VA Health Care:

Collections Fall Short of Expectations

T-HEHS-99-196: Published: Sep 23, 1999. Publicly Released: Sep 23, 1999.

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Stephen P. Backhus
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Pursuant to a congressional request, GAO discussed the Department of Veterans Affairs' (VA) efforts to increase revenues from alternative sources as a way to supplement its medical care appropriations, focusing on trends in third-party collections.

GAO noted that: (1) VA's third-party collections have declined in each of the past 3 fiscal years and may decline again by the end of fiscal year (FY) 1999; (2) in FY 1998, VA collected $442 million from third-party insurers for care provided to veterans for non-service-connected conditions, down from $523 million in FY 1995; (3) in FY 1999, as of August 31, VA had collected about $388 million from third-party insurers; (4) unless VA's September collections exceed by $19 million its average monthly collections of $35 million, the annual decline in third-party collections will continue for the fourth year in a row; (5) next fiscal year, VA will experience its first full year of billing insurers on a reasonable-charges basis rather than a reasonable-cost basis; (6) however, data are insufficient to predict whether this will reverse the declining collections trend; (7) VA has tried to reverse the decline in its collections from third-party insurers; (8) three factors limit VA's ability to increase the amount it collects from private insurers--the increasing number of veterans whose primary insurance is Medicare, increasing health maintenance organization penetration, and its own efforts to increase the emphasis on outpatient care; (9) nevertheless, VA can enhance its chances of increasing collections if it ensures that the management improvements that are being implemented at some facilities are implemented throughout VA; and (10) these include overall improvements in VA medical facilities' use of good business management practices, as well as specific improvements in how facilities collect insurance information, document the appropriateness and medical necessity of care being billed, and pursue unpaid bills.

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