Implementation of the CHAMPUS Reform Initiative

GAO discussed the problems the Department of Defense (DOD) encountered during implementation of the Civilian Health and Medical Program of the Uniformed Services Reform Initiative (CRI). GAO found that: (1) the CRI contractor experienced difficulties processing claims from health care providers because of its inadequate processing system, and contracted for an adequate claims processing system, but DOD might not have time to assess the new system before deciding whether to exercise the next contract option; (2) the contractor has undergone numerous management reorganizations, several as a result of its claims processing difficulties; (3) the contractor had about 155,000 unprocessed claims, of which 75 percent were over 30 days old; and (4) the contractor received several complaints concerning late payments or no payments, but made partial payments to some providers. GAO also found that: (1) the DOD CHAMPUS office played a limited role in ensuring that the contractor fully implemented its claims processing and management information systems; (2) DOD delayed exercising its contract options and modified the original contract payments schedule because of concerns regarding the contractor's financial capability; and (3) DOD reinstated resource-sharing incentive provisions to permit the contractor to maximize use of military facilities.