Sole Community Hospitals: Early Indications Show That TRICARE's Revised Reimbursement Rules Have Not Affected Access to Care
Published: 2015-04-15T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: DOD offered health care to about 9.6 million eligible beneficiaries through TRICARE, which provides care through military treatment facilities and civilian providers. Because DOD determined that its approach for reimbursing SCHs (459 in 2014) based on their billed charges was inconsistent with TRICARE's governing statute to reimburse civilian providers in a manner similar to Medicare, it implemented revised rules in January 2014.
House Report 113-446, which accompanied the National Defense Authorization Act for Fiscal Year 2015, included a provision for GAO to review issues related to the changes in TRICARE's reimbursement rules for SCHs. In this report, GAO examines (1) how TRICARE's revised reimbursement rules for SCHs compare to Medicare's reimbursement rules for these hospitals, and (2) the extent to which TRICARE's revised reimbursement rules for SCHs may have affected access to these facilities by servicemembers and their dependents. GAO reviewed federal laws and regulations as well as TRICARE and Medicare's rules for reimbursing SCHs. GAO analyzed fiscal year 2013 TRICARE claims data on SCH admissions and reimbursement amounts, and Medicare data on SCH net patient revenue and total discharges. GAO interviewed 10 SCHs with the highest number of TRICARE admissions or reimbursement amounts about access issues. GAO also interviewed officials from DOD and national health care associations and military beneficiary coalition groups.
section_title: What GAO Found
paragraphs: TRICARE's revised reimbursement rules for Sole Community Hospitals (SCHs), which provide health care in rural areas or where similar hospitals do not exist under certain criteria, approximate those for Medicare's. Specifically, both programs reimburse SCHs using the greater of either a cost-based amount or the allowed amount under a diagnostic-related-group-based payment system, although each program takes a different approach in implementing these methods. Each program also provides for reimbursement adjustments under specific circumstances. In order to minimize sudden significant reductions in SCHs' TRICARE reimbursements, the revised rules include a transition period during which an eligible SCH is reimbursed using a cost-based ratio that is reduced annually until it matches the SCH's Medicare cost-to-charge ratio, which is calculated by the Centers for Medicare & Medicaid Services for each hospital. Under TRICARE's revised rules for SCHs, this cost-to-charge ratio will be multiplied by the hospitals' billed charges to determine their reimbursement amounts. Most SCHs—about 74 percent—qualified for a transition to their Medicare cost-to-charge ratios.
Because most SCHs have just completed the first year of a multi-year transition, it is too early to determine the full effect of the revised reimbursement rules, including any impact on TRICARE beneficiaries' access to care at these hospitals. Nonetheless, early indications show that TRICARE beneficiaries have not experienced problems accessing inpatient care at these facilities. Specifically, Defense Health Agency (DHA) officials reported that they do not think access to inpatient care at SCHs will be an issue because hospitals that participate in the Medicare program are required to participate in the TRICARE program and serve its beneficiaries. Although some of them were not familiar with this requirement, officials from the 10 SCHs GAO interviewed with the highest number of TRICARE admissions, the highest reimbursement amounts, or both, stated that they provide care to all patients, including TRICARE beneficiaries. DHA officials also said that they track access issues pertaining to inpatient care at SCHs through concerns or complaints, and as of February 2015, they had not received any access complaints. They noted that they are still looking at ways to measure changes in access to care at these facilities and will likely focus on the 44 SCHs that had 100 or more TRICARE admissions. In addition, other stakeholders, including representatives of national health care associations and military beneficiary coalition groups, said that they are not aware of TRICARE beneficiaries having difficulty accessing care at SCHs. Moreover, in its analysis of available Medicare data for these facilities (427 of 459 SCHs), GAO found that overall TRICARE reimbursements for SCHs averaged less than 1 percent of SCHs' net patient revenue, with TRICARE beneficiaries making up just over 1 percent of their total discharges for fiscal year 2013. As a result, the impact of TRICARE's revised reimbursement rules may likely be small for most SCHs.
GAO provided a draft of this report to the Department of Defense (DOD) for comment. DOD responded that it agreed with the report's findings and provided technical comments, which we incorporated as appropriate.

section_title: Letter
paragraphs: The Department of Defense (DOD) offered health care coverage to about  9.6 million eligible beneficiaries through TRICARE, its regionally  structured health care program, in fiscal year 2013. Although TRICARE  provides some care directly through military treatment facilities, civilian  health care providers, including physicians and hospitals, are also used to  augment the direct care system when needed.
By law, TRICARE—administered by DOD’s Defense Health Agency  (DHA)—must, to the extent practicable, reimburse civilian providers in a  manner similar to Medicare. TRICARE pays for most inpatient hospital  care under a diagnosis-related group (DRG) inpatient prospective  payment system (IPPS) similar to Medicare’s. Until recently, TRICARE  exempted sole community hospitals (SCH)—which provide health care in  rural areas or where like hospitals do not exist under certain criteria— from reimbursement under its DRG-based payment system. Under  Medicare, SCHs qualified for special payment provisions that were based  on historical hospital costs and other factors. However, because these  hospital-specific costs were unavailable to DOD, the department did not  implement Medicare’s special payment provisions for SCHs and has  generally been reimbursing SCHs based on their billed charges.
DHA determined that continuing to reimburse SCHs on the basis of their  billed charges was fiscally imprudent and inconsistent with TRICARE’s  governing statute, and, as a result, it implemented revised reimbursement  rules in January 2014 that are designed to more closely align with  Medicare’s payment provisions for SCHs. DHA estimated that the new  reimbursement rules will result in a cost savings of more than $590 million  through fiscal year 2017.
However, there have been congressional questions about the potential  effect of these reimbursement changes on TRICARE beneficiaries’  access to inpatient care at SCHs, which we are defining as their ability to  obtain care at these facilities. House Report 113-446, which accompanied  the National Defense Authorization Act for Fiscal Year 2015, included a  provision for GAO to review issues related to the changes in TRICARE’s  reimbursement rules for SCHs. In this report, we examine (1) how  TRICARE’s revised reimbursement rules for SCHs compare to  Medicare’s reimbursement rules for these hospitals, and (2) the extent to  which TRICARE’s revised reimbursement rules for SCHs may have  affected access to these facilities by servicemembers and their  dependents.
To determine how TRICARE’s revised reimbursement rules for SCHs  compare to Medicare’s reimbursement rules for these hospitals, we  reviewed relevant federal laws and regulations as well as TRICARE’s and  Medicare’s rules for reimbursing hospitals for inpatient care. We also  interviewed DHA officials about the revised rules for reimbursing SCHs  and their implementation of these rules. In addition, we analyzed data on  the reimbursement rates for SCHs and reviewed DHA’s cost savings  estimate. We determined that the data were sufficiently reliable for the  purposes of this report based on information from DHA officials about the  procedures in place to ensure its quality and completeness.
To determine the extent to which TRICARE’s revised reimbursement  rules for SCHs may have affected beneficiaries’ access to care at these  facilities, we obtained fiscal year 2013 TRICARE claims data on the  number of admissions and reimbursement amounts for each of the 459  hospitals that were designated as SCHs in 2014. We used these data to  assess the frequency of TRICARE admissions to identify TRICARE  beneficiaries’ utilization of inpatient care at these facilities. We also used  these data to select 10 SCHs that had the highest number of TRICARE  admissions, the highest reimbursement amounts, or both, and we  interviewed officials at those SCHs about the change in TRICARE  reimbursement rules and any resulting effect on access to care. (See  appendix I for our selection methodology and a list of these facilities.) We  determined that the TRICARE claims data were sufficiently reliable for the  purposes of this report based on information from DHA officials about the  procedures in place to ensure the quality and completeness of these  data. We also analyzed the proximity of SCHs with 100 or more  TRICARE admissions in fiscal year 2013 (44 of 459 SCHs) to military  hospitals and clinics to determine military beneficiaries’ potential reliance  on these SCHs as a source of inpatient care. We also obtained fiscal  year 2013 data on net patient revenue, total number of discharges, and  the number of hospital beds for 427 of the 459 SCHs using the  Healthcare Cost Report Information System. We determined that the  Healthcare Cost Report Information System data were sufficiently reliable  for the purposes of this report based on information about the procedures  in place to ensure the quality and completeness of these data.
Furthermore, we contacted officials at selected military hospitals located  within 40 miles of some of the highest-volume SCHs we identified about  their reliance on the SCHs, as well as any effects the revised rules have  had on beneficiaries’ access to care at these facilities. We also  contacted each of the military services to determine whether an SCH was  located near a military hospital that had closed or no longer offered  inpatient care since 2012, and we interviewed officials at these locations  to assess beneficiaries’ reliance on these SCHs and whether their access  had been impaired. We interviewed officials from DHA, the three  TRICARE Regional Offices (North, South, and West), and the three  regional TRICARE managed care support contractors (UnitedHealthcare  Military & Veterans Services, Humana Military Healthcare Services, and  Health Net Federal Services) about changes in the reimbursement rules,  the effect of the changes on SCHs, and the effect on TRICARE  beneficiaries’ access to care at these facilities. We also interviewed  DHA officials about their plans to monitor access to care at sole  community hospitals. Finally, we interviewed officials from the following  national health care associations and military beneficiary coalition  groups—American Hospital Association’s Section for Small or Rural  Hospitals, National Rural Health Association, Military Officers Association  of America, and the National Military Family Association—to obtain their  insights about these issues from the perspective of those who would  potentially be affected by the revised reimbursement rules.
We conducted this performance audit from October 2014 to April 2015 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: Under TRICARE, beneficiaries may obtain health care through either the  direct care system of military treatment facilities or the purchased care  system of civilian providers and hospitals, including SCHs. SCHs were  exempted from TRICARE’s reimbursement rules for hospitals until  revised rules were implemented in January 2014.
subsections: section_title: Sole Community Hospitals
paragraphs: SCHs serve communities that rely on them for inpatient care, and they  include hospitals and regional medical centers ranging in size from 9 to  598 beds. The intent of the SCH designation is to maintain access to  needed health services for Medicare beneficiaries by providing financial  assistance to hospitals that are geographically isolated. A hospital may  generally qualify for SCH status by showing that because of factors such  as isolated location, weather conditions, travel conditions, or absence of  other like hospitals, it is the sole source of inpatient hospital services  reasonably available in a geographic area.
In 2014, 459 hospitals were designated as SCHs under the Medicare  program. A hospital that qualifies as an SCH under the Centers for  Medicare & Medicaid Services’s (CMS) Medicare regulations is also  considered an SCH under TRICARE. Specifically, a hospital paid under  the Medicare Acute Care Hospital IPPS is eligible for classification as an  SCH if it meets one of the following criteria established by CMS:
The hospital is at least 35 miles from other like hospitals;
The hospital is rural, between 25 and 35 miles from other like  hospitals, and meets one of the following criteria:
No more than 25 percent of hospital inpatients or no more than   25 percent of the Medicare inpatients in the hospital’s service area  are admitted to other like hospitals within a 35-mile radius of the  hospital or, if larger, within its service area;
The hospital has fewer than 50 beds and would meet the   25 percent criterion except that some beneficiaries or residents  were forced to seek specialized care outside of the service area  due to the unavailability of necessary specialty services at the  hospital; or
Because of local topography or periods of prolonged severe  weather conditions, the other like hospitals are inaccessible for at  least 30 days in each 2 out of 3 years.
The hospital is rural and located between 15 and 25 miles from other  like hospitals, but because of local topography or periods of prolonged  severe weather conditions, the other like hospitals are inaccessible for  at least 30 days in each of 2 out of 3 years; or
The hospital is rural and because of distance, posted speed limits,  and predictable weather conditions, the travel time between the  hospital and the nearest like hospital is at least 45 minutes.
section_title: TRICARE Networks and Access-to-Care Standards
paragraphs: Under the TRICARE program, beneficiaries can obtain care either from  providers at military treatment facilities or from civilian providers. DHA  contracts with three regional managed care support contractors to  develop networks of civilian providers in their respective regions,  including SCHs, to serve TRICARE beneficiaries in geographic areas  called Prime Service Areas. Prime Service Areas are geographically  defined by a set of 5-digit zip codes, usually within an approximate   40-mile radius of a military treatment facility. These civilian provider  networks are required to meet specific access standards for certain types  of TRICARE beneficiaries, such as travel times or wait times for  appointments. However, these access standards do not apply to  inpatient care.
section_title: TRICARE’s Reimbursement Rules for Hospitals
paragraphs: Since 1987, DHA has reimbursed hospitals for claims using the agency’s  DRG-based payment system, which was modeled after Medicare’s  system. Under this system, claims are priced using an annual standard  amount and a weighted value for each DRG. For example, in fiscal year  2014, the TRICARE annual standard amount was approximately  $5,500.00. Payment weights are assigned to each DRG based on the  average resources used to treat patients. For example, in fiscal year  2014, a lung transplant had a weight of 8.6099, which would be multiplied  by the annual standard payment amount ($5,500.00) for a reimbursement  of $47,354.45. TRICARE’s DRG-based payment system differs from  Medicare’s DRG-based payment system in that each program has  different annual standard amounts and different DRG weights due to  differences in the characteristics of their beneficiary populations. For  example, Medicare’s population, which is generally older and less healthy  than TRICARE’s population, may require more resources and may  require longer inpatient lengths of stay. Also, some services, notably  obstetric and pediatric services, are nearly absent from Medicare, but are  a much larger component of TRICARE’s services.
SCHs were exempted from DHA’s DRG-based payment system because  they had special payment provisions under Medicare that allowed for  payments based on historical costs as well as certain types of  adjustments, such as additional payments for significant volume  decreases defined as a more than 5 percent decrease in total inpatient  discharges as compared to the immediately preceding cost reporting  period. Instead, DHA generally reimbursed SCHs based on their billed  charges for inpatient care provided to TRICARE beneficiaries. However,  distinctions were made among providers based on network status.  Specifically, nonnetwork SCHs were reimbursed for their billed charges,  and network hospitals were reimbursed based on their billed charges less  any discounts that they negotiated with the managed care support  contractors.
section_title: TRICARE’s Revised Reimbursement Rules for SCHs Approximate Those for Medicare
paragraphs: Under its revised reimbursement rules for SCHs, DHA’s methodology for  TRICARE approximates the rules for Medicare for these hospitals.  Specifically, both programs reimburse SCHs using the greater of either a  cost-based amount or the allowed amount under a DRG-based payment  system. However, each program takes a different approach in  implementing these methods.
Medicare reimburses each SCH based on which of the following methods  yields the greatest aggregate payment for that hospital: (1) the updated  hospital-specific rate based on cost per discharge from fiscal year 1982,  (2) the updated hospital-specific rate based on cost per discharge from  fiscal year 1987, (3) the updated hospital-specific rate based on cost per  discharge from fiscal year 1996, (4) the updated hospital-specific rate  based on cost per discharge from fiscal year 2006, or (5) the IPPS  hospital-specific DRG rate payment. Medicare’s reimbursement rules  also include payment adjustments that SCHs may receive under special  programs or circumstances, such as adjustments to SCHs that  experience significant volume decreases.
Beginning January 1, 2014, TRICARE began reimbursing SCHs based  upon the greater of (1) the SCH’s Medicare cost-to-charge ratio, or (2)  TRICARE’s DRG-based payment system. The Medicare cost-to-charge  ratio that TRICARE uses is calculated for each hospital by CMS and is  distinct from the historical hospital-specific rates based on the cost per  discharge that Medicare uses to reimburse SCHs. Under TRICARE’s  revised rules for SCHs, the cost-to-charge ratio will be multiplied by each  hospital’s billed charges to determine its reimbursement amount. Also, at  the end of each year, DHA calculates the aggregate amount that each  SCH would have been reimbursed under TRICARE’s DRG-based  payment system, which it uses to reimburse other hospitals that provide  inpatient care to TRICARE beneficiaries. If an SCH’s aggregate  reimbursement would have been more under this system than it would  have using the Medicare cost-to-charge ratio, DHA pays the SCH the  difference. TRICARE’s revised reimbursement rules also include payment  adjustments that SCHs may receive under special circumstances,  although the specific TRICARE adjustments differ from those available  under Medicare. For example, effective with the revised reimbursement  rules, SCHs may qualify for a General Temporary Military Contingency  Payment Adjustment if they meet certain criteria, including serving a  disproportionate share of active duty servicemembers and their  dependents—10 percent or more of the SCH’s total admissions. At the  time of our review, DHA officials did not have an estimate of the number  of SCHs that would qualify for this adjustment.
Under TRICARE’s revised rules, some SCHs—which were previously  reimbursed at up to 100 percent of their billed charges—will eventually be  reimbursed at 30 to 50 percent of their billed charges. In order to  minimize sudden significant reimbursement reductions on SCHs, DHA’s  revised rules include a transition period to the new reimbursement levels  for most SCHs. Eligible SCHs are reimbursed using an individually  derived base-year ratio that is reduced annually until it matches the  SCH’s Medicare cost-to-charge ratio that CMS has calculated for each  hospital. For each hospital designated as an SCH during fiscal year 2012,  DHA calculated a base-year ratio of their allowed-to-billed charges using  fiscal year 2012 TRICARE claims data. Based on these calculations,  each SCH fell into one of two categories: (1) SCHs with base-year ratios  higher than their Medicare cost-to-charge ratios, or (2) SCHs with base- year ratios lower than, or equal to, their Medicare cost-to-charge ratios.
Most SCHs fell into the first category with base-year ratios higher than  their Medicare cost-to-charge ratios (339 or 74 percent), which qualified  them for a transition period. For these SCHs, their base-year ratios are  reduced annually based on their network participation status, and their  modified ratios are multiplied by their billed charges beginning January 1,  2014. Specifically, a nonnetwork SCH has no more than a 15 percentage  point reduction each year, while a network SCH has no more than a   10 percentage point reduction as its reimbursement level declines to its  respective Medicare cost-to-charge ratio. The length of the transition  period differs for each SCH and is determined by the difference between  its base-year ratio and its Medicare cost-to-charge ratio, and its network  status. Figure 1 shows an example of the transition for a network SCH  with a 95 percent base-year ratio that is transitioning to a Medicare cost- to-charge ratio of 40 percent. As a network provider, the SCH’s base-year  ratio would be reduced by 10 percentage points to 85 percent during the  first year of implementation of the revised rules and would continue to be  reduced until its reimbursement ratio matches the SCH’s Medicare ratio   5 years later.
Twenty-four percent (111 of 459) of the hospitals that were designated as  SCHs during fiscal year 2012 with base-year ratios less than or equal to  their Medicare cost-to-charge ratios did not qualify for a transition period  because either their reimbursement increased to their Medicare cost-to- charge ratio, or they continued to be reimbursed at their Medicare cost-to- charge ratio. Similarly, about 2 percent (9 of 459) of the hospitals that  were not designated as SCH in fiscal year 2012 also did not qualify for a  transition period. Instead, these SCHs are now reimbursed using their  Medicare cost-to-charge ratio in accordance with TRICARE’s revised  reimbursement rules.
Once an SCH reaches its Medicare cost-to-charge ratio, TRICARE  reimburses labor, delivery, and nursery care services at 130 percent of  this ratio. This rule is based on DHA’s assessment that Medicare’s ratio  does not accurately reflect the costs for these services. According to  TRICARE’s fiscal year 2013 claims data, 120 SCHs (approximately   30 percent of all SCHs) were already reimbursed using rates that were   at or below their Medicare cost-to-charge ratios.
section_title: Early Indications Show That Access to Care Has Not Been Affected by TRICARE’s Revised Reimbursement Rules for SCHs
paragraphs: Because most SCHs have just completed the first year of a multi-year  transition, it is too early to determine the full effect of the revised  reimbursement rules on SCHs, including any effect on TRICARE  beneficiaries’ ability to obtain care at these hospitals. Nonetheless, early  indications show that TRICARE beneficiaries have not experienced  problems accessing inpatient care at these facilities.
For fiscal year 2013, we found that overall TRICARE reimbursements for  SCHs averaged less than 1 percent of their net patient revenue, with  TRICARE beneficiaries making up just over 1 percent of their total  discharges. We also found that the majority of SCHs—58 percent (265  of 459)—had fewer than 20 TRICARE admissions during this time while  10 percent (44 of 459) had 100 or more TRICARE admissions. As a  result, the impact of TRICARE’s revised reimbursement rules may likely  be small for most SCHs. Figure 2 illustrates a breakdown of the 459  SCHs by their fiscal year 2013 TRICARE admissions.
DHA officials reported that they do not think access to inpatient care at  SCHs will be an issue because hospitals that participate in the Medicare  program are required to participate in the TRICARE program and serve  its beneficiaries. Officials from the 10 SCHs we identified as having the  highest number of TRICARE admissions, the highest reimbursement  amounts, or both, told us that they provide care to all patients, including  TRICARE beneficiaries—although some of them were not familiar with  this requirement. TRICARE reimbursement for these SCHs ranged from  about 2 to 12 percent of their net patient revenue, and TRICARE  beneficiaries accounted for about 1 to 27 percent of their total discharges.  See table 1 for TRICARE percentages of net patient revenue and total  discharges for each of these SCHs.
However, TRICARE beneficiaries’ access to care at SCHs could be  affected if these hospitals reduced or eliminated their inpatient services.  The SCH officials we spoke with told us that they had not reduced the  inpatient services available at their hospitals as a result of TRICARE’s  revised reimbursement rules. However, officials at two SCHs did express  concerns about future difficulties maintaining their current level of  operations as they face further reductions in reimbursements not only  from TRICARE, but also from other sources, such as Medicare and  Medicaid. These officials said that they are concerned about their  facilities’ long-term survival. Given the current environment of decreasing  reimbursements, some SCHs we interviewed reported taking proactive  steps, such as eliminating equipment maintenance contracts, to help  offset the reimbursement reductions. Officials from one facility we  interviewed told us that they are considering an option to partner with  another SCH as a way to increase efficiency.
TRICARE beneficiaries’ demand for inpatient care at SCHs also may be  affected by the availability of inpatient care from their respective military  installation. We found that 24 of the 44 SCHs we identified as having 100  or more TRICARE admissions in fiscal year 2013—about half—were  within 40 miles of a military installation that only had an outpatient clinic.  (See appendix II for a list of the 44 SCHs and their proximity to military  hospitals and clinics). As a result, servicemembers and their dependents  in those locations may be more reliant on a nearby SCH for their inpatient  care. We found that TRICARE inpatient admissions for these 24 facilities  ranged from 101 to 2,178 in fiscal year 2013, and 6 of them were among  the 10 SCHs that we interviewed because they had the highest number of  TRICARE admissions, the highest reimbursement amounts, or both.  Officials from these 6 SCHs told us that nearby TRICARE beneficiaries  tend to rely on their facilities for certain types of inpatient services, such  as labor and delivery. See figure 3 for additional information about SCHs  with 100 or more TRICARE admissions and their proximity to military  hospitals and clinics.
We also found that 12 of the 44 SCHs with 100 or more admissions were  located fewer than 40 miles from a military hospital. TRICARE admissions  for these facilities ranged from 117 to 2,364 in fiscal year 2013. Three of  these SCHs—which are located near Naval hospitals in North Carolina  and South Carolina—were among the 10 SCHs with the highest number  of TRICARE admissions or the highest numbers of both admissions and  reimbursement that we interviewed. An official with Naval Hospital Camp  Lejeune (North Carolina) told us the hospital relies on local SCHs  because it is either unable to meet their beneficiaries’ demand for certain  services, such as obstetric care, or because the SCHs offer services not  available at the Naval hospital, such as some cardiac care. Naval  Hospital Beaufort (South Carolina) provides limited inpatient services, and  according to an official there, most of that hospital’s beneficiaries obtain  inpatient care at the local SCH, including intensive care, all pediatric care,  maternity and newborn care, and certain types of specialty care not  provided at the Naval hospital (neurology, cardiology, and  gastroenterology).
We also interviewed officials at two additional military hospitals—Naval  Hospital Lemoore (California) and Naval Hospital Oak Harbor  (Washington)—that had eliminated all or most of their inpatient care and  were within 40 miles of an SCH. These officials told us that they rely more  on other hospitals that are closer to their installations than the SCHs. For  example, an official with Naval Hospital Lemoore told us that Lemoore  currently has a resource sharing agreement with another hospital, which  is closer to them than the nearby SCH. This agreement allows military  providers with privileges to deliver babies for TRICARE beneficiaries at  that facility. Officials from Naval Hospital Oak Harbor told us that their  hospital tends to utilize three smaller facilities closer to it than the SCH  depending on the type of service needed.
DHA and managed care support contractor officials told us that they have  not heard of concerns or issues with beneficiary access at SCHs resulting  from the revised reimbursement rules. DHA officials reported that they do  not think access to inpatient care at SCHs will be an issue because  hospitals that participate in the Medicare program are required to  participate in the TRICARE program and serve its beneficiaries. DHA  officials told us they track access issues pertaining to inpatient care at  SCHs through concerns or complaints communicated to them through the  TRICARE Regional Offices or directly from beneficiaries. As of February  2015, these officials told us they have not received any such complaints.  They noted that they are looking at ways to measure changes in access  to care at these facilities, possibly by comparing the number of  discharges from one year to the next. Although their plans are under  development, officials stated that they will likely focus on the 44 SCHs  that had 100 or more TRICARE admissions. Officials from DHA’s  TRICARE Regional Offices and the managed care support contractors  also told us that they have not received complaints or heard of issues  from beneficiaries about their ability to access inpatient care at SCHs. In  addition, officials from national health care associations and military  beneficiary coalition groups that we spoke with also reported that they  have not heard any concerns about access to care at SCHs resulting  from TRICARE’s revised reimbursement rules.
section_title: Agency Comments
paragraphs: We provided a draft of this report to DOD for comment. DOD responded  that it agreed with the report’s findings, and its comments are reprinted in  appendix III. DOD also provided technical comments, which we  incorporated as appropriate.
We are sending copies of this report to the Secretary of Defense and  appropriate congressional committees. In addition, the report will be  available at no charge on the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-7114 or draperd@gao.gov. Contact points for our   Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. Major contributors to this report are listed in  appendix IV.
section_title: Appendix I: Methodology for Selecting Sole Community Hospitals Based on Fiscal Year 2013 TRICARE Claims Data
paragraphs: We obtained TRICARE claims data on the number of admissions and  reimbursement amounts for each sole community hospital (SCH) for fiscal  year 2013. We used these data to select the eight SCHs with the highest  number of TRICARE admissions and the eight SCHs with the highest  reimbursement amounts. Due to overlap, the number of unique SCHs we  selected totaled 10. We interviewed officials at those hospitals about the  change in TRICARE reimbursement rules and any resulting effect on  access to care.
section_title: Appendix II: Sole Community Hospitals with More than 100 TRICARE Admissions, FY 2013, by Distance from a Military Facility
paragraphs: Sole community hospital (SCH)  8 SCHs that were 40 miles or more from a military outpatient clinic or hospital  Fiscal Year (FY)  2013 TRICARE  admissions  40 miles from a military  outpatient clinic(s) military hospital(s)
Sole community hospital (SCH)  12 SCHs that were less than 40 miles from a military hospital or a hospital and an outpatient clinic  Fiscal Year (FY)  2013 TRICARE  admissions  outpatient clinic(s) military hospital(s)
section_title: Appendix III: Comments from the Department of Defense
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
paragraphs: Debra A. Draper, Director, (202) 512-7114 or draperd@gao.gov.
subsections: section_title: Staff Acknowledgments
paragraphs: In addition to the contact name above, Bonnie Anderson, Assistant  Director; Jennie Apter; Jackie Hamilton; Natalie Herzog; Giselle Hicks;  Sylvia Diaz Jones; and Eric Wedum made key contributions to this report.