Defense Health Care: Challenges Facing DOD in Implementing Nationwide Managed Care

GAO discussed the Department of Defense's (DOD) efforts to: (1) implement TRICARE, its managed health care program; and (2) secure regional health care contracts to support TRICARE. GAO noted that: (1) TRICARE is a regional approach to DOD health care management under which beneficiaries can choose a number of health care options; (2) DOD will allocate resources for TRICARE using incentives for effective management, and establish contracts to complement each region's military health facilities; (3) DOD believes that TRICARE is compatible with the President's health care plan; (4) DOD has made substantial progress in implementing TRICARE and is using lessons learned from its other attempts to manage military and dependent health care; (5) it is not certain that TRICARE will be a more cost-effective approach than the military's present combination of direct care and the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS); (6) the lack of a medical care cost-sharing requirement may determine whether TRICARE is cost-effective; (7) there are concerns about whether TRICARE lead agents will have sufficient control over contractor activities, the use of CHAMPUS money, and military treatment facilities in their regions; (8) questions have arisen about DOD evaluation of contractor proposals under TRICARE and about the startup time DOD is allowing TRICARE contractors; and (9) DOD is moving quickly to implement TRICARE contracts without completing regional planning efforts.