Dec. 19, 2018 —
We determined whether the Office of the Under Secretary of Defense (Health Affairs), Defense Health Agency (DHA), Navy Bureau of Medicine and Surgery (BUMED), U.S. Army Medical Command (MEDCOM), and Air Force Surgeon General implemented actions to correct problems identified in six prior DoD Office of Inspector General (OIG) reports related to the collection of outstanding balances of medical service accounts (accounts) for patients authorized to receive care in military medical treatment facilities. We also summarized systemic issues related to accounts identified in these prior reports, as well as new issues identified during our followup review.
The medical service accounts function includes billing, recording accounts receivable, and collecting funds for medical procedures provided to patients authorized to receive care in military medical treatment facilities. The facilities charge civilian patients who are not eligible beneficiaries for services provided and may also bill insurance, Medicare, or Medicaid on a patient’s behalf. An account is considered delinquent if the medical treatment facility has not received payment within 120 days. Once an account is delinquent, medical treatment facility personnel may transfer the account to the U.S. Treasury for collection.
The Services manage accounts at military medical treatment facilities through the Uniform Business Offices (UBOs). The DHA develops guidance, regulations, and instructions to support the Assistant Secretary of Defense for Health Affairs in administering all medical and dental programs. The National Defense Authorization Act for FY 2017 transfers authority for administration of all medical treatment facilities from the Secretary of Defense to the DHA beginning October 1, 2018.
Between August 2014 and January 2017, the DoD OIG issued six reports containing 47 recommendations to improve the management of delinquent accounts such as reviewing open delinquent accounts, collecting billing information, and prioritizing delinquent accounts. See Appendix B for a full summary of recommendations from the prior six audit reports and the status of each.
The prior six reports were based on audits performed at the following Army, Navy, and Air Force (the Services) locations: Brooke Army Medical Center, William Beaumont Army Medical Center, Naval Medical Center Portsmouth, Landstuhl Regional Medical Center, David Grant U.S. Air Force Medical Center, and MEDCOM. The reports identified that UBO management for all Services did not effectively manage delinquent accounts and that, in total, 33,859 accounts, valued at $80.2 million, were delinquent but not transferred to the U.S. Treasury for collection.
Medical treatment facilities implemented some corrective actions from the prior audit reports and improved billing processes for accounts with the implementation of the DoD medical billing system, Armed Forces Billing and Collection Utilization Solution (ABACUS); collection of patient billing information; and transfer of debt to the U.S. Treasury for collection. Specifically, the Services implemented corrective actions for 40 of the 47 prior audit report recommendations; however, we found that two of the corrective actions taken to address the recommendations were not fully implemented.
Furthermore, in this followup audit, we determined that additional actions are needed to further improve the processes the Services’ use to review and pursue collections on open and delinquent accounts.
The Services did not:
- review and pursue collections on 27,149 open delinquent accounts, valued at $77.7 million, that were identified in the prior audit reports, obtain approval from the proper authority to write off uncollectible debt as recommended in the prior audit, or update applicable regulations related to identifying termination authority;
- promptly and aggressively initiate collection action or send 34 delinquent accounts, valued at $6 million, to the U.S. Treasury for collection within the time required by the DoD Financial Management Regulation because the Services lacked sufficient resources, experienced frequent ABACUS system down times and delays in working with the insurance companies, and manually entered transactions into U.S. Treasury debt collection systems, which slowed processing times;
- implement consistent procedures for managing accounts related to Medicare and Medicaid billing, using billing transaction codes in ABACUS, and obtaining patient demographic information because DHA management did not ensure that standardized processes were in place for all the Services;
- bill patients or insurance companies for inpatient services provided from October 1, 2017, through February 12, 2018, because DHA management placed a hold on inpatient billing until all medical treatment facilities were ready to bill with the updated rates; and
- have reliable account data because data was not reconciled after being transferred from one program to another, UBO management did not inform the DHA of data transfer problems, UBO staff stated that they did not receive adequate ABACUS training, and BUMED management did not establish account processing guidance or instructions for identifying billable accounts in ABACUS, which resulted in 18,898 billable accounts, valued at $2.4 million, not being billed to the patients.
As a result, the Services were unable to determine the total number and dollar value of delinquent accounts, and they have not fully pursued opportunities to collect a potential $80.1 million on delinquent accounts and accounts not billed.
We make several recommendations to address our findings, including that the DHA Director review and process delinquent debt accounts, review and properly terminate uncollectable debt, work with the Department of Health and Human Services to resolve denied reimbursement for medical services, determine how to improve the transfer time of delinquent accounts, develop a strategy to improve Medicare and Medicaid billing, establish and implement guidance for processing accounts in ABACUS, determine which reports in ABACUS are used to identify billing and ensure those reports are accurate, provide guidance on reports used to identify accounts ready to be billed, and determine what billing process is best for all Services to use.
Additionally, we recommend that the MEDCOM Commander update the applicable regulations if MEDCOM obtains authority to terminate uncollectible debt.
We also recommend that the BUMED Surgeon General require the Naval Medical Center Portsmouth UBO to review and process the 18,898 billable accounts, and determine if all billable accounts are included in daily reviews. Furthermore, we recommend that the Surgeon General establish procedures to process accounts in ABACUS when the accounts are sent to the Centralized Receivables Service and Cross Servicing Next Generation.
Management Comments and Our Response
The DHA Deputy Director, responding for the DHA Director, agreed to review the current process to determine how to improve the transfer time of delinquent accounts, and to establish and implement guidance for monitoring and processing delinquent accounts. However, the Deputy Director did not address whether the planned actions would improve the transfer time of delinquent accounts. Furthermore, the comments did not address establishing and implementing guidance for monitoring and processing delinquent accounts to comply with the 120-day requirement. Therefore, we consider this recommendation unresolved and request additional comments in response to the final report.
The DHA Deputy Director partially agreed to work with the medical treatment facilities’ UBO management to research and review all Composite Health Care System (CHCS) transactions transferred to ABACUS and identify information that was not properly transferred to ensure that account data and status is accurate and that the accounts are billed, transferred to Treasury, or written off as appropriate. However, the Deputy Director did not clarify what specific actions the DHA will take to research and review all CHCS transactions transferred to ABACUS and ensure that account data and status is accurate and that accounts are billed, transferred to the Treasury, or written off as appropriate. Therefore, we consider this recommendation unresolved and request additional comments in response to the final report.
The DHA Deputy Director also agreed to determine which reports in ABACUS are used to identify medical service accounts for billing and reporting and require the medical treatment facility UBO personnel for all Services to review those reports to ensure that the data is accurate and reliable. However, the Deputy Director did not describe the actions the DHA will take to ensure that the Services review the reports to ensure that the data is accurate and reliable. Therefore, we consider this recommendation unresolved and request additional comments in response to the final report.
The DHA Deputy Director further agreed to provide additional training to UBO personnel for processing medical service accounts in ABACUS. However, the Deputy Director did not provide a plan that includes providing additional training to UBO personnel, beyond their current training, to address the errors identified during this audit. Therefore, we consider this recommendation unresolved and request additional comments in response to the final report.
The Deputy Director DHA agreed to all other recommendations, which we consider resolved but will remain open. We will close the recommendations once we verify that the agreed upon corrective actions were completed.
The Interim Chief of Staff of MEDCOM, responding for the MEDCOM Commander, agreed with our recommendation to update applicable regulations to identify MEDCOM as the debt termination authority if it obtains the authority. This recommendation is resolved but will remain open. We will close the recommendation once we verify that the agreed upon corrective actions were completed.
The Surgeon General, U.S. Navy Bureau of Medicine and Surgery, did not respond to the recommendations in the report. Therefore, the recommendations are unresolved. We request that the Surgeon General provide comments on the final report.
This report is a result of Project No. D2018-D000CL-0069.000.