VA Needs Better Control Over Its Payments to Private Health Care Providers

HRD-85-49: Published: Aug 28, 1985. Publicly Released: Aug 28, 1985.

Additional Materials:


David P. Baine
(202) 512-7101


Office of Public Affairs
(202) 512-4800

The Veterans Administration (VA) provides health care to most veterans at its own facilities; however, when circumstances prevent veterans from traveling to VA facilities, VA authorizes them to obtain care from private health care providers. GAO evaluated the VA system for determining how much to pay private health care providers.

Under VA reimbursement criteria, the maximum reimbursable fee for any medical procedure should be at, or above the middle of, the range of fees normally charged, but should not approach the top of the range. GAO found that: (1) of the maximum fees it reviewed, most were either above or below the range under VA criteria; (2) 23 percent of the bills it examined were for fees outside the approved range; and (3) it could not determine what the total dollar effect would be if all payments were within the criteria. GAO also found that the VA system is outdated and inadequate because VA has not: (1) updated its list of medical procedures, so clinics must determine for themselves the usual fee for such procedures; (2) recognized changes in usual fees that come about because of improved technology; (3) converted to the standard system for coding medical procedures; or (4) established a system to establish conversion factors that result in appropriate fees. In addition, GAO found that VA could improve its fee schedule system by adopting criteria used by the Medicare program and by the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS).

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: VA tested the implementation of this recommendation at two medical centers and found that it increased costs from 19 to 213 percent. Based on the test results, VA considers this recommendation too costly to implement.

    Recommendation: The Administrator of Veterans Affairs should direct the Chief Medical Director to use CHAMPUS fee schedules as the temporary basis for paying private physicians and other health care providers for care provided to eligible veterans.

    Agency Affected: Veterans Administration

  2. Status: Closed - Not Implemented

    Comments: The Medicare fee schedule is based on a survey of physician-billed charges. Insurance companies contracted to maintain the system annually rank physician charges and choose the 80th percentile as the maximum allowable charge. As physicians continue to increase their charges, the maximum charge escalates. VA believes there is no incentive or means to control costs with this method.

    Recommendation: The Administrator of Veterans Affairs should direct the Chief Medical Director to use the more precise Medicare fee schedules once the automated claims processing system is fully developed.

    Agency Affected: Veterans Administration


Explore the full database of GAO's Open Recommendations »

Sep 21, 2020

Sep 16, 2020

Sep 9, 2020

Aug 21, 2020

Jul 29, 2020

Jul 15, 2020

Jul 9, 2020

Jun 9, 2020

Jun 3, 2020

Looking for more? Browse all our products here