Defense Health Care:

Medicare Costs and Other Issues May Affect Uniformed Services Treatment Facilities' Future

HEHS-96-124: Published: May 17, 1996. Publicly Released: May 17, 1996.

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Pursuant to a congressional request, GAO reviewed the integration of uniformed services treatment facilities (USTF) into the Department of Defense's (DOD) TRICARE Program, focusing on: (1) whether USTF members' use of Medicare and the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS) results in unnecessary costs; and (2) other issues that need to be considered during USTF program reauthorization.

GAO found that: (1) in fiscal year (FY) 1994, USTF members' use of Medicare resulted in over $9.5 million in unnecessary costs; (2) unnecessary costs from members' Medicare use could total almost $38 million during FY 1994 to FY 1997; (3) DOD cannot fully recover unnecessary Medicare payments from USTF under current USTF agreements; (4) DOD and the Health Care Financing Administration (HCFA) lack the explicit authority to prevent Medicare-eligible USTF members from using Medicare; (5) DOD has been able to curb USTF members' use of military treatment facilities and CHAMPUS because it has controls in place to minimize such use; (6) Congress needs to consider how to serve USTF members' health care needs cost-effectively, given DOD implementation of TRICARE and its mandate to limit program costs; (7) some reports have indicated that the USTF managed care program costs DOD from $93 million to $193 million more per year than CHAMPUS; (8) Congress needs to consider whether USTF should retain their noncompetitive status after TRICARE implementation, and what the cost implications to TRICARE would be; and (9) USTF enrollment of Medicare-eligible members creates inequities for most older military retirees who rely on space-available care in military hospitals.

Matters for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: The FY1997 Defense Authorization Act makes the USTF program a permanent part of the DOD health care system, as sole-source contractors under TRICARE. USTF members will continue to be treated differently than other DOD beneficiaries.

    Matter: Congress should consider specifying in the authorizing legislation whether USTF should continue as sole source contractors under TRICARE, and whether USTF members should be treated differently from all other DOD beneficiaries who receive medical services under DOD managed care support contracts and direct care system.

  2. Status: Closed - Implemented

    Comments: The National Defense Authorization Act for Fiscal Year 1997 requires Medicare-eligible members to elect whether to receive care from USTF or under Medicare and authorizes DOD to disenroll any enrollee who violates the election and receives benefits under Medicare.

    Matter: To prevent unnecessary costs to the government from USTF members' Medicare use, Congress should consider requiring Medicare-eligible members to elect whether to receive care from USTF or under Medicare for a specified time period and authorizing the Secretary of Defense to disenroll USTF members who act contrary to their election not to use Medicare.

  3. Status: Closed - Not Implemented

    Comments: No action has been taken.

    Matter: To prevent unnecessary costs to the government from USTF members' Medicare use, Congress should consider deeming USTF Medicare-risk health maintenance organizations under the Social Security Act's section 1876(a)(3) for the limited purpose of allowing the Health Care Financing Administration (HCFA) to identify and block payments for the costs of services incurred by dually eligible members.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: No action has been taken during the past year. DCAA has been unable to obtain data from HCFA.

    Recommendation: The Secretary of Defense should direct the Assistant Secretary of Defense, Health Affairs, to review USTF network providers who have inappropriately billed Medicare for USTF members' care and, as appropriate, require providers to reimburse Medicare for unnecessary payments and bill USTF for such costs.

    Agency Affected: Department of Defense

  2. Status: Closed - Not Implemented

    Comments: No action has been taken.

    Recommendation: The Secretary of Defense should direct the Assistant Secretary of Defense, Health Affairs, pending action on the matters for congressional consideration in this report, to include, in all future USTF agreements, a method for directly and fully offsetting all unnecessary Medicare payments from USTF.

    Agency Affected: Department of Defense

  3. Status: Closed - Not Implemented

    Comments: No action has been taken.

    Recommendation: The Secretary of Defense should direct the Assistant Secretary of Defense, Health Affairs, to reconsider continuing the USTF sole source contractual relationship with DOD under TRICARE, including whether USTF members should be treated the same way all other DOD beneficiaries are treated under DOD managed care support contracts and direct care system.

    Agency Affected: Department of Defense

 

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