United States General Accounting Office GAO Report to the Chairman, Subcommittee on Defense, Committee on Appropriations, House of Representatives April 1999 DEFENSE HEALTH PROGRAM Reporting of Funding Adjustments Would Assist Congressional Oversight GAO/HEHS-99-79 United States GAO General Accounting Office Washington, D.C. 20548 Health, Education, and Human Services Division B-281106 April 29, 1999 The Honorable Jerry Lewis Chairman, Subcommittee on Defense Committee on Appropriations House of Representatives Dear Mr. Chairman: As one of the largest health care providers in the nation, the Department of Defense (DOD) has experienced many of the same challenges as the private sector health care industry—including rising costs, problems with access to care, and lack of a uniform benefit. Between fiscal years 1994 and 1998, the Congress appropriated $48.9 billion for DOD’s Defense Health Program (DHP) to provide medical and dental services to active duty personnel and their families and retired military personnel. These funds were appropriated for DHP operations and maintenance (O&M) expenses.1 They were primarily used to deliver patient care in DOD’s direct care system of service-operated military treatment facilities (MTF) or to purchase care through the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS) and seven TRICARE managed care support (MCS) contracts.2 Each year, the Congress appropriates funds for DHP O&M expenses after reviewing and making adjustments to DOD’s budget request. DOD’s request estimates dollar requirements for the entire DHP and shows how proposed spending would be allocated among seven major health care subactivities (for example, direct care, purchased care, training) and the 34 specific program elements. After the Congress appropriates overall DHP funding, DOD allocates its appropriation among the seven DHP subactivities and the 34 program elements. These budget allocations generally align with the budget request estimates, and DOD reports the allocated amounts back to 1 In addition to the DHP O&M appropriation, the Congress appropriates funds to cover other military health system costs. For example, in fiscal year 1999, the Congress appropriated a total of about $15.9 billion for the military health system. This included $9.9 billion for DHP O&M; $5.3 billion for military personnel; $401 million for DHP procurement; $228 million for military construction; and $19.4 million for research and development. 2 DOD administered CHAMPUS as an insurance-like program to pay for a portion of the care military families and retirees under age 65 received from private sector providers. Under its TRICARE managed care reform effort, DOD phased out CHAMPUS between 1995 and 1998 and now purchases private health care and administrative services nationwide from major health care companies under its MCS contracts. Page 1 GAO/HEHS-99-79 Defense Health Program B-281106 the Congress with the next fiscal year’s budget request. Actual obligations,3 however, are separately reported two years later to the Congress with that subsequent fiscal year’s budget request. The previous subcommittee chairman raised concerns about apparent discrepancies between DOD’s budget allocations and the actual obligations for direct and purchased care. The chairman asked that we determine (1) the extent to which DHP obligations have differed from DOD’s budget allocations, particularly for MCS contracts; (2) the reasons for any such differences; and (3) whether congressional oversight of DHP funding changes could be enhanced if DOD provided notification or budget execution data. In doing our work, we interviewed and obtained documentation from budget officials of the Office of the Secretary of Defense (Comptroller); the Office of the Assistant Secretary of Defense (Health Affairs); the TRICARE Management Activity (TMA); and the Army, Navy, and Air Force Surgeons General. Because MCS contracts became a DHP program element in fiscal year 1994, we analyzed fiscal years 1994 through 1998 budget data. DOD provided the data on DHP O&M requests, budget allocations, and obligations between 1994 and 1998 by subactivity and program element.4 We reviewed these data for internal consistency, where possible, but did not independently review source data to validate its accuracy. We performed our work between August 1998 and March 1999 in conformance with generally accepted government auditing standards. Between fiscal years 1994 and 1998, the Congress appropriated Results in Brief $48.9 billion for DHP O&M expenses. During that period, DHP obligations at the subactivity level, particularly for direct and purchased care, differed in significant ways from DOD’s budget allocations. In total, about $4.8 billion was obligated differently—as either increases to or decreases from the budget allocations DOD had developed for the seven DHP subactivities. Between 1994 and 1998 for example, DOD decreased its purchased care obligations by about $2 billion and adjusted direct patient care and information technology obligations by $1.4 billion. DOD also moved varying amounts into and out of such other subactivities as MTF base operations, medical education, and management activities. 3 Amounts of orders placed, contracts awarded, services received, and similar transactions during a given period that will require payments during the same or future period. 4 In compiling the 1994 through 1998 data, DOD used the program element structure for the fiscal year 2000 DHP budget request and made adjustments for prior years to ensure accurate comparisons. Page 2 GAO/HEHS-99-79 Defense Health Program B-281106 These funding changes occurred because of internal DOD policy choices and other major program changes. According to DOD, its strategy was to fully fund purchased care activities within available funding levels. This strategy left less to budget for direct care and other DHP subactivities. TMA officials also told us that because the DHP has both direct and purchased care components, whereby many beneficiaries can access either system to obtain health care, it is difficult to reliably estimate annual demand and costs for each component. Between 1994 and 1996, purchased care obligations were $1.9 billion less than allocated because of faulty physician payment rate and actuarial assumptions. Between 1994 and 1998, direct patient care obligations amounted to $1 billion more than DOD had allocated—during a period of base closures and MTF downsizing—largely because DOD understated estimated direct care requirements. Also, between 1996 and 1998, DOD overestimated MCS contract costs, believing that contract award prices would be higher and implementation would begin sooner than what occurred. Thus, most of the unobligated MCS contract funds were used to defray higher than anticipated CHAMPUS obligations. The movement of DHP funds from one subactivity to another does not require prior congressional notification or approval.5 As a result, these sizeable funding changes have generally occurred without congressional awareness. Now that the MCS contracts are implemented nationwide, DOD officials expect future DHP obligations to track more closely with budget allocations. However, they also expect some level of changes to continue during budget execution, given the uncertainties in estimating the annual costs of the direct care and purchased care system components. Meanwhile, current law and regulations will continue to allow DOD the latitude to move funds between subactivities with little or no congressional oversight. Thus, congressional oversight could be enhanced if the Congress chooses to require DOD to (1) notify the congressional defense committees of its intent to shift funds among subactivities whenever the shifted amount exceeds a certain threshold amount and/or (2) provide quarterly budget execution data. The DHP budget estimates submitted to the Congress consist of all the O&M Background on the and procurement resources needed to support DOD’s consolidated medical DHP O&M Budget 5 As defined in DOD financial management regulation 7000.14-R (Vol. 3, Ch. 6), these actions are not considered reprogramming, which requires notification or prior approval of the Congress. Page 3 GAO/HEHS-99-79 Defense Health Program B-281106 activities.6 According to DOD, the budget estimates are based on the continued refinement and application of a managed care strategy and methodology used to produce DOD’s health care services for eligible beneficiaries. Operating under the Assistant Secretary of Defense (Health Affairs), TMA is responsible for formulating the DHP budget request and for managing DOD’s CHAMPUS and MCS contracts. The Surgeons General of the Army, Navy, and Air Force are responsible for the budget execution of decentralized medical activities such as direct MTF patient care. The DHP O&M budget request consists of a single budget activity—administration and servicewide activities.7 Each year, DOD provides detailed DHP budget information to the Congress in “justification materials” that show amounts requested for each of the 7 subactivities that encompass 34 program elements (see table 1).8 6 This report addresses O&M resources, or about 96 percent of DOD’s fiscal year 1999 DHP budget request. The remaining 4 percent of the DHP budget request ($401 million in fiscal year 1999) funds procurement of capital equipment in support of MTF and health care operations. 7 In addition to the DHP O&M budget request that covers health care expenses, DOD submits O&M budget requests to finance other portions of DOD’s readiness and quality-of-life priorities. O&M appropriations fund a diverse range of programs and activities that include salaries and benefits for most civilian DOD employees, depot maintenance activities, fuel purchases, flying hours, environmental restoration, base operations, and consumable supplies. Moreover, each service and DOD agency spends O&M funds. 8 In general, non-DHP O&M budget requests are presented as four broad budget activities: operating forces, mobilization, training and recruiting, and administration and servicewide activities. These requests usually break down each budget activity into activity groups, which in turn are broken into subactivity groups, and finally into program elements. In contrast, the DHP O&M budget consists of a single budget activity—administration and servicewide activities. For comparison of the budget line items, the DHP subactivities and program elements correspond to the non-DHP O&M activity groups and subactivities line items. Page 4 GAO/HEHS-99-79 Defense Health Program B-281106 Table 1: Defense Health Program Operations and Maintenance Subactivities and Program Elements Subactivity Pays for Program element In-house care Medical and dental care for patients in MTFs Defense medical centers, hospitals, and medical clinics—CONUS; (direct care) defense medical centers, hospitals, and medical clinics—OCONUS; dental care activities—CONUS; and dental care activities—OCONUS Private sector care Medical and dental care for patients in Managed care support contracts, CHAMPUS, and care in (purchased care) private sector settings nondefense facilities Consolidated health Supporting DOD’s worldwide delivery of Other health activities, military public/occupational health, other support patient care unique military medical activities, aeromedical evacuation activities, Armed Forces Institute of Pathology, examining activities, and veterinary activities Information Automated information systems to support Central information management management military medical readiness and health care administration Management Headquarters administration of direct care Management headquarters and TRICARE Management Activity activities and private sector medical activities Education and Achieving and maintaining general and Armed Forces Health Professions Scholarship Program, Uniformed training specialized medical skills and abilities of Services University of the Health Sciences, and other education military and civilian professionals and training Base operations/ Operating and maintaining DOD-owned Minor construction—CONUS; minor construction—OCONUS; communications medical and dental facilities maintenance and repair—CONUS; maintenance and repair—OCONUS; real property services—CONUS; real property services—OCONUS; base operations—CONUS; base operations—OCONUS; base communication—CONUS; base communication—OCONUS; environmental conservation; environmental compliance; pollution prevention; and visual information activities Note: CONUS means continental United States; OCONUS means outside the continental United States. Source: Department of Defense Comptroller. While the Congress appropriates DHP O&M funds as a single lump sum, its budget decision is based on the DHP budget request presented at the subactivity and program element levels. Since 1994, the Congress has generally appropriated more for DHP O&M expenses than DOD requested (see fig. 1). Page 5 GAO/HEHS-99-79 Defense Health Program B-281106 Figure 1: Defense Health Program Operations and Maintenance Budget 12 Dollars in Billions Status, Fiscal Years 1994–99 9.86 9.89 9.94 10.04 10.11 9.9 10 9.61 9.59 9.65 9.33 9.36 9.08 8 2 2 2 0 1994 1995 1996 1997 1998 1999 Fiscal Year Requested Appropriated Source: TMA Office of Resource Management. Committee reports may specify relatively small amounts of funding for such items as breast cancer and ovarian cancer research, which DOD then obligates through the appropriate account in accordance with congressional direction.9 Other than the funds specifically earmarked by the Congress, DOD has the latitude to allocate its congressional appropriation as needed to meet estimated subactivity and program element requirements. Between 1994 and 1999, DOD allocated most appropriations to direct care (primarily MTF patient care) and to purchased care (primarily CHAMPUS and MCS contracts). Table 2 shows the allocation of DHP appropriations by subactivity (see tables I.1 and I.2 for detailed information on DHP budget requests, budget allocations, and actual or currently estimated obligations between fiscal years 1994 and 1999). 9 Between fiscal years 1994 and 1999, of the total $58.7 billion DHP O&M appropriation, the Congress specified about $929 million in funding for designated activities. Page 6 GAO/HEHS-99-79 Defense Health Program B-281106 Table 2: DOD’s Allocation of Defense Health Program Operations and Dollars in billions Maintenance Appropriations by Subactivity 1994 1995 1996 1997 1998 1999 Subactivity, Fiscal Years 1994-99 Direct $2.93 $3.06 $3.45 $3.46 $3.35 $3.15 care Purchased 4.38 4.51 4.27 3.94 4.05 4.07 care Consolidated 0.68 0.66 0.71 0.83 0.98 0.88 health support Information 0.22 0.21 0.22 0.31 0.22 0.30 management Management 0.13 0.12 0.10 0.09 0.15 0.17 activities Education 0.25 0.26 0.22 0.29 0.32 0.31 and training Base 0.74 0.77 0.91 1.01 1.03 1.02 operations Totala $9.33 $9.59 $9.89 $9.94 $10.11 $9.90 a Totals may not add because of rounding. Source: TMA Office of Resource Management. The Congress appropriated $48.9 billion for DHP O&M expenses between Significant fiscal years 1994 and 1998. During budget execution, DOD obligated about Differences Between $4.8 billion differently—as either increases or decreases—from its budget Budget Allocations allocations for the various subactivities (see table 3). Obligations differed particularly for the direct care and purchased care subactivities. However, and Obligations the magnitude of the funding adjustments has diminished in recent years, dropping to about $283 million in fiscal year 1998 from a peak of almost $1.5 billion in fiscal year 1995. Because the Congress makes a lump-sum appropriation, under DOD regulations and informal arrangements with the Congress, these adjustments did not require congressional notification or approval. Page 7 GAO/HEHS-99-79 Defense Health Program B-281106 Table 3: Funding Adjustments Made at the Subactivity Level During Budget Execution, Fiscal Years 1994-98 Dollars in thousands Magnitude of increase and Subactivity 1994 1995 1996 1997 1998 decrease Direct care $519,842 $356,469 –$40,875 –$106,997 –$2,691 $1,026,874 Purchased care –606,680 –727,119 –546,764 –66,069 –84,093 2,030,725 Consolidated health support 7,403 157,296 148,368 69,111 –78,332 460,510 Information management 23,393 45,458 220,467 –101,271 5,739 396,328 Management activities –29,691 –2,938 44,715 68,118 33,628 179,090 Education and training –23,696 16,927 59,147 4,527 13,458 117,755 Base operations 127,004 187,738 95,617 69,235 –64,904 544,498 Subtotal, increase 677,642 763,888 568,314 210,991 52,825 2,273,660 Subtotal, decrease –660,067 –730,057 –587,639 –274,337 –230,020 –2,482,120 Magnitude of adjustment 1,337,709 1,493,945 1,155,953 485,328 282,845 4,755,780 Appropriation $9,326,635 $9,591,331 $9,886,961 $9,937,908 $10,108,007 $48,850,842 Note: This table details funding adjustments at the subactivity level during budget execution. See table I.3 for information presented for each fiscal year on other DHP adjustments such as supplemental appropriations, rescissions, and reprogramming, as well as the amount of unobligated funds left over at the end of the fiscal year. Source: TMA Office of Resource Management data. The largest funding adjustments occurred in the direct care and purchased care subactivities. Between 1994 and 1998, DOD allocated $21.2 billion from the final DHP appropriation for purchased care but obligated only $19.1 billion, allowing DOD to reallocate $2.0 billion into such areas as direct patient care, information management, and base operations. For example, between 1994 and 1995, DOD increased obligations for direct care at MTFs by $876.3 million above the allocation. Between 1994 and 1996, DOD obligated about $289.5 million more than it had allocated for the information management subactivity. Also, funding for the base operations subactivity—which includes such items as repairs and maintenance on MTF facilities—received an increase of $479.6 million over the budget allocation between 1994 and 1997. (Table I.4 details the funding increases and decreases for each subactivity and program element between fiscal years 1994 and 1998.) In each year between 1994 and 1998, DOD’s budget allocation for purchased care—which provided funds for CHAMPUS, the now-terminated CHAMPUS Page 8 GAO/HEHS-99-79 Defense Health Program B-281106 Reform Initiative contracts,10 and MCS contracts—exceeded obligations, as shown in figure 2. Figure 2: Comparison of CHAMPUS and MCS Contract Budget Allocations Dollars in Billions and Actual Obligations, Fiscal Years 4 3.86 3.86 1994-98 3.77 3.58 3.49 3.49 3.41 3.32 3.33 3.28 3 2 1 0 1994 1995 1996 1997 1998 Fiscal Year Allocated Obligated Source: TMA Office of Resource Management. At the program element level, the largest adjustments within the purchased care subactivity occurred between 1994 and 1996, when DOD obligated $1.4 billion less than the budget allocation for the CHAMPUS program element (see table I.4 and fig. 3). In contrast, MCS contract budget allocations more closely matched obligations through 1996, when DOD implemented two of the then four awarded MCS contracts on time. In 1997 and 1998, however, when implementation of the last three contracts was delayed, MCS budget allocations exceeded obligations by $990 million. Because of the delays in starting up these contracts, most of the 10 Between 1994 and 1996, most MCS contract obligations were used for two CHAMPUS Reform Initiative managed care contracts in Louisiana, California, and Hawaii. Budget obligations for these two contracts were $820.4 million (1994), $826.2 million (1995), and $838.2 million (1996). Page 9 GAO/HEHS-99-79 Defense Health Program B-281106 unobligated MCS contract funds were used to defray higher than anticipated CHAMPUS program obligations. Page 10 GAO/HEHS-99-79 Defense Health Program B-281106 Figure 3: Purchased Care Subactivity Funding Adjustments in CHAMPUS 600 Dollars in Millions and MCS Contract Program Elements, Fiscal Years 1994-98 446.7 400 371.6 200 0 -47.8 -200 -69.8 -103.5 -400 -387.8 -476.2 -486.3 -469.0 -600 -520.6 1994 1995 1996 1997 1998 Fiscal Year CHAMPUS MCS Source: TMA Office of Resource Management data. Page 11 GAO/HEHS-99-79 Defense Health Program B-281106 According to DOD officials, between 1994 and 1998, DOD-wide budget DHP Obligations pressures and major program changes—such as downsizing and the Differed From Budget rollout of TRICARE managed care reforms—made it difficult to estimate Allocations for and allocate resources between direct care and purchased care budgets. They emphasized that while they are directly responsible for appropriation Several Reasons amounts at the lump-sum level, they have flexibility to manage the health care delivery system. Therefore, in executing the DHP appropriation funds for patient care, such funds may flow from direct care to purchased care and vice versa. They believe this flexibility is critical to efficiently managing the military health care delivery system.11 DOD officials cited several interrelated reasons why DHP obligations differed from DOD’s budget allocations between fiscal years 1994 and 1998. These reasons also suggest why “shortfalls” in recent DHP budget requests have prompted congressional concerns about the process DOD uses to estimate and allocate the DHP budget. Decision to Fully Fund TMA, Health Affairs, and service budget officials made various internal Purchased Care Left Less budget policy choices that included a DHP budget strategy to fully fund for Other Subactivities purchased care activities within available funding levels. This strategy, coupled with general budget pressures, left less money with which to budget direct care and other DHP subactivity requirements (such as information management and base operations). To keep within the DOD-wide spending caps, the officials intentionally understated requirements for direct care and other subactivities in the DHP budget requests submitted to the Congress. This pattern of policy choices, which led budget officials to underestimate direct care budget requirements, is underscored by the congressional testimonies by the Assistant Secretary of Defense (Health Affairs) and the service Surgeons General—all of whom identified shortfalls in the past 3 years of DHP budget requests, 1997 through 1999.12 The shortfalls—that is, the difference between the Assistant Secretary’s and the Surgeons General’s views of their needs and the President’s budget submission—have raised congressional concerns over DHP budget requests and prompted both DOD and the Congress to 11 DOD officials commented that most of the adjustments moved between purchased care and direct care subactivities—both of which pay for the delivery of health care to beneficiaries—and that increased funding for information management also supported the implementation of managed care in the direct care system. 12 For example, in testimony before appropriations committees on the fiscal year 1997 budget request, the Assistant Secretary of Defense (Health Affairs) and the service Surgeons General provided specific details of how a $475 million shortfall would severely reduce care and medical services to military families and retirees. One Surgeon General testified that the shortfall would force him to cut services equivalent to closing two large hospitals for an entire year. Page 12 GAO/HEHS-99-79 Defense Health Program B-281106 offset the shortfalls in various ways (see table 4). In addition, TMA and service officials told us they have relied on DHP’s flexibility during budget execution to fund direct patient care with funds available and not needed for CHAMPUS and MCS contracts. Table 4: Offsets to Shortfalls in Defense Health Program Operations Dollars in millions and Maintenance Budget Requests, Offset by Fiscal Years 1997-99 Budget DOD Appropriation Supplemental Fiscal year request action increase appropriation 1997 $9,358.3 None $475.0 None 1998 10,040.6 $274.0 None $1.9a (amended budget request) 1999 9,653.4 104.6b None 204.1b (reprogramming) a P. L. 105-174. b P. L. 105-277. In addition to the almost $309 million in offsets from the supplemental appropriation and DOD reprogramming, DOD plans to take other actions in fiscal year 1999 to address the additional fiscal pressures. Planned actions include making cost-saving efficiencies within the direct care system, support activities, headquarters management, and MCS and information technology contracts. Timing of the Budget TMA officials told us that forecasting health care costs for budgeting Process Presents purposes is inherently challenging because the budget year starts about 18 Challenges months after DOD starts preparing DHP budget estimates and 8 months after the President submits the DHP budget request to the Congress. They commented that many conditions change, affecting their direct and purchased care estimates over these protracted periods. In our view, however, these comments do not explain the often large differences that have occurred between budget allocations—which are established after the congressional appropriation is actually received—and obligations, which follow almost immediately thereafter. DOD has the flexibility to allocate most of its congressional appropriations as needed among the various DHP subactivities. Despite this flexibility and even taking into account the minor impacts of other adjustments to DHP’s allocated budget amounts such as supplemental appropriations or reprogrammings,13 DHP 13 Table I.3 identifies other adjustments following congressional approval of funds for DHP O&M expenses enacted through the annual appropriations act. Compared with the almost $4.8 billion in funding increases and decreases during budget execution, the impacts were minor from other adjustments: a net decrease of $139.4 million from foreign currency fluctuations, supplemental appropriations, program cancellations, rescissions, reprogrammings, transfers, and withholds; and $57.7 million in unobligated funds between 1994 and 1998. Page 13 GAO/HEHS-99-79 Defense Health Program B-281106 obligations still varied significantly from the budget allocations reported to the Congress, calling into question DOD’s methods for estimating DHP budget requirements. Number of Nonenrolled TMA and Health Affairs budget officials told us that the DHP beneficiary Beneficiaries Causes population is largely undefined, leading to budget uncertainty. According Budget Uncertainty to these officials, DOD has little control over where beneficiaries go to get their health care because MTFs and MCS contractors do not enroll most beneficiaries. TMA officials stated that, in formulating the DHP budget request, separate cost estimates for MTFs and MCS contracts are based on the best available information at the time. Although service officials told us they had developed higher direct care budget estimates—which TMA nonetheless chose to underfund in the final DHP budget requests—one official told us that the nonenrolled beneficiary population is a major impediment to submitting realistic DHP budget requests. Moreover, DOD’s capitation method (allocating MTF budgets on the basis of the number of estimated users of the military health system) has not kept pace with MTF cost increases for space-available care to nonenrolled beneficiaries for medical services and outpatient prescription drugs.14 Others have noted similar concerns about the lack of a clearly defined beneficiary population and the effect on DHP budgeting uncertainties. For example, in a 1995 report,15 the Congressional Budget Office (CBO) raised concerns that, even with TRICARE Prime’s lower cost-sharing features providing incentives, not enough beneficiaries would enroll, and DOD would continue to have difficulties planning and budgeting. For DOD to effectively predict costs and efficiently manage the system, CBO concluded that DOD would need a universal beneficiary enrollment system to clearly identify the population for whom health care is to be provided. CBO concluded that even under TRICARE, beneficiaries can move in and out of the system as they please, relying on it for all, some, or none of their care. DOD would have to continue its reliance on surveys to estimate how many beneficiaries use direct care and purchased care and to what extent DOD is 14 DOD has designed a new funding system—enrollment-based capitation—which is intended to motivate and reward MTF commanders for maximizing their enrolled population. Under this approach, DOD funds MTFs on the basis of the number of beneficiaries enrolled in Prime at the MTF. Under enrollment-based capitation, MTFs will continue to receive funding for the care they provide to nonenrollees, but at a lower rate than for those enrolled. 15 CBO Papers: Restructuring Military Medical Care (July 1995). Page 14 GAO/HEHS-99-79 Defense Health Program B-281106 their primary or secondary source of coverage. In previous reports,16 we also raised concerns about the budgetary uncertainties caused by less-than-optimal enrollment. Moreover, at the end of fiscal year 1998, we estimate that less than half of the 8.2 million DOD-eligible beneficiaries were enrolled. Thus, DOD’s budgeting uncertainties stem, in large measure, from its lack of a universal enrollment requirement. Base Closures Did Not Higher than expected MTF costs in fiscal years 1994 and 1995 were given as Yield Expected Savings another reason that DHP obligations differed from budget allocations, according to TMA, Health Affairs, and service officials. The budget savings projected to result from base closures (and reflected in their requests) were not achieved. Therefore, although the number of MTFs decreased by 9.5 percent between 1994 and 1998, DOD wound up obligating $726 million more for direct care than the amount allocated (see fig. 4). One service official told us that despite MTF downsizing, the number of beneficiaries going to MTFs has not dropped, thus sustaining a high level of demand for MTF health care. But MTF inpatient and outpatient workload data reported to the Congress in DOD’s annual justification materials indicate that MTF inpatient and outpatient workload declined by a respective 54.5 percent and 26 percent between 1994 and 1998. However, DOD and TMA officials cautioned us that the MTF workload data are not accurate. Yet, a May 1998 DOD Inspector General audit report (on the extent to which managed care utilization management savings met Health Affairs’ expectations as reflected in its DHP budgets17 found a significant reduction in inpatient and outpatient workload at 15 large MTFs from fiscal year 1994 through 1996, but no corresponding decrease in operating costs. DOD’s Inspector General attributed the cause to MTFs generally increasing their military medical staffing and infrastructure costs (real property maintenance, minor construction, and housekeeping). And, according to the Inspector General, it is especially difficult to reduce operating costs when workload is reducing without decreasing military medical staffing. 16 For more information on DOD enrollment and capitation features, see Defense Health Care: Issues and Challenges Confronting Military Medicine (GAO/HEHS-95-104, Mar. 22, 1995) and Defense Health Care: Operational Difficulties and System Uncertainties Pose Continuing Challenges for TRICARE (GAO/T-HEHS-98-100, Feb. 26, 1998). 17 DOD, Office of the Inspector General, Joint Audit Report: Military Health System Utilization Management Program at Medical Centers, Report No. 98-136 (May 22, 1998). Page 15 GAO/HEHS-99-79 Defense Health Program B-281106 Figure 4: Direct Care Budget Status, Fiscal Years 1994-98 4.0 Dollars in Billions 3.8 3.6 3.45 3.45 3.45 3.46 3.41 3.42 3.4 3.35 3.41 3.24 3.35 3.35 3.2 3.1 3.06 3.0 2.92 2.93 2.8 2.6 0.2 0 1994 1995 1996 1997 1998 Fiscal Year Requested Allocated Obligated Source: TMA Office of Resource Management. Lower Purchased Care TMA, Health Affairs, and service officials also told us that several Obligations Were Not interrelated factors had made purchased care obligations significantly Anticipated lower than the allocated amounts between 1994 and 1998. First, they did not fully account for savings from rate changes in the CHAMPUS maximum allowable charge (CMAC) for physician payments.18 DOD officials told us that during this period, CHAMPUS budget requests and allocations did not account for $408 million to $656 million in estimated 3-year CMAC savings between 1994 and 1996. For fiscal years 1997 to 1998, DOD has estimated that CMAC saved $1.5 billion in CHAMPUS and TRICARE contract costs. Given that DHP purchased care budget requests and allocations track more closely with obligations in 1997 and 1998, it appears TMA better accounted for CMAC savings. Second, DOD officials cited a factor related to their 18 Beginning in 1991, the Congress directed DOD to gradually lower reimbursement rates paid to civilian physicians under CHAMPUS. Physician payments had been based on charges that were 50 percent higher on average than those paid for identical treatment under the Medicare program. For more information, see Defense Health Care: Reimbursement Rates Appropriately Set; Other Problems Concern Physicians (GAO/HEHS-98-80, Feb. 26, 1998). Page 16 GAO/HEHS-99-79 Defense Health Program B-281106 budget strategy of conservatively estimating purchased care costs. After an earlier history of CHAMPUS budget shortfalls, DOD changed its budget strategy from not fully funding CHAMPUS to ensuring CHAMPUS was fully funded.19 However, they noted that an actuarial model for projecting CHAMPUS costs, which was used to formulate the budget requests for fiscal years 1994 through 1996, greatly overestimated CHAMPUS requirements. Concerns About Finally, with the CHAMPUS phase-out and the switch to MCS contracts, TMA Antideficiency Act and Health Affairs officials cited the need to fully fund these contracts in Violations Drove Decisions their budget request. According to these officials, their MCS budgeting strategy was essentially driven by the concern that if there were not enough funds allocated for the MCS contracts, an Antideficiency Act violation could occur. We do not see, however, how requesting the amount of funds DOD anticipates the contracts will actually cost could trigger an Antideficiency Act violation. Budget requests, even where they fail to fully fund an activity, do not cause such violations. One of the ways an Antideficiency Act violation could occur is if DOD continued to pay additional amounts under the contract and overobligated or overexpended the appropriation or fund account related to the contract.20 In such a case, the proper response would be to reprogram funds and/or seek additional appropriations in advance of any such potential deficiency. In other words, should funds allocated for the MCS contracts appear to be inadequate, DOD would find itself in essentially the same position as any agency that anticipates running short of funds. Only if DOD officials continued to make additional payments under the contract knowing that appropriations for them were not available would there be an Antideficiency Act violation. Looking ahead, DOD officials pointed out that the amount of funds shifted between DHP subactivities had fallen in 1997 and 1998, and they anticipated that volatility within the purchased care subactivity would also decrease now that all seven MCS contracts have been implemented. Officials also stated that TMA has established new resource management controls. A quarterly workgroup process, for example, refines CHAMPUS and MCS 19 Between 1985 and 1991, unanticipated growth in the CHAMPUS program was the main factor behind $2.8 billion budget shortfalls, much of which had to be financed through reprogramming and supplemental appropriations. For more information, see DOD Health Care: Funding Shortfalls in CHAMPUS, Fiscal Years 1985-91 (GAO/HRD-90-99BR, Mar. 19, 1990). 20 Antideficiency Act violations can also occur when entering into a contract or making an obligation in advance of an appropriation unless authorized by law; or overobligating or overexpending an apportionment or reapportionment of amounts permitted by DOD’s administrative control of funds regulations. Page 17 GAO/HEHS-99-79 Defense Health Program B-281106 contract requirements and identifies associated DHP-wide adjustments that can be used to formulate future budget estimates. They stated that these procedures represent significant improvements in their ability to precisely project direct care and purchased care requirements. They acknowledged, however, that the next round of MCS contracts will be awarded and administered differently than the first round and that their integrated care system, with its largely nonenrolled beneficiary population, is inherently difficult to budget for. Thus, funding changes during budget execution are nearly inevitable. The movement of DHP funds between subactivities does not require prior Notification or Budget congressional notification or approval. While the Congress must be Execution Data Would notified in many cases when DOD transfers or reprograms appropriated Enhance Oversight of funds, these reporting rules do not apply to the movement of funds among DHP subactivities. As a result, sizeable funding changes have occurred DHP Funding without specific notification. Refinements to the reporting process would Changes put the Congress in a better position to be aware of funding changes. Reprogramming Actions Under procedures agreed upon between congressional committees and Have Varying Degrees of DOD, funds can be obligated for purposes other than originally proposed Congressional Oversight through transfers and reprogrammings. Reprogramming shifts funds from one program to another within the same budget account, while a transfer shifts funds from one account to another. According to the Congressional Research Service, DOD uses the term “reprogramming” for both kinds of transactions.21 DOD budgetary regulations,22 reflecting instructions from the appropriations committees, distinguish among three types of reprogramming actions: 1. Actions requiring congressional notification and approval, including (a) all transfers between accounts, (b) any change to a program that is a matter of special interest to the Congress, and (c) increases to congressionally approved procurement quantities; 2. Actions requiring only notification of the Congress, including reprogramming that exceeds certain threshold amounts; and 21 In annual appropriations bills, the Congress grants DOD authority to transfer up to specified amounts between accounts. In recent years, DOD has been given general transfer authority of $2 billion per year, and additional amounts have been made available for transfer for specific purposes. See M. Tyszkiewicz and S. Daggett, CRS Report for Congress: A Defense Budget Primer (Washington, D.C.: Congressional Research Service, 1998). 22 DOD Financial Management Regulation 7000.14-R (Vol. 3, Ch. 6). Page 18 GAO/HEHS-99-79 Defense Health Program B-281106 3. Actions not requiring any congressional notification, including reprogramming below certain threshold amounts and actions that reclassify amounts and actions within an appropriation without changing the purpose for which the funds were appropriated. For example, DOD is required to notify the Congress if it shifts funds from the DHP O&M to the DHP procurement component. But the notification requirements do not apply when funds move from one DHP subactivity to another (such as from purchased care to direct care) or between DHP program elements (such as from MCS contracts to CHAMPUS, both within the purchased care subactivity) because such movements are within the same budget activity (administration and servicewide activities). Thus, the movements do not represent a change in the purpose for which the funds were appropriated and fit under the third type of reprogramming procedures. Congress Has Required To help increase the visibility of DOD funding changes, the reports DOD to Report Budget accompanying recent defense appropriations acts have directed DOD to Execution Data provide congressional defense committees with quarterly budget execution data on certain other O&M accounts.23 For example, in fiscal year 1999, DOD is directed to provide data for each budget activity, activity group, and subactivity not later than 45 days past the close of each quarter. These reports are to include the budget request and actual obligations and the DOD distribution of unallocated congressional adjustments to the budget request, as well as various details on reprogramming actions. This type of timely information supports congressional oversight of DOD O&M budget execution and shows the extent to which DOD is obligating O&M funds for purposes other than the Congress had been made aware of.24 Under current procedures, DHP obligations are reported at the subactivity and program element levels in the prior-year column when DOD submits its 23 The fiscal years 1998 and 1999 conference reports require DOD to provide the congressional defense committees such data for each of the active, defensewide, reserve, and national guard O&M accounts. 24 Quarterly reporting of budget execution data may satisfy the congressional committees’ need to know more about such shifting. However, in an earlier report (Year-End Spending: Reforms Underway But Better Reporting and Oversight Needed (GAO/AIMD-98-185, July 31, 1998), we found that budget execution data reported separately to the Office of Management and Budget and to the Department of the Treasury were inconsistent with actual obligations data reported by agencies in formulating the President’s budget request. Also, in recent testimony (DOD Financial Management: More Reliable Information Key to Assuring Accountability and Managing Defense Operations More Efficiently (GAO/T-AIMD/NSIAD-99-145, Apr. 14, 1999)), we noted that DOD’s systems and controls over its use of budgetary resources were ineffective. DOD’s budgetary resources control weaknesses may leave DOD unaware of the actual amount of all funds available for obligation and expenditures in each appropriation account. Page 19 GAO/HEHS-99-79 Defense Health Program B-281106 budget request justification material to the Congress. However, such information is not reported in a manner that allows easy comparison with the prior year’s budget allocations, and thus does not facilitate oversight of funding changes that took place during budget execution. Reprogramming notification regulations do not apply when funds shift from one DHP subactivity to another, and congressional committees have not directed DOD to report DHP O&M budget execution data in the same manner as other O&M accounts. The information needed to support congressional notification or quarterly budget execution reports is now readily available because DOD officials have instituted their own internal reviews to better track DHP budget execution. For example, DOD now requires internal quarterly budget execution reports from the services to document the shift of funds between subactivities. Therefore, we discussed with DOD officials potential reporting changes that would facilitate congressional oversight of DHP funding adjustments during budget execution. DOD officials told us that subjecting the lump-sum DHP appropriation to the reprogramming procedures that require prior approval from the Congress would eliminate flexibility, making it very difficult to manage the finances of the integrated MTF and MCS contract health care system. However, in our view, subjecting the DHP appropriation to reprogramming procedures for notification, but not prior approval, to the Congress whenever funds above a certain threshold shift from one DHP subactivity to another would not diminish DOD’s flexibility. DOD officials agreed that congressional oversight would be enhanced by quarterly budget execution reports on DHP obligations by subactivity and program element. Depending on where the threshold was set and the extent to which special interest DHP subactivities were designated for reporting, notification could involve fewer reports than a quarterly reporting process for DHP subactivities and program elements. Thus, in our view, notification may well offer a less burdensome means of facilitating congressional oversight of DHP funding changes during budget execution. DOD officials expect future DHP obligations to track more closely with Conclusions budget requests and allocations, while acknowledging that some movement of funds is inevitable given the lack of a universally enrolled beneficiary population for direct and purchased care. Although DOD is not required to adhere to its own budget requests or reported budget allocations when it obligates funds, in our view, a repeated failure to do so without providing sufficient justification could cause the Congress to Page 20 GAO/HEHS-99-79 Defense Health Program B-281106 question the validity of DHP budget requests. The Congress, however, will not be made aware of improvements or continuing funding adjustments unless DOD begins to either notify or report to congressional committees on how it obligates DHP appropriations. In our view, and DOD agrees, additional information on how obligations differ from budget requests and allocations would improve oversight by the Congress and DOD. Since TMA officials already require quarterly budget execution reports to improve their internal budget oversight and budget decisionmaking, DOD would not be burdened by notifying or reporting similar information to the Congress. Such notification or reporting could provide the Congress with a basis for scrutinizing DHP budget request justifications and determining whether additional program controls—such as a universal requirement that all beneficiaries enroll in direct care or purchased care components—are needed. The Congress may wish to consider requiring DOD, consistent with current Matter for notification standards and procedures, to notify the congressional defense Congressional committees of its intent to shift funds among subactivities (such as direct Consideration care, purchased care, and base operations). Such notification, while not requiring congressional approval of the funding shift itself, could be initiated whenever the amount of the funding shift exceeded a certain threshold to be determined by the Congress. The notification would specify where funds are being deducted and where they are being added, and the justification for such reallocation. Also, or alternatively, the Congress may wish to consider requiring DOD to provide congressional defense committees with quarterly budget execution data on DHP O&M accounts. These data could be provided in the same manner and under the same time frames as DOD currently provides data for non-DHP O&M accounts. In its comments on a draft of the report, DOD concurred with the report Agency Comments and its focus of making the DHP funding more visible to the Congress. DOD and Our Evaluation further agreed that providing additional budget execution data to the Congress, on a regular basis, would be a valuable step toward keeping congressional members informed about the military health care system’s financial status. Finally, DOD agreed to modify its current process for internally reporting DHP obligations to report DHP O&M budget execution data to the Congress in the same manner as the non-DHP O&M accounts. Page 21 GAO/HEHS-99-79 Defense Health Program B-281106 However, DOD did not support requiring it to notify congressional defense committees of its intent to shift funds among DHP subactivities. DOD stated that such notification could potentially limit its ability to obligate DHP funds and affect beneficiaries’ timely access to health care. We disagree. As we point out, such notification would not require prior approval of the funding shift itself, but would be initiated whenever the funding shift exceeded a certain amount to be determined by the Congress. These and other details of the notification procedure could be worked out between congressional committees and DOD to further ensure that DOD’s ability to obligate funds for the timely delivery of health care services was not impaired. Further, as the report points out, notification could involve fewer reports than a quarterly reporting process for DHP subactivities. Thus, in our view, notification may well offer a less burdensome means of facilitating congressional oversight of DHP funding changes during budget execution. DOD also suggested several technical changes to the draft, which we have incorporated where appropriate. DOD’s comments are presented in their entirety in appendix II. As agreed with your office, unless you publicly announce its contents earlier, we plan no further distribution of this report until 30 days from its date. At that time, we will send copies to Senator Wayne Allard, Senator Robert C. Byrd, Senator Max Cleland, Senator Daniel K. Inouye, Senator Carl Levin, Senator Ted Stevens, Senator John Warner, Representative Neil Abercrombie, Representative Steve Buyer, Representative John P. Murtha, Representative David Obey, Representative Ike Skelton, Representative Floyd Spence, and Representative C.W. Bill Young in their capacities as chairman or ranking minority member of Senate and House committees and subcommittees. We will also send copies at that time to the Honorable William S. Cohen, Secretary of Defense; the Honorable William J. Lynn, III, Under Secretary of Defense (Comptroller); the Honorable Sue Bailey, Assistant Secretary of Defense (Health Affairs); and the Honorable Jacob J. Lew, Director, Office of Management and Budget. Copies will be made available to others upon request. Page 22 GAO/HEHS-99-79 Defense Health Program B-281106 If you or your staff have any questions concerning this report, please contact Stephen P. Backhus, Director, Veterans’ Affairs and Military Health Care Issues, on (202) 512-7101 or Daniel Brier, Assistant Director, on (202) 512-6803. Other contributors to this report include Carolyn Kirby (Evaluator-in-Charge), Jon Chasson, Craig Winslow, and Mary Reich. Sincerely yours, Richard L. Hembra Assistant Comptroller General Page 23 GAO/HEHS-99-79 Defense Health Program Contents Letter 1 Appendix I 26 Other Adjustments to DHP Total Obligational Authority 34 Detailed Defense Health Program Budget Tables Appendix II 37 Comments From the Department of Defense Tables Table 1: Defense Health Program Operations and Maintenance 5 Subactivities and Program Elements Table 2: DOD’s Allocation of Defense Health Program Operations 7 and Maintenance Appropriations by Subactivity, Fiscal Years 1994-99 Table 3: Funding Adjustments Made at the Subactivity Level 8 During Budget Execution, Fiscal Years 1994-98 Table 4: Offsets to Shortfalls in Defense Health Program 13 Operations and Maintenance Budget Requests, Fiscal Years 1997-99 Table I.1: Defense Health Program Budget Requests, Budget 26 Allocations, and Actual Obligations, Fiscal Years 1994-96 Table I.2: Defense Health Program Budget Requests, Budget 30 Allocations, and Actual Obligations, Fiscal Years 1997-99 Table I.3: Other Adjustments to Defense Health Program Budgets, 34 Fiscal Years 1994-98 Table I.4: Funding Increases and Decreases by Subactivity and 35 Program Element, Fiscal Years 1994-98 Figures Figure 1: Defense Health Program Operations and Maintenance 6 Budget Status, Fiscal Years 1994–99 Figure 2: Comparison of CHAMPUS and MCS Contract Budget 9 Allocations and Actual Obligations, Fiscal Years 1994-98 Page 24 GAO/HEHS-99-79 Defense Health Program Contents Figure 3: Purchased Care Subactivity Funding Adjustments in 11 CHAMPUS and MCS Contract Program Elements, Fiscal Years 1994-98 Figure 4: Direct Care Budget Status, Fiscal Years 1994-98 16 Abbreviations CBO Congressional Budget Office CHAMPUS Civilian Health and Medical Program of the Uniformed Services CMAC CHAMPUS Maximum Allowable Charge CONUS continental United States DHP Defense Health Program DOD Department of Defense MCS managed care support MTF military treatment facility O&M operations and maintenance OCONUS outside the continental United States TMA TRICARE Management Activity Page 25 GAO/HEHS-99-79 Defense Health Program Appendix I Detailed Defense Health Program Budget Tables Table I.1: Defense Health Program Budget Requests, Budget Allocations, and Actual Obligations, Fiscal Years 1994-96 Dollars in thousands Subactivity/ 1994 1995 1996 program Budget Budget Actual Budget Budget Actual Budget Budget Actual element request allocation obligation request allocation obligation request allocation obligation Direct care Medical $2,583,114 $2,592,596 $3,062,708 $2,706,329 $2,658,394 $2,988,546 $3,035,259 $3,026,670 $2,954,594 centers, hospitals, and clinics— CONUS Medical 222,816 223,634 235,131 233,444 233,444 265,572 232,605 238,125 288,577 centers, hospitals, and clinics— OCONUS Dental care 98,612 98,612 129,105 132,718 131,718 126,533 134,787 134,787 131,391 activities— CONUS Dental care 18,783 18,783 26,523 26,213 33,213 32,587 52,034 53,414 37,559 activities— OCONUS Subtotal $2,923,325 $2,933,625 $3,453,467 $3,098,704 $3,056,769 $3,413,238 $3,454,685 $3,452,996 $3,412,121 Purchased care CHAMPUS 3,000,669 3,000,669 2,524,500 2,885,100 2,885,100 2,398,800 2,414,000 2,414,000 2,026,225 Managed care 863,400 863,400 793,600 980,100 980,100 932,300 1,356,100 1,356,100 1,252,621 support contracts Care in 461,613 513,937 453,226 613,087 643,087 450,068 496,997 496,997 441,487 nondefense facilities Subtotal $4,325,682 $4,378,006 $3,771,326 $4,478,287 $4,508,287 $3,781,168 $4,267,097 $4,267,097 $3,720,333 Consolidated health support Examining 24,294 24,294 22,941 23,456 23,014 24,176 23,089 23,089 26,485 activities— health care Other health 209,726 244,295 252,927 242,279 241,542 345,152 255,894 271,394 348,352 activities Military public/ 145,274 169,220 187,507 167,823 163,223 169,444 191,139 191,139 186,230 occupational health Veterinary 8,782 10,229 9,898 10,145 9,859 12,692 9,850 9,850 14,135 services Military unique 95,378 111,099 94,782 110,182 108,975 147,373 96,379 99,779 163,352 requirements (continued) Page 26 GAO/HEHS-99-79 Defense Health Program Appendix I Detailed Defense Health Program Budget Tables Dollars in thousands Subactivity/ 1994 1995 1996 program Budget Budget Actual Budget Budget Actual Budget Budget Actual element request allocation obligation request allocation obligation request allocation obligation Aeromedical 72,115 84,001 83,801 83,308 83,142 80,227 82,688 82,688 78,309 evacuation system Armed Forces 28,377 33,054 31,739 32,781 32,352 40,339 32,484 32,484 41,928 Institute of Pathology Subtotal $583,946 $676,192 $683,595 $669,974 $662,107 $819,403 $691,523 $710,423 $858,791 Information management Central 206,659 224,247 247,640 221,692 211,545 257,003 226,332 224,102 444,569 information management Management activities Management 24,943 28,479 25,457 26,225 25,539 36,481 25,937 25,937 54,144 headquarters TRICARE 102,472 102,472 75,803 94,000 94,000 80,120 70,000 69,603 86,111 Support Officea Subtotal $127,415 $130,951 $101,260 $120,225 $119,539 $116,601 $95,937 $95,540 $140,255 Education and training Armed Forces 70,197 70,197 73,479 80,014 79,504 71,513 85,671 85,671 74,081 Health Professions Scholarship Program Uniformed 39,891 45,756 57,067 40,847 50,457 60,791 43,700 50,552 60,145 Services University of Health Sciences Education and 92,350 130,255 91,966 130,655 130,655 145,239 86,575 86,575 147,719 training— health care Subtotal $202,438 $246,208 $222,512 $251,516 $260,616 $277,543 $215,946 $222,798 $281,945 Base operations/communications Environmental 86 86 20 72 72 10 72 72 524 conservation Pollution 76 76 35 64 64 29 64 64 132 prevention Environmental 22,316 22,316 26,287 18,739 18,612 27,167 16,931 16,931 27,864 compliance Minor 14,969 14,969 50,216 20,024 20,024 69,123 32,583 32,583 52,642 construction— CONUS (continued) Page 27 GAO/HEHS-99-79 Defense Health Program Appendix I Detailed Defense Health Program Budget Tables Dollars in thousands Subactivity/ 1994 1995 1996 program Budget Budget Actual Budget Budget Actual Budget Budget Actual element request allocation obligation request allocation obligation request allocation obligation Minor 2,042 2,042 7,883 2,731 2,731 13,282 4,287 4,287 7,183 construction— OCONUS Maintenance 227,491 227,491 235,430 186,462 190,076 260,349 286,864 286,864 302,666 and repair— CONUS Maintenance 31,022 31,022 36,156 25,427 25,920 50,663 30,346 30,346 75,970 and repair— OCONUS Real property 154,426 165,452 191,668 200,910 199,105 184,964 209,080 209,080 183,312 services— CONUS Real property 16,854 18,057 20,918 21,007 20,819 16,269 21,493 21,493 19,286 services— OCONUS Visual 10,321 10,321 9,974 12,316 12,148 7,796 11,819 11,819 8,599 information activities Base 29,881 29,881 36,993 30,741 30,711 39,225 36,853 36,853 40,976 communication- CONUS Base 4,075 4,075 3,682 4,192 4,188 4,006 3,607 3,607 4,496 communication- OCONUS Base 176,864 189,494 219,518 226,559 224,522 254,612 235,771 235,771 260,513 operations— CONUS Base 20,650 22,124 25,630 23,689 23,476 32,711 24,235 24,235 25,459 operations— OCONUS Subtotal $711,073 $737,406 $864,410 $772,933 $772,468 $960,206 $914,005 $914,005 $1,009,622 Total $9,080,538 $9,326,635 $9,344,210 $9,613,331 $9,591,331 $9,625,162 $9,865,525 $9,886,961 $9,867,636 a The TRICARE Support Office program element incorporated only Office of CHAMPUS costs in these years. Source: TMA Office of Resource Management. Page 28 GAO/HEHS-99-79 Defense Health Program Appendix I Detailed Defense Health Program Budget Tables Page 29 GAO/HEHS-99-79 Defense Health Program Appendix I Detailed Defense Health Program Budget Tables Table I.2: Defense Health Program Budget Requests, Budget Allocations, Dollars in thousands and Actual Obligations, Fiscal Years 1997 1997-99 Subactivity/program element Budget request Budget allocation Actual obligation Direct care Medical centers, $2,771,958 $2,973,647 $2,856,273 hospitals, and clinics—CONUS Medical centers, hospitals 271,479 282,330 301,359 and clinics—OCONUS Dental care activities— 140,927 153,630 152,002 CONUS Dental care activities— 57,949 45,836 38,812 OCONUS Subtotal $3,242,313 $3,455,443 $3,348,446 Purchased care CHAMPUS 1,048,700 1,048,770 1,495,502 Managed care support 2,439,900 2,439,900 1,919,292 contracts Care in nondefense 447,561 456,103 463,910 facilities Subtotal $3,936,161 $3,944,773 $3,878,704 Consolidated health support Examining activities— 28,924 28,924 29,013 health care Other health activities 325,927 325,927 337,704 Military 144,047 163,233 198,116 public/occupational health Veterinary services 11,713 11,713 13,625 Military-unique 97,215 182,932 197,564 requirements Aeromedical evacuation 81,711 74,861 75,737 system Armed Forces Institute of 37,982 37,982 42,924 Pathology Subtotal $727,519 $825,572 $894,683 Information management Central information 190,077 314,410 213,139 management Management activities Management headquarters 25,637 35,930 32,050 TRICARE Management 0 0 46,682 Activityb TRICARE Support Officec 54,141 54,141 79,457 Page 30 GAO/HEHS-99-79 Defense Health Program Appendix I Detailed Defense Health Program Budget Tables 1998 1999 Budget request Budget allocation Actual obligation Budget request Budget allocation Current estimatea $2,936,809 $2,871,009 $2,856,720 $2,475,717 $2,666,113 $3,140,421 279,003 279,003 279,070 289,293 289,293 282,464 158,027 158,027 174,511 155,704 155,704 150,428 45,723 45,723 40,770 41,130 41,130 38,681 $3,419,562 $3,353,762 $3,351,071 $2,961,844 $3,152,240 $3,611,994 735,120 735,120 1,106,710 573,700 573,700 593,700 2,848,888 2,848,888 2,379,869 3,010,200 3,010,200 2,819,800 470,703 470,703 484,039 486,495 486,495 500,614 $4,054,711 $4,054,711 $3,970,618 $4,070,395 $4,070,395 $3,914,114 29,101 29,101 29,463 30,857 30,857 30,813 379,642 379,642 310,400 372,864 372,864 271,887 171,058 171,058 191,822 170,271 170,271 202,027 12,524 12,524 15,245 13,276 13,276 14,475 154,952 272,177 229,694 160,889 178,239 213,773 79,721 79,721 82,232 79,611 79,611 79,758 38,724 38,724 45,759 39,476 39,476 45,600 $865,722 $982,947 $904,615 $867,244 $884,594 $858,333 222,329 219,329 225,068 274,371 297,871 256,568 91,271 91,271 35,646 36,228 36,228 33,992 0 0 143,807 128,784 128,784 144,087 54,554 54,554 0 0 0 0 (continued) Page 31 GAO/HEHS-99-79 Defense Health Program Appendix I Detailed Defense Health Program Budget Tables Dollars in thousands Subactivity/program 1997 element Budget request Budget allocation Actual obligation Subtotal $79,778 $90,071 $158,189 Education and training Armed Forces Health 83,995 80,842 75,389 Professions Scholarship Program Uniformed Services 52,000 70,450 74,463 University of Health Sciences Education and 123,236 142,501 148,468 training—health care Subtotal $259,231 $293,793 $298,320 Base operations/communications Environmental 74 2,400 904 conservation Pollution prevention 66 500 1,262 Environmental compliance 23,106 23,653 20,216 Minor 33,281 33,384 51,331 construction—CONUS Minor 6,339 8,727 7,223 construction—OCONUS Maintenance and 245,903 285,545 349,450 repair— CONUS Maintenance and 46,839 60,240 75,308 repair—OCONUS Real property services— 184,626 214,058 198,010 CONUS Real property services— 16,054 24,858 20,050 OCONUS Visual information activities 9,605 8,174 8,363 Base 42,047 43,219 43,723 communication—CONUS Base 4,159 4,820 4,166 communication—OCONUS Base operations—CONUS 276,888 277,111 276,450 Base 34,222 27,157 26,625 operations—OCONUS Subtotal $923,209 $1,013,846 $1,083,081 Total $9,358,288 $9,937,908 $9,874,562 Page 32 GAO/HEHS-99-79 Defense Health Program Appendix I Detailed Defense Health Program Budget Tables 1998 1999 Budget request Budget allocation Actual obligation Budget request Budget allocation Current estimatea $145,825 $145,825 $179,453 $165,012 $165,012 $178,079 85,623 85,623 83,327 84,959 84,959 78,854 51,314 70,314 74,270 55,760 64,560 73,630 163,549 163,549 175,347 157,561 157,561 154,223 $300,486 $319,486 $332,944 $298,280 $307,080 $306,707 1,900 1,900 504 3,124 3,124 3,650 500 500 1,994 417 417 483 30,276 30,276 23,180 18,443 18,443 19,570 31,468 31,468 42,288 33,573 33,573 29,761 8,865 8,865 2,206 8,469 8,469 8,447 280,721 280,721 283,005 272,117 272,117 149,743 63,692 63,692 58,071 48,082 50,202 67,737 221,782 221,782 203,354 232,773 232,773 217,961 25,453 25,453 20,566 31,304 31,304 23,477 8,234 8,234 7,703 8,314 8,314 7,584 43,750 43,750 38,822 41,719 41,719 44,223 5,214 5,214 4,397 5,018 5,018 4,215 287,370 287,370 252,443 287,529 289,529 268,854 22,722 22,722 28,510 25,407 25,407 26,563 $1,031,947 $1,031,947 $967,043 $1,016,289 $1,020,409 $872,268 $10,040,582 $10,108,007 $9,930,812 $9,653,435 $9,897,601 $9,998,063 Page 33 GAO/HEHS-99-79 Defense Health Program Appendix I Detailed Defense Health Program Budget Tables a Data source for fiscal year 1999 current estimate is the Defense Health Program Justification of Estimates for Fiscal Years 2000 and 2001, Vol. I (Feb. 1999). The total $9,998,063,000 current estimate includes an anticipated $104,561,000 reprogramming from the Air Force O&M account to the DHP O&M account. b DOD established the TRICARE Management Activity program element in fiscal year 1998. The new organization now includes several former management headquarters offices and the TRICARE Support Office. TRICARE Management Activity costs shown in fiscal year 1997 reflect estimates as if the program element existed for that period. c The TRICARE Support Office program element incorporated only Office of CHAMPUS costs in fiscal years 1997 and 1998. Source: TMA Office of Resource Management. Following congressional approval of funds for Defense Health Program Other Adjustments to (DHP) operations and maintenance (O&M) expenses enacted through the DHP Total annual appropriations act, various other actions by DOD or the Congress Obligational Authority result in further adjustments. These adjustments can increase or decrease the total obligational authority available to DOD for DHP O&M expenses. Table I.3 details the other adjustments. Table I.3: Other Adjustments to Defense Health Program Budgets, Fiscal Years 1994-98 Dollars in millions Net adjustment, Adjustment 1994 1995 1996 1997 1998 1994-98 Foreign currency fluctuations 0 0 0 0 –$13.0 –$13.0 Supplemental appropriations 0 $13.2 0 $21.0 1.9 36.1 Program cancellations 0 0 0 –9.3 0 –9.3 Rescissions 0 0 –$15.2 –21.0 0 –36.2 Reprogrammings $20.9 26.6 29.7 –36.4 –144.2 –103.4 Transfers 0 0 0.2 –3.2 –2.0 –5.0 Withholds 0 0 –8.0 0 –0.5 –8.5 Subtotal $20. 9 $39.8 $6.7 –$49.0 –$157.8 –139.4 Total obligational authority $9,347.6 $9,630.9 $9,893.6 $9,762.1 $9,950.2 48,584.4 Unobligated balance at end of fiscal year $3.4 $5.8 $26.0 $3.2 $19.4 $57.7 Note: Totals may not add because of rounding. Source: TMA Office of Resource Management. Page 34 GAO/HEHS-99-79 Defense Health Program Appendix I Detailed Defense Health Program Budget Tables Table I.4: Funding Increases and Decreases by Subactivity and Program Element, Fiscal Years 1994-98 Dollars in thousands Subactivity/program element 1994 1995 1996 1997 1998 Direct care Defense medical centers, station $470,112 $330,152 –$72,076 –$117,374 –$14,289 hospitals, and medical clinics—CONUS Defense medical centers, station 11,497 32,128 50,452 19,029 67 hospitals, and medical clinics—OCONUS Dental care activities—CONUS 30,493 –5,185 –3,396 –1,628 16,484 Dental care activities—OCONUS 7,740 –626 –15,855 –7,024 –4,953 Subtotal $519,842 $356,469 –$40,875 –$106,997 –$2,691 Purchased care CHAMPUS –476,169 –486,300 –387,775 446,732 371,590 Managed care support contracts –69,800 –47,800 –103,479 –520,608 –469,019 Care in nondefense facilities –60,711 –193,019 –55,510 7,807 13,336 Subtotal –$606,680 –727,119 –$546,764 –$66,069 –$84,093 Consolidated health support Examining activities—health care –1,353 1,162 3,396 89 362 Other health activities 8,632 103,610 76,958 11,777 –69,242 Military public/occupational health 18,287 6,221 –4,909 34,883 20,764 Veterinary services –331 2,833 4,285 1,912 2,721 Military-unique requirements –16,317 38,398 63,573 14,632 –42,483 Aeromedical evacuation system –200 –2,915 –4,379 876 2,511 Armed Forces Institute of Pathology –1,315 7,987 9,444 4,942 7,035 Subtotal $7,403 $157,296 $148,368 $69,111 –$78,332 Information management Central information management 23,393 45,458 220,467 –101,271 5,739 Management activities Management headquarters –3,022 10,942 28,207 –3,880 –55,625 TRICARE Management Activity 0 0 0 46,682 143,807 TRICARE Support Office –26,669 –13,880 16,508 25,316 –54,554 Subtotal –$29,691 –$2,938 $44,715 $68,118 $33,628 Education and training Armed Forces Health Professions 3,282 –7,991 –11,590 –5,453 –2,296 Scholarship Program Uniformed Services University of 11,311 10,334 9,593 4,013 3,956 Health Sciences Education and training—health care –38,289 14,584 61,144 5,967 11,798 (continued) Page 35 GAO/HEHS-99-79 Defense Health Program Appendix I Detailed Defense Health Program Budget Tables Dollars in thousands Subactivity/program element 1994 1995 1996 1997 1998 Subtotal –$23,696 $16,927 $59,147 $4,527 $13,458 Base operations/communications Environmental conservation –66 –62 452 –1,496 –1,396 Pollution prevention –41 –35 68 762 1,494 Environmental compliance 3,971 8,555 10,933 –3,437 –7,096 Minor construction—CONUS 35,247 49,099 20,059 17,947 10,820 Minor construction—OCONUS 5,841 10,551 2,896 –1,504 –6,659 Maintenance and repair—CONUS 7,939 70,273 15,802 63,905 2,284 Maintenance and repair—OCONUS 5,134 24,743 45,624 15,068 –5,621 Real property services—CONUS 26,216 –14,141 –25,768 –16,048 –18,428 Real property services—OCONUS 2,861 –4,550 –2,207 –4,808 –4,887 Visual information activities –347 –4,352 –3,220 189 –531 Base communication—CONUS 7,112 8,514 4,123 504 –4,928 Base communication—OCONUS –393 –182 889 –654 –817 Base operations—CONUS 30,024 30,090 24,742 –661 –34,927 Base operations—OCONUS 3,506 9,235 1,224 –532 5,788 Subtotal $127,004 $187,738 $95,617 $69,235 –$64,904 Source: TMA Office of Resource Management data. Page 36 GAO/HEHS-99-79 Defense Health Program Appendix II Comments From the Department of Defense Page 37 GAO/HEHS-99-79 Defense Health Program Appendix II Comments From the Department of Defense Now on p. 2. Now on p. 3. Now figs. 1, 2, and 4. Now in table 3. Now on p. 13. Now on p. 14. Now on p. 14. Page 38 GAO/HEHS-99-79 Defense Health Program Appendix II Comments From the Department of Defense Now on p. 14. Now on p. 17. (101620) Page 39 GAO/HEHS-99-79 Defense Health Program Ordering Information The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. Orders by mail: U.S. General Accounting Office P.O. 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Defense Health Program: Reporting of Funding Adjustments Would Assist Congressional Oversight
Published by the Government Accountability Office on 1999-04-29.
Below is a raw (and likely hideous) rendition of the original report. (PDF)