[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
IDENTIFYING THE CAUSES OF INAPPROPRIATE
BILLING PRACTICES BY THE U.S.
DEPARTMENT OF VETERANS AFFAIRS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON HEALTH
of the
COMMITTEE ON VETERANS' AFFAIRS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
OCTOBER 15, 2009
__________
Serial No. 111-50
__________
Printed for the use of the Committee on Veterans' Affairs
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COMMITTEE ON VETERANS' AFFAIRS
BOB FILNER, California, Chairman
CORRINE BROWN, Florida STEVE BUYER, Indiana, Ranking
VIC SNYDER, Arkansas CLIFF STEARNS, Florida
MICHAEL H. MICHAUD, Maine JERRY MORAN, Kansas
STEPHANIE HERSETH SANDLIN, South HENRY E. BROWN, Jr., South
Dakota Carolina
HARRY E. MITCHELL, Arizona JEFF MILLER, Florida
JOHN J. HALL, New York JOHN BOOZMAN, Arkansas
DEBORAH L. HALVORSON, Illinois BRIAN P. BILBRAY, California
THOMAS S.P. PERRIELLO, Virginia DOUG LAMBORN, Colorado
HARRY TEAGUE, New Mexico GUS M. BILIRAKIS, Florida
CIRO D. RODRIGUEZ, Texas VERN BUCHANAN, Florida
JOE DONNELLY, Indiana DAVID P. ROE, Tennessee
JERRY McNERNEY, California
ZACHARY T. SPACE, Ohio
TIMOTHY J. WALZ, Minnesota
JOHN H. ADLER, New Jersey
ANN KIRKPATRICK, Arizona
GLENN C. NYE, Virginia
Malcom A. Shorter, Staff Director
______
SUBCOMMITTEE ON HEALTH
MICHAEL H. MICHAUD, Maine, Chairman
CORRINE BROWN, Florida HENRY E. BROWN, Jr., South
VIC SNYDER, Arkansas Carolina, Ranking
HARRY TEAGUE, New Mexico CLIFF STEARNS, Florida
CIRO D. RODRIGUEZ, Texas JERRY MORAN, Kansas
JOE DONNELLY, Indiana JOHN BOOZMAN, Arkansas
JERRY McNERNEY, California GUS M. BILIRAKIS, Florida
GLENN C. NYE, Virginia VERN BUCHANAN, Florida
DEBORAH L. HALVORSON, Illinois
THOMAS S.P. PERRIELLO, Virginia
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
hearing records of the Committee on Veterans' Affairs are also
published in electronic form. The printed hearing record remains the
official version. Because electronic submissions are used to prepare
both printed and electronic versions of the hearing record, the process
of converting between various electronic formats may introduce
unintentional errors or omissions. Such occurrences are inherent in the
current publication process and should diminish as the process is
further refined.
C O N T E N T S
__________
October 15, 2009
Page
Identifying the Causes of Inappropriate Billing Practices by the
U.S. Department of Veterans Affairs............................ 1
OPENING STATEMENTS
Hon. Glenn C. Nye................................................ 1
Chairman Michaud, prepared statement of.......................... 26
Hon. Henry E. Brown, Jr., Ranking Republican Member.............. 2
Prepared statement of Congressman Brown...................... 26
WITNESSES
U.S. Government Accountability Office, Kay L. Daly, Director,
Financial Management and Assurance............................. 12
Prepared statement of Ms. Daly............................... 35
U.S. Department of Veterans Affairs, Gary M. Baker, MA, Chief
Business Officer, Veterans Health Administration............... 16
Prepared statement of Mr. Baker.............................. 43
______
American Legion, Denise A. Williams, Assistant Director for
Health Policy, Veterans Affairs and Rehabilitation Commission.. 6
Prepared statement of Ms. Williams........................... 34
Disabled American Veterans, Adrian Atizado, Assistant National
Legislative Director........................................... 5
Prepared statement of Mr. Atizado............................ 29
Paralyzed Veterans of America, Fred Cowell, Senior Health Policy
Analyst........................................................ 3
Prepared statement of Mr. Cowell............................. 27
MATERIAL SUBMITTED FOR THE RECORD
Post-Hearing Questions and Responses for the Record:
Hon. Michael Michaud, Chairman, Subcommittee on Health,
Committee on Veterans' Affairs to Ms. Kay Daly, Director,
Financial Management and Assurance, U.S. Government
Accountability Office, letter dated October 20, 2009, and
response letter dated November 23, 2009.................... 50
Hon. Michael Michaud, Chairman, Subcommittee on Health,
Committee on Veterans' Affairs to Hon. Eric K. Shinseki,
Secretary, U.S. Department of Veterans Affairs, letter
dated October 20, 2009, and VA responses................... 52
IDENTIFYING THE CAUSES OF INAPPROPRIATE
BILLING PRACTICES BY THE U.S.
DEPARTMENT OF VETERANS AFFAIRS
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THURSDAY, OCTOBER 15, 2009
U.S. House of Representatives,
Committee on Veterans' Affairs,
Subcommittee on Health,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:09 a.m., in
Room 334, Cannon House Office Building, Hon. Glenn C. Nye
presiding.
Present: Representatives Michaud, Snyder, Nye, Perriello,
and Brown of South Carolina.
OPENING STATEMENT OF HON. GLENN C. NYE
Mr. Nye [presiding]. Good morning. I would like to bring
the Subcommittee on Health hearing to order and apologize for
the late start. Chairman Michaud will be with us a little bit
later and asked me to Chair for him in the meantime so thank
you all for being here. Before we get started, I would like to
ask for unanimous consent that all Members may have 5
legislative days in which to revise and extend their remarks.
Hearing no objections, so ordered.
Again, I would like to thank everyone for attending this
important hearing. Today's hearing will focus on the
inappropriate billing practices of the U.S. Department of
Veterans Affairs (VA), where veterans receive a bill for the
wrong amount or get a bill that they should not have received
in the first place. Unfortunately, inappropriate billing
affects both service-connected veterans and non-service-
connected veterans. For example, a veteran with a service-
related spinal cord injury may be billed for the treatment of a
urinary tract infection. Now, the urinary tract infection may
clearly be linked to, and a result of, the service-connected
injury. However, veterans are still receiving bills for the
treatment of such secondary conditions. As a result, these
veterans may be forced to seek a time consuming and burdensome
readjudication of their claim indicating the original service-
connected ratings.
It is my understanding that one of the reasons for
inappropriate billing of secondary conditions is that the VA
cannot store more than six service-connected conditions in
their information technology (IT) system. It is also my
understanding that the VA is taking steps to correct the
deficiency but the problem has not been fully resolved and our
veterans continue to receive inaccurate bills.
Non-service-connected veterans also encounter overbilling
and inappropriate charges for copayments. One issue that I have
been made aware of repeatedly is that some non-service-
connected veterans receive multiple bills for a single medical
treatment or health care visit.
It is evident that inefficiencies in the billing system
exist where something is inappropriately triggering the
multiple billing episodes. It may be simple human error, or IT
error, but this has the potential of imposing an unnecessary
burden on our veterans. Just imagine all the time that our
veterans spend and the stress that they experience in trying to
resolve improper bills.
One thing is clear: inappropriate billing is not acceptable
and we must do better by our veterans. Today I hope to get to
the bottom of this issue. We will examine why veterans and
their insurers are receiving inaccurate bills, learn what the
VA is doing to address this problem, and explore how we can
fully remedy the problem. We have brought together witnesses
who can shed light on the problem and I look forward to their
testimonies.
I would now like to yield to and recognize Ranking Member
Brown for any opening comments he may have.
[The prepared statement of Chairman Michaud appears on
p. 26.]
OPENING STATEMENT OF HON. HENRY E. BROWN, JR.
Mr. Brown of South Carolina. Thank you, Mr. Chairman.
Thanks to the witnesses for coming. I am looking forward to the
dialogue today.
It is the solemn mission of the Department of Veterans
Affairs and the Federal Government to care for the men and
women in uniform who sustain injuries and illnesses as a result
of their service to our Nation. Therefore, I find it deeply
troubling to hear about veterans being inappropriately billed
for copayments for medical care and the medications to treat
service-connected conditions.
A similar issue arose earlier this year when the Obama
Administration was considering a plan to bill veterans' private
insurance for service-connected care. Fortunately, this ill-
conceived proposal never saw the light of day, given the fierce
opposition of Members from both sides of the aisle and the
veterans service organizations (VSOs). As I said then, this
flies in the face of our moral obligation as a grateful Nation
to care for those wounded heroes.
Thanks, and I yield back.
[The prepared statement of Congressman Brown appears on
p. 26.]
Mr. Nye. Thank you, Mr. Brown. Do any other Members wish to
make an opening statement? Great. I would like to go ahead and
introduce the first panel. The first panel includes Mr. Fred
Cowell, the Senior Health Policy Analyst from Paralyzed
Veterans of America (PVA); Mr. Adrian Atizado, Assistant
National Legislative Director from Disabled American Veterans
(DAV); and Denise Williams, Assistant Director for Health
Policy, Veterans Affairs and Rehabilitation Commission at the
American Legion. Mr. Cowell, I would like to recognize you for
your opening statement. Thank you for being here.
STATEMENTS OF FRED COWELL, SENIOR HEALTH POLICY ANALYST,
PARALYZED VETERANS OF AMERICA; ADRIAN ATIZADO, ASSISTANT
NATIONAL LEGISLATIVE DIRECTOR, DISABLED AMERICAN VETERANS; AND
DENISE A. WILLIAMS, ASSISTANT DIRECTOR FOR HEALTH POLICY,
VETERANS AFFAIRS AND REHABILITATION COMMISSION, AMERICAN LEGION
STATEMENT OF FRED COWELL
Mr. Cowell. Chairman Michaud, Ranking Member Brown,
Congressman Nye, Members of the Subcommittee, the Paralyzed
Veterans of America appreciates this opportunity to present
current information and its ongoing concerns regarding VA's
inappropriate billing practices for medical care services
delivered to America's veterans.
Mr. Chairman, as you know The Independent Budget has
identified problems with the billing process in its 2009 and
2010 editions. Inappropriate billing for medical services is a
VA systemwide problem and affects both service-connected and
non-service-connected veterans. Inappropriate charges for VA
medical services places unnecessary financial stress on
individual veterans and their families. These inaccurate
charges are not easily remedied and their occurrence places a
burden for correction directly on the veteran, their families,
or their caregivers. Additionally, PVA believes that many
veterans are not aware of these billing mistakes and simply
submit full payment to VA when a billing statement arrives at
their home. Veterans who are astute enough to scrutinize their
VA billing statements to identify erroneous charges have just
begun a cumbersome process to actually correct the problem and
receive a credit for the error on a subsequent VA billing
statement. It has become the veteran's responsibility to seek
VA assistance wherever possible.
If the veteran contacts the VA Health Resource Center in
Topeka, Kansas, concerning questions about their account, they
must work through a telephone maze before reaching a
representative to discuss the billing issue. The Health
Resource Center representative cannot remove charges that are
in dispute and can only email the reported error to the proper
VA facility for consideration. The local facility then has 30
days to respond to the veteran if the veteran requests such
contact. In the meantime, subsequent billing statements
continue to arrive at the veteran's home and penalty charges
continue to accrue. Because of extensive delays, many PVA
members have foregone assistance from the Resource Center and
seek assistance from their local providers who may or may not
intervene on their behalf.
Mr. Chairman, the process to correct inappropriate billing
is not an easy path for veterans as VA billing statements are
often received months after an actual medical care encounter,
and subsequent credit corrections only appear months after
corrective intervention has taken place. It is often difficult
for veterans to remember health care treatment dates and match
billing statements that arrive months after treatment to search
for billing errors. PVA's experience, as mentioned earlier, has
shown that both service-connected and non-service-connected
veterans are being erroneously billed for their VA care. PVA
members who are 100-percent service-connected for their spinal
cord injuries report that they receive VA bills related to
their service-connected condition. VA is billing these veterans
for secondary medical conditions directly related to their
service-connected condition. Some VA billing offices explain
that because a veteran is not rated for these secondary
conditions that they can freely bill for this care. This issue
is amplified in our written statement to the record.
These veterans also report that their private insurance
providers are often billed for VA care they receive for their
service-connected conditions. PVA non-service-connected
veterans report that they consistently receive multiple
copayment charges for a single VA medical care service. Again,
the veteran has identified a billing error the corrective
process just begins. If the error is discovered by the veteran
finding proper assistance is difficult and corrective action
takes months to achieve. Corrective action and follow through
is the veteran's responsibility because the veteran receives no
acknowledgment letter from the VA that an error has actually
happened. The veteran is forced to review subsequent billing
statements to see if he or she actually receives a credit entry
for the previous error.
Mr. Chairman, I personally have been experiencing billing
errors for years concerning the services I receive from the
Washington, DC, Medical Center. The quality of care I have
received is of the highest caliber. But almost every billing
statement I receive has several charges that are incorrect. For
several years I simply paid these charges because I did not
realize they were erroneous. For at least the past 3 years, I
now work with my visiting nurse to review my bills for
incorrect charges. She then contacts the social worker on my
team and they work with the DC business office to remove
incorrect charges. This is a monthly process because somehow
the problem cannot be fixed on the local level and these errors
continue to happen. This means that important frontline health
care workers are spending their valuable time on correcting
billing issues rather than caring for veterans.
Because VA has been experiencing reports from veterans
across America that inappropriate billing is happening, we
conducted a survey of our membership to understand the scope of
the problem. In September of 2009, PVA sent an email survey to
approximately 4,000 of our members regarding the issue. Within
2 weeks, we had received 449 responses to the survey. Of the
449 respondents, approximately 9 percent report receiving more
than one bill for the same treatment episode; approximately 17
percent claim to have been billed directly for a service-
connected condition; and another 22 percent claim that their
insurance company is being billed for treatment of a service-
connected condition.
Mr. Chairman, we are asking the Subcommittee to take action
on the issue of inappropriate billing and to intervene on
behalf of PVA members and on behalf of all veterans who are
experiencing incorrect VA billing problems. PVA knows this is a
national problem, as evidenced by our survey.
The stress of living with a catastrophic disability is
burden enough, Mr. Chairman, without experiencing continued
billing problems associated with the care we receive from the
VA. Mr. Chairman, this concludes my remarks and I will be happy
to attempt to answer any questions you may have.
[The prepared statement of Mr. Cowell appears on p. 27.]
Mr. Nye. Thank you very much for your opening statement,
Mr. Cowell. I would like to recognize you, Mr. Atizado, for
your opening statement.
STATEMENT OF ADRIAN ATIZADO
Mr. Atizado. Mr. Chairman, Ranking Member Brown, Members of
the Subcommittee. I would like to thank you first and foremost
for inviting the DAV to present our views on inappropriate
billing practices by the VA. Like my colleague here, there are
numerous concerns about inappropriate billing. But we do bring
two points of concern: the effects of inappropriate billing on
VA's financial resources, as well as the veteran/patient, both
of which affect patient care and patient satisfaction.
The efficient and the timely collection of reimbursable
costs is a tremendous driver at local facilities that adds to
their resources toward meeting the growing health care demands
of sick and disabled veterans. However, when we compare fiscal
year 2009 and the 2010 budget estimates to those of prior
years, we see a dramatic increase in estimated collections for
third party as well as first party and other copayments. This
is concerning in light of the overall actual expected
collections that have been below budget estimates, that is with
the exception of fiscal year 2008 when VA actually exceed
estimated collections.
If you compare, however, the fiscal year 2008 and 2010
budget estimates for medical care fund subaccounts, there is an
expected increase of 50 percent for third-party collections or
collections to insurance companies of veterans, and a 30-
percent increase in first party and other copayments,
collections from veteran/patients themselves.
The DAV is concerned that ever-increasing budget estimates
and the need of local VA facilities to meet them to ensure they
have adequate resources may encourage or contribute to
inappropriate billing. And although it is mitigated to some
extent by designating these collections as no-year funds, the
exceedingly dramatic shift in gains and losses in these
subaccounts can have a detrimental effect. Without facility by
facility performance and trend data on collections, we are
concerned that VA's ability to effectively manage the Medical
Care Collections Fund (MCCF) program to enhance revenue and
avoid inappropriate billing is severely impaired.
Despite efforts prompted by reports from the U.S.
Government Accountability Office (GAO) and VA's Office of
Inspector General (OIG) to enhance revenue collections and
protect against erroneous billing, the DAV continues to receive
reports from our members that inappropriate billing continues.
To supplement the anecdotal evidence we have collected over the
years, DAV recently conducted a survey, much like PVA, of our
DAV Commander's Action Network. We asked survey recipients to
participate if they believe VA has inappropriately billed them
or their insurance companies. There is also the survey of 402
respondents from across the Nation, show about 43 percent
receive bills for their care from VA and approximately 62
percent had other insurance coverage being billed for VA care.
And we also asked if they had received more than one bill
for the same treatment, and about 18 percent affirmed. We then
asked if they are billed for treatment at the VA for a service-
connected condition, 42 percent, or 167 veterans, said they
are. And about 55 percent confirmed that their insurance
company is being billed for a service-connected related
treatment.
We understand that under the law, VA must bill veterans and
their insurers for providing treatment for non-service-
connected conditions. However, inappropriate billing causes
undue financial and emotional stress on veterans and their
families. The four vignettes included in my written testimony
from veterans who are being inappropriately billed goes to the
heart of being a veteran-centric health care system. What is
most troubling is the perception these veterans carry about VA
being indiscriminating in their billing and collections, and VA
being unresponsive when veterans bring their concerns to the
local facility for corrective action.
Now, VA is not supposed to be a for-profit health care
provider, but it is perceived as such by our veterans. And this
is because in the private sector it is up to the patient to
catch mistakes when they or their insurance are being
inappropriately billed. We believe VA should be held to a
higher standard than the private sector provider.
Mr. Chairman, as I remain in the audience for the remainder
of this hearing I will listen with the ear of these four
veterans and others like them about what VA is proactively
doing to address their actions and ensure no future
inappropriate billing occurs.
Again, we appreciate the Subcommittee's interest in this
issue and we thank you for the opportunity to present our
views. We will appreciate your consideration of our testimony
in pressing this important matter for America's sick and
disabled veterans. I will be pleased to answer any questions
that you or other Subcommittee Members may have. Thank you.
[The prepared statement of Mr. Atizado appears on p. 29.]
Mr. Nye. Thank you very much, Mr. Atizado. I would now like
to recognize Ms. Williams for an opening statement.
STATEMENT OF DENISE A. WILLIAMS
Ms. Williams. Mr. Chairman and Members of the Subcommittee.
The American Legion appreciates the opportunity to offer our
views on this very important issue. The American Legion has a
long history of advocating on behalf of veterans. A very
notable instance where this is evident was in March 2009 when
Past National Commander David Rehbein met with President Obama
and learned that the Administration planned to move forward on
a proposal to charge veterans' private insurance for the
treatment of service-connected injuries and illnesses at VA
medical facilities. Under the proposed change, VA would bill
the veteran's private insurance company for treatment of their
service-connected disability. After fierce opposition from the
American Legion and other veterans service organizations, the
Administration dropped their plan to bill private insurance
companies for treatment of service-connected medical
conditions.
In June 2004, the GAO released a report which stated that
VA had inadequate patient intake procedures, insufficient
documentation by physicians, a shortage of qualified billing
coders, and insufficient automation, all of which diminished
MCCF collections. GAO conducted a followup audit in 2008 and
echoed similar findings, that VA has ineffective controls over
their medical center billings and collections which limits
revenue from third-party insurance companies. The report also
concluded that VA lacks policies, procedures, and reporting
mechanisms for oversight of third-party billings and
collections.
The Department of VA Inspector General's Office conducted
an evaluation of the MCCF first party billings and collections
practices in 2004. The report found that the veterans were
inappropriately billed because of inaccurate medical facility
veterans health information systems and technology
architecture. In 2007, the VA OIG carried out another
evaluation of 10 facilities and ascertained that there were
missed billing opportunities at 10 facilities due to
insufficient documentation of resident supervision.
Additionally, there were cases where episodes of care were not
billed due to coding staff's lack of experience and insurance
companies denying payment because of billing staff placing
incorrect information in the system.
In light of these findings, we recommend that VA implement
continuing education of all coders and their supervisors. The
American Legion urges VA OIG and GAO to conduct followup
evaluations of their latest reports to determined whether VA
has complied with these recommendations.
Mr. Chairman, although VA has made great strides in
rectifying these issues surrounding their billing and
collection practices, it is apparent that there is still room
for improvement. As recent as April 2009, the American Legion
compiled a total of 10 documented cases where VA erroneously
billed service-connected veterans' private insurance for their
service-connected medical care. In one case, an 80-percent
service-connected veteran reported that his wife's private
insurance had been billed repeatedly for his treatment of
service-connected illness. The veteran inquired about it
through the VA primary care team and was told that they will
continue to be billed as long as they have private insurance.
The veteran explained that he was being billed for service-
connected disabilities. However, the inappropriate billing
continues.
The American Legion is deeply concerned about this critical
situation and contends that VA work jointly with us to
investigate these and other cases, as well as collect pertinent
records from affected veterans and take the necessary
corrective measures. Additionally, we recommend that the VA
create a means to alert coders of service-connected conditions
in their system and increase efforts and focus on monitoring
accounts receivable.
Finally, we would like to take this opportunity to express
our thanks to Chairman Filner for the introduction of H.R.
3365, the ``Medicare VA Reimbursement Act of 2009.'' The
American Legion strongly supports this bill and would like to
encourage your colleagues to follow suit.
On behalf of the American Legion, I appreciate the
invitation to present our views on this very important topic.
This concludes my testimony.
[The prepared statement of Ms. Williams appears on p. 34.]
Mr. Nye. Thank you very much, Ms. Williams. I would like to
take the opportunity to ask a couple of question of our panel
members. First of all, I would just like to say I appreciate
Mr. Brown, the Ranking Member's opening comments, when he
mentioned something that a number of our panelists also
mentioned, about the notion that the Administration was kicking
around earlier in the year about potentially charging veterans'
private insurance for service-connected injuries. I want to say
I was also proud to be part of that bipartisan effort along
with our VSOs to raise the issue quickly to the White House.
Fortunately, we were able to resolve that and get that taken
off the table early.
It is clear to me that despite some of our victories, we
have still got some problems in execution at the VA. I would
like to ask if all of the panelists might tell me what they are
hearing from their membership in terms of the amount of time
that it typically takes for these inappropriate billing
episodes to be resolved? If I could start with Mr. Cowell.
Mr. Cowell. In my personal experience, I generally receive
a VA billing statement 3 or 4 months from the actual date of
treatment. At that point, I have to go through the bill, match
it. I have learned over time to match it to a home calendar
that I keep so that I can track actual visit dates from my home
care nurse. If I notice more than one billing in that
particular month, and generally I get a single visit in a month
from my home care nurse. Sometimes I am billed as often as
three or four times in that month for that single service. I
then have to wait for the following visit, which is the
following month, to talk with her about the issue. She checks
her calendar, verifies that there is erroneous billing going
on. And then she goes back to the DC hospital and contacts the
social worker on that team, who then reviews the chart. And
they go up to the business office.
So sometimes it can take 6 to 8 months to get a correction
for a billing error. And most months there is more than one
billing error on my statement. And we are hearing the same
thing from veterans across the country, PVA members, that it
takes 6 to 8 months, if they even know that there is a billing
error, to get it corrected.
Mr. Nye. Did you say that most months there is a billing
error on your statement?
Mr. Cowell. That is correct.
Mr. Nye. All right, thank you. Mr. Atizado.
Mr. Atizado. Well, thank you for that question. The
veterans that I ended up calling from our survey who said that
it was okay for us to contact them, the time runs the gamut
from having it corrected within a few weeks, to not being
corrected at all, to being corrected for one bill and having a
recurring bill; I should say recurring inappropriate bill,
happen the following treatment episode or the following month.
So I can certainly tell you that there is no consistency in the
corrective actions. There just is not.
Some veterans have given up. Some veterans will pay. And
some veterans will hold themselves in debt, and end up having
an offset put on either their compensation or pension, despite
the fact that it is an inappropriate bill.
Mr. Nye. Okay, thank you.
Ms. Williams.
Ms. Williams. Mr. Chairman, I believe it varies based on
the case. But those 10 cases that we compiled in April, one of
our Assistant Directors did follow up with the veterans and I
believe there were some cases that were not resolved, and this
was last week. I must say that our Executive Director did meet
with our VA liaison last week and I believe that they are
working on resolving those cases. So it does vary. We do not
have an exact time for when they are resolved, but there are
still some cases out there that have not been rectified.
Mr. Nye. Okay. Mr. Cowell, just a followup for you. You
suggested that your home care nurse had been helping you go
back and follow up on the inaccuracies, and I just wanted to
make sure that I understood that correctly. Is that typical of
your membership, to have that kind of assistance when going
back and checking your bill?
Mr. Cowell. I cannot speak for our membership on this
issue. But I am rather trying to bring the firsthand account of
my experience. And I am astute enough, and have been coached
enough, to know how to look for these errors now that I realize
they are happening. I think many of our members do not even
know that there is inappropriate billing going on. They
receive, our non-service-connected members that would receive a
copayment bill, just simply pay the bill. If they neglect to
pay the bill then they receive a series of uncomfortable
letters about possible penalties and other actions that can
result if they do not submit payment.
If you submit payment for an inappropriate bill, there is
never any followup from the VA, who then double checks to see
if their billing statements are even correct. So the veteran
can be out of pocket if he chooses to go ahead and pay the
bill. If you delay payment then you incur penalties and charges
on your account that are added on until the situation is
corrected.
Mr. Nye. Okay. Thank you. I also wanted to follow up on
your surveys, between you and Mr. Atizado. Did both of your
organizations use the same survey? Or did you use separate
surveys?
Mr. Cowell. We did not collaborate with DAV on our survey.
We knew the personal situations that our members were
experiencing and we phrased the questions of our survey
depending on the experiences that we knew about.
Mr. Nye. Okay. Well, then I would like to ask both of you
if you would be willing to share your survey questions so that
we might better inform the VA to do some similar outreach on
their side?
Mr. Cowell. I cannot imagine that we would not. I think we
would need to look at some confidentiality issues with the
individual veteran. But maybe there is a way we can scrub that
so that the reports are not identifiable.
Mr. Nye. That is fine. I think it is more important that we
have the questions and the survey methodology rather than the
individual names. Mr. Atizado, are you satisfied with that idea
as well? With sharing the questions?
Mr. Atizado. On the issue about personally identifiable
information, I do not see a reason to, I would have to confer
with our legal, of course.
Mr. Nye. Okay. Then we will have to follow up with you on
that. One more question for Ms. Williams, you had talked during
your testimony about erroneous billing for service-connected
veterans. Did you also find that there were similar problems
with erroneous billing among veterans with non-service-
connected injuries.
Ms. Williams. Yes, we did. With the cases that we followed
up, there were cases where they were billed for more than once.
And also they were billed for their service-connected
disabilities.
Mr. Nye. Great. At this time I would like to yield to the
Ranking Member Mr. Brown for any questions he might have.
Mr. Brown of South Carolina. Thank you very much. This is
kind of a general question, just listening to some of the
answers previously. If you are erroneously billed, then you try
to correct it. But during the correction stages, they will add
penalties on to the bill? And finally, they will actually
assess your pension check to be able to make the payment?
Mr. Cowell. That is correct, Congressman Brown.
Mr. Brown of South Carolina. They will take it out of your
check if you do not pay?
Mr. Cowell. Or they will withhold the amount of money that
you may owe the VA for charges being billed.
Mr. Atizado. There is a specific process for that, Ranking
Member Brown. There is, I believe within so many days, I
believe it is 90 days, a certain debt goes to, I believe, the
Debt Management Center in----
Mr. Brown of South Carolina. Collections center.
Mr. Atizado. Well, it actually goes to a debt management,
Debt Management Center in Minneapolis. If it is over 180 days
it can actually get referred to the offset program that VA has
with the Treasury more----
Mr. Brown of South Carolina. Do they charge you a fee?
Mr. Atizado. I am sorry.
Mr. Brown of South Carolina. Do they add a fee on after it
is late a certain number of days?
Mr. Atizado. I could not speak to that, sir. I do not
believe so, but----
Mr. Brown of South Carolina. Do they charge you an add on
fee if you pay late?
Mr. Cowell. Yes. There is a late penalty and charge for
late payment.
Mr. Brown of South Carolina. How much does that normally
run?
Mr. Cowell. I do not know the----
Mr. Brown of South Carolina. It is a percent of the----
Mr. Cowell [continuing]. Percentage, sir, but I could get
that information for you.
[Mr. Cowell subsequently provided the following
information:]
PVA does not know the methodology that VA used to set the
amount of the late penalty fee that has been determined by VA
to be an appropriate amount to be charged. Additionally, PVA
does not know just how much lapsed time has been determined by
VA to trigger a late payment penalty. Whatever the methodology
that VA applied it seems that a case could be made that it was
an arbitrary decision by VA and PVA wonders why Congress was
not involved in the decision.
Recommendation: PVA suggests that Congressman Brown request
information from VA's business office to clarify this question.
Mr. Brown of South Carolina. And they will charge you even
though that----
Mr. Cowell. Even though the bill is in dispute.
Mr. Brown of South Carolina [continuing]. The veteran
reports that?
Mr. Cowell. Even though the bill is in dispute, until it is
resolved----
Mr. Brown of South Carolina. Is that right?
Mr. Cowell [continuing]. The charge continues to accrue.
Mr. Brown of South Carolina. And finally, will they just
write it off? Of what is the conclusion?
Mr. Cowell. Well, one of the situations that we have heard
from our non-service-connected members is if they are not in
receipt of a VA pension, so there is not an offset available
through withholding compensation or pension, they turn it over
to the IRS, who then can, if they have a refund coming on their
next year's taxes, they will withhold that refund until that
amount is paid.
Mr. Brown of South Carolina. If you paid it anyway under
protest, will they reimburse it?
Mr. Cowell. I have never known of a case where VA
reimbursed for overpayment. I do not think they have a method
of even understanding if they are incorrectly billing.
Mr. Atizado. They do. Ranking Member, they do. In fact, one
of our Members who is the fourth vignette, I believe, in my
testimony, did ask for an audit; I believe it was back in March
of this year. It was not only until 2 or 3 weeks ago that he
received a refund check back. But there is a process, I
believe, part of a business integrity policy, a handbook that
VA has.
Mr. Brown of South Carolina. Okay. Mr. Cowell, let me----
Mr. Cowell. I would just like to add that that burden is on
the veteran to even know that he has incorrectly been billed--
--
Mr. Brown of South Carolina. Right.
Mr. Cowell [continuing]. Before he can pursue the remedy
for refund.
Mr. Brown of South Carolina. Let me ask you a question. You
called for VA to take immediate action to change this
regulation so that a veteran who is rated permanently and
totally can never be erroneously billed. Specifically, what is
your recommendation to fix the problem?
Mr. Cowell. You are asking me, Mr. Ranking Member?
Mr. Brown of South Carolina. Yes, sir.
Mr. Cowell. Yes. Well, the situation is just so widespread,
and we think that each facility, there are liberties being
taken with actually the regulation and the statute. If VA
cannot clarify the regulation then we would call on Members of
Congress to do a statutory change to make it very clear to VA
that this is inappropriate.
Mr. Brown of South Carolina. Do you think the
Administration could do it administratively? Or do you think we
would have to take legislative action?
Mr. Cowell. Well, I want to believe that we do not need
statutory change. But this has been an ongoing problem. We have
mentioned it in The Independent Budget for over 2 years. I
think because of the language change that happened, and local
facilities are able to collect the collections and keep that
money, I believe that that has caused a perverse incentive for
them to really aggressively go after billing practices. It may
take a statutory change to make it absolutely clear so that the
VA knows that their boundaries are.
Mr. Brown of South Carolina. Okay, thank you. Mr. Cowell,
if you could, would you send us a copy of your legislative
proposal so that we could then, you know, take some action on
it?
Mr. Cowell. I will confer with our legislative director,
Mr. Brown, and we will be happy to put some language together
for you.
[Mr. Cowell subsequently provided the proposal to the
Committee staff.]
PVA is currently working on a draft proposal to submit to the
Committee on Veterans' Affairs regarding billing of veterans
with 100 percent a service-connected disability rated Permanent
and Total. As we stated in our testimony for the hearing, it
makes no sense whatsoever that the VA be permitted to bill a
veteran for any care if they have a Permanent and Total rating.
A Total rating suggests that any health condition that requires
treatment is secondary to the original service-connected
condition without the need for consideration as a second
condition. In our opinion, this should mean that 100 percent
Total and Permanent service-connected disabled veterans should
not be billed, nor should his/her insurance company be billed,
for any treatment these veterans receive. Correcting this
problem is one of PVA's top legislative priorities for this
year. As such, we will be presenting a point paper on the issue
of how this change can be implemented either by statute or
through regulation.
If veterans who are now rated 100 percent permanent and total
are forced to seek adjudication for secondary conditions
related to their service-connected condition the VBA claims
process will certainly be further swamped by the volume of
claims necessary to rectify this situation.
Mr. Brown of South Carolina. Very good. Thank you so much.
Mr. Nye. Thank you, Mr. Brown. And thank you to the first
panelists. I would like to go ahead and invite the second
panel, Ms. Kay Daly, to come up to the table and join us for
her testimony.
I would like now to yield to the Subcommittee Chairman, Mr.
Michaud.
Mr. Michaud [presiding]. First of all, I would like to
thank Mr. Nye for taking over and running the Subcommittee
hearing for the first panel. I really appreciate it. And I
appreciate your advocacy for our veterans. So thank you very
much. Ms. Daly.
STATEMENT OF KAY L. DALY, DIRECTOR, FINANCIAL MANAGEMENT AND
ASSURANCE, U.S. GOVERNMENT ACCOUNTABILITY OFFICE
Ms. Daly. Mr. Chairman, and Ranking Member Brown, and the
other Members of the Subcommittee, I am very pleased to be here
today to discuss our prior work on the Department of Veterans
Affairs controls over medical center billings and collections.
VA is authorized to provide certain medical services to
veterans with non-service-related conditions and to recover
some of the costs of providing these additional benefits
through billing and collecting payments through veterans'
private health insurers. These are commonly referred to as
third-party insurers. VA can also use these third-party health
insurance collections to supplement its medical care
appropriations.
Today, my testimony will summarize the findings from our
June 2008 report that are most relevant to the subject of
today's hearing. Specifically, I will focus on our findings
concerning one, the effectiveness of VA medical center billing
practices at selected locations we visited; and two, VA-wide
controls for performing timely followup on amounts that were
due from third-party insurers; and third, the adequacy of VA's
oversight of the billing and collection process.
Regarding the effectiveness of the billing processes, our
analysis of unbilled patient services at 18 case study
locations found excessive average days to bill, coding and
billing errors, and a lack of management oversight that raised
questions about $1.7 billion that was not billed to third-party
insurers at the 18 locations we reviewed. Now, it is important
that coding for the medical services is accurate and timely
because insurers will not accept improperly coded bills or
bills that are considered late, which is usually 1 year, or
sometimes as little as 6 months, after the services were
provided.
At the 10 non-Consolidated Patient Account Center (CPAC)
medical centers we reviewed, we found the average days to bill
ranged from 109 days to 146 days in fiscal year 2007. That
compares to VA's goal of 60 days. We also found these centers
had significant problems that accounted for over $254 million,
that is 21 percent, of the total unbilled medical services cost
at those 10 centers.
Now, our case study analysis of the eight medical centers
that were under the CPAC initiative found that CPAC officials
performed a more thorough review of the billing function. The
CPAC centers average days to bill ranged from 39 days to 68
days, and their billing errors accounted for about $37.5
million, or about 7 percent of the medical center costs that
were not billed to third-party insurers. Managers at the
locations we visited did not perform adequate reviews of the
services assigned to the various categories, including whether
it was service- or non-service-connected, to ensure that the
bills were appropriately coded and classified.
Our June 2008 report also identified significant problems
related to timely followup with third-party insurers on their
actions to collect amounts that had been billed. Our
statistically valid tests for the required initial followup
showed a failure rate of 69 percent VA-wide, 36 percent for the
CPAC centers and 71 percent for non-CPAC centers. The failure
to make timely followup contacts and delays in initiating those
contacts with the third-party insurance companies increases the
risks that the payments will not be collected, or that payments
will be substantially delayed. Management officials at several
of the medical centers tested in our statistical sample
attributed their high followup failure rate to inadequate
staffing. However, we found that a lack of management oversight
at the medical centers, as well as at the VA management level,
contribute to the control weaknesses we identified.
In addition, we found that VA and medical centers have few
standardized management reports to facilitate the oversight.
Limitations in management reporting were because VA's health
care billing and collections systems operate as stand alone
systems at each medical center. Therefore, VA-wide reporting
was dependent on numerous individual queries and data calls.
Enhanced oversight would permit VA headquarters and medical
center management to monitor trends and performance metrics,
such as increases or decreases in unbillable amounts.
In summary, until VA addresses its significant continuing
weaknesses in controls over coding, billing, and collections
followup, it will continue to be at risk for millions in
erroneous billings and not maximize revenue that can provide
medical care to our Nation's veterans.
Mr. Chairman, Ranking Member Brown, and the other Members
of the Subcommittee, this concludes my prepared statement and I
would be happy to respond to any questions you may have at this
time.
[The prepared statement of Ms. Daly appears on p. 35.]
Mr. Michaud. Thank you very much, Ms. Daly, for your
testimony this morning. Are the internal control issues you
identified related to VA billing and collection practices the
result of a lack of oversight at the local medical centers? Or
is this a VA-wide problem? What can officials at both levels do
to fix these problems? What should Congress do?
Ms. Daly. That is a very good question. I think we found
there were problems at both the local medical centers in doing
adequate oversight over how the bills were being coded and
classified, and whether they were being classified correctly so
they could be billed correctly. Then VA-wide, we found that
they lacked good policies and procedures. There was a
significant lack of policies and procedures in place, and they
also did not get information in order to provide good oversight
over the process, too, at the VA-wide level.
Regarding what Congress could do, I think that Congress has
taken some important steps already. Providing hearings such as
this today help raise awareness of the issue and helps you in
providing oversight. And, of course, GAO always stands ready to
help you in performing that oversight in any way you wish.
Mr. Michaud. Thank you. And I would like to thank you and
all the staff at GAO for the tremendous job that you do in
helping Congress, not only this Committee but all the
Committees of Congress, do its job. So thank you very much. Mr.
Brown.
Mr. Brown of South Carolina. And I also want to echo that,
Ms. Daly. I just have one quick question. Given today's
testimony, do you see a need for a followup GAO review to
determine how multiple and inappropriate billing errors
continue to occur, and what action must be taken to prevent
future problems?
Ms. Daly. Well, Congressman Brown, I think it would be
important, if it is important to the Congress to help you
explore these issues further, we would be glad to assist in any
way we can. I think there were certain issues that were
discussed at today's hearing earlier that was outside of our
review's scope. So I, if there is any way we can assist we
would be glad to do so.
Mr. Brown of South Carolina. Do you see any change in the,
I guess, whether it is becoming more errors or less errors? Or
what is your handle on that?
Ms. Daly. Well, from our review of June 2008 we have not
had the opportunity to follow up on the impact of that yet, and
the actions that VA has taken. VA informed us last week that
they had issued new policies and procedures and a handbook, but
I am not sure how effectively that has been implemented at the
medical centers at this time.
Mr. Brown of South Carolina. What percentage of billings
are third party?
Ms. Daly. I do not have that answer readily available for
you, sir, but I would be glad to get back to you with that.
[The GAO subsequently provided the following information:]
According to VHA's Chief Business Officer, 83 percent of its
billings in fiscal year 2009 stem from veterans' private health
insurers, commonly referred to as third-party insurers.
Mr. Brown of South Carolina. It is a significant number, I
assume?
Ms. Daly. I think so. The amounts that we saw at just the
10 medical centers, the way they were classified it looked as
though, there were $1.7 billion in total at all of the 18
centers. But I cannot say how much of that was third party or
not.
Mr. Brown of South Carolina. And what do you do with those
funds?
Ms. Daly. I am sorry?
Mr. Brown of South Carolina. What do you do with those
funds?
Ms. Daly. Those funds can be used, that is, anything
recovered from the third-party medical insurers, can be used
toward medical care for VA, you know, our veterans.
Mr. Brown of South Carolina. Do you all decide that? Or is
that decided legislatively?
Ms. Daly. The Congress passed a law permitting that back
in, I believe, 1996.
Mr. Brown of South Carolina. So that gives you all the
flexibility to spend them under different categories? Or do you
have a specific purpose to spend it on? Like, could you spend
it on buildings? Or equipment? Or is it just for paying
employees? Or, you know, how much freedom do you have to use
those funds?
Ms. Daly. Well sir, I believe it is supposed to be focused
on just the medical care. But I am not certain if it cannot
extend to facilities related to medical care or not, so if you
would like, I could get back to you with that information.
[The GAO subsequently provided the following information:]
In our June 2008 report (GAO-08-675), we reported that the
Veterans Reconciliation Act 1997, which was enacted as part of
the Balanced Budget Act 1997, authorized VA to collect and
deposit third-party health insurance payments in its Medical
Care Collections Fund, which VA could then use to supplement
its medical care appropriations.
Specifically, amounts in that fund can be used for furnishing
medical care and services and for VA expenses related to the
identification, billing, auditing, and collection of amounts
owed.
Mr. Brown of South Carolina. Okay. It could be $2 billion
or $3 billion, it seems like.
Ms. Daly. That was roughly how much was collected last year
from third-party insurers. It was over $2 billion.
Mr. Brown of South Carolina. Right. Okay. Thank you very
much.
Ms. Daly. Thank you.
Mr. Michaud. Mr. Snyder.
Mr. Snyder. I do not have any questions.
Mr. Michaud. Well, once again thank you very much, Ms.
Daly, for your testimony this morning. We look forward to
working with you as we move forward to get further into this
issue. So thank you very much.
Ms. Daly. You are very welcome.
Mr. Michaud. I would like to call the third and last panel.
It is Mr. Gary Baker, who is the Chief Business Officer of the
Veterans Health Administration of the VA, who is accompanied by
Ms. Stephanie Mardon and Ms. Kristin Cunningham. I would like
to thank you, Mr. Baker, for coming here this morning. We look
forward to your testimony, and thank you for all that you do
for our veterans.
STATEMENT OF GARY M. BAKER, MA, CHIEF BUSINESS OFFICER,
VETERANS HEALTH ADMINISTRATION, U.S. DEPARTMENT OF VETERANS
AFFAIRS; ACCOMPANIED BY STEPHANIE MARDON, DEPUTY CHIEF BUSINESS
OFFICER FOR REVENUE OPERATIONS, VETERANS HEALTH ADMINISTRATION,
U.S. DEPARTMENT OF VETERANS AFFAIRS; AND KRISTIN CUNNINGHAM,
DIRECTOR OF BUSINESS OPERATIONS, VETERANS HEALTH
ADMINISTRATION, U.S. DEPARTMENT OF VETERANS AFFAIRS
Mr. Baker. Thank you, Mr. Chairman, and Mr. Ranking Member.
Thank you for providing me this opportunity to discuss the
Department of Veterans Affairs' billing practices. I am
accompanied today by Ms. Stephanie Mardon, Deputy Chief
Business Officer for Revenue Operations, and Ms. Kristin
Cunningham, Director of Business Operations. I would like to
request that my written statement be submitted for the record.
Mr. Michaud. Without objection, so ordered.
Mr. Baker. Thank you. VA is required by law to charge
copayments to certain veterans who meet income requirements and
who receive care for non-service-connected conditions. VA must
also bill health insurance carriers for services provided to
veterans treated for their non-service-connected conditions. VA
currently has four types of non-service-connected copayments
for which veterans may be charged: outpatient and inpatient
medical services, extended care services, and medication
copays. Veterans who are unable to pay VA's copayment charges
are encouraged to complete requests for assistance at their
local facility. VA earlier embarked on a program this year to
improve communication of these options for assistance through
posters and other materials posted on VA's Web site and
available at local medical centers. Veterans and their families
can also call VA's first party call center, as was referenced
earlier at the Topeka Health Resource Center, using a toll-free
number for assistance in understanding their copayment charges
and payment alternative options.
VA bills health care insurers for non-service-connected
conditions. Veterans are not responsible for paying any of the
remaining balance of VA's insurance claims that are not paid or
covered by their health insurance. Any payment received by VA
is used to offset, dollar for dollar, the veteran's copayment
responsibility. I might add that it is this dollar for dollar
copay offset that delays VA's copay billing as was mentioned
earlier in a previous panel.
Veterans and their health insurers are not to be charged
for care provided for their service-connected conditions. VA
has a number of mechanisms in place to ensure that charges are
appropriate. VA's health information system identifies veterans
who are service-connected, flags their record, and lists all
rated service-connected disabilities. During each treatment
encounter the VA provider determines whether the medical care
or prescriptions provided are related to the veteran's service-
connected disabilities. This prevents bills from being
generated automatically. In addition, when VA is notified that
a veteran is rated as service-connected retroactively through a
service-connected adjudication award, VA automatically reviews
the account and refunds are generated back to the effective
date of the service-connected decision. If the veteran has not
paid the copay then the copay is wiped off the books.
We thank the VSOs for their suggestions on improvements and
note the VA has already addressed many of them. As an example,
VA has enhanced our VistA information system to facilitate data
exchange between Veterans Benefits Administration (VBA) and
Veterans Health Administration (VHA) so that medical personnel
now have access to up to 150 service-connected conditions, if
there are that many rated by VBA. Additionally, medical center
staff have access to other computer applications that provide
more detailed information on service-connected rated
disabilities when that is required. Moreover, VA has already
put in place extensive training for staff to appropriately
determine service connection and other special authority
relationships for billing purposes. I brought with me today an
example of our crib cards that are available on the computer
terminals for billing staff and providers that provides
information on billing activity, appropriate service-connected
information, and other issues that relate to the providers'
responsibilities as veterans are billed. In addition, business
compliance staff at each facility also perform a variety of
first and third-party billing compliance reviews that are
routinely reported to VHA leadership at local, regional, and
national levels.
Over the past 5 years, VHA has also developed many other
initiatives to improve billing practices, including publication
of a handbook that establishes policies and procedures for
monitoring possible inappropriate referrals to the debt
management center and Treasury offset program, as were
mentioned earlier. Additionally, VA installed software in all
systems in 2008 to ensure that these debts were not referred
automatically for offset. That is that they require review by
billing staff before they are sent to make sure that the offset
is appropriate based on the veteran's eligibility status. This
has resulted in a dramatic reduction in inappropriate
referrals. VA also now requires staff to perform monthly
reviews of medical care billing and report results to local
compliance officers. In order to accurately classify care as
not billable, VA implemented a software enhancement in July of
2009 in followup to the GAO report that was mentioned earlier.
VA also implemented a mechanism to monitor and periodically
audit these determinations. Finally, VA strengthened controls
over accounts receivable by implementing monitors by Veterans
Integrated Service Network quality assurance staff.
Mr. Chairman, we appreciate the opportunity to respond to
the concerns about VA's billing practices raised by veterans
and oversight bodies, and to describe our efforts to improve
these processes. Should a veteran receive a bill that appears
to be in error, VA encourages the veteran to contact their
local medical center revenue staff who will review the bill
with the veteran and help reconcile the issue.
Thank you again for this opportunity. My colleagues and I
are available for your questions, sir.
[The prepared statement of Mr. Baker appears on p. 43.]
Mr. Michaud. Thank you very much, Mr. Baker, for your
testimony. I appreciate what VA has been trying to do to solve
this problem. However, as you heard from the first panel, there
seems to be a disconnect in looking at billing for a service-
connected disability. That is a big concern that I have. At the
beginning of the year, we heard through the grapevine that this
Administration was going to go after third-party collections
for veterans with service-connected disabilities. So I am
wondering whether or not there is someone in the VA who still
believes that is a good policy and is doing it even though they
are not supposed to. There are veterans who will fight this.
But unfortunately, then there will be veterans who will not
fight it, and will actually pay. That is the big concern that I
have. I know that the GAO made seven recommendations on how the
VA can correct this. Has the VA adopted all seven of those
recommendations?
Mr. Baker. Yes, Mr. Chairman. VA has provided information
to GAO, as we mentioned, at a meeting that was held earlier
last week. But we had provided a written response some time ago
indicating our actions on all seven activities. And we have
incorporated their recommendations into our policies and
practice, issued new handbooks, new policy guidelines, and
training and followup.
If I might address the service-connected issue, it has
never been VA's authority to bill for service-connected
conditions. While I understand that there was earlier this year
some discussion of changing that practice, that was never
communicated to our field facilities and providers as a change
in policy. And our information systems, as I indicated earlier,
automatically exempt service-connected veterans who are
compensably service-connected from copay billing for inpatient
and outpatient care, and other exemptions as they relate to
eligibility. And our providers received no change in
instructions in terms of exempting veterans for treatment of
their service-connected conditions. In terms of the concerns
that were addressed by the first panel in terms of billing for
service-connected conditions, I would not sit here and say that
VA is perfect in its billing practices. Certainly there are
times when we make errors and we stand ready and willing to
correct those errors. And if there are instances where we are
not being timely in terms of followup on that, we certainly
want to hear about that so that we can improve them not only on
an individual situation, but if we have a systemic problem we
are more than happy to address that.
However, there was a concern expressed about our billing
for conditions that are related to a service-connected
condition, whether for 100-percent service-connected veteran
who is permanent and total, or any veteran who has a condition
that is either secondary to or adjunct to their service-
connected condition. The authority for VA to bill for third-
party insurance states that VA will bill for non-service-
connected conditions. It does not state that VA health care
providers are in the business of adjudicating what is or is not
a service-connected condition. And it is the legal
interpretation that VHA has received from our General Counsel
and our policy that we will bill third-party insurers for non-
service-connected conditions.
As such a veteran, as was indicated, who is permanently and
totally disabled who is service-connected for a particular
condition but who has a secondary condition that, while related
to that, is not actually adjudicated as service-connected, we
at this time have an obligation to bill third-party insurers
for that care. Now, obviously, as we indicated earlier, if that
veteran is exempt from copays based on their eligibility
status, and obviously a 100-percent service-connected veteran
is exempt from all copay bills, no copy bills are generated in
that situation.
Mr. Michaud. Do you view improper billing as a problem? Or
do you feel that what you heard from the first panel are just
isolated cases?
Mr. Baker. In terms of improper billing? I think VA billed
almost $16 million, or $13 million copay bills last year total.
I think that there is a possibility that VA makes errors in
making copay bills, or in the millions of third-party bills
that we make. I do not believe that we have a large scale
systemic problem in terms of identification of service-
connected conditions. But it is related to the frontline
provider who delivers service, identifying that the care is
related or not related to the veteran's service-connected
condition. We recognize that there can be occasionally be
errors made in that situation, and that there are
interpretation issues that can arise particularly related to
the issues related to adjunct and secondary conditions, where
the veteran clearly thinks that it is related to their service-
connected condition. But within a strict interpretation of the
law, we are required to bill for non-service-connected care to
third-party payers.
Mr. Michaud. Are there any regions doing a worse job than
others in their improper billing practices? Or is it equalized
across the VA system? Or are there some regions that are bad?
Or worse, I should say.
Mr. Baker. In terms of the kind of information that was
provided earlier by the first panel, basically we are dependent
on the anecdotal information of individual reports that we
follow up on when we receive that information. We have not seen
a pattern particularly related to geography or individual
locations to my knowledge, sir.
Mr. Michaud. But you keep a record of the improper billing?
Mr. Baker. Well, when we are made aware of an improper
billing at a national level we do. We do not have a mechanism
of aggregating individual requests for reclaim at local
facilities. So we do not have a mechanism that aggregates that
nationally for review on a regular basis.
Mr. Michaud. Do the local facilities keep a record?
Mr. Baker. I cannot answer that, sir. I do not know whether
any of the other panel members know or not. We will take that
for the record, sir, and answer that question.
Mr. Michaud. Yes, but I would like to see what the error
rate has been at the local area, and if you can break that out.
I am concerned that there might be some areas that are
interpreting the statutes differently. And if so, then billing
errors may be really focused in those particular areas. I would
assume that since this is an issue that has been raised and
with which VSOs have been concerned about, that central office
would have taken a more proactive approach in asking, ``Well,
is this a problem? And if so, is it systemic throughout the VA?
Or are there different regions where it is concentrated?''
Since it appears that you have not done that, I am just
concerned about how much weight you are really putting on the
errors out here. Because I can tell you, having heard from
veterans who have been billed improperly, that is definitely an
emotional and stressful time for those individuals who served
this country. So I would like to know whether or not it is a
systemic issue, and if you can give a break out of where those
cases are throughout the VA system. And if the VSOs have any
information on that as well, hopefully the VSOs would be able
to bring that to the Committee, also.
[The VA subsequently provided the following information:]
Brief Statement of Issue: On October 15, 2009, the House
Veterans' Affairs Committee (HVAC), Subcommittee on Health held
a hearing entitled ``Inappropriate Billing Practices of the VA:
Identifying the Causes and Exploring Potential Solutions.''
During the hearing, representatives from veterans service
organizations expressed concerns on behalf of their members
regarding VA's billing for service-connected care. As a
followup action item, HVAC Health Chairman Michaud tasked VA
with identifying the number of first and third party bills that
were issued in error when providing care to service-connected
veterans or those with special treatment authorities.
Response: Since the information necessary to respond to this
tasker was not available nationally, the Veterans Health
Administration (VHA) Chief Business Office (CBO) conducted a
data call with field facilities to obtain the information for
fiscal year 2009. The results of the data call showed
approximately 0.13 percent of all charges for first party
billing and 0.08 percent of all third party health insurance
claims were canceled due to service-connected or special
authority relationship (Attachment 1). In terms of unique
veterans, VA estimates that 3,899 had charges canceled for
first party bills and 1,182 had bills canceled that were sent
to third party health insurance.
Conclusion: VA strives to ensure that all veterans are billed
correctly and will provide education to all appropriate VHA
staff regarding proper identification of service connected and
special authority treatment to ensure bills are not issued in
error.
Attachment 1
First Party Charge Information for FY 2009 Related to Cancelled Charges Due to Service Connection or Special Authorities
First Party
--------------------------------------------------------------------------------------------------------------------------------------------------------
% of Dollars
Total No. % Charges Unique 1st % Charges. Cancelled
Total No. Total $$ Billed Charges. Total $$. Cancelled Party Cancelled for SC/SA
Charges Cancelled Cancelled for for SC/SA Veterans for SC/SA Compared to
Billed for SC/SA SC/SA Compared to impacted by Compared to Total Billed
National VISN Total Billed
--------------------------------------------------------------------------------------------------------------------------------------------------------
National Data..................... 58,123,612 $1,098,640,563 75,756 $1,617,598 100.00% 3899 0.13% 0.15%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 1............................ 2,688,063 $53,328,682 2,303 $46,995 3.04% 119 0.09% 0.09%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 2............................ 1,459,129 $27,625,709 3,629 $80,553 4.79% 187 0.25% 0.29%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 3............................ 2,099,330 $39,912,620 2,703 $40,294 3.57% 139 0.13% 0.10%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 4............................ 3,424,203 $66,292,937 2,499 $74,896 3.30% 129 0.07% 0.11%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 5............................ 1,254,997 $23,978,122 431 $7,885 0.57% 22 0.03% 0.03%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 6............................ 3,035,771 $57,577,576 2,972 $69,837 3.92% 153 0.10% 0.12%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 7............................ 3,361,357 $60,447,896 2,342 $44,290 3.09% 121 0.07% 0.07%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 8............................ 5,440,431 $104,456,086 10,148 $170,557 13.40% 522 0.19% 0.16%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 9............................ 2,725,788 $54,098,602 4,256 $111,304 5.62% 219 0.16% 0.21%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 10........................... 2,214,198 $42,735,574 1,672 $30,914 2.21% 86 0.08% 0.07%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 11........................... 2,719,451 $52,282,501 3,685 $90,682 4.86% 190 0.14% 0.17%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 12........................... 3,350,670 $60,497,329 3,089 $62,125 4.08% 159 0.09% 0.10%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 15........................... 2,598,516 $52,952,044 3,640 $72,326 4.80% 187 0.14% 0.14%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 16........................... 5,168,865 $89,658,986 12,951 $238,408 17.10% 667 0.25% 0.27%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 17........................... 2,351,779 $43,216,067 2,266 $38,291 2.99% 117 0.10% 0.09%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 18........................... 2,484,447 $44,879,226 4,371 $138,507 5.77% 225 0.18% 0.31%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 19........................... 1,706,080 $32,857,659 4,176 $88,895 5.51% 215 0.24% 0.27%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 20........................... 1,952,795 $38,959,407 1,984 $52,225 2.62% 102 0.10% 0.13%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 21........................... 2,259,813 $41,638,891 1,732 $26,307 2.29% 89 0.08% 0.06%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 22........................... 2,240,935 $43,783,321 2,265 $57,288 2.99% 117 0.10% 0.13%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 23........................... 3,586,994 $67,461,328 2,642 $75,020 3.49% 136 0.07% 0.11%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Third Party Bill Information for FY 2009 Related to Cancelled Charges Due to Service Connection or Special Authorities
Third Party
--------------------------------------------------------------------------------------------------------------------------------------------------------
% of Dollars
Total No. % Bills Unique 3rd % Bills Cancelled
Total No. Total $$ Billed Bills Total $$. Cancelled Party Cancelled for SC/SA
Bills Cancelled Cancelled for for SC/SA Veterans for SC/SA Compared to
for SC/SA SC/SA vs. National impacted by Compared to Total Billed
Total VISN Total Billed
--------------------------------------------------------------------------------------------------------------------------------------------------------
National Data..................... 15,996,559 $5,262,640,851 13,247 $17,978,532 100.00% 1182 0.08% 0.34%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 1............................ 916,315 $237,694,722 751 $339,155 5.67% 67 0.08% 0.14%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 2............................ 337,687 $64,513,751 43 $116,401 0.32% 4 0.01% 0.18%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 3............................ 761,149 $280,054,567 430 $878,711 3.25% 38 0.06% 0.31%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 4............................ 681,663 $198,947,474 508 $264,083 3.83% 45 0.07% 0.13%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 5............................ 449,432 $99,607,402 209 $265,212 1.58% 19 0.05% 0.27%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 6............................ 1,173,067 $390,049,591 1,197 $1,797,072 9.04% 107 0.10% 0.46%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 7............................ 1,108,811 $324,126,450 1,212 $3,208,808 9.15% 108 0.11% 0.99%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 8............................ 1,479,890 $551,943,794 575 $1,501,974 4.34% 51 0.04% 0.27%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 9............................ 981,260 $327,630,840 624 $577,341 4.71% 56 0.06% 0.18%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 10........................... 650,447 $207,057,364 540 $289,590 4.08% 48 0.08% 0.14%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 11........................... 747,082 $196,937,482 35 $1,932 0.26% 3 0.00% 0.00%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 12........................... 635,279 $264,870,793 429 $3,023,688 3.24% 38 0.07% 1.14%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 15........................... 597,016 $160,827,421 750 $992,605 5.66% 67 0.13% 0.62%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 16........................... 1,300,072 $411,264,979 2,701 $650,849 20.39% 241 0.21% 0.16%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 17........................... 611,718 $195,039,564 244 $89,430 1.84% 22 0.04% 0.05%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 18........................... 642,145 $246,543,368 523 $1,094,209 3.95% 47 0.08% 0.44%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 19........................... 490,095 $155,538,544 804 $932,032 6.07% 72 0.16% 0.60%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 20........................... 524,931 $203,956,161 756 $833,731 5.71% 67 0.14% 0.41%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 21........................... 420,452 $217,609,364 278 $523,269 2.10% 25 0.07% 0.24%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 22........................... 348,832 $186,329,272 192 $228,661 1.45% 17 0.06% 0.12%
--------------------------------------------------------------------------------------------------------------------------------------------------------
VISN 23........................... 1,139,216 $342,097,949 446 $369,782 3.37% 40 0.04% 0.11%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mr. Baker. Yes, sir. I would mention that within the past
year we have had three, what we call table topic training
sessions, for nationally, on the issue of service-connected
billing, both copay and third party, to provide training to our
staff in the field on what is sometimes a difficult situation.
So certainly we are aware of the concern, and we have tried to
take action both in terms of training and policy to address
this issue.
Mr. Michaud. Because the only way I would see improper
billing would be if you decided to bill Medicare for their
services----
Mr. Baker. As you know, we are precluded from doing that,
sir.
Mr. Michaud. I know. But if you have to do improper
billing----
Mr. Baker. That is where we should----
Mr. Michaud. That is the way you should do the improper
billing versus the improper billing for our veterans. Mr.
Brown?
Mr. Brown of South Carolina. Thank you, Mr. Chairman. Thank
you, Mr. Baker, for your service. I know those 16 million
claims that you pay a year, we probably never hear from all the
millions that it works okay. But, you know, that is the way the
system works, right? You hear from those that it is not
connecting. My question would be is that, we heard from the
veterans service organizations that say they do not receive
their billing statements from VA until several months after the
service. Could you address that timeline?
Mr. Baker. Yes. We have----
Mr. Brown of South Carolina. They said it could be as much
as 3 months.
Mr. Baker. Right. We have a mechanism that we hold the
first party copay bills if a veteran has third-party insurance.
Mr. Brown of South Carolina. To be sure you collect it?
Mr. Baker. To allow us to submit the bill to the third-
party insurer and give them an opportunity to pay. So that if
there is a payment from the third-party insurance that covers
the entire copay or portion of it, that we would only bill that
remainder. That does delay our release of the copay bill to the
individual veteran for 90 days. If we have not received payment
or receive only partial payment, then the copay bill is
released after that 90-day period. And it is an issue, also,
that we do process those insurance claims and apply them to our
copay bills through a manual process rather than an automated
process. So it does take some time to do that. And there are
potentials for error based on that manual process. But
certainly we have worked hard to educate and improve our
processes in that area. It is part of our response to concerns
that were expressed by an OIG report back in 2004 that
identified some problems in this area.
Mr. Brown of South Carolina. Do you have just a normal
chain of command to these guys that really have a problem
addressing the bills? Do we have some kind of an organization
set up so they do not fall through the loops? I know that
sometimes they said that even under the protest, you know, they
get some kind of add on service charge because they are late.
Mr. Baker. Well to address the service charge, there is an
administration and interest charge that occurs for copays that
remain on the books over a certain period of time and they do
aggregate every 30 days. We have a number of mechanisms that
are available to assist the veterans who have questions or
concerns. We certainly have revenue staff at individual
facilities that are available. We have patient advocate staff
that are available to assist the veterans. We have our national
First Party Call Center that was established specifically
because when copay bills are sent we often receive a flurry of
calls based on those copay bills. And that was creating
difficulties at local sites. So we created our Health Resource
Center in Topeka, Kansas, which focuses specifically on that.
They have the copay bills available and they have information
that allows them access to each individual VistA system across
the system so they can review the copay bill with the veteran,
look at what care was provided, and help explain to the veteran
what the conditions may be.
As was indicated during the first panel, there are
situations where it cannot be resolved through the First Party
Call Center and it requires a review by the local facility. But
we have worked hard to improve our handoff process for that to
make sure that there is followup on that and our call center
does follow up periodically to make sure that the condition has
been addressed and the veteran has received a response to his
inquiry.
Mr. Brown of South Carolina. Do you have, like, a special
person designated at each one of the service centers to address
delinquent accounts?
Mr. Baker. We have accounts receivable technicians who are
responsible for followup on third-party claims, as was
identified during the GAO testimony. But they also followup on
first party claims as well.
Mr. Brown of South Carolina. I guess you heard from the
gentleman from the PVA who calls for the VA to take immediate
action to change its regulation so that veterans rated
permanently and totally could never have been erroneously
billed. Specifically, what can be done to fix the problem? And
do we need legislation to address it?
Mr. Baker. My understanding of the current law as written
is that VA is responsible for billing for non-service-connected
conditions. Permanent and total veterans can receive care for
both their service-connected and for non-service-connected
conditions that have not been adjudicated. It was an important
point, I think, that was made by the first panel that this
policy requires that in those circumstances that the veteran
wants to avoid that billing to their third-party insurance
company that they be required to submit a claim for service-
connection. And if that does not provide a particular value to
the veteran, other than avoiding third-party billing, it
certainly does create additional work for VA. So my assessment
would be that if this is a concern to Congress and the veteran
community, that it require legislation for VA to change its
practices.
Mr. Brown of South Carolina. But let me ask you a question,
Mr. Baker. If they do not want you to bill the third party, why
are they giving you the third-party information?
Mr. Baker. We ask veterans to provide us with third-party
information so that we can meet our requirement to bill for
non-service-connected----
Mr. Brown of South Carolina. But if it is 100-percent
disabled, why would you even need it?
Mr. Baker. Well, this is a supposition on my part, sir. It
is hard for me to know specifically what happens in every
circumstance. But I think even in cases where veterans are 100-
percent service-connected and permanently and totally disabled,
there is a recognition of a difference between a condition that
has no relationship to their service-connected disabilities,
and one that they think is secondary or adjunct to that
condition. And it is in those situations where they believe
that it is secondary to or caused by their service-connected
condition that the veterans are asserting that it is
inappropriate for VA to bill for that care.
Mr. Brown of South Carolina. Okay, just one further
question. I know that we are going to have to go vote, and
thank you for your patience, Mr. Chairman. But do you feel like
you have a pretty good cross sharing of information between the
VBA and the VHA?
Mr. Baker. We have worked hard to improve our situation in
sharing information with VBA and VHA. VHA has always had the
ability to store a virtually unlimited number of service-
connected conditions. However, the information system used by
VBA in the past could only store six conditions. As VBA has
moved to its VETSNET system, the corporate information system,
they are now able to store an unlimited number of service-
connected conditions as well. It is my understanding that for
any condition that, or any veteran who has had a rating
decision since 2002, that their new corporate information
system has all service-connected disabilities. We have linked
our VHA information system with them. And when we established
that initial link we also went back for all known service-
connected veterans who were in the VHA information system at
that time and queried VBA to get that full range of service-
connected information rather than just the six that we might
have previously. For any new adjudication actions, either new
or updated, we automatically receive the full range of service-
connected conditions at this time. It flows through our
enrollment information system and goes to each individual VistA
system. So it is available to providers, billing staff, and
eligibility staff at every medical center.
Mr. Brown of South Carolina. Just for curiosity, how large
is that data file?
Mr. Baker. The data file has information on approximately 9
million veterans, 7.6 million of which are active enrolled
veterans at this time.
Mr. Brown of South Carolina. Thank you very much.
Mr. Michaud. Thank you very much, Mr. Brown. Once again,
Mr. Baker, I want to thank you, and Ms. Mardon, and Ms.
Cunningham for coming here this morning. I look forward to
working with you as we move forward to try to take care of some
of the problems that we heard from the first panel. And I also
want to thank all the VA staff. I know it is not an easy job
and all too often we tend to forget to thank those who are
actually administering and doing what they have to do to make
sure the veterans are served. So thank you and your staff for
what you are doing.
Mr. Baker. Thank you, sir.
Mr. Michaud. The hearing is adjourned.
[Whereupon, at 11:17 a.m., the Subcommittee was adjourned.]
A P P E N D I X
----------
Prepared Statement of Hon. Michael H. Michaud, Chairman,
Subcommittee on Health
The Subcommittee on Health will now come to order. I would like to
thank everyone for attending this hearing.
Today's hearing will focus on the inappropriate billing practices
of the VA where veterans receive a bill for the wrong amount or get a
bill that they should not have received in the first place.
Unfortunately, inappropriate billing affects both service-connected
veterans and non-service connected veterans.
For example, a veteran with a service-related spinal cord injury
may be billed for the treatment of urinary tract infections. Urinary
tract infection is clearly linked to and is a result of the service-
connected injury; however, these veterans are receiving bills for the
treatment of such secondary conditions. As a result, these veterans may
be forced to seek a time-consuming and burdensome readjudication of
their claims indicating the original service-connected ratings.
It is my understanding that one of the reasons for inappropriate
billing of secondary conditions is that the VA cannot store more than
six service connected conditions in their IT system. It is also my
understanding that the VA is taking steps to correct this deficiency,
but the problem has not been fully resolved and our veterans continue
to receive the inaccurate bills.
Non-service connected veterans also encounter overbilling and
inappropriate charges for copayments. One issue that I've been made
aware of repeatedly is that some non-service connected veterans receive
multiple bills for a single medical treatment or health care visit. It
is evident that inefficiencies in the billing system exist where
something is inappropriately triggering the multiple billing episodes.
It may be simple human error or IT error, but this has the
potential of imposing an unnecessary burden on our veterans. Just
imagine all the time that our veterans spend and the stress that they
experience in trying to resolve the improper bills. One thing is clear.
Inappropriate billing is not acceptable and we must do better by our
veterans.
Today, I hope to get to the bottom of this issue. We will examine
why veterans and their insurers are receiving inaccurate bills, learn
what the VA is doing to address this problem, and explore how we can
fully remedy this problem.
We have brought together witnesses who can shed light on this
problem, and I look forward to their testimonies.
Statement of Hon. Henry E. Brown, Jr., Ranking Republican Member,
Subcommittee on Health
Thank you Mr. Chairman. I appreciate your holding this hearing
today.
It is the solemn mission of the Department of Veterans Affairs (VA)
and the Federal Government to care for the men and women in uniform who
sustain injuries and illnesses as a result of their service to our
Nation.
Therefore, I find it deeply troubling to hear about veterans being
inappropriately billed for copayments for medical care and medications
to treat service connected conditions.
A similar issue arose earlier this year when the Obama
Administration was considering a plan to bill veterans' private
insurance for service-connected care. Fortunately, this ill-conceived
proposal never saw the light of day, given the fierce opposition of
members from both sides of the aisle and Veterans Service
Organizations.
As I said then, this flies in the face of our moral obligation as a
grateful nation to care for these wounded heroes.
I continue to strongly oppose any attempt to allow VA to shirk this
obligation and will ensure that we uphold our responsibility to provide
resources to protect and honor the service of our highest priority
veterans.
It is unacceptable for VA not to have and put in force policies and
procedures to ensure that veterans are not frustrated and burdened by
receiving inappropriate and multiple billing statements.
I look forward to hearing from our witnesses today to gain a better
understanding of the depth of the problem and what actions must be
taken to prevent future inappropriate billing errors.
Thank you Mr. Chairman. I yield back the balance of my time.
Prepared Statement of Fred Cowell, Senior Health Policy Analyst,
Paralyzed Veterans of America
Chairman Michaud, Ranking Member Brown, and Members of the
Subcommittee, Paralyzed Veterans of America (PVA) would like to thank
you for the opportunity to provide testimony on an issue that has had a
critical impact on the lives of our members, veterans with spinal cord
injury or dysfunction. In recent years, as we have seen significant
increases in both medical care collections estimates as well as the
actual dollars collected, we have received an increasing number of
reports from veterans who are being inappropriately billed by the
Veterans Health Administration (VHA) for their care. Moreover, this is
not a problem being experienced by just service-connected disabled
veterans, but non-service connected disabled veterans as well.
The Independent Budget (IB)--co-authored by PVA, AMVETS, Disabled
American Veterans, and Veterans of Foreign Wars--has repeatedly focused
our attention on this issue. Unfortunately, until now, little attention
has been paid to this problem while medical care collections continue
to grow at an alarming rate. We are very pleased that the Subcommittee
has chosen to investigate this issue in light of recent budget
increases that have included billions of dollars in collections.
Inappropriate charges for VA medical services places unnecessary
financial stress on individual veterans and their families. These
inaccurate charges are not easily remedied and their occurrence places
the burden for correction directly on the veteran, their families or
caregivers. PVA believes that many veterans are not aware of these
mistakes and simply submit full payment to VA when a billing statement
arrives at their home.
Veterans who are astute enough to scrutinize their VA billing
statements to identify erroneous charges have just begun a cumbersome
process to actually correct the problem and receive a credit for the
error on a VA subsequent billing statement. It has become the veteran's
responsibility to seek VA assistance wherever possible. This is not an
easy task for veterans as VA billing statements are often received
months after an actual medical care encounter and subsequent credit
corrections only appear months after corrective intervention has taken
place. It is often difficult for veterans to remember medical care
treatment dates and match billing statements that arrive months after
treatment to search for billing errors.
In order to understand inappropriate billing, it is important to
emphasize that service-connected and non-service connected veterans
have experienced this problem. However, the problems that these two
populations of veterans have faced are uniquely different. Service-
connected veterans are faced with a scenario where they, or their
insurance company, may be billed for treatment of a service-connected
condition. Meanwhile, non-service connected disabled veterans are
usually billed multiple times for the same treatment episode or have
difficulty getting their insurance companies to pay for treatment
provided by the VA.
In preparation for this hearing, PVA conducted an email survey of
our members. We sent a questionnaire to approximately 4,000 PVA
members. Of that number, approximately 10 percent (449 members) of the
survey recipients responded. The survey included only a few questions
to attempt to gauge the prevalence of billing issues faced by our
members. Approximately 30 percent of respondents are either billed
directly by the VA for care that they receive or have their insurance
companies billed for their care.
After establishing this baseline of information, we directed our
questions toward the billing issues that these individuals face. Of the
449 respondents, approximately 9 percent claim to receive more than one
bill for the same treatment episode, approximately 17 percent claim to
be billed directly for treatment of a service-connected condition, and
approximately 22 percent claim that their insurance company is being
billed for treatment of a service-connected condition.
Subsequent to this survey, we reached out to our National service
officers to help us identify why these issues may be occurring. First,
it is important to note that the vast majority of PVA members who are
service-connected are rated as 100 percent TOTAL and PERMANENT. To be
clear, TOTAL and PERMANENT suggests to us that any condition that a
veteran experiences is related to his or her service-connected
condition. In our opinion, this should mean that 100 percent TOTAL and
PERMANENT service-connected disabled veterans should not be billed, nor
should their insurance company be billed, for any treatment they
receive. However, this is not how the VHA sees it.
In order to illustrate what we identified as the single biggest
billing problem facing our service-connected members, I would like to
provide an example. A PVA national service officer is assisting a 100
percent TOTAL and PERMANENT veteran who was injured while serving in
Operation Iraqi Freedom (OIF). The veteran also served in Operation
Enduring Freedom (OEF). According to the VA medical center where he is
receiving care, he has service-connected rating determinations for loss
of use of both feet (100 percent), impairment of sphincter control (100
percent), neurogenic bladder (60 percent), traumatic chest wall defect
(10 percent), and deformity of the penis (0 percent).
The veteran developed a pressure ulcer on his buttocks. He received
bills from the VA on more than one occasion for treatments of the
pressure ulcer. The PVA service officer discussed this issue with the
Chief of Spinal Cord Medicine at the VA medical center. The doctor then
inquired with the billing office at that VA medical center as to why
the veteran was being billed for these treatments. He explained that
pressure ulcer is the number 1 secondary condition that veterans with
spinal cord injury face. The billing office then informed him that he
was not rated for that secondary condition; therefore, the facility was
permitted to bill for that treatment. More troublesome is that the
billing office advised the doctor that if the veteran does not want to
be billed for that treatment in the future, he should re-file his
compensation claim for consideration of his currently non-rated
secondary conditions.
This scenario is unbelievable in so many ways. First and foremost,
I go back to my point that veterans who are rated TOTAL and PERMANENT
should not be billed for any treatment since TOTAL suggests that any
secondary condition is related to the service-connected condition.
Second, it is incredible that the VA would suggest that veterans who
are being rated for well-known, but non-rated, secondary conditions
should re-file or reopen their claims. This is something that we have
heard from many of our members and service officers. If the VA thinks
it has a problem with the claims backlog now, we can only imagine what
the backlog will look like if all veterans experiencing this problem go
back to the Veterans Benefits Administration (VBA) for consideration of
something that will almost certainly be granted months later.
We would like to recommend that either the VA immediately change
its regulations to reflect the fact that a TOTAL and PERMANENT rating
means exactly that. If the VA is unwilling to make this absolutely
necessary change, then we call on Congress to fix this statutorily.
It is time that the VA stops playing this game. The obvious
disconnect between rated service-connected conditions and coding for
the purposes of medical care billing is appalling. More astounding is
the fact that veterans with more than six service-connected disability
ratings are frequently billed improperly due to VA's inability to
electronically store more than six service-connected conditions in the
Compensation and Pension (C&P) Benefits Delivery Network (BDN) master
record. Moreover, the lack of timely and/or complete information
exchange about service-connected conditions between the VBA and VHA
places an additional burden on the veteran to sort out this disconnect.
VA has undertaken a five-step approach to change the process by
which it electronically shares C&P eligibility and benefits data with
VHA, particularly information about service-connected conditions that
exceed the six stored in the C&P BDN. According to VA, because of
difficulties in the development and implementation of the first two
steps, the plan for improving VBA/VHA sharing of information about
veterans' service-connected conditions has been delayed. Furthermore,
VA acknowledges that not all these cases, with six service-connected
conditions, have been identified under the new plan; however, it will
determine the best course of action to take to further address the
cases with incomplete service-connected disability information.
While it is shameful that VHA takes advantage of veterans with
service-connected conditions like this, it is equally disappointing
that veterans who depend on the VA for their care but who are not rated
for service-connected conditions are also being taken advantage of.
Non-service connected veterans are also constantly frustrated with VA's
billing process. Over-billing and inappropriate charging for copayments
is becoming the norm rather than the exception. Frequently, veterans
are experiencing multiple billing episodes for a single medical
treatment or health care visit.
Inappropriate bill coding is causing major problems for veterans
subject to VA copayments. Veterans using VA specialized services,
outpatient services and VA's Home Based Primary Care programs are
reporting multiple billings for a single visit. Often these multiple
billing instances are the result of followup medical team meetings
where a veteran's condition and treatment plan is discussed. Somehow
these discussions and subsequent entries into the veteran's medical
chart trigger additional billing. In other instances simple phone calls
from VA health care professionals to individual veterans to discuss
their treatment plan or medication usage can also result in copayment
charges when no actual medical visit has even occurred.
Once the veteran has identified a billing error the corrective
process just begins. If the error is discovered by the veteran, finding
proper assistance is difficult and corrective action takes months to
achieve. Corrective action follow thru is the veteran's responsibility
because the veteran receives no acknowledgement letter from VA that an
error has happened. The veteran is forced to review subsequent billing
statements to see if he or she actually receives a credit entry for the
previous error.
This is a problem that I have personally experienced. Very often, I
receive bills from the Washington, DC, VA medical center that reflect
multiple charges for the same treatment episode. On more than one
occasion I have even paid out of my own pocket for bills due to the
extensive delay in correcting this problem and due to the fact that I
have received threatening letters from the VHA about my non-payment.
Fortunately, with the help of my direct health care providers and staff
at the DC VA, I have been able to eventually resolve these problems.
Unfortunately, due to the delays in receiving bills in the first
place--usually 3 to 4 months--and the time it takes to remedy this
problem--usually an additional 2 to 3 months--I am typically not
reimbursed for any payments that I make for that treatment episode for
quite some time.
Mr. Chairman and Members of the Subcommittee, it is time that the
VA really be taken to task for its billing practices. If Congress and
the Administration are going to continue to rely on massive collections
estimates and dollars actually collected to support the VA health care
budget, then serious examination of how the VA is achieving these
numbers is necessary. As long as we know that the VA is taking
advantage of veterans and inappropriately billing them, both service-
connected and non-service connected, we will continue to express
opposition to building VA budgets on collections.
Mr. Chairman, we thank you again for conducting this extremely
important hearing. Hopefully through the information provided here, the
VA will take corrective action to ensure that veterans are not being
burdened with paying medical treatment bills that they should not be
paying. We look forward to working with you and the Subcommittee to
ensure that these problems get corrected.
Thank you again, and I would be happy to answer any questions that
you might have.
Prepared Statement of Adrian Atizado, Assistant National
Legislative Director, Disabled American Veterans
Mr. Chairman and Members of the Subcommittee:
Thank you for inviting the Disabled American Veterans (DAV) to
present our views before the Subcommittee on Health on inappropriate
billing practices by the Department of Veterans Affairs (VA). DAV is an
organization of 1.2 million service-disabled veterans, and devotes its
energies to building better lives for disabled veterans and their
families. We appreciate your leadership in enhancing VA health care
programs on which many service-connected disabled veterans must rely.
As this Subcommittee is aware, the VA has the authority to retain
in the Medical Care Collections Fund (MCCF), all collections from
health insurers of veterans who receive VA care for non-service-
connected conditions, as well as other revenues such as veterans'
copayments and deductibles. However, the funds collected may only be
used for providing VA medical care and services, and for paying
Departmental expenses from the collections. MCCF funds are transferred
to a no-year Medical Care service account \1\ and allocated to the
medical centers that collect them one month in arrears.
---------------------------------------------------------------------------
\1\ P.L. 105-65
---------------------------------------------------------------------------
Legislative Authority
Authority for the Department to seek reimbursement from third-party
health insurers for the cost of medical care furnished to insured non-
service-connected veterans, was provided in Public Law 99-272. This law
also authorized the VA to assess a means test, based on a veteran's
income and assets, for assessing copayment requirements for certain
non-service-connected veterans. In 1990, Public Law 101-508 expanded
the VA's recovery program by providing authority to seek reimbursement
from third-party payers for the cost of medical care provided to
insured service-connected veterans who are treated for non-service-
connected conditions. The law also authorized the outpatient per diem
copayment and medication copayment programs.
In 1997, Public Law 105-33 established the MCCF, and authorized the
VA to retain collections from health insurers and veterans' copayments
at the local medical center, rather than returned to the Department of
Treasury. This law also granted the VA authority to begin billing a
veteran's health insurer reasonable charges, which are based on amounts
that health insurers pay private sector health care providers for
services. Public Law 106-117, enacted in 1999, authorized the VA to set
outpatient and medication copayments rates and to establish a maximum
cap on medication copayments for a calendar year. This law also
authorized the Secretary to establish extended care copayment amounts,
a maximum monthly copayment cap and a process to determine an
individual veteran's copayment responsibilities based on a veteran's
available resources. Public Law 108-7, Public Law 108-422, and Public
Law 108-447, consolidated balances and future receipts from other
sources into the MCCF and became effective beginning in fiscal year
(FY) 2004.
Medical Care Collections
The Veterans Health Administration (VHA) is funded through multiple
appropriations accounts that are supplemented by other sources of
revenue. The Committees on Veterans' Affairs, in their views and
estimates, and the Committees on Appropriations, include MCCF
collections when considering the amount of needed funding for the VA's
medical care accounts. Consequently, the efficient and timely
collection of reimbursable costs is a tremendous driver at local VA
facilities that greatly benefits them in meeting growing health care
demands. The issue we raise here is the unintended consequences this
financial incentive may be having on veterans who seek care from the
VA.
Looking at collection estimates from the VA's budget submissions,
it should be noted from the table below, that both the adjustment for
FY 2006 and slower rate of increase for estimated collections, has
contributed to the VA's meeting and exceeding expected collections.
However, more than doubling collection estimates from FY 2009 to 2010
may be overly optimistic.
Increase/(Decrease) from Previous Fiscal Year
MCCF Budget Estimate
----------------------------------------------------------------------------------------------------------------
FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010
----------------------------------------------------------------------------------------------------------------
$1,616,619.................. $2,144,409 $2,418,700 $2,164,004 $2,247,353 $2,320,069 $2,466,860 $2,833,762
----------------------------------------------------------------------------------------------------------------
.......................... 33% 13% (12%) 4% 3% 6% 15%
----------------------------------------------------------------------------------------------------------------
Four MCCF subaccounts relevant to this hearing make up over 97
percent of total collections: Third Party; Pharmacy Copayments; First-
Party and Other Copayments; and Long-Term Care Copayments. As
previously mentioned, the FY 2009 and 2010 budget estimates showing the
dramatic increase in estimated collections are to come from Third Party
and First Party and Other Copayments.
Increase/(Decrease) from Previous Fiscal Year
MCCF Budget Estimate by Subaccount
----------------------------------------------------------------------------------------------------------------
FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010
----------------------------------------------------------------------------------------------------------------
Third Party $349,018 $(72,347) $138,625 $128,803 $(49,835) $184,154 $443,738
----------------------------------------------------------------------------------------------------------------
Pharmacy Copays $(42,377) $311,610 $(147,210) $34,500 $107,125 $(95,714) $(64,435)
----------------------------------------------------------------------------------------------------------------
First-Party & Other $229,249 $46,100 $(269,948) $(16,176) $18,201 $16,688 $26,445
Copays
----------------------------------------------------------------------------------------------------------------
Long-Term Care Copays $(12,151) $(12,153) $(8,500) $5,704 $(1,857) $-- $(456)
----------------------------------------------------------------------------------------------------------------
Total $523,739 $273,210 $(287,033) $152,831 $73,634 $105,128 $405,292
----------------------------------------------------------------------------------------------------------------
Such expectations in increased collections translate to financial
pressure at local facilities to increase their collection efforts.
However, the actual-to-expected collections have historically been
below the estimated amount, except for FY 2008 when the VA exceeded
estimated collections.
Actual vs. Budget Estimate: Gain/(Loss)
(in thousands)
----------------------------------------------------------------------------------------------------------------
2004 2005 2006 2007 2008
----------------------------------------------------------------------------------------------------------------
MCCF Budget Estimate $2,144,409 $2,418,700 $2,133,744 $2,247,353 $2,320,069
----------------------------------------------------------------------------------------------------------------
MCCF Actual Collections: $1,747,276 $1,897,089 $2,007,377 $2,226,653 $2,477,880
----------------------------------------------------------------------------------------------------------------
Total $(397,133) $(521,611) $(126,367) $(20,700) $157,811
----------------------------------------------------------------------------------------------------------------
For the four relevant sources of revenue, the VA's actual
collections substantially exceeded estimates in Third-Party and First-
Party and Other Copays, but with substantial losses in other accounts.
Actual vs. Budget Estimate: Gain/(Loss)
(in thousands)
----------------------------------------------------------------------------------------------------------------
MCCF Accounts 2004 2005 2006 2007 2008
----------------------------------------------------------------------------------------------------------------
Third Party $(149,171) $ 18,597 $(79,815) $(43,082) $ 242,856
----------------------------------------------------------------------------------------------------------------
Pharmacy Copayments $ 14,615 $(272,006) $(49,973) $(46,884) $(164,940)
----------------------------------------------------------------------------------------------------------------
First-Party & Other Copays $(246,022) $(287,374) $(477) $31,088 $30,197
----------------------------------------------------------------------------------------------------------------
Long-Term Care Copays $(16,076) $(3,589) $3,847 $(2,505) $(596)
----------------------------------------------------------------------------------------------------------------
Total $(396,654) $ $(126,418) $ (61,383) $107,517
(544,372)
----------------------------------------------------------------------------------------------------------------
Although it is mitigated to some extent by designating collections
as no-year funds, such an exceedingly dramatic shift in gains and
losses from which VA medical centers project, plan, and manage health
delivery until actual appropriations are received, can have a
detrimental effect on meeting the medical care needs of veterans. We
are also concerned with the need of local VA facilities to meet ever-
increasing budget estimates to ensure adequate funding, may encourage
or contribute to inappropriate billing. Hence, the question remains, as
to the extent of any cause and effect inappropriate billing and
collections may have on the delivery of high quality health care to
disabled veterans.
First-Party Billing and Collection
VA's authority for first-party billing under title 38, United
States Code, Sections 1710, 1710B, 1722, and 1722A, is in this
instance, for first-party copayments assessed against veterans for
pharmacy, long-term care, inpatient and outpatient services. MCCF
program staff at VA medical facilities establish first-party debts, and
to do so accurately, must have valid compensation and pension (C&P)
benefit award status information for each veteran receiving medical
services to ensure only appropriate billings and collections are made.
Disputed bills are normally resolved locally or are otherwise
considered delinquent after 3 monthly collection letters are sent by
the medical facility to the veteran. Delinquent first-party debts can
be sent to a collection agency, or automatically collected under the
Treasury Offset Program (TOP), where veterans' Federal payments such as
Social Security, VA Compensation, VA Pension, and Internal Revenue
Service tax refunds can be offset to collect unpaid delinquent first
party debts.
The VA Office of Inspector General (OIG) issued a report \2\ on
December 1, 2004, evaluating first-party billings and collections only
for veterans service-connected 50 percent or higher or in receipt of
pension. Four recommendations were made as a consequence of this
report. Part of VA's response is an action plan requiring the Office of
Compliance and Business Integrity (CBI) to monitor copayment charges
issued to certain veterans\3\ and for facility revenue and the
associated business office staff to take corrective action when
inappropriate bills are identified. Unfortunately, these corrective
measures only apply to those veterans whose compensation and pension
have been offset by the inappropriately billed amount--a necessary but
high threshold for action by the VA for a problem the Department itself
has created.
---------------------------------------------------------------------------
\2\ http://www.va.gov/oig/52/reports/2005/VAOIG-03-00940-38.pdf
\3\ Department of Veterans Affairs, VHA Handbook 1030.03, October
16, 2006.
---------------------------------------------------------------------------
Despite VA efforts, we receive recurring reports from our members
that inappropriate billing continues. Inappropriate billing of veterans
for VA medical care occurs due to incorrect C&P status of a veteran,
such as the limited number of service-connected disabilities available
for MCCF staff to view in their information system, and the effective
date of claims for service connection, which were pending when the
veteran sought treatment, and thus was made subject to copayments.
Clearly, information management is crucial in avoiding inappropriate
first-party billing, where such simple information is readily available
in the Veterans Benefits Administration (VBA) information system, but
may not be readily accessible by the MCCF staff of a local VHA
facility. The VA has made little progress linking these two systems for
more accurate results.
Third-Party Billing and Collection
Although the VA has attempted to implement more effective billing
practices and systems, it has historically been unable to meet its
collection goals. Similar to the need to have accurate information on
C&P status of veterans, third-party insurance information is also
needed to avert inappropriate third-party billing. The type of policies
and the types of services covered by the insurers, patient copayments
and deductibles, and preadmission certification requirements are vital
to the VA's MCCF program. The Department's ability to accurately
document the non-service-connected care provided to insured veterans,
and assign the appropriate codes for billing purposes, is essential to
accurate third-party collections.
Failure to properly document care can lead to missed opportunities
to bill for care, billing backlogs, overpayments by insurers, or
denials of VA invoices. More importantly, although the VA is authorized
to bill third parties only for non-service-connected care, we continue
to hear reports from service-connected disabled veterans, their
spouses, or caregivers, that the VA is billing their insurance
companies for treatment of service-connected conditions. At times,
notification of the billing departments of their local VA medical
centers is sufficient. In other instances however, the inappropriate
billing continues for the same condition or treatment, the
inappropriate invoice has been outstanding for such a period of time
that the veteran's credit history is adversely impacted through
collection agency action, or debt considered 180 days delinquent from
inappropriate billing is recovered by automatically offsetting a
veteran's compensation or pension benefit \4\ causing undue stress on
veterans and their families.
---------------------------------------------------------------------------
\4\ VA Handbook 4800.7, Treasury Offset Program and Treasury Cross
Servicing, December 8, 2003.
---------------------------------------------------------------------------
To supplement the anecdotal evidence we have collected over the
years, DAV recently conducted a survey by email of our DAV Commander's
Action Network. We asked survey recipients to participate if they
believe VA has inappropriately billed them or their insurance
companies. The results of the survey of 402 respondents from across the
nation show 43 percent (172 veterans) receive bills for their care from
the VA and approximately 62 percent (246) had other insurance coverage
being billed for their care at the VA. We also asked if they had
received more than one bill for the same treatment for which 18 percent
(74) affirmed.
In addition, 42 percent (167) said they are being billed for
treatment at the VA for a service-connected condition and 55 percent
(220) acknowledged that their insurance companies are being billed for
treatment from VA of a service-connected condition.
Of the 281 respondents who provided information for any followup we
may have, we selected and contacted four veterans who gladly shared
their experiences:
Veteran from Massachusetts: Service-connected for spinal cord
injury (SCI) and was referred to a VA Podiatrist by his primary
care physician for a secondary condition related to his SCI.
After completing the referral, the veteran's insurance was
billed. He spoke to a VA financial officer about this
situation. He took no corrective action, but rather responded
to the veteran, ``your injury is for your back, not your feet!
What does it matter to you? You are not paying it, your
insurance company is.''
Veteran from Wisconsin: Service-connected for degenerative
joint disease for which he received care from orthopedics at
his local VA medical center. His insurance was billed and
subsequently paid a portion for this care. The veteran also
paid for his portion of the bill. According to the veteran,
inappropriate billings for these treatments have been going on
for the past 3 years, despite earlier attempts to correct the
situation. The veteran has since decided to let it go
unaddressed. According to him, ``there is very little
discrimination from VA to bill my insurance.''
Veteran from North Dakota: Service-connected for hypertension
and has an ongoing VA prescription for this condition. He
indicates that on and off for well over 2 years, the VA has on
more than one occasion billed his insurance for his
hypertension medication. Although he has spoken to the business
office of his local VA facility, the situation remains
unresolved and has left him with the impression that, ``they
just don't seem to take any corrective action whatsoever.''
Veteran from South Carolina: Service-connected for migraine
headaches, depression, and orthopedic conditions for which he
takes prescription medications from the VA. He had been billed
for medication copayments as well as his insurance for
medications and treatments for his service-connected
disabilities. The veteran would routinely call the toll-free
number listed on the bill for medication copayments three to
four times a year for corrective action, to no avail. He faxed
a copy of his most recent VBA decision, but the inappropriate
billing still continued. Consequently, the veteran went to the
VA facility in person and handed a copy of his VBA decision to
the clerk. Although they were apologetic as the veteran watched
the billing staff input the pertinent information, the veteran
continues to this day, to receive bills for treatment of his
service-connected conditions. He subsequently called to have
these bills stopped and asked for an audit in March 2009 for
all inappropriate bills that VA has received payment. He
finally received his refund early this month. Since then
however, the veteran has sporadically received inappropriate
bills and has not had the inclination to see if his insurance
has paid any inappropriate billing from the VA. His final
thought was that, ``there are not enough protections in place
in the front end and veterans have to pay for their mistakes in
the back end.''
Mr. Chairman, it should be noted that for those veterans whose
inappropriate billing issues were not properly addressed locally, and
thus have risen to my office for assistance, the Chief Business Office
staff in VA Central Office have been accommodating and expeditious in
their assistance on every case. However, this should not be the process
for properly addressing all inappropriate billing cases.
Our members believe asking veterans to pay for part of the benefits
a grateful nation provides for them is fundamentally contrary to the
spirit and principles underlying the provision of benefits to veterans.
Accordingly, the delegates of our most recent national convention held
in Denver, Colorado August 22-25, 2009, passed two pertinent
resolutions: Resolution No. 234, which calls for legislation to repeal
all copayments for military retirees' and veterans' medical services
and prescriptions; and Resolution No. 184, which opposes any
legislation that would require the VA to recover third-party payments
for the care and treatment of a veteran's service-connected
disabilities.
The VA should be credited for actions it has taken for collecting
accurate first- and third-party information, strengthening coding
procedures and medical record documentation, which is aimed at
enhancing revenue collections and protecting against inappropriate
billing. However, the current revenue process requires extensive manual
and subjective intervention, causing significant delays in collections
and diminished revenue for the VHA. It also results in inappropriate
billing to veterans and their insurers, and places undue burden and
stress of veterans and their families. While under the law, VA must
bill veterans and their insurers for providing treatment for non-
service-connected conditions. Causing harm in the process requires the
Department to be more proactive to redress such actions and ensure no
repetition occurs. As our survey reveals, whatever system or process
the VA is using to address inappropriate billing, much work still needs
to be done.
We look forward to hearing from VA today on what it is proactively
doing to find and correct inappropriate bills and to eliminate future
inappropriate billing to veterans and their insurers. In addition, we
are interested to hear more about how the VHA's Revenue Improvement and
Systems Enhancements (RISE) program and Consolidated Patient Account
Centers (CPACs), which together we understand will implement a
regionally based industry model end-to-end revenue system, will fully
address the concerns we and the individual veterans have raised in this
testimony.
Mr. Chairman, we appreciate the Subcommittee's interest in this
issue and we again thank you for the opportunity to present our views.
We will appreciate your consideration of our views on this pressing and
important matter to America's sick and disabled veterans. I would be
pleased to address your questions, or those of other Subcommittee
Members.
Statement of Denise A. Williams, Assistant Director for Health Policy,
Veterans Affairs and Rehabilitation Commission, American Legion
Mr. Chairman and Members of the Subcommittee:
The American Legion appreciates the opportunity to offer our views
on this very important issue.
Background
In 1986 Public Law (P.L.) 99-272, the Consolidated Omnibus Budget
Reconciliation Act of 1985, gave the Department of Veterans Affairs
(VA) authority to bill health insurance companies for health care
provided to non-service-connected veterans who have private health
insurance. This legislation also authorized VA to collect co-payments
from non-service-connected veterans based on their income. Veterans
that are service-connected at a 50 percent or higher rating are
eligible for cost free care and medication for their service-connected
treatment.
As an expansion to that authority, in 1990 P.L. 101-508 established
the Medical Care Cost Recovery (MCCR) revolving fund. This gave VA
authority to seek reimbursement from third-party payers for the cost of
medical care provided to insured service-connected veterans treated for
NSC conditions. The law also authorized the per diem copayment and
medication copayment programs. In 1997, P.L. 105-33 established VA's
current Medical Care Collections Fund (MCCF) and authorized VA to
retain collections from health insurers and veterans' copayments at the
local medical center/Veterans Integrated Service Network (VISN) level.
In 2006, VA implemented a pilot project which created their
Consolidated Patient Account Center. This was to address all
operational areas contributing to the establishment and management of
patient accounts and related billing and collections processes.
The American Legion has a long history of advocating on behalf of
veterans. A very notable instance where this was evident was in March
2009, when Past National Commander David Rehbein met with President
Obama and learned that the Administration planned to move forward on a
proposal to charge veterans with private insurance for the treatment of
service-connected injuries and illnesses at VA medical facilities.
Under the proposed changes, VA would bill the veterans' private
insurance company for treatment of their service-connected
disabilities.
After fierce opposition from The American Legion and other
Veterans' Service Organizations (VSOs), the Administration dropped
their plan to bill private insurance companies for treatment of
service-connected medical conditions.
Discussion
In June 2004, the Government Accountability Office (GAO) released a
report, ``Internal Control Weaknesses Impair Third-Party Collections,''
which stated that VA had inadequate patient intake procedures,
insufficient documentation by physicians, a shortage of qualified
billing coders, and insufficient automation, all which diminished VA's
Medical Care Collection Fund (MCCF) collections. GAO conducted a
followup audit in 2008 and echoed similar findings that VA has
ineffective controls over their medical center billings and collections
which limit revenue from third-party insurance companies. The report
also concluded that VA lacks policies, procedures and reporting
mechanism for oversight of third-party billings and collections.
The Department of Veterans Affairs Office of Inspector General
(VAOIG) conducted an evaluation of the MCCF first-party billings and
collections practices in 2004. The report found that veterans were
inappropriately billed because of inaccurate medical facility Veterans
Health Information Systems and Technology Architecture (VistA). In
2007, VAOIG carried out another evaluation of 10 facilities and
ascertained that there were missed billing opportunities at all 10
facilities due to insufficient documentation of resident supervision.
Additionally, there were cases where episodes of care were not
billed due to coding staff's lack of experience and insurance companies
denying payment because billing staff placed incorrect information in
the system. In light of these findings, we recommend that VA implement
continuing education of all coders and their supervisors. The American
Legion urges VAOIG and GAO to conduct followup evaluations on their
latest reports to determine whether VA has complied with their
recommendations.
Mr. Chairman, although VA has made great strides in rectifying the
issues surrounding their billing and collections practices, it is
apparent that there is still room for improvement. As recent as April
2009, The American Legion compiled a total of 10 documented cases where
VA erroneously billed service-connected veterans' private insurances
for their service-connected medical care.
In one case, a veteran passed away in the Tampa VA Medical Center
November 27, 2008. He was 100 percent service-connected for several
conditions, and was also a military retiree enrolled in TRICARE for
Life. Under the provisions of VHA Handbook 1660.06, dated May 16, 2008,
the veteran's medical care was billed to TRICARE for Life. According to
the Handbook since the VA cannot bill Medicaid, TRICARE for Life
becomes the first payee. The Tampa VA Medical Center billed TRICARE for
$1,017,019.81 and TRICARE paid $304,092.58. Again, the veteran was 100
percent service-connected and the Medical Center did have the correct
information at the time they billed TRICARE.
According to the Handbook, the veteran is responsible for any and
all TRICARE co-payments; in this case, the veteran was billed by
TRICARE for a number of co-payments up to his catastrophic gap of
$3000.00. There is no difference between this and billing private
medical insurance.
In a second case, an 80 percent service-connected veteran reported
that his wife's private insurance has been billed repeatedly for his
treatment of service-connected illness. The veteran inquired about it
through the VA Primary Care Team and was told they will continue to be
billed as long as they have private insurance. The veteran explained
that he was being billed for service-connected disabilities; however,
the inappropriate billing continues. The American Legion is deeply
concerned about this critical situation and contends VA work jointly
with us to investigate these and any other cases, as well as collect
pertinent records from affected veterans and take the necessary
corrective measures. Additionally, we recommend that VA create a means
to alert coders of service-connected conditions in their system and
increase efforts and focus on monitoring accounts receivable.
In May 2009 The American Legion National Executive Committee
adopted a resolution, which calls for GAO and VAOIG to conduct
individual investigations into the allegations VA is billing service-
connected veterans for their cost-free health care. In addition, the
resolution urges VA to implement a third-party reimbursement and
diagnostic team comprised of an individual within each VISN to review
compliance and ensure veterans will not continue to be billed for their
service-connected medical conditions.
Finally, we would like to take this opportunity to express our
thanks to Chairman Filner for the introduction of H.R. 3365, The
Medicare VA Reimbursement Act of 2009. The American Legion strongly
supports this bill and would like to encourage your colleagues to
follow suit. On behalf of The American Legion, I appreciate the
invitation to present our views on this very important topic. This
concludes my testimony.
Statement of Kay L. Daly, Director, Financial Management and Assurance,
U.S. Government Accountability Office
VA Health Care: Ineffective Medical Center Controls Resulted in
Inappropriate Billing and Collection Practices
GAO Highlights
Why GAO Did This Study
GAO was asked to testify on billing practices of the Department of
Veterans Affairs (VA). GAO previously reported that continuing problems
in billing and collection processes at VA impaired its ability to
maximize revenue from private insurance companies (third-party
insurers). In June 2008, GAO reported on this followup review that (1)
evaluated VA billing controls, (2) assessed VA-wide controls for
collections, and (3) determined the effectiveness of VA oversight over
third-party billings and collections.
What GAO Recommends
In its June 2008 report, GAO made seven recommendations to improve
VA's third-party billing and collection processes, including actions to
improve (1) third-party billings (2) followup on unpaid amounts, and
(3) management oversight of billing and collections. VA concurred with
all seven recommendations and noted steps it was taking to address
them. GAO will follow up to determine whether, and if so, to what
extent, VA has taken action to address our recommendations.
What GAO Found
In June 2008, GAO reported that its case-study analysis of unbilled
patient services at 18 medical centers, including 10 medical centers
with low billing performance and 8 medical centers under VA's
Consolidated Patient Account Centers (CPAC) initiative considered to be
high performers, found documentation, coding, and billing errors and
inadequate management oversight that resulted in unbilled amounts. The
total amount that VA had categorized as unbillable in fiscal year 2007
for these 18 case-study medical centers was approximately $1.7 billion.
Although some medical services are not billable, such as service-
connected treatment, management had not validated reasons for related
unbilled amounts of about $1.4 billion to assure that all billable
costs are charged to third-party insurers.
GAO also found excessive time to bill and coding errors. The 10
non-CPAC medical centers reported average days to bill ranging from 109
days to 146 days in fiscal year 2007, compared to VA's goal of 60 days,
and significant coding and billing errors and other problems that
totaled over $254 million or 21 percent of the total in unbilled
medical services costs at those centers. Although GAO determined that
CPAC officials performed a more thorough review of billings, GAO's
analysis of unbilled amounts for the 8 CPAC centers found problems that
accounted for $37.5 million, or about 7 percent, of the total unbilled
medical services costs.
GAO's June 2008 report identified significant percentages of cases
where required followup was not done. These are considered to be
control failures. VA guidance requires medical center accounts
receivable staff to make up to three followup contacts, as necessary,
on outstanding third-party insurer unpaid bills, which were $600
million as of September 2007. As shown in the table below, GAO's
statistical tests of a random sample of fiscal year 2007 third-party
bills identified high control-failure rates related to the requirement
for initial, second, and third followups with third-party insurers on
unpaid amounts.
------------------------------------------------------------------------
Estimated Control Failures on Timely Followup on Unpaid Bills
-------------------------------------------------------------------------
VA-wide CPAC Non-CPAC
Required followup centers centers centers
------------------------------------------------------------------------
Initial 69% 36% 71%
------------------------------------------------------------------------
Second 44% 23% 45%
------------------------------------------------------------------------
Third 20% 22% 17%
------------------------------------------------------------------------
Source: GAO analysis of VA data.
Notes: Tests are of a VA-wide random-probability sample of third-
party accounts-receivable data. Failure rates are based on the lower
bound of GAO's two-sided, 95 percent confidence interval.
GAO also reported in June 2008 that VA lacked policies and
procedures and a full range of standardized reports for effective
management oversight of VA-wide third-party billing and collection
operations. Further, although VA management has undertaken several
initiatives to strengthen processes and controls and enhance third-
party revenue, many of these initiatives are open-ended or will not be
implemented for several years.
__________
Mr. Chairman and Members of the Subcommittee:
I am pleased to be here today to discuss our prior work on the
Department of Veterans Affairs' (VA) controls over medical center
billings and collections. The department provides health care to
eligible veterans through a system of Veterans Health Administration
(VHA) medical facilities that constitute one of the largest health care
systems in the world. VA is authorized \1\ to provide certain medical
services to veterans with non-service-related conditions and to recover
some of the cost of providing these additional benefits through billing
and collecting payments from veterans' private health insurers,
commonly referred to as third-party insurers.\2\ VA can also use these
third-party health insurance collections to supplement its medical care
appropriations. VA third-party billing and collection operations are
carried out through a nationwide network of 153 medical centers, 801
outpatient clinics, and 135 nursing homes, residential rehabilitation
treatment programs, and readjustment counseling centers. VA reported in
its fiscal year 2008 performance and accountability report that about
5\1/2\ million people received treatment in VA health care facilities,
and VA collections for health care services totaled nearly $2.4
billion.\3\
---------------------------------------------------------------------------
\1\ The Veterans' Health Care Eligibility Reform Act of 1996, Pub.
L. No. 104-262, Sec. 101, 110 Stat. 3177, 3178 (Oct. 9, 1996) (codified
at 38 U.S.C. Sec. 1710) and the Veterans Reconciliation Act of 1997,
Pub. L. No. 105-33, tit. VIII, Sec. 8023, 111 Stat. 251, 665 (Aug. 5,
1997) (codified at 38 U.S.C. Sec. 1729A).
\2\ VA does not bill for health care services provided to veterans
who have Medicare coverage only or veterans who have no private health
insurance.
\3\ VA collections for health care services include third-party
collections as well as patient copayments for medical services.
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Since 2001 we have reported that continuing weaknesses in VA
billing processes and controls have impaired VA's ability to maximize
the collections received from third-party insurers.\4\ Most recently,
in June 2008 we reported\5\ on VA's ineffective controls over medical
center billings and collections. My testimony today summarizes the
findings of our June 2008 report that are most relevant to the subject
of today's hearing. Specifically, I will focus on our findings
concerning (1) the effectiveness of VA medical center billing processes
at selected locations, (2) VA controls for performing timely followup
on outstanding third-party receivables, and (3) the adequacy of VA
oversight of billing and collection processes.
---------------------------------------------------------------------------
\4\ GAO, VA Health Care: VA Has Not Sufficiently Explored
Alternatives for Optimizing Third-Party Collections, GAO-01-1157T
(Washington, D.C.: Sept. 20, 2001); GAO, VA Health Care: VA Increases
Third-Party Collections as It Addresses Problems in Its Collections
Operations, GAO-03-740T (Washington, D.C.: May 7, 2003); and GAO, VA
Medical Centers: Further Operational Improvements Could Enhance Third-
Party Collections, GAO-04-739 (Washington, D.C.: July 19, 2004).
\5\ GAO, VA Health Care: Ineffective Controls over Medical Center
Billings and Collections Limit Revenue from Third-Party Insurance
Companies, GAO-08-675 (Washington, D.C.: June 10, 2008).
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To achieve our first objective, we used a case study approach to
assess billing controls because VA did not have centralized data on
third-party billings. For our case studies, we selected the 10 medical
centers with the highest numbers of days to bill (lowest billing
performance) and the 8 medical centers under the Consolidated Patient
Account Center (CPAC)\6\ management initiative for regionalized billing
and collection activity that were expected to be high performers. To
achieve the second objective, we tested controls for timely collection
followup and documentation of contacts on third-party bills using a VA-
wide statistical sample, and stratified subsets of our VA-wide sample
for CPAC medical centers and medical centers that were not under the
CPAC initiative. To address our third objective on VA management
oversight capability, we reviewed management reports generated by key
VA systems and interviewed medical center and VHA officials about their
oversight procedures.
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\6\ One of VA's initiatives to improve billing and collection
functions was the establishment of a CPAC pilot program covering 8
medical centers. The CPAC model, based on the private-sector approach,
consists of a stand-alone regionalized billing and collections activity
supported by data validation, customer service, and other functions.
---------------------------------------------------------------------------
We conducted the work for the June 2008 report on which this
testimony was based from January 2007 through May 2008 in accordance
with generally accepted Government auditing standards. Those standards
require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence
obtained provided a reasonable basis for our findings and conclusions
based on our audit objectives.
Case Study Medical Centers' Weaknesses Resulted in Underbillings of
Third-Party Insurers
Our 2008 report found significant internal control weaknesses and
inadequate management oversight that limited VA's ability to maximize
collections from third-party insurers. Our 18 case studies included 10
medical centers with reported low billing performance and the 8 medical
centers under the CPAC management initiative for regionalized billing
and collection activity that were expected to be high performers. Our
case study analysis of unbilled patient services at 18 case study
medical centers found excessive average days to bill, coding and
billing errors, and a lack of management oversight, which raised
questions about why $1.7 billion was not billed to third-party insurers
at the 18 locations we reviewed. It is important that coding for
medical services is accurate and timely because insurers will not
accept improperly coded bills. Moreover, many insurers have national or
regional contracts with VA that bar insurer liability for payment of
bills received after a specified period of time after the date that
medical services were provided, usually 1 year, but sometimes as little
as 6 months.
There are valid reasons why some medical services are not billable,
including service-connected treatment, Medicare coverage, and the lack
of private health insurance coverage.\7\ In fiscal year 2007, the 18
medical centers we reviewed had $1.4 billion in unbilled amounts in
these categories. We found that medical center management at all 18 of
our case study locations did not always validate the reasons these
amounts were unbilled.
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\7\ Under 38 U.S.C. Sec. 1729, VA is not authorized to collect
these amounts from third-party insurers.
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At the 10 non-CPAC medical centers we reviewed, we identified low
billing performance including average days to bill ranging from 109
days to 146 days in fiscal year 2007, compared to VA's goal of 60 days.
We also found these centers had significant documentation, coding, and
billing errors and performed little or no management oversight of the
billing function. As illustrated in figure 1, omissions in
documentation ($10.4 million), the use of inaccurate clinical service
codes ($48.3 million), and other undefined reasons ($195.4 million)
accounted for over $254 million, or 21 percent, of the $1.2 billion in
total unbilled medical services costs at the 10 non-CPAC medical
centers. The largest group of billing errors included $25 million for
which the billing time frame had expired. Managers at the 10 non-CPAC
medical centers did not perform adequate reviews of the services
assigned to these categories to ensure that billing clerks
appropriately classified them. While not the focus of our audit, such
reviews are also critical for effectively identifying and addressing
any overbillings.
Figure 1: Fiscal Year 2007 Unbilled Amounts by Reason for 10 Medical
Centers with the Largest Elapsed Days to Bill
[GRAPHIC] [TIFF OMITTED] T3435A.001
Source: GAO analysis of 10 case study medical centers' Reasons Not
Billable data.
Our case study analysis of the eight medical centers under the CPAC
initiative, with $508.7 million in unbilled amounts, found that CPAC
officials performed a more thorough review of the billing function. Our
analysis of fiscal year 2007 unbilled amounts for the eight CPAC
centers showed that these centers' average days to bill ranged from 39
days to 68 days, compared to VA's 2007 goal of 60 days. As illustrated
in figure 2, CPAC centers' documentation errors ($4.2 million), coding
and billing errors ($21.4 million), and other undefined reasons ($11.9
million) accounted for $37.5 million or about 7 percent of medical
services costs that were not billed to third-party insurers.
Figure 2: Fiscal Year 2007 Unbilled Amounts by Reason for Eight Medical
Centers under CPAC
[GRAPHIC] [TIFF OMITTED] T3435A.002
Source: GAO analysis of 8 CPAC case study medical centers' Reasons Not
Billable data.
Medical Centers Have Not Followed VA Policy for Timely Followup and
Documentation on Unpaid Third-Party Receivables
Our June 2008 report identified significant problems related to
timely followup and documentation of contacts with third-party insurers
on actions to collect outstanding receivables. VA policy\8\ requires
medical center accounts receivable staff to make up to three followup
contacts, as necessary, on outstanding third-party receivables, which
were $600 million as of September 25, 2007.
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\8\ VA Handbook 4800.14, Medical Care Debts, Section 4(b)(1).
---------------------------------------------------------------------------
Our statistical tests\9\ of a stratified random sample of 260
fiscal year 2007 third-party bills identified high percentages of cases
where required followup was not done, which is considered to be a
control failure. These high control failure rates occurred VA-wide, in
CPAC and non-CPAC medical centers, as shown in table 1. For example,
our tests for the required initial followup showed a failure rate of 69
percent VA-wide, 36 percent for CPAC centers, and 71 percent for non-
CPAC centers.
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\9\ Our statistical tests were based on a 95 percent, 2-sided
confidence interval. Because confidence intervals varied widely for our
various control tests, we used a conservative estimate of our test
results that is based on the lower bound of our confidence intervals.
Our sample included bills over $250.
Table 1: Estimated Failure Rates for Controls on Timely Followup on
Unpaid Third Party Insurer Receivables
------------------------------------------------------------------------
VA-wide CPAC Non-CPAC
Required followup medical medical medical
centers centers centers
------------------------------------------------------------------------
Initial, 45 days 69% 36% 71%
------------------------------------------------------------------------
Second, 21 days after first 44% 23% 45%
contact
------------------------------------------------------------------------
Third, 14 days after second 20% 22% 17%
contact
------------------------------------------------------------------------
Source: GAO analysis of VA data.
Notes: Tests are of a VA-wide random-probability sample of third-
party accounts-receivable data.
Failure rates are based on the lower bound of our two-sided, 95 percent
confidence interval. Our sample included bills over $250.
The failure to make timely followup contacts and delays in
initiating contacts with third-party insurance companies on unpaid
amounts increase the risk that payments will not be collected, or that
payments will be substantially delayed. Of the population of fiscal
year 2007 billings that were used for our stratified random sample, VA
had collected about 47 percent as of September 25, 2007.\10\ Our
analysis of accounts receivable aging data showed that 6.25 percent of
the receivables balance as of the end of fiscal year 2007 was over 1
year old.\11\
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\10\ The stratified random sample population was valued at $547.8
million and VA had collected about $260.1 million as of September 25,
2007.
\11\ Specifically, $37.5 million of the total $600 million in
receivables as of the end of fiscal year 2007 was over 1 year old.
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VA policy requires that accounts receivable staff include a comment
for any adjustments\12\ to decrease outstanding third-party bills. The
policy requires that the explanation be clear and unambiguous and state
the particular reason for the adjustment. Our tests of whether accounts
receivable personnel adequately documented reasons for adjustments to
decrease a bill found a failure rate of 38 percent VA-wide. Without
clear documentation of the reasons for billing adjustments, VA
management lacks the ability to monitor the validity of the
adjustments. Further, the lack of followup documentation undermines the
reliability of trend information needed to effectively manage third-
party receivables.
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\12\ Accounts receivable staff reduce third-party receivables for a
variety of reasons including, but not limited to, partial payments when
the amount received is the full amount expected from the insurance
carrier, the amount of payment received is the usual and customary
amount received from the insurance company, or medical services are not
covered under the insurance policy.
---------------------------------------------------------------------------
Management officials at several of the medical centers tested in
our statistical sample attributed their high followup failure rate to
inadequate staffing. However, we found that a lack of management
oversight at the medical centers as well as at the VHA management level
contribute to the control weaknesses we identified. In addition, we
found that VHA and medical centers have few standardized management
reports to facilitate oversight. Similar to the billings process, we
found that the case study medical centers have limited procedures in
place to monitor the collections process. Moreover, uncollected third-
party receivables place an added burden on taxpayers because additional
amounts would need to be covered by annual appropriations to support
the same level of service to veterans.
VA Lacks Policies and Procedures for Assuring Adequate Oversight of
Third-Party Billings and Collections
In June 2008 we reported that there were no formal policies and
procedures for oversight of the third-party insurer billing and
collection processes by medical centers or VHA. As a result, we found
little or no monitoring and oversight of the third-party billing and
collection processes. This raises concerns about the adequacy of
oversight over the $1.7 billion in unbilled amounts at the 18 case
study medical centers, including the hundreds of millions of dollars in
unbilled amounts related to coding, billing, and documentation errors,
and other undefined reasons. The lack of formal VA policies for
management oversight of third-party billings and collections also
raises VA-wide concerns.
In addition, we found that medical centers and VHA had few
standardized management reports to facilitate oversight. For example,
our review of VHA's Chief Business Office (CBO) reports found that
these reports generally consisted of data on VA-wide days to bill,
accounts receivable, and collections. VHA CBO did not generate detailed
performance reports by medical center, and it did not review data on
the status of unbilled amounts. We noted that limitations in management
reporting related to VHA systems design. Specifically, VA's health care
billing and collection systems operated as stand-alone systems at each
medical center. As such, VA-wide reporting was dependent on numerous
individual queries and data calls. Enhanced oversight would permit VHA
and medical center management to monitor trends and performance
metrics, such as increases or decreases in unbillable amounts.
In summary, while our 2008 report focused on VA underbillings and
related control weaknesses, the weaknesses we identified could also
result in VA overbillings to third-party insurance companies or
veterans. For example, inaccurate data entry could result in bills for
services to veterans for service-connected illnesses or conditions.
Nonetheless, VA has made some progress in improving policy guidance and
processes for billing and collecting medical care receivables from
third-party insurers. In our 2008 report, we noted, but did not assess,
that VA management had undertaken several initiatives to strengthen
processes and controls over third-party billings and collections. For
example, VA had completed initiatives for (1) recruitment and retention
of coders and health information managers and (2) updating VHA policy
guidance related to third-party revenue. In addition, VA had six key
strategic initiatives, including CPAC, under way to enhance revenue
from third-party insurers. Until VA addresses its significant,
continuing weaknesses in controls over coding, billing, and collections
followup that prevent it from maximizing revenue from third-party
insurance companies, it will continue to be at risk of millions in
erroneous billings. These errors negatively affect VA's ability to
provide medical care to the Nation's veterans.
Our June 2008 report included seven recommendations to VA aimed at
strengthening key internal control activities over third-party billings
and collections and improving management oversight. In comments on a
draft of that report, VA concurred with all seven of our
recommendations and provided information on steps it is taking to
address them. We will follow up to determine whether, and if so, to
what extent VA has taken action to address our recommendations.
Mr. Chairman and Ranking Member Brown, this concludes my prepared
statement. I would be happy to respond to any questions you or other
Members of the Subcommittee may have at this time.
Contact and Acknowledgments
For further information about this testimony, please contact Kay L.
Daly, Director, Financial Management and Assurance at (202) 512-9095,
or [email protected]. Contact points for our offices of Congressional
Relations and Public Affairs may be found on the last page of this
testimony. Major contributors to this testimony included Gayle L.
Fischer, Assistant Director; Carla J. Lewis, Assistant Director; F. Abe
Dymond, Assistant General Counsel; Carl S. Barden; Deyanna J. Beeler;
Francine DelVecchio; Lauren S. Fassler; Patrick T. Frey; Jason Kelly;
Amanda K. Miller; Meg Mills; Matthew L. Wood; and Matthew P. Zaun.
Statement of Gary M. Baker, MA, Chief Business Officer, Veterans Health
Administration, U.S. Department of Veterans Affairs
Mr. Chairman and Mr. Ranking Member: thank you for providing me
this opportunity to discuss the Department of Veterans Affairs' (VA)
billing practices. I am accompanied today by Ms. Stephanie Mardon,
Deputy Chief Business Officer for Revenue Operations, and Ms. Kristin
Cunningham, Director of Business Operations.
VA is required by law to charge copayments to certain Veterans who
meet income requirements and receive care for non-service-connected
treatment. VA must also bill health insurance carriers for services
provided to Veterans treated for their non-service-connected
conditions. My testimony today will focus on VA's response to concerns
expressed by Veterans and oversight bodies regarding VA's billing
practices and the mechanisms VA has put in place to ensure charges are
appropriate.
VA's Billing Guidelines
Veterans in Priority Group 1 (service connected 50 percent or more)
are never charged a copayment. For other Veterans, VA currently has
four types of non-service-connected copayments for which may be
charged: outpatient, inpatient, extended care services and medication.
Veterans are not charged copayments for a number of outpatient services
including: publicly announced VA health fairs; screenings and
immunizations; smoking and weight loss counseling; telephone care and
laboratory; flat film radiology; and electrocardiograms. For primary
care outpatient visits there is a $15 copayment charge and for
specialty care outpatient visits a $50 copayment. Veterans do not
receive more than one outpatient copayment charge per day.
For Veterans required to pay an inpatient copayment charge, rates
vary based upon whether the Veteran is enrolled in Priority Group 7 or
not. Veterans enrolled in Priority Group 8 and certain other Veterans
are responsible for VA's full inpatient copayment and Veterans enrolled
in Priority Group 7 and certain other Veterans are responsible for
paying 20 percent of VA's inpatient copayment. Veterans in Priority
Groups 1, 2 3 and 5 do not have to pay inpatient or outpatient copays.
Veterans in Priority Groups 4 and 6 may be exempt due to income or
special eligibility for treatment of certain conditions.
For Veterans required to pay extended care service copayments these
are based on three levels of non-service-connected care including:
inpatient, non-institutional and adult day health care. Actual
copayments vary depending on the Veteran's financial situation.
For medication copayments, Veterans are not billed if they have a
service-connected disability rated 50 percent or greater, they are
former Prisoners of War, or if their medications are related to certain
eligibility exceptions. Veterans enrolled in Priority Groups 2 thru 6
have a $960 calendar year cap on the amount that they can be charged
for these copayments.
Veterans who are unable to pay VA's copayment charges are
encouraged to complete requests for assistance including waivers,
hardships, compromises and repayment plans. VA embarked on a program
earlier this year to improve communication of these options to Veterans
and their families through developing posters and other materials for
local facilities and VA's Web site (see Appendices A through E). VA
staff members are encouraged to ensure that Veterans and their families
are aware of these options. In addition, Veterans and their families
can call VA's First Party Call Center at the Health Resource Center in
Topeka, KS using a toll-free number for assistance in understanding
their copayment charges and payment alternative options.
VA bills private health insurers for medical care, supplies and
prescriptions provided to Veterans for their non-service-connected
conditions. VA cannot bill Medicare, but it can bill Medicare
supplemental health insurance carriers for covered services. (Reference
38 USC Sec. 1729.) Veterans are not responsible for paying any
remaining balance of VA's insurance claim not paid or covered by their
health insurance. Any payment received by VA is used to offset ``dollar
for dollar'' a Veteran's VA copayment responsibility.
Ensuring Billing Accuracy
In VA's billing program, Veterans and their health insurers are not
to be charged for care provided for their service-connected conditions.
VA has a number of mechanisms that have been put in place to ensure
Veterans and their third party health insurers are charged
appropriately. VA's health information system identifies Veterans who
are service-connected, flags their record, and lists all rated service-
connected disabilities. During each treatment encounter, the VA
provider determines whether the medical care or prescriptions provided
are related to the Veteran's rated service-connected conditions. This
determination prevents bills from being generated automatically. In
addition, when VA is notified that a Veteran is rated as service-
connected retroactively, VA reviews the Veteran's account to ensure any
bills that have may been generated for the newly rated conditions are
cancelled or that refunds are generated back to the effective date of
the service-connected decision. As an example, the 2008 National
Defense Authorization Act exempted combat Veterans who were discharged
from active duty on or after January 2003, from copayments for
conditions possibly related to their combat service for a 5-year
period. VA is now generating refunds for any copayments Veterans may
have been required to make when their copayment exemption expired after
2 years under the previous authority. VA hopes this will assist those
Veterans who served in the combat theater of operations.
The Veterans Service Organizations 2010 Independent Budget made
recommendations to help VA improve billing practices: VA has already
addressed many of these. In response to the recommendation regarding
improved data exchange between the Veterans Benefits Administration
(VBA) and the Veterans Health Administration (VHA), VHA has made
significant progress through enhancements to VHA's Veterans Health
Information Systems Technology Architecture (VistA). This now contains
information that provides medical staff data for more than 150 service-
connected conditions. Additionally, medical center staff has access to
other applications that provide more detailed information on rated
disabilities. VHA staff has been participating in a pilot of the
Virtual VA application which provides Web-based access to view rating
decisions. This provides more detailed information concerning Veterans'
service-connected disabilities. The pilot has proven very successful in
providing clear, reliable information for use in service-connected
determinations.
In response to the VSO recommendations that VA review our billing
procedures and intensify training, VA has already put in place
extensive training for clinical, coding and billing staff to
appropriately determine service-connection and other special authority
relationships for billing purposes. All providers receive a pocket card
that outlines protocols for determining service-connected care for
billing purposes. Business compliance staff at each level of VHA also
perform a variety of first and third party billing compliance reviews
that are routinely reported to VHA leadership.
Over the last 5 years, VA has also developed many other initiatives
to improve billing practices in response to VA Office of Inspector
General (OIG) Report No. 03-00940-38, ``Evaluation of Selected Medical
Care Collection Fund First Party Billings and Collections'' published
on December 1, 2004. In this report, OIG identified that Priority
Groups 1 and 5 Veterans were receiving compensation and pension
benefits and their debts were being referred inappropriately to VA's
Debt Management Center (DMC). In response to this report, VA published
VHA Handbook 1030.03, ``First Party Co-payment Monitoring Policy''
(dated October 16, 2006) which established policies and procedures for
monitoring possible inappropriate referral of debts to DMC. This
handbook requires staff to conduct a full account review for any
copayments charged to these Veterans to determine billing accuracy.
Additionally, VA installed software in all VistA systems in August 2008
to ensure that these debts are not referred automatically for offset.
This has resulted in dramatic reductions reducing inappropriate
referrals from 89 percent at the time of the OIG report to 16 percent
in Fiscal Year 2009.
VA also put in place several enhancements to strengthen its billing
program in response to the July 2008 Government Accountability Office
(GAO) Report 08-675, ``Ineffective Controls over Medical Center
Billings and Collections Limit Revenue from Third-Party Insurance
Companies.'' To increase oversight and monitoring of the billing
program, VA now requires staff to perform monthly reviews and report
results to local compliances officers. In order to accurately classify
care as not billable, VA implemented a software enhancement in July
2009 and provided training to staff. VA also implemented a mechanism to
monitor and periodically audit these determinations. Finally, VA
strengthened controls over accounts receivable by implementing monitors
by VISN financial quality assurance staff.
Conclusion
Mr. Chairman, we appreciate the opportunity to respond to the
concerns about VHA billing practices raised by Veterans and oversight
bodies and to describe our efforts to improve the process. VA prides
itself on ensuring that Veterans and their health insurers are
appropriately charged for non-service-connected care. We are equally
committed to ensuring that Veterans are not billed inappropriately for
treatment of service-connected conditions. To that end, VHA has
instituted billing protocols, training, monitoring, and oversight
systems. Should a Veteran receive a bill that appears to be in error,
VA encourages Veterans to contact their local medical center revenue
staff, who will review the bill with the Veteran and help to reconcile
the issue. Thank you, again, for this opportunity. My colleagues and I
are available for your questions.
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MATERIAL SUBMITTED FOR THE RECORD
Committee on Veterans' Affairs
Washington, DC.
October 20, 2009
Ms. Kay Daly
Director
Financial Management and Assurance
U.S. Government Accountability Office
441 G Street, NW
Washington, DC 20548
Dear Ms. Daly:
Thank you for your testimony at the U.S. House of Representatives
Committee on Veterans' Affairs Subcommittee on Health oversight hearing
on ``Identifying the Causes of Inappropriate Billing Practices by the
VA'' that took place on October 15, 2009.
Please provide answers to the following questions by December 2,
2009, to Jeff Burdette, Legislative Assistant to the Subcommittee on
Health.
1. Although the June 2008 GAO report focused on under-billing, is
it possible to infer that the VA may have issues with over-billing
because the VA has internal control weaknesses and problems with
omissions in documentation and use of inaccurate clinical service
codes?
2. There are valid reasons that VA does not bill third-parties for
medical care, such as medical care provided for service-connected
conditions and when services are covered by Medicare. Is VA ensuring
that patient medical services provided that are placed into non-
billable categories are correctly placed there?
Thank you again for taking the time to answer these questions. The
Committee looks forward to receiving your answers by December 2, 2009.
Sincerely,
Michael H. Michaud
Chairman
__________
U.S. Government Accountability Office
Washington, DC.
November 23, 2009
The Honorable Michael H. Michaud
Chairman
Subcommittee on Health
Committee on Veterans' Affairs
House of Representatives
Subject: The Department of Veterans Affairs (VA) Health Care: Response
to Hearing Questions Related to Controls over VA's Medical Center
Billings and Collections
Dear Mr. Chairman:
On October 15, 2009, we testified before your Subcommittee at a
hearing entitled, Inappropriate Billing Practices of the VA:
Identifying the Causes and Exploring Potential Solutions.\1\ Our
testimony was primarily based on our June 2008 report \2\ on (1) the
effectiveness of VA medical center billing processes at selected
locations, (2) VA controls for performing timely followup on
outstanding third-party receivables, and (3) the adequacy of VA
oversight of billing and collection processes.
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\1\ GAO, VA Health Care: Ineffective Medical Center Controls
Resulted in Inappropriate Billing and Collection Practices, GAO-10-152T
(Washington, D.C.: Oct. 15, 2009).
\2\ GAO, VA Health Care: Ineffective Controls over Medical Center
Billings and Collections Limit Revenue from Third-Party Insurance
Companies, GAO-08-675 (Washington, D.C.: June 10, 2008).
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This letter responds to your October 20, 2009, request to provide
answers to followup questions relating to our October 15, 2009,
testimony. Your questions, along with our responses, based primarily on
our June 2008 report, follow.
1. Although the June 2008 GAO report focused on under-billing, is
it possible to infer that the VA may have issues with over-billing
because the VA has internal control weaknesses and problems with
omissions in documentation and use of inaccurate clinical service
codes?
As we testified before your Subcommittee in October 2009,\3\ while
our June 2008 report focused on VA underbillings and related control
weaknesses, the weaknesses we identified could also result in VA
overbillings to third-party insurers or veterans. For example, weak
controls permitting billing errors could result in overbilling for
services to veterans for service-connected illnesses or conditions.
Until VA addresses its significant, continuing weaknesses in controls
over coding, billing, and collections followup, it will continue to be
at risk of millions of dollars in erroneous billings, including both
over- and underbilling for veterans' medical-connected services. These
errors can negatively affect VA's ability to provide medical care to
the Nation's veterans.
---------------------------------------------------------------------------
\3\ GAO-10-152T.
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2. There are valid reasons that VA does not bill third-parties for
medical care, such as medical care provided for service-connected
conditions and when services are covered by Medicare. Is VA ensuring
that patient medical services provided that are placed into non-
billable categories are correctly placed there?
Our case study analysis of unbilled patient services at 18 VA
medical centers found, among other things, that coding and billing
errors as well as a lack of management oversight raised questions about
whether $1.7 billion was correctly not billed to third-party insurers.
While $1.4 billion of this amount appeared to relate to services for
which VA does not have a cost recovery right, such as medical care for
service-connected conditions and services covered by Medicare and was
therefore nonbillable,\4\ we found that medical center management did
not always validate the cited reasons these amounts were unbilled. For
example, managers at 10 case study medical centers did not perform
adequate reviews of cited treatment classifications to ensure billings
were appropriately nonbillable.
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\4\ Under 38 U.S.C. Sec. 1729, VA is not authorized to collect
these amounts from third-party insurers.
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VA advised us in November 2009 it has taken the following steps to
help ensure that patient medical services provided are correctly placed
into the nonbillable categories.
In December 2008, VA issued a fact sheet that detailed
new procedures for monitoring ``reasons not billable'' codes for
accuracy and timeliness.
In February 2009, VA issued Veterans Health
Administration Directive 2009-010, Monitoring ``Reasons Not Billable''
to formalize the monitoring process for coding and billing accuracy
related to nonbillable encounters.
In July 2009, VA deployed a software enhancement to its
Veterans Health Information Systems and Technology Architecture (VistA)
system\5\ to standardize the ``reasons not billable'' codes used to
track why a specific medical treatment is not billable.
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\5\ VistA is a comprehensive medical records system. VistA includes
an accounts receivable module that supports third-party billings and
collections.
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In July and August 2009, VA provided national training to
staff on the system enhancement.
Although we have not independently assessed the adequacy of these
actions, if fully and effectively implemented, they appear to have
merit in better ensuring VA patients' medical care service billings are
correctly classified as nonbillable.
If you or your staff have questions about the responses to the
questions, please contact me at (202) 512-9095 or by e-mail at
[email protected]. A key contributor to this correspondence was Carla
Lewis, Assistant Director.
Sincerely yours,
Kay L. Daly
Director
Financial Management and Assurance
Committee on Veterans' Affairs
Washington, DC.
October 20, 2009
Honorable Eric K. Shinseki
Secretary
U.S. Department of Veterans Affairs
810 Vermont Avenue, NW
Washington, DC 20240
Dear Secretary Shinseki:
Thank you for the testimony of Gary M. Baker, Chief Business
Officer for the Veterans Health Administration, at the U.S. House of
Representatives Committee on Veterans' Affairs Subcommittee on Health
oversight hearing on ``Identifying the Causes of Inappropriate Billing
Practices by the VA'' that took place on October 15, 2009.
Please provide answers to the following questions by December 2,
2009, to Jeff Burdette, Legislative Assistant to the Subcommittee on
Health.
1. Does the VA collect data to assess the prevalence of their
inappropriate billing practices? Is this linked to a performance
measure to track VA's progress in decreasing the number of
inappropriate billings?
2. How does the VA minimize improper billing? For example, are
there directives or requirements for standardized procedures to limit
coding errors and to address other issues leading to erroneous billing?
3. The witnesses speaking on behalf of veterans service
organizations testified that non-service connected veterans may be
billed multiple times for a single episode of treatment. What do you
think are some potential reasons for this error? Is it a human
processing error and/or an IT coding error?
4. What is the VA doing to improve the communication between VHA
and VBA so that information about service-connected conditions is
complete and timely?
5. In their testimony, the Paralyzed Veterans of America cited a
case where the VA bills veterans who are rated with 100 percent total
and permanent disability. Why is the VA billing these individuals? Is
this practice allowed in statute or regulations, or do these cases
reflect unintended billings?
Thank you again for taking the time to answer these questions. The
Committee looks forward to receiving your answers by December 2, 2009.
Sincerely,
Michael H. Michaud
Chairman
__________
Questions for the Record
The Honorable Michael H. Michaud, Chairman
House Committee on Veterans' Affairs
Subcommittee on Health
Identifying the Causes of Inappropriate Billing Practices by the VA
October 15, 2009
Question 1: Does the VA collect data to assess the prevalence of
their inappropriate billing practices? Is this linked to a performance
measure to track VA's progress in decreasing the number of
inappropriate billings?
Response: Data on bills created in error is currently collected on
a local basis at each facility. However, VA is currently developing
procedures to collect this data at a national level, so that trends can
be analyzed to better drive system-wide improvements in billing
practices.
The VHA's Office of Compliance and Business Integrity (CBI), which
oversees VHA's revenue operations, implemented a series of metrics that
monitor high risk activities impacting the revenue cycle, to include
billings. CBI continuously reviews revenue cycle activities and
identifies areas of high risk that may need a focused review.
Question 2: How does the VA minimize improper billing? For example,
are there directives or requirements for standardized procedures to
limit coding errors to address other issues leading to erroneous
billing?
Response: VHA has implemented a number of standardized procedures
and training initiatives in order to minimize bills created in error.
In November 2007, VHA published Handbook 1907.03, Health Information
Management Clinical Coding Program Procedures, to establish minimum
bill coding accuracy standards and provide procedures for conducting
coding reviews for many different purposes, including third-party
billing. In December 2008, VHA developed and issued to the field, new
procedures specifically for monitoring reasons not billable codes for
accuracy and timeliness. This process was formalized via a directive
(VHA 2009-010). VHA also implemented a system enhancement along with
training modules to standardize ``reasons not billable'' codes, which
allows for better oversight of this process.
VHA has implemented a number of training programs on specific
billing topics including billing associated with Combat Veteran special
authority to ensure staff understands the authorities and billing
requirements for these topics. VHA also presented a training program to
field staff on Service/Non-service-Connected care and Special Treatment
Authorities in September 2009. VHA has focused targeted training
efforts tailored to clinicians through issuance in August 2009, of
Physician Documentation FlipCards, which provide quick reference
resources including tips on documentation, evaluation and management
coding, medication copayments, and service-connected/special treatment
authorities.
Finally, VHA has used hybrid title 38 hiring authority to increase
the number of qualified coders and provided opportunities for special
advancement for professional achievement while in VA service. A
national Health Information Management (HIM) inventory conducted in
October 2008, reported 1,282 coders at VA facilities which represent an
increase of 394 coders since 2007. Eighty-two percent (1,048) of coders
hold HIM credentials, an increase of 255 coders since 2007. In order to
assure this staff receives ongoing training, educational programs are
provided both via satellite and web-based modalities. Also, a tool kit
containing coding and documentation improvement strategies is posted on
the HIM Web site along with a Metrics Dashboard which includes coding
indicators.
Question 3: The witnesses speaking on behalf of Veterans Service
Organizations (VSOs) testified that non-service connected Veterans may
be billed multiple times for a single episode of treatment. What do you
think are some potential reasons for this error? Is it a human
processing error and/or an IT coding?
Response: It is important to note that Veterans receive a separate
prescription copayment charge for each individual prescription that may
have been issued during a single treatment episode. These individual
prescription copayment billings for non-service connected prescriptions
may be interpreted as multiple billings for the same episode of care by
the Veteran. VA's billing system is designed to provide monthly
statements so the Veteran has an opportunity to either pay the charges
or request administrative relief through waiver or compromise. If the
charges are not paid after three statements are issued, and no new
charges have been incurred, no further statements are issued for those
charges. If the Veteran incurs additional charges after the initial
charges are reported on a statement, the balance of unpaid charges will
continue to be shown on each subsequent statement. VHA believes that
the billing system is working as designed but more education is needed
on the patient statements for Veterans.
Question 4: What is VA doing to improve the communications between
VHA and VBA so that information about service-connected conditions is
complete and timely?
Response: VA has made significant progress in the exchange of data
between VBA and VHA. The information contained in the VistA system for
medical staff now allows for more than 150 service connected
conditions. As VBA has transitioned to its VETSNET application, VHA has
gained access to more detailed listings of service-connected conditions
without the limitation to six service-connected conditions, as had been
the case with the Benefits Delivery Network system. In addition,
medical center staff has access to other applications which provide
more detailed information on rated disabilities such as the web-based
Hospital INQuiry(HINQ) application. VHA staff has been participating in
a pilot of the Virtual VA application which provides web-based access
to view rating decisions. This provides more detailed information
concerning Veterans' service-connected disabilities. This pilot has
proven to be very successful in providing clear and reliable
information for use in service-connection determinations. The pilot is
expected to be expanded to more staff when technical infrastructure
capability is expanded.
Question 5: In their testimony, the Paralyzed Veterans of America
cited a case where the VA bills Veterans who are rated with 100 percent
total and permanent disability. Why is the VA billing these
individuals? Is this practice allowed in statute or regulations, or do
these cases reflect unintended billings?
Response: Veterans rated 100 percent total and permanent should not
receive copayment bills for any services. However, by statute, their
third party insurance may be billed for care provided for conditions
not adjudicated as service-connected by VBA. VA clinical staff is
required to identify such non-service-connected care for billing to
third party insurers. Also, if a Veteran had a lesser percentage
disability and was recently determined to be 100 percent total and
permanent, he/she may still receive bills from treatment provided at
the lower rated disability or for non-service connected disabilities
while rated less than 100 percent. Although VA strives for zero errors
in our billing practices, we know there are situations where Veterans
or third party insurers may have received bills in error. If this
situation occurs, Veterans are encouraged to contact their local
medical center revenue staff who will review the bill and cancel it as
appropriate.