Update: Proof We are Treated as Second Class TRICARE Beneficiaries

We will not repeat what we previously discussed in the original post, Proof We are Treated as Second Class TRICARE Beneficiaries Using DHA’s Own Data from 29 December 2013. If you have not read it, click on the title and you will be able to read it at your leisure.

We are only updating the information showing how much the Defense Health Agency (DHA) pays for care in the Philippines compared to the rest of the world and it is significantly worse than before when it showed they were spending 13% of what was expected based on 2010 TRICARE data.

We tried to give DHA every benefit of the doubt when we made the calculations. The indisputable facts and assumptions are below.

Facts:

1. We obtained the actual per capita cost for TRICARE Standard beneficiaries for 2012 from the TRICARE Fiscal Year 2013 Report to Congress from page 90 and page 93. For under 65 retiree/survivor and family members $7,476 was paid by TRICARE per beneficiary while for 65 and over retiree/survivor and family members $15,175 was paid by TRICARE and Medicare per beneficiary; TRICARE Overseas covers what Medicare would pay in the states.
2. The DODIG Report 2014-052 states that in 2012 TRICARE spent $3,610,817 on beneficiary medical care in the Philippines.
3. DHA stated in their published announcement of the Demonstration that in 2009 there were 11,000 beneficiaries in the Philippines. Based on 2009 DOD Actuary information on the total number of retirees and survivors in the Philippines to arrive at 11,000 beneficiaries a factor of 1.69 beneficiaries per sponsor was used. Using 2012 DOD Actuary number of retirees and survivors, multiplied by 1.69 the total beneficiary population comes 11,782.
4. The DOD Actuary data for 2012 says 1,768 retirees are under 65 while 1,934 are 65 or older. It also states that 188 survivors are under 65 while 490 are 65 or older.
5. DHA says the cost of care in the Philippines is 57% of what it costs in the U.S. except that the cost of pharmaceuticals, laboratory and radiology is at 100% and higher cost inpatient care generally involving open heart surgery and cancer treatments are closer to 80%.

In order to simplify the calculations and give DHA the benefit of the doubt, all of which work in their favor, we made the following assumptions.

Assumptions:

1. The population of beneficiaries stayed the same between 2009 and 2012 in spite of what the DOD Actuary claims so total beneficiaries used in the calculations was 11,000. (This increases the per capita amount spent in the Philippines in DHA’s favor.)
2. We used the DOD Actuary distribution of retirees and survivors under 65 and 65 and over in the calculations but assumed that all family members are under 65. (This will cause the number affected by the lowest percentage to be less than it is in DHA’s favor.)
3. While DHA says the cost of pharmaceuticals and ancillary services cost the same as in the U.S. we chose to use the 57% value to calculate the expected per capita cost. (This will cause the expected cost to be lower than it really is, also in DHA’s favor.)

We developed the table below, using these facts and assumptions.

It should be obvious to everyone that at 7.7% and 3.79% of the expected expenditure that DHA has been extremely successful in their focused and deliberate attack on TRICARE beneficiaries in the Philippines. In just two years they have been able to cut the expenditure in half. It shouldn’t take too many more years before they can declare total victory by eliminating all cost to TRICARE.

The DODIG is so proud of DHA that they preferred to ignore contractor directed price increases in the Philippines and tote DHA’s huge successes in the Philippines in their recent report. In fact they were so proud of the accomplishments that they urged, no demanded, that DHA start to implement the same processes in other countries to reduce their expenditures to equal the levels they achieved in the Philippines. Their recommendation was to start in Japan, South Korea, the United Kingdom, Italy and Turkey.

This should be a heads up to beneficiaries and retirees in other countries; you maybe next on the list.

If you want to find out the real story behind DHA’s focused attack on TRICARE beneficiaries in the Philippines instead of their spin and propaganda, read TRICARE: Betrayal in the Philippines, Is This the Future of TRICARE Overseas?