Summary
GAO previously reported that continuing problems in billing and collection processes at the Department of Veterans Affairs (VA) impaired VA's ability to maximize revenue from private (third-party) insurance companies. VA has undertaken several initiatives to address these weaknesses. GAO was asked to perform a follow-up audit to (1) evaluate VA billing controls, (2) assess VA-wide controls for collections, (3) determine the effectiveness of VA-wide oversight, and (4) provide information on the status of key VA improvement initiatives. GAO performed case study analyses of the third-party billing function, statistically tested controls over collections, and reviewed current oversight policies and procedures. GAO also reviewed and summarized VA information on the status of key management initiatives to enhance third-party revenue.
GAO's case study analysis of unbilled patient encounters at 18 medical centers, including 10 medical centers with low billing performance and 8 medical centers under VA's Consolidated Patient Account Centers (CPAC) initiative considered to be high performers, found documentation, coding, and billing errors and inadequate management oversight for approximately $1.7 billion deemed unbillable in fiscal year 2007. Although some medical services are unbillable, such as service-connected treatment, management has not validated reasons for related unbilled amounts of about $1.4 billion to assure that all billable costs are charged to third-party insurers. Because insurers will not accept improperly coded bills and they generally will not pay bills received more than 1 year after the date that medical services were provided, it is important that coding for medical services is accurate and timely. The 10 case study medical centers reported average days to bill ranging from 109 days to 146 days in fiscal year 2007 and significant coding and billing errors and other problems that accounted for over $254 million, or 21 percent, of the $1.2 billion in unbilled medical services costs. Although GAO determined that CPAC officials performed a more thorough review of billings, GAO's analysis of unbilled amounts for the 8 CPAC centers found problems that accounted for $37.5 million, or about 7 percent, of the $508.7 million in unbilled medical services costs. In addition, GAO's VA-wide statistical tests of collections follow-up on unpaid third-party bills of $250 or more identified significant control failures related to timely follow-up and documentation of contacts with third-party insurers on outstanding receivables. VA guidance requires medical center accounts receivable staff to make up to three follow-up contacts, as necessary, on outstanding third-party receivables. GAO's tests identified high failure rates VA-wide as well as for CPAC and non-CPAC medical centers related to the requirement for timely follow up with third-party insurers on unpaid amounts. GAO's tests also found high failure rates associated with the lack of documentation of follow-up contacts. VA lacks policies and procedures and a full range of standardized reports for effective management oversight of VA-wide third-party billing and collection operations. Further, although VA management has undertaken several initiatives to enhance third-party revenue, many of these initiatives are open-ended or will not be implemented for several years. Until these shortcomings are addressed, VA will continue to fall short of its goal to maximize third-party revenue, thereby placing a higher burden on taxpayers.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change
from "In process" to "Implemented" or "Not implemented" based on our follow up work.
Director:
Team:
Phone:
Kay L. Daly
Government Accountability Office: Financial Management and Assurance
(202) 512-9312
Recommendations for Executive Action
Recommendation: To assure that all amounts that should be billed to third-party insurers are billed in an accurate and timely manner, the Secretary of Veterans Affairs should establish procedures requiring medical center management to perform and document detailed monthly reviews of patient encounters determined to be nonbillable by coding staff to ensure they are properly coded to maximize revenue from third-party insurer billings and collections.
Agency Affected: Department of Veterans Affairs
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To assure that all amounts that should be billed to third-party insurers are billed in an accurate and timely manner, the Secretary of Veterans Affairs should establish procedures requiring medical center management to develop and use management reports on medical center performance with respect to accuracy and timeliness of billing performance and take appropriate corrective action to maximize revenue from third-party insurer billings and collections.
Agency Affected: Department of Veterans Affairs
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To assure timely follow-up and documentation of unpaid thirdparty billings, the Secretary of Veterans Affairs should establish a process requiring medical centers to monitor their accounts receivable staffs' adherence to the requirement in VA Handbook 4800.14, Medical Care Debts, to follow-up on outstanding third-party accounts receivable within specified time frames to maximize revenue from third-party insurer billings and collections.
Agency Affected: Department of Veterans Affairs
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To assure timely follow-up and documentation of unpaid thirdparty billings, the Secretary of Veterans Affairs should establish a mechanism requiring medical centers to monitor their accounts receivable staff adherence to VA Handbook 4800.14, Medical Care Debts, which requires documenting a brief summary of all follow-up contacts, including information on when a payment will be made or why a payment was not made, to maximize revenue from third-party insurer billings and collections.
Agency Affected: Department of Veterans Affairs
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To assure timely follow-up and documentation of unpaid thirdparty billings, the Secretary of Veterans Affairs should establish a process requiring medical centers to confirm that accounts receivable staff are following the requirement in Veterans Health Administration (VHA) Handbook 4800.14, Write-Offs, Decreases, And Termination of Medical Care Collections Fund Accounts Third-Party Receivable Balances, to provide a specific explanation for any adjustments to decrease third party accounts receivable from third-party insurers to maximize revenue from third-party insurer billings and collections.
Agency Affected: Department of Veterans Affairs
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To assure effective VA-wide oversight of billings and collections with regard to third-party insurers, the Secretary of Veterans Affairs should require VHA to establish a formal VA-wide process for managing and overseeing medical center billing performance, including development of standardized reports on unbilled amounts by category, to maximize revenue from third-party insurer billings and collections.
Agency Affected: Department of Veterans Affairs
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To assure effective VA-wide oversight of billings and collections with regard to third-party insurers, the Secretary of Veterans Affairs should establish procedures requiring periodic VHA-wide assessments by the Chief Business Office to document whether medical center staff are performing timely and accurately documented follow-up on outstanding third-party accounts receivable, as required in VHA Handbook 4800.14, to maximize revenue from third-party insurer billings and collections.
Agency Affected: Department of Veterans Affairs
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
