Medicare Subvention Demonstration: DOD Data Limitations May Require
Adjustments and Raise Broader Concerns (Letter Report, 05/28/99,
GAO/HEHS-99-39).

Pursuant to a legislative requirement, GAO provided information on the
Medicare Subvention Demonstration Program, focusing on the sufficiency
of the Department of Defense's (DOD) data systems for: (1) determining
DOD's historical level of effort (LOE) and Medicare payments; and (2)
managing the demonstration and assessing its cost effects.

GAO noted that: (1) portions of DOD's baseline costs may be understated,
which could lead to Medicare overpayments if not adjusted; (2) this
results from data inaccuracies in areas of DOD's medical cost accounting
system such as pay and prescription drugs; (3) these findings show that
the DOD cost system problems GAO and others have reported on over the
years persist and continue to affect the DOD health care activities that
rely on these systems; (4) at the root of the problem is the
long-standing lack of DOD and services' oversight as well as a lack of
incentives to ensure the data's accuracy, timeliness, and completeness;
(5) DOD officials told GAO that DOD is committed to making whatever
adjustments are needed to ensure Medicare does not overpay DOD; (6) data
problems also make the subvention demonstration more difficult to manage
at both the national and local levels; (7) for example, DOD managers do
not have sufficiently accurate or timely data to know whether Medicare
capitated payments will cover DOD's costs to provide the full range of
health care to beneficiaries or to determine whether it is more
cost-effective to deliver care in DOD facilities or purchase it from
network providers; (8) timely and accurate tracking of cost and
utilization data is critical to these decisions, as is the case in other
managed care organizations; (9) acting on the problems GAO identified,
DOD officials developed a management improvement plan to begin
addressing baseline and systematic data weaknesses, and the Health Care
Financing Administration (HCFA) plans to hire a contractor to review
DOD's data and methodology; (10) in their reviews, these agencies may
need to reestimate the baseline using more reliable data or consider
alternate ways to determine the baseline; (11) because DOD uses its cost
accounting systems for many other health care management purposes beyond
the demonstration's needs, such as resource allocation and make versus
buy decisions, GAO believes DOD needs to dedicate sufficient management
attention and effort to ensure data reliability and accuracy; and (12)
DOD established a health care data quality task force to begin
addressing the broader system causes of the data problems that GAO and
others have continued to identify.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS-99-39
     TITLE:  Medicare Subvention Demonstration: DOD Data Limitations
	     May Require Adjustments and Raise Broader Concerns
      DATE:  05/28/99
   SUBJECT:  Health maintenance organizations
	     Health care costs
	     Veterans benefits
	     Health care programs
	     Overpayments
	     Data integrity
	     Data collection
	     Federal agency accounting systems
	     Internal controls
	     Retired military personnel
IDENTIFIER:  DOD TRICARE Program
	     Medicare Program
	     Medicare Choice Program
	     DOD Medical Expense and Performance Reporting System
	     Civilian Health and Medical Program of the Uniformed
	     Services
	     DOD Medicare Subvention Demonstration Program
	     CHAMPUS

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Cover
================================================================ COVER

Report to Congressional Committees

May 1999

MEDICARE SUBVENTION DEMONSTRATION
- DOD DATA LIMITATIONS MAY REQUIRE
ADJUSTMENTS AND RAISE BROADER
CONCERNS

GAO/HEHS-99-39

DOD/Medicare Subvention

(101607)

Abbreviations
=============================================================== ABBREV

  BBA - Balanced Budget Act of 1997
  CHAMPUS - Civilian Health and Medical Program of the Uniformed
     Services
  DOD - Department of Defense
  HCFA - Health Care Financing Administration
  HMO - health maintenance organization
  LOE - level of effort
  MEPRS - Medical Expense Performance Reporting System
  MTF - military treatment facility
  OIG - Office of Inspector General

Letter
=============================================================== LETTER

B-278140

May 28, 1999

Congressional Committees

The Balanced Budget Act of 1997 (BBA) authorized a 3-year test,
called Medicare subvention, allowing Medicare-eligible military
retirees, their dependents, and survivors to enroll in a new
Department of Defense (DOD) health maintenance organization (HMO). 
The demonstration's stated goal is to implement an alternative for
delivering accessible and quality care to Medicare-eligible military
beneficiaries, while not increasing the cost to either DOD or
Medicare.  Currently, care for these beneficiaries at military
treatment facilities (MTF) is provided on a space-available basis
that lacks the continuity often important to older retirees.  Under
this demonstration, the Medicare Trust Funds will pay DOD for health
care provided to eligible retirees at six sites.  DOD will provide
enrollees the full range of Medicare-covered services as well as some
additional services.  In principle, beneficiaries, DOD, and Medicare
could all gain under subvention.  Beneficiaries who choose DOD's plan
can use their Medicare benefit to receive care at an MTF.  Under
subvention, Medicare's payment for enrollees could be less than what
it pays private plans serving other Medicare beneficiaries, and DOD
could gain additional funds and use excess capacity where it exists. 

The BBA required that, before Medicare reimburses DOD under the
demonstration, the test sites spend the amount they would have spent
without the demonstration on Medicare-eligible retirees' care.\1 DOD
already receives money for its care of retirees aged 65 and over as
part of its annual appropriation.  Since DOD does not have an
accounting system that can measure the cost of care provided to
individuals, DOD developed, and the Health Care Financing
Administration (HCFA), within the Department of Health and Human
Services, agreed with, a complex method to estimate this level of
effort (LOE), or baseline.  It is important that LOE be correctly
calculated.  If LOE is underestimated, Medicare may overpay; if LOE
is overstated, Medicare may underpay, which could cause DOD to
further reduce space-available care or shift resources from other
programs or beneficiary groups to pay for demonstration enrollees'
care.  Using 1996 data, DOD currently estimates its LOE for the six
sites to be $172 million.\2 To further protect the Trust Funds, the
BBA caps payments to DOD at $50 million in the demonstration's first
year, $60 million in the second year, and $65 million in the third
year. 

The BBA also directed GAO to report annually on the demonstration's
effect on Medicare costs.\3 Because the demonstration began
delivering care at its first site in September 1998 and was not fully
implemented at all sites until January 1999, there is not yet
sufficient evidence to assess subvention's cost to Medicare. 
Consequently, this first report to your committees focuses on the
sufficiency of DOD's data systems for (1) determining DOD's
historical LOE and Medicare payments and (2) managing the
demonstration and assessing its cost effects.  In conducting our
evaluation, we reviewed not only DOD's method for measuring LOE and
capturing DOD health care costs but also source data from key DOD
information and accounting systems used to calculate LOE and manage
the military health care system in general.  We conducted our review
in accordance with generally accepted government auditing standards. 
(Addressees are listed at the end of this letter.  App.  II describes
the scope and methodology of our work in more detail.)

--------------------
\1 More precisely, the requirement is in the Social Security Act, as
amended by the BBA.  (Section 4015 of the BBA, P.L.  105-33, 111
Stat.  251, 337, added section 1896 to the Social Security Act.  This
section authorizes the subvention demonstration.  See 42 U.S.C. 
1395ggg.)

\2 App.  I describes in more detail the process used to determine
Medicare payments. 

\3 We are to report on a number of other issues, including the
demonstration's impact on access, quality, and military readiness, as
well as DOD's management of the demonstration and compliance with
Medicare regulations.  These issues will be the subjects of future
reports. 

   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

Portions of DOD's baseline costs may be understated, which could lead
to Medicare overpayments if not adjusted.  This results from data
inaccuracies in areas of DOD's medical cost accounting system such as
pay and prescription drugs.  Our findings show that the DOD cost
system problems we and others have reported on over the years
continue to affect the DOD health care activities that rely on these
systems.  At the root of the problem is the long-standing lack of DOD
and services' oversight as well as a lack of incentives to ensure the
data's accuracy, timeliness, and completeness.  DOD officials told us
that DOD is committed to making the adjustments necessary to ensure
Medicare does not overpay DOD. 

Data problems also make the subvention demonstration more difficult
to manage at both the national and local levels.  For example, DOD
managers do not have sufficiently accurate or timely data to know
whether Medicare capitated payments will cover DOD's costs to provide
the full range of health care to beneficiaries or to determine
whether it is more cost-effective to deliver care in DOD facilities
or purchase it from network providers.  Timely and accurate tracking
of cost and utilization data is critical to these decisions, as is
the case in other managed care organizations. 

Acting on the problems we identified, DOD officials developed a
management improvement plan to begin addressing baseline and systemic
data weaknesses, and HCFA plans to hire a contractor to review DOD's
data and methodology.  In their reviews, these agencies may need to
reestimate the baseline using more reliable data or consider
alternate ways to determine the baseline. 

Because DOD uses its cost accounting systems for many other health
care management purposes beyond the demonstration's needs, such as
resource allocation and make-versus-buy decisions, we believe DOD
needs to dedicate sufficient management attention and effort to
ensure data reliability and accuracy.  Recently, DOD established a
health care data quality task force to begin addressing the broader
system causes of the data problems that we and others have continued
to identify.  We make several recommendations in this report
concerning these matters. 

   BACKGROUND
------------------------------------------------------------ Letter :2

Currently, about 1.3 million retired military personnel and their
dependents and survivors who reside in the United States are age 65
or older.  This number is expected to increase to about 1.6 million
by 2004.  By contrast, the number of active duty personnel and their
dependents is projected to remain constant.  Of the 1.3 million dual
eligibles (that is, eligible for both military health care and
Medicare), about half live within 40 miles of an MTF.  This 40-mile
radius is a rule of thumb for defining such facilities' catchment"
(or service) areas. 

Retirees are eligible for a broad range of health care services under
TRICARE Prime,\4 DOD's HMO program, until they turn 65, when they
become eligible for Medicare.  Once they turn 65, retirees lose their
eligibility for TRICARE Prime.  They continue to qualify for
inpatient and outpatient care in MTFs, but only on a space-available
basis.  Limited space and resources, coupled with the priority given
to active duty personnel and other beneficiaries who are under age
65, mean that military retirees aged 65 and over often do not get
appointments and other services at an MTF when they need them
(although they may continue to get prescription drugs from MTFs). 

Most military retirees who are 65 and over are eligible for Medicare,
a federal program administered by HCFA that covers health care
expenses of the elderly, some disabled people, and people with
end-stage kidney disease.  Medicare part A covers inpatient hospital,
skilled nursing facility, and hospice care; Medicare part B covers
physician and other outpatient services for beneficiaries choosing to
pay a monthly premium.  Original, or traditional, fee-for-service
Medicare has two distinctive features:  it allows the patient to
choose his or her physician, and it reimburses beneficiaries' claims
for hospital, physician, and other care on a fee-for-service basis. 
Beneficiaries who receive care are responsible for part of the
charges--for example, 20 percent of the Medicare fee schedule amount
for physician services, or the $768 deductible for hospital care. 

As an alternative to fee-for-service Medicare, beneficiaries may
choose the Medicare+Choice option, which permits them to enroll in
private Medicare HMOs and other private health plans.  These plans
provide all standard Medicare benefits.  Beneficiaries in these
plans, like beneficiaries in original Medicare, must pay the
program's monthly premium for part B coverage.  Medicare+Choice plans
also may offer additional benefits, such as prescription drug
coverage, and may waive cost-sharing required by original Medicare. 
For these additional benefits, plans may charge an extra premium,
though many do not.  Medicare pays a capitated rate (a fixed amount
each month per enrollee) to Medicare+Choice plans, and the plans bear
the financial risk if the beneficiary's costs exceed the capitated
rate. 

--------------------
\4 As an employer, DOD established its TRICARE program to provide
comprehensive health care to active duty personnel, their dependents,
and military retirees.  TRICARE beneficiaries may get care at MTFs as
well as from civilian providers in the local community. 

   HOW THE DEMONSTRATION WORKS
------------------------------------------------------------ Letter :3

About 125,000 dual-eligible military retirees reside in the catchment
areas of the six sites--about one-fifth of dual eligibles living
within 40 miles of an MTF.  About 30,000 will be allowed to enroll in
the demonstration on a first-come, first-served basis.  Demonstration
participants will enroll in TRICARE Senior Prime, a new, DOD-run HMO
exclusively for the demonstration areas and open to dual eligibles
only.  Senior Prime offers hospital, physician, and other
Medicare-covered services.  Senior Prime builds on TRICARE Prime,
adding home health and other Medicare-required services.  Under the
demonstration, DOD will not charge enrollees a premium, at least for
the first year.  Services may, at Senior Prime's option, be provided
at an MTF or by a civilian network provider, but copayments differ by
where the service is provided.  For example, inpatient
hospitalization will be free at the MTF but require a copayment for
civilian providers.  DOD anticipates that most services will be
provided in MTFs. 

Like enrollees in private Medicare HMOs, Senior Prime enrollees are
locked out of Medicare fee-for-service coverage.  An enrollee who
uses a civilian provider without a Senior Prime referral or
authorization is responsible for the full charge.  Like commercial
Medicare HMOs and other private, managed care plans available through
Medicare+Choice, Senior Prime gets a capitated Medicare payment for
each enrollee.\5 In addition, Senior Prime must comply with all
Medicare requirements for the protection of beneficiaries, provision
of information, cost-sharing limitations, access, quality assurance,
external review, and appeal and grievance procedures.  Unlike a
conventional Medicare+Choice plan, Senior Prime is established and
operated by DOD; in addition to the standard benefits offered by a
private Medicare+Choice plan, Senior Prime gives its members priority
for treatment at MTFs over other dual eligibles.\6 To be eligible for
Senior Prime, a military retiree (or dependent or survivor) must: 

  -- be enrolled in both Medicare part A and part B (an estimated 90
     percent of dual eligibles are enrolled in part B);

  -- reside in one of the six geographic areas covered by the
     demonstration;

  -- be a dual-eligible beneficiary who used an MTF before January 1,
     1998, or became dually eligible (turned 65) after December 31,
     1997; and

  -- agree to use Medicare-covered and MTF services only through
     Senior Prime. 

The six sites for the demonstration differ considerably in their
numbers of retired Medicare-eligible beneficiaries and in what DOD
terms enrollment capacity--in effect, each site's planned
enrollment (see table 1).  The sites also differ in several other
ways, such as region, branch of service responsible for the MTF,
size, and amount of managed care penetration in the local market. 

                                     Table 1
                     
                         Demonstration Sites for Medicare
                                    Subvention

                  Start of                                               Current
                  service                   Dual         Planned  enrollment (as
Site name         delivery           eligibles\a      enrollment    of 5/1/99)\b
----------------  --------------  --------------  --------------  --------------
Colorado Springs
--------------------------------------------------------------------------------
Evans Army        January 1,              13,689           3,200           2,895
 Community         1999
 Hospital,
 Ft. Carson; and
 10th Medical
 Group,
 Air Force
 Academy, CO

Dover
--------------------------------------------------------------------------------
436th Medical     January 1,               3,905           1,500             678
 Group, Dover      1999
 Air Force Base,
 Dover, DE

Keesler
--------------------------------------------------------------------------------
Keesler Medical   December 1,              7,361           3,100           2,687
 Center, Biloxi,   1998
 MS

Madigan
--------------------------------------------------------------------------------
Madigan Army      September 1,            21,709           3,300           3,634
 Medical           1998
 Center,
 Ft. Lewis,
 Takoma, WA

San Antonio
--------------------------------------------------------------------------------
San Antonio
 Wilford Hall      October 1,             34,148          10,000          10,413
 Medical Center,   1998
 Lackland Air
 Force Base; and
 Brooke Army
 Medical Center,                           7,067           2,700           1,844
 Ft. Sam           December 1,
 Houston, TX       1998

 Texoma
 Reynolds Army
 Community
 Hospital, Ft.
 Sill, Lawton,
 OK; and
 Sheppard Air
 Force
 Base Hospital,
 Wichita Falls,
 TX

San Diego
--------------------------------------------------------------------------------
Naval Medical     November 1,             35,619           4,000           2,897
 Center San        1998
 Diego,
 San Diego, CA
================================================================================
Total                                    123,498          27,800          25,048
--------------------------------------------------------------------------------
Note:  A site may include more than one MTF and more than one
geographic area. 

\a Data are from the Defense Medical Information System for fiscal
year 1998, third quarter. 

\b Current enrollment can be more than planned because of "age-ins,"
which are enrollees who reached age 65 after December 31, 1997. 

Source:  DOD. 

The amount that Medicare will pay DOD for subvention enrollees
depends not only on Medicare's capitated rate for Senior Prime but
also on DOD's historical, or baseline, health care costs, termed LOE. 
The BBA required that DOD maintain its previous LOE in providing
space-available care to dual-eligible retirees in the demonstration
areas and that the Medicare payment reimburse DOD only for care above
the LOE.  As agreed by HCFA and DOD, DOD cannot receive any Medicare
payments unless current DOD expenses for the dual eligibles reach
this baseline.  Measurement of LOE is sensitive to data quality and
reliability.  If costs are omitted from LOE, DOD may be overpaid, but
if LOE is inflated, Medicare will pay too little or perhaps nothing. 

Facility cost and workload data used to establish DOD's LOE are drawn
primarily from DOD's Medical Expense Performance Reporting System
(MEPRS).  MEPRS data are used for many military health care services
or management purposes such as resource allocation determinations,
make-versus-buy decisions--such as whether to offer certain product
lines or purchase them as needed, setting third-party billing rates,
and cost comparisons of DOD's health care delivery system with other
alternatives.  Thus, LOE accuracy and key military health care system
functions rely in large measure on MEPRS and related data systems to
provide accurate, timely, and complete cost and workload information. 

--------------------
\5 The BBA provided that the demonstration rates be 95 percent of
Medicare+Choice rates, adjusted to exclude payments for direct and
indirect medical education and disproportionate share hospitals. 
Furthermore, the BBA also provided that a share of DOD's capital
costs be excluded from the rate, and that HHS and DOD must decide
what that percentage share is.  They have set the capital cost
exclusion at 67 percent. 

\6 The subvention demonstration has a second component--Medicare
Partners.  Under Medicare Partners, a demonstration MTF can contract
with Medicare+Choice plans to provide dual-eligibles enrolled in
these plans with selected services at the MTF.  It appears that
generally MTFs will "sell" only specific services, such as the
services of certain specialties, for which they have excess capacity. 
DOD agreed not to implement Medicare Partners until at least 90 days
after the beginning of Senior Prime enrollment.  It appears that it
may be a year before Medicare Partners is activated at any site. 

   LOE SOURCE DATA INACCURACIES
   MAY RESULT IN MEDICARE
   OVERPAYMENTS
------------------------------------------------------------ Letter :4

Portions of DOD's LOE may be understated because of inaccuracies in
its source data, and as a result, Medicare overpayments may occur
during the demonstration.  DOD's health care information systems are
generally not auditable and often cannot be reconciled with source
data and documents.  Military and civilian pay and prescription drugs
exemplify areas of possible inaccuracy.  These problems stem from a
long-standing lack of DOD and service oversight and incentives to
ensure the data's accuracy, timeliness, and completeness.  In
response to our preliminary findings, DOD recently developed a plan
for improving MEPRS data and business practices both during and after
the demonstration.  The effects of these efforts on data quality and
DOD's ability to measure demonstration costs remain to be seen.  In
addition, DOD officials told us that they are committed to making any
necessary changes to ensure that Medicare does not overpay DOD. 

      UNCERTAINTY ABOUT DATA
      QUALITY REDUCES CONFIDENCE
      IN LOE ESTIMATE
---------------------------------------------------------- Letter :4.1

DOD has acknowledged concerns about MEPRS, its key system for
estimating costs for military health care.  DOD officials described
it as a stepchild system that has been underfunded and
inconsistently used.  As a result, DOD and the services have not
effectively monitored MEPRS to ensure data quality.  The MEPRS policy
manual states that the Assistant Secretary of Defense (Health
Affairs) is responsible for MEPRS direction and management; the DOD
Comptroller is responsible for finance, budgeting, and accounting
guidance for all health care resources; and the services are
responsible for implementing MEPRS guidance and reporting uniform and
comparable data.  But at the three sites we visited, we found that
MTF staff did not fully audit MEPRS' expense, workload, or manpower
data for 1996 or later years.  And recent DOD self-assessment surveys
of MEPRS and other workload data quality showed wide variances among
facilities. 

We and others have identified major concerns with MEPRS, including
inconsistent data collection and reporting, service differences in
how depreciation is recorded and what is counted as readiness\7
(and thus not counted as patient care), and the completeness of the
accounting for all relevant expenses.  Responding to our questions
and concerns, in 1998 DOD developed a MEPRS Management Improvement
Plan.  The plan focuses first on the subvention sites and turns to
improving the entire system later.  (See app.  III.) The goal is for
a working group composed of Army, Navy, and Air Force officials to
develop and initiate standard business rules for recording,
collecting, and reporting MEPRS data.  The group is assessing the
feasibility of incorporating into MEPRS other DOD
appropriations--such as research, development, testing, and
evaluation; military construction; military pay; and civilian pay--to
capture all MTF revenues and expenses. 

Part of this plan calls for reconciliation of MEPRS data on finance,
manpower, and workload with source documents and with data systems
that provide information to MEPRS.  However, DOD's plan does not
address some aspects of data quality.\8

For example, we found evidence that basic data consistency checks had
not been performed.  Also, even when improved, MEPRS will continue to
provide costs by cost center, functional area, and program, but not
by individual patient or groups of patients.  Consequently, an
improved MEPRS may still not be ideally suited to identifying the
costs of groups, such as the demonstration's dual-eligible retirees. 
A DOD official told us the agency is planning to award a contract to
determine how its systems compare with other health care cost
systems; whether changes are needed; and, if so, the extent and
feasibility of such changes. 

--------------------
\7 Readiness is the capacity to engage in military action. 

\8 The plan also does not address how MEPRS should be used for
financial reporting, which requires the use of full cost accounting
as defined by federal accounting standards. 

      PROBLEMS IN ESTIMATING MAJOR
      COST COMPONENTS POINT TO
      POTENTIAL MEDICARE
      OVERPAYMENTS
---------------------------------------------------------- Letter :4.2

Our analysis showed that the demonstration may result in Medicare
overpayments.  Two cases illustrate how data and related estimation
problems may lead to a significant understatement of LOE. 

The first concerns military and civilian pay.  Military personnel
account for more than half of total military health care expenses. 
However, all DOD activities, medical or otherwise, use
service-specific composite pay rates--rather than actual pay--for
estimating labor costs.  This approach appears to understate actual
pay at demonstration facilities.  For example, DOD applies the same
pay rate to a hospital administrator who is a lieutenant colonel and
to an orthopedic surgeon of the same rank.  This method would
understate actual pay because actual salaries for physicians are
generally higher than those for other personnel of the same rank.  In
particular, physicians receive larger and more frequent special pay
allowances compared with nonphysicians. 

A study of Air Force MTFs by the Institute for Defense Analysis found
that composite rates understated military physicians' salaries but
that these understatements were offset by an overestimate for
nonphysicians.\9 At large facilities, the understatement of
physicians' salaries would be expected to be greater, because these
MTFs have more specialists.  In the subvention demonstration, four of
the MTFs, representing over 60 percent of the demonstration's planned
enrollment, are major medical centers--Madigan Army Medical Center
(Wash.), Brooke Army Medical Center (Tex.), Wilford Hall Medical
Center (Tex.), and Naval Medical Center San Diego (Calif.).  In
reviewing data from Wilford Hall Medical Center, we compared the
national composite pay rate used in calculating LOE with another
composite pay rate used locally and found a 6.8-percent difference. 
(We also found a 5.3-percent difference in civilian pay.) Our
examination of the data did not provide grounds for choosing one rate
over the other, but differences of this magnitude are cause for
concern. 

DOD maintains that its composite pay rate approach is appropriate,
because it reflects the way that appropriations for pay are
distributed to all DOD facilities.  Furthermore, DOD contends that
collecting actual pay data would be costly.  We believe, however,
that while DOD's composite pay rate approach may be accurate
nationally and acceptable for other purposes, because all facility
differences average out, it appears to understate actual pay at the
subvention facilities by eliminating factors that make their
personnel and compensation mix unique and above average.  The
treatment of physicians' pay is the most pertinent, but other factors
that may differentiate these particular facilities from the average
facility, such as locality pay, are also omitted, except as they are
reflected in national averages.  DOD and HCFA have agreed to continue
reviewing this issue and to make any needed changes. 

A second probable source of LOE understatement is the adjustment to
exclude prescription drug expenses.  Medicare generally does not
cover outpatient prescription drugs, so the demonstration's
Memorandum of Agreement excludes prescription drug costs from the LOE
for the six sites.  However, DOD accounting systems often do not
distinguish between pharmaceutical supplies used in clinic
operations, such as chemotherapy drugs, and drugs that patients take
home.  This broad pharmaceutical category amounts to about $17
million in LOE (according to the DOD contractor responsible for
estimating LOE).  In removing all expenses in this category, not just
those for outpatient drugs, DOD appears to be understating LOE.  DOD
has not offered a compelling reason for removing the entire amount
from LOE.  DOD officials have said that they will study this issue
and make any necessary adjustments. 

--------------------
\9 Institute for Defense Analysis, Cost Analysis of the Military
Medical Care System:  Final Report, P-2990 (Washington, D.C.: 
Institute for Defense Analysis, Sept.  1994). 

      RECENT CHANGES IN DATA
      SYSTEMS AND CHOICE OF 1996
      AS BASE YEAR RAISE CONCERNS
---------------------------------------------------------- Letter :4.3

Improvements in DOD's health care cost and information systems are
likely to result in better measurement of current costs, but this may
have a perverse effect on Medicare payments.  If certain omissions or
inaccuracies are left uncorrected in LOE but later corrected in
current demonstration costs, the more accurately measured current
costs will be tallied against the deficient baseline.  This situation
would make it easier for DOD to meet its LOE thresholds and tests,
and thus to get Medicare payments (see app.  I). 

Along with the health care cost data problems, we found that much of
the documentation supporting the base year (1996) calculations is no
longer available, hindering data verification.  DOD and HCFA recently
considered changing the LOE base year to 1998 because the data would
be more readily available and auditable.  However, DOD and HCFA have
concluded thus far that the 1996 data may be adequate for the
demonstration purpose and have not changed the demonstration
baseline, although they continue to analyze the issue. 

      HCFA BEGAN REVIEWING
      BASELINE DATA AND
      METHODOLOGY AS A RESULT OF
      OUR EARLY FINDINGS
---------------------------------------------------------- Letter :4.4

Although HCFA officials were involved in designing the demonstration,
including the Medicare payment provisions, annual reconciliation, and
beneficiary marketing processes, they had not reviewed DOD's baseline
data and methodology for compliance with the demonstration's terms or
with Medicare reimbursement regulations until we disclosed our
preliminary findings.  HCFA officials told us that the limited number
of HCFA staff assigned to the demonstration have other
responsibilities and thus have been unable to devote full attention
to the project. 

In discussions with us, HCFA officials acknowledged that DOD's LOE
methodology and supporting data are more complex and problematic than
they originally believed.  They told us that they are assigning more
staff to review the methodology and data; are committed to working
with DOD to improve the LOE estimate; and are planning to award a
contract to review all the issues we identified.  Furthermore, DOD
and HCFA officials told us they plan to continue meeting to clarify
the Memorandum of Agreement's details so that misunderstandings
between the two agencies are minimized and the demonstration is
implemented as efficiently as possible. 

   DATA WEAKNESSES AND PAYMENT
   COMPLEXITY LIMIT DOD IN
   MANAGING THE DEMONSTRATION AND
   ITS BROADER HEALTH SYSTEM
------------------------------------------------------------ Letter :5

For DOD, the real challenge of subvention is to establish and run a
managed care system that meets the requirements of Medicare and its
beneficiaries.  To meet its responsibilities, DOD must manage the
subvention demonstration and track its progress toward reaching the
LOE target.  In addition, like other managed health care plans, DOD
must manage costs and resources to maintain access to and quality of
care.  These are data-intensive tasks, and inadequate data systems
will undermine a managed care plan's ability to compete effectively. 
In addition, the demonstration's complex payment arrangements, and
the fact that HCFA and DOD have yet to specify a risk-adjustment
method and how sites are to be paid, add uncertainty for DOD
managers.  Consequently, the inadequacies of DOD's data systems limit
its ability, at both the site and national levels, to manage the
demonstration and deliver health care. 

      DATA INACCURACIES HAMPER DOD
      IN DETERMINING WHETHER
      MEDICARE REIMBURSEMENT
      COVERS DOD COSTS AND IN
      ASSESSING MAKE/BUY CHOICES
---------------------------------------------------------- Letter :5.1

In taking responsibility for all Medicare-covered care of its Senior
Prime enrollees, DOD needs to know whether Medicare reimbursement
covers DOD's costs to deliver this care.  DOD believes that its costs
overall are less than civilian costs, and an Institute for Defense
Analysis study,\10 which compared peacetime military health care
costs with civilian costs, partially supports that conclusion. 
However, the Institute for Defense Analysis study encountered
considerable difficulties in using DOD data to determine costs and
made major adjustments to compensate for data limitations.  The study
found that DOD's costs were about 6 percent less than the private
sector's.  However, this estimate was based largely on data for a
nonelderly population that would use fewer resources per person than
retirees aged 65 and over, and it did not include the costs of
providing skilled nursing facility and home health care.  These two
services account for about one-seventh of Medicare's cost per
beneficiary.  DOD will need accurate, timely tracking of costs and
utilization, particularly because 95 percent of the modified
Medicare+Choice rates does not appear to leave DOD a large margin
above cost. 

Like other managed care organizations, DOD continually makes
decisions about whether to treat particular patients or send them to
external network providers and whether to offer certain services or
product lines or purchase them as needed.  These decisions are
usually made on the basis of incremental or marginal cost and may
vary over time, depending on market conditions and other factors.  It
does not appear that MEPRS or other data systems currently give DOD
adequate or accurate cost information on which to base these
decisions.  Some decisions are simple, of course--if a patient needs
a kidney transplant and an MTF cannot provide it, the service must be
purchased.  But some represent choices between providing care in the
MTF or in the community, such as whether to purchase some or all
radiology services or provide them at the MTF.  Inadequate cost data
may lead MTF managers to select the more costly option. 

--------------------
\10 Cost Analysis of the Military Medical Care System:  Final Report
(Sept.  1994). 

      PAYMENT RULES CREATE
      UNCERTAINTY FOR DOD MANAGERS
---------------------------------------------------------- Letter :5.2

The payment arrangements of the demonstration complicate its
operation (see app.  I).  DOD will not know until reconciliation
takes place--roughly 6 months after the year's end--how much final
payment it will receive.  For care delivered in 1999, the annual
reconciliation may not be completed until mid-2000.  Adding to this
uncertainty is that HCFA has not yet specified the method and
criteria for adjusting Medicare payments for differences in
enrollees' health status.  Furthermore, individual sites do not know,
because DOD has not indicated, how money from Medicare will be
distributed among the sites.  In theory, DOD could give part of the
final payment to sites according to their success in meeting monthly
thresholds, or it could use the final payment to rescue less
successful sites or to compensate sites that have
sicker-than-average patients. 

Different payment scenarios will likely cause site managers to change
their decisions about enrollment and capacity.  For example, if DOD
allows sites to spend all or part of interim (monthly) payments or
allocates part of final payments to sites, site managers are likely
to increase capacity and try to expand Senior Prime enrollment.  This
situation is less likely if DOD opts not to use a site's performance
to determine its share of final payments but instead uses the
payments to rescue less successful sites or for other purposes. 

In view of this uncertainty, some sites may pay for dual eligibles'
care exclusively from their site budgets, which draw on DOD's
appropriated funds.  Because final payments from HCFA are determined
in the year after care is delivered, Medicare funds cannot be relied
on to pay for care.  As a result, a site manager faced with expenses
that threaten to exceed the site budget has three primary choices: 
reduce care for enrollees, reduce care for nonenrollees 65 and over
and for younger military beneficiaries, or reduce enrollment through
attrition.  The extent to which such uncertainties will affect sites'
management of Senior Prime will be clearer after the sites have had
more experience with subvention. 

      LONG-STANDING DATA PROBLEMS
      RAISE BROADER CONCERNS ABOUT
      SYSTEM MANAGEMENT
---------------------------------------------------------- Letter :5.3

DOD's cost and workload reporting system weaknesses have effects that
reach beyond the Medicare subvention demonstration.  These data are
used throughout the military health care system by facility, service,
and headquarters managers to make policy decisions, evaluate program
effectiveness, and track expenditures against budgeted funds.  But in
recent years, we and others have identified data weaknesses that
indicate limitations in DOD's ability to, for example,

  -- project accurate system costs for allocating resources;

  -- establish accurate billing rates for third-party insurer
     collections that provide millions of dollars of revenue each
     year; and

  -- conduct make-versus-buy analyses for improving the quality,
     accessibility, and cost-effectiveness of military health
     care--including weighing alternatives for providing
     beneficiaries' care such as the Federal Employees Health
     Benefits Program. 

In addition to the MEPRS management improvement plan, DOD established
a TRICARE data quality task force to address the broader system
causes of the data problems that we and others continually have
identified. 

DOD's cost system problems are persistent and long-standing.  In
1992, for example, DOD's Office of Inspector General (OIG) reported
that MEPRS did not track all costs associated with the delivery of
peacetime health care, thereby understating the actual costs of
operating and supporting MTFs.  In addition, third-party billing
rates did not reflect the total costs of the health care provided,
resulting in understated billings.  Also, health care cost
information could not be easily retrieved and was not standardized,
and military composite rates did not reflect the actual labor costs
of medical professionals.\11 In 1995, the OIG reported on problems
with the source systems underlying MEPRS.  DOD's general fund
accounts, which are drawn upon to pay health care expenses, were not
auditable because assets were not properly valued or reported in the
accounts, contingent liabilities were not properly recognized or
disclosed, disbursements and collections were not properly accounted
for, and adequate accounting systems generally were not in place.\12
Furthermore, in 1998, the OIG reported that data used to calculate
the military retirement health benefits liability were neither
current nor complete.\13 Other studies by the OIG, contractors, and
researchers during the period likewise identified and documented many
of the same data inaccuracies and omissions in DOD's health care
information systems.\14 Our review of the subvention baseline's data
reliability, moreover, has served to affirm that the data system
problems identified over the years continue and thus affect all DOD
health care operations that rely on these systems. 

DOD's enrollment-based capitation program, for example, can be used
to allocate resources to MTFs on the basis of their TRICARE
enrollment levels and assign prices for an MTF's services to be
charged other MTFs when they refer patients to that facility.  This
transfer pricing portion of the enrollment-based capitation program
relies heavily on cost data to calculate the payment to MTFs for
their services.  If underpaid, MTFs may experience funding shortfalls
and be forced to restrict care.  Thus, the enrollment-based
capitation program's implementation guidance stressed that MTF
managers should make data quality a top priority if the program was
to succeed.  Moreover, DOD recently sought to reconcile MEPRS
expenses with finance system obligations to correct data errors that
would affect transfer prices.  DOD found incomplete MEPRS data and
mismatches in facilities' MEPRS and obligations data that would
significantly understate prices established for those facilities.  As
a result, DOD urged MTF commanders to review and, to the extent
possible, correct their MEPRS data. 

MEPRS data are also used to calculate MTFs' third-party reimbursement
rates.  Such reimbursements include MTF collections from
beneficiaries' non-DOD health insurance policies.  In fiscal year
1997, DOD collected almost $140 million in such reimbursements. 
These collections are projected to decline because many beneficiaries
drop their third-party insurance after they enroll in TRICARE Prime. 
To ensure such collections are maximized, it is important that MTF
billing rates accurately reflect the facilities' costs. 

Weaknesses in DOD's cost data can also impair the ability to evaluate
alternate approaches to providing care to military beneficiaries. 
MTF commanders regularly confront make-versus-buy decisions and need
reliable data to decide when to provide care at the MTF and when to
seek private sector alternatives.  Moreover, analyzing the
cost-effectiveness and feasibility of new approaches--such as
Medicare subvention, a mail-order pharmacy benefit for retirees, or
Federal Employees Health Benefits Program coverage for senior
retirees--also requires data on military facility care costs compared
with these options.  For example, the "733 Study," DOD's 1994
comprehensive study of military health care, drew heavily upon MEPRS
data to compare DOD facility care costs with care provided under the
Civilian Health and Medical Program of the Uniformed Services
(CHAMPUS), the precursor to TRICARE.\15 The study's conclusion that
DOD's facility costs generally were lower has been challenged and
today remains at issue.  Therefore, DOD's MEPRS cost and workload
data should be as accurate as possible to support day-to-day system
management and to provide the Congress with accurate assessments of
system alternatives. 

As noted earlier, DOD established a high-level data quality task
force to begin addressing what officials now see as an urgent need
for data quality improvements.  The task force's mission statement
reiterates that clinical workload data are used by DOD's medical
departments in their budgetary decisions, manpower justifications,
program actions, and facility "rightsizing" initiatives.  In
addition, data-dependent managed care support contracts,
enrollment-based capitation endeavors, and the Medicare subvention
demonstration accentuate DOD's reliance on accurate data.  The
statement points out that data systems such as MEPRS, the Composite
Health Care System, and the Ambulatory Data System, which support the
MTFs in their daily activities, were developed independently and are
not linked, leading to financial, workload, and data accuracy issues. 
Other contributing factors cited include

  -- lack of consistent command emphasis to ensure that workload and
     other data reports are complete, timely, and accurate;

  -- paucity of business rules, standardized training, and procedural
     guidelines for clerical and professional staff;

  -- segmentation of functions and staffing as well as cultural and
     operational differences among the services and their facilities;
     and

  -- conversion to a data-driven managed care environment involving
     new management methods that require accurate, relevant data. 

The mission statement establishes a December 2000 project completion
date but notes that the project's complexity and magnitude may
require an extension.  While this project is daunting, we agree it is
critical that DOD begin to take actions needed to improve its data
quality and that it fully commit itself to the project's success. 
However, even if the target date is met, the project can have only
limited impact on the subvention demonstration, which is scheduled to
end at the same time. 

--------------------
\11 DOD OIG, Peacetime Health Care Costs in the Military Health
Services System, Report No.  92-PED-04 (Washington, D.C.:  DOD OIG,
Sept.  1992). 

\12 DOD OIG, Major Deficiencies Preventing Auditors from Rendering
Audit Opinions on DOD General Fund Financial Statements, Report No. 
95-301 (Washington, D.C.:  DOD OIG, Aug.  1995). 

\13 DOD OIG, DOD Military Retirement Health Benefits Liability for FY
1997, Report No.  99-010 (Washington, D.C.:  DOD OIG, Oct.  1998). 

\14 RAND National Defense Research Institute, Evaluation of the
CHAMPUS Reform Initiative, Volumes 3 and 6, R-4244/3-HA and
R-4244/6-HA (Santa Monica, Calif.:  RAND, 1993 and 1994), and The
Demand for Military Health Care:  Supporting Research for a
Comprehensive Study of the Military Health Care System, MR-407-1-OSD
(Santa Monica, Calif.:  Rand, 1995); DOD OIG, Review of Utilization
Management in the Military Health Services System (Washington, D.C.: 
DOD OIG, June 1995), and Reporting Graduate Medical Education Costs,
Report No.  97-147 (Washington, D.C.:  DOD OIG, May 1997); and
Institute for Defense Analysis and CNA Corporation, Evaluation of the
TRICARE Program:  FY 1998 Report to the Congress (Washington, D.C.: 
Institute for Defense Analysis and CNA Corporation, 1998).

\15 DOD, Office of Program Analysis and Evaluation, The Economics of
Sizing the Military Medical Establishment, Executive Report of the
Comprehensive Study of the Military Medical Care System (Washington,
D.C.:  DOD, Apr.  1994). 

   CONCLUSIONS
------------------------------------------------------------ Letter :6

The Medicare subvention demonstration provides DOD and HCFA a
valuable opportunity to gauge the effects of treating
Medicare-eligible beneficiaries in military facilities.  However, the
demonstration's payment rules and method of estimating LOE demand
accurate, timely, and complete data, and DOD's ability to provide
such information with its current systems is questionable.  These
data problems also call into question DOD's ability to manage its
overall health care system.  In short, DOD lacks an information
system that can produce credible cost data on its individual
beneficiaries and beneficiary groups. 

Yet, even with good information systems, DOD and the demonstration
sites face a considerable challenge in managing the demonstration. 
For example, the demonstration sites will not know how much they will
be paid for a given year until well into the following year, and DOD
has not yet made other decisions regarding sites' interim and final
payments.  Nonetheless, the experience of the demonstration will
provide valuable information for developing a permanent reimbursement
system, if the demonstration is deemed to meet its cost, quality, and
other goals. 

Beyond the demonstration, DOD's many other needs for reliable cost
data warrant that it dedicate sufficient effort to improving the
data's accuracy and reliability.  In that regard, DOD's new
management improvement plan and data quality task force are positive
steps.  We urge DOD's continued high-level attention to these issues. 

   RECOMMENDATIONS TO THE
   SECRETARY OF DEFENSE
------------------------------------------------------------ Letter :7

We recommend that the Secretary of Defense direct the Assistant
Secretary of Defense (Health Affairs), in collaboration with HCFA, to
identify the baseline's weaknesses and resulting errors in LOE and
determine a more reliable baseline.  This effort should consider the
merits of using a more recent base year for the demonstration and
weigh alternatives to the current baseline method.  Furthermore, to
reduce funding uncertainties for site managers, the Assistant
Secretary should state definitively how final Medicare payments will
be allocated among the demonstration sites, and working with HCFA,
explain the method and criteria for risk-adjusting sites' Medicare
payments. 

We also recommend that the Secretary of Defense direct the Assistant
Secretary of Defense (Health Affairs) to improve cost and workload
data quality.  This is especially important because DOD also uses
these data in managing its general health care operations.  The
effort should identify specific actions needed by the Assistant
Secretary and the services to correct current cost and workload data
collection and reporting problems.  It should also ensure, by
maintaining all source data and documents, that MEPRS can be audited. 
This effort may require actions by and coordination with other DOD
Assistant Secretaries, and the Secretary should direct their
participation. 

   RECOMMENDATION TO THE
   ADMINISTRATOR OF HCFA
------------------------------------------------------------ Letter :8

We recommend that the Administrator of the Health Care Financing
Administration, in collaboration with DOD, identify the baseline's
weaknesses and, as appropriate, determine a more reliable baseline. 
HCFA efforts should include providing DOD specific guidance on
baseline cost components and assessing baseline source data and
methods for reliability and compliance with HCFA guidance and
regulations.  Also, working with DOD, the Administrator should
promptly specify the method and criteria for risk-adjusting the
Medicare payments. 

   AGENCY COMMENTS AND OUR
   EVALUATION
------------------------------------------------------------ Letter :9

DOD and HCFA commented on a draft of this report.  DOD found the
report valuable in raising issues deserving its immediate attention;
agreed with each recommendation for its action; and stated that it
would continue working with HCFA to improve the measurement of LOE
and improve its data systems.  HCFA stated that after we made our
preliminary findings known last year, it began working closely with
DOD on the LOE data accuracy issues.  HCFA stated that while both
parties have agreed thus far to keep the 1996 baseline, it was
awarding a contract to review the threshold's weaknesses and identify
needed improvements.  Also, as we recommended, HCFA stated that both
parties now agree on a payment reconciliation approach that will be
made final shortly.  Both parties also suggested technical changes to
the report, which we incorporated where appropriate.  DOD and HCFA
comments appear in their entirety in appendixes V and VI,
respectively. 

---------------------------------------------------------- Letter :9.1

We are sending copies of this report to the Honorable William S. 
Cohen, Secretary of Defense, and the Honorable Nancy-Ann Min DeParle,
Administrator of HCFA, and will make copies available to others upon
request. 

Please contact me at (202) 512-7111 or Dan Brier, Assistant Director,
at (202) 512-6803 if you or your staff have any questions about this
report.  Other GAO staff who contributed to this report are Catherine
O'Hara, Evaluator-in-Charge; Linda Radey; Jonathan Ratner; Phyllis
Thorburn; and Sibyl Tilson. 

Stephen P.  Backhus
Director, Veterans' Affairs and
 Military Health Care Issues

List of Addressees

The Honorable John W.  Warner
Chairman
The Honorable Carl Levin
Ranking Minority Member
Committee on Armed Services
United States Senate

The Honorable William V.  Roth, Jr.
Chairman
The Honorable Daniel Patrick Moynihan
Ranking Minority Member
Committee on Finance
United States Senate

The Honorable Floyd D.  Spence
Chairman
The Honorable Ike Skelton
Ranking Minority Member
Committee on Armed Services
House of Representatives

The Honorable Tom Bliley
Chairman
The Honorable John D.  Dingell
Ranking Minority Member
Committee on Commerce
House of Representatives

The Honorable Bill Archer
Chairman
The Honorable Charles B.  Rangel
Ranking Minority Member
Committee on Ways and Means
House of Representatives

PROCESS FOR DETERMINING MEDICARE
PAYMENTS
=========================================================== Appendix I

The process for determining whether and how much Medicare pays to DOD
under the demonstration program begins with the estimation of DOD's
level of effort (LOE), or baseline costs.  To derive LOE, DOD
estimated its actual expenses in providing care to retirees during a
base, or reference, year.  Using 1996 as the base year, DOD currently
estimates LOE for the six sites at $172 million.  As agreed by HCFA
and DOD, Medicare payment does not start until current expenses reach
this baseline.  Thus, to the extent DOD's baseline expenses may be
over- or understated, Medicare either will under- or overpay.  And,
if expenses are captured during the demonstration that were not
included in the baseline, the baseline costs will be reached more
easily, which will erroneously trigger payments. 

Medicare payments to DOD involve both interim reimbursement, which is
monthly, and an annual reconciliation to determine final payment. 
DOD will receive interim payments from Medicare that are based on
monthly site LOE thresholds.  Only when a site's enrollment in Senior
Prime meets a specified threshold, which is a percentage of the
site's LOE, will interim payments be triggered.\16 The site is not
required to meet the annual threshold--a percentage of the annual
LOE--before it is entitled to interim payments. 

At the end of the year, two tests are applied to determine how much,
if any, of the interim payments DOD can retain.  First, expenses for
all dual eligibles (enrollees and nonenrollees) at all sites must
meet or exceed LOE ($172 million).  Second, expenses for enrollees
(as proxied by capitated payments for them) must reach or exceed
fixed thresholds--30 percent of LOE in the first year, 40 percent in
the next year, and 50 percent in the third. 

If DOD passes these two tests, two additional steps determine the
final payment.  First, Medicare's capitated rate, which is a modified
version of the Medicare+Choice rate,\17 is based on the average cost
for Medicare enrollees by county.  HCFA will risk adjust this rate
for Senior Prime enrollees, raising the rate if the enrollees were
sicker than average and decreasing the rate if they were healthier. 
Enrollees' rates are not changed if their health was average.  The
Memorandum of Agreement signed by HCFA and DOD for the demonstration
states that risk adjustment will take place only if the evidence of
differences in health status is compelling; neither the method of
adjustment nor the criteria for distinguishing compelling evidence
from less convincing evidence are given.  The second step requires,
for each site, an offset to interim payments to account for any
months in which enrollment fell short of the site's threshold. 
Finally, expenses for space-available care are added to the capitated
payments and baseline LOE is subtractedthe result is the final
payment to DOD.  The Balanced Budget Act caps payments to DOD at $50
million in the demonstration's first year, $60 million in the second
year, and $65 million in the third year. 

--------------------
\16 Monthly interim payments are the capitated payments for all
enrollees at a site minus the site's monthly threshold.  The
threshold is the site's monthly LOE multiplied by a stated percentage
(30 percent in the first 10 months of the demonstration, 40 percent
in the next 9, and 50 percent in the final 9 months). 

\17 Medicare's rate for Senior Prime enrollees is 95 percent of the
Medicare+Choice rate, with certain exclusions as specified in the
Balanced Budget Act and the Memorandum of Agreement. 

SCOPE AND METHODOLOGY
========================================================== Appendix II

In conducting our evaluation, we reviewed the method for measuring
DOD's LOE and ongoing DOD health care costs for Medicare-eligible
military retirees in the demonstration; we also reviewed key DOD
information and accounting systems and the data drawn from these
systems.  We visited three MTFs--Brooke Army Medical Center and
Wilford Hall Air Force Medical Center in San Antonio, Texas, and
Naval Medical Center San Diego, California.  These three centers are
expected to account for more than half the workload in the six-site
demonstration.  While at these sites, we interviewed command,
finance, and accounting staff, and reviewed cost and workload data. 
We also reviewed LOE cost calculations and interviewed DOD and HCFA
officials responsible for the subvention demonstration.  In addition,
we visited Madigan Army Medical Center, Fort Lewis, Washington,
shortly after it began delivering care under the demonstration.  We
also conducted an in-depth review of data system documentation and
Office of Inspector General and other studies related to the quality
of DOD data systems.  The data system documentation we examined, our
discussions with cognizant officials, and our review of other studies
confirmed that the data systems used in estimating LOE and measuring
ongoing DOD health care costs are also used to support DOD health
budgetary and program decisions, manpower justifications, facility
"rightsizing" initiatives, and managed care support contract
payments.  On this basis, we believe that our findings about DOD's
data are applicable systemwide. 

(See figure in printed edition.)Appendix III
DOD'S MEPRS MANAGEMENT IMPROVEMENT
PLAN
========================================================== Appendix II

(See figure in printed edition.)

(See figure in printed edition.)

(See figure in printed edition.)Appendix IV
ESTABLISHMENT OF HEALTH CARE DATA
QUALITY TEAM
========================================================== Appendix II

(See figure in printed edition.)

(See figure in printed edition.)

(See figure in printed edition.)

(See figure in printed edition.)

(See figure in printed edition.)Appendix V
COMMENTS FROM THE DEPARTMENT OF
DEFENSE
========================================================== Appendix II

(See figure in printed edition.)

(See figure in printed edition.)Appendix VI
COMMENTS FROM THE HEALTH CARE
FINANCING ADMINISTRATION
========================================================== Appendix II

(See figure in printed edition.)

(See figure in printed edition.)

(See figure in printed edition.)

*** End of document. ***