Defense Health Care: Opportunities to Improve Future TRICARE Managed Care Support Contract Transitions
Fast Facts
DOD offers health care through contractors with TRICARE, its regional health care program. In July 2016, DOD awarded its fourth generation of TRICARE contracts, which consolidated two regions.
DOD provided a transition period for its incoming and outgoing contractors, after which the incoming contractors assumed responsibility for delivering health care. The incoming contractors had trouble meeting deadlines for processing referrals and claims because DOD’s transition guidance wasn’t specific enough to prepare them.
We recommended that DOD improve guidance and oversight requirements for future transitions.
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Highlights
What GAO Found
The implementation of a required new health care benefit option delayed aspects of the transition to the Department of Defense's (DOD) fourth generation of TRICARE managed care support contracts (T-2017). The National Defense Authorization Act for Fiscal Year 2017 required DOD to implement TRICARE Select, a new preferred provider benefit option. As a result, DOD delayed the start of health care delivery—the date the incoming T-2017 contractors would assume responsibility for managing health care—from October 1, 2017, to January 1, 2018, to align with the mandated implementation date for TRICARE Select. DOD also delayed and lengthened a planned period for the department to make changes to beneficiary information in TRICARE's eligibility system. According to DOD and its contractors, this delay contributed to problems with enrollment processing backlogs that were not addressed until several months after health care delivery began.
Timeline of the Fourth Generation (T-2017) TRICARE Contract Transition
DOD experienced challenges during the T-2017 transition that resulted from weaknesses with its transition guidance and oversight. Specifically, DOD's guidance does not always specify the amount and types of data outgoing contractors have to share with incoming contractors. This led to contractor disagreements over data transfers, which DOD did not always resolve in a timely manner. Contractors reported that these issues contributed to problems after health care delivery began for the T-2017 contracts, such as with processing referrals. DHA also determined that some of DHA's oversight requirements, such as for specialty care referrals, were not feasible or effective, which limited some testing of contractors' readiness for health care delivery. This occurred in part because DOD's relevant subject matter experts did not review the requirements.
DOD addressed most of the problems that occurred after health care delivery began by requiring the contractors to develop and implement corrective action plans. DOD and contractors are addressing some problems that have persisted, including problems with the contractors' provider directory accuracy in both regions and claims processing in one region. DOD has an opportunity to avoid similar problems in the future by improving the specificity of its transition guidance and effectiveness of its oversight requirements.
Why GAO Did This Study
DOD contracts with private sector companies—referred to as managed care support contractors—to deliver health care services to its TRICARE program beneficiaries through networks of civilian providers. In July 2016, DOD awarded its fourth generation of TRICARE contracts, referred to as T-2017, for management of civilian providers in its two regions (East and West). For new TRICARE contracts, DOD provides a transition period—usually 9 to 12 months—for the incoming and outgoing contractors. During this time, the incoming contractors must take specific steps to prepare for health care delivery.
The John S. McCain National Defense Authorization Act for Fiscal Year 2019 included a provision for GAO to review the T-2017 transition. This report examines (1) how the requirement to implement TRICARE Select affected the transition, (2) challenges DOD experienced executing the T-2017 transition process, and (3) how DOD addressed problems after the start of health care delivery. GAO reviewed and analyzed DOD guidance, contract requirements, and other relevant documentation, and interviewed DOD officials, TRICARE contractors, and other stakeholders.
Recommendations
GAO is making three recommendations to improve future contract transitions, including that DOD improve the specificity of its transition guidance and have subject matter experts review oversight requirements. DOD concurred with GAO's recommendations and identified steps the department is taking to address them.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Defense Health Agency | The Director of DHA should define data sharing requirements with more specificity in its transition guidance for outgoing and incoming contractors, including the time period covered and the types of data that must be shared. (Recommendation 1) |
In 2019, DHA concurred with our recommendation and noted that it would update the TRICARE Operations Manual regarding data transfers during transitions. In 2022, DHA published a TRICARE Operations Manual update to the chapter on contractor transitions. Specifically, the transitions chapter includes a new section "Critical Processes - Records Management" that outlines records transfer from outgoing to incoming contractor, including the number of years of historical data to be transferred, the format of data transferred, and specification of what information the contractor considers proprietary. Based on this policy update, the recommendation is closed as of October 2022.
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| Defense Health Agency | The Director of DHA should revise the process the agency has in place for resolving issues raised between contractors during transition to ensure such issues are resolved within time frames that will not adversely affect the transition schedule. (Recommendation 2) |
In 2019, DHA concurred with our recommendation and noted that for the next contract transition it would develop a formal process to ensure contractors' questions are resolved in a timely manner. In 2022, DHA provided its T-5 Transition Management and Quality Assurance Plan which outlines a requirement to escalate all Government and contractor risks into senior leadership. Specifically, all issues are to go through the Transition Manager for escalation. Based on this policy update which formalizes an instruction to contractors to address transition issues, the recommendation is closed as of November 2022.
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| Defense Health Agency | The Director of DHA should incorporate lessons learned from this transition and ensure that subject matter experts review PRV/PRAV requirements and performance guarantees prior to the issuance of the request for proposal for the next transition. These requirements should be reviewed to ensure their feasibility and effectiveness for assessing contractor readiness. (Recommendation 3) |
In 2019, DHA concurred with our recommendation and noted that DHA subject matter experts would have an opportunity to review lessons learned and review PRV/PRAV requirements. In 2019 and 2020, DHA reviewed lessons learned and PRV/ PRAV requirements with relevant officials during workshops focused on developing risk assessment and PRV/PRAV for the next TRICARE contract transition (known as T5). According to DOD officials, DHA subject matter experts also participated in writing the T-5 contract and PRV/PRAV requirements. Based on this information, the recommendation is closed as of October 2022.
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