For such  contracts, most, but not all, of the requirements include an expected  outcome, but the manner in which that outcome is to be achieved is left to  the contractor. TMA then reviewed the revised proposals and, based on this review,  awarded the contract to UnitedHealth. TMA’s Guidance on Contract Transitions Was Inadequate, and Its Oversight Was Insufficient

		TMA’s Transition Guidance Was Inadequate for Both TRO-West and UnitedHealth

TMA provided some guidance to both TRO-West and UnitedHealth for  the West region’s managed care support contract transition, but the  guidance was inadequate because it lacked sufficient specificity on how  to both oversee the transition and meet certain transition requirements. As a result, contractors would need to have  a referral management system that could electronically interface with the  referral management systems used by the region’s MTFs to facilitate this  process. In  addition, while we recognize that under a performance-based contract an  agency does not provide detailed instructions to the contractor on how to  meet its requirements, we do not believe that a performance-based  contract diminishes TMA’s responsibility to provide an oversight structure  for managing the contractor’s performance during the transition period. As  we have previously reported, important attributes of a performance-based  contract include measurable performance standards and a quality   The  assurance plan for evaluating the contractor’s performance.contract with UnitedHealth contains these features. However, UnitedHealth officials did not  recall these discussions in our interviews, and TRO-West officials could  not provide documentation that they took place. Inadequate Guidance and Insufficient Oversight during the Contractor Transition Contributed to Health Care Delivery Problems, but Ultimately Led to Greater Oversight

TMA’s inadequate guidance and insufficient oversight of UnitedHealth’s  transition contributed to problems at the start of health care delivery,  which in turn led to the disruption in the continuity of care for some  beneficiaries and potentially cost the department millions of dollars,  according to Army officials. On May 2, 2013, the director of TMA issued a  temporary waiver of the requirement for TRICARE Prime beneficiaries to  obtain referral authorizations for specialty care. Call centers: TMA’s oversight of UnitedHealth’s plans for staffing its call  centers was insufficient, which contributed to a delayed resolution of  UnitedHealth’s performance problems, which lasted until the third month  of health care delivery. UnitedHealth began meeting its telephone response time requirements in  June 2013. A  majority of this penalty resulted from its failure to answer 90 percent of all  customer service calls within the required 30 seconds. Conclusions

The transition of managed care support contractors in the West region did  not go smoothly. Many problems arose that negatively affected TRICARE  beneficiaries and potentially resulted in additional costs for DOD. UnitedHealth was the first new managed care support contractor since  the TRICARE program began, and its transition highlighted numerous  deficiencies in TMA’s guidance and oversight. Furthermore, TMA failed to ensure that the incoming and  outgoing contractors used the same version of transition guidance,  resulting in information gaps that were left largely to the contractors to  resolve, contributing to UnitedHealth’s delay in meeting transition  requirements related to its provider network. Moreover, the transition guidance for  UnitedHealth also lacked sufficient detail for some requirements,  including the development of a critical interface for managing specialty  care referrals, which was not pretested to ensure that it was fully  operational prior to health care delivery, unlike pretesting that was done  for other system interfaces. Eventually, TMA did begin taking steps to hold  the contractor accountable for the problems that surfaced, including the  use of corrective action requests and financial penalties. In addition, to ensure that future managed care support contractors have  the information they need to successfully complete transition  requirements and are fully prepared for health care delivery, we  recommend that the Secretary of Defense require the Director of DHA to  5. DOD  stated that we made two specific assertions that it wanted to clarify:   (1) that TMA guidance and oversight during the transition period  contributed to issues with health care delivery; and (2) that this is the first  transition to a nonincumbent contractor since the start of the TRICARE  program. Our  report acknowledges that TMA conducted readiness reviews and some  pretesting activities. However, these financially related sanctions were for missed  requirements that took place after health care delivery began, and were  not imposed as a result of the missed transition requirements. DOD concurred or partially concurred with each of our recommendations. However, DOD disagreed with some of the related findings upon which  these recommendations were based.
Why GAO Did This Study

DOD provides health care through TRICARE, its regionally structured health care program. In each of its regions (North, South, West), DOD uses contractors to manage health care delivery through civilian providers, among other tasks. UnitedHealth—an organization new to TRICARE—was awarded the contract in the West region. After health care delivery began, UnitedHealth experienced problems fulfilling some requirements and delivering care to TRICARE beneficiaries.
GAO was asked to review the West region's transition to UnitedHealth. This report provides information on (1) the extent to which TMA provided guidance and oversight of the new contractor's transition period in preparation for health care delivery; and (2) how, if at all, TMA's guidance and oversight during the transition period contributed to issues with health care delivery. GAO reviewed and analyzed TMA guidance, contract requirements, and other relevant documentation, and interviewed TMA and UnitedHealth officials.

What GAO Found

The recent transition of TRICARE's managed care support contractors (contractors) in the West region did not go smoothly and highlighted numerous deficiencies in guidance and oversight by the TRICARE Management Activity (TMA)—the Department of Defense's (DOD) office responsible for awarding and managing these contracts at the time of GAO's review. For example, TMA did not ensure that its outgoing and incoming contractors used the same version of transition guidance, resulting in problems that were left largely to the contractors to resolve. Additionally, TMA's guidance lacked sufficient specificity for some requirements, such as the development of a referral management system that could interface with the referral systems used by the regions' military treatment facilities—a system that was also not tested prior to health care delivery, unlike other critical system interfaces. In addition, TMA lacked a process for holding the contractor accountable when transition requirements were delayed or not met. TMA officials explained that the regional contracts are performance-based, meaning that most—but not all—of the contract requirements include an expected outcome, but the manner in which that outcome is to be achieved is left to the contractor. As a result, TMA officials stated that, regardless of their concerns, it was difficult to hold UnitedHealthcare Military & Veterans Services (UnitedHealth) accountable until the requirement was actually missed. However, as GAO has previously reported, important attributes of a performance-based contract include features that allow for the evaluation of a contractor's performance. UnitedHealth's contract contained these features, and as a result, GAO believes that this performance-based contract structure did not diminish TMA's responsibility for providing sufficient oversight to ensure that the contractor was performing as required.
TMA's inadequate guidance and insufficient oversight contributed to problems with health care delivery. UnitedHealth experienced difficulty in meeting some of its requirements early on, disrupting continuity of care for some beneficiaries and potentially resulting in unnecessary costs. For example, the lack of guidance on developing a referral management interface contributed to problems with the processing of specialty care referrals. Consequently, the requirement for beneficiaries to obtain a referral authorization for specialty care was temporarily waived—a move that the Army estimated could cost DOD over a million dollars as beneficiaries may have obtained more specialty care from civilian providers than from military treatment facilities. Further, insufficient oversight related to UnitedHealth's determination of the number of staff needed to man its call center contributed to a delayed resolution in meeting telephone response time requirements. As a result, it was not until the third month of health care delivery that UnitedHealth was able to meet its requirement to answer 90 percent of calls within 30 seconds. These and other problems ultimately resulted in TMA holding the contractor accountable through the use of corrective action requests and financial penalties.

What GAO Recommends

GAO recommends that DOD review and revise as necessary, its transition guidance to strengthen its oversight and ensure that future managed care support contractors have sufficient information to successfully complete transition requirements. DOD concurred or partially concurred with GAO's recommendations, but disagreed with some of GAO's findings. GAO maintains that the information presented is accurate, and recommendations valid as discussed in the report.