Summary: It is impossible to quantify precisely the amount lost to fraud in the military health care system, but the Defense Department (DOD) and the health care industry generally agree that fraud and abuse could account for as much as 20 percent of all health care costs. Because DOD spent $5.7 billion on managed care between 1996 and 1998, DOD could have lost more than $1 billion to fraud and abuse during this time. Fraud and abuse can also undermine the quality of care provided and can harm patients' health. For example, patients might receive incorrect diagnoses and inadequate treatment when a provider bills DOD for fabricated test results. DOD and its contractors have had limited success in identifying fraud and abuse in TRICARE--DOD's managed health care system. To its credit, DOD recognizes that it needs to reduce its vulnerability to fraud and abuse and has identified several revisions it could make to its antifraud policies and requirements. However, it has been slow to implement these policy changes, which would require contractors to establish a more aggressive fraud and abuse identification program.
