Publicly Released: January 13, 2022
Objective
The objective of the audit was to determine whether the Defense Health Agency (DHA) accurately identified and reported improper payments as required by the Payment Integrity Information Act of 2019 (PIIA).
Background
The DHA is the DoD Component responsible for administering the Military Health Benefits (MHB) Program, which provides health care services to approximately 9.4 million eligible TRICARE beneficiaries. The PIIA requires Federal agencies to identify programs susceptible to significant improper payments, to estimate and report the amount of improper payments, and to report actions planned to reduce future improper payments. The PIIA defines an improper payment as any payment that should not have been made, was made in an incorrect amount, was made to ineligible recipients, or was made for ineligible goods or services. The PIIA also considers payments as improper when they did not have the required supporting documentation at the time of disbursement.
Finding
The DHA did not have adequate processes to identify improper payments and produce a reliable improper payment estimate for the MHB Program for the FY 2021 reporting period. Specifically, the DHA did not:
- implement effective DHA sampling methodology when developing the improper payment rate, or
- conduct adequate improper payment reviews of Administrative and Other Costs payments or TRICARE West payments.
The DHA could not provide a reliable improper payment estimate because it did not use payment transactions when applying its sampling methodology to the data population. Also, the DHA did not consider the characteristics of its data population before applying its sampling methodology and did not calculate its sample size in accordance with its sampling and estimation methodology. Additionally, the DHA did not complete improper payment reviews for any of the Administrative and Other Costs sub‑populations, base its improper payment reviews of TRICARE West medical claims on a payment definition that was in accordance with the PIIA, and conduct medical record reviews in accordance with its sampling and estimation methodology plan.
As a result, the DHA is unable to effectively identify improper payments and will not produce a reliable improper payment estimate for the MHB Program for FY 2021.
Recommendations
We recommend that the Director of the DHA develop and implement procedures to use paid amounts in DHA sample populations and update the sampling methodology to consider data characteristics and ensure an appropriate sample size. We also recommend that the Director of the DHA use an improper payment definition that complies with the PIIA. Finally, we recommend that the Director of the DHA evaluate and plan for necessary resources to ensure adequate reviews of payments and timely reporting of improper payment estimates.
Management Comments and Our Response
The Director of the Defense Health Agency agreed to address all of the recommendations; therefore, the recommendations are considered resolved and open. We will close the recommendations once we verify that the agreed‑upon actions are complete.
This report is the result of Project No. D2021-D000FL-0128.000.