United States Government Accountability Office

GAO Report to the Committees on Armed 

Services, U.S. Senate and House of 

Representatives 

DEFENSE HEALTH

CARE 

Implementation Issues 

for New TRICARE 

Contracts and 

Regional Structure 

July 2005 

 

GAO-05-773 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

July 2005

DEFENSE HEALTH CARE 

Implementation Issues for New TRICARE 

Highlights of GAO-05-773, a report to Contracts and Regional Structure 

Committees on Armed Services, U.S.

Senate and House of Representatives

The Department of Defense (DOD) 

provides health care through

TRICARE—a regionally structured

program that uses civilian 

contractors to maintain provider

networks to complement health

care provided at military treatment

facilities (MTF). In 2004, DOD 

implemented extensive changes to

its TRICARE contracts and regional

structure. A committee report

accompanying the Ronald W. 

Reagan National Defense 

Authorization Act for Fiscal Year

2005 directed GAO to provide 

information on implementation 

issues for (1) the new TRICARE 

contracts and (2) the new regional 

structure. This report also provides 

information on the new

management tools used to assess 

(3) contractors’ performance and 

(4) program performance at the

MTF and regional levels. 

What GAO Recommends

GAO is making recommendations 

to DOD that are aimed at 

determining the costs associated

with its automated system for

referrals and authorizations to

decide what future investments are 

warranted as well as clarifying

responsibilities for contract

oversight and establishing

protocols for regional offices to

collaborate with MTFs to facilitate

regional oversight. 

DOD concurred with each of GAO’s 

recommendations and stated that it

was actively working to manage 

these issues. 

During implementation of the new health care delivery contracts, issues arose 

that affected the administration of the TRICARE program. These issues 

increased program costs and impacted operations but had a minimal impact on 

the delivery of health care to beneficiaries. In particular, DOD’s automated 

referral and authorization system was not available for contractors and MTFs at

the start of health care delivery, resulting in the need for labor-intensive manual

processes. DOD could not provide comprehensive costs associated with the

system’s development and subsequent nonavailability, but contractors’ initial 

estimates for implementing manual processes in response to the system’s 

nonavailability exceed $250 million over the 5-year contract period. DOD 

continues to incur costs to identify and develop solutions for managing referrals

and authorizations and could not yet provide a time frame for when an

automated system would be implemented. 

Implementation of the new regional structure, called the governance structure, 

highlighted ambiguities about the roles and responsibilities of the newly 

established TRICARE regional offices (TRO) with respect to both contract 

oversight and coordination with the military services’ MTFs. DOD offices, which 

traditionally oversee the contracts, and the TROs, which were assigned contract 

oversight responsibilities under the plan for the new governance structure, have 

had difficulties coordinating their responsibilities. In addition, while the

governance plan states that TRO directors are to work with MTFs on issues such

as maximizing the use of the direct care system, it does not provide the TROs 

with a protocol for these interactions. TRO directors do not have authority over

MTFs and must rely on a collaborative approach to obtain cooperation. In some

instances, military service officials have expressed concern that TROs have 

overstepped their authority by directly providing MTFs with guidance.

DOD has two new management tools for assessing the performance of 

contractors—performance guarantees and award fees. While performance 

guarantees serve as the basis for financial penalties, DOD’s process for assessing 

penalties is still evolving. Nonetheless, for the first quarter of the contract year, 

DOD assessed all contractors with performance guarantee penalties, including 

penalties related to telephone wait times and the timely submission of referral 

reports for specialty care. In addition to penalties, DOD uses award fees to

provide contractors with financial bonuses based on customer service. All 

contractors received an award fee for their performance during the first quarter

of their contract year. 

Although business plans were intended to be the management tools used to

assess program performance at the MTF and regional levels, the fiscal year 2005 

business plans for MTFs and TROs could not be used as intended for program 

oversight. Lacking clear guidance, each military service used its own approach 

to develop MTF business plans. The resulting inconsistencies in content and

form impeded development of regional business plans, which are intended to

incorporate the regions’ MTF business plans. The three military services have

collaborated to develop a standard MTF business planning approach—an effort

that should improve both the MTF and regional plans for fiscal year 2006. 

www.gao.gov/cgi-bin/getrpt?GAO-05-773.

To view the full product, including the scope 

and methodology, click on the link above.

For more information, contact Marcia Crosse

at (202) 512-7119 or crossem@gao.gov.
 Contents 

Letter 1

Results in Brief 4

Conclusions 6

Recommendations for Executive Action 8 

Agency Comments and Our Evaluation 8 

Appendix I Briefing on the Implementation of New TRICARE 

Contracts and Governance Structure 11 

Appendix II Comments from the Department of Defense and 

GAO’s Response 88 

Abbreviations 

DEERS Defense Enrollment Eligibility Reporting System

DOD Department of Defense 

EWRAS Enterprise Wide Referral and Authorization System

MCSC managed care support contractor 

MTF military treatment facility

RFP request for proposal

TED TRICARE Encounter Data 

TMA TRICARE Management Activity

TOL TRICARE On Line 

TRO TRICARE regional office

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Page i GAO-05-773 TRICARE Implementation Issues
United States Government Accountability Office

Washington, DC 20548 

July 27, 2005 

The Honorable John Warner 

Chairman 

The Honorable Carl Levin 

Ranking Minority Member

Committee on Armed Services 

United States Senate 

The Honorable Duncan Hunter 

Chairman 

The Honorable Ike Skelton 

Ranking Minority Member

Committee on Armed Services 

House of Representatives 

The Department of Defense (DOD) provides health care to over 9 million 

beneficiaries, including active duty personnel, retirees, and their 

dependents, through its TRICARE program, which is expected to cost 

$36 billion in 2005. TRICARE beneficiaries can obtain health care through 

DOD’s direct care system of military hospitals and clinics, commonly 

referred to as military treatment facilities (MTF), and through DOD’s

purchased care system of civilian providers. DOD uses managed care 

support contractors (MCSC) to develop networks of providers to

complement care available in MTFs and to perform other customer service

functions, such as claims processing. DOD’s TRICARE Management

Activity (TMA), under the Assistant Secretary of Defense for Health

Affairs, is responsible for procuring, administering, and overseeing the 

health care delivery contracts for purchased care. Beginning in 1995, TMA 

implemented the TRICARE purchased care system through 7 health care

delivery contracts that covered 11 geographic health care regions 

nationwide. We previously reported that the contracts’ size, complexity, 

and prescriptive requirements limited innovation and competition among

contractors.1

 l t 1

GAO, Defense Hea th Care: Lessons Learned From TRICARE Contracts and Implica ions 

or the Future, GAO-01-742T (Washington, D.C.: May 17, 2001).

Page 1 GAO-05-773 TRICARE Implementation Issues
In August 2002, TMA announced extensive changes to the next generation 

of TRICARE contracts that included consolidating the number of health

care regions from 11 to 3 and correspondingly reducing the number of

health care delivery contracts to 3. Additionally, some of the health care 

functions that had been included in the previous TRICARE contracts, such 

as retail pharmacy services and MTF appointments, were removed from

the new health care delivery contracts. These functions were either

separately awarded as national contracts or were given to the military 

services to manage. In designing the new contracts, TMA used a 

performance-based contracting approach that focuses on outcomes and 

gives the MCSCs latitude on how to achieve them—unlike the previous 

contracts that more specifically prescribed how MCSCs were to meet

contract standards. To oversee MCSCs’ performance under the new

contracting approach, TMA developed management tools to ensure that

specific program outcomes are achieved and to monitor MTF 

commanders’ and beneficiaries’ satisfaction with customer service. 

TMA and the military services also made substantial changes to the 

management and oversight of TRICARE’s purchased and direct care 

systems through the joint development of a governance plan. This plan 

established a new, regional governance structure, including the creation of

TRICARE regional offices (TRO) to manage each of the three TRICARE 

regions (North, South, and West).2

 The TROs are each led by a director, 

who reports to the Deputy Director of TMA. According to the governance 

plan, TRO directors are considered the health plan managers for the 

regions and are responsible for managing the new contracts, including 

ensuring network quality and adequacy, monitoring customer satisfaction 

outcomes, and coordinating appointment and referral management

policies. TRO directors are also responsible for supporting MTF 

commanders in their efforts to maximize the use of MTFs and for 

providing other assistance as needed. 

Through the governance plan, TMA and the military services established 

annual business plans as the primary management tools for overseeing the 

delivery of health care at the MTF and regional levels. MTFs are

responsible for developing business plans that establish their capabilities

and capacity and that provide financial and workload information. After 

each military service approves the MTF business plans, MTF commanders 

 2

The governance plan also designated selected locations with more than one MTF as

Multiple Service Markets. We did not include these markets in the scope of our review. 

Page 2 GAO-05-773 TRICARE Implementation Issues
submit them to the TROs for inclusion in a single, regional business plan

that also contains information about health care delivery in areas without

MTFs. To oversee the delivery of health care and achieve optimal use of

the direct care system, senior officials can use business plans to make 

informed decisions on what health care should be provided through the 

MTFs versus the purchased care system of civilian providers. 

The implementation of the new contracts and governance structure 

involved numerous transition activities that required careful planning and 

execution to ensure that the delivery of health care to beneficiaries was 

not disrupted. The Senate Committee on Armed Services, in a report

accompanying the Ronald W. Reagan National Defense Authorization Act 

for Fiscal Year 2005, directed GAO to monitor the transition to the new

contracts and governance structure supporting the TRICARE program and 

to provide an assessment of initial transition activities.

3

 In response, we 

examined 

1. issues that arose during implementation of the new TRICARE 

contracts and how they are being addressed, 

2. issues that arose during implementation of the new TRICARE 

governance structure and how they are being addressed, 

3. management tools established to assess MCSCs’ performance and how

these tools are being used, and 

4. management tools established to assess TRICARE program

performance at the MTF and regional levels and how these tools are 

being used. 

To conduct our evaluation, we interviewed officials at the offices 

responsible for administering the TRICARE program, including TMA; the 

Offices of the Surgeons General for the Army, Navy, and Air Force; TROs 

and MCSCs for the North, South, and West regions; and beneficiary group 

representatives. We also reviewed TMA directives, organizational charts, 

guidance, manuals, and contract requirements. We evaluated the 

governance plan and organizational structure and reviewed the timelines 

and plans for the transition to the new contracts and governance 

structure. We analyzed business planning documents for each of the TROs 

and for selected MTFs for fiscal year 2005. We also reviewed the reports 

 3

S. Rep. No. 108-260, at 351 (2004). 

Page 3 GAO-05-773 TRICARE Implementation Issues
and tools that are being used to monitor MCSC performance, including 

customer satisfaction surveys that are administered to beneficiaries and to 

MTF commanders. We assessed the reliability of the data used in this

report and determined that they were sufficiently reliable for our purpose. 

To assess the reliability of the data, we (1) confirmed with TMA and 

MCSCs that the data they provided included the elements that we

requested and that these data elements were consistent with provided 

documentation and (2) conducted detailed interviews with TMA and 

MCSC officials to identify any limitations in the data. We conducted our 

work from December 2004 through July 2005 in accordance with generally 

accepted government auditing standards. 

On May 2, 2005, we provided your staff with a briefing on the preliminary 

results of this review. The purpose of this letter is to provide the published 

briefing slides to you, which appear as appendix I. The information in

these slides has been updated to provide more current data. 

A range of issues arose during implementation of the new health care 

delivery contracts that affected the administration of the TRICARE 

program. These issues increased program costs and impacted operations

but had a minimal impact on the delivery of health care to beneficiaries. 

For example, the transition to new contracts prompted a higher-thanexpected volume of beneficiary calls, requiring MCSCs to use additional 

resources to reduce telephone hold times and minimize beneficiary 

inconvenience. In addition, other problems, including difficulties with

computer systems, strained program operations. The most significant and

costly issue was the nonavailability of the Enterprise Wide Referral and 

Authorization System (EWRAS) that TMA and the military services had 

been developing since 2001. EWRAS was expected to provide automated 

referrals and authorizations for specialty care, and both MTFs and MCSCs 

had developed business processes based on the assumption that EWRAS 

would be available at the start of health care delivery. In its absence, both 

entities expeditiously developed and implemented labor-intensive manual

processes. MCSCs’ initial estimates of the costs involved with addressing 

the absence of EWRAS exceed $250 million over the 5-year contract

period, but they have not yet negotiated this cost with TMA for 

reimbursement. MTFs had to absorb the costs associated with addressing

the additional workload resulting from the need to manually process 

referrals and authorizations, and the military services could not provide

the costs of these efforts. TMA officials also could not provide 

comprehensive costs incurred to develop EWRAS but estimated $9 million 

in contract costs—an estimate that does not include the staff resources 

Results in Brief

Page 4 GAO-05-773 TRICARE Implementation Issues
expended to develop specifications for the system. Further, additional

resources are being expended as TMA has established multiple teams to

develop solutions for managing referrals and authorizations. Depending on

what these teams recommend, TMA officials will decide whether EWRAS 

will be used or whether another automated system will need to be

developed even though TMA lacks critical cost information needed to

facilitate decision making on the optimal approach for managing referrals 

and authorizations. Additionally, although TMA continues to incur costs 

related to identifying and developing solutions, TMA officials could not 

provide an estimate of when an automated system would be available. 

Issues arose during the implementation of the new TRICARE regional 

governance structure that highlighted ambiguities about the roles and 

responsibilities of the TROs with respect to both contract oversight and 

collaboration with the military services’ MTFs. Although the governance

plan gives TRO directors responsibility for overseeing contract functions, 

it does not specifically delineate how this responsibility is to be 

coordinated with the TMA offices traditionally responsible for contract

oversight. As a result, there have been coordination difficulties between 

the TROs and these TMA offices, resulting in conflicting communications 

on issues such as financial penalties and policy related to authorizations 

for care to an MCSC. In light of these difficulties, TMA officials have 

acknowledged the need to reassess and clarify the responsibilities and 

coordination requirements for contract oversight functions. In addition, 

while the governance plan states that TRO directors are to work with 

MTFs on issues such as maximizing the use of the direct care system, it 

does not provide the TROs with a protocol for these interactions. Because

MTFs belong to the military services, TRO directors do not have authority 

over them and must rely on a collaborative approach to obtain 

cooperation. In the absence of clear protocols, military service officials 

have expressed concern about TROs’ efforts to exert influence on MTFs 

stating that TROs have overstepped their authority in some instances by

directly providing guidance to MTFs on issues such as referral 

management procedures and the movement of staff among MTFs. 

TMA has two new management tools for assessing the performance of the 

MCSCs—performance guarantees and award fees—which are used to

financially penalize and reward MCSCs. Performance guarantees establish 

a minimum baseline for performance against 10 specific standards and 

serve as the basis for financial penalties. Although TMA has assessed 

performance guarantee penalties for each of the MCSCs, the process for 

assessing these penalties is still evolving. Because the new health care 

delivery contracts are performance based and focus on outcomes instead 

Page 5 GAO-05-773 TRICARE Implementation Issues
of processes, each MCSC measures and reports performance data 

differently. As of April 2005, TMA was still working with two MCSCs to 

understand their reported data and was still working to complete the 

validation of MCSCs’ systems that generate reported performance data. 

Furthermore, TMA and MCSC officials acknowledge that administering the 

performance guarantees is difficult because not all of these standards 

reflect common industry practices and, therefore, they have no precedent

on how to measure them. Separately, TMA uses award fees to provide 

MCSCs with financial bonuses based on customer satisfaction surveys 

administered to beneficiaries and MTF commanders as well as the TRO 

directors’ firsthand knowledge of MCSCs’ performance. All MCSCs 

received an award fee for their performance during the first quarter of

their contract year. 

Business plans—the management tools established for overseeing 

TRICARE performance at the MTF and regional levels—could not be used 

as intended during fiscal year 2005. TMA provided the military services 

with only minimal guidance on developing MTF business plans and, 

consequently, each of the services developed its own guidance, resulting 

in variations among the fiscal year 2005 MTF business plans in both 

content and format. These inconsistencies subsequently impeded the 

development of the regional business plans, which were intended to

incorporate the regions’ MTF business plans. As a result, regional business 

plans for fiscal year 2005 focused primarily on regional operations and 

health care delivery in areas without MTFs and could not be used to

ensure optimal use of the direct care system. To improve upon the 

business planning process for fiscal year 2006, the three military services

collaborated to develop an automated tool to standardize the content and 

format of MTF business plans and to ensure that the plans are aligned with

the military health system’s overarching strategic plan. The automated tool

also includes metrics that can be used to assess direct care system 

performance. TMA officials expect that the automated tool for MTF

business plans will subsequently improve the quality of information to be 

incorporated in the regional plans, allowing regional plans to be used as 

intended to monitor both the direct and purchased care systems. 

The overall implementation of the new contracts and governance structure 

was an enormous undertaking for all stakeholders in the TRICARE system

that proceeded with few issues affecting beneficiaries due to the close 

collaboration of TMA, MCSCs, and the military services. Most of the 

contract implementation issues were related to program administration 

and affected costs and operations with little impact on health care 

Conclusions 

Page 6 GAO-05-773 TRICARE Implementation Issues
delivery. The most significant implementation issue—the nonavailability of

EWRAS—required extensive and costly process changes under short time 

frames. However, TMA has not clearly identified all of the costs associated 

with EWRAS development and nonavailability although MCSCs’ have 

estimated costs of over $250 million for their efforts in addressing this 

problem over the 5-year contract period. Additionally, TMA continues to

incur costs related to developing solutions for managing referrals and 

authorizations—a process that may take years to complete. Without a

complete understanding of past and ongoing costs associated with EWRAS 

and the development of solutions, TMA will have difficulty determining

what further investments are warranted in developing the optimal

approach for managing referrals and authorizations. 

The implementation of the new regional governance structure has not 

been flawless, largely because the role of the newly created TROs was not 

always clearly defined in the governance plan. Confusion about the TROs’ 

role in contract oversight has created coordination problems with the 

TMA offices that have traditionally conducted contract oversight

functions, resulting in conflicting directions on certain issues. Further, 

despite the TROs’ lack of authority over the direct care system, the 

governance plan did not provide clear protocols for how TROs are 

expected to collaborate with the military services’ MTFs in order to obtain 

their cooperation and maximize regional use of the direct care system. In

some instances, military service officials have expressed concerns about

the TROs overstepping their authority in working with MTFs, potentially 

straining the collaborative relationships. Without clearly defined roles and 

responsibilities for overseeing the contracts and collaborating with MTFs, 

TRO’s oversight of regional health care delivery as envisioned by the 

governance plan could be compromised. 

Finally, the management tools used in assessing program performance 

continue to evolve. TMA is working with the MCSCs to hone its approach

for measuring and administering performance guarantees, an effort that 

should help improve contract oversight. Furthermore, the new automated 

business planning tool appears promising and could result in

improvements in the consistency and content of the fiscal year 2006 MTF 

business plans, subsequently improving the quality of the regional plans. If

effective, TROs and MTF commanders should be able to use the business 

plans as intended to assess program performance at the MTF and regional

levels and to ensure optimal use of the direct care system. 

Page 7 GAO-05-773 TRICARE Implementation Issues
As DOD considers what further investments are warranted for managing

referrals and authorizations, we recommend that the Secretary of Defense 

direct the Assistant Secretary of Defense for Health Affairs to determine 

comprehensive costs for the development and nonavailability of EWRAS 

as well as the costs being incurred to develop a solution. 

To facilitate the TROs’ oversight of regional health care delivery, we 

recommend that the Secretary of Defense direct the Assistant Secretary of 

Defense for Health Affairs to take the following two actions: 

1. clearly define the TROs’ contract oversight roles and responsibilities as

they relate to other TMA offices and

2. establish protocols for how TROs are to collaborate with the military 

services’ MTFs. 

In commenting on a draft of this report, DOD concurred with each of our 

recommendations and said that it was actively working to manage the 

issues we noted. DOD’s written response is reprinted in appendix II. DOD 

also provided several technical comments that we incorporated where 

appropriate. 

Recommendations for 

Executive Action

Agency Comments 

and Our Evaluation 

DOD specifically stated that as the search for an automated solution to

referrals and authorizations continues, the process of cost development

and containment is ongoing. Once all costs associated with the 

nonavailability of EWRAS have been fully examined, DOD plans to

negotiate a final cost for manual referral processing with the MCSCs. In 

addition, DOD stated that as it develops and implements an automated 

solution for processing referrals and authorizations, program oversight

will be maintained to ensure that an automated solution satisfies the needs 

of all end users. 

To more clearly define contract oversight responsibilities, DOD said that it

is in the process of reexamining business functions for the TROs and other

TMA offices. DOD acknowledged that TMA’s existing business practices

and processes were established before the TROs were created and that

business functions need to be reexamined in light of the new regional 

structure. The Assistant Secretary of Defense for Health Affairs has 

directed TMA to evaluate certain business functions and to develop 

written guidance to clearly define how the related business practices are 

performed. In conducting this evaluation, it will be important for DOD to

specifically examine the administration of MCSCs’ performance 

Page 8 GAO-05-773 TRICARE Implementation Issues
guarantees and the associated financial penalties—a critical aspect of 

contract oversight where coordination has been problematic. Further, to

ensure continuous communication and coordination of critical issues 

affecting all contracts, DOD has recently established a Program Oversight 

Council, whose members include the TRO Directors, the Deputy Chief for 

Acquisitions, the Deputy Chief for Resource Management and 

Procurement, and the Chief of Health Plan Operations. 

In addition, DOD stated that it intends to establish protocols and specific

management mechanisms for the TROs to coordinate with MTFs. In

particular, the Assistant Secretary of Defense for Health Affairs has 

directed the development of agreed-upon protocols and mechanisms for 

the TROs to coordinate regional business plans with MTFs in their regions.

While we agree that the business planning process is the primary method 

of collaboration between TROs and MTFs, it is not the only area for which 

protocols are needed. Because TROs serve as the health plan managers for 

the regions, they will sometimes need to collaborate with MTFs on issues 

that are not directly related to business plans, such as the communication 

of referral management procedures. We believe that established protocols 

could facilitate such communication and alleviate the military services’

concerns about how TROs are interacting with the MTFs. 

Despite concurring with our recommendations, DOD stated that the report

did not emphasize what it viewed as the positive aspects of the 

implementation—primarily that DOD achieved its paramount goal of

assuring a minimal impact on beneficiaries. However, the objectives of our 

review were to identify the issues that were encountered during the 

implementation of the new contracts and governance structure, and our 

report appropriately focuses on these issues. Nonetheless, our overarching 

assessment of DOD’s implementation activities clearly states that the 

impact on beneficiaries was minimal and attributes this to the close

collaboration of TMA, MCSCs, and the military services. 

We are sending copies of this report to the Secretary of Defense and other 

interested parties. We will also make copies available upon request. In

addition, the report will be available at no charge on GAO’s Web site at

http://www.gao.gov. 

Page 9 GAO-05-773 TRICARE Implementation Issues
If you or your staff have any questions about this report, please contact me

at (202) 512-7119. Contact points for our Offices of Congressional

Relations and Public Affairs may be found on the last page of this report. 

In addition to the contacts named above, Bonnie Anderson, Assistant

Director, Lois Shoemaker, Rob Suls, and Cathy Hamann made key 

contributions to this report. 

Marcia Crosse 

Director, Health Care

Page 10 GAO-05-773 TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance Appendix I: Briefing on the Implementation Structure 

of New TRICARE Contracts and Governance 

Structure 

1

Implementation of New TRICARE 

Contracts and Governance Structure

Briefing for Congressional Staff

Senate Committee on Armed Services

House Committee on Armed Services

Updated

Page 11 GAO-05-773 TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 12 GAO-05-773

2

Table of Contents

Page

• Introduction 3

• Purpose & Key Questions 8

• Scope and Methodology 9

• Background 12

• Key Question 1: Contract Implementation Issues 29

• Key Question 2: Governance Implementation Issues 52 

• Key Question 3: Tools to Oversee MCSCs 58

• Key Question 4: Tools for MTFs and Regions 68

• Appendix I: Performance Guarantees 75 

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 13 GAO-05-773

3

Introduction

• The Department of Defense (DOD) provides health care for 

over 9 million beneficiaries through its military health system,

called TRICARE, which is expected to cost $36 billion in 

2005.

• Beneficiaries include active duty servicemembers, their 

families, military retirees and their eligible family

members, and survivors.

• Under TRICARE, beneficiaries can receive health care

through 

• military hospitals and clinics, commonly referred to as

military treatment facilities (MTF), and

• civilian providers.

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 14 GAO-05-773

4

Introduction (continued)

• MTFs comprise DOD’s direct care system for providing health care

to beneficiaries.

• Within the direct care system, each military service, under its

Surgeon General, is responsible for managing its MTFs.

• Networks of civilian providers comprise DOD’s purchased care 

system, which is intended to complement the direct care system of

MTFs.

• Through its health care delivery contracts, DOD uses civilian 

managed care support contractors (MCSC) to develop 

networks of primary and specialty care providers and to provide 

other customer service functions, such as claims processing. 

• The TRICARE Management Activity (TMA), under the 

Assistant Secretary of Defense for Health Affairs, is

responsible for awarding, administering, and overseeing these contracts.

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 15 GAO-05-773

5

Introduction (continued)

• Beginning in 1995, TMA implemented its TRICARE program through 7

health care delivery contracts that covered 11 geographic health care

regions nationwide.

• We previously reported that the size, complexity, and prescriptive

requirements of these contracts limited innovation and competition among contractors.1

• In August 2002, TMA announced major changes to the next generation of

TRICARE health care delivery contracts. 

• These contracts consolidated the number of health care regions from

11 to 3—North, South, and West. (See fig. 1.)

• Each region contains about one-third of the beneficiary population.

• TMA used a performance-based contracting approach that focused on 

outcomes and gave MCSCs latitude on how to achieve them, unlike

the previous contracts that more specifically prescribed how MCSCs

were to meet contract standards.

• For these contracts, TMA developed new management tools to 

ensure that specific program outcomes were achieved and to

monitor customer satisfaction.

1

GAO, Defense Health Care: Lessons Learned From TRICARE Contracts and Implications for the Future, 

GAO-01-742T (Washington, D.C.: May 17, 2001).

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 16 GAO-05-773

6

Introduction (continued)

Figure 1: Comparison of Previous and Current TRICARE Regions

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 17 GAO-05-773

7

Introduction (continued)

• TMA and the military services also created a governance plan to 

help manage and oversee the TRICARE program.

• The governance plan established a new regional infrastructure, 

called the governance structure, to manage and oversee both the

direct care and purchased care systems of the TRICARE program. 

• Each of the three regions has a TRICARE regional office (TRO)

that is led by a regional director who reports to TMA.

• The TROs are considered part of TMA’s organization.

• The plan designated selected locations with more than one 

MTF as Multiple Service Markets.

2

• The governance plan established annual business plans as the 

primary management tools for overseeing the delivery of health 

care at the MTF and regional levels.

2

We did not include these markets in the scope of our review. 

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 18 GAO-05-773

8

Purpose & Key Questions

• The Senate Committee on Armed Services, in a report accompanying the 

Ronald W. Reagan National Defense Authorization Act for Fiscal Year

2005, directed GAO to monitor the transition to the new contracts and 

governance structure supporting the TRICARE program and to provide an

assessment of initial transition activities by May 2005.3

• In response, we addressed the following key questions:

1. What issues arose during implementation of the new TRICARE

contracts, and how are they being addressed?

2. What issues arose during implementation of the new TRICARE

governance structure, and how are they being addressed?

3. What management tools were established to assess MCSCs’

performance, and how are these tools being used?

4. What management tools were established to assess TRICARE 

program performance at the MTF and regional levels, and how are 

these tools being used?

3

S. Rep. No. 108-260, at 351 (2004). 

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Scope and Methodology

• To do our work, we interviewed officials from offices with

responsibilities for developing, implementing, and monitoring

the TRICARE program, including

• TMA;

• Offices of the Surgeons General for the Army, Navy, and

Air Force;

• TROs for the North, South, and West regions;

• MCSCs for the North, South, and West regions; and

• beneficiary group representatives.

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Scope and Methodology (continued)

• We also reviewed

• TMA directives, organizational charts, guidance, manuals, and 

contract requirements;

• the governance plan and organizational structure;

• timelines and plans for the transition to the new contracts and

governance structure;

• copies of all TRO business planning documents and selected

MTF business planning documents for fiscal year 2005;

• reports and tools used to monitor MCSCs’ performance; and

• customer satisfaction surveys that are administered to 

beneficiaries and to MTF commanders.

• We did not evaluate information related to Multiple Service Markets.

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Scope and Methodology (continued)

• We did not independently validate data on provider network

changes, telephone hold times, electronic claims processing,

or costs provided by TMA and MCSC officials.

• However, we determined that these data were sufficiently

reliable for the purpose of our work by

• confirming with TMA and MCSCs that the data they

provided included the elements that we requested and

that these data were consistent with provided 

documentation and

• conducting detailed interviews with DOD and MCSC 

officials to understand the limitations of the data.

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Background

• Functions Included in the Previous TRICARE Health Care Delivery Contracts

• Design of the Previous TRICARE Contracts

• Changes to the TRICARE Contracts

• Functions Included in the Current TRICARE Health Care Delivery Contracts

• Design of the Current TRICARE Health Care Delivery Contracts

• TMA’s Approach to Monitoring the Current TRICARE Health Care Delivery Contracts

• New TRICARE Health Care Delivery Contract Implementation

• Previous Regional Oversight Structure

• Current Regional Oversight Structure

• Responsibilities of TRO Directors

• Business Planning

• MTF Business Plans

• Regional Business Plans

• Magnitude of the Transition

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Background (continued)

Functions Included in the Previous TRICARE Health Care 

Delivery Contracts

• The main functions covered in the previous TRICARE health

care delivery contracts included

• developing civilian provider networks,

• referring and authorizing beneficiaries for health care, 

• processing health care claims, 

• conducting utilization management and quality

management programs, and 

• educating providers and beneficiaries.

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Background (continued)

Design of the Previous TRICARE Contracts

• The design of the previous TRICARE contracts was based on

prescriptive requirements.

• For example, the adequacy of the provider network was

measured through the requirement that MCSCs maintain

a specific provider-to-beneficiary ratio: 1 provider to every

1,200 TRICARE enrollees.

4

• TMA was responsible for monitoring the MCSCs’

performance to ensure compliance with these requirements.

4

Beneficiary enrollment is required for participation in TRICARE’s health maintenance organization option.

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Background (continued)

Changes to the TRICARE Contracts

• Previously, TMA solicited proposals for TRICARE’s seven 

health care delivery contracts that covered 11 regions 

through separate requests for proposals (RFP)—each of

which contained unique regional requirements. 

• To ensure program uniformity among the regions and to

simplify administration of the program, new health care

delivery contracts were awarded separately for each of the 

three regions from a single RFP.

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Background (continued)

Functions Included in the Current TRICARE Health Care Delivery 

Contracts

• TMA collaborated extensively with each of the military

services to design the next generation of TRICARE contracts.

• Some of the health care functions that had been included in 

the previous TRICARE contracts were carved out from the 

new health care delivery contracts and were either separately 

awarded as national contracts or were given to the military

services to manage.

• Carve-out contracts: retail pharmacy services, marketing and education services, and the adjudication of Medicare- eligible retiree claims.

• Military services’ responsibilities: MTF appointment

setting, resource-sharing agreements, health care

information line, and medical necessity reviews, among 

others.

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Background (continued)

Design of Current TRICARE Health Care Delivery Contracts

• The current TRICARE health care delivery contracts are designed 

to be performance based.

• Performance-based contracts focus on desired outcomes—

usually based on common industry practices—and give the 

contractor latitude on how to achieve them.

• For example, provider network adequacy is now ensured 

through an outcome that requires MCSCs to establish a 

sufficient network of providers so that beneficiaries can make

appointments for care within TRICARE’s access standards5 

rather than through a specific provider-to-beneficiary ratio.

• However, some prescriptive requirements remain in these 

contracts when results are mandated by law or regulations.

5

The wait time for a well-patient visit or a specialty care referral may not exceed 4 weeks; for a routine visit, the wait 

time may not exceed 1 week; for urgent care, the wait time may not exceed 24 hours.

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Background (continued)

Design of Current TRICARE Health Care Delivery Contracts

• The current health care delivery contracts are based on five

overarching objectives to 

• ensure optimal use of MTFs,

• attain the highest possible level of beneficiary satisfaction, 

• attain best-value health care by utilizing commercial practices

when possible,

• have fully operational services and systems at the start of 

health care delivery so there is minimal disruption to

beneficiaries and MTFs, and

• ensure that TMA has ready access to contractor-maintained 

data. 

• The contract contains more than 130 outcomes, which are linked to

these objectives.

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Background (continued)

TMA’s Approach to Monitoring the Current TRICARE Health Care

Delivery Contracts

• Under the new health care delivery contracts, TMA requires

MCSCs to have internal quality management programs that it

uses to assess MCSC performance.

• In addition, the contracts specify weekly, monthly, quarterly,

and annual reporting requirements.

• TMA is responsible for validating the systems that MCSCs

use to generate the data for their performance reports to

ensure that the information provided is reliable and accurate.

• In addition, TMA obtains data to monitor performance

through other sources, such as its own claims records

database and claims accuracy audits.

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Background (continued)

New TRICARE Health Care Delivery Contract Implementation

• TMA awarded its current TRICARE health care delivery contracts

on August 21, 2003.

• TMA and the MCSCs collaborated extensively in planning and 

conducting the transition to the new contracts.

• Each MCSC had to submit a transition plan to TMA.

• TMA designated transition managers for each region and had 

routine meetings with MCSCs to monitor transition activities.

• Each of the three health care delivery contracts had multiple start 

dates to accommodate the transition from each of the former seven 

contracts.

• The first health care delivery start date was June 1, 2004.

• The last health care delivery start date was November 1, 2004.

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Background (continued)

Previous Regional Oversight Structure

• Previously, each of the 11 health care regions had been 

managed by a designated MTF commander, called a lead

agent, who also functioned as the focal point for coordinating 

regional health care services.

• Lead agents collaborated with other MTF commanders in the

region to facilitate health care delivery in the direct care

system. 

• Lead agents also monitored selected contract requirements, such as the adequacy of the civilian provider networks.

• Each lead agent had his or her own office and staff.

• Staffing and organizational structures of each office 

varied.

• Lead agents reported to their respective military services.

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Background (continued)

Current Regional Oversight Structure

• The TRICARE governance plan established a new regional 

structure for overseeing the purchased care and direct care

systems.

• The governance plan establishes three TROs—one for each

region and contract. 

• Each TRO is led by a director and can have up to

60 staff, including some staff from the military services.

• Each TRO has the same organizational structure.

• TRO locations:

• TRO North—Falls Church, Virginia

• TRO South—San Antonio, Texas

• TRO West—San Diego, California

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Background (continued)

Responsibilities of TRO Directors

• TRO directors are considered the health plan managers for 

the regions and report to the Deputy Director of TMA.

• TRO directors are responsible for managing the new 

contracts including

• ensuring network quality and adequacy,

• monitoring customer satisfaction outcomes, and

• coordinating appointment and referral management

policies.

• TRO directors are also responsible for supporting MTF 

commanders in their efforts to maximize the use of the MTFs

and providing other assistance as needed.

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Background (continued)

Business Planning

• According to the governance plan, business planning will be 

the key management tool for integrating the direct and

purchased care systems in order to achieve optimal 

utilization of direct care resources and provide management

accountability at every level of the military health system.

• The governance plan established requirements for annual 

business plans at the MTF and regional levels.

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Background (continued)

MTF Business Plans

• MTF commanders are responsible for developing business 

plans to

• help establish the direct care system capabilities and 

capacity,

• analyze local market demands and identify opportunities

to maximize the use of the MTFs, and

• provide complete financial and workload information.

• Once they are finalized and approved, MTF business plans 

are provided to the TROs for incorporation into the regional 

business plans.

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Background (continued)

Regional Business Plans

• The TRO directors are responsible for the development and 

implementation of the regional business plans.

• TRO directors are responsible for developing business plans

for non-MTF areas where beneficiaries would need to rely

primarily on civilian providers to obtain health care.

• The business plans for non-MTF areas are integrated with the

MTF business plans to create a single, regional business plan 

that is intended to provide TRO directors with information about

all regional assets, costs, and expenditures. 

• TRO directors can use the regional business plans as management 

tools to make recommendations to the military services regarding

direct care system resources.

• In addition, the TRO directors are supposed to monitor regional

performance against the business plans.

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Background (continued)

Magnitude of Transition

• The overall transition to the new contracts and governance

structure was an enormous undertaking for all stakeholders 

in the TRICARE system.

• Multiple transitions were required.

• 7 health care contracts had to be phased out and 

transitioned to 3 new health care delivery contracts.

• 11 lead agent offices had to be phased out with their work

transitioned to the 3 TROs.

• Selected functions had to be transitioned from the 

previous health care delivery contracts to either the

separate, national contracts or to the military services for 

local administration.

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Background (continued)

Magnitude of Transition

• In addition, TMA had to plan for the transition of new 

information systems, including

• a new version of the Defense Enrollment Eligibility

Reporting System (DEERS);

• a new records system for health care claims, called the 

TRICARE Encounter Data (TED) System; and

• TRICARE On Line (TOL), an all-inclusive Web portal that

provides access to military health system resources.

• Enterprise Wide Referral and Authorization System

(EWRAS), a component of TOL, is designed to provide 

automated referrals and authorizations for specialty

care. 

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Key Question 1: Contract Implementation Issues

• What issues arose during implementation of the new

TRICARE contracts, and how are they being addressed?

• Issues Impacting Beneficiaries

• EWRAS

• Difficulties Implementing the TED System

• Difficulties Meeting Electronic Claims Submission Standard

• Challenges with Carve-out Contracts

• Military Services’ Challenges with New Contract

Responsibilities

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Key Question 1: Contract Implementation Issues

Issues Impacting Beneficiaries

• Overall, TMA, MCSC, and military service officials stated that most

issues encountered during implementation appeared to have little 

impact on beneficiaries because complaints have been minimal.

• To ensure a seamless transition for beneficiaries,TMA, MCSC, and

military service officials cited a high level of collaboration prior to 

and during the implementation.

• For example, TMA officials identified the transition to new 

DEERS as a high-risk area because DEERS is used to

determine eligibility for health care services. Problems with its 

implementation would have negatively impacted beneficiaries’ 

access to care.

• Therefore, officials within TMA, the military services, and the 

MCSCs collaborated in the development and testing of new 

DEERS, which was implemented with minimal disruption.

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Key Question 1: Contract Implementation Issues

Issues Impacting Beneficiaries (continued)

• Beneficiary group representatives told us that the transition was

relatively seamless, and the issues that existed are being resolved. 

The issues most often noted included the following:

• Some beneficiaries had to change their primary care provider

when the contracts transitioned.

• Long telephone wait times for customer service occurred in

some places.

• Access to care was sometimes delayed due to implementation 

of new procedures for specialty care referrals.

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Key Question 1: Contract Implementation Issues

Issues Impacting Beneficiaries (continued)

• According to the MCSCs, about 5 percent (34,392 of

659,814) of beneficiaries enrolled with civilian primary care

providers had to change their primary care provider.

• Percentage of beneficiaries by region who had to change 

providers:

• West region: 11 percent (28,336 of 247,379) 

• North region: 2 percent (4,656 of 266,435)

• South region: 1 percent (1,400 of 146,000) 

• In most regions where the contracts changed, the incoming 

MCSC was able to either purchase the incumbents’ civilian

provider networks or recruit previously participating 

providers into the new networks. 

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Key Question 1: Contract Implementation Issues

Issues Impacting Beneficiaries (continued)

• MCSCs experienced a higher-than-expected customer- service call volume during early contract implementation.

• MCSC and TMA officials stated that the main reasons for 

calls included questions about changes in TRICARE and

the status of referrals and authorizations for specialty

care.

• As a result, all of the MCSCs experienced difficulties meeting 

TMA’s telephone wait-time standard that “95 percent of all 

calls shall not be on hold for a period of more than

30 seconds during the entire call.”

• One MCSC told us that in July 2004—its highest volume

month for phone calls—it had average hold times of over 

10 minutes with a peak of 29 minutes.

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Key Question 1: Contract Implementation Issues

Issues Impacting Beneficiaries (continued)

• In response, MCSCs told us that they took the following steps: 

• One MCSC added almost 200 additional staff.

• Another MCSC added 100 additional staff.

• A third MCSC established and staffed a new phone center.

• As of March 2005, only one MCSC was meeting the telephone waittime standard. The other two MCSCs were meeting the hold-time

standard for about 81 and 93 percent of calls instead of the 

required 95 percent. 

• The previous TRICARE contracts did not have hold-time standards.

TMA officials told us that there was no comparable industry

standard and that they included this requirement in the new 

contracts because of beneficiary dissatisfaction with hold times

under the old contracts.

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Key Question 1: Contract Implementation Issues

EWRAS Nonavailability

• The most significant and costly issue was that EWRAS was not

available for MCSCs and MTFs at the start of health care delivery

and continues to be unavailable despite years of effort in

designing the system. 

• EWRAS, intended to be a component of TOL, was designed to be

an automated tool for accepting and sending referrals and 

authorizations for specialty care between MTFs and MCSCs’ 

network providers while complying with privacy standards.

• MCSC officials told us they based their proposals in 2002 on the

assumption that EWRAS would be available. However, EWRAS

was only a concept at that time.

• Correspondingly, MTFs developed business processes with the 

expectation that EWRAS would be available when the new 

TRICARE health care delivery contracts were implemented.

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Key Question 1: Contract Implementation Issues

EWRAS Timeline

• TMA began conceptualizing and designing EWRAS in 2001.

• A triservice working group was established in June 2001 to define 

referrals and authorizations and to develop business processes to

support an automated system.

• However, TMA did not involve MCSCs in EWRAS’ development as

it did for the new version of DEERS.

• TMA’s contractor for developing TOL was given the added 

responsibility of developing the referral and authorization system.

• A modification to the TOL contract, dated March 2003, called for a

fully functioning system prototype to be available in May 2003.

• However, this prototype was not delivered, and in November 2003, a

separate contract for developing EWRAS was awarded to the TOL 

contractor.

• The planned completion date stated in the contract’s project

management plan was March 31, 2004.

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Key Question 1: Contract Implementation Issues

EWRAS Timeline (continued)

• According to TMA officials, the EWRAS prototype was tested in 

March 2004. At that time, TMA officials recognized that EWRAS

might not be ready by the start of health care delivery.

• According to TMA officials, the prototype did not adequately

address the business processes that MTFs and MCSCs needed.

• MTFs were focused on clinical information.

• MCSCs were focused on information needed to process claims.

• On March 5, 2004, TMA issued a contract change order to the 

MCSCs directing them to work with MTF commanders to develop a 

contingency plan for transmitting referrals and authorizations in the 

event that EWRAS would not be available.

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Key Question 1: Contract Implementation Issues

EWRAS Contingency Plans

• On May 20, 2004, TMA issued a contract change order to MCSCs

directing them to implement the contingency plans. 

• MCSCs had to respond quickly in light of the first health care

delivery start date of June 1, 2004. Within a short time frame, 

MCSCs told us that they had to

• implement new business processes,

• realign existing staff,

• hire and train additional staff, and

• obtain additional office space and technology.

• Correspondingly, MTFs had to modify their business processes for

transmitting referrals and authorizations because they had

developed processes based on the assumption that EWRAS would 

be available.

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Key Question 1: Contract Implementation Issues

EWRAS Costs

• EWRAS’s development and its subsequent nonavailability have 

increased the costs associated with implementing the new 

TRICARE contracts.

• The cost of EWRAS’s development is difficult to quantify.

• According to TMA, approximately $9 million was spent on

EWRAS’s development.

• TMA officials could not specify how much of the TOL 

contract’s costs were related to EWRAS’s development, but 

they estimate a cost of $3 million.

• TMA subsequently spent about $6 million on EWRAS’s

development under a separate contract.

• In addition to contract costs, TMA and the military services

expended staffing resources for several years developing 

specifications for the system.

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Key Question 1: Contract Implementation Issues

EWRAS Costs (continued)

• Unexpected costs associated with the nonavailability of

EWRAS are also difficult to quantify.

• In March 2004, the three MCSCs estimated that the 

manual process could cost the government over $250 million over 5 years. However, the costs of these 

contract changes have not been negotiated with TMA.

• The military services told us that MTFs had to absorb

the additional workload created by the need for manual 

referrals. The military services have not estimated the 

costs associated with these changes for the direct care 

system. 

• To help alleviate the additional workload, two of the 

military services procured electronic fax systems for

the exchange of referral information. 

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Key Question 1: Contract Implementation Issues

EWRAS Customer Service Impact

• EWRAS’s nonavailability also had a customer service impact.

• According to MCSCs,

• implementing the manual process in a short time frame 

caused confusion for beneficiaries and resulted in many

phone calls asking for clarification that contributed to

longer telephone wait times, and

• questions about referrals and authorizations continue to

be one of the main reasons for phone calls.

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Key Question 1: Contract Implementation Issues

EWRAS Solutions

• TMA has established multiple teams to develop solutions to 

EWRAS’s nonavailability.

• Similar to the 2001 tri-service working group, these teams 

started by developing definitions and business processes 

related to referrals and authorizations.

• The teams have developed recommendations for short-term

remedies and continue to work on midrange and long-term

solutions.

• Depending on what these teams conclude, TMA officials will decide

whether EWRAS will be used or whether another automated 

system will need to be developed.

• As a result, TMA officials do not know when an automated

referral and authorization system will be available even though

TMA continues to incur costs seeking a solution.

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Key Question 1: Contract Implementation Issues

Difficulties Implementing the TED System

• TMA experienced problems with its new TED system at the

start of health care delivery under the new contracts. 

• After a claim is processed and paid, a claim record is

submitted to TMA’s TED system. This system uses the

claim records to monitor claims processing timeliness

and accuracy and to reimburse MCSCs for the care of

MTF enrollees that is provided by civilian providers.

• Although initial processing of beneficiary and provider

claims have not been impacted by problems with the

TED system’s implementation, MCSCs have been

impacted by these problems.

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Key Question 1: Contract Implementation Issues

Difficulties Implementing the TED System (continued)

• MCSC officials told us they did not get to test the TED system to

identify any potential problems prior to the start of health care

delivery as they had with the new version of DEERS.

• As a result, some claim records were rejected by the TED 

system because of errors made by MCSCs as they learned 

how the system functioned.

• Additionally, some claim records were erroneously rejected due to 

errors with TMA’s TED system. As a result, TMA made a

temporary adjustment to the TED system.

• In some cases, MCSCs had to use additional staff or resources to

correct and resubmit rejected claim records.

• One MCSC planned for a claim record reject rate of about 6 percent but actually experienced a much higher reject rate of 

about 30 percent. 

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Key Question 1: Contract Implementation Issues

Difficulties Implementing the TED System (continued)

• Due to MCSC submission errors and TED system problems, TMA had large accounts payable with the MCSCs because of

the backlog of claim records that needed to be cleared so

that MCSCs could be reimbursed.

• As of May 2005, one MCSC official told us that it still had

large accounts receivable with TMA largely due to

submission errors.

• TMA implemented an update to the TED system in April 2005

that is expected to resolve problems related to errors in the

system. 

• According to TMA, some TED errors have been reduced as a

result of the update, but as of May 2005, the full impact of the

update had not been assessed.

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Key Question 1: Contract Implementation Issues

Difficulties Meeting Electronic Claims Submission Standard

• MCSCs stated that they experienced difficulties meeting the 

contract standard that 100 percent of network providers submit 

claims electronically.

• In March 2005, MCSCs received about 50-70 percent of 

network claims electronically.

6

• MCSCs stated that some providers do not submit any of their

health care claims electronically. 

• MCSCs have little leverage to encourage electronic submission 

because TRICARE patients are generally a low percentage of 

most providers’ business.

• According to one MCSC, this standard is not realistic and is costly 

to the government because MCSCs must expend additional

resources in attempting to meet it.

• TMA officials are reexamining this standard. 

6

Under the previous TRICARE contracts, TMA received about 30-35 percent of claims for health care electronically.

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Key Question 1: Contract Implementation Issues

Challenges with Carve-Out Contracts

• Carving certain functions out of the new health care delivery

contracts appears to have created some confusion for 

beneficiaries. 

• According to MCSCs, some beneficiaries are uncertain 

about whom to call when they have questions about

issues such as retail pharmacy claims or Medicareeligible retiree claims, which are managed by other 

contractors. 

• TMA has worked with MCSCs to establish phone

procedures to assist beneficiaries who contact them

about issues related to the carve-out contracts.

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Key Question 1: Contract Implementation Issues

Challenges with Carve-Out Contracts (continued)

• MCSC officials told us that assigning responsibility for retail 

pharmacy services to a separate contractor impeded their ability to 

adequately monitor beneficiaries’ drug use because they no longer

have this information. 

• One MCSC told us that under the previous health care delivery

contracts, they mined pharmacy data in order to direct

individualized mailings to providers and beneficiaries to ensure

that medical best practices related to pharmaceuticals were

followed.

• In addition, one MCSC told us that the pharmacy carve-out contract

eliminates any financial incentives for the MCSCs to manage 

beneficiaries’ drug use. 

• According to TMA officials, MCSCs can currently obtain beneficiary

pharmacy data on a case-by-case basis from TMA’s centralized 

pharmacy database.

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 59 GAO-05-773

49

Key Question 1: Contract Implementation Issues

Military Services’ Challenges with New Contract

Responsibilities—National Appointment Contract

• At the start of health care delivery under the new contracts, the 

national contract for MTF appointments had not been awarded.

• The appointment contract was intended to provide 

appointment-making services for MTFs that did not have the 

capability to perform this task internally.

• The military services were responsible for awarding this

contract under the auspices of the U.S. Army Medical

Command Center for Health Care Contracting.

• Military service officials told us that the contract award was

delayed for many reasons, including the need for coordination

among the services and the fact that the initial proposals did not 

meet requirements.

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 60 GAO-05-773

50

Key Question 1: Contract Implementation Issues

Military Services’ Challenges with New Contract

Responsibilities—National Appointment Contract (continued)

• To provide for appointments until the national contract was awarded, the 

military services temporarily extended existing MTF appointment

contracts.

• On March 29, 2005, the U.S. Army Medical Command Center for Health

Care Contracting awarded three national appointment contracts to the 

three MCSCs that are managing the health care delivery contracts.

• MTF commanders who need appointment services can request

contract support through their local contracting support agencies.

• Each contractor will then have the opportunity to bid on each request

for appointing services.

• MTFs will have to pay the MCSCs for the services they request under

these contracts.

• The new contracts were effective April 2005.

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 61 GAO-05-773

51

Key Question 1: Contract Implementation Issues

Military Services’ Challenges with New Contract

Responsibilities—Medical Necessity Reviews

• TMA initially gave the military services responsibility for medical necessity

reviews related to referrals and authorizations for specialty care.

• According to military service officials, TMA did not provide sufficient

information about executing this responsibility. Additionally, some

MTFs did not have the manpower or clinical expertise to conduct the

reviews.

• As a result, TMA gave this responsibility to MCSCs through a 

contract change order.

• The MCSCs currently estimate that this change could cost more than 

$80 million over 5 years, but the cost of this change has not yet been 

negotiated with TMA.

• According to TMA officials, if this function had been initially included 

as a requirement of the health care delivery contracts, its cost would

likely have been less than that of the contract change order.

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 62 GAO-05-773

52

Key Question 2: Governance Implementation Issues

• What issues arose during implementation of the new

TRICARE governance structure, and how are they being 

addressed?

• TRO Contract Oversight Responsibilities

• TRO Collaboration with MTFs

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 63 GAO-05-773

53

Key Question 2: Governance Implementation Issues

TRO Contract Oversight Responsibilities

• Although the governance plan gives TRO directors responsibility 

to oversee contract functions, it did not specifically delineate how 

this responsibility would be coordinated with central TMA offices

that have traditionally conducted oversight of the TRICARE 

contracts.

• Each of the three TROs has an on-site contract operations

office whose responsibilities include contract oversight. 

• TRO directors are responsible for awarding financial bonuses

to MCSCs on the basis of customer satisfaction. 

• TMA’s centrally located offices also conduct contract oversight. 

• Among other duties, these staff are responsible for

determining and communicating financial penalties to MCSCs.

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 64 GAO-05-773

54

Key Question 2: Governance Implementation Issues

TRO Contract Oversight Responsibilities (continued)

• The TROs’ contract staff and TMA’s centralized contract staff have 

not always coordinated on issues involving oversight of MCSCs.

• For example, according to TMA officials,

• a TRO director had TRO contract staff communicate a 

financial penalty reduction to an MCSC without the

consensus of TMA’s centrally located contract staff, who did 

not agree with this decision, and

• TRO contract staff approved mailings from an MCSC to 

beneficiaries related to authorization requirements. 

However, TMA’s centrally located contract staff determined 

that these mailings conflicted with TMA regulations.

• While these TRO decisions were ultimately rescinded, they

resulted in conflicting messages to an MCSC. 

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 65 GAO-05-773

55

Key Question 2: Governance Implementation Issues

TRO Contract Oversight Responsibilities (continued)

• TMA officials acknowledged the need to reassess

• what contract oversight functions should reside in the 

TROs and what functions should remain centralized and

• existing business practices and processes that need to

be modified to clearly define 

• how TMA offices will coordinate and perform certain

functions with TROs and

• how the TROs will coordinate with each other.

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 66 GAO-05-773

56

Key Question 2: Governance Implementation Issues

TRO Collaboration with MTFs

• According to the governance plan, TRO directors are to

have information about the assets and capacity of the MTFs

in their regions so they can make recommendations to the

military services about maximizing the use of the direct care

system. 

• However, the governance plan did not establish protocols

for TRO collaborations with MTFs.

• TRO directors do not have authority over the direct care

system of MTFs in their regions.

• MTF commanders report to their respective military 

service and are not accountable to the TRO directors.

• To obtain cooperation, TRO directors must work

collaboratively with the military services.

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 67 GAO-05-773

57

Key Question 2: Governance Implementation Issues

TRO Collaboration with MTFs (continued)

• The Surgeons General and their representatives stated that TRO 

directors should view the MTFs as “customers” and should focus on 

managing the contracts. They also expressed concern about TRO 

directors’ efforts to exert influence on the MTFs.

• For example, they stated that the TROs have sometimes

overstepped their authorities by providing individual MTFs with 

guidance—especially related to referral management and 

movement of staff among MTFs.

• One Surgeon General pointed out that it is difficult for TROs to

provide MTFs with individual assistance because the new regions

are large and contain many MTFs.

• In contrast, lead agents managed smaller regions and could 

provide MTFs with more individual attention.

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 68 GAO-05-773

58

Key Question 3: Tools to Oversee MCSCs

• What management tools are in place to assess MCSCs’ 

performance, and how are these tools being used?

• MCSC Performance Guarantees

• MCSC Award Fees

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 69 GAO-05-773

59

Key Question 3: Tools to Oversee MCSCs

Performance Guarantees

• One management tool that TMA uses to oversee the health care

delivery contracts is performance guarantees.

• TMA’s RFP included 10 performance standards that were

designated as performance guarantees. (See app. I for a list of the 

performance guarantees.)

• Each organization that submitted a proposal had to guarantee 

that it would meet or exceed these standards.

• On a quarterly basis, TMA assesses the MCSCs’ performance in

meeting these standards and notifies them of financial penalties

when their performance does not meet the standards.

• Upon receipt of notification, MCSCs have 10 days to respond to 

TMA’s assessment. TMA evaluates the responses and makes 

a final determination.

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 70 GAO-05-773

60

Key Question 3: Tools to Oversee MCSCs

Performance Guarantees (continued)

• According to TMA officials, performance guarantees are 

focused on customer service but do not always rely on

common industry practices.

• Some performance guarantees are prescriptive and

identical to requirements in the previous contracts, such

as

• claims processing timeliness and 

• claims processing accuracy.

• In addition, some performance guarantees were created

for the new contracts.

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 71 GAO-05-773

61

Key Question 3: Tools to Oversee MCSCs

Performance Guarantees (continued)

• One newly created performance guarantee requires network

specialty providers to submit clear and legible reports to the 

referring provider within 10 working days of the specialty encounter

98 percent of the time.

• TMA officials acknowledged that there was no precedent upon 

which to base this standard.

• According to TMA and MCSCs, this process inserts a health 

care plan in the middle of the relationship between the referring

and consulting physician—something that is never done in the 

civilian market.

• When a network specialty referral is required, the MCSC is 

provided with a referral letter that recommends one or more

specialty providers to the beneficiary.

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 72 GAO-05-773

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Key Question 3: Tools to Oversee MCSCs

Performance Guarantees (continued)

• TMA and MCSC officials acknowledge that one problem with

measuring the performance guarantee related to network

specialty reports is that not all beneficiaries follow through 

with their referral appointments. 

• For example, if more than 2 percent of the beneficiaries 

do not follow through with their appointments, the

standard cannot be met regardless of the MCSCs’

efficiency.

• MCSC and TMA officials acknowledged that this standard, 

among others, needs to be reassessed.

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 73 GAO-05-773

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Key Question 3: Tools to Oversee MCSCs

Performance Guarantees (continued)

• All MCSCs were assessed performance guarantee penalties during

their first quarter of health care delivery.

• Generally, penalties were assessed for not meeting standards 

for referral reports, telephone wait times, and network

adequacy.

• One claims processing standard was waived because of TMA’s

problems with specific edits in the TED system.

• Because the new health care delivery contracts are performancebased and focus on outcomes, there is some variation in how 

MCSCs are measuring and reporting performance data.

• For example, one MCSC incorrectly reported compliance with 

the telephone hold-time standard using an alternative definition 

of hold time that resulted in inaccurate but more favorable 

measurements for the MCSC.

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 74 GAO-05-773

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Key Question 3: Tools to Oversee MCSCs

Performance Guarantees (continued)

• The penalties for not meeting the performance guarantee 

related to network specialty provider referral reports are

• $100 for each report not submitted within 10 days and

• an additional $100 for each report not submitted within 

30 days.

• TMA officials told us that they established the penalty amount

based on the approximate cost of a specialty care office visit.

• For the first quarter of performance guarantees, TMA initially

assessed MCSCs almost $9 million for not meeting this

standard.7

• TMA did not modify the standard for referral reports even

though EWRAS was not available.

7

The amount of this assessment may change after TMA and MCSCs negotiate a final settlement.

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 75 GAO-05-773

65

Key Question 3: Tools to Oversee MCSCs

Performance Guarantees (continued)

• In December 2004—6 months after the first health care delivery

start date–TMA officials established an approach for consistently

assessing performance guarantee penalties when not all data were

available from the MCSCs or when TMA had not validated the 

MCSCs’ systems used to generate the data.8

• For one MCSC, TMA officials told us that they had to use this 

approach for all but one of the performance guarantees

because the MCSC’s reports did not provide clear measures

against the standards.

• As of April 2005, TMA was still working with two of the MCSCs to

understand the data that were being reported. In addition, TMA was

still working to complete validation of MCSCs’ systems for 

generating performance data to ensure that they are accurate and

reliable.

8

In these instances, TMA will withhold an amount necessary to protect the government. If the data have not been 

validated, TMA will subsequently coordinate with the MCSC to correct or reaffirm the penalty.

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 76 GAO-05-773

66

Key Question 3: Tools to Oversee MCSCs

Performance Guarantees (continued)

• The health care delivery contract requires quarterly round table

meetings with TMA, MCSCs, and others to review current policies

and procedures and determine where best practices can be

implemented. 

• The first of these meetings was convened in April 2005. 

According to a TMA official, participants agreed to reconvene in 

May 2005 to discuss selected contractual performance 

standards, including 

• common definitions of the standards, 

• common measurements of the standards, and 

• whether the standards comply with common industry

practices.

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 77 GAO-05-773

67

Key Question 3: Tools to Oversee MCSCs

Award Fees

• Another management tool that TMA is using to oversee the new 

health care delivery contracts is the award fee, which is a financial 

bonus based on customer satisfaction.

• Award fees are assessed quarterly with a structured but 

subjective process using the results of satisfaction surveys of 

beneficiaries and MTF commanders as well as the TRO 

directors’ firsthand knowledge of the MCSCs’ performance.

• MCSCs provide input on their performance.

• TRO directors determine the award amount.

• All three MCSCs have received an award fee for the first quarter of 

performance for which they were assessed.

• MCSCs stated that adding quantifiable goals to the award fee 

determination process would help increase incentives for improving 

performance.

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 78 GAO-05-773

68

Key Question 4: Tools for MTFs and Regions

• What management tools are in place to assess program

performance at the MTF and regional levels, and how are 

these tools being used?

• MTF Business Plans

• Regional Business Plans

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 79 GAO-05-773

69

Key Question 4: Tools for MTFs and Regions

MTF Business Plans

• The MTF business plan is the key management tool that

MTF commanders are expected to develop and use to

manage the delivery of health care in the direct care system 

and to make decisions on what health care should be 

provided through the purchased care system.

• TMA did not provide the military services with

comprehensive guidance on how to prepare and use 

business plans for fiscal year 2005 even though TMA has

been developing its business planning approach since fiscal

year 2003.

• According to the TMA official involved in developing the

business planning process, TMA initially conceived 

business plans as budgeting spreadsheets, not as

management tools.

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 80 GAO-05-773

70

Key Question 4: Tools for MTFs and Regions (continued)

MTF Business Plans

• MTF commanders are expected to submit their completed 

business plans to TRO directors for inclusion in the regional 

business plan.

• For fiscal year 2005, each military service developed its own

business planning guidance. As a result, business plan

formats and content lacked consistent metrics for monitoring

MTF performance and varied among the services.

• For example, some business plans were spreadsheets

while others contained some narrative.

• TMA officials told us that MTF business plans for fiscal year

2005 could not be used as management tools.

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 81 GAO-05-773

71

Key Question 4: Tools for MTFs and Regions (continued)

MTF Business Plans

• The military services are working together to improve and standardize the

business planning process.

• Representatives of the three military services developed an automated 

tool for creating standardized MTF business plans beginning in fiscal year

2006.

• The business plan tool aligns with the military health system’s

overarching strategic plan.

• The tool contains metrics for monitoring MTF performance in

areas such as enrollment levels and beneficiary satisfaction with 

telephone access.

• TMA officials endorsed this tool but were not involved in its initial 

development.

• TMA officials also told us they were planning to establish a triservice work

group to develop uniform business planning guidance that would also 

establish the relationship between the military services’ business plans 

and the military health system budget.

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 82 GAO-05-773

72

Key Question 4: Tools for MTFs and Regions (continued)

Regional Business Plans

• The regional business plan is the key management tool for

TRO directors because it is intended to provide information 

about the regional health care assets of both the direct and 

purchased care systems.

• In fiscal year 2005, TRO directors were unable to develop

and use regional business plans as envisioned by the

governance plan.

• The MTF business plans they received, which were to be 

incorporated into the regional plan, did not provide

comparable or complete information for MTFs in the 

regions.

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 83 GAO-05-773

73

Key Question 4: Tools for MTFs and Regions (continued)

Regional Business Plans

• Reasons that TRO directors had difficulty incorporating MTF 

business plans into the regional plans include the following:

• The military services’ MTF business plans varied in

content.

• Two TRO directors stated that not all MTFs in the region 

submitted their business plans prior to the development

of the regional plan.

• One of the TRO directors stated that some plans that

were submitted had not been approved by their

respective Surgeons General and could not be 

considered final. As a result, these MTF plans could not

be incorporated into the regional plan.

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 84 GAO-05-773

74

Key Question 4: Tools for MTFs and Regions (continued)

Regional Business Plans

• Due to limited MTF information, the fiscal year 2005 regional

business plans are currently focused on issues such as

• TRO operations and

• health care delivery in areas without MTFs.

• Because the fiscal year 2005 regional business plans are lacking

information about the direct care system, TRO directors cannot use 

them as intended to monitor and make suggestions to the military

services on maximizing the use of the direct care system.

• TMA officials stated that improvements in the MTF business plans

for fiscal year 2006 should correspondingly improve the regional

business plans and allow them to be used as intended to monitor 

both the direct and purchased care systems.

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 85 GAO-05-773

75

Appendix I: Performance Guarantees

The 10 performance guarantees are as follows:

1. Telephone service (busy signals)—Not less than 95 percent of 

calls shall be received without the caller encountering a busy signal.

2. Telephone service (hold time)—95 percent of all calls shall 

not be on hold for a period of more than 30 seconds during the entire telephone call.

3. Claims processing—Not less than 95 percent of retained

claims and adjustment claims processed shall be completed 

within 30 calendar days from the date of receipt.

4. Claims processing—100 percent of retained claims shall be 

processed to completion within 60 calendar days.

5. Claims processing—100 percent of all claims shall be

processed to completion within 120 calendar days.

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 86 GAO-05-773

76

Appendix I: Performance Guarantees (continued)

6. Payment errors—The absolute value of the payment errors for

sampled TEDS (initial submissions, resubmissions, and

adjustments/cancellation submissions) shall not exceed

2 percent. 

7. TED validity edits—The accuracy rate for TED validity edits 

shall not be less than 

• 93 percent after 6 months of performance and 

• 98 percent after 9 months and thereafter during the entire 

term of the contract. 

8. TED provisional edits—The accuracy rate for TED provisional 

edits shall not be less than 

• 88 percent after 6 months of performance and 

• 94 percent after 9 months and thereafter during the entire 

term of the contract.

1

1Validity edits check for the presence of an expected value in a data field, such as a number in an age field. Provisional edits check for the accuracy of an expected data value relative to another known value, such as

relating “female” to “hysterectomy.”

TRICARE Implementation Issues
Appendix I: Briefing on the Implementation of

New TRICARE Contracts and Governance

Structure 

Page 87 GAO-05-773

77

Appendix I: Performance Guarantees (continued)

9. Network adequacy—Not less than 96 percent of contractor

referrals of beneficiaries residing within selected geographic

areas shall be to an MTF or network provider with an

appointment available within the access standards.

10. Specialty care referral/consultation/operative reports—The 

MCSC shall ensure that network specialty providers provide 

clearly legible specialty care consultation of referral reports,

operative reports, and discharge summaries to the beneficiary’s

initiating provider within 10 working days of the specialty

encounter 98 percent of the time. 

TRICARE Implementation Iss
Appendix II: Comments from the Department Appendix II: Comments from the Department of Defense and GAO’s Response

of Defense and GAO’s Response 

Page 88 GAO-05-773 TRICARE Implementation Issues
Appendix II: Comments from the Department 

of Defense and GAO’s Response

Page 89 GAO-05-773 TRICARE Implementation Issues
Appendix II: Comments from the Department 

of Defense and GAO’s Response

See comment 1. 

See comment 2. 

Page 90 GAO-05-773 TRICARE Implementation Issues
Appendix II: Comments from the Department 

of Defense and GAO’s Response

Now on pp. 4 and 5. 

See comment 3. 

Now on pp. 6 and 7. 

See comment 4. 

Page 91 GAO-05-773 TRICARE Implementation Issues
Appendix II: Comments from the Department 

of Defense and GAO’s Response

Page 92 GAO-05-773 TRICARE Implementation Issues
Appendix II: Comments from the Department 

of Defense and GAO’s Response

Page 93 GAO-05-773 TRICARE Implementation Issues
Appendix II: Comments from the Department 

of Defense and GAO’s Response

Page 94 GAO-05-773 TRICARE Implementation Issues
Appendix II: Comments from

the Department of Defense and

GAO’s Response 

The following are GAO’s comments on the DOD June 29, 2005, letter. 

1. The TRICARE Management Activity (TMA) estimated that $9 million in

contract costs had been spent for the development of EWRAS through 

June 2004. In addition, as a result of EWRAS nonavailability, the 

managed care support contractors (MCSC) estimated $250 million for 

implementing a manual referral and authorization process over five

years. However, TMA did not provide us with complete data related to 

EWRAS costs. TMA could only verify that $6 million had been spent on 

a contract to develop the system and estimated that an additional 

$3 million had been spent on EWRAS development through another 

information system contract. Therefore, TMA’s estimate of EWRAS 

expenditures are associated only with system development contracts 

and do not include the separate costs incurred by TMA or the military 

services for staffing resources expended in conceptualizing the system

and developing system specifications. 

GAO’s Comments 

2. TMA has established multiple teams to develop solutions for managing 

referrals and authorizations. In July 2005, we confirmed with TMA 

officials that the most recent team has established a business process

that will serve as the framework for the automated management of 

referrals and authorization. DOD’s response acknowledges that efforts 

to develop an automated system are ongoing as functional

requirements for a system are being defined and technical solutions 

analyzed. Therefore, as we reported, TMA continues to incur costs to 

identify and develop solutions for managing referrals and 

authorizations. Additionally, DOD’s response asserts that an 

automated system is expected to be complete within 24 months. 

However, in further discussions, TMA officials told us that

implementation would not be initiated until the concept of operations 

is approved and funding is provided—activities that had not occurred 

and would likely stretch the timeline past 24 months. Additionally, in

its rationale, DOD confirms that until definitions for both business

processes and functional requirements are completed, a technical 

solution and implementation timeline cannot be developed. 

3. We believe that our report paragraph accurately depicts the history 

and status of the referral and authorization process. Further, as

previously stated, TMA officials told us that implementation would not

be initiated until the concept of operations is approved and funding is

provided—activities that had not occurred and would likely stretch the 

timeline past 24 months. In addition, DOD confirmed that a technical

solution and implementation timeline cannot be developed until 

Page 95 GAO-05-773 TRICARE Implementation Issues
Appendix II: Comments from

the Department of Defense and

GAO’s Response 

definitions for both business processes and functional requirements

are completed. 

4. We agree that the lack of standardization of the referral and 

authorization process prohibited TMA from deploying its EWRAS 

automated system. This was a critical issue that TMA should have 

recognized and addressed during EWRAS development. Because this

was not done, EWRAS could not be deployed, and, as we concluded, 

EWRAS nonavailability became the most significant implementation 

issue. 

(290419) Page 96 GAO-05-773 TRICARE Implementation Issues
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