Defense Health Care: Oversight of the TRICARE Civilian Provider Network Should Be Improved
Published: 2003-07-31T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Testifying before Congress in 2002, military beneficiary groups described problems accessing care from TRICARE's civilian medical providers. Providers also testified on their dissatisfaction with the TRICARE program, specifying low reimbursement rates and administrative burdens. The Bob Stump National Defense Authorization Act of 2003 required GAO to review the oversight of the TRICARE network of civilian providers. Specifically, GAO describes how the Department of Defense (DOD) oversees the adequacy of the civilian provider network, evaluates DOD's oversight of the civilian provider network, and describes the factors that have been reported to contribute to network inadequacy. GAO analyzed TRICARE Prime--the managed care component of TRICARE. To describe and evaluate DOD's oversight, GAO reviewed and analyzed information from reports on network adequacy and interviewed DOD and contractor officials in 5 of 11 TRICARE regions.
section_title: What GAO Found
paragraphs: For the 8.7 million TRICARE beneficiaries, DOD relies on the civilian provider network to supplement health care delivered by its military treatment facilities. To ensure the adequacy of the civilian provider network, DOD has standards for the number and mix of providers, both primary care and specialists, necessary to satisfy TRICARE Prime beneficiaries' needs. In addition, DOD has standards for appointment wait, office wait, and travel times to ensure that TRICARE Prime beneficiaries have timely access to care. DOD has delegated oversight of the civilian provider network to the local level through regional TRICARE lead agents. DOD's ability to effectively oversee the TRICARE civilian provider network is hindered in several ways. First, the measurement used to determine if there is a sufficient number and mix of providers in a geographic area does not always account for the total number of beneficiaries who may seek care or the availability of providers. This may result in an underestimation of the number of providers needed in an area. Second, incomplete contractor reporting on access to care makes it difficult for DOD to assess compliance with these standards. Finally, DOD does not systematically collect and analyze beneficiary complaints, which might assist in identifying inadequacies in the civilian provider network. However, DOD has tools, such as surveys of network providers and automated reporting systems which, while not designed specifically for monitoring the civilian provider network, could, if modified, improve DOD's ability to oversee the network. DOD and its contractors have reported that a lack of providers in certain geographic locations, low reimbursement rates, and administrative requirements contribute to potential civilian provider network inadequacy. DOD and contractors have reported long-standing provider shortages in some geographic areas. In areas where DOD determines that access to care is severely impaired, DOD has the authority to increase reimbursement rates. Since 2002, DOD has used its reimbursement authority to increase rates in Alaska and Idaho in an attempt to entice more providers to join the network. DOD officials told us that the contractors have achieved some success in recruiting additional providers by using this authority. Additionally, civilian providers have expressed concerns that TRICARE's reimbursement rates are generally too low and administrative requirements too cumbersome. However, while reimbursement rates and administrative requirements may have created provider dissatisfaction, it is not clear how much this has affected civilian provider network adequacy except in limited geographic locations, because the information contractors provide to DOD is not sufficient to measure network adequacy.

section_title: Letter
paragraphs: The primary mission of TRICARE, the Department of Defense’s (DOD)  health care system, is to provide care for eligible active duty personnel,  retirees, and dependents. These beneficiaries, currently numbering more  than 8.7 million, can receive their care through military hospitals and  clinics called military treatment facilities (MTFs) or through TRICARE’s  civilian provider network. The civilian provider network is developed by  managed care support contractors and is designed to complement the  availability of care offered by MTFs.
DOD faces new challenges in ensuring that the TRICARE civilian provider  network can provide adequate access to care that complements the  capabilities of MTFs. In 2003, DOD intends to award new contracts for the  delivery of care in the civilian provider network because the current  contracts will expire. As a result, the providers who choose to participate  in the network may change, while those who remain will operate under  new policies and procedures. During this transition, DOD is still  responsible for ensuring that the civilian provider network provides  adequate access to care, even if beneficiaries must change providers.
TRICARE also faces beneficiary and provider dissatisfaction with the  existing civilian provider network. During April 2002 testimony before the  Subcommittee on Personnel of the House Armed Services Committee,  beneficiary groups described problems with access to care from  TRICARE’s civilian providers. Also, providers testified about their  dissatisfaction with the TRICARE program, specifying low reimbursement  rates and administrative burdens.
In response to these concerns, the Bob Stump National Defense  Authorization Act of 2003 required that we review DOD’s oversight of the  adequacy of the TRICARE civilian provider network. As agreed with the  committees of jurisdiction we focused on DOD’s oversight and did not  assess the adequacy of the network. Also, we analyzed TRICARE Prime,  the managed care component of the TRICARE health delivery system.  Specifically, we agreed to (1) describe how DOD oversees the adequacy of  the civilian provider network, (2) evaluate DOD’s oversight of the  adequacy of the civilian provider network, (3) describe the factors that  have been reported to contribute to network inadequacy, and (4) describe  how the new contracts might affect network adequacy. We testified before  the Subcommittee on Total Force of the House Committee on Armed  Services on March 27, 2003, about our findings at that time.
To describe and evaluate DOD’s oversight of the TRICARE civilian  provider network, we reviewed and analyzed information from five  network adequacy reports submitted between June and October of 2002.  We reviewed at least one report from each of the contractors who develop  and maintain the network of providers to augment the care provided by  MTFs. We also interviewed DOD regional officials, known as lead agents,  and MTF officials from 5 of 11 TRICARE regions. In addition, we  interviewed officials from each of the four contractors. As part of our  assessment of DOD’s oversight, we reviewed surveys of beneficiaries and  providers, as well as DOD data collection initiatives that could be used by  DOD to oversee its civilian provider network. We did not validate the data  in the surveys or collection initiatives. We also interviewed officials at  TRICARE Management Activity (TMA) in Falls Church, Va., the office with  responsibility for ensuring that DOD health policy is implemented, and  officials at TMA-West, the office that carries out contracting functions,  including monitoring the civilian contracts and writing the requests for  proposals for the future contracts. To describe factors that may contribute  to network inadequacy, we interviewed DOD, contractor, and professional  health association officials. In addition, we met with groups representing  TRICARE beneficiaries to discuss their concerns. Finally, we reviewed  DOD’s request for proposals for the new health care contracts and  interviewed DOD and contractor officials to determine how the new  contracts might affect network adequacy. Appendix I contains more  details about our scope and methodology. We conducted our work from  June 2002 through July 2003 in accordance with generally accepted  government auditing standards.
subsections: section_title: Background
paragraphs: TRICARE has three options for its eligible beneficiaries:    TRICARE Prime, a program in which beneficiaries enroll and receive care  in a managed network similar to a health maintenance organization;    TRICARE Extra, a program in which beneficiaries receive care from a  network of preferred providers; and    TRICARE Standard, a fee-for-service program that requires no network  use.
The programs vary according to the amount beneficiaries must contribute  toward the cost of their care and according to the choices beneficiaries  have in selecting providers. In TRICARE Prime, the program in which  active duty personnel generally must participate, the beneficiaries must  select a primary care manager (PCM) who either provides care or  authorizes referrals to specialists. Most beneficiaries who enroll in  TRICARE Prime select their PCMs from MTFs, while other enrollees select  their PCMs from the civilian provider network. Regardless of their  status—military or civilian—PCMs may refer Prime beneficiaries to  providers in either MTFs or TRICARE’s civilian provider network.
Both TRICARE Extra and TRICARE Standard require copayments, but  beneficiaries do not enroll with or have their care managed by PCMs.  Beneficiaries choosing TRICARE Extra use the same civilian provider  network available to those in TRICARE Prime, and beneficiaries choosing  TRICARE Standard are not required to use providers in any network.  TRICARE Extra and Standard beneficiaries may receive care at an MTF  when space is available.
The Office of the Assistant Secretary of Defense for Health Affairs (Health  Affairs) establishes TRICARE policy and has overall responsibility for the  program. TMA, under Health Affairs, is responsible for awarding and  monitoring the TRICARE contracts. DOD has delegated oversight of the  civilian provider network to regional TRICARE lead agents. The lead agent  for each region coordinates the services provided by MTFs and civilian  network providers. The lead agents respond to direction from Health  Affairs, but report directly to their respective Surgeons General. In  overseeing the network, lead agents have staff assigned to MTFs to  provide the local interaction with contractor representatives and respond  to beneficiary complaints as needed and report back to the lead agent.
Currently, DOD employs four civilian health care companies or  contractors that are responsible for developing and maintaining the  civilian provider network that complements the care delivered by MTFs.  The contractors recruit civilian providers into a network of PCMs and  specialists who provide care to beneficiaries enrolled in TRICARE Prime.  Contractors are required to establish and maintain the network of civilian  providers in the following locations: all catchment areas, base  realignment and closure sites, other contract-specified areas, and  noncatchment areas where a contractor deems it cost effective. These  locations are called prime service areas. In the remaining areas, a network  is not required. (See fig. 1.)
This network of civilian providers also serves as the network of preferred  providers for beneficiaries who use TRICARE Extra. In 2002, contractors  reported that the civilian provider network included about 37,000 PCMs  and 134,000 specialists.
The contractors are also responsible for ensuring adequate access to  health care, referring and authorizing beneficiaries for health care,  educating providers and beneficiaries about TRICARE benefits, ensuring  that providers are credentialed, and processing claims. In their network  agreements with civilian providers, contractors establish reimbursement  rates and certain requirements for submitting claims. Reimbursement  rates cannot be greater than Medicare rates unless DOD authorizes a  higher rate.
DOD’s four contractors manage the delivery of care to beneficiaries in 11  TRICARE regions. DOD is currently analyzing proposals to award new  civilian health care contracts, and when they are awarded in 2003, DOD  will reorganize the 11 regions into 3—North, South, and West—with a  single contract for each region. Contractors will be responsible for  developing a new civilian provider network that will become operational  in April 2004. Under these new contracts DOD will continue to emphasize  maximizing the role of MTFs in providing care. See appendix II for maps  depicting the current and future regions.
section_title: DOD Has Standards for Network Adequacy and Requires Contractors’ Compliance
paragraphs: DOD has standards intended to ensure that its civilian provider network  enhances and supports the capabilities of the MTFs in providing care to  millions of TRICARE Prime beneficiaries. DOD requires that contractors  have a sufficient number and mix of providers, both primary care and  specialists, to satisfy the needs of beneficiaries enrolled in the Prime  option. Specifically, it is the responsibility of the contractors to ensure that  each prime service area in the network has at least one full-time equivalent  PCM for every 2,000 TRICARE Prime enrollees and one full-time  equivalent provider (both PCMs and specialists) for every 1,200 TRICARE  Prime enrollees.
In addition, DOD has access-to-care standards that are designed to ensure  that Prime beneficiaries receive timely care from providers. Under these  standards    appointment wait times shall not exceed 24 hours for urgent care, 1 week  for routine care, or 4 weeks for well-patient and specialty care;    office wait times shall not exceed 30 minutes for nonemergency care; and  travel times shall not exceed 30 minutes for routine care and 1 hour for  specialty care.
Lead agents are responsible for ensuring that the civilian provider network  meets these standards so that all TRICARE Prime beneficiaries in their  region have adequate access to health care. To do so, lead agents told us  they use network adequacy reports that contractors provide each quarter  as the primary tool to oversee the network. According to DOD’s operations  manual, these reports are to contain information on the status of the  network, such as the number and type of specialists; data on adherence to  the access standards; a list of civilian and military primary care managers;  and the number of their enrollees. The reports may also contain  information on steps contractors have taken to address any network  inadequacies.
However, because the reporting requirements do not specify a standard  process for collecting information on network adequacy, contractors vary  in how they obtain this information. For example, lead agents told us that  one contractor conducts visits of providers’ offices to review appointment  wait times, while another contractor uses an automated appointment  tracking system to collect this information.
Lead agents told us they also rely on beneficiary complaints to oversee the  adequacy of the civilian provider network. Beneficiaries may complain  directly to DOD, the contractor, lead agent, or MTF. DOD officials said  that when they receive a beneficiary complaint, they direct the complaint  to either the contractor, lead agent, or MTF, depending on the subject of  the complaint.
In addition to these tools, lead agents periodically monitor contractor  compliance by reviewing performance related to specific contract  requirements, including requirements related to network adequacy. Lead  agents also told us they periodically schedule reviews of special issues  related to network adequacy, such as conducting telephone surveys of  providers to determine whether they are accepting TRICARE Prime  patients. In addition, lead agents stated they meet regularly with MTF and  contractor representatives to discuss network adequacy.
If lead agents determine that the network is inadequate, the lead agents or  TMA may issue enforcement actions to encourage contractors to address  deficiencies in their region. However, lead agents told us that few  enforcement actions have been issued. During our review, three  enforcement actions related to network adequacy were open for the five  regions we visited. Lead agents said they prefer to address deficiencies  informally rather than take formal actions, particularly in areas where they  do not believe the contractor can correct the deficiency because of local  market conditions. For example, rather than taking a formal enforcement  action, one lead agent worked with the contractor to arrange for a  specialist from one area to travel to another area periodically.
section_title: DOD’s Oversight of the Civilian Provider Network Has Weaknesses, But Additional Tools May Help
paragraphs: DOD’s ability to effectively oversee the TRICARE civilian provider  network is hindered by (1) flaws in its required provider-to-beneficiary  ratios, (2) incomplete reporting on beneficiaries’ access to providers, and  (3) the absence of a systematic assessment of complaints. Although DOD  has required the network to meet established ratios of providers to  beneficiaries, the ratios may underestimate the number of providers  needed in an area. Similarly, although DOD has certain requirements  governing Prime beneficiary access to available providers, the information  reported to DOD on this access is often incomplete—making it difficult to  assess compliance with the requirements. Finally, when beneficiaries  complain about availability or access in the network, these complaints can  be directed to different DOD entities, with no guarantee that the  complaints will be compiled and analyzed in the aggregate to identify  possible trends or patterns and correct network problems. However, DOD  has existing surveys and automated reporting systems that, while not  designed specifically for monitoring the civilian provider network, could  provide valuable information and potentially improve DOD’s ability to  oversee the civilian provider network.
subsections: section_title: Provider-to-Beneficiary Ratios May Not Account for Actual Number of Beneficiaries or Availability of Providers
paragraphs: The provider-to-beneficiary ratios contractors report to DOD for a prime  service area do not always accurately reflect the potential health care  workload for that area or the provider capability to deliver the care. In  some cases, the provider-to-beneficiary ratios underestimate the number  of providers, particularly specialists, needed in an area. This  underestimation occurs because in calculating the ratios, some  contractors do not include the total number of Prime enrollees within the  area. Instead, in some areas contractors base their ratio calculations on  the total number of beneficiaries enrolled with civilian PCMs and do not  count beneficiaries enrolled with PCMs in MTFs. The ratio is most likely to  result in an underestimation of the need for providers in areas in which the  MTF is a clinic or small hospital with a limited availability of specialists.  For example, the Air Force clinic at Grand Forks, N. Dak. has few  specialists on staff and must rely on the civilian provider network for a  large proportion of specialist care. In fiscal year 2002, 90 percent of its  specialist appointments were referred to the network. In contrast, a large  MTF, such as Wright Patterson Medical Center in Dayton, Ohio, has many  specialist providers on staff and referred only 2 percent of its specialty  appointments to the civilian provider network during fiscal year 2002.  Incorporating MTF provider capability and the total number of Prime  enrollees into the network assessment would give DOD a more complete  and accurate assessment of the adequacy of the network for a  geographical area.
Moreover, in reporting whether the network meets the established ratios,  contractors do not make the same assumptions about the level of  participation on the part of civilian network providers. Contractors  generally assume that between 10 to 20 percent of their providers’  practices are dedicated to TRICARE Prime beneficiaries. Therefore, if a  contractor assumes 20 percent of all providers’ practices are dedicated to  TRICARE Prime rather than 10 percent, the contractor will need half as  many providers in the network in order to meet the prescribed ratio  standard. These assumptions may or may not be accurate, and the  assumptions have a significant effect on the number of providers required  in the network.
section_title: Information Reported on Access Standards Was Incomplete
paragraphs: In the network adequacy reports we reviewed, the contractors did not  always report all the information required by DOD to assess compliance  with the access standards. Specifically, for the network adequacy reports  we reviewed from 5 of the 11 TRICARE regions, we found that contractors  reported less than half of the required information on access standards for  appointment wait, office wait, and travel times. Some contractors reported  more information than others, but none reported all the required access  information. Contractors said they had difficulties in capturing and  reporting information to demonstrate compliance with the access  standards. They stated that it was not practical or feasible to document  every appointment and office wait time because some beneficiaries make  their own appointments directly and provider offices are spread  throughout the geographic area.
section_title: Beneficiary Complaints Are Not Systematically Collected and Evaluated
paragraphs: Most of the DOD lead agents we interviewed told us that because  information on access standards is not fully reported, they monitor  compliance with the access standards by reviewing beneficiary  complaints. Lead agents and contractors said such complaints may include  a beneficiary’s inability to get an appointment, having to drive long  distances for care, or a provider not accepting new TRICARE Prime  patients. Because beneficiary complaints are received through numerous  venues, often handled informally on a case-by-case basis, and not centrally  evaluated, it is difficult for DOD to assess the extent of any systemic  access problems. Separately, TMA has a database of complaints that  includes some complaints about access to care. TMA has received these  complaints either directly, through DOD’s beneficiary survey, or from  letters sent by beneficiaries to their congressional representatives.  However, the usefulness of the database is limited because it does not  capture complaints sent to MTFs, lead agents, or contractors.
While contractor and lead agent officials told us they have received few  complaints about network access problems, this small number of  complaints could indicate either an overall satisfaction with care or a  general lack of knowledge about how or to whom to complain.  Additionally, a small number of complaints, particularly when spread  among many sources, limits DOD’s ability to identify any specific trends of  systemic problems related to network adequacy within TRICARE.
The next generation of contracts, called TNEX, may result in a more  structured approach to collecting complaint information when  implemented in 2004. Under TNEX, the civilian provider network must be  accredited in each region by a nationally recognized accrediting  organization, such as the National Committee for Quality Assurance  (NCQA) or the Joint Commission on Accreditation of Healthcare  Organizations (JCAHO). These organizations typically require procedures  for addressing beneficiary complaints. For example, NCQA guidance  requires procedures for registering, responding to, and investigating  complaints. It also requires documentation of actions taken to address  complaints. JCAHO guidance has similar requirements. Such procedures  could provide DOD with a basic structure that in turn could lead to a more  systematic means of collecting and evaluating complaint data at the prime  service area and regional levels.
section_title: Potential Network Oversight Tools
paragraphs: DOD has some tools that, while not designed specifically for monitoring  the civilian provider network, could be useful for oversight. For example,  the Health Care Survey of DOD Beneficiaries (HCSDB) could be used as a  source of information for overseeing civilian provider network adequacy  at the national level. This quarterly survey contains specific questions on  all beneficiaries’ experiences related to access to care. For example, our  analysis of the 2000 HCSDB data for all Prime beneficiaries receiving care  from civilian providers indicates that over one-third of these beneficiaries  waited more than DOD’s standard of 1 day for access to a provider for an  illness or an injury. However, the survey’s sample design does not  generally allow for assessing the adequacy of the civilian provider network  in most prime service areas and the survey’s response rate of 35 percent  further limits its usefulness.
In addition to DOD’s beneficiary survey, contractors conduct surveys of  providers that could assist in DOD’s oversight of the civilian provider  network. These surveys are intended to assess providers’ satisfaction with  contractors’ performance and other TRICARE requirements. However,  these surveys have very low response rates, ranging from 4 to 19 percent,  and in some cases they reflect unrepresentative samples of providers. For  example, one contractor surveyed only those providers who participated  in a contractor-sponsored seminar. Also, we found considerable variation  among the survey instruments, with some assessing provider satisfaction  more thoroughly than others. Despite these weaknesses, if improved, the  surveys could reveal concerns providers may have about participating in  the TRICARE network. This in turn could help DOD address these  concerns and mitigate problems that might affect the adequacy of the  network.
In addition to these existing surveys, DOD is piloting two initiatives for  collecting information on meeting access standards that could help in the  oversight of network adequacy. The first, the Enterprise Wide Referral and  Authorization System (EWRAS), which is currently being tested in the  Washington D.C. area, captures information on specialty care  appointments in MTFs and information on some specialty care  appointments in the civilian provider network. DOD officials said they  expect EWRAS to be fully implemented in Spring 2004. The second  initiative, the Access to Care (ATC) Project, gathers information on  appointments and specialty referrals at or originating from MTFs.  Specifically, it captures data on whether beneficiaries had a referral,  declined an appointment that was available, cancelled an appointment, or  left without being seen. It also records the average number of days  between when the appointment was made and when the beneficiary was  seen, as well as clinic cancellations and future appointments. This  information can help indicate the extent to which MTFs are meeting the  appointment wait-time access standards. Although the ATC Project is  currently being piloted at four MTFs, a similar system, if modified to  accommodate the requirements of the contractors for the civilian provider  network, could provide valuable information on appointment wait time  standards—information that is necessary for overseeing the adequacy of  the network.
section_title: DOD and Contractors Report Three Factors That May Contribute to Civilian Provider Network Inadequacy
paragraphs: DOD and its contractors have reported three factors that may contribute  to potential civilian provider network inadequacy: lack of providers in  certain geographic locations, low reimbursement rates, and administrative  requirements. First, DOD and contractors have reported regional  shortages for certain types of specialists in rural areas. For example, they  reported shortages for endocrinologists in the Upper Peninsula of  Michigan, dermatologists in New Mexico, and neurologists and allergists in  Mountain Home, Idaho. Additionally, in these instances, TRICARE officials  and contractors have reported difficulties in recruiting providers into the  TRICARE Prime network because in some areas providers, notably  specialists, will not join managed care programs. For example, contractor  network data indicate that there have been long-standing specialist  shortages in TRICARE in areas such as Alaska or eastern New Mexico,  where the lead agent stated that the providers in those locations have  repeatedly refused to join any managed care network.
There are certain geographic locations in which DOD has confirmed  shortages of providers and has raised TRICARE’s reimbursement rates as  a means of remedying such shortages. Although by statute DOD generally  cannot pay TRICARE network providers more than they would be paid  under the Medicare fee schedule, DOD may make payments of up to 115  percent of the Medicare fee to ensure the availability of an adequate  number of qualified healthcare providers. In 2000, DOD increased  reimbursement rates in rural Alaska in an attempt to entice more  providers to join the network. Similarly, in 2002, DOD increased  reimbursement rates for the rest of Alaska, and in 2003, DOD increased the  rates for selected specialists in Idaho to address documented network  shortcomings. These three instances are the only times DOD has used its  authority to pay above the Medicare rate in order to address local area  provider shortages, and the increases have had mixed success. In 2001,  for instance, we found that the 2000 rate increase in rural Alaska had not  increased provider participation. On the other hand, DOD officials told us  that with the 2002 increase in Alaska and the 2003 increase in Idaho,  contractors were experiencing some success in recruiting providers in  those areas. According to DOD officials, for example, six neurosurgeons in  Boise, Idaho agreed to join the network, eliminating the neurosurgeon  shortfall in that prime service area. In Alaska, DOD officials reported that  since the reimbursement rate increased, providers for radiology, thoracic  surgery, pediatrics, and other specialties have stated they will participate  in TRICARE.
The general levels of TRICARE’s reimbursement rates are another factor  that DOD and contractor officials told us may contribute to civilian  provider network inadequacy. Specifically, according to contractor  officials, civilian network providers have expressed concerns about the  decline in Medicare fees in 2002 and the potential for further reductions,  which they have said will affect their participation in the network. In  addition, there have been reported instances in which groups of providers  have banded together and refused to accept TRICARE Prime patients due  to their concerns with low reimbursement rates. One contractor identified  low reimbursement rates as the most frequent cause of provider  dissatisfaction. In addition to provider complaints, beneficiary advocacy  groups, such as the Military Officers Association of America (MOAA), have  cited instances of providers refusing care to beneficiaries because of low  reimbursement rates. However, while TRICARE’s reimbursement rates  may have created dissatisfaction among providers, it is not clear how  much this has affected civilian provider network adequacy except in  limited geographic locations, because the information contractors provide  to DOD is not sufficient to measure network adequacy. Additionally, there  are indications that reimbursement rates have little influence on providers’  decisions to leave the TRICARE network. Data from one contractor  indicated that out of the 2,156 providers who left the network between  June 2001 and May 2002, 900 providers cited reasons for leaving and only  10 percent of these cited reimbursement rates as a reason for leaving the  network.
Contractors report that providers have also expressed dissatisfaction with  some TRICARE administrative requirements, such as credentialing and  preauthorizations and referrals—but the effect of these requirements on  civilian provider network adequacy is also unclear. For example, many  providers have complained about TRICARE’s credentialing requirements.  In TRICARE, a provider must get recredentialed every 2 years, compared  to every 3 years for the private sector. Providers have said that this places  cumbersome administrative requirements on them.
Another widely reported concern about TRICARE administrative  requirements relates to preauthorization and referral requirements.  Civilian PCM providers are required to get preauthorizations from MTFs  before referring patients for care. While preauthorization is a standard  managed care practice, providers complain that obtaining  preauthorization adversely affects the quality of care provided to  beneficiaries because it takes too much time. In addition, civilian PCMs  have expressed concern that they cannot refer beneficiaries to the  specialist of their choice because of MTFs’ “right of first refusal” that gives  an MTF discretion to care for the beneficiary or refer the care to a civilian  provider. Nevertheless, there are not direct data confirming that  administrative burdens translate into widespread civilian provider  network inadequacies. Further, when reviewing one contractor’s survey of  providers who left the network, we found that only 1 percent of providers  responding cited administrative burdens as a factor.
section_title: New Contracts May Address Some Network Concerns, But May Create Others
paragraphs: DOD’s new contracts for providing civilian health care, called TNEX, may  address some network concerns raised by providers and beneficiaries, but  may create other areas of concern. Because the new contracts had not yet  been finalized as of June 2003, the specific mechanisms DOD and the  contractors will use to ensure network adequacy are not known. Under  TNEX, DOD plans to retain the requirement that the civilian provider  network complement the clinical services provided by MTFs; the access  standards for appointment and office wait times, as well as travel-time  standards; and the periodic reporting on the adequacy of the network.  However, the requirement to use provider-to-beneficiary ratios to measure  network adequacy will be eliminated, although such ratios may be used  during the network accreditation process.
Further, TNEX contains a provision intended to encourage contractors to  develop an adequate civilian provider network. This provision states that  at least 96 percent of contractor referrals shall be to a MTF or network  provider with an appointment available within the access standards.  Failure to achieve the 96 percent standard will affect contractors  financially.
TNEX may reduce the administrative burden related to provider  credentialing and patient referrals. Currently, civilian network providers  must follow TRICARE-specific requirements for credentialing. In contrast,  TNEX will allow network providers to be credentialed through a nationally  recognized accrediting organization. DOD officials stated this approach is  more in line with industry practices. Patient referral procedures will also  change under TNEX. Referral requirements will be reduced, but the MTFs  will still retain the right of first refusal.
On the other hand, TNEX may be creating a new administrative concern  for contractors and providers by requiring that all network claims  submitted by civilian providers be filed electronically. In fiscal year 2002,  only 25 percent of processed claims were submitted electronically.  Contractors stated that such a requirement could discourage providers  from joining or staying in the network because providers may not be  willing to modify their systems to submit electronic claims for a small  volume of TRICARE beneficiaries. DOD states that electronic filing will  reduce claims-processing costs.
section_title: Conclusions
paragraphs: DOD spends over $5 billion a year for health care delivered by the network  of civilian providers to complement care provided in the MTFs; however,  DOD has exercised limited oversight of the adequacy of the civilian  provider network. The information DOD relies on to assess the network  does not always accurately reflect the actual numbers of beneficiaries or  availability of providers. Further, the contractors do not report  comprehensive data on the network’s compliance with DOD’s access  standards, which are key benchmarks in assessing network adequacy. This  information will be important as DOD oversees the transition to the new  health care delivery contracts.
Incorporating data on the numbers and types of providers in the MTFs and  the total number of beneficiaries enrolled in TRICARE Prime would give  DOD a more accurate and comprehensive report of the potential workload  the civilian provider network faces in a prime service area and the  adequacy of the number of PCMs and specialists to deliver that care.  Similarly, more thorough reporting on beneficiaries’ access to care within  the standard time frames and development of a more systematic means of  collecting and evaluating complaint data would help DOD’s oversight of  the ability of the civilian provider network to deliver timely care to  beneficiaries. Further, with improvements in response rates and provider  representation, the civilian provider satisfaction surveys could also be  useful in identifying actions DOD and the contractors could take to  address provider concerns and ensure network stability.
section_title: Recommendations for Executive Action
paragraphs: To improve DOD’s oversight of the civilian provider network, we  recommend that the Secretary of Defense direct the Assistant Secretary of  Defense for Health Affairs to    ensure that MTF capabilities and all enrolled Prime beneficiaries in prime  service areas are accounted for when assessing and documenting the  adequacy of the civilian provider network;    ensure that the information reported on the required access standards is    explore ways to ensure that beneficiary complaints are systematically  evaluated and used to oversee the civilian provider network; and    explore options for improving the civilian provider surveys so that the  results of the surveys could be useful to DOD and the contractors in  identifying civilian provider concerns and developing actions that might  mitigate concerns and help ensure the adequacy of the civilian provider  network.
section_title: Agency Comments and Our Evaluation
paragraphs: DOD provided written comments on a draft of this report. (See app. III.)  DOD concurred with the report’s recommendations.
In its written comments, DOD stressed that strong oversight of the civilian  provider network is necessary and should be continuously monitored for  improvements. DOD said that the implementation of TNEX will address  many of the points raised in our report. DOD said TNEX will enhance the  reporting of information about network adequacy as well as provide  powerful financial incentives for contractors to optimize the direct care  system, maximize the extent of civilian provider networks, and achieve the  highest level of beneficiary satisfaction. However, since the TNEX  contracts have not been finalized as of July 2003, it is too early to assess  whether the contracts will result in improved oversight.
In its written comments DOD also said that the report title might mislead  some into concluding that we found the TRICARE network to be  inadequate. As we noted in the draft report, we did not assess the  adequacy of the civilian provider network but focused our work on DOD’s  oversight of the network. We believe the title of the report reflects that  focus.
DOD also provided technical comments, which we incorporated into the  report as appropriate.
We are sending copies of this report to the Secretary of Defense,  appropriate congressional committees, and other interested parties.  Copies will also be made available 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 staff have questions about this report,  please contact me at (202) 512-7101. Other contacts and staff  acknowledgments are listed in appendix IV.
section_title: Appendix I: Scope and Methodology
paragraphs: To describe and evaluate DOD’s oversight of the adequacy of the civilian  provider network, we reviewed and analyzed the information in the  quarterly network adequacy reports submitted by each contractor. We  identified the requirements for the content of these adequacy reports  based upon the general requirements in the TRICARE Operations Manual  and the additional requirements in contractors’ Best and Final Offers. We  reviewed the contents of five of the contractors’ quarterly network  adequacy reports, submitted between June 2002 and October 2002, and  compared them to the applicable reporting requirements. Each report was  evaluated for compliance regarding the provider-to-beneficiary ratios and  the access-to-care standards.
Because DOD has delegated the oversight of the network to the regional  lead agents, we discussed civilian provider network oversight with  officials in 5 of the 11 TRICARE regions—Northeast, Mid-Atlantic,  Heartland, Central, and Northwest. To discuss network management, we  interviewed officials from the four contractors—HealthNet, Humana,  Sierra, and TriWest—that are responsible for developing and maintaining  the provider network that augments care provided by DOD’s MTFs.  Because concerns regarding network adequacy may also be identified at  the local level, we met with lead agent and contractor officials at MTFs in  each of the regions we visited. Finally, we interviewed officials at TMA in  Falls Church, Va., the office that is responsible for ensuring that DOD  health policy is implemented, and officials at TMA-West in Aurora, Colo.,  the office that carries out contracting functions, including monitoring the  civilian contracts and writing the request for proposals for the future  contracts.
As part of our assessment of DOD’s oversight, we also reviewed surveys of  beneficiaries and providers, as well as DOD data collection initiatives as  potential tools for overseeing DOD’s civilian provider network, but did not  validate the data in the surveys or collection initiatives. Using annual data  from the 2000 HCSDB, we analyzed beneficiaries’ responses to access-to- care questions for those who were enrolled in Prime and received most of  their health care in the civilian provider network. We examined the results  of access-to-care questions based on whether or not these beneficiaries  were seen within the TRICARE access-to-care standards. Because we  included only Prime beneficiaries who received care in the civilian  provider network, our analysis of access to care does not reflect the entire  survey sample. To examine the provider surveys as potential oversight  tools, we obtained and reviewed each contractor’s 2001 provider survey  and assessed the survey’s response rate, sample selection, and the  instrument itself. We also discussed DOD initiatives underway and being  tested with cognizant officials to assess their potential as oversight tools.
To describe factors that may contribute to network inadequacy, we  interviewed and obtained documentation from DOD and contractor  officials regarding current network inadequacies, including their location,  duration, and the type of specialty needed. We also obtained provider  termination reports from three of the four contractors, which described  providers’ reasons for leaving the network. To further explore DOD’s  response to civilian provider concerns regarding rates, we interviewed  DOD officials on the use of their authority to raise reimbursement rates.  We also interviewed officials from the American Medical Association, The  Military Coalition, the MOAA, the National Association for Uniformed  Services, and the National Veteran’s Alliance to supplement data on the  possible causes of network inadequacy.
Finally, we reviewed DOD’s request for proposals for the future contracts  and interviewed DOD and contractor officials to describe how the new  contracts might affect network adequacy.
We conducted our work from June 2002 through July 2003 in accordance  with generally accepted government auditing standards.
section_title: Appendix II: Comparison of Current and Future TRICARE Regions
paragraphs: The shaded areas in figure 2 represent the 11 current TRICARE geographic  regions. The shaded areas in figure 3 represent the 3 planned TRICARE  geographic regions under the TNEX contracts expected to be awarded in  2003.
section_title: Appendix III: Comments from the Department of Defense
section_title: Appendix IV: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Acknowledgments
paragraphs: In addition to those named above, contributors to this report were Louise  Duhamel, Marc Feuerberg, Krister Friday, Gay Hee Lee, John Oh, and  Marie Stetser.