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In addition to health care delivery, the Defense Health

Program supports the FY 93 requirements of three field activities:

The $294 million in the medical procurement account is to fund the purchase of capital equipment for medical treatment facilities as well as other equipment requirements. Examples include initial outfitting of new, expanded or altered health care facilities being constructed under major construction programs; equipment for modernization and replacement of worn-out, obsolete, or uneconomically reparable items; information processing requirements and equipment supporting pollution control, clinical investigation, and occupational and environmental health programs.

The military medical research and development account of $313 million funds the efforts to prevent illness and injury to the fighting forces. These medical research and development efforts are directed at resolving military unique problems that affect all activities of the active duty force from training to mobilization and deployment, through redeployment to home base.

These efforts focus on infectious disease, protection against biological and chemical agents, environmental hazards, military systems health hazards and developing combat casualty care treatment regimens and materiel to save life and limb.

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Phase-funding of major medical construction initiatives has allowed us to get several much needed large projects started which will help modernize our aging hospital inventory. caution however, is that based on the increasing portion of the military construction budget being consumed by phase-funded projects, maintaining adequate resources to ensure appropriate maintenance, upgrades and alterations to existing facilities becomes increasingly more difficult.

Funding for medical military personnel, reserve component personnel, combat support medical units and activities, and certain management headquarters are included in the budgets of the military departments and are not part of the consolidated Defense Health Program budget. In addition, regarding medical personnel, the new management authorities do not allow for change in the structure of the chain of command within a military department or within a unified or specified command for those

DELIVERY OF HEALTH CARE

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Last year I reported to you that the environment for coordinated care had been created. This year, it pleases me to report that on January 8th, I transmitted to the Service Secretaries the instructions to begin the Department's three-year phased implementation of our Coordinated Care Program. This managed care initiative is designed to better accomplish the medical mission by improving access to quality health care services, while controlling health care cost growth. This program will provide medical treatment facility Commanders with the tools, authority and flexibility needed to perform more effectively the health care mission. The centerpiece of the program will be local health care delivery systems and networks based on arrangements between military and civilian health care providers and organizations.

With the instructions to implement Coordinated Care, I have issued policy guidance to the military departments concerning enrollment, site selection, network development, specialized treatment facilities, education, communication strategies, quality management, and health promotion and disease prevention. The three year phased implementation will involve twenty-five percent of stateside hospital locations in the first year, an

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additional fifty percent in the second year, and the remaining twenty-five percent in the third year. To the extent that the program is successful in redirecting existing CHAMPUS workload to military medical treatment facilities or network providers, funds budgeted for CHAMPUS will be realigned to support this effort.

of the many program features detailed to date, our enrollment feature has sparked the most discussion within the Department. And, I believe it is one of interest to the committee. So, I would like to dwell on it for just a moment. Enrollment is the feature that will assist each hospital commander in determining the demographics of the beneficiary population for whom he or she is responsible. It is from this base that he or she will build resource requirements; the enrollment design must afford workload management. The design elements include:

Automatic enrollment for, active duty members

Voluntary enrollment for all other beneficiaries,

Advantages and disadvantages to be weighed in choosing whether or not to enroll were designed in keeping with the

committee's guidance of a year ago.

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Essentially,

Beneficiaries enrolling are assured availability of care and incur lower out-of-pocket costs when using civilian network providers who have accepted negotiated rates. However, enrolled beneficiaries must select a provider from the panel of providers

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Beneficiaries electing NOT to enroll after having been offered the opportunity to do so, retain their freedom of choice of providers and may use the military hospital for emergent care and pharmacy services. They will forego routine care in the military hospital and face higher CHAMPUS deductibles.

Although the

This committee has expressed special interest in several of our CHAMPUS alternative health care delivery programs. Most of these efforts are demonstration projects designed to test various management and delivery concepts and strategies in the CHAMPUS portion of our Military Health Services System. final, formal evaluation of these projects has not concluded, we have incorporated the most effective and productive project features into the Coordinated Care program. For example, the CHAMPUS Reform Initiative experience shows that it is essential for the contractor to work hand-in-hand, every day with each commander regarding management of health care finders, coordination between the military hospital and network providers, and resource sharing. For this reason, the relationship with military hospitals is strengthened in the new Request for Proposals for California and Hawaii, and it is a key feature in Coordinated Care. As we implement Coordinated Care, we will continue this process.