Pursuant to a legislative requirement, GAO provided information on the Medicare Subvention Demonstration Program, focusing on the sufficiency of the Department of Defense's (DOD) data systems for: (1) determining DOD's historical level of effort (LOE) and Medicare payments; and (2) managing the demonstration and assessing its cost effects.
Recommendations for Executive Action
|Department of Defense||The Secretary of Defense should direct the Assistant Secretary of Defense (Health Affairs), in collaboration with HCFA, to identify the baseline's weaknesses and resulting errors in LOE and determine a more reliable baseline. This effort should consider the merits of using a more recent base year for the demonstration and weigh alternatives to the baseline method. Furthermore, to reduce funding uncertainties for site managers, the Assistant Secretary should state definitively how final Medicare payments will be allocated among the demonstration sites, and working with HCFA, explain the method and criteria for risk-adjusting sites' Medicare payments.|
|Department of Defense||The Secretary of Defense should direct the Assistant Secretary of Defense (Health Affairs) to improve cost and workload data quality. This is especially important because DOD also uses these data in managing its general health care operations. The effort should identify specific actions needed by the Assistant Secretary and the services to correct cost and workload data collection and reporting problems. It should also ensure, by maintaining all source data and documents, that the Medical Expense Performance Reporting System can be audited. This effort may require actions by and coordination with other DOD Assistant Secretaries, and the Secretary should direct their participation.|
|Health Care Financing Administration||The Administrator, HCFA, should, in collaboration with DOD, identify the baseline's weaknesses and, as appropriate, determine a more reliable baseline. HCFA efforts should include providing DOD specific guidance on baseline cost components and assessing baseline source data and methodologies for reliability and compliance with HCFA guidance and regulations. Also, working with DOD, the Administrator should promptly specify the method and criteria for risk-adjusting the Medicare payments.|