TRICARE - History

History

Historically, health care for military personnel and their dependents was provided in military medical facilities as promised by the military, and through a referral system, by civilian medical personnel where military physicians were not available in a certain specialty, or overcrowding of a military medical facility occurred. After World War II and the Korean War, access to care in military facilities became increasingly unavailable due to resource constraints and growing demands on the system, and "space-available basis" was first noted. To address this problem, Congress passed the Dependents Medical Care Act of 1956 and the Military Medical Benefits Amendments of 1966. These acts allowed the Secretary of Defense to contract with civilian health care providers. This civilian health care program became known as the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS) in 1966.

In the late 1980s, because of escalating costs, paperwork demands, and general beneficiary dissatisfaction, DoD initiated a series of demonstration projects. Under a program known as the CHAMPUS Reform Initiative (CRI), a contractor provided both health care and administrative-related services, including claims processing. The CRI project was one of the first to introduce managed care features to the CHAMPUS program. Beneficiaries under CRI were offered three choices — a health maintenance organization-like option called TRICARE (CHAMPUS) Prime that required enrollment and offered enhanced benefits and low-cost shares, a preferred provider organization-like option called TRICARE (CHAMPUS) Extra that required use of network providers in exchange for lower cost shares, and the standard CHAMPUS option that continued the freedom of choice in selecting providers but required higher cost shares and deductibles known as TRICARE Standard.

Although DOD’s initial intent under CRI was to award three competitively bid contracts covering six states, only one bid, made by Foundation Health Corporation (now Health Net) covering California and Hawaii, was received. Foundation delivered services under this contract between August 1988 and January 1994.

In late 1993, in response to requirements in the DOD Appropriation Act for Fiscal Year 1994, the DoD announced plans for implementing a nationwide managed care program for the MHS that would be completely implemented by May 1997. Under this program, known as Tricare, the United States was divided into 12 health care regions. An administrative organization, the lead agent, was designated for each region and coordinated the health care needs of all military treatment facilities in the region. Under Tricare, seven managed care support contracts were awarded covering DOD’s 12 health care regions.

Since then, Tricare has undergone several restructuring initiatives, including re-alignment of contract regions, Base Realignment and Closure, and the addition of "Tricare for Life" benefits in 2001 for those who are Medicare-eligible, and "Tricare Reserve Select" in 2005.