VA Testimony of Gary M. Baker before Congress on October 15, 2009

United States Department of Veterans Affairs

STATEMENT OF
GARY M. BAKER, MA
CHIEF BUSINESS OFFICER
VETERANS HEALTH ADMINISTRATION
DEPARTMENT OF VETERANS AFFAIRS
BEFORE THE
COMMITTEE ON VETERANS’ AFFAIRS
SUBCOMMITTEE ON HEALTH
UNITED STATES HOUSE OF REPRESENTATIVES
OCTOBER 15, 2009

October 15, 2009

Mr. Chairman and Mr. Ranking Member: thank you for providing me this opportunity to discuss the Department of Veterans Affairs’ (VA) billing practices. I am accompanied today by Ms. Stephanie Mardon, Deputy Chief Business Officer for Revenue Operations, and Ms. Kristin Cunningham, Director of Business Operations.

VA is required by law to charge copayments to certain Veterans who meet income requirements and receive care for non service-connected treatment. VA must also bill health insurance carriers for services provided to Veterans treated for their non service-connected conditions. My testimony today will focus on VA’s response to concerns expressed by Veterans and oversight bodies regarding VA’s billing practices and the mechanisms VA has put in place to ensure charges are appropriate.

VA’s Billing Guidelines

Veterans in Priority Group 1 (service connected 50% or more) are never charged a copayment. For other Veterans, VA currently has four types of non service-connected copayments for which may be charged: outpatient, inpatient, extended care services and medication. Veterans are not charged copayments for a number of outpatient services including: publicly-announced VA health fairs; screenings and immunizations; smoking and weight loss counseling; telephone care and laboratory; flat film radiology; and electrocardiograms. For primary care outpatient visits there is a $15 copayment charge and for specialty care outpatient visits a $50 copayment. Veterans do not receive more than one outpatient copayment charge per day.

For Veterans required to pay an inpatient copayment charge, rates vary based upon whether the Veteran is enrolled in Priority Group 7 or not. Veterans enrolled in Priority Group 8 and certain other Veterans are responsible for VA’s full inpatient copayment and Veterans enrolled in Priority Group 7 and certain other Veterans are responsible for paying 20 percent of VA’s inpatient copayment. Veterans in Priority Groups 1,2 3 and 5 do not have to pay inpatient or outpatient copays. Veterans in Priority Groups 4 and 6 may be exempt due to income or special eligibility for treatment of certain conditions.

For Veterans required to pay extended care service copayments these are based on three levels of nonservice-connected care including: inpatient, non-institutional and adult day health care. Actual copayments vary depending on the Veteran’s financial situation.

For medication copayments, Veterans are not billed if they have a service-connected disability rated 50 percent or greater, they are former Prisoners of War, or if their medications are related to certain eligibility exceptions. Veterans enrolled in Priority Groups 2 thru 6 have a $960 calendar year cap on the amount that they can be charged for these copayments.

Veterans who are unable to pay VA’s copayment charges are encouraged to complete requests for assistance including waivers, hardships, compromises and repayment plans. VA embarked on a program earlier this year to improve communication of these options to Veterans and their families through developing posters and other materials for local facilities and VA’s Web site (see Appendices A through E). VA staff members are encouraged to ensure that Veterans and their families are aware of these options. In addition, Veterans and their families can call VA’s First Party Call Center at the Health Resource Center in Topeka, KS using a toll-free number for assistance in understanding their copayment charges and payment alternative options.

VA bills private health insurers for medical care, supplies and prescriptions provided to Veterans for their non service-connected conditions. VA cannot bill Medicare, but it can bill Medicare supplemental health insurance carriers for covered services. (Reference 38 USC § 1729.) Veterans are not responsible for paying any remaining balance of VA’s insurance claim not paid or covered by their health insurance. Any payment received by VA is used to offset "dollar for dollar" a Veteran’s VA copayment responsibility.

Ensuring Billing Accuracy

In VA’s billing program, Veterans and their health insurers are not to be charged for care provided for their service-connected conditions. VA has a number of mechanisms that have been put in place to ensure Veterans and their third party health insurers are charged appropriately. VA’s health information system identifies Veterans who are service-connected, flags their record, and lists all rated service-connected disabilities. During each treatment encounter, the VA provider determines whether the medical care or prescriptions provided are related to the Veteran’s rated service-connected conditions. This determination prevents bills from being generated automatically. In addition, when VA is notified that a Veteran is rated as service-connected retroactively, VA reviews the Veteran’s account to ensure any bills that have may been generated for the newly rated conditions are cancelled or that refunds are generated back to the effective date of the service-connected decision. As an example, the 2008 National Defense Authorization Act exempted combat Veterans who were discharged from active duty on or after January 2003, from copayments for conditions possibly related to their combat service for a 5 year period. VA is now generating refunds for any copayments Veterans may have been required to make when their copayment exemption expired after 2 years under the previous authority. VA hopes this will assist those Veterans who served in the combat theater of operations.

The Veterans Service Organizations 2010 Independent Budget made recommendations to help VA improve billing practices: VA has already addressed many of these. In response to the recommendation regarding improved data exchange between the Veterans Benefits Administration (VBA) and the Veterans Health Administration (VHA), VHA has made significant progress through enhancements to VHA’s Veterans Health Information Systems Technology Architecture (VistA). This now contains information that provides medical staff data for more than 150 service-connected conditions. Additionally, medical center staff has access to other applications that provide more detailed information on rated disabilities. VHA staff has been participating in a pilot of the Virtual VA application which provides Web-based access to view rating decisions. This provides more detailed information concerning Veterans’ service-connected disabilities. The pilot has proven very successful in providing clear, reliable information for use in service-connected determinations.

In response to the VSO recommendations that VA review our billing procedures and intensify training, VA has already put in place extensive training for clinical, coding and billing staff to appropriately determine service-connection and other special authority relationships for billing purposes. All providers receive a pocket card that outlines protocols for determining service-connected care for billing purposes. Business compliance staff at each level of VHA also perform a variety of first and third party billing compliance reviews that are routinely reported to VHA leadership.

Over the last five years, VA has also developed many other initiatives to improve billing practices in response to VA Office of Inspector General (OIG) Report No. 03-00940-38, “Evaluation of Selected Medical Care Collection Fund First Party Billings and Collections” published on December 1, 2004. In this report, OIG identified that Priority Groups 1 and 5 Veterans were receiving compensation and pension benefits and their debts were being referred inappropriately to VA’s Debt Management Center (DMC). In response to this report, VA published VHA Handbook 1030.03, “First Party Co-payment Monitoring Policy” (dated October 16, 2006) which established policies and procedures for monitoring possible inappropriate referral of debts to DMC. This handbook requires staff to conduct a full account review for any copayments charged to these Veterans to determine billing accuracy. Additionally, VA installed software in all VistA systems in August 2008 to ensure that these debts are not referred automatically for offset. This has resulted in dramatic reductions reducing inappropriate referrals from 89 percent at the time of the OIG report to 16 percent in Fiscal Year 2009.

VA also put in place several enhancements to strengthen its billing program in response to the July 2008 Government Accountability Office (GAO) Report 08-675, “Ineffective Controls over Medical Center Billings and Collections Limit Revenue from Third-Party Insurance Companies.” To increase oversight and monitoring of the billing program, VA now requires staff to perform monthly reviews and report results to local compliances officers. In order to accurately classify care as not billable, VA implemented a software enhancement in July 2009 and provided training to staff. VA also implemented a mechanism to monitor and periodically audit these determinations. Finally, VA strengthened controls over accounts receivable by implementing monitors by VISN financial quality assurance staff.

Conclusion

Mr. Chairman, we appreciate the opportunity to respond to the concerns about VHA billing practices raised by Veterans and oversight bodies and to describe our efforts to improve the process. VA prides itself on ensuring that Veterans and their health insurers are appropriately charged for non service-connected care. We are equally committed to ensuring that Veterans are not billed inappropriately for treatment of service-connected conditions. To that end, VHA has instituted billing protocols, training, monitoring, and oversight systems. Should a Veteran receive a bill that appears to be in error, VA encourages Veterans to contact their local medical center revenue staff, who will review the bill with the Veteran and help to reconcile the issue. Thank you, again, for this opportunity. My colleagues and I are available for your questions.