Federal internal  control standards suggest that agencies should monitor performance data  to assess the quality of performance over time. DOD Has Not Systematically Monitored the Availability of Covered Medications or the Timeliness and Accuracy of Prescriptions Filled for the Pilot across MTF Pharmacies

For the pilot, DOD has not systematically monitored the availability of  covered medications, or the timeliness and accuracy of prescriptions filled  across MTF pharmacies. According to the standards for internal control in  the federal government, agencies should establish and review  performance standards, and then monitor these data to assess the quality  of performance over time. DOD has not established performance  standards across MTF pharmacies for ensuring that covered medications  are available and prescriptions are filled in a timely and accurate manner  for pilot beneficiaries. DOD Has Not Monitored Beneficiary Satisfaction with the Pilot

DOD has not monitored the extent to which beneficiaries who participated  in the pilot were satisfied with the transfer of prescriptions to mail order or  MTF pharmacies. Federal internal control standards suggest that  agencies obtain information from external stakeholders who may have a  significant impact on the agency achieving its goals. Federal internal control standards also  require agencies to monitor and assess the quality of performance over  time in order to ensure that findings are promptly resolved. By not  separately surveying pilot beneficiaries’ satisfaction with mail order or  MTF pharmacies, DOD does not know whether beneficiaries faced any  difficulties obtaining their covered medications, which is particularly  important to monitor during transitions of care. For mail order, DOD officials who monitor the pilot told us they have relied  on the results from a quarterly survey of all TRICARE mail-order  pharmacy users— the TRICARE Mail-Order Pharmacy Satisfaction  Survey—to assess the satisfaction of pilot beneficiaries. However, other DOD officials who monitor the survey  results said they do not recommend generalizing the survey results to the  overall TRICARE mail-order population or to pilot beneficiaries, thus  making the use of these data for this purpose questionable. DOD Has Issued Regulations, but Has Not Finalized Planning Documents for the Expansion of the Pilot Requirements

As of August 6, 2015, DOD issued an interim final rule implementing the  expansion of the pilot requirements to all eligible TRICARE  beneficiaries.developing planning documents for the expansion of the pilot  requirements to all eligible TRICARE beneficiaries, but have not finalized  these documents. Officials said these contract requirements will likely model those that  were developed for the pilot, including requiring ESI to report monthly  cost savings estimates. We recognize that NDAA for Fiscal Year 2015 shortened the period of the  pilot; however, the lack of systematic monitoring that we identified and  discussed earlier in the report suggests that DOD, in planning for the  expansion of the pilot requirements, would benefit from enhanced  emphasis on the monitoring of the availability of covered medications, the  timeliness and accuracy of prescriptions filled through mail order and  MTF pharmacies, and beneficiary satisfaction. These savings are expected to grow  once the requirements of the pilot are expanded to all eligible TRICARE  beneficiaries. Agency Comments and Our Evaluation

In commenting on a draft of this report, DOD concurred with our audit  findings and conclusions, as well as our recommendation that planning  documents for the expansion should include requirements to monitor  affected beneficiaries, including the availability of covered medications,  the timeliness and accuracy of prescriptions filled, and the satisfaction of  beneficiaries with mail order and MTF pharmacies. Appendix I: Methodologies to Develop the TRICARE for Life Pharmacy Pilot’s Cost Savings Estimates

The estimated cost savings for the first year of the pilot of $123 million  were generally comparable to the projected cost savings of approximately  $120 million that the Department of Defense (DOD) reported prior to the  start of the pilot. To develop the cost savings estimate of $123 million for the first year of  the pilot (February 15, 2014 through February 28, 2015), ESI officials  explained that they used data from February 15, 2014 through February 28, 2015 to  determine that approximately 785,000 prescriptions for covered  medications were filled through mail order for the pilot, determined the mail-order cost of these prescriptions, typically filled  for a 90-day supply, including ingredient cost, dispensing fees, and  administrative fees,  converted the mail-order cost of each of these prescriptions from a  90-day supply to the cost for a 30-day supply (e.g., the ingredient cost  for a 90-day supply at mail order of $30 would have been $10 for a  30-day supply at a retail pharmacy), determined what the cost would have been for these prescriptions if  they had been filled at a retail pharmacy, typically filled for a 30-day  supply,  calculated the difference between the copayments at mail order to the  copayments that beneficiaries would pay at retail pharmacies,  calculated the total cost savings for filling these 785,000 prescriptions  through mail order instead of at retail pharmacy: total ingredient cost  difference plus dispensing fee difference plus administrative fee  difference less copayment difference. Mail Order Pharmacies: DOD’s Use of VA’s Mail Pharmacy Could  Produce Savings and Other Benefits.
Why GAO Did This Study

DOD offers a pharmacy benefit to TRICARE beneficiaries who may obtain prescriptions from TRICARE's mail-order program, MTF pharmacies, or retail pharmacies. In 2013, the DOD Inspector General reported it was more cost efficient to fill prescriptions through mail order than retail pharmacies. To reduce costs, the National Defense Authorization Act (NDAA) for Fiscal Year 2013 required DOD to implement a pilot for certain TRICARE beneficiaries to obtain covered brand maintenance medications through mail order or MTF pharmacies. Under NDAA 2015, the pilot terminates at the end of fiscal year 2015, after which the pilot requirements are to be expanded to all eligible TRICARE beneficiaries.
The NDAA 2015 included a provision for GAO to examine the pilot. This report examines the extent to which DOD has (1) monitored whether covered brand maintenance medications were available, and prescriptions were filled on time and accurately, (2) monitored the satisfaction of participating beneficiaries, (3) achieved expected cost savings, and (4) prepared for the expansion. GAO reviewed and analyzed pilot performance and beneficiary satisfaction data, and cost savings estimates, and interviewed DOD officials and other stakeholders.

What GAO Found

For covered brand maintenance medications—those medications that are taken on a regular and recurring basis—the Department of Defense (DOD) has not fully monitored availability or the timeliness and accuracy of prescriptions filled for the TRICARE for Life Pharmacy Pilot. Specifically, GAO found that for the
mail-order program: DOD has monitored the availability of medications. It has also established and monitored performance standards on the timeliness and accuracy of prescriptions filled through mail order for all of TRICARE, but has not separately monitored performance through mail order for the pilot.
military-treatment-facility (MTF) pharmacies: DOD has not established or systematically monitored performance standards for the pilot on the availability of covered medications, or the timeliness and accuracy of prescriptions filled across MTF pharmacies.
Federal internal control standards suggest that agencies establish and review performance standards and monitor performance data to assess the quality of performance over time. Without fully monitoring the pilot's performance, DOD does not know whether it is working as intended, information that would be beneficial given the upcoming expansion of its requirements to all eligible TRICARE beneficiaries.
DOD has not monitored the extent to which beneficiaries were satisfied with the transfer of prescriptions to mail order or MTF pharmacies for the pilot. DOD officials said they relied on the results from a quarterly survey of TRICARE mail-order users to assess the satisfaction of pilot beneficiaries. However, other DOD officials who monitor the survey data said they do not know how representative the respondents are of pilot beneficiaries making the use of these data for this purpose questionable. Moreover, DOD has not monitored satisfaction of pilot beneficiaries across MTF pharmacies. Federal internal control standards require agencies to obtain information from external stakeholders to assess if they are achieving their goals, and to monitor and assess the quality of performance over time to ensure that issues are resolved. Without this stakeholder input, DOD lacks important information as to whether pilot beneficiaries faced any difficulties, including with obtaining their medications.
DOD appears to have achieved its expected cost savings based on estimates GAO reviewed. For the first year of the pilot, DOD's estimated cost savings were approximately $123 million based on the prescriptions for covered medications filled through mail order. This was comparable to DOD's projected cost savings of $120 million, an estimate that DOD developed prior to the start of the pilot.
DOD has issued regulations, but not finalized planning documents for the expansion of the pilot requirements. Officials said that they are in the process of developing planning documents, which will generally model those that were developed for the pilot. Given the limited monitoring conducted during the pilot, as it finalizes its planning documents for the expansion of the pilot to all eligible TRICARE beneficiaries, DOD would benefit from developing a robust monitoring process of affected beneficiaries, including the availability of medications, the timeliness and accuracy of prescriptions filled, and beneficiary satisfaction.

What GAO Recommends

GAO recommends that DOD develop a monitoring plan as part of its expansion planning documents. DOD concurred with GAO's recommendation.