Review of Alleged Overpayments for Non-VA Care Made by Florida VA Facilities

The OIG Hotline received an allegation in October 2014 that VA was paying full price for physician services to a non-VA care provider rather than paying lower contract rates, resulting in overpayments of provider claims for non-VA care. We substantiated the allegation that, contrary to Government regulations, Veterans Health Administration’s (VHA) Florida claims processing centers did not reimburse a non-VA care provider based on the applicable Medicare rates, when appropriate. We determined that VHA payments exceeded Medicare rates in 52 of the 55 examples provided by the complainant, of which 44 (with a value of $27,010) were related to specific physician administered drugs. The associated overpayments totaled $28,295. Based on these results, we expanded our review to all payments made by Florida VA facilities from October 1, 2012 through March 31, 2016 for these types of services. Our review of 73,124 payments to non-VA care providers for physician-administered drugs from October 1, 2012 through March 31, 2016 identified 26,178 overpayments (35.8 percent), totaling approximately $17.2 million, ranging from $.01 to $47,943.40. Of this $17.2 million, VHA overpaid approximately $6.9 million (40.2 percent) to the provider identified in the allegation. These overpayments occurred because VHA did not use Medicare rates for physician administered drugs, as published by the Centers for Medicare & Medicaid Services. These funds could have been more effectively spent on veteran care. We recommended the Under Secretary for Health ensure that all payments for non-VA physician-administered drugs are made in accordance with the Code of Federal Regulations for all Veterans Integrated Service Networks. We also recommended the Under Secretary develop a plan for uploading Medicare rates into the Fee Basis Claims System (to enable the proper payment of physician-administered drug claims) and issue Bills of Collection for overpayments to non-VA care providers. VHA concurred with our recommendations and provided an action plan to address those recommendations. VHA also stated that they would provide the OIG with documentation to support completion of the action plans.