Subject: Update on the New TRICARE Proposed Closed Network 12004

U.S. Military Retirees of the Philippines Group

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Tricare Philippines Newsletter 12004


Update on the New TRICARE Proposed Closed Network 

First, in order to provide a better subject line, the old subject line will be terminated and a new one used that includes the actual topic of the newsletter along with a designation to show its sequence compared to previous and future newsletters. This designation will include a year designation, 12, and then a numerical designation starting with 001. Since this is the 4th newsletter its designation is 12004.
We decided to submit this article earlier than planned, given the recent inclusion of some information in the TRICARE Operations Manual. However, the TRICARE Management Activity (TMA) has not yet provided an easy to understand and comprehensive explanation of the program. We will attempt to address what we know; based on previous information we received, along with the current description. We will also relate it to what we know about the processes involved based on our history of assisting beneficiaries in claims processing and discussions with many Philippine physicians and hospitals that have previously encountered these processes first hand.
We first became aware of the demonstration project, known as the “Closed Network” in September 2011 when one of our members discovered a short notice announcing it in the Federal Register. However, TMA made no effort to inform Philippine beneficiaries of the project or had they discussed it with beneficiaries prior to the notice in the Federal Register to get their input or concerns about more changes to their TRICARE Standard benefit; changes that affect nobody else in the world but them.
Our immediate inquires were initially met with claims that the process had not been finalized and therefore no information could be provided nor could they discuss the new plan with beneficiaries. However little by little various contacts reveled a little about the program and a short time later there was an announcement, which was included in the RAO Baguio Bulletin, that briefly described their plans. We contacted TMA and addressed some issues we had with the little we knew about the program and later did the same at a face to face with two TMA employees in Manila. Although we addressed a number of critical issues, to date and based on the recent publication, only one seems to have been addressed which we will discuss later. In late November 2011 the Stars and Stripes, with our input, did an extensive article on the issues we face in the Philippines. In an interview with TMA they told S&S that the project was scheduled for implementation in the spring of 2012 and that in the coming months they would hire a contractor. A couple of weeks later we discovered that in fact the contractor had been hired well before the interview with S&S and was International SOS (ISOS).
Stars and Stripes TRICARE Article In April, when we met with TMA and their contract staff, we were informed that the program had been delayed but no new time was set nor were any reasons given. The newly updated TRICARE Operations Manual now indicates a start date of 1 January 2013.
Extract from TRICARE Operations Manual 6010.56-M, February 1, 2008 with change 74, Chapter 18, Section 12 which addresses the project.
Closed Network 
Links to selected references in the above document.

Chapter 24, Section 14     Chapter 24, Section 4     Chapter 24, Section 26     Chapter 07, Section 2   Chapter 13, Section 6     TPM Chapter 1, Section 7.1
On the surface the Closed Network sounds good and would eliminate many of the problems we currently face. Would we like to see it succeed? Certainly, but only if it truly did eliminate the current problems caused by TMA and doesn’t simply replace them with another set of problems or worse change the name but continue business essentially as usual.
Based on the previous information available to us and the new document we have the following concerns.
The initial plan as proposed in September 2011 and programmed to start in the spring of 2012 was delayed but without any explanation. So what happened during the 8 months between the announcement in the Federal Register and the proposed start date? When we discovered the proposal we addressed a number of concerns. We believe some of those concerns, which remain in the current published plan, are the primary reason for the delay and a new addition to the provisions only adds credence to our premise.
We were further told the primary location would be in the Manila-Angeles-Subic corridor, with other locations being considered as the demonstration project progressed.
A significant issue that concerned us was a comment we received that U.S. Prime travel standards would be applied to those required to use the closed network. To date we have not received a response to our concerns on this issue. If applied here it means TMA could require we travel up to 100 miles, 161 kilometers, to see a provider. See
Understanding Prime Travel. For example travel distance from Angeles City to The Medical City hospital in Manila is approximately 55 miles, from Subic approximately 92 miles. Travel to Pasay from these locations, Asian Hospital, is 61 and 98 miles respectively. So beneficiaries from these areas could be required to travel to anywhere in the greater Manila area to see a physician or for hospitalization.  The time required to make these trips would require 8 to 10 hour unlike in the states where it would take less than 4 hours.
Intuitively most beneficiaries might think this is unlikely since there are providers in most specialties and multiple hospitals in all these locations who are now certified. However consider that for TRICARE Prime Remote in Manila there are only three physicians that can be used but no specialists. For specialty care these patients pay cash up front and submit claims just like we do since there are no network specialists. See
Manila Prime Remote Provider List. The lone hospital on the list of approved providers is Makati Medical Center who just received their Joint Commission International accreditation and one of only three accredited facilities in Manila; St. Luke’s and The Medical City are the others. Originally Prime used St Luke’s but after significant issues with nonpayment of claims they refused to see Prime patients and file claims. The next in line was The Medical City who also found they had significant issues with nonpayment of claims and also stopped accepting Prime. Months later Makati Medical Center agreed to accept Prime but in between Prime patients had to pay cash up front for inpatient care and then file claims since no hospitals would accept them and process their claims.
Why all the problems with Prime finding providers and how does it relate to the Closed Network?
To a large extent the Closed Network is a modified Prime being applied to Standard and TRICARE for Life in the Philippines but without the lower copays and other benefits associated with Prime.
Like Prime providers the Closed Network providers will have to file claims and agree to a number of requirements before they will be classified as an “Approved Provider”. All of these U.S. requirements are foreign and poorly understood by providers and the health care industry in the Philippines.
Provider Requirements

  1. Accept fees at or below those they receive from cash patients.
  2. File claims using the complex U.S. coding and billing system.
  3. Agree not to collect cost-shares and deductibles until after receipt of the EOB.
  4. Hold patients harmless if TMA decides to pay the provider less than billed or denies the claim.

Accept fees at or below those they receive from cash patients. They have to agree to accept fees no greater than the Philippine CMAC which understates a significant number of local normal and customary fees. These are the same fees that they are paid in full and in cash by the majority of their patients now. So they will be required to receive less when they see TRICARE “Closed Network” patients.
File claims using the complex U.S. coding and billing system. This system of coding and billing is not used anywhere else in the world, is complex and constantly changing. For example today there are 13,000 codes used for billing. By 2014 the U.S. plans to increase that to 68,000 at the cost of billions of dollars in the U.S. just to train staff to learn the new system. The U.S. billing system requires that they understand which local procedures are bundled, combined, and which local bundled procedures have to be unbundled for claims filing purposes. They can purchase manuals, for hundreds of dollars, that explain what is bundled but here is no known guidance on what local bundled procedures have to be unbundled in order to increase chances of full payment. See article on the
new complex system. How many people believe local providers will be willing to spend the money to hire U.S. trained coders and pay for their annual continuing education in the U.S. so they can submit a claim and wait 60 days to get $10.50 back on a $14.00 outpatient visit. Failure to comply with all the complex rules when filing claims will result in denial of the claim and non-payment to the provider.
Agree not to collect cost-shares and deductibles until after receipt of the EOB. The collection of deductibles and copays was the one issue that TMA seems to have changed. Originally the requirement was that the provider would collect the deductible or copays at time of care. However that supposed that every provider had a computer connected to the internet at each of their offices and with office clerks trained in accessing the appropriate TRICARE systems to determine if they should collect deductibles or just the copay. It appears they got around the issue by changing the requirement where the provider has to agree to not collect anything until they receive the EOB. Now consider for a moment that all their patients currently pay cash at time of care or use local programs that deposit funds into their accounts weekly for care provided. Now these providers will have to hire an additional employee to manage the growing accounts receivable, mail out reminders or call each patient when it is time for them to pay their cost share or take them to court if they don't pay or write it off as a loss; all this for a $3.50 copay and for patients that represent 0.01% of the population. And this doesn’t consider the cost to them to learn the U.S. claims system and file claims. We suspect few providers will see this as a viable process to receive payment.
Hold patients harmless if TMA decides to pay them less than billed or denies the claim. Under the current Philippine CMAC most physicians and many hospitals including laboratory and radiology will find many claims either denied out of hand or the allowed amount greatly reduced. This will happen because the CMAC understates local actual fees for most ancillaries and physicians billing for inpatient professional fees will find the same issues even if they hired U.S. trained coders to process their claims. See previous
newsletter 20120410 on the CMAC. Hospitals will find many claims denied due to not understanding the differences between how they do business and how hospitals in the states do business; something as simple as the order in which they list diagnosis will cause a claim to be denied. This requirement will then put the provider at risk for tens of thousands of dollars in lost revenue. In a review of 2009 claims data we received via the Freedom of Information Act we found on average that far less than 50% of billed amounts were even approved for payment and in the case of inpatient professional 7% of the billed amounts were approved for beneficiary claims. We feel most providers will not find this level of reimbursement of their usual cash fees as acceptable and refuse to participate in the program.
These are the same policies, except for the deductible and copay policy, which apply to Prime. Since there are no deductibles providers can and do collect copays at time of care, eliminating the need to hire staff to monitor and collect those months later. This will add an additional layer of administrative procedures for the “Closed Network” compared to Prime.
Because of these policies that are foreign to the local health care industry providers have lost large sums of money in the past and why St Luke’s and then The Medical City backed out of the Prime program and why there are so few physicians willing to accept Prime patients in Manila. The Medical City even tried to overcome the problems with claims processing by hiring a U.S. based claims processing company but because the processes and terminology are so different even they were not able to get claims approved for payment with any regularity.
For these reasons we believe TMA will have a hard time recruiting sufficient quality physicians and hospitals in the Angeles-Subic-Manila corridor or anywhere else in the Philippines for that matter. So if Approved Providers are limited then beneficiaries can expect to pay for travel that many times will exceed the cost of a visit, as well as expend the better part of a day just to see a specialist or possibly be hospitalized.
What is the new provision added to the “Closed Network”?
Earlier we said that we thought these requirements were the primary cause of the delay in implementation and a newly added provision added credence to our premise.
The specific addition is addressed at paragraph 4.9 and 3.3 of the revision to the TRICARE Operations Manual, see these items highlighted at
Closed Network. Essentially what these paragraphs say is in the event they cannot recruit sufficient providers who will agree to the requirements, addressed above, they will add providers called “Certified Providers” who beneficiaries will be required to see. However these providers will require cash payment at time of care and the beneficiary will then have to file a claim. Essentially they will be required to use the same system used now but without the current choice of providers everyone else on Standard has. These claims will be subject to the same policies and practices now imposed on us and result in beneficiaries once again having to pay for the majority of their care but under a new program entitled the “Closed Network”.
So our concern is that the real “Closed Network” will be a rehash of the current program with more restrictions on beneficiaries while TMA touts to congress and the service organization that we have a new system of highly qualified providers who accept TRICARE, process claims and hold patients harmless for any disallowed amounts. But they will conveniently omit the rest of the story as Paul Harvey used to say.
We sincerely hope this doesn’t happen but we don’t hold out much chance that their U.S. designed network will work. Even if it gets off the ground we suspect most of the providers classified as “Approved” will back out within a few months when they realize the associated costs of processing claims, collecting copays and deductibles months later and denied claims for reasons they don’t understand, all of which will have a significant impact on their bottom line.
Obviously we don’t know for certain how the “Closed Network” will play out but we are giving you our educated guess. If it works out, that will be good for beneficiaries in the Philippines. If not, the end result is likely to be business as usual. The main point to take away from this discussion is not to get to overly enthusiastic and become complacent. We still need to continue to learn how to use and process claims within the current system of local rules and policies as they will continue to exist even if the “Closed Network” does get off the ground because it now has a provision that you can also be required to see physicians and hospitals, pay cash and then process claims in compliance with the U.S. claims and billing system.
What’s next?
The next issue of the newsletter will return to the original path with a discussion of basic claims filing suggestions, followed by specific guidance for outpatient claims, then followed by ancillary claims such as pharmacy, laboratory and radiology and then the more difficult inpatient claims.

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