Thank you, Mr. Chairman.

My statement is short. I will summarize it as I go, and then submit the entire statement.

Mr. WHITE. Without objection, then, your entire statement will be placed in the record.

Dr. MOXLEY. Thank you, sir.

STATEMENT OF HON. JOHN H. MOXLEY III, M.D., ASSISTANT SECRETARY OF DEFENSE (HEALTH AFFAIRS)

Dr. MOXLEY. Mr. Chairman and members of the subcommittee, I am pleased to respond to your request that I testify this morning regarding to bills H.R 2547 and H.R. 3351, now before the subcommittee. As you have indicated, I am accompanied by Mr. Theodore Wood. the Director of OCHAMPUS.

First, let me address H.R. 2547, a bill:

To amend title 10, United States Code, to reduce the cost-sharing required of participants in the Civilian Health and Medical Program of the Uniformed Services, CHAMPUS, for inpatient medical care provided on an emergency basis. Under existing law, the categories of beneficiaries covered by the bill, that is to say, retirees and their dependents, and the survivors of deceased active duty and retired members, are required to pay 25 percent of the cost for all inpatient care, including emergency care, under CHAMPUS. As indicated, the enactment of this bill would have the effect of reducing the cost-share for emergency inpatient care for these categories of beneficiaries to the amount that would have been charged had the care been received in a uniformed services hospital-that charge is currently $3.50 per day for a retired officer patient and no charge for a retired enlisted patient, and $5 per day for the dependents of both or $25 per admission, whichever is greater.

While the Department of Defense shares the goal of improving cost-sharing for CHAMPUS beneficiaries, we believe that H.R. 2547 offers only a limited solution to the cost-sharing dilemma of the retired beneficiary group. For example, many types of nonemergency care can be more expensive than some emergency care. It is our position, therefore, that changes to the basic CHAMPUS cost-sharing formulas, accomplished without regard for the more comprehensive recommendations of the Defense resources management study might be counterproductive. We would prefer a comprehensive approach and solution to the issue. The Defense resources management study, the so-called Rice study, regarded the 25 percent cost-share required of the retiree beneficiary group inferior in financial protection to most commercial plans and the Federal employee health benefits program because of the absence of a limit on out-of-pocket expenses.

The department is currently assessing a legislative proposal as part of an omnibus CHAMPUS legislative package which would establish for all CHAMPUS beneficaries an annual maximum liability of $1,000 for deductible and cost-share amounts applicable to covered services under the program. Accordingly, we recommend that the subcommittee defer a decision on H.R. 2547 until after it has had an opportunity to consider the legislative proposal we are now preparing,

which we expect to have ready for submission early in the first session of the 97th Congress.

The enactment of H.R. 3351, a bill "to amend chapter 55 of title 10, United States Code, to authorize dependents of members of the uniformed services serving on active duty to use CHAMPUS inpatient cost-sharing rates for certain surgery performed on an outpatient basis," would permit CHAMPUS to cost-share certain kinds of ambulatory surgery for dependents of active-duty members at the inpatient rate even though it is performed on an outpatient basis. Ambulatory surgery for this beneficiary category must, under present law, be cost-shared at the outpatient rate.

When the present CHAMPUS law was enacted, the current practice of performing certain kinds of surgery on an outpatient basis did not exist. The current cost-sharing provisions of the law, in effect, encourage active-duty dependents to undergo these procedures on an inpatient basis to greatly reduce their out-of-pocket costs. Physicians tend to accommodate them since their professional fees are not significantly different in either case. By performing the surgical procedure in question on an inpatient basis, the physician significantly reduces the beneficiary's share of the cost, but greatly increases the Government's share. For example, for a common procedure of the type in question, if it is performed on an inpatient basis, the beneficiary's share is $25, as opposed to $120 if it were performed on an outpatient basis, and the Government's share would be approximately $600, Under the provisions of H.R. 3351 for the same procedure performed on an outpatient basis, the beneficiary would still pay the same $25, but the Government's share would only be $200 instead of $600. This results from the fact that the total charge involved for inpatient care in a hospital is several times greater than it would be in an ambulatory surgical facility.

H.R. 3351 would remove the disincentive to choosing ambulatory surgery. Moreover, it would contribute to reducing the total cost of health care. For these reasons, the Department of Defense strongly supports its enactment.

Mr. Chairman, it is my understanding that, in addition to the two bills I have just discussed, you also want me to outline the provisions of the President's recently announced CHAMPUS initiatives.

The first initiative involves the establishment of a comprehensive dental care program under CHAMPUS for the spouses and children. of active-duty members of the uniformed services As with all other types of benefits under CHAMPUS, this proposal contains a costsharing arrangement, with both an annual deductible and copayment provision. Active-duty members whose dependents receive authorized dental benefits under the proposal would be required to pay the following "first dollar" amounts, depending upon their pay grade:

Mr. Chairman, it varies all the way from $30 for an E-1 through E-4 up to $200 for an O-7 through O-10. I would be happy to detail that later if you choose, or now. It's in the statement, but I would be happy to detail it, or we can come back to it later, whatever you wish. Mr. WHITE. Be as explicit as you can, but your statement in its entirety is in the record at this point.

Dr. MOXLEY. OK.