Billing problems to third-party insurers plague VA

Systems' failure to track payments brings into question $1.7 billion in unbilled services, GAO says.

A sample of medical centers managed by the Veterans Affairs Department failed to follow proper billing procedures on about $1.7 billion in uncollected payments to check if private insurance companies owed money to the department, according to a report released on Thursday by the Government Accountability Office.

In a study of 18 VA medical centers, GAO found that delays, billing mistakes or a lack of oversight led to the centers failing to check if $1.7 billion in fiscal 2007 should have been billed to third-party insurance companies. The medical centers have valid reasons for not billing for certain medical procedures, such as treatment received during military service, services covered by Medicare and a patient not having private health insurance. But "medical center management did not always validate the reasons for these unbilled amounts," said the report.

"VA still has significant weaknesses in their controls in billing, follow-up and collection," said Kay Daly, GAO's acting director for financial management and assurance and the one of the report's authors. "They could be obtaining hundreds of millions in revenue from third-party insurers if they addressed these weaknesses."

GAO performed the case study as a follow-up to a 2004 report that also identified failures in VA's ability to bill third-party insurers for care given at medical centers. The department often did not bill private insurance companies that covered patients treated at its facilities. The most recent report acknowledges VA has made some progress in correcting those shortcomings issue, but concludes many patient visits still are not billed to third-party insurers.

"We found that VA didn't have the full range of reports they needed to manage this at a high level perspective," Daly said. "They didn't have information on the billing and collection process or formal procedures to provide them with that information."

GAO found 10 medical centers took, on average, 109 to 146 days to bill third-party insurers. VA's goal is 60 days. "We also found these centers had significant documentation, coding, and billing errors and performed little or no management oversight of the billing function," the report stated.

GAO said the lack of reporting was closely tied to problems in the design of VA's computer systems. The Veterans Health Information Systems Architecture, or VistA, a medical records system that includes accounts receivable, operates as a stand-alone system at each medical center. That prevents officials from directly accessing individual medical center data and requires officials to call each center to ask for information.

To collect the data in one accessible location, VA developed the Performance and Operations Web-Enabled Reports System, which serves as a data warehouse for VistA data. GAO noted, however, that the system does not provide all the required standard management reports to conduct oversight and additional queries and data compilations are needed to collect the billing data.

VA has undertaken initiatives to upgrade its systems. The Clinical Data Entry program will allow the department to capture clinical data automatically during a patient's first visit. The system also will compile procedures that are expensive and conducted frequently but are not billed. VA wanted to complete the system in May 2007 but the department has yet to set a deployment date.

Another major driver in VA's efforts to optimize revenue collection is the Patient Financial Services System, which will resolve business processes and technology issues in VA's revenue collection and financial management systems.