HomeReportsAll DoD OIG Reports

Audit of Payments to the DoD for Medical Services Provided to Department of Veterans Affairs Beneficiaries at Selected Army Medical Centers DODIG-2019-073

PRINT  |  E-MAIL

 

Objective

We determined whether the Army billed and received payment for services provided to Department of Veterans Affairs (VA) beneficiaries under Health Care Sharing Agreements at selected Army medical centers. We conducted this audit in response to allegations that were made to the DoD Hotline. We performed the audit at Tripler Army Medical Center (Tripler) in Honolulu, Hawaii, and William Beaumont Army Medical Center (Beaumont) in El Paso, Texas.

Background

The DoD and VA coordinate, use, or exchange their health care resources through Health Care Resource Sharing Agreements. Public law states that the goal of resource sharing is to improve the access, quality, and cost effectiveness of the health care provided by the Veterans Health Administration and the Military Health System to the beneficiaries of both Departments. The DoD provides health care to VA beneficiaries when the beneficiaries are referred to the DoD by the VA. The VA is then supposed to reimburse the providing military treatment facilities based on reimbursement rates established in the resource sharing agreements.

Finding

We determined that Tripler and Beaumont personnel did not always bill the VA for authorized care and did not receive payment from the VA for all medical care provided to VA beneficiaries under resource sharing agreements established between the DoD and the VA.

Tripler and Beaumont personnel did not bill, or could not determine whether they billed, the VA for all eligible services because encounter data did not transfer from the scheduling system to the billing system and the scheduling system did not record laboratory, radiology, and pharmacy services provided to VA beneficiaries in the patient encounter summaries. Based on our review of sampled encounters, we found that, in 20 of 137 FY 2017 VA encounters sampled at Tripler and 17 of 93 FY 2017 VA encounters sampled at Beaumont, some elements of care did not properly cross from the scheduling system to the billing system. In addition, in 69 outpatient encounters included in the 137 Tripler encounters we reviewed, Tripler personnel did not bill the VA for doctors’ rounds in 11 encounters and clinic visits in 16 encounters. This occurred, in part, because of known errors in the scheduling system that prevented claims from transferring to the billing system.

Additionally, Tripler personnel provided VA beneficiaries care that was unauthorized and ineligible for reimbursement from the VA because Tripler personnel did not always check for a valid authorization before providing care to the VA beneficiaries. In addition, Beaumont billing personnel could not verify whether the VA authorized all of the care they provided to VA beneficiaries and billed to the VA because Beaumont personnel did not enter authorization data into the scheduling system. Although a VA referral is required for all VA outpatient appointments, Beaumont personnel believed it was unnecessary to verify authorization because the VA historically paid all claims. Beaumont personnel did not verify VA authorization in any of the 93 encounters in the Beaumont sample. Although we determined that the VA authorized all of the 93 encounters, Beaumont personnel could not provide evidence that the VA provided authorization before Beaumont providers administered the care, which could result in the VA denying payment for the care.

Additionally, according to Tripler personnel, as of May 2018, the VA Pacific Islands Health Care System had not paid $23.8 million for FY 2017 health care because VA Pacific Islands Health Care System personnel had not yet reviewed and processed the claims.

Finally, Tripler did not receive payment for some care provided to VA beneficiaries in FYs 2016 and 2017 because the Deputy Assistant Secretary of Defense (Health Resources Management and Policy) approved a settlement proposed by the VA to cover FY 2016 claims. The settlement was intended to provide payment for all of Tripler’s FY 2016 open and unpaid VA claims, and included a provision for a reconciliation to determine whether the settlement amount was determined correctly. However, after reconciliation of the settlement amount, Tripler did not receive $9.4 million of FY 2016 claims for which the settlement did not cover. VA payments become part of Tripler’s operating revenue; therefore, the settlement resulted in a loss of $9.4 million in FY 2016. The settlement also resulted in the VA improperly denying up to 9,700 FY 2017 claims for care the DoD provided to VA beneficiaries in FY 2016 because VA personnel believed that the FY 2017 claims were included in the FY 2016 settlement. These 9,700 claims represent 87 percent of all FY 2017 denials, which, according to Tripler personnel, totaled over $5.3 million as of May 2018. These FY 2017 denials reduced Tripler’s FY 2017 operating revenue.

As a result, Tripler experienced revenue shortfalls that prevented execution of planned projects and acquisitions. Furthermore, the control weaknesses we identified may exist at other sharing sites where the DoD provides medical services to VA beneficiaries, increasing the risk that the DoD will provide unauthorized and unreimbursed care to VA beneficiaries in the future.

Recommendations

Among other recommendations, we recommend that the:

  • Assistant Secretary of Defense (Health Affairs) coordinate with VA counterparts on the Health Executive Committee to develop a joint solution to improve timeliness of VA payments to Tripler; 
     
  • Defense Health Agency Director identify sources of billing errors and modify the system to prevent future errors; 
     
  • Tripler Army Medical Center Commander review and resubmit all FY 2016 and FY 2017 claims that the VA denied due to the settlement; and 
     
  • William Beaumont Army Medical Center Commander update standard operating procedures to require a valid authorization for VA beneficiaries. 

Management Comments and Our Response

The Principal Deputy Assistant Secretary of Defense (Health Affairs) (PDASD[HA]), responding for the Assistant Secretary of Defense (Health Affairs), agreed with the recommendation to coordinate with the Health Executive Committee to determine the source of payment delays at Tripler and develop a joint solution to improve timeliness of payments. The PDASD(HA) stated that the Health Executive Committee Financial Management Work Group has been investigating claim by-claim billing processes since 2014, and that its current effort is to streamline billing through the pilot Advance Payment Program. Comments from the PDASD(HA) partially addressed the recommendation. While the working group’s examination of the financial problems at this sharing site meets the intent of the recommendation, the PDASD(HA) did not explain how the Advance Payment Program, which was implemented at one pilot site as of March 2019, would improve the timeliness of payments to Tripler for care provided to VA beneficiaries. Therefore, this recommendation is unresolved. We request that the Assistant Secretary of Defense (Health Affairs) provide us with documentation that demonstrates how the Advance Payment Program will improve the timeliness of VAPIHCS payments to Tripler, and that outlines an implementation timeline for Tripler.

The PDASD(HA), responding for the DHA Director, agreed with the recommendation to identify the source of billing errors, stating that DHA personnel believe the source of the errors is in the scheduling system. The DHA Uniform Business Office will coordinate with scheduling system representatives to identify the source of errors that prevented information from transferring to the billing system. The recommendation is resolved but will remain open. We will close the recommendation once the DHA provides documentation that demonstrates that the DHA identified the system errors.

The PDASD(HA), responding for the DHA Director, disagreed with the recommendation to modify the billing system to prevent future errors, stating that the errors did not occur in the billing system and therefore it is not the billing system that needs modification. However, the PDASD(HA) stated that DHA personnel will coordinate with clinical system representatives to address scheduling system data quality. Although the PDASD(HA) disagreed, his comments meet the intent of the recommendation, which is to identify and resolve system errors that prevent billing regardless of where in the billing process the errors occurred.

The recommendation is resolved but will remain open. We will close this recommendation once the DHA provides documentation that demonstrates DHA personnel corrected the system errors that prevented billing and payment of inpatient professional fees. 

The U.S. Army Medical Command Chief of Staff, responding for the Tripler Commander, agreed with the recommendations to resubmit FYs 2016 and 2017 claims denied by the VA and stated that they completed these actions on October 31, 2018. We reviewed supporting documents that showed that Tripler personnel sent the claims to the VA. The recommendations are resolved but will remain open. We will close the recommendations when Tripler personnel provide us with a report that indicates whether the resubmitted claims were paid, rejected, or denied. 

The U.S. Army Medical Command Chief of Staff, responding for the Beaumont Commander, disagreed with our recommendation to update standard operating procedures to require a valid authorization for VA beneficiaries. However, Beaumont took other corrective actions, including updating the Medical Support Assistant Handbook, updating two standard operating procedures, and providing training for providers and staff. These actions, which were completed on February 15, 2019, meet the intent of the recommendation. We verified that Beaumont personnel updated the handbook and standard operating procedures as described in the Chief of Staff’s response. Therefore, the recommendation is closed.

This report is a result of Project No. D2017-D000CJ-0183.000.