GAO Report #GAO-03-928

United States General Accounting Office

GAO

Report to Congressional Committees

July 2003

DEFENSE HEALTH
CARE
Oversight of the
TRICARE Civilian
Provider Network
Should Be Improved

GAO-03-928

July 2003

DEFENSE HEALTH CARE

Highlights of GAO-03-928, a report to
congressional committees

Testifying before Congress in 2002,
military beneficiary groups
described problems accessing care
from TRICARE’s civilian medical
providers. Providers also testified
on their dissatisfaction with the
TRICARE program, specifying low
reimbursement rates and
administrative burdens.
The Bob Stump National Defense
Authorization Act of 2003 required
GAO to review the oversight of the
TRICARE network of civilian
providers. Specifically, GAO
describes how the Department of
Defense (DOD) oversees the
adequacy of the civilian provider
network, evaluates DOD’s
oversight of the civilian provider
network, and describes the factors
that have been reported to
contribute to network inadequacy.
GAO analyzed TRICARE Prime—
the managed care component of
TRICARE. To describe and
evaluate DOD’s oversight, GAO
reviewed and analyzed information
from reports on network adequacy
and interviewed DOD and
contractor officials in 5 of 11
TRICARE regions.

GAO recommends that DOD
improve its oversight of the civilian
provider network by ensuring
sufficient information is reported
and by exploring options for
evaluating beneficiary complaints
and improving provider survey
data. DOD concurred with the
recommendations.
www.gao.gov/cgi-bin/getrpt?GAO-03-928.
To view the full product, including the scope
and methodology, click on the link above.
For more information, contact Marjorie Kanof
at (202) 512-7101.

Oversight of the TRICARE Civilian
Provider Network Should Be Improved

For the 8.7 million TRICARE beneficiaries, DOD relies on the civilian
provider network to supplement health care delivered by its military
treatment facilities. To ensure the adequacy of the civilian provider
network, DOD has standards for the number and mix of providers, both
primary care and specialists, necessary to satisfy TRICARE Prime
beneficiaries’ needs. In addition, DOD has standards for appointment wait,
office wait, and travel times to ensure that TRICARE Prime beneficiaries
have timely access to care. DOD has delegated oversight of the civilian
provider network to the local level through regional TRICARE lead agents.
DOD’s ability to effectively oversee the TRICARE civilian provider network
is hindered in several ways. First, the measurement used to determine if
there is a sufficient number and mix of providers in a geographic area does
not always account for the total number of beneficiaries who may seek care
or the availability of providers. This may result in an underestimation of the
number of providers needed in an area. Second, incomplete contractor
reporting on access to care makes it difficult for DOD to assess compliance
with these standards. Finally, DOD does not systematically collect and
analyze beneficiary complaints, which might assist in identifying
inadequacies in the civilian provider network. However, DOD has tools,
such as surveys of network providers and automated reporting systems
which, while not designed specifically for monitoring the civilian provider
network, could, if modified, improve DOD’s ability to oversee the network.
DOD and its contractors have reported that a lack of providers in certain
geographic locations, low reimbursement rates, and administrative
requirements contribute to potential civilian provider network inadequacy.
DOD and contractors have reported long-standing provider shortages in
some geographic areas. In areas where DOD determines that access to care
is severely impaired, DOD has the authority to increase reimbursement
rates. Since 2002, DOD has used its reimbursement authority to increase
rates in Alaska and Idaho in an attempt to entice more providers to join the
network. DOD officials told us that the contractors have achieved some
success in recruiting additional providers by using this authority.
Additionally, civilian providers have expressed concerns that TRICARE’s
reimbursement rates are generally too low and administrative requirements
too cumbersome. However, while reimbursement rates and administrative
requirements may have created provider dissatisfaction, it is not clear how
much this has affected civilian provider network adequacy except in limited
geographic locations, because the information contractors provide to DOD is
not sufficient to measure network adequacy.

Contents

Letter

1
Results in Brief
Background
DOD Has Standards for Network Adequacy and Requires
Contractors’ Compliance
DOD’s Oversight of the Civilian Provider Network Has
Weaknesses, But Additional Tools May Help
DOD and Contractors Report Three Factors That May Contribute
to Civilian Provider Network Inadequacy
New Contracts May Address Some Network Concerns, But May
Create Others
Conclusions
Recommendations for Executive Action
Agency Comments and Our Evaluation

3
4
8
10
14
17
18
19
19

Appendix I

Scope and Methodology

21

Appendix II

Comparison of Current and Future TRICARE
Regions

23

Appendix III

Comments from the Department of Defense

25

Appendix IV

GAO Contacts and Staff Acknowledgments

29

GAO Contacts
Acknowledgments

29
29

Figure 1: Areas of the United States with a TRICARE Network of
Civilian Providers
Figure 2: Current TRICARE Regions
Figure 3: Future TRICARE Regions After TNEX Implementation

7
23
24

Figures

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GAO-03-928 TRICARE Civilian Provider Network

Abbreviations
ATC
DOD
EWRAS
HCSDB
JCAHO
MOAA
MTF
NCQA
PCM
TMA

Access To Care Project
Department of Defense
Enterprise Wide Referral and Authorization System
Health Care Survey of DOD Beneficiaries
Joint Commission on Accreditation of Healthcare
Organizations
Military Officers Association of America
military treatment facility
National Committee for Quality Assurance
primary care manager
TRICARE Management Activity

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GAO-03-928 TRICARE Civilian Provider Network

United States General Accounting Office
Washington, DC 20548

July 31, 2003
The Honorable John Warner
Chairman
The Honorable Carl Levin
Ranking Minority Member
Committee on Armed Services
United States Senate
The Honorable Duncan L. Hunter
Chairman
The Honorable Ike Skelton
Ranking Minority Member
Committee on Armed Services
House of Representatives
The primary mission of TRICARE, the Department of Defense’s (DOD)
health care system, is to provide care for eligible active duty personnel,
retirees, and dependents. These beneficiaries, currently numbering more
than 8.7 million, can receive their care through military hospitals and
clinics called military treatment facilities (MTFs) or through TRICARE’s
civilian provider network. The civilian provider network is developed by
managed care support contractors and is designed to complement the
availability of care offered by MTFs.1
DOD faces new challenges in ensuring that the TRICARE civilian provider
network can provide adequate access to care that complements the
capabilities of MTFs. In 2003, DOD intends to award new contracts for the
delivery of care in the civilian provider network because the current
contracts will expire. As a result, the providers who choose to participate
in the network may change, while those who remain will operate under
new policies and procedures. During this transition, DOD is still
responsible for ensuring that the civilian provider network provides
adequate access to care, even if beneficiaries must change providers.

1

MTFs supply most of the health care services TRICARE beneficiaries receive. The military
health system was funded at about $26.4 billion for fiscal year 2003. Approximately 20
percent of this amount, $5.2 billion, was budgeted for the TRICARE civilian provider
network.

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TRICARE also faces beneficiary and provider dissatisfaction with the
existing civilian provider network. During April 2002 testimony before the
Subcommittee on Personnel of the House Armed Services Committee,
beneficiary groups described problems with access to care from
TRICARE’s civilian providers. Also, providers testified about their
dissatisfaction with the TRICARE program, specifying low reimbursement
rates and administrative burdens.
In response to these concerns, the Bob Stump National Defense
Authorization Act of 2003 required that we review DOD’s oversight of the
adequacy of the TRICARE civilian provider network.2 As agreed with the
committees of jurisdiction we focused on DOD’s oversight and did not
assess the adequacy of the network. Also, we analyzed TRICARE Prime,
the managed care component of the TRICARE health delivery system.
Specifically, we agreed to (1) describe how DOD oversees the adequacy of
the civilian provider network, (2) evaluate DOD’s oversight of the
adequacy of the civilian provider network, (3) describe the factors that
have been reported to contribute to network inadequacy, and (4) describe
how the new contracts might affect network adequacy. We testified before
the Subcommittee on Total Force of the House Committee on Armed
Services on March 27, 2003, about our findings at that time.3
To describe and evaluate DOD’s oversight of the TRICARE civilian
provider network, we reviewed and analyzed information from five
network adequacy reports submitted between June and October of 2002.
We reviewed at least one report from each of the contractors who develop
and maintain the network of providers to augment the care provided by
MTFs. We also interviewed DOD regional officials, known as lead agents,
and MTF officials from 5 of 11 TRICARE regions. In addition, we
interviewed officials from each of the four contractors. As part of our
assessment of DOD’s oversight, we reviewed surveys of beneficiaries and
providers, as well as DOD data collection initiatives that could be used by
DOD to oversee its civilian provider network. We did not validate the data
in the surveys or collection initiatives. We also interviewed officials at
TRICARE Management Activity (TMA) in Falls Church, Va., the office with
responsibility for ensuring that DOD health policy is implemented, and

2

Pub. L. No. 107-314, § 712, 116 Stat. 2458, 2588 (2002). See also, H.R. Rep. No. 107-436.

3

U.S. General Accounting Office, Defense Health Care: Oversight of the Adequacy of
TRICARE’s Civilian Provider Network Has Weaknesses, GAO-03-592T (Washington, D.C.:
Mar. 27, 2003).

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officials at TMA-West, the office that carries out contracting functions,
including monitoring the civilian contracts and writing the requests for
proposals for the future contracts. To describe factors that may contribute
to network inadequacy, we interviewed DOD, contractor, and professional
health association officials. In addition, we met with groups representing
TRICARE beneficiaries to discuss their concerns. Finally, we reviewed
DOD’s request for proposals for the new health care contracts and
interviewed DOD and contractor officials to determine how the new
contracts might affect network adequacy. Appendix I contains more
details about our scope and methodology. We conducted our work from
June 2002 through July 2003 in accordance with generally accepted
government auditing standards.

Results in Brief

To oversee the adequacy of the civilian provider network, DOD has
standards that are designed to ensure that the network has a sufficient
number and mix of providers, both primary care and specialists, to satisfy
TRICARE Prime beneficiaries’ needs. In addition, DOD has standards for
appointment wait, office wait, and travel times that are designed to ensure
that TRICARE Prime beneficiaries have adequate access to care. DOD has
delegated oversight of the civilian provider network to lead agents, who
are responsible for ensuring that these standards have been met.
DOD’s ability to effectively oversee the TRICARE civilian provider
network is hindered in several ways. First, the measurement used to
determine if there is a sufficient number of providers for the beneficiaries
in an area does not always account for the actual number of beneficiaries
who may seek care or the availability of providers. In some cases, this may
result in an underestimation of the number of providers needed in an area.
Second, incomplete contractor reporting on access to care makes it
difficult for DOD to assess compliance with these standards. Finally, DOD
does not systematically collect and analyze beneficiary complaints, which
might assist in identifying inadequacies in the TRICARE civilian provider
network. However, DOD has surveys of TRICARE beneficiaries and
network providers and automated reporting systems on appointments and
referrals that, while not designed specifically for monitoring the civilian
provider network, could provide information and potentially improve
DOD’s ability to oversee the civilian provider network.
DOD and its contractors have reported three factors that may contribute
to potential civilian provider network inadequacy: lack of providers in
certain geographic locations, low reimbursement rates, and administrative
requirements. DOD and contractors have reported long-standing provider

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shortages in some geographic areas because providers in certain areas
may refuse to join any network. In areas where DOD determines that
access to care is severely impaired, DOD has the authority to increase
reimbursement rates. Since 2002, DOD has used this authority to increase
reimbursement rates in Alaska and Idaho in an attempt to remedy such
provider shortages. DOD told us that the contractors have achieved some
success in recruiting additional providers by using this authority.
Additionally, civilian providers have expressed concerns about TRICARE’s
reimbursement rates being too low and administrative requirements being
too cumbersome. However, while reimbursement rates and administrative
requirements may have created dissatisfaction among providers, it is not
clear that these factors have resulted in insufficient numbers of providers
in the civilian network because the information contractors provide to
DOD is not sufficient to measure network adequacy.
The new contracts, which DOD expects to award during the summer of
2003, may result in improved civilian provider network participation by
addressing some network providers’ concerns about administrative
requirements. For example, the new contracts may simplify requirements
for provider credentialing and referrals, two administrative procedures
providers have complained about. However, according to contractors, the
new contracts may also create requirements that could discourage
provider participation, such as the new requirement that all network
claims submitted by civilian providers be filed electronically. Currently,
only about 25 percent of such claims are submitted electronically.
We are recommending that the Secretary of Defense direct the Assistant
Secretary of Defense for Health Affairs to improve DOD’s oversight of the
civilian provider network by ensuring sufficient information is reported to
assess network adequacy and by exploring options for evaluating
beneficiary complaints and improving provider survey data. In
commenting on a draft of this report, DOD concurred with the report’s
recommendations.

TRICARE has three options for its eligible beneficiaries:

Background
•
•
•

TRICARE Prime, a program in which beneficiaries enroll and receive care
in a managed network similar to a health maintenance organization;
TRICARE Extra, a program in which beneficiaries receive care from a
network of preferred providers; and
TRICARE Standard, a fee-for-service program that requires no network
use.

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The programs vary according to the amount beneficiaries must contribute
toward the cost of their care and according to the choices beneficiaries
have in selecting providers. In TRICARE Prime,4 the program in which
active duty personnel generally must participate, the beneficiaries must
select a primary care manager (PCM)5 who either provides care or
authorizes referrals to specialists. Most beneficiaries who enroll in
TRICARE Prime select their PCMs from MTFs, while other enrollees select
their PCMs from the civilian provider network. Regardless of their
status—military or civilian—PCMs may refer Prime beneficiaries to
providers in either MTFs or TRICARE’s civilian provider network.6
Both TRICARE Extra and TRICARE Standard require copayments, but
beneficiaries do not enroll with or have their care managed by PCMs.
Beneficiaries choosing TRICARE Extra use the same civilian provider
network available to those in TRICARE Prime, and beneficiaries choosing
TRICARE Standard are not required to use providers in any network.
TRICARE Extra and Standard beneficiaries may receive care at an MTF
when space is available.
The Office of the Assistant Secretary of Defense for Health Affairs (Health
Affairs) establishes TRICARE policy and has overall responsibility for the
program. TMA, under Health Affairs, is responsible for awarding and
monitoring the TRICARE contracts. DOD has delegated oversight of the
civilian provider network to regional TRICARE lead agents. The lead agent
for each region coordinates the services provided by MTFs and civilian
network providers. The lead agents respond to direction from Health
Affairs, but report directly to their respective Surgeons General. In
overseeing the network, lead agents have staff assigned to MTFs to
provide the local interaction with contractor representatives and respond
to beneficiary complaints as needed and report back to the lead agent.

4

Out of more than 8.7 million eligible beneficiaries, nearly half are enrolled in TRICARE
Prime.
5

A primary care manager is a provider or team of providers at an MTF or a provider in the
civilian network to whom a beneficiary is assigned for primary care services when he or
she enrolls in TRICARE Prime. Enrolled beneficiaries agree to initially seek all
nonemergency, nonmental health care services from these providers.
6

DOD’s policy is to optimize the use of the MTF. Accordingly, when a referral for specialty
care is made by a civilian PCM, the MTF retains the “right of first refusal” to accommodate
the beneficiary within the MTF or refer the beneficiary to the civilian provider network for
the needed medical care.

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Currently, DOD employs four civilian health care companies or
contractors that are responsible for developing and maintaining the
civilian provider network that complements the care delivered by MTFs.
The contractors recruit civilian providers into a network of PCMs and
specialists who provide care to beneficiaries enrolled in TRICARE Prime.
Contractors are required to establish and maintain the network of civilian
providers in the following locations: all catchment areas,7 base
realignment and closure sites,8 other contract-specified areas, and
noncatchment areas where a contractor deems it cost effective. These
locations are called prime service areas. In the remaining areas, a network
is not required. (See fig. 1.)

7

Catchment areas are geographic areas determined by the Assistant Secretary of Defense
for Health Affairs that are defined by five-digit zip codes, usually within an approximate 40mile radius of MTFs with inpatient care.

8

Base realignment and closure sites are military installations that have been closed or
realigned as the result of decisions made by the Commissions on Base Realignment and
Closure.

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Figure 1: Areas of the United States with a TRICARE Network of Civilian Providers

Source: DOD.

Note: Shaded areas represent zip codes in which there was a TRICARE network of civilian providers
as of May 2003.

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GAO-03-928 TRICARE Civilian Provider Network

This network of civilian providers also serves as the network of preferred
providers for beneficiaries who use TRICARE Extra. In 2002, contractors
reported that the civilian provider network included about 37,000 PCMs
and 134,000 specialists.
The contractors are also responsible for ensuring adequate access to
health care, referring and authorizing beneficiaries for health care,
educating providers and beneficiaries about TRICARE benefits, ensuring
that providers are credentialed, and processing claims. In their network
agreements with civilian providers, contractors establish reimbursement
rates and certain requirements for submitting claims. Reimbursement
rates cannot be greater than Medicare rates unless DOD authorizes a
higher rate.
DOD’s four contractors manage the delivery of care to beneficiaries in 11
TRICARE regions. DOD is currently analyzing proposals to award new
civilian health care contracts, and when they are awarded in 2003, DOD
will reorganize the 11 regions into 3—North, South, and West—with a
single contract for each region. Contractors will be responsible for
developing a new civilian provider network that will become operational
in April 2004. Under these new contracts DOD will continue to emphasize
maximizing the role of MTFs in providing care. See appendix II for maps
depicting the current and future regions.

DOD Has Standards
for Network
Adequacy and
Requires Contractors’
Compliance

DOD has standards intended to ensure that its civilian provider network
enhances and supports the capabilities of the MTFs in providing care to
millions of TRICARE Prime beneficiaries. DOD requires that contractors
have a sufficient number and mix of providers, both primary care and
specialists, to satisfy the needs of beneficiaries enrolled in the Prime
option. Specifically, it is the responsibility of the contractors to ensure that
each prime service area in the network has at least one full-time equivalent
PCM for every 2,000 TRICARE Prime enrollees and one full-time
equivalent provider (both PCMs and specialists) for every 1,200 TRICARE
Prime enrollees.9

9

In addition, all four contractors generally follow the Graduate Medical Education National
Advisory Committee recommendation for determining the specialty mix requirements for
their network.

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In addition, DOD has access-to-care standards that are designed to ensure
that Prime beneficiaries receive timely care from providers.10 Under these
standards
•
•
•

appointment wait times shall not exceed 24 hours for urgent care, 1 week
for routine care, or 4 weeks for well-patient and specialty care;
office wait times shall not exceed 30 minutes for nonemergency care; and
travel times shall not exceed 30 minutes for routine care and 1 hour for
specialty care.11
Lead agents are responsible for ensuring that the civilian provider network
meets these standards so that all TRICARE Prime beneficiaries in their
region have adequate access to health care. To do so, lead agents told us
they use network adequacy reports that contractors provide each quarter
as the primary tool to oversee the network. According to DOD’s operations
manual, these reports are to contain information on the status of the
network, such as the number and type of specialists; data on adherence to
the access standards; a list of civilian and military primary care managers;
and the number of their enrollees. The reports may also contain
information on steps contractors have taken to address any network
inadequacies.
However, because the reporting requirements do not specify a standard
process for collecting information on network adequacy, contractors vary
in how they obtain this information. For example, lead agents told us that
one contractor conducts visits of providers’ offices to review appointment
wait times, while another contractor uses an automated appointment
tracking system to collect this information.
Lead agents told us they also rely on beneficiary complaints to oversee the
adequacy of the civilian provider network. Beneficiaries may complain
directly to DOD, the contractor, lead agent, or MTF. DOD officials said
that when they receive a beneficiary complaint, they direct the complaint
to either the contractor, lead agent, or MTF, depending on the subject of
the complaint.

10

DOD does not specify access standards for eligible beneficiaries who do not enroll in
TRICARE Prime. However, DOD requires that contractors provide information and/or
assist all beneficiaries—regardless of which option they choose—in finding a participating
provider in their area.

11

32 C.F.R. § 199.17(p)(5)(i), (ii), (iv) and (v) (2002).

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In addition to these tools, lead agents periodically monitor contractor
compliance by reviewing performance related to specific contract
requirements, including requirements related to network adequacy. Lead
agents also told us they periodically schedule reviews of special issues
related to network adequacy, such as conducting telephone surveys of
providers to determine whether they are accepting TRICARE Prime
patients. In addition, lead agents stated they meet regularly with MTF and
contractor representatives to discuss network adequacy.
If lead agents determine that the network is inadequate, the lead agents or
TMA may issue enforcement actions to encourage contractors to address
deficiencies in their region. However, lead agents told us that few
enforcement actions have been issued. During our review, three
enforcement actions related to network adequacy were open for the five
regions we visited.12 Lead agents said they prefer to address deficiencies
informally rather than take formal actions, particularly in areas where they
do not believe the contractor can correct the deficiency because of local
market conditions. For example, rather than taking a formal enforcement
action, one lead agent worked with the contractor to arrange for a
specialist from one area to travel to another area periodically.

DOD’s Oversight of
the Civilian Provider
Network Has
Weaknesses, But
Additional Tools May
Help

DOD’s ability to effectively oversee the TRICARE civilian provider
network is hindered by (1) flaws in its required provider-to-beneficiary
ratios, (2) incomplete reporting on beneficiaries’ access to providers, and
(3) the absence of a systematic assessment of complaints. Although DOD
has required the network to meet established ratios of providers to
beneficiaries, the ratios may underestimate the number of providers
needed in an area. Similarly, although DOD has certain requirements
governing Prime beneficiary access to available providers, the information
reported to DOD on this access is often incomplete—making it difficult to
assess compliance with the requirements. Finally, when beneficiaries
complain about availability or access in the network, these complaints can
be directed to different DOD entities, with no guarantee that the
complaints will be compiled and analyzed in the aggregate to identify
possible trends or patterns and correct network problems. However, DOD
has existing surveys and automated reporting systems that, while not

12

All three enforcement actions were for lack of available providers in certain geographical
areas. For example, there were shortfalls of orthopedic surgeons and neurosurgeons in
Spokane, Washington.

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designed specifically for monitoring the civilian provider network, could
provide valuable information and potentially improve DOD’s ability to
oversee the civilian provider network.

Provider-to-Beneficiary
Ratios May Not Account
for Actual Number of
Beneficiaries or
Availability of Providers

The provider-to-beneficiary ratios contractors report to DOD for a prime
service area do not always accurately reflect the potential health care
workload for that area or the provider capability to deliver the care. In
some cases, the provider-to-beneficiary ratios underestimate the number
of providers, particularly specialists, needed in an area. This
underestimation occurs because in calculating the ratios, some
contractors do not include the total number of Prime enrollees within the
area. Instead, in some areas contractors base their ratio calculations on
the total number of beneficiaries enrolled with civilian PCMs and do not
count beneficiaries enrolled with PCMs in MTFs. The ratio is most likely to
result in an underestimation of the need for providers in areas in which the
MTF is a clinic or small hospital with a limited availability of specialists.
For example, the Air Force clinic at Grand Forks, N. Dak. has few
specialists on staff and must rely on the civilian provider network for a
large proportion of specialist care. In fiscal year 2002, 90 percent of its
specialist appointments were referred to the network. In contrast, a large
MTF, such as Wright Patterson Medical Center in Dayton, Ohio, has many
specialist providers on staff and referred only 2 percent of its specialty
appointments to the civilian provider network during fiscal year 2002.
Incorporating MTF provider capability and the total number of Prime
enrollees into the network assessment would give DOD a more complete
and accurate assessment of the adequacy of the network for a
geographical area.
Moreover, in reporting whether the network meets the established ratios,
contractors do not make the same assumptions about the level of
participation on the part of civilian network providers. Contractors
generally assume that between 10 to 20 percent of their providers’
practices are dedicated to TRICARE Prime beneficiaries. Therefore, if a
contractor assumes 20 percent of all providers’ practices are dedicated to
TRICARE Prime rather than 10 percent, the contractor will need half as
many providers in the network in order to meet the prescribed ratio
standard. These assumptions may or may not be accurate, and the
assumptions have a significant effect on the number of providers required
in the network.

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Information Reported on
Access Standards Was
Incomplete

In the network adequacy reports we reviewed, the contractors did not
always report all the information required by DOD to assess compliance
with the access standards. Specifically, for the network adequacy reports
we reviewed from 5 of the 11 TRICARE regions, we found that contractors
reported less than half of the required information on access standards for
appointment wait, office wait, and travel times. Some contractors reported
more information than others, but none reported all the required access
information. Contractors said they had difficulties in capturing and
reporting information to demonstrate compliance with the access
standards. They stated that it was not practical or feasible to document
every appointment and office wait time because some beneficiaries make
their own appointments directly and provider offices are spread
throughout the geographic area.

Beneficiary Complaints
Are Not Systematically
Collected and Evaluated

Most of the DOD lead agents we interviewed told us that because
information on access standards is not fully reported, they monitor
compliance with the access standards by reviewing beneficiary
complaints. Lead agents and contractors said such complaints may include
a beneficiary’s inability to get an appointment, having to drive long
distances for care, or a provider not accepting new TRICARE Prime
patients. Because beneficiary complaints are received through numerous
venues, often handled informally on a case-by-case basis, and not centrally
evaluated, it is difficult for DOD to assess the extent of any systemic
access problems. Separately, TMA has a database of complaints that
includes some complaints about access to care. TMA has received these
complaints either directly, through DOD’s beneficiary survey, or from
letters sent by beneficiaries to their congressional representatives.
However, the usefulness of the database is limited because it does not
capture complaints sent to MTFs, lead agents, or contractors.
While contractor and lead agent officials told us they have received few
complaints about network access problems, this small number of
complaints could indicate either an overall satisfaction with care or a
general lack of knowledge about how or to whom to complain.
Additionally, a small number of complaints, particularly when spread
among many sources, limits DOD’s ability to identify any specific trends of
systemic problems related to network adequacy within TRICARE.
The next generation of contracts, called TNEX, may result in a more
structured approach to collecting complaint information when
implemented in 2004. Under TNEX, the civilian provider network must be
accredited in each region by a nationally recognized accrediting

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organization, such as the National Committee for Quality Assurance
(NCQA) or the Joint Commission on Accreditation of Healthcare
Organizations (JCAHO). These organizations typically require procedures
for addressing beneficiary complaints. For example, NCQA guidance
requires procedures for registering, responding to, and investigating
complaints. It also requires documentation of actions taken to address
complaints. JCAHO guidance has similar requirements. Such procedures
could provide DOD with a basic structure that in turn could lead to a more
systematic means of collecting and evaluating complaint data at the prime
service area and regional levels.

Potential Network
Oversight Tools

DOD has some tools that, while not designed specifically for monitoring
the civilian provider network, could be useful for oversight. For example,
the Health Care Survey of DOD Beneficiaries (HCSDB) could be used as a
source of information for overseeing civilian provider network adequacy
at the national level.13 This quarterly survey contains specific questions on
all beneficiaries’ experiences related to access to care.14 For example, our
analysis of the 2000 HCSDB data for all Prime beneficiaries receiving care
from civilian providers indicates that over one-third of these beneficiaries
waited more than DOD’s standard of 1 day for access to a provider for an
illness or an injury. However, the survey’s sample design does not
generally allow for assessing the adequacy of the civilian provider network
in most prime service areas and the survey’s response rate of 35 percent
further limits its usefulness.15
In addition to DOD’s beneficiary survey, contractors conduct surveys of
providers that could assist in DOD’s oversight of the civilian provider
network. These surveys are intended to assess providers’ satisfaction with
contractors’ performance and other TRICARE requirements. However,

13

This survey was required by the National Defense Authorization Act for Fiscal Year 1993,
Pub. L. No. 102-484, § 724, 106 Stat. 2315, 2440 (1992).

14

These questions ask how many days a beneficiary had to wait to see a provider for regular
or routine care and how long they had to wait to receive treatment for an injury or illness,
among other things. Also, DOD recently added questions to the survey specifically aimed at
beneficiaries receiving care from civilian providers. These questions ask how difficult it
was to obtain care and locate a doctor, and whether a civilian provider had left the
network.

15

Even though DOD samples 180,000 beneficiaries annually, the 35 percent response rate
reduces the sample to about 63,000. As a result the survey estimates may be biased if those
who responded to the survey are not representative of the entire surveyed population.

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these surveys have very low response rates, ranging from 4 to 19 percent,
and in some cases they reflect unrepresentative samples of providers. For
example, one contractor surveyed only those providers who participated
in a contractor-sponsored seminar. Also, we found considerable variation
among the survey instruments, with some assessing provider satisfaction
more thoroughly than others. Despite these weaknesses, if improved, the
surveys could reveal concerns providers may have about participating in
the TRICARE network. This in turn could help DOD address these
concerns and mitigate problems that might affect the adequacy of the
network.
In addition to these existing surveys, DOD is piloting two initiatives for
collecting information on meeting access standards that could help in the
oversight of network adequacy. The first, the Enterprise Wide Referral and
Authorization System (EWRAS), which is currently being tested in the
Washington D.C. area, captures information on specialty care
appointments in MTFs and information on some specialty care
appointments in the civilian provider network. DOD officials said they
expect EWRAS to be fully implemented in Spring 2004. The second
initiative, the Access to Care (ATC) Project, gathers information on
appointments and specialty referrals at or originating from MTFs.
Specifically, it captures data on whether beneficiaries had a referral,
declined an appointment that was available, cancelled an appointment, or
left without being seen. It also records the average number of days
between when the appointment was made and when the beneficiary was
seen, as well as clinic cancellations and future appointments. This
information can help indicate the extent to which MTFs are meeting the
appointment wait-time access standards. Although the ATC Project is
currently being piloted at four MTFs, a similar system, if modified to
accommodate the requirements of the contractors for the civilian provider
network, could provide valuable information on appointment wait time
standards—information that is necessary for overseeing the adequacy of
the network.

DOD and Contractors
Report Three Factors
That May Contribute
to Civilian Provider
Network Inadequacy

DOD and its contractors have reported three factors that may contribute
to potential civilian provider network inadequacy: lack of providers in
certain geographic locations, low reimbursement rates, and administrative
requirements. First, DOD and contractors have reported regional
shortages for certain types of specialists in rural areas. For example, they
reported shortages for endocrinologists in the Upper Peninsula of
Michigan, dermatologists in New Mexico, and neurologists and allergists in
Mountain Home, Idaho. Additionally, in these instances, TRICARE officials

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and contractors have reported difficulties in recruiting providers into the
TRICARE Prime network because in some areas providers, notably
specialists, will not join managed care programs. For example, contractor
network data indicate that there have been long-standing specialist
shortages in TRICARE in areas such as Alaska or eastern New Mexico,
where the lead agent stated that the providers in those locations have
repeatedly refused to join any managed care network.
There are certain geographic locations in which DOD has confirmed
shortages of providers and has raised TRICARE’s reimbursement rates as
a means of remedying such shortages. Although by statute DOD generally
cannot pay TRICARE network providers more than they would be paid
under the Medicare fee schedule,16 DOD may make payments of up to 115
percent of the Medicare fee to ensure the availability of an adequate
number of qualified healthcare providers.17 In 2000, DOD increased
reimbursement rates in rural Alaska in an attempt to entice more
providers to join the network. Similarly, in 2002, DOD increased
reimbursement rates for the rest of Alaska, and in 2003, DOD increased the
rates for selected specialists in Idaho to address documented network
shortcomings. These three instances are the only times DOD has used its
authority to pay above the Medicare rate in order to address local area
provider shortages,18 and the increases have had mixed success. In 2001,
for instance, we found that the 2000 rate increase in rural Alaska had not
increased provider participation.19 On the other hand, DOD officials told us
that with the 2002 increase in Alaska and the 2003 increase in Idaho,
contractors were experiencing some success in recruiting providers in
those areas. According to DOD officials, for example, six neurosurgeons in
Boise, Idaho agreed to join the network, eliminating the neurosurgeon
shortfall in that prime service area. In Alaska, DOD officials reported that

16

10 U.S.C. § 1079(h)(1) (2000).

17

10 U.S.C. § 1097b (2000).

18

DOD officials told us that all requests received by Health Affairs to increase rates have
been approved. Additionally, there are two other instances in which DOD increased its
reimbursement rates above Medicare’s, but these increases did not address local area
shortages. In 1997, DOD increased national reimbursement rates for obstetrical care. In
April 2002, DOD adopted a policy that will authorize a 10 percent bonus payment to
selected TRICARE providers working in medically underserved areas as defined by the
Health Resources and Services Administration, consistent with Medicare payment policy.
DOD plans to implement the bonus payment in July 2003.

19

U.S. General Accounting Office, Defense Health Care: Across-the-Board Physician Rate
Increase Would Be Costly and Unnecessary, GAO-01-620 (Washington, D.C.: May 24, 2001).

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since the reimbursement rate increased, providers for radiology, thoracic
surgery, pediatrics, and other specialties have stated they will participate
in TRICARE.
The general levels of TRICARE’s reimbursement rates are another factor
that DOD and contractor officials told us may contribute to civilian
provider network inadequacy. Specifically, according to contractor
officials, civilian network providers have expressed concerns about the
decline in Medicare fees in 2002 and the potential for further reductions,
which they have said will affect their participation in the network. In
addition, there have been reported instances in which groups of providers
have banded together and refused to accept TRICARE Prime patients due
to their concerns with low reimbursement rates. One contractor identified
low reimbursement rates as the most frequent cause of provider
dissatisfaction. In addition to provider complaints, beneficiary advocacy
groups, such as the Military Officers Association of America (MOAA), have
cited instances of providers refusing care to beneficiaries because of low
reimbursement rates. However, while TRICARE’s reimbursement rates
may have created dissatisfaction among providers, it is not clear how
much this has affected civilian provider network adequacy except in
limited geographic locations, because the information contractors provide
to DOD is not sufficient to measure network adequacy. Additionally, there
are indications that reimbursement rates have little influence on providers’
decisions to leave the TRICARE network. Data from one contractor
indicated that out of the 2,156 providers who left the network between
June 2001 and May 2002, 900 providers cited reasons for leaving and only
10 percent of these cited reimbursement rates as a reason for leaving the
network.
Contractors report that providers have also expressed dissatisfaction with
some TRICARE administrative requirements, such as credentialing and
preauthorizations and referrals—but the effect of these requirements on
civilian provider network adequacy is also unclear. For example, many
providers have complained about TRICARE’s credentialing requirements.
In TRICARE, a provider must get recredentialed every 2 years, compared
to every 3 years for the private sector. Providers have said that this places
cumbersome administrative requirements on them.
Another widely reported concern about TRICARE administrative
requirements relates to preauthorization and referral requirements.
Civilian PCM providers are required to get preauthorizations from MTFs
before referring patients for care. While preauthorization is a standard
managed care practice, providers complain that obtaining

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preauthorization adversely affects the quality of care provided to
beneficiaries because it takes too much time. In addition, civilian PCMs
have expressed concern that they cannot refer beneficiaries to the
specialist of their choice because of MTFs’ “right of first refusal” that gives
an MTF discretion to care for the beneficiary or refer the care to a civilian
provider. Nevertheless, there are not direct data confirming that
administrative burdens translate into widespread civilian provider
network inadequacies. Further, when reviewing one contractor’s survey of
providers who left the network, we found that only 1 percent of providers
responding cited administrative burdens as a factor.

New Contracts May
Address Some
Network Concerns,
But May Create
Others

DOD’s new contracts for providing civilian health care, called TNEX, may
address some network concerns raised by providers and beneficiaries, but
may create other areas of concern. Because the new contracts had not yet
been finalized as of June 2003, the specific mechanisms DOD and the
contractors will use to ensure network adequacy are not known. Under
TNEX, DOD plans to retain the requirement that the civilian provider
network complement the clinical services provided by MTFs; the access
standards for appointment and office wait times, as well as travel-time
standards; and the periodic reporting on the adequacy of the network.
However, the requirement to use provider-to-beneficiary ratios to measure
network adequacy will be eliminated, although such ratios may be used
during the network accreditation process.
Further, TNEX contains a provision intended to encourage contractors to
develop an adequate civilian provider network. This provision states that
at least 96 percent of contractor referrals shall be to a MTF or network
provider with an appointment available within the access standards.
Failure to achieve the 96 percent standard will affect contractors
financially.
TNEX may reduce the administrative burden related to provider
credentialing and patient referrals. Currently, civilian network providers
must follow TRICARE-specific requirements for credentialing. In contrast,
TNEX will allow network providers to be credentialed through a nationally
recognized accrediting organization. DOD officials stated this approach is
more in line with industry practices. Patient referral procedures will also
change under TNEX. Referral requirements will be reduced, but the MTFs
will still retain the right of first refusal.
On the other hand, TNEX may be creating a new administrative concern
for contractors and providers by requiring that all network claims

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submitted by civilian providers be filed electronically.20 In fiscal year 2002,
only 25 percent of processed claims were submitted electronically.21
Contractors stated that such a requirement could discourage providers
from joining or staying in the network because providers may not be
willing to modify their systems to submit electronic claims for a small
volume of TRICARE beneficiaries. DOD states that electronic filing will
reduce claims-processing costs.

Conclusions

DOD spends over $5 billion a year for health care delivered by the network
of civilian providers to complement care provided in the MTFs; however,
DOD has exercised limited oversight of the adequacy of the civilian
provider network. The information DOD relies on to assess the network
does not always accurately reflect the actual numbers of beneficiaries or
availability of providers. Further, the contractors do not report
comprehensive data on the network’s compliance with DOD’s access
standards, which are key benchmarks in assessing network adequacy. This
information will be important as DOD oversees the transition to the new
health care delivery contracts.
Incorporating data on the numbers and types of providers in the MTFs and
the total number of beneficiaries enrolled in TRICARE Prime would give
DOD a more accurate and comprehensive report of the potential workload
the civilian provider network faces in a prime service area and the
adequacy of the number of PCMs and specialists to deliver that care.
Similarly, more thorough reporting on beneficiaries’ access to care within
the standard time frames and development of a more systematic means of
collecting and evaluating complaint data would help DOD’s oversight of
the ability of the civilian provider network to deliver timely care to
beneficiaries. Further, with improvements in response rates and provider
representation, the civilian provider satisfaction surveys could also be
useful in identifying actions DOD and the contractors could take to
address provider concerns and ensure network stability.

20

The Health Insurance Portability and Accountability Act of 1996 included provisions for
the establishment of standards and requirements for the electronic transmission of health
information. Pub. L. No. 104-191, § 262, 110 Stat. 1936, 2021. Effective October 16, 2003,
Medicare claims generally must be submitted electronically.

21

This percentage does not include pharmacy claims or claims for care provided to
Medicare-eligible beneficiaries under TRICARE For Life.

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Recommendations for
Executive Action
•

•
•
•

Agency Comments
and Our Evaluation

To improve DOD’s oversight of the civilian provider network, we
recommend that the Secretary of Defense direct the Assistant Secretary of
Defense for Health Affairs to
ensure that MTF capabilities and all enrolled Prime beneficiaries in prime
service areas are accounted for when assessing and documenting the
adequacy of the civilian provider network;
ensure that the information reported on the required access standards is
sufficient and reliable;
explore ways to ensure that beneficiary complaints are systematically
evaluated and used to oversee the civilian provider network; and
explore options for improving the civilian provider surveys so that the
results of the surveys could be useful to DOD and the contractors in
identifying civilian provider concerns and developing actions that might
mitigate concerns and help ensure the adequacy of the civilian provider
network.

DOD provided written comments on a draft of this report. (See app. III.)
DOD concurred with the report’s recommendations.
In its written comments, DOD stressed that strong oversight of the civilian
provider network is necessary and should be continuously monitored for
improvements. DOD said that the implementation of TNEX will address
many of the points raised in our report. DOD said TNEX will enhance the
reporting of information about network adequacy as well as provide
powerful financial incentives for contractors to optimize the direct care
system, maximize the extent of civilian provider networks, and achieve the
highest level of beneficiary satisfaction. However, since the TNEX
contracts have not been finalized as of July 2003, it is too early to assess
whether the contracts will result in improved oversight.
In its written comments DOD also said that the report title might mislead
some into concluding that we found the TRICARE network to be
inadequate. As we noted in the draft report, we did not assess the
adequacy of the civilian provider network but focused our work on DOD’s
oversight of the network. We believe the title of the report reflects that
focus.
DOD also provided technical comments, which we incorporated into the
report as appropriate.

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GAO-03-928 TRICARE Civilian Provider Network

We are sending copies of this report to the Secretary of Defense,
appropriate congressional committees, and other interested parties.
Copies will also be made available to others upon request. In addition, the
report is available at no charge on the GAO Web site at
http://www.gao.gov. If you or your staff have questions about this report,
please contact me at (202) 512-7101. Other contacts and staff
acknowledgments are listed in appendix IV.

Marjorie E. Kanof
Director, Health Care—Clinical
and Military Health Care Issues

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GAO-03-928 TRICARE Civilian Provider Network

Appendix I: Scope and Methodology

Appendix I: Scope and Methodology

To describe and evaluate DOD’s oversight of the adequacy of the civilian
provider network, we reviewed and analyzed the information in the
quarterly network adequacy reports submitted by each contractor. We
identified the requirements for the content of these adequacy reports
based upon the general requirements in the TRICARE Operations Manual
and the additional requirements in contractors’ Best and Final Offers. We
reviewed the contents of five of the contractors’ quarterly network
adequacy reports, submitted between June 2002 and October 2002, and
compared them to the applicable reporting requirements. Each report was
evaluated for compliance regarding the provider-to-beneficiary ratios and
the access-to-care standards.
Because DOD has delegated the oversight of the network to the regional
lead agents, we discussed civilian provider network oversight with
officials in 5 of the 11 TRICARE regions—Northeast, Mid-Atlantic,
Heartland, Central, and Northwest. To discuss network management, we
interviewed officials from the four contractors—HealthNet, Humana,
Sierra, and TriWest—that are responsible for developing and maintaining
the provider network that augments care provided by DOD’s MTFs.
Because concerns regarding network adequacy may also be identified at
the local level, we met with lead agent and contractor officials at MTFs in
each of the regions we visited. Finally, we interviewed officials at TMA in
Falls Church, Va., the office that is responsible for ensuring that DOD
health policy is implemented, and officials at TMA-West in Aurora, Colo.,
the office that carries out contracting functions, including monitoring the
civilian contracts and writing the request for proposals for the future
contracts.
As part of our assessment of DOD’s oversight, we also reviewed surveys of
beneficiaries and providers, as well as DOD data collection initiatives as
potential tools for overseeing DOD’s civilian provider network, but did not
validate the data in the surveys or collection initiatives. Using annual data
from the 2000 HCSDB, we analyzed beneficiaries’ responses to access-tocare questions for those who were enrolled in Prime and received most of
their health care in the civilian provider network. We examined the results
of access-to-care questions based on whether or not these beneficiaries
were seen within the TRICARE access-to-care standards. Because we
included only Prime beneficiaries who received care in the civilian
provider network, our analysis of access to care does not reflect the entire
survey sample. To examine the provider surveys as potential oversight
tools, we obtained and reviewed each contractor’s 2001 provider survey
and assessed the survey’s response rate, sample selection, and the

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Appendix I: Scope and Methodology

instrument itself. We also discussed DOD initiatives underway and being
tested with cognizant officials to assess their potential as oversight tools.
To describe factors that may contribute to network inadequacy, we
interviewed and obtained documentation from DOD and contractor
officials regarding current network inadequacies, including their location,
duration, and the type of specialty needed. We also obtained provider
termination reports from three of the four contractors,1 which described
providers’ reasons for leaving the network. To further explore DOD’s
response to civilian provider concerns regarding rates, we interviewed
DOD officials on the use of their authority to raise reimbursement rates.
We also interviewed officials from the American Medical Association, The
Military Coalition, the MOAA, the National Association for Uniformed
Services, and the National Veteran’s Alliance to supplement data on the
possible causes of network inadequacy.
Finally, we reviewed DOD’s request for proposals for the future contracts
and interviewed DOD and contractor officials to describe how the new
contracts might affect network adequacy.
We conducted our work from June 2002 through July 2003 in accordance
with generally accepted government auditing standards.

1

One contractor does not collect data on provider terminations.

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Appendix II: Comparison of Current and
Future TRICARE Regions

Appendix II: Comparison of Current and
Future TRICARE Regions
The shaded areas in figure 2 represent the 11 current TRICARE geographic
regions. The shaded areas in figure 3 represent the 3 planned TRICARE
geographic regions under the TNEX contracts expected to be awarded in
2003.
Figure 2: Current TRICARE Regions

Northwest
Heartland
Northeast

Golden
Gate

Mid-Atlantic

Southern
California
Southeast
Central
Gulfsouth
Southwest

Hawaii Pacific

Alaska (Northwest)
Source: DOD.

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Appendix II: Comparison of Current and
Future TRICARE Regions

Figure 3: Future TRICARE Regions After TNEX Implementation

North
West

South

Hawaii (West)

Alaska (West)
Source: DOD.

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Appendix III: Comments from the Department
of Defense

Appendix III: Comments from the
Department of Defense

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GAO-03-928 TRICARE Civilian Provider Network

Appendix III: Comments from the Department
of Defense

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GAO-03-928 TRICARE Civilian Provider Network

Appendix III: Comments from the Department
of Defense

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GAO-03-928 TRICARE Civilian Provider Network

Appendix III: Comments from the Department
of Defense

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GAO-03-928 TRICARE Civilian Provider Network

Appendix IV: GAO Contacts and Staff
Acknowledgments

Appendix IV: GAO Contacts and Staff
Acknowledgments
GAO Contacts

Kristi Peterson, (202) 512-7951
Allan Richardson, (404) 679-1863

Acknowledgments

In addition to those named above, contributors to this report were Louise
Duhamel, Marc Feuerberg, Krister Friday, Gay Hee Lee, John Oh, and
Marie Stetser.

(290203)

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