Mr. MURTHA. The next witness is Colonel Charles Partridge, with the National Association for Uniformed Services. Colonel Partridge.

STATEMENT OF COLONEL PARTRIDGE

Colonel PARTRIDGE. Mr. Chairman, distinguished members of the panel, we appreciate the opportunity to be here today.

I represent the National Association for Uniformed Services, all grades, all branches, active and retired and their families and the Society of Military Widows.

The CRI program was established as a pilot in 1988 to obtain better use of the MTF's, the Military Treatment Facilities, and to reduce medical inflation. The program works. Positive incentives were used to get people to enroll and to attract beneficiaries into the program, and 95 percent of them, by surveys and by our discussions with them are satisfied. They like the small co-payment, the no claims forms. They like no deductibles and they like the easy access to health care. Over a two-year period-I believe 1989 to 1991, a survey showed the program saved approximately $150 million, $120 million of that went to the government, $30 million to the beneficiaries. The Military Treatment Facility Commanders like it, the beneficiaries like it. It reduced inflation. It exceeded all expectations. It is a win-win-win, a win for DOD, a win for beneficiaries and a win for the taxpayer because of the savings. Now DOD wants to change it.

Their new contract would increase costs to patients. It would force enrollment into the program. There would be negative incentives and the beneficiary would lose some options to care that they have now under CRI. And besides, it is an unproven system. It has not been up and running and been subject to scrutiny. The CRI program has been analyzed and scrutinized exhaustively and it has been proven a success. We have real problems elsewhere, in Indiana, for example, where both major bases are being closed and nothing is being done to provide those thousands of beneficiaries with a managed care program. Our suggestion would be leave California and Hawaii alone and look at other areas where the base closures are taking place.

Our recommendation would be to withdraw the RFP, reissue it along the CRI model, and we know that the beneficiaries would be delighted with that.

[The statement of Colonel Partridge follows:]

Mr. Chairman, and members of the Committee, I welcome the opportunity to present the views of the National Association for Uniformed Services and the Society of Military Widows. The National Association for Uniformed Services represents all grades and branches of uniformed services personnel, their spouses and survivors. Our nation-wide non-partisan association includes active,

retired, reserve and National Guard, disabled and other veterans of the seven uniformed services: Army, Marines, Navy, Air Force, Coast Guard, Public Health Service, and the National Oceanic and Atmospheric Administration. Our affiliate, the Society of Military Widows is an active group of women who were married to uniformed services personnel of all grades and branches and represents a broad spectrum of military society. With such membership, we are able to draw information from a broad base for our legislative activities.

We believe that delivery of health care by the Department of Defense to its 9.2 million beneficiaries is a program that should be improved prior to declaring a "peace dividend" that many in Congress and the Administration indicate has become available as a result of the end of the Cold War. Before Department of Defense funds are reduced or used for other purposes we believe that the programs which support and sustain the men and women of our Armed Forces, active, retired, veterans and their families should first be adequately funded and managed. This is particularly true of the military health services system, which as bases are closed and forces are drawn down, will become increasingly difficult to manage.

A major concern today of military personnel, retirees and their families is the uncertainty surrounding the access to military medical care, long waits for care, and inability to obtain appointments because of staff and physician shortages. If care is not available within the military treatment facility, then beneficiaries

are required to use high cost civilian providers under CHAMPUS. Often this is in a community where they have recently arrived with no family or community ties and no one to whom they can turn for advice. Further, the CHAMPUS system requires extensive paper work for reimbursement and relatively large copayments and deductibles.

The current health services system needs improvement from the viewpoint of the Department of Defense as well. Health care costs are soaring, large numbers of patients are forced to use the expensive CHAMPUS fee-for-service programs, funds for operating hospitals are being cut as bases are closed and personnel reductions are made. The Department views a managed care system coordinating military and civilian health care resources as a necessity to bring costs under control. Thus, both the beneficiary and the Department of Defense have an interest in reducing the cost of health care and insuring that access and quality are enhanced. However, beneficiaries do not want to see their interests sacrificed for budgetary reasons.

CRI Program

The CHAMPUS Reform Initiative (CRI), a pilot program begun in California and Hawaii in 1988 to run for five years deals head-on with the issues of medical inflation, beneficiary satisfaction and coordination of military and civilian resources.

Major advantages of the program are that it offers options to beneficiaries, places the contractor at risk to provide cost-effective health care, uses positive incentives to enrollment, eliminates beneficiary paper work and reduces or eliminates co-payments and deductibles.

· Regular CHAMPUS - which offers the widest choice and the lowest savings to beneficiaries.

In a survey to determine how beneficiaries felt about the most restrictive CRI option, 95% indicate that they are satisfied with CHAMPUS Prime. The reasons given are small co-payments, no claim forms, no deductibles and easy access to health care. A recent survey of 23 military treatment facility commanders shows that all were highly satisfied with the operation of the CHAMPUS Reform Initiative and over 90% say that CRI has vastly improved