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Highlights

Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) use of support contracts to help deliver health care and to control costs, focusing on: (1) whether resource sharing savings are meeting DOD's projections and thus helping control TRICARE costs; (2) what problems DOD might be encountering in pursuing resource sharing; and (3) actions and alternatives pursued by DOD to overcome those problems. GAO also considered the implications of resource sharing within the broader context of TRICARE's overall cost-effectiveness.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense 1. The Secretary of Defense should direct the Assistant Secretary of Defense (Health Affairs) to determine whether any further resource sharing savings remain under the current contracts and, as appropriate, consummate promising agreements while seeking other mutually acceptable alternatives to resource sharing.
Closed - Implemented
Acting in accord with GAO's recommendations, DOD and the contractors accelerated their resource sharing efforts, resulting in new resource sharing agreements projected to save an additional $38 million annually. Those resource sharing savings ultimately represent government savings--or loss avoidance protection--in that the government assumes total responsibility for contractors' financial losses beyond a certain point--which the otherwise general failure of resource sharing may bring about.
Department of Defense 2. The Secretary of Defense should direct the Assistant Secretary of Defense (Health Affairs) to determine, to the extent the new contracts with revised financing use resource sharing, whether any such agreements are available and, as appropriate, enter promising agreements while seeking effective alternatives to resource sharing.
Closed - Not Implemented
This recommendation is no longer applicable as DOD has eliminated resource sharing requirements from contract proposals which alleviates the government's responsibility for losses due to potential resource sharing failures.
Department of Defense 3. The Secretary of Defense should direct the Assistant Secretary of Defense (Health Affairs) to incorporate, while planning for and implementing the next wave of military treatment facility financing and contract management initiatives, such resource sharing lessons learned as the need for coherent, timely policies; clearly understood procedures; mutually beneficial incentives; and effective collaboration.
Closed - Not Implemented
The recommendation is no longer applicable as DOD eliminated resource sharing requirements from contract proposals.

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