Defense Health Care:

Continued Management Focus Key to Settling TRICARE Change Orders Quickly

GAO-01-513: Published: Apr 10, 2001. Publicly Released: Apr 30, 2001.

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Marjorie E. Kanof
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Under TRICARE, the Department of Defense's (DOD) managed care program, military-operated hospitals and clinics are supplemented by contracted civilian services. Since the inception of TRICARE, DOD has made many changes to these contracts via contract change orders. Since July 1997, when GAO reported that DOD was trying to improve its change order process, the backlog of change orders has continued to grow. This report evaluates (1) the status of the change order backlog and how DOD addressed it, (2) factors that contributed to the growth of the backlog, and (3) DOD's new initiative to improve the change order process. GAO found that as of June, 2000, the number of change orders issued had almost tripled, while the number of unsettled change orders had more than doubled since July 1997. Despite recommendations to devote high-level attention to managing improvements to the change order process, this was not done. Until recently, none of TRICARE Management Activity's (TMA) many initiatives significantly improved the process or reduced the backlog. The current small backlog is the result of recent concerted effort, not better management over time. TMA's new Change Management Process (CMP) appears to address many of TMA's problems with change orders. However, past initiatives have made similar promises and delivered little when they were abandoned or eclipsed by higher priorities. The high volume of change orders now or soon to enter the new CMP makes it imperative that TMA management closely monitor the process to prevent future backlogs.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: In its April 30, 2001 report, GAO recommended that the Secretary of Defense direct the Assistant Secretary of Defense for Health Affairs to monitor the new Change Management Process, and take corrective action if problems, such as a growing backlog, are identified. DOD reports that the Assistant Secretary of Defense approved the process after a formal briefing. DOD also reported that the process provides a structured approach to approve, prioritize, and track prospective changes. Under the process, DOD is using a tailored integrated process team change order contracting approach and change orders are negotiated and settled before changes are implemented. DOD reports, in response to GAO's August 12, 2002 request, that the process is being used and outstanding change orders total 51 (down from the 562 open change orders GAO reported as of July 1, 2000).

    Recommendation: To prevent future change order backlogs and funding shortfalls, the Secretary of Defense should direct the Assistant Secretary of Defense (Health Affairs) to give the new Change Management Process the high-level management attention needed to succeed.

    Agency Affected: Department of Defense


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