Opportunities To Increase VA Medical Care Cost Recoveries

HRD-84-31: Published: Feb 13, 1984. Publicly Released: Feb 13, 1984.

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The Veterans Administration (VA) generally provides free medical care to eligible veterans. However, when a veteran requires treatment of injuries suffered on the job or as the result of another person's negligent actions, VA can recover the cost of the medical care provided from the responsible third party. VA can also recover the cost of care provided to nonveterans in an emergency and to patients later found to be ineligible for VA care. GAO reviewed VA methods for establishing medical care cost recovery rates. Specifically, GAO sought to determine whether: (1) the VA medical/surgical per diem rate was adequate to recover the cost of care provided to acute care patients; (2) the national average per diem rate generated the same total charges as would individual facility rates; and (3) the rates were revised in a timely manner.

GAO found that VA use of two national average per diem rates for billing purposes resulted in: (1) an undercharging of acute medical/surgical patients and those treated at high-cost facilities; and (2) an overcharging of patients treated at low-cost facilities. GAO also determined that: (1) revised VA per diem rates did not go into effect until after the start of the fiscal year, which reduced VA billing amounts; (2) VA medical centers used various methods to develop sharing agreement rates, some of which appeared to measure costs better than others; (3) some standard indirect costs included in VA national per diem rates were not included in any of the sharing agreement rates; and (4) sharing agreements were not always renewed in a timely manner.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: VA developed recovery rates for medical, surgical, and psychiatric care which exclude certain nonacute costs. VA decided not to use separate rates for each facility because it could complicate the billing process and may increase the number of contested bills.

    Recommendation: The Administrator of Veterans Affairs should, through the Chief Medical Director, develop separate medical care recovery rates for acute and nonacute medical/surgical and psychiatric care on a facility-by-facility basis.

    Agency Affected: Veterans Administration

  2. Status: Closed - Implemented

    Comments: Guidance was published in April 1986.

    Recommendation: The Administrator of Veterans Affairs should, through the Chief Medical Director, provide more specific guidance on costs to be included in private sector sharing agreement rates to ensure that they are consistent with factors used in developing per diem rates.

    Agency Affected: Veterans Administration

  3. Status: Closed - Implemented

    Comments: Although implementation of this recommendation should result in measurable savings, GAO was not able to project those savings on the basis of the work performed during the review, and to review the savings now would require a substantial investment of staff time.

    Recommendation: The Administrator of Veterans Affairs should, through the Chief Medical Director, direct VA medical centers to renegotiate sharing agreements before they expire.

    Agency Affected: Veterans Administration


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