Publicly Released: February 7, 2022
The objective of this audit was to determine whether the Defense Health Agency (DHA) paid for telehealth services in accordance with Federal and DoD guidance.
The DHA manages the TRICARE program for 9.6 million active duty, retired, National Guard, and Reserve members, including their families, survivors, and others entitled to DoD medical care. Two regional contractors, known as managed care support contractors (MCSCs), administer a network of medical providers in the continental United States that provide health care services and support to DoD beneficiaries. The contractors receive, process, and pay claims for authorized medical services on behalf of the DHA.
Telehealth is the use of information and telecommunication technology to provide medically and psychologically necessary and appropriate diagnostic and treatment services remotely. Telehealth involves a patient at an “originating site” receiving care from a provider at a “distant site.”
The DHA spent $2.9 million in FY 2018 and $4.0 million in FY 2019 for TRICARE claims coded as telehealth; in FY 2020, the DHA paid telehealth claims totaling $2.3 million through February 2020. However, use of telehealth by TRICARE beneficiaries increased in March 2020 as a result of the Coronavirus Disease–2019 (COVID-19) pandemic. As of September 2020, TRICARE telehealth payments exceeded $150 million in FY 2020.
The DHA improperly paid claims for FY 2020 telehealth services. We obtained a sample of 166 claims for FY 2020 originating site fee claims and 389 additional related claims. We received and reviewed medical records for 138 beneficiaries associated with these claims and determined that the DHA improperly paid 107 originating site fee claims totaling $2,627; we statistically projected that 69 percent of FY 2020 originating site fee payments made by the DHA were unsupported. These improper payments occurred because the DHA did not have controls in place to prevent payment when the claims for originating site and distant site services were performed by the same provider, or when the beneficiary was not present at the originating site.
Additionally, DHA officials improperly paid $1,454 for 15 distant site claims that were not coded as telehealth visits in accordance with TRICARE policy because the DHA did not have controls in place to reject improperly coded claims. The DHA also paid one claim for services inappropriate for telehealth delivery.
As a result of the improperly paid telehealth claims, we projected that the DHA potentially overpaid health care providers for originating site fees by $620,162 from October 2019 through June 2020. These funds could have been used for other critical health care services within the DoD. Additionally, telehealth visits have risen exponentially and these vulnerabilities could increase the risk of fraud, potentially resulting in a much larger amount of wasted funds. Finally, improperly coded claims may result in under- or over-reporting of telehealth use by TRICARE beneficiaries, which could adversely affect DHA resourcing decisions.
We recommend that the DHA Director:
- establish controls that prevent improper payment of originating site fee claims, improperly coded telehealth claims, and claims for services inappropriate for telehealth delivery;
- establish controls that require both patient and provider location for telehealth claims; and
- review FY 2020 telehealth claims payments to recover improperly paid claims.
Management Comments and Our Response
The DHA Director agreed with the findings and recommendations in the report. The Director stated that the TRICARE West Region MCSC implemented a system change that identifies and allows payment of originating site fee claims when billed on the same date of service but billed with a different rendering provider or rejects payment with the same rendering provider. The Director stated that the West Region MCSC ran a claims sweep project from December 18, 2020 to March 22, 2021, to correct 16,440 claims for a net recoupment of $144,102. The Director also stated that the TRICARE East Region MCSC developed a system change that results in the denial of telehealth claims when the place of service code indicates it is a telehealth claim but is submitted without a telehealth modifier. The Director further described three contract oversight tools used for identifying, monitoring, and resolving improper payment concerns or issues.
The Director’s comments partially addressed the recommendations to prevent improper payment of originating site fee claims and improperly coded telehealth claims, and to recover improperly paid FY 2020 telehealth claims. The comments did not address recommendations to prevent payment of claims for services inappropriate for telehealth delivery or to require both provider and patient location for telehealth claims. Therefore, the recommendations are unresolved. We request that the Director provide additional comments that describe the specific actions that the DHA or MCSCs will take to resolve each of the recommendations.
This report is the result of Project No. DODIG-D000AW-0147.000.