VA Health Care: Guidance Needed for Determining the Cost to	 
Collect from Veterans and Private Health Insurers (21-JUL-04,	 
GAO-04-938).							 
                                                                 
During a May 2003 congressional hearing, questions were raised	 
about the accuracy of the Department of Veterans Affairs' (VA)	 
reported costs for collecting payments from veterans and private 
health insurers for its Medical Care Collections Fund (MCCF).	 
Congress also had questions about VA's practice of using	 
third-party collections to satisfy veterans' first-party debt.	 
GAO's objectives were to determine: (1) the accuracy of VA's	 
reported cost for collecting first- and third-party payments from
veterans and private health insurers, and (2) how VA's practice  
of satisfying first-party debt with third-party payments affects 
the collections process.					 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-938 					        
    ACCNO:   A11026						        
  TITLE:     VA Health Care: Guidance Needed for Determining the Cost 
to Collect from Veterans and Private Health Insurers		 
     DATE:   07/21/2004 
  SUBJECT:   Cost accounting					 
	     Debt collection					 
	     Government collections				 
	     Health care costs					 
	     Payments						 
	     Veterans						 
	     Health insurance					 
	     Data integrity					 
	     Collection procedures				 
	     Administrative costs				 
	     Internal controls					 
	     VA Medical Care Collections Fund			 

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GAO-04-938

United States Government Accountability Office

GAO 	Report to the Chairman, Subcommittee on Oversight and Investigations,
            Committee on Veterans' Affairs, House of Representatives

July 2004

VA HEALTH CARE

 Guidance Needed for Determining the Cost to Collect from Veterans and Private
                                Health Insurers

GAO-04-938

Highlights of GAO-04-938, a report to the Subcommittee on Oversight and
Investigations, Committee on Veterans' Affairs, House of Representatives

During a May 2003 subcommittee hearing, questions were raised about the
accuracy of the Department of Veterans Affairs' (VA) reported costs for
collecting payments from veterans and private health insurers for its
Medical Care Collections Fund (MCCF). The subcommittee also had questions
about VA's practice of using third-party collections to satisfy veterans'
first-party debt. GAO's objectives were to determine: (1) the accuracy of
VA's reported cost for collecting firstand third-party payments from
veterans and private health insurers, and (2) how VA's practice of
satisfying first-party debt with third-party payments affects the
collections process.

GAO recommends that the Secretary provide guidance for standardizing and
consistently applying across VA the accounting of costs associated with
collecting payments from veterans and private health insurers. GAO
believes its previous suggestion to Congress-that it consider clarifying
the cost recovery provisions of title 38 of the U.S. Code to direct VA to
collect copayments from patients regardless of any amounts recovered from
private health insurance except in instances where the insurer pays the
full cost of VA care-is still valid. In commenting on a draft of this
report, VA concurred with our recommendation.

July 2004

VA HEALTH CARE

Guidance Needed for Determining the Cost to Collect from Veterans and Private
Health Insurers

VA has not provided guidance to its Chief Business Office and Veterans
Integrated Service Networks (VISN) for accounting for the costs associated
with collecting payments from veterans and private health insurers. As a
result, GAO found that the Chief Business Office and VISNs excluded some
costs associated with collecting first-and third-party payments. In
addition, GAO found inconsistencies in the way VISNs allocate these costs.
Consequently, VA's reported costs to collect are inaccurate.

Inconsistencies in VISN Allocation of Costs by Revenue Cycle Activity, May
2004

VA's practice of satisfying-or paying for-first-party, or veterans'
copayment debt, with collections from third-party insurers has resulted in
a reduction in overall collections and increased administrative expenses
due to the reconciliation process. VA has taken the position that payments
made from third-party insurers should be used to satisfy veterans'
first-party debt. The law and legislative history are not clear on whether
third-party collections can be used for this purpose.

www.gao.gov/cgi-bin/getrpt?GAO-04-938.

To view the full product, including the scope and methodology, click on
the link above. For more information, contact Cynthia A. Bascetta at (202)
512-7101.

Contents

  Letter

Results in Brief
Background
Lack of Guidance Results in Inaccurate Reporting of Costs
Satisfying First-Party Debt with Third-Party Payments Limits

Overall Collections Conclusions Recommendation for Executive Action Agency
Comments 1

2 3 7

10 11 12 12

Appendix I Scope and Methodology

Appendix II 	Medical Care Collections Fund Revenue Cycle Activities

Related GAO Products

  Figures

Figure 1: VA's MCCF Revenue Cycle for Third-Party Collections 5 Figure 2:
Inconsistencies in VISN Allocation of Costs to the Field

Office Cost Center for Selected Revenue Cycle Activities,

May 2004 9

Abbreviations

MCCF Medical Care Collections Fund PFSS Patient Financial Services System
VA Department of Veterans Affairs VISN Veterans Integrated Service Nework

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separately.

United States Government Accountability Office Washington, DC 20548

July 21, 2004

The Honorable Steve Buyer
Chairman
Subcommittee on Oversight and Investigations
Committee on Veterans' Affairs
House of Representatives

Dear Mr. Chairman:

The Department of Veterans Affairs (VA) pays and provides for the
service-connected and nonservice-connected health care needs of eligible
veterans. In general, for nonservice-connected care, that is, for
disabilities
that are not a result of injuries or illnesses incurred or aggravated
during
military service, VA bills and collects copayments from veterans.
Additionally, some veterans maintain other health insurance and VA bills
and collects funds from these insurers for nonservice-connected care.
Health care costs recovered from veterans (first-party collections) and
insurers (third-party collections) totaled about $682 million and $804
million, respectively, in fiscal year 2003. These payments were VA's
largest
source of revenue to supplement its $25.5 billion medical care
appropriation in that year.

During your May 2003 hearing on VA's third-party collection efforts you
expressed concern about the accuracy of reported costs for collecting
payments from veterans and private health insurers for VA's Medical Care
Collections Fund (MCCF).1 You also had questions about VA's practice of
using third-party collections to satisfy-or pay for-a veteran's
first-party
debt. Our objectives were to determine: (1) the accuracy of VA's reported
cost for collecting first-and third-party payments from veterans and
private health insurers, and (2) how VA's practice of satisfying
first-party
debt with third-party payments affects the collections process.

1The Balanced Budget Act of 1997 established VA's Medical Care Collections
Fund. The fund includes veteran copayments, payments from third parties,
and other funds collected in connection with the provision of care,
services, or medications to veterans. Such funds may be used to provide
additional care and services to veterans and to pay for costs related to
the identification, billing, auditing, and collection of amounts owed for
medical care and services. See 38 U.S.C. S:1729A(2000).

  Results in Brief

To conduct our review, we examined VA's collections data for fiscal year
2003; reviewed relevant VA documents, such as MCCF organizational and flow
charts; interviewed financial officers for large private sector hospital
systems; and consulted with the Healthcare Financial Management
Association to identify industry practices for calculating the cost for
collecting first- and third-party payments. We also interviewed officials
in VA's central office and all of its Veteran Integrated Service Networks
(VISN)2 to better understand the resources expended to collect first- and
third-party revenue and the use of third-party revenue to satisfy
first-party debt. Our work was performed from June 2003 through June 2004
in accordance with generally accepted government auditing standards. For
more details on our scope and methodology, see appendix I.

VA's reported cost for collecting first-and third-party payments is
inaccurate. VA has not provided guidance to its VISNs for accounting for
the costs associated with collecting payments from veterans and private
health insurers. As a result, we found inconsistencies in the way VISNs
allocate these costs, which have led in some cases to the exclusion of
costs in VA's reported cost to collect first- and third-party payments.
For example, VISN 2's (Albany, New York) estimated $470,000 contract for
collecting third-party payments is not included in VA's reported cost.
Also not included in VA's reported cost is $635,000 incurred by VISN 8
(Bay Pines, Florida) to assist veterans with questions about bills they
receive and, if necessary, the arrangement of payment plans.

VA's practice of satisfying first-party debt with collections from
third-party insurers has resulted in reduced overall collections and
increased administrative expenses due to the reconciliation process. VA
has taken the position that payments made by third-party insurers should
be used to satisfy veterans' copayment debt. However, the law and the
relevant legislative history are not clear on whether third-party
collections can be used for this purpose. Consequently, we believe that
that the action we previously suggested to Congress-that it consider
clarifying the costrecovery provisions of title 38 of the U.S. Code to
direct VA to collect copayments from patients regardless of any amounts
recovered from private health insurance except in instances where the
insurer pays the full cost of VA care-is still valid. We are also making a
recommendation

2The management of VA's 158 hospitals and other health care facilities is
decentralized to 21 regional networks referred to as Veterans Integrated
Service Networks.

Background

to improve VA's process for accounting for its cost for collecting first-
and third-party payments. In commenting on a draft of this report, VA
concurred with our recommendation.

VA operates one of the nation's largest health care systems to provide
care to approximately 5.2 million veterans who receive health care through
158 VA medical centers (VAMC) and almost 900 outpatient clinics
nationwide. The VA health care system also consists of nursing homes,
residential rehabilitation treatment programs, and readjustment counseling
centers.

In 1986 Congress authorized VA to collect payments from third-party health
insurers for the treatment of veterans with nonservice-connected
disabilities, and it also established copayments from veterans for this
care.3 Funds collected were deposited into the U.S. Treasury as
miscellaneous receipts and were not made specifically available to VA to
supplement its medical care appropriations. The Balanced Budget Act of
1997 established a new fund in the U.S. Treasury, the Department of
Veterans Affairs Medical Care Collections Fund, and authorized VA to use
funds in this account to supplement its medical care appropriations.4 As
part of VA's 1997 strategic plan, VA expected that collections from
firstand third-party payments would cover the majority of the cost of care
provided to veterans for nonservice-connected disabilities. VA has
determined that some of these veterans, about 25 percent of VA's user
population in fiscal year 2002, were required to pay a copayment because
of their income levels.5

In September 1999, VA adopted a fee schedule, called "reasonable charges,"
which are itemized fees based on diagnoses and procedures. This schedule
allows VA to more accurately bill for the care provided. To implement
this, VA created additional bill-processing functions- particularly in the
areas of documenting care, coding the care, and processing bills for each
episode of care.

3Pub. L. No. 99-272, 100 Stat. 372, 373, 383.

438 U.S.C. S:1729A(c)(1)(A).

5VA uses a financial means test that examines the income and net worth of
the veteran to determine ability and requirement to pay copayments.

To collect from health insurers, VA uses a four-function process with 13
activities to manage the information needed to bill and collect
third-party payments-also known as the MCCF revenue cycle (see fig. 1).
First, the intake revenue cycle function involves gathering insurance
information on the patient and verifying that information with the insurer
as well as collecting demographic data on the veteran. Second, the
utilization review function involves precertification of care in
compliance with the veteran's insurance policy, including continued stay
reviews to obtain authorization from third-party insurers for payment.
Third, the billing function involves properly documenting the health care
provided to patients by physicians and other health care providers. Based
on the physician documentation, the diagnoses and medical procedures
performed are coded. VA then creates and sends bills to insurers based on
the insurance and coding information obtained. Finally, the collections,
or accounts receivable, function includes processing payments from
insurers and following up on outstanding or denied bills. See appendix II
for a description of the activities that take place within each of the
four functions.

Figure 1: VA's MCCF Revenue Cycle for Third-Party Collections

aReviewing clinical information and obtaining payment authorization from
third-party insurer for continuation of care.

bReviewing outstanding claims sent to third-party insurers and identifying
amount of payment due to VA for collection follow-up work.

cReferring delinquent first-party debt to the U.S. Treasury for collection
against any future government payment to the veteran, such as reducing an
income tax refund by the amount of the first-party debt.

dReceiving notification of partial or nonpayment from the third-party
insurer, reviewing documentation, initiating an appeal to the third-party
insurer for payment, and following up for appropriate payment.

VA's Chief Business Office utilizes a performance measure-an efficiency
rating it refers to as "cost to collect"-that reflects VA's cost to
collect one dollar from first- and third-parties.6 To calculate the
efficiency rating VA divides the costs of generating a bill and collecting
payments from veterans and private health insurers by the actual revenue
received from these sources. To measure the cost, cost data are extracted
from two

6The Chief Business Office was established in May 2002 to provide guidance
for VA's collection activity.

financial accounts, or cost centers, which are intended to capture field
office costs and central office costs.7 Specifically, cost centers are
used for classifying costs related to each of the 13 functional activities
and the organizations that support these activities.

According to an official with the Healthcare Financial Management
Association,8 because business practices differ among entities, there are
many variables that entities include in their calculations of the cost for
collecting funds from first and third parties. Thus, a comparison of
collection efficiency-the cost to collect one dollar-between different
entities would be difficult. However, according to the official, it is
reasonable to expect that business practices within the same organization
such as the VA can be standardized, which would facilitate such a
comparison internally.

The VA health care system has unique rules and regulations governing its
billing practices. For instance, VA is generally not authorized to bill
Medicare or Medicaid for care provided to Medicare- or Medicaid-eligible
veterans. VA must pay for all inpatient and outpatient care associated
with a service-connected disability-it cannot collect copayments or bill
thirdparty insurers for this care.

VA uses third-party collections to satisfy veterans' first-party debt.
Specifically, if VA treats an insured veteran for a nonservice-connected
disability, and the veteran is also determined by VA to have copayment
responsibilities, VA will apply each dollar collected from the insurer to
satisfy the veteran's copayment debt related to that treatment.9 As we

7The specific cost centers that the Chief Business Office uses in its cost
model are stated in VA Handbook 4671.1 as MCCF Field Stations and
CBO-Business Policy. In this report we refer to the MCCF Field Stations
cost center as the field office cost center and the CBO-Business Policy
cost center as the central office cost center.

8The association comprises about 32,000 healthcare financial management
professionals organized to improve financial management of healthcare
institutions and related healthcare organizations. Its goals include
increasing knowledge in financial management, establishing and
promulgating principles relative to financial management, and promoting
and encouraging financial management standards of performance for
individuals and institutions in the various areas of financial management.

9Among the veterans receiving this benefit are certain veterans who,
according to the VA, are capable of satisfying their copayment
obligations.

  Lack of Guidance Results in Inaccurate Reporting of Costs

stated in a previous report to Congress,10 the statutes governing VA
recoveries from private health insurers and veteran copayments do not
clearly specify the relationship between the two provisions. In the
absence of definitive guidance in the law, VA's General Counsel has
determined that insurance recoveries should be used to satisfy veterans'
copayment debt. The law and the relevant legislative history are not clear
on whether third-party collections can be used for this purpose.

VA has not provided guidance to the Chief Business Office or VISNs for
accounting for the costs associated with collecting payments from veterans
and private health insurers. As a result, we found that VA's Chief
Business Office and VISNs did not allocate certain costs associated with
activities related to collecting first- and third-party payments to the
two cost centers used in the calculation of cost to collect.11 In
addition, we found inconsistencies in the way VISNs allocated these costs
to the field office cost center. Consequently, reported costs to collect
are inaccurate.

We found that some costs incurred by VA's central office as part of its
efforts for collecting first- and third-party payments were not allocated
to the central office cost center. For example, the following activities
are costs incurred by organizations that support the Chief Business
Office, but are not included in the central office cost center:

o  	Staff at the Health Eligibility Center spend a portion of their time
determining veterans' copayment status.

o  	Staff at the Health Revenue Center processed first-party refunds
resulting from a settlement with a third-party payer regarding claims
submitted from January 1995 through December 2001. VA reported that about
15 fulltime staff members are dedicated to this effort.

o  	Staff assigned to Health Informatics assisted with
contractor-developed software to review third-party claims for accuracy.

Some costs incurred by field locations also were not always allocated to
the field office cost center. Cost allocation differences occur because VA

10See U.S. General Accounting Office, VA Medical Care: Increasing
Recoveries From Private Health Insurers Will Prove Difficult,
GAO/HEHS-98-4 (Washington, D.C.: Oct. 17, 1997).

11While we found costs that were excluded from the calculation, there
could be costs that were allocated to the two cost centers that are not
associated with collecting first- and third-party payments.

does not provide guidance to its field locations on which costs to
allocate to specific cost centers. Thus, each of VA's health care VISNs
makes a determination as to which cost center to use when allocating costs
for specific revenue cycle functions-such as patient intake and
registration and utilization review. Figure 2 shows inconsistencies among
VISNs in the way they allocate costs to some of the activities within the
revenue cycle functions. For example, for precertification and
certification activities within the utilization review function, 13 VISNs
allocated all of the cost, 3 VISNs allocated some costs, and 5 VISNs
allocated none of the cost to the field office cost center. In addition,
the following are examples of costs that are related to collection
activities but were not included in the costs for collecting payments:

o  	A veteran call center in VISN 8 (Bay Pines, Florida)-staffing
resources valued at about $635,000 designed to assist veterans with
questions about bills they receive and, if necessary, the arrangement of
payment plans.12

o  	Two service contracts in VISN 2 (Albany, New York)-approximately
$470,000 in contract expenses for collecting third-party payments and a
service contract estimated at $104,000 for insurance verification.

o  	Two service contracts in VISN 10 (Cincinnati, Ohio)-approximately
$100,000 in contract expenses to use a software package that reviews
claims sent to third-party insurers for technical accuracy. Also not
included was an estimated $425,000 to license the use of insurance
identification and verification software.

12At the time of our review, this cost was allocated to a cost center
other than the one used by the Chief Business Office in its calculation
for the field cost center, entitled "Miscellaneous Benefits and Services,
Administrative Programs." VA Handbook 4671.1, January 16, 2003.

Figure 2: Inconsistencies in VISN Allocation of Costs to the Field Office
Cost Center for Selected Revenue Cycle Activities, May 2004

          All costs for activity allocated to field office cost center

         Some costs for activity allocated to field office cost center

          No costs for activity allocated to field office cost center

Source: GAO analysis of VA VISN data.

  Satisfying First-Party Debt with Third-Party Payments Limits Overall
  Collections

In an attempt to standardize how MCCF staff carry out the revenue cycle
functions and to instill fiscal discipline throughout its entire health
system, VA is piloting the Patient Financial Services System (PFSS) in
VISN 10 (Cincinnati, Ohio). PFSS is a financial software package that
contains individual patient accounts for billing purposes. According to
the Chief Business Office, the system is a key element to standardize MCCF
operations throughout the entire VA health care system. PFSS is expected
to improve first- and third-party collections by capturing and
consolidating inpatient and outpatient billing information. However, PFSS
is not currently designed to capture the cost of staff time for these
activities-a key element for assessing the efficiency of VA's collection
efforts.

VA's practice of satisfying veterans' copayment debt with collections from
third-party insurers has reduced overall collections and increased
administrative expenses. VA does not quantify the lost revenue from
veterans' copayments that is not collected and could be used to supplement
its medical care appropriation. Based on interviews with network officials
and site visits to individual medical facilities, we did not discover any
locations that track the volume of first-party debt that is not collected
and its relative dollar value. Hence, the exact dollar value of
first-party revenue that was not collected is unknown.

Seventeen of the 21 network officials we interviewed stated that
considerable administrative time is dedicated to the process required to
satisfy first-party debt with third-party collections-resources that could
be invested elsewhere if the practice did not exist. One facility official
estimated that approximately 5 full-time equivalent staff are used to
satisfy first-party debt. Furthermore, one VISN official estimated that
its medical facilities use approximately 11 full-time equivalent staff on
this process.

Collections staff routinely receive insurance payments that include
voluminous reports that detail each claim. For example, one medical center
provided us with a report that contained approximately 1,000 line items,
each representing a pharmaceutical reimbursement. Staff at the medical
center must sort through each line item and manually match it to a claim
in the veteran's file to determine if the veteran was charged a copayment
for the pharmaceutical. In those cases where VA receives a reimbursement
and the veteran was charged a copayment, VA will issue a credit or refund
to the veteran-in the case of pharmaceuticals this amount can be up to $7.

Conclusions

VA will delay billing copayments to veterans with private health insurance
for 90 days to allow time for the insurer to reimburse VA. However, when
insurers reimburse VA after the 90-day period, VA must absorb the cost of
additional staff time for processing a refund if the veteran has already
paid the bill.

In our 1997 report, we discussed that VA's practice of satisfying
copayment debt with recoveries made from third-party insurers has resulted
in reduced overall cost recoveries and increased administrative expense.13
In the report we suggested that Congress consider clarifying the cost
recovery provisions of title 38 of the U.S. Code to direct VA to collect
copayments from patients regardless of any amounts recovered from private
health insurance except in instances where the insurer pays the full cost
of VA care.

VA does not provide guidance to its Chief Business Office and VISNs for
accounting for the costs associated with collecting payments from private
health insurers and veterans. As a result, VA's Chief Business Office and
VISNs did not allocate certain costs associated with activities related to
collecting first- and third-party payments to the two cost centers used by
the Chief Business Office in its calculation of cost to collect. In
addition, we found inconsistencies in the way VISNs allocated these costs
to the field office cost center. Consequently, VA's reported
cost-to-collect measure is inaccurate. Furthermore, VA has determined that
it should use collections from private health insurers to satisfy veteran
copayment debt. The law is silent on this point. VA's determination has
resulted in increased administrative expenses and reduced overall
collections, thus making fewer dollars available for veteran health care.
We believe our previous suggestion to Congress-that it consider clarifying
the cost recovery provisions of title 38 of the U.S. Code to direct VA to
collect copayments from patients regardless of any amounts recovered from
private health insurance except in instances where the insurer pays the
full cost of VA care-is still valid. Such action would reduce the
administrative burden on VA staff, reduce VA administrative expenses, and
allow VA to maximize collections to help meet its costs for providing
health care.

13See GAO/HEHS-98-4.

Recommendation for Executive Action

  Agency Comments

To accurately determine and report the cost to collect first- and
third-party payments, we recommend that the Secretary of Veterans Affairs
direct the Under Secretary for Health to provide guidance for
standardizing and consistently applying across VA the accounting of costs
associated with collecting payments from veterans and private health
insurers.

We provided a draft of this report to VA for comment. In oral comments, an
official in VA's Office of Congressional and Legislative Affairs informed
us that VA concurred with our recommendation.

We are sending copies of this report to the Secretary of Veterans Affairs,
interested congressional committees, and other interested parties. We will
also make copies available to others upon request. In addition, this
report will be available at no charge on GAO's Web site at
http://www.gao.gov/.

If you or your staff have any questions about this report, please call me
at (202) 512-7101 or Michael T. Blair, Jr., at (404) 679-1944. Michael
Tropauer and Aditi Shah Archer contributed to this report.

Sincerely yours,

Cynthia A. Bascetta Director, Health Care-Veterans' Health and Benefits
Issues

                       Appendix I: Scope and Methodology

To do our work, we reviewed our prior work and Department of Veterans
Affairs (VA) Office of Inspector General reports on VA's first-and
thirdparty revenue collection for the Medical Care Collections Fund
(MCCF). We obtained and reviewed copies of VA policies and regulations
governing these collection activities. Also, we reviewed statements by the
Federal Accounting Standards and Advisory Board on managerial cost
accounting concepts and standards for the federal government.

We interviewed officials at VA's Chief Business Office, which provides
policy guidance to MCCF field staff, and obtained information on what they
consider to be direct expenses of collecting first- and third-party
revenue and documentation on how they calculate the cost to collect
firstand third-party revenue. This information was validated through
telephone interviews of key officials at each of VA's 21 networks and site
visits to 4 medical facilities. Also, we obtained information on the
organizational structure for each network and its medical facilities and
obtained the views of VISN and medical facility officials on the accuracy
of the Chief Business Office's cost reporting. In addition, we obtained
information from the Healthcare Financial Management Association on other
health care industry practices for reporting the cost to collect first-
and thirdparty payments.

Regarding the practice of satisfying first-party debt with third-party
revenue, we reviewed past opinions and decisions by VA's Office of General
Counsel, applicable laws and regulations, and existing GAO matters for
consideration. We also discussed the implementation of VA's Office of
General Counsel's decisions with staff from VA's Chief Business Office and
medical facilities.

Appendix II: Medical Care Collections Fund Revenue Cycle Activities

In 1986, Congress authorized VA to collect payments from third-party
health insurers for the treatment of veterans with nonservice-connected
disabilities, and it also established copayments for this care. Funds
collected were deposited into the U.S. Treasury as miscellaneous receipts
and not made specifically available to the VA to supplement its medical
care appropriations. The Balanced Budget Act of 1997 established a new
fund in the U.S. Treasury, the Department of Veterans Affairs Medical Care
Collections Fund, and authorized VA to use funds in this account to
supplement its medical care appropriations. To collect from health
insurers, VA uses a four-function process with the following 13 activities
to bill and collect third-party payments.

1. 	Patient Registration: Collecting patient demographic information,
determining eligibility for health care benefits, ascertaining financial
status, and obtaining consent for release of medical information.

2. 	Insurance Identification: Obtaining insurance information from
veteran, spouse, or employer.

3. 	Insurance Verification: Confirming patient insurance information and
contacting third-party insurer for verification of coverage and benefit
structure.

4. 	Precertification and Certification: Contacting third-party insurer to
obtain payment authorization for VA-provided care.

5. 	Continued Stay Reviews: Reviewing clinical information and obtaining
payment authorization from third-party insurer for continuation of care.

6. 	Coding and Documentation: Reviewing and assigning appropriate codes to
document diagnosis of patient ailment and treatment procedures and
validating information documented by the physician.

7. 	Bill Creation: Gathering pertinent data for bills; authorizing and
generating bills; and submitting bills to payers.

8. 	Claims Correspondence and Inquiries: Providing customer service for
veterans, payers, Congress, and VA Regional Counsel.

9. 	Establishment of Receivables: Reviewing outstanding claims sent to
third-party insurers and identifying amount of payment due to VA for
collection follow-up work.

Appendix II: Medical Care Collections Fund Revenue Cycle Activities

10. Payment Processing: Reviewing, posting, and reconciling payment
received.

11. Collection Correspondence and Inquiries: Following up with payers;
resolving first-party bankruptcies, hardships and waivers; processing
refund requests, repayment plans, and returned checks; referring claims to
utilization review; and generating probate action.

12. Referral of Indebtedness: Referring delinquent first-party debt to the
U.S. Treasury for collection against any future government payment to the
veteran, such as reducing an income tax refund by the amount of the
first-party debt.

13. Appeals: Receiving notification of partial or nonpayment from the
third-party insurer, reviewing documentation, initiating an appeal to the
third-party insurer for payment, and following up for appropriate payment.

Related GAO Products

VA Health Care: VA Increases Third-Party Collections as It Addresses
Problems in Its Collections Operations. GAO-03-740T. Washington, D.C.: May
7, 2003.

VA Health Care: Third-Party Collections Rising as VA Continues to Address
Problems in Its Collections Operations. GAO-03-145. Washington, D.C.:
January 31, 2003.

VA Health Care: VA Has Not Sufficiently Explored Alternatives for
Optimizing Third-Party Collections. GAO-01-1157T. Washington, D.C.:
September 20, 2001.

VA Health Care: Third-Party Charges Based on Sound Methodology;
Implementation Challenges Remain. GAO/HEHS-99-124. Washington, D.C.: June
11, 1999.

VA Medical Care: Increasing Recoveries From Private Health Insurers Will
Prove Difficult. GAO/HEHS-98-4. Washington, D.C.: October 17, 1997.

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