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VA Health Care: Ineffective Controls over Medical Center Billings and Collections Limit Revenue from Third-Party Insurance Companies

GAO-08-675 Published: Jun 10, 2008. Publicly Released: Jul 10, 2008.
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Highlights

GAO previously reported that continuing problems in billing and collection processes at the Department of Veterans Affairs (VA) impaired VA's ability to maximize revenue from private (third-party) insurance companies. VA has undertaken several initiatives to address these weaknesses. GAO was asked to perform a follow-up audit to (1) evaluate VA billing controls, (2) assess VA-wide controls for collections, (3) determine the effectiveness of VA-wide oversight, and (4) provide information on the status of key VA improvement initiatives. GAO performed case study analyses of the third-party billing function, statistically tested controls over collections, and reviewed current oversight policies and procedures. GAO also reviewed and summarized VA information on the status of key management initiatives to enhance third-party revenue.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Veterans Affairs To assure that all amounts that should be billed to third-party insurers are billed in an accurate and timely manner, the Secretary of Veterans Affairs should establish procedures requiring medical center management to perform and document detailed monthly reviews of patient encounters determined to be nonbillable by coding staff to ensure they are properly coded to maximize revenue from third-party insurer billings and collections.
Closed – Implemented
The Department of Veterans Affairs (VA) established policies and procedures for reviewing and monitoring patient encounters determined to be nonbillable, which coding staff enter in VA's billing system as "reasons not billable" (RNB). Specifically, in December 2008, VA issued guidance for VHA facility supervisors to review Reasons Not Billable Reports for their facilities on a monthly basis to validate the accuracy of the RNBs entered into VA's billing system. The guidance establishes procedures for performing the monthly reviews. VA formalized the RNB review process when it issued its policy in a VHA Directive. The policy requires each Facility Director to establish appropriate controls related to RNB standard operating procedures, ensure there is a monthly review process for the Reasons Not Billable Report, and take corrective actions as necessary. The policy also requires each facility's Compliance and Business Integrity Officer, in conjunction with the facility?s Compliance Committee, to review the outcome of the monthly management reviews and analyze and document related corrective actions.
Department of Veterans Affairs To assure that all amounts that should be billed to third-party insurers are billed in an accurate and timely manner, the Secretary of Veterans Affairs should establish procedures requiring medical center management to develop and use management reports on medical center performance with respect to accuracy and timeliness of billing performance and take appropriate corrective action to maximize revenue from third-party insurer billings and collections.
Closed – Implemented
The Department of Veterans Affairs (VA) established procedures requiring medical center management to use management reports to monitor the accuracy and timeliness of third party billing determinations and take corrective action as needed. In December 2008, VA issued guidance titled Reviewing Reasons Not Billable Report Data which states that VHA facility supervisors (Revenue Coordinators or Billing Supervisors) are to review Reasons Not Billable Reports for their facility on a monthly basis. The purpose of this report is to validate the accuracy and timeliness of the reasons not billable (RNB) determinations entered into VA's billing system by VA coding staff and to take corrective actions as needed. VA formalized this review process when it issued the policy in a VHA Directive. The policy requires each Facility Director to establish appropriate controls related to RNB standard operating procedures, ensure there is a monthly review process for the Reasons Not Billable Reports, and take corrective actions as necessary. The policy also requires each facility's Compliance and Business Integrity Officer and Compliance Committee to review the results of the supervisors? review of monthly Reasons Not Billable Reports and analyze and document related corrective actions. In addition to the Reasons Not Billable Report, management at VHA facilities monitor billing timeliness using Days to Bill metric.
Department of Veterans Affairs To assure timely follow-up and documentation of unpaid thirdparty billings, the Secretary of Veterans Affairs should establish a process requiring medical centers to monitor their accounts receivable staffs' adherence to the requirement in VA Handbook 4800.14, Medical Care Debts, to follow-up on outstanding third-party accounts receivable within specified time frames to maximize revenue from third-party insurer billings and collections.
Closed – Implemented
The Department of Veterans Affairs (VA) established a process requiring medical centers to review and monitor their accounts receivable staffs' adherence to requirements regarding timelines for following up on unpaid third-party billings. In fiscal year 2008, quality assurance staff in each facility instituted monthly reviews to determine accounts receivable staffs' compliance with the required timelines. The results of these monthly reviews are provided to facility management so they can track compliance and take corrective actions as needed.
Department of Veterans Affairs To assure timely follow-up and documentation of unpaid thirdparty billings, the Secretary of Veterans Affairs should establish a mechanism requiring medical centers to monitor their accounts receivable staff adherence to VA Handbook 4800.14, Medical Care Debts, which requires documenting a brief summary of all follow-up contacts, including information on when a payment will be made or why a payment was not made, to maximize revenue from third-party insurer billings and collections.
Closed – Implemented
The Department of Veterans Affairs (VA) established a mechanism requiring medical centers to review and monitor their accounts receivable staffs' adherence to requirements regarding documenting a summary of follow-up contacts on unpaid third-party billings. In fiscal year 2008, quality assurance staff in each VHA facility began monthly reviews to determine whether staff at the facilities are entering appropriate comments in the payment system when following up on third-party accounts receivables, in accordance with VA policy. Each month, quality assurance staff select random samples of third-party receivables from every medical center and determine whether follow-up on each sampled receivable was done in accordance with VA requirements. The results of these reviews are provided to facility management to track compliance and take corrective actions as needed.
Department of Veterans Affairs To assure timely follow-up and documentation of unpaid thirdparty billings, the Secretary of Veterans Affairs should establish a process requiring medical centers to confirm that accounts receivable staff are following the requirement in Veterans Health Administration (VHA) Handbook 4800.14, Write-Offs, Decreases, And Termination of Medical Care Collections Fund Accounts Third-Party Receivable Balances, to provide a specific explanation for any adjustments to decrease third party accounts receivable from third-party insurers to maximize revenue from third-party insurer billings and collections.
Closed – Implemented
The Department of Veterans Affairs (VA) established a review process to confirm that accounts receivable staff are adhering to the requirement to provide specific explanations for any adjustments to decrease accounts receivables owed from third-party insurers. In 2009, VA Financial Quality Assurance Managers began audits of accounts receivable adjustments and terminations at each facility, based on a sample of accounts receivable, and they provide this information to facility management to track compliance with requirements related to third-party follow-up.
Department of Veterans Affairs To assure effective VA-wide oversight of billings and collections with regard to third-party insurers, the Secretary of Veterans Affairs should require VHA to establish a formal VA-wide process for managing and overseeing medical center billing performance, including development of standardized reports on unbilled amounts by category, to maximize revenue from third-party insurer billings and collections.
Closed – Implemented
The Department of Veterans Affairs (VA) established a formal review process and developed standardized reports for managing and overseeing medical center billing performance. VA's policy requires each Facility Director to establish appropriate controls related to reasons not billable (RNB) standard operating procedures, ensure there is a monthly review process for the Reasons Not Billable Reports and Encoder Case Comments Reports, and take corrective actions as necessary. The policy also requires each facility's Compliance and Business Integrity Officer and Compliance Committee to review the results of the supervisors' review of monthly Reasons Not Billable Reports and analyze and document related corrective actions. Further, VA standardized the list of "reasons not billable" (RNB) codes which facilitated the monitoring of staff compliance with third-party billing requirements.
Department of Veterans Affairs To assure effective VA-wide oversight of billings and collections with regard to third-party insurers, the Secretary of Veterans Affairs should establish procedures requiring periodic VHA-wide assessments by the Chief Business Office to document whether medical center staff are performing timely and accurately documented follow-up on outstanding third-party accounts receivable, as required in VHA Handbook 4800.14, to maximize revenue from third-party insurer billings and collections.
Closed – Implemented
In fiscal year 2008, quality assurance staff in each VHA facility began monthly reviews to determine whether staff in individual medical facilities are (1) following up on third-party accounts receivables in accordance with established timelines and (2) entering appropriate comments in the payment system when following up on third-party accounts receivables. The results of the reviews are forwarded to VHA's Chief Business Office for analysis on a VHA-wide basis. Further, according to VA, facility Internal Control Departments test adherence to the policy regarding third-party follow-up during their annual monitoring of facilities' Accounts Management Departments.

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AccountabilityBilling proceduresCollection proceduresData collectionData integrityDebt collectionDocumentationHealth care cost controlHealth care costsHealth care servicesHealth centersHealth insuranceInsurance companiesInternal controlsInvoicesMedical care cost recoveryPolicy evaluationRecords managementVeterans hospitalsMedical expense claimsPolicies and proceduresStandards (health care)