Defense Health Care:

Across-the-Board Physician Rate Increases Would be Costly and Unnecessary

GAO-01-620: Published: May 24, 2001. Publicly Released: May 24, 2001.

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This report describes the financial and management impact of increasing physician reimbursement rates in TRICARE -- the military's managed health care program. GAO found that changing the TRICARE reimbursement rate nationally to the 70th percentile of billed charges would be costly, inflationary, and largely unnecessary. Such an increase could cost the Defense Department (DOD) and its beneficiaries an additional $604 million annually with DOD paying most of this. In addition, an across-the-board increase is unnecessary because the vast majority of military beneficiaries are getting the care they need from military and civilian doctors who accept TRICARE's reimbursement rates. Nevertheless, access is impaired in some remote and rural areas. DOD's use of its existing authority to increase reimbursement rates in one of those areas--rural Alaska--has not encouraged civilian physicians to treat TRICARE beneficiaries.

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