Military Treatment Facilities
Improvements Needed to Increase DOD Third-Party Collections Gao ID: GAO-04-322R February 20, 2004Like the private health care industry, the cost of providing health care services to the Department of Defense's (DOD) active duty personnel, their dependents, retirees, and survivors and their dependents has increased dramatically over the past decade. In fiscal year 2003, DOD reported that more than 8.7 million Military Health System beneficiaries were eligible to receive health care at a cost of about $27.2 billion per year--up from a reported 8.2 million eligible beneficiaries at a cost of $15.6 billion in fiscal year 1997. To the extent that DOD beneficiaries have private health insurance coverage, DOD is authorized to bill insurance companies under the Third Party Collections Program. As such, DOD has the opportunity to defray the rising cost of providing health care to an increasing number of eligible beneficiaries. In October 2002, we reported that the three military treatment facilities (MTFs) we visited did not always bill and collect from private insurers for care that was reimbursable to the government. At all three facilities, we identified control weaknesses that resulted in instances where these MTFs had not identified all patients with third-party insurance and sometimes did not bill those insurers even when they were aware such coverage existed. Consequently, opportunities to collect millions of dollars of reimbursements from insurers for medical services provided were forgone. Concerned that there were additional MTFs that also did not effectively bill and collect for reimbursable services, Congress requested that we expand our audit to provide some perspective on the amount of such services that were not billed and collected across all of DOD's MTFs. However, after determining that it was not feasible to develop a DOD-wide estimate of missed collection opportunities, as agreed and explained in more detail later, we are providing a perspective on the amount of services not billed and collected across all of DOD's MTFs based on work performed by DOD's service auditors at 35 of the largest MTFs reporting collections. This report also provides information on (1) specific control weaknesses and other issues that impair DOD's ability to increase collections, (2) the department's ongoing efforts to improve the third-party billings and collection function, and (3) our assessment of DOD's use of performance metrics to manage third-party collections at its MTFs.
Based on our previous audit work and our analysis of reports issued by the military service auditors, conservatively, tens of millions of dollars are not being collected each year because key information required to effectively bill and collect from third-party insurers is often not properly collected, recorded, or used by the MTFs. DOD's failure to effectively bill and collect from third-party insurers, in effect, reduces the amount third-party private sector insurance companies must pay out in benefits and unnecessarily adds to DOD's increasing health care budget--financed by taxpayers. While DOD has limited control over the burgeoning cost of providing health care benefits to DOD retirees and their dependents and active duty dependents, DOD has an opportunity to offset the impact of its rising health care costs by collecting amounts due from its Third Party Collections Program. However, because DOD does not maintain a reliable central database containing patient insurance information, which would facilitate sampling and thus the development of a statistically based projection across the entire universe of care provided by MTFs, neither the service auditors nor we could feasibly provide a comprehensive estimate of the total third-party collections shortfall across all MTFs. Further, DOD's current transition to a new billing methodology made it impractical for us to perform even limited sampling and testing at this time. Weaknesses throughout DOD's third-party billing and collection process, such as incomplete medical documentation and coding of care provided, insufficient monitoring of accounts receivable, and ineffective follow-up to collect accounts receivable, have all contributed to collection shortfalls. The single biggest obstacle to increasing collections, however, is inadequate identification of patients with third-party insurance. DOD does not have effective systems or processes for obtaining and updating insurance information for patients that have other health insurance coverage. This weakness dramatically reduces the possibility of collecting from third-party insurers and recouping the cost of providing reimbursable care. According to DOD officials, they have several process and system improvement initiatives planned or underway that are intended to address the weaknesses identified. Central to DOD's effort to improve the Third Party Collections Program overall and conform to industry best practices, DOD recently initiated a new itemized billing methodology for outpatient care. However, the new billing system resulted in significant start-up issues that, according to DOD officials, seriously affected third-party outpatient billings and collections in the short term. Consequently, total collections, including inpatient, outpatient, and ancillary reimbursements, in fiscal year 2003 were only about $92 million--down from previous years by about $30 million or 25 percent. DOD officials said that this is a temporary decline due to implementation issues with outpatient itemized billing and the impact of the Iraq mobilization on MTF operations. Officials expect collections to increase and exceed earlier levels as problems are resolved and new system enhancements are implemented. However, according to DOD officials, many of the system enhancements will not be fully operational until fiscal year 2005 and beyond. Although DOD monitors certain performance information related to MTF workload and third-party collections, little is done with this information in terms of managing DOD's Third Party Collections Program. Presently, the department lacks key information needed to establish performance goals for billings and collections functions to assess individual MTFs.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-04-322R, Military Treatment Facilities: Improvements Needed to Increase DOD Third-Party Collections
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February 20, 2004:
The Honorable Dennis J. Kucinich:
Ranking Minority Member:
Subcommittee on National Security, Emerging Threats and International
Relations:
Committee on Government Reform:
House of Representatives:
The Honorable Janice D. Schakowsky:
House of Representatives:
Subject: Military Treatment Facilities: Improvements Needed to Increase
DOD Third-Party:
Collections:
Like the private health care industry, the cost of providing health
care services to the Department of Defense's (DOD) active duty
personnel, their dependents, retirees, and survivors and their
dependents has increased dramatically over the past decade. In fiscal
year 2003, DOD reported that more than 8.7 million Military Health
System beneficiaries were eligible to receive health care at a cost of
about $27.2 billion per year--up from a reported 8.2 million eligible
beneficiaries at a cost of $15.6 billion in fiscal year 1997. To the
extent that DOD beneficiaries have private health insurance coverage,
DOD is authorized to bill insurance companies under the Third Party
Collections Program.[Footnote 1] As such, DOD has the opportunity to
defray the rising cost of providing health care to an increasing number
of eligible beneficiaries.
In October 2002, we reported to you that the three military treatment
facilities (MTFs) we visited did not always bill and collect from
private insurers for care that was reimbursable to the
government.[Footnote 2] At all three facilities, we identified control
weaknesses that resulted in instances where these MTFs had not
identified all patients with third-party insurance and sometimes did
not bill those insurers even when they were aware such coverage
existed. Consequently, opportunities to collect millions of dollars of
reimbursements from insurers for medical services provided were
forgone.
Concerned that there were additional MTFs that also did not effectively
bill and collect for reimbursable services, you requested that we
expand our audit to provide some perspective on the amount of such
services that were not billed and collected across all of DOD's MTFs.
However, after determining that it was not feasible to develop a DOD-
wide estimate of missed collection opportunities, as agreed to with
your offices and explained in more detail later, we are providing a
perspective on the amount of services not billed and collected across
all of DOD's MTFs based on work performed by DOD's service auditors at
35 of the largest MTFs reporting collections. This report also provides
information on (1) specific control weaknesses and other issues that
impair DOD's ability to increase collections, (2) the department's
ongoing efforts to improve the third-party billings and collection
function, and (3) our assessment of DOD's use of performance metrics to
manage third-party collections at its MTFs.
We performed our work from April 2003 through December 2003 in
accordance with generally accepted government auditing standards.
Details on our objectives, scope and methodology are included in
enclosure 1.
Results in Brief:
Based on our previous audit work and our analysis of reports issued by
the military service auditors, conservatively, tens of millions of
dollars are not being collected each year because key information
required to effectively bill and collect from third-party insurers is
often not properly collected, recorded, or used by the MTFs. DOD's
failure to effectively bill and collect from third-party insurers, in
effect, reduces the amount third-party private sector insurance
companies must pay out in benefits and unnecessarily adds to DOD's
increasing health care budget--financed by taxpayers. While DOD has
limited control over the burgeoning cost of providing health care
benefits to DOD retirees and their dependents and active duty
dependents, DOD has an opportunity to offset the impact of its rising
health care costs by collecting amounts due from its Third Party
Collections Program.
For fiscal years 2000 through 2002, DOD's Third Party Collections
Program generated on average about $122 million annually. However, the
Army, Navy, and Air Force service auditors at 35 of the largest 132
MTFs found that collections from reimbursable health care costs could
be increased by approximately $44 million a year at these 35 facilities
alone. These findings along with our past and current work suggest that
the billing and collections problems we reported on previously are
pervasive throughout DOD. However, because DOD does not maintain a
reliable central database containing patient insurance information,
which would facilitate sampling and thus the development of a
statistically based projection across the entire universe of care
provided by MTFs, neither the service auditors nor we could feasibly
provide a comprehensive estimate of the total third-party collections
shortfall across all MTFs. Further, DOD's current transition to a new
billing methodology made it impractical for us to perform even limited
sampling and testing at this time.
Weaknesses throughout DOD's third-party billing and collection process,
such as incomplete medical documentation and coding of care provided,
insufficient monitoring of accounts receivable, and ineffective follow-
up to collect accounts receivable, have all contributed to collection
shortfalls. The single biggest obstacle to increasing collections,
however, is inadequate identification of patients with third-party
insurance. DOD does not have effective systems or processes for
obtaining and updating insurance information for patients that have
other health insurance coverage. This weakness dramatically reduces the
possibility of collecting from third-party insurers and recouping the
cost of providing reimbursable care.
According to DOD officials, they have several process and system
improvement initiatives planned or underway that are intended to
address the weaknesses identified. Central to DOD's effort to improve
the Third Party Collections Program overall and conform to industry
best practices, DOD recently initiated a new itemized billing
methodology for outpatient care. However, the new billing system
resulted in significant start-up issues that, according to DOD
officials, seriously affected third-party outpatient billings and
collections in the short term. Consequently, total collections,
including inpatient, outpatient, and ancillary reimbursements, in
fiscal year 2003 were only about $92 million--down from previous years
by about $30 million or 25 percent. DOD officials said that this is a
temporary decline due to implementation issues with outpatient itemized
billing and the impact of the Iraq mobilization on MTF operations.
Officials expect collections to increase and exceed earlier levels as
problems are resolved and new system enhancements are implemented.
However, according to DOD officials, many of the system enhancements
will not be fully operational until fiscal year 2005 and beyond.
Although DOD monitors certain performance information related to MTF
workload and third-party collections, little is done with this
information in terms of managing DOD's Third Party Collections Program.
Presently, the department lacks key information needed to establish
performance goals for billings and collections functions to assess
individual MTFs.
This letter includes recommendations to the Secretary of Defense to
implement a corrective action plan to address start-up problems with
DOD's outpatient itemized billing methodology and establish an
effective performance management system that establishes realistic
collection goals by MTF.
In its written comments, reprinted in enclosure II, DOD concurred with
our recommendations and acknowledged that additional funds could have
been recovered. DOD also included in its comments a comprehensive
discussion of its current and future initiatives aimed at improving its
Third Party Collections Program. However, DOD (1) took exception with
our position that additional collections could be used to offset the
rising cost of health care and (2) questioned our reliance on the work
of other auditors to provide some perspective on how much more could be
collected annually from third-party insurers. First, we recognize that
there is a statutory prohibition against DOD using third-party
collections to reduce an individual MTF's operating budget, and, as
noted in this letter, that DOD may use the collections to support the
operations of the MTF instead of depositing the collections in the
General Fund of the Treasury. However, our point, taking a broader
view, is that every dollar recovered from third-party insurers is one
more dollar for the Congress to consider in funding the government's
operations. We reaffirm our position that DOD has the opportunity, as
well as a fiduciary responsibility to taxpayers, to maximize its
collection efforts under this program.
Second, the information in our letter on the potential amount of lost
collections is adequately supported. As detailed in this letter, DOD's
incomplete or flawed data prevented us from providing a more
comprehensive estimate of third-party collections shortfalls across all
MTFs. Consistent with generally accepted government auditing standards,
we relied on prior work performed by military service auditors at 35
MTFs, as well as our own more recent assessments, to provide an
estimate of lost collections.
Background:
The military health system has three missions: (1) maintaining the
health of active-duty service personnel, (2) medically supporting
military operations, and (3) providing care to the dependents of
active-duty personnel, retirees and their families, and survivors and
their dependents. The military health care system has changed
significantly during the past decade. Along with substantial active
duty force and infrastructure reductions, medical personnel strength
has decreased by 15 percent, and one-third of all military hospitals
have been closed. Further, the 1980s doubling of military health costs
and increasing beneficiary concerns about care access in military
hospitals led DOD to establish its nationwide managed care program,
called TRICARE. In recent years, the defense authorization act for
fiscal year 2001[Footnote 3] greatly expanded the health care benefits
available through DOD for Medicare-eligible military retirees. In the
past, these retirees were not eligible for the TRICARE health care
program and were able to get care from MTFs only when space was
available.
TRICARE covers inpatient services, outpatient services such as
physician visits and lab tests, and skilled nursing facility and other
postacute care. It also covers prescription drugs, which are available
at MTFs, through DOD's TRICARE Mail Order Pharmacy, and at civilian
pharmacies. TRICARE delivers care through (1) Army, Navy, and Air Force
operated medical centers, (2) community hospitals, (3) major clinics,
known as MTFs, that serve military installations, and (4) a network of
civilian providers managed by DOD's managed care support contractors.
Eligible beneficiaries can access care at the MTFs for free or at
minimal cost. However, if a beneficiary has other health insurance
coverage, then the care provided by the MTF may be reimbursable by
private health insurers. The government is authorized to collect the
reimbursable amounts from insurance companies under the Third Party
Collections Program authorized by 10 U.S.C. §1095.[Footnote 4] Instead
of depositing the collections in the Treasury, DOD may use the
collections to support the operations of the MTF.
DOD's Third Party Collections Program is led by the TRICARE Management
Activity (TMA) in coordination with the Army Medical Command (MEDCOM),
the Navy's Bureau of Medicine and Surgery (BUMED), and the Air Force
Medical Service. TMA sets policy and provides program oversight and
issue resolution, and develops reimbursement rates. Service managers at
each of the service medical commands develop and execute service-
specific guidelines and provide oversight within their service for
third-party collection operations. However, individual MTFs are
responsible for executing policy, training personnel, developing
marketing plans, operating within compliance guidelines, implementing
best practice solutions, and establishing internal controls.
Consequently, individual MTFs have great flexibility to determine how
they will implement DOD policy and manage their Third Party Collections
Program.
Tens of Millions of Dollars Are Not Collected Each Year:
Based on work performed by Army, Navy, and Air Force service auditors
at 35 of the 132 largest MTFs, collections from reimbursable health
care costs could be increased substantially. Their audit work, some of
which is recent and fairly comprehensive and some of which is more
limited in scope and not completed recently, could be used to suggest
that approximately $44 million a year more could be colleted at these
35 facilities. While some MTFs are performing better than others,
service auditors found collection shortfalls at all the MTFs visited.
Because DOD does not maintain a reliable central database containing
patient insurance information, which could facilitate sampling, neither
the service auditors nor we could feasibly provide a comprehensive
estimate of third-party collection shortfalls across all MTFs. In
addition, DOD's current transition to a new itemized billing
methodology, which significantly disrupted collections in fiscal year
2003, made it impractical for us to perform even limit sampling and
testing at this time because these estimates would not be reflective of
future years collections. Therefore, even though there are differences
in the service auditors' sampling periods, scope of work, and sampling
approaches that preclude us from comparing the relative performance
among Army, Navy, and Air Force MTFs, these estimates provide the most
comprehensive and current information with respect to DOD's third-party
collection shortfall.
* In March 2003, based on work performed at five of the Army's largest
MTFs, the Army Audit Agency reported that these five facilities could
have collected an additional $24.5 million more annually--doubling
current collections at those sites.[Footnote 5] Of all the service
auditors, the Army auditors provided the most recent and comprehensive
assessment of collections--providing audit coverage for all workloads
or types of care provided including inpatient, outpatient, ancillary
services, pharmacy, and ambulatory visits.
* Focusing only on reimbursable pharmaceutical collections, the Air
Force Audit Agency reported[Footnote 6] that for the 13 Air Force MTFs
audited, these facilities could have collected an additional $15.7
million annually.
* Based on work performed in 1996 at 17 Navy facilities and focusing
strictly on outpatient workload, the Naval Audit Service
reported[Footnote 7] that these MTFs could have collected an additional
$3.4 million annually.
Although the service auditors looked at different workloads and used
varying audit approaches, the conclusions were similar. All determined
that millions of dollars in reimbursable care were not being collected.
The auditors identified similar reasons for collections shortfalls: (1)
medical personnel often failed to identify patients with other health
insurance, (2) bills were not always prepared even when the information
was available, and (3) staff did not aggressively follow up on open
claims with private insurance companies. Generally, these findings are
consistent with our previous audit findings for the three MTFs we
visited.[Footnote 8] Across all the services, auditors have concluded
that significant increases in collections are possible at every MTF
examined, and this condition likely exists in varying degrees
throughout DOD's MTFs.
Process Weaknesses Limit Collections:
Weaknesses in DOD's third-party billing and collection processes and
systems impair DOD's ability to collect tens of millions of dollars
each year from third-party insurers. As shown by our prior work and
confirmed by earlier or more current service auditor reports,
weaknesses throughout the process, such as inadequate identification of
patients with third-party insurance, incomplete medical documentation
and coding of care provided, insufficient monitoring of accounts
receivable, and ineffective follow-up to collect accounts receivable,
have all contributed to collection shortfalls. According to DOD
officials, they presently have several initiatives planned and underway
that are intended to address many of the weaknesses identified. In
particular, DOD is in the process of implementing automated systems
improvements, including a new DOD-wide itemized billing methodology,
intended to improve its billing processes and increase collections.
DOD's billing and collections process cuts across five functional
areas, as shown in figure 1. In each functional area or phase of the
process, DOD must obtain and document key information in order to
properly bill third-party insurers and maximize collections. Each phase
of the process is therefore highly dependent on the completeness and
accuracy of information collected in prior phases. However, because
MTFs do not always properly collect, record, or utilize key information
during each phase of the process, the pool of potential third-party
collections is diminished with each control breakdown during the
process.
Figure 1: Breakdowns Reduce DOD's Third-Party Collections:
[See PDF for image]
[End of figure]
Starting with patient intake, our previous work as well as the service
MTF audits have shown that DOD does not have effective systems and
processes for obtaining and updating insurance information for patients
who have other health insurance coverage or for verifying the accuracy
of the information with the insurer. This weakness dramatically reduces
the possibility of collecting from third-party insurers and recouping
the cost of providing reimbursable care. For example, based on work
performed by Army service auditors at five MTFs, they found that while
MTF records identified 4.5 percent of the outpatients as having third-
party insurance, in fact about 9.8 percent of the outpatients had
insurance, more than doubling the number of patients with insurance and
projected to include an additional 96,000 patients. If the MTFs had
accurate insurance information for these patients, Army auditors
estimated that they could have collected an additional $8.7 million. At
three MTFs where we tested internal controls, we found these MTFs also
were not identifying all patients with third-party insurance coverage
and frequently did not bill insurers even when they knew the patients
had insurance coverage, thereby losing opportunities to collect
millions of dollars in reimbursable care. According to DOD officials,
they are currently exploring the possibility of outsourcing this
function with the hope of establishing a comprehensive, independently
validated database of beneficiaries with third-party health insurance.
During the medical documentation and coding phases, MTF physicians and
other health care providers must adequately document the health care
provided to the patient and medical records professionals must assign
complete and accurate diagnoses and procedure codes to ensure that
third-party insurers are billed appropriately. However, MTF physicians
and other health care providers often do not adequately document their
diagnosis or the specific procedures performed. For example, one
independent study[Footnote 9] conducted at 50 MTFs found that
approximately 17 percent of the records reviewed did not contain
documentation for the specified date of the outpatient visit and about
34 percent to 47 percent of the time, reviewers could not find
documentation in the medical record for the diagnosis or procedure
performed. In addition, care is sometimes coded inaccurately, as shown
in one DOD coding validation study; approximately 14 percent of the
diagnosis and procedure codes reviewed were in error.[Footnote 10]
The completeness and accuracy of insurance and medical coding
information are extremely important since it is the sole basis used to
identify reimbursable care and create and send bills to third-party
insurers. However, because care is sometimes not coded or improperly
coded, it is either not identified as billable care, overbilled,
underbilled, or rejected from the billing system. In addition, as we
reported previously,[Footnote 11] even when this information was
available, the staff often did not send a bill for a variety of reasons
including lack of staff resources and clerical oversights. Finally,
accounts receivable personnel are responsible for processing payments
from insurers and following up with insurers on outstanding or denied
bills. However, many MTFs do not actively monitor and manage accounts
receivable to ensure prompt resolution of disputed claims and pursue
collection of delinquent accounts. According to some DOD officials,
heavy workloads, limited staff resources, and the lack of legal support
make it cost prohibitive for the MTFs to resolve and pursue low dollar
value claims. Thus far, however, DOD has not performed any type of
cost-benefit analysis to determine what claims it should or should not
pursue.
To address collection issues, the Army has initiated a process to
consolidate and document denied or disputed claims, grouping them by
insurer and the reason for denial, in an effort to cost effectively
resolve these claims. Specifically at 15 MTFs, after collections
efforts have been unsuccessful, the Army is using a contractor to
attempt collection, track accounts receivable by insurance company, and
document the government's case for reimbursement with the intent of
putting the Army in a better position to resolve disputed claims and
demand payment or initiate legal action.
Itemized Billing Methodology Results in Decreased Collections for
Fiscal Year 2003:
DOD's implementation of a new outpatient itemized billing methodology
intended to improve its billing processes and increase collections has
led to a significant decrease in collections during fiscal year 2003.
For fiscal years 2000 through 2002, DOD's Third Party Collections
Program has generated an average of about $122 million in revenues a
year. However, in fiscal year 2003 total collections decreased by about
$30 million to only $92 million. According to DOD officials, the
decline is temporary and is attributable largely to start-up problems
associated with the new itemized billing methodology and to a lesser
degree, the Iraqi mobilization.
In October 2002, in an effort to improve the Third Party Collections
Program, conform to industry best practices, and comply with standards
for the protection of electronic private health information set by the
Secretary of Health and Human Services,[Footnote 12] DOD transitioned
to an itemized billing methodology for outpatient care. Previously, DOD
billed outpatient care using a standard, all-inclusive rate based on
the average cost of a clinical visit. This entailed annual DOD
calculations of the cost of providing care by the type of outpatient
visit, including physician care, and ancillary costs such as pharmacy,
laboratory, and other services, typically associated with the clinical
visit type. For example, as shown in figure 2, under the all-inclusive
rate, an insurer might have been billed $150 for a visit to an MTF's
family practice clinic, or $200 for a patient visit to an MTF's
cardiology clinic.
Figure 2: Comparison of Bills Under All-inclusive Rate and Itemized
Billing:
[See PDF for image]
[End of figure]
However, under itemized billing, because DOD bills third-party insurers
based on the specific services and procedures provided, including any
medications prescribed or laboratory or other ancillary care provided
for a particular clinical visit, several bills may have to be prepared.
A TMA study comparing MTF billings under the all-inclusive rate and
itemized billing methods concluded that, on average, the amount of
billings to insurers would be approximately the same under either
billing method. However TMA projected that under itemized billing,
MTFs' third-party collections should increase, as automation
improvements would help to more completely identify all reimbursable
care for billing. In addition, itemized billing, especially when
electronic billing and other system improvements are implemented, would
result in MTF claims being in a format more widely accepted by the
insurers.
In implementing the new outpatient billing system, DOD officials
acknowledged that collections had declined in the first 2 quarters of
fiscal year 2003, but they expected that collections would catch up by
the end of the fiscal year. Instead, as shown in figure 3, we found
that collections did not recover by the end of fiscal year 2003.
Figure 3: MTF Inpatient and Outpatient Collections for Fiscal Year 2000
through 2003:
[See PDF for image]
[End of figure]
The major reason for the collections drop off was recoveries for
outpatient care. As seen in figure 3, reimbursements for outpatient
care, billed under the new itemized billing system, decreased by more
than 30 percent from peak collections in fiscal years 2001 and 2002 and
inpatient care collections declined by more than 20 percent--from a
high of about $58 million in fiscal year 2001--to just over $44 million
in fiscal year 2003. According to DOD officials, incorrect or
incomplete medical coding and other system start-up problems have
resulted in an unusually high number of bills being rejected by the
automated outpatient billing systems. Consequently, in fiscal year
2003, many of the MTFs did not send numerous bills to insurers for
payment, and collections have fallen dramatically.
As discussed previously, MTF physicians and other health care providers
must adequately document the nature of health care provided to the
patient, and medical records professionals must assign complete and
accurate diagnoses and procedure codes to ensure that third-party
insurers are billed appropriately. Under the new itemized billing
methodology, the system requires more specificity and consistency among
the diagnosis and procedure codes and provider-related information in
order to pass systems edit checks and automatically generate a bill.
This is a significant cultural change that requires physician and other
health care providers to document more precisely the care they provide.
However, according to DOD officials, in some cases the cultural shift
toward more complete documentation of medical care has not taken hold
yet. As a result, administrative personnel are currently researching
and manually correcting coding errors and other rejected transactions
on a bill-by-bill basis, which is extremely labor intensive and has
resulted in significant billing backlogs.
In the long term, TMA expects MTF collections to increase as automation
enhancements, other systems improvements, and reengineered MTF business
practices are implemented, resulting in the improved identification of
all reimbursable care for billing. For example, according to DOD
officials, they plan to add enhancements to the itemized billing system
that will identify incomplete or inaccurate information as the health
care provider enters patient data into the system. Planned automated
systems edit features would alert clinical staff when they enter
inconsistent or incongruent information into the system. This will
allow clinical staff, familiar with the care provided, to detect and
correct missing or incorrect information at the point of entry.
However, this and many other system enhancements will not be fully
operational until fiscal year 2005 and beyond.
Performance Metrics Not Available:
While DOD's Third Party Collections Program is led by TMA and managed
by Army, Navy, and Air Force medical commands, neither TMA nor the
services have an effective performance management system in place for
establishing performance goals, identifying collection shortfalls, and
managing the overall performance of DOD's Third Party Collections
Program. TMA and the services monitor certain performance information
related to MTF workload and collections. However, this information
alone does not provide the context needed to establish individual MTF
baselines or goals against which performance may be assessed. Key
information needed to establish credible performance expectations
includes both quantitative and qualitative information related to the
patient population covered by other health insurance and the type and
amount of care provided by each MTF to this population. Without this
information, DOD is unable to determine whether a particular MTF is
maximizing collections.
The amount of money collected from third-party insurers varies widely
from MTF to MTF depending on the extent to which the patient population
served has third-party health insurance and the type and level of care
provided by the MTF. For example, a large military hospital providing
specialty care in a metropolitan area and serving a large retiree
population with third-party health insurance is much more likely to
provide reimbursable care which in turn should generate higher
collections, than a military clinic in a remote location offering basic
medical care to a patient population consisting mainly of active duty
personnel and their dependents. However, TMA and the services do not
currently have visibility over information such as the number and
percentage of patients with third-party heath insurance and therefore
cannot use this and other profile information to set collections
performance expectations. According to DOD officials, they plan to
field a new centralized database in 2004 that will provide visibility
over demographic information including the beneficiary's age, gender,
physical location, and whether the beneficiary has third-party health
insurance.
Collections can also vary dramatically over time at a single MTF for
reasons that are not readily apparent to TMA or the services. Our
analysis of collections data for fiscal years 2000 through 2002 showed
that collections for individual MTFs fluctuated widely from year to
year for a significant number of MTFs--fluctuating upward by as much as
784 percent and downward by as much as 85 percent. Reasons provided by
MTF officials for increases include identifying and billing a
previously unbilled workload, hiring a new business manager, or
increased support from clinical staff or the MTF commander. Reasons for
declines are not as clear, but include systems problems, inadequate or
inexperienced staff, or the loss of key personnel. Although quarterly
collections activity is monitored by TMA or the services, little can be
done with this information in terms of managing DOD's Third Party
Collections Program. Given the absence of credible performance
expectations for each MTF, it is not possible to determine whether a
particular MTF is maximizing its collections.
Conclusion:
Managed effectively, DOD's Third Party Collections Program could
collect tens of millions of dollars more each year to offset the cost
of providing health care to DOD retirees and their dependents and
active duty dependents. Because DOD is authorized to use revenue
collected from third-party insurers to supplement its defense health
care appropriation and improve MTF operations, DOD has an opportunity
to reduce the budgetary impact of the rising cost of providing health
care services to DOD beneficiaries. Start-up problems with DOD's new
outpatient itemized billing methodology further jeopardize DOD's
ability to realize its third-party collections potential in the near
term and possibly into the future as it expands its itemized billing
methodology to the inpatient workload. Lessons learned from DOD's
current effort should provide valuable insights as it expands the use
of itemized billing. However, addressing the current problems with
itemized billing and maximizing third-party collections will require
sustained leadership and greater visibility over individual MTF
performance.
Recommendations for Executive Action:
We recommend that the Secretary of Defense direct the Assistant
Secretary of Defense for Health Affairs to (1) implement a corrective
action plan that includes time frames for addressing the start-up
problems with outpatient itemized billing that have resulted in
collections decreases in fiscal year 2003, and (2) establish an
effective performance management system that establishes realistic
performance baselines or collections goals for each MTF and enables
MTFs to identify collections shortfalls and improve their operations.
Agency Comments and Our Evaluation:
In its written comments, reprinted in enclosure II, DOD concurred with
our findings and recommendations and acknowledged that additional funds
could have been recovered. However, DOD (1) took exception with our
position that additional collections could be used to offset the rising
cost of health care and (2) questioned our reliance on the work of
other auditors to provide some perspective on how much more could be
collected annually from third-party insurers. In addition, DOD included
in its comments a comprehensive discussion of its current and future
initiatives aimed at improving its Third Party Collections Program.
First, with regard to the disposition of the third-party collections,
we recognize that there is a statutory prohibition against DOD using
third-party collections to reduce an individual MTF's operating budget.
Our letter clearly states that DOD is authorized to use the collections
to support the operations of the MTF and that these funds are a revenue
source that can be used to enhance the services provided by the MTFs.
Our point, taking a broader view, is that every dollar recovered from
third-party insurers is one more dollar for the Congress to consider in
funding the government's operations. We reaffirm our position that DOD
has the opportunity, as well as a fiduciary responsibility to
taxpayers, to maximize its collection efforts under this program.
Second, DOD expressed a concern that our evidence for the department's
missed collections opportunities was based solely upon previous
services audit reviews and that we did not provide an actual analysis
to support the statement. We disagree with DOD's comment and provide
our perspective based on the following three points.
In accordance with generally accepted government auditing standards
(GAGAS),[Footnote 13] in planning an audit, auditors should determine
whether other auditors have previously done, or are doing, audits of
the program or the entity that operates it. If other auditors have
recently performed work in the area, as was the case on this audit, the
availability of other auditors' work may influence the selection of
methodology, since the auditors may be able to rely on that work to
limit the extent of their own testing. Also in accordance with GAGAS
and as discussed the methodology section of this report, we performed
procedures regarding the specific work to be relied on that provided a
sufficient basis for that reliance. Specifically, we obtained evidence
concerning the other auditors' qualifications and independence through
prior experience, inquiry, and review of the other auditors' external
quality control review report. We also determined the sufficiency,
relevance, and competence of other auditors' evidence by reviewing
their reports and audit programs.[Footnote 14]
As detailed in our report, we analyzed the macro trend data on MTF
inpatient and outpatient collections for fiscal years 2000 through
2003. These data showed that collections had fallen dramatically in
fiscal year 2003 during its transition to a new outpatient billing
system, providing additional support for our finding that DOD had
missed collections opportunities. Further, our previous
report[Footnote 15] on MTF internal control activities, as referenced
in this letter, corroborated the work of the service auditors, as we
reported that the three MTFs that we reviewed did not have effective
controls over third-party billings and collections and therefore lost
opportunities to collect millions of dollars of reimbursements for
services.
As we discussed in this report, we selected our audit methodology and
decided to use the work of the service auditors for two reasons: (1)
DOD does not maintain a reliable central database containing patient
insurance information, which would have made providing a comprehensive
estimate of third-party collections shortfalls across all MTFs
possible, and (2) DOD's current transition to a new itemized billing
methodology, which significantly disrupted collections in fiscal year
2003, made it impractical for us to perform even limited sampling and
testing. As a result of these issues, neither DOD nor we can quantify
the amount of possible collections under this program. While the total
amount of collection shortfalls is also unknown, it is likely much
higher than the amounts reported by the service auditors, as they each
performed limited reviews of selected MTFs and/or types of services.
Thus, we maintain that our finding of at least tens of millions of
dollars of forgone annual collections is adequately supported and that
DOD needs to continue to work towards managing its Third Party
Collections Program as efficiently and effectively as possible.
Finally, DOD cited ongoing and planned efforts in the areas of patient
health insurance information, medical documentation and coding, and the
billing and collections function. DOD also cited a financial study
being done this fiscal year to determine what metrics could be used to
establish MTF-specific revenue goals. The department expects that as
milestones are achieved over the next several years in the areas of
business process reengineering and other business and automated system
enhancements, collections will increase over the previous year's
benchmark. While we acknowledge DOD's efforts in this area, many of
DOD's efforts will not be fully operational until fiscal year 2005 and
beyond. As a result, we cannot assess the adequacy of DOD's planned
actions and believe that it is premature for DOD to assert the success
of these efforts.
Unless you publicly announce its contents earlier, we will not
distribute this letter until 15 days from its date. At that time, we
will send copies to the Chairman of the Subcommittee on National
Security, Emerging Threats and International Relations, and the
Chairman and Ranking Minority Member, Subcommittee on Government
Efficiency and Financial Management, House Committee on Government
Reform, as well as other congressional committees. We are also sending
copies to the Secretary of Defense; the Assistant Secretary of Defense
for Health Affairs; and the Surgeons General of the military services.
Copies will be made available to others upon request. In addition, the
letter will also be available at no charge on GAO's home page at http:/
/www.gao.gov.
Please contact me at (202) 512-9095 or by e-mail at kutzg@gao.gov or
Diane Handley, Assistant Director, at (404) 679-1986 or by e-mail at
handleyd@gao.gov if you or your staffs have any questions concerning
this letter. Major contributors to this letter were Mario Artesiano,
Carl Barden, Francis Dymond, James Haynes, Julie Matta, Terry
Richardson, Vanessa Taylor, and Lisa Warde.
Signed by:
Gregory D. Kutz:
Director, Financial Management and Assurance:
Enclosures:
Enclosure I:
Scope and Methodology:
We relied on existing work of Army Audit Agency (AAA), Air Force Audit
Agency (AFAA), and Naval Audit Service (NAS) to provide a perspective
on the extent and amounts of reimbursable care that is not being
collected by MTFs. We did not verify or retest the amounts reported by
the service auditors; however, we did obtain, review, and discuss with
the auditors the audit methodologies used by each of the services. We
also obtained and reviewed audit programs and quality control reports
for the AAA and AFAA. Given the elapsed time for the NAS work, their
audit program and quality control report were not available. We
interviewed staff at TRICARE Management Activity in Falls Church,
Virginia; Army Medical Command (MEDCOM) in San Antonio, Texas; the
Navy's Bureau of Medicine and Surgery (BUMED) in Washington, D.C.; the
Air Force Medical Service (AFMS) in Washington, DC; and the National
Naval Medical Center in Bethesda, Maryland.
As agreed with our requesters to provide a perspective on the amount of
such services that were not billed and collected across all of DOD's
MTFs, we reviewed audit reports of service auditors. While scope,
timing, and methodology differences in AAA, AFAA, and NAS estimates
limit using these estimates to arrive at a DOD-wide estimate, the
estimates do provide a perspective of collections shortfalls at various
MTFs across DOD. We also analyzed individual MTF collections from
fiscal year 2001 through 2003 to assess the extent and reasons for
collections variances.
To identify the status of specific control weaknesses that resulted in
lost collections from third-party insurers, we reviewed the internal
control weaknesses identified by service auditors, those we had
identified in our earlier work, and DOD studies to identify the areas
most likely to affect collections.
To assess the performance information used by TMA and the services to
manage DOD's Third Party Collections Program we obtained and reviewed
information currently reported to TMA and the services by the MTFs and
inquired about the availability of other information not contained in
the information reported and inquired how these data were used to
oversee MTF billing and collections efforts. The Department of Defense
provided written comments on a draft to this letter. These comments are
presented and evaluated in the "Agency Comments and Our Evaluation"
section of this letter and reprinted in enclosure II. Although DOD's
comments also included four enclosures, their substance was generally
included in the comment letter and addressed as appropriate in our
agency comment response. Accordingly, we did not reprint all
enclosures. We performed our work from April 2003 through December 2003
in accordance with U.S. generally accepted government auditing
standards.
Enclosure II: Comments from the Department of Defense:
THE ASSISTANT SECRETARY OF DEFENSE:
WASHINGTON, DC 20301-1200:
HEALTH AFFAIRS:
FEB 06 2004:
Mr. Gregory D Kutz, Director:
Director, Financial Management & Assurance:
U.S. General Accounting Office:
441 G Street, N.W.
Washington, DC 20548:
Dear Mr. Kutz:
This is the Department of Defense (DoD) response to the General
Accounting Office (GAO) draft report "Military Treatment Facilities
Improvements Needed to Maximize DOD Third Party Collections," dated
Januaty 5, 2004 (GAO Code 192093/GAO-04-322R).
The Department appreciates the opportunity to comment on the draft
report and generally concurs with the GAO findings and recommendations
The Department's response to the GAO recommendations is enclosed, along
with overall comments and specific technical corrections for
incorporation into the final report.
I do take exception to the GAO's statement that if "managed
effectively, the DoD's Third Party Collections Program (TPCP) could
collect tens of million dollars more each year to offset providing
healthcare to DoD retirees and their dependents and active duty
dependents " In accordance with Title 10, United States Code, Section
1095 (g), military treatment facilities (MTFs) collections received
from third party payers are "credited to the appropriation supporting
the maintenance and operation of the facility and shall not be taken
into consideration to establishing the operating budget of the facility
" Therefore, the Department cannot decrement the MTF budget by
subsidizing program dollars with Third Party Collections in order to
offset healthcare delivery In regards to the stated missed collection
dollars, the GAO's evidence for the Department's missed collections
opportunities was based solely upon previous Service audit reviews and
did not provide an actual analysis to support the statement. I
acknowledge that additional funds could have been recovered; however,
over the last three years, my staff has worked closely with the
Military Departments to strengthen our TPCP. We had previously
identified the issues outlined by the GAO and have aggressively
implemented business process improvements in regards to TPCP operations
and to move to commercial practices Last fiscal year's critical
transition to outpatient itemized billing exemplifies our commitment to
improve TPCP The outcome of this business process reengineering and
other programmed business and automated system enhancements that
are outlined m our TPCP Improvement Plan will come to fruition over the
next several years As each milestone is achieved, I am confident that
the Department will realize increases m TPCP revenue over the previous
year's benchmark.
Please direct any questions to my points of contact on this matter: Lt
Col JoAnn Kelsch (functional) at (703) 681-3492, ext 4068 and Mr
Gunther J. Zimmerman (Audit Liaison) at (703) 681-3492, ext 4065:
Sincerely,
Signed by:
William Winkenwerder, Jr., MD:
Enclosures.
1. Response to GAO Report:
2 Additional Comments:
3 Technical Comments:
4 Surgeons General Comments:
5 DFAS Comments:
GAO DRAFT REPORT - DATED 5 JANUARY 2004 (GAO CODE-192093/GAO-04-322R):
"MILITARY TREATMENT FACILITIES (MTFs): IMPROVEMENTS NEEDED TO MAXIMIZE
DOD THIRD PARTY COLLECTIONS":
DEPARTMENT OF DEFENSE COMMENTS:
RECOMMENDATION 1: Implement a corrective action plan that includes
timeframes for addressing the start-up problems with outpatient
itemized billing that have resulted in collections decreases in Fiscal
Year 2003.
DOD RESPONSE: Concur. The Department has already taken significant
steps to improve outpatient itemized billing. The Department has
developed and implemented its Third Party Collections Program (TPCP)
improvement plan, which includes business process improvements in
support of Outpatient Itemized Billing (OIB) and Military Treatment
Facility (MTF) revenue cycle management to optimize TPCP billings and
collections. Elements of the plan were briefed to the GAO during the
entrance interview, April 8, 2003; and, a status update was provided
during the exit interview on December 18, 2003. The TPCP improvement
plan evolved from the improvement strategies identified during the
development of the Department's Uniform Business Office (UBO) Concept
of Exploration (COE), completed in Fiscal Year 2001; and, the Business
Process Reengineering (BPR) Demonstration of the Third Party
Collections Program, completed March 2001. The plan has been briefed to
the senior leadership within the Office of the Assistant Secretary of
Defense for Health Affairs (OASD(HA)), the TRICARE Management Activity
(TMA) and the Offices of the Surgeons General with subsequent status
updates in July and December 2003. The plan does address the issues
identified by the GAO based upon its review of prior audits conducted
by the Military Departments. Elements of the plan are outlined below.
Outpatient Itemized Billing:
The Department's transition from a flat-rate, all-inclusive
reimbursement methodology to Outpatient Itemized Billing (01B) in
October 2002, completed the first phase of its strategic plan to come
in line with private sector best practices in order to optimize TPCP
billing and collections. In its preparation for this business process
change, the Department studied the Veterans Administration's (VA)
itemized billing strategy and based on the VA's performance outcomes,
the Department anticipated decreases in collections similar to the VA's
first transition year. With the full implementation of OIB and the
business process improvements outlined below, the Department expects
Fiscal Year 2004 TPCP collections to exceed the previous year's
performance.
Other Health Insurance:
In support of TPCP, the Department focused its business process
improvements on the identification, validation and maintenance of Other
Health Insurance (OHI) files. Currently, the Department is reliant on
the beneficiary's self-disclosure of OHI. The Department has issued
policy that directs the Military Departments to have all DoD-eligible
beneficiaries complete the DD Form 2569, Third Party Collection Program
- Record of Other Health Insurance on an annual basis.
The Department has implemented a business process improvement this
fiscal year that added an OHI file maintenance indicator to the monthly
Data Quality Management Control (DQMC) Commander's Data Quality
Statement. Each month, each MTF will review and report the percentage
of medical records surveyed for the inclusion of a current DD Form
2569, Third Party Collection Program - Record of Other Health
Insurance. The monthly DQMC Commander's Data Quality Statement is
reported to the TMA. The goal of this initiative is to raise awareness
and action by the MTF command and Military Department senior
leadership; and, to provide the TMA with an effective monitoring tool
to assess MTF compliance with the DoD policy. Another initiative
sponsored by the OASD(HA) requested that the Military Department
Assistant Secretaries for Manpower and Reserve Affairs include Uniform
Business Office activities, to include the completion of DD Form 2569s,
in their respective Agency Audit Service and IG reviews of MTFs.
This fiscal year, the Department will deploy an automated information
system (AIS) enhancement that will provide a centralized data
repository of beneficiary OHI information on the Defense Eligibility
Enrollment Reporting System (DEERS). Currently, OHI files are limited
to the Composite Health Care System (CHCS) at each individual MTF.
Transition to the DEERS OHI central data repository will provide OHI
portability across the Military Health System (MHS). The centralized
data repository will also provide MTF staff, the TRICARE Management
Activity (TMA) and Military Department leadership with OHI reporting
indicators. The Department will have valuable information that will
allow trending and analysis by healthcare plan, geographical location
and beneficiary demographics and categories. This information will
assist the MHS in targeting OHI identification opportunities and assess
the impact of business process improvements in the capture and
maintenance of beneficiary OHI information.
The new utility of the DEERS OHI centralized data repository provides
the Department with another opportunity to apply new technology in its
continuing efforts to improve OHI identification. The Department and VA
are partnering on a project that benchmarks a system currently used by
the Center for Medicare and Medicaid Services (CMS). This project will
enable the DoD and VA to increase the OHI capture of their respective
beneficiaries by developing an insurance identification database and
outsourcing OHI validation and file maintenance. The Department
anticipates that this initiative will be deployable during fiscal year
2005.
MTF Revenue Cycle Management --Documentation and Coding:
With the Department's implementation of the itemized billing
methodology, reimbursement rates are now calculated based on the
medical coding of the healthcare services provided and documented in
the patient record. The Department has focused significant effort on
"front-end" MTF revenue cycle business process improvements to improve
the capture of medical encounter documentation and medical coding
accuracy. The Department issued policy memoranda during Fiscal Year
2003 that established MTF medical record availability and medical
encounter coding performance standards. The Department will publish a
departmental policy directive (DoDD) and instruction (DoDI) this fiscal
year. The specific performance criteria are further defined under
"Recommendation #2" below.
An ongoing initiative to improve the timely capture of medical
encounter documentation, the CHCS II Computer-based Patient Record
(CPR), will step up its deployment to an additional 35 MTFs during this
fiscal year. The Department will fully implement this application
within the next 30 months. An interim application, the Provider Graphic
User Interface (P-GUI), which provides a CHCS II-like front-end
application over the current Ambulatory Data Module (ADM), is an
alternative for the Military Departments until the CHCS II application
is available. Initial deployment of P-GUI (Fiscal Years 2003, 2004),
has demonstrated improved documentation and coding accuracy at the Air
Force and Navy MTFs currently using this application.
Over the past two years, the Department has aggressively audited MTF
coding practices to identify improvement and training opportunities.
The audits will continue this fiscal year. The monthly DQMC Commander's
Data Quality Statement also reports MTF coding performance measures. In
addition, this fiscal year the Department will begin deployment of the
first application of its Patient Accounting System, the Coding
Compliance Editor (CCE). The CCE will provide the MTF staff with an
automated coding and auditing tool utilized in the private sector. This
additional functionality will ensure greater coding accuracy and result
in the submission of timely and compliant bills to third party payers.
MTF Revenue Cycle Management - Billing Operations:
The second phase of the Patient Accounting System (PAS), a billing
system, was programmed and funded as part of the Fiscal Year 2002-2007
Program Objective Memorandum (POM). The Department will conduct product
acquisition this fiscal year; complete configuration and testing in
Fiscal Year 2005; and, implement MHS-wide deployment during Fiscal
Years 2006-2007. The PAS billing system will replace the billing
systems currently in use to support TPCP: the Third Party Outpatient
Collections System (TPOCS) and CHCS. The PAS will implement a charge-
master based billing system, a Commercial-Off-The-Shelf (COTS)
application, used to support billing operations in private sector
healthcare facilities. PAS requirements were identified by the UBO COE
and will also include the required elements to fully operationalize the
electronic transactions mandated by the Health Insurance Portability
and Accountability Act (HIPAA) of 1996. The PAS COTS application will
improve billing and collection operations and increase MTF revenue-
generating performance. Until full deployment of PAS, maintenance of
the TPOCS and CHCS billing systems will occur. System Change Requests
(SCRs) will
address required functionality needed to support billing operations as
needed. The Department has added an additional requirement description
to its Information Management/Information Technology (IM/IT) Capital
Investment Portfolio to address system enhancements in support of OIB:
the Cost Recovery Refresh. This action will prioritize TPCP IM/IT needs
and provide a funding vehicle to enable systems' enhancement until the
full deployment of the PAS billing system.
This fiscal year the Department will fully deploy an AIS enhancement to
implement the HIPAA electronic transaction that enables electronic
billing in support of outpatient TPCP. In support of HIPAA, the
contractor supporting TPOCS has transitioned to a new clearinghouse
that has established agreements with the Department's high volume third
party payers. Compliance with the HIPAA electronic billing requirements
and improved connectivity to the Department's high volume third party
payers, will streamline billing and collection operations and optimize
the MTFs' ability to generate revenue from TPCP.
The Department is currently analyzing several initiatives to outsource
MTF billing operations. This fiscal year, the UBO Working Group will
forward its recommendations to the TMA and Military Department Surgeons
General on its pharmacy electronic billing and outsourcing initiative.
The joint DoD/VA OHI project outlined above is another outsourcing
opportunity the Department is working. In addition, the Air Force
Medical Service will implement its outsourcing initiative this fiscal
year.
The Department hosts an annual training and education conference in
support of MTF cost recovery programs, to include TPCP. The theme for
this year's conference is "MTF Revenue Cycle Strategies." The UBO has
partnered with the Unified Biostatistical Utility (UBU) Working Group,
which has responsibility over the front-end revenue cycle processes of
coding and data reporting. Six educational tracks will be offered
geared towards both entry level and experienced MTF coders and billing
office personnel. In addition to the annual conference, the TMA is
sponsoring a new training program this fiscal year that will augment
the educational activities provided at the annual conference. The
curriculum will focus on billing and collection core competencies and
provide the Military Departments with another training and educational
forum.
Performance Measures: See comments provided under recommendation #2.
RECOMMENDATION 2: Establish an effective performance management system
that establishes realistic performance baselines or collections goals
for each MTF and enables MTFs to identify collection shortfalls and
improve their operations.
DOD RESPONSE: Concur. The Department has been proactively involved in
monitoring the TPCP and has aggressively pursued business process
improvements to optimize MTF revenue cycle management in support of
TPCP billing and collections. In support of TPCP, the Department has
identified performance measures that target critical processes within
the MTF revenue cycle. These performance indicators are captured at the
MTF-level and reported and monitored up through MHS senior leadership
within the Military Departments and the TMA. These performance measures
include:
1. Percentage of outpatient encounters, other than APVs, coded within 3
business days of the encounter; percentage of APVs coded within 15 days
of the encounter; percentage of inpatient records coded within 30 days
after discharge.
Source: DQMC Commander's Data Quality Statement Frequency: monthly:
2. MTF monthly inpatient record coding audits results. Source: DQMC
Commander's Data Quality Statement Frequency: monthly:
3. MTF monthly outpatient record coding audit results to include:
percentage of records on-hand or documented as checked out; percentage
of E & M codes deemed correct; percentage of ICD-9 codes deemed
correct; percentage of CPT codes deemed correct; and, percentage of
completed and current DD Form 2569s maintained in the record (non
active duty).
Source: DQMC Commander's Data Quality Statement Frequency: monthly:
4. Total TPCP outpatient and inpatient collections by Service per fiscal
year. Source: DD Form 2570, Third Party Collections Program - Report on
Program Results:
Frequency: quarterly:
5. The following performance measures were approved by the UBO Working
Group and will be implemented this fiscal year:
a. MHS Total TPCP Billing and Collections Comparison:
i. TPCP Outpatient Billing and Collections Comparison:
ii. TPCP Inpatient Billing and Collections Comparison:
b. TPCP: Days in Accounts Receivable (A/R):
c. TPCP Outpatient Gross Collections/Net Collections:
d. Top Outpatient MTFs By Service per Fiscal Year:
Source: DD 2570, Third Party Collections Program - Report on Program
Results Frequency: quarterly:
6. Other Health Insurance beneficiary demographics: the OHI central data
repository will be deployed MHS-wide this fiscal year. The Department
will have performance metrics that indicate the number of beneficiaries
with OHI by gender, age, geographical area and health plan coverage
type. Annual analysis of OHI trends, to include gains/loss in OHI
coverage will be utilized to assess impact of data capture process
improvements and marketing efforts.
Source: DEERS OHI central data repository reports Frequency: annually:
Additionally, this fiscal year, the TMA is conducting a financial study
to analyze the centrally-reported TPCP billings and collections data
and medical encounter data; review the currently reported performance
measures (noted above); review industry best practices and benchmarks;
and, provide recommendations to the Department regarding 1) the
applicability of appropriate TPCP performance indicators; and, 2) a
reporting vehicle that will provide monitoring from the MTF-level to
MHS senior leadership and facilitate process improvement and
implementation of corrective measures in order to improve program
performance. The study will address and recommend MTF-specific goals
and corresponding metrics to gauge performance in obtaining revenue-
generating goals. One standard cannot be applied throughout the
enterprise. With the implementation of OIB, a clinic visit is not the
same across the MHS. OIB is solely reliant on the acuity levels that
are directly and indirectly accounted for in the Evaluation and
Management (E&M) and Current Procedural and Terminology (CPT) coding
that capture the medical encounter (visit). Smaller MTFs have lower
acuity levels that attribute to lower intensity coding and therefore,
the charges billed will be lower as compared to larger MTFs with higher
acuity patients; and, the previous flat-rate billing methodology. For
this reason, the Department cautions the comparison of previous years'
billing and collections under the flat-rate billing methodology to
Fiscal Year 2003 and beyond that now operate under the outpatient
itemized billing methodology.
[End of section]
(192093):
FOOTNOTES
[1] The statutory underpinning for the program is 10 U.S.C. §1095.
[2] U.S. General Accounting Office, Military Treatment Facilities:
Internal Control Activities Need Improvement, GAO-03-168 (Washington,
D.C.: Oct. 25, 2002). The three facilities we visited were Eisenhower
Army Medical Center, Augusta, Georgia; Naval Medical Center-Portsmouth,
Portsmouth, Virginia; and Wilford Hall Air Force Medical Center, San
Antonio, Texas.
[3] Floyd D. Spence National Defense Authorization Act for Fiscal Year
2001, Pub. L. No. 106-398, § 712, 114 Stat. 1654, 1654A-176 (2000).
[4] The program was established pursuant to Public Law Number 99-272,
100 Stat. 82, 100 (1986).
[5] U.S. Army Audit Agency, Third party Collection Program, U.S. Army
Medical Command, Audit Report A-2003-0185-IMH (Mar. 10, 2003).
[6] Air Force Audit Agency, Third Party Collection Program--
Pharmaceuticals, Audit Report 01051015 (Aug. 8, 2001).
[7] Naval Audit Service, Recovery of Outpatient Health Care Costs From
Third Party Payers, Audit Report 010-97 (Dec. 17, 1996).
[8] GAO-03-168.
[9] The Iowa Foundation for Medical Care Information Systems,
Outpatient Database Coding Validation Audits, 2002.
[10] Defense Supply Service-Washington, Region 1 Coding Validation
Study, Overall Report: TRICARE Management Activity Health Program
Analysis and Evaluation, Contract Number GS-35F-4694G, Order Number
DASW01-01-F-1053.
[11] GAO-03-168.
[12] The Health Insurance Portability and Accountability Act of 1996
required the Secretary to adopt standards for financial and
administrative transactions to enable private health information to be
exchanged electronically. Public Law No. 104-191, §262 (a), 110 Stat.
2024, 42 U.S.C. §1320d-2.
[13] U.S. General Accounting Office, Government Auditing Standards,
2003 Revision, GAO-03-673G (Washington, D.C.: June 2003).
[14] Given the time elapsed, the audit program and quality control
review report for the NAS work was unavailable.
[15] GAO-03-168.
