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Purchasing Oncology Services:
Current Methods and Models in the Marketplace
Supplement to Cancer
Oncology Services
The Department of Defense Perspective
Doris Browne, M.D., M.P.H.1
Lynn M. Baatz, Ph.D.2
Fred Millard, M.D.3
Frank T. Ward, M.D.4
The Department of Defense (DoD) military health system has responsibility for
providing medical care for more than 8 million beneficiaries. This article discusses
initiatives related to both the providing and purchasing of oncology services. A
description of health care coverage under TRICARE, the Department?s managed
U.S. Army, Office of the Assistant Secretary
of Defense, Health Affairs, Washington, DC.
U.S. Air Force, Wright Patterson Hospital,
Wright Patterson Air Force Base, Ohio.
U.S. Navy, Naval Medical Center, San Diego,
U.S. Army, Walter Reed Army Medical Center,
Washington, DC.
care program, which utilizes military treatment facilities and civilian health care
providers, is provided. Participation in clinical trials by the DoD beneficiaries,
oncology services in military treatment facilities, quality management programs,
cancer research, and the development of new technologies to enhance early cancer
detection are presented. Access to research trials and new technologies is necessary
for a comprehensive approach to cancer care. Clinical trials have been the vehicle
by which the oncology community developed most of its formal clinical evidence
for the efficacy of various treatment approaches. The Department participates in
clinical trials through cooperative group membership or affiliation. Through an
interagency agreement with the National Cancer Institute, DoD beneficiaries have
available the option of participating in NCI-sponsored clinical trials through the
direct military care system or through civilian care with reimbursement for approved protocols nationwide. The DoD has been actively involved in breast cancer
research since 1992 and prostate and ovarian cancer research since 1997. The goals
of the cancer research programs are to expedite and facilitate breakthroughs in
research, support innovative, and exploratory ideas with a vision to foster new
directions, address neglected issues, and bring new investigators into the research
arena. The program incorporates the consumer perspective by involving consumers in the decision-making process. The DoD health care system trains experts in
the management of cancer patients and provides a multidisciplinary approach to
care through the direct military health care system or through network providers
as part of the TRICARE system. Although cost containment is key, the delivery of
high quality health care that is easily accessible is a primary goal of the military
Presented at The American Cancer Society National Conference on Purchasing Oncology Services: Current Methods and Models in the Marketplace, Chicago, Illinois, September 11?12,
The authors thank Ms. Nancy Olins.
Address for reprints: Commander, HQ,
504 Scott Street, Fort Detrick, MD 21702-5012.
Received January 7, 1998; accepted January 15,
health system. Provision of a comprehensive benefits package that includes a
spectrum of care and employing outcomes measurements to evaluate care that is
appropriate for the patient?s disease is essential. Cancer 1998;82:2010?5.
q 1998 American Cancer Society.
his article discusses the Department of Defense (DoD) initiatives
relating to both the provision and the purchasing of oncology
services. Beginning with a historic overview, the article will describe
the military treatment facility coverage under TRICARE, the Department?s participation in clinical trials, quality management, and new
technology issues, including some projections for the future.
A Historic Overview
The Mission of the Military Health System (MHS) is twofold: 1) to
achieve and maintain the ability to provide medical and preventive
q 1998 American Cancer Society
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Department of Defense Perspective/Browne et al.
health services and support to the U.S. Armed Forces
during military operations; and 2) to maintain the capability to provide continuous medical and preventive
services and support members of the Uniformed Services, their family members, and survivors, retired
members and their families, and all others entitled to
DoD health care.
The Office of the Assistant Secretary of Defense for
Health Affairs (OSD) (HA) develops forward-thinking
policies and priorities for quality defense health programs that are focused on readiness, develops policies
for the assessment and incorporation of scientific and
technologic advances into military medical practices,
and fosters and oversees activities that lead to innovation in science and technology.
The Office of the Deputy Assistant Secretary of
Defense (Clinical Services) recommends policy and
procedures on the scope of practice issues, medical
standards for military service, disease prevention and
health promotion, and scientific activities, including
medical research, special epidemiologic studies, clinical investigation programs, and Graduate Medical Education (GME). The Office monitors service compliance with these policies and procedures and makes
recommendations to improve health care quality.
DoD provides or arranges services for approximately 8.3 million beneficiaries through its ??direct
care system,?? which is comprised of 115 military hospitals and several hundred clinics and through care
purchased from civilian network providers under the
DoD TRICARE program.
Physician Education and Training in Oncology
Comprehensive clinical oncology services are provided for all beneficiaries who require it in the MHS.
Such services include medical, surgical, gynecologic,
and radiation oncology. GME programs in oncology
are combined and jointly run by the Army and Navy,
and Army and Air Force. This is a recent change in
military medical education. Previously, each service
conducted its own oncology GME program. Recognizing the need to operate more effectively in an era of
Defense downsizing and budgetary constraint, the
military services have joined together to consolidate
training programs. In addition to the resulting streamlined program, the consolidation has resulted in
stronger oncology GME. There are currently 8 ? 9 fellows each year participating as part of the 3-year oncology fellowship program. Some military personnel
participate in training at civilian institutions. All oncology subspecialties (ear, nose, and throat; hematology;
surgery; gynecology; radiation; and urology) are represented in the MHS.
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Congress has been appropriating funds to DoD for
breast cancer research since 1992. The mission of the
Breast Cancer Research Program (BCRP) is to reduce
the incidence of breast cancer and improve the quality
of life for those diagnosed with the disease. One of
the reasons DoD became involved in this research is
because of its 8 million beneficiaries and the high incidence of breast cancer diagnosed in the MHS. The
Army has been designated as the Executive Agent for
this program.
Goals of the BCRP are to expedite and facilitate
breakthroughs in breast cancer research and support
innovative research. Its ultimate intent is to eradicate
breast cancer. The vision is to foster new directions,
address neglected issues, and bring new investigators
into the field. Additional goals are to demonstrate solid
scientific judgment and to support research that will
translate into advances in breast cancer prevention,
diagnosis, and treatment.
Because this was a new research endeavor for
DoD, in 1993 the Institute of Medicine (IOM) was contracted to provide an investment strategy for the Breast
Cancer Program. IOM recommended a management
approach, peer review mechanism, and research investment strategy focusing on training and recruitment, research, and infrastructure enhancement with
consumer and minority involvement in decision
Congress provided funds to continue the BCRP
each year since 1993. In fiscal year (FY) 1997 funds
for prostate and ovarian cancer programs were added.
Congressional appropriations for prostate cancer research were in addition to the funds previously provided to the Army (Walter Reed Army Medical Center)
for prostate cancer. The need for basic and clinical
prostate research was supported to reduce the incidence of this life-threatening disease and to develop
more effective, more specific, and less toxic forms of
therapy for patients in all stages of the disease. Congress urged DoD to give the highest priority to funding
research that is multi-institutional, multidisciplinary,
and regionally focused.
A comprehensive program in ovarian cancer that
expands into endometrial, cervical, and other cancers
and includes prevention planning, implementation,
and development is supported.
Military Treatment Facility Coverage under TRICARE
TRICARE is the DoD-managed care program. It integrates care provided in military facilities with that provided in civilian communities by network providers
under contract to DoD. It offers beneficiaries health
choices: a health maintenance organization option
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CANCER Supplement May 15, 1998 / Volume 82 / Number 10
called TRICARE Prime, with enrollment and minimal
cost shares; TRICARE Extra, a preferred provider organization (PPO) option that includes annual deductibles and reduced cost-sharing; and TRICARE Standard, with annual deductibles and cost-sharing that is
greater than TRICARE Extra.
TRICARE is for active duty members, eligible family members, Civilian Health and Medical Programs of
Uniformed Services (CHAMPUS)-eligible retirees and
their family members, and survivors of all uniformed
services. TRICARE is designed to expand access to care
and assure high quality care, while controlling health
care costs for patients and taxpayers alike, and improve medical readiness.
The program is managed by the military in partnership with civilian contractors. There are 11 continental U.S. regions, plus Europe, each with a Lead
Agent, usually a commander of a large military treatment facility responsible for overseeing the program,
and the civilian managed care support contract.
TRICARE Prime provides a broad spectrum of care
and uniformity of benefits required to meet the health
care needs of the enrolled population. Prime covers
routine mammograms and Papanicolaou (Pap) smears
as well as diagnostic and preventive health care measures. TRICARE Prime?s preventive clinical benefits include periodic health examinations and follow-up, immunizations, cholesterol and blood pressure checks,
height and weight measures, vision and hearing
screening, and pediatric blood lead assessment. Targeted health promotion and disease prevention examinations include breast, female reproductive organ, testicular, colorectal, skin, oral and pharyngeal, and
thyroid cancers. Patient and parent educational
counseling also is covered and includes dietary and
nutrition assessment; physical activity and exercise;
safe sexual practices; tobacco, alcohol, and substance
abuse; accident and injury prevention; stress, bereavement, and suicide risk assessment; dental health promotion; and other cancer surveillance.
Primary Care Managers (PCMs) are responsible
for the provision of health care for TRICARE Primeenrolled beneficiaries. Under the PCM concept, enrolled members are assigned to an individual or
group/team of primary care providers for comprehensive health care. The PCMs are advocates for their
patients and liaisons with the MHS. PCMs may be
military or civilian in military treatment facilities or
may be TRICARE network providers in the civilian
TRICARE Extra is the PPO option with a copayment. In areas in which the managed care contractor
has established provider networks, the discounted rate
offered by the network providers is the same for all
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TRICARE/CHAMPUS beneficiaries. If a TRICARE Standard patient uses a network provider, in effect that
patient is participating in TRICARE Extra. Under this
option, the beneficiary is responsible for a smaller percentage of cost-sharing than when using the TRICARE
Standard Option and the provider rate has been discounted. Consequently, the patient will pay less than
if he/she had used a nonnetwork provider. Covered
benefits are the same as under TRICARE Standard program.
The covered services available under TRICARE
Standard are the same as currently available under
CHAMPUS. Specific oncology screening services covered under CHAMPUS (now TRICARE) Standard include routine mammograms and Pap smears. Previously, CHAMPUS could cost-share mammograms
and Pap smears only under very limited circumstances. Rules regarding frequency of procedures and
who may provide the services continue to be in effect.
CHAMPUS, now TRICARE, covers the following
oncology services and organ transplants: corneas, kidney, liver, liver-kidney, heart, lung, heart-lung, and
bone marrow. There are limits in certain circumstances. Some organ transplants only may be provided
in facilities that are authorized under the Specialized
Treatment Program for that particular type of transplant. Liver transplants also may require advance authorization for reimbursement under TRICARE. Some
military beneficiaries also receive medical care in Veterans facilities under a VA-DoD agreement. For example, cost-sharing for wigs for cancer patients may be
received from only one Department (DoD or VA).
Cost Containment Mechanisms and Payment for
Oncology Services under CHAMPUS/TRICARE
As with all TRICARE/CHAMPUS services, payment for
oncology procedures is based on established CHAMPUS Maximum Allowable Charges (CMACs). For inpatient institutional reimbursement, payment is based
on the appropriate diagnostic-related group, modeled
after the Medicare program. Outpatient institutional
reimbursement is based on billed charges. Provider
charges are based on the CMAC and Current Procedural Terminology (CPT) 4 codes.
All providers must be authorized to be compensated for services to MHS beneficiaries. Nonparticipating providers may be allowed reimbursement up to
115% of CMAC, participating providers may be allowed reimbursement up to 100% of CMAC, and TRICARE network providers may be allowed only the negotiated rate, but in no case �0% of the CMAC.
Payments by beneficiaries depend on which TRICARE/CHAMPUS option they have selected. In areas
in which TRICARE has not yet been implemented,
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Department of Defense Perspective/Browne et al.
(Northeast, Northcentral, and Mid-Atlantic states)
beneficiaries are covered under the CHAMPUS program, which involves annual deductibles and costsharing.
Occasionally it is necessary to refer beneficiaries
enrolled in TRICARE Prime to a nonnetwork provider
for specialty services. In such an instance, there is a
possibility the beneficiary will have to pay any amount
billed by the provider which is �0% of CMAC. Also
available to the TRICARE Prime beneficiary is the
Point-of-Service option. In this situation, a Prime enrollee elects to seek service outside the program and is
responsible for a payment that is greater than payment
under any other option.
Specialized Treatment Services
Specialized Treatment Services (STS) are concentrations of complex specialized care in centers of clinical
excellence created to conserve resources while offering
high quality care at the best cost. The user population
of the military medical treatment facility (MTF ) designated as a STS does not necessarily come from the
immediate service area. Military beneficiaries may use
any MTF. Historically, MTF funding included patients
from outside the service areas. Therefore, resources
for this care (baselines) are included in their capitated
STS facilities utilize a transfer payment policy
mechanism to receive payment for care rendered beyond their baseline. For the first time, medical centers
have an established funding mechanism when their
payable baseline is exceeded. The transfer payment
policy is an incentive for medical centers to establish
an STS. Rather than receive reimbursement for marginal costs incurred, MTFs now can be reimbursed at
average cost, which includes the cost of military salaries. The difference between the average and marginal
cost can be reinvested back into the facility.
Ambulatory/Outpatient Oncology Services
As in much of the private sector, oncology care is moving away from inpatient stays to ambulatory visits. The
Services use short stay units for many oncology patients. Additional educational and psychosocial support is provided to beneficiaries on an outpatient basis. For example, in the Air Force, same day surgery
is performed more commonly than in the past and
ambulatory infusion pumps are used for hydration,
chemotherapy, and transfusion. Nearly all chemotherapy given by Army and Air Force oncologists is in an
outpatient setting. The Navy has developed an ambulatory infusion center in addition to a clinic room that
operates during extended hours.
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Clinical Trials Participation
The National Cancer Institute (NCI) clinical trials program has been the means by which the oncology community has developed the majority of the formal clinical evidence for the efficacy of various treatment approaches in clinical cancer.
Cooperative group participation in clinical trials
include consortiums of clinical investigators located
throughout the country in single or multicenter institutions such as university cancer centers or community-based hospitals. Some military hospitals are
members or affiliates of cooperative groups, such as
the National Surgical Adjutant Breast and Prostate
Group, the Cancer and Leukemia Group B, the Southwest Oncology Group, the Eastern Cooperative Oncology Group, the Pediatric Oncology Group, the Gynecological Oncology Group, and the Radiation Therapy
Oncology Group.
In 1996, DoD signed an interagency agreement
with NCI to allow more DoD beneficiaries to participate in NCI-sponsored clinical trials, either through
MTFs or through civilian care reimbursed by DoD for
any NCI-sponsored Phase II or III approved clinical
trial nationwide. DoD became involved in this important agreement because of a need to provide a
broader opportunity for beneficiaries to participate in
clinical trials, and to increase access to state-of-theart medical care for CHAMPUS beneficiaries and to
share support for the scientific evaluation of new cancer treatment modalities. As of January 1998, approximately 91 cases have been funded under this agreement, which includes solid tumors, hematologic malignancies, and other tumors.
Evaluation Mechanisms
Clinical Quality Management Program
In the DoD, the Clinical Quality Management Program
establishes clinical monitoring and improvement
practices for health care services whether provided in
MTFs, under network provider agreements, or other
means established in support of DoD managed care.
The Program includes a number of requirements such
as military health care providers must earn readiness
certification documenting their preparation for military operations anywhere in the world and all military
hospitals and ambulatory clinics, as well as civilian
network facilities, providing care to DoD beneficiaries
must maintain accreditation by the Joint Commission on Accreditation of Healthcare Organizations
(JCAHO). A multidisciplinary panel of military and civilian consultants will develop criteria for clinical practice guidelines, clinical outcome measures, special
studies, and education initiatives.
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CANCER Supplement May 15, 1998 / Volume 82 / Number 10
Part of the quality management function is to implement special studies that will discover TRICARE
??best practice?? benchmarks and to communicate the
findings. All medical and health professionals who
participate in providing care to beneficiaries of the
DoD need to implement practices based on results
from these studies. These studies meet the criteria for
the JCAHO quality improvement standards and those
of the National Committee for Quality Assurance.
Clinical Report Card
The Health Plan Employer Data and Information Set
(HEDIS) created standardization performance measures. DoD uses HEDIS data as a tool to determine
how well DoD is doing vis-a?-vis the private sector.
HEDIS provides data to measure benchmarks that
allow comparison of performance among catchment
areas, TRICARE regions, and Services. DoD has developed a version of HEDIS called the MHS Report Card,
which addresses 17 of the HEDIS 71 data elements. It
measures performance in the areas of access, quality,
utilization, health behavior, and health status. Trend
analysis displays the difference between current (January 1997) and previous (August 1996) report card results. Among quality satisfaction measures analyzed
were the percentage of women with Pap smears and
the percentage of women age 50/ years with mammograms in the last 2 years. Among the first 17 performance measures analyzed are breast and cervical cancer screening. In the near future, an expansion of the
data elements to 45 and ultimately including all elements as part of the MHS Report Card will be attempted.
DoD currently is evaluating for The Foundation
for Accountability for possible implementation as a
performance tool for the breast cancer program.
Clinical Pathways and Patient Satisfaction
Walter Reed Army Medical Center, Madigan Army
Medical Center, Tripler Army Medical Centers, National Naval Medical Center, and Wilford Hall Air
Force Medical Center (WHMC) are developing clinical
pathways focusing on breast cancer and other malignancies. A clinical pathway is an algorithm used to
develop minimal levels of standardized types of care.
As an example of a performance measure in oncology, the 1996 Evaluation of Care and Outcomes Associated with Bone Marrow Transplantation provides a
preliminary view of the care provided in the MHS bone
marrow transplant program. Observed versus predicted mortality and leukemia free survival both were
measured. The probability of death for WHMC bone
marrow transplantation in identical leukemia patients
was not significantly different than predicted and the
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probability of these patients surviving free of recurrence was not significantly different than predicted.
To assess patient satisfaction with the bone marrow transplantation experience, a patient follow-up
clinical assessment was mailed to all living transplant
patients who received transplants at WHMC. Patients
responding to the satisfaction survey generally were
very satisfied with the medical care they received but
somewhat less satisfied with follow-up and support
services provided.
New Technology
Mobile Breast Cancer Center
The Mobile Breast Cancer Center (MBCC) is a prototype vehicle designed to provide a comprehensive system for breast cancer care, early detection, patient
counseling, and integration of multidisciplinary expert
clinical teleconsultation. It is a collaborative effort between DoD, the NCI, and the Department of Health
and Human Services? Office of Women?s Health. It is
designed to provide state-of-the-art technologies and
introduce real-time diagnosis, teleconsultation, televideo interaction, and aggressive educational support.
Goals of the MBCC are to increase the access
received by remote military beneficiaries and underserved populations to clinical trials and high
quality breast care. Benefits include extending scientific advances into new strategies for detection, prevention, diagnosis, education, treatment, follow-up,
and ongoing patient care. The MBCC addresses
problems identified by the Institute of Medicine regarding access to mammography by minority, low
income, and older women, and use of state-of-theart technology to overcome socioeconomic, cultural,
and technologic barriers. It addresses important research questions that center on the effect of poverty
and culture on breast cancer outcome, and patient
entry into clinical trials.
Other Initiatives
In FY 1996 and 1997, Congress directed the Assistant
Secretary of Defense for Health Affairs to develop
and implement a program to improve early detection, prevention, education, and diagnosis of breast
cancer for women beneficiaries of the MHS. The
OASD (HA) chartered a Tri-Service interdisciplinary
team called the DoD Breast Cancer Work Group. Its
purpose is to develop an implementation plan and
advise the TRICARE Executive Committee on utilization of the Defense Health Program breast cancer
The FY 97 Breast Cancer Initiative continues efforts to improve the early diagnosis, education, and
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Department of Defense Perspective/Browne et al.
prevention of breast cancer for women beneficiaries
of the MHS. The program utilizes a three-phased approach, which includes screening, diagnosis, mammography technician training, tumor registrar training, and training for data managers to support clinical
trials. In addition, it focuses on beneficiary access
to breast cancer screening, breast self-examination
techniques, and merit-based education programs.
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One of the merit-based education programs
funded under the Breast Cancer Initiative is a centralized Tumor Board covering the entire Pacific region.
The Air Force also is involved in a telemedicine consultation program to provide a hook up with other facilities that do not as yet have a telemedicine Tumor
Board. This program involves a radiation oncology
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