TRICARE: Changes to Access Policies and Payment Rates for Services Provided by Civilian Obstetricians

About 111,000 women covered by the Department of Defense's (DOD) TRICARE program gave birth during 2006. During their pregnancies, about half of these women received obstetric care from physicians and other providers practicing at military hospitals and clinics called military treatment facilities (MTF), while half received their care from civilian physicians and other civilian providers. In recent years, the use of civilian obstetric care has increased among TRICARE beneficiaries. In 2004, 51 percent of TRICARE beneficiaries delivered their babies at civilian hospitals; by 2006, 54 percent delivered at civilian hospitals. However, through 2005, some TRICARE beneficiaries reported difficulties obtaining obstetric care from civilian physicians. At the same time, some civilian physicians contended that TRICARE payment rates for obstetric care were too low. TRICARE reimburses physicians for most obstetric care using two global payments, one for uncomplicated vaginal delivery and the other for uncomplicated cesarean delivery, each of which is a single amount that covers a defined set of related services. In the case of obstetrics, these global payments cover a woman's prenatal visits, the physician's assistance at delivery of the baby, and postnatal care after the delivery of the baby. Under the TRICARE program, which is administered by DOD's TRICARE Management Activity (TMA), beneficiaries may obtain care through three different options. Beneficiaries enrolled in TRICARE's HMO-like option, called TRICARE Prime, generally obtain health care from physicians at an MTF. TRICARE Prime beneficiaries also may obtain care from a network civilian physician when the MTF does not have sufficient capacity to provide care. Beneficiaries who have not enrolled in Prime receive care under TRICARE Extra or TRICARE Standard. These options allow beneficiaries to receive care either from civilian physicians who belong to the TRICARE network or from civilian nonnetwork physicians, who do not belong to the TRICARE network but have agreed to accept TRICARE beneficiaries as patients on a case-by-case basis. TRICARE Extra and Standard beneficiaries may also receive care from a physician at an MTF on a space-as-available basis. TRICARE's civilian provider networks are developed by three managed care support contractors. Each managed care support contractor is responsible for the delivery of care to TRICARE beneficiaries in one of three geographic locations--North, South, and West. The managed care support contractors, among other things, establish targets for the number of physicians required to ensure a sufficient supply of providers to TRICARE patients in civilian provider networks. In developing these targets, each contractor estimates the percentage of each physician's practice that will likely be made up of TRICARE patients. The contractors also monitor progress in meeting targets to ensure network adequacy and periodically make adjustments to the targets to account for changes that occur in the availability of civilian physicians and demands for care of TRICARE beneficiaries. The National Defense Authorization Act (NDAA) for Fiscal Year 2006 directed us to evaluate the effectiveness of DOD's TRICARE program in achieving adequate access for beneficiaries to high-quality obstetric care. As discussed with the committees of jurisdiction, this report (1) describes changes TRICARE has made to obstetric coverage policy and payment rates since late 2003 to address concerns about access to civilian outpatient obstetric care and about the adequacy of payments to civilian physicians for obstetric care and (2) examines the extent to which TRICARE's managed care support contractors achieved targeted numbers of obstetric care providers in their civilian provider networks in 2005 and 2006, and potential implications for access to care.