Skip to main content

TRICARE Administrative Prices in the Northwest Region May Be Too High

HEHS-97-149R Published: Jun 24, 1997. Publicly Released: Jun 24, 1997.
Jump To:

Highlights

GAO reviewed the Department of Defense's (DOD) TRICARE program, focusing on whether TRICARE managers in the Northwest Region had taken advantage of DOD's contractual authority to adjust administrative prices to correspond with a large health care price decrease.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense To help ensure DOD pays fair and reasonable prices for administrative support in the Northwest Region, the Secretary of Defense should direct the Acting Assistant Secretary of Defense for Health Affairs to initiate action to determine the extent to which administrative support prices could be reduced as a result of a $169-million health care price reduction in modification P00008.
Closed – Implemented
On September 17, 1997, the TRICARE support office submitted a request to the Northwest Region MCS contractor (Foundation Health Federal Services) for an equitable adjustment affecting administrative support prices. FHFS did not believe an adjustment was warranted because the DOD had not sought to adjust the administrative prices in conjunction with other, regularly scheduled bid-price-adjustments. Nor did DOD assert a right to a price reduction under the changes clause by identifying a specific change made to an administrative task. Although the Acting ASH HA had agreed with the recommendation, the DOD contracting officer accepted the FHFS position that adjustment was foreclosed by specific agreement in modification P0008.
Department of Defense To better match administrative support prices with workload, GAO supports current Health Affairs efforts to develop contractual links between administrative support and health care workload prices. The Secretary of Defense should consider incorporating such a requirement in future cycles of TRICARE MCS contracts and, to the extent possible, in contracts under negotiation in the Northeast, Mid-Atlantic, and Heartland regions where it would not compromise the competitive procurement process.
Closed – Implemented
DOD is continuing its search for new approaches for pricing the administrative support functions of managed care support contractors, which would adjust for significant changes in the volume of health care required. Such new approaches will be incorporated into the next generation of TRICARE contracts.

Full Report

Full Report (10 pages)

Office of Public Affairs

Topics

Government Operations
Administrative costsContract modificationsHealth care cost controlHealth care costsManaged health careMilitary procurementPrice adjustmentsService contractsAdministrative supportHealth care