GAO Issues Report: Defense Health Care – DOD Expects New IT System Capabilities to Improve Other Health Insurance Processing

WASHINGTON, April 1 -- The Government Accountability Office has issued a report (GAO-22-105131) entitled "Defense Health Care - DOD Expects New IT System Capabilities to Improve Other Health Insurance Processing".

The report was sent to Sen. Jack Reed, D-Rhode Island, chairman, Sen. James M. Inhofe, R-Oklahoma, ranking member of the Senate Armed Services Committee, Rep. Adam Smith, D-Washington, chairman, and Rep. Mike Rogers, R-Alabama, ranking member of the House Armed Services Committee, on March 29, 2022. Here are excerpts of summaries associated with the report.

What GAO Found: "Under the TRICARE health plan--administered by the Department of Defense's (DOD) Defense Health Agency (DHA)--eligible beneficiaries who are not on active duty may have other health insurance (OHI) in addition to their TRICARE coverage. OHI includes medical, dental, or pharmacy services covered through a private insurance provider. When beneficiaries have OHI, TRICARE generally pays secondary to that OHI.

GAO found that military hospitals and clinics, referred to as military medical treatment facilities (MTF), may face various challenges in processing third-party claims. For example, MTF patient registration staff use a manual process for sharing hard copy OHI forms with MTF billing staff, and GAO found that the six MTFs it reviewed used inconsistent processes for sharing these forms. Officials from two of the MTFs told GAO that their billing staff are not receiving OHI forms from their facilities' outpatient clinics, potentially resulting in missed opportunities to bill and collect third-party payments.

However, starting in April 2022, DHA plans to add new system capabilities that it expects will resolve existing challenges. These capabilities, including patient registration and billing, will be integrated into DOD's new electronic health record system, MHS GENESIS, through the implementation of a new component called Revenue Cycle Expansion (Rev-X). Once Rev-X capabilities are available, the OHI information collected at registration and entered into the electronic health record system will automatically be available for billing, according to DHA officials. As a result, MTFs' patient registration staff will not need to share hard copy OHI forms with the MTFs' billing staff, eliminating lost billing opportunities related to OHI forms not being provided.

TRICARE contractors are required to submit the OHI information they obtain from beneficiaries' claims to a repository within DOD's eligibility system for potential use by MTFs in billing third-party claims. However, GAO found that the OHI information contractors submit is of limited use in assisting MTFs because the information is incomplete and may be inaccurate. DHA officials explained that contractors do not always submit all of the required data elements to the repository, and that the information submitted to the repository is not validated. As a result, DHA officials said that MTFs generally use the OHI repository as an indication of whether a beneficiary could have OHI, but not for purposes of filling a claim. Officials stated that MTF staff are responsible for collecting and verifying OHI for each appointment, and that these steps occur at all MTFs.

The requirement for contractors to submit OHI information to the repository will become unnecessary with the implementation of MHS GENESIS and its component, Rev-X. DHA officials told GAO that in September 2020, MHS GENESIS began to replace the repository as the primary source for storing OHI information and explained that the repository may be discontinued when MHS GENESIS is fully implemented. Phasing out the repository and the requirement for contractors to submit OHI information to it will improve efficiency by removing the need to submit information and maintain a repository that is of limited use for MTFs in assisting with their OHI billing activities."

Why GAO Did This Study: "Through DOD's TRICARE health plan, beneficiaries--including servicemembers and dependents--may receive care from the direct care system of military hospitals or clinics, or from the private sector care system of civilian providers administered by contractors. When non-active duty beneficiaries have OHI, DOD is authorized to recover the cost of providing their health care.

Public Law 116-283 includes a provision for GAO to review DOD's OHI billing practices for care received under the TRICARE program. This report (1) describes challenges MTFs may face when processing OHI third-party claims for TRICARE beneficiaries; and (2) examines OHI information contractors submit to DOD for beneficiaries who receive care from civilian providers.

GAO examined relevant documentation for the collection and billing of OHI claims and interviewed DHA officials, including those responsible for MHS GENESIS and its new billing component; contractor officials; and officials from six MTFs selected for variety in military service, use of MHS GENESIS, and amount of OHI payment received in 2018 through 2020--the most recent data available."

What GAO Recommends: "GAO recommends that DHA phase out the OHI repository, including the requirement for contractors to submit OHI information to it. DOD concurred with GAO's recommendation and stated that the implementation of MHS GENESIS and Rev-X will enable the department to phase out the OHI repository."

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March 29, 2022

To: The Honorable Jack Reed, Chairman, The Honorable James M. Inhofe, Ranking Member, Committee on Armed Services, United States Senate

The Honorable Adam Smith, Chairman, The Honorable Mike Rogers, Ranking Member, Committee on Armed Services, House of Representatives

The Department of Defense (DOD) offers health care services to eligible beneficiaries, including active duty servicemembers and their dependents, through its TRICARE health plan./1 Through TRICARE, which the Defense Health Agency (DHA) administers, eligible beneficiaries may receive care from the direct care system of military hospitals and clinics, referred to as military medical treatment facilities (MTFs). They may also receive care from the private sector care system of civilian providers who participate in TRICARE plans administered by contractors. In fiscal year 2020, DOD provided health care to over 9.6 million beneficiaries at a cost of approximately $51 billion.

In some instances, beneficiaries--other than active duty--have other health insurance (OHI) coverage, such as through their employer or a private insurance provider./2 OHI is any health insurance policy that covers medical, dental, or pharmacy services. All non-active duty beneficiaries are required to provide information regarding this additional insurance to the department on an annual basis, or when there is a change in their coverage status. By law, beneficiaries' OHI has an obligation to pay for services, to the extent of its liability, before TRICARE does. In other words, OHI is the primary payer, and TRICARE is the secondary payer./3

Federal law authorizes MTFs to collect payment from beneficiaries' OHI./4 Each of the military services' MTFs (Army, Navy, and Air Force) has a Uniform Business Office that administers a Third Party Collections program, among other programs./5 The money collected from third-party payers, such as OHI, represents a revenue source for MTFs and directly supports the operation and maintenance budget of the local MTF where care was provided./6 In 2019, the DOD Inspector General (IG) reported on DHA and the military services' inadequate management of the Third Party Collections program, including the insufficient collection of OHI payments./7 The IG estimated that with better management, MTFs could have collected approximately $70 million more from OHI third-party payers between October 1, 2015, and June 30, 2018.

For health care received outside of MTFs through private sector care, DHA contracts with private companies, referred to as managed care support contractors, in two TRICARE regions (East and West) to develop networks of civilian providers and to provide other customer service and administrative functions, such as claims processing. These contractors rely on civilian providers to collect OHI information from TRICARE beneficiaries and to bill their OHI prior to billing TRICARE. Contractors are also required to submit the OHI information they receive from beneficiaries' claims to DOD's eligibility system so that MTFs can potentially use such OHI information for the purposes of third-party billing to collect additional payment.

The William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 includes a provision for us to review DOD's billing practices related to OHI under the TRICARE program./8 In this report, we (1) describe challenges MTFs may face when processing OHI thirdparty claims for TRICARE beneficiaries, and (2) examine the OHI information contractors submit to DOD for beneficiaries who receive care from civilian providers./9

To describe challenges MTFs may face when processing OHI third-party claims for TRICARE beneficiaries, we reviewed DHA guidance documents that outline the roles and responsibilities for processing OHI third-party claims at MTFs. We also interviewed DHA officials responsible for developing guidance on collecting OHI and processing related claims.

In addition, we selected a non-generalizable sample of six MTFs, and we interviewed officials at those MTFs responsible for collecting OHI and for processing OHI third-party claims./10 We focused our selection on MTFs that had implemented DOD's new electronic health record, MHS GENESIS, which impacts how MTFs will manage OHI information and process related claims. We selected two MTFs from each military service--Army, Navy, and Air Force--based on the distribution of uncollected OHI third-party payments to total amount billed, measured as a percentage, representing one MTF with a high percentage and one MTF with a low percentage for each service. To do this, we reviewed MTF data submitted to DHA from 2018 through 2020 on MTF OHI thirdparty claims, including data on the number of MTF visits, OHI claims filed, amount billed, and amount collected from these claims./11 We reviewed relevant documents about compiling these data and interviewed knowledgeable officials about the completeness and accuracy of these data. Based on this, we determined that these data were sufficiently reliable for the purposes of selecting MTFs to include in our review.

Additionally, we interviewed DHA officials responsible for the transition to MHS GENESIS as well as the implementation of a new component that will integrate additional capabilities, such as billing and patient registration, into MHS GENESIS. We used the information obtained from these interviews to determine how the new capabilities for MHS GENESIS will affect MTFs' processing of OHI third-party claims. We also reviewed the DOD IG's 2019 report on OHI third-party claims and interviewed DOD IG and DHA officials to obtain an update on the recommendations made to DHA. (For more information about the status of these recommendations, see appendix I.)

To examine the OHI information contractors submit to DOD for beneficiaries who receive care from civilian providers, we reviewed contractors' provider handbooks, TRICARE manuals, and the OHI reports contractors are required to submit to DHA. We interviewed the two TRICARE contractors (Humana and Health Net), including their claims processing subcontractors, about how they collect and share OHI information obtained from OHI third-party claims with DHA. We interviewed DHA officials who are responsible for monitoring the TRICARE contractors to determine how they are meeting requirements to submit OHI information to the Defense Eligibility Enrollment Reporting System (DEERS), which is the department's system of eligibility used for TRICARE. We also interviewed Defense Manpower Data Center officials who are responsible for the DEERS OHI repository as well as the DHA DEERS liaison about the type of OHI information contractors are required to submit and its accuracy and completeness. Finally, we interviewed DHA officials responsible for the transition to MHS GENESIS and its new component to understand how these systems will be used to collect and store OHI. We also compared the collection of OHI to federal standards for internal control./12 Specifically, we evaluated DOD's requirement for contractors to submit OHI information to DHA in the context of principle 13, which calls for management to use quality information to achieve its objectives.

We conducted this performance audit from March 2021 to March 2022 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.

See footnotes here: https://www.gao.gov/assets/gao-22-105131.pdf

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Conclusions

TRICARE OHI claims represent a revenue source for MTFs, and with DHA's implementation of a new electronic health record system, MHS GENESIS, and a new component, Rev-X, DHA anticipates that it will be able to address many of the challenges surrounding OHI third-party claims, such as the coordination and data sharing issues we identified. As DHA and the MTFs fully implement these new system capabilities, it will be important for them to ensure that they fully address these challenges, as expected, which will facilitate MTFs' ability to maximize cost recovery.

Furthermore, phasing out the OHI DEERS repository and the need for contractors to submit OHI information to it will help ensure that contractors are fulfilling requirements in the most efficient and helpful manner to the billing process.

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Recommendations for Executive Action

We are making the following recommendation to the Department of Defense:

The Director of the Defense Health Agency should phase out the use of the DEERS OHI repository, including the requirement for TRICARE contractors to submit OHI information to DEERS. (Recommendation 1)

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Agency Comments

We provided a draft of this report to DOD for review and comment. In its written comments, reproduced in appendix II, DOD concurred with our recommendation and stated that its implementation of MHS GENESIS and Rev-X will enable the department to begin phasing out the use of the DEERS OHI repository. DOD also provided technical comments, which we have incorporated, as appropriate.

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The text of the GAO report is available at https://www.gao.gov/products/gao-22-105131

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