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U.S. Military Retirees of the Philippines Group


Tricare Philippines Newsletter 13009
Insights into the Angeles Demo Failure, How it Effects Everyone Else and the Future

There are some very significant points and conclusions that came out of the recent failure of the Defense Health Agency (DHA) Philippine Demonstration Project and many of them impact on both of the unique and separate “Plans” we all have to understand and use interchangeably.

1. DHA and ISOS were not prepared for this failure and were caught flatfooted and by surprise.

a. The initial total silence from DHA and International SOS (ISOS) when this occurred went on for a week. The silence included their failure to respond to questions posed by Stars & Stripes which resulted in an article on the failure without comment from DHA, see To key hospitals quit Tricare pilot project for retirees in Philippines.
b. It was obvious by this failure to respond or even acknowledge the failure and offer alternatives for care that both entities were caught completely off guard and were scrambling to come up with some way to save face in the face of failure.
c. The contractor, ISOS, was not effective in managing or monitoring the program as hundreds of retirees knew of the impending failure weeks before it happened.
d. DHA’s failure to keep their promise and place a full time employee on the ground contributed greatly to their ignorance of the imminent failure.


The TRICARE function within DHA is not known for silence when the press calls. They have an entire pision devoted to getting the word out. Within that pision is a branch dedicated just to responding to the traditional media and is known as the “Official TRICARE Spokesperson”. So when you read articles with “Camacho said”, it comes from the horse’s mouth of TRICARE so to speak. This group is also responsible for all the propaganda put out on Facebook, Twitter and YouTube. They also prepare talking points for the DHA leadership and others that appear at various speaking venues. This group is not known to be at a loss for words and have no compulsion against stretching the truth, even to the point of breaking, to try to put the best spin on things and we have seen many examples. The previous 5 articles on the Demo had responses available to the reporters within a day, two at most. Ten days after the first half of the Demo providers dropped out the last half followed. Five days later Stars & Stripes published an article on the demise, Two key hospitals quit Tricare pilot project for retirees in Philippines, but it was published without a comment from DHA. This was more than two weeks since they found out that the providers were all jumping ship but they had nothing to say. It is clear they didn’t have a clue what was happening and why, even though we advised them this was an inevitable outcome of their design.

Finally, after another week past, they responded and a second article was published, DHA hopes billing fix will bring back Philippine hospitals that quit pilot project. Given their tone it is quite apparent they do not have much hope in seeing a revival of the Demo in Angeles. Then it took DHA weeks more before clear guidance was placed on the contractor’s web page for affected beneficiaries. Even then they failed to make any real effort in informing beneficiaries by using newspaper articles, flyers or push email. If beneficiaries failed to monitor one of the contractor’s web pages on a daily basis they would never know what their new options were but is typical.

2. Research, design and preparation for the Demonstration was apparently never done or done by someone not familiar with the provision of health care, the health care industry culture in the Philippines or health care billing practices in the Philippines.

a. Reasonable and competent organizations would have researched the differences between the two countries health care billing, cultures and practices and made allowances for them.
b. Reasonable and competent organizations would have obtained feedback from local beneficiaries on the basics of access to care, travel times, walk in clinics, multiple clinics per provider and quality of care issues.
c. Reasonable and competent organizations would have interviewed local provider organizations and local health insurance groups and hired a local competent consultant, familiar with the health industry in both countries to advise them instead of creating a fake local company owned and operated by them.


If the steps outlined above had been carried out the Demo would look and feel much different than it does. But none of this was done which also helped lead to the failure in Angeles and probably in all locations sooner or later. We have never been against the concept but are very much against how it was and is being implemented.

So what is wrong with the Demo as it was developed and implemented?

  • It is not fair to the providers so they will not stay with it in the long term. They are often underpaid when they were told they would be paid in full and they do not understand how to itemize and cost claims IAW the U.S. standards. They do not understand nor can they read the CMAC rates and they bear no relation to how they see the provision of care or payments. Even if DHA pays ISOS to create the claims for Demo providers they will be upset with their payments, outside office visits, because the fees will be cut by 20% to 50% due to a CMAC that is not designed for the Philippines and is one size fits all.
  • International SOS used greed to get providers to sign up by telling them to over-charge for visits and sometimes up to 5 times their normal rates and most of these will be paid in full because of a poorly designed CMAC. This is not fair to beneficiaries and a violation of local law.
  • Our choices of providers are extremely limited and the Demo rules are suspended in many specialties where they cannot find someone that will sign up; even with greed used as an incentive. This means that the claimed benefits of the Demo for the beneficiary are limited and often not available which means for much care they are still required to pay upfront and file claims; claims that are routinely denied as are the Demo provider claims. We know of beneficiaries that had to use one of the many exceptions and were required to paid cash for care well in excess of $15,000, most of which they will never get back because they are not coders and can’t break out the claims as required; where are the claims processors DHA hired to do it for providers.
  • There are absolutely no quality checks done on providers beyond they have a license to do what they do from the local government. Mick Frewen, Vice President Operations, TRICARE Asia Pacific International SOS tried to use doublespeak to cover this up by saying that all Demo providers were first Certified providers. However TRICARE Certification only means that the provider agreed to certification, provided the necessary licenses and tax certificates and allowed ISOS to take pictures of their office. This means in many cases we are required to use a single or one of two providers who we know do not provide quality care but which we are mandated to see or pay for our own care.
  • The Demo contracts are poorly written which allows providers to ignore filing claims for care that was paid in full by deductibles. This makes it impossible for a beneficiary to get credit for their deductibles and multiple hospitals have advised retirees that they see no benefit in filing these claims and have not. Mick Frewen, Vice President Operations, TRICARE Asia Pacific International SOS again tried to use doublespeak to cover this up by claiming that the “Timely Filing Rule” required that they file claims within 3 years. While this is true it does not carry any provision that they must file claims if they don’t want to. When pushed on this point and asked for specifics within the provider agreements that would prove his contention that providers had to file claims he responded that that information was proprietary and therefore none of our business; so much for an open and honest benefit plan administrator.
  • Limited choices force veterans to bypass quality providers to travel for hours to see providers of lower quality. In most areas only a limited number of providers at limited hospitals are available under the Demo or in Angeles no providers. It is not uncommon for a beneficiary to be forced to travel past many good hospitals and physicians to seek care from a single provider at a distant location.
  • Veterans and their families are forced to use two separate and significantly different systems of health care and claims processing depending on where they live or travel. In other words, even when all areas are added, only a very small portion of the Philippines will be under the Demo rules. While DHA likes to claim when phase III is implemented about 95% of the total population of 11,000 plus will be covered we know that to be absolutely not true but concocted for congress and the service organizations. This is obviously not true because it assumes that only a total of around 550 beneficiaries live in areas such as Baguio, Davao, Cebu, Naga, Tacloban, Bacolod, Dagupan, San Fernando La Union, Tarlac or anywhere else except in the Demo areas. More on this important point at item 5 below.
  • Only beneficiaries in the Philippines find they have two separate but mandated plans. Plans that use completely different rules and which apply depending on where you receive care. In other words you would be required to use Demo rules when seeing a provider on the south side of a street but when that provider referred you to another provider on the north side of the street you would have to proceed under Philippine TRICARE Standard. Live in Lucena Quezon and you use Philippine Standard, visit Manila for the day and you better know all the rules and carry the list of approved providers in your hip pocket because you are now in Demo country!

3. The DHA claim that all local providers are well versed in the U.S. billing standards and procedure breakouts proved to be completely wrong.

a. The primary cause of the failure was because local providers are not trained or qualified to convert their local global bills into the unique U.S. detailed itemized and costed bill.
b. This was admitted by DHA in the follow-up article written by Stars & Stripes as they attempted to defend the Demo and save some face. See DHA hopes billing fix will bring back Philippine hospitals that quit pilot project.
c. This admission now shows, without any doubt, that DHA is aware that their claim any beneficiary that was filing a claim could simply ask the local provider to provide the required unique U.S. detailed itemized and costed bill was never possible.
d. Based on the claims data, DHA provided us under the FOIA, millions of dollars in claims were denied because these mandated breakouts were not provided and because they could not be provided.
e. DHA should be required to go back and reopen every claim that was denied due the failure of the beneficiary to provide the mandated unique U.S. detailed itemized and costed bill and pay them based on billed charges!


This single admission on the part of DHA will have or should have resounding consequences and should cause thousands of claims to be relooked and paid as billed charges. At least a responsible and caring caretaker of a population’s medical benefit, that discovered they made a major error in judgment and understanding of this magnitude of the local health care industry environment and customs, would take those actions and it is likely if a private medical insurance company had denied as many claims as DHA has based on impossible requirements based on false guidance, the federal government would likely step in and require they make good on those claims.

Here is what they said in the article, “Improperly documented billing by some Philippine doctors and specialists held up overall claim reimbursements….”. Converting the “Camacho said” doublespeak to English they said, Physician claims were denied, large amounts disallowed or claims returned because the physicians failed to learn the proper rules required to convert local procedures into bundled and unbundled U.S. procedures and then break out their global bill to match these procedures as required by DHA. Oh, and let’s not forget the charge breakout needs to be IAW the CMAC rates which means they need to code the procedures or they will still be paid much less than expected.

DHA has told beneficiaries for more than 5 years all they needed to do is ask their provider to convert the local global bill as outlined above and they will be paid. As with the Demo, DHA claimed all these years that local physicians were well versed in a U.S. unique and complex billing process. Even U.S. physicians don’t fully understand it so hire degreed coders to file their claims. Here is a collage of correspondence from DHA and their contractors telling Philippine beneficiaries time and again local providers would do it for them and it cost those beneficiaries millions of dollars in denied claims! Anyone that had a claim denied because of this impossible demand should write their Congressman and demand that DHA reopen the claim(s) and they be paid as billed charges as in the rest of the world. Consider also sending copies to the DODIG and one or both Armed Services Committees. Or send this Newsletter and let them know you agree and support these conclusions and demands.

4. In an attempt to salvage the Demo and save face, DHA has authorized ISOS to hire inpiduals to assist local Demo providers in converting their claims; in essence they hired claims processors to do the conversions for physicians they now concede are not able to do it themselves. See the article cited above.

a. ISOS senior staff previously claimed they could not legally do this because of conflict of interest laws/rules which are now apparently being disregarded by both DHA and ISOS. Last October at the initial Demo briefing by ISOS in Manila we specifically asked if ISOS would be providing assistance in converting local claims to the U.S. itemized and costed standard. Mark Zimmerman, TRICARE Regional Program Director, Asia Pacific International SOS made it clear to us that they could never do this and went on to claim that local providers understood the complex and unique U.S. claims processing format and costing so it was not necessary!
b. This action places ISOS and DHA in a tenuous position with respect to a number of clear conflict of interest violations.
c. Adds additional ammunition to the argument that DHA’s mandate that beneficiaries obtain these mandated unique U.S. detailed itemized and costed bills from their provider was completely false.


Conflict of interest places the government, beneficiaries and even the contractor at risk. What is conflict of interest? Wikipedia defines Conflict of interest as “A conflict of interest is a set of circumstances that creates a risk that professional judgement or actions regarding a primary interest will be unduly influenced by a secondary interest.” Essentially a conflict of interest is a situation in which a corporation like ISOS has competing interests or loyalties which may cause one interest be compromised to further another interest that is more profitable to the corporation.

In the case of ISOS and their TRICARE contract a conflict of interest exists if their competing requirements would lead a reasonable person to question whether their motivations are aligned with the government and beneficiaries best interests. So what are these interests that conflict?

  • Their contract requires that they establish and maintain the Philippine Demonstration Project.
  • Their contract now requires that they provide staff to assist local Demo providers convert their claims to insure they are happy and paid so they will remain in the Demo.
  • Their contract requires they adjudicate all TRICARE overseas claims. Adjudicate means to review the claim information and ensure that program requirements are met and the claim is paid within the established guidelines.

ISOS has a significant vested interest in insuring the Philippine Demo succeeds and at any cost. Why? The company makes millions in revenue from this program. If it succeeds at the very least it will continue in the Philippines which will continue to generate millions in revenue for years to come. DHA has already indicated their intention to expand the Demo concept to other overseas countries if it succeeds here. That would cause the revenue from this project to increase at least ten fold.

The Demo is on the verge of failure due to nonpayment of claims because local providers cannot convert local claims to the U.S. itemized standard. ISOS now has a mandate and funding from DHA to provide staff, claims processors, to assist in converting claims for payment. If this works and the providers get paid what they expect the Demo could continue; if not it will fail. The CMAC fails to pay local rates in a number of areas from ancillary services to professional fees for surgery and inpatient care and represents a 20 to 50 percent loss over standard fees for local providers. Claims processors with training in the intricacies and nuances of the U.S. system know enough to make slight changes in the wording of a procedure to cause it to be paid at a higher rate or to fudge a little and add an additional procedure or two to the claim to insure that providers are paid and happy so will stay with the program. After all it would be in the best interest of ISOS if the Demo succeeded. Mr. Zimmerman already admitted this would be a significant conflict of interest last October and obviously for this very reason.

If a company that was making money on the Demo and stood to make much more if it succeeds also controlled the processing (adjudication) of the Demo claims as well it would at the very least be tempting to at least smooth the way for these claims if not treat them more leniently or generously than non-demo claims. While we have no absolute proof there is anything going on we do know that claims from Demo providers use a different claim number system that identifies them as Demo claims. We have also have in our possession some EOBs from Demo provider submitted claims where they were paid billed charges instead of using the CMAC which increased the allowed amount. We have not seen the same leniency with beneficiary filed claims where the claim was for similar care. Our inquiry into these differences in processing of Demo claims has been stonewalled for six months now. With the company having control at both ends of the claim there is, at the very least, a serious conflict of interest present.

Given their past history with TRICARE in the Philippines and these conflicts of interest many may feel there is also a good chance that inappropriate actions are taking place that will further their agenda at the expense of the taxpayer and beneficiaries. The government has an obligation to remove these conflicts of interest immediately.

5. DHA claims that once Phase III of the Demo is complete about 95% of all beneficiaries will be covered by the Demo.

a. DHA has never done a proper survey of the population base in the Philippines to determine distribution.
b. DHA preferred to use a proxy to determine population so used the location of providers in claims submissions.
c. Based on their claims of where the population is located and the loss of the single largest one of those population centers, Angeles, from the Demo at best 40% of all beneficiaries will be covered by the Demo.
d. The DOD Office of the Actuary statics show a slow but steady increase in the retiree population over the last 6 years of more than 3% a year.
e. Traditional population centers of beneficiaries were based around the two closed bases but as older retirees die the new retirees coming to the Philippines are choosing to live in many other locations outside these traditional areas. Over the last 5 years that would equate to a shift of an additional 15% of the total population outside these areas beyond those already living outside these areas.


DHA claims that 72% of TRICARE beneficiaries live within 100 miles of Metro Manila and the balance, 28%, live in the provinces beyond and based on 10 year old data. That means that 7,920 live within 100 miles of Metro Manila and 3,080 live in the provinces beyond. See their chart. When the Demo is fully implemented Angeles, Olongapo, Manila, Cavite and Iloilo will constitute the entire area serviced by the Demo. Even if these figures were correct, does anyone believe that the majority of the 7,920 live within the first four cities? And further that the majority of those living in the provinces beyond, 3,080, live in Iloiol? If we consider 95% as being who is covered that means all beneficiaries within the 100 mile radius of Manila live within one of the first four areas except 396. That means all those living northeast of Manila beyond a point just south of Dugupan or southwest a little past Lucena and east in Bataan are no more than 396 total. Once Iloilo in the provinces is added only another 154 beneficiaries will be excluded including those that live in Baguio, San Fernando La Union, Naga, Cebu, CDO, Tacloban, Davao and dozens more locations. To add further controversy when viewing the chart look at figures on the second page and compare their figures for retirees in the Western Pacific compared to the official figures from the DOD Actuary. If they can’t even get these basic figures right, what chance is there that the calculations on the first page and used for the Demo have any validity? The only people that would believe that are those that have no understanding of where people live in the Philippines and have spent no time here.

As we can see a proxy using historical claims submissions has multiple flaws. First statically valid surveys of retirees in the Philippines indicate that 76% do not file claims but pay for their own care. That means that most beneficiaries don’t file claims. So who filed the claims used to determine where you and I live? The answer is providers that were operating in a few areas using the practices invented by HVC and certified even though they did meet the basic requirements for certification. These providers submitted the majority of the claims. Although we repored these certifications that allowed these groups to function as physician groups without any real physicians and physicians to bill as hospitals, DHA ignored the problem for years. Once one understands who filed claims and who did not, it becomes clear any attempt to convert claim volume into beneficiary location is flawed as demonstrated above. One glaring example of how flawed the conclusions are; when the Demo was programmed to start Orion, Bataan was one of the Phase I sites and was included right up to the last minute. Orion is a small second class municipality of about 50,000 located about half way down the Bataan peninsula on a secondary road. Although DHA’s study of claims submissions translated into a significant beneficiary population in Orion, in reality there are only a handful of beneficiaries in the location; most actually live in Balanga but DHA and ISOS don’t know this. The clams came from one of those providers that were certified under questionable conditions and who then submitted claims, many probably fraudulently. When this was brought to DHA’s attention they immediately and quietly removed Orion from the Demo and have refused to explain how they could have made such a mistake.

If we are going to use a proxy we prefer to use another one and one that probably better demonstrates the actual distribution of the TRICARE population. The proxy is where Health Visions Corp. (HVC) placed its clinics and hospitals. Since they were in the business of filing inflated claims, like Demo provider are told to do, for care provided TRICARE beneficiaries it only makes sense to believe they placed their facilities only where there were large enough populations to make it worth their while. We also know that HVC paid finders to go out and locate TRICARE beneficiaries, many of whom are Fil-Ams and survivors and their children but it is unlikely DHA and ISOS are aware of this. A few years back DHA conveniently produced a slide presentation with a map of the Philippines that pinpointed the locations of all the HVC facilities. Using this listing we can produce a list of cities where the beneficiary population lived in sufficient numbers to make it worthwhile for HVC to invest in facilities and staff to treat and file claims on them. If one matches some older Certified Provider lists, before access to care was reduced and beneficiaries stopped filing claims, the number of certified providers in these areas can be used as a second proxy to determine the relative size of the beneficiary population in some of these locations.

First view the map and then the beneficiary population estimates based on the two proxies.

6. TRICARE Assistance During Disasters

TRICARE assistance to beneficiaries during disasters has been ongoing for many years in the U.S. and in other countries such as Japan and can be found at their Disaster Information – Disaster Alerts webpage.

TRICARE assistance to beneficiaries during disaster is non-existent for their Second Class Beneficiaries in the Philippines and has been absent from day one.

If you access the webpage above you will note, see snapshot, notices for tornadoes, wildfires, hurricanes, flood and even just tropical storms. Also of note is the promptness of these notices. See the notice for Tropical Storm Karen. The notice is dated 4 Oct 13 and the storm wasn’t scheduled to make landfall until 6 Oct 13, two days later. What are some typical things TRICARE does to assist beneficiaries during these disasters? Primarily they relax rules that allow beneficiaries better access care and which may also be impossible to meet during a disaster. By doing this it allows these beneficiaries to access care that they would otherwise have to pay for themselves due to denied claims based on failure to comply with the rules.

In the last ten years the Philippines has experienced, on average, 20 storms ranging from tropical storms all the way to category 5 typhoons every year. In addition significant earthquakes occur fairly often and in fact there was a major one that caused major damage and loss of life just a month before typhoon Yolanda, a category 5 storm, devastated a huge portion of the Philippines. But not once have we heard not one word out of DHA offering even a little assistance and we can only wonder why not.

Typhoon Yolanda was a disaster of epic proportions and the entire world has turned out to help the Filipinos affected, but still not one peep from DHA. One inpidual wrote a compelling open letter to DHA and ISO and anyone else that would listen begging DHA to relax some rules that beneficiaries in the affected areas would not be able to comply with. We also did two blog articles on our Second Class status, How TRICARE and International SOS Respond to Disasters in the Philippines, and How TRICARE, DHA and ISOS Responded to Typhoon Haiyan in Support of Beneficiaries. Both were posted in a hope they might shame DHA into stepping forward and do what is right. We also privately contacted DHA with our own request and now more than two weeks have passed.

What is the result? You got it, a BIG FAT NOTHING!

We shouldn’t have to beg and grovel to be treated equally with all other beneficiaries. But we have been singled out to be treated as Second Class Beneficiaries by DHA for years. We have endured extremely limited access to care, almost blanket denial of claims because we cannot comply with requirements nobody else in the world have and DHA now admits cannot be met. So when we find that we are singled out to be ignored during disaster after disaster, even when some of us beg for assistance we should not be surprised.

Actions speak louder than words, no, in our case the actions over the years actually scream at us and they clearly say; we consider you less worthy of our time and effort or an equal medical benefit because we consider you to be Second Class Beneficiaries. Even if they later concede so they don’t look so bad, by comparison where others are granted exceptions before the storm, we are still treated like Second Class Beneficiaries.

Isn’t time we all stood up and demanded of Congress that we be treated fairly and equally to all other beneficiaries and granted equal access to care? We need to also demand that DHA set up a program like in the states that provides reasonable and timely responses to disasters as they occur.


If anyone needs assistance with any of these issues feel free to contact USMRoP at:


What’s Next?

As we gather more information from DHA, the contractor and beneficiaries we will continue to send out newsletters but generally not more than once a month.What we are seeing is rapidly put together policy that then changes within a few days only to be changed once again. These in turn raise new issues or other unforeseen problems surface. To keep up with these we will post shorter topic specific updates and notices on our blog, TRICARE Overseas Philippines Blog. Recommend those interested in keeping informed on the experiment check it frequently or alternately add your email address and click “Follow” about midway down the front page and on the right. This will automatically email you a link to each new entry.

Archived Newsletters

Previous Newsletters can be accessed by going to U.S. Military Retirees of the Philippines Group TRICARE Newsletter Archive.

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