Summary

Combined, the Department of Defense (DOD) and the Department of Veterans Affairs (VA) provide health care services to about 12 million beneficiaries at an estimated cost of about $53 billion for fiscal year 2004--$26.7 billion for DOD and $26.5 billion for VA. In 1982 the Congress passed the VA and DOD Health Resources Sharing and Emergency Operations Act (Sharing Act) to promote more cost-effective use of health care resources and more efficient delivery of care. Specifically, the Congress authorized military treatment facilities and VA medical centers to enter into sharing agreements to buy, sell, and barter medical and support services. To further encourage on-going collaboration, the Congress, in section 721 of the Bob Stump National Defense Authorization Act (NDAA) for Fiscal Year 2003, directed the Secretary of Defense and the Secretary of Veterans Affairs to establish a joint incentives program to identify and provide incentives to implement, fund, and evaluate creative health care coordination and sharing initiatives between DOD and VA. To facilitate the program, each Secretary is required to contribute a minimum of $15 million from each department's appropriation into an account established in the U. S. Treasury for each fiscal year from 2004 through 2007. DOD's TRICARE Management Activity and VA's Medical Sharing Office administer the incentive fund program. The offices have jointly issued a request for proposals from DOD and VA medical facilities around the country.

During the first five months of the program DOD and VA have established criteria for evaluating proposals. As of February 25, 2004, the departments are reviewing 57 proposals that have been submitted. DOD and VA program officials have not established a firm date for final selection but anticipate it will take place during the summer of 2004. While the agencies have made progress in implementing the program, they have not made contributions to the fund; they anticipate doing so by March 31, 2004. VA has raised a concern whether services provided to veterans will have to be commensurate with its contributions to the sharing incentive fund. DOD and VA officials are discussing how the fund contributions will be used. DOD and VA officials agreed the information in this report is accurate.