January 27, 2022

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Defense Health Care: Implementation of Value-Based Initiatives in TRICARE

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<div>The Defense Health Agency (DHA)—the agency within the Department of Defense (DOD) that administers DOD's health care program, TRICARE—has identified a number of value-based initiatives for potential implementation with civilian providers and hospitals under the TRICARE program. These initiatives aim to help DHA build a value-based health care delivery system, in which providers are rewarded for value of services provided instead of volume of services provided. For these initiatives, value is generally measured in terms of improved health outcomes, enhanced experience of care for the patient, and reduced health care costs over time. GAO found that DHA has identified 20 value-based initiatives, including a program that makes incentive payments for hospitals that meet certain quality metrics for maternity services and a program that promotes adherence to medication regimens by waiving co-payments, among others. According to DHA officials, the 20 initiatives include five that have been implemented (two complete, three underway); three that will be implemented in the future—two with anticipated 2020 start dates are currently on hold due to the department's need to focus on the response to the Coronavirus Disease (COVID-19) pandemic and one that is expected to be implemented in January 2021; eight that are still under review, but no decisions have been made about whether and when they might be implemented; and four that were considered but will not be implemented. In fiscal year 2019, DOD offered health care services to approximately 9.6 million eligible beneficiaries worldwide through TRICARE, its regionally structured health care program. Beneficiaries may obtain health care services through DOD's direct care system of military hospitals and clinics or from its purchased care system of civilian providers. DOD contracts with private sector companies—referred to as managed care support contractors—to develop and maintain networks of civilian providers and perform other customer service functions for its purchased care system. The National Defense Authorization Act for Fiscal Year 2017 (NDAA 2017) required DOD to develop and implement value-based incentive initiatives in its TRICARE contracts. The NDAA 2017 also included a provision that required GAO to review these initiatives. This correspondence describes the initiatives DHA has developed and the status of each, as of June 2020. To do this work, GAO interviewed knowledgeable DHA officials and analyzed available documentation on each initiative, including decision papers, congressional reports, and Federal Register notices. For more information, contact Debra A. Draper at (202) 512-7114 or draperd@gao.gov.</div>

What GAO Found

The Defense Health Agency (DHA)—the agency within the Department of Defense (DOD) that administers DOD’s health care program, TRICARE—has identified a number of value-based initiatives for potential implementation with civilian providers and hospitals under the TRICARE program. These initiatives aim to help DHA build a value-based health care delivery system, in which providers are rewarded for value of services provided instead of volume of services provided. For these initiatives, value is generally measured in terms of improved health outcomes, enhanced experience of care for the patient, and reduced health care costs over time.

GAO found that DHA has identified 20 value-based initiatives, including a program that makes incentive payments for hospitals that meet certain quality metrics for maternity services and a program that promotes adherence to medication regimens by waiving co-payments, among others. According to DHA officials, the 20 initiatives include

  • five that have been implemented (two complete, three underway);
  • three that will be implemented in the future—two with anticipated 2020 start dates are currently on hold due to the department’s need to focus on the response to the Coronavirus Disease (COVID-19) pandemic and one that is expected to be implemented in January 2021;
  • eight that are still under review, but no decisions have been made about whether and when they might be implemented; and
  • four that were considered but will not be implemented.

Why GAO Did This Study

In fiscal year 2019, DOD offered health care services to approximately 9.6 million eligible beneficiaries worldwide through TRICARE, its regionally structured health care program. Beneficiaries may obtain health care services through DOD’s direct care system of military hospitals and clinics or from its purchased care system of civilian providers. DOD contracts with private sector companies—referred to as managed care support contractors—to develop and maintain networks of civilian providers and perform other customer service functions for its purchased care system.

The National Defense Authorization Act for Fiscal Year 2017 (NDAA 2017) required DOD to develop and implement value-based incentive initiatives in its TRICARE contracts. The NDAA 2017 also included a provision that required GAO to review these initiatives. This correspondence describes the initiatives DHA has developed and the status of each, as of June 2020. To do this work, GAO interviewed knowledgeable DHA officials and analyzed available documentation on each initiative, including decision papers, congressional reports, and Federal Register notices.

For more information, contact Debra A. Draper at (202) 512-7114 or draperd@gao.gov.

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