Summary: GAO discussed the Department of Defense's (DOD) implementation of the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS) Reform Initiative (CRI), focusing on the DOD relationship with the CRI contractor. GAO found that: (1) after experiencing numerous CHAMPUS claims processing difficulties, the CRI contractor subcontracted for the development of a new claims processing system, only 3 months before DOD was to decide whether to exercise a contract option; (2) it was too early to determine whether the new system would allow the CRI contractor to reduce its excessive backlog of CHAMPUS claims; (3) the CRI contractor has received numerous complaints from CHAMPUS health care providers regarding late or missing payments; (4) the DOD CHAMPUS office (OCHAMPUS) has played only a limited role in CRI contract oversight; (5) OCHAMPUS repeatedly warned other DOD organizations regarding inherent CRI risks and the contractor's ineffective performance; (6) DOD modified the contract's payment schedule because of its concern over the CRI contractor's financial condition; and (7) DOD removed from the CRI contract requirements and incentives for increased CHAMPUS use of military health care resources, but subsequently modified the contract to encourage the contractor to complete more resource-sharing agreements.
