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Report | July 24, 2015

Followup Audit: DoD Military Treatment Facilities Continue to Miss Opportunities to Collect on Third Party Outpatient Claims



Our objective was to determine whether Military Treatment Facility (MTF) officials collected outpatient third party health insurance claims as agreed to in Recommendation 1.b of DoD IG Report No. D-2007-108, “Outpatient Third Party Collection Program,” July 18, 2007 and whether these actions corrected the identified deficiencies.


Assistant Secretary of Defense for Health Affairs (ASD[HA]) officials did not implement Recommendation 1.b as agreed to in DoD IG Report No. D‑2007‑108. MTF officials generally did not conduct compliance audits as required by the Uniform Business Office Manual at the six MTFs reviewed. Based on the statistical sample, there were 144,930 claims worth $34.8 million that had at least one discrepancy. Specifically, MTF officials did not:

  • conduct initial follow up on 64,345 claims worth $17.3 million;
  • document the claim write-off rationale for 67,047 claims worth $11.9 million;
  • forward 45,812 claims worth $9.6 million to their legal office for collection; or
  • obtain precertification or preauthorization for 19,632 claims worth $10.3 million.

This occurred because some MTF officials stated that the compliance audits did not add value to improve the program or its collections, while other officials stated that compliance audits were an administrative burden due to limited resources.

As a result, MTFs continue to miss opportunities to collect additional payments from outstanding outpatient claims worth $21.7 million that remains uncollected for FY 2012 through FY 2014. This also increased the risk of healthcare billing fraud, waste, abuse, and mismanagement.


Among other recommendations, the ASD(HA) should:

  • conduct an analysis to determine the sufficient time needed to conduct adequate follow up;
  • ensure that MTF officials complied with the Uniform Business Office Manual;
  • develop a standardized quarterly compliance audit checklist and oversee the results of the audits; and
  • establish an agreement to accept MTF claims for 90‑day prescriptions.

Management Comments and Our Response

Comments from Acting Director for Business Support Directorate, responding on behalf of the ASD(HA) partially addressed the recommendations. We request that he provide comments in response to this report.  

This report is a result of Project No. D2014-D000XD-0123.000.