Report | Jan. 27, 2017

Medical Service Accounts at U.S. Army Medical Command Need Additional Management Oversight DODIG-2017-045

Objective

Our objective was to determine whether U.S. Army Medical Command (MEDCOM) Uniform Business Office (UBO) effectively managed delinquent medical service accounts. This report is the sixth in a series on the management of medical service accounts. We nonstatistically selected and reviewed 20 high-dollar medical service accounts, valued at $2.7 million, transferred to MEDCOM by Brooke Army Medical Center UBO.

Findings

MEDCOM officials did not effectively manage delinquent medical service accounts. Between June 12, 2012, and March 3, 2016, Army military treatment facility UBOs determined that 21,742 medical service accounts, valued at $41.1 million, were uncollectible, and transferred the debt to MEDCOM. Of the 20 medical service accounts reviewed, MEDCOM officials allowed Brooke Army Medical Center UBO to terminate collection actions for 10 accounts that did not comply with the DoD Financial Management Regulation (FMR) conditions for terminating debt. Furthermore, of those 10 accounts, MEDCOM officials did not return 9 potentially collectible accounts to Brooke Army Medical Center to continue aggressive collection efforts.

The 21,742 uncollectible medical service accounts at MEDCOM existed because MEDCOM officials did not have adequate procedures to process the transferred accounts. Specifically, MEDCOM officials did not have procedures in place to review the transferred accounts or to return potentially collectible accounts to the military treatment facility UBOs to continue collection.

In addition, neither MEDCOM officials nor officials with Army military treatment facility UBOs complied with the DoD FMR and Defense Health Agency requirements for writing off and terminating debt. Specifically, once the accounts were transferred by the military treatment facility UBOs, MEDCOM officials terminated collection actions on 6,599 accounts with uncollectible balances of $25 or greater without proper authority (only the Defense Finance and Accounting Service, DoD Components, the Department of Justice, and the Department of the Treasury have legal authority to approve the termination of collection actions for debts).1 Furthermore, Army military treatment facility UBOs did not provide supporting documentation or a history of collection efforts when they wrote off uncollectible accounts, including the 15,076 accounts with balances of less than $25 that MEDCOM may have been authorized to terminate under the DoD FMR.

This occurred because MEDCOM officials issued guidance on aged accounts receivable that did not include the procedures necessary to comply with the DoD FMR and Defense Health Agency requirements. Furthermore, the Armed Forces Billing and Collection Utilization Solution, the DoD medical billing system implemented in FY 2016, did not include the necessary guidance to comply with the DoD FMR conditions for terminating debt.

Without adequate procedures and guidance, MEDCOM officials missed opportunities to maximize collection on 9 of the 20 accounts reviewed, valued at $1.8 million. Until MEDCOM personnel review the remaining 21,722 accounts, they risk missing the opportunity to collect up to $38.4 million for MEDCOM’s military treatment facilities to fund administrative, operating, and equipment costs; readiness training; and trauma consortium activities.

Recommendations

We recommend that the Commander, MEDCOM, review the 21,742 medical service accounts transferred by military treatment facility UBOs to ensure all appropriate collection efforts were exhausted, and obtain approval from the appropriate authoritative agency to terminate the debts, including approval by the Department of Justice or Department of the Treasury to terminate debts over $100,000. The Commander should also implement procedures for uncollectible debt, including reviewing the transferred debt, requiring documentation supporting the write-off and termination of the debt, gaining approval from the appropriate authoritative agency to terminate the debt, and documenting the approval of termination. Furthermore, the Commander should update MEDCOM guidance and establish guidance for the Armed Forces Billing and Collections Utilization Solution to ensure clear guidance is provided for medical service accounts to be terminated in compliance with the DoD FMR.

The Commander, MEDCOM; the Commander, U.S. Army Claims Service; and the Director, Defense Finance and Accounting Service Indianapolis, Accounts Receivable Directorate, should coordinate to determine the appropriate authoritative agency for approving the termination of collection actions for medical service account debts under $100,000, in compliance with the DoD FMR.

Management Comments and Our Response

The Chief of Staff, MEDCOM, responding for the Commander, MEDCOM, partially addressed the recommendations. The Chief of Staff met the intent of our recommendations to obtain approval from the Department of the Treasury or the Department of Justice to terminate uncollectible medical service accounts over $100,000, and to update MEDCOM guidance and establish guidance for the Armed Forces Billing and Collections Utilization Solution. The Chief of Staff stated that MEDCOM issued interim guidance to all UBOs, and that this guidance outlines the requirements for collections, write-offs, and adjustments, including reasons to transfer uncollectible debts and the required supporting documentation.

Both the Commander and the Director, Enterprise Solutions and Standards, responding for the Director, Defense Finance and Accounting Service Indianapolis, agreed with our recommendation to coordinate to determine the appropriate agency to approve debt termination for accounts under $100,000. The Commander, U.S. Army Claims Service, stated that on November 16, 2016, his office met with MEDCOM personnel and agreed that medical service account claims were outside the purview of his office. MEDCOM personnel agreed to seek the approval to suspend, compromise, and terminate debts from the Assistant Secretary of the Army. No further comments are required.

The Chief of Staff, MEDCOM, did not agree with our recommendation to review the 21,742 medical service accounts and to implement procedures over uncollectible medical service account debt. He stated that the errors found in our sample do not warrant the review of over 21,000 transactions. In addition, the Chief of Staff stated that the DoD FMR authorizes the write-off of certain balances for some medical services accounts, and that regulations permit the adjustments made to other accounts to remove erroneous receivables. We request that the Commander, MEDCOM, provide additional information on how he plans to resolve the recommendations. We plan to follow-up in the future to monitor implementation of the recommendations.

In addition, the Chief of Staff, MEDCOM, did not agree with the potential monetary benefits, stating that the benefits incorrectly project a limited number of errors to the entire population. We request that the Commander, MEDCOM, provide additional comments describing how he plans to review the 21,742 medical service accounts and how he plans to identify the monetary benefits after completing the review.


1 67 accounts were not included in the analysis of accounts with balances over or under $25 because MEDCOM officials did not report an uncollectible balance for these accounts.

This report is a result of Project No. D2016-D000CL-0114.000.