DoD Needs to Improve the Billing System for Health Care Provided to Contractors at Medical Treatment Facilities in Southwest Asia

The previous Commander, U.S. Central Command, requested this audit. Our objective was to follow up on the Department of Defense Office of Inspector General Report No. D-2009-078, Health Care Provided by Military Treatment Facilities to Contractors in Southwest Asia, May 4, 2009. In April 2011, DoD began billing contractors for health care provided in Southwest Asia; however, improvements to the billing system are needed. DoD officials took more than 5 years from the issuance of DoD guidance that required contractor reimbursement for health care to develop and implement a billing system. This occurred because the working group designated the Defense Finance and Accounting Service (DFAS) to perform the billing, but the group did not assign a functional proponent to oversee the billing system. As a result, DoD did not bill contractors for at least $8.1 million in health care expenses for FY 2010. This estimate does not include missed opportunities to bill contractors for health care between FY 2006, when DoD issued guidance, and FY 2009. Also, DoD Components experienced data reliability problems that affected the accuracy of the bills, totaling $84,116, for contractor health care provided in February 2011. This occurred because the DoD working group decided to use two nonfinancial databases that were not intended for billing, and staff at medical treatment facilities in Southwest Asia and contractor personnel made data input errors. As a result, DoD underbilled contractors for health care provided in February 2011 by at least $128,850. Without improvements to the billing process, it is likely that DFAS will continue to underbill. We recommend that the Under Secretary of Defense (Comptroller)/Chief Financial Officer, DoD, chair a meeting with the Under Secretary of Defense for Acquisition, Technology, and Logistics and the Under Secretary of Defense for Personnel and Readiness to assign a DoD functional proponent for billing contractors for health care.