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further stimulate incentive to better manage the total health care workload as well as more flexibility to provide cost-effective health services.

The AMEDD is working towards the goals established by the Assistant Secretary of Defense (Health Affairs) under Project Restore to contain CHAMPUS workload at the FY 1986 level. While this effort is somewhat hampered by competing priorities and budgetary constraints within the Army, a review of our first quarter statistics for the number of CHAMPUS non-availability statements issued by Army facilities indicates a 5.5 percent decline from the last quarter of FY 1987. Obligations for CHAMPUS claims are also running slightly below the initial projection.

Efforts are underway to develop and begin a Catchment Area Demonstration as called for by the 1988 Author ization Act. Under this concept, the local

MTF commander will be responsible for providing all health care services to eligible beneficiaries through either the direct care system or under CHAMPUS. The objectives of this demonstration are to provide the local conmander with the resources and author ity to develop the most cost-effective sources of care within his catchment area, to pursue alternative delivery mechanisms to augment the services available from the direct care system, and to improve beneficiary access to care by exploring all available options to meet their health care demand.

The concept is being designed to be conducted at at least two sites. Current programs which afford staffing and service augmentation at the MTFs will continue to be employed. These include the DOD/VA sharing agreements and the Military-Civilian Health Services Partnership Program. Other contracts and negotiated agreements with the private health care sector will also be

pursued. An enrollment system will be established for each location. To encourage 100 percent enrollment an alternative system will be included at one site. Each activity will employ the "health finder" concept to assist beneficiar ies referred to civilian providers. Concurrent evaluations as well as retrospective review will provide for control and proliferation of positive aspects of the demonstration.

Last year, I reported to you on the efforts of our AMEDD Quality Assurance (QA) Program and the results of an audit of all active and reserve component physicians. These actions are continuing in our efforts to ensure that quality care is provided to all our beneficiaries. Our program is based on rigid enforcement of confidential peer review at each military medical treatment facility under the explicit and direct oversight of the Medical Corps commander. The overall Quality Assurance Program entails patient care assessment, provider credentialing, utilization review, and risk management.

Results from the 1986 DOC contract to the Commission on Professional and Hospital Activities of Ann Arbor, Michigan, for external civilian peer review have recently been received. I'm pleased to report that of 16,000 separate Army cases (primarily high risk categories) reviewed by this agency for substandard care, only 19 have been reported to date to represent a possible major deviation from the standard. All of these cases had previously been identified by the MTF under their ongoing QA program. Although we would prefer not to have any such cases, the fact that the number is small and that these cases had previously been identified by internal review attests to the efficacy of our QA program.

In conclusion, the Army Medical Department is proud of its service to the

nation in peace and war. We are committed to providing quality health care to the soldiers and their families that we serve. The delivery of health care in the future will be challenging - not only in terms of patient needs and provider expectations, but also in terms of cost and budget considerations. The continued support and cooperation of the Congress is necessary to meet these challenges and ensure quality health care for our beneficiaries.

Madam Chairman, that concludes my prepared statement. I will be happy to

answer any of your questions.

Mrs. BYRON. General Chesney.


GENERAL, U.S. Air Force
General CHESNEY. Good morning, Madam Chairman.

I would also like to submit my statement for the record. I have a few quick things that I would like to bring to your attention.

We also have the same major budget problems this year that the Army and the Navy have. We actually got 10 percent less money this year in our medical budget than we got last year, and with a 9 percent inflation factor and with a 1.5 percent growth in our beneficiaries we are down 20 percent less money this year than we had last year, and it costs us more to send people out for CHAMPUS, as Dr. Mayer testified. We find it costs us $420 a day to take care of our patients in house; civilian costs are $697 plus the doctor's fee, which runs it up to $1,000 or so. So it is, “Pay me now, or pay me more later," so they are all in the same box, the same fund, CHAMPUS and my O&M.

So I am $65 million short right now of being able to finish this year. Each of our major commands has a date when they are going to run out of money, and the first one starts in May. So we are going to have to be able to reprogram.

The line of the Air Force has made it very clear that they do not want us to stop medical care to any line of beneficiaries, and they will help us in getting the money to reprogram or whatever else we must do. We are in a very bad situation right now.

We are working hard with the Veterans' Administration on sharing agreements, as was testified in previous hearings; we are working that well. We are trying to start some PRIMUS clinics this year. They save money; they will save us money. We have got four areas where we are going to start this year and one next year.

We are looking ahead to implementing a catchment area management test at two of our sites. We think we can get better care and save money for the Government in doing that, and we are pushing forward to starting that the first of October.

We continue to have qualified medical personnel coming in. We can staff most of our current authorized positions. We do have some shortages in general surgery, radiology, psychiatry, Ob-Gyn, and nurse-anesthesia. We are really concerned about the increasing competition for nurses.

We want to thank this committee for your strong support and help in the past, and we would be happy to answer any questions.

[The prepared statement of General Chesney follows:

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Peacetime Medical Care


The Surgeon General
United States Air Force

9 March 1988


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