Defense Health Care

Department of Defense (DOD) health care costs have been escalating rapidly, particularly in the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS), where costs increased from $1.4 billion in fiscal year 1985 to an estimated $3.6 billion in fiscal year 1991. In June 1990, DOD unveiled a plan, to be implemented over 3 years, for containing health care costs and improving beneficiaries' access to high-quality care. Coordinated Care, the plan's centerpiece, will essentially transform military health care into a system of managed care similar to health maintenance organizations. Building on earlier testimony before Congress (GAO/T-HRD-91-14, Mar. 14, 1991), this report concludes that DOD has advances in moving to a managed health care system, particularly in light of the magnitude and complexity of the undertaking. However, the effort is behind schedule because many complex organizational details and some policies still need to be developed and decided upon. For example, it is unclear exactly what will be expected of military hospital commanders or what additional resources will be needed to implement the program. One important issue raised by GAO in its March testimony--the need to provide for uniform benefits and cost sharing--is not addressed in the current Coordinated Care program. Enrolled beneficiaries who are able to get their medical care at a military hospital will pay less than $10 a day for inpatient service, while those who must use civilian providers will pay a large part of the bill, usually 25 percent.

GAO found that: (1) since June 1990, DOD has made significant advances in moving to a managed health care system, especially in light of the magnitude and complexity of this undertaking; (2) since many complex operational details and some policies still need to be developed and decided upon, DOD is behind schedule in implementing the program; (3) it is unclear exactly what will be expected of military hospital commanders in terms of management responsibilities and accountability, how the Civilian Health and Medical Program of the Uniformed Services Reform initiative will be blended into the Coordinated Care program, what additional resources will be needed to implement the program and where they will come from, when sufficient budgeting and resource allocation systems will be in place to implement a managed care system, when the military services will be ready to implement Coordinated Care, and how Coordinated Care will be evaluated; (4) until recently, DOD had made little progress in implementing the program at its one test site, but assigning the Assistant Secretary of Health Affairs responsibility for developing a unified medical budget and allocating resources should help resolve funding disputes that may arise among the services; (5) DOD still has not addressed the need to provide uniform benefits and cost sharing; and (6) uneven benefits and cost-sharing requirements vary across the country, adding to beneficiaries' confusion and uncertainty about their medical benefits.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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