Cost containment in the Defense Department's managed-care program has been hampered by slow implementation of utilization management and resource-sharing agreements between military hospitals and contractors.
Those are among the conclusions of a recent report by the General Accounting Office, Congress' investigative arm.
Unless implementation proceeds on schedule, the military health system may not save the nearly $1.3 billion over five years the Pentagon originally expected as a result of both programs under its Tricare managed-care plan, the GAO reported.
Tricare covers the dependents of armed services members and retirees not eligible for Medicare. The Defense Department expects to spend $1.3 billion on contracts to cover those beneficiaries in fiscal 1996, which ends Sept. 30.
Beneficiaries eligible for Tricare make up nearly two-thirds of the 8.2 million people covered by the military healthcare system.
The Pentagon had estimated $810 million in savings over five years because of resource-sharing agreements through which managed-care contractors would supply healthcare practitioners or equipment to base healthcare facilities to treat military beneficiaries, the GAO said.
But the GAO reports that military healthcare facility commanders and contractors say they don't understand how to adjust future contract prices with the managed-care companies based on the savings that result from those arrangements. Because of that confusion, they have not actively pursued sharing agreements.
Meanwhile, the Pentagon estimated savings of $480 million over five years through utilization management.
But the GAO reports that the military-controlled utilization management for the Washington-Oregon region did not start for five months after the March 1995 implementation date of the Tricare program in that region.
And in the four-state Southwest region, military officials have expressed dissatisfaction with the way the contractor, Foundation Health Federal Services, implemented utilization management and withheld some payments because of poor performance.