The Pentagon has been spending as much as $1,400 for an electric breast pump that goes for $192 in stores, according to an Inspector General's report released Friday.
Overall, the Defense Health Agency (DHA) overpaid $16.2 million for standard electric breast pumps and replacement parts provided to beneficiaries in the former North, South and West Tricare regions, the Pentagon IG's office said.
Congress first ordered Tricare to provide a free standard electric breast pump to all new moms as part of the 2015 National Defense Authorization Act. With a physician's prescription, each mom can receive a free new breast pump and supplies, such as tubing and breast pump bottles, per "birth event."
Under Tricare's policy, the pumps can be ordered through a medical supply company and billed directly to Tricare, or users can purchase a pump at a store and submit the receipt themselves.
But the DHA policy failed to "require contractors for the three Tricare regions to use suppliers with fixed reimbursement rates," the investigation found.
Until late last year, Tricare West was managed by United Healthcare, Humana managed Tricare South, and Health Net Federal Services managed Tricare North. The North and South regions have since been combined into Tricare East, managed by Humana, while Health Net took over Tricare West. United Healthcare lost the contract.
DHA "overpaid for breast pumps by 91.2 percent [overpaying for 54,006 of 59,241 pumps] and by 56.8 percent for replacement parts [overpaying for 380,911 of 671,112 parts] when compared to the negotiated fixed reimbursement rate for eight different breast pump models," the report said.
"DHA paid $12.2 million more for breast pumps and $4 million more for replacement parts than it would have if it had required the Tricare regional contractors to use suppliers with fixed negotiated rates," it said.
"If the DHA continues the practice of excessively over paying reimbursements to beneficiaries, given the current pricing and volume, they could overpay $81.2 million over the next five years," the report said.
The worst example of overpayment was to a supplier in Pennsylvania in Tricare's then-North region of $1,400 for a "Medela Pump in Style Starter Set."
"This same breast pump can also be purchased on the open market for $192," the IG's report said.
The report began as an examination of whether the Defense Department was paying too much for breast pumps and replacement parts for Tricare beneficiaries.
The report recommends that the Defense Health Agency put in place fixed rates for breast pumps and parts, a step that then-Tricare West contractor United Healthcare had taken on its own with two national suppliers. Even so, United Healthcare recouped more than $718,000 in overpayments from one unnamed supplier, Tricare officials told investigators.
They added in their official response that they plan to revamp their coverage policy to include fixed reimbursement rates across the system.
The report also said Tricare should eliminate the option for moms to buy their own pumps and supplies and submit receipts for reimbursement, an option less than 1 percent of beneficiaries used in 2016, they found.
But Tricare disagreed with that recommendation.
"The DHA Director stated that the DHA wants to allow beneficiaries to continue to have access to out‑of‑network providers and retail environments for the purchases of these items with reasonable cost controls," the report said.
-- Richard Sisk can be reached at Richard.Sisk@Military.com.
-- Amy Bushatz can be reached at firstname.lastname@example.org.