Pentagon to Bill Private Insurers for Retirees’ Care

The Defense Department, departing from current policy, will begin billing private insurance companies on Oct. 1 for medical care that military hospitals give retirees and dependents, the Pentagon announced Friday.

The change in billing practices, authorized by Congress early this year, will not result in any additional charges to retirees or dependents admitted to military hospitals, the Pentagon said.

But the new procedure will force companies that have insured military retirees or dependents to pay a per diem rate for any care dispensed to their beneficiaries by a military hospital. Currently, the Defense Department picks up the full cost of such medical care inside its own facilities.

Added Revenues Seen

Lt. Col. Pete Wyro, a Pentagon spokesman, said the per diem rate will be calculated each fiscal year by the Pentagon’s comptroller. This year’s rate is about $420 a day.

The Pentagon has estimated that the change in billing procedures will produce an estimated $10 million in additional revenue for the government during its first year. Defense officials estimate that up to 40% of the retirees and military dependents eligible for military health care may have private insurance as well.

The change in billing procedures is part of an effort by the Defense Department to rein in skyrocketing health costs.

Under current policy, all active-duty military personnel are entitled to automatic admittance and free care at military hospitals. Military retirees and the dependents of both active-duty and retired personnel also are entitled to admittance to a military hospital, but only on a “space-available” basis.

Free Medical Care

Retirees and dependents get free medical care in the military hospitals, paying only for their food. If retirees or dependents go to a civilian hospital because a military facility is full, they are covered by another Pentagon health plan that requires a co-payment.

As a result, many eligible beneficiaries have purchased private health insurance. Insurers of retirees and dependents will now be forced to pay for care dispensed at military as well as civilian hospitals.