Detailed Information on the
Defense Health Care Assessment

The Department of Defense and Department of Veterans Affairs will establish a jointly staffed Federal Health Care Center to promote more cost-effective use of health care resources and more efficient delivery of care across the two systems.

Establish a pay for performance measure of clinical quality in the prospective payment system.

Take steps to finalize performance measures with annual targets that are aligned to operational healthcare and deployable forces.

Establishment of a Joint National Capital Medical Command to eliminate redundant command structures, align resource streams, and provide clear lines of authority for local decision making.

Control pharmacy cost growth through initiatives such as targeted audit programs.

Improve coordination with VA through sharing of enrollment and patient record data as well as through implementation of several joint medical sites.

Measure: Patient Satisfaction Surveys

Explanation:Validated patient satisfaction surveys are available and are being used with various beneficiary groups.

Measure: Per Member per Month average annual percentage increase

Explanation:For each fiscal year, the DoD will maintain an average Defense Health Program (DHP) medical cost per equivalent life increase at or below the average healthcare premium increase in the civilian sector, as determined by the average premium increase in the Kaiser Family Foundation and the Health Research and Educational Trust annual Health Insurance Survey.

Measure: Percent of Armed Forces whose medical readiness status is indeterminate.

Explanation:It shows how well the Military Health System is able to ensure that all service members receive critical health assessments. The annual periodic health assessment and the annual dental health examination are the cornerstones of longitudinal health must be accomplished in a timely and effective fashion. When the assessments have not been accomplished, there is no way to know if the individual service member has developed a condition that could impair their ability to serve.

Measure: Percent of Armed Forces without any deployment limiting medical condition.

Explanation:It shows how well the Military Health Service identifies significant medical conditions that would affect the availability of service members to deploy. This criterion provides commanders with a rough estimate of how many of the unit members should be available to deploy

Is the program purpose clear?

Explanation: Purpose 1: To enhance DoD and National security with medical readiness and properly trained health care providers, equipment, etc. Purpose 2: Provides health care to active duty members and retirees, and their families.

Evidence: 10 USC chapter 55; Health Affairs Mission Statement; DoD Health Affairs Charter

Does the program address a specific and existing problem, interest, or need?

Explanation: The program provides medical readiness training for war time operations and provides health care benefits for military members, retirees, and their families.

Evidence: 10 USC chapter 55; Health Affairs Mission Statement; DoD Health Affairs Charter

Is the program designed so that it is not redundant or duplicative of any Federal, state, local or private effort?

Explanation: No other federal program develops and maintains a medical readiness capability to support DoD's war time requirements. The medical readiness capability is the primary reason DoD maintains a military health care system. This infrastructure serves as a training platform to develop and maintain required war time skills and also provides health care for military members, retirees, and their families. DoD provides much family-related care that can be obtained in the private sector or from other Federal programs. DoD is in the process of reviewing its medical readiness cost and methods to maintain this capability. DoD expects to perform a comparative analysis of its current training platform benefits and costs to review alternative methods.

Evidence: DoD develops and maintains its medical readiness capability through the military health care system infrastructure. The DoD health care infrastructure is the primary mechanism to ensure military health providers maintain medical readiness skills as they provide health care to military beneficiaries. Health Affairs expects thier internal medical readiness review to be complete during 2004. It is expected that this will tie into the 2006 DoD Transformation Program Review.

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: DoD is re-designing its health care system with new TRICARE contracts that alter the contractor's economic incentives so they will optimize the utilization of DoD hospitals and other federal hospitals (e.g. Department of Veterans Affairs) before the private sector. DoD expects this will increase the Military Treatment Facilities (MTFs) workload, lower overall health care costs, and enhance its medical readiness. The new contracts are expected to begin in FY 2004. DoD is currently developing a method to conduct a comprehensive review of its medical readiness mission, originally designed to support large ground troop operations. It plans to identify the DHP and non-DHP costs, MILPERS/training requirements, establish common definitions, and identify other issues as it transforms the mission to the current war fighting doctrine. DoD expects its internal review of medical readiness to be complete in 2004. Therefore this is not an appropriate question at this time, while the program transitions to new TRICARE contracts and conducts a medical readiness mission review.

Evidence: DoD has published the new TRICARE contract request for proposal with an estimated FY 2004 implementation date. The proposed new contracts realign economic incentives to increase utilization at military hospitals and other federal hospitals (e.g. Department of Veterans Affairs) before work is moved to the private sector. In 2004, DoD also expects to begin a new retail pharmacy contract and Medicare/TRICARE Intermediary contract. DoD is in the process of developing a method to review its medical readiness mission that will standardizes definitions, review costs, and ensure its mission is properly designed, funded, and maintained. Health Affairs expects its internal medical readiness review to be complete during 2004. It is expected that this will tie into the 2006 DoD Transformation Program Review. The Administration intends to review the applicability of this question in 2005.

Is the program effectively targeted, so program resources reach intended beneficiaries and/or otherwise address the program's purpose directly?

Explanation: The program provides the military with medical readiness capabilities. In addition to developing and maintaining the DoD's medical readiness capabilities, the MTFs provide health care to military health beneficiaries. DoD has started a review of the cost and current methods used to provide its medical readiness mission. DoD expects to receive an analysis of alternative ways to meet this mission as a result of this review in 2004. However, it is recognized that federal funding to provide care to military beneficiaries is needed regardless of the method used to maintain medical readiness.

Evidence: In FY 2003, the unified medical budget ($25.4 billion) funds the military health care system, which is responsible for over 8 million beneficiaries. Health care is delivered through military medical facilities, private sector medical providers, and private sector medical facilities. In addition, these funds support the training and equipment required to maintain the medical readiness capabilities.

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: DoD implemented its 5-year Military Health System (MHS) strategic plan in FY 2003. The plan, with 6 long-term goals and 19 objectives, identifies annual indicators to support its strategic direction. To monitor progress, the MHS uses a balanced score approach with annual outcome measures, built in part on past annual performance contract measures. Additional measures are being revised or developed as the plan is implemented. For example, an objective of the service to external customers goal is the national healthy people 2010 program. DoD identifies annual disease specific mortality and morbidity rates, health promotion activities, and provider compliance with clinical guidelines as annual indicators to measure progress on this objective and the overall goal.

Evidence: The new MHS strategic plan contains 6 long-term goals: improve service to customers, financial stewardship, medical readiness, health care quality, program efficiency, and overall value. It includes 19 objectives in support of these goals and 38 annual indicators to monitor progress. DoD planning documents demonstrate that 10 of the annual indicators are fully developed, 21 are under some level of development, and the final 7 indicators are waiting to be addressed.

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: DoD has developed targets and timeframes for most of its goal areas identified in the MHS 5-year strategic plan. DoD is in the process of developing targets and annual indicators for the remaining of its goal and objective areas as it implements the new strategic plan. To facilitate the implementation, DoD is using previously developed data, where appropriate.

Evidence: The MHS strategic plan's balanced score card is build on previously developed data and new data. Monthly senior MHS leadership review the plan's indicators in its "Instrument Panel" tool. Quarterly, the Service SGs review a subset of the plan's indicators that are aligned to DoD's performance contract. Additional subsets of these indicators are used in DoD for the SECDEF and P&R offices to monitor the program. Finally, the developed and proposed indicators are reviewed quarterly at the MHS Leadership Team Meeting.

Does the program have a limited number of specific annual performance measures that demonstrate progress toward achieving the program's long-term measures?

Explanation: The annual indicators are designed to measure progress toward the MHS Strategic Plan's long-term goals. Several of the annual indicators are based on previous data while others are under development. DoD continues to use its annual performance contract, a subset of 8 of the MHS's 38 annual indicators; signed by the Services, Health Affairs, USD (Personnel & Readiness), and the Deputy Secretary of Defense. The MHS plan identifies leadership owners and measure leaders to develop, revise, and monitor progress toward the goal areas. MHS leaders meet monthly and quarterly to review various measures. DoD has not yet fully developed indicators for all the objective areas but is aggressively working toward this end.

Evidence: A review of the goals, objectives, and targets from the MHS Leadership Team Meeting of May 7, 2003 briefing slides and balanced score card of the MHS strategic plan demonstrates 38 specific annual performance measures identified. DoD has developed 10 of the annual indicators with 21 under some level of development and 7 additional waiting to be addressed. Of the 38 annual indicators, 8 are directly linked to the 15 measures in DoD's performance contracts with the Services.

Does the program have baselines and ambitious targets and timeframes for its annual measures?

Explanation: Implementation of the MHS strategic plan and development of annual indicators is progressing quickly. Several of the annual indicators are based on previously developed data. For example, the 8 performance contract measures linked to the plan have historical data and baselines. However, most of the remaining annual indicators remain under development. Therefore, baseline data and ambitious targets do not yet exist for most of the 38 annual indicators in the MHS strategic plan.

Evidence: A review of the goals, objectives, and targets from the MHS Leadership Team Meeting of May 7, 2003 briefing slides and balanced score card of the MHS strategic plan demonstrates 38 specific annual performance measures identified. DoD has developed 10 of the annual indicators with 21 under some level of development and 7 additional waiting to be addressed. Of the 38 annual indicators, 8 are directly linked to the 15 measures in DoD's performance contracts with the Services.

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, etc.) commit to and work toward the annual and/or long-term goals of the program?

Explanation: The MHS strategic plan was developed by the Assistant Secretary for Health Affairs, Services Surgeon Generals (SGs), key TRICARE Management Activity staff, and DHP staff. The Service SGs are working to ensure their medical strategic plans align to the DoD plan. The SGs have implemented variations of the balance score card to support the MHS goal and objective areas. DoD's new TRICARE contracts, expected in FY 2004, will require the contractors to report performance indicators linked to the MHS strategic goals. Current TRICARE contractors' report some data linked to the new MHS strategic direction.

Evidence: The MHS Strategic Planning documents describe how the Air Force, Army, and Navy medical services were involved in the development of the MHS strategic plan. The MHS balanced score card identifies linkage between the Service SGs annual performance contract for several of the MHS goal areas. DoD documents identify progress by the Army, Navy, Air Force, and TMA to link their medical strategic plans to the MHS strategic plan.

Are independent and quality evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: DHP uses several independent studies during its process to review and update its annual performance contracts with the services. This includes a review of the evaluations made by the Joint Accreditation of Health Care Organization (JCAHO) that compares the quality of care in DoD hospitals to private sector hospitals. In addition, DoD reviews the annual CNA study, mandated by Congress, to determine if any of the recommendations are appropriate for incorporation into the annual performance contract. The use of these evaluations are limited to its linkage to the strategic direction of the DHP and will change as the new MHS strategic measures and targets are fully developed. However, it is expected that the use of these and other independent evaluations to assess the performance gaps will continue.

Evidence: Discussion with Health Affairs staff on the development and use of independent evaluations with the annual performance contracts. The MHS Strategic Plan and the DoD performance contracts with the service SGs demonstrate measures that relate to the Joint Accreditation of Health Care Organization standards. The congressional mandated report, conducted by the Center for Naval Analysis (CNA) and IDA (Inst. Of Defense Analysis).

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: DHP has not yet reached this level of performance measure planning. DoD indicated that it will be addressed as it more fully implements its new MHS strategic Plan.

Evidence: The MHS strategic plan does not relate performance measures to budget resources or the impact of the goals and objectives on policy, budget, or legislative changes. There is no indication in the MHS strategic plan documents how the goals will align to budget funding or policy changes. The FY 2004 budget does not address performance based budgeting type activities.

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: DoD has taken steps to create and implement it MHS strategic plan. It continues to develop annual indicators for the new MHS goals and objectives. It is also working with the Services to link their specific medical plans to the overall MHS plan. The approach to use previously developed data, while new and revised measures are being developed, has enabled DoD to more quickly implement this new direction. DoD expects to continue to develop annual indicators so it can establish baselines and targets to monitor the progress.

Evidence: A review of the goals, objectives, and targets from the MHS Leadership Team Meeting of May 7, 2003 briefing slides and balanced score card to the MHS strategic plan demonstrates 38 specific annual performance measures identified. DoD has developed 10 of the annual indicators with 21 under some level of development and 7 additional waiting to be addressed. Of the 38 annual indicators, 8 are directly linked to the 15 measures in DoD's performance contracts with the Services.

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: The data used to monitor the MHS Strategic Plan is collected on the 15th of each month. DoD uses the data it collects to monitor progress toward its MHS goals and objectives, which are reviewed quarterly by the MHS Leadership Team. Some of the data is also used for its Annual performance contracts with the Services and monitored monthly. DoD continues to participate in the federal common measures initiative.

Evidence: Monthly, senior MHS leadership review the plan's indicators in its "Instrument Panel" tool. Quarterly, the Service SGs review a subset of the plan's indicators that are aligned to DoD's performance contract. Additional subsets of these indicators are used in DoD for the SECDEF and P&R offices to monitor the program. Finally, developed and proposed indicators are reviewed quarterly at the MHS Leadership Team Meeting.

Are Federal managers and program partners (grantees, subgrantees, contractors, cost-sharing partners, etc.) held accountable for cost, schedule and performance results?

Explanation: DoD identified the Service SGs as its program managers for care in the military hospitals and medical readiness. Accountability of key responsibilities is demonstrated at the quarterly MHS Leadership Team Meetings and the monthly Performance Contract reviews. DoD expects increase TRICARE accountability with the creation of a revised regional governance structure from 12 to 3 regions as the new TRICARE contracts are implemented. TRICARE contractors are held accountable through the contract's performance measures. If a contractor fails to meet a standard DoD requires the contractor to address the issues with a improvement plan. The current TRICARE contract design has no incentives to address costs. However, in the new contracts DoD plans to address cost management with economic incentives that encourage the contractors to fully utilize DoD's internal health care system before workload is shifted to the private sector.

Evidence: DoD identified the Services' SGs and TRICARE contractors as its key program managers. The MHS strategic plan annual indicators, reviewed quarterly, and the annual performance contracts, reviewed monthly, with the Services are the primary mechanisms to hold the Services accountable. The DoD reviews and monitor the TRICARE contract performance measures on a regular basis. One example, a TRICARE contract's access measure fell below the standard and DoD required an improvement plan to meet the standard. The draft Regional Governance Structure documents, received 3 July, 2003.

Are all funds (Federal and partners') obligated in a timely manner and spent for the intended purpose?

Explanation: DHP and OMB monitors obligations to ensure that funds are obligated according to the spending plan. OMB and DoD monitors obligations on a monthly basis to ensure that obligations match the spending plan.

Evidence: DHP provided OMB with a quarterly spending plan for FY 2003. The DoD 1002 reports illustrate the account and sub-account obligations by month.

Does the program have procedures (e.g., competitive sourcing/cost comparisons, IT improvements, approporaite incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: The program does not have procedures in place to measure and achieve efficiencies and cost effectiveness. DoD has identified some measures and plans to develop additional efficiency measures. However, DoD has not identified procedures to apply its measures to demonstrate how efficiencies and cost effectiveness will be assured.

Evidence: The FY 2004 budget submission to OMB as well as past congressional budget justificationt documents do not contain efficiency measures. Review of the status of the goals, objectives, and targets in the MHS Leadership Team Meeting of May 7, 2003 and annual performance contracts with the Service SGs.

Does the program collaborate and coordinate effectively with related programs?

Explanation: DoD and VA have made progress on several high-level management collaboration issues and expanded the traditional resource sharing at the local level. However, most of these initiatives are in the initial stages of implementation and have not yet demonstrated significant implementation or specific resource savings. Through the DoD/VA Executive Council, the Departments recently completed a joint strategic plan to increase their partnership efforts. The joint plan calls for the development of an interoperable clinical data repository to enable both departments access to shared clinical data. The departments plan to develop a data repository to allow VA access to DoD personnel data to verify veterans military service records. They established a limited pilot for DoD to use the VA Consolidated Mail Order Pharmacy and are in the process of assessing the results of the study. In addition, the Departments expect to use the Executive Council to identify and implement the DoD/VA resource sharing pilots required by FY2003 NDAA.

Evidence: The DoD/VA Joint Sharing Strategic Plan identifies goals to increase future sharing, such as a clinical data repository. However, most of these initiatives are still in the planning phase and have not achieved sustained or quantifiable results. Major challenges still exist with the implementation of the interoperable VA and DOD information systems for enrollment and two-way shared patient information. While the two Department's health care systems expend nearly $30 billion annually each, VA's 2004 performance target for sharing agreements with DoD is only $150 million. The North Chicago VA-Navy project is still awaiting implementation after years of planning. Other sharing initiatives, which appear to have promise like DoD's use of VA's consolidated mail order pharmacy are still in the early pilot and evaluation stage.

Does the program use strong financial management practices?

Explanation: DoD is not able to identify any recent audits or reports that demonstrates DHP is free from material internal control weaknesses or that payments are properly made and accounted for. DoD monitors DHPs operational financial performance through a Resource Management Steering Committee that meets twice a month. In addition, mid-year execution reviews of obligations are conducted with the Comptroller and OMB.

Evidence: No recent audits or reports are available.

Has the program taken meaningful steps to address its management deficiencies?

Explanation: The MHS Strategic Plan and Annual performance contracts with the services address specific management concerns of the military health care system. DoD continues to review how it accomplishes its medical readiness mission. In addition, the monthly leadership reviews the MHS balanced scored card and provides an increased leadership focus on the MHS goals and objectives. DoD has increased it focus on DoD and VA health coordination with the development of a joint strategic plan. A significant step, the implementation of this joint plan and the completion of several initiatives that are on-going from the past few years still need to be completed to further the collaboration and coordination efforts to demonstrate full scale implementation and increased resource savings.

Evidence: A review of the goals, objectives, and targets from the MHS Leadership Team Meeting of May 7, 2003 briefing slides and balanced score card to the MHS strategic plan demonstrates 38 specific annual performance measures identified. MHS Strategic Planning documents describe how the Air Force, Army, and Navy medical services were involved as partners with Health Affairs to develop the MHS strategic plan. The MHS balanced score card identifies linkage between the Service SGs annual performance contract measures and several of the MHS plan goals. DoD documents show progress with the Army, Navy, Air Force, and TMA to link their medical strategic plans to the MHS strategic plan.

Has the program demonstrated adequate progress in achieving its long-term outcome performance goals?

Explanation: The new MHS strategic plan with 6 long-term goals has 19 objectives identified with 38 annual indicators to monitor progress. DoD is measuring some indicators for most if its goal areas. The indicators generally suggest progress toward its goals. It is notable that DoD is using older data, where appropriate, refining past data, and developing new data to better monitor progress toward its goals. The 6 new MHS strategic plan's 5-year goals are to improve the programs service to customers, financial stewardship, medical readiness, health care quality, program efficiency, and overall value.

Evidence: The new MHS strategic plan contains 6 long-term goals. It has 19 objectives in support of the goals with 38 annual indicators to monitor progress. DoD planning documents demonstrate that 10 of the annual indicators are fully developed, 21 are under some level of development, and the final 7 indicators are waiting to be addressed. DoD uses a balanced score card approach that indicates linkage between the Service SGs annual performance contract measures and several of the MHS plan goals.

Does the program (including program partners) achieve its annual performance goals?

Explanation: Implementation of the new MHS strategic plan and development of annual indicators are progressing quickly. A number of the annual indicators are based on data already available. However, most of the annual measures are either being revised or under development. Therefore, annual indicators with baseline data and targets do not exist for most of the annual indicators. DoD is working on these areas as it moves forward with the MHS strategic plan.

Evidence: Review of the status of the goals, objectives, and targets in the MHS Leadership Team Meeting of May 7, 2003. A comparison of the MHS strategic plan goals and objectives to the MHS balanced score card measures demonstrates 38 specific annual performance measures identified. The program has fully developed 10 of these indicators with 21 under some level of development and 7 additional waiting to be addressed.

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program performance goals each year?

Explanation: DoD has not identified DHP efficiency measures and targets as required under question 4 of section III; therefore, the instruction require a "no" answer. DoD indicates that it monitors and improves program efficiency through its executive and financial reviews. In addition, DoD plans to develop efficiency measures as part of its MHS strategic plan.

Evidence: The FY 2003 budget estimate submission to OMB as well as past congressional budget justificationt documents do not contain efficiency measures for this benefit program. MSH Strategic plan.

Does the performance of this program compare favorably to other programs, including government, private, etc., that have similar purpose and goals?

Explanation: On quality of care, the military hospitals continue to exceed the average private hospital score in independent evaluation for Joint Commission accreditation. DoD continues to receive high customer satisfaction ratings for care provided in military hospitals. On medical readiness, it is generally recognized that DoD's medical readiness capability is the most advanced among other nations with military medical capabilities.

Evidence: The comparison of DoD average JCAHO grid scores to the average private sector JCAHO grid scores, and the MTF customer survey response demonstrate comparative measures that favorable relate the military health care system to private sector health care systems. No specific medical readiness measures were available but it is generally accepted among other militaries that the medical readiness of the US military is above that of other nations.

Do independent and quality evaluations of this program indicate that the program is effective and achieving results?

Explanation: DoD has limited use of independent programs evaluations to improve performance measures. The CNA and JCAHO scores are used in the process to revise annual performance contracts. It is expected that with the new strategic plan, DHP will better be able to demonstrate how the use of these and other independent evaluations are used to improve program performance.

Evidence: The DHP staff identified a limited use of independent studies in its process to revise the annual performance contracts. Health Affairs staff reviews independent evaluations like the CNA, IDA TRICARE evaluation, and JCAHO scores as one of the many inputs used to determine if a change is required to annual performance contract measure.