VA Medical Care:

Increasing Recoveries From Private Health Insurers Will Prove Difficult

HEHS-98-4: Published: Oct 17, 1997. Publicly Released: Oct 17, 1997.

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Pursuant to a congressional request, GAO reviewed the Department of Veterans Affairs' (VA) efforts to recover from private health insurers the costs it incurs to provide health care services to veterans with no service-connected disabilities, focusing on: (1) those factors that limit VA's ability to recover more of its billed charges; (2) VA's ability to achieve its revenue targets by identifying factors that could decrease future recoveries and assessing the potential for VA initiatives to increase medical care cost recoveries; and (3) the way VA applies insurance payments to veterans' copayment liability for veterans in the discretionary care category.

GAO noted that: (1) attaining VA's goal to increase recoveries from private health insurance from $495 million in fiscal year (FY) 1996 to $826 million in FY 2002 will be difficult; (2) for GAO's sample, most of the charges VA was unable to recover for bills submitted to private health insurers were appropriately denied or reduced by the insurers; (3) recoveries from private health insurance dropped for the first time in FY 1996 and have continued to drop during FY 1997; (4) several factors help explain the decreases and suggest that further decreases are likely, including: (a) the declining and aging of the veteran population, meaning that VA must serve a greater proportion of veterans to maintain its current workload and that more VA users will have secondary, rather than primary, health insurance coverage in the future; (b) veterans' increased enrollment in health maintenance organizations (HMOs) and other managed care plans, and decreased enrollment in fee-for-service plans, which reduces the number of veterans covered by insurance from which VA can reasonably expect to recover; (c) changes in how insurers process VA claims that could result in refunds to insurers of overpayments that VA estimates exceeded $600 million and could reduce future recoveries by over 20 percent; and (d) shifts in care from inpatient to outpatient settings that, while both needed and appropriate, could reduce private insurance recoveries and increase recovery costs; (5) VA has a number of initiatives to address some of these problems and to help it attain its recovery goals; (6) these include legislation to: (a) allow VA to retain recoveries from private health insurance and veteran copayments as an incentive to improve the identification and pursuit of recoveries; and (b) extend lapsing authority to recover the costs of services provided to veterans for conditions unrelated to their service-connected disabilities; (7) VA's initiatives would address some, but not all, of the factors affecting future recoveries; (8) however, considerable uncertainty remains about VA's ability to achieve its revenue goal; (9) VA was unable to provide an analytical basis for its recovery projections; (10) projected increases in VA's future recoveries were not supported by or attributed to improvements related to its planned initiatives; and (11) VA's General Counsel interprets the relationship between recoveries from private health insurance and veterans' copayments as requiring that a portion of insurance recoveries to be used to reduce veterans' copayment obligations.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Matters for Congressional Consideration

    Matter: The Congress may wish to consider clarifying the cost recovery provisions of title 38 of the U.S. Code to direct VA to collect means test copayments, per diem charges, and pharmacy copayments from patients regardless of any amounts recovered from private health insurance except in instances where the insurer pays the full cost of VA care.

    Status: Closed - Not Implemented

    Comments: No action has been taken.

    Matter: The Congress may wish to take advantage of the provisions of the Health Insurance Portability and Accountability Act to authorize VA to recover the costs of service-connected treatments from private health insurance after the specified exclusionary period.

    Status: Closed - Not Implemented

    Comments: No action has been taken.

    Matter: The Congress may wish to consider giving VA the authority to disenroll veterans from the VA health care system who knowingly provide VA incomplete or inaccurate data about their incomes, employers, or insurance coverage.

    Status: Closed - Not Implemented

    Comments: No action has been taken.

    Recommendations for Executive Action

    Recommendation: The Secretary of Veterans Affairs should work with the Director, the Office of Personnel Management, to identify options for including VA facilities as preferred or participating providers under Federal Employees Health Benefit plans, including HMOs and preferred provider plans.

    Agency Affected: Department of Veterans Affairs

    Status: Closed - Implemented

    Comments: The Office of General Counsel contacted OPM but found that VA is generally not a good candidate for being a preferred provider because it would not be able to provide care to all members covered by Federal Employees Health Benefit plans. The problem also exists with becoming an HMO preferred provider. In one location, South Dakota, VA has a preferred provider arrangement, because VA is the only medical facility in that geographic area.

    Recommendation: The Secretary of Veterans Affairs should work with the Director, the Office of Personnel Management, to identify options for including VA facilities as preferred or participating providers under Federal Employees Health Benefit plans, including HMOs and preferred provider plans.

    Agency Affected: Department of Veterans Affairs

    Status: Closed - Implemented

    Comments: The Office of General Counsel contacted OPM but found that VA is generally not a good candidate for being a preferred provider because it would not be able to provide care to all members covered by Federal Employees Health Benefit plans. The problem also exists with becoming an HMO preferred provider. In one location, South Dakota, VA has a preferred provider arrangement, because VA is the only medical facility in that geographic area.

    Recommendation: The Secretary of Veterans Affairs should design physician incentives to encourage appropriate use of hospital care. Such incentives should not, however, be so strong that they would result in denial of needed hospital care.

    Agency Affected: Office of Personnel Management

    Status: Closed - Implemented

    Comments: VHA has taken a number of actions that will reduce inappropriate levels of care, and has established performance goals related to providing care in the most appropriate setting.

    Recommendation: The Secretary of Veterans Affairs should, in designing the enrollment process for the veterans' health care program, develop procedures for gathering and updating detailed information on veterans' employment, insurance, and service-connected disabilities.

    Agency Affected: Department of Veterans Affairs

    Status: Closed - Implemented

    Comments: Staff members of the Medical Care Cost Recovery Office participated in the redesign of the VAF 10-10 (now called the VAF 10-10EZ). This form now contains numerous questions regarding health insurance.

    Recommendation: The Secretary of Veterans Affairs should assign adequate resources to Medical Care Cost Recovery Program activities to protect the government's interest in reinsurers' requests for refunds of claimed overpayments.

    Agency Affected: Department of Veterans Affairs

    Status: Closed - Implemented

    Comments: Effective in fiscal year 1998, the assignment of resources to Medical Care Cost Recovery (MCCR) Program activities is made at the VISN/local level. The ability to retain resources from their collection efforts provides an incentive for VISNs to assign adequate resources to MCCR activities relative to its overall priorities. Staff are assigned to review medical records and supporting documentation as claims are submitted for overpayments by the insured. VA stated on August 13, 2003 that although this is a VISN/local level responsibility, the Veterans Health Administration will continue to stress the importance of resource support.

    Recommendation: The Secretary of Veterans Affairs should develop procedures to ensure that authority to retain health insurance recoveries would not detract from services to veterans who lack private health insurance.

    Agency Affected: Department of Veterans Affairs

    Status: Closed - Implemented

    Comments: VA believes the actions it is taking to ensure that access to care is not compromised through the Veterans Equitable Resource Allocation (VERA) system will fulfill the intent of this recommendation. Some of VA's actions include developing a tracking system to monitor special care workload relative to VERA funding allocations, improving the reporting and retrieval of VERA's underlying data, and developing a review process for allocations by Network Directors to the medical centers. VA also believes expanded enrollment provides assurance that veterans who seek care will be able to obtain it regardless of whether they have insurance or not. In addition, VHA has set up systems to measure waiting times to obtain medical appointments, as well as VA's ability to maintain access to care for certain special veteran populations such as veterans with spinal cord injuries or disorders and traumatic brain injuries.

    Recommendation: The Secretary of Veterans Affairs should establish procedures to work with state insurance commissions to ensure that exclusionary clauses inconsistent with VA's recovery authority are removed from private health insurance policies.

    Agency Affected: Department of Veterans Affairs

    Status: Closed - Implemented

    Comments: On August 13, 2003, VA reported that most health plans have eliminated exclusionary clauses that were inconsistent with VA's recovery authority. Those few that the Veterans Health Administration (VHA) now encounters are found in self-funded ERISA plans, which are those plans under the jurisdiction of the United States Department of Labor (DOL), not state insurance commissions. This issue is among the matters VHA is discussing with DOL in regard to enhancing VHA's collections from ERISA plans. Nevertheless, VHA and the Office of General Counsel still plan, for clarification and emphasis, to include a provision addressing this issue in relevant VA regulations.

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