Summary: GAO testified on the Department of Defense's (DOD) plans to change the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS). The DOD CHAMPUS Reform Initiative objectives are to: (1) contain CHAMPUS costs for the government and beneficiaries; (2) increase beneficiary access to health care; (3) improve coordination between CHAMPUS and military treatment facilities; (4) ensure quality of care; and (5) simplify CHAMPUS administrative procedures. Although DOD believes that the Initiative will contain costs, it has not analyzed: (1) the potential from the cost-saving features; (2) the costs of program improvements; and (3) the costs of implementing administrative requirements. DOD also believes that the Initiative will improve beneficiary satisfaction, but both industry and beneficiary organizations raised concerns about whether this will occur. While the Initiative may reduce beneficiary claim-filing problems, it requires contractors to implement new features while retaining the current features and increases program complexity. Industry officials expressed concern that the Initiative's administrative requirements are excessive, overly restrictive, duplicative, and unclear and that coordination with military facilities will be difficult. Although a new DOD proposal has addressed many of the concerns that industries raised by allowing offerers more flexibility in designing systems for new programs and submitting alternative cost proposals, GAO believes that DOD should evaluate the Initiative's demonstration phase to determine the effects of the Initiative on its objectives.
