Medicare Subvention Demonstration: DOD Data Limitations May Require Adjustments and Raise Broader Concerns

HEHS-99-39 Published: May 28, 1999. Publicly Released: May 28, 1999.
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Highlights

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.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
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.
Closed - Implemented
Acting on the problems GAO identified, in October 1998, DOD developed and began implementing a data management improvement plan. DOD agreed that it would continue working with HCFA to improve the measurement of the level of effort and systemic data deficiencies cited in the GAO report. Also in response, HCFA hired a contractor to review DOD's data and methodology. For the time being, HCFA and DOD have agreed to keep the 1997 baseline, but the HCFA contract should identify the threshold's weaknesses and identify needed improvements. Also, both parties now agree on a payment reconciliation approach that will be made shortly.
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.
Closed - Not Implemented
The Medicare Subvention Demonstration concluded in December 2001. The Congress authorized a different military retiree health care program in the Fiscal Year 2001 National Defense Authorization Act. Thus, the need for DOD to take appropriate action on this recommendation was mitigated by the Subvention Demonstration's pending termination. However, GAO's recommendation was aimed more broadly at spurring DOD to correct data quality problems that jeopardize overall management of military health care. Although DOD took steps to address the issues identified in our report--for example, by establishing a high-level data quality task force and implementing a Data Quality Management Control Program--unreliable and poor quality cost and workload data for military treatment facilities remained a problem as of 2002. In an audit report in August of that year, the DODIG noted that, without corrective action, the quality of financial and workload data used in important management decisions would not improve and that DOD's Annual Statement of Assurance would continue to report military health service data quality management controls as a material weakness.
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.
Closed - Implemented
Acting on the problems GAO identified, HCFA hired a contractor to review DOD's data and methodology. For the time being, HCFA and DOD have agreed to keep the 1997 baseline, but the HCFA contract should identify the threshold's weaknesses and identify needed improvements. Also in response, DOD developed and began implementing a data management improvement plan in October 1998. DOD agreed that it would continue working with HCFA to improve the measurement of the level of effort and systemic data deficiencies cited in the GAO report. Finally, both parties now agree on a payment reconciliation approach that will be made shortly.

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