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DOD updates Congress on Defense Health Agency plan

The Defense Department updated Congress on its progress toward implementing a plan to establish a new agency that will absorb the functions of Tricare and create shared services for use across the military health system.

The Defense Department updated Congress on its progress toward implementing a plan to establish a new agency that will absorb the functions of Tricare and create shared services for use across the military health system.

Under that plan, the creation of the new Defense Health Agency will enable the department to combine and manage common clinical and business processes and health system functions—such as health information technology, medical logistics and medical education—and allow them to be shared by the three service branches to save money and increase efficiency. The Army, Navy and Air Force currently administer those processes separately.

DOD first reported to Congress on the basic elements of the plan in March 2012. In the second of three such reports, sent to the leadership of the Senate and House Appropriations and Armed Services Committees on June 27, DOD laid out business case analyses for four of 10 planned shared services—medical logistics, facility planning, health information technology and the Tricare health plan—which DOD said it will begin to implement in stages starting in fiscal 2014.

DOD plans to report on the remaining six services by the end of September of this year, and to implement them between Oct. 1, 2013, and Sept. 30, 2015. The reports are required by the 2012 National Defense Authorization Act.

Under the planned reforms, Tricare support functions will begin transitioning to a shared services model within the new DHA on Oct. 1, 2013. The new model will support an integrated health delivery system across the military services and the purchase of health care services contracts.

That effort encompasses two consolidation and business process reengineering goals—more efficient provision of customer service and improvements in reimbursement for health services.

"The Tricare Service Center (TSC) initiative will improve customer service efficiency by eliminating expensive walk-in service centers located at every [military treatment facility] and providing greater access to information through current toll-free call centers and readily available Internet resources," the plan stated. "These options are available 24/7 worldwide and more than 80 percent less expensive per encounter compared to the TSCs."

"The second consolidation initiative involves contracting with a single, centralized service to identify beneficiaries with Other Health Insurance (OHI)," the report said. "By earlier identification of OHI, we can improve coordination of benefits with other insurance companies and reduce [military health system] payment for services that should have been paid by OHI. A centralized contract will more accurately identify beneficiaries with OHI rather than relying on the current self-reported method."

DOD said the two consolidation initiatives will save up to $787 million over six years.

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