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Tricare can’t force any providers to participate in providing medical care to any Tricare beneficiary. And this is especially true overseas. The Demonstration Project has been in place for two months now, (it had to be delayed because they couldn’t get providers to join), and it has been a very rocky start.

What was supposed to be a program with providers of most of the required specialties represented in the program has, to date, 42 specialties that are waived, (meaning that beneficiaries must use non-Demo project providers for those specialties and pay up front, just as they did before the Demo project). In the three Demo areas, the highest number of specialties represented is 22. But there are many specialties not represented that are needed.

Another issue that has come to light is that the Approved providers are being told that they can charge up to the Champus Maximum Allowed Amount,(CMAC), even though their normal and customary fees are at least half of the CMAC. Thus, what was a normal $12 out-patient office visit now can be charges at $26. Of that the beneficiary must pay a co-pay of 25%, ($6.50), or more than half of what would have been the normal and customary fees. (Under the old system, the beneficiary would pay the full bill, file a claim and be reimbursed 75%,($9.00), making his co-pay $3.00. Now Tricare is responsible to pay $19.50 for an office visit that used to cost them $9.00).

Tricare’s contractor, International SOS,(ISOS), apparently has told the providers that they can charge the higher fees in order to compensate for the administrative cost of filing Tricare claims and taking the risk of no payment or underpayment of the claim. However, the charging of administrative fees is specifically prohibited by Federal Regulations. Providers are not allowed to bill Tricare for administrative fees or to hide these fees in their billing. In fact, this was one of the charges filed against Thomas Lutz, CEO of Health Visions, in the $100 million fraud case prosecuted several years ago.

(See http://www.tricare.mil/fraud/News/Document/Thomas%20Lutz%20and%20HVC%20Indictment.pdf)

The Federal Register Notice of Philippine Demonstration published 09/28/2011 http://db.tt/hhxm8Jk2 stated; “To be included on the approved list, a provider must agree to accept reimbursement at the lower of the usual and customary charges and the established fee schedule”. This new policy is a total reversal of the notice in the Federal register and is a violation of 32 CFR, 199.9;

199.9 (b) (2) Improper billing practices.

Examples include, charging CHAMPUS beneficiaries rates for services and supplies that are in excess of those charges routinely charged by the provider to the general public, commercial health insurance carriers, or other federal health benefit entitlement programs for the same or similar services.

Since Tricare, (and ISOS), know what the normal and customary charges are for the general public and have advised, (apparently, according to statements made by providers to beneficiaries), the providers to charge a higher fee in order to recoup administrative cost and the risk of non or underpayment, Tricare and ISOS are facilitating fraud upon the US Government.

I imagine that Tricare will claim that they have the authority to advise providers to double, (or more), their fees in order to entice them to be a participant in the Demonstration Project, but I doubt that they have that authority under Federal Statute or Regulations since that policy means an increase of cost to the US taxpayer and higher out of pocket cost to the beneficiaries.