We have also found that CRI was extremely beneficial during Desert Shield and Desert Storm by providing civilian contract providers at the MTFs

in order to support deployment. Further, the civilian provider network was in place to provide for the outplacement of beneficiaries in the event MTF capabilities were insufficient.

Similar activities are under way in support of California and Hawaii base closures and downsizing. We have found that CRI has provided a readily available and established network of providers and the necessary administrative support staff in order to accommodate beneficiaries and retirees who may remain behind after base closure or downsizing, yet still are entitled to CHAMPUS health care benefits.

An extremely important feature of the CRI system is that of the CHAMPUS service center. The service center staff, based at the MTF, provides assistance to the beneficiaries. Persons needing treatment can access either the beneficiary representatives or the health care finder personnel under CRI and be referred to a civilian physician if the local military facility cannot

provide the necessary care.

In your letter of invitation, you asked that I comment on the changes proposed to CRI by the recently released RFP. While our analysis of the new requirements under the new RFP is still under way, I would like to highlight the major changes we have found to date.

Perhaps the most significant change we have noted relates to the dramatic altering of patient incentives. Currently, enrollment in CRI's HMO option, called PRIME, is voluntary and is focused for those who use CHAMPUS benefits the most. PRIME is very popular with the beneficiary population in California and Hawaii. Current enrollment is now in excess of 165,000 beneficiaries and increasing at approximately 5,000 per month. It should be noted that the PRIME program requires very minimal copayments or out-ofpocket expenses. The newly released RFP proposed significantly higher costs shares for enrollees and even higher deductibles for those opting not to enroll. In addition, it is our understanding that those enrollees declining enrollment will not be permitted (or "locked out") of the military facilities and clinics, except for emergency care and pharmacy services. It is too early to tell what the

ramifications of these benefit changes might be relative to both cost and

enrollment activities.

An additional tool in managing care has been the PPO (preferred provider organization) option (entitled Extra under the CRI contract) which further encourages beneficiaries to secure care through the network of high quality providers who have agreed to discount their billing rates. We have estimated that approximately 300,000 beneficiaries are accessing the PPO option. It should be noted that the new RFP does not provide for a PPO option.

In conclusion, Foundation believes that the current CRI contract is an attractive benefit package and has been demonstrated to be beneficial to the beneficiaries and MTF commanders. Our routine surveys indicate an extremely high beneficiary satisfaction (97 percent in the most recent survey) and a high acceptance rate (96 percent) of MTF commanders. We also believe that the objectives of securing significant cost reductions and/or cost avoidance have been achieved through the CRI efforts and have been documented by RAND. Therefore, it is our belief that the CRI design works and meets the goals of the Department of Defense.

Thank you for inviting me to this hearing. I am ready to answer any

questions you may have.