- The Washington Times - Friday, April 4, 2014

Overseas health providers likely gouged the military for millions of dollars and the Department of Defense did little to stop it, says a new report from the Pentagon’s internal watchdog.

Officials at Tricare Management Activity (TMA) — part of the military’s health leadership — didn’t try to negotiate lower prices at any of the 163 overseas health care locations, instead paying whatever bills they got — to a tune of $238 million in fiscal year 2012.

In the six countries where the Defense Department spends the most on health care without negotiating for lower prices, investigators said the bills jumped 203 percent, going from a combined $21.1 million to $63.8 million from 2009 to 2012.

“Without negotiating rates or implementing other cost containment measures, TMA potentially paid more than necessary for health care services provided by overseas providers and missed potential opportunities to obtain the best value for health care services,” said a report from the Pentagon Inspector General’s Office.

Negotiating even basic price caps for services could help save $16 million a year, investigators warned, saying that it’s especially important because “TMA payments may continue to significantly increase resulting in much higher payments over the next five years.”

Negotiating lower prices can have a drastic effect. TMA has reached pricing agreements in three countries, and payments have dropped in all three over the last four years. The DOD is paying 5.7 percent less in Puerto Rico, 67.1 percent less in Panama and 82.1 percent less in the Philippines.

The DOD said it can be difficult to negotiate price agreements with medical providers in nations where U.S. service personnel make up a small percentage of the local population, and that they need to study how best to lower prices without affecting medical treatment for troops.

“I am very concerned with the rise of health care costs and the impact that these costs have on the DOD budget,” Jonathan Woodson, the assistant secretary of defense for health affairs, said on behalf of Tricare in the inspector general report. “As such, we continually look for opportunities to control health care costs and will continue to do so.”

The danger for fraud is also high without any price limits, and the inspector general is concerned about a repeat of what happened over a decade ago in the Philippines. TMA payments to medical providers there rose from $2.9 million in 1998 to $64.2 million in 2003 — a change of 2,135 percent in just five years.

In 2008, the CEO of the company that had received the majority of the payments was convicted of defrauding the U.S. government and deliberately inflating prices. With the scheme uncovered, payments are down to where they were almost 20 years ago — hovering around $3 million.

Investigators are concerned that a lack of oversight by Pentagon medical leaders could lead to a repeat of the U.S. getting ripped off.

There is no evidence, however, that the quality of care is dropping, the inspector general said. It’s simply a matter of how much is being paid.

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