July 26, 2019
Military Health System Reform
The Department of Defense (DOD) administers a statutory
health entitlement (under Chapter 55 of Title 10) through
the Military Health System (MHS). The MHS offers health
care benefits and services to approximately 9.6 million
beneficiaries composed of servicemembers, military
retirees, and family members. Health care services are
available through DOD-operated hospitals and clinics–
known as military treatment facilities (MTFs)–or through
civilian health care providers participating in TRICARE.
Currently, various DOD entities administer the MTFs and
the TRICARE program. Those entities include the Defense
Health Agency (DHA) and the military services’ medical
departments (i.e., Army Medical Command, Navy Bureau
of Medicine and Surgery, and Air Force Medical Service).
In 2016, the conference report accompanying the National
Defense Authorization Act for Fiscal Year 2017 (H.Rept.
114-840) noted that “the current organizational structure of
the military health system–essentially three separate health
systems each managed by three Services–paralyzes rapid
decision-making and stifles innovation in producing a
modern health care delivery system that would better serve
all beneficiaries.” Subsequently, numerous reforms were
directed in law. An overview of the contributing factors,
reform mandate, and DOD’s implementation efforts are
discussed below.
Contributing Factors to MHS Reform
Over the past three decades, various committees,
commissions, and federal government entities have issued
reports highlighting a need to re-evaluate, or restructure, the
MHS, such as:
Final Report of the Military Compensation and
Retirement Modernization Commission (2015);
MHS Modernization Study (2013);
DOD Task Force on MHS Governance (2011);
Task Force on the Future of Military Health Care
(2007);
Medical Readiness Review of the Quadrennial Defense
Review (2006);
Comprehensive Study of the Military Medical Care
System (1993); and
various assessments by the Government Accountability
Office (GAO).
Many of the reports have noted that MHS reform may
bring opportunities to enhance medical readiness of the
armed forces, improve health care quality and access,
increase patient satisfaction, reduce administrative burden
on beneficiaries, and lower overall costs.
Congress Mandates MHS Reform
MHS reform was directed in the National Defense
Authorization Act for Fiscal Year 2017 (NDAA; P.L. 114-
328) and codified in 10 U.S.C. §§1073c-1073d. This reform
includes:
a transfer of MTF administration and management from
the Service Surgeons General to the Director of the
DHA (§702);
reorganization of DHA’s internal structure (§702);
redesignation of the Service Surgeons General as
principal advisors for their respective military service
and as service chief medical advisors to the DHA
(§702); and
restructure or realignment of MTFs to best support
military medical readiness and the readiness of medical
personnel (§703).
Congress originally directed that MHS reform be completed
by October 1, 2018. However, the FY2018 NDAA (P.L.
115-91) and FY2019 NDAA (P.L. 115-232) provided
additional clarifications on the transfer of MTFs, the roles
and responsibilities of the DHA and the Service Surgeons
General, and an extension on implementing reform efforts
to September 30, 2021. The reforms do not impact any
TRICARE health plan options or its cost-sharing features.
Implementing MHS Reform
DOD submitted its implementation plan to Congress in
June 2018, describing a “streamlined organizational model
that standardizes the delivery of care across the MHS with
less overhead, more timely policy-making, and a
transparent process for oversight and measurement of
performance.” DOD later revised its plan to reflect certain
accelerated tasks and milestones, such as the transfer of
MTFs to the DHA. Changes are to occur through 2021.
MHS Governance and Financial Management
Reform
Since DHA and the service medical departments report to
separate senior defense officials, decisions on MHS policy,
programs, processes, and resources are vetted in a variety of
working groups, boards, and councils. DOD describes the
current MHS governance as a “sclerotic decision-making
process” that often serves as a barrier to timely
improvements. The revised governance process delineates
who makes certain decisions. The Assistant Secretary of
Defense for Health Affairs is to have primary authority and
oversight of the MHS. DHA is to make all decisions
relating to health care delivery in MTFs. Meanwhile, each
respective service medical department is to make decisions
relating to “operational readiness matters.”
