Defense Health Care:

Opportunities to Reduce TRICARE Claims Processing and Other Costs

T-HEHS-00-138: Published: Jun 22, 2000. Publicly Released: Jun 22, 2000.

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Stephen P. Backhus
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Pursuant to a congressional request, GAO discussed opportunities to reduce claims processing and other costs of the Department of Defense's (DOD) managed health care program--TRICARE, focusing on: (1) the cost of processing TRICARE claims; (2) opportunities that potentially can reduce costs and improve service to beneficiaries, namely increased anti-fraud efforts and more joint procurement of pharmaceuticals and medical supplies with the Department of Veterans Affairs (VA); and (3) the process beneficiaries use to make medical appointments.

GAO noted that: (1) processing TRICARE claims costs several times as much as processing Medicare claims--$7.50 compared to $1.78 per claim on average; (2) however, much of the cost difference appears to be attributable to differences in program design and processing requirements; (3) for example, TRICARE offers three different benefit packages, with reimbursement rates that are established for each provider, and a complex system of authorizations and referrals; (4) the program also experiences frequent changes to coverage and operating policies that make it difficult to administer; (5) nonetheless, GAO and others believe that opportunities exist to reduce some of the approximately $225 million spent annually to process claims; (6) in response to the House version of the fiscal year 2001 Defense Authorization bill, and through several of its own initiatives that mirror private-sector practices, DOD has adopted and is planning several actions to reduce claims processing costs, including increasing electronic claims submission and web-based services to reduce the costs of claims review and to deal with the large number of inquiries received by providers and beneficiaries; (7) beyond claims processing, GAO believes there are other opportunities to reduce TRICARE costs and improve services; (8) for example, although DOD has efforts under way to combat health care fraud and abuse, these efforts have only been marginally effective; (9) additional opportunities exist to save potentially hundreds of millions of dollars that could be used to purchase care for military beneficiaries; (10) also, GAO believes that additional cooperation with VA to procure pharmaceuticals and medical supplies could yield substantial savings; and (11) different systems are in place throughout the military health system for making medical appointments, and beneficiaries sometimes are unsure as to how to make such appointments, leading to frustration with TRICARE.

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