Summary
The $24 billion Military Health System provided health care to over 8 million eligible beneficiaries. Although Congress has provided sizeable increases in funding for health care over the past few years, the Department of Defense (DOD) has needed supplemental appropriations for 6 of the last 8 fiscal years from 1994 to 2001 because its costs were higher than expected. The growing budgetary pressure increases the risk of not achieving the mission of the organization. DOD's military treatment facilities (MTF) represent over half of DOD's health care expenditures. The three MTF's reviewed have not effectively implemented internal control activities in the areas of eligibility, billings and collections, expired drugs, personal property management, and government purchase card usage. The three MTFs also did not identify all patients with third party insurance coverage. In addition, they frequently did not bill those insurers even when they knew that such coverage existed, thereby losing opportunities to collect millions of dollars of reimbursements for services. Ineffective physical and financial controls over personal property assets and indications of control breakdowns in the use of government purchase cards existed at the three facilities.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change
from "In process" to "Implemented" or "Not implemented" based on our follow up work.
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Recommendations for Executive Action
Recommendation: Because having sound financial and management practices affects the ability of program directors and managers to make better decisions and achieve results, the Under Secretary of Defense for Personnel and Readiness and the military services' Surgeons General should, in conjunction with the senior management at the three MTF's, as appropriate, develop a strategy to make short-term and long-term improvements in data quality in the automated eligibility, cost, and clinical health care systems.
Agency Affected: Department of Defense: Office of the Under Secretary for Personnel and Readiness
Status: Implemented
Comments: A strategy has been developed at both the DoD and Military Department levels to make improvements in data quality in the automated systems for eligibility, cost, and clinical healthcare. Among the data system improvements made at the DoD level were 1) the Coding and Compliance Editor, which has successfully completed testing and is in deployment, and 2) the Provider Graphical User Interface (PGUI) for the legacy Composite Health Care System (CHCS). PGUI development is complete and deployment was at the end of 2004.
Recommendation: Because having sound financial and management practices affects the ability of program directors and managers to make better decisions and achieve results, the Under Secretary of Defense for Personnel and Readiness and the military services' Surgeons General should, in conjunction with the senior management at the three MTF's, as appropriate, develop and utilize analytical tools for facilitating the identification of erroneous records in the eligibility, cost, and clinical health care systems such as comparisons between Social Security Administration records and facility automated medical management records.
Agency Affected: Department of Defense: Office of the Under Secretary for Personnel and Readiness
Status: Implemented
Comments: The Department did not concur with this recommendation. Nonetheless, significant improvements have been taken to assist in identifying erroneous records. At the TMA level, procedures have been posted on the Web for over a year that address the process to be utilized in ensuring duplicate records are not kept in Composite Health Care System (CHCS). These guidelines have also been provided to the Military Treatment Facilities (MTFs). Within the Department's TMA's Management Control Program (MCP), an Assessable Unit was developed to compare MTF records to DEERS eligibles. A new Department of Defense Instruction (DoDI) was developed (based upon a DoD IG recommendation) to govern the confiscation of invalid identification cards at MTFs and is in the final stages of coordination before signature. The Navy created an Assessable Unit (AU) in its Management Control Program to monitor records. The Air Force has created an AFI (AFI 41-115) which outlines a two-step eligibility verification process.
Recommendation: Because having sound financial and management practices affects the ability of program directors and managers to make better decisions and achieve results, the Under Secretary of Defense for Personnel and Readiness and the military services' Surgeons General should, in conjunction with the senior management at the three MTF's, as appropriate, reiterate through correspondence with MTF personnel the importance of completing or updating the DOD Form 2569, as required, to document whether each health care beneficiary has third party insurance.
Agency Affected: Department of Defense: Office of the Under Secretary for Personnel and Readiness
Status: Implemented
Comments: DOD has made significant improvements to its education, and billing/collection processes have been instituted. Outpatient Itemized Billing (OIB) was implemented to improve the billing/collection processes. The Uniform Business Office (UBO) process has been reinforced with UBO guidance sent to Services, Hotline established, Newsletter created, and the introduction of an annual conference. Each MTF commander was charged with reviewing his/her program against the demonstration results to identify improvements. The Navy is developing Best Practices to verify and capture patient insurance information. The requirement to identify, document and update health insurance information was reiterated via memorandum to Army Regional Medical Center Commanders. The memo was also disseminated to the Uniform Business Office Managers and staff of Army MTFs. To facilitate and encourage command support of the capture of Other Health Insurance (OHI), MTA has added a question to the MTF monthly Commanders Data Quality Statement requesting the percentages of completed and current DD2569s contained in the medical records.
Recommendation: Because having sound financial and management practices affects the ability of program directors and managers to make better decisions and achieve results, the Under Secretary of Defense for Personnel and Readiness and the military services' Surgeons General should, in conjunction with the senior management at the three MTF's, as appropriate, require MTFs to maintain an itemized list of the names and quantities of drugs to be returned to the pharmaceutical return goods contractor for credit or disposal, and require MTFs to routinely monitor and evaluate, based on the management reports provided by the contractor and the pharmaceutical prime vendor, the credits received from the returns of drugs and net losses of those drugs to use as an indicator in determining whether on hand inventory levels are appropriate.
Agency Affected: Department of Defense: Office of the Under Secretary for Personnel and Readiness
Status: In process
Comments: According to DOD, OIG DoD auditors found during work on their Project No. D2003LF-0109, "DoD Management of Pharmaceutical Inventory and Processing of Returned Pharmaceuticals," that the GAO recommendation would be difficult to implement because preparation of a returned pharmaceutical inventory is a lengthy process and it is difficult to match to the inventory prepared by the pharmaceutical returns company. As an alternative, the OIG DoD will suggest in a future report that the pharmaceutical returns company should be required to prepare an inventory at the time the expired pharmaceuticals are collected and that an MTF representative should be present when the inventory is taken to ensure all expired/returned pharmaceuticals are identified and accounted for. The OASD(HA), Defense Logistics Agency, and Military Departments have agreed to take the alternate actions recommended in OIG DoD Report Number D-2004-087, "DoD Management of Pharmaceutical Inventory and Processing of Returned Pharmaceuticals," June 17, 2004. Also, a GAO representative agreed that the recommended approach in the OIG DoD report was an acceptable alternative.
Recommendation: Because having sound financial and management practices affects the ability of program directors and managers to make better decisions and achieve results, the Under Secretary of Defense for Personnel and Readiness and the military services' Surgeons General should, in conjunction with the senior management at the three MTF's, as appropriate, require property office management to maintain, and have readily available, independent documentation supporting the cost and date of acquisition for all accountable personal property.
Agency Affected: Department of Defense: Office of the Under Secretary for Personnel and Readiness
Status: Implemented
Comments: DOD reported that the Services have business procedures in place to document the acquisition and costs of all accountable personal property. Additionally, the Defense Medical Logistics Standard Support (DMLSS) system Release III provides a property accounting application to improve tracking and record keeping. Deployment continues on schedule at all MTFs. As of January 2004, DMLSS Release III was deployed to 70 of the 110 sites. ECD for all 110 sites is still 2005; and 2006 for the small sites.
Recommendation: Because having sound financial and management practices affects the ability of program directors and managers to make better decisions and achieve results, the Under Secretary of Defense for Personnel and Readiness and the military services' Surgeons General should, in conjunction with the senior management at the three MTF's, as appropriate, require property office management to promptly report the loss of any personal property items detected during their periodic physical inventories, and to adjust the property records accordingly.
Agency Affected: Department of Defense: Office of the Under Secretary for Personnel and Readiness
Status: Implemented
Comments: DOD reported that the Services have business procedures in place to document the acquisition and costs of all accountable personal property. Additionally, the Defense Medical Logistics Standard Support (DMLSS) system Release III provides a property accounting application to improve tracking and record keeping. Deployment continues on schedule at all MTFs. As of January 2004, DMLSS Release III was deployed to 70 of the 110 sites. ECD for all 110 sites is still 2005; and 2006 for the small sites.
Recommendation: Because having sound financial and management practices affects the ability of program directors and managers to make better decisions and achieve results, the Under Secretary of Defense for Personnel and Readiness and the military services' Surgeons General should, in conjunction with the senior management at the three MTF's, as appropriate, review and modify the existing processes and requirements to improve documentation of purchase card transaction approvals, independent receipt of the items, and invoices to better verify costs and quantities.
Agency Affected: Department of Defense: Office of the Under Secretary for Personnel and Readiness
Status: In process
Comments: The Deputy Secretary of Defense and Department of Defense Inspector General have both issued memorandums to the Military Departments outlining responsibilities and oversight of the DoD Purchase Card program. Additionally, TMA issued a memorandum to the TMA Directors reinforcing the purchase card policy. Additionally, the DMLSS Release III currently being deployed contains positive control procedures for purchase card activities. The Services are also instituting oversight. Based upon GAO's findings, the Army has implemented corrective actions at Eisenhowever Army Medical Center. The Navy purchase card audit procedures are being reviewed by MED-IG review team and increased management attention is being focused on oversight of purchase card usage. The Air Force has implemented corrective actions at Wilford Hall Medical Center and is sponsoring educational opportunities at Air Force-level conferences to help educate staff on purchase care responsibilities. Lastly, the senior Air Force medical leadership is being focused on the purchase card program. Program Management Reviews will be performed at each Regional Contracting Office and the ongoing 100% surveillance of the Billing Official accounts will provide reasonable assurance that existing processes and requirements are in place to detect fraud, waste and abuse. Army MEDCOM policies and procedures have not changed enough to warrant revision of MEDCOM SOPs; however, MEDCOM is implementing a wide range of program improvements. These include (1) a Program Management Review (PMR) of each Regional Contracting Office, and (2) a review of all Billing Officials' accounts. Navy's BUMED has taken several actions including: (1) the issuance of general guidance in October 2003 for the GPC program; (2) having the Procurement Management Review Team of FISC, Norfolk conduct an independent annual review to ensure that all BUMED activities follow the guidance and adopt sound GPC practice and (3) making the GPC program a mandatory assessable unit under the BUMED Management Control Program for 2004. Air Force - The AF has developed GPC program training for all Base Contracting Offices. Additionally, GPC awareness training has been developed and is now presented at Medical Logistics training workshops. Army Medical Command actions include a fully implemented (1) Program Management Review (PMR) of each Regional Contracting Office, and (2) 100% review of all Billing Officials Accounts. At the MILDEP level, the Army GPC regulation is in draft form. ECD for final issuance of the regulation is September 2005. Navy and Air Force actions are completed. 2005: Army Gov't Purchase Card Reg is under review to incorporate comments from the field. Review process ECD is 12/05. Once completed, a provisional working document will be released to the field.
Recommendation: Because having sound financial and management practices affects the ability of program directors and managers to make better decisions and achieve results, the Under Secretary of Defense for Personnel and Readiness and the military services' Surgeons General should, in conjunction with the senior management at the three MTF's, as appropriate, reiterate through correspondence with MTF personnel the importance of entering patient insurance coverage information into the automated medical information system so that more complete and accurate reports can be generated to better identify reimbursable care for billing.
Agency Affected: Department of Defense: Office of the Under Secretary for Personnel and Readiness
Status: Implemented
Comments: DOD made significant improvements to its education and billing/collection processes. Outpatient Itemized Billing (OIB) was implemented to improve the billing/collection processes. The Uniform Business Office (UBO) process has been reinforced with UBO guidance sent to Services, Hotline established, Newsletter created, and the introduction of an annual conference. Further enhancements include: Army - 1) implemented a Standardized Insurance Table in CHCS (October 2002); 2) disseminates a Best Practices primer each quarter to each MTF UBO; 3) the AMEDD recently enhanced its billing workforce by 90 FTEs to improve billing performance; 4) the AMEDD conducted a Business Process Reengineering Demonstration to identify the most efficient method of collecting third party insurance. This effort yielded lessons learned and an objective measure of process redesign benefits. Each MTF commander was charged with reviewing his/her program against the demonstration results to identify improvements; 5) the AMEDD entered into a contract with a vendor to collect accounts outstanding greater than 90 days. This frees the in-house staff to focus attention on accounts 1-90 days old; 6) the AMEDD is automating pharmacy billing. This was not the case during the GAO evaluation. The accuracy of billing and identification of patients with OHI is dramatically improving: Air Force - 1) developing procedure manuals for each step of the revenue cycle; 2) AFIs being updated; and 3) re-engineering being considered. Navy is developing Best Practices to verify and capture patient insurance information. The requirement to identify, document and update health insurance information was reiterated via memorandum to Army Regional Medical Center Commanders. The memo was also disseminated to the Uniform Business Office Managers and staff of Army MTFs. To facilitate and encourage command support of the capture of Other Health Insurance (OHI), MTA has added a question to the MTF monthly Commanders Data Quality Statement requesting the percentages of completed and current DD2569s contained in the medical records. MILDEPTS have been requested to add GAO Reports on the Third Party Collection to MTF Annual Statements of Assurance and to include GAO Third Party Collections issues in their IG and audit service evaluations of MTFs.
Recommendation: Because having sound financial and management practices affects the ability of program directors and managers to make better decisions and achieve results, the Under Secretary of Defense for Personnel and Readiness and the military services' Surgeons General should, in conjunction with the senior management at the three MTF's, as appropriate, reiterate through correspondence with MTF personnel the importance of billing third party insurance carriers promptly for admissions, outpatient visits, and pharmacy care, including items identified in our testing as well as other care not billed.
Agency Affected: Department of Defense: Office of the Under Secretary for Personnel and Readiness
Status: Implemented
Comments: DOD made significant improvements to its education and billing/collection processes. Outpatient Itemized Billing (OIB) was implemented to improve the billing/collection processes. The Uniform Business Office (UBO) process has been reinforced with UBO guidance sent to Services, Hotline established, Newsletter created, and the introduction of an annual conference. Further enhancements include: Army - 1) implemented a Standardized Insurance Table in CHCS (October 2002); 2) disseminates a Best Practices primer each quarter to each MTF UBO; 3) the AMEDD recently enhanced its billing workforce by 90 FTEs to improve billing performance; 4) the AMEDD conducted a Business Process Reengineering Demonstration to identify the most efficient method of collecting third party insurance. This effort yielded lessons learned and an objective measure of process redesign benefits. Each MTF commander was charged with reviewing his/her program against the demonstration results to identify improvements; 5) the AMEDD entered into a contract with a vendor to collect accounts outstanding greater than 90 days. This frees the in-house staff to focus attention on accounts 1-90 days old; 6) the AMEDD is automating pharmacy billing. This was not the case during the GAO evaluation. The accuracy of billing and identification of patients with OHI is dramatically improving: Air Force - 1) developing procedure manuals for each step of the revenue cycle; 2) AFIs being updated; and 3) re-engineering being considered. Navy is developing Best Practices to verify and capture patient insurance information. The requirement to identify, document and update health insurance information was reiterated via memorandum to Army Regional Medical Center Commanders. The memo was also disseminated to the Uniform Business Office Managers and staff of Army MTFs. To facilitate and encourage command support of the capture of Other Health Insurance (OHI), MTA has added a question to the MTF monthly Commanders Data Quality Statement requesting the percentages of completed and current DD2569s contained in the medical records. MILDEPTS have been requested to add GAO Reports on the Third Party Collection to MTF Annual Statements of Assurance and to include GAO Third Party Collections issues in their IG and audit service evaluations of MTFs.
Recommendation: Because having sound financial and management practices affects the ability of program directors and managers to make better decisions and achieve results, the Under Secretary of Defense for Personnel and Readiness and the military services' Surgeons General should, in conjunction with the senior management at the three MTF's, as appropriate, reiterate through correspondence with MTF personnel the importance of collecting third party reimbursements due to the government to the fullest extent allowed as required by DOD policy.
Agency Affected: Department of Defense: Office of the Under Secretary for Personnel and Readiness
Status: Implemented
Comments: DOD made significant improvements to its education and billing/collection processes. Outpatient Itemized Billing (OIB) was implemented to improve the billing/collection processes. The Uniform Business Office (UBO) process has been reinforced with UBO guidance sent to Services, Hotline established, Newsletter created, and the introduction of an annual conference. Further enhancements include: Army - 1) implemented a Standardized Insurance Table in CHCS (October 2002); 2) disseminates a Best Practices primer each quarter to each MTF UBO; 3) the AMEDD recently enhanced its billing workforce by 90 FTEs to improve billing performance; 4) the AMEDD conducted a Business Process Reengineering Demonstration to identify the most efficient method of collecting third party insurance. This effort yielded lessons learned and an objective measure of process redesign benefits. Each MTF commander was charged with reviewing his/her program against the demonstration results to identify improvements; 5) the AMEDD entered into a contract with a vendor to collect accounts outstanding greater than 90 days. This frees the in-house staff to focus attention on accounts 1-90 days old; 6) the AMEDD is automating pharmacy billing. This was not the case during the GAO evaluation. The accuracy of billing and identification of patient with OHI is dramatically improving: Air Force - 1) developing procedure manuals for each step of the revenue cycle; 2) AFIs being updated; and 3) re-engineering being considered. Navy is developing Best Practices to verify and capture patient insurance information. The requirement to identify, document and update health insurance information was reiterated via memorandum to Army Regional Medical Center Commanders. The memo was also disseminated to the Uniform Business Office Managers and staff of Army MTFs. To facilitate and encourage command support of the capture of Other Health Insurance (OHI), MTA has added a question to the MTF monthly Commanders Data Quality Statement requesting the percentages of completed and current DD2569s contained in the medical records. MILDEPTS have been requested to add GAO Reports on the Third Party Collection to MTF Annual Statements of Assurance and to include GAO Third Party Collections issues in their IG and audit service evaluations of MTFs.
