An evaluation of transfer payments within the Military Health Services System
Portis, Alan L.
San Miguel, Joseph G.
Summers, Donald E.
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Under the Department of Defense's (DoD) modified capitation resource allocation system, there are incentives to shift costs to other components of the Military Health Services System (MHSS). In the transition to capitation budgeting, the Office of the Assistant Secretary of Defense for Health Affairs (OASDlHA) published the Transfer Payment policy in 1995 to ensure the equitable transfer of funds between the Services and Military Treatment Facilities (MTFs). This thesis begins by providing background on the MHSS direct care system, TRICARE Program, and DoD's modified capitation resource allocation methodology. Since the methodology of transfer payments is based on data from currently utilized information systems, this thesis contains a discussion of those systems as well as those planned for deployment. The relevant prospective payment system (PPS) costing factors used in determining a transfer price are also examined. Case studies are used to illustrate when a transfer payment would occur and what computations are employed in determining the amount of funds to transfer. Although the policy was designed to provide for an equitable transfer of funds, it has been the subject of much debate. Consequently, this thesis examines the major implementation issues and current effectiveness of the policy itself
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