Pentagon Seeks Bids to Change Its Health Care

The Pentagon, after years of study, has begun overhauling its health care system for dependents and retirees.

The Pentagon’s office of health affairs announced Friday that it has started mailing formal requests for proposals to more than 200 health care providers and insurance companies that had expressed an interest in bidding on four “demonstration projects.”

Those projects, expected to involve contracts totaling $600 million, will affect an estimated 1.7 million retirees and dependents living in six states and one major metropolitan area.

States Grouped in Pairs

The six states are being grouped geographically in pairs with one contract to be awarded for each two states--California and Hawaii, North Carolina and South Carolina, and Georgia and Florida. The New Orleans metropolitan area will be handled separately with its own contract.

Assuming the one-year demonstration programs work as expected, the reform effort will be extended nationwide to encompass all 5.1 million eligible retirees and dependents.

In essence, the Pentagon now wants to stop running its own health insurance plan and rely instead on regional contractors.

The contractor--whether an insurance company, health maintenance organization or hospital chain--will have to assume the responsibility for providing health care to retirees and dependents in the test areas for a set annual fee.

The contractors will put themselves “at risk,” meaning they will lose money if unable to provide the necessary care at the agreed price.

Information Conference

Julian Barber, a spokesman for Dr. William Mayer, assistant defense secretary for health affairs, said interested bidders would be invited to a special information conference in about a month and bids would be due in 90 days.

That will allow the selection of winners by early fall and the start of services in the six states and New Orleans by the spring of 1988, he said.

The reform effort is aimed at replacing CHAMPUS--the Civilian Health and Medical Program of the Uniformed Services. That is the insurance plan that covers dependents and retirees when they turn to the civilian sector for care because space is not available in military hospitals.

About 75% of the care provided to retirees and dependents is dispensed at military facilities. The remaining 25% is provided by the civilian sector, amounting to almost 6 million claims a year.