AUDIT REPORT #18-00469-150 AUGUST 6, 2019

Office of Audits and Evaluations

VETERANS HEALTH ADMINISTRATION 

Non-VA Emergency Care 

Claims Inappropriately 

Denied and Rejected
In addition to general privacy laws that govern release of medical 

information, disclosure of certain veteran health or other private 

information may be prohibited by various federal statutes including, but not 

limited to, 38 U.S.C. §§ 5701, 5705, and 7332, absent an exemption or other 

specified circumstances. As mandated by law, the OIG adheres to privacy 

and confidentiality laws and regulations protecting veteran health or other 

private information in this report.

Report suspected wrongdoing in VA programs and operations 

to the VA OIG Hotline:

www.va.gov/oig/hotline

1-800-488-8244

The mission of the Office of Inspector General is to 

serve veterans and the public by conducting effective 

oversight of the programs and operations of the 

Department of Veterans Affairs through independent 

audits, inspections, reviews, and investigations.
VA OIG 18-00469-150 | Page i | August 6, 2019

Non-VA Emergency Care Claims

Inappropriately Denied and Rejected

Executive Summary

When veterans receive emergency care at non-VA facilities, they can file for reimbursement of 

non-VA emergency care costs. If claims are denied or rejected, non-VA facilities and providers 

can bill the veterans for some or all the costs of the emergency care services provided.

A September 2017 request from then Representative Tim Walz (Minnesota) expressed a concern 

about claims processors denying veterans’ non-VA emergency care claims to meet production 

goals and receive incentives such as high performance ratings and bonuses.1 The VA Office of 

Inspector General (OIG) conducted this audit to determine whether processors of non-VA 

emergency care claims inappropriately denied or rejected the claims, and if so, whether the cause 

was pressure to meet production standards. 

A Significant Number of Denied and Rejected Claims Were 

Inappropriately Processed, Some Leading to Wrongful Denials and 

Rejections

VA personnel who process payments of claims for medical care obtained outside VA are from 

the Claims Adjudication and Reimbursement Directorate (CAR) in the VA’s Office of 

Community Care (OCC). The audit team’s nationwide accuracy review found that an estimated 

31 percent of denied or rejected non-VA emergency care claims were inappropriately processed 

by CAR staff.2 Denied and rejected claims could shift the financial burden of non-VA care from 

VA to the veteran. Under regulations, when a claim is “denied” it is because there is not a basis 

for a payment, but a claim may also be “rejected,” which means that it cannot be decided until 

the claimant provides additional or corrected information.3 When CAR denies a claim, the 

claimant may have to pay out of pocket for his or her emergency care. 

The billed amount of inappropriately processed claims from April 1 through September 30, 

2017, that were denied or rejected was large in the aggregate—an estimated $716 million—and 

presented potential undue financial risk to an estimated 60,800 veterans. The audit team could 

not determine whether providers billed veterans for inappropriately processed claims that VA did 

not reimburse. However, the risk of undue financial burden remained for individuals who could 

ultimately be billed by the non-VA provider for their episode of emergency care. Although 

1 Throughout this report, claims processors are generally referred to as voucher examiners.

2 The audit team assessed 240 denied or rejected non-VA emergency care claims that were scanned or electronically 

received from April 1 through September 30, 2017, and processed under 38 U.S.C. § 1728 (unauthorized claims) or

§ 1725 (Millennium Bill claims).

3 A claimant can be the veteran or a non-VA provider or facility.
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claimants can appeal denied claims, CAR was not effectively monitoring veterans’ appeals of 

non-VA emergency care claims decisions. 

While not all claims-processing errors resulted in inaccurate decisions, the audit revealed that a 

portion of those denied and rejected claims should have been approved. The OIG estimated that 

about 17,400 veterans, with bills totaling at least $53.3 million, were negatively affected during 

the audit period. The OIG estimated that if corrective actions are not taken, these errors could 

result in $533 million in improper underpayments to claimants over five years.4

The remaining processing errors are also significant, as claimants did not receive complete and 

accurate information regarding why their claims were not approved. In other words, the 

procedural errors created a risk that claimants could not effectively respond with necessary 

information to obtain claim approval and payment.

OCC’s CAR Culture Created Pressure for Timely Production

The audit found that the OCC’s CAR placed more emphasis on the number of claims processed 

than the accuracy of the claims decisions. Prioritizing production over quality stemmed from a 

backlog of unprocessed claims more than 30 days old, which OCC and CAR leaders tried to 

reduce. At the start of fiscal year (FY) 2016, the inventory of aged claims was about 482,000 

claims out of 1.7 million (28 percent).5 The initial goal in 2016 was to process and pay at least 

85 percent of authorized non-VA care claims within 30 days (and 45 days for unauthorized 

non-VA emergency care claims) and reduce the claims backlog to less than 10 percent of the 

total inventory. By 2017, that goal increased to 98 percent of claims. Even with these goals, 

Veterans Health Administration (VHA) data showed the inventory of aged claims had increased 

to 36 percent of all claims by November 2018. 

To address the congressional request, the audit team conducted interviews with 182 CAR staff 

and leaders, reviewed survey responses from 435 CAR staff, assessed 180 denied and 60 rejected 

non-VA claims that were scanned or electronically received during the audit period, and 

reviewed relevant email records. Since at least December 2016, OCC and CAR leaders have 

discussed and developed strategies to process more claims.

6

Interviews revealed that voucher 

examiners received a work-production credit when they rejected or denied a claim, or sent the 

claim for payment, but did not receive credit for researching the claim and then suspending it for 

clinical review. 

4 To project the monetary benefit over the next five years, the audit team multiplied the estimated financial impact 

during the six-month period to obtain a yearly rate. 

5 Aged claims are authorized claims over 30 days old and unauthorized claims over 45 days old.

6 Appendix A provides additional details on instances of concerted claims-processing efforts, and the emphasis on 

timeliness, to meet goals and reduce backlogs.
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Interviews and survey responses showed that some voucher examiners were verbally directed or 

encouraged to deny non-VA emergency claims to meet production standards. Additionally, some 

examiners who had not been directly encouraged to reject or deny claims responded that they 

still felt the CAR culture created “systemic pressure to favor speed over accuracy.” Overall, the 

responses showed that the claims-processing environment focused on production and prioritized 

quantity over quality.

Through interviews, the audit team identified factors in CAR’s claims-processing environment 

that staff considered to be incentives (such as overtime and telework privileges) that were tied to 

meeting or exceeding production targets. OCC policy instructs supervisors to authorize overtime 

only to examiners who meet performance standards. Examiners felt that supervisors incentivized 

overtime opportunities based on production outcomes. Similarly, telework opportunities were 

tied to the quantity of claims processed. Examiners who did not consistently meet the production 

numbers were not considered for overtime and had their telework privileges removed. Examiners 

also earned bonuses when they exceeded performance standards. The FY 2017 annual bonuses

awarded to eligible voucher examiners at general schedule-4 (GS-4) through GS-6 pay levels

were $500 for an outstanding rating and $350 for an excellent rating. Although performance 

ratings are directly tied to performance bonuses, the OIG did not find that performance bonuses 

were a driving factor for examiners to inappropriately process claims to meet production 

standards. While production standards were tied directly to performance evaluations and 

overtime and telework opportunities, accuracy standards did not hold a similar weight.

CAR Lacked Sufficient Quality Controls

Senior voucher examiners were held to a production standard of processing 13 unauthorized or

Millennium Bill (Mill Bill) claims per hour to receive a fully successful performance rating, and 

15 of these claims per hour to receive an exceptional rating.7 The accuracy performance standard

required processing 96.5 percent of claims accurately to receive a fully successful rating and 

98.5 percent to receive an exceptional rating. The audit found that standards for accurate claims 

processing were unofficial and inconsistently monitored from region to region. Even though 

performance evaluations for voucher examiners included an accuracy standard, CAR did not 

have an accuracy assessment policy or standardized practice. These accuracy standards were 

inconsistently applied because they were based on supervisory review and spot checks for 

potential errors at the local level. 

Nearly half the voucher examiners who responded to the audit team’s survey said they were not 

aware of supervisors reviewing any of their claims for accuracy. Furthermore, voucher 

7 Unauthorized claims are for reimbursement of unauthorized care for veterans with service-connected disabilities 

that meet certain administrative and clinical eligibility requirements under 38 U.S.C. § 1728. Millennium Bill claims 

are for reimbursement of unauthorized care for veterans with nonservice-connected disabilities that meet certain 

administrative and clinical eligibility requirements under 38 U.S.C. § 1725.
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examiners reported that the production and accuracy standards at the fully successful level were 

too high and did not allow enough time to do a thorough and complete job of assessing claims. 

Because, according to CAR data, nearly 80 percent of unauthorized and Mill Bill claims are 

denied or rejected, it is especially important that they be denied or rejected for accurate reasons.

Additional Barriers Affected Claims Processing 

Clear communication about claims status is critical for veterans to respond to denials and 

rejections in a timely manner. However, during the course of the audit, the OIG team found a 

significant backlog in mail processing that created a risk that veterans would not be informed of 

a claims decision or would be informed too late to resubmit or appeal. Backlogs at three facilities 

showed stacks of unsent claims decision letters printed between one and two months prior to the 

OIG site visits. The outgoing mail typically included claim rejection and denial letters that 

needed time-sensitive responses, such as updating claim information or appealing a denial. 

Finally, since FY 2017 the OCC experienced several leadership changes, including three CAR 

directors. While the findings in this report cannot be tied directly to the lack of stability in key 

leadership positions, it provided the context in which problems were allowed to continue without 

remediation.

VHA’s Recent Actions

During this audit, the OIG team provided interim briefings to CAR leaders. In May 2019, VHA 

officials reported to the audit team that they had implemented process improvements and 

initiatives that affect claims processing nationwide and the environment in which claims are 

processed. The changes that VHA reported include standardizing denial and rejection reasons, 

reviewing denial and rejection reasons on clinical decisions, offering regular training, and 

developing plans and strategies that focus on quality. The OIG has not verified the 

implementation of these actions.

What the OIG Recommended

The audit team concluded that there was a significant risk that some of the errors identified 

resulted from the environmental pressure to meet production targets, insufficient quality 

assurance of claims-processing accuracy, and incentives that were associated with meeting 

production targets. 

The OIG made 11 recommendations to improve the accuracy of non-VA emergency claims 

processing, including recommendations to address the culture of prioritizing claims productivity 

over accuracy, improve performance evaluation standards and review processes, tie incentives to 

all performance standards rather than just production quantity, reevaluate inappropriately 

processed claims, and improve internal and external communication about claim status.
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Management Comments

The Executive in Charge, Office of the Under Secretary for Health, concurred with 

recommendations 1–4, 7–9, and 11; concurred in principle with recommendations 5, 6, and 10;

and submitted acceptable corrective action plans for all recommendations. The OIG will monitor 

implementation of planned actions and will close the recommendations when VA provides 

sufficient evidence demonstrating progress in addressing the intent of the recommendations and 

the issues identified. 

LARRY M. REINKEMEYER

Assistant Inspector General

for Audits and Evaluations
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Contents

Executive Summary......................................................................................................................... i

Abbreviations............................................................................................................................... viii

Introduction......................................................................................................................................1

Results and Recommendations........................................................................................................6

Finding 1: A Significant Number of Denied and Rejected Claims Were Inappropriately 

Processed, Some Leading to Wrongful Denials and Rejections.........................6

Impact of Inappropriate Processing ............................................................................................7

Evidence and Examples of Inappropriately Processed Claims and Wrongful Denials ..............7

Recommendations 1–4..............................................................................................................14

Finding 2: OCC’s CAR Culture Created Pressure for Timely Production ...............................17

Recommendations 5–8..............................................................................................................24

Finding 3: CAR Lacked Sufficient Quality Controls Over Denied and Rejected Claims........26

Recommendation 9....................................................................................................................28

Finding 4: Additional Barriers Affected Claims Processing.....................................................30

Recommendations 10–11..........................................................................................................33

Appendix A: Timeline of OCC Efforts to Meet Claims-Processing Goals...................................36

Appendix B: Background ..............................................................................................................39

Appendix C: Scope and Methodology...........................................................................................45

Appendix D: Statistical Sampling Methodology ...........................................................................47
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Appendix E: Potential Monetary Benefits in Accordance with Inspector General Act 

Amendments..................................................................................................................................51

Appendix F: Survey Results ..........................................................................................................52

Appendix G: Management Comments...........................................................................................57

OIG Contact and Staff Acknowledgments ....................................................................................69

Report Distribution ........................................................................................................................70
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Abbreviations

CAR Claims Adjudication and Reimbursement

CFR Code of Federal Regulations

eCAMS Electronic Claims Adjudication Management System

FBCS Fee Basis Claims System

FY fiscal year

GAO Government Accountability Office

GS General Schedule

OCC Office of Community Care

OIG Office of Inspector General

U.S.C United States Code

VACC VA Community Care

VHA Veterans Health Administration

VISN Veterans Integrated Service Network
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Non-VA Emergency Care Claims

Inappropriately Denied and Rejected

Introduction

When a veteran receives emergency care at a non-VA facility, the claimant can file for 

reimbursement of non-VA emergency care costs. The claimant requesting payment or 

reimbursement may be the provider of care, the veteran who paid for the treatment, or a person 

or organization that paid for such treatment on behalf of the veteran. The VA Office of Inspector 

General (OIG) conducted this audit to determine whether VA medical claims processors in the 

Veterans Health Administration (VHA), Office of Community Care (OCC), inappropriately 

denied or rejected non-VA emergency care claims, and if so whether the cause was pressure to 

meet production standards. 

The OIG initiated this audit in 2017 at the request of then Congressman Tim Walz (Minnesota), 

the former Ranking Member of the U.S. House of Representatives’ Committee on Veterans’ 

Affairs. Senator Tammy Baldwin (Wisconsin) and then Senator Claire McCaskill (Missouri) 

made similar requests. The congressional requests asked the OIG to investigate whether VA 

OCC’s production standards incentivize employees to deny non-VA emergency care claims, and 

whether employees were directed or encouraged by VA managers to deny veterans’ claims in 

order to meet production standards. Then Congressman Walz was concerned that VA’s OCC 

“has created perverse incentives for its claims processors to deny veterans’ emergency care 

claims to meet production goals and in turn receive high performance appraisal ratings and 

bonuses.” 

The OIG concluded that an estimated 31 percent of denials and rejections were inappropriately 

processed during the review period, and that undue production pressures combined with lack of 

effective quality assurance measures were the cause. This inappropriate processing led to a 

significant number of claims being denied or rejected that should have been approved, and 

occurred because there is no effective quality control process, and leadership has been in 

constant flux. This audit also identified issues with mail processing, which can cause 

inappropriate denials and leave veterans in the dark regarding the status of their claims. 

Why This Is Important

It is critical that VHA staff process claims for non-VA emergency care in an accurate and timely 

fashion. When these claims are denied, non-VA facilities and providers can bill veterans for 

some or all the costs of the emergency care services provided. Therefore, inappropriately denied 

or rejected non-VA emergency care claims present a risk of substantial, undue financial burden 

on veterans. 

When a claim is denied or rejected, the financial burden could shift to the veteran. The billed 

amount of inappropriately processed claims from April 1 through September 30, 2017, that were 

denied or rejected was large in the aggregate—an estimated $716 million—and presented
Non-VA Emergency Care Claims Inappropriately Denied and Rejected

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potential undue financial risk to an estimated 60,800 veterans. Although the audit team could not 

determine whether providers billed veterans for inappropriately processed claims that VA did not 

reimburse, the risk of undue financial burden remained for individuals who may ultimately be 

billed by the non-VA provider for their episode of emergency care. 

Of the inappropriately processed denials and rejections, the audit reveals that a portion of those 

claims should have been approved. The OIG estimated about 17,400 of the 60,800 veterans—

with bills totaling at least $53.3 million—were negatively impacted during the audit period. The 

remaining processing errors are also significant, as claimants did not receive complete and 

accurate information regarding why their claims were not approved. In other words, the 

procedural errors created a risk that claimants could not effectively respond with necessary

information to potentially obtain approval and payment of the claim.

Denial or Rejection of Non-VA Emergency Care Claims

Title 38 of the United States Code (U.S.C.) authorizes payment or reimbursement to a claimant 

for emergency treatment provided to veterans meeting specific eligibility criteria. Three sections 

of 38 U.S.C. provide VA authority to pay non-VA emergency care claims.

8

To qualify for payment or reimbursement, each non-VA emergency care claim must meet 

administrative and clinical criteria for eligibility under the appropriate legal authority. Voucher 

examiners and clinical review nurses determine if the claim meets eligibility criteria (illustrated 

in appendix B).9

OIG’s analysis of claims data indicates claims are generally denied because 

· The claimant did not meet the filing requirement deadline,

· A VA facility was determined to have been available, or

· The condition was determined not to be an emergency.10

Claims are generally rejected because they are missing necessary information such as place of 

service, codes, medical records, or correct patient information. When a claim is rejected, a notice 

 

8 38 U.S.C. § 1703, Contracts for hospital care and medical services in non-Department facilities, defines the 

requirements for contracting of “authorized” non-VA emergency care. These types of claims are referred to as 

authorized claims; 38 U.S.C. § 1728, Reimbursement of certain medical expenses, defines the requirements for 

reimbursement of “unauthorized” care claims for service-connected disabilities. These types of claims are referred to 

as unauthorized claims; 38. U.S.C. § 1725, Reimbursement for emergency treatment, defines the requirements for 

reimbursement of “unauthorized” care claims for nonservice-connected disabilities. These types of claims are 

referred to as Millennium Bill (otherwise known as Mill Bill) claims.

9 VHA’s Community Care Eligibility Criteria for Emergency Care lists the administrative and clinical requirements 

under 38 U.S.C §§ 1703, 1728, and 1725.

10 VA availability is generally based on a clinical determination of distance, nature of condition, and ability of the 

VA facility to render needed emergency treatment.
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is sent to the claimant requesting additional information to process the claim. The claimant must 

provide additional information within the prescribed time frame.

Organizational Structure 

VHA OCC supports veterans who obtain medical care and services through non-VA providers 

and is led by the Deputy Under Secretary for Health for Community Care. A primary service line 

in OCC is Delivery Operations. Staff in Delivery Operations manage all programs that allow 

veterans and their family members to receive care and services outside of VA, including the 

programs that pay for such care. Delivery Operations includes the Claims Adjudication and 

Reimbursement (CAR) function. Since fiscal year (FY) 2017 the leadership chain of VHA’s 

OCC and CAR experienced several changes, including three directors of CAR.

CAR personnel process payments of claims for medical care obtained outside of VA, and the 

director of CAR reports to the executive director of OCC’s Delivery Operations. During the 

scope of this audit, data indicated there were about 1,300 claims-processing staff who receive, 

research, and adjudicate claims, and about 130 licensed nurses to review the clinical eligibility of 

veterans’ non-VA care claims. CAR also leveraged about 350 contract staff to assist in verifying 

and distributing incoming claims.

The Claims Decision-Making Process

CAR staff process claims through the Fee Basis Claims System (FBCS), the official system of 

record for all non-VA care claims adjudication. As shown in Figure 1, when processing a claim, 

voucher examiners research the veteran’s health records and document necessary information for 

claim adjudication, such as dates of service and the date the claim was filed with VA. Voucher 

examiners review the administrative eligibility requirements for the three payment authorities in 

hierarchical order to determine the appropriate payment authority to process the claim (Figure 2). 

The voucher examiner may deny or reject the claim based on its failure to meet administrative 

eligibilities, or if instructed by clinical staff that it does not meet clinical eligibilities.

Figure 1. General steps to process non-VA emergency care claims 

(Source: VA OIG analysis of legal authorities, as described in footnote 8 and VHA policy)

1

•Voucher examiner checks veteran health records for 

information needed to process the claim

2

•Voucher examiner determines administrative eligibility—that 

is, which payment criteria the claim meets 

3

•Voucher examiner sends the claim for clinical review, or 

denies or rejects it based on lack of administrative eligibility
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When notification of emergency care is not received within 72 hours of admission, the claim 

should be considered under the second two authorities—unauthorized and Mill Bill—in 

sequence. When considering a claim under these two authorities and when administrative 

eligibility is met, the claim is suspended for clinical review. A clinical review nurse researches 

the claim and the veteran’s records before documenting a final claim decision on the clinical 

tracking record. The nurse also researches the appropriate payment authority that applies to the 

claim. The claim is routed back to a voucher examiner for final adjudication based on the clinical 

review instructions. Payment of each claim for an episode of care occurs only if the claim meets 

the administrative and clinical requirements of the eligible payment authority.

Figure 2. Precedence of legal authorities for processing non-VA emergency care claims

(Source: VA OIG analysis of legal authorities) 

In FY 2017, CAR data shows that voucher examiners processed over 4.5 million non-VA 

emergency care claims.11 Figure 3 illustrates the percentage of claims that CAR accepted, 

denied, and rejected.

 

11 The 4.5 million claims did not include authorized non-VA emergency care claims. The OIG identified the 

FY 2017 emergency care claims data using methodology provided by CAR. During the sample review of claims

from this population, the audit team identified a number of claims that were not for emergency treatment but for an 

office visit or care for a nonveteran. Therefore, the total number of claims identified using the CAR parameters may 

overstate the number of actual non-VA emergency care claims.

Authorized

(§1703)

•In order for a claim to meet 

authorized eligibility, VA 

must be notified within 72 

hours of admission. 

Unauthorized

(§1728)

•When a claim does not meet 

authorized eligiblity criteria, 

the voucher examiner should 

then review against 

unauthorized eligibility 

criteria. 

Mill Bill

(§1725)

•If a claim does not meet 

eligibility criteria under either 

an authorized or 

unauthorized claim, the 

voucher examiner then must 

review the claim under Mill 

Bill eligibility criteria. 
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Figure 3. The percentage of non-VA emergency care claims (not including authorized claims) that 

CAR accepted, denied, and rejected

(Source: Non-VA emergency care claims decisions for FY 2017; derived from VA’s Corporate Data 

Warehouse)

What the OIG Did

The scope of this audit focused on non-VA emergency care claims-processing activities and 

oversight by OCC CAR personnel nationwide. The audit work included site visits to nine CAR 

locations.

12 The audit team’s findings in this report are drawn from

· Interviews with 182 staff and leaders, 

· Observations of claims-processing activities, 

· Survey responses from 435 CAR staff in every CAR region,13

· Assessments of a statistically selected sample of 180 denied and 60 rejected non-VA 

emergency care claims that were scanned or electronically received from April through 

September 2017, and

· Reviews of relevant VA email records.

Appendixes C and D provide additional details on what the audit team did, and appendix F

provides additional details on the survey responses.

 

12 The OIG team conducted site visits from January through May 2018 to the following locations: Cleveland, Ohio 

(Region 1); Columbia, Missouri (Region 3); Denver, Colorado (Region 4); Kansas City, Missouri (Region 3); 

Minneapolis, Minnesota (Region 4); Perry Point, Maryland (Region 2); St. Cloud, Minnesota (Region 4); 

Vancouver, Washington (Region 5); and Washington, DC (Region 2).

13 The OIG distributed an electronic survey to 1,333 CAR staff.

Accepted,

22%

Denied,

15%

Rejected, 

63%
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Results and Recommendations

The following OIG findings are discussed in this report:

· A significant number of denied and rejected claims were inappropriately processed, some 

leading to wrongful denials and rejections. 

· OCC’s CAR culture created pressure for timely production.

· CAR lacked sufficient quality controls over denied and rejected claims.

· Additional barriers affected claims processing. 

Since FY 2017, the OCC experienced several leadership changes, including three CAR directors. 

While the findings in this report cannot be tied directly to the lack of stability in key leadership 

positions, it provided the context in which problems were allowed to continue without 

remediation.

Finding 1: A Significant Number of Denied and Rejected Claims Were 

Inappropriately Processed, Some Leading to Wrongful Denials and 

Rejections 

Nationwide, the audit team determined that claims processors rejected or denied non-VA 

emergency care claims inappropriately an estimated 31 percent of the time during the review 

period. When CAR denies claims, the claimant—which can ultimately be the veteran—is 

responsible for paying for the care.

The audit team assessed 240 denied or rejected non-VA emergency care claims that were 

scanned or electronically received from April 1 through September 30, 2017, and processed 

under 38 U.S.C. §§ 1728 (unauthorized claims) and 1725 (Millennium Bill claims).

14 To 

determine whether claims were inappropriately processed, the audit team reviewed claims 

against authorized, unauthorized, and Mill Bill criteria to assess whether the claims were 

administratively eligible for payment. Generally, processing errors occurred because voucher 

examiners inconsistently applied claims adjudication criteria. 

The audit team projected the sample review results to the population of denied and rejected 

non-VA emergency care claims and determined that CAR inappropriately processed an 

estimated 196,000 of 632,000 of those claims (31 percent), affecting about 60,800 veterans. 

Inappropriately processed claims resulted in either a wrongful denial or rejection, or an increased 

risk that claimants would not take the necessary actions to respond to the claims decision

because they did not receive an accurate reason why their claim was not approved.

 

14 The 240 claims consisted of 180 denied and 60 rejected claims. This consisted of 30 denied and 10 rejected claims 

from each CAR region, and as a result of the congressional requests, the team reviewed an additional 30 denied and 

10 rejected from the CAR facilities in Minneapolis and St. Cloud, Minnesota, which are located in Region 4.
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Impact of Inappropriate Processing

To determine whether claims should have been approved, the audit team assessed the claims to 

determine if they met specific payment criteria and collaborated with OIG’s Office of Healthcare 

Inspections to determine if the claims were clinically eligible for payment. For the projected 

196,000 inappropriately processed claims, CAR staff should have approved approximately 

45,000 claims for payment for about 17,400 veterans.

The processing errors did not always result in an inaccurate decision. However, these errors are 

significant because they increase the risk that claimants would not take the necessary actions to 

respond to the claim decision because they did not receive an accurate reason why their claim 

was not approved. The audit team estimated that for 151,000 of 196,000 inappropriately 

processed claims, voucher examiners generally should have either routed claims to CAR nurses 

for clinical review, suspended the claims, denied the claims with appropriate denial reasons, or in 

some instances rejected the claims for additional support. 

Evidence and Examples of Inappropriately Processed Claims and 

Wrongful Denials

The estimated 632,000 claims consisted of 170,000 denied claims and 462,000 rejected claims. 

Of the estimated 196,000 processing errors, 81,500 were denied claims and 114,000 were 

rejected claims.15 The claimant then has the burden of appealing a denied claim or resubmitting 

information for rejected claims, both of which result in additional processing for CAR staff. 

The audit team’s nationwide accuracy review found a more significant error rate among denied 

claims (48 percent) than rejected claims (25 percent). Therefore, the following sections and 

examples focus on the different ways that CAR staff inappropriately processed denied claims.

Inappropriately Denied Claims

The audit determined that CAR inappropriately processed an estimated 81,500 of the 170,000 

claims they denied (48 percent). Figure 4 presents the processing error rates based on the volume 

of denied claims per region. For example, of the claims denied by Region 3 voucher examiners, 

an estimated 70 percent were processed inappropriately.

 

15 Estimates may not sum exactly due to the rounding.
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Figure 4. Estimated processing error rates for denied non-VA emergency care claims per region.

Note: Information in the figure is based on the projected overall likelihood that an error would occur 

within each region. The differences in error rates displayed in Figure 4 are statistically significant 

between Region 1 and Region 3, Region 2 and Region 3, and Region 3 and Region 4. There is no 

statistically significant difference in error rates between regions unless stated otherwise.

(Source: VA OIG statistical sample analysis, projected results)

Inappropriately Denied When Reviewed Under Incorrect Payment 

Authority

The audit team found that voucher examiners did not always follow the hierarchy of payment 

authorities when reviewing claims, and therefore did not always forward the claim to an OCC 

clinician for clinical eligibility review. 

Example 1 

A veteran presented to a non-VA emergency department with the chief complaint 

of seizures on July 5, 2017. This veteran was 50-percent service-connected 

disabled and contacted VA within 72 hours of being admitted to the emergency 

department. Based on this information, the claim met eligibility criteria for an 

authorized claim; however, a voucher examiner denied this claim with the reason 

“Denied because of 38 U.S.C. § 1725 No VA Treatment in Past 24 Months" 

without a clinical review. Since this veteran met the administrative eligibility 

criteria, the audit team concluded that this claim should have been assessed by a 

clinician to confirm whether the care rendered was related to a service-connected 

disability or an adjunct condition. The audit team found that not only was this 

claim not assessed by a clinician, but a voucher examiner inappropriately 

40%

33%

70%

47%

50%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Region 1 Region 2 Region 3 Region 4 Region 5
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completed the required clinical tracking record. The voucher examiner made the 

assessment that the veteran’s service-connected disability was not related to the 

emergency episode of care, and the claim was ultimately denied. The audit team 

determined that the claim was administratively eligible under a different 

authority, and the veteran’s history of VA treatment was not applicable. 

CAR concurred that this claim was inappropriately denied and that the voucher 

examiner should have only documented the administrative eligibility. This 

inappropriate denial potentially resulted in the non-VA provider billing the 

veteran about $15,000.

Inappropriately Denied When Administratively or Clinically Eligible

Voucher examiners inappropriately denied claims when the claim was administratively or 

clinically eligible, such as denying a claim for not being timely filed when it was, or not 

determining whether a veteran had received medical services within the past 24-month period. 

As a result, voucher examiners did not always forward the claim to clinical staff for review and 

potential approval.

Example 2

A nonservice-connected disabled veteran presented to, and was subsequently 

discharged from, a non-VA emergency department on March 9, 2017. VA 

received an electronic claim for the non-VA emergency care on May 13, 2017, 

which was 65 days from the date of discharge. The audit team noted that the 

claim did not meet eligibility criteria for an authorized claim or an unauthorized 

claim; therefore, the claim should have been reviewed against Mill Bill eligibility 

criteria. Mill Bill eligibility criteria require that the claim be filed within 90 days 

of the date of discharge from the facility that provided the emergency treatment.

The audit team determined that the voucher examiner inappropriately applied 

OCC’s criteria and denied this claim for not being timely filed. CAR agreed with 

the audit team’s assessment of this claim.
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Inappropriately Denied When Other Health Insurance Was Present

Voucher examiners inappropriately denied claims when the veteran had other health insurance, 

instead of holding the claims for future processing.16 Based on OIG’s assessment of CAR data, 

CAR denied about 14,000 claims for the reason “Other Health Insurance Present” during 

FY 2017.

Example 3

A veteran with active Medicare insurance presented to a non-VA emergency 

department on July 17, 2017. The voucher examiner administratively reviewed the 

claim and appropriately routed the claim to the clinician for a clinical review. 

Based on the clinical tracking record, the clinician determined that the emergency 

episode of care was not related to a service-connected or adjunct condition, and 

the claim was subsequently reviewed against Mill Bill eligibility criteria. At the 

time, guidance from CAR leaders instructed voucher examiners to suspend claims 

for veterans that had active health insurance. The voucher examiner 

inappropriately applied criteria and denied this claim with the reason of “Other 

Health Insurance Present” when the claim should have been suspended. CAR 

agreed with the audit team’s assessment of this claim.

Recommendation 1 addresses the need for VHA to reevaluate all claims denied after April 8, 

2016, for the reason of “other health insurance” for appropriate corrective action.

Clinical Errors Resulted in Inappropriate Denials

CAR clinical review nurses did not always appropriately determine clinical eligibility, which 

resulted in inappropriately denied claims. The audit team consulted with the OIG Office of 

Healthcare Inspections to determine if sample claims met clinical eligibility. The OIG Office of 

Healthcare Inspections assessed claims to determine if 

· The episode of care was clinically emergent, or considered emergent by a prudent 

layperson,

· A VA medical facility was feasibly available, and

· Emergency care rendered was related to the veteran’s service-connected disability.

 

16 On April 8, 2016, the U.S. Court of Appeals for Veterans Claims ruled that Congress intended that veterans be 

reimbursed for the portion of their emergency medical costs not covered by other health insurance and for which 

they would otherwise be personally liable (Staab v. McDonald, 28 Vet. App. 50 (2016). The Bulletin, 5, no. 9, (April 

28, 2016), a publication for the non-VA medical care community, instructed that all Mill Bill claims subject to other 

health insurance criteria must not be rejected or denied, and they must be held until new guidance is developed. 

Effective January 9, 2018, VA revised 38 CFR § 17.1005 concerning payment or reimbursement for emergency 

treatment for nonservice-connected conditions at non-VA facilities. 
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The OIG determined that CAR clinical review nurses should have clinically approved some of 

the non-VA emergency care claims in the audit sample because the episode of care met the 

definition of emergency given by the authority under which the claim might qualify for payment. 

In other cases, a VA medical facility was not feasibly available, or the veteran did obtain 

emergency care in relation to a service-connected condition. 

Inappropriately Denied for Other Reasons

· Voucher examiners denied claims for the reason “not timely filed,” but the paper claim 

did not have a date stamp. Without a date stamp on the claims, the voucher examiners did 

not have assurance that the claims were not filed on time. The audit team observed 

unprocessed mail several weeks old at visited CAR facilities. Some voucher examiners 

told the audit team that they date stamp everything, some examiners told the team they 

date stamp only medical records, and other examiners told the audit team they did not 

date stamp incoming mail at all. Mail deficiencies are discussed further in a subsequent 

section of this report. 

· Voucher examiners denied claims without a clinical assessment to confirm that the 

veteran had not received VA treatment in the past 24 months.

17

· Claims were denied for third-party liability instead of rejected, but no evidence of a 

third-party liability existed.18 Voucher examiners could not reject claims for third-party 

liability because the reason is no longer on FBCS’s list of standard reasons. As a result, 

the audit team identified claims that were denied for third-party liability instead of 

rejected, but no evidence of a liability existed. Voucher examiners should have rejected 

the claim to obtain further support of a third-party liability or exhaustion of such payment 

coverage.

· Voucher examiners did not follow clinical direction. For example, a clinician determined 

that an episode of care was eligible and should be approved against unauthorized 

 

17 Per 38 CFR §§ 17.1002(d) and 17.1006, a clinician has to make the determination that no VA treatment was 

provided in the past 24 months. Based on the CAR Standardized Administrative and Clinical Review Template, the 

voucher examiner was responsible for determining if a veteran was enrolled and received medical services within a 

24-month period. However, neither the template nor the training provided to voucher examiners explains that a 

clinician is needed to make this determination.

18 Under 38 U.S.C. § 1728, VA acts as secondary payer when a third party is financially responsible for coverage of 

emergency treatment expenses received for service-connected conditions. In some cases, under 38 U.S.C. § 1725, 

VA may act as secondary payer when certain third-party liability exists for emergency treatment received for 

nonservice-connected conditions (e.g., situations involving auto insurance or workers’ compensation claims). For 

such instances, VA coverage is limited to the amount for which the veteran is personally liable after the amount of 

third-party coverage (e.g., exhausting coverage of automobile personal injury protection insurance coverage). The 

Bulletin, 3, no. 13 (June 26, 2014), states the rejection reason included “clarification of auto insurance vs. other 3rd 

party liability processes and requirements. It is imperative that sites utilize this rejection reason and forward the 

letter prior to denying a claim for third party liability.”
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eligibility criteria, but a voucher examiner inappropriately denied the claim for failure to 

meet obsolete Mill Bill eligibility criteria. 

· Voucher examiners used an incorrect denial reason. 

· Voucher examiners inappropriately made a clinical assessment. 

Inappropriately Rejected Claims

Claims are generally rejected because they are missing necessary information such as place of 

service, codes, medical records, or correct patient information. In this situation, a notice is sent to 

the claimant requesting additional information to process the claim. 

While the audit team’s accuracy review found a more significant error rate among denied claims, 

the audit team determined that CAR inappropriately processed an estimated 114,000 of 462,000 

of the claims they rejected (25 percent). When rejected, the claimant has the burden of timely 

providing additional information based on the rejection reason. The audit team determined that 

CAR staff inappropriately rejected claims for the following reasons:

· The voucher examiner did not identify the medical records that were available.

· The voucher examiner did not identify the patient in the claims-processing system.

· The voucher examiner used an incorrect rejection reason.

Recommendation 2 addresses the need for VHA to implement a clearly defined decision matrix 

that allows staff to accurately determine when claims should be denied, rejected, or approved;

initiate a process to systematically audit denied and rejected claims; and take corrective actions 

as needed based on audit results.

Recommendation 3 addresses the need for VHA to develop and implement a control to ensure 

claims processors have the appropriate options in the claims-processing system of record to 

request evidence necessary to substantiate third-party liability claims.

Financial Burden on Veterans

Denied and rejected claims could shift the financial burden of non-VA care from VA to the 

veteran. An estimated 60,800 veterans whose claims were inaccurately processed during the last 

two quarters of FY 2017 were at risk of potential undue financial burden in the billed amount of 

an estimated $716 million as a result of claims processors inappropriately denying or rejecting 

non-VA emergency care claims. The audit team could not determine whether providers billed 

veterans for inappropriately processed claims that VA did not reimburse. However, the risk of 

undue financial burden exists for individuals who may ultimately be billed by the non-VA 

provider for their episode of emergency care. 
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While not all claims-processing errors resulted in an inaccurate decision, the audit team found 

that CAR should have approved an estimated 45,000 non-VA emergency care claims for 

payment for about 17,400 veterans during the last two quarters of FY 2017. 

The total billed amount for emergency care rendered for the estimated 45,000 claims was at least

$53.3 million during the six-month period, representing improper underpayments to the 

claimants. According to Office of Management and Budget Circular A-123, Appendix C, an 

improper payment includes inappropriate denials of payment or service.19 The OIG further 

estimated errors could result in $533 million in improper underpayments over five years if 

corrective actions are not taken.20

Non-VA facilities and providers may have billed veterans for some or all of the costs of the 

emergency care services after CAR did not approve the claims, which could cause significant 

stress and undue financial hardship on the veterans.

On February 2, 2016, VA’s Assistant Deputy Under Secretary for Health for Community Care 

expressed similar concerns in testimony to the House Committee on Veterans’ Affairs, 

Subcommittee on Health:

In FY 2014, approximately 30 percent of the 2.9 million emergency treatment 

claims filed with VA were denied, amounting to $2.6 billion in billed charges that 

reverted to Veterans and their [other health insurance]. Many of these denials are 

the result of inconsistent application of the “prudent layperson” standard from 

claim to claim and confusion among Veterans about when they are eligible to 

receive emergency treatment through community care.

Recommendation 4 addresses the need for VHA to reevaluate for appropriate corrective action 

all sample claims identified in this audit as inappropriately denied and rejected.

CAR Did Not Effectively Monitor Veterans’ Claims Appeals

Although claimants can appeal denied claims, the OIG found that CAR was not effectively 

monitoring veterans’ appeals of non-VA emergency care claims decisions. According to the 

 

19 Office of Management and Budget Circular A-123, Appendix C, states, “An improper payment is any payment 

that should not have been made or that was made in an incorrect amount under statutory, contractual, administrative, 

or other legally applicable requirements. Incorrect amounts are overpayments or underpayments that are made to 

eligible recipients (including inappropriate denials of payment or service, any payment that does not account for 

credit for applicable discounts, payments that are for an incorrect amount, and duplicate payments).”

20 The estimated value represents the total billed amount. VA documentation states that VA payment rates for 

emergency care are generally 100 percent of Medicare rates for service-connected conditions and 70 percent of 

Medicare rates for nonservice-connected conditions. In addition, the OIG estimated that if OCC continued to 

inaccurately deny or reject claims they should have approved as estimated in table D.1 for a six-month period, based 

on payment rates in effect at the time of this review, this could lead to an estimated $533 million in improper 

payments over five years. The five-year estimate is an extrapolation of the six-month estimate.
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former CAR director, claimants who disagree with the CAR decision to deny a claim can contact 

the local CAR facility by phone, letter, or form for reconsideration of the claim. If claimants

disagree with the results of reconsideration, they may formally appeal by filing a Notice of 

Disagreement for review by the Board of Veterans’ Appeals. 

According to a CAR program analyst, CAR started collecting appeals data in September 2017 in 

response to the Veterans Appeals Improvement and Modernization Act of 2017.

21 In October 

2017, the then VHA Executive in Charge requested a meeting with VHA personnel regarding the 

inventory of VHA appeals and how they are tracked. In response, an OCC CAR analyst 

attempted to collect the following information from CAR facilities: 

· What is used by your facility to track claims/appeals?

· Does your facility report on Notices of Disagreement and Statements of the Case?

· Can you provide the number of Notices of Disagreement pending?

One CAR VA Community Care (VACC) manager stated their facility was “so far behind” with 

appeals and had appeals in multiple boxes and file cabinets over the years that were never 

inventoried. In response to the manager, a CAR administrative officer reported that the request 

for appeals data was not feasible and noted that having so many appeals in a disorganized 

manner would raise a lot of questions. 

An issue briefing document, prepared in October 2017 for the then executive director for OCC

Delivery Operations in response to a meeting request from the then VHA Executive in Charge, 

outlined concerns that VA field offices were not accurately capturing appeals data. The issue 

briefing document included a finding that VHA was not tracking appeals data, which created a 

data integrity issue for both the Board of Veterans’ Appeals and VHA.

To assess these issues further, the OIG initiated a separate audit in October 2018 regarding 

CAR’s management and oversight of appeals of non-VA care claims decisions.

Recommendations 1–4

1. The Under Secretary for Health reevaluates all claims denied after April 8, 2016, for the 

reason of “other health insurance” for appropriate corrective action.22

2. The Under Secretary for Health implements a clearly defined decision matrix that allows 

staff to accurately determine when claims should be denied, rejected, or approved; initiate 

a process to systematically audit denied and rejected claims; and take corrective actions 

as needed based on audit results.

 

21 Veterans Appeals Improvement and Modernization Act of 2017, Pub. L. No. 115-55.

22 Recommendations directed to the Under Secretary for Health were submitted to the Executive in Charge, who has 

the authority to perform the functions and duties of the Under Secretary for Health.
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3. The Under Secretary for Health develops and implements a control to ensure claims 

processors have the appropriate options in the claims-processing system of record to 

request evidence necessary to substantiate third-party liability claims.

4. The Under Secretary for Health reevaluates all sample claims identified in this audit as 

inappropriately denied and rejected for appropriate corrective action. 

Management Comments

The Executive in Charge, Office of the Under Secretary for Health, stated that VHA recognizes 

the impact erroneously denied and rejected claims may have on veterans and that they take 

seriously their responsibility to pay claims timely and accurately. The Executive in Charge 

concurred with recommendations 1–4 and provided corrective action plans with anticipated 

implementation by late 2019. 

In response to recommendation 1, the Executive in Charge stated that OCC will take corrective 

actions on claims determined to have been improperly denied for the presence of other health 

insurance after April 8, 2016. 

For recommendation 2, the Executive in Charge stated that OCC has revised and standardized all 

claim denial and rejection reasons and is fully revising the Emergency Care Claim Processing 

Standard Operating Procedures and developing additional job aides and tools to assist staff with 

making accurate eligibility and adjudication decisions. He further stated that OCC initiated 

weekly quality and accuracy reviews covering rejected and denied claims, and review results are 

regularly discussed at the CAR level for nationwide awareness and discussion of additional 

internal controls needed to prevent future errors. 

For recommendation 3, the Executive in Charge stated that OCC implemented controls to ensure 

claims processors have appropriate processes and tools to adjudicate claims with a partial 

payment by a third party. He stated that all OCC claims-processing sites have disabled the denial 

reason related to third-party liability and that weekly accuracy reviews of denied and rejected 

claims are conducted by supervisors to monitor the disposition of these claims. 

In response to recommendation 4, the Executive in Charge stated that all sample claims 

identified in this audit as inappropriately denied and rejected will be reevaluated for appropriate 

corrective action. He further stated that OCC will begin issuing letters to negatively affected 

veterans explaining the error and OCC’s readjudication actions. 

OIG Response

The Executive in Charge’s comments and corrective action plans are responsive to the intent of 

the recommendations. The OIG will monitor implementation of planned actions and will close 

the recommendations when VA provides sufficient evidence demonstrating progress in 
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addressing the issues identified. The full text of the responses from the Executive in Charge is in 

appendix G.

The Executive in Charge also provided technical comments related to this finding, which are also 

included in appendix G. The OIG carefully considered these comments and took the following 

actions. The OIG updated footnote 8 to clarify that 38 U.S.C § 1703 is a contract authority. The 

OIG also updated footnote 16 to indicate that updated regulations regarding other health 

insurance criteria were published on January 9, 2018. The Executive in Charge also stated VHA 

began processing held claims on that date. The OIG did not remove footnote 18 in reference to

38 U.S.C § 1725, as this footnote and criteria was specifically in reference to claims subject to 

third-party liability such as an automobile accident or worker’s compensation claims, as noted in 

the footnote and corresponding paragraph. The Executive in Charge provided similar comments 

regarding third-party liability discussed in appendix B.

The technical comments also noted that the 38 U.S.C. § 1725 information in Figure B.2 does not 

reflect the changes made to implement the ruling in Staab v. McDonald, 28 Vet. App. 50 (2016). 

Since the figure in appendix B represented criteria in use during the scope of the audit team’s 

data review, and the Staab ruling was implemented after the scope of that review, the OIG did

not revise the figure. The Executive in Charge stated that OCC updated processing guidance in 

accordance with the interim final rule published on January 9, 2018, and that OCC is developing 

additional job aides and tools to assist staff with making accurate eligibility and adjudication 

decisions. These will be provided as part of deliverables for recommendation 2.
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Finding 2: OCC’s CAR Culture Created Pressure for Timely 

Production

The audit team determined that VA staff in OCC’s CAR worked under a claims-processing

production culture that placed more emphasis on the quantity of processed claims than the 

accuracy of the claims decisions. Prioritizing production stemmed from a backlog of 

unprocessed claims more than 30 days old, which OCC and CAR leaders tried to reduce. 

Appendix A provides additional details on instances of concerted claims-processing efforts, and 

the emphasis on timeliness, to meet goals and reduce backlogs.

Interviews and survey responses revealed that some voucher examiners were verbally directed or 

encouraged to deny non-VA emergency claims to meet production standards. Additionally, some 

examiners who had not been directly encouraged to reject or deny claims responded that they 

still felt the CAR culture creates “systemic pressure to favor speed over accuracy.” Overall, the 

responses revealed that the claims-processing environment prioritized quantity over quality.

In addition, voucher examiners reported that the production and accuracy standards at the fully 

successful level were too high and did not allow enough time to do a thorough and complete job 

of assessing claims. Through interviews, the audit team identified factors in CAR’s claimsprocessing environment that staff considered to be incentives, such as overtime and telework 

privileges, that were tied to meeting or exceeding production targets. While production standards 

were tied directly to performance evaluations and overtime and telework opportunities, accuracy 

of claims decisions did not hold a similar weight. 

OCC Claims-Processing Goals 

In 2016, the then VA Secretary implemented the MyVA transformation, which included 

“breakthrough priorities.” One of the priorities was to improve community care. The goals 

included processing and paying non-VA care claims within 30 days, 85 percent of the time, and 

reducing the claims backlog to less than 10 percent of the total inventory. At the start of FY 2016 

the inventory of non-VA aged claims was about 482,000 claims out of 1.7 million (28 percent).23

In February 2017, it was reported that the then Assistant Deputy Under Secretary for Community 

Care requested that OCC determine what it would take to process claims within 30 days about 

95 percent of the time. The goal increased further to 98 percent of the time for a campaign called 

“The Road to 98 Percent.” According to a former CAR director, the goal to process 98 percent of 

claims within 30 days was based on a health insurance industry standard. However, the former 

CAR director also stated the claims-processing system, FBCS, involves manual processes that 

 

23 During this audit, the overall goal of processing 85, 95, or 98 percent of claims was 30 days for authorized, clean 

claims, and 45 days for unauthorized emergency care claims. Aged claims are authorized claims over 30 days old 

and unauthorized claims over 45 days old.
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result in low production compared to industry standards. As of November 2018, the inventory of 

non-VA aged claims had risen to about 993,000 claims out of 2.7 million (36 percent). 

According to the regional officers and VACC managers’ performance standards, 40 percent of 

their overall rating focuses on eliminating aged claims and reducing improper payments for 

approved claims. CAR leaders’ performance standards did not include specific measures for 

accurately denying or rejecting claims. 

Voucher Examiners Reported Their Standards Did Not Allow 

Sufficient Time to Make Accurate Decisions 

Voucher examiners stated they could not do a thorough job and process enough claims to meet 

the production targets in their performance standards. About 24 percent (94 of 394) of staff who 

responded to the audit team’s survey indicated they could not process the necessary number of 

non-VA emergency care claims per their performance standards to receive a fully successful 

performance rating on production targets. In addition, over 20 percent (81 of 394) of staff 

indicated they were unsure. Some of the voucher examiners that indicated they were not able to 

process the necessary numbers of claims provided the following comments:

· “They have an unreasonable number to meet if you are going to thoroughly research each 

claim to ensure the correct determination.” 

· “Processing takes an inordinate amount of time due to the inefficiency of the FBCS 

program, the amount of steps required to process a claim, as well as the complexity of 

statutes and regulations applied to non-VA emergency claims.” 

· “There are many tasks and responsibilities that are not rated or evaluated that we are 

required to perform. The performance standard does not ensure quality work. Only 

quantity.” 

In addition to survey responses, an additional 22 voucher examiners stated during interviews that 

they could not meet the production standards or were unsure if they could meet production 

standards. For example, they said

· Production numbers are unrealistic, and staff feel stressed out about the numbers. 

· Production targets are unattainable. Numbers are stressed more than accuracy. 

· There are too many interruptions, such as answering phone calls, opening mail, or other 

customer service duties. 
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Production Standards Developed, Then Revised Downward

Voucher examiners were held to claims-processing production standards. CAR leaders stated 

that performance standards are a normal tool in government performance appraisals and have 

long been in place in voucher examiner performance plans. 

According to the then CAR deputy director, the Veterans Engineering Resource Center

conducted time studies that led to the development of production standards. The Veterans 

Engineering Resource Center team visited five claims-processing sites in May 2015 and 

collected more than 13,000 observations to provide recommendations for productivity ranges and 

standards. On October 1, 2015, based on the time studies, CAR implemented production 

standards. In May 2016, CAR decreased the production standards by 30 percent. According to 

the then CAR director, this occurred because management observed the claims-processing 

productivity standard was too high, and more than 25 percent of the staff did not meet standards. 

Voucher examiners’ performance standards included production standards as a critical element.

24

At the general schedule-6 (GS-6) level, voucher examiners’ production standards included 

processing 13 unauthorized or Mill Bill claims per hour to receive a fully successful rating, and 

15 to receive an exceptional rating. The production standards for the GS-5 and GS-4 levels were

reduced by 20 percent and 40 percent, respectively. 

Based on interviews with CAR staff, voucher examiners received a work-production credit when 

they rejected or denied a claim or sent the claim for payment. Voucher examiners did not receive 

credit for researching the claim and then suspending the claim for clinical review. Voucher 

examiners may receive multiple work production credits for denying a batch of claims or sending 

multiple claims to payment that are for the same episode of care. One non-VA emergency care 

visit or episode of care may have multiple claims with the same adjudication, which would allow 

the voucher examiner to receive multiple work production credits for all claims associated with 

the episode of care.

Non-Claims-Processing Duties Assigned to Voucher Examiners

Supervisors acknowledged that voucher examiners’ performance standards did not fully capture 

their workload. Voucher examiners also provide customer service such as answering incoming 

calls from claimants and processing incoming and outgoing mail, otherwise referred to as 

nonproduction time. According to CAR leaders and supervisors, employees and supervisors were 

responsible for excluding nonproduction time when determining their claims-processing

productivity.

 

24 The voucher examiner’s performance standards include three critical elements (claims processor production 

targets, voucher examiner accuracy standards, and voucher examiner customer service standards) and two 

noncritical elements (voucher examiner teamwork standards and voucher examiner mission support standards).
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One VACC manager said voucher examiners may receive a fully successful or higher rating 

without meeting their production targets because supervisors allow for unplanned processing 

complications that are beyond examiners’ immediate control. A CAR facility supervisor told the 

audit team that all their employees would need to be placed on performance improvement plans 

if they were held to nationally defined standards, implying that they would not meet the 

standards. The audit team determined that the amount of nonproduction time varied significantly 

across processing locations and among voucher examiners, which impacted CAR’s ability to 

accurately estimate overall processing standards and expectations. 

In June 2016, CAR started developing a productivity tool to assist supervisors with logging and 

tracking employee performance and to track national productivity information. CAR 

implemented and mandated the tool in May 2018. The then CAR director indicated that, based 

on data thus far, more than 50 percent of CAR staff would not meet production standards based 

upon the tool’s output, and stated that additional time studies were forthcoming.

Recommendation 5 addresses the need for VHA to reevaluate production targets, work 

production credits, and application of non-processing time for voucher examiners to ensure the 

production targets include claims research time.

CAR Claims-Processing Environment Focused on Production Over 

Accuracy

CAR leaders, including the former CAR director, the then deputy director, regional officers, and 

some VACC managers, told the audit team they emphasize and value the importance of accurate 

claims processing. However, as described in the following sections, CAR managers, supervisors, 

and voucher examiners reported in interviews and survey responses that the CAR claimsprocessing environment led staff to focus on production over accuracy. This included voucher 

examiners reporting that they were aware of other voucher examiners denying or rejecting claims 

in an effort to meet productivity targets.

The audit team interviewed 182 CAR personnel, including 116 voucher examiners who indicated 

that they process non-VA emergency care claims, and obtained survey responses from 435 CAR 

staff, including 394 voucher examiners who indicated they process non-VA emergency care 

claims. The interviewees and survey respondents represented each CAR region.25 In addition to 

their answers to the survey questions, which are detailed in appendix F, survey respondents 

provided detailed comments in their responses. 

 

25 About 70 percent of the 116 voucher examiners the OIG interviewed also completed the survey.
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Examiners Directed or Encouraged to Improperly Deny and Reject 

Claims

During interviews and on survey responses, 10 voucher examiners indicated they were directed 

or encouraged to improperly deny veterans’ non-VA emergency care claims to meet production 

standards.26 The voucher examiners indicated the instruction was verbal. This included direction 

from supervisors and a VACC manager located in all five regions. Some of these voucher 

examiners also provided comments to their affirmative survey responses, which included the 

following:

· “I was told by my supervisor to focus on ‘speed before accuracy.’ I didn't feel that this is 

an acceptable practice, and thus was unable to meet productivity.” 

· “Numbers are everything, the faster the better is what we are told.” 

· “Been told to process faster, even if that means inaccuracy. Click and pick.” 

Recommendation 6 addresses the need for VHA to request and ensure the Office of Resolution 

Management conducts an organizational assessment of the specific CAR locations where staff 

reported they were directed or encouraged to improperly process claims, and to take appropriate 

action.

27

Most voucher examiners responded that they were not specifically directed or encouraged to 

deny non-VA emergency care claims to meet production standards. These voucher examiners 

answered “No” to the survey question; however, the OIG determined that the comments 

accompanying their responses indicated the pressure to meet standards was cultural:

· “Supervisor’s [sic] do not tell us to RTP [return to provider] or deny claims, they push 

the numbers on us. The standard is set high and the supervisors expect us to maintain that 

and that's when the processors, who feel the pressure, do things like deny or RTP in order 

to meet numbers.”28

· “The pressure to reject or deny without due diligence is structural, not personal. When 

employee metrics are weighted primarily on production, there is systemic pressure to 

favor speed over accuracy.” 

 

26 Based on interviews and survey responses, 17 voucher examiners indicated they were directed or encouraged to 

improperly deny veterans’ non-VA emergency care claims to meet production standards. The audit team followed 

up with the majority of these individuals and determined that seven were not specifically directed to improperly 

deny claims but were either provided with some degree of inappropriate guidance or were aware of other examiners 

improperly processing claims.

27 The audit team provided these specific CAR locations to the then CAR deputy director during the audit.

28 RTP refers to an FBCS processing selection, Return to Provider, otherwise referred to as rejecting the claim.
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Examiners Aware of Inaccurate Denials and Rejections

In a different survey question, 154 of 394 voucher examiners (39 percent) answered 

affirmatively when asked if they were aware of any instances in which claims processors 

inaccurately denied or rejected non-VA emergency care claims for productivity standards

(Figure 5). These affirmative respondents spanned all five geographical regions. 

Figure 5. Results of OIG survey question 6

(Source: VA OIG analysis of survey responses)

Comments from voucher examiners showed that they felt productivity standards created pressure 

“to meet numbers” in any way possible: 

· “With the pressure of meeting the standard individuals are in an extreme hurry and 

rejecting and denying are the easiest way to get claims out without spending a lot of time 

looking for the right action to take.” 

· “Some processors are feeling the stress of having to meet the numbers instead of just 

working without the added pressure of meeting numbers. Therefore, they are making 

unnecessary mistakes which are causing mo[r]e corrections, phone calls from vendors, 

and angry veterans.” 

· “The ‘Numbers’ game is unofficially enforced. Management says quality over quantity, 

but whenever you do not meet ‘their expected’ quota, you are called into the office and 

asked why you haven’t been performing.” 

Yes, 

39%

No , 

58%

No Response, 3%

Are you aware of any instances in which claims 

processors inaccurately denied or rejected non-VA 

emergency care claims in an effort to meet or exceed 

individual production targets?
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· “The bosses just threaten you with being fired to get your numbers. Constant non stop 

intimidation. The atmosphere is terrible. I think it is more that processors just rapidly slop 

claims through as fast as they can just to hit their numbers.” 

Managers and supervisors also reported during interviews that CAR leaders emphasized quantity 

of non-VA emergency care claims processed versus quality of the examiners’ claims decisions.

Their statements reflect the following concerns:

· FBCS does not produce any management reports tracking the quality of denied and 

rejected claims.

· The emphasis nationwide is quantity over quality.

· The focus now is on quantity; what happened to the quality aspect of processing claims? 

Errors are unmanageable.

Recommendation 7 addresses the need for VHA to implement a strategic plan to ensure CAR 

emphasizes the accuracy of claims-processing decisions.

Production Incentives 

Production standards are designated as a critical element of the voucher examiners’ annual 

performance appraisal; therefore, individual productivity is crucial in order to be eligible for an 

annual performance bonus. CAR staff stated a voucher examiner must receive an overall rating 

of outstanding or excellent to receive an annual performance bonus. To receive such ratings, the

voucher examiner must be rated by the supervisor as exceptional for the three critical elements of 

the performance appraisal: productivity, accuracy, and customer service. The FY 2017 annual 

bonus awarded to eligible voucher examiners at levels GS-4 through GS-6 was $500 for an 

outstanding rating and $350 for an excellent rating. Although performance ratings are directly 

tied to performance bonuses, the OIG did not find that performance bonuses were a driving 

factor to inappropriately process claims in order to meet production standards. 

The OIG determined from interviews and surveys that voucher examiners felt that supervisors 

utilized productivity as an incentive to receive overtime opportunities and telework privileges. 

OCC policy instructs supervisors to authorize overtime only to examiners who meet performance 

standards. Similarly, according to voucher examiners interviewed or surveyed, telework 

opportunities were tied to the quantity of claims processed. Examiners who didn’t consistently 

meet the production numbers were not considered for overtime and had telework privileges 

removed.

When a voucher examiner researches a claim, determines that it has met administrative eligibility 

requirements, and sends it to clinical review, the voucher examiner does not receive credit for 

that work until clinical staff send the claim back for a final adjudication decision. In contrast, 
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examiners receive work credit as soon as they deny or reject a claim. Voucher examiners 

provided comments to their survey responses, which included the following:

· “RTP [return to provider], Deny or reroute are options used to ‘beat’ the system and meet 

numbers. Quantity is all that seems to matter, not quality and [t]hen people see that errors 

[a]re not being looked at, only numbers than [sic] shortcuts will be taken to meet 

productivity.” 

· “CAR has focused much on quantity and fudging numbers moving claims to unused 

queues rather than the quality of what’s being processed.” 

· “I feel there is too much pressure to perform to standards. More emphasis on production 

and running reports vs getting the job done correctly with appropriate help. I feel many 

errors could be avoided if we did not have the pressure of productivity.” 

The overall culture to decrease the backlog, incentives to meet production targets, and the 

structure of earning work production credit presented a risk of inappropriately processed claims.

Recommendation 8 addresses the need for VHA to implement controls to ensure eligibility for 

overtime, telework, and annual performance bonuses for CAR staff considers all facets of 

performance.

Recommendations 5–8

5. The Under Secretary for Health reevaluates production targets, work production credits, 

and application of non-processing time for voucher examiners to ensure the production 

targets include claims research.

6. The Under Secretary for Health requests and ensures the Office of Resolution 

Management conducts an organizational assessment of the Claims Adjudication and

Reimbursement processing locations where staff reported they were directed or 

encouraged to improperly process claims, and to take appropriate action. 

7. The Under Secretary for Health implements strategic plans to ensure the Office of 

Community Care, Claims Adjudication and Reimbursement Directorate, emphasizes the 

accuracy of claims-processing decisions.

8. The Under Secretary for Health implements controls to ensure eligibility for overtime, 

telework, and annual performance bonuses for Claims Adjudication and Reimbursement 

staff includes all facets of performance.

Management Comments

The Executive in Charge concurred in principle with recommendations 5 and 6 and concurred 

with recommendations 7 and 8. The Executive in Charge provided action plans for each 

recommendation, with completion dates targeted for no later than October 2019. 
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In response to recommendation 5, the Executive in Charge stated that OCC eliminated the 

critical production-related performance element from the voucher examiners’ FY 2018 and FY 

2019 performance plan. The Executive in Charge stated that OCC initiated discussions to fully 

revise voucher examiner performance plans to align with CAR’s new strategic direction, and the 

performance plan will emphasize balance across production, accuracy, quality, customer service, 

and teamwork. 

In response to recommendation 6, the Executive in Charge stated OCC concurs in principle that 

an organizational assessment of processing locations where staff reported they were directed or 

encouraged to improperly process claims is warranted but considers responsibility for the 

assessment to fall within the authority of the Executive Director of OCC Delivery Operations.

The Executive Director will charter a workgroup that will include those with expertise aimed at 

helping CAR managers and supervisors change and adopt behaviors important to focusing on 

quality management and may also include the Office of Resolution Management and other 

subject matter experts knowledgeable about employee engagement, inclusion, and psychological 

safety.

In response to recommendation 7, the Executive in Charge stated that OCC is currently 

implementing a comprehensive strategic and transformational plan. He further stated that a

cornerstone of CAR’s strategic plan is a renewed emphasis on quality assurance and accuracy of 

claims-processing decisions.

In response to recommendation 8, the Executive in Charge stated that CAR has drafted new 

performance plans and standards for staff, which take into consideration many facets of 

performance. He stated all facets of new performance standards will factor into the determination 

of overtime and telework assignments. He further stated that CAR recently created a nationwide 

overtime policy.

OIG Response

The Executive in Charge’s comments and corrective action plans are responsive to the intent of 

the recommendations. The OIG will monitor implementation of planned actions and will close 

the recommendations when VA provides sufficient evidence demonstrating progress in 

addressing the issues identified. The full text of the responses from the Executive in Charge is in 

appendix G.
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Finding 3: CAR Lacked Sufficient Quality Controls Over Denied and 

Rejected Claims

CAR management lacked a standardized quality assurance function or mechanism for evaluating 

the accuracy of claims the voucher examiners processed. The former CAR director did not 

receive reports on the accuracy rate of denied and rejected claims, and the then CAR deputy 

director stated that there was no requirement for frontline supervisors to review denied and

rejected claims. 

CAR did not have policy that requires supervisors to assess the accuracy of claims decisions. 

This is significant because, according to CAR data, denied and rejected claims accounted for 

nearly 80 percent of the unauthorized and Mill Bill claims processed. Although CAR monitored 

production on a national level, the then CAR deputy director told the audit team that supervisors 

were responsible for monitoring and assessing accuracy at the local level. The then deputy 

director stated that different monitoring techniques are used, and CAR did not prescribe a 

specific method to assess the accuracy of claims because there is a varying degree of difficulty 

involved in processing the different types of claims. Further, different techniques may be needed 

at the local level. 

According to the voucher examiner performance standards, voucher examiners must process at 

least 96.5 percent of claims accurately to receive a fully successful rating, and at least 

98.5 percent of claims accurately to receive an exceptional rating. According to the performance 

standards, the accuracy rate is based on “spot checks of uncorrected data entries or omissions.”

29

The performance standards indicate that errors are determined by data input that causes 

erroneous payments, incorrect veteran selection, or incorrect vendor selection. The accuracy 

standard is based on a random sample review of claims for errors, and there is not a minimum

standard number of claims to review. Both the former and the then CAR directors told the audit 

team that it was assumed the supervisors would also assess the accuracy of denied and rejected 

claims, in addition to approved claims.

Quality Controls Varied

The audit team determined that supervisors’ quality assurance methods varied. Supervisors at 

two of nine facilities the audit team visited stated they assessed all types of claims decisions, 

including rejected and denied claims, to determine if the claim was appropriately adjudicated. 

Supervisors at the remaining seven facilities stated they assessed accuracy by relying on the 

 

29 The audit team requested clarification of the performance standard language “uncorrected data entries or 

omissions.” The then CAR deputy director stated the intent is that claims are reviewed for accuracy. 
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Program Integrity Tool reports, the Quality Inspector Tool, or reviewing claims decisions on a 

summary level by assessing the claim program authority and the denial or rejection reason.30

According to voucher examiners’ performance standards, there was no standard method for 

calculating accuracy and determining whether a voucher examiner met or exceeded the 

96.5 percent target for a fully successful rating. Nearly half the voucher examiners who 

responded to the audit team survey answered that that they were not aware of supervisors 

reviewing any of their claims for accuracy (Figure 6).

Figure 6. Results of OIG survey question 8.

(Source: VA OIG analysis of survey responses)

According to the performance standards, supervisors should discuss accuracy rates with voucher 

examiners monthly. Based on survey responses, about 20 percent of voucher examiners who 

reported that claims were reviewed for accuracy were not aware of the results of those reviews.

During interviews, supervisors responded that claims accuracy reviews occurred mostly when an 

approved claim sent to payment was rejected by the Quality Inspector Tool.

 

30 The Program Integrity Tool report identifies a potential improper payment. The Quality Inspector Tool was 

developed to help ensure payments are being processed correctly. 

All ER 

claims are 

subject to 

supervisory 

review for 

accuracy, 

39%

I am not 

aware of any 

claims being 

reviewed for 

accuracy, 

49%

Only approved claims are 

reviewed for accuracy, 5%

Only rejected or denied 

claims are reviewed for 

accuracy, 4%

No response, 

3%

Are non-VA emergency care claims-processing decisions, 

including rejected and denied claims, reviewed for accuracy by 

a supervisor?
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Quality Issues Since at Least 2014 

VHA was aware of quality assurance deficiencies as early as March 2014, when the Government 

Accountability Office (GAO) issued a report regarding veterans’ Mill Bill emergency care 

benefits.31 GAO found “VA staff who processed claims did not comply with applicable 

requirements of the Millennium Act, its implementing regulations, or VA policies when they 

denied the claims.”

32 In response to the 2014 GAO report, the then CAR deputy director

established an internal control workgroup consisting of clinical staff. 

Starting in October 2017, the workgroup began auditing denied claims for August, October, and 

November 2017, and January 2018, and identified errors each month ranging from 18 to 

34 percent of the denial decisions. The top denial reason used inappropriately was the prudent 

layperson criteria. Although the workgroup identified errors during this effort, two clinical 

nurses and an administrative officer from the group stated no action was taken with the audit 

results. In addition, the administrative officer stated that the workgroup audited limited facilities 

because it did not have access to necessary data for every facility. The administrative officer also 

stated that the workgroup stopped conducting audits because it was waiting on CAR to add 

clinical leaders. 

The lack of quality assurance created a risk that denied and rejected non-VA emergency care 

claims would not be accurately adjudicated.

Recommendation 9

9. The Under Secretary for Health develops and implements a clearly defined and effective 

quality assurance program that encompasses all claims decisions and includes a 

standardized process for supervisors to determine and effectively monitor the extent to

which claims processors accurately rejected and denied non-VA emergency care claims.

Management Comments

The Executive in Charge concurred with recommendation 9 and stated that CAR’s strategic plan 

includes the creation of a new quality assurance product. He stated that the CAR quality 

assurance plan includes initiatives to create and enhance the quality assurance product line at the 

regional and national levels, and includes hiring quality assurance officers, internal control 

specialists, policy analysts, and trainers. Furthermore, key initiatives of the plan include growing 

 

31 GAO, VA Health Care Actions Needed to Improve Administration and Oversight of Veterans’ Millennium Act 

Emergency Care Benefit, GAO-14-175 (Washington, DC, March 2014).

32 The Veterans Millennium Health Care and Benefits Act authorizes the Secretary to reimburse for the reasonable 

value of emergency treatment furnished in a non-Department facility for veterans who are active Department 

healthcare participants and who are personally liable for such treatment. 
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and perfecting internal quality and accuracy reviews, with improved automated generation of 

samples, as well as clinical workgroup quality and accuracy reviews.

OIG Response

The Executive in Charge’s comments and corrective actions plans are responsive to the intent of 

the recommendation. The OIG will monitor implementation of planned actions and will close the 

recommendation when VA provides sufficient evidence demonstrating progress in addressing the 

issues identified, to include effectively monitoring the accuracy of rejected and denied claims. 

The full text of the response from the Executive in Charge is in appendix G.
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Finding 4: Additional Barriers Affected Claims Processing

Processing errors during the verification and distribution portion of the claim adjudication 

process impacted voucher examiner claims-processing accuracy and timeliness. Backlogs of 

unprocessed mail at some facilities also negatively affected veterans’ outcomes when applying 

for reimbursement of non-VA emergency care. According to the former CAR director, voucher 

examiners are often responsible for collateral duties, such as processing mail, which take their 

time away from processing claims. 

Processing Errors Increased Work for Voucher Examiners

CAR management, supervisors, and voucher examiners stated that errors made in the verification 

and distribution portion of the claims adjudication process resulted in additional work for the 

voucher examiners. Contractors’ staff generally performed the verification and distribution

function for CAR, leaving voucher examiners mainly with the research and adjudication of the 

non-VA emergency care claims. According to voucher examiners, when the contract staff made 

errors such as assigning the incorrect payment authority during distribution, CAR voucher 

examiners needed to correctly assign it to the appropriate authority to proceed with the claim’s 

adjudication. Voucher examiners said that contractor and CAR claims-processing errors led to 

increased customer service calls from frustrated veterans and non-VA healthcare providers.

Backlogs of Incoming Mail Presented Risk That Veterans’ Claims 

Would Not Be Approved

The audit team identified incoming mail that was postmarked about one month prior at two of 

nine visited CAR facilities. Incoming mail typically consisted of benefits claims and medical 

records for claims that, if left unopened, CAR could inappropriately deny as not being timely 

filed within 90 days, as well as time-sensitive appeals. The backlogs of mail documents also 

placed veterans’ claims or appeal information at risk of being lost or destroyed prior to scanning.

The then CAR deputy director told the audit team that CAR’s expectation was for staff to scan 

paper claims into VA’s FBCS within 24 hours of receipt. Furthermore, two CAR regional 

officers said that processing sites require all mail to be scanned into FBCS within 24 hours of 

receipt and, along with outgoing mail, be certified to management that all mail is timely 

processed.

The audit team concluded that CAR management did not enforce this control, and based on 

discussions with CAR leaders and managers, mail processing issues were not always 

communicated through reporting lines. As previously noted, the audit team identified instances 

in which CAR staff inappropriately denied claims for untimely filing because mail was not 

scanned into VA records systems or properly date-stamped. The audit team identified 12 paper 
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claims during sample reviews that voucher examiners denied as not timely filed but were not 

given a date stamp to prove when VA received the claim.

In the 2014 GAO report on Mill Bill emergency care benefits, GAO recommended that “VA 

implement measures to ensure that all VA facilities comply with VA’s policy requirement that 

incoming claims be date-stamped and scanned into FBCS on the date of receipt.”33

VA’s action plans indicated they added questions to the field assistance visit checklist to monitor 

VA facilities’ compliance with the scanning and date-stamping requirements. However, VA 

discontinued the field assistance visit program in October 2014. In November 2015, VA began 

requiring supervisors at VA facilities to certify that their staff were scanning incoming claims 

and medical records daily. The audit team concluded that CAR management did not ensure 

facilities timely scanned or date-stamped mail upon receipt, which placed veterans at risk for 

inappropriate decisions.

Recommendation 10 addresses the need for VHA to develop and implement clearly defined 

controls to ensure CAR facilities routinely communicate backlogs of incoming mail to OCC

leaders, with associated action plans to accurately record the date the documents were received.

Backlogs of Outgoing Mail Presented Risk That Veterans Would Not 

Be Informed of the Claims Decision

The audit team identified unsent outgoing mail that had been printed between one and two 

months earlier at three of nine visited CAR facilities (some pictured in Figure 7). The outgoing

mail typically included claim denial and rejection letters needing time-sensitive responses from 

claimants, such as providing requested records or filing appeals. 

 

33 GAO, VA Health Care Actions Needed to Improve Administration and Oversight of Veterans’ Millennium Act 

Emergency Care Benefit, GAO-14-175 (Washington, DC, March 2014).
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Figure 7. Top – Outgoing claim denial and rejection letters at a CAR Region 1 facility. Bottom left and right 

– Outgoing mail, consisting of claim denial and rejection letters, as well as incoming mail waiting to be 

processed at a CAR Region 4 facility. 

(Source: VA OIG; photos taken during site visits on February 1 and April 19, 2018)

In March 2017, the then CAR deputy director emailed the then CAR director about issues with 

five years of unsent claim denial and rejection letters to veterans. The correspondence indicated

that the then CAR director and the Region 3 officer had only just learned about the region’s 

320,000 unsent letters to veterans and had previously been told there were no large backlogs of 

mail. The then CAR director later concluded to Region 3 that “it is very important to ensure the 

denials/rejects are sent due to Veterans[’] due process.” 

The former CAR director stated that the VA medical centers requested that CAR staff not mail 

veteran letters because of wording complications and veterans not understanding the letters. 

Supervisors at six of the visited facilities stated they mailed rejection letters to the non-VA 

providers, but indicated they either did not send or could not provide evidence that VA mailed 

required rejected claim correspondence to veterans. The former CAR director and a site 
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supervisor believed that the rejection letter would confuse the veteran and lead to more customer 

service phone calls. According to law,

34

[T] he Secretary shall provide to the claimant and the claimant’s representative, if 

any, . . . notice of any information, and any medical or lay evidence, not 

previously provided to the Secretary that is necessary to substantiate the claim. As 

part of that notice, the Secretary shall indicate which portion of that information

and evidence, if any, is to be provided by the claimant and which portion, if any, 

the Secretary . . . 

VHA was aware of mail processing issues as early as March 2014, when the 2014 GAO report

on Mill Bill emergency care benefits stated,

The lack of documentation for many of the claims we reviewed at the four VA 

facilities we visited suggests that the four VA facilities we visited did not notify 

some veterans that their Millennium Act claims were denied and of their rights to 

appeal these denials. If similar situations are occurring at other VA facilities 

nationwide, where veterans are not informed of Millennium Act claim denials or 

of their appeal rights, and the claims have been inappropriately denied, then 

veterans could become financially liable for emergency care that VA should have 

covered.

GAO recommended VA require supervisors to develop mechanisms for verifying veteran denial 

letters are printed and mailed. VA’s action plans for emphasizing the importance of verifying 

that veteran denial letters are printed and mailed included printing an article in the April 2014 

biweekly bulletin and making an announcement during the July 2014 bimonthly Veterans 

Integrated Service Network (VISN) call. In December 2016, VA collected information from each 

VISN about the process it used for verifying that denial letters for Millennium Act claims were 

printed and mailed to veterans. However, the audit team determined that CAR did not timely 

mail denial letters, putting veterans at risk of not knowing that CAR denied or rejected their 

claims. Recommendation 11 addresses the need for timely communication of claims decisions to 

veterans and providers and what actions the veteran may take in response.

Recommendations 10–11

10. The Under Secretary for Health develops and implements clearly defined controls to 

ensure Claims Adjudication and Reimbursement processing facilities routinely 

communicate backlogs of incoming mail to Office of Community Care leaders with 

associated action plans to accurately record the date the documents were received.

 

34 38 U.S.C. § 5103, Notice to claimants of required information and evidence.
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11. The Under Secretary for Health develops and implements clearly defined controls to 

ensure Claims Adjudication and Reimbursement processing facilities and VA medical 

centers timely communicate claims decisions to veterans and providers to ensure veterans 

are notified of what VA needs to adjudicate the claims and what actions the veteran may 

take in response.

Management Comments

The Executive in Charge concurred in principle with recommendation 10 and concurred with 

recommendation 11. In response to recommendation 10, the Executive in Charge stated that to 

address the overall concern of delayed paper mail processing upon receipt by VA, OCC 

implemented the Paper to Electronic Data Interchange initiative, which is intended to ensure that 

community care claims and records are digitized promptly and that newly submitted claims and 

supporting documentation are received electronically. The Executive in Charge stated that during 

phase one of the initiative, OCC forwarded paper claims to an outside vendor for scanning and 

electronic conversion, and in phase two community providers are to send paper claims and 

supporting documents directly to a centralized claims intake center. The Executive in Charge 

also stated that OCC instructed claims-processing staff in March 2019 to begin using the claim 

date provided by the provider to determine if a claim was filed timely. He stated that this process 

change affords maximum leniency for the timely filing of paper claims and is expected to end 

timely filing denials resulting from delays in paper mail processing.

In response to recommendation 11, the Executive in Charge stated VA is deploying a new 

claims-processing system, the Electronic Claims Adjudication Management System (eCAMS).

The Executive in Charge stated eCAMS will replace the Fee Basis Claims System legacy system

and that all outbound correspondence through eCAMS will eventually be centralized and mailed 

from the Financial Services Center. Furthermore, weekly reviews of correspondence in 

processing queues will be performed by CAR managers and leaders to ensure correspondence is 

being printed timely.

OIG Response

The Executive in Charge’s comments and corrective action plans are responsive to the intent of 

the recommendations. As noted in the Executive in Charge’s response to recommendation 10, 

OCC recognizes the impact delays in processing paper mail after receipt by VA can have when 

making timely filing determinations. While the Executive in Charge concurred in principle with 

recommendation 10, the OIG maintains that OCC needs to ensure CAR facilities effectively and 

timely forward all their paper claims to the outside vendor for scanning and conversion, or 

otherwise communicate the backlog to OCC. The OIG will monitor implementation of planned 

actions and will close the recommendations when VA provides sufficient evidence 

demonstrating progress in addressing the issues identified. The full text of the responses from the 

Executive in Charge is in appendix G.
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Regarding OCC instructing claims-processing staff to begin using the claim date provided by the 

provider to determine if a claim was filed timely, the OIG notes that this action is inconsistent 

with the Code of Federal Regulations (CFR) requirement. As discussed in appendix B, under 38 

CFR §17.127, Date of Filing Claims: “The date of filing any claim for payment or 

reimbursement of the expenses of medical care and services not previously authorized shall be 

the postmark date of a formal claim, or the date of any preceding telephone call, telegram, or 

other communication constituting an informal claim.”

The Executive in Charge also provided technical comments related to this finding, included in 

appendix G, that indicated the discussion on mail backlogs was inaccurate in some instances 

because it did not clearly explain the differences between processing of claims filed by providers 

and claims filed by veterans. The comments noted that generally rejection notices are not sent to 

the veteran because it could cause confusion. The OIG clarified in the section that the issue of 

outgoing mail pertained to claimants in general, which include non-VA providers. The OIG 

previously stated in this report that a claimant may be a veteran or non-VA provider or facility, 

and maintains that claimants should be timely notified of the claims decisions and have the 

ability to provide a timely response. Similarly, the recommendation addresses the need for VHA 

to ensure timely communication of claims decisions to veterans and providers.

The Executive in Charge recommended clarification of footnote 43 to reflect that it only applies 

to 38 U.S.C. § 1728. The OIG did not revise this footnote because 38 CFR §17.127 indicates the 

date of filing for payment and reimbursement of medical expenses is for claims not previously 

authorized, and based on what the audit team found, the final payment authority is not always 

known at the time a claim is received. Specifically, the payment authority is determined as 

voucher examiners process the claim. 
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Appendix A: Timeline of OCC Efforts to Meet 

Claims-Processing Goals

OCC leaders emphasized to CAR leaders the need to improve timeliness and to reduce and 

eliminate the backlog of claims. According to the performance standards of the CAR director

and the then deputy director, 30 percent of their overall rating included meeting production 

targets and reducing the backlog of claims. Since 2015, OCC and CAR have encouraged

overtime and conducted periodic backlog reduction efforts in an attempt to meet goals. 

The following timeline represents instances of concerted claims-processing efforts to meet goals 

and reduce backlogs leading up to and during the scope of the audit team’s sample claims 

assessment, including CAR inquiries to change policy regarding who makes the prudent 

layperson decision.35

December 2016

CAR developed a competition between CAR regions in response to OCC’s request for what they 

referred to as another “Backlog Blitz” to meet a goal of 85 percent of claims processed timely by 

the end of December 2016. Part of the strategy for this effort was that claims processors would 

be focused on “moving claims through quickly” with weekly winners and “most valuable 

players” selected each week of the competition for those who processed the most claims.

The then executive director of OCC’s Delivery Operations requested that CAR start its efforts 

earlier than planned to reach the goal and suggested including other types of claims that 

contractors processed in their performance that would move the claims-processing figures in 

their favor. The then executive director requested in an email to the then CAR director that a big 

push was needed to meet the goal of 85 percent of claims processed timely, and suggested, 

“perhaps you can look at the CHOICE claims working through the FSC [Financial Services 

Center] and count [them] in our TOTAL claims processed.”

36

February 2017

The then CAR director indicated that the then Deputy Under Secretary for Health for 

Community Care requested OCC determine what it would take to process claims within 30 days 

 

35 38 CFR 17.1006 and 17.1002 (b) state a clinician is responsible for determining if “the initial evaluation and 

treatment is for a condition of such a nature that a prudent layperson would have reasonably expected that delay in 

seeking immediate medical attention would have been hazardous to life or health.” A prudent layperson in this 

context is a person with average knowledge of health and medicine. Clinicians apply this standard to veterans’ 

unauthorized care to determine whether to pay non-VA emergency care claims.

36 According to CAR staff, the Financial Services Center provided CAR with claims-processing work. the Financial 

Services Center provides a wide range of financial services to the VA, such as payment processing. The audit team 

did not determine if other types of claims were actually included in the calculations, as suggested.
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about 95 percent of the time. The then CAR director indicated that 200 to 300 additional staff 

might eliminate overtime and the claims backlog and meet the goal of 95 percent in six months.

March 2017

The then Deputy Under Secretary for Health for Community Care and the then executive director

of OCC’s Delivery Operations presented to VISN Directors the “Road to 98 Percent” initiative to 

eliminate the backlog and meet a timeliness standard similar to that of the private health 

insurance industry. The presentation indicated the goal was for VHA OCC to process 98 percent 

of authorized claims within 30 days and unauthorized claims within 45 days, and that this would 

occur within seven to nine months (October–December 2017).

May 2017 

The then Deputy Under Secretary for Health for Community Care directed the start of a 

command center to focus on improving the timeliness of claims processing at four lowperforming processing locations. According to a May 2017 report of contact, during one of the 

phone calls intended to focus on improving the timeliness of claims processing, a meeting 

participant explained to managers and supervisors how teams went through internal control 

checks to ensure accurate and proper payment. According to the report of contact, the Region 3 

officer indicated that this practice created a bottleneck and needed to stop immediately. A 

supervisor explained that due to the high number of improper payments by inexperienced staff, 

the internal control was essential. The Region 3 officer further stated per the report of contact, “I 

don’t want to say accuracy doesn’t matter, but accuracy doesn’t matter.” In addition, the Region 

3 officer stated that “timeliness was the primary focus of [then Deputy Under Secretary for 

Health for Community Care] and that we were not to worry about payment accuracy.” The report 

of contact also described another call where the then CAR director indicated that the then Deputy 

Under Secretary for Health for Community Care was concerned with timeliness.

July 2017

According to the then CAR deputy director, at the request of the then Deputy Under Secretary 

for Health for Community Care, OCC and CAR leaders encouraged additional overtime to 

further progress in timeliness and eliminating the backlog as they approached the end of the 

fiscal year. According to VHA data, CAR staff substantially increased their overtime hours per 

pay period between July and December 2017. 

August 2017

The Region 3 officer inquired with the OCC director of policy and planning regarding the 

possibility of allowing nonclinical staff, rather than clinical staff, to apply the prudent layperson 

standard when adjudicating claims in an effort to improve the claims-processing backlog. The 
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director of policy and planning informed the Region 3 officer that the action would not comply 

with regulations. The then deputy director persisted with the attempt to allow nonclinical staff to 

apply the prudent layperson standard when adjudicating claims and told the director of policy 

and planning that CAR was not following a similar regulation that required a clinician to review 

whether a veteran had received care at a VA facility within a 24-month period.

Regulations state, “a designated VA clinician at the VA medical facility of jurisdiction will make 

the determination” that “[a]t the time the emergency treatment was furnished, the veteran was 

enrolled in the VA health care system and had received medical services under authority of 38 

U.S.C. chapter 17 within the 24-month period preceding the furnishing of such emergency 

treatment.”

37 The audit team’s accuracy review identified several instances in which nonclinical 

staff made the determination whether a veteran had received care at a VA facility within a 24-

month period, and identified one instance where a nonclinical staff member reviewed a claim for 

clinical eligibility.

 

37 38 CFR §§17.1002 (d) and 17.1006.
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Appendix B: Background

OCC Claims Adjudication and Reimbursement Governance Structure

In FY 2015, OCC implemented a new organizational structure to manage non-VA care claims 

processing, divided into five geographical regions.38 VHA documentation shows that this

regional management structure was implemented to establish a single, shared-services 

organization responsible for claims processing, appeals, clinical reviews, and bills of collection. 

Each of the five regions has a regional officer who reports to the director and deputy director of 

CAR (Figure B.1). Throughout the regions, CAR has VACC managers that report to their 

respective regional officer. CAR staff in the five regions are located either at geographically 

consolidated sites or VHA medical facilities. CAR facilities have one or more local supervisors 

who oversee voucher examiners. These local supervisors and clinical nurses report to the VACC

managers. According to the then CAR deputy director, CAR staff also may process claims from 

other regions as needed.

Figure B.1. VHA OCC’s Claims Adjudication and Reimbursement organization chart

(Source: OIG analysis of OCC CAR organizational chart for FYs 2017 and 2018)

According to CAR data, CAR has almost 1,800 staff, including about 15 VACC managers, 

70 claims supervisors, and 1,300 claims-processing staff who receive reimbursement claims, 

research the veterans’ administrative eligibilities, and adjudicate claims. CAR employs about 

 

38 OCC’s five geographical regions encompass corresponding VISNs. Region 1 includes VISNs in the Northeast 

(1, 2, 3, 4, 10 and 11); Region 2 includes VISNs in the East (5, 6, 7, and 8); Region 3 includes VISNs in the 

Midwest (9, 12, 15, and 16); Region 4 includes VISNs in the North and South (17, 18, 19, and 23); and Region 5 

includes VISNs in the West (20, 21, and 22).

Executive Director of Delivery Operations, OCC

Director, Claims Adjudication and Reimbursement

Deputy Director, Claims Adjudication and 

Reimbursement

Region 1 

Officer

-CAR VACC 

Managers

-Clinical Nurses

-Supervisors

-Voucher 

Examiners

Region 2 

Officer

-CAR VACC 

Managers

-Clinical Nurses

-Supervisors

-Voucher 

Examiners

Region 3 

Officer

-CAR VACC 

Managers

-Clinical Nurses

-Supervisors

-Voucher 

Examiners

Region 4 

Officer

-CAR VACC 

Managers

-Clinical Nurses

-Supervisors

-Voucher 

Examiners

Region 5 

Officer

-CAR VACC 

Managers

-Clinical Nurses

-Supervisors

-Voucher 

Examiners
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130 licensed nurses to review the clinical eligibility of veterans’ non-VA care claims. The 

approximately 280 remaining staff work in the following roles: 

· Administration and program office

· Payment center

· Reconsiderations and appeals

· Finance/reconciliation 

· Internal controls/training/oversight

· Provider/customer relations 

According to the former CAR director, CAR also relies on about 350 contract staff to assist in 

verifying and distributing incoming claims.

Besides processing claims, voucher examiners answer phone calls, assist claimants face-to-face, 

scan incoming mail, and process outgoing claim decision letters. 

CAR Claims-Processing Workload

According to data provided by CAR in October 2017, CAR staff processed over 16.6 million

non-VA emergency care claims (unauthorized and Mill Bill) from January 2015 through 

September 2017. One non-VA emergency care visit, or episode of care, can consist of multiple 

claims, including an institutional claim and several provider claims. In addition, the number of 

claims does not equate to the number of veterans, as one veteran may have multiple claims. CAR 

either accepts the claim for payment, denies the claim, or rejects the claim to the community 

provider for additional information. In some cases, if a rejected claim is resubmitted by the 

claimant, it is considered a new claim. 

CAR officials reported that VHA paid about $1.37 billion for reimbursement of all non-VA 

emergency care for veterans in FY 2017.39 The total billed amount for all non-VA emergency 

care claims CAR denied in FY 2017 was $1.95 billion. According to OCC, VA medical center

funding follows historical values of prior years for budgeting. 

CAR Claims Review Process 

The claims process begins when a claim is submitted, either electronically or in paper form. 

CAR processing staff receive electronic claims through FBCS, the official system of record for 

all non-VA emergency care claims adjudication. When a claimant submits a paper claim, CAR

processing staff sort, scan, and upload the claim and associated information into the FBCS.40

 

39 Values for authorized, unauthorized, and Mill Bill non-VA emergency care claims. 

40 Processing staff consist of lead voucher examiners, voucher examiners, program support clerks, and in some cases 

contract staff.
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CAR processing staff verify claim information, assign a payment authority, and link the claim to 

any applicable prior authorizations for care on file in a veteran’s electronic health record. Once 

in FBCS, claims are routed by CAR supervisors to voucher examiners’ queues for processing. 

Prior GAO Findings and Recommendations 

GAO issued a report in March 2014 regarding veterans’ Millennium Act emergency care 

benefits.41 GAO found that VA staff did not comply with applicable Millennium Act 

requirements when they denied the claims, such as not notifying veterans as required that their 

Millennium Act claims were denied. GAO also found weaknesses in VA’s oversight of these 

claims. VA did not collect adequate data for monitoring the appropriateness of Millennium Act 

claim denials. GAO also found that VA staff failed to date stamp and timely scan incoming 

claims. GAO made 12 recommendations to VA, which included the following:

· Require VA facilities to audit the appropriateness of Millennium Act claim approvals and 

denials or establish performance measures related to the appropriateness of claims

decisions.

· Clarify policy for claims processing, such as forwarding claims sent to the wrong facility.

· Require VA facilities to assist the veteran in determining if the claim is eligible for 

coverage by auto insurance or a third party before denying the claim. 

· Clarify guidance that specifies clinicians should determine whether emergent care is 

related to the veteran’s service-connected disability before other criteria are applied.

· Establish a reporting mechanism for VA facilities to provide VA Central Office with data 

related to appropriateness of decisions to approve or deny Millennium Act claims.

· Develop mechanisms for verifying that veteran denial letters are printed and mailed.

· Improve oversight by increasing focus on determining whether claims are appropriately 

denied and ensure deficiencies are corrected.

· Ensure all VA facilities date stamp and scan incoming claims on the date of receipt.

Criteria

In addition to federal regulations, a VHA directive outlines the three payment authorities to 

acquire and pay for non-VA emergency care claims.

42 Each non-VA emergency care claim must 

meet administrative and clinical criteria for eligibility under the appropriate legal authority. 

Voucher examiners and clinical review nurses determine if the claim meets eligibility criteria 

 

41 GAO, VA Health Care Actions Needed to Improve Administration and Oversight of Veterans’ Millennium Act 

Emergency Care Benefit, GAO-14-175 (Washington, DC, March 2014).

42 VHA Directive 1601, Non-VA Medical Care Program, January 23, 2013.
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using VHA’s Community Care Eligibility Criteria for Emergency Care chart, shown in 

Figures B.2 and B.3.

VHA’s Community Care Eligibility Criteria for Emergency Care Chart 

38 U.S.C. § 1703 (38 CFR §§ 17.52-17.56)

Outpatient – Emergency Care

(Authorized Claims)

Must meet ALL of the following: 

- VA notification within 72 hours [38 CFR 17.54(a)] –

and 

- Claims filed within 6 years [31 U.S.C. § 3702(b)] - and 

- Clinical definition of an emergency [38 CFR 

17.52(a)(3)] - and 

- VA and other Federal facilities were not feasibly 

available [38 CFR 17.120(c)] – AND

Must meet one [38 CFR 17.52]:

1. A VA-rated service-connected (SC) disability – or 

2. A disability for which a Veteran was released from 

active duty – or 

3. A disability of a Veteran who has a disability rated as 

permanent and total (P&T) in nature from a SC disability 

– or 

4. A disability associated with and held to be aggravating 

a service-connected disability – or

5. For any disability of a Veteran participating in a 

rehabilitation program under 38 U.S.C. Chapter 31 and 

when there is a need for hospital care or medical services 

for any of the reasons listed in 38 CFR 17.48(i) – or 

6. Any disability of a Veteran who has a VA SC 

disability rating of 50 percent or greater – or (Note: A 

service-connected disability rated at 50 percent or more 

is for one disability, not as a result of combining 

multiple disabilities). 

7. A Veteran who received hospital care, nursing home 

care, domiciliary care, or medical services, and requires 

care or services to complete treatment, for up to 12 

months... -- or 

8. A Veteran receiving increased VA pension or 

additional compensation based on need for aid and 

attendance or housebound benefits... -- or 

9. A Veteran who develops an emergency while 

receiving hospital care or medical services in a VA or 

VA contracted facility ... – or 

10. Hospital care or medical services that will obviate 

the need for hospital admission for Veterans in Alaska, 

Hawaii, Virgin Islands and other territories of the United 

States ... - or 

11. Hospital care or medical services while in authorized 

travel status as indicated in 38 CFR 17.52(a)(8) – or 

12. For any disability of a Veteran receiving VA contract 

nursing home care, and in need of emergency 

treatment... 

38 U.S.C. § 1703 (38 CFR §§ 17.52-17.56)

Inpatient – Emergency Care

(Authorized Claims)

Must meet ALL of the following: 

- VA notification within 72 hours [38 CFR 17.54(a)] – and 

- Claims filed within 6 years [31 U.S.C. § 3702(b)] - and 

- Clinical definition of an emergency [38 CFR 17.52(a)(3)] 

- and 

- VA and other Federal facilities were not feasibly available 

[38 CFR 17.120(c)] - AND 

Must meet one [38 CFR 17.52]:

1. A VA-rated service-connected (SC) disability – or 

2. A disability for which a Veteran was released from active 

duty – or 

3. A disability of a Veteran who has a disability rated as 

permanent and total (P&T) in nature from a SC disability –

or 

4. A disability associated with and held to be aggravating a 

service-connected disability – or 

5. For any disability of a Veteran participating in a 

rehabilitation program under 38 U.S.C. Chapter 31 and 

when there is a need for hospital care or medical services 

for any of the reasons listed in 38 CFR 17.48(i) – or 

6. A Veteran who develops an emergency while receiving 

hospital care or medical services in a VA or VA contracted 

facility ... - or 

7. Female Veteran 

8. Hospital care or medical services that will obviate the 

need for hospital admission for Veterans in Alaska, Hawaii, 

Virgin Islands and other territories of the United States ... --

or 

9. Hospital care or medical services while in authorized 

travel status as indicated in 38 CFR 17.52(a)(8) – or 

10. For any disability of a Veteran receiving VA contract 

nursing home care, and in need of emergency treatment... 

Note: Payment is limited to the point of stabilization, 

except when: 

- VA is contacted upon stabilization – and 

- VA cannot accept the transfer of the Veteran – and 

- The community care facility made and documented 

reasonable attempts to transfer the Veteran to a VA or other 

Federal facility 

Figure B.2. OIG adaptation of VHA’s Community Care Eligibility Criteria for Emergency Care chart (See 

Figure B.3 for a continuation of this figure.)

(Source: VA Community Care Desk Procedures Eligibility Chart, dated February 8, 2017)
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38 U.S.C. § 1728 (38 CFR §§ 17.120-17.132)

Emergency Care (Outpatient and Inpatient)

(Unauthorized Claims)

Must meet ALL of the following: 

- Claims filed within 2 years [38 CFR 17.126] - and 

- Prudent layperson definition [38 CFR 17.120(b)] - and 

- VA and other Federal facilities were not feasibly 

available [38 CFR 17.120(c)] - AND 

Must meet one [38 CFR 17.120]:

1. A VA-rated service-connected (SC) disability – or

2. For nonservice-connected disabilities associated with 

and held to be aggravating a service-connected disability 

– or 

3. For any disability of a Veteran who has a disability 

rated as permanent and total (P&T) in nature from a SC 

disability – or 

4. For any illness, injury, or dental condition in the case 

of a Veteran participating in a rehabilitation program 

under 38 U.S.C. Chapter 31, and medically determined 

to be in need of hospital care or medical services 

(including dental) for any of the reasons listed in 38 CFR 

17.47(i)(2) 

Note: Payment is limited to the point of stabilization, 

except when: 

- VA is contacted upon stabilization – and 

- VA cannot accept the transfer of the Veteran – and 

- The community care facility made and documented 

reasonable attempts to transfer the Veteran to a VA 

facility or other Federal facility

38 U.S.C. § 1725 (38 CFR §§ 17.1000-17.1008)

Emergency Care (Outpatient and Inpatient)

(Mill Bill Claims)

Must meet ALL of the following: 

- Claims filed within 90 days [38 CFR 17.1004(d)] - and 

- Prudent layperson definition [38 CFR 17.120(b)] - and 

- VA and other Federal facilities were not feasibly 

available [38 CFR 17.120(c)] - AND 

Must meet one [38 CFR 17.1002]:

1. The emergency services were provided in a hospital 

emergency department or a similar facility – and 

2. Veteran was enrolled in the VA health care system and 

had received medical services under authority of 38 U.S.C. 

Chapter 17 within the 24-month period preceding the 

furnishing of such emergency treatment – and 

3. Veteran is financially liable to the provider of 

emergency treatment for that treatment – and 

4. Veteran has no coverage under a health-plan contract 

(no other health insurance - OHI) for payment or 

reimbursement* – and 

5. The claimant has no contractual or legal recourse, and 

has exhausted without success all liability claims and 

remedies reasonably available to the Veteran or provider 

against a third party for payment of such treatment for 

extinguishing, in whole, the Veteran’s liability to the

provider – and 

6. The Veteran is not eligible for reimbursement under 38 

U.S.C. § 1728 for the emergency treatment 

Note: Payment is limited to the point of stabilization, 

except when same conditions as 38 U.S.C 1728. 

*Potentially subject to change if the Staab Ruling is 

upheld.

Figure B.3. OIG adaptation of VHA’s Community Care Eligibility Criteria for Emergency Care chart

(Continued from Figure B.2.) 

(Source: VA Community Care Desk Procedures Eligibility Chart, dated February 8, 2017)

Payment Authorities

According to trainings given by the Quality Workforce Development and VHA Community Care 

Operations Program Office, when voucher examiners process claims, they must keep in mind the 

order of legal authorities. Specifically, when a claim does not meet the administrative and 

clinical eligibility for an authorized claim, the voucher examiner should next review a claim 

against unauthorized claim eligibility criteria. When a claim is not eligible under either 

authorized or unauthorized eligibility criteria, the voucher examiner must lastly review the claim 

against Mill Bill eligibility criteria. 

Filing Date

Federal regulation states that “[t]he date of filing any claim for payment or reimbursement of the 

expenses of medical care and services not previously authorized shall be the postmark date of a 
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formal claim, or the date of any preceding telephone call, telegram, or other communication

constituting an informal claim.”43

Clinical Review Requirements

Federal regulations state that a designated VA clinician will make the determination whether a 

veteran was enrolled in the VA health care system and had received medical services within the 

24-month period preceding the furnishing of emergency treatment.44 In other words, for a 

voucher examiner to deny a claim with the denial reason of “38 U.S.C. 1725 No VA Treatment 

in Past 24 Months,” a clinician needs to make that determination. Yet the CAR Standardized 

Administrative and Clinical Review Template indicated the voucher examiner was responsible 

for determining if a veteran was enrolled and received medical services within a 24-month 

period. 

Third-Party Liability 

When certain third-party liability exists for emergency treatment rendered to veterans for 

nonservice-connected conditions (e.g., situations involving auto insurance or workers’ 

compensation claims), VA may act as a secondary payer. VA acts as secondary payer when a 

third party is financially responsible for coverage of emergency treatment expenses received for 

service-connected conditions (under 38 U.S.C. § 1728). In some cases, VA may act as secondary 

payer when certain third-party liability exists for emergency treatment received for 

nonservice-connected conditions (under 38 U.S.C. § 1725). In such instances, VA coverage is 

limited to the amount for which the veteran is personally liable after exhausting the third-party 

coverage (e.g., automobile personal injury protection insurance). 

In the 2014 GAO report on Mill Bill emergency care benefits, GAO recommended VA 

“establish a policy regarding processing Millennium Act claims to require VA facilities to assist 

the veteran in determining whether a claim is eligible for coverage by auto insurance or another 

third party before denying the claim.” As a result, a new Millennium Bill Third Party Liability

Request for Additional Information rejection reason was created. According to OCC guidance, 

the rejection reason included “clarification of auto insurance vs. other 3rd party liability 

processes and requirements. It is imperative that sites utilize this rejection reason and forward the 

letter prior to denying a claim for third-party liability.”

45

 

43 38 CFR §17.127, Date of filing claims.

44 Per 38 CFR §§ 17.1002(d) and 17.1006, a clinician has to make the determination that no VA treatment was 

provided in the past 24 months.

45 The Bulletin, 3, no. 13, (June 26, 2014).
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Appendix C: Scope and Methodology

Scope

The audit team performed audit work from December 2017 through May 2019. During this audit, 

the audit team provided interim briefings to CAR leaders. The audit scope was nationwide and 

covered non-VA emergency care claims-processing activities and decisions during FY 2017 and 

2018. In coordination with VA OIG statisticians, the team selected a statistical sample of denied 

and rejected non-VA emergency care claims that were scanned or electronically received during 

the six-month period of April 1 through September 30, 2017. Appendix D contains specific 

details of statistical sampling methodologies. 

Methodology

To address the audit objectives, the audit team

· Reviewed applicable laws, regulations, policies, procedures, and guidelines regarding 

non-VA emergency care claims;

· Interviewed 182 CAR staff with direct knowledge and responsibility for processing 

non-VA emergency care claims, including CAR leaders, regional officers, VACC 

managers, supervisors, lead examiners, and voucher examiners;

· Conducted a survey of voucher examiners consisting of questions about processing 

non-VA emergency care claims;

· Reviewed voucher examiner performance standards and ratings;

· Reviewed a statistical sample of denied or rejected non-VA emergency care claims and 

associated supporting documentation to determine if the claims were inappropriately 

processed;

· Conducted a clinical assessment of some sampled claims to determine if the episode of 

care in question was clinically emergent or considered emergent by a prudent layperson, 

if a VA medical facility was feasibly available, and if the emergency care rendered was 

related to the veteran’s service-connected disability;

46

· Reviewed relevant VA email records; and 

· Conducted site visits to nine CAR facilities, covering all five OCC regions. Four sites 

were selected based on congressional inquiries. The remaining five sites were selected 

 

46 This assessment was conducted by OIG healthcare inspectors.
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based on the percentage of denied and rejected claims during the last two quarters of 

FY 2017. Selected sites included both consolidated and nonconsolidated sites: 

o Region 1: Cleveland, Ohio 

o Region 2: Perry Point, Maryland; Washington, DC 

o Region 3: Columbia, Missouri; Kansas City, Missouri

o Region 4: Denver, Colorado; Minneapolis, Minnesota; St. Cloud, Minnesota

o Region 5: Vancouver, Washington

Fraud Assessment

The audit team assessed the risk that fraud, violations of legal and regulatory requirements, and 

abuse could occur during this audit. The audit team exercised due diligence in staying alert to 

any fraud indicators, including taking the following actions:

· Reviewed patient and billing information of sampled claims, such as patient name and 

claim date of service, to verify whether the information was consistent with the veterans’ 

information in the electronic health record;

· Interviewed CAR staff, reviewed relevant email records, and reviewed survey responses 

for potentially fraudulent activities within the scope of the audit; and

· Solicited the OIG’s Office of Investigations to determine if there were any ongoing cases 

involving processing of non-VA emergency care claims.

The audit team did not identify any instances of fraud during this audit. 

Data Reliability

The OIG used computer-processed data from VA’s Corporate Data Warehouse. To test for 

reliability, the audit team determined whether any data were missing from key fields, included 

any calculation errors, or were outside the time frame requested. The audit team also assessed 

whether the data contained obvious duplication of records, alphabetic or numeric characters in 

incorrect fields, or illogical relationships among data elements. The OIG compared claims 

documentation from VA’s FBCS system to claims data in VA’s Corporate Data Warehouse. The 

audit team concluded that the data obtained and relied on were sufficiently reliable for the 

purposes of this audit.

Government Standards

We conducted this performance audit in accordance with generally accepted government 

auditing standards. Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions 

based on our audit objectives. We believe that the evidence obtained provides a reasonable basis 

for our findings and conclusions based on our audit objectives.
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Appendix D: Statistical Sampling Methodology

To determine whether VA medical claims processors inappropriately processed denied or 

rejected non-VA emergency care claims, the audit team selected a statistical sample of 

· Denied Uniform Bill (UB-04) and Health Care Financing Administration (HCFA)

unauthorized and Millennium Bill claims, and

· Rejected UB-04 and HCFA unauthorized and Millennium Bill claims.

47

Population

To determine whether VA medical claims processors inappropriately processed denied or 

rejected non-VA emergency care claims, the audit team selected a sample of denied and rejected 

UB-04 and HCFA unauthorized and Millennium Bill claims. The population consisted of 

750,106 rejected claims and 220,339 denied claims that were scanned or electronically received

from April 1 through September 30, 2017. 

The scope included claims that were processed under 38 U.S.C. §1728 (unauthorized claims) and 

38 U.S.C. §1725 (Millennium Bill claims).48 The audit team contacted the OCC Department of 

Informatics and Data Analytics to obtain their methodology and further identify potential 

non-VA emergency care claims. According to the Department of Informatics and Data Analytics, 

non-VA emergency care claims can be identified by the place of service or revenue code on 

HCFA and UB-04 claims, respectively. Ultimately, the audit team reviewed a population of 

UB-04 claims with a revenue code containing any of the following: 045X, 0450, 0451, 0452, 

0456, or 0459. In addition, to ensure all non-VA emergency care claims were included, the audit 

team also included any claims with a description of “EMER,” or “ER.” For HCFA claims, the 

audit team reviewed claims with a place of service of 11, 20, 22, and 23.

Sampling Design

To assess non-VA emergency care claims, the audit team used a stratified random sample. From 

the population, the audit team sampled 180 denied and 60 rejected non-VA emergency care 

claims. The audit team ultimately reviewed a total of 359 claims, but only provided an 

assessment for 240 claims. The remaining 119 were replaced because the audit team determined 

 

47 The UB-04 claim is the official HCFA form used by hospitals and healthcare centers when submitting bills to 

Medicare and third-party payers for reimbursement for health services. The HCFA claim is the official standard 

form used by physicians and other providers when submitting claims for reimbursement to Medicare or Medicaid 

for health services.

48 Non-VA emergency care claims included unauthorized, Mill Bill, and service-connected emergency claims. The 

universe of claims for the last two quarters of FY 2017 consisted of about 1 percent of claims that were categorized 

as service-connected emergency care. The 240 claims assessed by the audit team were either unauthorized or Mill 

Bill claims.
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that the original claim was not an emergency episode of care, was not for a veteran’s non-VA 

emergency episode of care or was not processed by a voucher examiner.

Weights

The audit team calculated estimates in this report using weighted sample data. Sampling weights 

are computed by taking the product of the inverse of the probabilities of selection at each stage 

of sampling.

Projections and Margins of Error

The margins of error and confidence intervals are indicators of the precision of the estimates. If 

the OIG repeated this audit with multiple samples, the confidence intervals would differ for each 

sample, but would include the true population value 90 percent of the time.

Table D.1 presents estimates over the sample population, including the sample results, estimate, 

margin of error, lower 90 percent value and upper 90 percent value. 

Table D.1. Statistical Projections – Non-VA Emergency Care Claims Denial and 

Rejection Errors

Results

Sample 

Results Estimate

Margin of 

Error Lower 90% Upper 90%

Non-VA 

Emergency 

Care Claims –

In Scope

240 631,930 70,349 561,582 702,279

Inappropriately 

Processed

99 195,606

(31%)

55,338

(8%)

140,268

(23%)

250,944

(39%)

Inappropriately 

Processed –

Billed Amount

99 $716,150,400 $327,119,400 $389,031,000 $1,043,270,000

Inappropriately 

Processed –

Unique 

Veterans

99 60,837 18,735 42,102 79,573

Total Denied 

Claims

180 170,148 10,601 159,547 180,749

Inappropriately 

Processed -

Denied Claims 

86 81,526

(48%)

12,577

(7%)

68,949

(41%)

94,103

(55%)

Total Rejected 

Claims 

60 461,783 69,546 392,237 531,328
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Results

Sample 

Results Estimate

Margin of 

Error Lower 90% Upper 90%

Inappropriately 

Processed –

Rejected 

Claims

13 114,081

(25%)

53,890

(11%)

60,191

(14%)

167,970

(36%)

Inappropriately 

Processed 

Denial 

Percentage –

Region 1* 

12 40% 15% 25% 55%

Inappropriately 

Processed 

Denial 

Percentage –

Region 2*

10 33% 14% 19% 48%

Inappropriately 

Processed 

Denial 

Percentage –

Region 3*

21 70% 14% 56% 84%

Inappropriately 

Processed 

Denial 

Percentage –

Region 4*

28 47% 14% 32% 61%

Inappropriately 

Processed 

Denial 

Percentage –

Region 5*

15 50% 15% 35% 65%

Inappropriately 

Processed –

Claim Should 

Have Been 

Approved

28 44,959 24,831 20,129 69,790

Inappropriately 

Processed –

Claim Should 

Have Been 

Approved –

Billed Amount

28 $174,017,515 $120,733,820 $53,283,695 $375,164,371

Errors –

Claims Should 

Have Been 

Approved –

Unique 

Veterans

28 17,434 9,335 8,099 26,769
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Results

Sample 

Results Estimate

Margin of 

Error Lower 90% Upper 90%

Inappropriately 

Processed 

Claims Should 

Have Been 

Suspended, 

Rejected for

Additional 

Information, or 

Denied with 

Accurate 

Denial Reason

71 150,647 50,643 100,004 201,290

Source: VA OIG analysis of statistically sampled results projected over the sample population. Data 

used for analysis and projections was obtained from the VA’s Corporate Data Warehouse.

* The only statistically significant differences are between Region 1 and Region 3, Region 2 and 

Region 3, and Region 3 and Region 4. There is no statistically significant difference in error rate 

between region unless stated otherwise.
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Appendix E: Potential Monetary Benefits in 

Accordance with Inspector General Act Amendments

Note: The estimated value represents the total billed amount. VA documentation states that VA payment rates 

for emergency care are generally 100 percent of Medicare rates for service-connected conditions and 

70 percent of Medicare rates for nonservice-connected conditions. In addition, OIG estimated that if OCC 

continued to inaccurately deny or reject claims it should have approved as estimated in table D.1 for a sixmonth period, based on payment rates in effect at the time of this review, this could lead to an estimated 

$533 million in improper underpayments over five years. The five-year estimate is an extrapolation of the sixmonth estimate. The six-month estimate is a conservative estimate (based on the lower limit of the 90 percent 

confidence interval) therefore the five-year estimate is also conservative.

Recommendation Explanation of Benefits Better Use of 

Funds

Questioned 

Costs

1–4, 9 OCC inappropriately denied or 

rejected claims it should have 

approved, in the estimated amount of 

$53.3 million during a six-month 

period. The OIG further estimated 

errors could result in $533 million in 

improper underpayments over a 

period of five years if corrective 

actions are not taken.

$0 $533 million

Total $0 $533 million
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Appendix F: Survey Results

The audit team conducted a survey of CAR staff that process non-VA emergency care 

claims. The audit team distributed the survey to 1,333 CAR staff via email and during site 

visits. In total, 435 people responded to the survey. Of the 435 responses, 394 answered that

they processed non-VA emergency care claims. The figures below illustrate responses from 

those 394 voucher examiners.

Figure F.1. Pie chart of responses to question 2

(Source: VA OIG analysis of survey responses)

187

Respondents

48%

167 

Respondents

42%

33 Respondents

8%

7 Respondents

2%

On average, does it take you less time to deny non-VA 

emergency care claims than it does to approve 

claims?

Yes No Unsure No Response
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Figure F.2. Pie chart of responses to question 3

(Source: VA OIG analysis of survey responses)

Figure F.3. Pie chart of responses to question 4

(Source: VA OIG analysis of survey responses)

210

Respondents

53%

148

Respondents

38%

31 Respondents

8%

5 Respondents 

1%

On average, does it take you less time to reject nonVA emergency care claims than it does to approve 

claims? 

Yes No Unsure No Response

215 

Respondents

55%

94 

Respondents

24%

81

Respondents

20%

4 Respondents

1%

Are you able to process the necessary amount of nonVA emergency care claims per your performance 

standards to receive fully successful performance 

rating on production targets?

Yes No Unsure No Response
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Figure F.4. Pie chart of responses to question 5

(Source: VA OIG analysis of survey responses)

Figure F.5. Pie chart of responses to question 6

(Source: VA OIG analysis of survey responses)

156 

Respondents

40%

138 

Respondents

35%

90

Respondents

23%

10 Respondents

2%

Are you able to process the necessary amount of nonVA emergency care claims per your performance 

standards to receive exceptional performance rating 

on production targets?

Yes No Unsure No Response

154 

Respondents

39%

227 

Respondents

58%

13 Respondents 

3%

Are you aware of any instances in which claim 

processors inaccurately denied or rejected non-VA 

emergency care claims in an effort to meet or exceed 

individual production targets?

Yes No No Response
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Figure F.6. Pie chart of responses to question 7

(Source: VA OIG analysis of survey responses)

Figure F.7. Pie chart of responses to question 8

(Source: VA OIG analysis of survey responses)

16 Respondents 

4%

367 Respondents

93%

11 Respondents 

3%

Have you been directed or encouraged by a 

supervisor(s) to improperly deny or reject veterans' 

emergency care claims in order to meet production 

targets?

Yes No No Response

153 

Respondents

195 39%

Respondents

49%

20 Respondents

5%

16 Respondents

4% 10 Respondents

3%

Are non-VA emergency care claims-processing 

decisions, including rejected and denied claims, 

reviewed for accuracy by a supervisor?

All ER claims are subject to supervisory

review for accuracy.

I am not aware of any claims being

reviewed for accuracy.

Only approved claims are reviewed for

accuracy.

Only rejected or denied claims are

reviewed for accuracy.

No Response
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Figure F.8. Pie chart of responses to question 9

(Source: VA OIG analysis of survey responses)

Figure F.9. Pie chart of responses to question 10

(Source: VA OIG analysis of survey responses)

161 

Respondents

41%

146

Respondents

37%

74

Respondents

19%

13 Respondents

3%

If your claims were reviewed for accuracy, were you 

aware of the results?

Yes No Not Applicable No Response

229 

Respondents

58%

148 

Respondents

38%

17 Respondents

4%

Do you receive adequate training to successfully 

conduct the duties of your job?

Yes No No Response
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Appendix G: Management Comments

Department of Veterans Affairs Memorandum

Date: June 24, 2019

From: Executive in Charge, Office of the Under Secretary for Health (10)

Subj: OIG Draft Report, Non-VA Emergency Care Claims Inappropriately Denied and Rejected (VIEWS 

# 01118154)

To: Assistant Inspector General for Audits and Evaluations (52)

1. Thank you for the opportunity to review the Office of Inspector General (OIG) draft report Non-VA 

Emergency Care Claims Inappropriately Denied and Rejected. I concur with recommendations 1-4, 7-9 and 

11 and concur in principle with recommendations 5, 6 and 10. I am providing the attached technical 

comments and action plan to address OIG’s recommendations.

2. The Veterans Health Administration (VHA) is committed to continuously improving its 

processes and developing effective measures for non-VA emergency care claims processing. VHA is 

invested in protecting the interests and welfare of Veterans who rely on us to provide dependable, highquality health care. Paying claims timely and accurately is a priority for VHA and we take this responsibility 

very seriously. 

3. VHA greatly appreciates OIG’s findings, but it is important to note that the sample reviewed included claims 

from April to September 2017, and prior to receiving the OIG’s findings, VHA’s Office of Community Care 

(OCC) had self-identified most concerns found in the OIG report and began taking corrective actions. OCC 

took steps more than a year ago to implement numerous improvements to mitigate many of the findings in 

the report. Improvements included: 

a. Changing claims processing guidance and offering training to voucher examiners to enable 

greater accuracy and quality; 

b. Revising processes and adjusting system functions affecting the handling of other health 

insurance (OHI) claims as well as those used to correct denied claims and communicate with 

providers and Veterans;

c. Standardizing language used in denial notices and rejection reason explanations and 

implementing revised guidance to assist voucher examiner staff in claims decision-making;

d. Initiating nationwide quality and accuracy reviews, specifically on denied and rejected claims, 

to assess processing accuracy and identify additional staff training needed to address 

processing error trends; and 

e. Revising performance plans to eliminate production-related elements affecting voucher 

examiners in fiscal year 2018-2019.

4. OCC is continuing to make strategic and transformative changes to the Claims Adjudication and 

Reimbursement Directorate (CAR). These changes will significantly improve the claim processing 

environment ensuring greater quality, automation, and a positive work environment. These changes include:

a. Fully revising voucher examiners performance plans to align with the new strategic direction 

for CAR. The revised performance plan emphasizes balance across production, accuracy, 

quality, customer service, and teamwork dimensions.

b. Consolidating operations and focusing the organization on value-added activities and new 

product lines, with a concentration on education, training, quality, provider engagement, 

appeals and contractor performance.

c. Placing greater emphasis on process standardization, best practices, specialization, and 

workload oversight and balancing.
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d. Chartering a workgroup with members who are knowledgeable about employee engagement, 

inclusion, and psychological safety. The workgroup will also include those with expertise 

aimed at helping CAR managers and supervisors change and adopt behaviors important to 

focusing on quality management. 

e. Continuing to move towards elimination of paper claims as well as strengthening and 

modernizing the claims information technology infrastructure. Part of these modernization 

efforts includes implementation of the Electronic Claims Adjudication Management System 

(eCAMS). eCAMS is a modern, efficient, and automated software product that will process 

health care claims submitted by community providers and enable greater accuracy in claims 

handling. 

5. VHA is reviewing the audit’s sample claims and OHI denials and has initiated necessary corrective 

actions. OCC will provide impacted Veterans with a notice of the error and OCC’s re-adjudication 

actions and will be advised that they can contact the Community Care Contact Center if they need 

help with provider bills or negative financial reporting. Impacted Veterans will have 1 year from the 

date of the new decision notice to file an appeal. VHA will take these actions for the period covered 

by the OIG’s sample, and for any other claims determined to have been improperly denied between 

April 8, 2016 and January 9, 2018. VHA is already taking actions to address improperly denied 

claims after January 9, 2018.

6. If you have any questions, please email Karen Rasmussen, M.D., Director for GAO-OIG 

Accountability Liaison at VHA10EGGOALAction@va.gov. 

(Original signed by)

Richard A. Stone, M.D.

Attachments
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Attachment

VETERANS HEALTH ADMINISTRATION (VHA)

Action Plan

OIG Draft Report: Audit of Non-VA Emergency Care Claims Inappropriately 

Denied and Rejected

Date of Draft Report: May 13, 2019 

______________________________________________________________________

Recommendations/ Status Completion Date

Actions

Recommendation 1: The Under Secretary for Health reevaluates all claims denied after April 8, 

2016, for the reason of “other health insurance” for appropriate corrective action. 

VHA Comments: Concur

The Veterans Health Administration (VHA) recognizes the impact erroneously denied claims may have on 

Veterans and we take seriously our responsibility to pay claims timely and accurately. 

VHA’s Office of Community Care (OCC) will take corrective actions on claims determined to have been 

improperly denied for the presence of other health insurance (OHI) after April 8, 2016. The claimants will 

be provided with a notice of the error and OCC’s re-adjudication actions and will advise Veterans they 

can contact the Community Care Contact Center if they need help with provider bills or negative financial 

reporting. 

In addition, the claims will be reopened, any missing evidence will be requested (including evidence 

regarding any payment by OHI), and claims will be re-adjudicated upon receipt of any such missing 

evidence. Claimants will have 1 year from the date of the new decision notice to file an appeal. 

VHA will take these actions for the period covered by the OIG’s sample and for any other claims 

determined to have been improperly denied between April 8, 2016 and January 9, 2018. VHA is already 

taking actions to address improperly denied claims after January 9, 2018. 

To demonstrate completion of this recommendation, OCC will provide the following documentation:

· Copy of Veteran Communication Letter 

· Listing of affected Veterans notified of erroneously denied/rejected claims 

Status: Target Completion Date: 

In process November 2019

Recommendation 2: The Under Secretary for Health implements a clearly defined decision matrix 

that allows staff to accurately determine when claims should be denied, rejected, or approved; 

initiates a process to systematically audit denied and rejected claims; and takes corrective 

actions as needed based on audit results. 

VHA Comments: Concur
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In March 2018, after an internal audit of non-VA emergency claims, the Office of Community Care (OCC) 

began to develop and implement a portfolio of targeted process and organizational improvements aimed 

at addressing non-VA emergency claim processing accuracy and quality. To assist staff with making 

decisions on when claims should be denied, rejected, or approved, OCC is revising existing standard 

operating procedures (SOP) and developing additional job aides and tools to assist staff with making 

accurate eligibility and adjudication decisions. 

OCC has revised and standardized all claim denial and rejection reasons. The Emergency Care Claim 

Processing SOP document was updated with additional guidance on the use of standardized denial and 

rejection reasons. OCC communicated and distributed the revised SOP to existing staff. An OCC Special 

Audit Team review, completed in April 2019, found a 98 percent degree of compliance with the use of 

standardized denial or rejection reason codes. 

To systematically audit denied and rejected claims, in November 2018, OCC initiated weekly quality and 

accuracy reviews covering rejected and denied claims. OCC Claims Adjudication and Reimbursement 

Directorate (CAR) supervisors analyze the findings from these reviews to identify individual and group 

remedial training needs, as well as to determine local claims processing accuracy and trends. The 

reviews help to identify inappropriate denial reasons, non-standard denial reason usage and employees 

with patterns of inappropriate denials. Review results are regularly discussed at the CAR Directorate level

for nationwide awareness, best practice sharing, and discussion of additional internal controls needed to 

prevent future errors. 

The clinical workgroup within CAR now regularly reviews rejection and denial reasons on clinical 

decisions. In addition, pre-decisional denial secondary reviews by CAR Regional Clinical Managers 

began in February 2019. These reviews enable the Regional Clinical Managers to assess accuracy, 

quickly overturn incorrect decisions, and conduct on the spot training with staff. 

Finally, OCC is fully revising the Emergency Care Claim Processing SOP, and related training offerings to 

incorporate additional guidance and instructions important to claim adjudication and decisioning. 

To demonstrate completion of this recommendation, OCC will provide the following documentation:

· Revised Emergency Care Claim Processing SOP 

· Supervisor Quality and Accuracy Review SOP 

· OCC fiscal year 2019 Millennium Act Standard Denial Reason Analysis

Status: Target Completion Date: 

In process August 2019

Recommendation 3: The Under Secretary for Health develops and implements a control to ensure 

claims processors have the appropriate options in the claims processing system of record to 

request evidence necessary to substantiate third-party liability claims. 

VHA Comments: Concur 

The Office of Community Care (OCC) implemented the following controls to ensure claims processors 

have appropriate processes and tools to adjudicate claims with a partial payment by a third party, 

including under a health-plan contract. 

In March 2019, OCC eliminated the Fee Basis Claim System prompt that triggered a claim denial when a 

voucher examiner indicated that other health insurance was present. All OCC claims processing sites 

have disabled the denial reason titled: “Veteran has Third Party Liability.” If other payer information is not 
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submitted with the claim, the claim will be rejected with an indication that additional supporting 

documentation is necessary to determine the Department of Veterans Affairs allowable amount after any 

payment by a third party. 

The Emergency Care Claim Processing Standard Operating Procedures (SOP) document has been 

updated and this direction communicated and distributed to the field. Ad hoc spot checks are performed 

to verify that claims are rejected rather than denied when third party liability documentation is needed. 

Weekly accuracy reviews of denied and rejected claims are conducted by supervisors to monitor the 

disposition of these claims. 

OCC is fully revising the Emergency Care Claim Processing SOP and related training offerings to 

incorporate additional guidance and instructions important to claim adjudication and decisioning.

To demonstrate completion of this recommendation, OCC will provide the following documentation:

· Ad hoc spot check report confirming rejection, rather than denial, of claims 

· Revised Emergency Care Claim Processing SOP 

Status: Target Completion Date: 

 In process August 2019

Recommendation 4: The Under Secretary for Health reevaluates all sample claims identified in 

this audit as inappropriately denied and rejected for appropriate corrective action. 

VHA Comments: Concur

The Veterans Health Administration (VHA) recognizes the impact erroneously denied and rejected claims 

may have on Veterans and we take seriously our responsibility to pay claims timely and accurately. 

All sample claims identified in the Office of Inspector General audit as inappropriately denied and rejected 

will be reevaluated for appropriate corrective action. The Office of Community Care (OCC) will begin 

issuing letters to negatively affected Veterans. These letters will explain the error and OCC’s readjudication actions and advise Veterans about how they can contact the Community Care Contact 

Center should they need help with providers for costs paid out of pocket and/or negative financial 

reporting. Any new decisions issued after corrective action is taken will provide a 1 year appeal period 

from the date of the new decision. 

To demonstrate completion of this recommendation, OCC will provide a listing of affected Veterans from 

the audit, with the action taken on each. 

Status: Target Completion Date: 

In process September 2019

Recommendation 5: The Under Secretary for Health reevaluates production targets, work 

production credits, and application of non-processing time for voucher examiners to ensure the 

production targets include claims research.

VHA Comments: Concur in principle

In October of 2018, the Office of Community Care (OCC) eliminated the critical production-related 

performance element from the voucher examiner fiscal year (FY) 2018 performance plan. There is no 

need to reevaluate production targets or work production credits because production targets have been 

eliminated as well for FY 2019. 
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OCC initiated discussions to fully revise voucher examiner performance plans to align with the new 

strategic direction for the Claims Adjudication and Reimbursement Directorate (CAR). The revised

performance plan emphasizes balance across production, accuracy, quality, customer service, and 

teamwork dimensions. The revised CAR performance framework and voucher examiner plan is currently 

under union review. The voucher examiner performance plan takes into consideration all facets of 

activities important to CAR’s values and future direction. 

Upon the Veterans Health Administration and union agreement, OCC will begin national implementation. 

The new performance framework will become effective in FY 2019 if the performance plan is union 

approved by July 2019; otherwise, the plan will become effective with the next FY performance period.

To demonstrate completion of this recommendation, OCC will provide the revised/approved performance 

plan ready for implementation. 

Status: Target Completion Date: 

In process September 2019

Recommendation 6: The Under Secretary for Health requests and ensures the Office of 

Resolution Management conducts an organizational assessment of the Claims Adjudication and 

Reimbursement processing locations where staff reported they were directed or encouraged to 

improperly process claims and take appropriate action.

VHA Comments: Concur in principle

The Office of Community Care (OCC) concurs in principle that an organizational assessment of 

processing locations where staff reported they were directed or encouraged to improperly process claims 

is warranted but considers responsibility for the assessment to fall within the authority of the Executive 

Director (ED) of OCC Delivery Operations (DO). OCC believes it is prudent for the ED to conduct the 

organizational assessment. This effort is in alignment with the work DO has undertaken to ensure a 

positive workplace culture is in place to support a balanced set of values that includes production, 

accuracy, quality, customer service, and teamwork.

The ED will charter a workgroup, that may include the Office of Resolution Management as well as other 

subject matter experts within the Veterans Health Administration knowledgeable about employee 

engagement, inclusion, and psychological safety. The workgroup will also include those with expertise 

aimed at helping Claims Adjudication and Reimbursement Directorate managers and supervisors change 

and adopt behaviors important to focusing on quality management. 

To demonstrate completion of this recommendation, OCC will provide the following documentation:

· Organizational Assessment Workgroup Charter

· Organizational Assessment report 

Status: Target Completion Date: 

In process October 2019

Recommendation 7: The Under Secretary for Health implements strategic plans to ensure the 

Office of Community Care, Claims Adjudication and Reimbursement, emphasizes the accuracy of 

claims processing decisions. 

VHA Comments: Concur
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In September 2018, leaders from the Office of Community Care’s (OCC) Claims Adjudication and 

Reimbursement Directorate (CAR) completed development of a comprehensive strategic and 

transformational plan which affirms and communicates a mission, vision and goals centered on quality, 

service, accountability, and customer experience. The plan encompasses specific strategies for CAR’s 

transformation over a 2-year horizon including: 

· Moving the organization from being a manual, decentralized claims processing unit to one that is

regionally centralized and automated.

· Placing greater emphasis on process standardization, best practices, specialization, and 

workload oversight and balancing.

· Consolidating operations and focusing the organization on value-add activities and expansion into 

new product lines, such as quality, provider engagement, appeals and contractor performance.

A cornerstone of the CAR’s strategic plan is a renewed emphasis on quality assurance (QA) and 

accuracy of claims processing decisions. CAR defined quality initiatives for implementation at the regional 

and national levels. CAR’s QA Plan defines milestones with specific goals, activities with 

interdependencies, and key outcomes/deliverables. The plan includes the hiring of new QA positions 

which include: QA Officers at the Program and each regional level, Internal Controls Specialists, Policy 

Analysts and Trainers.

OCC is currently implementing both the CAR strategic and QA plans. CAR has already hired several of 

the key QA positions and is on track to complete the initiatives defined for the first milestone. 

OCC is overseeing progress through regular meetings with the CAR management team and staff. These 

meetings focus on progress and successes as well as provide a forum for problem-solving and 

refinement of future plans. Weekly QA plan meetings are also conducted regionally and nationally 

covering: process improvement results and opportunities, QA and accuracy review results, 

standardization issues and internal control needs and documentation efforts. Results reviewed at the 

national level guide system-wide improvements such as revised standard operating procedures, training, 

or other process improvements.

To demonstrate completion of this recommendation, OCC will provide the following documentation:

· Overall CAR Strategic Plan 

· CAR Quality Assurance Plan 

· 6-Month Quality Assurance Plan Progress Report 

Status: Target Completion Date: 

In Progress August 2019

Recommendation 8: The Under Secretary for Health implements controls to ensure eligibility for 

overtime, telework, and annual performance bonuses for Claims Adjudication and Reimbursement 

staff includes all facets of performance. 

VHA Comments: Concur 

Department of Veterans Affairs overtime (OT), telework, and annual performance bonus determinations 

must conform with applicable regulations, policies, and collective bargaining agreements. Per VA policy, 

employee performance is one consideration among others for OT and telework determinations. 
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The Office of Community Care (OCC) Claims Adjudication and Reimbursement Directorate (CAR) has 

drafted new performance plans and standards for staff which take into consideration many facets of 

performance. Elements such as accuracy, quality, customer service, and teamwork will be considered 

when assessing performance and determining an annual performance rating and awards under the new 

framework. All facets of new performance standards will factor into the determination of OT and telework 

assignments. CAR recently created a nationwide OT policy. CAR presented the proposed policy to the 

union for ratification in May 2019. Once agreed to, the policy will become effective immediately.

OCC will hold meetings and discussions with CAR managers and staff to introduce and implement the 

new performance framework and policy changes. These forums will help to ensure understanding of the 

changes being implemented. 

To demonstrate completion of this recommendation, OCC will provide the following documentation:

· Revised/approved performance plan ready for implementation 

· Revised CAR OT policy 

Status: Target Completion Date: 

In process September 2019

Recommendation 9: The Under Secretary for Health develops and implements a clearly defined 

and effective quality assurance program that encompasses all claims decisions and includes a 

standardized process for supervisors to determine and effectively monitor the extent to which 

claims processors accurately rejected and denied non-VA emergency care claims. 

VHA Comments: Concur

A cornerstone of the Office of Community Care’s (OCC) Claims Adjudication and Reimbursement 

Directorate (CAR) strategic plan is a renewed emphasis on quality assurance (QA) and accuracy of 

claims processing decisions. The strategic plan includes the creation of a new QA product.

The QA plan has been developed and defines milestones with specific goals, activities with 

interdependencies on other departments, and key outcomes/deliverables. The plan includes initiatives to 

create and enhance the QA product line at the regional and national levels. It includes the hiring of new 

QA positions which includes: QA Officers at the program and each regional level, Internal Controls 

Specialists, Policy Analysts and Trainers.

CAR is implementing the plan and has hired several of the key QA positions and is on track to complete 

key initiatives defined for the initial milestone:

· Grow and perfect internal quality and accuracy reviews, including improved automated generation 

of samples, storage and tracking of results and analysis;

· Grow and perfect clinical workgroup quality and accuracy reviews, including pre-decisional 

secondary reviews;

· Complete Program Integrity Tool Business Rules – Inpatient payments and enhanced duplicate 

detection;

· Align Regional Policy Analysts with Program Office QA team to write and standardize desk 

procedures; and
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· Fully revise the Emergency Care Claim Processing standard operating procedures (SOPs), and 

related training offerings to incorporate additional guidance and instructions important to claim 

adjudication and decisioning. 

OCC is overseeing CAR’s strategic plan implementation and holds regular meetings with the CAR 

management team and staff. These meetings focus on progress and successes as well as provide a 

forum for problem-solving and refinement of future plans. Weekly QA plan progress meetings are also 

conducted regionally and nationally covering: process improvement results and opportunities, QA and 

accuracy review results, standardization issues and internal control needs and documentation efforts. 

Results reviewed at the nation level guide system-wide improvements such as revised SOP’s, training, or 

other process improvements. 

To demonstrate completion of this recommendation, OCC will provide the following documentation:

· Overall CAR Strategic Plan

· CAR QA Plan 

· Fiscal year 2020, 1st Quarter QA Plan Progress Report 

· Revised Emergency Care Claim Processing SOP with included quality assurance actions and 

monitoring 

Status: Target Completion Date: 

In Progress December 2019

Recommendation 10: The Under Secretary for Health develops and implements clearly defined 

controls to ensure Claims Adjudication and Reimbursement processing facilities routinely 

communicate backlogs of incoming mail to Office of Community Care leaders with associated 

action plans to accurately record the date the documents were received. 

VHA Comments: Concur in principle 

The Office of Community Care (OCC) recognizes the impact delays in processing paper mail after receipt 

by the Department of Veterans Affairs (VA) can have when making timely filing determinations. To 

address this concern, in March 2019, OCC instructed claims processing staff to begin using the claim 

date provided by the provider to determine if a claim was filed timely. This process change affords 

maximum leniency for the timely filing of paper claims and is expected to end timely filing denials resulting 

from delays in paper mail processing.

To address the overall concern of delayed paper mail processing upon receipt by VA, the Office of 

Community Care (OCC) implemented the Paper to Electronic Data Interchange (P2E) Initiative. This 

initiative is intended to ensure that community care claims and records are digitized promptly, and that 

newly submitted claims and supporting documentation is received electronically. 

OCC anticipates that the volume of incoming paper claims will dramatically reduce later this year as the 

P2E Initiative moves into Phase 2. During Phase 1 of the initiative, OCC forwarded paper claims to an 

outside vendor for scanning and electronic conversion. In Phase 2, targeted to begin in July 2019, 

community providers will send paper claims and supporting documents directly to a centralized claims 

intake center. At this time, all claims and records will either be submitted electronically or converted to 

electronic transactions. This electronic process will all but eliminate paper processing. 
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In addition, OCC is updating regulations to mandate that providers use Electronic Data Interchange. OCC 

is incorporating an electronic claims submission process like the Centers for Medicare and Medicaid 

Services. 

To demonstrate completion of this recommendation, OCC will provide the following documentation:

· Revised Emergency Care Claims Processing 

· Demonstrated implementation of Phase 2 paper to electronic conversion

Status: Target Completion Date: 

In Progress December 2019

Recommendation 11: The Under Secretary for Health develops and implements clearly defined 

controls to ensure Claims Adjudication and Reimbursement processing facilities and VA medical 

centers timely communicate claims decisions to veterans and providers to ensure veterans are 

notified of what VA needs to adjudicate the claims and what actions the veteran may take in 

response. 

VHA Comments: Concur

The Office of Community Care (OCC) is proceeding with plans to automate and centralize outbound 

correspondence handling to ensure more timely communication of claims decisions. 

The Department of Veterans Affairs (VA) is deploying a new claims processing system. The Electronic 

Claims Adjudication Management System (eCAMS) is a modern, efficient, and automated product that 

will process health care claims submitted by community providers. eCAMS will replace the Fee Basis 

Claims System legacy system. The quality and timeliness of claims adjudication and decision-making will 

improve, with fully automated claims adjudication, as will the accuracy of payment processing and 

timeliness of communications sent to Veterans and providers. eCAMS is currently in testing with national 

deployment expected to complete by November 2019. All outbound correspondence through eCAMS will 

eventually be centralized and mailed from the Financial Services Center (FSC).

Until eCAMS and FCS handling is fully implemented, outbound correspondence will still be sent from 

CAR processing locations. Weekly reviews of correspondence in processing queues will be performed by 

CAR managers and leaders to ensure correspondence is being printed timely. In addition, CAR is 

currently evaluating locations and equipment for centralization of outbound mail to ensure greater 

efficiency, controls, and timeliness. 

To demonstrate completion of this recommendation, OCC will provide monthly reporting of 

correspondence print queue reviews at CAR processing locations. 

Status: Target Completion Date: 

In process December 2019
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Attachment

VETERANS HEALTH ADMINISTRATION (VHA)

Technical Comments

OIG Draft Report: Audit of Non-VA Emergency Care Claims Inappropriately 

Denied and Rejected

Date of Draft Report: May 13, 2019 

1. Suggested change (page 2 Footnote 7)49: We recommend revising the footnote as follows, “38 

U.S.C. 1703, Contracts for hospital care and medical services in non-Department facilities, 

defines the requirements for authorized non-VA care. In certain instances, described in 38 C.F.R. 

17.54, VA may deem non-VA emergency treatment to be authorized under section 1703 if VA is 

notified of an admission within 72 hours.” 

Justification: Section 1703 is a contract authority, not a reimbursement authority, and the 72-hour 

rule is regulatory, not statutory. 

2. Suggested change (page 11 Footnote 17): We recommend this footnote be removed.

Justification: The Department of Veterans Affairs (VA) is not a secondary payer under 38 U.S.C. 

1725. When VA reimburses under this authority, VA is the only payer. 

The 1725 reference in this footnote is outdated and does not reflect the changes made to 

implement Staab v. McDonald, 28 Vet. App. 50 (2016). VA is now secondary payer to all third 

party payers, including health insurance plans. VA must obtain evidence of any payment by a 

responsible third party to determine the VA allowable payment amount. If information about the 

third party payment is not received with the claims, they are rejected with an appropriate notice to 

submit supporting documentation to allow VA to process accordingly. 

3. Suggested change (page 10 Footnote 15): We recommend updating this footnote to state that 

VHA published implementing regulations on January 9, 2018, and began processing held claims 

on that date. 

4. Suggested change (pages 28-29): The discussion on pages 28-29, leading to recommendations 

10-11, is inaccurate in some instances because it does not clearly explain the differences 

between the processing of claims filed by providers (the majority of VHA’s claims) and claims filed 

by Veterans. Provider claims are processed in accordance with industry standards using rejection 

notices and explanations of benefits, which use remark codes to explain the bases for rejection 

and denial. Providers are accustomed to and understand these types of communications and 

procedures, and rejection notices seeking information within the providers’ possession or 

obtainable by the providers are generally not sent to the Veteran as well because it could cause 

confusion. Claims filed by a Veteran or provider that are being denied trigger the right to appeal. 

The Veteran is provided with notices in accordance with Chapter 51. We recommend this section 

be updated accordingly. 

5. Additional/Clarifying Information (page 37 Chart): The 1725 information contained in the chart is 

no longer applicable and does not reflect the changes made to implement Staab v. McDonald, 28 

 

49 OIG Note: Some references in this attachment to footnotes and page numbers changed during the editing and 

reformatting of this report. 
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Vet. App. 50 (2016). VA is now secondary payer to all third- party payers, including health 

insurance plans. VA must obtain evidence of any payment by a responsible third party to 

determine the VA allowable payment amount. If information about the third-party payment is not 

received with the claims, they are rejected with an appropriate notice to submit supporting 

documentation to allow VA to process accordingly. Office of Community Care (OCC) updated 

processing guidance in accordance with the IFR published on 1/9/18. 

OCC is developing additional job aides and tools to assist staff with making accurate eligibility 

and adjudication decisions. These will be provided as part of deliverables for Recommendation 

2.

6. Suggested change (page 38 Filing Claims Timely): We recommend revising this paragraph to 

clarify that the quoted provision applies to 38 U.S.C. 1728 specifically.

7. Suggested change (page 38 Third-Party Liability): We recommend updating this paragraph to 

account for the change in the law after Staab. 

For accessibility, the original format of this appendix has been modified

to comply with Section 508 of the Rehabilitation Act of 1973, as amended.
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VA OIG 18-00469-150 | Page 69 | August 6, 2019

OIG Contact and Staff Acknowledgments

Contact For more information about this report, please contact the 

Office of Inspector General at (202) 461-4720.

OIG Team Daniel Morris, Director

Brett Amiotte

Kalli Anello

Christopher Bellin

Yohannes Debesai

Lee Giesbrecht

Sonia Melwani, DO

Karen Myers

Carla Reid

Jason Reyes

Victor Rhee

Brock Sittinger

Amy Zheng, MD
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VA OIG 18-00469-150 | Page 70 | August 6, 2019

Report Distribution

VA Distribution

Office of the Secretary

Veterans Benefits Administration

Veterans Health Administration

National Cemetery Administration

Assistant Secretaries

Office of General Counsel

Office of Acquisition, Logistics, and Construction

Board of Veterans’ Appeals

Non-VA Distribution

House Committee on Veterans’ Affairs

House Appropriations Subcommittee on Military Construction, Veterans Affairs, 

and Related Agencies

House Committee on Oversight and Reform

Senate Committee on Veterans’ Affairs

Senate Appropriations Subcommittee on Military Construction, Veterans Affairs, 

and Related Agencies

Senate Committee on Homeland Security and Governmental Affairs

National Veterans Service Organizations

Government Accountability Office

Office of Management and Budget

U.S. Senate: Tammy Baldwin (Wisconsin)

OIG reports are available at www.va.gov/oig.