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25–101 2017

CHOICE CONSOLIDATION: IMPROVING VA 

COMMUNITY CARE BILLING AND REIMBURSEMENT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH 

OF THE

COMMITTEE ON VETERANS’ AFFAIRS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

THURSDAY, FEBRUARY 11, 2016 

Serial No. 114–55 

Printed for the use of the Committee on Veterans’ Affairs 

( 

Available via the World Wide Web: http://www.fdsys.gov 

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(II) 

COMMITTEE ON VETERANS’ AFFAIRS 

JEFF MILLER, Florida, Chairman 

DOUG LAMBORN, Colorado 

GUS M. BILIRAKIS, Florida, Vice-Chairman 

DAVID P. ROE, Tennessee 

DAN BENISHEK, Michigan 

TIM HUELSKAMP, Kansas 

MIKE COFFMAN, Colorado 

BRAD R. WENSTRUP, Ohio 

JACKIE WALORSKI, Indiana 

RALPH ABRAHAM, Louisiana 

LEE ZELDIN, New York 

RYAN COSTELLO, Pennsylvania 

AMATA COLEMAN RADEWAGEN, American 

Samoa 

MIKE BOST, Illinois 

CORRINE BROWN, Florida, Ranking 

Minority Member 

MARK TAKANO, California 

JULIA BROWNLEY, California 

DINA TITUS, Nevada 

RAUL RUIZ, California 

ANN M. KUSTER, New Hampshire 

BETO O’ROURKE, Texas 

KATHLEEN RICE, New York 

TIMOTHY J. WALZ, Minnesota 

JERRY MCNERNEY, California 

JON TOWERS, Staff Director 

DON PHILLIPS, Democratic Staff Director 

SUBCOMMITTEE ON HEALTH 

DAN BENISHEK, Michigan, Chairman 

GUS M. BILIRAKIS, Florida 

DAVID P. ROE, Tennessee 

TIM HUELSKAMP, Kansas 

MIKE COFFMAN, Colorado 

BRAD R. WENSTRUP, Ohio 

RALPH ABRAHAM, Louisiana 

JULIA BROWNLEY, California, Ranking 

Member 

MARK TAKANO, California 

RAUL RUIZ, California 

ANN M. KUSTER, New Hampshire 

BETO O’ROURKE, Texas 

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records 

of the Committee on Veterans’ Affairs are also published in electronic form. The printed 

hearing record remains the official version. Because electronic submissions are used to 

prepare both printed and electronic versions of the hearing record, the process of converting 

between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process 

is further refined. 

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(III) 

C O N T E N T S 

Thursday, February 11, 2016 

Page 

Choice Consolidation: Improving VA Community Care Billing and Reimbursement ...................................................................................................................... 1 

OPENING STATEMENTS 

Honorable Dan Benishek, Chairman ..................................................................... 1 

Honorable Mark Takano, Member ......................................................................... 2 

WITNESSES 

Randall B. Williamson, Director, Health Care, Government Accountability 

Office ..................................................................................................................... 4 

Prepared Statement ......................................................................................... 36 

Gary K. Abe, Deputy Assistant Inspector General for Audits and Evaluations, 

Office of the Inspector General, U.S. Department of Veterans Affairs ........... 5 

Prepared Statement ......................................................................................... 50 

Accompanied by: 

Larry Reinkemeyer, Director, Kansas City Audit Office, Office of the 

Inspector General, U.S. Department of Veterans Affairs 

Baligh Yehia, M.D., Assistant Deputy Under Secretary for Health for Community Care, Veterans Health Administration, U.S. Department of Veterans 

Affairs .................................................................................................................... 7 

Prepared Statement ......................................................................................... 55 

Accompanied by: 

Gene Migliaccio, Dr.P.H., Deputy Chief Business Officer for Purchased 

Care, Veterans Health Administration, U.S. Department of Veterans 

Affairs 

Roscoe G. Butler, Deputy Director, National Veterans Affairs and Rehabilitation Division, The American Legion ................................................................... 27 

Prepared Statement ......................................................................................... 58 

Carlos Fuentes, Senior Legislative Associate, Veterans of Foreign Wars on 

the United States ................................................................................................. 29 

Prepared Statement ......................................................................................... 61 

STATEMENT FOR THE RECORD 

American Medical Association ................................................................................ 64 

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(1) 

CHOICE CONSOLIDATION: IMPROVING VA 

COMMUNITY CARE BILLING AND REIMBURSEMENT 

Thursday, February 11, 2016 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON VETERANS’ AFFAIRS, 

SUBCOMMITTEE ON HEALTH, 

Washington, D.C. 

The Subcommittee met, pursuant to notice, at 10:01 a.m., in 

Room 334, Cannon House Office Building, Hon. Dan Benishek 

[Chairman of the Subcommittee] presiding. 

Present: Representatives Benishek, Roe, Huelskamp, Coffman, 

Wenstrup, Takano, Ruiz, and O’Rourke. 

Also Present: Representatives Lamborn, and Posey. 

OPENING STATEMENT OF DAN BENISHEK, CHAIRMAN 

Mr. BENISHEK. Before we begin, I would like to ask unanimous 

consent for Congressman Doug Lamborn from Colorado and Congressman Bill Posey from Florida to sit on the dais and participate 

in today’s hearing. So without objection, so ordered. 

Good morning. Thank you all for joining us for today’s Subcommittee hearing on Choice Consolidation: Improving the VA 

Community Care Billing and Reimbursement. 

This morning’s hearing is the second in the series of hearings the 

Subcommittee is holding over the next several weeks on several aspects of VA’s plan to consolidate community care programs under 

a new and improved Choice Program. 

Last week, we met to discuss eligibility for community care 

under the consolidation plan. This morning, we are going to discuss 

billing and reimbursement being considered under the plan. 

The importance of VA’s effort to consolidate community care programs and the impact that consolidation will have on the future of 

VA’s health care system cannot be overstated. The VA simply cannot offer veteran patients across the country the health care they 

need without using community providers to supplement the care 

provided in the VA medical facilities. That is a fact that is becoming increasingly obvious and increasingly expensive. In fiscal year 2012, the VA spent $4.5 billion on care in the community. Four years later in fiscal year 2015, care in the community 

costs more than doubled to just over $10 billion. That is almost an 

unprecedented increase over a relatively short time period and 

there is no sign that upward trend will reverse itself any time soon 

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with the budget submission that was released Tuesday estimating 

a need for $12 billion for community care in fiscal year 2017. 

In order for that money to be well spent and for our veterans to 

be well served by it, the VA must be a willing, fair, and consistent 

partner with community providers around the country. Unfortunately, the overly bureaucratic, highly manual claims process that 

VA currently employs to reimburse community providers does meet 

that standard. 

Despite aggressive oversight from this Subcommittee and by individual Members of Congress, community providers both large and 

small continue to report millions of dollars in past due unpaid 

claims, and my office continues to hear regularly from providers 

who would like to serve veterans, but they are hesitant to continue 

accepting referrals from the VA because it is so difficult for them 

to get paid for their services. 

My office also hears a lot of confusion and frustration from community providers about what they are supposed to be getting paid 

in the first place. Reimbursement rates vary widely across the VA’s 

multiple care in the community programs. 

In some cases, the VA reimbursement rates are lower than Medicare which makes it difficult for community providers to accept veteran patients and keep their doors open. In other cases, VA reimbursement rates are higher than Medicare. This is an inefficient 

way to run a large hospital, much less the Nation’s largest health 

care system. 

So moving forward, the VA must automate and simplify the department’s community care claims processing system so that community providers are reimbursed accurately and in a timely, transparent manner. 

VA must also honor the important role that community providers 

play in treating veteran patients by developing standardized reimbursement rates that are fair, competitive, and consistently applied. Multiple bureaucratic steps that only time rather than value 

must be eliminated. The stakes are simply too high for the VA to 

do anything less. 

Thank you again for being here and I will now yield to Mr. 

Takano for his opening statement. Thank you. 

OPENING STATEMENT OF MARK TAKANO 

Mr. TAKANO. Thank you, Mr. Chairman, for calling this hearing 

on VA’s future plan to improve billing and reimbursement practices 

so that providers in the community can expect prompt, accurate 

payments for services rendered to veterans in a community setting. 

We are all aware of the challenges that face the department in 

this area. Numerous VA Inspector Generals’ Reports, Government 

Accountability Office reports, and the recently released independent assessment all outline several problems that VA should 

and needs to address in order to ensure that proper billing and reimbursement practices are put in place and adhered to. 

The department is first and foremost a health care provider, not 

an insurer of care. Congress saw the need to address the wait time 

crisis that surfaced in 2014. The Veterans Choice Program was authorized as a temporary program to address that issue. Congress 

has now required VA to consolidate their numerous purchased care 

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programs under one umbrella in order to become more efficient and 

less confusing for veterans, employees, and providers. 

The new Veterans Choice Program offered by VA in the care consolidation plan is designed to do just that. Now that the wait time 

crisis has subsided, it is important to ensure the VA continues its 

mission of providing health care to our Nation’s veterans. 

It is important we remember that VA was built to provide unique 

medical services to veterans who suffer from combat-related injuries and illnesses. We know veterans feel that they get the best 

care at the VA. It is our job to make sure that the VA has the resources it needs to provide medical care services veterans need. 

We know the current claims infrastructure and claims processes 

are complex and inefficient due to highly manual procedures. VA 

lacks a centralized data repository to support auto adjudication. 

According to VA, there are more than 70 centers processing 

claims across 30 different claims systems. VA’s system is a labor 

intensive, paper-based process that results in late and sometimes 

incorrect payments. 

The Government Accountability Office reports that VA’s expenditures for its care in the community programs, veterans for whom 

VA has purchased care, and the number of claims processed by the 

Veterans Health Administration have grown considerably in recent 

years. 

In fiscal year 2015, VA obligated about $10.1 billion for its care 

in the community programs for about 1.5 million veterans. This is 

compared to fiscal year 2012 when VA spent about $4.5 billion on 

care in the community programs for about 983,000 veterans, about 

50 percent less. 

The most startling statistic is that the number of processed 

claims for VA care in the community programs increased by 81 percent. Given this increase and the state of VA’s information technology infrastructure, we potentially have a long, expensive road 

ahead of us. It will be no small task to fix this problem, and we 

must work together to get this right. 

Mr. Chairman, I am interested to hear from the department in 

more detail on how they plan to implement improvements, how 

much it will cost, and what they will need from us legislatively or 

otherwise in order for the plan to succeed. 

I agree with The American Legion that a strong, robust veterans’ 

health care system that is designed to treat the unique needs of 

those men and women who have served our country is what we 

need. Getting there in a timely manner remains to be seen. 

I look forward to hearing from all the witnesses today, and I look 

forward in the coming days to bring the best quality care to all of 

our veterans. Thank you and I yield back my time. 

Mr. BENISHEK. Thank you. 

Joining us today on our first panel is Randall Williamson, the Director of Healthcare for the Government Accountability Office; 

Gary Abe, the Deputy Assistant Inspector General for Audits and 

Evaluations for the VA Inspector General’s Office, accompanied by 

Larry Reinkemeyer, the Director of the Kansas City Audit Office; 

and Dr. Baligh Yehia, the VA Assistant Deputy Under Secretary 

for Health for Community Care, accompanied by Dr. Gene 

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Migliaccio, the VA Deputy Chief Business Officer for Purchased 

Care. 

Thank you all for being here today. Mr. Williamson, we will start 

with you. 

STATEMENT OF RANDALL B. WILLIAMSON 

Mr. WILLIAMSON. Good morning, Chairman Benishek and Members of the Subcommittee. I am pleased to be here today to discuss 

our preliminary findings on VHA’s efforts to improve the timeliness 

of its payments to non-VA providers when veterans access care in 

the community. 

The number of processed claims from community providers has 

almost doubled since 2012 and this sharp increase has overwhelmed the staff at some VHA claims processing centers in terms 

of their ability to process claims in a timely way. 

In fiscal year 2015, VHA paid less than 70 percent of its claims 

from community providers within 30 days. In contrast, TRICARE 

and Medicare paid about 99 percent of their claims within 30 days. 

To make matters worse, VHA data overstates their timeliness because paper claims which represent about 60 percent of the claims 

they get are not always promptly scanned into VHA’s claims processing system. Until this is done, the 30-day clock VHA uses to 

measure processing time doesn’t start to tick. 

At one VHA claims processing center we visited, for example, we 

observed about a dozen bins of paper claims and medical documentation awaiting scanning, some of which were received a month 

before our visit. 

Community providers who participated in our study were frustrated with VHA for requiring providers to submit claims and medical documentation multiple times, paying medical claims late, and 

being unresponsive to repeated attempts by providers to contact 

VHA and resolve payment issues. 

If these timeliness and poor customer service issues persist, VHA 

will risk losing the cooperation and participation of community providers as it attempts to transition to a future care delivery system 

that would heavily rely on them to deliver care to veterans. 

To its credit, VHA has recently taken steps to improve claims 

processing timeliness such as hiring more claims processing staff to 

replace those lost through attrition and establishing productivity 

standards for them. However, VHA acknowledges that its current 

claims processing system is not sustainable and longer-term solutions are needed including revamping archaic information technology systems. 

At the behest of the Congress, VHA is in the process of consolidating its various purchased care programs into a single program 

called the new Veterans Choice Program. To do so, VA has developed a broad consolidation plan which it presented to the Congress 

late last year to develop a robust network of community providers 

and streamline clinical and administrative processes. 

According to VA, implementing this plan will allow it to put into 

a place a much improved claims processing system. As well-intentioned as VA might be, bringing this community care consolidation 

plan to fruition will require a herculean effort on many fronts. 

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The sweeping changes VA is planning will likely be costly, and 

will require major organizational and structural changes and modernization of its IT systems. Achieving the objectives laid out in the 

plan will require strong leadership, careful and thoughtful planning, effective project management, and transparency and involvement with multiple stakeholders including the Congress. 

The absence of these elements can have severe consequences. 

Our prior work has shown that some of VA’s past attempts to 

achieve goals of similar magnitude have been derailed by poor 

planning, project management weaknesses, and insufficient oversight. 

VA’s past failures to modernize its systems for outpatient appointment scheduling, financial management, and inventory and 

asset management are stark reminders of what can happen if mega 

projects of this scale are mismanaged. These projects were canceled 

after investments of hundreds of millions of dollars leaving VA 

with little to show for its efforts. 

To date, we have not seen a detailed blueprint and specific strategies for how VHA plans to successfully implement the major components of its consolidation plan, especially as it relates to the 

claims processing system. 

Such a blueprint should include an analysis of available options, 

estimates costs, staff resources and new systems needed, specific 

timelines and a critical path for achieving its objectives and key 

milestones, performance measures to gauge success and hold managers accountable, and a process to ensure transparency among 

major stakeholders. 

That concludes my opening remarks. 

[THE PREPARED STATEMENT OF RANDALL B. WILLIAMSON APPEARS

IN THE APPENDIX]

Mr. BENISHEK. Thank you very much. 

Mr. Abe, could you please go ahead, five minutes. 

STATEMENT OF GARY K. ABE 

Mr. ABE. Mr. Chairman and Members of the Subcommittee, 

thank you for the opportunity to discuss the Office of Inspector 

General’s work concerning VA’s purchased care programs. 

I am accompanied by Mr. Larry Reinkemeyer, the Director of our 

Kansas City Audit Division. 

VA’s purchased care programs are critical to VA in carrying out 

its mission of providing medical care to our veterans. Our audits 

and other reviews have reported the challenges VA faces in authorizing, scheduling, and ensuring contractors provide medical records 

in support of services provided. 

It has been challenging to conduct effective oversight of VA’s purchased care programs because VA continues to make significant 

changes and additions to the programs. For example, we published 

four reports on PC3 in fiscal year 2015 that reviewed the effectiveness of PC3 in providing timely access to care. 

We had planned to review the timeliness and accuracy of PC3 

payments this fiscal year after providing VA sufficient time to process a significant number of claims to make reliable findings and 

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conclusions. However, PC3 was soon followed by the Veterans 

Choice Program. 

Nevertheless, we have started a quarterly review of paid Choice 

claims in order to meet the Choice Act requirement to submit a report on the timeliness and accuracy of payment of claims after 75 

percent of the almost $10 billion of program funds are spent or 

when the program ends in August 2017. 

This approach enables us to view the expenditure activity over 

time and helps assess whether VA’s payment process is improving 

or worsening. 

In September 2013, VA awarded Health Net and TriWest PC3 

contracts. In October 2014, VA amended the PC3 contracts to include administration of the Veterans Choice Program. This is an 

important matter when evaluating VA’s plan to align all non-VA 

care programs under the new Veterans Choice Program. 

Since Health Net and TriWest have built their Choice provider 

network upon the backbone of the PC3 network, there are lessons 

that can be learned from the series of reports we issued in fiscal 

year 2015 addressing aspects of VA’s implementation efforts. 

All four PC3 reports identify issues with inadequate processes for 

submitting timely authorizations, scheduling appointments, returning the medical document for continuity of care, and the provider 

network that lacks sufficient numbers and mixes of health care 

providers in the geographic locations where veterans needed them. 

Being a retired Army officer, I decided to seek care under the 

Veterans Choice Program. This was my first experience with VA 

health care. In July 2015, I visited my VA primary care provider 

and he ordered medical services that were not available timely 

from VA. For the first month, I was told I was not eligible for the 

Choice Program. Then in late August, I was told I was authorized 

for care and I would be notified of my appointment in three to five 

days. Months passed without a word. 

On December 14th, I received a letter from Health Net saying 

that they had scheduled an appointment with a local provider. 

However, the appointment was for December 12th, two days earlier. This is what VA considers blind scheduling. So I was a no 

show on Health Net’s records. 

I called the Veterans Choice call center and I asked if I could call 

the provider to avoid another blind scheduled appointment. They 

said yes. I called the local provider and scheduled an appointment 

on December 29th, about 165 days or five and a half months after 

my visit with my primary care provider in July. 

My experience is similar to the issues we identified in our PC3 

and recent Veterans Choice reports. The obstacles I experienced 

are also similar to those that many veterans are calling in to our 

hotline and most likely your local congressional offices. 

The complaints fall into the following general categories: program eligibility enrollment; the authorization process; appointments and scheduling; and veteran provider payments. 

In conclusion, our recent work has shown that VA faces challenges in administrating its purchased care programs. While purchasing health care services may afford VA flexibility in terms of 

expanded access to care and services that are not readily available 

at VA medical facilities, it also poses a significant risk to VA, and 

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more importantly, a great deal of frustration and risk to our veterans’ health when adequate controls are not in place. 

Without adequate controls, VA’s consolidation plan is at an increased risk of not achieving its goal of delivering timely and efficient health care to our veterans. 

Mr. Chairman, this concludes my statement. We would be happy 

to answer any questions you or the Members of the Subcommittee 

may have. 

[THE PREPARED STATEMENT OF GARY K. ABE APPEARS IN THE APPENDIX]

Mr. BENISHEK. Thank you very much, Mr. Abe. I appreciate you 

including your personal experience. 

Dr. Yehia, you are recognized. 

STATEMENT OF BALIGH YEHIA 

Dr. YEHIA. Thank you. 

Good morning Chairman Benishek and Members of the Subcommittee. Thank you for the opportunity to testify today regarding the department’s plan to consolidate community care programs, 

specifically on our efforts to improve billing and reimbursement. 

I am accompanied today by Gene Migliaccio who is our Deputy 

Chief Business Officer for Purchased Care. 

And I would like to take a moment, and look forward to the discussions from some of the other panelists and their experiences, 

and be able to talk a little bit about some of the improvements we 

are doing to address those. 

To start, community providers are critical to VA’s ability to deliver timely and quality care to veterans. As a clinician, I personally understand the importance of these partnerships and often 

jointly care for veterans with community providers. 

To strengthen and grow these important relationships, VA recognizes a need to pay claims accurately and timely. For many providers, late payments have a major impact on the practice, and 

may cause some not to care for our veterans. We know this is unacceptable, and it is particularly problematic in rural areas where the 

number of providers is limited. Late payments may also negatively 

impact our veterans by creating unnecessary financial hardships. 

That is why in our plan to consolidate community care programs, 

we are keenly focused on improving how we interact with community providers including payment. 

I want to provide the Subcommittee with an update on our 

progress since the June 3rd hearing related to claims processing 

and prompt payment. 

In the last eight months, we have focused our efforts on improving people, process, and technology. So first, related to people, we 

filled 220 vacancies in 57 days and that is 33 days faster than our 

90-day goal. We also provided and implemented productivity and 

quality standards. 

Second related to process, we have implemented real-time monitoring of claims to ensure that the oldest claims are paid first, and 

we are actively removing any unnecessary steps that may be barriers to paying timely claims. 

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Third related to technology, we continue to try to automate steps 

where we can and, for example, we removed the duplicate claims 

process and now that is automated. 

These efforts have produced results. As of today, 81 percent of 

authorized claims, meaning our current, meaning they are within 

30 days of receipt. This compares to 73 percent in June of last year. 

Some sites have improved more than others. So, for example, in 

Louisiana, claims processing has improved from 69 percent to 96 

percent in the last six months. This improvement is even more 

noteworthy given the fact that we continue to experience tremendous growth in the claims volume. 

Last fiscal year, we processed roughly 17 million claims which 

represents a 21 increase from the prior year. Even though we continue to improve in this area, there is still much work to be done 

to meet industry expectations. 

We also recognize that our Choice contractors have not been paid 

timely and understand the frustration this has caused. We are actively working to address these issues with an eye towards removing any barriers in the contract that may slow payment. 

I believe that open communication is critical for these partnerships to work, and have made it a point to meet weekly with the 

executives from Health Net and TriWest to talk about issues that 

we are discussing today. Getting these partnerships right is important for VA, and impacts our relationship with community providers and the veterans that we serve. 

We are taking steps to improve community care today, but also 

looking towards the future incorporating lessons learned from the 

current program and industry best practice. We aim to move towards a claims solution that is more fully automated. That is why 

in the recently released draft performance work statement, we include a specific section focused on claims processing and payment. 

Lastly, we take the recommendations from GAO and OIG seriously. We are closely monitoring their reports and working to resolve issues that are identified. However, we do need help from 

Congress to formalize VA’s prompt pay standard which will help us 

align with current industry practice, and then also help from Congress to change the recording of obligations to the time of payment 

so that we can improve our accuracy in terms of funding. 

These two proposals will address many of the deficiencies identified in both GAO and OIG reports. Getting provider payment is 

critically important. We look forward to continuing to work with 

veterans, veteran service organizations, yourself, and Congress as 

well as we move forward. 

I appreciate the opportunity to appear before you today, and am 

prepared to answer any questions you or other Members may have. 

Thank you. 

[THE PREPARED STATEMENT OF BALIGH YEHIA APPEARS IN THE APPENDIX]

Mr. BENISHEK. Thank you, Dr. Yehia. 

I now yield myself five minutes for my questions. Dr. Yehia, I 

guess I didn’t hear anything from you about some of the things 

that Mr. Williamson brought up to tell you the truth, and that is 

that we have a plan to consolidate all these different forms of comLeonard.horne on VACREP0180 with DISTILLER

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munity provider relationships. And we haven’t heard anything 

about how is that going to work. How are you thinking about it? 

What are the options? 

To me, it is kind of scary because right now there are seven different ways to do it which is complicated bureaucratically, but at 

least physicians then have kind of a choice as to what they do and 

where they fit in. And when you narrow it down to one system, 

that is pretty important to get that one system right then. You understand what I am getting at here? 

Dr. YEHIA. Yes. 

Mr. BENISHEK. And developing that system is going to obviously 

take time, but I would like to be involved in seeing what you are 

doing so that we can provide input. 

As you know, I took care of patients at the VA in multiple different ways throughout my career. Sometimes it was very frustrating. Then we finally settled on a system which was equitable, 

I think, for the VA and for my practice. 

Dr. YEHIA. Yeah. 

Mr. BENISHEK. One of the things that we wanted to talk about, 

too, is how are we going to set fair and competitive reimbursement 

rates for physicians. That is one of the things that comes to my 

mind as a provider. 

Can you talk about that a little bit? 

Dr. YEHIA. Yes. You know, when I talk to providers just as you 

talk to providers, without a doubt they want to care for veterans. 

And when I ask them kind of what stands in their way, one of the 

issues relates to payment and that deals with what you just described. One is reimbursement rates. 

Right now under all these different programs, we pay differently. 

So under the traditional PC3 Program, it is less than Medicare. 

Under the Choice Program, it is up to Medicare. In some of our 

emergency room authorities, we pay 70 percent of Medicare. 

It is very confusing for community providers to know what they 

are going to get billed for, what they are going to get paid for. And 

that actually causes some of the problems that we are experiencing 

today with prompt payment. A lot of folks are expecting the VA to 

pay a specific amount, but we don’t because they don’t understand 

all the rules that are in place. 

So what we hope to do is move towards a standardized fee schedule. That fee schedule will as best possible be based on Medicare 

which is kind of the common practice in the community. We know 

that some specialties we might have to pay a little bit more than 

Medicare and in some locales, specifically rural areas, we might 

have to pay a little bit more. 

But for the most part, we want to try to move the system towards Medicare rates as best as possible. So that is kind of some 

of the efforts that we are hoping to do. 

The other thing that is important to recognize is that not everything has a Medicare rate. So, for example, dental care, there is not 

actually a Medicare rate. And across our facilities in the VA, we 

pay different rates when there isn’t a Medicare rate. 

So some of the work that we are trying to do is for those services 

that there isn’t a fee schedule by Medicare, how can we come up 

with a regional fee schedule or a VA fee schedule so that folks 

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know exactly what they will get paid for the services they provide. 

That is a little bit of some of the work that we are starting. 

Mr. BENISHEK. Where are you in this consolidation situation? Do 

you have a blueprint of what you are going to do like Mr. 

Williamson talked about? When can you show that to us? 

Dr. YEHIA. So let me explain a little bit of where we are. So in 

the consolidation report that we presented, that provides a little bit 

of the overview, the blueprint, the direction. There are a number 

of things that we can do today. So what we are doing is, we are 

categorizing, one of the things within VA’s control that we can try 

to impact today. A lot of those have to do with, like process improvements, removing unnecessary steps. 

But as we kind of talked about as well last hearing, and in the 

plan, there are a number of things that we need to partner on to 

be able to do together, so being able to get to one eligibility criteria 

as we discussed before, we can’t do that. We need help from Congress. 

So there are a couple of things that are squarely in our field that 

we are trying to move forward, and then a couple things that we 

need partnership with you to move forward. 

Mr. BENISHEK. Can you tell me anything specifically that you are 

doing as far as this paperwork requirement from community providers? Apparently, there is different criteria as far as what the 

provider has to do depending on who they are, where they are, 

what medical center. It seems to be very variable. Can you just 

talk about that for a minute? 

Dr. YEHIA. Yes, I would love to discuss that because the other 

thing that I was mentioning is when I talk to community providers, 

one is payment. The other one is paperwork. And it comes in two 

forms. Currently our contractors, as many of you know, there is a 

requirement in there that we have to get the medical record before 

we can issue payment. That is not an industry standard. That is 

not how other health insurance companies work. 

As Dr. Shulkin mentioned yesterday, we are in the final stages 

of being able to remove that barrier from the contract. I think that 

is going to go a long way to ensuring that we provide more timely 

payment. 

The other thing that we are doing is, as you know, we don’t need 

every single piece of the record. I think back of when I was an intern taking care of patients, and I would get volumes from an outside hospital that I would have to comb through to figure out what 

piece of information do I need to care for this patient. 

So what we are doing as well is defining exactly what are the 

important pieces that we need from providers. So that is the treatment plan, what new meds they started, what procedures and labs 

they did. We don’t need every single nursing note or every single 

time a medication was administered. And I think that is going to 

reduce the paperwork burden. 

So those are two things that we are working on today to make 

the lives of community providers a little bit better. 

Mr. BENISHEK. All right. I am out of time. 

Mr. Takano, you are recognized for five minutes. 

Mr. TAKANO. Thank you very much. 

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11 

Mr. Abe, you mentioned your comments about the risks posed by 

inadequate controls. Can you elaborate a little bit more what you 

meant, that part of your comments? What controls were you referring to? 

Mr. ABE. Well, there are a number of them. I think one of the 

things that VA has to do is effectively identify the veterans who 

are eligible for Choice. The other thing is that they also need to 

stabilize all these programs, because as has been discussed, there 

are so many non-VA care programs, different eligibility requirements, and different payment methodologies. 

And they have continued over the years to produce a pilot, another pilot, and another pilot. And so it is very, very confusing out 

in the field to know how to pay claims and which veterans are eligible. I also think that if VA uses contractors, they need to hold 

these contractors accountable to the contract terms. 

I think the biggest thing from the veterans’ standpoint is that 

VA needs to minimize the veterans’ requirements, that veterans 

have to jump through all these hoops to get this care. I think those 

are probably the major lessons and major obstacles that we currently face. 

Mr. TAKANO. Okay. I don’t know who can answer this question, 

but where do third-party administrators fit into the new Veterans 

Choice Program? Are you going to create your own high-performing 

network in-house or how will the VA communicate with veterans 

using care in the community for their health care? 

Mr. MIGLIACCIO. Sir, I will take that question. The work we have 

been doing over the past since we were here in June of last year 

talking about prompt pay and the hard work that we put together 

in terms of the plan that we delivered to Congress at the end of 

October, we have also stood up as a part of the plan, something we 

call an integrated project team to focus on the future state. 

Looking at our patient-centered community care contract that we 

call PC3, we are looking for a follow-on contract. So what we are 

looking at in that contract is to look at high-performing networks, 

a claims solution, and other areas that we can support purchasing 

care in the community for our veterans. 

And I just want to give you a couple of examples, and we have 

been working at really a brisk, fast pace. We stood up this group 

a number of months back. In December, we had met with industry 

for an industry day. We presented our preliminary request for information, met with over 80 individuals representing 30 major 

health care entities in the country. 

From our meeting with industry, we developed, as Dr. Yehia had 

mentioned, a draft performance work statement that was released 

just a few weeks ago that will form and shape a draft request for 

proposal. We will come back to industry very very soon after, and 

then put a formalized request for proposal out in the next two 

months. 

Mr. TAKANO. So you are looking for a third-party administrator? 

Mr. MIGLIACCIO. That is contained in the draft performance work 

statement, yes, sir. 

Mr. TAKANO. All right. I want to get to another question. I know 

you had a second example, but I want to get this question out 

there. The Administration is proposing a creation, the creation of 

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12 

a fourth medical care account, medical community care. This account estimated at $7.3 billion will be funded out of medical services for fiscal year 2017, but is included as a separate request for 

fiscal year 2018 at $9.4 billion. 

What will the creation of an additional health care appropriation 

account mean in terms of the budget flexibility the secretary has 

continued to call for, and how will this additional account better 

enable VA to meet demand and provide quality and timely care to 

veterans? 

Dr. YEHIA. I will take that one. I think that account was required 

to be created as part of the Choice law that was passed. So I think 

it was something that Congress had asked us to do. I do think 

there is value, though, to make sure that there is a very specific 

pot of money that is designated for community care. 

I think your point about flexibility is important, though. We 

should make sure that there is adequate flexibility. So if we need 

to use a little bit more community care dollars in one year, we can 

move from the medical services account to the community care account. 

Mr. TAKANO. So, Dr. Migliaccio, I mean, so you are not going to 

build this billing system in-house? It is going to be a third-party 

administrator that you are looking to work with? 

Dr. YEHIA. What we are doing is in our draft performance work 

statement, our intention is to put out requirements, and so we say 

this is what we want. We want to be able to have a system that 

pays on time, that is mostly automated, and we put that out in our 

draft performance work statement. 

What we are doing now is receiving feedback from industry to 

say can they meet this requirement. So we are in that first phase 

to figure out is there partners in there, is there partners in the private sector that can do this. I think there probably are. We have 

just got to wait on their responses to see if they can actually meet 

those requirements. 

Mr. TAKANO. All right. Thank you. 

Mr. BENISHEK. Dr. Roe. 

Mr. ROE. Thank you, Mr. Chairman. 

First of all, I applaud VA for consolidating these six programs 

that are different. That makes it very, very hard to administer. 

There is no question. We have got different rules. 

Let me sort of lay out where I think falling short has hurt the 

VA like Mr. Abe in trying to get care. I have said this a hundred 

times if I have said it once in this hearing. I have made hundreds 

or thousands of appointments for people. It ain’t that hard to do. 

And Mr. Abe could pick the phone up and call his primary care doctor and make an appointment in five minutes. I can do that right 

now while we are waiting. It is not hard. 

We made it incredibly complicated and he had to wait almost six 

months to get an appointment with a doctor that he needed to see 

that his primary care doctor decided. 

The other thing that the VA has done that has really hurt—in 

a group like my size, if we don’t get paid promptly, we have enough 

cash reserves to survive that. If you are in a small one or two or 

three person practice, you cannot. 

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13 

And when the payments have been cut with Medicare down to 

really very low levels, when you have an ACA out there that has 

created an out-of-pocket expense that most people can’t afford, 

three or four thousand dollars out of pocket, they can’t pay the doctor. 

And then the VA decides not to pay the doctor. You are out of 

business. And that is why they don’t want to see, and even the reimbursement levels. Most of us, many of us are veterans, some are 

not, you almost never talk to a provider who doesn’t want to take 

care of a veteran. I mean, they just want to do it for a lot of noble 

reasons. 

So my question, I want to start out is why didn’t the VA just use 

a system like the Medicare is doing? They paid us promptly, quickly. I filed a lot of claims last year during my wife’s illness. Blue 

Cross and Blue Shield, they figured it out. They paid the hospital 

and the doctors very very promptly. What is the big deal? Why 

can’t you just do that? 

Dr. YEHIA. I have been nodding my head when you were talking 

because I agree with what you are saying. We actually, our team 

took a trip to one of the Medicare processing sites that processes 

claims to look at industry best practice because I asked the same 

question, why can’t we do that. 

And the more that I thought about it, there are a couple barriers 

that stand in our way. One is the technology piece. But as we had 

talked about, being able to partner with folks in the community 

that has access to those technology pieces like some of the Medicare subcontractors would address that. 

The other thing that is very convoluted is the fact that we have 

all these multiple programs with different eligibility. For Medicare, 

it is pretty crystal clear if you are eligible or not eligible. For us, 

and let me use the example of like ER care. We pay differently depending if it is service-connected or not service-connected. So it requires someone to look at the medical record to see did they go to 

the ER and was it for a service-connected related injury. If it is, 

we pay a different way. If it isn’t, we do something different. 

So I realized as I was going through this, is that we have to get 

the eligibility piece right which is what we talked about last week 

because if we continue to have a complex eligibility system, even 

if we partner with the best performers in the private sector, they 

are still going to have problems paying on time because it is so 

complex. 

So I think it is kind of a two-prong thing where we have got to 

find those partners or the technology that works, but we also have 

to do our part in partnership to simplify eligibility so it is not too 

complicated. 

Mr. ROE. Let me ask this question. These claims are paid out of 

what, 90 something different sites around the country? 

Dr. YEHIA. Yes, sir. 

Mr. ROE. And would you foresee a situation where one site would 

not pay one hospital to catch up the payments in another facility? 

Dr. YEHIA. Say that— 

Mr. ROE. In other words, here is one medical center over here 

and here is another medical center and someone has directed the 

payment. This one is behind three or four or five months. 

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14 

Dr. YEHIA. Yes, yes, yes. 

Mr. ROE. This one is caught up. 

Dr. YEHIA. Yes. 

Mr. ROE. Would you just direct all the assets over here? 

Dr. YEHIA. Yes. So that is exactly, yes. And so we are working 

on that right now. This is one of those things that I was describing 

about, things that we can do that are within VA’s control. Those 

90 different sites, and part of the reason is claims processing used 

to be at local medical centers, and now a lot of it is under the shop 

of community care. So that is why there are so many different locations. 

Because they are in different locations, there is different IT security clearances that have to occur. They can’t tap into one system. 

They actually have to get privileges to access the other system. I 

don’t know why it is that way, but that is what it is. 

So what we are working now is with our IT partnership and LaVerne Council who is the new Assistant Secretary for IT. Her team 

is really helping us to give security access to the sites that are performing really well, so they can process the claims for the sites that 

are performing not so well. We hope to— 

Mr. ROE. My time is about up. Let me— 

Dr. YEHIA. Yeah. 

Mr. ROE [continued]. —just tell you the real-world implications 

of that. Okay? I have a friend of mine who retired from his dental 

practice because there is always not enough dentists at a VA. He 

sees just VA patients. That very thing has happened where he 

works, so he doesn’t get paid. 

So he is going to have to close his dental practice because of 

what you guys are doing to pay claims somewhere else. And that 

means that veterans in a facility close to where I live are not going 

to get dental care. 

I yield back my time. 

Mr. BENISHEK. Mr. O’Rourke, you are up. 

Mr. O’ROURKE. Thank you, Mr. Chairman. 

Dr. Yehia, thank you for helping us better understand the plan 

and the proposal. 

And I want to begin by saying, when Dr. Shulkin, you, and the 

team first announced this in October, it was very encouraging and 

I was very excited by the vision that you all outlined for the VA. 

It was comprehensive. It made sense of leveraging community capacity. And what I read into it was having the VA better focus on 

what I think its core priorities should be. 

But given the skepticism well earned by the VA that I hear from 

Mr. Williamson and Mr. Abe, and in Mr. Abe’s case from his personal experience included, given the fact that you have ten and a 

half months left, given the scope of these changes, and then again 

to bring up what I think is the most critical urgent priority, reducing veterans’ suicide, and the crisis that we have there, that really 

will take concentrated focus for us to make a meaningful impact, 

what of this lift could you offload to someone else either in the public or private sector? 

So to follow-up on Dr. Roe’s question, if CMS has a 99 percent 

under 30-day pay rate, I know there are obstacles, and I know 

these are different animals, but is there a way to bust through that 

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15 

and contract this with CMS who seems to have figured this out, 

and has a lot of experience doing it right, or at least better than 

the VA? Is there some other part of the billing reimbursement validation process that could be outsourced to a private provider who 

does this really, really well and we could set these benchmarks and 

standards? 

So that will be my first question. The second one, a shorter one, 

can we get a copy of the draft performance work statement that 

you keep referring to? So my two questions for you. 

Dr. YEHIA. Sure. So yes to the second one. And I think we sent 

it to the Committee staff last week. 

Mr. O’ROURKE. Great. 

Dr. YEHIA. It is publicly available. And not only can you get a 

copy, but if you want me or others to come and walk you through 

it, we are happy to do that. 

And to your first point, that is exactly what is in the performance 

work statement. So there is a section in the performance work 

statement which is the first part of like an acquisition cycle. So as 

Gene was describing, it is kind of the first step and later on is the 

RFP and etcetera. 

So that is exactly what we are looking for. We are looking for 

who are those high-performing claims processing sites that potentially could in the future be able to bid on a proposal that we hope 

to do in the coming months to be able to see if they can meet those 

needs. And so we are looking exactly at that option. 

Mr. O’ROURKE. This is for Mr. Williamson and if time permits 

Mr. Abe. Within the ten and a half months, given the fact that we 

have VA’s past performance as a potential predictor of future performance, but also given the fact that we have people like Dr. 

Yehia, Dr. Shulkin, Secretary McDonald, who really do seem intent 

on turning this around and have some success to show for that, is 

this realistic? Should we temper our expectations? What are your 

thoughts? 

Mr. WILLIAMSON. Well, I have been working with GAO a long 

time, and I have become somewhat skeptical in that time. And I 

have heard a lot of well-intentioned stories from agencies. I really 

doubt whether it can be done in ten and a half months. I think the 

IT challenges alone, are daunting. On past IT modernization 

projects, VA’s track record hasn’t been real good. 

But I really appreciate VA’s enthusiasm and their progressive attitude toward solving this problem. I really think that is good, but 

realistically, it is going to be a tough pull. 

Mr. O’ROURKE. Dr. Yehia, how much is the IT part of this cost? 

And then if time allows, I would like Mr. Abe to comment. 

Dr. YEHIA. I guess the point of this RFP or, I am sorry, the draft 

performance work statement is to look for private sector commercial folks that could do the work. So that is out of all the different 

options, we are not talking about an off-the-shelf IT product. 

Mr. O’ROURKE. How much will we have to invest in addition to 

what we are spending on IT today to make this work? 

Dr. YEHIA. I would have to get back to you on that number. 

Mr. O’ROURKE. Okay. Mr. Abe, any thoughts? I know I don’t 

have a lot of time. Maybe an additional 15 seconds. 

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16 

Mr. ABE. Just to summarize, I think I agree with Mr. Williamson 

in the sense that, you know, the IT solution is a real big obstacle, 

especially considering their past performance. 

The other issue is that it really does take a lot of project management to do this. And, again, I think based on past experience, that 

has probably been inadequate. 

Mr. O’ROURKE. Thank you. Appreciate it. 

Thank you, Mr. Chairman. 

Mr. BENISHEK. Mr. Coffman, you are recognized. 

Mr. COFFMAN. Thank you, Mr. Chairman. 

Well, whoever would like to answer this. I have heard time and 

time again from ambulance companies that VA misapplies a prudent layperson standard for emergency transportation. 

For example, VA has been requiring ambulance providers to wait 

for underlying emergency care claims to be processed, and to provide medical documentation from the veterans’ emergency room 

visit prior to processing the transportation claims. Although VA insists this isn’t required, clearly the practice continues throughout 

the country, and veterans are often left with the bill. 

What is needed to correct the prudent layperson standard in the 

case of emergency ambulatory care? Who can answer that question? Yes. 

Dr. YEHIA. I will take it. You are spot on. The emergency system 

and the emergency ambulance part of the care system is challenging. That is why we wanted to tackle it, and we did tackle it 

in our consolidation plan. 

The problem with ER care, which is what we spoke about a little 

bit more last week is, there is multiple authorities that we have 

for providing ER care. If it is service-connected, we are the primary 

payer. If it is not service-connected, we are the payer of last resort. 

So they first go to other health insurance, then us. 

On top of that being the difference in payers, we have different 

requirements, if you were seen at the VA in the last 24 months, 

did you bypass a VA on your way to the ER, and the list goes on 

and on and on. 

I actually don’t think it is the application of the prudent 

layperson is the biggest barrier here. That is a common practice in 

most health plans. It is all the other things that we have in place 

based on statute and regulation that we hope to consolidate and fix 

that. And that is what we present here. 

As you know, that comes with a little bit of a cost. We wanted 

to be able to streamline and get to being the primary payer and 

remove all those barriers, but that is exactly what we want to do. 

And we have drafted some legislative proposals that get at that. So 

we are happy to share those with you if you are interested. 

Mr. COFFMAN. Okay. Last Saturday, I spoke at a convention for 

ophthalmologists. There were about 400 in Colorado. Well, last 

Sunday. And there were some VA personnel in there as well, docs 

as well. And everybody seemed to uniformly complain about Health 

Net— 

Dr. YEHIA. Yeah. 

Mr. COFFMAN [continued]. —and just how impossible it was to 

get paid. Is that the case throughout the country, or is this something endemic to Colorado? 

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17 

Dr. YEHIA. No. That is the case unfortunately across the country. 

And that is why we are taking actions to remove those barriers. 

The biggest barrier in that area is the fact that we require medical 

documentation before we pay the bill. I don’t know why that was 

in the contract. It was in the contract when I first started this role 

a couple months ago. I looked at it. I was like, this doesn’t make 

sense. No one else in the industry does this. 

We are in the final stages of finalizing that, and removing that 

barrier. I think Dr. Shulkin mentioned it will be done in two to 

three weeks. That is the timeframe that we are working on. As 

soon as we get that done, we will make sure that everyone is aware 

of that. 

The challenge is, when you get paid by Medicare or by a health 

plan, they don’t ask you to give the record. And this addresses a 

lot of the various issues that the IG and the GAO found in the report, too, of we are getting all these paper claims and all these 

medical records that we have to scan and do that. That is, part of 

the reason is because we have been tying payment to getting medical documentation back, which is not a standard of care in the 

community. 

Mr. COFFMAN. Who devised this contract? Who is responsible? 

Dr. YEHIA. This contract came about in September 2013, I think, 

or in the end of 2013, started implementing in 2014. I don’t exactly 

know. I don’t know exactly who designed that contract. I will say 

one thing— 

Mr. COFFMAN. But it was designed for the PC3 Program? 

Dr. YEHIA. Exactly. 

Mr. COFFMAN. And now it is being used on the Choice Program? 

Dr. YEHIA. Yeah. And that is like a very important point as you 

raise, Congressman. That initial vehicle, that contract was not 

meant to run the Choice Program. It was not designed to run a 

program like Choice where we are sending hundreds of thousands 

of veterans into the community expanding community care. 

That vehicle was not meant to do that. That is why we are moving out on this new draft performance work statement, getting a 

machine, a car that can actually run the race we want it to run. 

So part of it is, it just wasn’t designed to do what we want it to 

do. 

Mr. COFFMAN. Mr. Chairman, I yield back. 

Mr. BENISHEK. Thanks. 

Dr. Ruiz. 

Mr. RUIZ. Thank you, Mr. Chairman. 

The damage veterans suffer due to the VA’s current billing and 

reimbursement system is irreparable and unacceptable. A decorated Vietnam combat veteran from my district attempted to pursue care in the community for orthopedic issues and pain management. After navigating the complex and burdensome process of receiving care within his community, he was diagnosed with soft pallet complications that would require surgery before other issues 

could be addressed. 

As he learned to treat and manage his neck and back injuries, 

he also learned that the VA refused to pay his medical bills in a 

timely manner. This delayed payment meant that the patient 

couldn’t just concentrate on improving his health, he had to spend 

Leonard.horne on VACREP0180 with DISTILLER

18 

time worrying about his credit as the clinic, and later collections 

agencies hounded him for payment of his medical bills. 

Now this veteran has damaged health and damaged credit due 

to the VA. The VA is meant to serve veterans, but it is clear in 

this instance that they did the exact opposite. They added a bad 

credit to a veteran who is barely making ends meet. This was a 

grave disservice to him, one of our Nation’s heroes. 

So we talked about how the complicated system affects physicians and physicians’ ability to provide that care, but how does 

your team plan, and this is to Dr. Yehia, how do you and your 

team plan to prevent this from happening in the future? 

Dr. YEHIA. Thank you for that question. 

And, you know, I have been getting kind of similar letters, too, 

and it is not the VA that is sending them to the collection agency. 

There are two things here. 

Mr. RUIZ. It is the providers. 

Dr. YEHIA. It is the providers. 

Mr. RUIZ. But the providers— 

Dr. YEHIA. Because they are not— 

Mr. RUIZ [continued]. —as Dr. Roe said are hurting. 

Dr. YEHIA. Yes. 

Mr. RUIZ. And they are not getting payment, so they start to 

charge the patient. 

Dr. YEHIA. Yes. 

Mr. RUIZ. But the providers are under the expectations that they 

are going to get paid, and if they don’t get paid or if they don’t get 

paid in a timely manner, then they charge the patient. 

So how are we going to prevent the providers from getting late 

payments and, two, what are we going to do to correct— 

Dr. YEHIA. Yes. 

Mr. RUIZ [continued]. —the bad credit for the veterans who already suffered the ill consequences? 

Dr. YEHIA. You are describing it right. There are two things that 

we are doing. Number one, we have got to get the root cause, and 

the root cause of what we just described. The biggest barrier to 

prompt payment by our contracting partners is this requirement to 

submit the records. So we are getting to that basis. Once, I think 

we uncouple or unlink those, it is going to be a lot better to be able 

to pay more timely and accurately. 

When I started hearing reports that veterans were getting adverse credit reporting, you know, I got very frustrated because 

there should be no administrative burden that stands in the way 

of them getting care. 

So let me tell you what our team did. We actually stood up folks 

in our call center, and so if a veteran has any problems with adverse credit reporting, we have a 1–800 number they can call. It 

is a VA folk. They can chat with them. We will be able to connect 

with the community provider, and our contractor, as well as a debt 

agency to try to correct those. 

So I am happy to give you that phone number if you want to 

share it with your constituents or put it on your Web site. 

Mr. RUIZ. Go ahead and put it on C–SPAN right now. What is 

it? 

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Dr. YEHIA. I will tell you, though. It is 1–800–877–881–7618. 

And I am happy to provide it to the community because it is unacceptable. And so we are trying to do what we can on our part to 

help veterans that have an adverse credit reporting. 

Mr. RUIZ. And what has been those results of our veterans? Have 

they eliminated that bad credit? Have they corrected the problem? 

Dr. YEHIA. We just rolled this out a couple weeks ago, so I would 

have to get back to you on the kind of the results that we are getting. 

Mr. MIGLIACCIO. Prior to the rollout, we have written letters to 

credit bureaus on behalf of our veterans. It is a travesty. 

Mr. RUIZ. And what has been the results? 

Mr. MIGLIACCIO. We have seen some good results because they 

have corrected credit reports. And I can get you some data on that 

also. I don’t have specifics, but I am told that we have seen good, 

positive outcomes. But we will intervene. 

Mr. RUIZ. I would like to talk more about that because there are 

plenty of veterans throughout our country that don’t even know 

what their resources are to remedy this problem. 

Many of our veterans just accept it because they don’t like to 

complain and that means that sometimes they can’t apply for that 

loan to make home improvements. They have bad credit so they 

can’t pay rent in their apartment or other financial burdens. And 

so we need to outreach to make sure that that gets remedied. So 

thank you very much. 

Mr. BENISHEK. Mr. Wenstrup, you are recognized. 

Mr. WENSTRUP. Thank you, Mr. Chairman. 

If I can just add to that, I would hope that we don’t have to keep 

adding layers upon layers because layer one isn’t being done. Now 

you have layer two of writing letters saying, hey, it is not this guy’s 

fault. I mean, thank you for doing that, but that is not the answer 

obviously. 

My next question is, what does the individual, the patient, the 

veteran do, and what does the physician do when these claims 

aren’t getting paid? Is there a customer service branch that they 

can reach and have the same person to talk to when they call 

about the claim either from the doctor’s office or on behalf of the 

veteran or are they just—because I have been getting reports that 

every time they call, it is somebody different and they have to start 

all over and wondering where this is taking place? 

Dr. YEHIA. I think that is an area for improvement for us. To 

speak frankly, a lot of our claims processors also provide some of 

the customer service. What we are hoping to do is to kind of build 

a more robust customer service function for community providers. 

I don’t know how the focus of those relationships has been in the 

past, but if you look at our consolidation plan and where we want 

to go in the future, we think about three stakeholders—veterans, 

community providers, and our employees. And maybe it is a little 

bit because I am a clinician. I am very focused on making sure that 

we have robust provider relations and customer service for community providers. 

I think once we roll more of our plan out, this is going to be more 

localized so that at the regional level, there will be someone that 

they can talk to if they have issues and then also kind of nationally 

Leonard.horne on VACREP0180 with DISTILLER

20 

if they have just general information questions that they need, they 

can reach out. So I think we have more work to do in that area. 

Mr. WENSTRUP. And I appreciate you acknowledging that, and I 

hope that it can be more fluent, if you will, but also hopefully less 

of a need for that. Again, another layer that could be reduced if we 

are doing things right. 

You know, you talked about the complexity of all the various eligibilities and that is true. And I would throw out there, you know, 

sitting here, and you are involved with it, if there are ways that 

we can reduce that complicated process from this side of things, let 

us know what those are, you know. We would love to hear from you 

on that. And I imagine you will gather some ideas as you get more 

and more familiar with it. And I hope that you give us some feedback in that regard. 

Dr. YEHIA. I welcome that opportunity. We definitely do have 

some ideas, and I am looking forward to working with you. 

Mr. WENSTRUP. But I do think at the same time there will always be some variables as far as eligibility. But it seems to me that 

an algorithm can be built. You are in this classification, you are in 

that classification, push the button and let the claim roll. Because 

hopefully, it is not that complicated, but if it is giving us the opportunity on this end to change things, if we need to that, is fair to 

the veterans and gets the job done. And I do not know if you want 

to comment? If anyone else would like to comment on that any further? But anyway. 

When it comes to where you are headed, and there is a claim, 

there is usually a review of the claim when it comes from the provider. Do you anticipate, especially if you go outside the VA to process claims, do you anticipate the review to come within the VA? Or 

at that other claims processor? 

Dr. YEHIA. I would, as best as possible it would probably be outside. And this is how it would work. We want to create—the simpler that we can get the better which is, you know, more aligned 

with industry and Medicare. We would be able to, the way that I 

envision it working is with a partner. We would give them the 

business rules. So we would have you to check the name, make 

sure the provider’s address is right, make sure the bill charge was 

right, make sure they have the right eligibility criteria. So we 

would give them the business rules, they would put it into their 

system, and the way that it works now for Medicare and a lot of 

the other sites is, for the most part, it is green lights all the way 

through. A check is sent electronically and deposited in someone’s 

bank account. That is where we want to go to. The more complexity 

that we add, whether it is, we have to double check this because 

there is this eligibility in there, it makes it harder to automate 

every single step. So that is why I really welcome your comment 

to work together. Because we definitely need to be able to get to 

a simple, streamlined eligibility criteria that makes sense. Because 

those will form the business rules that we give to our partners in 

the community to process claims. 

Mr. WENSTRUP. Thank you. And I yield back. 

Mr. BENISHEK. Thanks. Mr. Huelskamp? You are recognized. 

Mr. HUELSKAMP. Thank you, Mr. Chairman. I will try to arrive 

at that time again in the future. This is pretty quick. And I apoloLeonard.horne on VACREP0180 with DISTILLER

21 

gize for being late. There was another Subcommittee hearing. And 

if I repeat some questions, hopefully it still provides some insight. 

But yesterday, I visited with, I do not remember whatever deputy under secretary it was, said that we were going to see some 

changes, and paying before a paper claim would be required, and 

some changes there. Doctor, can you describe that a little bit more? 

It was a short part of the discussion in my questions yesterday. 

Dr. YEHIA. Sure, and we have been chatting a little bit about 

that. What we were describing is the fact that in our current contract there is a requirement that we have to get the medical information, the medical record before we can issue a payment. And I 

was stating that it is different than the private sector. This is not 

a common practice in the private sector. This does not mean that 

we do not want records back, but we should not penalize community providers in that way. And so, what we are working on in the 

very near future to be able to kind of uncouple those, delink them 

so that we pay the claim when the work has been done, and then 

we still ask for the records, but not tie it to payment. 

Mr. HUELSKAMP. I appreciate that, and it was in less than two 

weeks? Is that the frame that— 

Dr. YEHIA. Yes, that is the timeframe we are working on. Yes, 

sir. 

Mr. HUELSKAMP. Okay. Okay. And if Choice was made permanent rather than a pilot program—which some in the VA still approach it that way. The Secretary has said he would like to see it 

made permanent and hopefully we can do that this year. Does that 

change that? Is that part of the reason that you want to have those 

records back? Describe that a little more if you would, doctor, from 

that perspective. 

Dr. YEHIA. Sure. I think that was a requirement that was embedded in the contract. It was a kind of a contractual agreement that 

we had to hold that, that folks had to be accounted to. I do not 

think there needs to be a specific, I do not think we have to get 

into that level of detail when we hopefully craft a new Choice program by law. So I think it was more of a barrier that was in the 

contract than a barrier in the law. 

Mr. HUELSKAMP. So again, you think it is a barrier in the law 

and the contract? 

Dr. YEHIA. No, the tying the payment to the record was more a 

contractual barrier than a legal barrier. 

Mr. HUELSKAMP. And who made that request, though? The VA 

would make that request? I mean, I doubt the providers made that 

request. That was a VA request, is that correct? 

Dr. YEHIA. We heard from our providers that they were not getting timely, so we looked at why were they not getting timely. And 

the biggest reason was they have to submit all these paper records 

to us. And so, we looked at our contract and that was a requirement, and we are working on uncoupling it. 

Mr. HUELSKAMP. Describe though why the VA wanted those 

records back? 

Dr. YEHIA. Oh, well we want the records for care coordination. 

So if someone goes out into the community and gets seen by a community provider, and I am their doctor, and I come back and see 

them, I want to know what happened. So we want to get records 

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22 

back to coordinate care. We do not need every single piece of the 

record. 

Mr. HUELSKAMP. Yes. 

Dr. YEHIA. The ones that are most important for the treatment 

plan. But it is important to get records for care coordination. But 

it should not be linked to payment. 

Mr. HUELSKAMP. Yes, absolutely. And I appreciate that. And fixing that, you know, I have 70 community hospitals in my congressional district. I think as of two weeks ago, we were up to all those 

hospitals, plus another 1,300 providers. And they would like to continue, and add on. But their goodwill is not going to run forever. 

And so we have got to fix that, and this looks like the worst payer 

in the whole system is the VA. And I will be meeting with some 

of them next week and would be happy to say, hey, we are going 

to fix that. In two weeks we will have some changes. 

One thing though I want to point out that I thought was astounding was page 21 of written testimony. It said that processing 

centers still require providers to use fax machines to place inquiries about the status of their claims. When are you going to get past 

the fax machine? 

Dr. YEHIA. That was the whole idea of customer service, where 

I said we still have a long way to go. I actually had a conversation 

with the head of our customer service for community care. And I 

would love to be able to discuss that a little bit more. Like I said, 

we have a long way to go to make sure that we are providing good 

customer service to our community providers. But we are focused 

on that. That is what we want to do. You should not send a question by fax. 

Mr. HUELSKAMP. Yes. You might actually send their bonuses by 

fax, and see how that would work, doctor. But so when will the fax 

machine be obsolete at the VA? I mean, when is this going to happen? I understand. 

Dr. YEHIA. Yes. Yes. 

Mr. HUELSKAMP. I mean, all joking aside, I mean, this looks silly. 

And if we cannot move past that, we have got some deeper problems, IT problems. Doctor, so when are we going to have customer 

service that reflects the 21st Century then? 

Dr. YEHIA. I think it is something that is going to be incremental. So I do not have a specific timeframe in my mind. But we 

are taking steps today to make it better. 

Mr. MIGLIACCIO. Yes, if I can give you a case in point? 

Mr. HUELSKAMP. Absolutely. 

Mr. MIGLIACCIO. Where eight months ago we were here, physicians could call in and check on their claims. And we put an arbitrary number on it, we said you can only ask about three claims 

and then you have got to call back. And so— 

Mr. HUELSKAMP. Oh my. 

Mr. MIGLIACCIO [continued]. —innovative physicians, you know, 

kept a number of lines going so they could continue their questions 

about their claims status. Well after our hearing in June, we went 

back and we stopped that practice because it did not make any 

sense. 

Mr. HUELSKAMP. Okay. 

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23 

Mr. MIGLIACCIO. I mean, we will take it step by step. As Dr. 

Yehia had mentioned, it is really evolutionary. But we want to get 

to a state where we can join that 21st Century. 

Mr. HUELSKAMP. Yes. And thank you, Mr. Chairman. I will say 

it is not evolutionary. This is a revolutionary change to the VA. 

And that is what I hope Choice does. And for my district it is, and 

everyone varies but— 

Mr. BENISHEK. You mean getting rid of the fax machine? 

Mr. HUELSKAMP. That could be considered revolutionary in some 

parts. So thank you, Mr. Chairman. I yield back. 

Mr. BENISHEK. Mr. Lamborn? 

Mr. LAMBORN. Thank you, Mr. Chairman, and thanks for having 

this hearing. I am sure you were probably watching the discussion 

we had with Secretary McDonald yesterday. And one thing that I 

was, and continue to be very upset and concerned about, is the recent Inspector General’s report on the problems in Colorado 

Springs. And whether we call it falsifying or just bad training and 

poor recordkeeping, there were people on the wait list who went 

way beyond 30 days. And yet the records did not reflect that. And 

it was not an honest recordkeeping. It was not a proper recordkeeping. And part of the problem is also veterans who are eligible 

for the Choice program, which we are here today to talk about, 

were not put on that list of eligible veterans. And that was a big 

problem and continues to be. 

Now the claim is that these have all been fixed in Colorado 

Springs. I think the jury is still out on that because we are still 

hearing reports of people falling through the cracks. And that simply should not be happening. In particular, and I know that you 

already discussed this today. And I apologize. I was at other meetings up until now, so I do not want to, sorry if I am covering old 

ground, but we have people, providers in the community, who are 

not being reimbursed on a timely basis. And I know this is anecdotal. But we have one provider in particular who has had to stop 

seeing veterans because he has not been paid for six months. Now 

how in this day and age, even if we are using fax machines, how 

can this be happening? 

Dr. YEHIA. Yes, I appreciate those comments. And if you give me 

the name of the provider we will have our team, we have actually 

created a rapid response team to work with providers that are having issues. So please give me that name, and we will be able to 

work on it. 

We are doing this like two-pronged approach where we are driving towards the future, but at the same time, we know there are 

problems in the current state. And so we are standing up and taking actions to address those. 

You know I will say about Eastern Colorado, because I did watch 

the hearing yesterday and I did a little bit of digging, they are in 

the top five in the country for utilizing Choice. And so I think, yes, 

I think we need to do better in making sure that everyone understands how the program works. But when I looked at it I was like, 

wow, they are actually sending a lot of the people out in the community. And I think people want, when I spoke with the medical 

center director and the VISN director, I think they want to see 

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24 

Choice succeed in Colorado. And that for me was very telling, the 

fact that they are sending so many folks in the community. 

The one other thing that I think want to mention is, you know, 

I looked at all these different reports that came out from the IG 

and GAO, and I think there are nuggets in there, there are themes 

in there that it is important to put into practice. But as both of the 

co-witnesses here presented, this program has been evolving so 

rapidly. PC3 rolled out in the beginning of 2014. Choice, end of 

2014, got changed again in 2015. Those are only some of the law 

stuff. Continuously we are making improvements in the program. 

So just imagine the level of training and really retraining that has 

to occur over and over again to learn new processes. 

We have not reached steady state yet, and in my mind that is 

good. Because I do not want to be at this state. I want to be at a 

much higher state of excellence. But when I looked at the reports 

there, a lot of them had to do with, you know, training and system 

issues. And I think hopefully as we continue to evolve and get to 

a better place, we are going to be able to deliver the care that we 

need to deliver. 

Mr. LAMBORN. Doctor, I hope there is not still a need, although 

I suspect there is, of a culture change, an attitude change. That 

there are those in the VA who simply are not comfortable or resist 

having the private sector be more involved with providing veterans 

care. And I know you all know this, but I want to say it for the 

record. 

Dr. YEHIA. Sure. 

Mr. LAMBORN. It is true that there are a lot of veterans providing 

health care within the VA system. That is wonderful. But there are 

a lot of veterans, at least in my community, in the private sector 

who are providing health care. And they also have the similar motivation to want to do a good job for their former colleagues in 

arms. 

Dr. YEHIA. No, I am with you. I am, you know, I am a clinician, 

and I practiced at a VA, and then I have also practiced at academic 

hospitals and community locations in taking care of veterans. And 

I jointly, I have a number of patients on my panel that I jointly 

care for with community providers. The fact is last fiscal year, we 

had 1.5 million veterans, unique veterans, that received community 

care. I think this trend is going to continue. I think as we get a 

little bit better at level setting, what is going to be offered in the 

VA, what we leverage the private sector to help us with, when I 

talk to the doctors at the VA, a lot of them, it is their colleagues 

down the street that they are sending their patients to. So I do not 

think they are, I do not know if it is a systemic culture thing. I 

think a lot of people welcome a community of practice. 

Mr. LAMBORN. Well I hope it is not. Mr. Chairman, I am going 

to yield back. But we will get you the name of that provider. Thank 

you. 

Mr. BENISHEK. Mr. Posey, you are recognized. 

Mr. POSEY. Thank you very much, Mr. Chairman. And thank you 

so much for letting me participate in your Committee today. Doctor 

Yehia, I hate to be redundant, but my concerns are very similar to 

those expressed by virtually every other Member of the Subcommittee. In my congressional district, we are already losing docLeonard.horne on VACREP0180 with DISTILLER

25 

tors because they have had such a bureaucratic nightmare trying 

to get paid. The physician’s billing department is being told that 

it is something they did wrong, even when they make the required 

changes. It is as much as five months time. And from what I have 

heard, my guys are lucky it is only taking them five months to get 

paid. 

Can you tell me what is being done to shorten the time between 

billing and payment? And what I mean by that is, besides just saying this is what we are doing, can you tell me where it has been 

enacted? Or have you got rules that have changed that? 

Dr. YEHIA. I do not want to sound like a broken record, but the 

biggest thing that we are talking about is coming in these next couple of weeks where we unlink the record from the payment. That, 

I think is going to really speed up payment. And your district is 

in Florida, right? 

Mr. POSEY. East Central Florida, yes. 

Dr. YEHIA. Yes, and Florida is dear to my heart because I grew 

up in Florida, I went to the University of Florida. And so I have 

read a lot of news articles about the hospital association and various challenges that Florida hospitals have been facing. Gene can 

describe a little bit about some of the work that we are doing with, 

specifically with some of the Florida providers to improve it. 

Mr. MIGLIACCIO. Sir, some of the things that we are doing as 

part of this, as Dr. Yehia had mentioned the rapid response team. 

We have gone out and met with congressional staff members in 

local districts. We also work with the hospital association, state 

hospital associations. And we have been out to Florida, not in your 

district, but if you would like us to come out and talk to some of 

the hospitals, we would be more than happy to do that. We provide 

a lot of provider education. We will take cases back with us and 

start to work on claims. A lot of it centers in some of the accounts 

receivable. But, you know, a case in point, we spent a lot of time 

in VISN 16, in Louisiana and Arkansas. And we have seen some 

phenomenal changes, not only in terms of paying our providers, but 

also working with our staff members. We pay, in we call it VISN 

16, Arkansas and Louisiana, about 96 percent of the time within 

30 days of our claims. And we are just having phenomenal cooperation. By working with providers and their business staffs, it does 

make a difference. And we would do that for you, too, sir. 

Mr. POSEY. Well I would appreciate it if you would come to our 

district and do that. Veterans who use the Veterans Choice Program, they are usually those in pain who cannot wait for long periods of time, obviously, to get treatment. For instance, spinal surgery, knee, hip replacements, and things like that. Why are they 

getting paperwork authorizing the procedures and care that expire 

before the paperwork is even generated? 

Mr. MIGLIACCIO. On the authorization side, we have also made 

a change on that recently too. And that was, we gave an authorization out, it expired, it had a very short life span. That authorization was only good up to 60 days. And that just did not make a 

lot of sense to us. And with Dr. Yehia, we talked about this when 

we created and drafted the plan that we presented to Congress in 

October. And we have extended that now in many, many cases up 

to a year. 

Leonard.horne on VACREP0180 with DISTILLER

26 

Mr. POSEY. Good, I am glad to hear that. What percentage of employees that handle veterans health care have a military service 

background? 

Mr. MIGLIACCIO. The number is about 30 percent, a little over 30 

percent of employees in the Veterans Health Administration that 

are vets. In our claims department it is over 50 percent. 

Mr. POSEY. You know, I mean, when we hear from you, all it, you 

know, sounds like everything is going to be quickly headed toward 

roses, and of course you all have been hearing that probably as 

long as you have been serving on this Committee. And, but when 

we get back in the districts and we seem to encounter claims people, for example, that do not seem quite frankly, and simply to 

have much respect for our veterans. And I wonder if you have ever 

considered making prior military service a condition of employment, at least in those departments, where it is, you know, point 

of service? 

Dr. YEHIA. Let me take that. So I want to clarify one thing. We 

do not think this is a sprint. This is, there are certain things that 

we have to get right today because they are such pain points. But, 

you know, we know this is going to be a journey to be able to get 

us to the ideal state where we want to be. 

I think what you are getting at is like military cultural competency training. And I think back to my medical training, and I 

never received anything specifically related to veteran or military 

cultural competency when I was training to be a doctor. My only 

experiences were when I was a medical student working at the VA 

taking care of veterans that I actually gained that appreciation and 

that respect. I think we could do a lot better at making sure that 

our community providers have access to that sort of training and 

we are actually taking steps to do that. We have four courses that 

are available online. People can get CME, continuing medical education credit, to learn more about the uniquenesses and the nuances of military and veteran health care. And so I think we can, 

I would love to be able to share those links with folks on the Committee so you guys can push them out to community providers in 

your community. 

Mr. POSEY. No, my thought, it’s just respect for the customer, 

you know, so they do not get the fast foot shuffle and the razzle 

dazzle. And I mean somebody is giving them authorizations that 

expired before they got the paperwork. Now nobody who respects 

the veteran that they are there to serve would do something that 

stupid. And so my thought is, maybe the claims people that process 

the claims actually ought to not get some kind of sensitivity training, maybe there ought to be a requirement that they have had 

military service, that they have some respect for the job. 

Dr. YEHIA. Well I think as Gene said, half of them have served. 

I would love to talk to you a little bit more about that. 

Mr. POSEY. I am sorry, Mr. Chairman. I went over. I apologize. 

Mr. BENISHEK. Well does anyone have any questions? You know, 

one of the things that came up here, Dr. Yehia, and I just wanted 

to kind of reemphasize it, is the number of stupid rules that the 

VA seems to have which hinder the accomplishment of its mission. 

And that, simply removing one of the rules is not going to solve all 

Leonard.horne on VACREP0180 with DISTILLER

27 

of these problems. A comprehensive review of all your practices has 

to be done. Go ahead. 

Mr. TAKANO. You know, I just am struck by, I just want to remind everyone on the Committee that the VA was never set up to 

be an insurer and a payer. And so it is a revolution of sorts that 

we are undergoing. I mean, increased only, accelerated in the last 

two or three years. But you were set up mainly to be a provider 

organization. And the mind set has been that you are a provider 

organization. It is not that you have a bias against care in the community, it is that you know the integrated health care that you 

provide was, you know, the idea that you are getting the records 

back was all about making sure that we manage the patient’s care. 

But now that we are looking at other approaches, and it looks 

like we are moving in the direction of maybe a permanent program 

of care in the community that is going to maybe expand over time, 

you know, you are setting up the systems to do that and taking on 

more of the characteristics of provider organization as well as an 

insurer and a payer. So it was never really set up to be like Medicare, which is a payer organization. So let us make that distinction. 

And a lot of the beating up, the beating up on the department, you 

know, it can be put into context. And so that is what I want to 

make sure we clarify. That you are undergoing this attempt to become, take on more of the role of a payer, somewhat of an insurer, 

and working with other partners. 

Mr. BENISHEK. The panel is now excused. Thank you very much. 

Joining us on our second panel is Roscoe G. Butler, the Deputy 

Director of the National Veterans Affairs and Rehabilitation Division of the American Legion; and Carlos Fuentes, the Senior Legislative Associate for the Veterans of Foreign Wars. I appreciate you 

coming today, gentlemen. And Mr. Butler, you can begin when you 

are ready. Thank you. 

STATEMENT OF ROSCOE G. BUTLER 

Mr. BUTLER. Thank you. The American Legion is committed to 

a strong, robust veterans health care system designed to treat the 

unique needs of those who have worn the uniform. However, even 

in the best of circumstances, there are situations where the system 

cannot meet the needs of the veteran and the veteran must seek 

care in the community. 

Chairman Benishek and Members of the Subcommittee on 

Health, I am privileged to be here today and to speak on behalf of 

The American Legion, our National Commander Dale Barnett, and 

more than two million members in over 14,000 posts across the 

country that make up the backbone of the Nation’s largest wartime 

veterans service organization. 

The VA purchased care program dates back to 1945 when VA’s 

Hometown Program was created. Since then, VA has implemented 

a number of programs in order to manage veterans health care 

when such care is not available in a VA health care facility, could 

not be provided in a timely manner, or is more cost effective, programs such as Fee Basis, Project Arch, PC3. 

Most recently in 2014, the Veterans Choice Program was enacted 

so that more veterans could be referred outside the VA for needed 

health care services. However it quickly became apparent that 

Leonard.horne on VACREP0180 with DISTILLER

28 

layering yet another program on top of the numerous existing nonVA care programs each with their own unique set of requirements 

resulted in a complex and confusing landscape for veterans and 

community providers as well as the VA employees that serve and 

support them. Therefore Congress passed legislation in July of 

2015 that required VA to develop a plan to consolidate existing 

community care programs, which VA delivered on October 30th, 

2015. 

Generally, the American Legion supports the plan to consolidate 

VA’s multiple purchased care programs into one new Veterans 

Community Program. We believe it has the potential to improve 

and expand veterans’ access to health care. Most depend on how 

VA will work with its employees, Congress, VSOs, private providers, academic affiliates, and other stakeholders as they move 

forward in developing and implementing the plan. 

As noted in the plan, the current system is a decentralized and 

highly manual process. The new VCP plan proposes integrating 

most of VA’s Community Care Program into one single program 

that would be seamless, transparent, and beneficial to enrolled veterans. VA states its new VCP will focus on operational efficiencies 

to include standardized billing and reimbursement as well as geographically adjusted fee schedules that are tied to Medicare and 

deemed appropriate. 

These efforts would make it easier and more appealing for community health care providers to partner with VA. The American 

Legion strongly believes VA must standardize its reimbursement 

rates, but not set the rates too low where providers would be discouraged from signing up as participating providers in the new 

VCP, such as providers in Alaska and other rural areas. 

In November 2015, we received an inquiry from a veteran requesting assistance with payment of a medical bill that was authorized under the current Veterans Community Care Program. 

The veteran explained that he was approved to be treated by a 

non-VA health care provider for a hernia surgery to be performed 

outside the VA. After the care was provided, VA payment was delayed for months which resulted in the claim being referred to an 

attorney’s office for collection. As a result, the veteran expressed 

disbelief and has lost faith in the VA system.This should never 

happen, but occurs more often than it should. 

The American Legion supports VA developing a 21st Century 

claims and reimbursement process that is rules-based, and to the 

extent, possible eliminates as much human intervention as possible. Therefore, we are pleased to see that VA proposes to implement a claims solution which is able to auto-adjudicate a high percentage of claims, enabling VA to pay community health care providers promptly and correctly, and to move to a standardized reasonable fee schedule to the extent practicable for consistency in reimbursement. 

However, we do not believe Congress should continue to provide 

VA an open checkbook without any assurance from VA that the 

plan will work. Much as further funding for the joint electronic 

record is contingent on providing benchmarks are met, Congress 

can and should require progress benchmarks here. 

Leonard.horne on VACREP0180 with DISTILLER

29 

In conclusion, VA plans for the new Veterans Choice Program 

need Congress’ approval. The American Legion believes the VA 

plan is a reasonable one given that desired result. VA has identified a number of necessary legislative items that require action by 

Congress in the short legislative window available this year in 

order to best serve veterans going forward in 2016. The American 

Legion supports many of those, such as measures budget flexibility, 

the Purchased Healthcare Streamlining and Modernization Act, 

flexibility for the Federal work period requirement, and special pay 

authority to help VA recruit and retain the best talent possible to 

lead their hospitals and health care networks. 

The American Legion believes that together, we can accomplish 

these legislative changes before the end of this session of Congress. 

We cannot let another year slip away. Our veterans deserve the 

same sense of urgency now that Congress has shown numerous 

times since the VA scandal first erupted in 2014. 

The American Legion thanks this Committee for their diligence 

and commitment to our veterans, and as they struggle to access 

health care across the country. And I am happy to answer any 

questions. 

[THE PREPARED STATEMENT OF ROSCOE G. BUTLER APPEARS IN

THE APPENDIX]

Mr. BENISHEK. Thank you, Mr. Butler. Mr. Fuentes, five minutes. 

STATEMENT OF CARLOS FUENTES 

Mr. FUENTES. Mr. Chairman, Members of the Subcommittee, on 

behalf of the VFW and our Auxiliary, I would like to thank you for 

the opportunity to present our views on VA’s plan to consolidate 

community care programs. 

The brave men and women who have worn our Nation’s uniform 

have earned and deserve timely access to high quality, comprehensive, and veteran-centric health care. That is why the VFW has 

made a concerted effort to evaluate the VA health care system and 

has worked with VA, Congress, and other stakeholders to implement reasonable solutions to issues we have identified. 

In the past year, we have collected and evaluated direct feedback 

from more than 12,000 veterans. Through this work, we have identified several concerns with the Choice program. Given the focus of 

today’s hearing, I would limit my remarks to billing issues we have 

identified. 

The most common billing complaint we hear from veterans who 

use the Choice program is that they have been improperly billed 

for their community care appointments. This typically occurs when 

a veteran is authorized to use the Choice program, but requires follow-up care that is outside of the scope of the original authorization. This is where the program often fails veterans. At times, a 

veteran arrives to a follow-up appointment before the care is authorized, so the veteran is either required to reschedule the appointment or assume the responsibility for the cost of that care. 

Most veterans reschedule that appointment and are forced to wait 

longer for the care they need. 

Leonard.horne on VACREP0180 with DISTILLER

30 

In some instances, a veteran arrives at the appointment and is 

unaware the care is not authorized. If the veteran’s provider is also 

unaware of the authorization status, or fails to inform the veteran, 

the veteran may be billed for the cost of that care. For example, 

a veteran in Saginaw, Michigan was authorized to use the Choice 

program for a vision exam. The provider prescribed him a specific 

treatment to save his vision. Since the provider was unable to administer that treatment, he was referred to a clinic nearby, where 

he received four courses of that treatment before being told that 

VA refused to pay his bill, and that he would need to pay his outstanding balance before he could continue to be seen. The VFW 

worked with Health Net to ensure that that veteran could continue 

his treatment while we figured out a way to pay for his bill. Since 

his treatment at the clinic was beyond the scope of the original authorization, Health Net did not have the ability to retroactively authorize the veteran’s care. Luckily, we were able to work with VA 

to have his bill paid, but it should not require our involvement to 

resolve this issue. That is why the VFW urges Congress and VA 

to empower local VA community care staff and the program’s contractors to make common sense exemptions to the Choice program 

requirements to prevent veterans from being needlessly billed for 

care VA is required to furnish. 

The VFW also believes that it is time to fully integrate community care providers into the veterans health care delivery model to 

ensure veterans have timely access to high quality comprehensive 

veteran-centric health care without having to cut through bureaucratic red tape. 

The VFW has also learned that providers at times are responsible for improper payments or billing. The Choice program requires that payment be contingent on providers providing the medical documentation. Private sector providers are not accustomed to 

reporting medical documentation before receiving payment. As a 

result, some of them will bill the veteran before sending VA or the 

program’s contractors the requisite medical records. To address this 

issue, VA has proposed decoupling medical documentation and payments. We are concerned that decoupling medical records and payments would remove the incentive of community care providers to 

share medical records with VA which could impact VA’s ability to 

verify the quality of care veterans receive. Ultimately, we will hold 

VA accountable for providing high quality care to veterans, regardless if it is at a VA medical facility or through community care providers. In order to ensure that quality, VA needs that medical documentation. 

The VFW believes that this issue can be addressed without decoupling medical documentation. For example, VA could develop IT 

solutions to facilitate a seamless integration of the health care 

records between medical facilities and their community care partners. This would prevent community providers from having to PDF 

or fax medical records to VA, and ensure that VA can verify the 

quality of care veterans receive. 

As this Committee continues to evaluate VA’s plan to consolidate 

community care programs, the VFW will continue to ensure veterans’ preferences and health care needs are prioritized. Mr. ChairLeonard.horne on VACREP0180 with DISTILLER

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man, this concludes my remarks and I am ready to answer any 

questions you may have. 

[THE PREPARED STATEMENT OF CARLOS FUENTES APPEARS IN THE

APPENDIX]

Mr. BENISHEK. Thank you, Mr. Fuentes. I yield myself five minutes for questions. And let me just comment about this medical 

record thing, and I noticed in your written testimony that you had 

that position. 

But you know, as a provider myself, you cannot be responsible 

for, like the hospital medical record may not be your medical 

record. And the physicians get delayed. Now there is certainly a 

reasonable requirement that if the physician has a habit of not returning any of the records, he should be reviewed as a provider and 

then maybe eliminated as a provider if he does not do medical 

records. Private practice physicians are responsible to get the referring doctor the pertinent records all the time. And they do it, and 

if they do not do it, then the people do not refer to them anymore. 

That is just a better way, in my opinion as a provider, to make 

sure that continues as we go by. 

Now you heard Dr. Yehia talk about improving the process. And 

I do not know if each of your organizations have any position on, 

would you be supportive of the VA moving to a Medicare model, or 

a TriCare model for payment? And using contractors to do that sort 

of thing? Would your organizations support that? Mr. Butler? 

Mr. BUTLER. I can speak for the Legion. We do not have a position on that. We have not been asked to consider that as an option 

at this time. But we can take that up and look at that at a future 

date and bring that back to the Committee. 

Mr. BENISHEK. Mr. Fuentes, do you have any position there? 

Mr. FUENTES. Mr. Chairman, to us, it does not really matter 

which vehicle is used. Really what we want to prevent is what happened in Phoenix at the urology clinic, when hundreds of veterans 

were sent to community care providers and VA had no way of seeing if those veterans received care, or if they received the proper 

care. So like I said in my statement, we are going to hold VA accountable for veterans receiving that high quality care. And VA 

needs that medical documentation. The vehicle they use, you know, 

it does not matter to us as long as they are able to— 

Mr. BENISHEK. Right. 

Mr. FUENTES [continued]. —guarantee that care. 

Mr. BENISHEK. Right. Are there any particular issues that you 

have not talked about that your membership is sort of interested 

in? To me it is a real worry about how this is actually going to 

work out. Consolidating all the aspects of care into one thing and 

having it work. So that is a real concern of mine. Is there any other 

thing that you did not bring in your testimony that you all are concerned about? 

Mr. BUTLER. I think similar, like the comment expressed by the 

GAO, we have similar concerns. This is a huge and tremendous undertaking. And VA’s track record has not been good when you look 

at trying to take a system and then develop the IT changes necessary. VA talked a lot about bringing in contractors to see how 

they are going to deliver a product. Oftentimes when that happens, 

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32 

when we look back at the scheduling redesign, when we look back 

at CoreFLS, VA spent millions of dollars in those type of initiatives, which was a huge IT network undertaking, without any 

deliverables. 

Mr. BENISHEK. Yes. 

Mr. BUTLER. And so we do not want the same thing to occur. And 

that is why in our testimony, Congress needs to assure, get some 

assurance from VA that they are going to be able to deliver, whatever the changes that they are saying they are going to be able to 

implement, they need to provide proof that they can deliver those 

changes first. 

Mr. BENISHEK. No I— 

Mr. BUTLER. Before you commit millions of dollars. 

Mr. BENISHEK. I agree, your benchmark idea makes a lot of 

sense. One of the concerns I have with the third party provider, the 

outside provider, is that what are they going to, are they going to 

cut any of their staff now if they have these outside providers doing 

a lot of the work? Does that mean that they are going to need less 

people in the VA? And is that going to actually happen? Or are we 

going to have two? That is my concern, are we going to be paying 

for two bureaucracies instead of one? So I have a lot of concerns 

about how this is done as well. And it is such a big project, it has 

a lot of scariness to me. I will yield back. Mr. Takano? 

Mr. TAKANO. Gentlemen, so you know the VA as a provider, historically has had, I think an interest in managing patient care in 

house. Over, from what I can tell, over the last several years it has 

initiated a number of contract programs to be able to refer patients 

out when they did not have certain services in house, whether it 

was OB/GYN or certain specialties. But now we seem to be at a 

point where we have authorized a temporary program that the Secretary is now saying that he would like to see permanent, which 

is this, the Choice Act, which was initially conditioned on how far 

you lived away. But that seems to all be, but now we are looking 

at consolidating all of these care in the community programs, all 

of these different contract programs now. 

And Chairman Benishek, you know, asked you your comfort level 

with this idea of becoming more like Medicare. Medicare, as you 

know, is not like the VA in the sense that it does not have, you 

know, its own hospitals, its own doctors. You know, it is a payment 

agency, right? Is that what your two organizations are comfortable 

with moving toward? When he says Medicare model, that VA 

maybe is less and less an institution that has its own doctors and 

is going to contract everything out? And it is kind of like we are 

more a payer agency? 

Mr. BUTLER. I can tell you that The American Legion position 

has not changed, that we believe the VA is a system worth saving. 

We advocate that. We supported the Choice Act as a temporary 

measure to allow VA time to get the resources, the doctors, and the 

necessary staff to care for our veterans. So our original position has 

not changed from our initial position, that we support the Choice 

Act as a temporary measure until such time as VA can be able to 

provide the care and service to veterans. 

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We know that community care, there will always be a need to 

refer veterans out in the community. But there also will be a need 

for the VA system. 

Mr. TAKANO. Mr. Fuentes? 

Mr. FUENTES. The VFW opposes, you know, making VA simply 

a payer of health care. We feel that VA delivers high quality health 

care and, unfortunately, it cannot deliver timely access to that high 

quality health care all times and everywhere. So you need to integrate the community, or community providers, into the veterans 

health care system. However, you need to eliminate that barrier 

that currently exists between the community and VA, where VA 

providers or VA facilities see the community as a safety valve, 

right, to alleviate the pressure on its demand. Instead, it needs to 

assess the demand and evaluate the capacity, similar to what Congressman O’Rourke has done in El Paso, assess, you know, the capabilities of the community and VA to really determine where 

those services need to be provided, and what the true demand is, 

so that VA can focus on the areas the community lacks. 

Mr. TAKANO. So we are not talking here about this question 

about reducing personnel in the VA because it is now being taken 

up outside the VA. That is, your organizations are not interested 

in that, is that correct? 

Mr. FUENTES. That is correct. 

Mr. BUTLER. That is correct. 

Mr. TAKANO. So you know the Secretary has used language and 

has said, you know, that he wants to, he is interested in making 

Choice permanent. I mean, that is what I have heard, you know, 

being said. So you still envision the Choice program as something 

that should be temporary? Because this question about how much 

money we are going to spend on IT systems to make VA more efficient at billing, more efficient at paying, I mean we can justify that 

based on what kind of VA prospectively we are looking at. I do believe we should be paying people more efficiently and taking away 

the bureaucratic problems in terms of whether we require them to 

get the records back before they are paid. But you know, the question of how much we invest in this, I mean, I think has some relationship to what kind of VA we are looking prospectively at— 

Mr. FUENTES. So, I think the problem here is that you consider 

community care, and I think everyone is considering community 

care, and the Choice program as something completely separate 

from VA. When moving forward, community care and community 

providers need to be an aspect of the system. They need to be incorporated into it. And honestly, VA needs to treat providers who participate in their high performing network like they would any other 

clinic within a VA medical facility. 

Mr. TAKANO. Okay, thank you. My time is up and— 

Mr. BUTLER. And let me just add, community care is never going 

to go away. You know, it has taken the form of many names, 

Hometown Program, fee basis. There is always going to be a need 

for community care. But there is also going to be a need for the 

VA health care system. And so there needs to be a balance between 

the two. One cannot replace the other. They have its place in meeting the needs of our veterans. 

Mr. TAKANO. Thank you for clarifying your position. Thank you. 

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Mr. BENISHEK. Dr. Roe? 

Mr. ROE. Thank you, Mr. Chairman. And I thank you, Mr. Butler 

and Mr. Fuentes, for your service to our country. A couple of 

things, I totally agree with Mr. Fuentes. What I have said for a 

long time is as a veteran physician, who served in the Second Infantry Division, I understand the needs I think of VA, of veterans. 

And why could I not be a veteran certified physician out here, but 

my bricks and mortar are off campus? You are absolutely right. 

And I could not agree more with that. 

There is a difference between the VA and private practice. In VA, 

every year we appropriate hundreds, well billions of dollars and 

they have got a big pot of money. On January 1 every year in my 

practice, I have no money. So I have got to generate that income 

to keep my bills paid. And the last person to get paid is the doctor. 

Everybody else gets paid before that. So when the VA is holding 

up their payment, every other system in the world pays differently 

than the VA does for outsourced care. Medicare does, private payers do, they all do. We can assure and just to show you how the 

payment models have changed, I was very deeply involved, as Dr. 

Benishek was, on the SGR reform. Medicare now requires us on 

the private side to pay for performance and outcomes. And so the 

private sector is already ahead of VA in paying for that quality of 

care. 

So I agree with you, Mr. Butler. I think there are going to be two 

systems. I think that the VA should embrace the private sector and 

identify quality physicians and provide quality care, and they are 

out there, and they want to provide the care. And then find a timely way to pay them. And then as Mr. Fuentes is saying, is to make 

sure that that quality of that care is as it should be. I agree with 

everything that has been said. And I think what we have to do is 

make this easier, so Mr. Abe, when he needs to get an appointment 

does not wait six months. I mean he gets an appointment in three 

weeks or a month or whatever his time, whatever his schedule 

shows. So I think that is what we need to get to. And I think we 

are all aligning up going in the same direction. I agree with you. 

And at home where I am, we have a very robust private sector. 

Many veterans out there, physicians, who want to see patients. I 

am in a group that had five, in an OB/GYN group that had five 

veterans in it. And so we were willing and able and more than 

happy to see those patients. And as I said previously, in the previous testimony in a large group you probably have the revenue to 

keep you going when VA did not pay you for six months. If you are 

a small surgical group with two surgeons, as Dr. Benishek may 

have been, or you are in a small internal medicine group, two or 

three doctors, or a family practice, and you do not get paid along 

with those other payers that are paying less than they used to, you 

shut the door. You lock the door and go somewhere else. 

So anyway, I just wanted to make those statements. I agree with 

most of the things you said, except I think Mr. Fuentes, I think 

there is a way VA and I think the VA is moving to a different payment system which will be better for veterans and for the doctors 

and the providers out in the community. So with that, I yield back. 

Mr. BENISHEK. Thank you. I had one more question, Mr. 

Fuentes, and that was about your statement about somebody going 

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to outside the VA to get care, like the ophthalmologist or the eye 

doctor, then that patient was then transferred for appropriate care 

elsewhere, but then the VA would not cover that other physician. 

How should they fix that? Do you have any suggestions for that? 

Mr. FUENTES. Yes. So like I said before, VA needs to treat all the 

providers within its high performing network like it would a provider within a VA clinic. So essentially, if I need to go to an ophthalmologist and receive specialized treatment, and then have to go 

to another clinic, I should not have to wait a month for VA to authorize that care, right? It should not be authorization based. Essentially, just like when I go to an ophthalmology clinic at VA, they 

are authorized to treat me and provide whatever care I need without having to go back to my primary care doctor and request authorization. 

Mr. BENISHEK. Right. All right, thank you. Any other questions? 

Well, thank you for your participation. I truly appreciate your 

input. Feel free to get hold of us as time goes by, to provide more 

input. Because we certainly want to hear what you all have to say. 

So you are all excused. I will ask unanimous consent that all Members have five legislative days to revise and extend their remarks 

and to include extraneous material. So without objection, that is ordered. This hearing is now adjourned. 

[Whereupon, at 11:54 a.m., the Subcommittee was adjourned.] 

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1For the purposes of this statement, the terms ‘‘VA care in the community’’ and ‘‘community 

providers’’ refer, respectively, to the services the department purchases outside VA medical facilities and the community providers who deliver the services under the following statutory authorities: 38 U.S.C. §§ 1703, 1725, 1728, 8111, and 8153. Before 2015, VHA referred to ‘‘community providers’’ as ‘‘non-VA providers’’ or ‘‘fee basis providers’’ and to ‘‘VA care in the community’’ as ‘‘non-VA medical care’’ or ‘‘fee basis care.’’ The agency began using the terms ‘‘community providers’’ and ‘‘VA care in the community’’ in the spring of 2015. 2 All emergency care purchased from community providers must meet the prudent layperson 

standard of an emergency, which means that the veteran’s condition is of such a nature that 

a prudent layperson would reasonably expect that delay in seeking immediate medical attention 

would result in placing the health of the individual in serious jeopardy, serious impairment to 

bodily functions, or serious dysfunction of any bodily organ or part. See 38 C.F.R. § 17.1002(b). 

There are additional criteria that must be met for VA to purchase emergency care from community providers, and these criteria vary depending on whether the care is related to the veteran’s 

service-connected disability. 3 As of November 2015, there were 141 VA medical facilities responsible for authorizing VA 

care in the community services and 95 VHA claims processing locations responsible for processing claims from community providers. 4Final figures for expenditures on VA care in the community in fiscal year 2015 will not be 

available until VHA’s claims processing locations finish processing all fiscal year 2015 claims. 

As of November 9, 2015, VA had paid about $6.65 billion for VA care in the community that 

was delivered in fiscal year 2015, but VHA’s claims processing locations also had a backlog of 

A P P E N D I X 

Prepared Statement of Randall B. Williamson 

VETERANS’ HEALTH CARE 

PRELIMINARY OBSERVATIONS ON VHA’S CLAIMS PROCESSING DELAYS AND EFFORTS

TO IMPROVE THE TIMELINESS OF PAYMENTS TO COMMUNITY PROVIDERS

UNITED STATES GOVERNMENT ACCOUNTABILITY OFFICE

Chairman Benishek, Ranking Member Brownley, and Members of the Subcommittee: 

I am pleased to be here today to discuss our ongoing work related to the plans 

of the Veterans Health Administration (VHA) of the Department of Veterans Affairs 

(VA) to consolidate its care in the community programs and improve the efficiency, 

accuracy, and timeliness of its payments to non-VA community providers. The majority of veterans utilizing VHA health care services receive care in VHA-operated 

medical facilities, such as VA medical centers or community-based outpatient clinics. However, to help ensure that veterans are provided timely and accessible care, 

the agency has purchased health care services from community providers through 

its care in the community programs since as early as 1945. 1 While the eligibility 

requirements and types of care purchased through the programs currently vary, in 

general VA purchases community care when (1) wait times for appointments at VA 

medical facilities exceed VA standards; (2) a VA medical facility is unable to provide 

certain specialty care services, such as cardiology or orthopedics; or (3) a veteran 

would have to travel long distances to obtain care at a VA medical facility. Under 

certain circumstances, VA is also authorized to purchase emergency care from community providers. 2 When veterans obtain care from community providers, these providers submit claims to VA for reimbursement on a fee-for-service basis. VHA staff 

at 95 claims processing locations throughout the country are responsible for processing and paying these claims. 3

VA’s expenditures for its care in the community programs, the number of veterans 

for whom VA has purchased care, and the number of claims processed by VHA have 

grown considerably in recent years. In fiscal year 2015, VA obligated about $10.1 

billion for its care in the community programs for about 1.5 million veterans. 4 Just 

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about 453,000 claims awaiting processing as of October 29, 2015. Total fiscal year 2015 expenditures for VA care in the community are expected to be closer to $10.1 billion. 5Department of Veterans Affairs Office of Inspector General, Veterans Health Administration: 

Audit of Non-VA Inpatient Fee Care Program, 09–03408–227 (Washington, D.C.: August 18, 

2010). 6 National Academy of Public Administration, Veterans Health Administration Fee Care Program (Washington, D.C.: September 2011). 7See GAO, VA Health Care: Actions Needed to Improve Administration and Oversight of Veterans’ Millennium Act Emergency Care Benefit, GAO 14 175 (Washington, D.C.: March 6, 2014) 

and GAO, VA Mental Health: Clearer Guidance on Access Policies and Wait-Time Data Needed, 

GAO 16 24 (Washington, D.C.: October 28, 2015). 8Pub. L. No. 114–41, Title IV, § 4002, 129 Stat. 443, 461 (2015). 

9The Veterans Access, Choice, and Accountability Act of 2014 (Choice Act) included a provision for us to report to Congress about the timeliness of VA’s payments for claims submitted 

by community providers when veterans access care outside the VA health care system, and compare the timeliness of VA’s payments to community providers to the timeliness of payments providers receive from Medicare and TRICARE, the Department of Defense’s (DOD) health care 

system. Pub. L. No. 113–146, § 105(c), 128 Stat. 1754, 1767 (2014). TRICARE is a regionally 

structured health care program for military service members, retirees, and their families. Under 

TRICARE, beneficiaries obtain health care either through DOD’s direct care system of military 

hospitals and clinics (referred to as military treatment facilities), or they receive care through 

DOD’s purchased care system of civilian providers and civilian facilities. In this statement, we 

focus on the purchased care component of TRICARE. 10From VHA, we interviewed officials from the Chief Business Office for Purchased Care; 

from CMS, we interviewed officials from the Medicare Contractor Management Group; and from 

DHA, we interviewed the Chief of TRICARE Contract Resource Management. 

three years earlier, in fiscal year 2012, VA spent about $4.5 billion on care in the 

community programs for about 983,000 veterans-about 50 percent fewer veterans 

than were served in fiscal year 2015. From fiscal year 2012 through fiscal year 

2015, the number of processed claims for VA care in the community programs increased by about 81 percent. 

The substantial increase in utilization of VA care in the community programs 

poses challenges for VHA, which has had ongoing difficulty processing claims from 

community providers in a timely manner. A 2010 report by the VA Office of the Inspector General found that VHA needed to take action to address the timeliness of 

its claims processing. 5 In 2011, the National Academy for Public Administration described numerous weaknesses in VHA’s claims processing system, which delayed 

payments to community providers. 6 In 2014 and 2015, we reported that some providers delivering services through VA care in the community experienced lengthy 

delays (i.e., in some cases, months or years) receiving payment on their claims. During a June 3, 2015, hearing of this Subcommittee, several witnesses testified about 

VHA’s continued lack of timeliness in paying claims for VA care in the community 

services. 7 The VA Budget and Choice Improvement Act required VHA to develop 

a plan for consolidating its VA care in the community programs (of which there are 

currently about 10), and VHA submitted this plan to Congress on October 30, 

2015. 8 As part of this plan, VHA said it would examine potential strategies for improving the timeliness and accuracy of its payments to community providers. 

My statement today will draw from our ongoing work examining the timeliness 

of VHA’s payments to community providers and its plans for addressing challenges 

that have impeded the timeliness of claims processing and payment. 9 We began this 

work in March 2015 and plan to issue a final report this spring. In particular, this 

statement reflects our preliminary observations about: 

1. VHA’s claims processing timeliness in fiscal year 2015, and how this timeliness 

compares to Medicare’s and TRICARE’s; 

2. the factors that have impeded the timeliness of VHA’s claims processing and 

payment; 

3. providers’ experiences with VHA’s claims processing; and 

4. VHA’s recent actions and plans to improve the timeliness of claims processing 

and payments for VA care in the community programs. 

To provide preliminary observations from our ongoing work examining these questions, we reviewed applicable policies; interviewed officials from VHA, the Centers 

for Medicare & Medicaid Services (CMS), the Department of Health and Human 

Services agency that administers Medicare; and the Defense Health Agency (DHA), 

the Department of Defense agency that administers TRICARE; and obtained fiscal 

year 2015 data on claims processing timeliness from VHA, CMS, and DHA. 

To assess the reliability of VHA’s, CMS’s, and DHA’s data on claims processing 

timeliness in fiscal year 2015, we interviewed knowledgeable agency officials about 

their respective data sources and methods for collecting data. 10 We found CMS’s 

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11The claims processing locations in our sample represented different regions in the United 

States, a range in timeliness performance, and a range in claims processing workload (i.e., the 

number of VA medical facilities for which the claims processing location processed claims). The 

four claims processing locations we visited are located in St. Louis, MO; Helena, MT; Columbia, 

SC; and Pearl, MS. 12We selected our claims sample on the basis of variation in the number of days elapsed between the date of service and the date of payment for each claim. 13We initially selected and received documentation for 40 claims-20 inpatient and 20 outpatient claims-from each of the four VHA claims processing locations we visited, for a total of 

160 claims. However, we excluded 4 claims from our sample, resulting in a sample of 156 claims. 

We excluded one claim because the documentation we received was not for the claim we had 

originally selected as part of our sample, and we excluded 3 other claims that were for home 

health services, which are processed using a different system than the one that is used to process other claims for VA care in the community. 14To collect statements from the state hospital associations about their experiences with 

VHA’s claims processing, we obtained the assistance of the American Hospital Association, 

which solicited written responses to our questions from its member hospitals and health care 

systems. 

and DHA’s data to be sufficiently reliable for reporting Medicare’s and TRICARE’s 

claims processing timeliness in fiscal year 2015. However, as we discuss in this 

statement, we determined that VHA’s data had limitations. As there were no other 

data available from VHA, we used these data for making comparisons to Medicare’s 

and TRICARE’s claims processing timeliness, but note the limitations of VHA’s data 

in making the comparisons. 

We also used VHA data on the timeliness of payments for claims that were processed between February 2014 and February 2015-the most recent data available 

when we began our study-to select a non-random sample of 4 VHA claims processing locations, where we conducted site visits in May and June 2015. 11 At each 

of these four sites, we interviewed managers and staff responsible for claims processing and reviewed documentation associated with a non-random sample of approximately 20 inpatient claims and 20 outpatient claims that were paid between 

February 2014 and February 2015. 12 We reviewed documentation for 156 claims in 

all and interviewed managers or staff at the 4 VHA claims processing locations to 

identify factors affecting the timeliness of payments for these claims. 13 We also (1) 

interviewed officials from a non-random sample of 12 community providers that had 

submitted claims to the 4 VHA claims processing locations we visited and (2) collected written statements from 12 state hospital associations, which collectively represent the views of at least 117 different hospitals or health care systems. 14 We selected the non-random sample of community providers we interviewed from among 

the providers that had submitted the most claims between February 2014 and February 2015 to the 4 VHA claims processing locations we visited. 

To assess the reliability of VHA’s data on claims that were paid between February 

2014 and February 2015, we interviewed knowledgeable agency officials, manually 

reviewed the content of the claims data, and electronically tested the data for missing values, outliers, and obvious errors. We concluded that the data were sufficiently 

reliable for selecting the samples of VHA claims we reviewed. Because the claims 

processing locations and samples of claims we reviewed at each location were not 

selected to be representative, we cannot generalize our findings to all VHA claims 

processing locations or to all claims for VA care in the community programs. Similarly, because the community providers and state hospital associations that participated in our review were not selected to be representative, we cannot generalize our 

findings to all providers participating in VA care in the community programs. 

We are conducting the work upon which this statement is based 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. 

We shared our preliminary observations with VA, CMS, and DHA. All three agencies provided us with technical comments, which we have incorporated as appropriate. 

Background 

Oversight of VA Care in the Community 

In response to a provision of the Veterans Access, Choice, and Accountability Act 

of 2014 (Choice Act), on October 1, 2014, VA transferred funds and the responsibility for managing and overseeing the processing of claims for VA care in the community from its Veterans’ Integrated Service Networks and VA medical centers to 

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15Pub. L. No. 113–146, § 106, 128 Stat.1754, 1768–69 (2014). VHA’s health care system is 

divided into areas called Veterans Integrated Service Networks, each responsible for managing 

and overseeing medical facilities within a defined geographic area. Networks oversee the dayto-day functions of VA medical facilities that are within their boundaries. Each VA medical facility is assigned to a single network. At the start of fiscal year 2016, there were 21 Veterans Integrated Service Networks, but VA is in the process of consolidating some networks so that by 

the end of fiscal year 2018, there will be 18 networks. 16 In addition to the programs described here, VA is also authorized to purchase care from 

Department of Defense and Indian Health Service facilities, community nursing homes, and 

community-based home health providers. 38 U.S.C. §§ 1710, 1720, 8111, and 8153. 17 38 U.S.C. § 1703. 18See Veterans Millennium Health Care and Benefits Act, Pub. L. No. 106–117, 113 Stat.1545 

(1999) (codified, as amended at 38 U.S.C. § 1725) for emergency care not related to a serviceconnected disability. See 38 U.S.C. § 1728(a)(1)-(3) for emergency care related to a service-connected disability. 19The two TPAs that currently hold these contracts are TriWest Healthcare Alliance and 

Health Net Federal Services. 20 If the claim is for individually authorized care, the community provider submits it to the 

VHA claims processing location that processes claims for the VA medical facility that authorized 

the veteran’s care. If the claim is for emergency care, the community provider submits it to the 

Continued 

VHA’s Chief Business Office for Purchased Care. 15 Previously, VHA’s networks and 

medical facilities were responsible for managing their own budgets for VA care in 

the community and the staff who processed these claims. After this transition, 

VHA’s Chief Business Office for Purchased Care became responsible for overseeing 

VA’s budget for care in the community programs and more than 2,000 staff working 

at 95 claims processing locations nationwide. 

Types of VA Care in the Community Services 

VA has several different programs through which it purchases VA care in the 

community services. 16

• Individually authorized care. The primary means by which VA has traditionally purchased care from community providers is through individual authorizations. 17 When a veteran cannot access a particular specialty care service 

from a VA medical facility-either because the service is not offered or the veteran would have to travel a long distance to obtain it from a VA medical facility-the veteran’s VA clinician may request an individual authorization for the 

veteran to obtain the service from a community provider. If this request is approved and the veteran is able to find a community provider who is willing to 

accept VA payment, VA will reimburse the provider on a fee-for-service basis. 

• Emergency Care. When care in the community is not preauthorized, VA may 

purchase two different types of emergency care from community providers: 1) 

emergency care for a condition that was related to a veteran’s service-connected 

disability or associated with or aggravating a veteran’s service-connected disability and 2) emergency care for conditions not related to veterans’ service-connected disabilities. The latter care is commonly referred to as Millennium Act 

emergency care. 18

• Patient-Centered Community Care (PC3) and the Veterans Choice Program. Established in 2013 and 2014, respectively, these programs are administered by two third-party administrators (TPA), with whom VA has contracted 

to create and maintain networks of primary and specialty care providers willing 

to treat veterans when they cannot feasibly access services from VA medical facilities. 19 The TPAs are responsible for making appointments with their network providers on behalf of veterans once VA medical facilities notify the TPAs 

that the veterans are authorized to receive care from community providers. 

The rates at which community providers are reimbursed by VA vary depending 

on whether the care is preauthorized or emergency care, and whether the providers 

are enrolled in the PC3 or Veterans Choice Program networks. For all types of VA 

care in the community services except individually authorized outpatient care, community providers must include medical documentation with the claims they submit 

to VHA or the TPAs. 

VHA’s System for Processing Claims from Community Providers 

Community providers who are not part of the PC3 or Veterans Choice Program 

networks submit claims for preauthorized and emergency care to one of VHA’s 95 

claims processing locations. 20 For PC3 and Veterans Choice Program care, commuLeonard.horne on VACREP0180 with DISTILLER

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VHA claims processing location that processes claims for the VA medical facility that is located 

nearest to where the community provider rendered the emergency services. 

nity providers submit their claims to the TPAs, and the TPAs process the claims 

and pay the community providers. Subsequently, the TPAs submit claims to one of 

VHA’s claims processing locations-either the one that authorized the care, in the 

case of PC3 claims, or the one that VHA has designated to receive Veterans Choice 

Program claims. VHA staff at these locations process these claims using the same 

systems used to process other claims for VA care in the community programs, and 

VA reimburses the TPAs for the care. 

To process claims for VA care in the community programs, staff at VHA’s claims 

processing locations use the Fee Basis Claims System (FBCS). FBCS does not automatically apply relevant criteria and determine whether claims are eligible for payment. Rather, staff at VHA’s claims processing locations must make determinations 

about which payment authority applies to each claim and which claims meet applicable administrative and clinical criteria for payment. (See table 1 for a description 

of these steps.) In addition to processing claims for VA care in the community programs, staff at VHA’s claims processing locations are also responsible for responding 

to telephone inquiries from community providers who call to check the status of 

their claims or inquire about claims that have been rejected. 

Table 1: Veterans Health Administration’s (VHA) Steps for Processing Claims for Care in the 

Community 

Processing step Description 

Receipt and scanning of claims and medical 

documentation VHA policy requires that paper claims be manually date-stamped and 

scanned into the Fee Basis Claims System (FBCS) upon receipt. 

Electronic claims are imported into FBCS..

If the community provider is required to submit medical documentation 

for the claim to be processed-which is the case for most types of VA 

care in the community services-VA can only accept it in paper form, and 

the medical documentation must also be scanned into FBCS..

Verification Once paper claims are scanned, staff at VHA’s claims processing 

locations visually compare the scanned image of the claim to the text in 

FBCS to verify that the system accurately captured information from the 

claim and manually enter any information that is missing or not 

accurately captured. They also determine whether claims should be 

rejected as duplicates of other claims that have already been processed..

Distribution After electronic and paper claims are entered into FBCS, staff at the VHA 

claims processing location electronically route the claims to staff with 

the appropriate processing expertise..

Processing Staff at VHA’s claims processing locations use FBCS to review claims for 

VA care in the community and determine whether the claims meet 

administrative and clinical criteria for payment..

Approval or rejection In FBCS, VHA’s claims processing staff manually check off each line 

item that is approved for payment on a claim and enter into FBCS 

rejection reasons for any items not approved for payment..

After determining which line items should be paid, the staff use FBCS to 

calculate payment amounts for each approved line item..

Payment After approving claims for payment, staff at VHA’s claims processing 

locations route the claims to VA’s ‘‘program integrity tool,’’ which 

electronically checks claims for potential improper payments before any 

funds are released..

Claims are then released for payment; VA’s financial services center 

issues an electronic payment to the community provider or the TPA, and 

claims processing staff mark the claims as paid in FBCS..

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21 VHA’s claims processing timeliness data do not account for the time it takes the TPAs to 

pay the community providers’ PC3 or Veterans’ Choice Program claims; however, VHA’s data 

do account for the time it takes VHA’s claims processing locations to process and reimburse the 

TPAs for these claims. 22The percentages reported here are for VHA, Medicare, and TRICARE claims that were processed within 30 days of receipt when they had sufficient information to be processed. Both Medicare and TRICARE have separate measures of claims processing timeliness for claims that require additional information to be processed. VHA has only one measure of claims processing 

timeliness, but if additional information is needed to process claims after they are initially received, VHA excludes from its calculation of timeliness any calendar days that elapse while it 

is awaiting this information. 

Table 1: Veterans Health Administration’s (VHA) Steps for Processing Claims for Care in the 

Community—Continued 

Processing step Description 

Notification to community provider After claims have been paid or rejected, FBCS generates preliminary fee 

remittance advice reports, which staff at VHA’s claims processing 

locations must print and mail to the community providers and TPAs. 

These documents include a listing of claim dates and services, the 

reasons why payments for any services were rejected, and the payment 

amounts for approved services..

Source: GAO analysis of VHA documents. / GAO 16 380T 

VHA, Medicare, and TRICARE Claims Processing Timeliness Requirements 

VHA, CMS, and DHA all have requirements for claims processing timeliness. See 

table 2. 

Table 2: Claims Processing Timeliness Requirements 

Agency Requirement 

Veterans Health Administration (VHA) A VHA directive states that 90 percent of all claims for VA care in the 

community must be processed (either paid or rejected) within 30 days of 

receipt.a.

Centers for Medicare & Medicaid Services (CMS) For Medicare claims, the standards were set by law and require that 95 

percent of clean claims-those claims with sufficient information to be 

processed (either paid or denied)-must be processed within 30 days of 

receipt.b CMS’s manual for processing Medicare claims states that the 

remaining claims must be processed within 45 days of receipt..

Defense Health Agency (DHA) TRICARE Managed Care Support Contractors are subject to claims 

processing timeliness requirements outlined in law and in DHA’s 

TRICARE Operations Manual. The requirements in the Operations Manual 

are more stringent than in the law. It states that 98 percent of claims 

with sufficient information to be processed must be paid or denied 

within 30 days of receipt and that all claims must be processed to 

completion within 90 days of receipt.c.

Source: GAO analysis of VHA, CMS, and DHA policies. / GAO 16 380T 

a VHA Directive 2010–005, Timeliness Standards for Processing Non-VA Provider Claims (January 27, 2010). 

b A ‘‘clean claim’’ has no defect or impropriety (including a lack of required substantiating documentation) or particular circumstance requiring special treatment that prevents timely payment of the claim. 42 U.S.C. § 1395h(c)(2)(B). Other claims require additional investigation 

or development before they can be paid. CMS, Medicare Claims Processing Manual, Publication 100–04 (Baltimore, MD: May 15, 2015). 

c By law, 95 percent of clean TRICARE claims must be processed within 30 days of submission to the claims processor, and all clean 

claims must be processed within 100 days of submission to the claims processor. 10 U.S.C. § 1095c(a). 

Preliminary Analyses Suggest VHA’s Claims Processing Was Significantly 

Less Timely Than Medicare’s and TRICARE’s in Fiscal Year 2015, and 

VHA’s Data Likely Overstate its Performance 

Our preliminary work shows that in fiscal year 2015, VHA’s processing of claims 

for VA care in the community services was significantly less timely than Medicare’s 

and TRICARE’s claims processing. VHA officials told us that the agency’s fiscal year 

2015 data show that VHA processed about 66 percent of claims within the agency’s 

required timeframe of 30 days or less. 21 In contrast, CMS and DHA data show that 

in fiscal year 2015, Medicare’s and TRICARE’s claims processing contractors processed about 99 percent of claims within 30 or fewer days of receipt. 22 According to 

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23Officials from CMS and DHA told us that their data on claims processing timeliness are 

reliable because the majority of Medicare and TRICARE claims are submitted electronically, 

their contractors’ claims processing systems are highly automated, and agency officials can independently validate the contractors’ performance data. 24 VHA officials told us that they intend to revise their current policy for claims processing 

timeliness because it does not account for the fact that it takes more time, on average, for VHA 

to process emergency care claims than it does to process claims for preauthorized VA care in 

the community services. According to VHA officials, in fiscal year 2015, staff at their claims 

processing locations took an average of 32 days to process claims for emergency care, compared 

to an average of 16 days for claims for care that was preauthorized. VHA officials said their 

future policy would require claims for preauthorized care to be processed in 30 days or less and 

claims for emergency care be processed in 45 days or less and that these new metrics would 

be more closely aligned with Medicare’s and TRICARE’s standards, which permit more time for 

claims processing when additional information must be requested from providers. However, 

VHA’s systems will still measure claims processing timeliness on the basis of the dates claims 

are entered into FBCS, which may not be the actual date of receipt for paper claims, so it is 

unlikely that VHA’s new metrics will result in more reliable estimates of the agency’s claims 

processing timeliness. 25 In contrast, electronic claims automatically receive an electronic date-stamp when they are 

imported into FBCS. 26Our estimate of the 2-week delay in scanning paper claims factored in 2 days for the paper 

claims to be mailed to VHA by the community providers. It also excluded 8 paper claims that 

appeared to be duplicates of claims that the community providers had previously submitted, 

based on the number of calendar days that had elapsed between the creation dates and the scan 

dates. At least one community provider told us that they do not change the creation date when 

they reprint and resubmit claims that VA has previously rejected. 27 Claims for Millennium Act emergency care must be received by VHA within 90 days of the 

latest of the following: the date of discharge; the date of the patient’s death, provided death occurred during transport to or stay in an emergency treatment facility; or the date that the veteran exhausted, without success, actions to obtain payment or reimbursement from a third 

party. VHA can deny these emergency care claims if they are submitted by community providers 

after 90 days. Claims for emergency care related to a veteran’s service-connected disability or 

a condition that aggravated a service-connected disability must be received within 2 years. 

CMS and DHA officials, the vast majority of Medicare and TRICARE claims are 

submitted electronically. 23

However, the difference between VHA’s claims processing timeliness and that of 

Medicare and TRICARE is likely greater than what VHA’s available data indicate. 

Specifically, VHA’s data likely overstate the agency’s claims processing timeliness 

because they do not account for delays in scanning paper claims, which VHA officials told us account for approximately 60 percent of claims for VA care in the community services. VHA’s policy states that determinations of claims processing timeliness should be based upon the date the claim is received, but its systems can only 

calculate timeliness on the basis of the date the claim is entered into FBCS. 24 When 

community providers submit paper claims, VHA policy requires claims processing 

staff to manually date-stamp them and scan the paper claims into FBCS on the date 

of receipt. 25 However, FBCS cannot electronically read the dates that are manually 

stamped on paper claims, so the scan date becomes the date used to calculate claims 

processing timeliness. 

Our preliminary review raises questions about whether staff at VHA’s claims 

processing locations are following the agency’s policy for promptly scanning paper 

claims. We do not know the extent of delays in scanning paper claims at all of 

VHA’s claims processing locations. However, our preliminary analysis of the nongeneralizable sample of 156 claims for VA care in the community services from the 

four VHA claims processing locations we visited suggests that it may have taken 

about 2 weeks, on average, for staff to scan the paper claims in our sample into 

FBCS. This estimate is based on the number of days that elapsed between the creation dates for 86 of the 94 paper claims in our sample and the dates the claims 

were scanned into FBCS. 26 Based on this analysis, we found that the number of 

days between the creation date and the scanned date for the paper claims in our 

sample ranged from 2 days to 90 days. 

Our observations at one claims processing location we visited were consistent with 

this analysis. For example, we observed about a dozen bins of paper claims and 

medical documentation waiting to be scanned, and some of these bins were labeled 

with dates indicating they were received by the claims processing location about a 

month before our visit. Additionally, this claims processing location was the only one 

of the four claims processing locations we visited that manually date-stamped all 

of its paper claims upon receipt. Staff at another claims processing location told us 

that they only date-stamp paper claims for emergency care upon receipt because 

these claims are only eligible for payment if they have been received within a certain amount of time after the date of service. 27 However, the staff said they do not 

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28See GAO 14 175. 29For all types of VA care in the community services except individually authorized outpatient 

care, community providers must include medical documentation with the claims they submit to 

VHA or the TPAs. According to VHA officials, VHA cannot accept any medical documentation 

electronically because of (1) a lack of interoperability between VHA’s systems and the providers’ 

and TPAs’ systems and (2) concerns about safeguarding the security of veterans’ health information, among other things. However, according to VHA officials, selected claims processing locations have made arrangements with certain community providers that enable VHA’s claims 

processing staff to remotely access the community providers’ medical records electronically. 

suming. Staff at the other two claims processing locations told us that they did not 

date-stamp any claims. 

These preliminary findings from the four claims processing locations we visited 

for this review are consistent with the claims processing deficiencies we identified 

in our 2014 report on the implementation of the Millennium Act emergency care 

benefit. 28 Specifically, we found that the VHA claims processing locations we reviewed for the 2014 report were rarely date-stamping incoming paper claims and 

were not promptly scanning a significant percentage of the paper claims we reviewed into FBCS. In our report, we recommended that VHA implement measures 

to ensure that all incoming claims are date-stamped and scanned into FBCS on the 

date of receipt, and VA agreed with our recommendations. Soon after we issued our 

2014 report, VHA reiterated its date-stamping and scanning policies on national 

calls with managers responsible for claims processing, posted articles in its biweekly 

bulletin for managers and staff, and conducted online training for staff that communicated the importance of date-stamping and promptly scanning claims. However, 

the observations from our most recent review of a new sample of claims at four 

other claims processing locations suggest that VHA had not monitored the operational effectiveness of their corrective actions to address our recommendation. VHA 

officials said that when they became aware of these more recent findings, they 

began requiring managers at their claims processing locations to periodically certify 

in writing that all incoming paper claims have been date-stamped and scanned on 

the day of receipt. 

Preliminary Analyses Indicate that Technology Limitations and Related 

Staffing Shortages Have Delayed VHA’s Claims Processing 

During the course of our preliminary work, VHA officials and staff at three of the 

four claims processing locations we visited told us that limitations of the existing 

information technology systems VHA uses for claims processing-and related workload challenges-delay processing and payment of claims for VA care in the community services. These identified limitations are described in more detail below. 

VHA cannot accept medical documentation electronically 

While VHA has the capacity to accept claims from community providers and the 

TPAs electronically, it does not have the capacity to accept medical documentation 

electronically from the providers and TPAs. 29 As a result, this documentation must 

be scanned into FBCS, which delays claims processing, according to VHA staff. Although VHA policy requires VHA staff to promptly scan paper claims into FBCS 

when received, delays can occur because staff do not have time to scan the high volume of claims and medical documentation received each day, and the capacity of 

scanning equipment is limited. For example, VHA staff at one claims processing location we visited told us that on Mondays (their heaviest day for mail since they 

do not receive mail on weekends), they do not scan any incoming claims with accompanying medical documentation. Instead, they generally scan only claims that do 

not have accompanying medical documentation on Mondays and scan claims with 

accompanying medical documentation into FBCS on Tuesdays and Wednesdays. In 

some cases, the medical documentation community providers must submit can be 

extensive, which may further delay its entry into FBCS. Officials from one community health care system told us that the medical documentation they submit with 

claims can be between 25 to 75 pages for each patient. With most types of claims 

requiring medical documentation, staff at VHA’s claims processing locations may 

need to scan a significant number of pages of incoming medical documentation each 

day. 

Authorizations for VA care in the community services are not always readily available in FBCS 

Staff at three of the four VHA claims processing locations we visited told us that 

processing and payment can also be delayed when authorizations for VA care in the 

community services are unavailable in FBCS. Before veterans obtain services from 

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30 A VA official provided additional detail on why the authorizations may be electronically suspended in FBCS and why the dates of service on the authorization and claim may not match. 

According to this official, when authorizations for inpatient care in the community services are 

entered into FBCS, they must include a discharge date. Because this date is generally not 

known until after the claim is received, staff at VA medical facilities may electronically suspend 

the authorization until they are alerted by staff from the VHA claims processing location that 

the claim has been received. No claims can be paid against an authorization while it is suspended, causing it to seem as though it is not available in FBCS. In cases where authorizations 

are not suspended, estimated discharge dates are entered. If VHA receives any claims with 

dates of service occurring after the date that was originally estimated for that inpatient episode 

of care, staff at the VA medical facility must create new authorizations in FBCS before staff 

at the VHA claims processing location can pay the claims. 

community providers, staff at VA medical facilities must indicate in the veteran’s 

VA electronic health record (a system separate from FBCS) that the service or services have been authorized, and then they must manually create an authorization in 

FBCS. However, VHA officials and staff told us that these authorizations are sometimes unavailable in FBCS at the time claims are processed, which delays processing and payment. The authorizations are unavailable because either (1) they 

have been electronically suspended in FBCS, and as a result staff at the VA medical 

facility that authorized the care must release them before any associated claims can 

be paid, or (2) the estimated date of service on the authorization does not match 

the date that services were actually rendered, and new authorizations must be entered by staff at the authorizing VA medical facility before the claims can be paid. 30

In our sample of 156 claims, 25 claims were delayed in being processed because 

an authorization was not initially available in FBCS, resulting in an average delay 

of approximately 42 days in claims processing. Additionally, 8 of the 12 community 

providers we interviewed said they were aware that some of their payments had 

been delayed because authorizations were not available in FBCS when their claims 

arrived at the VHA claims processing location. 

FBCS cannot automatically adjudicate claims 

FBCS cannot automatically adjudicate claims, and as a result, VHA staff must 

do so manually, which VHA staff told us can slow claims processing, make errors 

more likely, and delay claims payment. After information from claims and supporting medical documentation has been scanned and entered into FBCS, the system cannot fully adjudicate the claims without manual intervention. For example, 

FBCS lacks the capability to electronically apply relevant administrative and clinical criteria for Millennium Act emergency care claims, such as automatically determining whether a veteran is enrolled in the VHA health care system and whether 

they had received services from a VA clinician in the 24 months prior to accessing 

the emergency care. Instead, staff processing these claims perform searches within 

FBCS and manually select rejection reasons for any claims that do not meet VHA’s 

administrative or clinical criteria for payment. 

Among the 156 claims we reviewed at four claims processing locations, it took an 

average of 47 days for claims processing staff to determine that the claims met the 

administrative and clinical criteria for payment. In addition, even after claims are 

approved for payment, they require additional manual intervention before the community providers can be paid. For example, in cases where FBCS cannot automatically determine correct payment rates for VA care in the community services, VHA 

staff manually calculate VHA’s payment rates and enter this information into 

FBCS. Staff we interviewed also told us that it usually takes about 2 days for claims 

to return from VA’s program integrity tool, which is a system outside FBCS where 

claims are routed for prepayment review of potential improper payments. If corrections must be made after the claims return from this prepayment review, payments 

can be delayed further. 

Weaknesses in FBCS and VHA’s financial management systems have also 

delayed claims payments 

According to staff at three of the four claims processing locations we visited, payments on some VA care in the community claims are delayed when VHA does not 

have funds available to pay them, a problem that occurs in part because FBCS and 

VHA’s financial management systems do not permit officials to efficiently monitor 

the availability of funds for VA care in the community services. To improve its oversight of VA care in the community, the Choice Act directed VA to transfer the authority for processing payments for VA care in the community from its Veterans Integrated Service Networks and VA medical centers to VHA’s Chief Business Office 

for Purchased Care, a change VA implemented in October 2014. However, according 

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has remained largely a manual process due to limitations of FBCS and the use of 

separate systems to track obligations and expenditures. VHA uses historical data 

from FBCS to estimate obligations on a monthly basis. According to VHA officials, 

these estimates have been unreasonably low for some services, given the unexpected 

increase in utilization of VA care in the community services over the course of fiscal 

year 2015. In addition, FBCS does not fully interface with systems used to track 

the availability of funds, which results in staff having to manually record the obligations for outpatient VA care in the community services in these systems on a 

monthly basis. Together, these two issues have impeded the ability of VHA to ensure that funds are available to pay claims for VA care in the community as they 

are approved, according to VHA officials responsible for monitoring the use of funds. 

Our initial work shows that payments for 5 of the 156 claims we reviewed from four 

claims processing locations were delayed because funds were unavailable, resulting 

in payment delays that ranged from 1 to 215 days. 

Inadequate equipment delays scanning of paper claims and medical documentation 

VHA officials also told us that inadequate scanning equipment delayed claims 

processing and adversely affected VHA’s claims payment timeliness. At the time of 

our review, staff responsible for scanning paper claims and medical documentation 

at one of the four claims processing locations we visited told us that they did not 

have adequate scanning equipment. At this location, the scanners that staff showed 

us were small enough to be placed on desktops, while the trays for feeding documents into the scanners could only handle a limited number of pages at one time. 

With an estimated 60 percent of claims and 100 percent of medical documentation 

requiring scanning, these staff said that they struggled to keep up with the volume 

of paper coming in to their claims processing location. 

Staffing shortages adversely affect claims processing timeliness 

In addition to the technological issues described above, VHA officials and staff 

also told us that staffing shortages have adversely affected VHA’s claims processing 

timeliness. According to VHA officials, the overall number of authorized positions 

for claims processing staff did not change after the October 2014 organizational realignment that transferred claims processing management and oversight responsibilities to the Chief Business Office for Purchased Care. However, VHA officials 

said that VHA’s claims processing workload increased considerably over the course 

of fiscal years 2014 and 2015. (See figure 1 for an illustration of the increase in 

VHA’s claims processing workload between fiscal year 2012 and fiscal year 2015.) 

According to VHA officials and staff, the increase in workload contributed to poor 

staff morale, attrition, and staff shortages-all of which contributed to delays in processing and impeded VHA’s claims processing timeliness. VHA officials told us that 

in early fiscal year 2015, there were about 300 vacancies among the estimated 2,000 

authorized positions for claims processing staff. 

VA Care in the Community Providers Cite Administrative Burden, Lack of 

Notification, and Problems with Poor Customer Service 

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31The preliminary fee remittance advice reports include a listing of claim dates and services, 

the reasons why payments for any services were disapproved, and payment amounts for services 

that were approved. 

The 12 community providers and 12 state hospital association respondents who 

participated in our ongoing review told us about various issues they had experienced 

with VHA’s claims processing system. These issues are described in more detail 

below. 

Administrative burden of submitting claims and medical documentation to 

VHA 

Almost all of the community providers we interviewed (11 out of 12) and all of 

the state hospital association respondents that participated in our ongoing review 

described the administrative burden of submitting claims and medical documentation to their respective VHA claims processing locations. For example, one community provider told us that VHA claims only accounted for about five percent of their 

business, but the provider told us it employed one full-time staff member who was 

dedicated to submitting claims to VHA and following up on unpaid ones. This same 

provider employed a second full-time staff member to handle Medicaid claims, but 

these accounted for about 85 percent of their business. 

According to many of the community providers that participated in our review, 

obtaining payment from VHA often requires repeated submission of claims and medical documentation. Officials from one community provider we interviewed said that, 

at one point, they had been hand delivering paper medical documentation with 

paper copies of the related claims to their VHA claims processing location, but VHA 

staff at this location still routinely rejected their claims for a lack of medical documentation. Similarly, six state hospital association respondents also reported that 

their members’ claims were often rejected, even though they always sent medical 

documentation to their VHA claims processing location by certified mail. Some of 

the community health care system and hospital officials who participated in our review explained that they often must submit medical documentation to their VHA 

claims processing location twice-once for the claim related to hospital services and 

again for claims related to physician services. 

Lack of notification about claims decisions 

Community providers who participated in our review also explained that they 

rarely received written notifications from VHA about claims decisions. To inform 

community providers and the TPAs about whether their claims have been approved 

or rejected, staff at VHA’s claims processing locations print notices called preliminary fee remittance advice reports and mail them to the providers and TPAs. 31

However, community providers who participated in our study stated that they rarely 

received these paper reports in the mail, and even though they received VA payments electronically, it was not clear without the remittance advice reports which 

claims the payments applied to or whether VHA denied payment for certain line 

items on some claims. Unlike Medicare and TRICARE, VHA has no online portal 

where community providers can electronically check the status of their claims to 

find out if the claims are awaiting processing or if VHA needs additional information to process them. Several of the community providers who participated in our 

study told us that they would appreciate VHA establishing such a portal. 

Issues with telephone-based provider customer service 

Almost all of the community providers and state hospital associations that participated in our review (9 out of 12 providers and 11 out of 12 associations) experienced 

issues with the telephone-based provider customer service at VHA’s claims processing locations. For example, 

• officials from three of the community providers we interviewed reported that 

they routinely wait on hold for an hour or more while trying to follow up on 

unpaid claims. 

• Officials from a community health care system that operates 46 hospitals and 

submits claims to 5 different VHA claims processing locations said that 3 of 

these locations will not accept any phone calls and instead require providers to 

fax any questions about claim status. 

• According to officials from another community health care system, their VHA 

claims processing location has limited them to inquiring about only three claims 

per VHA staff member, per day. The officials explained that if they call twice 

on the same day and reach the same individual who has already checked the 

status of three claims, that person will refuse to check the status of additional 

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32 VHA officials said that once they became aware of this practice in the summer of 2015, they 

contacted managers at their claims processing locations to advise them that they should not be 

limiting the number of claims each community provider could call and inquire about each day. 33 VHA defines ‘‘backlogged’’ claims to be those that were received more than 30 days ago. 

However, VHA’s data do not account for paper claims that have been received by VHA claims 

processing locations but not yet scanned into FBCS. Therefore, VHA’s data likely underestimate 

the number of claims that have been awaiting processing for more than 30 days. 

claims; however, if they connect with a different VHA staff member, they may 

be able to inquire about additional claims. 32

While VHA Has Implemented Interim Measures, the Agency Does Not Expect to Address All Claims Processing Challenges until Fiscal Year 2018 

or Later 

VHA Has Recently Filled Staff Vacancies, Introduced Productivity Standards, Invested in Scanning Equipment, and Taken Other Steps to Improve Claims Processing Timeliness 

In the course of our ongoing work, VHA officials reported that they implemented 

several measures in fiscal year 2015 and early fiscal year 2016 that were intended 

to improve the timeliness of VHA’s payments to community providers and the TPAs. 

The following are the key steps that VHA officials have reported taking. 

• Staffing increases. VHA officials said that they have recently filled the approximately 300 staff vacancies that resulted from attrition shortly after the October 

2014 realignment of claims processing under VHA’s Chief Business Office for 

Purchased Care. The officials also told us that they have supplemented the existing workforce at VHA’s claims processing locations by hiring temporary staff 

and contractors to help address VHA’s backlog of claims awaiting processing. 

In addition, for 2 months in fiscal year 2015, VHA required its claims processing staff to work mandatory overtime, and according to VHA officials, staff 

are still working overtime on a voluntary basis. At some locations, VHA added 

second shifts for claims processing staff. As a result, VHA officials told us that 

VHA was able to decrease its backlog of unprocessed claims for VA care in the 

community from an all-time high of 736,000 claims in August 2015 to about 

453,000 claims as of October 29, 2015. 33

• Deployment of nationwide productivity standards. On October 1, 2015, VHA introduced new performance plans with nationwide productivity standards for its 

claims processing staff, and officials estimated that these standards would lead 

staff to process more claims each day, resulting in a 6.53 percent increase in 

claims processing productivity over the course of fiscal year 2016. 

• Improved access to data needed to monitor claims processing performance. VHA 

has implemented a new, real-time data tracking system to monitor claims processing productivity and other aspects of performance at its claims processing locations. This tool, which VHA officials refer to as the ‘‘command center,’’ permits VHA officials and managers at VHA’s claims processing locations to view 

claims data related to the timeliness of payments and other metrics at the national, claims processing location, and the individual staff level. Previously, 

many data were self-reported by the claims processing locations. The VHA officials we interviewed said that they monitor these data daily. 

• New scanning equipment. VHA recently purchased new scanning equipment for 

73 of its 95 claims processing locations, including the claims processing location 

we visited with the small, desktop scanners. The agency awarded a contract in 

November 2015, and officials said that VHA had installed this new equipment 

at almost all sites as of January 15, 2016. They expected that installation would 

be completed at the few remaining sites by the end of January 2016. 

• Improvement of cost estimation tools. In January 2016, VHA deployed an FBCS 

enhancement that is intended to improve VHA’s ability to estimate obligations 

for VA care in the community within FBCS. VHA officials said this will help 

them ensure that adequate funds are available to pay claims for VA care in the 

community services at the time the claims are processed. However, staff at VA 

medical facilities still must manually enter estimated obligations into VHA’s 

systems for tracking the availability of funds on a monthly basis, because this 

information cannot be automatically transferred from FBCS. 

VHA Is Examining Options for Modernizing Its Claims Processing System 

and Estimates Implementing New Technology and Other Solutions Will 

Take at Least 2 Years 

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34Department of Veterans Affairs, Plan to Consolidate Programs of Department of Veterans 

Affairs to Improve Access to Care, (Washington, D.C.: Oct. 30, 2015). The VA Budget and Choice 

Improvement Act required VA to develop a plan for consolidating its existing VA care in the 

community programs. The plan was due to Congress no later than November 1, 2015. Pub. L. 

No. 114–41, § 4002, 129 Stat. 443, 461 (2015). 35See GAO, Information Technology: Management Improvements Are Essential to VA’s Second Effort to Replace its Outpatient Scheduling System, GAO 10 579 (Washington, D.C.: May 

27, 2010); GAO, Information Technology: Actions Needed to Fully Establish Program Management Capability for VA’s Financial and Logistics Initiative, GAO 10 40 (Washington, D.C.: Oct. 

26, 2009); and Veterans Health Care: VHA Has Taken Steps to Address Deficiencies in its Logistics Program, but Significant Concerns Remain, GAO 13 336 (Washington, D.C.: Apr. 17, 

2013). 

VHA officials that we interviewed in the course of our ongoing work acknowledged 

that the recent steps they have taken to improve claims processing timeliness-such 

as hiring temporary staff and contractors and mandating that claims processing 

staff work overtime-are not sustainable in the long term. These officials said that 

if the agency is to dramatically improve its claims processing timeliness, comprehensive and technologically advanced solutions must be developed and implemented, 

such as modernizing and upgrading VHA’s existing claims processing system or contracting out the claims processing function. On October 30, 2015, VHA reported to 

Congress that it has plans to address these issues, but the agency estimates that 

it will take at least 2 years to implement solutions that will fully address all of the 

challenges now faced by its claims processing staff and by providers of VA care in 

the community services. 34 According to VHA officials, the success of this long-term 

modernization plan will also hinge on significant investments in the development 

and deployment of new technology. 

In its October 2015 strategic plan for consolidating VA care in the community programs and improving related business processes, VHA stated that it expects it will 

significantly increase its reliance on community providers to deliver care to veterans 

in the coming years. In addition, VHA plans to adopt many features or capabilities 

for its claims processing system that are similar to Medicare’s and TRICARE’s 

claims processing systems, including (1) greater automatic adjudication of claims, (2) 

automating the entry of authorizations, (3) establishing a mechanism by which community providers can electronically submit medical records, (4) creating a Webbased portal for community providers to check the status of their claims, and (5) 

establishing a nationwide provider customer service system with dedicated staff so 

that other staff can focus on claims processing. According to this strategic plan, 

VHA will examine potential strategies for developing these capabilities in fiscal year 

2016-including the possibilities of contracting for (1) the development of the claims 

processing system only or (2) all claims processing services, so that contractors, 

rather than VHA staff, would be responsible for processing claims (similar to Medicare and TRICARE). The strategic plan states that VHA will finalize more detailed 

implementation plans before the end of this fiscal year. The agency expects that deployment of its selected solutions will begin in fiscal year 2018 or later. 

According to VHA, the efforts underway to address deficiencies in its claims processing system will present major challenges, such as revamping VHA’s information 

technology systems and securing funding to do so. Our past work on planning best 

practices calls for an implementation strategy to help ensure that needed changes 

are made in a timely manner and that ramifications for key decisions (such as ones 

that relate to an agency’s current and future workforce profile) are considered. To 

date, VHA has not developed a detailed plan for achieving these goals. 

That VHA has not yet communicated a detailed plan is cause for concern, given 

VA’s past failed attempts to modernize key information technology systems. Our 

prior work has shown that VHA’s past attempts to achieve goals of a similar magnitude-such as modernizing its systems for (1) scheduling outpatient appointments 

in VA medical facilities, (2) financial management, and (3) inventory and asset management-have been derailed by weaknesses in project management, a lack of effective oversight, and the failure of pilot systems to support agency operations. 35 For 

example, we found: 

• VA undertook an initiative in 2000 to replace the outpatient scheduling system 

but terminated the project after spending $127 million over 9 years. 

• VA has been trying for many years to modernize or replace its financial management and inventory and asset management systems but has faced hurdles 

in carrying out these plans. In 2010, VA canceled a broad information technology improvement effort that would have improved both of these systems and 

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49 

36The portion of the broad information technology improvement effort that VA canceled in 

2010 pertaining to the update of VHA’s inventory and asset management system was not officially terminated until 2011. 

at the time was estimated to cost between $300 million and $400 million. 36 By 

September 2, 2009 (just before the project’s cancellation) VA had already spent 

almost $91 million of the $300 million to $400 million that was originally estimated. A previous initiative to revamp these systems was underway between 

1998 and 2004, but after reportedly having spent more than $249 million on 

development of the replacement system, VA discontinued the project because 

the pilot system failed to support VHA’s operations. 

According to VHA officials, instead of investing in administrative systems such as 

the claims processing system, outpatient scheduling system, financial management 

systems, or the inventory and asset management system, in recent years VA has 

prioritized investments in information technology enhancements that more directly 

relate to patient care. As such, VHA officials said they have had little success in 

gaining approval and funding for information technology improvements for these administrative systems. 

In summary, our preliminary analyses show that VHA’s average claims processing 

timeliness in fiscal year 2015 was significantly lower than Medicare’s and 

TRICARE’s timeliness and far below its own standard of paying 90 percent of claims 

within 30 days. To its credit, VHA has recently implemented measures (including 

hiring more staff and purchasing new scanning equipment), which are intended to 

address some challenges that have impeded its claims processing timeliness. VHA 

plans to address the remaining challenges through its longer term effort to implement a consolidated VA care in the community program in fiscal year 2018 or later. 

These sweeping changes do not come without risk and cost, and VHA has struggled 

to make changes of a similar magnitude in the past. However-based on statements 

made by some of the community providers that participated in our review-without 

significantly improving the timeliness of its payments and addressing community 

providers’ concerns about the administrative burden of obtaining VHA payments 

and the agency’s lack of responsiveness when they inquire about unpaid claims, 

VHA will risk losing the cooperation of these providers as it attempts to transition 

to a future care delivery model that would heavily rely on them to deliver care to 

veterans. 

Because this work is ongoing, we are not making recommendations on VHA’s 

processing and payment of claims from community providers at this time. 

Chairman Benishek, Ranking Member Brownley, and Members of the Subcommittee, this completes my prepared statement. I would be pleased to respond to 

any questions you may have at this time. 

GAO Contact and Staff Acknowledgments 

If you or your staffs have any questions about this statement, please contact me 

at (202) 512–7114 or williamsonr@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. 

GAO staff who made key contributions to this statement include Marcia A. Mann, 

Assistant Director; Elizabeth Conklin; Krister Friday; Jacquelyn Hamilton; and 

Alexis C. MacDonald. 

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1 Interim Report - Review of Phoenix VA Health Care System’s Urology Department, Phoenix, 

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Health Care System, Phoenix, AZ, October 15, 2015 

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f 

Prepared Statement of Gary K. Abe 

Mr. Chairman and Members of the Subcommittee, thank you for the opportunity 

to discuss the Office of Inspector General’s (OIG) work concerning VA’s purchase 

care programs. Our work covers issues discussed in VA’s Plan to Consolidate Programs of Department of Veterans Affairs to Improve Access to Care (consolidation 

plan), submitted to Congress as required by Public Law 114–41, Surface Transportation and Veteran Health Care Choice Improvement Act. I am accompanied by Mr. 

Larry Reinkemeyer, Director, OIG’s Kansas City Audit Division. 

BACKGROUND 

VA’s purchased care programs include the Veterans Choice Program (VCP), Patient-Centered Community Care (PC3), Fee Basis Care, and other non-VA care programs. VA’s purchased care programs are critical to VA in carrying out its mission 

of providing medical care, including outpatient services, inpatient care, mental 

health, dental services, and nursing home care to veterans. Our audits and reviews 

have reported the challenges VA faces in administering these programs, such as authorizing, scheduling, ensuring contractors provide medical information to VA in 

support of the services provided, ensuring VA inputs the medical information from 

contractors into the veteran’s VA medical record, and timely and accurate payment 

for care purchased outside the VA health care system. Specifically, we reported in 

January 2015, and October 2015, that the Phoenix VA Health Care System 

(PVAHCS) was experiencing problems coordinating administrative actions with contracted providers including timely insertion of contracted providers’ medical documentation into VA medical records. 1 We determined that non-VA providers’ clinical 

documents were not available for PVAHCS providers to review timely and that referring providers may not have addressed potentially important recommendations 

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2 Blind scheduling refers to scheduled appointments for veterans without discussing the tentative appointment with the veteran. 

and follow-up because they did not have access to non-VA clinical records. We also 

concluded that PVAHCS Urology Service and Non-VA Care Coordination staff did 

not provide timely care or ensure timely urological services were provided to patients needing care. 

It has been challenging to conduct effective oversight of VA’s purchase care programs because VA continues to fast track changes to the program. For example, we 

had planned to review the timeliness and accuracy of PC3 payments this fiscal year 

after providing VA sufficient time to process a significant number of PC3 medical 

claims to make reliable findings and conclusions. However, PC3 was soon followed 

by the VCP, which has only paid about $53 million of medical claims as of February 

1, 2016. Nevertheless, we plan on reviewing a statistically reliable number of paid 

Choice medical claims every quarter in order to meet the Veterans Access, Choice, 

and Accountability Act (VACAA) of 2014 (Public Law 113–146) requirement to submit a report on timeliness and accuracy after 75 percent of the almost $10 billion 

dollars appropriated to the VCP is spent or when the program ends in August 2017, 

whichever occurs first. This approach enables us to view the expenditure activity 

over time and helps assess whether the program services provided to veterans are 

improving or worsening. The planned approach also provides more time and opportunity for VA to strengthen its program controls specifically before the majority of 

funds are spent. 

PATIENT–CENTERED COMMUNITY CARE 

The PC3 program is a Veterans Health Administration (VHA) nationwide program that provides eligible veterans access through health care contracts to certain 

medical services. The PC3 program is used after the VA medical facility has exhausted other options for purchased care and when local VA medical facilities cannot readily provide the needed care to eligible veterans due to lack of available specialists, long wait times, geographic inaccessibility, or other factors. In September 

2013, VA awarded Health Net Federal Services, Limited Liability Corporation 

(Health Net) and TriWest Healthcare Alliance Corporation (TriWest) PC3 contracts 

totaling approximately $5 billion and $4.4 billion, respectively. Then on October 30, 

2014, VA amended the PC3 contracts with Health Net and TriWest to include administration of the VCP. Administration includes responsibilities such as, sending 

out Choice cards to eligible veterans, providing call center service, scheduling appointments, and providing care through their provider networks. This is an important matter when evaluating VA’s plan to align all non-VA care programs under the 

new VCP. Since Health Net and TriWest have built their Choice provider network 

upon the backbone of their PC3 network, there are lessons that can be learned from 

the series of reports we issued in FY 2015 addressing aspects of PC3 implementation efforts. A theme that was clear to us was that VA clinical and support staff 

were dissatisfied with PC3 in such areas as authorizing care, scheduling appointments, and veterans waiting for care. 

In our July 2015, Review of Allegations of Delays in Care Caused by Patient-Centered Community Care (PC3) Issues, we examined VHA’s use of PC3 contracted care 

to determine if it was causing patient care delays. We found that pervasive dissatisfaction with both PC3 contracts has caused all nine of the VA medical facilities 

we reviewed to stop using the PC3 program as intended. We projected Health Net 

and TriWest returned, or should have returned, almost 43,500 of 106,000 authorizations (41 percent) because of limited network providers and blind scheduling. 2 We 

determined that delays in care occurred because of the limited availability of PC3 

providers to deliver care. VHA also lacked controls to ensure VA medical facilities 

submit timely authorizations, and Health Net and TriWest schedule appointments 

and return authorizations in a timely manner. VHA needed to improve PC3 contractor compliance with timely notification of missed appointments, providing required medical documentation, and monitoring returned and completed authorizations. The then Interim Under Secretary for Health agreed with our recommendations to ensure PC3 contractors submit timely authorizations, evaluate the PC3 contractors’ network, revise contract terms to eliminate blind scheduling, and implement controls to make sure PC3 contractors comply with contract requirements. 

In our September 2015, Review of VHA’s PC3 Provider Network Adequacy, we reported that inadequate PC3 provider networks contributed significantly to VA medical facilities’ limited use of PC3. VHA spent 0.14 percent, or $3.8 million of its $2.8 

billion FY 2014 non-VA care budget on PC3. During the first 6 months of FY 2015, 

VHA’s PC3 purchases increased but still constituted less than 5 percent of its nonVA care expenditures. VHA staff attributed the limited use of PC3 to inadequate 

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provider networks that lacked sufficient numbers and mixes of health care providers 

in the geographic locations where veterans needed them. VA medical facility staff 

considered the PC3 networks inadequate because: 

• The PC3 network lacked needed specialty care providers, such as urologists and 

cardiologists. 

• Returned PC3 authorizations had to be re-authorized through non-VA care and 

increased veterans’ wait times for care. 

• Non-VA care provided veterans more timely care than PC3. 

For these staff, inadequate PC3 provider networks were a major disincentive to 

using PC3 because it increased veterans’ waiting times, staffs’ administrative workload, and delayed the delivery of care. Further, VHA had not ensured the development of adequate PC3 provider networks because it lacked an effective governance 

structure to oversee the Chief Business Office’s (CBO) planning and implementation 

of PC3; the CBO lacked an effective implementation strategy for the roll-out of PC3; 

and neither VHA nor Health Net and TriWest maintained adequate data to measure and monitor network adequacy. The Under Secretary for Health agreed with our 

recommendations to strengthen controls over the monitoring of PC3 network adequacy and ensure adequate implementation and monitoring plans are developed for 

future complex healthcare initiatives. 

In another September 2015 report, Review of Patient-Centered Community Care 

(PC3) Health Record Coordination, we found that VA lacked an effective program 

for monitoring the performance of their two contractors. We estimated that about 

32 percent of the PC3 episodes of care had complete clinical documentation provided 

within the time frame required under the PC3 contracts. This was well below the 

90 percent contract performance standard for outpatient and 95 percent for inpatient documentation. Contracting Officer’s Representatives (CORs) did not have an 

independent source of VA data to verify contractor compliance with the contracts. 

Instead, CORs monitored contract compliance by reviewing monthly performance reports submitted by the contractors. As a result, VA lacked adequate visibility and 

assurance that veterans were provided adequate continuity of care, and VA was at 

an increased risk of improperly awarding incentive fees or not applying penalty fees. 

We estimated 20 percent of the documentation was incomplete, and an additional 

48 percent was not provided to VA within the timeframe required in the contracts. 

From January 1 through September 30, 2014, we estimated that VA made about 

$870,000 of improper payments. 

Additionally, we reviewed just over 400 episodes of care and identified 3 critical 

findings that did not have contract-required elements annotated in the clinical documentation returned by TriWest’s providers, such as the name of the VA medical facility staff member contacted and date and time notified. Without this information 

and the timely receipt of critical findings, VHA lacked assurance that critical findings were being reported in accordance with the contract’s performance standards. 

Further, we examined each critical finding and found that PC3 patients experienced 

delays in treatment by VA, as well as by TriWest. We made recommendations to 

the VA Undersecretary for Health including to implement a mechanism to verify 

PC3 contractors’ performance, ensure PC3 contractors properly annotate and report 

critical findings in a timely manner, and impose financial or other remedies when 

contractors fail to meet requirements. 

The Under Secretary for Health provided a responsive action plan and expected 

to address our recommendations by August 2016. We are continuing to monitor VA’s 

progress and will do so until all proposed actions are completed. 

VETERANS CHOICE PROGRAM 

The VACAA created the VCP in November 2014. Following enactment of VACAA, 

VA turned to Health Net and TriWest, the administrators of the PC3 program, who 

had provider networks in place nation-wide. The VCP allows staff to identify veterans to include on the Veterans Choice List, a list that includes veterans with appointments beyond 30 days from the clinically indicated or preferred appointment 

dates and veterans who live more than 40 miles from a VA facility. Under this program, VA facilities began providing non-VA care to eligible veterans enrolled in VA 

health care as of August 1, 2014, and to recently discharged combat veterans who 

are within 5 years of their post-combat separation date. From August 2014 through 

February 1, 2016, VA has spent $224.4 million on the VCP. VA has reimbursed 

Health Net and Tri West $171.4 million of the $224.4 million (76 percent) for administering the program and $53.0 million of the $224.4 million (24 percent) for 

medical services provided to veterans. 

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Our OIG Hotline has received numerous complaints about the VCP during the 4th 

quarter of fiscal year 2015. These complaints fall into the following general categories: 

• Appointments and scheduling • Program eligibility and enrollment • Veteran and provider payments • Authorization process. 

In our February 2016, Review of Alleged Untimely Care at the Colorado Springs 

Community Based Outpatient Clinic, Colorado Springs, Colorado, we substantiated 

the allegation that eligible Colorado Springs veterans did not receive timely care in 

six reviewed services. These services were Audiology, Mental Health, Neurology, Optometry, Orthopedic, and Primary Care. We reviewed 150 referrals for specialty care 

consults and 300 primary care appointments. Of the 450 consults and appointments, 

288 veterans encountered wait times in excess of 30 days. For all 288 veterans, VA 

staff either did not add them to the Veterans Choice List or did not add them to 

the list in a timely manner. 

• For 59 of the 288 veterans, scheduling staff used incorrect dates that made it 

appear the appointment wait time was less than 30 days. • For 229 of the 288 veterans with appointments over 30 days, Non-VA Care Coordination staff did not add 173 veterans to the Veterans Choice List in a timely manner and they did not add 56 veterans to the list at all. • In addition, scheduling staff did not take timely action on 94 consults and primary care appointment requests. 

As a result, VA staff did not fully use VCP funds to afford Colorado Springs 

CBOC veterans the opportunity to receive timely care. The Eastern Colorado Health 

Care System Acting Director agreed with recommendations to ensure scheduling 

staff use the clinically indicated or preferred appointment dates for primary care appointments, use the earliest appropriate date for scheduling new patient consult appointments, place veterans with appointments over 30 days on the Veterans Choice 

List within 1 day of scheduling the appointment, and provide sufficient resources 

to act on consults within 7 days and appointment request for newly enrolled veterans within 1 day. Based on actions already implemented, we closed the recommendation to ensure that scheduling staff use the clinically indicated or preferred 

appointment dates when scheduling primary care patient appointments. 

In our February 2016 report, Review of Alleged Patient Scheduling Issues at the 

VA Medical Center in Tampa, Florida, we substantiated that when veterans received appointments in the community through the VCP, the facility did not cancel 

their existing VA appointments. For example, 

• We found that for 12 veterans, staff did not cancel the veterans’ corresponding 

VA appointments because Non-VA Care Coordination staff did not receive 

prompt notification from the contractor when a veteran scheduled a VCP appointment and no longer needed the VA appointment. 

• We also substantiated that the facility did not add all eligible veterans to the 

Veterans Choice List when their scheduled appointment was greater than 30 

days from their preferred date, and that staff inappropriately removed veterans 

from the Veterans Choice List. 

This occurred because Tampa VAMC schedulers thought they were appropriately 

removing the veteran from the Electronic Wait List, when they were actually removing the veteran from the Veterans Choice List. The Director agreed with our recommendations to ensure the facility receives prompt notification of scheduled VCP 

appointments, determine if the contractor complies with the notification requirements, ensure appropriate staff receive scheduling audit results and staff verify correction of errors, and ensure staff receive training regarding management of the 

Veterans Choice List. Based on actions already implemented, we closed 4 of the 5 

recommendations, and will follow up to ensure the facility receives prompt notification of scheduled VCP appointments. 

In addition to the audit required under VACAA, we have also initiated another 

national audit. We are reviewing the implementation of VCP to determine if there 

are barriers preventing veterans’ access to the program and whether VA has effectively communicated with veterans and providers about the program. 

NON–VA MEDICAL CARE OBLIGATIONS 

Sound financial stewardship of funds for purchased care is important to ensure 

the availability to pay providers. VA uses miscellaneous obligations to estimate the 

funding requirements needed to ensure that it does not overspend for a variety of 

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1 Audit of VA’s Financial Statements for Fiscal Years 2015 and 2014, November 16, 2015. 

goods and services, including non-VA Care. Beginning in FY 2015, the VACAA required the CBO to use special use funds to pay for non-VA Care services. If CBO 

de-obligates those funds after the fiscal year ends, those resources can no longer be 

used to create new non-VA Care authorizations for veterans waiting for services. VA 

is required to ensure that funds are available to cover the non-VA Care obligation 

and expenditure prior to entering into an agreement to purchase medical services. 

Once non-VA Care services are approved, the respective budget and/or finance office 

is responsible for verifying that funds are available and authorized, and the obligation is recorded in the financial system. 

In our January 2016 report, Audit of Non-VA Medical Care Obligations, we determined that VHA had overestimated, and thus over obligated, $543 million out of 

$1.9 billion (29 percent) of non-VA Care funds obligated as of the end of FY 2013. 

The $1.9 billion represented open obligations for which VA had not yet made payments at the end of FY 2013. The $543 million represented an over obligation of 

those funds as they were not needed to make such payments. The $543 million consisted of about $265 million of single-year funds, and $278 million of no-year funds. 

As a result, over obligated single-year funds were at risk of being unused and returned to the U.S. Department of Treasury due to expiration of the appropriation, 

and although no-year funds do not expire, they remain unavailable for current 

needs until deobligated. The overestimates occurred for several reasons, including 

the lack of adequate tools for medical center staff to reasonably estimate the costs 

of purchased care and weaknesses in the financial reconciliation processes. VHA 

also did not ensure that unused funds were deobligated after payments were complete. 

If VHA does not improve non-VA Care obligation management, VA medical facilities are likely to continue to over obligate funds, thus reducing the amount of funds 

facilities have available to spend on non-VA Care. In addition, beginning in FY 2015 

the VACAA effectively prohibits VA from using no-year funds for non-VA Care, 

which puts all over obligated non-VA Care funds at risk of being unavailable for 

any purpose. VACAA also limited the VA’s ability to transfer funds between nonVA Care and other Medical Services obligations, such as medical salaries. These restrictions increase the importance of accurately estimating non-VA Care obligations 

to maximize the amount funds used to provide care for veterans while minimizing 

the amount of unused funds that expire and are ultimately returned to the Treasury 

Department. 

We contract with CliftonLarsonAllen LLP (CLA) to audit VA’s consolidated financial statements. For the year ending September 30, 2015, they reported processing 

and reconciliation issues related to purchased care as a material weakness. 1 CLA 

increased its focus on purchased care given increased funding and implementation 

of the VACAA. CLA reported problems with the cost estimation process and additionally noted the lack of reconciliation between the Fee Basis Claims System used 

to authorize, process, and pay for non-VA Care and VA’s Financial Management 

System where obligations are recorded. 

All of these issues-lack of tools to estimate non-VA Care costs, lack of controls to 

ensure timely deobligations, and weaknesses in reconciling non-VA Care authorizations to obligations in the Financial Management System-makes the accurate and 

timely management of purchased care funds challenging. To address the challenges 

in estimating costs, VA has requested legislation that would allow VA to record an 

obligation at the time of payment rather than when care is authorized. In its consolidation plan, VA said this would likely reduce the potential for large deobligation 

amounts after the funds have expired. VA cites the Department of Defense’s Tricare 

program as an example of a large program with similar authority. 

We recognize that the current process and system infrastructure are complex and 

do not provide for effective funds management. We caution that such a change 

alone-i.e., obligating funds at the time of payment-would not necessarily remove all 

of VA’s challenges in this area. VA would still need adequate controls to monitor 

accounting, reconciliation, and management information processes to ensure they do 

not spend more than appropriated by Congress. 

CONCLUSION 

Our audits and reviews have shown that VA faces challenges in administering its 

purchased care programs. Veterans’ access to care, proper expenditure of funds, and 

timely payment of providers are at risk to the extent that VA lacked adequate processes to manage these funds and oversee program execution. While purchasing 

health care services from non-VA providers may afford VA flexibility in terms of exLeonard.horne on VACREP0180 with DISTILLER

55 

panded access to care and services that are not readily available at VA medical facilities, it also poses a significant risk to VA when adequate controls are not in 

place. With non-VA health care costs of about $6 billion in FY 2015 and future costs 

expected to increase, VA needs to improve program controls. Without adequate controls, VA’s consolidation plan is at increased risk of not achieving its goal of delivering timely and efficient health care to veterans. 

Mr. Chairman, this concludes my statement. We would be happy to answer any 

questions you or members of the Committee may have. 

f 

Prepared Statement of Dr. Baligh Yehia 

Good morning, Chairman Benishek, Ranking Member Brownley, and Members of 

the Subcommittee. Thank you for the opportunity to further discuss the proposed 

improvements to the billing and reimbursement processes included in the Department of Veterans Affairs’ (VA) plan to consolidate community care programs. To increase access to health care, VA plans to streamline the billing and reimbursement 

processes and implement system changes that will reduce frustration among community providers. I am accompanied today by Dr. Gene Migliaccio, Deputy Chief 

Business Officer for Purchased Care. 

VA is committed to providing Veterans access to timely, high-quality health care. 

In today’s complex and changing health care environment, where VA is experiencing 

a steep increase in demand for care, it is essential for VA to partner with providers 

in communities across the country to meet Veterans’ needs. To be effective, these 

partnerships must be principle-based, streamlined, and easy to navigate for Veterans, community providers, and VA employees. Historically, VA has used numerous 

programs, each with their own unique set of requirements, to create these critical 

partnerships with community providers. This resulted in a complex and confusing 

landscape for Veterans and community providers, as well as VA employees. 

Acknowledging these issues, VA is taking action as part of an enterprise-wide 

transformation called MyVA. MyVA will modernize VA’s culture, processes, and capabilities to put the needs, expectations, and interests of Veterans and their families 

first. Included in this transformation is a plan for the consolidation of community 

care programs and business processes, consistent with Title IV of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, the VA Budget and Choice Improvement Act, and recommendations set forth in the Independent 

Assessment of the Health Care Delivery Systems and Management Processes of the 

Department of Veterans Affairs (Independent Assessment Report) that was required 

by section 201 of the Veterans Access, Choice, and Accountability Act of 2014 

(Choice Act). 

On October 30, 2015, VA provided Congress with a possible plan for a New Veterans Choice Program (New VCP) that would include the consolidation of all purchased care programs. The New VCP will include some aspects of the current Veterans Choice Program established by section 101 of the Choice Act and incorporate 

additional elements designed to improve the delivery of community care. 

Consistent with the principles outlined in New VCP report, VA plans to streamline clinical and administrative processes, including the billing and reimbursement 

process. Clear guidelines, infrastructure, and processes to meet VA’s community 

care needs will improve community providers’ experience with VA while also increasing Veterans’ access to health care. Currently, many community providers face 

inaccuracies or delays in payments due to VA’s decentralized and highly manual 

billing and reimbursement process. VA plans to streamline business processes and 

implement new solutions that allow for auto adjudication of claims processing. 

Background 

Efficient adjudication of claims processing is the key to effective billing and reimbursement processes. High performing networks invest in centralized, scalable auto 

adjudication technology platforms and use simplified product and reimbursement 

rules to facilitate high levels of auto adjudication. This enables automation of most 

claims and only requires review of claims in question, reducing delays and errors 

in payments. While this type of technology investment will have significant up-front 

costs, efficiency gains, savings, and additional key analytic capabilities will be generated once the solution is complete. 

Auto adjudication of claims is made possible by establishing standard rules and 

processes, and integrating with complete patient and provider data. Systems interoperability allows for flexibility, enabling organizations to quickly respond to regulatory and best practice changes. Modern claims platforms can model care outcomes, 

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56 

and identify fraud, waste and abuse through data analytics. Industry standards do 

not require the receipt of medical records for payment. VA does have this requirement, which often causes delays in payment. Within the health plan industry, private health providers submit claims using a standard format which typically includes patient information, services provided, and authorization if an authorization 

was required and obtained. Medical information is provided directly to the referring 

provider either through a patient summary or electronically. As VA improves claims 

processing, VA will no longer require medical records for reimbursement. VA will 

strive to improve the automation of systems to process medical records and conduct 

retrospective audits to confirm their receipt and develop lessons learned to support 

continuous improvement. 

Current State 

The current VA claims infrastructure and claims process are complex and inefficient due to highly manual procedures. VA also lacks a centralized data repository 

to support auto adjudication. There are more than 70 centers processing claims 

across 30 different claims systems, resulting in inconsistent processes. Limited automation and manual matching of claims to authorizations prevents efficient adjudication. Low electronic data interchange (EDI) claims submission rates, decentralized 

and inconsistent intake processes, and limited staff productivity standards (i.e., 

workload metrics) result in labor-intensive, paper-based processes that generate 

late, and sometimes incorrect payments. In FY 15, errors were determined in six 

improper payment categories: duplicate payment, goods or services not received, incorrect amount, ineligible good or service, ineligible recipient and lack of documentation. The overall improper payment rate for Fiscal Year 15 was 54.77%(the error 

rate excluding acquisition findings would be 12.42%). The majority of error findings 

were identified following the evaluation of payment compliance with the VAAR and 

the FAR which was an expansion of the audit scope from FY 14, but does not correspond to an increase in instances where the wrong provider was paid, the wrong 

amount was paid, a duplicate payment was made or services were not received. 

Claims Processing Actions/Strategies Implemented for Improvement 

VA has already taken many steps to improve timeliness of payment to community 

providers. To increase transparency in the claims inventory, VA implemented a 

claims inventory dashboard allowing VA to monitor claims in near real time, including: 

• Backlog details -inventory by age, type of claim, and where claims are in the 

processing cycle • Monitor processing strategy - aged claims and ‘‘cliff’’ or claims about to age • Monitor staff and contractor productivity • Monitor incoming and processed trends 

VA established deep dive calls with Veterans Integrated Service Networks 

(VISNs) facing the largest backlogs. These calls occur several times per week and 

involve support staff in the review of data/dashboard, production, barriers, and staffing issues. The calls focus on site action plans for addressing the backlog, eliminating barriers and monitoring productivity, processes and trends. Furthermore, VA 

established weekly workload calls to specifically align support teams, work through 

local payment center issues and VISN issues, and address barriers to maximize improvement and contract support. 

To reduce aged claims, VA implemented of backlog strategy based on claim type 

and priorities, such as processing backlog claims and claims that are about to age 

and contribute to the backlog first. These claims are monitored on a daily basis so 

that corrections can be made when needed. Additionally, VA implemented claims 

processing performance standards which have been communicated in performance 

plans. 

Currently, VA is deploying a strategy to realign resources within each VISN and 

then nationally to ensure that resource allocation is consistent with need. VHA has 

ongoing communications with VAMC facility leadership to reduce and eliminate facility barriers to prompt payment such as ensuring timely entry of authorizations. 

As stated during the HVAC hearing in June 2015, VA would fill over 200 vacancies within 90 days of the hearing. VA exceeded that goal by hiring over 200 staff 

within eight weeks. 

VA has also improved outreach efforts with stakeholders. VA is identifying better 

and more frequent ways to communicate the status of claims processing timeliness 

with community providers, Members of Congress, and Veterans. Ongoing training 

is being provided to community providers on the resources available to address 

issues identified by the provider accounts receivables reports, to include monthly 

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calls held with providers to address account claim concerns. VA is meeting with 

State Hospital Associations across the country to educate them on claims processing, 

Veteran authorities for payment of claims, and local claims status. 

These recent actions have had a significant impact on processing volume. In fiscal 

year (FY) 2015, VHA processed 16,793,057 claims representing a 21 percent increase over the same period the year before, when VHA processed 13,256,119 

claims. As of January 15, 2016, Community Care claims inventory is 72.08 percent 

current, with a total claims volume at 1.8 million claims. 

VA continues to experience tremendous growth in the volume of claims for care 

provided by community providers. VHA has received 22 percent more claims from 

October 2014 through September 2015 compared to the same period in the prior 

year. VHA staff makes every effort to ensure claims are processed timely. Our current standard is to have at least 85 percent of our claims inventory current, which 

means under 30 days old for ‘‘clean’’ claims and under 45 days old for ‘‘other than 

clean’’ claims. A ‘‘clean claim’’ is a claim that has no defect or impropriety, such as 

a coding error. 

Future State 

VA will pursue a claims solution and simplify processes as it evolves to achieve 

parity with best practices. Consistent with the principles in the New VCP plan, VA 

will focus on: 

• Standardizing business rules and logic to support claims processing; • Improving reimbursement processes by removing the requirement for providers 

to submit medical records as a condition of payment; • Improving interfaces and coordination with dependent systems; and • Implementing reimbursement models to recognize and promote Connected 

Health activities, such as outreach to Veterans for self-help, health promotion 

and secondary prevention, telehealth, team-based care, and Veteran education. 

In the long term, VA will use a scalable, flexible claims platform that supports 

emerging value-based care models and streamlines data maintenance, storage, and 

retrieval. This new claims solution will support VA’s efforts to reduce waste, fraud, 

and abuse. In addition, the VA claims solution will integrate with Veteran Eligibility Systems, Authorization Systems, and standardized fee schedules to support 

auto adjudication. Integration with fee schedules will support new payment models 

and enable better tracking and billing integration with other health insurance 

(OHI). VA will also integrate the claims processing system with patient information, 

increasing VA’s ability to efficiently bill OHI. Taken together, the new claims solution will allow VA to pay on time and correctly while meeting Prompt Payment Act 

compliance. VA protects Veteran identifiable information in its IT systems via secure networks. VA will coordinate referral management with tracking financial obligations to provide the basis for resource and process adjustments based on forecasted versus actual use of funds. 

VA will determine whether to improve the system through the adoption of a new 

one or by purchasing the required capabilities externally. VA will oversee adherence 

to business rules, standardize internal controls, and have proper access to systems 

holding information to be reviewed. Keeping in line with best practices, VA will conduct claims audits for accuracy. VA also will provide compliance oversight for the 

new Prompt Payment compliance process owner in accordance with VA Directives, 

Handbooks, and other applicable policies. To monitor and improve performance of 

billing and reimbursement, VA will use industry standards as metrics for continuous process improvement. 

Conclusion 

VA is continuing to examine how the existing Veterans Choice Program interacts 

with other VA health programs. In addition, VA is evaluating how it will adapt to 

a rapidly changing health care environment and how it will interact with other 

health providers and insurers in the future. As VA continues to refine its health 

care delivery model, we look forward to providing more detail on how to convert the 

principles outlined in this plan into an executable, fiscally-sustainable future state. 

In addition, VA plans to review feedback and potentially incorporate recommendations from the Commission on Care and other stakeholders. 

In the meantime, VA will implement improvements to the delivery of community 

care through an incremental approach as outlined in the plan, building on certain 

provisions of the existing Veterans Choice Program. The implementation of these 

improvements requires balancing care provided at VA facilities and in the community, and addressing increasing health care costs. VA will work with Congress and 

the Administration to refine the approach described in this plan, with the goal of 

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1 Resolution No. 46: Department of Veterans Affairs (VA) Non-VA Care Programs 

improving Veteran’s health outcomes and experience, as well as maximizing the 

quality, efficiency, and sustainability of VA’s health programs. These improvements, 

like many of the enhancements VA has already made, are only possible with Congressional support, including legislation and necessary funding. 

VA strongly values its relationship with our community providers. We realize the 

vital role they play in assisting us in providing timely and high-quality care to Veterans. We are working hard to expedite payments and streamline our claims services in order to make this an effective and efficient process for all. 

Mr. Chairman, I appreciate the opportunity to appear before you today. We are 

prepared to answer any questions you or other Members of the Committee may 

have. 

f 

Prepared Statement of Roscoe G. Butler 

The American Legion believes in a strong, robust veterans’ healthcare system that 

is designed to treat the unique needs of those men and women who have served 

their country. However, even in the best of circumstances there are situations where 

the system cannot meet the health care needs of the veteran, and the veteran must 

seek care in the community. Rather than treating this situation as an afterthought, 

an add-on to the existing system, The American Legion believes the Department of 

Veterans Affairs (VA) must ‘‘develop a well-defined and consistent non-VA care coordination program, policy and procedure that includes a patient centered care 

strategy which takes veterans’ unique medical injuries and illnesses as well as their 

travel and distance into account.’’ 1

Chairman Benishek, Ranking Member Brownley and distinguished members of 

the Subcommittee on Health, on behalf of National Commander Dale Barnett and 

The American Legion; the country’s largest patriotic wartime service organization 

for veterans, comprising over 2 million members and serving every man and woman 

who has worn the uniform for this country; we thank you for the opportunity to testify regarding The American Legion’s position on ‘‘Billing and Reimbursement for 

care in the community under VA’s plan to consolidate non-VA care programs’’. 

Background 

The VA purchased care program dates back to 1945, when General Paul R. 

Hawley, Chief Medical Director, Veterans Administration, implemented VA’s hometown program. General Hawley recognized that many hospital admissions of World 

War II veterans could be avoided by treating them before they needed hospitalization. As a result, General Hawley instituted a plan for ‘‘hometown’’ medical and dental care at government expense for veterans with service-connected ailments. Under 

the Hometown Program, eligible veterans could be treated in their community by 

a doctor or dentist of their choice. 

Fast forward, VA has implemented a number of programs in order to manage veterans’ health care when such care is not available in a VA health care facility, could 

not be provided in a timely manner, or is more cost effective. Programs such as FeeBasis, Project Access Received Closer to Home (ARCH), Patient-Centered Community Care (PC3), and the Veterans Choice Program (VCP) were enacted by Congress 

to ensure eligible veterans could be referred outside the VA for needed health care 

services. 

Congress created the VCP after learning in 2014 that VA facilities were falsifying 

appointment logs to disguise delays in patient care. However, it quickly became apparent that layering yet another program on top of the numerous existing non-VA 

care programs, each with their own unique set of requirements, resulted in a complex and confusing landscape for veterans and community providers, as well as the 

VA employees that serve and support them. 

Therefore, Congress passed the Surface Transportation and Veterans Health Care 

Choice Improvement Act of 2015 (VA Budget and Choice Improvement Act) in July 

2015 after VA sought the opportunity to consolidate its multiple care in the community authorities and programs. This legislation required VA to develop a plan to consolidate existing community care programs. 

On October 30, 2015, VA delivered to Congress the department’s Plan to Consolidate Community Care Programs, its vision for the future outlining improvements 

for how VA will deliver health care to veterans. The plan seeks to consolidate and 

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2Plan to Consolidate Programs of Department of Veterans Affairs to Improve Access to Care 

- Oct 2015 3 VA Independent Assessment - Sept.2015 

tem and enhance the way VA partners with other federal health care providers, academic affiliates and community providers. It promises to simplify community care 

and gives more veterans access to the best care anywhere through a high performing network that keeps veterans at the center of care. 

Generally, The American Legion supports the plan to consolidate VA’s multiple 

and disparate purchased care programs into one New VCP. We believe it has the 

potential to improve and expand veterans’ access to health care. Much depends, 

however, on the department’s success in working with its employees, Congress, 

VSOs, private providers, academic affiliates, and other stakeholders as the agency 

moves forward in developing and implementing the plan. 

The American Legion commends VA Secretary Bob McDonald for his MyVA vision 

and leadership as he leads the largest and most complex integrated health system 

in America in a new direction, seeking to transform the department into a veterancentric organization by transforming VA’s culture, processes, and capabilities in 

order to meet the needs, expectations, and interests of veterans and their families. 

Billing and Reimbursement Rates under the New Veterans Choice Program 

VA’s current community care programs still utilize labor-intensive business processes that are too reliant upon manual data input, prone to errors and processing 

delays. VA’s New VCP billing and reimbursement process is outlined under sections 

4.4 and 4.5 of VA’s consolidation plan. As noted in the plan, the current system is 

a decentralized and highly manual process. 2 The New VCP plan proposes integrating most of VA’s community care programs into one single program that would 

be seamless, transparent, and beneficial to enrolled veterans. The New VCP envisions a three-phased approach to implement these changes to support improved 

health care delivery for enrolled veterans. 

The first phase will focus on the development of minimum viable systems and 

processes that can meet critical veteran needs without major changes to supporting 

technology or organizations. Phase II will consist of implementing interfaced systems and community care process changes. Finally, Phase III will include the deployment of integrated systems, maintenance and enhancement of the high-performing network, data-driven processes, and quality improvements. 

To improve the accuracy of claims and reimbursement processing, the 2015 Independent Assessment Report recommended that VA employ industry standard automated solutions to bill claims for VA medical care (revenue) and pay claims for NonVA Health Care (payment). 3 VA states its New VCP will focus on operational efficiencies, to include standardized billing and reimbursement, as well as geographically adjusted fee schedules that are tied to Medicare, as deemed appropriate. These 

foci will make it easier and more appealing for community health care providers to 

partner with VA. The American Legion strongly believes VA must standardize its 

reimbursement rates, but not set the rates too low where providers in Alaska and 

Rural America would be discouraged from signing up as a participating provider in 

the new VCP. 

Too often we receive telephone calls and emails from veterans requesting assistance with their non-VA care claim due to VA’s slow payment process. For example, 

in November 2015 we received an inquiry from a veteran requesting assistance with 

payment of a medical bill that was authorized under the VCP. The veteran explained he was approved through the VCP to be treated by a non-VA health care 

provider for a hernia surgery to be performed outside the VA. After months of 

delays by the VA, the claim was referred to an attorney’s office for collection. As 

a result, the veteran expressed disbelief and has lost faith in the VA system. This 

is just one example of the many veterans who have contacted our office in the past 

several months requesting assistance with VA’s current inefficient Non-VA claims 

processing system. 

The American Legion supports VA developing a 21st Century claims and reimbursement processing system that is rules-based, and to the extent possible, eliminates as much human intervention as possible. The system must eliminate the 

guess work out of the claims and reimbursement process and establish an error-free 

claims process that is responsive to veteran’s needs. 

Therefore, we are pleased to see that VA proposes to implement a claims solution 

which is able to auto-adjudicate a high percentage of claims, enabling VA to pay 

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4Florida Hospitals: VA owes $134 million in unpaid claims: Miami Herald; November 17, 2015 

ized regional fee schedule, to the extent practicable for consistency in reimbursement. 

Additionally VA proposes to simplify eligibility criteria so veterans can easily determine their options for community care, streamline the referral and authorization 

process to enable more timely access to community care, and standardize business 

processes to minimize administrative burden for community providers and VA staff. 

Improvements in how VA processes claims will enable VA to reimburse community 

providers in a timely and efficient fashion. 

The American Legion understands VA’s New VCP is a huge undertaking and 

agrees the plan will take time to fully implement, particularly the IT component required to auto-adjudicate a high percentage of claims. However, we do not believe 

Congress should continue to provide VA an open check book without any assurance 

from VA that their IT plan will work. Congress must require VA to not only provide 

an IT plan, but provide some proof that the claim and reimbursement system will 

work. Too often Congress has authorized funding in support of process improvement 

initiatives like CoreFLS, and VA’s scheduling system, to name a few, without any 

deliverables, resulting in wasted tax payer dollars that can never be recovered. In 

these situations, the ones who are impacted are our nation’s veterans who are calling out to Congress to fix the system. 

Prompt Payment Act 

The Prompt Payment Act (PPA) enacted in 2000, was to ensure the federal government makes timely payments. Under the PPA, all bills are to be paid within 30 

days after receipt and acceptance of material and/or services - or - after receipt of 

a proper invoice whichever is later. When payments are not timely, interest should 

be automatically paid. Due to a technicality explained below, which can be easily 

corrected, the VCP has continually failed to meet the requirements of the PPA. 

During The American Legion’s System Worth Saving (SWS) visits to VA medical 

centers, we often hear that when an invoice is submitted for payment, VA’s third 

party administrators (TPA’s) have been told to hold payment until the medical documentation to support the invoice is received. We also hear that when the medical 

documentation is received it is reviewed by the TPA and again by VA before payment is made. 

An immediate remedy would be for VA to authorize payment for any Non-VA 

claim immediately upon receipt of a valid bill for health care services that a veteran 

receives. So, we are glad to hear from the VA Choice Community Care team that 

in the very near future VA will authorize the TPA’s to begin paying any Non-VA 

health care claim under the VCP without first obtaining the veterans medical record 

from the Non-VA health care provider. 

The American Legion applauds VA for initiating this action. This will prevent stories like the November 2015 Miami Herald article about Florida hospitals trying to 

get the Department of Veterans Affairs to pay about $134.4 million in outstanding 

claims for medical services they provided to veterans. 4 If it is determined VA overpaid for the care and services, cost recovery should occur after VA has verified the 

care and services provided to veterans receiving that health care. Of course, ensuring that records are ultimately returned to VA is very important and we look forward to hearing more about how VA plans to achieve this. 

Conclusion 

The VA’s plans for the New Veterans Choice Program need approval from Congress. The American Legion believes that VA’s plan is a reasonable one given the 

desired results. VA needs to overhaul its outside care reimbursement programs, consolidating them into a more efficient bureaucracy able to systemically and dynamically interact with the network of private providers that are to supplement VA direct provided care. 

To do so, VA has identified a number of necessary legislative items that require 

action by Congress in the short legislative window available this year in order to 

best serve veterans going forward in 2016. Among these, for example, is the Purchased Health Care Streamlining and Modernization Act, which would allow VA to 

contract with providers on an individual basis in the community outside of Federal 

Acquisition Regulations, without forcing providers to meet excessive compliance burdens and while maintaining essential worker protections. 

We recognize that the Federal Acquisition Regulations (FAR) are cumbersome, 

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ment, but we also recognize the protections FAR provides to the taxpayer. Therefore, The American Legion recommends passage of this legislation as a three year 

pilot program with an Inspector General evaluation mandate after the first year 

using the tenets of the FAR that are reasonable for the situation to ensure that the 

taxpayer’s interests are protected. 

We also support VA’s efforts to recruit and retain the very best clinical professionals. These include, for example, flexibility for the federal work period requirement, which is not consistent with private sector medicine, and special pay authority to help VA recruit and retain the best talent possible to lead their hospitals and 

health care networks. 

In conclusion, The American Legion believes that together we can accomplish legislative changes to streamline Care in the Community programs before the end of 

this session of Congress. We can’t let another year slip away. Our veterans deserve 

the same sense of urgency now that Congress has shown numerous times since the 

VA scandal first erupted in 2014. 

The American Legion thanks this committee for their diligence and commitment 

to our nation’s veterans as they struggle to access health care across the country. 

We look forward to working with Congress, the Commission on Care, the MyVA Advisory Committee, and the VA as we seek to reform America’s health care for its 

veterans into a world-class system that puts veterans and their families at the center of their health care. 

Questions concerning this testimony can be directed to Warren J. Goldstein, Assistant Director in The American Legion Legislative Division (202) 861–2700. 

f 

Prepared Statement of Carlos Fuentes 

MR. CHAIRMAN AND MEMBERS OF THE SUBCOMMITTEE: 

On behalf of the men and women of the Veterans of Foreign Wars of the United 

States (VFW) and our Auxiliary, thank you for the opportunity to offer our thoughts 

on the Department of Veterans Affairs’ (VA) plan to consolidate its community care 

programs. 

The VFW strongly believes that veterans have earned and deserve timely access 

to high quality, comprehensive, and veteran-centered health care. That is why we 

have made a concerted effort to evaluate the state of the VA health care system 

through proactive outreach to veterans and have worked closely with VA, Congress, 

and other stakeholders to implement reasonable solutions to issues we have identified. 

In an effort to evaluate the Choice Program, the VFW has collected direct feedback from more than 12,000 veterans through surveys and direct requests for assistance through our national helpline (1–800–VFW–1899) and our general inquires 

email (vfw@vfw.org). Through this work we have identified several concerns with 

the Choice Program, including participation, eligibility, availability, scheduling, information technology (IT) system, and improper billing issues. For more information 

on our work and to read our latest reports on the Choice Program and the VA 

health care system, please visit the VFW’s VA Health Care Watch website at: 

www.vfw.org/VAWatch/. Given the focus of today’s hearing, I will limit my remarks 

to IT and improper billing issues. 

The VFW has heard from too many veterans that the community care provider 

they choose to use through the Choice Program has billed them for the cost of their 

care. While the VFW understands that some veterans are required to pay cost 

shares, it is unacceptable that any veteran is billed for care that VA is required to 

furnish. The most common billing complaint we have heard is when a veteran is 

authorized to use the Choice Program for a specific medical issue or treatment, but 

requires follow up care that is outside of the scope of the original authorization. 

In these cases, the veteran’s doctor is required to submit a request for additional 

services and the program’s contractors (Health Net or TriWest) must work with VA 

to get the additional services authorized before the care can be delivered. This is 

where the program often fails veterans. At times the care is not authorized before 

a veteran arrives at his or her follow up appointment, so the veteran is required 

to either reschedule or assume liability for the care. In most cases, veterans reschedule the appointment and are forced to wait for the care they need because VA 

is unable to authorize it fast enough. 

In some instances the veteran arrives at his or her follow up appointment and 

is unaware the care has not been authorized by VA. Given that private sector providers are not completely certain how the Choice Program works, many times they 

are also unaware that VA may not cover the cost of the appointment. This perfect 

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storm typically results in a veteran being held liable for the cost of the appointment 

despite being eligible for care through the Choice Program. 

For example, a veteran in Saginaw, Michigan, was authorized to use the Choice 

Program as a 40-miler. He contacted the Choice call center and was referred to an 

ophthalmologist for a vision exam. His ophthalmologist prescribed him a treatment 

to save the vision in one of his eyes. Since the ophthalmologist was unable to administer the treatment, he referred the veteran to a nearby clinic where he received 

four courses of treatment before the clinic informed him that VA refused to pay his 

bill and that he would need to pay his outstanding balance before he could continue 

his treatment. After evaluating his case, we were able to determine that his ophthalmologist failed to submit a request for additional services. Since his treatment 

at the clinic was beyond the scope of the original authorization, Health Net was unable to retroactively authorize the veteran’s care. The VFW is working to resolve 

this veteran’s case, but we were able to have his treatments reinstated while we 

find a way to have his $1,500 bill paid. 

It is unacceptable that veterans are forced to wait for their care because VA is 

unable to authorize their care in a timely manner. It is also unconscionable that 

a veteran can be held liable for the cost of his or her appointment because of a process error the veteran has no ability to control. That is why the VFW urges Congress 

to authorize VA to make common sense exemptions to Choice payment requirements, which includes being able to retroactively authorize care when a process 

error occurs. VA must also empower its employees and the program’s contractors to 

make such exemptions when it is in the best interest of a veteran’s health. 

The VFW also believes that it is time to move away from authorization based 

community care. In the Independent Budget’s ‘‘A Framework for Veterans Health 

Care Reform,’’ the VFW and our Independent Budget partners call for an integration of community care and VA care that would do away with the need for pre-authorizing every episode of care a veteran receives from community care providers. 

Currently, VA uses community care as a safety valve to alleviate the pressure on 

its health care facilities when VA care is not readily available. Instead, VA should 

leverage the capabilities of the providers in the local community, including private 

and public sector providers, to ensure veterans have timely access to high quality, 

comprehensive and veteran-centric health care options without the authorization 

barrier the currently exists. The VFW agrees with VA’s plan to create high performing networks tailored to each health care market. 

However, the VFW believes that network providers should be considered an extension of VA health care, regardless if it is a private or public sector provider. In 

doing so, VA would treat community providers as it does different clinics within a 

VA medical center. When a veteran is sent to an ophthalmology clinic for an eye 

exam, that ophthalmology clinic is authorized to carry out any needed treatment 

without having to seek authorization from the veteran’s primary care provider. 

Similarly, a network provider must have the ability to provide the care a veteran 

needs without having to cut through bureaucratic red tape. It is also important that 

veterans have the ability to receive follow up care at a VA medical facility when 

clinically appropriate and convenient. Currently, a community care provider is unable to refer patients to a VA clinic for follow up care. 

In speaking to private sector providers and Choice Program contractors, the VFW 

has learned that providers are sometimes responsible for delayed payments. The 

‘‘Veterans Access, Accountability and Choice Act of 2014’’ made payment to Choice 

providers contingent on the return of medical documentation. This means that a 

provider will not get paid for the cost of an appointment if that provider does not 

transmit the accompanying medical documentation with the bill to the program’s 

contractor. Private sector providers are not accustomed to having to report medical 

documentation before receiving payment. As a result, some of them will bill a veteran before sending VA or the program’s contractors the requisite medical records. 

To address this issue, VA has proposed decoupling medical documentation from payment. This would enable VA to pay the cost of an appointment without receiving 

the requisite medical documentation for the appointment. 

While the VFW understands the need to enable VA to quickly pay community 

care providers, we believe this can be achieved without decoupling medical documentation and payment. VA must do what is necessary to ensure the care veterans 

receive through community providers is equal to or higher quality than the care veterans receive at VA medical facilities. To do so, VA must integrate medical records 

from community care appointments into a veteran’s VA electronic health record 

(EHR). However, VA must first receive the medical record from community providers. The VFW is concerned that decoupling medical records and payment would 

remove the incentive for community care providers to send medical records to VA. 

When medical records are not returned, VA is unable to evaluate the care veterans 

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received from community providers or verify whether the veteran received care at 

all. 

For example, in an Office of Inspector General (OIG) inspection of access issues 

in the Urology Service at the Phoenix VA Health Care System, the OIG found that 

759 urology consults sent to community care providers were ‘‘lost to follow-up’’ because the OIG was unable to locate any evidence in affected veterans’ EHRs to validate whether they had been seen by a community care provider. Missing information precluded the OIG from properly assessing the quality of care these patients 

received from community providers. 

In speaking to Choice providers and the program’s contractors, the VFW has 

learned that the delay in reporting medical documentation is often due to the arduous reporting requirements VA places on Choice providers. Furthermore, the VFW 

has heard from providers that information VA requires them to report with medical 

records is not required by other programs, such as Medicare, and is not necessary 

to ensure quality of care. VA must ensure that the requirements it places on private 

sector providers are needed to ensure quality, not needless bureaucratic reporting 

requirements. That is why the VFW recommends that VA evaluate the reporting requirements placed on network and VA providers to identify and eliminate excess reporting requirements that are not necessary to ensure quality, including statutory 

reporting requirements that must be sunset. 

The VFW also learned that many Choice providers receive and send medical information through fax. While the VFW understands the need to protect medical information, there is no reason why, in the 21st century, VA is relying on fax to transmit 

medical records. VA must develop IT solutions to facilitate a seamless integration 

of health records between its medical facilities and their private and public sector 

partners. Congress must ensure VA has the resources necessary to develop IT solutions for its community care programs. 

When private sector providers do not have an EHR to integrate with the Veterans 

Information Systems and Technology Architecture (VistA), VA must authorize and 

train Choice providers to use VistA. This would serve to incentivize providers without an EHR to join VA’s Choice networks and would also ensure veterans receive 

fully integrated and coordinated health care within community care networks. Congress must also authorize VA to share its IT programs with network providers. 

In evaluating the Choice Program, the VFW found that private sector providers 

are often reluctant to participate in the Choice network because of misconceptions 

about the Choice Program. The VFW believes this is due to a lack of outreach and 

training from VA and the program’s contractors. While VA and the Choice contractors have made a concerted effort to properly train their employees, they have not 

made the same effort to ensure community care providers are aware of program requirements and changes. For example, the VFW has heard from several private sector providers that they cannot participate in the Choice Program because VA pays 

below Medicare. This is not true - Choice providers are paid at the Medicare rate. 

In some instances VA is even authorized to pay above the Medicare rate. Moving 

forward, VA must conduct outreach to private sector providers to eliminate misconceptions and ensure private sector providers are made aware of how they can 

partner with VA. 

As this Subcommittee continues to evaluate VA’s plan to consolidate its community care programs, the VFW will continue to ensure the voice, preference, and 

health care needs of veterans are prioritized and ensure VA health care reforms 

serve the best interest of our nation’s veterans. 

Mr. Chairman, this concludes my testimony. I will be happy to answer any questions you or the Subcommittee members may have. 

Information Required by Rule XI2(g)(4) of the House of Representatives 

Pursuant to Rule XI2(g)(4) of the House of Representatives, the VFW has not received any federal grants in Fiscal Year 2016, nor has it received any federal grants 

in the two previous Fiscal Years. 

The VFW has not received payments or contracts from any foreign governments 

in the current year or preceding two calendar years. 

f 

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Statements For The Record 

The American Medical Association 

The American Medical Association (AMA) appreciates the opportunity to submit 

this statement for the record in regards to the Committee on Veterans’ Affairs Subcommittee on Health’s hearing today on Choice Consolidation: Improving VA Community Care Billing and Reimbursement. The AMA is strongly committed to helping 

Congress and the Department of Veterans Affairs (VA) ensure the comprehensive 

delivery of, and timely access to, primary and specialty health care for our nation’s 

veterans. The AMA was an early supporter of the Veterans Choice Program (VCP) 

and we support the VA’s ongoing efforts to reform and improve the care delivery 

experience from the perspective of both the veteran patient and the physician. 

We commend the VA for recognizing that the VCP has not been working as intended, and we support the VA’s proposal to consolidate the VCP and all existing 

community care programs into one streamlined program. Consolidating the programs should create efficiencies and eliminate duplication and costs in administering the new VCP. We think that the poor response to the existing VCP has in 

part been due to confusion by veterans and physicians between the VCP and the 

other community care programs, such as the Patient-Centered Community Care 

(PC3) Program. In order to be effective, the VA’s partnerships with private physicians in the community need to be streamlined and easy to navigate for veterans, 

physicians, and VA staff. 

Specifically, we support the VA’s proposal to streamline and automate billing and 

reimbursement processes. According to the VA, ‘‘The current VA claims infrastructure and claims process are complex and inefficient due to highly manual procedures, and VA lacks a centralized data repository to support auto adjudication’’ 

(U.S. Department of Veterans Affairs, Plan to Consolidate Programs of Department 

of Veterans Affairs to Improve Access to Care,’’ October 30, 2015, at page 49). The 

VA has more than 70 centers processing claims across 30 different claims systems, 

and limited automation with paper-based processes that result in late and incorrect 

payments. Improving the VA’s reimbursement processes would alleviate some of the 

complaints that physicians and other providers have had tied to the VCP, e.g., administrative hassles and delays in payment. Moving toward auto-adjudication and 

away from requiring medical records for reimbursement-a current VA requirementshould help to improve claims processing accuracy and predictability and allow 

claims to be paid promptly, thereby providing an incentive for physicians to join and 

remain in the provider network. 

Under the VA’s proposal, the VA intends to standardize provider reimbursement 

rates to align with regional Medicare rates under a single program and will remain 

the primary payer. While we appreciate that the VA is moving in the right direction 

in terms of basing payment to providers on Medicare rates, the AMA supports the 

Medicare rate as a floor, not a ceiling, especially in areas where there are significant 

needs for service and limited available specialists. We also appreciate that the VA 

acknowledges the importance of increasing the transparency of payment rates to 

providers and allowing regional variation, where needed, recognizing the expense of 

clinical practice outside of the VA facilities. 

We are concerned, however, about the proposal for tiered networks in the New 

VCP. The VA indicates that they intend to provide veterans access to a tiered, 

‘‘high-performing network,’’ which will reward providers for delivering ‘‘high-quality 

care’’ while promoting veteran choice and access. The VA indicates that it will apply 

industry-leading health plan practices for the tiered network design and that providers in the Preferred tier, versus the Standard tier, must ‘‘demonstrate high-value 

care’’ in order to be considered in the Preferred tier and to receive higher payment. 

It is unclear, however, how ‘‘high-value care’’ will be determined or demonstrated. 

Given the numerous issues with access to care, especially specialty care, that have 

arisen with the narrow networks offered in the exchanges under the Affordable Care 

Act, we believe that the VA needs to proceed carefully in moving towards tiered networks. We are concerned that by tiering or narrowing the network, the New VCP 

will further exacerbate or create access problems. This is already occurring in certain states, tied to exchange plans and Medicare Advantage plans and their narrowed and tiered networks, with patients unable to find physicians in the top tiers 

in their areas or able to receive necessary specialized services because the tiering 

is specialty and not service or subspecialty specific. With many veterans requiring 

specialized services, such as mental and behavioral health care and orthopedics, 

which are already very limited in many places throughout the country, further 

tiering seems incompatible and actually in conflict with the direction of the New 

VCP program to provide greater and faster access to specialty care services in the 

Leonard.horne on VACREP0180 with DISTILLER

65 

community. Narrowing or tiering will do little to demonstrate confidence in the program and could deter participation by physicians in the community. If the goal is 

to encourage participation and get more ‘‘high-value’’ or ‘‘high-quality’’ physicians to 

participate in the program, this tiering will likely have the opposite effect. 

The AMA, on behalf of its physician and medical student members, is committed 

to helping ensure that our nation’s veterans receive comprehensive, timely, highquality care. We look forward to working with the Subcommittee to advance proposals to improve the Veterans Care Program and the care delivery experience for 

our veterans. 

Æ 

Leonard.horne on VACREP0180 with DISTILLER