GAO-04-563R Status of Defense Health Requirements for Fiscal Year 2004

United States General Accounting Office

Washington, DC 20548 

March 17, 2004 

The Honorable John W. 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 

Subject: Defense Health Care: Status of Fiscal Year 2004 Requirements for 

Reservists’ Benefits and Monitoring Beneficiaries’ Access to Care 

Since September 2001, about 360,000 reservists have been called to active duty to 

support the war on terrorism, conflicts in Afghanistan and Iraq, and other operations. 

Some reservists have been on active duty for a year or more, and the pace of reserve 

operations is expected to remain high for the foreseeable future. When mobilized for 

active duty under federal authorities, reservists are eligible to receive health care 

benefits through DOD’s military health care system, TRICARE. When reservists are 

ordered to active duty for more than 30 days, their families are also eligible for health 

benefits. 

DOD supplements its military health care facilities with civilian health care providers 

through its triple-option TRICARE program. DOD’s beneficiaries may enroll in 

TRICARE’s Prime option and go to a network provider to receive care; without 

enrolling, they can see a network provider through the preferred provider option, 

Extra; or they may elect to use Standard, the fee-for-service option. 1 Some 

beneficiaries have raised concerns about difficulties in finding civilian providers—

particularly Standard, non-network providers—who will accept TRICARE 

beneficiaries as patients. 

 

1

 All beneficiaries may receive care at military treatment facilities (MTF) as space and capabilities are 

available. TRICARE Prime enrollees have priority for care in MTFs. 
2 GAO-04-563R Status of Defense Health Requirements for Fiscal Year 2004

The National Defense Authorization Act (NDAA) for Fiscal Year 2004, enacted on 

November 24, 2003, required the Department of Defense (DOD) to make changes in 

its delivery and monitoring of health benefits. In addition, the law directed us to 

review and report on aspects of these requirements.2 As agreed with the committees 

of jurisdiction, we are providing the status of DOD’s progress in implementing five 

requirements—three related to health benefits for reservists and two related to 

monitoring beneficiaries’ access to care under TRICARE Standard. 

To obtain information about DOD’s progress in implementing these requirements, we 

reviewed relevant documentation from DOD and applicable laws. We also 

interviewed the DOD officials responsible for implementing them. Our work was 

conducted in March 2004 in accordance with generally accepted government auditing 

standards. 

In summary, DOD is in various stages of implementing the three requirements related 

to health care coverage for reservists. DOD has implemented the requirement 

extending the time reservists and their families can use TRICARE and is in the 

process of implementing the other two requirements. DOD has not implemented the 

two requirements directed at enhanced monitoring of beneficiaries’ access to care 

under TRICARE Standard. We will report further on these requirements as DOD 

makes progress. 

Background 

The NDAA 2004 required DOD to temporarily extend the period of TRICARE 

coverage for reservists and their families and provided the option for some reservists 

to buy into the TRICARE program. Specifically, the NDAA 2004 provisions required 

DOD to 

1) extend the Transitional Assistance Medical Program (TAMP) to allow recently 

demobilized reservists and their families to retain TRICARE benefits up to 180 

days;3

 

2) make reservists and their families eligible for TRICARE benefits as soon as 

they receive a delayed-effective-date order for activation or 90 days before 

activation—whichever is later; and 

3) allow certain reserve members, who are not mobilized, and their families who 

do not have any other health care benefits to enroll in TRICARE by paying 28 

percent of program costs.4

 

 

2

See Pub. L. No. 180-136, tit. VII, subtit. A, 117 Stat. 1392, 1524 (2003). 3

 Under TAMP, DOD provides a transitional period of benefits that allows reservists and their families 

to retain TRICARE benefits for a period following demobilization. The NDAA for Fiscal Year 2002 

previously extended the transition period from 30 days to 60 or 120 days depending on the members’ 

accrued total active federal military service. Pub. L. No. 107-107, § 736, 115 Stat. 1012, 1172 (2001) 

(codified at 10 U.S.C. §1145(a)(3) (2000)). 

4

 This enrollment would allow them to receive TRICARE benefits for any period that the member is an 

eligible unemployment compensation recipient or is not eligible for health care benefits under an 

employer-sponsored health benefit plan. 
3 GAO-04-563R Status of Defense Health Requirements for Fiscal Year 2004

DOD decided that the TAMP benefit and the provision of benefits upon activation 

would be retroactive to November 6, 2003. The provision allowing qualified 

reservists and their families to enroll in TRICARE requires DOD to issue regulations 

to administer the program. Congress limited expenditures for these three provisions 

to a combined total of $400 million for fiscal year 2004. All of the provisions are 

temporary, expiring December 31, 2004. 

In addition, the NDAA 2004 required DOD to enhance its monitoring of beneficiaries’ 

access to care for TRICARE Standard including 

1) designating an official to ensure the adequacy of provider participation in the 

Standard option in each of TRICARE’s market areas;5

 and 

2) conducting surveys in 20 market areas every fiscal year until all markets have 

been surveyed to determine how many providers are accepting new patients 

under TRICARE Standard. 

Status of Implementation of NDAA 2004 Requirements 

DOD is in varying stages of implementing the provisions for reservists’ health care 

under NDAA 2004. First, in order to extend the TAMP benefit period to 180 days as 

required by law, DOD modified its Defense Enrollment Eligibility Reporting System 

(DEERS), the database that maintains information about TRICARE eligibility. This 

modification, which also included changes that allowed DOD to track expenditures 

for the benefit, was completed in January 2004. According to DOD, reservists who 

separated prior to that period will be retroactively reimbursed for their own or family 

members’ medical expenses that were incurred on or after November 6, 2003. 

Second, DOD has not completed all of the changes that will allow it to make 

reservists and their families eligible for TRICARE benefits as soon as they receive 

delayed-effective-date orders for activation or 90 days before activation—whichever 

is later. This benefit could not be immediately implemented because it also required 

DEERS modifications to record eligibility and track benefit expenditures. In 

addition, according to DOD officials, it required other complicated changes, including 

changes to TRICARE’s contracts that are used to deliver health care through civilian 

providers. Further, each of the seven components that constitute the reserves had to 

change the process for ordering reservists to active duty, ensuring that DEERS 

receives mobilized reservists’ eligibility information.6

 According to a DOD official, 

the department expects to implement this benefit this month, and reservists with 

qualifying orders issued on or after November 6, 2003 will receive retroactive 

payments for these benefits. 

 

5

 DOD has identified 182 TRICARE market areas across the United States where there are large 

numbers of beneficiaries. The market areas were identified as part of DOD’s awarding of new 

TRICARE support contracts that are scheduled to be implemented in June 2004. 

6

 The armed forces reserve components consist of the Air Force Reserve, the Air National Guard, the 

Army Reserve, the Army National Guard, the Navy Reserve, the Marine Corps Reserve, and the Coast 

Guard Reserve. 
4 GAO-04-563R Status of Defense Health Requirements for Fiscal Year 2004

Third, DOD has not completed drafting the regulations to implement the provisions 

allowing certain reservists and their families who do not have other health insurance 

to enroll in TRICARE by paying 28 percent of program costs. According to a DOD 

official, regulations that involve new populations and new benefits generally take 12 

to 18 months to develop. Further, according to DOD officials, this benefit must have a 

reliable cost estimate before regulations are finalized, and to date, estimates from the 

Office of Management and Budget (OMB) and the Congressional Budget Office (CBO) 

differ widely. According to DOD, CBO’s estimated costs for this provision were 

about $70 million for fiscal year 2004 while OMB estimated that these costs would be 

$1 billion. Further, DOD officials anticipate that TAMP and the expanded period of 

eligibility for benefits could cost up to the $400 million allocated to cover the three 

provisions and little would subsequently be available to fund the enrollment benefit. 

Furthermore, DOD has not implemented the requirements in NDAA 2004 regarding 

monitoring of the TRICARE Standard benefit. First, DOD has not designated the 

official responsible for ensuring adequate participation of Standard providers. 

According to a DOD official, it is likely that this responsibility will be assigned to the 

Assistant Secretary of Defense for Health Affairs, who will delegate the responsibility 

to the three TRICARE Regional Directors. These Directors will oversee the new 

TRICARE support contracts, which are scheduled to begin implementation in June 

2004. 

Finally, according to a DOD official, the department has not received the approval 

from OMB required by the Paperwork Reduction Act to conduct its initial market 

survey.7

 DOD has requested emergency approval from OMB. Based on an 

anticipated approval in April 2004, the first surveys are expected to be sent out May 

31, 2004. DOD officials are uncertain when the analysis of the first set of surveys will 

be complete. Meanwhile, DOD has a Standard Directory feature on its Web page to 

help beneficiaries identify potential providers. The Web page explains that managed 

care support contractors will also help beneficiaries locate Standard providers. 

We will continue to monitor and report on DOD’s progress in implementing these 

requirements. 

Agency Comments 

DOD officials reviewed a draft of this report and provided technical comments, which 

we incorporated where appropriate. 

 

7

 44 U.S.C. §3501 et seq. (2000). 
5 GAO-04-563R Status of Defense Health Requirements for Fiscal Year 2004

- - - - - 

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

parties. We will provide copies of this report to others upon request. In addition, the 

report is available at no charge on the GAO Web site at http://www.gao.gov. If you or 

your staffs have any questions, please contact me at (202) 512-7119 or Bonnie W. 

Anderson at (404) 679-1900. Lois Shoemaker and Allan Richardson made key 

contributions to this report. 

Marcia Crosse 

Director, Health Care--Public Health 

 and Military Health Care Issues 

(290364) 
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