Defense Health Care

Under TRICARE, the military's managed health care program, contractors adjudicate and pay health care claims submitted by civilian providers of care or the military personnel who receive it. The Defense Department's (DOD) timeliness standard requires the contractors to process 75 percent of claims within 21 days. Although contractors processed 86 percent of claims within 21 days between July 1997 and June 1998, GAO found that 3 million claims took more than 21 days, prompting complaints from providers and beneficiaries. To improve timeliness, DOD proposes to adopt standards similar to Medicare's. DOD does not know the extent to which the claims-processing contractors pay claims accurately, less than half of the claims are subject to audit, and the methodology DOD uses to calculate payment error is statistically invalid. Accuracy is affected by TRICARE's complexity and numerous changes and by mistakes providers and beneficiaries make when filing their claims. They sometimes complain about adjudication decisions on correctly processed claims. Some providers complain that the review criteria for the commercial software program DOD requires its contractors to use to ensure appropriate payment are not published and available to them. GAO found that the program's criteria are based on industry standards but that some inappropriate denials of claims have resulted from DOD's slowness in directing contractors to incorporate TRICARE policy changes into their claims-processing systems.

GAO noted that: (1) between July 1, 1997, and June 30, 1998, DOD's contractors processed 86 percent of claims within 21 days; (2) this met DOD's timeliness standard of processing 75 percent of claims within 21 days; (3) even so, nearly 3 million claims took more than 21 days to process, which prompted complaints from some providers and beneficiaries about what they considered to be payment delays; (4) DOD has several initiatives under way to improve timeliness, including adopting payment and penalty standards used by the Medicare program; (5) if these standards are properly implemented and met by contractors, they should help reduce providers' complaints; (6) while DOD adequately measures contractors' performance in claims processing timeliness, it does not know the extent to which contractors are accurately paying claims; (7) less than half the claims are subject to its payment accuracy audit, and the methodology used to calculate the payment error rate is statistically invalid; (8) all contractors experienced problems with payment accuracy when they began processing TRICARE claims, often because they did not have enough time to adequately prepare to administer the program; (9) although contractors addressed these problems, they acknowledged that many factors affect the accuracy of claims processing--primarily the complexity of the program, compounded by numerous program changes; (10) GAO also found that some claims processing problems were due to mistakes made by providers and beneficiaries when filing their claims; (11) furthermore, because they do not always understand the program, sometimes providers and beneficiaries complain about adjudication decisions on claims that had actually been processed correctly; (12) to help ensure payment accuracy, DOD requires its contractors to use ClaimCheck, a commercial software program designed to ensure that professional providers are appropriately paid for services rendered; (13) ClaimCheck's use resulted in changes to only 3.5 percent of claims in fiscal year 1998 and saved about $53 million; (14) nonetheless, some providers complain about its use because ClaimCheck's review criteria are not published and available to them; (15) without this information, they expressed doubt that the criteria comply with industry claims review standards; (16) GAO found that, although ClaimCheck's review criteria are based on industry standards, its use has resulted in some inappropriate denials to TRICARE claims; and (17) these errors occurred because DOD was slow to direct contractors to incorporate TRICARE policy changes into their claims processing systems.

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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