[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

                              ----------                              


                       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.
---------------------------------------------------------------------------
    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).
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    \7\ Under 38 U.S.C. Sec. 1729, VA is not authorized to collect 
these amounts from third-party insurers.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    \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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \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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[GRAPHIC] [TIFF OMITTED] T3435A.008


                                 
                   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.
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    \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.

                                 
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