Summary: In response to escalating health care costs, Congress has urged the Defense Department (DOD) to gradually lower reimbursement rates paid to civilian physicians under the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS) for medical care provided to members of the armed forces. As DOD has implemented its payment revisions, however, some physicians have complained that the CHAMPUS maximum allowable charge (CMAC) is too low--particularly for obstetric and pediatric rates. Under DOD's new managed care program--TRICARE--these CMAC rates represent DOD's maximum physician reimbursement level. Under TRICARE, civilian doctors provide supplemental care at military treatment facilities. This report examines (1) whether DOD's methodology for setting CMAC rates complied with statutory requirements and how current CMAC rates compare with Medicare rates for similar services, (2) the basis for physicians' concerns about CMAC rates and how these concerns affect their willingness to treat military beneficiaries, (3) the basis for other concerns that physicians have about TRICARE that could also affect their willingness to treat military beneficiaries, and (4) how balance billing limits are being enforced.
