Medicare Subvention Demonstration

Many military retirees would like to use their Medicare benefits at military medical facilities, but federal law does not allow Medicare to pay the Defense Department (DOD). Many retirees can get health care at military facilities only when space is available and cannot rely on them for comprehensive, continuous care. DOD is willing to provide such care to these retirees if the law is changed so that Medicare could reimburse DOD. In light of these concerns, recent legislation authorized a three-year, six-site demonstration project, called Medicare subvention, which allows Medicare-eligible military retirees to enroll in a new, DOD-run health maintenance organization (HMO). Medicare can pay DOD for the health care provided to retirees enrolled in the demonstration project, subject to certain conditions. The demonstration's goal is to implement an alternative for delivering accessible and quality care to these "dual-eligible" retirees without increasing the cost to Medicare or DOD. This report examines enrollment in DOD's pilot HMOs for seniors. GAO discusses (1) how successful the demonstration has been in enrolling eligible beneficiaries, (2) what influenced retirees to join DOD's pilot HMOs, and (3) what factors accounted for differences in enrollment rates across demonstration sites.

GAO noted that: (1) in the first year of DOD's Medicare subvention demonstration, over one-fifth of Medicare-eligible military retirees in the demonstration areas enrolled in Senior Prime, DOD's HMO pilot for seniors, although enrollment rates differed markedly across the six demonstration sites; (2) two sites reached their enrollment targets and started putting applicants on a waiting list; consequently, the number of enrollees understates interest in the program at these two sites; (3) the demonstration allows retirees who turn age 65 after the demonstration's start to age-in--enroll in Senior Prime regardless of the site's enrollment limit--if they were enrolled until turning 65 in DOD's managed care plan for younger DOD beneficiaries; (4) slightly more retirees are aging-in than DOD had expected; (5) disenrollment rates are running at almost 5 percent per year demonstrationwide, relatively low compared with many other Medicare managed care organizations; (6) a retiree's recent use of the military health care system was a strong predictor of enrollment in Senior Prime--the greater the reliance on military health care in the previous year, the greater the likelihood of enrolling; (7) several related factors also influenced retirees' decisions: (a) satisfaction with previous health care; (b) knowledge of Senior Prime; and (c) convenience; (8) any potential expansion of DOD subvention would probably also tend to attract retirees with these characteristics, although they are a minority of all military retirees; (9) differences in site enrollment rates partly reflected the sites' different histories of serving retirees; (10) sites that had provided high levels of care to many older retirees had an advantage, since users who depended on military health care were more likely to choose Senior Prime; and (11) features of the local market and the site helped to shape individual enrollment decisions.