Defense Health Care

Under proposed reforms to the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS), which picks up much of the health care tab for military personnel and their dependents, private contractors would be enlisted to provide health care to CHAMPUS patients. In August 1993, the Secretary of Defense told Congress that the CHAMPUS Reform Initiative, with some benefit revisions and managerial changes, would be the most efficient way to provide health care to beneficiaries in Washington and Oregon. The Initiative offers beneficiaries three options: (1) a health maintenance organization offering better benefits and reduced out-of-pocket expenses; (2) a preferred provider network, which requires a higher level of beneficiary cost sharing; and (3) continuation in standard CHAMPUS. GAO concludes that the Defense Department (DOD) compared the Initiative and standard CHAMPUS in a reasonable way that fairly estimated the two health care delivery methods' likely costs, quality, and access. However, DOD is in the dark about how its other health care delivery methods stack up against the Initiative or standard CHAMPUS. As a result, GAO doubts that DOD's comparative cost base was inclusive enough for it to know that the Initiative is the most efficient method of providing health care in Washington and Oregon.

GAO found that: (1) after comparing CRI with the standard CHAMPUS program, DOD certified that the modified CRI program is the most efficient method of delivering health care in Washington and Oregon and there would be no difference in quality of care between the two programs; (2) DOD reasonably estimated the two health care delivery programs' expected costs, quality, and access; and (3) DOD does not have an adequate basis to support its conclusion that CRI is the most efficient way to deliver health care, since it did not compare other health care delivery methods it is currently testing with the modified CRI and standard CHAMPUS programs.