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Senator GLENN. Isn't the long term objective of the catchment area approach to rely less on the cost sharing CHAMPUS program and to provide more services through the direct health care system?

Dr. MAYER. The long term objective of both the CHAMPUS Reform Initiative and the catchment area management demonstration project is to provide the highest quality health care services to the beneficiary population in the most cost effective manner to the Department. At each catchment area management demonstration site, we expect the commander to, in keeping with his readiness mission, continue and expand those services which he can do most efficiently in the direct care system while relying upon contracts or other special arrangements with local civilian health care providers and practitioners to provide those services for which they are more cost effective.

CATCHMENT AREA MANAGEMENT Senator GLENN. General Chesney, your prepared statement suggests possible expansion of catchment area management prior to completion of the demonstration projects. What do you have planned and what is the time table for expansion of this program?

General CHESNEY. A major goal of the Air Force Medical Service is to increase access to high quality, affordable health care services and to reduce the complexity for our beneficiaries in obtaining this service. Catchment area management offers an effective means for achieving that goal. The principles upon which catchment area management is founded are embodied in DoD's Installation Management Policy. That policy consists of the following:

1. Commanders should be delegated broad authority to decide how best to accomplish the mission, and are accountable for all resources applied to the mission;

2. Headquarters staff activities shall be directed toward facilitating the commander's ability (flexibility) to accomplish the mission;

3. Commanders should be free to purchase goods and services whenever they can get the combination of quality, responsiveness, and cost that best satisfies their requirements; and

4. Unless prohibited by law, a share of any resources saved or earned should be made available to the commander to improve operations and conditions locally.

We are working with our major commands now to identify selected catchment areas with the right combination of high CHAMPUS costs, highly competitive civilian health care market, excess MTF capacity and innovative MTF management. By July we plan to have specific proposals that detail potential CHAMPUS cost savings if given the authority to apply CHAMPUS dollars to support those initiatives. These might include hiring of needed provider support staff, allowing our provider to be more productive; negotiating cost-effective preferred provider agreements for selected services; or buying a piece of diagnostic equipment allowing lower cost than buying that service downtown.

We will provide these proposals to Congress in seeking approval to use some CHAMPUS dollars in fiscal year 1989 at these selected locations. This will give those local commanders the flexibility and leverage needed to pursue these innovative, cost-saving initiatives. I needed your support in this worthwhile endeavor.

CATCHMENT AREA MANAGEMENT

Senator GLENN. Dr. Mayer, do you have any comments on expansion prior to the completion of the demonstration projects.

Dr. MAYER. The catchment area demonstration projects will be approved for a two year demonstration period. During this period there will be a single Tri-Service Evaluation Plan and evaluation contractor. The individual service demonstrations will be evaluated against a single set of criteria. In addition these demonstration will be compared with the other demonstrations that are already on-going, such as CHAMPUS Reform Initiative, Fort Drum and the Tidewater mental health project. As I mentioned before, we are trying to learn which of these concepts is most cost effective and under what circumstances. Our intent is not to expand any of these concepts until they have proven to be both efficient and cost effective.

CHAMPUS REFORM INITIATIVE

Senator GLENN. Dr. Mayer, you have devoted a lot of time and effort implementing the CHAMPUS Reform Initiative and the Senate has supported your efforts. We had all hoped that this initiative would bring improvements for health care delivery in the Department of Defense. It looks now that the scope and schedule you had planned on will fall short of what we had been led to expect. The Department of Defense has awarded only one contract and it is to the Foundation Health Corporation for the California/Hawaii region of the CHAMPUS Reform Initiative.

Does the current contract award for this region meet the objectives you had currently laid out for the CHAMPUS Reform Initiative? What is your

current implementation plan for this and future phases of CRI? Dr. MAYER. The CRI contract awarded for the California/Hawaii region meets all of the objectives which were set forth in the RFP as the basis for awarding a contract. There were five objectives:

1. To improve beneficiary access to care, especially for primary and preventive care services.-Beneficiaries will be able to enroll voluntarily in a program called CHAMPUS Prime which will provide greater access to affordable health care, as an alternative to overcrowded military hospitals. The beneficiary's cost share for most visits to doctors will be only five dollars. CHAMPUS Prime will also offer all beneficiaries new preventive care services not paid for by standard CHAMPUS, charge lower copayments than the current 25 percent for hospital care, and eliminate the requirement for beneficiaries to file claims. Beneficiaries will also be able to use a program called CHAMPUS Extra with no enrollment feature. It, too, will provide increased access to health care for less cost per service and eliminate the claims filing requirement. Finally, current beneficiary rights to use military facilities and civilian providers of choice under standard CHAMPUS will remain.

2. To improve coordination between military and civilian components of the military health services system.-Contractor personnel, as part of the Health Care Finder function, will be made available in all military catchment areas in California and Hawaii to help beneficiaries obtain referrals or appointments for services in the most appropriate setting, whether in a military facility or with civilian providers, improving beneficiary access to care and assuring optimal use of military hospitals. Efficient use of military hospitals also will be increased through agreements between the contractor and commanders of military hospitals for the contractor to provide civilian staff and other resources to the military hospital whenever possible in order to expand availability of care in military hospitals and avoid the higher cost of care in a civilian facility.

3. To reduce CHAMPUS costs for beneficiaries and the Government. Reduced beneficiary costs have been addressed above. The intent of the Department in establishing a fixed-price CHAMPUS contract is to create strong incentives for efficiency and cost-effectiveness in the delivery of high quality health care services. Potential modifications to the fixed price have been built into the contract to make it financially feasible, but without eroding the vital incentives. Subject to these modifications, based on already set formulas to account for unpredictable events, the fixed prices, which total approximately $3 billion over a potential five-year contractual relationship, are less than CHAMPUS is projected to cost without the contract. Thus, the Department has met its commitment to award a contract only if its cost apparently will be no greater than what CHAMPUS would cost without the Reform Initiative. The Government always retains the ability, at the end of each contract option period (never more than a year in duration) to elect against continuing the contract.

4. To provide quality care.—Another objective of the CHAMPUS Reform Initiative is to increase the ability of DoD to monitor the quality of care provided to CHAMPUS beneficiaries in the civilian sector. Under the contract, Foundation Health Corporation will maintain a state-of-the-art quality assurance program with a high percentage of board-certified physicians and an active CHAMPUS Quality Assurance Committee. The quality assurance program includes appeal and grievance processes to ensure that concerns are addressed in a timely and objective manner, and a utilization review process to monitor the use of health care services for appropriateness. Under separate contract, DoD will also maintain a separate, independent, peer review actively to monitor quality.

5. To simplify CHAMPUS procedures.-Under the Standard CHAMPUS Program beneficiaries often file their own claims. Under the CHAMPUS Prime and CHAMPUS Extra options, there is no beneficiary claims filing.

The Department is in a six month implementation period currently and is on track to begin services August 1, 1988. The Department expects this contract to operate for at least one year prior to any decision on expansion of the program outside California and Hawaii.

Senator GLENN. Dr. Mayer, I understand that the Navy has recently awarded a contract which includes four new NAVCARE clinics in California bringing the total to six in that state.

What effect will the services of these NAVCARE clinics have on your assessment of the CHAMPUS Reform Initiative?

Will similar services be offered by both programs to the same beneficiaries?

Can you accurately determine the costs and savings associated with either program in this environment?

Dr. MAYER. Although contractor-operated, the Navy's NAVCARE clinics are extensions of the military medical direct care system, as are the PRIMUS clinics of the Army and Air Force. The Government and the CRI Contractor had access to the same information with regard to existing and projected clinics to use as the basis for workload estimates during contract preparation. Thus, these new clinics, although they will provide some similar kinds of services to some of the same beneficiaries, pose no problems for the implementation or assessment of the CHAMPUS Reform Initiative.

QUESTIONS SUBMITTED BY SENATOR RICHARD C. SHELBY

OPTOMETRIC CARE

Senator SHELBY. I am concerned that the shortage of military optometrists in all three services has accelerated in recent years to the point that these shortages, particularly in the Army, have reached critical levels. Fort McClellan, in my home State of Alabama, has a requirement for four optometrists yet it has only one optometrist.

What are DOD and the services doing to address these critical shortfalls of optometrists?

Dr. MAYER. I would be reluctant to characterize the staffing levels of military optometrists as having critical shortages. The primary mission of the Military Health Services System is, and will continue to be, medical wartime readiness. Against tometrists; the number of optometrists available in the Active and Reserve compotometrists; the number of optometrists available in the active and reserve compo nents are well in excess of wartime requirements. I reserve the term “critical shortages” for wartime staffing levels far worse than that.

However, the Active component must also address the peacetime health benefits mission in addition to its wartime readiness role. Until recently, the number of military optometrists assigned had met or exceeded authorized levels; the staffing level of military optometrists for all three Military Departments averaged above 100 percent from fiscal year 1982 to fiscal year 1986. During this period, however, there was a reduction in both the authorizations and the assigned optometrists. In fiscal year 1986, the staffing level was 96 percent; however, at the end of fiscal year 1987, the staffing level has dropped to 86 percent, primarily because of the low staffing level within the Army (76 percent).

Optometrists, along with physicians, dentists and veterinarians, are the only medical professionals who receive special pay to help attract and retain them in the military. Other medical disciplines, such as psychologists, pharmacists, and podiatrists, are not eligible for this special pay, which is an important recruiting and re tention incentive available to the Military Departments. The Secretary of Defense has been directed by the Congress to assess the compensation levels of all military health care professionals. That assessment may find a need to improve the level of special pay for optometrists.

Since the Navy and Air Force do not have the optometry staffing difficulties to the extent reported by the Army, I will defer to that Department to address your concerns about optometry staffing in the Army in general and specifically at Fort McClellan.

Senator SHELBY. I am concerned that the shortage of military optometrists in all three services has accelerated in recent years to the point that these shortages, particularly in the Army, have reached critical levels. Fort McClellan, in my home State of Alabama, has a requirement for four optometrists yet it has only one optometrist.

What are DOD and the services doing to address these critical shortfalls of optometrists?

General BECKER. The Army is currently critically short military optometrists. The following strength figures reflect the historical trend and magnitude of the current shortage:

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In the 1970s the Army was chronically short of optometry officers due in large part to the cessation of the draft. The solution was the use of the Health Professions Scholarship Program (HPSP) for optometry students. HPSP input was not reduced to a steady state level which caused the optometry specialty to be in an average inventory status. The HPSP input for optometry was eliminated. The current shortage exists because of the following:

(1) The retention rates for the HPSP procured optometrists were lower than anticipated.

(2) The Army did not actively recruit for optometrists since 1980 because that career field was in a surplus status. Direct recruitment in substantial numbers did not begin until fiscal year 1987.

(3) There are higher salaries available in the civilian community. To resolve the shortage, a Plan of Action has been developed which is comprised of the following elements:

(1) Recruit 30 Optometrists each fiscal year in the short term (2-3 Years).

(2) Maximize the number of ROTC Cadets who gain educational delays for optometry school.

(3) Maximize the number of civilian optometrists hired.
(4) Develop an officer distribution plan for optometrists.
(5) Develop an optometry retention plan.
(6) Review pay of optometry civil servants.
(7) Explore potential for a form of the Senior Optometry Student Program.

(8) Establish the long range steady state accession number for military optometrists.

(9) Obtain a listing of senior students in Optometry School and complete a mailout to these students.

(10) Complete a mailout to civilian optometrists.

(11) Forward a letter to each Army Optometrist asking for their support during the shortage.

(12) Utilize personal services contracts at those locations where there is no optometry coverage (military or civilian).

(13) Assign eight additional personnel into the Officer Procurement Division to recruit optometrists.

At Fort McClellan, there is currently one authorization for a military optometrist and one will continue to be assigned. There were four authorizations there approximately 2 years ago, however, three of these authorizations were reallocated to other specialties by the local command. This action was most probably taken due to the low potential for total fill given the current status of optometry officers in the Army. It is too early to predict the actual results that will be obtained from the current recruiting and retention efforts. In fiscal year 1987, the recruitment goal for optometry was 10. A total of 10 applications were received for direct accession onto active duty. Of the 10 applicants, 3 were not selected, 5 were selected but declined entrance onto active duty, and 2 were accessed. Additionally, 5 optometrists entered active duty from the ROTC Educational Delay Program. The number of applicants to date in fiscal year 1988 for direct procurement indicates that the steps taken toward alleviating the shortage may be sufficient to resolve the shortage by fiscal year 1992. The Army Medical Department will remain vigilant in monitoring the status of this career field and will request assistance from DOD if it is determined that current efforts are not sufficient to resolve the shortage.

QUESTIONS SUBMITTED BY SENATOR PETE WILSON

A DECENTRALIZED COMPUTER SYSTEM

Senator WILSON. Dr. Mayer, in light of the fact that the Department has made a contract award on this system, is there any basis, in your opinion for the Department to continue to demonstrate, at cost to DOD, the so-called VA decentralized computer system? Shouldn't the Department now focus its resources only on the system being developed under your contract?

Dr. MAYER. During the past two years the Department of Defense has been running the Veterans Administration Decentralized Hospital Computer Program (VADHCP) at both March Air Force Base and Fitzsimons Army Medical Center. The purpose of this demonstration project was to assess the feasibility and cost effective ness of using the VA software in military medical facilities in lieu of a commercially procured Composite Health Care System (CHCS).

In an evaluation of the competing CHCS systems, the Department of Defense conducted the most comprehensive testing of a medical information system ever accomplished by DOD. The winning CHCS contractor, who used the VA system as its development nucleus and added features which responded to DOD specific require ments, will install its system in ten DOD hospitals for an operational test and evaluation.

In view of the fact that the winning vendor's CHCS is a VA-DHCP derivative, the feasibility of using a VA based system in military medical facilities has already been demonstrated. Discontinuing the VA test at March Air Force Base and Fitzsimons Army Medical Center would avoid future costs associated with data collection performed by a Defense contractor. The VA system would then be operated in a maintenance mode only to provide automation support to the hospitals until CHCS is installed.

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COMPREHENSIVE DATA MANAGEMENT SYSTEM

Senator Wilson. The Department has also been able to sign a development contract for the comprehensive data management system, a system identified as a requirement close to 10 years ago. Would you update the committee on the Department's plans for moving ahead with the acquisition of this system?

Dr. MAYER. On March 4, 1988, DOD signed a contract with Science Applications International Corporation for the continued development and deployment of the Composite Health Care System (CHCS). This system is a key component of the standard, integrated medical automation architecture being developed to support peacetime and mobilization operations and management information needs. The system will now be rigorously tested in ten operating hospitals, with their associated clinics. Concurrently, additional benefits analysis which is expected to strengthen the already positive benefit/cost ratio for this system will be conducted. The CHCS Operational Test and Evaluation will extend through Summer of 1989, with a DOD deployment decision expected in September 1989.

Based on currently programed funds, the following numbers of CHCS hospitals and clinics are scheduled for deployment each year:

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This schedule maximizes currently programed dollars by installing CHCS at the 37 percent of DOD hospitals which are responsible for 65 percent the DOD direct care inpatient workload, and 50 percent of the clinics which handle 51 percent of the outpatient workload by 1994.

Deployment of CHCS will satisfy a great portion of the total medical automated information requirement. Complementary efforts in the theater and contingency environment are currently in earlier development stages. The centerpiece theater system, the Joint Theater Medical Information System, will link the Joint Theater Commander with each medical treatment facility in the theater of operations, manage medical logistical information for all services, support global patient evacuation, and support patient care functions in wartime. I am requesting additional support for

TIS deployment as part of the current DOD programing cycle.

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