Veterans Health Care
Monitoring Is Needed to Determine the Accuracy of Veteran Copayment Charges Gao ID: GAO-11-795 August 29, 2011In fiscal year 2010, the Department of Veterans Affairs' (VA) Veterans Health Administration (VHA) billed veterans millions of medical copayment charges totaling more than $1 billon. Witnesses at a 2009 Subcommittee on Health, House Committee on Veterans' Affairs, hearing raised concerns about inappropriate copayment charges, including some associated with veterans' service-connected conditions. As a result, members of the Subcommittee asked GAO to review (1) VHA copayment charge accuracy, including error rates and related causes, and (2) VHA efforts to monitor copayment charge accuracy. To assess the accuracy of VHA's billed copayment charges, GAO evaluated samples of fiscal year 2010 billed and unbilled medical services to determine copayment error rates and related causes. GAO also reviewed VHA practices related to monitoring the accuracy of copayment charges.
Of the more than 56 million fiscal year 2010 veteran copayment charges billed by VHA, GAO estimates, based on its test of a probability sample of copayment charges, that 96 percent (or approximately 54.2 million) of the copayment charges were accurate and 4 percent (or approximately 2.3 million) were inaccurate. GAO's tests of a separate probability sample of the approximately 519 million VHA medical services that did not result in copayment charges showed that each of those VHA determinations was accurate. These and other estimated percentages are based on test results of probability samples and are subject to sampling error. Appendix I of this report contains additional information on the samples and the 95 percent confidence intervals for the estimates contained in this report. (1) Since the errors identified in GAO's probability sample all involved copayment overbilling, GAO estimates that 4 percent of the copayment charges involved overbilling of veterans. The errors GAO found were due to various factors, including inadequate review of previously billed copayment charges following retroactive changes in a veteran's service-connected conditions and the incorrect application of related medical reimbursements received from veterans' third-party insurance. (2) In tests GAO performed on another probability sample to identify underbilling errors in the approximately 519 million medical services that did not result in copayment charges, GAO found that VHA correctly determined that each tested service should not have resulted in a copayment charge. As a result, GAO tests showed that VHA accurately did not bill copayment charges for these services, which made up more than 90 percent of the approximately 576 million medical services provided during fiscal year 2010. While VHA performed various activities that involved reviewing the accuracy of some individual billed copayment charges, these activities do not constitute a systematic process for providing VHA-wide information on the accuracy and completeness of its copayment charges over time. In addition, GAO found that VHA had not established a performance measure for the accuracy level it wants to achieve in billing copayment charges. Without such a measure, it is not clear how the error rates GAO found would compare to error rates that VHA would consider acceptable, or if VHA would determine whether corrective actions need to be taken to reduce the error rates to lower levels. In addition, without a performance measure and periodic, systemwide information on the accuracy of its copayment charges, VHA cannot monitor changes in error rates and related causes over time. VHA also does not have meaningful performance information that it can provide to interested stakeholders when questions or concerns are raised concerning the accuracy of VHA's copayment charges billed to veterans. GAO makes two recommendations to the Secretary of Veterans Affairs to (1) establish a copayment accuracy performance measure and (2) establish and implement a formal process for periodically assessing the accuracy of veteran copayment charges VHA-wide. In written comments on a draft of this report, VA agreed with GAO's recommendations.
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: Susan Ragland Team: Government Accountability Office: Financial Management and Assurance Phone: (202) 512-8486GAO-11-795, Veterans Health Care: Monitoring Is Needed to Determine the Accuracy of Veteran Copayment Charges
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United States Government Accountability Office:
GAO:
Report to Congressional Requesters:
August 2011:
Veterans Health Care:
Monitoring Is Needed to Determine the Accuracy of Veteran Copayment
Charges:
GAO-11-795:
GAO Highlights:
Highlights of GAO-11-795, a report to congressional requesters.
Why GAO Did This Study:
In fiscal year 2010, the Department of Veterans Affairs‘ (VA) Veterans
Health Administration (VHA) billed veterans millions of medical
copayment charges totaling more than $1 billon. Witnesses at a 2009
Subcommittee on Health, House Committee on Veterans‘ Affairs, hearing
raised concerns about inappropriate copayment charges, including some
associated with veterans‘ service-connected conditions. As a result,
members of the Subcommittee asked GAO to review (1) VHA copayment
charge accuracy, including error rates and related causes, and (2) VHA
efforts to monitor copayment charge accuracy. To assess the accuracy
of VHA‘s billed copayment charges, GAO evaluated samples of fiscal
year 2010 billed and unbilled medical services to determine copayment
error rates and related causes. GAO also reviewed VHA practices
related to monitoring the accuracy of copayment charges.
What GAO Found:
Of the more than 56 million fiscal year 2010 veteran copayment charges
billed by VHA, GAO estimates, based on its test of a probability
sample of copayment charges, that 96 percent (or approximately 54.2
million) of the copayment charges were accurate and 4 percent (or
approximately 2.3 million) were inaccurate. GAO‘s tests of a separate
probability sample of the approximately 519 million VHA medical
services that did not result in copayment charges showed that each of
those VHA determinations was accurate. These and other estimated
percentages are based on test results of probability samples and are
subject to sampling error. Appendix I of this report contains
additional information on the samples and the 95 percent confidence
intervals for the estimates contained in this report.
* Since the errors identified in GAO‘s probability sample all involved
copayment overbilling, GAO estimates that 4 percent of the copayment
charges involved overbilling of veterans. The errors GAO found were
due to various factors, including inadequate review of previously
billed copayment charges following retroactive changes in a veteran‘s
service-connected conditions and the incorrect application of related
medical reimbursements received from veterans‘ third-party insurance.
* In tests GAO performed on another probability sample to identify
underbilling errors in the approximately 519 million medical services
that did not result in copayment charges, GAO found that VHA correctly
determined that each tested service should not have resulted in a
copayment charge. As a result, GAO tests showed that VHA accurately
did not bill copayment charges for these services, which made up more
than 90 percent of the approximately 576 million medical services
provided during fiscal year 2010.
While VHA performed various activities that involved reviewing the
accuracy of some individual billed copayment charges, these activities
do not constitute a systematic process for providing VHA-wide
information on the accuracy and completeness of its copayment charges
over time. In addition, GAO found that VHA had not established a
performance measure for the accuracy level it wants to achieve in
billing copayment charges. Without such a measure, it is not clear how
the error rates GAO found would compare to error rates that VHA would
consider acceptable, or if VHA would determine whether corrective
actions need to be taken to reduce the error rates to lower levels. In
addition, without a performance measure and periodic, systemwide
information on the accuracy of its copayment charges, VHA cannot
monitor changes in error rates and related causes over time. VHA also
does not have meaningful performance information that it can provide
to interested stakeholders when questions or concerns are raised
concerning the accuracy of VHA‘s copayment charges billed to veterans.
What GAO Recommends:
GAO makes two recommendations to the Secretary of Veterans Affairs to
(1) establish a copayment accuracy performance measure and
(2) establish and implement a formal process for periodically
assessing the accuracy of veteran copayment charges VHA-wide. In
written comments on a draft of this report, VA agreed with GAO‘s
recommendations.
View [hyperlink, http://www.gao.gov/products/GAO-11-795] or key
components. For more information, contact Susan Ragland, at (202) 512-
9095 or raglands@gao.gov.
[End of section]
Contents:
Letter:
Background:
Statistical Tests of VHA's Fiscal Year 2010 Copayment Charges Found
That an Estimated 96 Percent Were Accurate:
VHA Does Not Monitor Its Systemwide Copayment Error Rate:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Enrollment in VA Health Care and Copayment Billing
Process:
Appendix III: Comments from the Department of Veterans Affairs:
Appendix IV: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Fiscal Year 2010 VHA Medical Services:
Table 2: Number and Amount of Fiscal Year 2010 Copayment Charges by
Type of Medical Service:
Table 3: Summary Information on Estimated Error Rates Related to VHA's
Fiscal Year 2010 Billed Veteran Copayment Charges and Unbilled Medical
Services:
Table 4: Fiscal Year 2010 Population of VHA Copayment Charges by Type:
Table 5: Causes for Identified Errors in Copayment Charges:
Table 6: Estimated Error Rates for Veterans' Fiscal Year 2010
Copayment Charges:
Table 7: Fiscal Year 2010 VHA Medical Services by Type:
Table 8: Estimated Rates Applicable to Fiscal Year 2010 Medical
Services That Did Not Result in Veteran Copayment Charges:
Table 9: Causes for Observed Errors in Case Study Copayment Charges:
Table 10: VA Health Care Enrollment Priority Groups and Their
Eligibility Factors:
Table 11: Fiscal Year 2010 VHA Veteran Medical Services:
Table 12: General Applicability of Copayment Charges by Priority Group
and Type of Service:
Abbreviations:
CBI: Compliance and Business Integrity:
CPAC: Consolidated Patient Account Center:
CPRS: Computerized Patient Record System:
HEC: Health Eligibility Center:
MCCF: Medical Care Collections Fund:
MQAS: Management Quality Assurance Service:
POWER: Performance and Operations Web-Enabled Reports:
VA: Department of Veterans Affairs:
VBA: Veterans Benefits Administration:
VHA: Veterans Health Administration:
VistA: Veterans Health Information Services and Technology
Architecture:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
August 29, 2011:
Congressional Requesters:
The Department of Veterans Affairs (VA) provides health care to
eligible veterans through 21 health care networks, each composed of
multiple medical facilities, in the Veterans Health Administration
(VHA). VHA is authorized by law to bill certain veterans for
copayments for some medical services that are unrelated to conditions
that VA has determined to be a result of their military service.
[Footnote 1] Medical services provided by VHA include inpatient and
outpatient services, prescription medication, home health care, and
extended care services, including nursing home and respite care.
Representatives of veterans service organizations[Footnote 2]
testified at a congressional hearing[Footnote 3] about their concerns
that veterans were being billed for inappropriate copayment charges,
including copayments billed for medical services linked to their
service-connected conditions and injuries and multiple copayment
charges billed for the same medical treatment. In light of these
concerns, you asked us to review VHA's billing practices. This report
addresses (1) the accuracy rate of VHA's copayment charges, including
causes and rates of any over-and underbilling errors and (2) whether
VHA had systems and processes in place to adequately monitor the
accuracy of copayment charges billed to veterans.
In assessing the accuracy of VHA's fiscal year 2010 copayment charges
(the most recent fiscal year for which the information was available),
we first gained an understanding of VHA copayment billing practices by
reviewing information on VHA's systems and processes related to
determining which medical services should result in veteran copayment
charges and then for billing applicable copayment charges. In
conducting our work on copayment accuracy, including understanding VHA
activities related to assessing the accuracy of copayment charges, we
reviewed policies and procedures related to VHA's copayment billing
process and veterans' eligibility for medical care and copayment
billing. In addition, we performed a walk-through of the billing
process at a VHA medical center and discussed billing and monitoring
policies and practices with VHA officials and staff.
To determine the accuracy and completeness of VHA's copayment charges,
including rates and causes of errors, we selected probability samples
from two populations of VHA medical services provided to veterans--one
from medical services that resulted in veteran copayment charges and
the other from those medical services that did not result in copayment
charges. For each sampled medical service, we reviewed relevant
supporting documentation from VHA and from the Veterans Benefits
Administration (VBA), which included information regarding the
veterans' service-connected conditions. From this review, we
determined whether a veteran should have been billed a copayment
charge for the underlying medical service and, if so, whether the
billed copayment charge amount was correct or, if not, whether the
copayment charge was an over-or underbilling error. For each error
identified, we determined the causes.[Footnote 4] In addition, for
three types of medical services--inpatient, extended care, and fee
basis services--that were not selected in our sample because they
infrequently result in copayment charges, we selected and tested three
nongeneralizable probability samples of a limited number of copayment
charges as case studies to gain some insight into the types and causes
of any errors that we identified in copayment charges arising from
these services. Finally, to determine whether VHA has systems and
processes in place to adequately monitor the accuracy of billed
veteran copayment charges, we obtained and reviewed available
information on VHA practices related to monitoring the accuracy of
billed veteran copayment charges.
We conducted this performance audit from February 2010 through August
2011 in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our audit objectives.[Footnote 5]
Background:
VHA Health Care Eligibility and Enrollment:
To obtain VHA health care, most veterans submit an application by mail
or online to VHA's Health Eligibility Center (HEC) in Atlanta or in
person at a local VHA medical center. Generally, the nature and extent
of an individual veteran's service-connected medical conditions are
established through VBA.[Footnote 6] HEC processes applications and
assigns veterans to one of eight priority groups based on their
service-connected disabilities; special treatment authorities, such as
exposure to Agent Orange or ionizing radiation; and income level.
Whether VHA charges a veteran a copayment for medical services it
provides is determined, in part, by the veteran's priority group. For
example, veterans in priority group 1 are not required to pay any
copayments, and veterans in priority groups 7 and 8 are generally
required to pay copayments for all types of medical services. See
appendix II for additional details on the enrollment and eligibility
process, including priority groups and requirements for copayments.
When VHA is notified by VBA of a change in a veteran's service-
connected conditions or disability rating, VHA is responsible for
reevaluating the veteran's priority group status and reviewing the
veteran's account to determine whether any copayment charges that were
assessed after the effective date of the VBA award should be canceled
or refunded, if applicable, or whether any copayments should be
charged.
Medical Service and Copayment Billing:
Veterans' health records are stored in the Computerized Patient Record
System (CPRS) application of the Veterans Health Information Services
and Technology Architecture (VistA) system. CPRS includes information
on veterans' rated service-connected conditions and special treatment
authorities. When a veteran receives a VHA-provided medical service,
the provider identifies in CPRS whether the service provided was
related to the veteran's service-connected conditions or provided
under a special treatment authority.
When medical services provided to a veteran are not otherwise
precluded from copayment billing, VistA automatically establishes a
copayment charge to the veteran's account. VistA prevents copayment
charges to a veteran when:
* a provider indicates in CPRS that the medical service provided was
related to a veteran's service-connected conditions or special
authority;
* the medical service provided is one that is exempt from copayments
for all veterans, such as preventive screenings, immunizations, and
some laboratory services; and:
* a veteran receives more than one medical service in a single day.
[Footnote 7]
If a veteran has third-party medical insurance, VistA puts the
copayment charge placed on the veteran's account on hold for up to 90
days to allow time for VHA to process a claim for reimbursement from
the third-party insurer. To the extent that VHA receives third-party
reimbursement attributable to the medical service that resulted in a
copayment being charged to a veteran's account, VHA's policy is to
apply the insurance reimbursement to reduce or eliminate the related
pending copayment charge. The third-party insurance offset process is
a manual process that is to be performed, according to VHA policy, on
a daily basis by local medical center staff.
See appendix II for additional details on the copayment billing
process.
Fiscal Year 2010 Medical Services and Copayment Charges:
According to fiscal year 2010 VA information, VHA provided
approximately 576 million medical services to over 5.6 million
veterans through VHA's 21 health care networks composed of 153 medical
centers, 768 outpatient clinics, and 134 nursing homes located in all
50 states, the District of Columbia, and territories including Puerto
Rico and the Virgin Islands. When VHA facilities are not capable of
furnishing economical hospital care or medical services because of
geographic inaccessibility or are not capable of furnishing the care
or services required, VHA may authorize and pay a non-VHA provider to
provide certain veterans hospital care and medical services. When
authorized, VHA identified these as fee basis services. Table 1 shows
the types, number, and percentage of medical services provided by
type--outpatient, prescription, inpatient, extended care, and fee
basis.
Table 1: Fiscal Year 2010 VHA Medical Services:
Medical service type: Outpatient;
Number of services: 407,858,000;
Percentage of services: 70.83%.
Medical service type: Prescription;
Number of services: 136,036,000;
Percentage of services: 23.63%.
Medical service type: Inpatient;
Number of services: 7,703,000;
Percentage of services: 1.34%.
Medical service type: Extended care;
Number of services: 707,000;
Percentage of services: 0.12%.
Medical service type: Fee basis;
Number of services: 23,494,000;
Percentage of services: 4.08%.
Medical service type: Total;
Number of services: 575,798,000;
Percentage of services: 100.00%.
Source: GAO analysis of VHA data.
[End of table]
VA is also authorized, by statute to bill certain veterans for medical
service copayments (38 U.S.C. § 1710, 1710B, 1722A), and, if
applicable, their third-party medical insurance when the medical
services VHA provides are not related to the veteran's service-
connected medical conditions or associated with special treatment
authorities (38 U.S.C. § 1729). These collections supplement VA's
appropriations and are used to fund VHA medical services to veterans.
When VHA provides medical services that are not associated with a
veteran's service-connected conditions or special treatment
authorities and the veteran has third-party medical insurance, VHA is
authorized by statute (38 U.S.C. § 1729) to pursue insurance
reimbursement to the extent available under the veteran's coverage
from the veteran's third-party insurance. Veterans who owe copayment
charges for medical services for non-service-connected conditions or
for conditions not related to special treatment authorities must be
allowed to benefit from their third-party insurance to satisfy their
VHA obligations. Therefore, VHA is required to apply any insurance
reimbursement it receives from a veteran's third-party insurance to
the related copayment charge to reduce or eliminate the copayment
charge owed by the veteran.
VHA billed veterans for over 56.5 million copayment charges totaling
over $1 billion in fiscal year 2010. These copayment charges were
related to approximately 9.8 percent of the total of approximately 576
million VHA medical services provided. Individual veteran copayment
amounts in fiscal year 2010 ranged from a low of $5 for some extended
care services to a high of $1,100 for the first 90 days of an
inpatient hospital stay. Most billed copayment charges (88 percent)
were for prescription medications, for which the copayment charge is
generally $8 or $9 for up to a 30-day supply of medication. Table 2
shows the number, amounts, and related percentages associated with the
copayment charges billed to veterans in fiscal year 2010 by type of
service.
Table 2: Number and Amount of Fiscal Year 2010 Copayment Charges by
Type of Medical Service:
Medical service type: Prescription;
Total number of copayment charges: 49,852,000;
Percentage of individual copayment charge types: 88.22%;
Value of billed copayment charges: $824,504,000;
Percentage of billed copayment charge value: 78.02%.
Medical service type: Outpatient;
Total number of copayment charges: 6,325,000;
Percentage of individual copayment charge types: 11.19%;
Value of billed copayment charges: $173,698,000;
Percentage of billed copayment charge value: 16.44%.
Medical service type: Inpatient;
Total number of copayment charges: 125,000;
Percentage of individual copayment charge types: 0.22%;
Value of billed copayment charges: $47,255,000;
Percentage of billed copayment charge value: 4.47%.
Medical service type: Extended care;
Total number of copayment charges: 12,000;
Percentage of individual copayment charge types: 0.02%;
Value of billed copayment charges: $4,653,000;
Percentage of billed copayment charge value: 0.44%.
Medical service type: Fee basis;
Total number of copayment charges: 196,000;
Percentage of individual copayment charge types: 0.35%;
Value of billed copayment charges: $6,742,000;
Percentage of billed copayment charge value: 0.64%.
Medical service type: Total;
Total number of copayment charges: 56,510,000;
Percentage of individual copayment charge types: 100.00%;
Value of billed copayment charges: $1,056,852,000;
Percentage of billed copayment charge value: 100.00%.
Source: GAO analysis of VHA data.
Note: Percentages may not add to 100 because of rounding.
[End of table]
Statistical Tests of VHA's Fiscal Year 2010 Copayment Charges Found
That an Estimated 96 Percent Were Accurate:
Based on our tests of a probability sample of billed copayment
charges, we estimate that 96 percent of VHA's fiscal year 2010
copayment charges were accurate and 4 percent were inaccurate or
erroneous.[Footnote 8] We selected a probability sample of 100 fiscal
year 2010 copayment charges billed to veterans, which included only
prescription and outpatient services,[Footnote 9] and found 4
erroneous copayment charges, each of which resulted in an overbilling
to a veteran. Based on these test results, we estimate that of VHA's
56.5 million fiscal year 2010 copayment charges, approximately 54.2
million (96 percent) were accurate and approximately 2.3 million (4
percent) were inaccurate.[Footnote 10] In addition, none of the four
copayment errors we found involved underbilling of veterans.[Footnote
11]
In fiscal year 2010, more than 90 percent of VHA's medical services
did not result in billed copayment charges. To assess the completeness
of the billed copayment charge population and the extent of possible
underbilling errors associated with those medical services, we also
selected a second probability sample of 100 unbilled medical services
to assess whether VHA had correctly determined that each of the tested
medical services should not have been billed. We did so because
incorrect "no bill" determinations by VHA would represent underbilling
inaccuracies associated with VHA's fiscal year 2010 copayment charges.
Our tests of 100 unbilled medical services found that VHA correctly
determined that each of the medical services should not have resulted
in a veteran copayment charge--a 100 percent accuracy rate for this
probability sample. As a result, we are 95 percent confident that for
fiscal year 2010, VHA's rate of error in the population of unbilled
medical services associated with incorrectly determining that medical
services should not have resulted in a copayment charge was between 0
percent and 3 percent.[Footnote 12] (See table 3.)
Table 3: Summary Information on Estimated Error Rates Related to VHA's
Fiscal Year 2010 Billed Veteran Copayment Charges and Unbilled Medical
Services:
Sampled population: Billed copayment charges;
Type of possible error: Copayment charge--overbilling;
Number of errors: 4;
Estimated error rate percentage: 4%;
Ninety-five percent confidence: Lower limit percentage: 1.1%;
Ninety-five percent confidence: Upper limit percentage: 9.9%;
Size of applicable population: 56.5 million copayment charges.
Sampled population: Billed copayment charges;
Type of possible error: Copayment charge--underbilling;
Number of errors: 0;
Estimated error rate percentage: 0%;
Ninety-five percent confidence: Lower limit percentage: 0%;
Ninety-five percent confidence: Upper limit percentage: 3%;
Size of applicable population: 56.5 million copayment charges.
Sampled population: Unbilled medical services;
Type of possible error: Failed to bill a valid copayment charge;
Number of errors: 0;
Estimated error rate percentage: 0%;
Ninety-five percent confidence: Lower limit percentage: 0%;
Ninety-five percent confidence: Upper limit percentage: 3%;
Size of applicable population: 519.3 million[A] unbilled medical
services.
Source: GAO test results from a VHA-wide probability sample of billed
copayment charges to veterans and a second VHA-wide probability sample
of unbilled medical services.
[A] Population is estimated using fiscal year 2010 medical services
and copayment charges prepared in fiscal year 2010.
[End of table]
Nature and Causes of Copayment Billing Errors Vary:
With respect to erroneous copayment charges and our estimated error
rate of 4 percent, we found that each of the four copayment errors
occurred in overbilling to a veteran because:
* the veteran was billed for an incorrect amount,
* the charge should have been reversed or offset, or:
* if paid, the amount should have been refunded to the veteran.
Also, three of the four errors we found had not been identified by VHA
prior to our selection of the copayment charges for testing. For the
fourth error, VHA learned about the error when the veteran notified
VHA after receiving a monthly statement containing the wrong copayment
charge amount.
The four overbilling errors we found resulted from three causes. For
one of the errors, the copayment should not have been billed to the
veteran because, prior to billing the veteran, VHA had received
sufficient third-party insurance reimbursement to offset the copayment
and eliminate any amount owed by the veteran. Two of the errors
involved copayment charges that were paid by the veterans but were not
later refunded by VHA as would have been correct following VBA
decisions that resulted in a retroactive change to the veterans'
priority group status. VBA had informed VHA that it had retroactively
awarded the veterans either an additional service-connected condition
or increased a veteran's disability rating, which led VHA to change
the two veterans' priority groups. With a (retroactive) change in
priority group back to an effective date prior to the medical service
that led to the copayment charge we tested, each of the veterans was
no longer responsible for the copayment charge they had paid. Once VHA
revised the veterans' priority group status in response to VBA's
retroactive decisions, the veterans were due refunds for the two paid
copayment charges we tested. VHA had been aware of VBA's retroactive
award decisions for at least 4 months prior to our identification of
the copayments as errors; however, VHA had not determined that the
veterans were due refunds for the tested copayment charges. Following
our test-related inquiries, VHA officials provided us with
documentation that refunds to the veterans had been approved by VHA.
The fourth copayment error resulted when VHA incorrectly billed a
veteran a copayment amount for a 90-day prescription, instead of the
smaller copayment amount that was due for the 30-day prescription
supply the veteran received. After the veteran inquired about the
erroneous charge, VHA corrected it on the veteran's subsequent monthly
statement.
Case Study Tests Found Copayment Errors:
Three types of VHA medical services--inpatient, extended care, and fee
basis services--together represented less than 1 percent of VHA's
fiscal year 2010 copayment charge population.[Footnote 13] Therefore,
to provide some limited insight into copayments related to these
infrequently billed services, we tested--as case studies--three small
probability samples consisting of 10 each for inpatient, extended
care, and fee basis services.[Footnote 14]
We found four inaccurate copayment charges--two errors each associated
with inpatient and extended care services. Three of the four copayment
errors represented overbilling (two extended care services and one
inpatient service) and the other represented an underbilling error
(one inpatient service). In each case, VHA had not identified the
copayment errors we found prior to our selecting the copayment charges
for testing. Two of the three overbilling errors we found in our case
study tests involved VHA's incorrect application of the veterans'
third-party insurance reimbursement to offset the veterans' copayment
charges. The third overbilling error occurred when VHA billed the
veteran for a second copayment charge in the same day, which generally
is not permitted under VHA's policy. The one underbilling error
occurred when VHA incorrectly billed a veteran a lower copayment
amount based on the 2009 copayment rate instead of the higher 2010
copayment rate that was applicable at the time medical service was
provided.
Our case study test results are not generalizable to the larger
populations of medical services from which the samples were drawn.
However, they may provide some limited insight into copayment errors
affecting these infrequently billed types of medical services.
Copayment errors identified in both the probability sample and the
case study test work mostly involved overbillings, including errors
resulting from VHA's incorrect handling of third-party insurance
reimbursements. The case study errors we found do not affect our
estimate of VHA's overall error rate for fiscal year 2010 copayment
charges.
VHA's processes for determining copayment charges for many of the
copayments we tested resulting from inpatient, extended care, and fee
basis services are more complicated and generally require greater VHA
staff involvement and review compared with the processes for
determining the copayment charges associated with the more routine
outpatient and prescription services. This difference in complexity
may help explain why we found four copayment errors--two each in two
of the three small probability samples we tested in our case studies.
Veteran-Specific Data Issues Could Affect Other Copayment-Related
Billing Decisions:
In conducting our tests of the accuracy of VHA's copayment charges and
"no bill" decisions,[Footnote 15] we compared relevant veteran-
specific data maintained by VBA and VHA's HEC and local medical
centers to determine whether the VHA data were consistent and correct.
The relevant data we compared included each veteran's recorded service-
connected conditions, degree of disability, and priority group status.
[Footnote 16] These data are key to correctly determining whether a
medical service should be billed to a veteran as a copayment charge
and, if so, the correct amount of the copayment. Of the 200 medical
services we tested, we found that the key data for 197 veterans were
consistently and correctly recorded by VBA and VHA's HEC and local
medical centers. We found two instances where specific elements of
veteran data were not consistently recorded in VHA records and one
instance in which the recorded data were incorrect. After following up
with VHA on these instances, VHA corrected the data. While these data
recording errors did not cause the particular copayment-related charge
or "no bill" decision we tested to be inaccurate, they could have
affected other VHA copayment-related decisions for these veterans.
In one of the two data inconsistencies we found, HEC and the local VHA
medical center's records had the veteran's combined service-connected
condition percentage lower than what VBA had established, which
resulted in the veteran being assigned to an incorrect priority group.
As a result, if the veteran had been provided certain other medical
services, the data inconsistency could have caused the veteran to be
incorrectly charged a copayment. VHA officials said that the cause for
the incorrect data related to the data transfer from VBA to VHA's HEC
and local medical centers. According to VHA, the data transfer issue
and the incorrect data have since been corrected. In the other data
inconsistency instance, the disability rating recorded in HEC's and
the medical center's records were inconsistent, resulting in the
medical center having the veteran in an incorrect priority group.
According to VHA, the data error was due to problems during
registration at the medical center, which have since been resolved.
The third data error involved a local medical center's records having
an incorrect priority group for a veteran. The medical center had not
received the information needed to update the veteran's financial
assessment (also known as a means test), which was necessary to keep
the veteran in a priority group that would have made him exempt from
paying certain copayments. After our follow-up inquiries, VHA
confirmed that at the time the medical service was provided, the
veteran's recorded priority group was incorrect, and the center has
since received the information necessary to update the financial
assessment, and the veteran's recorded priority group is now correct.
VHA Does Not Monitor Its Systemwide Copayment Error Rates:
While various activities performed by VHA staff involve examining or
reviewing the accuracy of some individual veteran copayment charges,
we found that those activities do not provide VHA with systematic VHA-
wide information on the accuracy of copayment charges needed to
effectively monitor--over time--the rates of and causes for copayment
errors. We also found that VHA has not established a performance
measure or goal for the level of accuracy it wants to achieve for the
copayment charges it bills to veterans. As a result, it was not clear
how the copayment charge error rates we observed in our probability
samples would compare to rates of error VHA would consider acceptable
or whether corrective action needs to be taken to reduce the error
rates to lower levels. In addition, without procedures to periodically
assess the accuracy and completeness of its copayment charges, VHA
does not have the information needed to determine whether changes in
its accuracy rates are occurring over time.
In reviewing VHA's copayment billing process and the extent to which
VHA systematically monitors its copayment charges for accuracy, we
identified various activities that generally involved reviewing or
checking the accuracy of some individual copayment charges; however,
those activities are performed for reasons other than a systematic VHA-
wide assessment of the accuracy of billed copayment charges and do not
provide sufficient information for systemwide monitoring.
* Responding to veteran inquiries. VHA responds to veteran-related
questions or inquiries concerning specific copayment charges. In doing
so, VHA may evaluate some individual copayment charges and determine
whether they were accurate. However, VHA does not systematically track
and analyze the results of these individual reviews, including whether
the copayment charges were accurate or inaccurate and, if applicable,
the cause of any inaccuracies.
* Revenue reviews. Staff from VA's Management Quality Assurance
Service's (MQAS) Health Care Financial Assurance Division may evaluate
specific veteran copayment bills on a limited, ad hoc basis as part of
the recurring reviews of VA revenue activities at selected individual
medical centers. During these reviews, MQAS officials said they devote
most of their resources to evaluating third-party insurance
collections, as they make up the majority of the Medical Care
Collections Fund (MCCF).[Footnote 17] These revenue reviews are
focused on third-party insurance recoveries and in only some instances
may involve reviewing the accuracy of individual veteran copayment
charges.
* Local compliance programs. Individual medical centers and
Consolidated Patient Account Centers (CPAC) have decentralized
compliance programs that include varied processes and procedures
related to reviewing some individual copayment charges. The scope and
results of these compliance reviews may involve reviewing copayment-
related charges but do not routinely include a systematic assessment
of a probability sample of copayment charge accuracy. In addition, the
results of any reviews of copayment charge accuracy at medical centers
and CPAC locations are not consolidated and reported to VHA management.
* Targeted reviews of certain copayment charges. VHA instituted a
policy in October 2006,[Footnote 18] in response to a VA Inspector
General report,[Footnote 19] requiring VHA's Compliance and Business
Integrity (CBI) Office to identify delinquent copayment debts for
certain veterans whose accounts were being referred to debt
collection. VHA facilities were required to review the accounts to
help ensure that the referrals were not based on inaccurate copayment
charges. Initially, the policy required the VHA facilities to report
to the CBI Office the results of their targeted reviews until the
error rate in the applicable copayment charges went below 10 percent
for two consecutive quarters. As a result of a sustained decrease in
the related billing error rate, in October 2009, the CBI Office
stopped collecting national monitoring results from VHA facilities,
and in March 2010, VHA rescinded the requirements for facilities to
report the results of their quarterly reviews to the CBI Office.
[Footnote 20] However, VHA facilities are still responsible for
conducting the reviews.
As noted, these activities are conducted for specific reasons and are
not intended to provide VHA with systematic VHA-wide information on
the accuracy and completeness of copayment charges needed to
effectively monitor--over time--the rates of and causes for copayment
errors. Also, having meaningful performance information to provide to
stakeholders, including veterans organizations and Congress, could be
useful in cases where questions regarding the accuracy and
completeness of copayment charges are raised.
Conclusions:
Our tests of a probability sample of VHA copayment charges found
copayment errors which we estimate to be 4 percent or approximately
2.3 million of VHA's 56.5 million fiscal year 2010 copayment charges.
However, because VHA does not have established acceptable or tolerable
error rates for copayment charges, the extent to which the error rates
we observed would compare to levels of performance that VHA would
consider acceptable is unclear. We believe that it is important for
VHA to establish a performance measure for the copayment accuracy rate
it wants to achieve in billing copayment charges to veterans and, once
it is established, to periodically assess--on a systematic basis--the
accuracy and completeness of its copayment charges. With such
information, VHA would be able to make informed decisions concerning
the rates and causes of erroneous copayment charges, including whether
any actions are needed to lower its overall error rate. Such periodic
assessments could be integrated into VHA's existing quality assurance
monitoring efforts and provide meaningful management information on
various aspects of its copayment billing systems and processes,
including whether key veteran data were consistently and correctly
recorded in VHA records and systems. Further, having meaningful
performance information regarding copayment accuracy to provide to
stakeholders, including veterans organizations and Congress, could
assist VA in responding to any questions concerning the accuracy and
completeness of copayment charges.
Recommendations for Executive Action:
To provide VHA with the information needed to adequately monitor the
accuracy of copayment charges VHA-wide and to assess and respond to
the causes of copayment errors, the Secretary of Veterans Affairs
should direct VHA to take the following two actions:
* establish an accuracy performance measure or goal for copayment
charges billed to veterans and:
* establish and implement a formal process for periodically assessing--
VHA-wide--the accuracy of veteran copayment charges and taking
corrective actions as necessary.
Agency Comments and Our Evaluation:
In its written comments, VA generally agreed with our conclusions and
agreed with our recommendations. It also provided an overview of
planned actions, starting in fiscal year 2012, including plans to
establish an initial national performance measure for copayment charge
accuracy and implement a periodic assessment of billed copayment
accuracy. As VA implements these plans, it will be important for these
actions to provide the information needed to monitor VHA-wide
copayment accuracy and completeness and to assess and respond to the
causes of copayment errors. Such plans, if fully and effectively
implemented in accord with our conclusions and recommendations, should
respond to the conditions we found. We also incorporated VA's
technical comments where appropriate. VA's comments are reprinted in
appendix III.
As agreed with your offices, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 30 days
from the report date. At that time, we will send copies to the
Secretary of Veterans Affairs, appropriate congressional committees,
and other interested parties. The report will also be available at no
charge on the GAO website at [hyperlink, http://www.gao.gov].
If you or your staffs have any questions about this report, please
contact me at (202) 512-9095 or raglands@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. Major contributors to this report are
listed in appendix IV.
Signed by:
Susan Ragland:
Director, Financial Management and Assurance:
List of Requesters:
The Honorable Michael H. Michaud:
Ranking Member:
Subcommittee on Health:
Committee on Veterans Affairs:
House of Representatives:
The Honorable Gus M. Bilirakis:
House of Representatives:
The Honorable Corrine Brown:
House of Representatives:
The Honorable Vern Buchanan:
House of Representatives:
The Honorable Jerry McNerney:
House of Representatives:
The Honorable Cliff Stearns:
House of Representatives:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
Pursuant to a request from members of the Subcommittee on Health,
House Committee on Veterans' Affairs, we reviewed the Veterans Health
Administration's (VHA) copayment billing practices to determine (1)
the accuracy rate for VHA copayment charges, including causes for any
under-and overbilling errors, and (2) whether VHA had systems and
processes in place to adequately monitor the accuracy of copayment
charges billed to veterans.
Assessment of VHA Copayment Charge Accuracy:
To determine the accuracy rate and any causes for under-and
overbilling errors, we used as our criteria applicable law and VHA
policy. To gain an understanding of VHA's policies, procedures,
systems, and processes related to copayment billing practices, we
performed walk-throughs of applicable processes with appropriate VHA
staff at a medical center. We reviewed and discussed with agency
officials and staff applicable processes related to VHA's copayment
billing practices. We also interviewed Veterans Benefits
Administration (VBA) officials and staff about VBA decisions related
to veterans' service-connected conditions and disability ratings and
the transfer of that information to VHA. In addition, to assess the
reliability of data and information used in this report, we reviewed
Department of Veterans Affairs' (VA) procedures for ensuring the
reliability of data and information generated by key VHA systems used
in the copayment billing process, including VHA's Veterans Health
Information Systems and Technology Architecture (VistA), Performance
and Operations Web-Enabled Reports (POWER), and Prescription Benefits
Management systems. We determined that the data and information
generated from key VHA systems used in the copayment billing process
were sufficiently reliable for the purposes of our testing.
Probability Sample of VHA Copayment Charges:
To determine the accuracy of the copayment amount billed to veterans,
we selected a simple probability sample of 100 copayment charges from
the population of approximately 56.5 million fiscal year 2010
copayment charges in POWER[Footnote 21]. This sample was designed to
estimate the error rates in the population, if errors were found in
the sample, or to conclude with 95 percent confidence that the
population error rate is less than 3 percent, if no errors were found
in the sample. The population consisted of five broad types: (1)
prescription, (2) outpatient, (3) inpatient, (4) extended care, and
(5) fee basis (see table 4).
Table 4: Fiscal Year 2010 Population of VHA Copayment Charges by Type:
Type of charge: Prescription;
Number of charges in population: 49,851,878;
Number of charges as percentage of total: 88.22%.
Type of charge: Outpatient;
Number of charges in population: 6,324,632;
Number of charges as percentage of total: 11.19%.
Type of charge: Inpatient;
Number of charges in population: 125,250;
Number of charges as percentage of total: 0.22%.
Type of charge: Extended care;
Number of charges in population: 11,938;
Number of charges as percentage of total: 0.02%.
Type of charge: Fee basis;
Number of charges in population: 196,340;
Number of charges as percentage of total: 0.35%.
Type of charge: Total;
Number of charges in population: 56,510,038;
Number of charges as percentage of total: 100.00%.
Source: GAO analysis of VHA data.
[End of table]
To assess the reliability of population data used to select the
sample, we (1) reviewed related documentation, (2) reviewed internal
and external reports related to the systems, and (3) interviewed
knowledgeable VHA officials. We also, as part of our testing of
unbilled medical services, determined that for the purposes of our
testing, the population of fiscal year 2010 copayment charges was
materially complete. Based on our data reliability analysis, we
determined that the population data, obtained from POWER, were
sufficiently reliable for the purposes of our testing. For each
sampled item, we obtained applicable information and supporting
documentation from VHA and VBA and determined whether a veteran's
copayment charge was accurate in accordance with VHA's established
policies, procedures, systems, and guidance. For each inaccurate
copayment charge, we determined the cause and provided VHA with an
explanation of the error, the related cause, and any other relevant
information. Table 5 contains a detailed breakout of the causes of the
errors in copayment charges.[Footnote 22]
Table 5: Causes for Identified Errors in Copayment Charges:
Causes of identified errors: Incorrect application of third-party
insurance offset;
Number of errors: 1.
Causes of identified errors: Unprocessed refund following retroactive
adjudication;
Number of errors: 2.
Causes of identified errors: Incorrect charge amount;
Number of errors: 1.
Causes of identified errors: Total;
Number of errors: 4.
Source: GAO analysis.
[End of table]
There were limitations because of the nature of the testing we
performed. We did not:
* test the medical determinations (i.e., diagnosis and whether the
service was related to a veteran's service-connected conditions or
special treatment authority) of the medical service provider
(including the pharmacist, doctor, nurse, or other medical staff);
* test the determinations made as a result of the adjudication process
at VBA to determine the veteran's service-connected conditions and
related disability rating percentages;
* test the determination made by VHA on whether to bill a third-party
insurer for the medical service or the third-party insurer's
determination to pay, including the amount of that payment; and:
* confirm through outside sources (including contacting applicable
veterans) the accuracy or completeness of veteran-specific information
relied on by VHA as part of its decision to bill tested copayment
charges.
In table 6, we present our statistical results as (1) our projection
of the estimated error overall and (2) the 95 percent, two-sided
confidence intervals for the projections.[Footnote 23]
Table 6: Estimated Error Rates for Veterans' Fiscal Year 2010
Copayment Charges:
Test results: Percentage estimate;
VHA-wide accuracy rate: 96%;
VHA-wide error rate: 4%.
Test results: Ninety-five percent, two-sided confidence interval;
VHA-wide accuracy rate: 90.1% - 98.9%;
VHA-wide error rate: 1.1% - 9.9%.
Test results: Estimated copayment charges in fiscal year 2010 (two-
sided);
VHA-wide accuracy rate: 50.9 million - 55.9 million;
VHA-wide error rate: 622,000 - 5.61 million.
Source: GAO analysis.
[End of table]
Probability Sample of Unbilled Medical Services:
To (1) assess the completeness of the population of fiscal year 2010
copayment charges billed to veterans and (2) determine the accuracy of
VHA's decisions not to bill veterans copayments for medical services
provided in fiscal year 2010, we selected for review a probability
sample of 100 unbilled medical services from the population of VHA's
approximately 576 million fiscal year 2010 medical services.
Our sampling frame for this sample was developed by combining
databases from three VHA data warehouses (the National Patient Care
database, Purchased Care Data warehouse, and Pharmacy Data warehouse),
which totaled approximately 576 million medical services provided in
fiscal year 2010. VHA's databases do not separately identify or track
unbilled services, so this set of databases contained both billed and
unbilled fiscal year 2010 medical services. The population of medical
services consisted of five broad types: (1) prescription, (2)
outpatient, (3) inpatient, (4) extended care, and (5) fee basis (see
table 7).
Table 7: Fiscal Year 2010 VHA Medical Services by Type:
Medical service: Outpatient;
Number of services: 407,857,973;
Percentage of services: 70.83%.
Medical service: Prescription;
Number of services: 136,035,517;
Percentage of services: 23.63%.
Medical service: Inpatient;
Number of services: 7,702,514;
Percentage of services: 1.34%.
Medical service: Extended care;
Number of services: 707,388;
Percentage of services: 0.12%.
Medical service: Fee basis;
Number of services: 23,494,198;
Percentage of services: 4.08%.
Medical service: Total;
Number of services: 575,797,590;
Percentage of services: 100.00%.
Source: GAO analysis of VHA data.
[End of table]
Because the VHA-provided population of all medical services from which
we selected our sample included services that resulted in copayment
charges, we initially selected a larger probability sample of 150
medical services. After checking billing records, we excluded any
sampled medical services that resulted in a copayment charge. From the
remaining medical services, we selected the first 100 as our
probability sample of unbilled medical services.
This sample was designed to test for a 3 percent tolerable error rate
so that if we found no billing errors in the sample, we would be able
to conclude with 95 percent confidence that (1) the population of
fiscal year 2010 unbilled medical services did not include a material
number (more than 3 percent) of medical services that should have been
billed as copayment charges and (2) the population of billed fiscal
year 2010 copayment charges was materially complete for the purposes
of our tests. If errors were found, this sample could be used to
estimate the rate of copayment underbilling errors associated with
incorrect VHA determinations not to bill medical services in this
population.
To assess the reliability of population data used to select this
sample for testing, we (1) reviewed related documentation, (2)
reviewed any internal or external reports related to the systems, and
(3) interviewed knowledgeable VHA officials. Based on our data
reliability analysis, we determined that the population data were
sufficiently reliable for the purposes of our testing. For each of the
unbilled medical services we tested, we obtained applicable
information and supporting documentation from VHA and VBA to determine
whether VHA correctly determined that the 100 tested fiscal year 2010
medical services should not have resulted in copayment charges, in
accordance with VHA's established policies, procedures, systems, and
guidance.
There were limitations because of the nature of the testing we
performed. We did not:
* test the medical determinations (i.e., diagnosis and whether the
service was related to a veteran's service-connected conditions or
special treatment authority) of the medical service provider
(including the pharmacist, doctor, nurse, or other medical staff);
* test the determinations made as a result of the adjudication process
at VBA to determine the veteran's service-connected conditions and
related disability rating percentages;
* test VHA's ability to record all of the medical services in the
medical center-level VistA system, or VHA's ability to transfer all
the medical services to the appropriate data warehouse; and:
* confirm through outside sources (including contacting applicable
veterans) the accuracy or completeness of veteran-specific information
relied on by VHA as part of its decision to not bill for tested
medical services.
In table 8, we present our statistical results as (1) our projection
of the estimated error overall and (2) the 95 percent, two-sided
confidence intervals for the projections.
Table 8: Estimated Rates Applicable to Fiscal Year 2010 Medical
Services That Did Not Result in Veteran Copayment Charges:
Test results: Percentage estimate;
VHA-wide accuracy rate: 100%;
VHA-wide error rate: 0%.
Test results: Ninety-five percent, two-sided confidence interval;
VHA-wide accuracy rate: 97% - 100%;
VHA-wide error rate: 0% - 3%.
Test results: Estimated medical services in fiscal 2010 (two-sided)[A];
VHA-wide accuracy rate: 503.7 million - 519.3 million;
VHA-wide error rate: 0 - 15.6 million.
Source: GAO analysis.
[A] Population is estimated using fiscal year 2010 medical services
and copayment charges prepared in fiscal year 2010.
[End of table]
Case Studies of VHA Copayment Charges:
In addition to our statistical samples of copayment charges and
unbilled medical services, we tested--as case studies--three small,
nongeneralizable samples consisting of 10 copayment charges each from
inpatient, extended care, and fee basis services.[Footnote 24] These
three types of medical services combined represented less than 1
percent of the VHA-wide fiscal year 2010 copayment population. Results
from our nongeneralizable case study samples cannot be used to make
inferences about any population; consequently, results obtained from
these cases are specific to the particular cases selected. We
conducted this testing to provide limited insight into possible errors
in copayments billed for these types of medical services. For each
case study, we obtained applicable information and supporting
documentation from VHA and VBA and determined whether a veteran's
copayment charge was accurate in accordance with VHA's established
policies, procedures, systems, and guidance. For each inaccurate case
study copayment charge, we determined the cause and provided VHA with
an explanation of the error, the related cause, and any other relevant
information. Table 9 contains a breakout of the results of the testing
of the case studies.
Table 9: Causes for Observed Errors in Case Study Copayment Charges:
Causes for observed errors: Incorrect application of third-party
insurance offset;
Inpatient: 1;
Extended care: 1;
Fee basis: 0;
Total: 2.
Causes for observed errors: Incorrect charge amount error;
Inpatient: 1;
Extended care: 0;
Fee basis: 0;
Total: 1.
Causes for observed errors: Invalid copayment charge;
Inpatient: 0;
Extended care: 1;
Fee basis: 0;
Total: 1.
Causes for observed errors: Total;
Inpatient: 2;
Extended care: 2;
Fee basis: 0;
Total: 4.
Source: GAO analysis.
[End of table]
VHA Monitoring of Copayment Accuracy:
To determine whether VHA had systems and processes in place to
adequately monitor the accuracy of copayment charges, we identified
relevant policies, procedures, systems, practices, and related
documentation, whether at a national, regional, or local level,
related to VHA's efforts to monitor copayment accuracy. We reviewed
the documentation provided to determine whether it contributed to VHA
periodically assessing the accuracy of copayment charges and taking
appropriate action to address the underlying causes when errors or
inaccuracies are found. We also interviewed knowledgeable staff and
officials from VHA and VA's Office of Inspector General.
We conducted this performance audit from February 2010 through August
2011 in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our audit objectives.
[End of section]
Appendix II: Enrollment in VA Health Care and Copayment Billing
Process:
As part of our review of the accuracy of Veterans Health
Administration (VHA) copayment charges, we gained an understanding of
key aspects of veteran eligibility and enrollment for veteran health
services, veteran medical services and related copayment charges, and
copayment billing and adjustments.
Veteran Eligibility and Enrollment:
Veterans are eligible for Department of Veterans Affairs (VA) health
care benefits based on their period of and separation from military
service under any condition other than a dishonorable separation. To
obtain VHA medical services, most veterans must take action to enroll
in the VHA health care system. To initiate their enrollment, veterans
submit a completed enrollment application (VA Form 10-10EZ) either by
mail or online to VHA's Health Eligibility Center (HEC) in Atlanta for
review and processing, or veterans may visit a local VHA medical
center or facility where they can receive assistance in completing the
enrollment form.
HEC establishes a veteran's enrollment status (priority group), which
is primarily affected by decisions made by the Veterans Benefits
Administration (VBA), which establishes and administers a variety of
nonhealth benefits and services for veterans. VBA is responsible for
determining a veteran's service-connected conditions and, to the
extent applicable, a veteran's disability rating. In doing so, VBA
adjudicates veteran claims by determining whether a veteran's illness
or injury was incurred in or aggravated by the veteran's military
service (i.e., a service-connected condition). Once awarded to a
veteran, a service-connected condition is considered a "rated" service-
connected condition. Additional service-connected conditions may also
result in a change to a veteran's disability rating. VBA sends the
veteran a notification letter informing him or her of the award
decision, including the additional service-connected condition,
applicable changes in disability rating, and the effective date of the
award determination. Information on VBA award decisions is also
automatically transmitted to HEC. VBA may grant additional service-
connected conditions and change disability ratings retroactively by
establishing an effective date that precedes the date VBA makes the
determination.
Based on a veteran's service, including rated service-connected
conditions, applicable disability rating, special treatment
authorities, and other enrollment information such as the results of a
financial assessment (called a means test), HEC assigns veterans to
one of eight enrollment priority groups. Special treatment authorities
include care provided pursuant to 38 U.S.C. § 1710(e), and
implementing regulations at 38 C.F.R. §§ 17.36 (a)(3) and 17.36
(b)(6), which authorizes treatment for disorders that may be
associated with a Vietnam-era veteran's exposure to herbicide
(including Agent Orange); certain diseases deemed to be related to
exposure to radiation; disorders that may be related to service in the
Southwest Asia theater of operation during the Persian Gulf War;
illnesses that may be related to services in a qualifying combat
theater; and disorders that may be related to participation in certain
biological and chemical warfare testing, including Project SHAD
(Shipboard Hazard and Defense Project). Veterans covered by section
1710(e) are enrolled in priority group 6. Generally speaking, the more
service-connected conditions, higher disability rating, and special
treatment authorities that apply to a veteran, the less likely a
veteran will be subject to copayment charges. Table 10 shows the eight
priority groups and their eligibility factors.
Table 10: VA Health Care Enrollment Priority Groups and Their
Eligibility Factors:
Priority group: 1;
Eligibility factors:
* Veterans with service-connected disabilities rated 50 percent or
more disabling;
* Veterans determined by VA to be unemployable because of service-
connected conditions.
Priority group: 2;
Eligibility factors:
* Veterans with service-connected disabilities rated 30 percent or 40
percent disabling.
Priority group: 3;
Eligibility factors:
* Veterans who are former prisoners of war;
* Veterans awarded the Purple Heart;
* Veterans whose discharge was for a disability that was incurred or
aggravated in the line of duty;
* Veterans with service-connected disabilities rated 10 percent or 20
percent disabling;
* Veterans awarded special eligibility classification under 38 U.S.C.
§ 1151, "benefits for individuals disabled by treatment or vocational
rehabilitation";
* Veterans awarded the Medal of Honor.
Priority group: 4;
Eligibility factors:
* Veterans who are receiving aid and attendance or housebound benefits;
* Veterans who have been determined by VA to be catastrophically
disabled.
Priority group: 5;
Eligibility factors:
* Non-service-connected veterans and noncompensable service-connected
veterans rated 0 percent disabled whose annual incomes, net worth, or
both are below the established VA means test thresholds;
* Veterans receiving VA pension benefits;
* Veterans eligible for Medicaid benefits.
Priority group: 6;
Eligibility factors:
* World War I veterans;
* Compensable 0 percent service-connected veterans;
* Veterans exposed to ionizing radiation during atmospheric testing or
during the occupation of Hiroshima and Nagasaki;
* Project 112/SHAD participants (Shipboard Hazard and Defense Project);
* Veterans exposed to the defoliant Agent Orange while serving in the
Republic of Vietnam from 1962 through 1975;
* Veterans of the Persian Gulf War who served from August 2, 1990
through November 11, 1998;
* Veterans who served in a theater of combat operations after November
11, 1998, as follows:
- Currently enrolled veterans and new enrollees who were discharged
from active duty on or after January 23, 2003, are eligible for the
enhanced benefits for 5 years post discharge;
- Veterans discharged from active duty before January 23, 2003, who
apply for enrollment on or after January 28, 2008, are eligible for
this enhanced enrollment benefit through January 27, 2011.
Priority group: 7;
Eligibility factors: Veterans with income above the VA national income
threshold and below the geographic income threshold who agree to pay
copayment charges.
Priority group: 8;
Eligibility factors: Veterans with income above the VA national income
threshold and the geographic income threshold who agree to pay
copayment charges.
Source: VHA.
[End of table]
Medical Services and Copayment Charges:
Medical services provided by VHA include inpatient and outpatient
services, prescription medication, and extended services. When VHA
facilities are not capable of furnishing economical hospital care or
medical services because of geographic inaccessibility or are not
capable of furnishing the care or services required, VHA may authorize
and pay a non-VHA provider to provide certain veterans hospital care
and medical services. When authorized, VHA identifies these as fee
basis services.
VHA's clinical and health records system--the Computerized Patient
Record System--contains, among other things, information on veterans'
rated service-connected conditions and special treatment authorities.
When a veteran receives medical services, the provider indicates in
the system whether the service provided was related to a veteran's
service-connected conditions or special authorities, which affects
whether a copayment will be charged to the veteran.
According to VHA, almost 95 percent of the approximately 576 million
medical services provided to veterans in fiscal year 2010 consisted of
outpatient services (70.8 percent) and prescription services (23.6
percent). (See table 11.)
Table 11: Fiscal Year 2010 VHA Veteran Medical Services:
Medical service type: Outpatient;
Number of services: 407,858,000;
Percentage of services: 70.83%.
Medical service type: Prescription;
Number of services: 136,036,000;
Percentage of services: 23.63%.
Medical service type: Inpatient;
Number of services: 7,703,000;
Percentage of services: 1.34%.
Medical service type: Extended care;
Number of services: 707,000;
Percentage of services: 0.12%.
Medical service type: Fee basis;
Number of services: 23,494,000;
Percentage of services: 4.08%.
Medical service type: Total;
Number of services: 575,798,000;
Percentage of services: 100.00%.
Source: GAO analysis of VHA data.
[End of table]
Outpatient services. There are three copayment tiers or categories
that apply to outpatient services-no copayment, basic $15 copayment,
and specialty $50 copayment. For example, an outpatient visit for
immunizations or preventive screenings is included in the no copayment
tier. A basic (nonspecialty) outpatient service, which includes
primary care visits for diagnosis and management of acute and chronic
conditions, has a $15 copayment. A specialty outpatient service, which
requires a referral, includes cardiology services and radiology
services, such as magnetic resonance imagery, has a $50 copayment. If
the medical service, which might otherwise have an applicable
copayment, is determined to be related to a veteran's service-
connected condition or special treatment authority, then no copayment
charge would be due. Generally, only veterans in priority groups 7 and
8 are charged for applicable outpatient copayments. Further, when a
veteran in priority group 7 or 8 receives more than one outpatient
service in a single day, only one copayment--the highest applicable
amount--is to be charged to the veteran for that day.
Prescription services. Veterans can fill prescriptions for medications
at a VHA pharmacy or through the mail. Veterans whose prescriptions
require a copayment are charged either $8 (for veterans in priority
groups 2 through 6) or $9 (for priority groups 7 and 8)[Footnote 25]
for supplies of 30 days or less. If authorized, prescriptions may be
filled for up to a 90-day period at a time with a corresponding
copayment charge based on a longer number of days. Priority group 1
veterans do not pay any prescription copayment charges. Veterans in
priority groups 2 through 6 are subject to applicable copayment
charges but have an annual cap that limits their total prescription
copayment charges to $960 per year. Priority group 7 and 8 veterans
are generally subject to applicable prescription copayments but do not
have an annual cap.
Inpatient services. Inpatient stay copayment charges are $1,100 for up
to the first 90 days of care during a 365-day period and $550 for each
additional 90 days. In addition to the inpatient stay copayment
charges, patients are also subject to inpatient per diem charges of
$10 per day. As with other medical services, no inpatient copayment or
per diem will be charged if the stay is related to the veteran's
service-connected conditions or special treatment authority.
Generally, only veterans in priority groups 7 and 8 are charged
applicable inpatient copayment and per diem charges.
Extended care services. Extended care services generally include both
institutional (inpatient) and noninstitutional (outpatient) services.
VHA does not charge any copayments for the first 21 days of extended
care services in any 12-month period. Extended care copayment charges
are capped at a maximum of $97 per day for institutional nursing home
or institutional respite care, $5 per day for institutional
domiciliary care, and $15 per day for noninstitutional adult day
health care and noninstitutional respite care services. No extended
care copayments will be charged if the services are related to a
veteran's service-connected conditions or special treatment
authorities. Generally, only veterans in priority groups 4 through 8
may be subject to extended care copayment charges.
Fee basis care services. VHA may authorize certain veterans to receive
hospital care and medical services from non-VHA providers. When this
occurs, VHA refers to these services as fee basis care. Non-VHA
providers submit bills to VHA for medical services provided to
veterans. Copayment amounts and requirements related to fee basis
services are otherwise the same as those for services provided in VHA
facilities.
Determining the correct applicable copayment charge depends on many
factors, including the underlying medical service provided, a
veteran's applicable service-connected conditions and special
treatment authorities, priority group, and established copayment
amount. Table 12 provides general information on whether copayment
charges may apply to veterans in particular priority groups.
Table 12: General Applicability of Copayment Charges by Priority Group
and Type of Service:
Priority groups: 1;
Type of medical service:
Outpatient[A]: No;
Prescription[B]: No;
Inpatient[C]: No;
Extended care[D]: No.
Priority groups: 2 and 3;
Type of medical service:
Outpatient[A]: No;
Prescription[B]: Yes;
Inpatient[C]: No;
Extended care[D]: No.
Priority groups: 4;
Type of medical service:
Outpatient[A]: No;
Prescription[B]: No;
Inpatient[C]: No;
Extended care[D]: Yes.
Priority groups: 5;
Type of medical service:
Outpatient[A]: No;
Prescription[B]: Yes;
Inpatient[C]: No;
Extended care[D]: Yes.
Priority groups: 6;
Type of medical service:
Outpatient[A]: Yes;
Prescription[B]: Yes;
Inpatient[C]: Yes;
Extended care[D]: Yes.
Priority groups: 7;
Type of medical service:
Outpatient[A]: Yes;
Prescription[B]: Yes;
Inpatient[C]: Yes;
Extended care[D]: Yes.
Priority groups: 8;
Type of medical service:
Outpatient[A]: Yes;
Prescription[B]: Yes;
Inpatient[C]: Yes;
Extended care[D]: Yes.
Source: GAO analysis of VHA data.
[A] No copayment is due for X-rays, lab tests, and immunizations; a
$15 copayment is due for primary outpatient care; and $50 copayment is
due for specialty outpatient care.
[B] An $8 copayment is due for a 30-day prescription supply for
veterans in priority groups 2 through 6 who are also subject to a
calendar year cap of $960; a $9 copayment is due for a 30-day
prescription supply for veterans in priority groups 7 through 8 who
are not subject to the annual cap. (Priority groups 7 and 8 were
subject to the $8 copayment until July 1, 2010, when the $9 amount
became effective.)
[C] Veterans in priority groups 6 through 8 may be subject to a $10
per diem charge and $1,100 copayment charge for the first 90 days of
an inpatient stay during a year and $550 for each additional 90 days.
[D] Veterans in priority groups 4 through 8 are subject to applicable
copayment charges of $5 per day for domiciliary care, $15 per day for
noninstitutional respite care and adult day health care, and a maximum
$97 per day for institutional nursing home and respite care.
[End of table]
While table 12 reflects the general applicability of copayment charges
by priority group, some exceptions apply, including the following:
* Former prisoners of war, who make up part of priority group 3, are
not subject to any prescription copayment charges.
* Copayment requirements do not apply to priority group 6 veterans if
medical service is related to the priority group 6 placement.
* For priority group 7 veterans, the inpatient stay copayment rate
($1,100) is reduced by 80 percent.
* Veterans may be exempted from copayments based on results of the
financial assessment.
* Veterans who experience temporary financial difficulties may apply
to their local VHA facility for hardship waivers to eliminate
copayments for a defined short-term period or to have VHA waive a
specified amount of outstanding debt incurred for prior medical
services.
Copayment Billing and Adjustments:
Generally, when a copayment charge is applicable to a medical service,
the billing system determines whether that medical service should
result in a copayment amount being charged to a veteran's account
based on information recorded by the service provider and the
veteran's specific enrollment information, including priority group
status. The billing system also tracks all prescription copayment
charges billed to a veteran at all medical center sites to ensure that
the annual maximum prescription billing cap is not exceeded. For fee
basis care, staff at the local VHA facilities who process claims
submitted by non-VHA providers for reimbursement for the cost of
medical services provided to veterans outside of VHA medical centers
also manually establish a veteran copayment charge in the billing
system if the medical service in question would have resulted in a
copayment charge had the service been provided in a VHA facility.
If a veteran has active third-party health insurance, VHA's policy is
to file a claim with the veteran's third-party insurer seeking
reimbursement of costs related to medical services covered by the
veteran's third-party insurance that were not related to a veteran's
service-connected conditions or special treatment authorities. VHA is
authorized to pursue reimbursement from third-party insurers
regardless of whether the services were provided by VHA or non-VHA
providers. Under this policy, VHA is required to apply any related
insurance reimbursement received to reduce or eliminate any related
pending copayment charges due from the veteran. As a result, if a
veteran has third-party insurance and is subject to a copayment
charge, the copayment charge is not billed to the veteran on the
monthly statement for up to 90 days to allow time for VHA to receive
and apply reimbursement from the veteran's third-party insurer. If the
reimbursement received does not fully cover or offset the veteran's
copayment obligation, the veteran is responsible for any balance.
Unless reimbursement received from a veteran's third-party health
insurer is applied to eliminate or reduce the pending copayment
charge, the original copayment charge is released after 90 days, and
the charge appears on the veteran's subsequent monthly billing
statement. Applicable third-party insurance reimbursement received
after the copayment charge is billed to the veteran should still be
applied to reduce or eliminate a copayment charge if still unpaid, or
used to provide a refund of the billed amount if the veteran has paid
the amount. According to VHA procedures, this process, which is known
as the third-party insurance offset, is manual and is to be performed
on a daily basis after third-party insurance reimbursement is received
by local facility staff.
VHA is expected to adjust copayment charges or issue copayment refunds
when certain matters related to the billed amount change. When a third-
party insurance reimbursement that would fully offset or reduce a
billed copayment charge is received, VHA is expected to eliminate or
reduce the amount billed to the veteran's account, and if the amount
was previously paid by the veteran, VHA is responsible for initiating
a refund to the veteran. In addition, when VBA notifies VHA of a new
retroactively awarded service-connected condition or an increased
disability rating for a veteran, VHA staff are to review the veteran's
account to determine whether any previously billed copayment charges
for services provided after the effective date of the retroactive VBA
award determination should be canceled (if unpaid) or refunded (if
paid).
[End of section]
Appendix III: Comments from the Department of Veterans Affairs:
Department of Veterans Affairs:
Washington DC 20420:
August 11, 2011:
Ms. Susan Ragland:
Director, Financial Management and Assurance:
U.S. Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Ms. Ragland:
The Department of Veterans Affairs (VA) has reviewed the Government
Accountability Office's (GAO) draft report, "Veterans Health Care:
Monitoring is Needed to Determine the Accuracy of Veteran Copayment
Charges" (GAO-11-795), and generally agrees with GAO's conclusions and
concurs with GAO's recommendations to the Department.
The enclosure specifically addresses each of GAO's recommendations and
provides technical comments on the draft report. VA appreciates the
opportunity to comment on your draft report.
Sincerely,
Signed by:
John R. Gingrich:
Chief of Staff:
Enclosure:
[End of letter]
Enclosure:
Department of Veterans Affairs (VA) Comments to Government
Accountability Office (GAO) Draft Report:
Veterans Health Care: Monitoring is Needed to Determine the Accuracy of
Veteran Copayment Charges (GA0-11-795):
GAO recommendation: To provide VHA with the information needed to
adequately monitor the accuracy of copayment charges VHA-wide and to
assess and respond to causes for copayment errors, the Secretary of
Veterans Affairs should direct the Veterans Health Administration to
take the following two actions:
Recommendation 1: establish an accuracy performance measure or goal
for copayment charges billed to veterans;
VA response: Concur. The Veterans Health Administration (VHA) Chief
Business Office (CBO) and Office of Compliance and Business Integrity
(CBI) will jointly implement a national performance accuracy measure.
Based on GAO's findings, CBO will initially apply a 96 percent
accuracy rate performance standard for copayment charges issued to
Veterans. This performance standard may be adjusted quarterly to
ensure improved accuracy in copayment billing for Veterans. CBO will
take appropriate corrective actions to address any instances of non-
compliance with the new performance standards. The anticipated
implementation date is March 31, 2012.
Recommendation 2: establish and implement a formal process for
periodically assessing”-VHA-wide”-the accuracy of veteran copayment
charges and taking actions as necessary.
VA response: Concur. VHA will implement quarterly system-wide
processes to periodically assess the accuracy of Veteran copayment
changes and look for any trends.
VHA's CBO will implement an internal monitor for copayment accuracy.
For this internal monitoring process, CBO will generate a random
sample size from copayment billing activity. The sample will include
first party copayment billing data and any associated third party
claims. Each Consolidated Patient Account Center (CPAC) Quality
Assurance Department will conduct quarterly reviews using the
generated sample to monitor copayment charges. The reviews will assess
each copayment charge for accuracy related to amount, eligibility
category, and third to first party offset.
On a quarterly basis, performance results will be published for each
VHA facility and CPAC on the Performance and Operational Web Enabled
Reporting (POWER) Web site. CBO will take appropriate corrective
actions to address any instances of noncompliance with the new
performance standards. Reviews will begin first quarter fiscal year
(FY) 2012.
VHA's CBI will implement an external verification for copayment
accuracy. CBI recently developed an automated national performance
metric which identifies potentially inappropriate copayment charges
issued to Veterans in Priority Groups 1 through 5. On a quarterly
basis, performance results will be published for each VHA facility and
CPAC on the CBI Metrics Dashboard. CBI will also provide monthly
reports of this data to CBO and facilities for local monitoring. CBO
will take appropriate corrective actions to review Veterans'
eligibility and copayments, cancel inappropriate copayments, and issue
refunds to Veterans as appropriate. Reviews will begin first quarter
FY 2012.
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Susan Ragland, (202) 512-9095 or raglands@gao.gov:
Staff Acknowledgments:
In addition to the contact named above, John J. Reilly, Assistant
Director; Wilfred Holloway, Assistant Director; Mark Ramage, Assistant
Director; Sophie Brown; James Healy; Diane Morris; Quang Nguyen;
Gabrielle Perret; Sabrina Rivera; and Matthew Zaun made key
contributions to this report.
[End of section]
Footnotes:
[1] 38 U.S.C. §§ 1710, 1710B, and 1722A.
[2] Veterans service organizations advocate for veterans and assist
them in obtaining benefits and medical care from VA. The organizations
include AMVETS, Disabled American Veterans, Paralyzed Veterans of
America, and the Veterans of Foreign Wars.
[3] Identifying the Causes of Inappropriate Billing Practices by the
U.S. Department of Veterans Affairs: Hearing on H.R. 3365 Before the
H. Subcomm. on Health of the Comm. on Veterans' Affairs, 111thCong.
(2009).
[4] Our test of copayment charge accuracy included the accuracy of the
original copayment charge billed to a veteran's account as well as
VHA's handling of all subsequent adjustments to the copayment amount
that occurred or should have occurred as a result of third-party
insurance recovery related to the medical service or a retroactive
adjustment or change to a veteran's service-connected conditions and
applicable special authorities. Special authorities include care
provided for disorders that may be associated with exposure to
herbicide (including Agent Orange) or ionizing radiation, among other
disorders. Copayments originally charged in error but then identified
by VHA through a systematic review process and corrected in a timely
manner are considered to be accurate.
[5] See appendix I for additional details on our scope and methodology.
[6] VBA determines veterans' service-connected conditions and degree
of disability caused by those conditions. Once VBA has made these
determinations, a veteran is entitled to file a claim for additional
service-connected conditions or for a change in the degree of service-
connected disability through a formal process known as adjudication.
VBA automatically sends information regarding awarded service-
connected conditions, including subsequent changes, to HEC for, among
other things, HEC's use in determining a veteran's priority group
status.
[7] When a veteran receives more than one medical service in a day,
only one copayment charge--the highest applicable amount--is charged
to the veteran's account. This exception does not apply to multiple
prescription services on the same day.
[8] The estimated error rate in the population is based on observing
errors in our probability sample of billed copayment charges. Because
this estimate is based on a probability sample, it is subject to
sampling error because a different probability sample could have
produced different results. As a result, we are 95 percent confident
that fiscal year 2010 charges were inaccurate between 1.1 and 9.9
percent of the time. See appendix I for additional information on our
sample and sampling errors.
[9] Because this probability sample was drawn from the population of
billed copayment charges for which prescription (88.2 percent) and
outpatient (11.2 percent) services made up over 99 percent of all
copayment billed services, our probability sample of copayment charges
included only prescription-and outpatient-related copayment charges.
[10] We are 95 percent confident that for fiscal year 2010, the number
of accurate VHA copayment charges was between 50.9 million and 55.9
million and the number of inaccurate copayment charges was between
622,000 and 5.61 million. See appendix I for additional information on
our sample and sampling errors.
[11] We are 95 percent confident that for fiscal year 2010, the
underbilling error rate for VHA's copayment charges was between 0
percent and 3 percent. Appendix I contains additional information on
our sample of unbilled services.
[12] We are 95 percent confident that in fiscal year 2010, for the
population of unbilled medical services, VHA correctly determined that
medical services should not result in a copayment charge between 97
percent and 100 percent of the time. Appendix I contains additional
information on our sample of unbilled services.
[13] Because of the relatively high number of prescription and
outpatient services in the population, the probability sample of 100
copayment charges we tested did not include any copayment charges
resulting from these three types of medical services.
[14] Although the copayment charges we tested as part of our case
study tests were randomly selected, they represent a nongeneralizable
sample and were not designed to produce estimates or to be used to
make inferences about their population.
[15] For the probability samples we tested for the accuracy of VHA's
billed copayment charges and VHA's decisions that other medical
services should not result in a copayment charge, we obtained and
reviewed VBA and VHA data for 200 veterans--100 for each of the two
samples.
[16] For priority group status, we compared data from HEC and the
medical centers, as they maintain data on a veteran's assigned
priority group status.
[17] Collections from copayments, third-party reimbursements, parking
fees, and other fees are deposited in the MCCF and expended at the
local medical centers as medical service funds.
[18] VHA, First Party Co-Payment Monitoring Policy, VHA Handbook
1030.03 (Oct. 16, 2006).
[19] VA, Office of Inspector General, Evaluation of Selected Medical
Care Collections Fund First Party Billings and Collections, Rep. No.
03-00940-38 (Dec. 1, 2004).
[20] VHA Notice 2010-03, Rescission of VHA Handbook 1030.03, First-
Party Co-Payment Monitoring Policy (Mar. 4, 2010)
[21] With this probability sample, each member of the study population
had a nonzero probability of being included, and that probability
could be computed for any member.
[22] Our test of copayment charge accuracy included the accuracy of
the original copayment charge billed to a veteran's account as well as
VHA's handling of all subsequent adjustments to the copayment amount
that occurred or should have occurred as a result of third-party
insurance recovery related to the medical service or a retroactive
adjustment or change to a veteran's service-connected conditions and
applicable special authorities. Copayments originally charged in
error, but then identified by VHA through a systematic review process
and corrected in a timely manner, are considered to be accurate.
[23] Our 95 percent confidence interval means that if you were to
determine an estimate for 100 different probability samples, 95 out of
100 times the confidence interval would include the actual population
value. In other words, the actual population value is between the
lower and upper limits of the confidence interval 95 percent of the
time.
[24] Although these cases were randomly selected, we do not generalize
to a larger population because of the small number of cases selected
in each of the three samples.
[25] The $9 prescription copayment for priority groups 7 and 8 became
effective July 1, 2010.
[End of section]
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