managed health care. In my district, we have been getting complaints for many years about the traditional CHAMPUS program and how it relates to both in-patient and out-patient care, so it was six or seven years ago that I started working with this Committee and with you, Mr. Chairman, and all of us, to try to present some alternatives. We have been fortunate in New Orleans to have created an alternative demonstration project, which seems to be working pretty well. But all of a sudden now, with the changes that are taking place in California and Hawaii, it gives me great pause for concern as to whether or not these changes are going to last and to be fully implemented in our area. The Department calls their program a Coordinated Care Program. However, it removes positive incentives for attracting beneficiaries into a program which will lower costs to the beneficiary and to the Department. That is not what is happening in the greater New Orleans area in our demonstration program. The New Orleans program started in December 1991 and has enrolled over 4,000 beneficiaries into the CHAMPUS PRIME program, providing for a $5.00 co-payment, no deductibles and very little paperwork. So a lot of people are signing up. They are excited about the program. It seems to be working. It is too early to tell exactly how it will work, but projections are that it will save a significant amount of money to the government and to the taxpayer and provide better service for the beneficiaries. I understood that was happening in California and Hawaii. Not only were the beneficiaries getting better service, but the taxpayer saved money as well. I am astounded by the proposals of the Department to change it at this time. I am certainly astounded by what I hear in Mrs. Cox's testimony. I was wondering if the panelists could tell us we have several problems. If the negative incentives being proposed in California and Hawaii are proposed for the New Orleans program, presumably our military beneficiaries will be as upset as you are in the California area. Do you have any knowledge about the New Orleans program, any of you? Mrs. CHESCAVAGE. I think the contract is what, five years? So I would suspect some time at least at the end of that five years the intent would be to turn it into Coordinated Care. They want to turn everything into Coordinated Care. Mr. LIVINGSTON. There are annual options so that is a possibility.. Mrs. CHESCAVAGE. I don't know if they can modify the contract. If they could, I assume they will. Mr. TOUGH. We have seen significant growth in four months. The 4,000 enrollee number is perhaps more valuable compared to what we thought originally, that as the first projection, we would enroll no more than 1,600 to 2,000 in the first year, and in the first 4 months we have over 4,000 in Prime. So interest is very high. We have received no indication that the benefits would change for New Orleans to date. Mr. LIVINGSTON. We have another problem in Louisiana. We have one Air Force base closing in central Louisiana, England Air Force Base. We have the typical problems with a base closure and a lot of retired people in the area. I wonder if you might comment on how much the Department is doing to address those beneficiaries and their needs and the impact from that base closure or any base closure? Colonel PARTRIDGE. I can't specifically address England, but Carswell was closed and nothing was done until complaints were received, and now a CRI-type program is being put in there. Two major bases in Indiana are being closed, and there are thousands of beneficiaries there and nothing is being done to take care of those beneficiaries who will remain there after the hospital is closed. For the over-65 retiree and Reserve retiree who also get Medicare at age 65, they lose the pharmacy benefit when the base goes away, and they go on Medicare. DOD drops them off a cliff at age 65 and says "You are on your own unless we have space somewhere." For under 65, people who have depended on that care, it goes away and they are back on CHAMPUS. It would seem it would be a win-win situation to go in, set up a managed care program, negotiate lower rates and save CHAMPUS money on beneficiaries who are left in the area. Mr. LIVINGSTON. If you bring in CRI, what specific improvements would there be? Colonel PARTRIDGE. It provides choice, discounts, a positive incentive to get in. The contractor wants the people to choose that program. In many cases they get reduced rates on drugs, so even if there is a cost on drugs, it is a much reduced rate. Mr. LIVINGSTON. All these benefits and advantages would save the taxpayer money, too? Colonel PARTRIDGE. That is right. Mr. LIVINGSTON. Sounds like a good deal to me. CRI INITIATIVE Mr. MURTHA. Your statements, without objection, will appear in the record. I would like to clarify that we have one contractor invited here because he is the only contractor presently serving DOD in the CRI business. Hopefully, new competitive CRI contracts will be awarded to other regions of the country. What this Committee is upset about is the fact that DOD is changing the RFP to make it almost impossible for this concept, which we are interested in, to be expanded into other areas or to be continued where it is. So the beneficiaries lose benefits and in the end, it is going to confuse the whole situation and cost the government more money. That is the thing that is so irritating and upsetting to this Committee. We welcome any suggestions that are better. Having gone through this for eight years, we think we have come upon a solution, a conclusion which has been very beneficial to people, and the people being served are the ones that applaud the concept. The contractor happens to represent the concept in this case, but we want to make it very clear the concept is what we are interested in. We hope DOD will go back and look at this RFP and decide that this concept, which is less expensive and gives better coverage, will be changed to include that idea. Unless there are any other comments, we thank the panel for appearing today, and hopefully we can work this problem out. Thank you very much. The Committee will adjourn until 1:30 p.m. this afternoon. [CLERK'S NOTE.-The following statement was submitted for the record by the Air Force Sergeants Association.] Mister Chairman and distinguished members of this committee. We greatly appreciate having this opportunity to present our views on behalf of the 170,000 members of the Air Force Sergeants Association (AFSA) and all enlisted personnel of the Air Force, active, Guard, Reserve, retired and veteran. Health care is an issue of increasing importance to our members and their families. It is ironic that we are presenting our views on this issue to you, because we are very much aware of all the persistent efforts that your committee has expended over the past several years to improve the military health care system. The adage, "preaching to the choir," is the most appropriate way to describe the situation that we are experiencing. However, we are taking this opportunity with optimism and hope that the administration, and specifically the Department of Defense (DoD) will get the message loud and clear to take the most responsible courses(s) of action without delay. We cringe when we think of the shape our military and veterans health care systems would be in if we did not have the benefit of your oversight and prodding to those departments and agencies whose responsibility it should be to "take care of its own:" The deserving military personnel and their families and survivors. In our testimony we will bypass the tendency to reiterate the reasons for our government's obligation to provide medical care and the current problems and deficiencies that currently |