Defense Health Care:

CHAMPUS Reform Initiative--Unresolved Issues

HRD-87-65BR: Published: Mar 4, 1987. Publicly Released: Mar 4, 1987.

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Pursuant to a congressional request, GAO reviewed Department of Defense (DOD) changes to the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS).

DOD is proposing to change CHAMPUS because of significant cost increases and other problems. GAO found that the objectives of the CHAMPUS reform initiative are to: (1) contain costs; (2) increase beneficiary access to medical care; (3) improve coordination between CHAMPUS and the military treatment facilities; (4) ensure quality care; and (5) simplify administrative procedures by contracting for the processing and payment of medical care claims. As part of the initiative, DOD proposed a new enrollment program to expand benefits and lower costs to beneficiaries willing to obtain medical care from the contractor's network of providers. GAO believes that DOD should resolve key issues before it proceeds with the implementation of the initiative, specifically whether: (1) cost containment can be accomplished within the proposed program structure; (2) contractors will have a financial incentive to provide minimum medical care at the lowest costs; and (3) simplifying CHAMPUS procedures will create problems in program administration.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: DOD contracted with the Rand Corporation to develop and perform an evaluation methodology. Congress, in DOD authorization and appropriations acts, directed DOD to evaluate the methodology and place limits on future phases until the initial phase is evaluated.

    Recommendation: The Secretary of Defense should direct the Assistant Secretary of Defense (Health Affairs) to: (1) expeditiously develop a methodology for conducting a thorough evaluation of the initiative's demonstration phase; (2) ensure that the initiative's demonstration phase is of sufficient duration that issues such as those raised in this report, and those that may arise during the demonstration, can be thoroughly evaluated before DOD proceeds to subsequent phases of the initiative; and (3) inform Congress promptly if DOD determines that the congressionally directed timetable for nationwide implementation of the initiative cannot be met because of the need for a more thorough demonstration phase.

    Agency Affected: Department of Defense


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