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An important characteristic of coordinated care is the ability to adapt many different organizational models of care under a management umbrella that maintains consistency and equity of the benefit and offers assurances of that consistency and equity to the beneficiaries.

There has been some confusion in the distinction between demonstration projects, which test certain components of the Military Health Services System, and the Coordinated Care Program, which encompasses the entire health care delivery system. The broader perspective of coordinated care represents an actual evolution from component tests to systemic reforms. It takes on particular importance in light of the recent

consolidation of the Department's health care resources under my purview, as well as the tremendous budget pressures faced by DOD as a whole. Given that the medical program funds, which amount to $15.3 billion, include the new Defense Health Program ($9.5 billion), Military Construction ($240 million), and Military Personnel ($5.5 billion), I must consider the requirements of all medical programs. CHAMPUS expenditures, projected at $3.9 billion in FY 93, are 26 percent of the total medical program. There have been many substantial improvements in the management of the CHAMPUS component. Significant opportunities exist, over time, for improving management in the remainder of the system, as well, which will use $11.4 billion, or 74 percent of the FY 93

It is the reasonable, and judicious, course for me to capitalize on those management improvements realized in the CHAMPUS program and to incorporate them now into permanent systemic reforms for the entire Military Health Services System. The Coordinated Care Program is the vehicle for accomplishing precisely that.

As the committee is aware, the CHAMPUS Reform Initiative in California and Hawaii is reaching the completion of its demonstration period. The Department faced a dilemma when conflicting direction was received from Congress regarding this project. To ensure objectivity, we requested guidance from the Comptroller General. Meanwhile, being cognizant of the Federal Acquisition Regulations, and mindful of the myriad of activities necessary in conducting a competitive procurement, we released a Request for Proposals (RFP) in January.

The release of that RFP

was in no way prejudicial to the Comptroller General's opinion or the final determination. Clearly stated in the RFP was that the

start date would be either August 1993 or February 1994. The Comptroller General's decision now establishes that date as August 1993. Bids from interested vendors are expected by the end of May.

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The scope of work in this RFP reflects our coordinated care thrust to achieve management and delivery improvements in our total system.

In New Orleans, with strong committee support, a contract was awarded last year for an out-of-catchment area demonstration project bringing the many benefits of a managed...or coordinated...care program to the 24,000 CHAMPUS beneficiaries in that metropolitan area. The demonstration is underway; following a six month implementation period, services began December 1st.

The first tri-service coordinated care site, also known as TRICARE, in the Tidewater area of Virginia, is another project of particular interest to the committee. As required by law, we have begun negotiations for modification to the fiscal intermediary (FI) contract for assistance with network

development, marketing and claims processing. Additionally, through the FI, a TRICARE Service Center will operate near Naval Hospital, Portsmouth, with health care finder, health benefits advisor and triage functions available. The Tidewater project is only one of many coordinated care site initiatives. It is unique in that it attempts to bring together three catchment areas each

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This year also has seen extensive work on the managed care plan for the Uniform Services Treatment Facilities. This plan is nearing completion and we project an early 1993 date for the start of services under the managed care plan.

The Request for Proposals for implementing coordinated care in Washington and Oregon is scheduled for release this summer. The model for this project will be the CHAMPUS reform initiative successor contract for California and Hawaii.

Also this fiscal year, we will begin development of a similar contract solicitation for Florida. Because of contractual commitments to an already existing managed care project in the Southeast Region, the schedule is for release of an RFP in FY 1993 with delivery of services to begin in 1995.

The Base Realignment and Closure Act has generated considerable concern among many beneficiaries living in proximity to a hospital scheduled for closure. For the Coordinated Care Program, I have established a joint service task force to analyze strategies for possible initiatives in non-catchment areas, those areas not served by a military hospital yet having sizable beneficiary populations.

This task force will work with the

military services as they develop transition plans for the

delivery of health care to eligible beneficiaries remaining in areas affected by closure actions.

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This year we have implemented, or continued implementation of, several new benefits for our beneficiaries as well as some less visible management improvements to the CHAMPUS program.

*We implemented the CHAMPUS benefit authorizing payment for mammograms and pap smears. We are expanding further preventive care services as part of the Coordinated Care Program.

*Coverage was established under CHAMPUS for lung and

heart-lung transplants.

*Case management of high cost or catastrophically ill beneficiaries was continued. We will be expanding this as part of our Coordinated Care Program.

When

*Physician payment reform regulations were promulgated. fully implemented in May of this year, payment equity will be increased, payments for overpriced procedures will be reduced, and payments for primary care services will be increased. *Comprehensive mental health regulations were published, improving our utilization management of this CHAMPUS benefit. *We now are in the process of implementing a new mental health partial hospitalization benefit.