Association for Public Policy Analysis & Management

The military health system serves over 9.4 million military personnel and their families, many of whom rely on TRICARE Standard, a fee-for-service health care plan, for their insurance coverage. An even larger government health plan is Medicare, which serves over 55 million Americans who are age 65 or older or qualify through their receipt of Social Security Disability Insurance. For coordination of benefits between the two programs, TRICARE is second payer to Medicare for those military beneficiaries eligible for Medicare, and primary payer for benefits in the TRICARE program that are not covered by Medicare. Some health care providers do not accept new TRICARE Standard or Medicare patients, for various reasons. The goal of this paper is to better understand what factors affect providers’ decision to accept new patients from government health insurance programs such as TRICARE Standard and Medicare, including competing demand from each other as well as other programs.

We address two main research questions: (1) how the acceptance rate for new TRICARE Standard patients compares to the acceptance rate for new Medicare patients, separately for primary care providers, specialists, and mental health providers; and (2) what provider and local-area characteristics are associated with the decision to accept each insurance type.

We use data from the TRICARE Standard Survey of Providers, which was administered to a nationally representative sample of civilian physicians and non-physician mental health providers from 2012 to 2015. Among other questions, providers were asked whether they accept any new patients, new TRICARE Standard patients, or new Medicare patients. The data also include information about the characteristics of the providers, such as their specialization, practice type, and age. In addition, we incorporate data from the American Community Survey to measure local area characteristics, such as the number of providers per 1,000 residents and per capita income.

We first present descriptive statistics showing the mean acceptance rate of TRICARE Standard and Medicare by provider characteristics to provide a baseline for how TRICARE Standard and Medicare acceptance rates differ and which types of providers are most likely to accept each type of insurance. Providers that do not accept these insurance sources are asked for an explanation; we provide a summary of the most frequently mentioned responses to add context for the relatively low acceptance rates by certain providers.

We then use a nested logit model to estimate the relationships between provider and local area characteristics and insurance acceptance decisions. The outcomes we analyze are whether providers accept any new patients, and if they do accept new patients, if they accept: (1) both new TRICARE Standard and new Medicare patients; (2) new TRICARE Standard but not new Medicare patients; (3) new Medicare patients but not new TRICARE Standard patients; or (4) no new patients from either TRICARE Standard or Medicare. Our findings will provide insight into the challenges and opportunities associated with attempts at improving the acceptance rate of TRICARE Standard and Medicare.