Military Health System Reform

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:

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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. 114328) 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.”

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Military Health System Reform

Figure 1. MHS Reform – Implementation Phases, 2018-2021

Source: CRS graphic based on DOD, “Plan 3: Implementation Plan for the Complete Transition of Military Medical Treatment Facilities to the

Defense Health Agency,” p. 5, June 24, 2019.

Notes: Yellow stars = DOD’s estimated completion date for each objective. Qtr 1 = January-March. Qtr 2 = April-June. Qtr 3 = JulySeptember. Qtr 4 = October-December.

Realign the MTFs

DHA plans to assume control of certain MTFs and establish

health care market offices in three phases (see Figure 1).

Phase 1, which began on October 1, 2018, transfers seven

MTFs to the DHA. This phase serves as DHA’s testing

period to ensure adequate support and infrastructure are in

place prior to the next round of transfers. Phase 2 would

transfer all remaining MTFs in the U.S. on October 1, 2019

and establish geographic health care markets–a group of

MTFs that operate as a health system. Newly formed health

care market offices are to assist with MTF oversight,

coordinate health services and resources across MTFs and

TRICARE providers, and provide technical assistance to

MTFs. Phase 3 would transfer overseas MTFs on April 1,

2020 and establish similar health care market offices, called

Defense Health Regions.

Transform the Service Medical Departments

As MTFs are divested to the DHA, service medical

departments are to restructure to focus solely on medical

readiness and medical capabilities in support of military

operations. This includes the creation of “readiness

organizations,” respectively named the Army Medical

Readiness Command, Navy Medical Readiness and

Training Command, and the Air Force Medical Readiness

Agency. The responsibilities of these organizations include

manning, training, and equipping military medical

personnel; delivering clinical services in the operational or

non-MTF settings; and establishing and monitoring medical

readiness standards.

Considerations for Congress

DOD provides periodic, informal briefings on MHS reform

to the congressional defense committees. To date, no formal

hearings have been convened. The following lines of

inquiry may assist Congress with receiving further

clarification on DOD’s reform efforts and support

congressional oversight of the MHS throughout this yearslong process.

Status of Reform

 What is the status of the transfer of MTFs from the

military services to the DHA?

 What best practices were discovered from the initial

transfer of MTFs in 2018 and how will those practices

apply to future implementation phases?

Measuring Impacts of Reform

 How are reform efforts impacting beneficiaries, health

care providers, medical readiness, military services,

combatant commanders, DHA, and non-DOD partners?

 What is DOD’s plan to reshape the size or composition

of the medical workforce?

 How will DOD measure effectiveness or cost-savings

generated from MHS reform?

 How will DHA and the services’ medical readiness

organizations measure its ability to support combatant

commander requirements for medical capabilities and

forces?

Additional Needs for Reform

 DOD has suggested that changes to current law may be

required to successfully implement MHS Reform. What

statutory changes are needed?

 Are DHA and the services’ medical readiness

organizations appropriately structured and resourced to

carry out its revised responsibilities?

Bryce H. P. Mendez, Analyst in Defense Health Care

Policy

https://crsreports.congress.gov

Military Health System Reform

IF11273

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