[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]


     CHOICE CONSOLIDATION: IMPROVING VA COMMUNITY CARE BILLING AND 
                             REIMBURSEMENT

=======================================================================

                                 HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON HEALTH

                                 OF THE

                     COMMITTEE ON VETERANS' AFFAIRS
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                      THURSDAY, FEBRUARY 11, 2016

                               __________

                           Serial No. 114-55

                               __________

       Printed for the use of the Committee on Veterans' Affairs
       
       
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                     COMMITTEE ON VETERANS' AFFAIRS

                     JEFF MILLER, Florida, Chairman

DOUG LAMBORN, Colorado               CORRINE BROWN, Florida, Ranking 
GUS M. BILIRAKIS, Florida, Vice-         Minority Member
    Chairman                         MARK TAKANO, California
DAVID P. ROE, Tennessee              JULIA BROWNLEY, California
DAN BENISHEK, Michigan               DINA TITUS, Nevada
TIM HUELSKAMP, Kansas                RAUL RUIZ, California
MIKE COFFMAN, Colorado               ANN M. KUSTER, New Hampshire
BRAD R. WENSTRUP, Ohio               BETO O'ROURKE, Texas
JACKIE WALORSKI, Indiana             KATHLEEN RICE, New York
RALPH ABRAHAM, Louisiana             TIMOTHY J. WALZ, Minnesota
LEE ZELDIN, New York                 JERRY McNERNEY, California
RYAN COSTELLO, Pennsylvania
AMATA COLEMAN RADEWAGEN, American 
    Samoa
MIKE BOST, Illinois
                       Jon Towers, Staff Director
                Don Phillips, Democratic Staff Director

                         SUBCOMMITTEE ON HEALTH

                    DAN BENISHEK, Michigan, Chairman

GUS M. BILIRAKIS, Florida            JULIA BROWNLEY, California, 
DAVID P. ROE, Tennessee                  Ranking Member
TIM HUELSKAMP, Kansas                MARK TAKANO, California
MIKE COFFMAN, Colorado               RAUL RUIZ, California
BRAD R. WENSTRUP, Ohio               ANN M. KUSTER, New Hampshire
RALPH ABRAHAM, Louisiana             BETO O'ROURKE, Texas

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

                              ----------                              

                      Thursday, February 11, 2016

                                                                   Page

Choice Consolidation: Improving VA Community Care Billing and 
  Reimbursement..................................................     1

                           OPENING STATEMENTS

Honorable Dan Benishek, Chairman.................................     1
Honorable Mark Takano, Member....................................     2

                               WITNESSES

Randall B. Williamson, Director, Health Care, Government 
  Accountability Office..........................................     4
    Prepared Statement...........................................    36
Gary K. Abe, Deputy Assistant Inspector General for Audits and 
  Evaluations, Office of the Inspector General, U.S. Department 
  of Veterans Affairs............................................     5
    Prepared Statement...........................................    50
        Accompanied by:

    Larry Reinkemeyer, Director, Kansas City Audit Office, Office 
        of the Inspector General, U.S. Department of Veterans 
        Affairs
Baligh Yehia, M.D., Assistant Deputy Under Secretary for Health 
  for Community Care, Veterans Health Administration, U.S. 
  Department of Veterans Affairs.................................     7
    Prepared Statement...........................................    55
        Accompanied by:

    Gene Migliaccio, Dr.P.H., Deputy Chief Business Officer for 
        Purchased Care, Veterans Health Administration, U.S. 
        Department of Veterans Affairs
Roscoe G. Butler, Deputy Director, National Veterans Affairs and 
  Rehabilitation Division, The American Legion...................    27
    Prepared Statement...........................................    58
Carlos Fuentes, Senior Legislative Associate, Veterans of Foreign 
  Wars on the United States......................................    29
    Prepared Statement...........................................    61

                        STATEMENT FOR THE RECORD

American Medical Association.....................................    64

 
     CHOICE CONSOLIDATION: IMPROVING VA COMMUNITY CARE BILLING AND 
                             REIMBURSEMENT

                              ----------                              


                      Thursday, February 11, 2016

             U.S. House of Representatives,
                    Committee on Veterans' Affairs,
                                    Subcommittee on Health,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to notice, at 10:01 a.m., in 
Room 334, Cannon House Office Building, Hon. Dan Benishek 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Benishek, Roe, Huelskamp, Coffman, 
Wenstrup, Takano, Ruiz, and O'Rourke.
    Also Present: Representatives Lamborn, and Posey.

          OPENING STATEMENT OF DAN BENISHEK, CHAIRMAN

    Mr. Benishek. Before we begin, I would like to ask 
unanimous consent for Congressman Doug Lamborn from Colorado 
and Congressman Bill Posey from Florida to sit on the dais and 
participate in today's hearing. So without objection, so 
ordered.
    Good morning. Thank you all for joining us for today's 
Subcommittee hearing on Choice Consolidation: Improving the VA 
Community Care Billing and Reimbursement.
    This morning's hearing is the second in the series of 
hearings the Subcommittee is holding over the next several 
weeks on several aspects of VA's plan to consolidate community 
care programs under a new and improved Choice Program.
    Last week, we met to discuss eligibility for community care 
under the consolidation plan. This morning, we are going to 
discuss billing and reimbursement being considered under the 
plan.
    The importance of VA's effort to consolidate community care 
programs and the impact that consolidation will have on the 
future of VA's health care system cannot be overstated. The VA 
simply cannot offer veteran patients across the country the 
health care they need without using community providers to 
supplement the care provided in the VA medical facilities. That 
is a fact that is becoming increasingly obvious and 
increasingly expensive.
    In fiscal year 2012, the VA spent $4.5 billion on care in 
the community. Four years later in fiscal year 2015, care in 
the community costs more than doubled to just over $10 billion. 
That is almost an unprecedented increase over a relatively 
short time period and there is no sign that upward trend will 
reverse itself any time soon with the budget submission that 
was released Tuesday estimating a need for $12 billion for 
community care in fiscal year 2017.
    In order for that money to be well spent and for our 
veterans to be well served by it, the VA must be a willing, 
fair, and consistent partner with community providers around 
the country. Unfortunately, the overly bureaucratic, highly 
manual claims process that VA currently employs to reimburse 
community providers does meet that standard.
    Despite aggressive oversight from this Subcommittee and by 
individual Members of Congress, community providers both large 
and small continue to report millions of dollars in past due 
unpaid claims, and my office continues to hear regularly from 
providers who would like to serve veterans, but they are 
hesitant to continue accepting referrals from the VA because it 
is so difficult for them to get paid for their services.
    My office also hears a lot of confusion and frustration 
from community providers about what they are supposed to be 
getting paid in the first place. Reimbursement rates vary 
widely across the VA's multiple care in the community programs.
    In some cases, the VA reimbursement rates are lower than 
Medicare which makes it difficult for community providers to 
accept veteran patients and keep their doors open. In other 
cases, VA reimbursement rates are higher than Medicare. This is 
an inefficient way to run a large hospital, much less the 
Nation's largest health care system.
    So moving forward, the VA must automate and simplify the 
department's community care claims processing system so that 
community providers are reimbursed accurately and in a timely, 
transparent manner.
    VA must also honor the important role that community 
providers play in treating veteran patients by developing 
standardized reimbursement rates that are fair, competitive, 
and consistently applied. Multiple bureaucratic steps that only 
time rather than value must be eliminated. The stakes are 
simply too high for the VA to do anything less.
    Thank you again for being here and I will now yield to Mr. 
Takano for his opening statement. Thank you.

                OPENING STATEMENT OF MARK TAKANO

    Mr. Takano. Thank you, Mr. Chairman, for calling this 
hearing on VA's future plan to improve billing and 
reimbursement practices so that providers in the community can 
expect prompt, accurate payments for services rendered to 
veterans in a community setting.
    We are all aware of the challenges that face the department 
in this area. Numerous VA Inspector Generals' Reports, 
Government Accountability Office reports, and the recently 
released independent assessment all outline several problems 
that VA should and needs to address in order to ensure that 
proper billing and reimbursement practices are put in place and 
adhered to.
    The department is first and foremost a health care 
provider, not an insurer of care. Congress saw the need to 
address the wait time crisis that surfaced in 2014. The 
Veterans Choice Program was authorized as a temporary program 
to address that issue. Congress has now required VA to 
consolidate their numerous purchased care programs under one 
umbrella in order to become more efficient and less confusing 
for veterans, employees, and providers.
    The new Veterans Choice Program offered by VA in the care 
consolidation plan is designed to do just that. Now that the 
wait time crisis has subsided, it is important to ensure the VA 
continues its mission of providing health care to our Nation's 
veterans.
    It is important we remember that VA was built to provide 
unique medical services to veterans who suffer from combat-
related injuries and illnesses. We know veterans feel that they 
get the best care at the VA. It is our job to make sure that 
the VA has the resources it needs to provide medical care 
services veterans need.
    We know the current claims infrastructure and claims 
processes are complex and inefficient due to highly manual 
procedures. VA lacks a centralized data repository to support 
auto adjudication.
    According to VA, there are more than 70 centers processing 
claims across 30 different claims systems. VA's system is a 
labor intensive, paper-based process that results in late and 
sometimes incorrect payments.
    The Government Accountability Office reports that VA's 
expenditures for its care in the community programs, veterans 
for whom VA has purchased care, and the number of claims 
processed by the Veterans Health Administration have grown 
considerably in recent years.
    In fiscal year 2015, VA obligated about $10.1 billion for 
its care in the community programs for about 1.5 million 
veterans. This is compared to fiscal year 2012 when VA spent 
about $4.5 billion on care in the community programs for about 
983,000 veterans, about 50 percent less.
    The most startling statistic is that the number of 
processed claims for VA care in the community programs 
increased by 81 percent. Given this increase and the state of 
VA's information technology infrastructure, we potentially have 
a long, expensive road ahead of us. It will be no small task to 
fix this problem, and we must work together to get this right.
    Mr. Chairman, I am interested to hear from the department 
in more detail on how they plan to implement improvements, how 
much it will cost, and what they will need from us 
legislatively or otherwise in order for the plan to succeed.
    I agree with The American Legion that a strong, robust 
veterans' health care system that is designed to treat the 
unique needs of those men and women who have served our country 
is what we need. Getting there in a timely manner remains to be 
seen.
    I look forward to hearing from all the witnesses today, and 
I look forward in the coming days to bring the best quality 
care to all of our veterans. Thank you and I yield back my 
time.
    Mr. Benishek. Thank you.
    Joining us today on our first panel is Randall Williamson, 
the Director of Healthcare for the Government Accountability 
Office; Gary Abe, the Deputy Assistant Inspector General for 
Audits and Evaluations for the VA Inspector General's Office, 
accompanied by Larry Reinkemeyer, the Director of the Kansas 
City Audit Office; and Dr. Baligh Yehia, the VA Assistant 
Deputy Under Secretary for Health for Community Care, 
accompanied by Dr. Gene Migliaccio, the VA Deputy Chief 
Business Officer for Purchased Care.
    Thank you all for being here today. Mr. Williamson, we will 
start with you.

               STATEMENT OF RANDALL B. WILLIAMSON

    Mr. Williamson. Good morning, Chairman Benishek and Members 
of the Subcommittee. I am pleased to be here today to discuss 
our preliminary findings on VHA's efforts to improve the 
timeliness of its payments to non-VA providers when veterans 
access care in the community.
    The number of processed claims from community providers has 
almost doubled since 2012 and this sharp increase has 
overwhelmed the staff at some VHA claims processing centers in 
terms of their ability to process claims in a timely way.
    In fiscal year 2015, VHA paid less than 70 percent of its 
claims from community providers within 30 days. In contrast, 
TRICARE and Medicare paid about 99 percent of their claims 
within 30 days.
    To make matters worse, VHA data overstates their timeliness 
because paper claims which represent about 60 percent of the 
claims they get are not always promptly scanned into VHA's 
claims processing system. Until this is done, the 30-day clock 
VHA uses to measure processing time doesn't start to tick.
    At one VHA claims processing center we visited, for 
example, we observed about a dozen bins of paper claims and 
medical documentation awaiting scanning, some of which were 
received a month before our visit.
    Community providers who participated in our study were 
frustrated with VHA for requiring providers to submit claims 
and medical documentation multiple times, paying medical claims 
late, and being unresponsive to repeated attempts by providers 
to contact VHA and resolve payment issues.
    If these timeliness and poor customer service issues 
persist, VHA will risk losing the cooperation and participation 
of community providers as it attempts to transition to a future 
care delivery system that would heavily rely on them to deliver 
care to veterans.
    To its credit, VHA has recently taken steps to improve 
claims processing timeliness such as hiring more claims 
processing staff to replace those lost through attrition and 
establishing productivity standards for them. However, VHA 
acknowledges that its current claims processing system is not 
sustainable and longer-term solutions are needed including 
revamping archaic information technology systems.
    At the behest of the Congress, VHA is in the process of 
consolidating its various purchased care programs into a single 
program called the new Veterans Choice Program. To do so, VA 
has developed a broad consolidation plan which it presented to 
the Congress late last year to develop a robust network of 
community providers and streamline clinical and administrative 
processes.
    According to VA, implementing this plan will allow it to 
put into a place a much improved claims processing system. As 
well-intentioned as VA might be, bringing this community care 
consolidation plan to fruition will require a herculean effort 
on many fronts.
    The sweeping changes VA is planning will likely be costly, 
and will require major organizational and structural changes 
and modernization of its IT systems. Achieving the objectives 
laid out in the plan will require strong leadership, careful 
and thoughtful planning, effective project management, and 
transparency and involvement with multiple stakeholders 
including the Congress.
    The absence of these elements can have severe consequences. 
Our prior work has shown that some of VA's past attempts to 
achieve goals of similar magnitude have been derailed by poor 
planning, project management weaknesses, and insufficient 
oversight.
    VA's past failures to modernize its systems for outpatient 
appointment scheduling, financial management, and inventory and 
asset management are stark reminders of what can happen if mega 
projects of this scale are mismanaged. These projects were 
canceled after investments of hundreds of millions of dollars 
leaving VA with little to show for its efforts.
    To date, we have not seen a detailed blueprint and specific 
strategies for how VHA plans to successfully implement the 
major components of its consolidation plan, especially as it 
relates to the claims processing system.
    Such a blueprint should include an analysis of available 
options, estimates costs, staff resources and new systems 
needed, specific timelines and a critical path for achieving 
its objectives and key milestones, performance measures to 
gauge success and hold managers accountable, and a process to 
ensure transparency among major stakeholders.
    That concludes my opening remarks.

    [The prepared statement of Randall B. Williamson appears in 
the Appendix]

    Mr. Benishek. Thank you very much.
    Mr. Abe, could you please go ahead, five minutes.

                    STATEMENT OF GARY K. ABE

    Mr. Abe. Mr. Chairman and Members of the Subcommittee, 
thank you for the opportunity to discuss the Office of 
Inspector General's work concerning VA's purchased care 
programs.
    I am accompanied by Mr. Larry Reinkemeyer, the Director of 
our Kansas City Audit Division.
    VA's purchased care programs are critical to VA in carrying 
out its mission of providing medical care to our veterans. Our 
audits and other reviews have reported the challenges VA faces 
in authorizing, scheduling, and ensuring contractors provide 
medical records in support of services provided.
    It has been challenging to conduct effective oversight of 
VA's purchased care programs because VA continues to make 
significant changes and additions to the programs. For example, 
we published four reports on PC3 in fiscal year 2015 that 
reviewed the effectiveness of PC3 in providing timely access to 
care.
    We had planned to review the timeliness and accuracy of PC3 
payments this fiscal year after providing VA sufficient time to 
process a significant number of claims to make reliable 
findings and conclusions. However, PC3 was soon followed by the 
Veterans Choice Program.
    Nevertheless, we have started a quarterly review of paid 
Choice claims in order to meet the Choice Act requirement to 
submit a report on the timeliness and accuracy of payment of 
claims after 75 percent of the almost $10 billion of program 
funds are spent or when the program ends in August 2017.
    This approach enables us to view the expenditure activity 
over time and helps assess whether VA's payment process is 
improving or worsening.
    In September 2013, VA awarded Health Net and TriWest PC3 
contracts. In October 2014, VA amended the PC3 contracts to 
include administration of the Veterans Choice Program. This is 
an important matter when evaluating VA's plan to align all non-
VA care programs under the new Veterans Choice Program.
    Since Health Net and TriWest have built their Choice 
provider network upon the backbone of the PC3 network, there 
are lessons that can be learned from the series of reports we 
issued in fiscal year 2015 addressing aspects of VA's 
implementation efforts.
    All four PC3 reports identify issues with inadequate 
processes for submitting timely authorizations, scheduling 
appointments, returning the medical document for continuity of 
care, and the provider network that lacks sufficient numbers 
and mixes of health care providers in the geographic locations 
where veterans needed them.
    Being a retired Army officer, I decided to seek care under 
the Veterans Choice Program. This was my first experience with 
VA health care. In July 2015, I visited my VA primary care 
provider and he ordered medical services that were not 
available timely from VA. For the first month, I was told I was 
not eligible for the Choice Program. Then in late August, I was 
told I was authorized for care and I would be notified of my 
appointment in three to five days. Months passed without a 
word.
    On December 14th, I received a letter from Health Net 
saying that they had scheduled an appointment with a local 
provider. However, the appointment was for December 12th, two 
days earlier. This is what VA considers blind scheduling. So I 
was a no show on Health Net's records.
    I called the Veterans Choice call center and I asked if I 
could call the provider to avoid another blind scheduled 
appointment. They said yes. I called the local provider and 
scheduled an appointment on December 29th, about 165 days or 
five and a half months after my visit with my primary care 
provider in July.
    My experience is similar to the issues we identified in our 
PC3 and recent Veterans Choice reports. The obstacles I 
experienced are also similar to those that many veterans are 
calling in to our hotline and most likely your local 
congressional offices.
    The complaints fall into the following general categories: 
program eligibility enrollment; the authorization process; 
appointments and scheduling; and veteran provider payments.
    In conclusion, our recent work has shown that VA faces 
challenges in administrating its purchased care programs. While 
purchasing health care services may afford VA flexibility in 
terms of expanded access to care and services that are not 
readily available at VA medical facilities, it also poses a 
significant risk to VA, and more importantly, a great deal of 
frustration and risk to our veterans' health when adequate 
controls are not in place.
    Without adequate controls, VA's consolidation plan is at an 
increased risk of not achieving its goal of delivering timely 
and efficient health care to our veterans.
    Mr. Chairman, this concludes my statement. We would be 
happy to answer any questions you or the Members of the 
Subcommittee may have.

    [The prepared statement of Gary K. Abe appears in the 
Appendix]

    Mr. Benishek. Thank you very much, Mr. Abe. I appreciate 
you including your personal experience.
    Dr. Yehia, you are recognized.

                   STATEMENT OF BALIGH YEHIA

    Dr. Yehia. Thank you.
    Good morning Chairman Benishek and Members of the 
Subcommittee. Thank you for the opportunity to testify today 
regarding the department's plan to consolidate community care 
programs, specifically on our efforts to improve billing and 
reimbursement.
    I am accompanied today by Gene Migliaccio who is our Deputy 
Chief Business Officer for Purchased Care.
    And I would like to take a moment, and look forward to the 
discussions from some of the other panelists and their 
experiences, and be able to talk a little bit about some of the 
improvements we are doing to address those.
    To start, community providers are critical to VA's ability 
to deliver timely and quality care to veterans. As a clinician, 
I personally understand the importance of these partnerships 
and often jointly care for veterans with community providers.
    To strengthen and grow these important relationships, VA 
recognizes a need to pay claims accurately and timely. For many 
providers, late payments have a major impact on the practice, 
and may cause some not to care for our veterans. We know this 
is unacceptable, and it is particularly problematic in rural 
areas where the number of providers is limited. Late payments 
may also negatively impact our veterans by creating unnecessary 
financial hardships. That is why in our plan to consolidate 
community care programs, we are keenly focused on improving how 
we interact with community providers including payment.
    I want to provide the Subcommittee with an update on our 
progress since the June 3rd hearing related to claims 
processing and prompt payment.
    In the last eight months, we have focused our efforts on 
improving people, process, and technology. So first, related to 
people, we filled 220 vacancies in 57 days and that is 33 days 
faster than our 90-day goal. We also provided and implemented 
productivity and quality standards.
    Second related to process, we have implemented real-time 
monitoring of claims to ensure that the oldest claims are paid 
first, and we are actively removing any unnecessary steps that 
may be barriers to paying timely claims.
    Third related to technology, we continue to try to automate 
steps where we can and, for example, we removed the duplicate 
claims process and now that is automated.
    These efforts have produced results. As of today, 81 
percent of authorized claims, meaning our current, meaning they 
are within 30 days of receipt. This compares to 73 percent in 
June of last year.
    Some sites have improved more than others. So, for example, 
in Louisiana, claims processing has improved from 69 percent to 
96 percent in the last six months. This improvement is even 
more noteworthy given the fact that we continue to experience 
tremendous growth in the claims volume.
    Last fiscal year, we processed roughly 17 million claims 
which represents a 21 increase from the prior year. Even though 
we continue to improve in this area, there is still much work 
to be done to meet industry expectations.
    We also recognize that our Choice contractors have not been 
paid timely and understand the frustration this has caused. We 
are actively working to address these issues with an eye 
towards removing any barriers in the contract that may slow 
payment.
    I believe that open communication is critical for these 
partnerships to work, and have made it a point to meet weekly 
with the executives from Health Net and TriWest to talk about 
issues that we are discussing today. Getting these partnerships 
right is important for VA, and impacts our relationship with 
community providers and the veterans that we serve.
    We are taking steps to improve community care today, but 
also looking towards the future incorporating lessons learned 
from the current program and industry best practice. We aim to 
move towards a claims solution that is more fully automated. 
That is why in the recently released draft performance work 
statement, we include a specific section focused on claims 
processing and payment.
    Lastly, we take the recommendations from GAO and OIG 
seriously. We are closely monitoring their reports and working 
to resolve issues that are identified. However, we do need help 
from Congress to formalize VA's prompt pay standard which will 
help us align with current industry practice, and then also 
help from Congress to change the recording of obligations to 
the time of payment so that we can improve our accuracy in 
terms of funding.
    These two proposals will address many of the deficiencies 
identified in both GAO and OIG reports. Getting provider 
payment is critically important. We look forward to continuing 
to work with veterans, veteran service organizations, yourself, 
and Congress as well as we move forward.
    I appreciate the opportunity to appear before you today, 
and am prepared to answer any questions you or other Members 
may have. Thank you.

    [The prepared statement of Baligh Yehia appears in the 
Appendix]

    Mr. Benishek. Thank you, Dr. Yehia.
    I now yield myself five minutes for my questions. Dr. 
Yehia, I guess I didn't hear anything from you about some of 
the things that Mr. Williamson brought up to tell you the 
truth, and that is that we have a plan to consolidate all these 
different forms of community provider relationships. And we 
haven't heard anything about how is that going to work. How are 
you thinking about it? What are the options?
    To me, it is kind of scary because right now there are 
seven different ways to do it which is complicated 
bureaucratically, but at least physicians then have kind of a 
choice as to what they do and where they fit in. And when you 
narrow it down to one system, that is pretty important to get 
that one system right then. You understand what I am getting at 
here?
    Dr. Yehia. Yes.
    Mr. Benishek. And developing that system is going to 
obviously take time, but I would like to be involved in seeing 
what you are doing so that we can provide input.
    As you know, I took care of patients at the VA in multiple 
different ways throughout my career. Sometimes it was very 
frustrating. Then we finally settled on a system which was 
equitable, I think, for the VA and for my practice.
    Dr. Yehia. Yeah.
    Mr. Benishek. One of the things that we wanted to talk 
about, too, is how are we going to set fair and competitive 
reimbursement rates for physicians. That is one of the things 
that comes to my mind as a provider.
    Can you talk about that a little bit?
    Dr. Yehia. Yes. You know, when I talk to providers just as 
you talk to providers, without a doubt they want to care for 
veterans. And when I ask them kind of what stands in their way, 
one of the issues relates to payment and that deals with what 
you just described. One is reimbursement rates.
    Right now under all these different programs, we pay 
differently. So under the traditional PC3 Program, it is less 
than Medicare. Under the Choice Program, it is up to Medicare. 
In some of our emergency room authorities, we pay 70 percent of 
Medicare.
    It is very confusing for community providers to know what 
they are going to get billed for, what they are going to get 
paid for. And that actually causes some of the problems that we 
are experiencing today with prompt payment. A lot of folks are 
expecting the VA to pay a specific amount, but we don't because 
they don't understand all the rules that are in place.
    So what we hope to do is move towards a standardized fee 
schedule. That fee schedule will as best possible be based on 
Medicare which is kind of the common practice in the community. 
We know that some specialties we might have to pay a little bit 
more than Medicare and in some locales, specifically rural 
areas, we might have to pay a little bit more.
    But for the most part, we want to try to move the system 
towards Medicare rates as best as possible. So that is kind of 
some of the efforts that we are hoping to do.
    The other thing that is important to recognize is that not 
everything has a Medicare rate. So, for example, dental care, 
there is not actually a Medicare rate. And across our 
facilities in the VA, we pay different rates when there isn't a 
Medicare rate.
    So some of the work that we are trying to do is for those 
services that there isn't a fee schedule by Medicare, how can 
we come up with a regional fee schedule or a VA fee schedule so 
that folks know exactly what they will get paid for the 
services they provide. That is a little bit of some of the work 
that we are starting.
    Mr. Benishek. Where are you in this consolidation 
situation? Do you have a blueprint of what you are going to do 
like Mr. Williamson talked about? When can you show that to us?
    Dr. Yehia. So let me explain a little bit of where we are. 
So in the consolidation report that we presented, that provides 
a little bit of the overview, the blueprint, the direction. 
There are a number of things that we can do today. So what we 
are doing is, we are categorizing, one of the things within 
VA's control that we can try to impact today. A lot of those 
have to do with, like process improvements, removing 
unnecessary steps.
    But as we kind of talked about as well last hearing, and in 
the plan, there are a number of things that we need to partner 
on to be able to do together, so being able to get to one 
eligibility criteria as we discussed before, we can't do that. 
We need help from Congress.
    So there are a couple of things that are squarely in our 
field that we are trying to move forward, and then a couple 
things that we need partnership with you to move forward.
    Mr. Benishek. Can you tell me anything specifically that 
you are doing as far as this paperwork requirement from 
community providers? Apparently, there is different criteria as 
far as what the provider has to do depending on who they are, 
where they are, what medical center. It seems to be very 
variable. Can you just talk about that for a minute?
    Dr. Yehia. Yes, I would love to discuss that because the 
other thing that I was mentioning is when I talk to community 
providers, one is payment. The other one is paperwork. And it 
comes in two forms. Currently our contractors, as many of you 
know, there is a requirement in there that we have to get the 
medical record before we can issue payment. That is not an 
industry standard. That is not how other health insurance 
companies work.
    As Dr. Shulkin mentioned yesterday, we are in the final 
stages of being able to remove that barrier from the contract. 
I think that is going to go a long way to ensuring that we 
provide more timely payment.
    The other thing that we are doing is, as you know, we don't 
need every single piece of the record. I think back of when I 
was an intern taking care of patients, and I would get volumes 
from an outside hospital that I would have to comb through to 
figure out what piece of information do I need to care for this 
patient.
    So what we are doing as well is defining exactly what are 
the important pieces that we need from providers. So that is 
the treatment plan, what new meds they started, what procedures 
and labs they did. We don't need every single nursing note or 
every single time a medication was administered. And I think 
that is going to reduce the paperwork burden.
    So those are two things that we are working on today to 
make the lives of community providers a little bit better.
    Mr. Benishek. All right. I am out of time.
    Mr. Takano, you are recognized for five minutes.
    Mr. Takano. Thank you very much.
    Mr. Abe, you mentioned your comments about the risks posed 
by inadequate controls. Can you elaborate a little bit more 
what you meant, that part of your comments? What controls were 
you referring to?
    Mr. Abe. Well, there are a number of them. I think one of 
the things that VA has to do is effectively identify the 
veterans who are eligible for Choice. The other thing is that 
they also need to stabilize all these programs, because as has 
been discussed, there are so many non-VA care programs, 
different eligibility requirements, and different payment 
methodologies.
    And they have continued over the years to produce a pilot, 
another pilot, and another pilot. And so it is very, very 
confusing out in the field to know how to pay claims and which 
veterans are eligible. I also think that if VA uses 
contractors, they need to hold these contractors accountable to 
the contract terms.
    I think the biggest thing from the veterans' standpoint is 
that VA needs to minimize the veterans' requirements, that 
veterans have to jump through all these hoops to get this care. 
I think those are probably the major lessons and major 
obstacles that we currently face.
    Mr. Takano. Okay. I don't know who can answer this 
question, but where do third-party administrators fit into the 
new Veterans Choice Program? Are you going to create your own 
high-performing network in-house or how will the VA communicate 
with veterans using care in the community for their health 
care?
    Mr. Migliaccio. Sir, I will take that question. The work we 
have been doing over the past since we were here in June of 
last year talking about prompt pay and the hard work that we 
put together in terms of the plan that we delivered to Congress 
at the end of October, we have also stood up as a part of the 
plan, something we call an integrated project team to focus on 
the future state.
    Looking at our patient-centered community care contract 
that we call PC3, we are looking for a follow-on contract. So 
what we are looking at in that contract is to look at high-
performing networks, a claims solution, and other areas that we 
can support purchasing care in the community for our veterans.
    And I just want to give you a couple of examples, and we 
have been working at really a brisk, fast pace. We stood up 
this group a number of months back. In December, we had met 
with industry for an industry day. We presented our preliminary 
request for information, met with over 80 individuals 
representing 30 major health care entities in the country.
    From our meeting with industry, we developed, as Dr. Yehia 
had mentioned, a draft performance work statement that was 
released just a few weeks ago that will form and shape a draft 
request for proposal. We will come back to industry very very 
soon after, and then put a formalized request for proposal out 
in the next two months.
    Mr. Takano. So you are looking for a third-party 
administrator?
    Mr. Migliaccio. That is contained in the draft performance 
work statement, yes, sir.
    Mr. Takano. All right. I want to get to another question. I 
know you had a second example, but I want to get this question 
out there. The Administration is proposing a creation, the 
creation of a fourth medical care account, medical community 
care. This account estimated at $7.3 billion will be funded out 
of medical services for fiscal year 2017, but is included as a 
separate request for fiscal year 2018 at $9.4 billion.
    What will the creation of an additional health care 
appropriation account mean in terms of the budget flexibility 
the secretary has continued to call for, and how will this 
additional account better enable VA to meet demand and provide 
quality and timely care to veterans?
    Dr. Yehia. I will take that one. I think that account was 
required to be created as part of the Choice law that was 
passed. So I think it was something that Congress had asked us 
to do. I do think there is value, though, to make sure that 
there is a very specific pot of money that is designated for 
community care.
    I think your point about flexibility is important, though. 
We should make sure that there is adequate flexibility. So if 
we need to use a little bit more community care dollars in one 
year, we can move from the medical services account to the 
community care account.
    Mr. Takano. So, Dr. Migliaccio, I mean, so you are not 
going to build this billing system in-house? It is going to be 
a third-party administrator that you are looking to work with?
    Dr. Yehia. What we are doing is in our draft performance 
work statement, our intention is to put out requirements, and 
so we say this is what we want. We want to be able to have a 
system that pays on time, that is mostly automated, and we put 
that out in our draft performance work statement.
    What we are doing now is receiving feedback from industry 
to say can they meet this requirement. So we are in that first 
phase to figure out is there partners in there, is there 
partners in the private sector that can do this. I think there 
probably are. We have just got to wait on their responses to 
see if they can actually meet those requirements.
    Mr. Takano. All right. Thank you.
    Mr. Benishek. Dr. Roe.
    Mr. Roe. Thank you, Mr. Chairman.
    First of all, I applaud VA for consolidating these six 
programs that are different. That makes it very, very hard to 
administer. There is no question. We have got different rules.
    Let me sort of lay out where I think falling short has hurt 
the VA like Mr. Abe in trying to get care. I have said this a 
hundred times if I have said it once in this hearing. I have 
made hundreds or thousands of appointments for people. It ain't 
that hard to do. And Mr. Abe could pick the phone up and call 
his primary care doctor and make an appointment in five 
minutes. I can do that right now while we are waiting. It is 
not hard.
    We made it incredibly complicated and he had to wait almost 
six months to get an appointment with a doctor that he needed 
to see that his primary care doctor decided.
    The other thing that the VA has done that has really hurt--
in a group like my size, if we don't get paid promptly, we have 
enough cash reserves to survive that. If you are in a small one 
or two or three person practice, you cannot.
    And when the payments have been cut with Medicare down to 
really very low levels, when you have an ACA out there that has 
created an out-of-pocket expense that most people can't afford, 
three or four thousand dollars out of pocket, they can't pay 
the doctor.
    And then the VA decides not to pay the doctor. You are out 
of business. And that is why they don't want to see, and even 
the reimbursement levels. Most of us, many of us are veterans, 
some are not, you almost never talk to a provider who doesn't 
want to take care of a veteran. I mean, they just want to do it 
for a lot of noble reasons.
    So my question, I want to start out is why didn't the VA 
just use a system like the Medicare is doing? They paid us 
promptly, quickly. I filed a lot of claims last year during my 
wife's illness. Blue Cross and Blue Shield, they figured it 
out. They paid the hospital and the doctors very very promptly. 
What is the big deal? Why can't you just do that?
    Dr. Yehia. I have been nodding my head when you were 
talking because I agree with what you are saying. We actually, 
our team took a trip to one of the Medicare processing sites 
that processes claims to look at industry best practice because 
I asked the same question, why can't we do that.
    And the more that I thought about it, there are a couple 
barriers that stand in our way. One is the technology piece. 
But as we had talked about, being able to partner with folks in 
the community that has access to those technology pieces like 
some of the Medicare subcontractors would address that.
    The other thing that is very convoluted is the fact that we 
have all these multiple programs with different eligibility. 
For Medicare, it is pretty crystal clear if you are eligible or 
not eligible. For us, and let me use the example of like ER 
care. We pay differently depending if it is service-connected 
or not service-connected. So it requires someone to look at the 
medical record to see did they go to the ER and was it for a 
service-connected related injury. If it is, we pay a different 
way. If it isn't, we do something different.
    So I realized as I was going through this, is that we have 
to get the eligibility piece right which is what we talked 
about last week because if we continue to have a complex 
eligibility system, even if we partner with the best performers 
in the private sector, they are still going to have problems 
paying on time because it is so complex.
    So I think it is kind of a two-prong thing where we have 
got to find those partners or the technology that works, but we 
also have to do our part in partnership to simplify eligibility 
so it is not too complicated.
    Mr. Roe. Let me ask this question. These claims are paid 
out of what, 90 something different sites around the country?
    Dr. Yehia. Yes, sir.
    Mr. Roe. And would you foresee a situation where one site 
would not pay one hospital to catch up the payments in another 
facility?
    Dr. Yehia. Say that--
    Mr. Roe. In other words, here is one medical center over 
here and here is another medical center and someone has 
directed the payment. This one is behind three or four or five 
months.
    Dr. Yehia. Yes, yes, yes.
    Mr. Roe. This one is caught up.
    Dr. Yehia. Yes.
    Mr. Roe. Would you just direct all the assets over here?
    Dr. Yehia. Yes. So that is exactly, yes. And so we are 
working on that right now. This is one of those things that I 
was describing about, things that we can do that are within 
VA's control. Those 90 different sites, and part of the reason 
is claims processing used to be at local medical centers, and 
now a lot of it is under the shop of community care. So that is 
why there are so many different locations.
    Because they are in different locations, there is different 
IT security clearances that have to occur. They can't tap into 
one system. They actually have to get privileges to access the 
other system. I don't know why it is that way, but that is what 
it is.
    So what we are working now is with our IT partnership and 
LaVerne Council who is the new Assistant Secretary for IT. Her 
team is really helping us to give security access to the sites 
that are performing really well, so they can process the claims 
for the sites that are performing not so well. We hope to--
    Mr. Roe. My time is about up. Let me--
    Dr. Yehia. Yeah.
    Mr. Roe [continued]. --just tell you the real-world 
implications of that. Okay? I have a friend of mine who retired 
from his dental practice because there is always not enough 
dentists at a VA. He sees just VA patients. That very thing has 
happened where he works, so he doesn't get paid.
    So he is going to have to close his dental practice because 
of what you guys are doing to pay claims somewhere else. And 
that means that veterans in a facility close to where I live 
are not going to get dental care.
    I yield back my time.
    Mr. Benishek. Mr. O'Rourke, you are up.
    Mr. O'Rourke. Thank you, Mr. Chairman.
    Dr. Yehia, thank you for helping us better understand the 
plan and the proposal.
    And I want to begin by saying, when Dr. Shulkin, you, and 
the team first announced this in October, it was very 
encouraging and I was very excited by the vision that you all 
outlined for the VA. It was comprehensive. It made sense of 
leveraging community capacity. And what I read into it was 
having the VA better focus on what I think its core priorities 
should be.
    But given the skepticism well earned by the VA that I hear 
from Mr. Williamson and Mr. Abe, and in Mr. Abe's case from his 
personal experience included, given the fact that you have ten 
and a half months left, given the scope of these changes, and 
then again to bring up what I think is the most critical urgent 
priority, reducing veterans' suicide, and the crisis that we 
have there, that really will take concentrated focus for us to 
make a meaningful impact, what of this lift could you offload 
to someone else either in the public or private sector?
    So to follow-up on Dr. Roe's question, if CMS has a 99 
percent under 30-day pay rate, I know there are obstacles, and 
I know these are different animals, but is there a way to bust 
through that and contract this with CMS who seems to have 
figured this out, and has a lot of experience doing it right, 
or at least better than the VA? Is there some other part of the 
billing reimbursement validation process that could be 
outsourced to a private provider who does this really, really 
well and we could set these benchmarks and standards?
    So that will be my first question. The second one, a 
shorter one, can we get a copy of the draft performance work 
statement that you keep referring to? So my two questions for 
you.
    Dr. Yehia. Sure. So yes to the second one. And I think we 
sent it to the Committee staff last week.
    Mr. O'Rourke. Great.
    Dr. Yehia. It is publicly available. And not only can you 
get a copy, but if you want me or others to come and walk you 
through it, we are happy to do that.
    And to your first point, that is exactly what is in the 
performance work statement. So there is a section in the 
performance work statement which is the first part of like an 
acquisition cycle. So as Gene was describing, it is kind of the 
first step and later on is the RFP and etcetera.
    So that is exactly what we are looking for. We are looking 
for who are those high-performing claims processing sites that 
potentially could in the future be able to bid on a proposal 
that we hope to do in the coming months to be able to see if 
they can meet those needs. And so we are looking exactly at 
that option.
    Mr. O'Rourke. This is for Mr. Williamson and if time 
permits Mr. Abe. Within the ten and a half months, given the 
fact that we have VA's past performance as a potential 
predictor of future performance, but also given the fact that 
we have people like Dr. Yehia, Dr. Shulkin, Secretary McDonald, 
who really do seem intent on turning this around and have some 
success to show for that, is this realistic? Should we temper 
our expectations? What are your thoughts?
    Mr. Williamson. Well, I have been working with GAO a long 
time, and I have become somewhat skeptical in that time. And I 
have heard a lot of well-intentioned stories from agencies. I 
really doubt whether it can be done in ten and a half months. I 
think the IT challenges alone, are daunting. On past IT 
modernization projects, VA's track record hasn't been real 
good.
    But I really appreciate VA's enthusiasm and their 
progressive attitude toward solving this problem. I really 
think that is good, but realistically, it is going to be a 
tough pull.
    Mr. O'Rourke. Dr. Yehia, how much is the IT part of this 
cost? And then if time allows, I would like Mr. Abe to comment.
    Dr. Yehia. I guess the point of this RFP or, I am sorry, 
the draft performance work statement is to look for private 
sector commercial folks that could do the work. So that is out 
of all the different options, we are not talking about an off-
the-shelf IT product.
    Mr. O'Rourke. How much will we have to invest in addition 
to what we are spending on IT today to make this work?
    Dr. Yehia. I would have to get back to you on that number.
    Mr. O'Rourke. Okay. Mr. Abe, any thoughts? I know I don't 
have a lot of time. Maybe an additional 15 seconds.
    Mr. Abe. Just to summarize, I think I agree with Mr. 
Williamson in the sense that, you know, the IT solution is a 
real big obstacle, especially considering their past 
performance.
    The other issue is that it really does take a lot of 
project management to do this. And, again, I think based on 
past experience, that has probably been inadequate.
    Mr. O'Rourke. Thank you. Appreciate it.
    Thank you, Mr. Chairman.
    Mr. Benishek. Mr. Coffman, you are recognized.
    Mr. Coffman. Thank you, Mr. Chairman.
    Well, whoever would like to answer this. I have heard time 
and time again from ambulance companies that VA misapplies a 
prudent layperson standard for emergency transportation.
    For example, VA has been requiring ambulance providers to 
wait for underlying emergency care claims to be processed, and 
to provide medical documentation from the veterans' emergency 
room visit prior to processing the transportation claims. 
Although VA insists this isn't required, clearly the practice 
continues throughout the country, and veterans are often left 
with the bill.
    What is needed to correct the prudent layperson standard in 
the case of emergency ambulatory care? Who can answer that 
question? Yes.
    Dr. Yehia. I will take it. You are spot on. The emergency 
system and the emergency ambulance part of the care system is 
challenging. That is why we wanted to tackle it, and we did 
tackle it in our consolidation plan.
    The problem with ER care, which is what we spoke about a 
little bit more last week is, there is multiple authorities 
that we have for providing ER care. If it is service-connected, 
we are the primary payer. If it is not service-connected, we 
are the payer of last resort. So they first go to other health 
insurance, then us.
    On top of that being the difference in payers, we have 
different requirements, if you were seen at the VA in the last 
24 months, did you bypass a VA on your way to the ER, and the 
list goes on and on and on.
    I actually don't think it is the application of the prudent 
layperson is the biggest barrier here. That is a common 
practice in most health plans. It is all the other things that 
we have in place based on statute and regulation that we hope 
to consolidate and fix that. And that is what we present here.
    As you know, that comes with a little bit of a cost. We 
wanted to be able to streamline and get to being the primary 
payer and remove all those barriers, but that is exactly what 
we want to do. And we have drafted some legislative proposals 
that get at that. So we are happy to share those with you if 
you are interested.
    Mr. Coffman. Okay. Last Saturday, I spoke at a convention 
for ophthalmologists. There were about 400 in Colorado. Well, 
last Sunday. And there were some VA personnel in there as well, 
docs as well. And everybody seemed to uniformly complain about 
Health Net--
    Dr. Yehia. Yeah.
    Mr. Coffman [continued]. --and just how impossible it was 
to get paid. Is that the case throughout the country, or is 
this something endemic to Colorado?
    Dr. Yehia. No. That is the case unfortunately across the 
country. And that is why we are taking actions to remove those 
barriers. The biggest barrier in that area is the fact that we 
require medical documentation before we pay the bill. I don't 
know why that was in the contract. It was in the contract when 
I first started this role a couple months ago. I looked at it. 
I was like, this doesn't make sense. No one else in the 
industry does this.
    We are in the final stages of finalizing that, and removing 
that barrier. I think Dr. Shulkin mentioned it will be done in 
two to three weeks. That is the timeframe that we are working 
on. As soon as we get that done, we will make sure that 
everyone is aware of that.
    The challenge is, when you get paid by Medicare or by a 
health plan, they don't ask you to give the record. And this 
addresses a lot of the various issues that the IG and the GAO 
found in the report, too, of we are getting all these paper 
claims and all these medical records that we have to scan and 
do that. That is, part of the reason is because we have been 
tying payment to getting medical documentation back, which is 
not a standard of care in the community.
    Mr. Coffman. Who devised this contract? Who is responsible?
    Dr. Yehia. This contract came about in September 2013, I 
think, or in the end of 2013, started implementing in 2014. I 
don't exactly know. I don't know exactly who designed that 
contract. I will say one thing--
    Mr. Coffman. But it was designed for the PC3 Program?
    Dr. Yehia. Exactly.
    Mr. Coffman. And now it is being used on the Choice 
Program?
    Dr. Yehia. Yeah. And that is like a very important point as 
you raise, Congressman. That initial vehicle, that contract was 
not meant to run the Choice Program. It was not designed to run 
a program like Choice where we are sending hundreds of 
thousands of veterans into the community expanding community 
care.
    That vehicle was not meant to do that. That is why we are 
moving out on this new draft performance work statement, 
getting a machine, a car that can actually run the race we want 
it to run. So part of it is, it just wasn't designed to do what 
we want it to do.
    Mr. Coffman. Mr. Chairman, I yield back.
    Mr. Benishek. Thanks.
    Dr. Ruiz.
    Mr. Ruiz. Thank you, Mr. Chairman.
    The damage veterans suffer due to the VA's current billing 
and reimbursement system is irreparable and unacceptable. A 
decorated Vietnam combat veteran from my district attempted to 
pursue care in the community for orthopedic issues and pain 
management. After navigating the complex and burdensome process 
of receiving care within his community, he was diagnosed with 
soft pallet complications that would require surgery before 
other issues could be addressed.
    As he learned to treat and manage his neck and back 
injuries, he also learned that the VA refused to pay his 
medical bills in a timely manner. This delayed payment meant 
that the patient couldn't just concentrate on improving his 
health, he had to spend time worrying about his credit as the 
clinic, and later collections agencies hounded him for payment 
of his medical bills.
    Now this veteran has damaged health and damaged credit due 
to the VA. The VA is meant to serve veterans, but it is clear 
in this instance that they did the exact opposite. They added a 
bad credit to a veteran who is barely making ends meet. This 
was a grave disservice to him, one of our Nation's heroes.
    So we talked about how the complicated system affects 
physicians and physicians' ability to provide that care, but 
how does your team plan, and this is to Dr. Yehia, how do you 
and your team plan to prevent this from happening in the 
future?
    Dr. Yehia. Thank you for that question.
    And, you know, I have been getting kind of similar letters, 
too, and it is not the VA that is sending them to the 
collection agency. There are two things here.
    Mr. Ruiz. It is the providers.
    Dr. Yehia. It is the providers.
    Mr. Ruiz. But the providers--
    Dr. Yehia. Because they are not--
    Mr. Ruiz [continued]. --as Dr. Roe said are hurting.
    Dr. Yehia. Yes.
    Mr. Ruiz. And they are not getting payment, so they start 
to charge the patient.
    Dr. Yehia. Yes.
    Mr. Ruiz. But the providers are under the expectations that 
they are going to get paid, and if they don't get paid or if 
they don't get paid in a timely manner, then they charge the 
patient.
    So how are we going to prevent the providers from getting 
late payments and, two, what are we going to do to correct--
    Dr. Yehia. Yes.
    Mr. Ruiz [continued]. --the bad credit for the veterans who 
already suffered the ill consequences?
    Dr. Yehia. You are describing it right. There are two 
things that we are doing. Number one, we have got to get the 
root cause, and the root cause of what we just described. The 
biggest barrier to prompt payment by our contracting partners 
is this requirement to submit the records. So we are getting to 
that basis. Once, I think we uncouple or unlink those, it is 
going to be a lot better to be able to pay more timely and 
accurately.
    When I started hearing reports that veterans were getting 
adverse credit reporting, you know, I got very frustrated 
because there should be no administrative burden that stands in 
the way of them getting care.
    So let me tell you what our team did. We actually stood up 
folks in our call center, and so if a veteran has any problems 
with adverse credit reporting, we have a 1-800 number they can 
call. It is a VA folk. They can chat with them. We will be able 
to connect with the community provider, and our contractor, as 
well as a debt agency to try to correct those.
    So I am happy to give you that phone number if you want to 
share it with your constituents or put it on your Web site.
    Mr. Ruiz. Go ahead and put it on C-SPAN right now. What is 
it?
    Dr. Yehia. I will tell you, though. It is 1-800-877-881-
7618. And I am happy to provide it to the community because it 
is unacceptable. And so we are trying to do what we can on our 
part to help veterans that have an adverse credit reporting.
    Mr. Ruiz. And what has been those results of our veterans? 
Have they eliminated that bad credit? Have they corrected the 
problem?
    Dr. Yehia. We just rolled this out a couple weeks ago, so I 
would have to get back to you on the kind of the results that 
we are getting.
    Mr. Migliaccio. Prior to the rollout, we have written 
letters to credit bureaus on behalf of our veterans. It is a 
travesty.
    Mr. Ruiz. And what has been the results?
    Mr. Migliaccio. We have seen some good results because they 
have corrected credit reports. And I can get you some data on 
that also. I don't have specifics, but I am told that we have 
seen good, positive outcomes. But we will intervene.
    Mr. Ruiz. I would like to talk more about that because 
there are plenty of veterans throughout our country that don't 
even know what their resources are to remedy this problem.
    Many of our veterans just accept it because they don't like 
to complain and that means that sometimes they can't apply for 
that loan to make home improvements. They have bad credit so 
they can't pay rent in their apartment or other financial 
burdens. And so we need to outreach to make sure that that gets 
remedied. So thank you very much.
    Mr. Benishek. Mr. Wenstrup, you are recognized.
    Mr. Wenstrup. Thank you, Mr. Chairman.
    If I can just add to that, I would hope that we don't have 
to keep adding layers upon layers because layer one isn't being 
done. Now you have layer two of writing letters saying, hey, it 
is not this guy's fault. I mean, thank you for doing that, but 
that is not the answer obviously.
    My next question is, what does the individual, the patient, 
the veteran do, and what does the physician do when these 
claims aren't getting paid? Is there a customer service branch 
that they can reach and have the same person to talk to when 
they call about the claim either from the doctor's office or on 
behalf of the veteran or are they just--because I have been 
getting reports that every time they call, it is somebody 
different and they have to start all over and wondering where 
this is taking place?
    Dr. Yehia. I think that is an area for improvement for us. 
To speak frankly, a lot of our claims processors also provide 
some of the customer service. What we are hoping to do is to 
kind of build a more robust customer service function for 
community providers.
    I don't know how the focus of those relationships has been 
in the past, but if you look at our consolidation plan and 
where we want to go in the future, we think about three 
stakeholders--veterans, community providers, and our employees. 
And maybe it is a little bit because I am a clinician. I am 
very focused on making sure that we have robust provider 
relations and customer service for community providers.
    I think once we roll more of our plan out, this is going to 
be more localized so that at the regional level, there will be 
someone that they can talk to if they have issues and then also 
kind of nationally if they have just general information 
questions that they need, they can reach out. So I think we 
have more work to do in that area.
    Mr. Wenstrup. And I appreciate you acknowledging that, and 
I hope that it can be more fluent, if you will, but also 
hopefully less of a need for that. Again, another layer that 
could be reduced if we are doing things right.
    You know, you talked about the complexity of all the 
various eligibilities and that is true. And I would throw out 
there, you know, sitting here, and you are involved with it, if 
there are ways that we can reduce that complicated process from 
this side of things, let us know what those are, you know. We 
would love to hear from you on that. And I imagine you will 
gather some ideas as you get more and more familiar with it. 
And I hope that you give us some feedback in that regard.
    Dr. Yehia. I welcome that opportunity. We definitely do 
have some ideas, and I am looking forward to working with you.
    Mr. Wenstrup. But I do think at the same time there will 
always be some variables as far as eligibility. But it seems to 
me that an algorithm can be built. You are in this 
classification, you are in that classification, push the button 
and let the claim roll. Because hopefully, it is not that 
complicated, but if it is giving us the opportunity on this end 
to change things, if we need to that, is fair to the veterans 
and gets the job done. And I do not know if you want to 
comment? If anyone else would like to comment on that any 
further? But anyway.
    When it comes to where you are headed, and there is a 
claim, there is usually a review of the claim when it comes 
from the provider. Do you anticipate, especially if you go 
outside the VA to process claims, do you anticipate the review 
to come within the VA? Or at that other claims processor?
    Dr. Yehia. I would, as best as possible it would probably 
be outside. And this is how it would work. We want to create--
the simpler that we can get the better which is, you know, more 
aligned with industry and Medicare. We would be able to, the 
way that I envision it working is with a partner. We would give 
them the business rules. So we would have you to check the 
name, make sure the provider's address is right, make sure the 
bill charge was right, make sure they have the right 
eligibility criteria. So we would give them the business rules, 
they would put it into their system, and the way that it works 
now for Medicare and a lot of the other sites is, for the most 
part, it is green lights all the way through. A check is sent 
electronically and deposited in someone's bank account. That is 
where we want to go to. The more complexity that we add, 
whether it is, we have to double check this because there is 
this eligibility in there, it makes it harder to automate every 
single step. So that is why I really welcome your comment to 
work together. Because we definitely need to be able to get to 
a simple, streamlined eligibility criteria that makes sense. 
Because those will form the business rules that we give to our 
partners in the community to process claims.
    Mr. Wenstrup. Thank you. And I yield back.
    Mr. Benishek. Thanks. Mr. Huelskamp? You are recognized.
    Mr. Huelskamp. Thank you, Mr. Chairman. I will try to 
arrive at that time again in the future. This is pretty quick. 
And I apologize for being late. There was another Subcommittee 
hearing. And if I repeat some questions, hopefully it still 
provides some insight.
    But yesterday, I visited with, I do not remember whatever 
deputy under secretary it was, said that we were going to see 
some changes, and paying before a paper claim would be 
required, and some changes there. Doctor, can you describe that 
a little bit more? It was a short part of the discussion in my 
questions yesterday.
    Dr. Yehia. Sure, and we have been chatting a little bit 
about that. What we were describing is the fact that in our 
current contract there is a requirement that we have to get the 
medical information, the medical record before we can issue a 
payment. And I was stating that it is different than the 
private sector. This is not a common practice in the private 
sector. This does not mean that we do not want records back, 
but we should not penalize community providers in that way. And 
so, what we are working on in the very near future to be able 
to kind of uncouple those, delink them so that we pay the claim 
when the work has been done, and then we still ask for the 
records, but not tie it to payment.
    Mr. Huelskamp. I appreciate that, and it was in less than 
two weeks? Is that the frame that--
    Dr. Yehia. Yes, that is the timeframe we are working on. 
Yes, sir.
    Mr. Huelskamp. Okay. Okay. And if Choice was made permanent 
rather than a pilot program--which some in the VA still 
approach it that way. The Secretary has said he would like to 
see it made permanent and hopefully we can do that this year. 
Does that change that? Is that part of the reason that you want 
to have those records back? Describe that a little more if you 
would, doctor, from that perspective.
    Dr. Yehia. Sure. I think that was a requirement that was 
embedded in the contract. It was a kind of a contractual 
agreement that we had to hold that, that folks had to be 
accounted to. I do not think there needs to be a specific, I do 
not think we have to get into that level of detail when we 
hopefully craft a new Choice program by law. So I think it was 
more of a barrier that was in the contract than a barrier in 
the law.
    Mr. Huelskamp. So again, you think it is a barrier in the 
law and the contract?
    Dr. Yehia. No, the tying the payment to the record was more 
a contractual barrier than a legal barrier.
    Mr. Huelskamp. And who made that request, though? The VA 
would make that request? I mean, I doubt the providers made 
that request. That was a VA request, is that correct?
    Dr. Yehia. We heard from our providers that they were not 
getting timely, so we looked at why were they not getting 
timely. And the biggest reason was they have to submit all 
these paper records to us. And so, we looked at our contract 
and that was a requirement, and we are working on uncoupling 
it.
    Mr. Huelskamp. Describe though why the VA wanted those 
records back?
    Dr. Yehia. Oh, well we want the records for care 
coordination. So if someone goes out into the community and 
gets seen by a community provider, and I am their doctor, and I 
come back and see them, I want to know what happened. So we 
want to get records back to coordinate care. We do not need 
every single piece of the record.
    Mr. Huelskamp. Yes.
    Dr. Yehia. The ones that are most important for the 
treatment plan. But it is important to get records for care 
coordination. But it should not be linked to payment.
    Mr. Huelskamp. Yes, absolutely. And I appreciate that. And 
fixing that, you know, I have 70 community hospitals in my 
congressional district. I think as of two weeks ago, we were up 
to all those hospitals, plus another 1,300 providers. And they 
would like to continue, and add on. But their goodwill is not 
going to run forever. And so we have got to fix that, and this 
looks like the worst payer in the whole system is the VA. And I 
will be meeting with some of them next week and would be happy 
to say, hey, we are going to fix that. In two weeks we will 
have some changes.
    One thing though I want to point out that I thought was 
astounding was page 21 of written testimony. It said that 
processing centers still require providers to use fax machines 
to place inquiries about the status of their claims. When are 
you going to get past the fax machine?
    Dr. Yehia. That was the whole idea of customer service, 
where I said we still have a long way to go. I actually had a 
conversation with the head of our customer service for 
community care. And I would love to be able to discuss that a 
little bit more. Like I said, we have a long way to go to make 
sure that we are providing good customer service to our 
community providers. But we are focused on that. That is what 
we want to do. You should not send a question by fax.
    Mr. Huelskamp. Yes. You might actually send their bonuses 
by fax, and see how that would work, doctor. But so when will 
the fax machine be obsolete at the VA? I mean, when is this 
going to happen? I understand.
    Dr. Yehia. Yes. Yes.
    Mr. Huelskamp. I mean, all joking aside, I mean, this looks 
silly. And if we cannot move past that, we have got some deeper 
problems, IT problems. Doctor, so when are we going to have 
customer service that reflects the 21st Century then?
    Dr. Yehia. I think it is something that is going to be 
incremental. So I do not have a specific timeframe in my mind. 
But we are taking steps today to make it better.
    Mr. Migliaccio. Yes, if I can give you a case in point?
    Mr. Huelskamp. Absolutely.
    Mr. Migliaccio. Where eight months ago we were here, 
physicians could call in and check on their claims. And we put 
an arbitrary number on it, we said you can only ask about three 
claims and then you have got to call back. And so--
    Mr. Huelskamp. Oh my.
    Mr. Migliaccio [continued]. --innovative physicians, you 
know, kept a number of lines going so they could continue their 
questions about their claims status. Well after our hearing in 
June, we went back and we stopped that practice because it did 
not make any sense.
    Mr. Huelskamp. Okay.
    Mr. Migliaccio. I mean, we will take it step by step. As 
Dr. Yehia had mentioned, it is really evolutionary. But we want 
to get to a state where we can join that 21st Century.
    Mr. Huelskamp. Yes. And thank you, Mr. Chairman. I will say 
it is not evolutionary. This is a revolutionary change to the 
VA. And that is what I hope Choice does. And for my district it 
is, and everyone varies but--
    Mr. Benishek. You mean getting rid of the fax machine?
    Mr. Huelskamp. That could be considered revolutionary in 
some parts. So thank you, Mr. Chairman. I yield back.
    Mr. Benishek. Mr. Lamborn?
    Mr. Lamborn. Thank you, Mr. Chairman, and thanks for having 
this hearing. I am sure you were probably watching the 
discussion we had with Secretary McDonald yesterday. And one 
thing that I was, and continue to be very upset and concerned 
about, is the recent Inspector General's report on the problems 
in Colorado Springs. And whether we call it falsifying or just 
bad training and poor recordkeeping, there were people on the 
wait list who went way beyond 30 days. And yet the records did 
not reflect that. And it was not an honest recordkeeping. It 
was not a proper recordkeeping. And part of the problem is also 
veterans who are eligible for the Choice program, which we are 
here today to talk about, were not put on that list of eligible 
veterans. And that was a big problem and continues to be.
    Now the claim is that these have all been fixed in Colorado 
Springs. I think the jury is still out on that because we are 
still hearing reports of people falling through the cracks. And 
that simply should not be happening. In particular, and I know 
that you already discussed this today. And I apologize. I was 
at other meetings up until now, so I do not want to, sorry if I 
am covering old ground, but we have people, providers in the 
community, who are not being reimbursed on a timely basis. And 
I know this is anecdotal. But we have one provider in 
particular who has had to stop seeing veterans because he has 
not been paid for six months. Now how in this day and age, even 
if we are using fax machines, how can this be happening?
    Dr. Yehia. Yes, I appreciate those comments. And if you 
give me the name of the provider we will have our team, we have 
actually created a rapid response team to work with providers 
that are having issues. So please give me that name, and we 
will be able to work on it.
    We are doing this like two-pronged approach where we are 
driving towards the future, but at the same time, we know there 
are problems in the current state. And so we are standing up 
and taking actions to address those.
    You know I will say about Eastern Colorado, because I did 
watch the hearing yesterday and I did a little bit of digging, 
they are in the top five in the country for utilizing Choice. 
And so I think, yes, I think we need to do better in making 
sure that everyone understands how the program works. But when 
I looked at it I was like, wow, they are actually sending a lot 
of the people out in the community. And I think people want, 
when I spoke with the medical center director and the VISN 
director, I think they want to see Choice succeed in Colorado. 
And that for me was very telling, the fact that they are 
sending so many folks in the community.
    The one other thing that I think want to mention is, you 
know, I looked at all these different reports that came out 
from the IG and GAO, and I think there are nuggets in there, 
there are themes in there that it is important to put into 
practice. But as both of the co-witnesses here presented, this 
program has been evolving so rapidly. PC3 rolled out in the 
beginning of 2014. Choice, end of 2014, got changed again in 
2015. Those are only some of the law stuff. Continuously we are 
making improvements in the program. So just imagine the level 
of training and really retraining that has to occur over and 
over again to learn new processes.
    We have not reached steady state yet, and in my mind that 
is good. Because I do not want to be at this state. I want to 
be at a much higher state of excellence. But when I looked at 
the reports there, a lot of them had to do with, you know, 
training and system issues. And I think hopefully as we 
continue to evolve and get to a better place, we are going to 
be able to deliver the care that we need to deliver.
    Mr. Lamborn. Doctor, I hope there is not still a need, 
although I suspect there is, of a culture change, an attitude 
change. That there are those in the VA who simply are not 
comfortable or resist having the private sector be more 
involved with providing veterans care. And I know you all know 
this, but I want to say it for the record.
    Dr. Yehia. Sure.
    Mr. Lamborn. It is true that there are a lot of veterans 
providing health care within the VA system. That is wonderful. 
But there are a lot of veterans, at least in my community, in 
the private sector who are providing health care. And they also 
have the similar motivation to want to do a good job for their 
former colleagues in arms.
    Dr. Yehia. No, I am with you. I am, you know, I am a 
clinician, and I practiced at a VA, and then I have also 
practiced at academic hospitals and community locations in 
taking care of veterans. And I jointly, I have a number of 
patients on my panel that I jointly care for with community 
providers. The fact is last fiscal year, we had 1.5 million 
veterans, unique veterans, that received community care. I 
think this trend is going to continue. I think as we get a 
little bit better at level setting, what is going to be offered 
in the VA, what we leverage the private sector to help us with, 
when I talk to the doctors at the VA, a lot of them, it is 
their colleagues down the street that they are sending their 
patients to. So I do not think they are, I do not know if it is 
a systemic culture thing. I think a lot of people welcome a 
community of practice.
    Mr. Lamborn. Well I hope it is not. Mr. Chairman, I am 
going to yield back. But we will get you the name of that 
provider. Thank you.
    Mr. Benishek. Mr. Posey, you are recognized.
    Mr. Posey. Thank you very much, Mr. Chairman. And thank you 
so much for letting me participate in your Committee today. 
Doctor Yehia, I hate to be redundant, but my concerns are very 
similar to those expressed by virtually every other Member of 
the Subcommittee. In my congressional district, we are already 
losing doctors because they have had such a bureaucratic 
nightmare trying to get paid. The physician's billing 
department is being told that it is something they did wrong, 
even when they make the required changes. It is as much as five 
months time. And from what I have heard, my guys are lucky it 
is only taking them five months to get paid.
    Can you tell me what is being done to shorten the time 
between billing and payment? And what I mean by that is, 
besides just saying this is what we are doing, can you tell me 
where it has been enacted? Or have you got rules that have 
changed that?
    Dr. Yehia. I do not want to sound like a broken record, but 
the biggest thing that we are talking about is coming in these 
next couple of weeks where we unlink the record from the 
payment. That, I think is going to really speed up payment. And 
your district is in Florida, right?
    Mr. Posey. East Central Florida, yes.
    Dr. Yehia. Yes, and Florida is dear to my heart because I 
grew up in Florida, I went to the University of Florida. And so 
I have read a lot of news articles about the hospital 
association and various challenges that Florida hospitals have 
been facing. Gene can describe a little bit about some of the 
work that we are doing with, specifically with some of the 
Florida providers to improve it.
    Mr. Migliaccio. Sir, some of the things that we are doing 
as part of this, as Dr. Yehia had mentioned the rapid response 
team. We have gone out and met with congressional staff members 
in local districts. We also work with the hospital association, 
state hospital associations. And we have been out to Florida, 
not in your district, but if you would like us to come out and 
talk to some of the hospitals, we would be more than happy to 
do that. We provide a lot of provider education. We will take 
cases back with us and start to work on claims. A lot of it 
centers in some of the accounts receivable. But, you know, a 
case in point, we spent a lot of time in VISN 16, in Louisiana 
and Arkansas. And we have seen some phenomenal changes, not 
only in terms of paying our providers, but also working with 
our staff members. We pay, in we call it VISN 16, Arkansas and 
Louisiana, about 96 percent of the time within 30 days of our 
claims. And we are just having phenomenal cooperation. By 
working with providers and their business staffs, it does make 
a difference. And we would do that for you, too, sir.
    Mr. Posey. Well I would appreciate it if you would come to 
our district and do that. Veterans who use the Veterans Choice 
Program, they are usually those in pain who cannot wait for 
long periods of time, obviously, to get treatment. For 
instance, spinal surgery, knee, hip replacements, and things 
like that. Why are they getting paperwork authorizing the 
procedures and care that expire before the paperwork is even 
generated?
    Mr. Migliaccio. On the authorization side, we have also 
made a change on that recently too. And that was, we gave an 
authorization out, it expired, it had a very short life span. 
That authorization was only good up to 60 days. And that just 
did not make a lot of sense to us. And with Dr. Yehia, we 
talked about this when we created and drafted the plan that we 
presented to Congress in October. And we have extended that now 
in many, many cases up to a year.
    Mr. Posey. Good, I am glad to hear that. What percentage of 
employees that handle veterans health care have a military 
service background?
    Mr. Migliaccio. The number is about 30 percent, a little 
over 30 percent of employees in the Veterans Health 
Administration that are vets. In our claims department it is 
over 50 percent.
    Mr. Posey. You know, I mean, when we hear from you, all it, 
you know, sounds like everything is going to be quickly headed 
toward roses, and of course you all have been hearing that 
probably as long as you have been serving on this Committee. 
And, but when we get back in the districts and we seem to 
encounter claims people, for example, that do not seem quite 
frankly, and simply to have much respect for our veterans. And 
I wonder if you have ever considered making prior military 
service a condition of employment, at least in those 
departments, where it is, you know, point of service?
    Dr. Yehia. Let me take that. So I want to clarify one 
thing. We do not think this is a sprint. This is, there are 
certain things that we have to get right today because they are 
such pain points. But, you know, we know this is going to be a 
journey to be able to get us to the ideal state where we want 
to be.
    I think what you are getting at is like military cultural 
competency training. And I think back to my medical training, 
and I never received anything specifically related to veteran 
or military cultural competency when I was training to be a 
doctor. My only experiences were when I was a medical student 
working at the VA taking care of veterans that I actually 
gained that appreciation and that respect. I think we could do 
a lot better at making sure that our community providers have 
access to that sort of training and we are actually taking 
steps to do that. We have four courses that are available 
online. People can get CME, continuing medical education 
credit, to learn more about the uniquenesses and the nuances of 
military and veteran health care. And so I think we can, I 
would love to be able to share those links with folks on the 
Committee so you guys can push them out to community providers 
in your community.
    Mr. Posey. No, my thought, it's just respect for the 
customer, you know, so they do not get the fast foot shuffle 
and the razzle dazzle. And I mean somebody is giving them 
authorizations that expired before they got the paperwork. Now 
nobody who respects the veteran that they are there to serve 
would do something that stupid. And so my thought is, maybe the 
claims people that process the claims actually ought to not get 
some kind of sensitivity training, maybe there ought to be a 
requirement that they have had military service, that they have 
some respect for the job.
    Dr. Yehia. Well I think as Gene said, half of them have 
served. I would love to talk to you a little bit more about 
that.
    Mr. Posey. I am sorry, Mr. Chairman. I went over. I 
apologize.
    Mr. Benishek. Well does anyone have any questions? You 
know, one of the things that came up here, Dr. Yehia, and I 
just wanted to kind of reemphasize it, is the number of stupid 
rules that the VA seems to have which hinder the accomplishment 
of its mission. And that, simply removing one of the rules is 
not going to solve all of these problems. A comprehensive 
review of all your practices has to be done. Go ahead.
    Mr. Takano. You know, I just am struck by, I just want to 
remind everyone on the Committee that the VA was never set up 
to be an insurer and a payer. And so it is a revolution of 
sorts that we are undergoing. I mean, increased only, 
accelerated in the last two or three years. But you were set up 
mainly to be a provider organization. And the mind set has been 
that you are a provider organization. It is not that you have a 
bias against care in the community, it is that you know the 
integrated health care that you provide was, you know, the idea 
that you are getting the records back was all about making sure 
that we manage the patient's care.
    But now that we are looking at other approaches, and it 
looks like we are moving in the direction of maybe a permanent 
program of care in the community that is going to maybe expand 
over time, you know, you are setting up the systems to do that 
and taking on more of the characteristics of provider 
organization as well as an insurer and a payer. So it was never 
really set up to be like Medicare, which is a payer 
organization. So let us make that distinction. And a lot of the 
beating up, the beating up on the department, you know, it can 
be put into context. And so that is what I want to make sure we 
clarify. That you are undergoing this attempt to become, take 
on more of the role of a payer, somewhat of an insurer, and 
working with other partners.
    Mr. Benishek. The panel is now excused. Thank you very 
much.
    Joining us on our second panel is Roscoe G. Butler, the 
Deputy Director of the National Veterans Affairs and 
Rehabilitation Division of the American Legion; and Carlos 
Fuentes, the Senior Legislative Associate for the Veterans of 
Foreign Wars. I appreciate you coming today, gentlemen. And Mr. 
Butler, you can begin when you are ready. Thank you.

                 STATEMENT OF ROSCOE G. BUTLER

    Mr. Butler. Thank you. The American Legion is committed to 
a strong, robust veterans health care system designed to treat 
the unique needs of those who have worn the uniform. However, 
even in the best of circumstances, there are situations where 
the system cannot meet the needs of the veteran and the veteran 
must seek care in the community.
    Chairman Benishek and Members of the Subcommittee on 
Health, I am privileged to be here today and to speak on behalf 
of The American Legion, our National Commander Dale Barnett, 
and more than two million members in over 14,000 posts across 
the country that make up the backbone of the Nation's largest 
wartime veterans service organization.
    The VA purchased care program dates back to 1945 when VA's 
Hometown Program was created. Since then, VA has implemented a 
number of programs in order to manage veterans health care when 
such care is not available in a VA health care facility, could 
not be provided in a timely manner, or is more cost effective, 
programs such as Fee Basis, Project Arch, PC3.
    Most recently in 2014, the Veterans Choice Program was 
enacted so that more veterans could be referred outside the VA 
for needed health care services. However it quickly became 
apparent that layering yet another program on top of the 
numerous existing non-VA care programs each with their own 
unique set of requirements resulted in a complex and confusing 
landscape for veterans and community providers as well as the 
VA employees that serve and support them. Therefore Congress 
passed legislation in July of 2015 that required VA to develop 
a plan to consolidate existing community care programs, which 
VA delivered on October 30th, 2015.
    Generally, the American Legion supports the plan to 
consolidate VA's multiple purchased care programs into one new 
Veterans Community Program. We believe it has the potential to 
improve and expand veterans' access to health care. Most depend 
on how VA will work with its employees, Congress, VSOs, private 
providers, academic affiliates, and other stakeholders as they 
move forward in developing and implementing the plan.
    As noted in the plan, the current system is a decentralized 
and highly manual process. The new VCP plan proposes 
integrating most of VA's Community Care Program into one single 
program that would be seamless, transparent, and beneficial to 
enrolled veterans. VA states its new VCP will focus on 
operational efficiencies to include standardized billing and 
reimbursement as well as geographically adjusted fee schedules 
that are tied to Medicare and deemed appropriate.
    These efforts would make it easier and more appealing for 
community health care providers to partner with VA. The 
American Legion strongly believes VA must standardize its 
reimbursement rates, but not set the rates too low where 
providers would be discouraged from signing up as participating 
providers in the new VCP, such as providers in Alaska and other 
rural areas.
    In November 2015, we received an inquiry from a veteran 
requesting assistance with payment of a medical bill that was 
authorized under the current Veterans Community Care Program. 
The veteran explained that he was approved to be treated by a 
non-VA health care provider for a hernia surgery to be 
performed outside the VA. After the care was provided, VA 
payment was delayed for months which resulted in the claim 
being referred to an attorney's office for collection. As a 
result, the veteran expressed disbelief and has lost faith in 
the VA system.This should never happen, but occurs more often 
than it should.
    The American Legion supports VA developing a 21st Century 
claims and reimbursement process that is rules-based, and to 
the extent, possible eliminates as much human intervention as 
possible. Therefore, we are pleased to see that VA proposes to 
implement a claims solution which is able to auto-adjudicate a 
high percentage of claims, enabling VA to pay community health 
care providers promptly and correctly, and to move to a 
standardized reasonable fee schedule to the extent practicable 
for consistency in reimbursement.
    However, we do not believe Congress should continue to 
provide VA an open checkbook without any assurance from VA that 
the plan will work. Much as further funding for the joint 
electronic record is contingent on providing benchmarks are 
met, Congress can and should require progress benchmarks here.
    In conclusion, VA plans for the new Veterans Choice Program 
need Congress' approval. The American Legion believes the VA 
plan is a reasonable one given that desired result. VA has 
identified a number of necessary legislative items that require 
action by Congress in the short legislative window available 
this year in order to best serve veterans going forward in 
2016. The American Legion supports many of those, such as 
measures budget flexibility, the Purchased Healthcare 
Streamlining and Modernization Act, flexibility for the Federal 
work period requirement, and special pay authority to help VA 
recruit and retain the best talent possible to lead their 
hospitals and health care networks.
    The American Legion believes that together, we can 
accomplish these legislative changes before the end of this 
session of Congress. We cannot let another year slip away. Our 
veterans deserve the same sense of urgency now that Congress 
has shown numerous times since the VA scandal first erupted in 
2014.
    The American Legion thanks this Committee for their 
diligence and commitment to our veterans, and as they struggle 
to access health care across the country. And I am happy to 
answer any questions.

    [The prepared statement of Roscoe G. Butler appears in the 
Appendix]

    Mr. Benishek. Thank you, Mr. Butler. Mr. Fuentes, five 
minutes.

                  STATEMENT OF CARLOS FUENTES

    Mr. Fuentes. Mr. Chairman, Members of the Subcommittee, on 
behalf of the VFW and our Auxiliary, I would like to thank you 
for the opportunity to present our views on VA's plan to 
consolidate community care programs.
    The brave men and women who have worn our Nation's uniform 
have earned and deserve timely access to high quality, 
comprehensive, and veteran-centric health care. That is why the 
VFW has made a concerted effort to evaluate the VA health care 
system and has worked with VA, Congress, and other stakeholders 
to implement reasonable solutions to issues we have identified.
    In the past year, we have collected and evaluated direct 
feedback from more than 12,000 veterans. Through this work, we 
have identified several concerns with the Choice program. Given 
the focus of today's hearing, I would limit my remarks to 
billing issues we have identified.
    The most common billing complaint we hear from veterans who 
use the Choice program is that they have been improperly billed 
for their community care appointments. This typically occurs 
when a veteran is authorized to use the Choice program, but 
requires follow-up care that is outside of the scope of the 
original authorization. This is where the program often fails 
veterans. At times, a veteran arrives to a follow-up 
appointment before the care is authorized, so the veteran is 
either required to reschedule the appointment or assume the 
responsibility for the cost of that care. Most veterans 
reschedule that appointment and are forced to wait longer for 
the care they need.
    In some instances, a veteran arrives at the appointment and 
is unaware the care is not authorized. If the veteran's 
provider is also unaware of the authorization status, or fails 
to inform the veteran, the veteran may be billed for the cost 
of that care. For example, a veteran in Saginaw, Michigan was 
authorized to use the Choice program for a vision exam. The 
provider prescribed him a specific treatment to save his 
vision. Since the provider was unable to administer that 
treatment, he was referred to a clinic nearby, where he 
received four courses of that treatment before being told that 
VA refused to pay his bill, and that he would need to pay his 
outstanding balance before he could continue to be seen. The 
VFW worked with Health Net to ensure that that veteran could 
continue his treatment while we figured out a way to pay for 
his bill. Since his treatment at the clinic was beyond the 
scope of the original authorization, Health Net did not have 
the ability to retroactively authorize the veteran's care. 
Luckily, we were able to work with VA to have his bill paid, 
but it should not require our involvement to resolve this 
issue. That is why the VFW urges Congress and VA to empower 
local VA community care staff and the program's contractors to 
make common sense exemptions to the Choice program requirements 
to prevent veterans from being needlessly billed for care VA is 
required to furnish.
    The VFW also believes that it is time to fully integrate 
community care providers into the veterans health care delivery 
model to ensure veterans have timely access to high quality 
comprehensive veteran-centric health care without having to cut 
through bureaucratic red tape.
    The VFW has also learned that providers at times are 
responsible for improper payments or billing. The Choice 
program requires that payment be contingent on providers 
providing the medical documentation. Private sector providers 
are not accustomed to reporting medical documentation before 
receiving payment. As a result, some of them will bill the 
veteran before sending VA or the program's contractors the 
requisite medical records. To address this issue, VA has 
proposed decoupling medical documentation and payments. We are 
concerned that decoupling medical records and payments would 
remove the incentive of community care providers to share 
medical records with VA which could impact VA's ability to 
verify the quality of care veterans receive. Ultimately, we 
will hold VA accountable for providing high quality care to 
veterans, regardless if it is at a VA medical facility or 
through community care providers. In order to ensure that 
quality, VA needs that medical documentation.
    The VFW believes that this issue can be addressed without 
decoupling medical documentation. For example, VA could develop 
IT solutions to facilitate a seamless integration of the health 
care records between medical facilities and their community 
care partners. This would prevent community providers from 
having to PDF or fax medical records to VA, and ensure that VA 
can verify the quality of care veterans receive.
    As this Committee continues to evaluate VA's plan to 
consolidate community care programs, the VFW will continue to 
ensure veterans' preferences and health care needs are 
prioritized. Mr. Chairman, this concludes my remarks and I am 
ready to answer any questions you may have.

    [The prepared statement of Carlos Fuentes appears in the 
Appendix]

    Mr. Benishek. Thank you, Mr. Fuentes. I yield myself five 
minutes for questions. And let me just comment about this 
medical record thing, and I noticed in your written testimony 
that you had that position.
    But you know, as a provider myself, you cannot be 
responsible for, like the hospital medical record may not be 
your medical record. And the physicians get delayed. Now there 
is certainly a reasonable requirement that if the physician has 
a habit of not returning any of the records, he should be 
reviewed as a provider and then maybe eliminated as a provider 
if he does not do medical records. Private practice physicians 
are responsible to get the referring doctor the pertinent 
records all the time. And they do it, and if they do not do it, 
then the people do not refer to them anymore. That is just a 
better way, in my opinion as a provider, to make sure that 
continues as we go by.
    Now you heard Dr. Yehia talk about improving the process. 
And I do not know if each of your organizations have any 
position on, would you be supportive of the VA moving to a 
Medicare model, or a TriCare model for payment? And using 
contractors to do that sort of thing? Would your organizations 
support that? Mr. Butler?
    Mr. Butler. I can speak for the Legion. We do not have a 
position on that. We have not been asked to consider that as an 
option at this time. But we can take that up and look at that 
at a future date and bring that back to the Committee.
    Mr. Benishek. Mr. Fuentes, do you have any position there?
    Mr. Fuentes. Mr. Chairman, to us, it does not really matter 
which vehicle is used. Really what we want to prevent is what 
happened in Phoenix at the urology clinic, when hundreds of 
veterans were sent to community care providers and VA had no 
way of seeing if those veterans received care, or if they 
received the proper care. So like I said in my statement, we 
are going to hold VA accountable for veterans receiving that 
high quality care. And VA needs that medical documentation. The 
vehicle they use, you know, it does not matter to us as long as 
they are able to--
    Mr. Benishek. Right.
    Mr. Fuentes [continued]. --guarantee that care.
    Mr. Benishek. Right. Are there any particular issues that 
you have not talked about that your membership is sort of 
interested in? To me it is a real worry about how this is 
actually going to work out. Consolidating all the aspects of 
care into one thing and having it work. So that is a real 
concern of mine. Is there any other thing that you did not 
bring in your testimony that you all are concerned about?
    Mr. Butler. I think similar, like the comment expressed by 
the GAO, we have similar concerns. This is a huge and 
tremendous undertaking. And VA's track record has not been good 
when you look at trying to take a system and then develop the 
IT changes necessary. VA talked a lot about bringing in 
contractors to see how they are going to deliver a product. 
Oftentimes when that happens, when we look back at the 
scheduling redesign, when we look back at CoreFLS, VA spent 
millions of dollars in those type of initiatives, which was a 
huge IT network undertaking, without any deliverables.
    Mr. Benishek. Yes.
    Mr. Butler. And so we do not want the same thing to occur. 
And that is why in our testimony, Congress needs to assure, get 
some assurance from VA that they are going to be able to 
deliver, whatever the changes that they are saying they are 
going to be able to implement, they need to provide proof that 
they can deliver those changes first.
    Mr. Benishek. No I--
    Mr. Butler. Before you commit millions of dollars.
    Mr. Benishek. I agree, your benchmark idea makes a lot of 
sense. One of the concerns I have with the third party 
provider, the outside provider, is that what are they going to, 
are they going to cut any of their staff now if they have these 
outside providers doing a lot of the work? Does that mean that 
they are going to need less people in the VA? And is that going 
to actually happen? Or are we going to have two? That is my 
concern, are we going to be paying for two bureaucracies 
instead of one? So I have a lot of concerns about how this is 
done as well. And it is such a big project, it has a lot of 
scariness to me. I will yield back. Mr. Takano?
    Mr. Takano. Gentlemen, so you know the VA as a provider, 
historically has had, I think an interest in managing patient 
care in house. Over, from what I can tell, over the last 
several years it has initiated a number of contract programs to 
be able to refer patients out when they did not have certain 
services in house, whether it was OB/GYN or certain 
specialties. But now we seem to be at a point where we have 
authorized a temporary program that the Secretary is now saying 
that he would like to see permanent, which is this, the Choice 
Act, which was initially conditioned on how far you lived away. 
But that seems to all be, but now we are looking at 
consolidating all of these care in the community programs, all 
of these different contract programs now.
    And Chairman Benishek, you know, asked you your comfort 
level with this idea of becoming more like Medicare. Medicare, 
as you know, is not like the VA in the sense that it does not 
have, you know, its own hospitals, its own doctors. You know, 
it is a payment agency, right? Is that what your two 
organizations are comfortable with moving toward? When he says 
Medicare model, that VA maybe is less and less an institution 
that has its own doctors and is going to contract everything 
out? And it is kind of like we are more a payer agency?
    Mr. Butler. I can tell you that The American Legion 
position has not changed, that we believe the VA is a system 
worth saving. We advocate that. We supported the Choice Act as 
a temporary measure to allow VA time to get the resources, the 
doctors, and the necessary staff to care for our veterans. So 
our original position has not changed from our initial 
position, that we support the Choice Act as a temporary measure 
until such time as VA can be able to provide the care and 
service to veterans.
    We know that community care, there will always be a need to 
refer veterans out in the community. But there also will be a 
need for the VA system.
    Mr. Takano. Mr. Fuentes?
    Mr. Fuentes. The VFW opposes, you know, making VA simply a 
payer of health care. We feel that VA delivers high quality 
health care and, unfortunately, it cannot deliver timely access 
to that high quality health care all times and everywhere. So 
you need to integrate the community, or community providers, 
into the veterans health care system. However, you need to 
eliminate that barrier that currently exists between the 
community and VA, where VA providers or VA facilities see the 
community as a safety valve, right, to alleviate the pressure 
on its demand. Instead, it needs to assess the demand and 
evaluate the capacity, similar to what Congressman O'Rourke has 
done in El Paso, assess, you know, the capabilities of the 
community and VA to really determine where those services need 
to be provided, and what the true demand is, so that VA can 
focus on the areas the community lacks.
    Mr. Takano. So we are not talking here about this question 
about reducing personnel in the VA because it is now being 
taken up outside the VA. That is, your organizations are not 
interested in that, is that correct?
    Mr. Fuentes. That is correct.
    Mr. Butler. That is correct.
    Mr. Takano. So you know the Secretary has used language and 
has said, you know, that he wants to, he is interested in 
making Choice permanent. I mean, that is what I have heard, you 
know, being said. So you still envision the Choice program as 
something that should be temporary? Because this question about 
how much money we are going to spend on IT systems to make VA 
more efficient at billing, more efficient at paying, I mean we 
can justify that based on what kind of VA prospectively we are 
looking at. I do believe we should be paying people more 
efficiently and taking away the bureaucratic problems in terms 
of whether we require them to get the records back before they 
are paid. But you know, the question of how much we invest in 
this, I mean, I think has some relationship to what kind of VA 
we are looking prospectively at--
    Mr. Fuentes. So, I think the problem here is that you 
consider community care, and I think everyone is considering 
community care, and the Choice program as something completely 
separate from VA. When moving forward, community care and 
community providers need to be an aspect of the system. They 
need to be incorporated into it. And honestly, VA needs to 
treat providers who participate in their high performing 
network like they would any other clinic within a VA medical 
facility.
    Mr. Takano. Okay, thank you. My time is up and--
    Mr. Butler. And let me just add, community care is never 
going to go away. You know, it has taken the form of many 
names, Hometown Program, fee basis. There is always going to be 
a need for community care. But there is also going to be a need 
for the VA health care system. And so there needs to be a 
balance between the two. One cannot replace the other. They 
have its place in meeting the needs of our veterans.
    Mr. Takano. Thank you for clarifying your position. Thank 
you.
    Mr. Benishek. Dr. Roe?
    Mr. Roe. Thank you, Mr. Chairman. And I thank you, Mr. 
Butler and Mr. Fuentes, for your service to our country. A 
couple of things, I totally agree with Mr. Fuentes. What I have 
said for a long time is as a veteran physician, who served in 
the Second Infantry Division, I understand the needs I think of 
VA, of veterans. And why could I not be a veteran certified 
physician out here, but my bricks and mortar are off campus? 
You are absolutely right. And I could not agree more with that.
    There is a difference between the VA and private practice. 
In VA, every year we appropriate hundreds, well billions of 
dollars and they have got a big pot of money. On January 1 
every year in my practice, I have no money. So I have got to 
generate that income to keep my bills paid. And the last person 
to get paid is the doctor. Everybody else gets paid before 
that. So when the VA is holding up their payment, every other 
system in the world pays differently than the VA does for 
outsourced care. Medicare does, private payers do, they all do. 
We can assure and just to show you how the payment models have 
changed, I was very deeply involved, as Dr. Benishek was, on 
the SGR reform. Medicare now requires us on the private side to 
pay for performance and outcomes. And so the private sector is 
already ahead of VA in paying for that quality of care.
    So I agree with you, Mr. Butler. I think there are going to 
be two systems. I think that the VA should embrace the private 
sector and identify quality physicians and provide quality 
care, and they are out there, and they want to provide the 
care. And then find a timely way to pay them. And then as Mr. 
Fuentes is saying, is to make sure that that quality of that 
care is as it should be. I agree with everything that has been 
said. And I think what we have to do is make this easier, so 
Mr. Abe, when he needs to get an appointment does not wait six 
months. I mean he gets an appointment in three weeks or a month 
or whatever his time, whatever his schedule shows. So I think 
that is what we need to get to. And I think we are all aligning 
up going in the same direction. I agree with you. And at home 
where I am, we have a very robust private sector. Many veterans 
out there, physicians, who want to see patients. I am in a 
group that had five, in an OB/GYN group that had five veterans 
in it. And so we were willing and able and more than happy to 
see those patients. And as I said previously, in the previous 
testimony in a large group you probably have the revenue to 
keep you going when VA did not pay you for six months. If you 
are a small surgical group with two surgeons, as Dr. Benishek 
may have been, or you are in a small internal medicine group, 
two or three doctors, or a family practice, and you do not get 
paid along with those other payers that are paying less than 
they used to, you shut the door. You lock the door and go 
somewhere else.
    So anyway, I just wanted to make those statements. I agree 
with most of the things you said, except I think Mr. Fuentes, I 
think there is a way VA and I think the VA is moving to a 
different payment system which will be better for veterans and 
for the doctors and the providers out in the community. So with 
that, I yield back.
    Mr. Benishek. Thank you. I had one more question, Mr. 
Fuentes, and that was about your statement about somebody going 
to outside the VA to get care, like the ophthalmologist or the 
eye doctor, then that patient was then transferred for 
appropriate care elsewhere, but then the VA would not cover 
that other physician. How should they fix that? Do you have any 
suggestions for that?
    Mr. Fuentes. Yes. So like I said before, VA needs to treat 
all the providers within its high performing network like it 
would a provider within a VA clinic. So essentially, if I need 
to go to an ophthalmologist and receive specialized treatment, 
and then have to go to another clinic, I should not have to 
wait a month for VA to authorize that care, right? It should 
not be authorization based. Essentially, just like when I go to 
an ophthalmology clinic at VA, they are authorized to treat me 
and provide whatever care I need without having to go back to 
my primary care doctor and request authorization.
    Mr. Benishek. Right. All right, thank you. Any other 
questions? Well, thank you for your participation. I truly 
appreciate your input. Feel free to get hold of us as time goes 
by, to provide more input. Because we certainly want to hear 
what you all have to say. So you are all excused. I will ask 
unanimous consent that all Members have five legislative days 
to revise and extend their remarks and to include extraneous 
material. So without objection, that is ordered. This hearing 
is now adjourned.

    [Whereupon, at 11:54 a.m., the Subcommittee was adjourned.]


                           A P P E N D I X

                              ----------                              

              Prepared Statement of Randall B. Williamson

                         VETERANS' HEALTH CARE

Preliminary Observations on VHA's Claims Processing Delays and Efforts 
      to Improve the Timeliness of Payments to Community Providers

             United States Government Accountability Office
    Chairman Benishek, Ranking Member Brownley, and Members of the 
Subcommittee:

    I am pleased to be here today to discuss our ongoing work related 
to the plans of the Veterans Health Administration (VHA) of the 
Department of Veterans Affairs (VA) to consolidate its care in the 
community programs and improve the efficiency, accuracy, and timeliness 
of its payments to non-VA community providers. The majority of veterans 
utilizing VHA health care services receive care in VHA-operated medical 
facilities, such as VA medical centers or community-based outpatient 
clinics. However, to help ensure that veterans are provided timely and 
accessible care, the agency has purchased health care services from 
community providers through its care in the community programs since as 
early as 1945. \1\ While the eligibility requirements and types of care 
purchased through the programs currently vary, in general VA purchases 
community care when (1) wait times for appointments at VA medical 
facilities exceed VA standards; (2) a VA medical facility is unable to 
provide certain specialty care services, such as cardiology or 
orthopedics; or (3) a veteran would have to travel long distances to 
obtain care at a VA medical facility. Under certain circumstances, VA 
is also authorized to purchase emergency care from community providers. 
\2\ When veterans obtain care from community providers, these providers 
submit claims to VA for reimbursement on a fee-for-service basis. VHA 
staff at 95 claims processing locations throughout the country are 
responsible for processing and paying these claims. \3\
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    \1\ For the purposes of this statement, the terms ``VA care in the 
community'' and ``community providers'' refer, respectively, to the 
services the department purchases outside VA medical facilities and the 
community providers who deliver the services under the following 
statutory authorities: 38 U.S.C. Sec. Sec.  1703, 1725, 1728, 8111, and 
8153. Before 2015, VHA referred to ``community providers'' as ``non-VA 
providers'' or ``fee basis providers'' and to ``VA care in the 
community'' as ``non-VA medical care'' or ``fee basis care.'' The 
agency began using the terms ``community providers'' and ``VA care in 
the community'' in the spring of 2015.
    \2\ All emergency care purchased from community providers must meet 
the prudent layperson standard of an emergency, which means that the 
veteran's condition is of such a nature that a prudent layperson would 
reasonably expect that delay in seeking immediate medical attention 
would result in placing the health of the individual in serious 
jeopardy, serious impairment to bodily functions, or serious 
dysfunction of any bodily organ or part. See 38 C.F.R. Sec.  
17.1002(b). There are additional criteria that must be met for VA to 
purchase emergency care from community providers, and these criteria 
vary depending on whether the care is related to the veteran's service-
connected disability.
    \3\ As of November 2015, there were 141 VA medical facilities 
responsible for authorizing VA care in the community services and 95 
VHA claims processing locations responsible for processing claims from 
community providers.
---------------------------------------------------------------------------
    VA's expenditures for its care in the community programs, the 
number of veterans for whom VA has purchased care, and the number of 
claims processed by VHA have grown considerably in recent years. In 
fiscal year 2015, VA obligated about $10.1 billion for its care in the 
community programs for about 1.5 million veterans. \4\ Just three years 
earlier, in fiscal year 2012, VA spent about $4.5 billion on care in 
the community programs for about 983,000 veterans-about 50 percent 
fewer veterans than were served in fiscal year 2015. From fiscal year 
2012 through fiscal year 2015, the number of processed claims for VA 
care in the community programs increased by about 81 percent.
---------------------------------------------------------------------------
    \4\ Final figures for expenditures on VA care in the community in 
fiscal year 2015 will not be available until VHA's claims processing 
locations finish processing all fiscal year 2015 claims. As of November 
9, 2015, VA had paid about $6.65 billion for VA care in the community 
that was delivered in fiscal year 2015, but VHA's claims processing 
locations also had a backlog of about 453,000 claims awaiting 
processing as of October 29, 2015. Total fiscal year 2015 expenditures 
for VA care in the community are expected to be closer to $10.1 
billion.
---------------------------------------------------------------------------
    The substantial increase in utilization of VA care in the community 
programs poses challenges for VHA, which has had ongoing difficulty 
processing claims from community providers in a timely manner. A 2010 
report by the VA Office of the Inspector General found that VHA needed 
to take action to address the timeliness of its claims processing. \5\ 
In 2011, the National Academy for Public Administration described 
numerous weaknesses in VHA's claims processing system, which delayed 
payments to community providers. \6\ In 2014 and 2015, we reported that 
some providers delivering services through VA care in the community 
experienced lengthy delays (i.e., in some cases, months or years) 
receiving payment on their claims. During a June 3, 2015, hearing of 
this Subcommittee, several witnesses testified about VHA's continued 
lack of timeliness in paying claims for VA care in the community 
services. \7\ The VA Budget and Choice Improvement Act required VHA to 
develop a plan for consolidating its VA care in the community programs 
(of which there are currently about 10), and VHA submitted this plan to 
Congress on October 30, 2015. \8\ As part of this plan, VHA said it 
would examine potential strategies for improving the timeliness and 
accuracy of its payments to community providers.
---------------------------------------------------------------------------
    \5\ Department of Veterans Affairs Office of Inspector General, 
Veterans Health Administration: Audit of Non-VA Inpatient Fee Care 
Program, 09-03408-227 (Washington, D.C.: August 18, 2010).
    \6\ National Academy of Public Administration, Veterans Health 
Administration Fee Care Program (Washington, D.C.: September 2011).
    \7\ See GAO, VA Health Care: Actions Needed to Improve 
Administration and Oversight of Veterans' Millennium Act Emergency Care 
Benefit, GAO 14 175 (Washington, D.C.: March 6, 2014) and GAO, VA 
Mental Health: Clearer Guidance on Access Policies and Wait-Time Data 
Needed, GAO 16 24 (Washington, D.C.: October 28, 2015).
    \8\ Pub. L. No. 114-41, Title IV, Sec.  4002, 129 Stat. 443, 461 
(2015).
---------------------------------------------------------------------------
    My statement today will draw from our ongoing work examining the 
timeliness of VHA's payments to community providers and its plans for 
addressing challenges that have impeded the timeliness of claims 
processing and payment. \9\ We began this work in March 2015 and plan 
to issue a final report this spring. In particular, this statement 
reflects our preliminary observations about:
---------------------------------------------------------------------------
    \9\ The Veterans Access, Choice, and Accountability Act of 2014 
(Choice Act) included a provision for us to report to Congress about 
the timeliness of VA's payments for claims submitted by community 
providers when veterans access care outside the VA health care system, 
and compare the timeliness of VA's payments to community providers to 
the timeliness of payments providers receive from Medicare and TRICARE, 
the Department of Defense's (DOD) health care system. Pub. L. No. 113-
146, Sec.  105(c), 128 Stat. 1754, 1767 (2014). TRICARE is a regionally 
structured health care program for military service members, retirees, 
and their families. Under TRICARE, beneficiaries obtain health care 
either through DOD's direct care system of military hospitals and 
clinics (referred to as military treatment facilities), or they receive 
care through DOD's purchased care system of civilian providers and 
civilian facilities. In this statement, we focus on the purchased care 
component of TRICARE.

    1.  VHA's claims processing timeliness in fiscal year 2015, and how 
this timeliness compares to Medicare's and TRICARE's;
    2.  the factors that have impeded the timeliness of VHA's claims 
processing and payment;
    3.  providers' experiences with VHA's claims processing; and
    4.  VHA's recent actions and plans to improve the timeliness of 
claims processing and payments for VA care in the community programs.

    To provide preliminary observations from our ongoing work examining 
these questions, we reviewed applicable policies; interviewed officials 
from VHA, the Centers for Medicare & Medicaid Services (CMS), the 
Department of Health and Human Services agency that administers 
Medicare; and the Defense Health Agency (DHA), the Department of 
Defense agency that administers TRICARE; and obtained fiscal year 2015 
data on claims processing timeliness from VHA, CMS, and DHA.
    To assess the reliability of VHA's, CMS's, and DHA's data on claims 
processing timeliness in fiscal year 2015, we interviewed knowledgeable 
agency officials about their respective data sources and methods for 
collecting data. \10\ We found CMS's and DHA's data to be sufficiently 
reliable for reporting Medicare's and TRICARE's claims processing 
timeliness in fiscal year 2015. However, as we discuss in this 
statement, we determined that VHA's data had limitations. As there were 
no other data available from VHA, we used these data for making 
comparisons to Medicare's and TRICARE's claims processing timeliness, 
but note the limitations of VHA's data in making the comparisons.
---------------------------------------------------------------------------
    \10\ From VHA, we interviewed officials from the Chief Business 
Office for Purchased Care; from CMS, we interviewed officials from the 
Medicare Contractor Management Group; and from DHA, we interviewed the 
Chief of TRICARE Contract Resource Management.
---------------------------------------------------------------------------
    We also used VHA data on the timeliness of payments for claims that 
were processed between February 2014 and February 2015-the most recent 
data available when we began our study-to select a non-random sample of 
4 VHA claims processing locations, where we conducted site visits in 
May and June 2015. \11\ At each of these four sites, we interviewed 
managers and staff responsible for claims processing and reviewed 
documentation associated with a non-random sample of approximately 20 
inpatient claims and 20 outpatient claims that were paid between 
February 2014 and February 2015. \12\ We reviewed documentation for 156 
claims in all and interviewed managers or staff at the 4 VHA claims 
processing locations to identify factors affecting the timeliness of 
payments for these claims. \13\ We also (1) interviewed officials from 
a non-random sample of 12 community providers that had submitted claims 
to the 4 VHA claims processing locations we visited and (2) collected 
written statements from 12 state hospital associations, which 
collectively represent the views of at least 117 different hospitals or 
health care systems. \14\ We selected the non-random sample of 
community providers we interviewed from among the providers that had 
submitted the most claims between February 2014 and February 2015 to 
the 4 VHA claims processing locations we visited.
---------------------------------------------------------------------------
    \11\ The claims processing locations in our sample represented 
different regions in the United States, a range in timeliness 
performance, and a range in claims processing workload (i.e., the 
number of VA medical facilities for which the claims processing 
location processed claims). The four claims processing locations we 
visited are located in St. Louis, MO; Helena, MT; Columbia, SC; and 
Pearl, MS.
    \12\ We selected our claims sample on the basis of variation in the 
number of days elapsed between the date of service and the date of 
payment for each claim.
    \13\ We initially selected and received documentation for 40 
claims-20 inpatient and 20 outpatient claims-from each of the four VHA 
claims processing locations we visited, for a total of 160 claims. 
However, we excluded 4 claims from our sample, resulting in a sample of 
156 claims. We excluded one claim because the documentation we received 
was not for the claim we had originally selected as part of our sample, 
and we excluded 3 other claims that were for home health services, 
which are processed using a different system than the one that is used 
to process other claims for VA care in the community.
    \14\ To collect statements from the state hospital associations 
about their experiences with VHA's claims processing, we obtained the 
assistance of the American Hospital Association, which solicited 
written responses to our questions from its member hospitals and health 
care systems.
---------------------------------------------------------------------------
    To assess the reliability of VHA's data on claims that were paid 
between February 2014 and February 2015, we interviewed knowledgeable 
agency officials, manually reviewed the content of the claims data, and 
electronically tested the data for missing values, outliers, and 
obvious errors. We concluded that the data were sufficiently reliable 
for selecting the samples of VHA claims we reviewed. Because the claims 
processing locations and samples of claims we reviewed at each location 
were not selected to be representative, we cannot generalize our 
findings to all VHA claims processing locations or to all claims for VA 
care in the community programs. Similarly, because the community 
providers and state hospital associations that participated in our 
review were not selected to be representative, we cannot generalize our 
findings to all providers participating in VA care in the community 
programs.
    We are conducting the work upon which this statement is based 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 provides a reasonable basis for our findings and 
conclusions based on our audit objectives.
    We shared our preliminary observations with VA, CMS, and DHA. All 
three agencies provided us with technical comments, which we have 
incorporated as appropriate.

Background

Oversight of VA Care in the Community

    In response to a provision of the Veterans Access, Choice, and 
Accountability Act of 2014 (Choice Act), on October 1, 2014, VA 
transferred funds and the responsibility for managing and overseeing 
the processing of claims for VA care in the community from its 
Veterans' Integrated Service Networks and VA medical centers to VHA's 
Chief Business Office for Purchased Care. \15\ Previously, VHA's 
networks and medical facilities were responsible for managing their own 
budgets for VA care in the community and the staff who processed these 
claims. After this transition, VHA's Chief Business Office for 
Purchased Care became responsible for overseeing VA's budget for care 
in the community programs and more than 2,000 staff working at 95 
claims processing locations nationwide.
---------------------------------------------------------------------------
    \15\ Pub. L. No. 113-146, Sec.  106, 128 Stat.1754, 1768-69 (2014). 
VHA's health care system is divided into areas called Veterans 
Integrated Service Networks, each responsible for managing and 
overseeing medical facilities within a defined geographic area. 
Networks oversee the day-to-day functions of VA medical facilities that 
are within their boundaries. Each VA medical facility is assigned to a 
single network. At the start of fiscal year 2016, there were 21 
Veterans Integrated Service Networks, but VA is in the process of 
consolidating some networks so that by the end of fiscal year 2018, 
there will be 18 networks.

---------------------------------------------------------------------------
Types of VA Care in the Community Services

    VA has several different programs through which it purchases VA 
care in the community services. \16\
---------------------------------------------------------------------------
    \16\ In addition to the programs described here, VA is also 
authorized to purchase care from Department of Defense and Indian 
Health Service facilities, community nursing homes, and community-based 
home health providers. 38 U.S.C. Sec. Sec.  1710, 1720, 8111, and 8153.

      Individually authorized care. The primary means by which 
VA has traditionally purchased care from community providers is through 
individual authorizations. \17\ When a veteran cannot access a 
particular specialty care service from a VA medical facility-either 
because the service is not offered or the veteran would have to travel 
a long distance to obtain it from a VA medical facility-the veteran's 
VA clinician may request an individual authorization for the veteran to 
obtain the service from a community provider. If this request is 
approved and the veteran is able to find a community provider who is 
willing to accept VA payment, VA will reimburse the provider on a fee-
for-service basis.
---------------------------------------------------------------------------
    \17\ 38 U.S.C. Sec.  1703.

      Emergency Care. When care in the community is not 
preauthorized, VA may purchase two different types of emergency care 
from community providers: 1) emergency care for a condition that was 
related to a veteran's service-connected disability or associated with 
or aggravating a veteran's service-connected disability and 2) 
emergency care for conditions not related to veterans' service-
connected disabilities. The latter care is commonly referred to as 
Millennium Act emergency care. \18\
---------------------------------------------------------------------------
    \18\ See Veterans Millennium Health Care and Benefits Act, Pub. L. 
No. 106-117, 113 Stat.1545 (1999) (codified, as amended at 38 U.S.C. 
Sec.  1725) for emergency care not related to a service-connected 
disability. See 38 U.S.C. Sec.  1728(a)(1)-(3) for emergency care 
related to a service-connected disability.

      Patient-Centered Community Care (PC3) and the Veterans 
Choice Program. Established in 2013 and 2014, respectively, these 
programs are administered by two third-party administrators (TPA), with 
whom VA has contracted to create and maintain networks of primary and 
specialty care providers willing to treat veterans when they cannot 
feasibly access services from VA medical facilities. \19\ The TPAs are 
responsible for making appointments with their network providers on 
behalf of veterans once VA medical facilities notify the TPAs that the 
veterans are authorized to receive care from community providers.
---------------------------------------------------------------------------
    \19\ The two TPAs that currently hold these contracts are TriWest 
Healthcare Alliance and Health Net Federal Services.

    The rates at which community providers are reimbursed by VA vary 
depending on whether the care is preauthorized or emergency care, and 
whether the providers are enrolled in the PC3 or Veterans Choice 
Program networks. For all types of VA care in the community services 
except individually authorized outpatient care, community providers 
must include medical documentation with the claims they submit to VHA 
---------------------------------------------------------------------------
or the TPAs.

VHA's System for Processing Claims from Community Providers

    Community providers who are not part of the PC3 or Veterans Choice 
Program networks submit claims for preauthorized and emergency care to 
one of VHA's 95 claims processing locations. \20\ For PC3 and Veterans 
Choice Program care, community providers submit their claims to the 
TPAs, and the TPAs process the claims and pay the community providers. 
Subsequently, the TPAs submit claims to one of VHA's claims processing 
locations-either the one that authorized the care, in the case of PC3 
claims, or the one that VHA has designated to receive Veterans Choice 
Program claims. VHA staff at these locations process these claims using 
the same systems used to process other claims for VA care in the 
community programs, and VA reimburses the TPAs for the care.
---------------------------------------------------------------------------
    \20\ If the claim is for individually authorized care, the 
community provider submits it to the VHA claims processing location 
that processes claims for the VA medical facility that authorized the 
veteran's care. If the claim is for emergency care, the community 
provider submits it to the VHA claims processing location that 
processes claims for the VA medical facility that is located nearest to 
where the community provider rendered the emergency services.
---------------------------------------------------------------------------
    To process claims for VA care in the community programs, staff at 
VHA's claims processing locations use the Fee Basis Claims System 
(FBCS). FBCS does not automatically apply relevant criteria and 
determine whether claims are eligible for payment. Rather, staff at 
VHA's claims processing locations must make determinations about which 
payment authority applies to each claim and which claims meet 
applicable administrative and clinical criteria for payment. (See table 
1 for a description of these steps.) In addition to processing claims 
for VA care in the community programs, staff at VHA's claims processing 
locations are also responsible for responding to telephone inquiries 
from community providers who call to check the status of their claims 
or inquire about claims that have been rejected.


     Table 1:  Veterans Health Administration's (VHA) Steps for Processing Claims for Care in the Community
----------------------------------------------------------------------------------------------------------------
             Processing step                                            Description
----------------------------------------------------------------------------------------------------------------
Receipt and scanning of claims and           VHA policy requires that paper claims be manually date-stamped and
 medical documentation                            scanned into the Fee Basis Claims System (FBCS) upon receipt.
                                                                      Electronic claims are imported into FBCS.
                                           If the community provider is required to submit medical documentation
                                           for the claim to be processed-which is the case for most types of VA
                                            care in the community services-VA can only accept it in paper form,
                                                  and the medical documentation must also be scanned into FBCS.
----------------------------------------------------------------------------------------------------------------
Verification                                    Once paper claims are scanned, staff at VHA's claims processing
                                           locations visually compare the scanned image of the claim to the text
                                              in FBCS to verify that the system accurately captured information
                                           from the claim and manually enter any information that is missing or
                                           not accurately captured. They also determine whether claims should be
                                                  rejected as duplicates of other claims that have already been
                                                                                                     processed.
----------------------------------------------------------------------------------------------------------------
Distribution                               After electronic and paper claims are entered into FBCS, staff at the
                                              VHA claims processing location electronically route the claims to
                                                               staff with the appropriate processing expertise.
----------------------------------------------------------------------------------------------------------------
Processing                                 Staff at VHA's claims processing locations use FBCS to review claims
                                             for VA care in the community and determine whether the claims meet
                                                              administrative and clinical criteria for payment.
----------------------------------------------------------------------------------------------------------------
Approval or rejection                       In FBCS, VHA's claims processing staff manually check off each line
                                               item that is approved for payment on a claim and enter into FBCS
                                                      rejection reasons for any items not approved for payment.
                                           After determining which line items should be paid, the staff use FBCS
                                                      to calculate payment amounts for each approved line item.
----------------------------------------------------------------------------------------------------------------
Payment                                    After approving claims for payment, staff at VHA's claims processing
                                           locations route the claims to VA's ``program integrity tool,'' which
                                            electronically checks claims for potential improper payments before
                                                                                        any funds are released.
                                           Claims are then released for payment; VA's financial services center
                                             issues an electronic payment to the community provider or the TPA,
                                                   and claims processing staff mark the claims as paid in FBCS.
----------------------------------------------------------------------------------------------------------------
Notification to community provider          After claims have been paid or rejected, FBCS generates preliminary
                                           fee remittance advice reports, which staff at VHA's claims processing
                                             locations must print and mail to the community providers and TPAs.
                                             These documents include a listing of claim dates and services, the
                                           reasons why payments for any services were rejected, and the payment
                                                                                 amounts for approved services.
----------------------------------------------------------------------------------------------------------------
Source: GAO analysis of VHA documents. / GAO 16 380T

VHA, Medicare, and TRICARE Claims Processing Timeliness Requirements

    VHA, CMS, and DHA all have requirements for claims processing 
timeliness. See table 2.

                               Table 2:  Claims Processing Timeliness Requirements
----------------------------------------------------------------------------------------------------------------
                  Agency                                                Requirement
----------------------------------------------------------------------------------------------------------------
Veterans Health Administration (VHA)        A VHA directive states that 90 percent of all claims for VA care in
                                            the community must be processed (either paid or rejected) within 30
                                                                                              days of receipt.a
----------------------------------------------------------------------------------------------------------------
Centers for Medicare & Medicaid Services    For Medicare claims, the standards were set by law and require that
 (CMS)                                      95 percent of clean claims-those claims with sufficient information
                                            to be processed (either paid or denied)-must be processed within 30
                                           days of receipt.b CMS's manual for processing Medicare claims states
                                                  that the remaining claims must be processed within 45 days of
                                                                                                       receipt.
----------------------------------------------------------------------------------------------------------------
Defense Health Agency (DHA)                      TRICARE Managed Care Support Contractors are subject to claims
                                                processing timeliness requirements outlined in law and in DHA's
                                           TRICARE Operations Manual. The requirements in the Operations Manual
                                               are more stringent than in the law. It states that 98 percent of
                                             claims with sufficient information to be processed must be paid or
                                                   denied within 30 days of receipt and that all claims must be
                                                            processed to completion within 90 days of receipt.c
----------------------------------------------------------------------------------------------------------------
Source: GAO analysis of VHA, CMS, and DHA policies. / GAO 16 380T
a VHA Directive 2010-005, Timeliness Standards for Processing Non-VA Provider Claims (January 27, 2010).
b A ``clean claim'' has no defect or impropriety (including a lack of required substantiating documentation) or
  particular circumstance requiring special treatment that prevents timely payment of the claim. 42 U.S.C. Sec.
  1395h(c)(2)(B). Other claims require additional investigation or development before they can be paid. CMS,
  Medicare Claims Processing Manual, Publication 100-04 (Baltimore, MD: May 15, 2015).
c By law, 95 percent of clean TRICARE claims must be processed within 30 days of submission to the claims
  processor, and all clean claims must be processed within 100 days of submission to the claims processor. 10
  U.S.C. Sec.  1095c(a).

Preliminary Analyses Suggest VHA's Claims Processing Was Significantly 
    Less Timely Than Medicare's and TRICARE's in Fiscal Year 2015, and 
    VHA's Data Likely Overstate its Performance

    Our preliminary work shows that in fiscal year 2015, VHA's 
processing of claims for VA care in the community services was 
significantly less timely than Medicare's and TRICARE's claims 
processing. VHA officials told us that the agency's fiscal year 2015 
data show that VHA processed about 66 percent of claims within the 
agency's required timeframe of 30 days or less. \21\ In contrast, CMS 
and DHA data show that in fiscal year 2015, Medicare's and TRICARE's 
claims processing contractors processed about 99 percent of claims 
within 30 or fewer days of receipt. \22\ According to CMS and DHA 
officials, the vast majority of Medicare and TRICARE claims are 
submitted electronically. \23\
---------------------------------------------------------------------------
    \21\ VHA's claims processing timeliness data do not account for the 
time it takes the TPAs to pay the community providers' PC3 or Veterans' 
Choice Program claims; however, VHA's data do account for the time it 
takes VHA's claims processing locations to process and reimburse the 
TPAs for these claims.
    \22\ The percentages reported here are for VHA, Medicare, and 
TRICARE claims that were processed within 30 days of receipt when they 
had sufficient information to be processed. Both Medicare and TRICARE 
have separate measures of claims processing timeliness for claims that 
require additional information to be processed. VHA has only one 
measure of claims processing timeliness, but if additional information 
is needed to process claims after they are initially received, VHA 
excludes from its calculation of timeliness any calendar days that 
elapse while it is awaiting this information.
    \23\ Officials from CMS and DHA told us that their data on claims 
processing timeliness are reliable because the majority of Medicare and 
TRICARE claims are submitted electronically, their contractors' claims 
processing systems are highly automated, and agency officials can 
independently validate the contractors' performance data.
---------------------------------------------------------------------------
    However, the difference between VHA's claims processing timeliness 
and that of Medicare and TRICARE is likely greater than what VHA's 
available data indicate. Specifically, VHA's data likely overstate the 
agency's claims processing timeliness because they do not account for 
delays in scanning paper claims, which VHA officials told us account 
for approximately 60 percent of claims for VA care in the community 
services. VHA's policy states that determinations of claims processing 
timeliness should be based upon the date the claim is received, but its 
systems can only calculate timeliness on the basis of the date the 
claim is entered into FBCS. \24\ When community providers submit paper 
claims, VHA policy requires claims processing staff to manually date-
stamp them and scan the paper claims into FBCS on the date of receipt. 
\25\ However, FBCS cannot electronically read the dates that are 
manually stamped on paper claims, so the scan date becomes the date 
used to calculate claims processing timeliness.
---------------------------------------------------------------------------
    \24\ VHA officials told us that they intend to revise their current 
policy for claims processing timeliness because it does not account for 
the fact that it takes more time, on average, for VHA to process 
emergency care claims than it does to process claims for preauthorized 
VA care in the community services. According to VHA officials, in 
fiscal year 2015, staff at their claims processing locations took an 
average of 32 days to process claims for emergency care, compared to an 
average of 16 days for claims for care that was preauthorized. VHA 
officials said their future policy would require claims for 
preauthorized care to be processed in 30 days or less and claims for 
emergency care be processed in 45 days or less and that these new 
metrics would be more closely aligned with Medicare's and TRICARE's 
standards, which permit more time for claims processing when additional 
information must be requested from providers. However, VHA's systems 
will still measure claims processing timeliness on the basis of the 
dates claims are entered into FBCS, which may not be the actual date of 
receipt for paper claims, so it is unlikely that VHA's new metrics will 
result in more reliable estimates of the agency's claims processing 
timeliness.
    \25\ In contrast, electronic claims automatically receive an 
electronic date-stamp when they are imported into FBCS.
---------------------------------------------------------------------------
    Our preliminary review raises questions about whether staff at 
VHA's claims processing locations are following the agency's policy for 
promptly scanning paper claims. We do not know the extent of delays in 
scanning paper claims at all of VHA's claims processing locations. 
However, our preliminary analysis of the non-generalizable sample of 
156 claims for VA care in the community services from the four VHA 
claims processing locations we visited suggests that it may have taken 
about 2 weeks, on average, for staff to scan the paper claims in our 
sample into FBCS. This estimate is based on the number of days that 
elapsed between the creation dates for 86 of the 94 paper claims in our 
sample and the dates the claims were scanned into FBCS. \26\ Based on 
this analysis, we found that the number of days between the creation 
date and the scanned date for the paper claims in our sample ranged 
from 2 days to 90 days.
---------------------------------------------------------------------------
    \26\ Our estimate of the 2-week delay in scanning paper claims 
factored in 2 days for the paper claims to be mailed to VHA by the 
community providers. It also excluded 8 paper claims that appeared to 
be duplicates of claims that the community providers had previously 
submitted, based on the number of calendar days that had elapsed 
between the creation dates and the scan dates. At least one community 
provider told us that they do not change the creation date when they 
reprint and resubmit claims that VA has previously rejected.
---------------------------------------------------------------------------
    Our observations at one claims processing location we visited were 
consistent with this analysis. For example, we observed about a dozen 
bins of paper claims and medical documentation waiting to be scanned, 
and some of these bins were labeled with dates indicating they were 
received by the claims processing location about a month before our 
visit. Additionally, this claims processing location was the only one 
of the four claims processing locations we visited that manually date-
stamped all of its paper claims upon receipt. Staff at another claims 
processing location told us that they only date-stamp paper claims for 
emergency care upon receipt because these claims are only eligible for 
payment if they have been received within a certain amount of time 
after the date of service. \27\ However, the staff said they do not 
date-stamp non-emergency care claims because to do so would be too 
time-consuming. Staff at the other two claims processing locations told 
us that they did not date-stamp any claims.
---------------------------------------------------------------------------
    \27\ Claims for Millennium Act emergency care must be received by 
VHA within 90 days of the latest of the following: the date of 
discharge; the date of the patient's death, provided death occurred 
during transport to or stay in an emergency treatment facility; or the 
date that the veteran exhausted, without success, actions to obtain 
payment or reimbursement from a third party. VHA can deny these 
emergency care claims if they are submitted by community providers 
after 90 days. Claims for emergency care related to a veteran's 
service-connected disability or a condition that aggravated a service-
connected disability must be received within 2 years.
---------------------------------------------------------------------------
    These preliminary findings from the four claims processing 
locations we visited for this review are consistent with the claims 
processing deficiencies we identified in our 2014 report on the 
implementation of the Millennium Act emergency care benefit. \28\ 
Specifically, we found that the VHA claims processing locations we 
reviewed for the 2014 report were rarely date-stamping incoming paper 
claims and were not promptly scanning a significant percentage of the 
paper claims we reviewed into FBCS. In our report, we recommended that 
VHA implement measures to ensure that all incoming claims are date-
stamped and scanned into FBCS on the date of receipt, and VA agreed 
with our recommendations. Soon after we issued our 2014 report, VHA 
reiterated its date-stamping and scanning policies on national calls 
with managers responsible for claims processing, posted articles in its 
biweekly bulletin for managers and staff, and conducted online training 
for staff that communicated the importance of date-stamping and 
promptly scanning claims. However, the observations from our most 
recent review of a new sample of claims at four other claims processing 
locations suggest that VHA had not monitored the operational 
effectiveness of their corrective actions to address our 
recommendation. VHA officials said that when they became aware of these 
more recent findings, they began requiring managers at their claims 
processing locations to periodically certify in writing that all 
incoming paper claims have been date-stamped and scanned on the day of 
receipt.
---------------------------------------------------------------------------
    \28\ See GAO 14 175.

Preliminary Analyses Indicate that Technology Limitations and Related 
---------------------------------------------------------------------------
    Staffing Shortages Have Delayed VHA's Claims Processing

    During the course of our preliminary work, VHA officials and staff 
at three of the four claims processing locations we visited told us 
that limitations of the existing information technology systems VHA 
uses for claims processing-and related workload challenges-delay 
processing and payment of claims for VA care in the community services. 
These identified limitations are described in more detail below.

VHA cannot accept medical documentation electronically

    While VHA has the capacity to accept claims from community 
providers and the TPAs electronically, it does not have the capacity to 
accept medical documentation electronically from the providers and 
TPAs. \29\ As a result, this documentation must be scanned into FBCS, 
which delays claims processing, according to VHA staff. Although VHA 
policy requires VHA staff to promptly scan paper claims into FBCS when 
received, delays can occur because staff do not have time to scan the 
high volume of claims and medical documentation received each day, and 
the capacity of scanning equipment is limited. For example, VHA staff 
at one claims processing location we visited told us that on Mondays 
(their heaviest day for mail since they do not receive mail on 
weekends), they do not scan any incoming claims with accompanying 
medical documentation. Instead, they generally scan only claims that do 
not have accompanying medical documentation on Mondays and scan claims 
with accompanying medical documentation into FBCS on Tuesdays and 
Wednesdays. In some cases, the medical documentation community 
providers must submit can be extensive, which may further delay its 
entry into FBCS. Officials from one community health care system told 
us that the medical documentation they submit with claims can be 
between 25 to 75 pages for each patient. With most types of claims 
requiring medical documentation, staff at VHA's claims processing 
locations may need to scan a significant number of pages of incoming 
medical documentation each day.
---------------------------------------------------------------------------
    \29\ For all types of VA care in the community services except 
individually authorized outpatient care, community providers must 
include medical documentation with the claims they submit to VHA or the 
TPAs. According to VHA officials, VHA cannot accept any medical 
documentation electronically because of (1) a lack of interoperability 
between VHA's systems and the providers' and TPAs' systems and (2) 
concerns about safeguarding the security of veterans' health 
information, among other things. However, according to VHA officials, 
selected claims processing locations have made arrangements with 
certain community providers that enable VHA's claims processing staff 
to remotely access the community providers' medical records 
electronically.

Authorizations for VA care in the community services are not always 
---------------------------------------------------------------------------
    readily available in FBCS

    Staff at three of the four VHA claims processing locations we 
visited told us that processing and payment can also be delayed when 
authorizations for VA care in the community services are unavailable in 
FBCS. Before veterans obtain services from community providers, staff 
at VA medical facilities must indicate in the veteran's VA electronic 
health record (a system separate from FBCS) that the service or 
services have been authorized, and then they must manually create an 
authorization in FBCS. However, VHA officials and staff told us that 
these authorizations are sometimes unavailable in FBCS at the time 
claims are processed, which delays processing and payment. The 
authorizations are unavailable because either (1) they have been 
electronically suspended in FBCS, and as a result staff at the VA 
medical facility that authorized the care must release them before any 
associated claims can be paid, or (2) the estimated date of service on 
the authorization does not match the date that services were actually 
rendered, and new authorizations must be entered by staff at the 
authorizing VA medical facility before the claims can be paid. \30\
---------------------------------------------------------------------------
    \30\ A VA official provided additional detail on why the 
authorizations may be electronically suspended in FBCS and why the 
dates of service on the authorization and claim may not match. 
According to this official, when authorizations for inpatient care in 
the community services are entered into FBCS, they must include a 
discharge date. Because this date is generally not known until after 
the claim is received, staff at VA medical facilities may 
electronically suspend the authorization until they are alerted by 
staff from the VHA claims processing location that the claim has been 
received. No claims can be paid against an authorization while it is 
suspended, causing it to seem as though it is not available in FBCS. In 
cases where authorizations are not suspended, estimated discharge dates 
are entered. If VHA receives any claims with dates of service occurring 
after the date that was originally estimated for that inpatient episode 
of care, staff at the VA medical facility must create new 
authorizations in FBCS before staff at the VHA claims processing 
location can pay the claims.
---------------------------------------------------------------------------
    In our sample of 156 claims, 25 claims were delayed in being 
processed because an authorization was not initially available in FBCS, 
resulting in an average delay of approximately 42 days in claims 
processing. Additionally, 8 of the 12 community providers we 
interviewed said they were aware that some of their payments had been 
delayed because authorizations were not available in FBCS when their 
claims arrived at the VHA claims processing location.

FBCS cannot automatically adjudicate claims

    FBCS cannot automatically adjudicate claims, and as a result, VHA 
staff must do so manually, which VHA staff told us can slow claims 
processing, make errors more likely, and delay claims payment. After 
information from claims and supporting medical documentation has been 
scanned and entered into FBCS, the system cannot fully adjudicate the 
claims without manual intervention. For example, FBCS lacks the 
capability to electronically apply relevant administrative and clinical 
criteria for Millennium Act emergency care claims, such as 
automatically determining whether a veteran is enrolled in the VHA 
health care system and whether they had received services from a VA 
clinician in the 24 months prior to accessing the emergency care. 
Instead, staff processing these claims perform searches within FBCS and 
manually select rejection reasons for any claims that do not meet VHA's 
administrative or clinical criteria for payment.
    Among the 156 claims we reviewed at four claims processing 
locations, it took an average of 47 days for claims processing staff to 
determine that the claims met the administrative and clinical criteria 
for payment. In addition, even after claims are approved for payment, 
they require additional manual intervention before the community 
providers can be paid. For example, in cases where FBCS cannot 
automatically determine correct payment rates for VA care in the 
community services, VHA staff manually calculate VHA's payment rates 
and enter this information into FBCS. Staff we interviewed also told us 
that it usually takes about 2 days for claims to return from VA's 
program integrity tool, which is a system outside FBCS where claims are 
routed for prepayment review of potential improper payments. If 
corrections must be made after the claims return from this prepayment 
review, payments can be delayed further.

Weaknesses in FBCS and VHA's financial management systems have also 
    delayed claims payments

    According to staff at three of the four claims processing locations 
we visited, payments on some VA care in the community claims are 
delayed when VHA does not have funds available to pay them, a problem 
that occurs in part because FBCS and VHA's financial management systems 
do not permit officials to efficiently monitor the availability of 
funds for VA care in the community services. To improve its oversight 
of VA care in the community, the Choice Act directed VA to transfer the 
authority for processing payments for VA care in the community from its 
Veterans Integrated Service Networks and VA medical centers to VHA's 
Chief Business Office for Purchased Care, a change VA implemented in 
October 2014. However, according to VHA officials from that office, 
monitoring the use of funds-at a national level-has remained largely a 
manual process due to limitations of FBCS and the use of separate 
systems to track obligations and expenditures. VHA uses historical data 
from FBCS to estimate obligations on a monthly basis. According to VHA 
officials, these estimates have been unreasonably low for some 
services, given the unexpected increase in utilization of VA care in 
the community services over the course of fiscal year 2015. In 
addition, FBCS does not fully interface with systems used to track the 
availability of funds, which results in staff having to manually record 
the obligations for outpatient VA care in the community services in 
these systems on a monthly basis. Together, these two issues have 
impeded the ability of VHA to ensure that funds are available to pay 
claims for VA care in the community as they are approved, according to 
VHA officials responsible for monitoring the use of funds. Our initial 
work shows that payments for 5 of the 156 claims we reviewed from four 
claims processing locations were delayed because funds were 
unavailable, resulting in payment delays that ranged from 1 to 215 
days.

Inadequate equipment delays scanning of paper claims and medical 
    documentation

    VHA officials also told us that inadequate scanning equipment 
delayed claims processing and adversely affected VHA's claims payment 
timeliness. At the time of our review, staff responsible for scanning 
paper claims and medical documentation at one of the four claims 
processing locations we visited told us that they did not have adequate 
scanning equipment. At this location, the scanners that staff showed us 
were small enough to be placed on desktops, while the trays for feeding 
documents into the scanners could only handle a limited number of pages 
at one time. With an estimated 60 percent of claims and 100 percent of 
medical documentation requiring scanning, these staff said that they 
struggled to keep up with the volume of paper coming in to their claims 
processing location.

Staffing shortages adversely affect claims processing timeliness

    In addition to the technological issues described above, VHA 
officials and staff also told us that staffing shortages have adversely 
affected VHA's claims processing timeliness. According to VHA 
officials, the overall number of authorized positions for claims 
processing staff did not change after the October 2014 organizational 
realignment that transferred claims processing management and oversight 
responsibilities to the Chief Business Office for Purchased Care. 
However, VHA officials said that VHA's claims processing workload 
increased considerably over the course of fiscal years 2014 and 2015. 
(See figure 1 for an illustration of the increase in VHA's claims 
processing workload between fiscal year 2012 and fiscal year 2015.)

[GRAPHIC] [TIFF OMITTED] T5101.001


    According to VHA officials and staff, the increase in workload 
contributed to poor staff morale, attrition, and staff shortages-all of 
which contributed to delays in processing and impeded VHA's claims 
processing timeliness. VHA officials told us that in early fiscal year 
2015, there were about 300 vacancies among the estimated 2,000 
authorized positions for claims processing staff.

VA Care in the Community Providers Cite Administrative Burden, Lack of 
    Notification, and Problems with Poor Customer Service

    The 12 community providers and 12 state hospital association 
respondents who participated in our ongoing review told us about 
various issues they had experienced with VHA's claims processing 
system. These issues are described in more detail below.

Administrative burden of submitting claims and medical documentation to 
    VHA

    Almost all of the community providers we interviewed (11 out of 12) 
and all of the state hospital association respondents that participated 
in our ongoing review described the administrative burden of submitting 
claims and medical documentation to their respective VHA claims 
processing locations. For example, one community provider told us that 
VHA claims only accounted for about five percent of their business, but 
the provider told us it employed one full-time staff member who was 
dedicated to submitting claims to VHA and following up on unpaid ones. 
This same provider employed a second full-time staff member to handle 
Medicaid claims, but these accounted for about 85 percent of their 
business.
    According to many of the community providers that participated in 
our review, obtaining payment from VHA often requires repeated 
submission of claims and medical documentation. Officials from one 
community provider we interviewed said that, at one point, they had 
been hand delivering paper medical documentation with paper copies of 
the related claims to their VHA claims processing location, but VHA 
staff at this location still routinely rejected their claims for a lack 
of medical documentation. Similarly, six state hospital association 
respondents also reported that their members' claims were often 
rejected, even though they always sent medical documentation to their 
VHA claims processing location by certified mail. Some of the community 
health care system and hospital officials who participated in our 
review explained that they often must submit medical documentation to 
their VHA claims processing location twice-once for the claim related 
to hospital services and again for claims related to physician 
services.

Lack of notification about claims decisions

    Community providers who participated in our review also explained 
that they rarely received written notifications from VHA about claims 
decisions. To inform community providers and the TPAs about whether 
their claims have been approved or rejected, staff at VHA's claims 
processing locations print notices called preliminary fee remittance 
advice reports and mail them to the providers and TPAs. \31\ However, 
community providers who participated in our study stated that they 
rarely received these paper reports in the mail, and even though they 
received VA payments electronically, it was not clear without the 
remittance advice reports which claims the payments applied to or 
whether VHA denied payment for certain line items on some claims. 
Unlike Medicare and TRICARE, VHA has no online portal where community 
providers can electronically check the status of their claims to find 
out if the claims are awaiting processing or if VHA needs additional 
information to process them. Several of the community providers who 
participated in our study told us that they would appreciate VHA 
establishing such a portal.
---------------------------------------------------------------------------
    \31\ The preliminary fee remittance advice reports include a 
listing of claim dates and services, the reasons why payments for any 
services were disapproved, and payment amounts for services that were 
approved.

---------------------------------------------------------------------------
Issues with telephone-based provider customer service

    Almost all of the community providers and state hospital 
associations that participated in our review (9 out of 12 providers and 
11 out of 12 associations) experienced issues with the telephone-based 
provider customer service at VHA's claims processing locations. For 
example,

      officials from three of the community providers we 
interviewed reported that they routinely wait on hold for an hour or 
more while trying to follow up on unpaid claims.
      Officials from a community health care system that 
operates 46 hospitals and submits claims to 5 different VHA claims 
processing locations said that 3 of these locations will not accept any 
phone calls and instead require providers to fax any questions about 
claim status.
      According to officials from another community health care 
system, their VHA claims processing location has limited them to 
inquiring about only three claims per VHA staff member, per day. The 
officials explained that if they call twice on the same day and reach 
the same individual who has already checked the status of three claims, 
that person will refuse to check the status of additional claims; 
however, if they connect with a different VHA staff member, they may be 
able to inquire about additional claims. \32\
---------------------------------------------------------------------------
    \32\ VHA officials said that once they became aware of this 
practice in the summer of 2015, they contacted managers at their claims 
processing locations to advise them that they should not be limiting 
the number of claims each community provider could call and inquire 
about each day.

While VHA Has Implemented Interim Measures, the Agency Does Not Expect 
    to Address All Claims Processing Challenges until Fiscal Year 2018 
---------------------------------------------------------------------------
    or Later

VHA Has Recently Filled Staff Vacancies, Introduced Productivity 
    Standards, Invested in Scanning Equipment, and Taken Other Steps to 
    Improve Claims Processing Timeliness

    In the course of our ongoing work, VHA officials reported that they 
implemented several measures in fiscal year 2015 and early fiscal year 
2016 that were intended to improve the timeliness of VHA's payments to 
community providers and the TPAs. The following are the key steps that 
VHA officials have reported taking.

      Staffing increases. VHA officials said that they have 
recently filled the approximately 300 staff vacancies that resulted 
from attrition shortly after the October 2014 realignment of claims 
processing under VHA's Chief Business Office for Purchased Care. The 
officials also told us that they have supplemented the existing 
workforce at VHA's claims processing locations by hiring temporary 
staff and contractors to help address VHA's backlog of claims awaiting 
processing. In addition, for 2 months in fiscal year 2015, VHA required 
its claims processing staff to work mandatory overtime, and according 
to VHA officials, staff are still working overtime on a voluntary 
basis. At some locations, VHA added second shifts for claims processing 
staff. As a result, VHA officials told us that VHA was able to decrease 
its backlog of unprocessed claims for VA care in the community from an 
all-time high of 736,000 claims in August 2015 to about 453,000 claims 
as of October 29, 2015. \33\
---------------------------------------------------------------------------
    \33\ VHA defines ``backlogged'' claims to be those that were 
received more than 30 days ago. However, VHA's data do not account for 
paper claims that have been received by VHA claims processing locations 
but not yet scanned into FBCS. Therefore, VHA's data likely 
underestimate the number of claims that have been awaiting processing 
for more than 30 days.
---------------------------------------------------------------------------
      Deployment of nationwide productivity standards. On 
October 1, 2015, VHA introduced new performance plans with nationwide 
productivity standards for its claims processing staff, and officials 
estimated that these standards would lead staff to process more claims 
each day, resulting in a 6.53 percent increase in claims processing 
productivity over the course of fiscal year 2016.
      Improved access to data needed to monitor claims 
processing performance. VHA has implemented a new, real-time data 
tracking system to monitor claims processing productivity and other 
aspects of performance at its claims processing locations. This tool, 
which VHA officials refer to as the ``command center,'' permits VHA 
officials and managers at VHA's claims processing locations to view 
claims data related to the timeliness of payments and other metrics at 
the national, claims processing location, and the individual staff 
level. Previously, many data were self-reported by the claims 
processing locations. The VHA officials we interviewed said that they 
monitor these data daily.
      New scanning equipment. VHA recently purchased new 
scanning equipment for 73 of its 95 claims processing locations, 
including the claims processing location we visited with the small, 
desktop scanners. The agency awarded a contract in November 2015, and 
officials said that VHA had installed this new equipment at almost all 
sites as of January 15, 2016. They expected that installation would be 
completed at the few remaining sites by the end of January 2016.
      Improvement of cost estimation tools. In January 2016, 
VHA deployed an FBCS enhancement that is intended to improve VHA's 
ability to estimate obligations for VA care in the community within 
FBCS. VHA officials said this will help them ensure that adequate funds 
are available to pay claims for VA care in the community services at 
the time the claims are processed. However, staff at VA medical 
facilities still must manually enter estimated obligations into VHA's 
systems for tracking the availability of funds on a monthly basis, 
because this information cannot be automatically transferred from FBCS.

VHA Is Examining Options for Modernizing Its Claims Processing System 
    and Estimates Implementing New Technology and Other Solutions Will 
    Take at Least 2 Years

    VHA officials that we interviewed in the course of our ongoing work 
acknowledged that the recent steps they have taken to improve claims 
processing timeliness-such as hiring temporary staff and contractors 
and mandating that claims processing staff work overtime-are not 
sustainable in the long term. These officials said that if the agency 
is to dramatically improve its claims processing timeliness, 
comprehensive and technologically advanced solutions must be developed 
and implemented, such as modernizing and upgrading VHA's existing 
claims processing system or contracting out the claims processing 
function. On October 30, 2015, VHA reported to Congress that it has 
plans to address these issues, but the agency estimates that it will 
take at least 2 years to implement solutions that will fully address 
all of the challenges now faced by its claims processing staff and by 
providers of VA care in the community services. \34\ According to VHA 
officials, the success of this long-term modernization plan will also 
hinge on significant investments in the development and deployment of 
new technology.
---------------------------------------------------------------------------
    \34\ Department of Veterans Affairs, Plan to Consolidate Programs 
of Department of Veterans Affairs to Improve Access to Care, 
(Washington, D.C.: Oct. 30, 2015). The VA Budget and Choice Improvement 
Act required VA to develop a plan for consolidating its existing VA 
care in the community programs. The plan was due to Congress no later 
than November 1, 2015. Pub. L. No. 114-41, Sec.  4002, 129 Stat. 443, 
461 (2015).
---------------------------------------------------------------------------
    In its October 2015 strategic plan for consolidating VA care in the 
community programs and improving related business processes, VHA stated 
that it expects it will significantly increase its reliance on 
community providers to deliver care to veterans in the coming years. In 
addition, VHA plans to adopt many features or capabilities for its 
claims processing system that are similar to Medicare's and TRICARE's 
claims processing systems, including (1) greater automatic adjudication 
of claims, (2) automating the entry of authorizations, (3) establishing 
a mechanism by which community providers can electronically submit 
medical records, (4) creating a Web-based portal for community 
providers to check the status of their claims, and (5) establishing a 
nationwide provider customer service system with dedicated staff so 
that other staff can focus on claims processing. According to this 
strategic plan, VHA will examine potential strategies for developing 
these capabilities in fiscal year 2016-including the possibilities of 
contracting for (1) the development of the claims processing system 
only or (2) all claims processing services, so that contractors, rather 
than VHA staff, would be responsible for processing claims (similar to 
Medicare and TRICARE). The strategic plan states that VHA will finalize 
more detailed implementation plans before the end of this fiscal year. 
The agency expects that deployment of its selected solutions will begin 
in fiscal year 2018 or later.
    According to VHA, the efforts underway to address deficiencies in 
its claims processing system will present major challenges, such as 
revamping VHA's information technology systems and securing funding to 
do so. Our past work on planning best practices calls for an 
implementation strategy to help ensure that needed changes are made in 
a timely manner and that ramifications for key decisions (such as ones 
that relate to an agency's current and future workforce profile) are 
considered. To date, VHA has not developed a detailed plan for 
achieving these goals.
    That VHA has not yet communicated a detailed plan is cause for 
concern, given VA's past failed attempts to modernize key information 
technology systems. Our prior work has shown that VHA's past attempts 
to achieve goals of a similar magnitude-such as modernizing its systems 
for (1) scheduling outpatient appointments in VA medical facilities, 
(2) financial management, and (3) inventory and asset management-have 
been derailed by weaknesses in project management, a lack of effective 
oversight, and the failure of pilot systems to support agency 
operations. \35\ For example, we found:
---------------------------------------------------------------------------
    \35\ See GAO, Information Technology: Management Improvements Are 
Essential to VA's Second Effort to Replace its Outpatient Scheduling 
System, GAO 10 579 (Washington, D.C.: May 27, 2010); GAO, Information 
Technology: Actions Needed to Fully Establish Program Management 
Capability for VA's Financial and Logistics Initiative, GAO 10 40 
(Washington, D.C.: Oct. 26, 2009); and Veterans Health Care: VHA Has 
Taken Steps to Address Deficiencies in its Logistics Program, but 
Significant Concerns Remain, GAO 13 336 (Washington, D.C.: Apr. 17, 
2013).

      VA undertook an initiative in 2000 to replace the 
outpatient scheduling system but terminated the project after spending 
$127 million over 9 years.
      VA has been trying for many years to modernize or replace 
its financial management and inventory and asset management systems but 
has faced hurdles in carrying out these plans. In 2010, VA canceled a 
broad information technology improvement effort that would have 
improved both of these systems and at the time was estimated to cost 
between $300 million and $400 million. \36\ By September 2, 2009 (just 
before the project's cancellation) VA had already spent almost $91 
million of the $300 million to $400 million that was originally 
estimated. A previous initiative to revamp these systems was underway 
between 1998 and 2004, but after reportedly having spent more than $249 
million on development of the replacement system, VA discontinued the 
project because the pilot system failed to support VHA's operations.
---------------------------------------------------------------------------
    \36\ The portion of the broad information technology improvement 
effort that VA canceled in 2010 pertaining to the update of VHA's 
inventory and asset management system was not officially terminated 
until 2011.

    According to VHA officials, instead of investing in administrative 
systems such as the claims processing system, outpatient scheduling 
system, financial management systems, or the inventory and asset 
management system, in recent years VA has prioritized investments in 
information technology enhancements that more directly relate to 
patient care. As such, VHA officials said they have had little success 
in gaining approval and funding for information technology improvements 
for these administrative systems.
    In summary, our preliminary analyses show that VHA's average claims 
processing timeliness in fiscal year 2015 was significantly lower than 
Medicare's and TRICARE's timeliness and far below its own standard of 
paying 90 percent of claims within 30 days. To its credit, VHA has 
recently implemented measures (including hiring more staff and 
purchasing new scanning equipment), which are intended to address some 
challenges that have impeded its claims processing timeliness. VHA 
plans to address the remaining challenges through its longer term 
effort to implement a consolidated VA care in the community program in 
fiscal year 2018 or later. These sweeping changes do not come without 
risk and cost, and VHA has struggled to make changes of a similar 
magnitude in the past. However-based on statements made by some of the 
community providers that participated in our review-without 
significantly improving the timeliness of its payments and addressing 
community providers' concerns about the administrative burden of 
obtaining VHA payments and the agency's lack of responsiveness when 
they inquire about unpaid claims, VHA will risk losing the cooperation 
of these providers as it attempts to transition to a future care 
delivery model that would heavily rely on them to deliver care to 
veterans.
    Because this work is ongoing, we are not making recommendations on 
VHA's processing and payment of claims from community providers at this 
time.
    Chairman Benishek, Ranking Member Brownley, and Members of the 
Subcommittee, this completes my prepared statement. I would be pleased 
to respond to any questions you may have at this time.

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    If you or your staffs have any questions about this statement, 
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contributions to this statement include Marcia A. Mann, Assistant 
Director; Elizabeth Conklin; Krister Friday; Jacquelyn Hamilton; and 
Alexis C. MacDonald.

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                   Prepared Statement of Gary K. Abe
    Mr. Chairman and Members of the Subcommittee, thank you for the 
opportunity to discuss the Office of Inspector General's (OIG) work 
concerning VA's purchase care programs. Our work covers issues 
discussed in VA's Plan to Consolidate Programs of Department of 
Veterans Affairs to Improve Access to Care (consolidation plan), 
submitted to Congress as required by Public Law 114-41, Surface 
Transportation and Veteran Health Care Choice Improvement Act. I am 
accompanied by Mr. Larry Reinkemeyer, Director, OIG's Kansas City Audit 
Division.

BACKGROUND

    VA's purchased care programs include the Veterans Choice Program 
(VCP), Patient-Centered Community Care (PC3), Fee Basis Care, and other 
non-VA care programs. VA's purchased care programs are critical to VA 
in carrying out its mission of providing medical care, including 
outpatient services, inpatient care, mental health, dental services, 
and nursing home care to veterans. Our audits and reviews have reported 
the challenges VA faces in administering these programs, such as 
authorizing, scheduling, ensuring contractors provide medical 
information to VA in support of the services provided, ensuring VA 
inputs the medical information from contractors into the veteran's VA 
medical record, and timely and accurate payment for care purchased 
outside the VA health care system. Specifically, we reported in January 
2015, and October 2015, that the Phoenix VA Health Care System (PVAHCS) 
was experiencing problems coordinating administrative actions with 
contracted providers including timely insertion of contracted 
providers' medical documentation into VA medical records. \1\ We 
determined that non-VA providers' clinical documents were not available 
for PVAHCS providers to review timely and that referring providers may 
not have addressed potentially important recommendations and follow-up 
because they did not have access to non-VA clinical records. We also 
concluded that PVAHCS Urology Service and Non-VA Care Coordination 
staff did not provide timely care or ensure timely urological services 
were provided to patients needing care.
---------------------------------------------------------------------------
    \1\ Interim Report - Review of Phoenix VA Health Care System's 
Urology Department, Phoenix, AZ, January 28, 2015; and Healthcare 
Inspection - Access to Urology Service, Phoenix VA Health Care System, 
Phoenix, AZ, October 15, 2015
---------------------------------------------------------------------------
    It has been challenging to conduct effective oversight of VA's 
purchase care programs because VA continues to fast track changes to 
the program. For example, we had planned to review the timeliness and 
accuracy of PC3 payments this fiscal year after providing VA sufficient 
time to process a significant number of PC3 medical claims to make 
reliable findings and conclusions. However, PC3 was soon followed by 
the VCP, which has only paid about $53 million of medical claims as of 
February 1, 2016. Nevertheless, we plan on reviewing a statistically 
reliable number of paid Choice medical claims every quarter in order to 
meet the Veterans Access, Choice, and Accountability Act (VACAA) of 
2014 (Public Law 113-146) requirement to submit a report on timeliness 
and accuracy after 75 percent of the almost $10 billion dollars 
appropriated to the VCP is spent or when the program ends in August 
2017, whichever occurs first. This approach enables us to view the 
expenditure activity over time and helps assess whether the program 
services provided to veterans are improving or worsening. The planned 
approach also provides more time and opportunity for VA to strengthen 
its program controls specifically before the majority of funds are 
spent.

PATIENT-CENTERED COMMUNITY CARE

    The PC3 program is a Veterans Health Administration (VHA) 
nationwide program that provides eligible veterans access through 
health care contracts to certain medical services. The PC3 program is 
used after the VA medical facility has exhausted other options for 
purchased care and when local VA medical facilities cannot readily 
provide the needed care to eligible veterans due to lack of available 
specialists, long wait times, geographic inaccessibility, or other 
factors. In September 2013, VA awarded Health Net Federal Services, 
Limited Liability Corporation (Health Net) and TriWest Healthcare 
Alliance Corporation (TriWest) PC3 contracts totaling approximately $5 
billion and $4.4 billion, respectively. Then on October 30, 2014, VA 
amended the PC3 contracts with Health Net and TriWest to include 
administration of the VCP. Administration includes responsibilities 
such as, sending out Choice cards to eligible veterans, providing call 
center service, scheduling appointments, and providing care through 
their provider networks. This is an important matter when evaluating 
VA's plan to align all non-VA care programs under the new VCP. Since 
Health Net and TriWest have built their Choice provider network upon 
the backbone of their PC3 network, there are lessons that can be 
learned from the series of reports we issued in FY 2015 addressing 
aspects of PC3 implementation efforts. A theme that was clear to us was 
that VA clinical and support staff were dissatisfied with PC3 in such 
areas as authorizing care, scheduling appointments, and veterans 
waiting for care.
    In our July 2015, Review of Allegations of Delays in Care Caused by 
Patient-Centered Community Care (PC3) Issues, we examined VHA's use of 
PC3 contracted care to determine if it was causing patient care delays. 
We found that pervasive dissatisfaction with both PC3 contracts has 
caused all nine of the VA medical facilities we reviewed to stop using 
the PC3 program as intended. We projected Health Net and TriWest 
returned, or should have returned, almost 43,500 of 106,000 
authorizations (41 percent) because of limited network providers and 
blind scheduling. \2\ We determined that delays in care occurred 
because of the limited availability of PC3 providers to deliver care. 
VHA also lacked controls to ensure VA medical facilities submit timely 
authorizations, and Health Net and TriWest schedule appointments and 
return authorizations in a timely manner. VHA needed to improve PC3 
contractor compliance with timely notification of missed appointments, 
providing required medical documentation, and monitoring returned and 
completed authorizations. The then Interim Under Secretary for Health 
agreed with our recommendations to ensure PC3 contractors submit timely 
authorizations, evaluate the PC3 contractors' network, revise contract 
terms to eliminate blind scheduling, and implement controls to make 
sure PC3 contractors comply with contract requirements.
---------------------------------------------------------------------------
    \2\ Blind scheduling refers to scheduled appointments for veterans 
without discussing the tentative appointment with the veteran.
---------------------------------------------------------------------------
    In our September 2015, Review of VHA's PC3 Provider Network 
Adequacy, we reported that inadequate PC3 provider networks contributed 
significantly to VA medical facilities' limited use of PC3. VHA spent 
0.14 percent, or $3.8 million of its $2.8 billion FY 2014 non-VA care 
budget on PC3. During the first 6 months of FY 2015, VHA's PC3 
purchases increased but still constituted less than 5 percent of its 
non-VA care expenditures. VHA staff attributed the limited use of PC3 
to inadequate provider networks that lacked sufficient numbers and 
mixes of health care providers in the geographic locations where 
veterans needed them. VA medical facility staff considered the PC3 
networks inadequate because:

      The PC3 network lacked needed specialty care providers, 
such as urologists and cardiologists.
      Returned PC3 authorizations had to be re-authorized 
through non-VA care and increased veterans' wait times for care.
      Non-VA care provided veterans more timely care than PC3.

    For these staff, inadequate PC3 provider networks were a major 
disincentive to using PC3 because it increased veterans' waiting times, 
staffs' administrative workload, and delayed the delivery of care. 
Further, VHA had not ensured the development of adequate PC3 provider 
networks because it lacked an effective governance structure to oversee 
the Chief Business Office's (CBO) planning and implementation of PC3; 
the CBO lacked an effective implementation strategy for the roll-out of 
PC3; and neither VHA nor Health Net and TriWest maintained adequate 
data to measure and monitor network adequacy. The Under Secretary for 
Health agreed with our recommendations to strengthen controls over the 
monitoring of PC3 network adequacy and ensure adequate implementation 
and monitoring plans are developed for future complex healthcare 
initiatives.
    In another September 2015 report, Review of Patient-Centered 
Community Care (PC3) Health Record Coordination, we found that VA 
lacked an effective program for monitoring the performance of their two 
contractors. We estimated that about 32 percent of the PC3 episodes of 
care had complete clinical documentation provided within the time frame 
required under the PC3 contracts. This was well below the 90 percent 
contract performance standard for outpatient and 95 percent for 
inpatient documentation. Contracting Officer's Representatives (CORs) 
did not have an independent source of VA data to verify contractor 
compliance with the contracts. Instead, CORs monitored contract 
compliance by reviewing monthly performance reports submitted by the 
contractors. As a result, VA lacked adequate visibility and assurance 
that veterans were provided adequate continuity of care, and VA was at 
an increased risk of improperly awarding incentive fees or not applying 
penalty fees. We estimated 20 percent of the documentation was 
incomplete, and an additional 48 percent was not provided to VA within 
the timeframe required in the contracts. From January 1 through 
September 30, 2014, we estimated that VA made about $870,000 of 
improper payments.
    Additionally, we reviewed just over 400 episodes of care and 
identified 3 critical findings that did not have contract-required 
elements annotated in the clinical documentation returned by TriWest's 
providers, such as the name of the VA medical facility staff member 
contacted and date and time notified. Without this information and the 
timely receipt of critical findings, VHA lacked assurance that critical 
findings were being reported in accordance with the contract's 
performance standards. Further, we examined each critical finding and 
found that PC3 patients experienced delays in treatment by VA, as well 
as by TriWest. We made recommendations to the VA Undersecretary for 
Health including to implement a mechanism to verify PC3 contractors' 
performance, ensure PC3 contractors properly annotate and report 
critical findings in a timely manner, and impose financial or other 
remedies when contractors fail to meet requirements.
    The Under Secretary for Health provided a responsive action plan 
and expected to address our recommendations by August 2016. We are 
continuing to monitor VA's progress and will do so until all proposed 
actions are completed.

VETERANS CHOICE PROGRAM

    The VACAA created the VCP in November 2014. Following enactment of 
VACAA, VA turned to Health Net and TriWest, the administrators of the 
PC3 program, who had provider networks in place nation-wide. The VCP 
allows staff to identify veterans to include on the Veterans Choice 
List, a list that includes veterans with appointments beyond 30 days 
from the clinically indicated or preferred appointment dates and 
veterans who live more than 40 miles from a VA facility. Under this 
program, VA facilities began providing non-VA care to eligible veterans 
enrolled in VA health care as of August 1, 2014, and to recently 
discharged combat veterans who are within 5 years of their post-combat 
separation date. From August 2014 through February 1, 2016, VA has 
spent $224.4 million on the VCP. VA has reimbursed Health Net and Tri 
West $171.4 million of the $224.4 million (76 percent) for 
administering the program and $53.0 million of the $224.4 million (24 
percent) for medical services provided to veterans.
    Our OIG Hotline has received numerous complaints about the VCP 
during the 4th quarter of fiscal year 2015. These complaints fall into 
the following general categories:

      Appointments and scheduling
      Program eligibility and enrollment
      Veteran and provider payments
      Authorization process.

    In our February 2016, Review of Alleged Untimely Care at the 
Colorado Springs Community Based Outpatient Clinic, Colorado Springs, 
Colorado, we substantiated the allegation that eligible Colorado 
Springs veterans did not receive timely care in six reviewed services. 
These services were Audiology, Mental Health, Neurology, Optometry, 
Orthopedic, and Primary Care. We reviewed 150 referrals for specialty 
care consults and 300 primary care appointments. Of the 450 consults 
and appointments, 288 veterans encountered wait times in excess of 30 
days. For all 288 veterans, VA staff either did not add them to the 
Veterans Choice List or did not add them to the list in a timely 
manner.

      For 59 of the 288 veterans, scheduling staff used 
incorrect dates that made it appear the appointment wait time was less 
than 30 days.
      For 229 of the 288 veterans with appointments over 30 
days, Non-VA Care Coordination staff did not add 173 veterans to the 
Veterans Choice List in a timely manner and they did not add 56 
veterans to the list at all.
      In addition, scheduling staff did not take timely action 
on 94 consults and primary care appointment requests.

    As a result, VA staff did not fully use VCP funds to afford 
Colorado Springs CBOC veterans the opportunity to receive timely care. 
The Eastern Colorado Health Care System Acting Director agreed with 
recommendations to ensure scheduling staff use the clinically indicated 
or preferred appointment dates for primary care appointments, use the 
earliest appropriate date for scheduling new patient consult 
appointments, place veterans with appointments over 30 days on the 
Veterans Choice List within 1 day of scheduling the appointment, and 
provide sufficient resources to act on consults within 7 days and 
appointment request for newly enrolled veterans within 1 day. Based on 
actions already implemented, we closed the recommendation to ensure 
that scheduling staff use the clinically indicated or preferred 
appointment dates when scheduling primary care patient appointments.
    In our February 2016 report, Review of Alleged Patient Scheduling 
Issues at the VA Medical Center in Tampa, Florida, we substantiated 
that when veterans received appointments in the community through the 
VCP, the facility did not cancel their existing VA appointments. For 
example,

      We found that for 12 veterans, staff did not cancel the 
veterans' corresponding VA appointments because Non-VA Care 
Coordination staff did not receive prompt notification from the 
contractor when a veteran scheduled a VCP appointment and no longer 
needed the VA appointment.
      We also substantiated that the facility did not add all 
eligible veterans to the Veterans Choice List when their scheduled 
appointment was greater than 30 days from their preferred date, and 
that staff inappropriately removed veterans from the Veterans Choice 
List.

    This occurred because Tampa VAMC schedulers thought they were 
appropriately removing the veteran from the Electronic Wait List, when 
they were actually removing the veteran from the Veterans Choice List. 
The Director agreed with our recommendations to ensure the facility 
receives prompt notification of scheduled VCP appointments, determine 
if the contractor complies with the notification requirements, ensure 
appropriate staff receive scheduling audit results and staff verify 
correction of errors, and ensure staff receive training regarding 
management of the Veterans Choice List. Based on actions already 
implemented, we closed 4 of the 5 recommendations, and will follow up 
to ensure the facility receives prompt notification of scheduled VCP 
appointments.
    In addition to the audit required under VACAA, we have also 
initiated another national audit. We are reviewing the implementation 
of VCP to determine if there are barriers preventing veterans' access 
to the program and whether VA has effectively communicated with 
veterans and providers about the program.

NON-VA MEDICAL CARE OBLIGATIONS

    Sound financial stewardship of funds for purchased care is 
important to ensure the availability to pay providers. VA uses 
miscellaneous obligations to estimate the funding requirements needed 
to ensure that it does not overspend for a variety of goods and 
services, including non-VA Care. Beginning in FY 2015, the VACAA 
required the CBO to use special use funds to pay for non-VA Care 
services. If CBO de-obligates those funds after the fiscal year ends, 
those resources can no longer be used to create new non-VA Care 
authorizations for veterans waiting for services. VA is required to 
ensure that funds are available to cover the non-VA Care obligation and 
expenditure prior to entering into an agreement to purchase medical 
services. Once non-VA Care services are approved, the respective budget 
and/or finance office is responsible for verifying that funds are 
available and authorized, and the obligation is recorded in the 
financial system.
    In our January 2016 report, Audit of Non-VA Medical Care 
Obligations, we determined that VHA had overestimated, and thus over 
obligated, $543 million out of $1.9 billion (29 percent) of non-VA Care 
funds obligated as of the end of FY 2013. The $1.9 billion represented 
open obligations for which VA had not yet made payments at the end of 
FY 2013. The $543 million represented an over obligation of those funds 
as they were not needed to make such payments. The $543 million 
consisted of about $265 million of single-year funds, and $278 million 
of no-year funds. As a result, over obligated single-year funds were at 
risk of being unused and returned to the U.S. Department of Treasury 
due to expiration of the appropriation, and although no-year funds do 
not expire, they remain unavailable for current needs until 
deobligated. The overestimates occurred for several reasons, including 
the lack of adequate tools for medical center staff to reasonably 
estimate the costs of purchased care and weaknesses in the financial 
reconciliation processes. VHA also did not ensure that unused funds 
were deobligated after payments were complete.
    If VHA does not improve non-VA Care obligation management, VA 
medical facilities are likely to continue to over obligate funds, thus 
reducing the amount of funds facilities have available to spend on non-
VA Care. In addition, beginning in FY 2015 the VACAA effectively 
prohibits VA from using no-year funds for non-VA Care, which puts all 
over obligated non-VA Care funds at risk of being unavailable for any 
purpose. VACAA also limited the VA's ability to transfer funds between 
non-VA Care and other Medical Services obligations, such as medical 
salaries. These restrictions increase the importance of accurately 
estimating non-VA Care obligations to maximize the amount funds used to 
provide care for veterans while minimizing the amount of unused funds 
that expire and are ultimately returned to the Treasury Department.
    We contract with CliftonLarsonAllen LLP (CLA) to audit VA's 
consolidated financial statements. For the year ending September 30, 
2015, they reported processing and reconciliation issues related to 
purchased care as a material weakness. \1\ CLA increased its focus on 
purchased care given increased funding and implementation of the VACAA. 
CLA reported problems with the cost estimation process and additionally 
noted the lack of reconciliation between the Fee Basis Claims System 
used to authorize, process, and pay for non-VA Care and VA's Financial 
Management System where obligations are recorded.
---------------------------------------------------------------------------
    \1\ Audit of VA's Financial Statements for Fiscal Years 2015 and 
2014, November 16, 2015.
---------------------------------------------------------------------------
    All of these issues-lack of tools to estimate non-VA Care costs, 
lack of controls to ensure timely deobligations, and weaknesses in 
reconciling non-VA Care authorizations to obligations in the Financial 
Management System-makes the accurate and timely management of purchased 
care funds challenging. To address the challenges in estimating costs, 
VA has requested legislation that would allow VA to record an 
obligation at the time of payment rather than when care is authorized. 
In its consolidation plan, VA said this would likely reduce the 
potential for large deobligation amounts after the funds have expired. 
VA cites the Department of Defense's Tricare program as an example of a 
large program with similar authority.
    We recognize that the current process and system infrastructure are 
complex and do not provide for effective funds management. We caution 
that such a change alone-i.e., obligating funds at the time of payment-
would not necessarily remove all of VA's challenges in this area. VA 
would still need adequate controls to monitor accounting, 
reconciliation, and management information processes to ensure they do 
not spend more than appropriated by Congress.

CONCLUSION

    Our audits and reviews have shown that VA faces challenges in 
administering its purchased care programs. Veterans' access to care, 
proper expenditure of funds, and timely payment of providers are at 
risk to the extent that VA lacked adequate processes to manage these 
funds and oversee program execution. While purchasing health care 
services from non-VA providers may afford VA flexibility in terms of 
expanded access to care and services that are not readily available at 
VA medical facilities, it also poses a significant risk to VA when 
adequate controls are not in place. With non-VA health care costs of 
about $6 billion in FY 2015 and future costs expected to increase, VA 
needs to improve program controls. Without adequate controls, VA's 
consolidation plan is at increased risk of not achieving its goal of 
delivering timely and efficient health care to veterans.
    Mr. Chairman, this concludes my statement. We would be happy to 
answer any questions you or members of the Committee may have.

                                 
                 Prepared Statement of Dr. Baligh Yehia
    Good morning, Chairman Benishek, Ranking Member Brownley, and 
Members of the Subcommittee. Thank you for the opportunity to further 
discuss the proposed improvements to the billing and reimbursement 
processes included in the Department of Veterans Affairs' (VA) plan to 
consolidate community care programs. To increase access to health care, 
VA plans to streamline the billing and reimbursement processes and 
implement system changes that will reduce frustration among community 
providers. I am accompanied today by Dr. Gene Migliaccio, Deputy Chief 
Business Officer for Purchased Care.
    VA is committed to providing Veterans access to timely, high-
quality health care. In today's complex and changing health care 
environment, where VA is experiencing a steep increase in demand for 
care, it is essential for VA to partner with providers in communities 
across the country to meet Veterans' needs. To be effective, these 
partnerships must be principle-based, streamlined, and easy to navigate 
for Veterans, community providers, and VA employees. Historically, VA 
has used numerous programs, each with their own unique set of 
requirements, to create these critical partnerships with community 
providers. This resulted in a complex and confusing landscape for 
Veterans and community providers, as well as VA employees.
    Acknowledging these issues, VA is taking action as part of an 
enterprise-wide transformation called MyVA. MyVA will modernize VA's 
culture, processes, and capabilities to put the needs, expectations, 
and interests of Veterans and their families first. Included in this 
transformation is a plan for the consolidation of community care 
programs and business processes, consistent with Title IV of the 
Surface Transportation and Veterans Health Care Choice Improvement Act 
of 2015, the VA Budget and Choice Improvement Act, and recommendations 
set forth in the Independent Assessment of the Health Care Delivery 
Systems and Management Processes of the Department of Veterans Affairs 
(Independent Assessment Report) that was required by section 201 of the 
Veterans Access, Choice, and Accountability Act of 2014 (Choice Act).
    On October 30, 2015, VA provided Congress with a possible plan for 
a New Veterans Choice Program (New VCP) that would include the 
consolidation of all purchased care programs. The New VCP will include 
some aspects of the current Veterans Choice Program established by 
section 101 of the Choice Act and incorporate additional elements 
designed to improve the delivery of community care.
    Consistent with the principles outlined in New VCP report, VA plans 
to streamline clinical and administrative processes, including the 
billing and reimbursement process. Clear guidelines, infrastructure, 
and processes to meet VA's community care needs will improve community 
providers' experience with VA while also increasing Veterans' access to 
health care. Currently, many community providers face inaccuracies or 
delays in payments due to VA's decentralized and highly manual billing 
and reimbursement process. VA plans to streamline business processes 
and implement new solutions that allow for auto adjudication of claims 
processing.

Background

    Efficient adjudication of claims processing is the key to effective 
billing and reimbursement processes. High performing networks invest in 
centralized, scalable auto adjudication technology platforms and use 
simplified product and reimbursement rules to facilitate high levels of 
auto adjudication. This enables automation of most claims and only 
requires review of claims in question, reducing delays and errors in 
payments. While this type of technology investment will have 
significant up-front costs, efficiency gains, savings, and additional 
key analytic capabilities will be generated once the solution is 
complete.
    Auto adjudication of claims is made possible by establishing 
standard rules and processes, and integrating with complete patient and 
provider data. Systems interoperability allows for flexibility, 
enabling organizations to quickly respond to regulatory and best 
practice changes. Modern claims platforms can model care outcomes, and 
identify fraud, waste and abuse through data analytics. Industry 
standards do not require the receipt of medical records for payment. VA 
does have this requirement, which often causes delays in payment. 
Within the health plan industry, private health providers submit claims 
using a standard format which typically includes patient information, 
services provided, and authorization if an authorization was required 
and obtained. Medical information is provided directly to the referring 
provider either through a patient summary or electronically. As VA 
improves claims processing, VA will no longer require medical records 
for reimbursement. VA will strive to improve the automation of systems 
to process medical records and conduct retrospective audits to confirm 
their receipt and develop lessons learned to support continuous 
improvement.

Current State

    The current VA claims infrastructure and claims process are complex 
and inefficient due to highly manual procedures. VA also lacks a 
centralized data repository to support auto adjudication. There are 
more than 70 centers processing claims across 30 different claims 
systems, resulting in inconsistent processes. Limited automation and 
manual matching of claims to authorizations prevents efficient 
adjudication. Low electronic data interchange (EDI) claims submission 
rates, decentralized and inconsistent intake processes, and limited 
staff productivity standards (i.e., workload metrics) result in labor-
intensive, paper-based processes that generate late, and sometimes 
incorrect payments. In FY 15, errors were determined in six improper 
payment categories: duplicate payment, goods or services not received, 
incorrect amount, ineligible good or service, ineligible recipient and 
lack of documentation. The overall improper payment rate for Fiscal 
Year 15 was 54.77%(the error rate excluding acquisition findings would 
be 12.42%). The majority of error findings were identified following 
the evaluation of payment compliance with the VAAR and the FAR which 
was an expansion of the audit scope from FY 14, but does not correspond 
to an increase in instances where the wrong provider was paid, the 
wrong amount was paid, a duplicate payment was made or services were 
not received.

Claims Processing Actions/Strategies Implemented for Improvement

    VA has already taken many steps to improve timeliness of payment to 
community providers. To increase transparency in the claims inventory, 
VA implemented a claims inventory dashboard allowing VA to monitor 
claims in near real time, including:

      Backlog details -inventory by age, type of claim, and 
where claims are in the processing cycle
      Monitor processing strategy - aged claims and ``cliff'' 
or claims about to age
      Monitor staff and contractor productivity
      Monitor incoming and processed trends

    VA established deep dive calls with Veterans Integrated Service 
Networks (VISNs) facing the largest backlogs. These calls occur several 
times per week and involve support staff in the review of data/
dashboard, production, barriers, and staffing issues. The calls focus 
on site action plans for addressing the backlog, eliminating barriers 
and monitoring productivity, processes and trends. Furthermore, VA 
established weekly workload calls to specifically align support teams, 
work through local payment center issues and VISN issues, and address 
barriers to maximize improvement and contract support.
    To reduce aged claims, VA implemented of backlog strategy based on 
claim type and priorities, such as processing backlog claims and claims 
that are about to age and contribute to the backlog first. These claims 
are monitored on a daily basis so that corrections can be made when 
needed. Additionally, VA implemented claims processing performance 
standards which have been communicated in performance plans.
    Currently, VA is deploying a strategy to realign resources within 
each VISN and then nationally to ensure that resource allocation is 
consistent with need. VHA has ongoing communications with VAMC facility 
leadership to reduce and eliminate facility barriers to prompt payment 
such as ensuring timely entry of authorizations.
    As stated during the HVAC hearing in June 2015, VA would fill over 
200 vacancies within 90 days of the hearing. VA exceeded that goal by 
hiring over 200 staff within eight weeks.
    VA has also improved outreach efforts with stakeholders. VA is 
identifying better and more frequent ways to communicate the status of 
claims processing timeliness with community providers, Members of 
Congress, and Veterans. Ongoing training is being provided to community 
providers on the resources available to address issues identified by 
the provider accounts receivables reports, to include monthly calls 
held with providers to address account claim concerns. VA is meeting 
with State Hospital Associations across the country to educate them on 
claims processing, Veteran authorities for payment of claims, and local 
claims status.
    These recent actions have had a significant impact on processing 
volume. In fiscal year (FY) 2015, VHA processed 16,793,057 claims 
representing a 21 percent increase over the same period the year 
before, when VHA processed 13,256,119 claims. As of January 15, 2016, 
Community Care claims inventory is 72.08 percent current, with a total 
claims volume at 1.8 million claims.
    VA continues to experience tremendous growth in the volume of 
claims for care provided by community providers. VHA has received 22 
percent more claims from October 2014 through September 2015 compared 
to the same period in the prior year. VHA staff makes every effort to 
ensure claims are processed timely. Our current standard is to have at 
least 85 percent of our claims inventory current, which means under 30 
days old for ``clean'' claims and under 45 days old for ``other than 
clean'' claims. A ``clean claim'' is a claim that has no defect or 
impropriety, such as a coding error.

Future State

    VA will pursue a claims solution and simplify processes as it 
evolves to achieve parity with best practices. Consistent with the 
principles in the New VCP plan, VA will focus on:

      Standardizing business rules and logic to support claims 
processing;
      Improving reimbursement processes by removing the 
requirement for providers to submit medical records as a condition of 
payment;
      Improving interfaces and coordination with dependent 
systems; and
      Implementing reimbursement models to recognize and 
promote Connected Health activities, such as outreach to Veterans for 
self-help, health promotion and secondary prevention, telehealth, team-
based care, and Veteran education.

    In the long term, VA will use a scalable, flexible claims platform 
that supports emerging value-based care models and streamlines data 
maintenance, storage, and retrieval. This new claims solution will 
support VA's efforts to reduce waste, fraud, and abuse. In addition, 
the VA claims solution will integrate with Veteran Eligibility Systems, 
Authorization Systems, and standardized fee schedules to support auto 
adjudication. Integration with fee schedules will support new payment 
models and enable better tracking and billing integration with other 
health insurance (OHI). VA will also integrate the claims processing 
system with patient information, increasing VA's ability to efficiently 
bill OHI. Taken together, the new claims solution will allow VA to pay 
on time and correctly while meeting Prompt Payment Act compliance. VA 
protects Veteran identifiable information in its IT systems via secure 
networks. VA will coordinate referral management with tracking 
financial obligations to provide the basis for resource and process 
adjustments based on forecasted versus actual use of funds.
    VA will determine whether to improve the system through the 
adoption of a new one or by purchasing the required capabilities 
externally. VA will oversee adherence to business rules, standardize 
internal controls, and have proper access to systems holding 
information to be reviewed. Keeping in line with best practices, VA 
will conduct claims audits for accuracy. VA also will provide 
compliance oversight for the new Prompt Payment compliance process 
owner in accordance with VA Directives, Handbooks, and other applicable 
policies. To monitor and improve performance of billing and 
reimbursement, VA will use industry standards as metrics for continuous 
process improvement.

Conclusion

    VA is continuing to examine how the existing Veterans Choice 
Program interacts with other VA health programs. In addition, VA is 
evaluating how it will adapt to a rapidly changing health care 
environment and how it will interact with other health providers and 
insurers in the future. As VA continues to refine its health care 
delivery model, we look forward to providing more detail on how to 
convert the principles outlined in this plan into an executable, 
fiscally-sustainable future state. In addition, VA plans to review 
feedback and potentially incorporate recommendations from the 
Commission on Care and other stakeholders.
    In the meantime, VA will implement improvements to the delivery of 
community care through an incremental approach as outlined in the plan, 
building on certain provisions of the existing Veterans Choice Program. 
The implementation of these improvements requires balancing care 
provided at VA facilities and in the community, and addressing 
increasing health care costs. VA will work with Congress and the 
Administration to refine the approach described in this plan, with the 
goal of improving Veteran's health outcomes and experience, as well as 
maximizing the quality, efficiency, and sustainability of VA's health 
programs. These improvements, like many of the enhancements VA has 
already made, are only possible with Congressional support, including 
legislation and necessary funding.
    VA strongly values its relationship with our community providers. 
We realize the vital role they play in assisting us in providing timely 
and high-quality care to Veterans. We are working hard to expedite 
payments and streamline our claims services in order to make this an 
effective and efficient process for all.
    Mr. Chairman, I appreciate the opportunity to appear before you 
today. We are prepared to answer any questions you or other Members of 
the Committee may have.

                                 
                 Prepared Statement of Roscoe G. Butler
    The American Legion believes in a strong, robust veterans' 
healthcare system that is designed to treat the unique needs of those 
men and women who have served their country. However, even in the best 
of circumstances there are situations where the system cannot meet the 
health care needs of the veteran, and the veteran must seek care in the 
community. Rather than treating this situation as an afterthought, an 
add-on to the existing system, The American Legion believes the 
Department of Veterans Affairs (VA) must ``develop a well-defined and 
consistent non-VA care coordination program, policy and procedure that 
includes a patient centered care strategy which takes veterans' unique 
medical injuries and illnesses as well as their travel and distance 
into account.'' \1\
---------------------------------------------------------------------------
    \1\ Resolution No. 46: Department of Veterans Affairs (VA) Non-VA 
Care Programs
---------------------------------------------------------------------------
    Chairman Benishek, Ranking Member Brownley and distinguished 
members of the Subcommittee on Health, on behalf of National Commander 
Dale Barnett and The American Legion; the country's largest patriotic 
wartime service organization for veterans, comprising over 2 million 
members and serving every man and woman who has worn the uniform for 
this country; we thank you for the opportunity to testify regarding The 
American Legion's position on ``Billing and Reimbursement for care in 
the community under VA's plan to consolidate non-VA care programs''.

                               Background

    The VA purchased care program dates back to 1945, when General Paul 
R. Hawley, Chief Medical Director, Veterans Administration, implemented 
VA's hometown program. General Hawley recognized that many hospital 
admissions of World War II veterans could be avoided by treating them 
before they needed hospitalization. As a result, General Hawley 
instituted a plan for ``hometown'' medical and dental care at 
government expense for veterans with service-connected ailments. Under 
the Hometown Program, eligible veterans could be treated in their 
community by a doctor or dentist of their choice.
    Fast forward, VA has implemented a number of programs in order to 
manage veterans' health care when such care is not available in a VA 
health care facility, could not be provided in a timely manner, or is 
more cost effective. Programs such as Fee-Basis, Project Access 
Received Closer to Home (ARCH), Patient-Centered Community Care (PC3), 
and the Veterans Choice Program (VCP) were enacted by Congress to 
ensure eligible veterans could be referred outside the VA for needed 
health care services.
    Congress created the VCP after learning in 2014 that VA facilities 
were falsifying appointment logs to disguise delays in patient care. 
However, it quickly became apparent that layering yet another program 
on top of the numerous existing non-VA care programs, each with their 
own unique set of requirements, resulted in a complex and confusing 
landscape for veterans and community providers, as well as the VA 
employees that serve and support them.
    Therefore, Congress passed the Surface Transportation and Veterans 
Health Care Choice Improvement Act of 2015 (VA Budget and Choice 
Improvement Act) in July 2015 after VA sought the opportunity to 
consolidate its multiple care in the community authorities and 
programs. This legislation required VA to develop a plan to consolidate 
existing community care programs.
    On October 30, 2015, VA delivered to Congress the department's Plan 
to Consolidate Community Care Programs, its vision for the future 
outlining improvements for how VA will deliver health care to veterans. 
The plan seeks to consolidate and streamline existing community care 
programs into an integrated care delivery system and enhance the way VA 
partners with other federal health care providers, academic affiliates 
and community providers. It promises to simplify community care and 
gives more veterans access to the best care anywhere through a high 
performing network that keeps veterans at the center of care.
    Generally, The American Legion supports the plan to consolidate 
VA's multiple and disparate purchased care programs into one New VCP. 
We believe it has the potential to improve and expand veterans' access 
to health care. Much depends, however, on the department's success in 
working with its employees, Congress, VSOs, private providers, academic 
affiliates, and other stakeholders as the agency moves forward in 
developing and implementing the plan.
    The American Legion commends VA Secretary Bob McDonald for his MyVA 
vision and leadership as he leads the largest and most complex 
integrated health system in America in a new direction, seeking to 
transform the department into a veteran-centric organization by 
transforming VA's culture, processes, and capabilities in order to meet 
the needs, expectations, and interests of veterans and their families.

 Billing and Reimbursement Rates under the New Veterans Choice Program

    VA's current community care programs still utilize labor-intensive 
business processes that are too reliant upon manual data input, prone 
to errors and processing delays. VA's New VCP billing and reimbursement 
process is outlined under sections 4.4 and 4.5 of VA's consolidation 
plan. As noted in the plan, the current system is a decentralized and 
highly manual process. \2\ The New VCP plan proposes integrating most 
of VA's community care programs into one single program that would be 
seamless, transparent, and beneficial to enrolled veterans. The New VCP 
envisions a three-phased approach to implement these changes to support 
improved health care delivery for enrolled veterans.
---------------------------------------------------------------------------
    \2\ Plan to Consolidate Programs of Department of Veterans Affairs 
to Improve Access to Care - Oct 2015
---------------------------------------------------------------------------
    The first phase will focus on the development of minimum viable 
systems and processes that can meet critical veteran needs without 
major changes to supporting technology or organizations. Phase II will 
consist of implementing interfaced systems and community care process 
changes. Finally, Phase III will include the deployment of integrated 
systems, maintenance and enhancement of the high-performing network, 
data-driven processes, and quality improvements.
    To improve the accuracy of claims and reimbursement processing, the 
2015 Independent Assessment Report recommended that VA employ industry 
standard automated solutions to bill claims for VA medical care 
(revenue) and pay claims for Non-VA Health Care (payment). \3\ VA 
states its New VCP will focus on operational efficiencies, to include 
standardized billing and reimbursement, as well as geographically 
adjusted fee schedules that are tied to Medicare, as deemed 
appropriate. These foci will make it easier and more appealing for 
community health care providers to partner with VA. The American Legion 
strongly believes VA must standardize its reimbursement rates, but not 
set the rates too low where providers in Alaska and Rural America would 
be discouraged from signing up as a participating provider in the new 
VCP.
---------------------------------------------------------------------------
    \3\ VA Independent Assessment - Sept.2015
---------------------------------------------------------------------------
    Too often we receive telephone calls and emails from veterans 
requesting assistance with their non-VA care claim due to VA's slow 
payment process. For example, in November 2015 we received an inquiry 
from a veteran requesting assistance with payment of a medical bill 
that was authorized under the VCP. The veteran explained he was 
approved through the VCP to be treated by a non-VA health care provider 
for a hernia surgery to be performed outside the VA. After months of 
delays by the VA, the claim was referred to an attorney's office for 
collection. As a result, the veteran expressed disbelief and has lost 
faith in the VA system. This is just one example of the many veterans 
who have contacted our office in the past several months requesting 
assistance with VA's current inefficient Non-VA claims processing 
system.
    The American Legion supports VA developing a 21st Century claims 
and reimbursement processing system that is rules-based, and to the 
extent possible, eliminates as much human intervention as possible. The 
system must eliminate the guess work out of the claims and 
reimbursement process and establish an error-free claims process that 
is responsive to veteran's needs.
    Therefore, we are pleased to see that VA proposes to implement a 
claims solution which is able to auto-adjudicate a high percentage of 
claims, enabling VA to pay community health care providers promptly and 
correctly and to move to a standardized regional fee schedule, to the 
extent practicable for consistency in reimbursement.
    Additionally VA proposes to simplify eligibility criteria so 
veterans can easily determine their options for community care, 
streamline the referral and authorization process to enable more timely 
access to community care, and standardize business processes to 
minimize administrative burden for community providers and VA staff. 
Improvements in how VA processes claims will enable VA to reimburse 
community providers in a timely and efficient fashion.
    The American Legion understands VA's New VCP is a huge undertaking 
and agrees the plan will take time to fully implement, particularly the 
IT component required to auto-adjudicate a high percentage of claims. 
However, we do not believe Congress should continue to provide VA an 
open check book without any assurance from VA that their IT plan will 
work. Congress must require VA to not only provide an IT plan, but 
provide some proof that the claim and reimbursement system will work. 
Too often Congress has authorized funding in support of process 
improvement initiatives like CoreFLS, and VA's scheduling system, to 
name a few, without any deliverables, resulting in wasted tax payer 
dollars that can never be recovered. In these situations, the ones who 
are impacted are our nation's veterans who are calling out to Congress 
to fix the system.

                           Prompt Payment Act

    The Prompt Payment Act (PPA) enacted in 2000, was to ensure the 
federal government makes timely payments. Under the PPA, all bills are 
to be paid within 30 days after receipt and acceptance of material and/
or services - or - after receipt of a proper invoice whichever is 
later. When payments are not timely, interest should be automatically 
paid. Due to a technicality explained below, which can be easily 
corrected, the VCP has continually failed to meet the requirements of 
the PPA.
    During The American Legion's System Worth Saving (SWS) visits to VA 
medical centers, we often hear that when an invoice is submitted for 
payment, VA's third party administrators (TPA's) have been told to hold 
payment until the medical documentation to support the invoice is 
received. We also hear that when the medical documentation is received 
it is reviewed by the TPA and again by VA before payment is made.
    An immediate remedy would be for VA to authorize payment for any 
Non-VA claim immediately upon receipt of a valid bill for health care 
services that a veteran receives. So, we are glad to hear from the VA 
Choice Community Care team that in the very near future VA will 
authorize the TPA's to begin paying any Non-VA health care claim under 
the VCP without first obtaining the veterans medical record from the 
Non-VA health care provider.
    The American Legion applauds VA for initiating this action. This 
will prevent stories like the November 2015 Miami Herald article about 
Florida hospitals trying to get the Department of Veterans Affairs to 
pay about $134.4 million in outstanding claims for medical services 
they provided to veterans. \4\ If it is determined VA overpaid for the 
care and services, cost recovery should occur after VA has verified the 
care and services provided to veterans receiving that health care. Of 
course, ensuring that records are ultimately returned to VA is very 
important and we look forward to hearing more about how VA plans to 
achieve this.
---------------------------------------------------------------------------
    \4\ Florida Hospitals: VA owes $134 million in unpaid claims: Miami 
Herald; November 17, 2015
---------------------------------------------------------------------------

                               Conclusion

    The VA's plans for the New Veterans Choice Program need approval 
from Congress. The American Legion believes that VA's plan is a 
reasonable one given the desired results. VA needs to overhaul its 
outside care reimbursement programs, consolidating them into a more 
efficient bureaucracy able to systemically and dynamically interact 
with the network of private providers that are to supplement VA direct 
provided care.
    To do so, VA has identified a number of necessary legislative items 
that require action by Congress in the short legislative window 
available this year in order to best serve veterans going forward in 
2016. Among these, for example, is the Purchased Health Care 
Streamlining and Modernization Act, which would allow VA to contract 
with providers on an individual basis in the community outside of 
Federal Acquisition Regulations, without forcing providers to meet 
excessive compliance burdens and while maintaining essential worker 
protections.
    We recognize that the Federal Acquisition Regulations (FAR) are 
cumbersome, and it discourages a lot of smaller businesses from wanting 
to sell to the government, but we also recognize the protections FAR 
provides to the taxpayer. Therefore, The American Legion recommends 
passage of this legislation as a three year pilot program with an 
Inspector General evaluation mandate after the first year using the 
tenets of the FAR that are reasonable for the situation to ensure that 
the taxpayer's interests are protected.
    We also support VA's efforts to recruit and retain the very best 
clinical professionals. These include, for example, flexibility for the 
federal work period requirement, which is not consistent with private 
sector medicine, and special pay authority to help VA recruit and 
retain the best talent possible to lead their hospitals and health care 
networks.
    In conclusion, The American Legion believes that together we can 
accomplish legislative changes to streamline Care in the Community 
programs before the end of this session of Congress. We can't let 
another year slip away. Our veterans deserve the same sense of urgency 
now that Congress has shown numerous times since the VA scandal first 
erupted in 2014.
    The American Legion thanks this committee for their diligence and 
commitment to our nation's veterans as they struggle to access health 
care across the country. We look forward to working with Congress, the 
Commission on Care, the MyVA Advisory Committee, and the VA as we seek 
to reform America's health care for its veterans into a world-class 
system that puts veterans and their families at the center of their 
health care.
    Questions concerning this testimony can be directed to Warren J. 
Goldstein, Assistant Director in The American Legion Legislative 
Division (202) 861-2700.

                                 
                  Prepared Statement of Carlos Fuentes
    MR. CHAIRMAN AND MEMBERS OF THE SUBCOMMITTEE:

    On behalf of the men and women of the Veterans of Foreign Wars of 
the United States (VFW) and our Auxiliary, thank you for the 
opportunity to offer our thoughts on the Department of Veterans 
Affairs' (VA) plan to consolidate its community care programs.
    The VFW strongly believes that veterans have earned and deserve 
timely access to high quality, comprehensive, and veteran-centered 
health care. That is why we have made a concerted effort to evaluate 
the state of the VA health care system through proactive outreach to 
veterans and have worked closely with VA, Congress, and other 
stakeholders to implement reasonable solutions to issues we have 
identified.
    In an effort to evaluate the Choice Program, the VFW has collected 
direct feedback from more than 12,000 veterans through surveys and 
direct requests for assistance through our national helpline (1-800-
VFW-1899) and our general inquires email ([email protected]). Through this 
work we have identified several concerns with the Choice Program, 
including participation, eligibility, availability, scheduling, 
information technology (IT) system, and improper billing issues. For 
more information on our work and to read our latest reports on the 
Choice Program and the VA health care system, please visit the VFW's VA 
Health Care Watch website at: www.vfw.org/VAWatch/. Given the focus of 
today's hearing, I will limit my remarks to IT and improper billing 
issues.
    The VFW has heard from too many veterans that the community care 
provider they choose to use through the Choice Program has billed them 
for the cost of their care. While the VFW understands that some 
veterans are required to pay cost shares, it is unacceptable that any 
veteran is billed for care that VA is required to furnish. The most 
common billing complaint we have heard is when a veteran is authorized 
to use the Choice Program for a specific medical issue or treatment, 
but requires follow up care that is outside of the scope of the 
original authorization.
    In these cases, the veteran's doctor is required to submit a 
request for additional services and the program's contractors (Health 
Net or TriWest) must work with VA to get the additional services 
authorized before the care can be delivered. This is where the program 
often fails veterans. At times the care is not authorized before a 
veteran arrives at his or her follow up appointment, so the veteran is 
required to either reschedule or assume liability for the care. In most 
cases, veterans reschedule the appointment and are forced to wait for 
the care they need because VA is unable to authorize it fast enough.
    In some instances the veteran arrives at his or her follow up 
appointment and is unaware the care has not been authorized by VA. 
Given that private sector providers are not completely certain how the 
Choice Program works, many times they are also unaware that VA may not 
cover the cost of the appointment. This perfect storm typically results 
in a veteran being held liable for the cost of the appointment despite 
being eligible for care through the Choice Program.
    For example, a veteran in Saginaw, Michigan, was authorized to use 
the Choice Program as a 40-miler. He contacted the Choice call center 
and was referred to an ophthalmologist for a vision exam. His 
ophthalmologist prescribed him a treatment to save the vision in one of 
his eyes. Since the ophthalmologist was unable to administer the 
treatment, he referred the veteran to a nearby clinic where he received 
four courses of treatment before the clinic informed him that VA 
refused to pay his bill and that he would need to pay his outstanding 
balance before he could continue his treatment. After evaluating his 
case, we were able to determine that his ophthalmologist failed to 
submit a request for additional services. Since his treatment at the 
clinic was beyond the scope of the original authorization, Health Net 
was unable to retroactively authorize the veteran's care. The VFW is 
working to resolve this veteran's case, but we were able to have his 
treatments reinstated while we find a way to have his $1,500 bill paid.
    It is unacceptable that veterans are forced to wait for their care 
because VA is unable to authorize their care in a timely manner. It is 
also unconscionable that a veteran can be held liable for the cost of 
his or her appointment because of a process error the veteran has no 
ability to control. That is why the VFW urges Congress to authorize VA 
to make common sense exemptions to Choice payment requirements, which 
includes being able to retroactively authorize care when a process 
error occurs. VA must also empower its employees and the program's 
contractors to make such exemptions when it is in the best interest of 
a veteran's health.
    The VFW also believes that it is time to move away from 
authorization based community care. In the Independent Budget's ``A 
Framework for Veterans Health Care Reform,'' the VFW and our 
Independent Budget partners call for an integration of community care 
and VA care that would do away with the need for pre-authorizing every 
episode of care a veteran receives from community care providers. 
Currently, VA uses community care as a safety valve to alleviate the 
pressure on its health care facilities when VA care is not readily 
available. Instead, VA should leverage the capabilities of the 
providers in the local community, including private and public sector 
providers, to ensure veterans have timely access to high quality, 
comprehensive and veteran-centric health care options without the 
authorization barrier the currently exists. The VFW agrees with VA's 
plan to create high performing networks tailored to each health care 
market.
    However, the VFW believes that network providers should be 
considered an extension of VA health care, regardless if it is a 
private or public sector provider. In doing so, VA would treat 
community providers as it does different clinics within a VA medical 
center. When a veteran is sent to an ophthalmology clinic for an eye 
exam, that ophthalmology clinic is authorized to carry out any needed 
treatment without having to seek authorization from the veteran's 
primary care provider. Similarly, a network provider must have the 
ability to provide the care a veteran needs without having to cut 
through bureaucratic red tape. It is also important that veterans have 
the ability to receive follow up care at a VA medical facility when 
clinically appropriate and convenient. Currently, a community care 
provider is unable to refer patients to a VA clinic for follow up care.
    In speaking to private sector providers and Choice Program 
contractors, the VFW has learned that providers are sometimes 
responsible for delayed payments. The ``Veterans Access, Accountability 
and Choice Act of 2014'' made payment to Choice providers contingent on 
the return of medical documentation. This means that a provider will 
not get paid for the cost of an appointment if that provider does not 
transmit the accompanying medical documentation with the bill to the 
program's contractor. Private sector providers are not accustomed to 
having to report medical documentation before receiving payment. As a 
result, some of them will bill a veteran before sending VA or the 
program's contractors the requisite medical records. To address this 
issue, VA has proposed decoupling medical documentation from payment. 
This would enable VA to pay the cost of an appointment without 
receiving the requisite medical documentation for the appointment.
    While the VFW understands the need to enable VA to quickly pay 
community care providers, we believe this can be achieved without 
decoupling medical documentation and payment. VA must do what is 
necessary to ensure the care veterans receive through community 
providers is equal to or higher quality than the care veterans receive 
at VA medical facilities. To do so, VA must integrate medical records 
from community care appointments into a veteran's VA electronic health 
record (EHR). However, VA must first receive the medical record from 
community providers. The VFW is concerned that decoupling medical 
records and payment would remove the incentive for community care 
providers to send medical records to VA. When medical records are not 
returned, VA is unable to evaluate the care veterans received from 
community providers or verify whether the veteran received care at all.
    For example, in an Office of Inspector General (OIG) inspection of 
access issues in the Urology Service at the Phoenix VA Health Care 
System, the OIG found that 759 urology consults sent to community care 
providers were ``lost to follow-up'' because the OIG was unable to 
locate any evidence in affected veterans' EHRs to validate whether they 
had been seen by a community care provider. Missing information 
precluded the OIG from properly assessing the quality of care these 
patients received from community providers.
    In speaking to Choice providers and the program's contractors, the 
VFW has learned that the delay in reporting medical documentation is 
often due to the arduous reporting requirements VA places on Choice 
providers. Furthermore, the VFW has heard from providers that 
information VA requires them to report with medical records is not 
required by other programs, such as Medicare, and is not necessary to 
ensure quality of care. VA must ensure that the requirements it places 
on private sector providers are needed to ensure quality, not needless 
bureaucratic reporting requirements. That is why the VFW recommends 
that VA evaluate the reporting requirements placed on network and VA 
providers to identify and eliminate excess reporting requirements that 
are not necessary to ensure quality, including statutory reporting 
requirements that must be sunset.
    The VFW also learned that many Choice providers receive and send 
medical information through fax. While the VFW understands the need to 
protect medical information, there is no reason why, in the 21st 
century, VA is relying on fax to transmit medical records. VA must 
develop IT solutions to facilitate a seamless integration of health 
records between its medical facilities and their private and public 
sector partners. Congress must ensure VA has the resources necessary to 
develop IT solutions for its community care programs.
    When private sector providers do not have an EHR to integrate with 
the Veterans Information Systems and Technology Architecture (VistA), 
VA must authorize and train Choice providers to use VistA. This would 
serve to incentivize providers without an EHR to join VA's Choice 
networks and would also ensure veterans receive fully integrated and 
coordinated health care within community care networks. Congress must 
also authorize VA to share its IT programs with network providers.
    In evaluating the Choice Program, the VFW found that private sector 
providers are often reluctant to participate in the Choice network 
because of misconceptions about the Choice Program. The VFW believes 
this is due to a lack of outreach and training from VA and the 
program's contractors. While VA and the Choice contractors have made a 
concerted effort to properly train their employees, they have not made 
the same effort to ensure community care providers are aware of program 
requirements and changes. For example, the VFW has heard from several 
private sector providers that they cannot participate in the Choice 
Program because VA pays below Medicare. This is not true - Choice 
providers are paid at the Medicare rate. In some instances VA is even 
authorized to pay above the Medicare rate. Moving forward, VA must 
conduct outreach to private sector providers to eliminate 
misconceptions and ensure private sector providers are made aware of 
how they can partner with VA.
    As this Subcommittee continues to evaluate VA's plan to consolidate 
its community care programs, the VFW will continue to ensure the voice, 
preference, and health care needs of veterans are prioritized and 
ensure VA health care reforms serve the best interest of our nation's 
veterans.
    Mr. Chairman, this concludes my testimony. I will be happy to 
answer any questions you or the Subcommittee members may have.

 Information Required by Rule XI2(g)(4) of the House of Representatives

    Pursuant to Rule XI2(g)(4) of the House of Representatives, the VFW 
has not received any federal grants in Fiscal Year 2016, nor has it 
received any federal grants in the two previous Fiscal Years.
    The VFW has not received payments or contracts from any foreign 
governments in the current year or preceding two calendar years.

                                 
                       Statements For The Record

                    The American Medical Association
    The American Medical Association (AMA) appreciates the opportunity 
to submit this statement for the record in regards to the Committee on 
Veterans' Affairs Subcommittee on Health's hearing today on Choice 
Consolidation: Improving VA Community Care Billing and Reimbursement. 
The AMA is strongly committed to helping Congress and the Department of 
Veterans Affairs (VA) ensure the comprehensive delivery of, and timely 
access to, primary and specialty health care for our nation's veterans. 
The AMA was an early supporter of the Veterans Choice Program (VCP) and 
we support the VA's ongoing efforts to reform and improve the care 
delivery experience from the perspective of both the veteran patient 
and the physician.
    We commend the VA for recognizing that the VCP has not been working 
as intended, and we support the VA's proposal to consolidate the VCP 
and all existing community care programs into one streamlined program. 
Consolidating the programs should create efficiencies and eliminate 
duplication and costs in administering the new VCP. We think that the 
poor response to the existing VCP has in part been due to confusion by 
veterans and physicians between the VCP and the other community care 
programs, such as the Patient-Centered Community Care (PC3) Program. In 
order to be effective, the VA's partnerships with private physicians in 
the community need to be streamlined and easy to navigate for veterans, 
physicians, and VA staff.
    Specifically, we support the VA's proposal to streamline and 
automate billing and reimbursement processes. According to the VA, 
``The current VA claims infrastructure and claims process are complex 
and inefficient due to highly manual procedures, and VA lacks a 
centralized data repository to support auto adjudication'' (U.S. 
Department of Veterans Affairs, Plan to Consolidate Programs of 
Department of Veterans Affairs to Improve Access to Care,'' October 30, 
2015, at page 49). The VA has more than 70 centers processing claims 
across 30 different claims systems, and limited automation with paper-
based processes that result in late and incorrect payments. Improving 
the VA's reimbursement processes would alleviate some of the complaints 
that physicians and other providers have had tied to the VCP, e.g., 
administrative hassles and delays in payment. Moving toward auto-
adjudication and away from requiring medical records for reimbursement-
a current VA requirement-should help to improve claims processing 
accuracy and predictability and allow claims to be paid promptly, 
thereby providing an incentive for physicians to join and remain in the 
provider network.
    Under the VA's proposal, the VA intends to standardize provider 
reimbursement rates to align with regional Medicare rates under a 
single program and will remain the primary payer. While we appreciate 
that the VA is moving in the right direction in terms of basing payment 
to providers on Medicare rates, the AMA supports the Medicare rate as a 
floor, not a ceiling, especially in areas where there are significant 
needs for service and limited available specialists. We also appreciate 
that the VA acknowledges the importance of increasing the transparency 
of payment rates to providers and allowing regional variation, where 
needed, recognizing the expense of clinical practice outside of the VA 
facilities.
    We are concerned, however, about the proposal for tiered networks 
in the New VCP. The VA indicates that they intend to provide veterans 
access to a tiered, ``high-performing network,'' which will reward 
providers for delivering ``high-quality care'' while promoting veteran 
choice and access. The VA indicates that it will apply industry-leading 
health plan practices for the tiered network design and that providers 
in the Preferred tier, versus the Standard tier, must ``demonstrate 
high-value care'' in order to be considered in the Preferred tier and 
to receive higher payment. It is unclear, however, how ``high-value 
care'' will be determined or demonstrated. Given the numerous issues 
with access to care, especially specialty care, that have arisen with 
the narrow networks offered in the exchanges under the Affordable Care 
Act, we believe that the VA needs to proceed carefully in moving 
towards tiered networks. We are concerned that by tiering or narrowing 
the network, the New VCP will further exacerbate or create access 
problems. This is already occurring in certain states, tied to exchange 
plans and Medicare Advantage plans and their narrowed and tiered 
networks, with patients unable to find physicians in the top tiers in 
their areas or able to receive necessary specialized services because 
the tiering is specialty and not service or subspecialty specific. With 
many veterans requiring specialized services, such as mental and 
behavioral health care and orthopedics, which are already very limited 
in many places throughout the country, further tiering seems 
incompatible and actually in conflict with the direction of the New VCP 
program to provide greater and faster access to specialty care services 
in the community. Narrowing or tiering will do little to demonstrate 
confidence in the program and could deter participation by physicians 
in the community. If the goal is to encourage participation and get 
more ``high-value'' or ``high-quality'' physicians to participate in 
the program, this tiering will likely have the opposite effect.
    The AMA, on behalf of its physician and medical student members, is 
committed to helping ensure that our nation's veterans receive 
comprehensive, timely, high-quality care. We look forward to working 
with the Subcommittee to advance proposals to improve the Veterans Care 
Program and the care delivery experience for our veterans.

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