Indian Health Service:

Updated Policies and Procedures and Increased Oversight Needed for Billings and Collections from Private Insurers

GAO-10-42R: Published: Oct 22, 2009. Publicly Released: Nov 23, 2009.

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The Indian Health Service (IHS), an agency in the Department of Health and Human Services (HHS), provides health care services to American Indians and Alaskan Natives. For fiscal year 2009, Congress appropriated approximately $3.6 billion for health care services to be made available through IHS. The agency provides direct medical care, including primary care services, ancillary services, and some specialty services, through its network of facilities, including hospitals, health centers, and clinics. IHS also provides funding to direct care facilities that are operated by tribes. IHS headquarters oversees 12 area offices that cover 161 service units in 35 states. The Indian Health Care Improvement Act of 1976, as amended, authorizes IHS to collect reimbursement for services provided at IHS facilities from third-party insurers, including Medicare, the federal health insurance program for elderly and disabled individuals; Medicaid, a joint federal and state health financing program for certain low-income families and individuals; and private health insurers. IHS is allowed to retain funds collected from these insurers without a corresponding offset against its appropriations, so that all revenue collected by a facility remains with that facility, supplementing its appropriations. For fiscal year 2008, IHS reported that it collected about $795 million from all third-party insurers, of which about $94 million, or 12 percent, was collected from private insurers. The remaining 88 percent was collected from the Medicare and Medicaid programs. According to IHS, these funds were used to purchase new medical equipment and medical supplies, and to provide compensation and benefits for IHS employees. Given the importance of these collections to IHS's mission, Congress asked us to examine several areas related to IHS's billings and collections activities. Specifically, Congress asked us to review IHS's policies and procedures for writing off amounts owed to the agency by private insurers, internal control procedures related to billing and collection, and the amounts and reasons for denied claims and claims written off as uncollectible by IHS. Because IHS was unable to provide much of the information we requested on the amounts of denied and adjusted claims and amounts written off for more than 6 months after our requests for these data, this report examines (1) the design of IHS's policies and procedures for billing and collecting revenue from private insurers including write-offs of uncollectible claims, and (2) the adequacy of IHS headquarters' monitoring of area office and service unit compliance with policies and procedures for the billing and collection of revenue from private insurers.

The design of IHS's policies and procedures for billing and collection activities--as reflected in Part 5 and Part 9 of the Indian Health Manual, and IHS's Revenue Operations Manual--is generally consistent with FSIO's standard business processes for managing federal accounts receivable, which include key processes related to the four phases of IHS's business revenue cycle. For example, FSIO specifies that there typically are triggering events that require establishing a receivable as well as processes for capturing, verifying, and reviewing customer information. Consistent with these expectations, IHS's policies and procedures include specific guidance on obtaining and verifying patient data at registration and for recording these data in RPMS. IHS headquarters' monitoring activities of area office and service unit compliance with billing and collection policies and procedures are inadequate, but agency officials told us they are taking steps to increase oversight. Federal internal control standards require agency management to conduct monitoring of program quality and performance. Part 5 of the Indian Health Manual requires the Director of ORAP to monitor area office and service unit compliance with IHS policies and procedures for billing and collecting revenue through IHS-wide policy compliance reviews and internal audits. Before implementing the Web-based tool, ORAP's monitoring of policy compliance had consisted of a small number of on-site compliance reviews at IHS service units and through regular meetings with field staff.

Recommendations for Executive Action

  1. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Director of IHS should strengthen IHS's management and oversight of billing and collection activities by updating and providing additional guidance in the agency's policies and procedures for billing and collection from private insurers. As part of this effort, the Director of IHS should direct IHS officials to develop specific tools and reporting mechanisms to monitor and manage the business revenue cycle, including billing and collection, and debt management activities.

    Agency Affected: Department of Health and Human Services: Health Services Administration: Indian Health Service

  2. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Director of IHS should strengthen IHS's management and oversight of billing and collection activities by updating and providing additional guidance in the agency's policies and procedures for billing and collection from private insurers. As part of this effort, the Director of IHS should direct IHS officials to develop and establish location-specific guidance for implementing the requirements in Part 9 of the Indian Health Manual for area offices and service units to individually develop and implement debt management programs and operational plans, and direct the Area Office Directors and Service Unit CEOs to provide training at the local level to ensure the programs and plans are effectively implemented.

    Agency Affected: Department of Health and Human Services: Health Services Administration: Indian Health Service

  3. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Director of IHS should strengthen IHS's management and oversight of billing and collection activities by updating and providing additional guidance in the agency's policies and procedures for billing and collection from private insurers. As part of this effort, the Director of IHS should direct IHS officials to review and update the outdated parts of the Indian Health Manual to reflect IHS's implementation of Unified Financial Management System (UFMS).

    Agency Affected: Department of Health and Human Services: Health Services Administration: Indian Health Service

  4. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Director of IHS should strengthen IHS's management and oversight of billing and collection activities by updating and providing additional guidance in the agency's policies and procedures for billing and collection from private insurers. As part of this effort, the Director of IHS should direct IHS officials to develop a risk-based approach using the information obtained from the new data sources (i.e., the UFMS database and Web-based tool) to prioritize which service units receive future on-site compliance reviews.

    Agency Affected: Department of Health and Human Services: Health Services Administration: Indian Health Service

 

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