VA HEALTH CARE

Further Action Needed to 

Address Weaknesses in 

Management and Oversight 

of Non-VA Medical Care

Statement of Randall B. Williamson 

Director, Health Care

Testimony 

Before the Committee on Veterans’ 

Affairs, House of Representatives

For Release on Delivery 

Expected at 10:15 a.m. ET

Wednesday, June 18, 2014

GAO-14-696T

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-696T, a testimony 

before the Committee on Veterans’ Affairs, 

House of Representatives

June 18, 2014

VA HEALTH CARE

Further Action Needed to Address Weaknesses in 

Management and Oversight of Non-VA Medical Care

Why GAO Did This Study

Due to serious and longstanding 

problems with the timely scheduling of 

veterans’ appointments in VA facilities, 

VA recently announced that it will allow 

additional veterans to be treated 

through its Non-VA Medical Care 

Program.

This testimony is based on two GAO 

reports and addresses the extent to 

which (1) VA collects reliable 

information on wait times and costeffectiveness of the Non-VA Medical 

Care Program; (2) VA facilities comply 

with Millennium Act claims processing 

requirements and VA oversees claims 

processing activities; and (3) VA 

educates veterans about eligibility for 

Millennium Act emergency care and 

communicates with non-VA providers. 

For both reports, GAO reviewed 

relevant requirements and visited 

10 VA facilities. For its report on the 

oversight and management of the NonVA Medical Care Program, GAO 

reviewed non-VA medical care 

spending and utilization data from 

fiscal year 2008 through fiscal year 

2012. For its report on the Millennium 

Act emergency care benefit, GAO 

reviewed 128 denied Millennium Act 

claims to determine the accuracy of 

processing decisions. 

GAO made numerous 

recommendations to VA in the two 

prior reports related to improving 

(1) data on wait times and costeffectiveness for non-VA medical care; 

(2) compliance with claims processing 

requirements; and (3) veterans’ 

knowledge of non-VA medical care 

eligibility. VA agreed with these

recommendations but has yet to fully 

implement them.

What GAO Found

GAO’s May 2013 report on the oversight and management of the Non-VA 

Medical Care Program found that the Department of Veterans Affairs (VA) does 

not collect data on wait times veterans face in obtaining care from non-VA 

providers. The lack of data on wait times limits VA’s efforts to effectively oversee 

the Non-VA Medical Care Program because it is not possible for VA to determine 

if veterans who receive care from non-VA providers are receiving that care 

sooner than they would in VA facilities. In addition, GAO found that VA cannot 

assess the cost-effectiveness of non-VA medical care because it cannot analyze 

data on all services and charges for an episode of care, which is a combined 

total of all care provided to a veteran during a single office visit or inpatient stay. 

As a result, VA cannot determine whether delivering care through non-VA 

providers is more cost-effective than augmenting its own capacity in areas with 

high utilization of non-VA medical care.

GAO’s March 2014 report found patterns of noncompliance with applicable 

requirements for processing emergency care claims covered under the Veterans 

Millennium Health Care and Benefits Act (Millennium Act) at each of the four VA 

facilities visited. This led to the inappropriate denial of some claims and the 

failure to notify veterans that their claims had been denied at these facilities. The 

Millennium Act authorizes VA to cover emergency care for conditions not related 

to veterans’ service-connected disabilities when veterans who have no other 

health plan coverage receive care at non-VA providers and meet other specified 

criteria. Specifically, GAO determined that about 20 percent of the 128 claims it 

reviewed had been denied inappropriately, and almost 65 percent of the 

reviewed claims lacked documentation showing that the veterans were informed 

their claims were denied and explained their appeal rights. As a result of GAO’s 

review, the VA facilities reconsidered and paid 25 claims that they initially had 

inappropriately denied. GAO also found that there is significant risk that these 

patterns of noncompliance will continue because VA’s existing oversight 

mechanisms do not focus on whether VA facilities appropriately approve or deny 

non-VA medical care claims or fail to notify veterans that their claims have been 

denied.

GAO also reported in March 2014 that gaps exist in veterans’ knowledge about 

eligibility criteria for Millennium Act emergency care, and communication 

weaknesses exist between VA and non-VA providers. Specifically, GAO found 

that veterans’ lack of understanding about their emergency care benefits under 

the Millennium Act presents risks for potentially negative effects on veterans’ 

health because they may forgo treatment at non-VA providers, and on veterans’ 

finances because they may assume VA will pay for care in situations that do not 

meet VA criteria. Despite VA’s efforts to improve communications, some non-VA 

providers reported instances in which VA facilities’ claims processing staff were 

unresponsive to their questions about submitted claims.

View GAO-14-696T. For more information, 

contact Randall Williamson at (202) 512-7114 

or williamsonr@gao.gov. 

. 
 

Page 1 GAO-14-696T

Chairman Miller, Ranking Member Michaud, and Members of the 

Committee: 

I am pleased to be here today to discuss our work on the Department of 

Veterans Affairs’ (VA) delivery of care through its Non-VA Medical Care 

Program.1 The majority of veterans enrolled in the VA health care system 

receive care in VA-operated medical facilities, such as VA medical 

centers and community-based outpatient clinics.2 However, VA is 

authorized to obtain health care services from non-VA providers to help 

ensure that veterans are provided timely and accessible care.3 For 

example, VA may utilize non-VA medical care when a VA facility is unable 

to provide certain specialty care services, such as cardiology or 

orthopedics, or when a veteran would have to travel long distances to 

obtain care at a VA medical facility. Non-VA providers treat veterans in 

non-VA facilities, such as physicians’ offices or hospitals in the 

community. Non-VA providers are commonly paid by VA using a fee-forservice arrangement. In fiscal year 2013, VA spent about $4.8 billion on 

non-VA medical care for more than 1 million veterans, which accounted 

for about 11.6 percent of VA’s total medical services budget for that year.4

There are two main non-VA medical care delivery methods—

preauthorized care and emergency care—that are approved using two 

different processes. The first, preauthorized care, is approved in advance 

by VA facility officials. VA may authorize veterans to seek care from nonVA providers for a number of reasons, including when (1) wait times for 

appointments at VA facilities exceed VA standards; (2) the distance 

veterans must travel to VA facilities is impractical for the veteran; and 

(3) VA facilities do not offer the medical services the veteran needs. 

Preauthorized care accounts for the majority of spending and utilization 

 

1

The Non-VA Medical Care Program was previously known as the Fee Basis Care 

Program. 

2

VA’s health care system includes 151 VA medical centers. VA also provides care to 

veterans in VA-operated community-based outpatient clinics, community living centers 

(nursing homes), residential rehabilitation treatment programs, and comprehensive home 

care programs.

3

VA obtains the services of non-VA providers in non-VA facilities under the following 

statutory authorities: 38 U.S.C. §§ 1703, 1725, 1728, 8111, and 8153.

4

This percentage reflects final appropriations numbers for VA’s total medical services 

budget after the across-the-board budget rescissions in fiscal year 2013.
 

Page 2 GAO-14-696T

(about 60 percent of spending and about 88 percent of utilization) for the 

Non-VA Medical Care Program. The second, emergency care, is not 

typically approved in advance by VA facility officials and has certain 

criteria that must be met in order for VA to approve reimbursement for the 

non-VA provider.

In response to serious and longstanding problems regarding the timely

scheduling of veterans’ appointments in VA facilities that have been 

highlighted in recent congressional oversight hearings, VA has 

announced its intention to allow additional veterans to be treated through 

its Non-VA Medical Care Program. With this likely increase in the 

utilization of non-VA medical care, it is not only important to ensure that 

veterans will obtain timely treatment from non-VA providers, but also to 

ensure that non-VA medical care is a reliable and cost-effective means 

for VA to deliver services. Today, I will address the extent to which (1) VA 

collects reliable information on wait times and cost-effectiveness of the 

Non-VA Medical Care Program; (2) VA facilities comply with claims 

processing requirements for emergency care provided under the 

Veterans Millennium Health Care and Benefits Act (Millennium Act), and 

the extent to which VA oversees facilities’ claims processing activities; 

and (3) VA educates veterans about eligibility for Millennium Act 

emergency care and communicates with non-VA providers about claims 

processing.5

My statement is based on the key findings of two GAO reports that 

identified weaknesses in VA’s management and oversight of its Non-VA 

Medical Care Program: a March 2014 report entitled VA Health Care: 

Actions Needed to Improve Administration and Oversight of Veterans’ 

Millennium Act Emergency Care Benefit, and a May 2013 report entitled 

VA Health Care: Management and Oversight of Fee Basis Care Need 

Improvement.

6

 

5

The Veterans Millennium Health Care and Benefits Act (Millennium Act) authorizes VA to 

cover emergency care for conditions not related to veterans’ service-connected disabilities 

when veterans who have no other health plan coverage receive care at non-VA providers 

and meet other eligibility criteria. See Pub. L. No. 106-117, § 111, 113 Stat. 1545, 1553 

(1999) (codified, as amended, at 38 U.S.C. § 1725).

For the March 2014 report, which focused on VA’s 

6

See GAO, VA Health Care: Actions Needed to Improve Administration and Oversight of 

Veterans’ Millennium Act Emergency Care Benefit, GAO-14-175 (Washington, D.C.: 

Mar. 6, 2014) and VA Health Care: Management and Oversight of Fee Basis Care Need 

Improvement, GAO-13-441 (Washington, D.C.: May 31, 2013). 
 

Page 3 GAO-14-696T

administration and oversight of Millennium Act emergency care delivered 

to veterans by non-VA providers, we reviewed the law, its implementing 

regulations, and applicable VA policies and guidance to identify 

applicable requirements for processing these claims. We then visited four 

VA facilities that were selected on the basis of fiscal year 2012 spending 

totals and geographic location and reviewed VA documents—including 

128 Millennium Act emergency care claims that these four facilities had 

denied in fiscal year 2012. We also interviewed officials from VA, non-VA 

providers, and veterans service organizations. For the May 2013 report, 

which focused on VA’s management and oversight of non-VA medical 

care spending and utilization, we reviewed relevant laws and regulations, 

VA policies, and spending and utilization data on non-VA medical care 

from fiscal years 2008 through 2012. We also interviewed VA officials and 

examined the non-VA medical care operations at six selected VA facilities

that varied in size, services offered, and geographic location. The results 

of both of these studies cannot be generalized to all VA facilities, but they 

illustrate the serious weaknesses in various aspects of the Non-VA 

Medical Care Program. We have made numerous recommendations to 

VA in these previous reports, and VA has concurred with all of them. We 

are not making any new recommendations at this time. In June 2014, in 

preparation for this statement, we met with VA officials to discuss the 

status of VA’s implementation of action plans to address the 

recommendations included in these two reports.

The work this statement is based on was conducted in accordance with 

generally accepted government accounting 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. The reports cited provide additional information on 

our scope and methodology.

When veterans obtain care from non-VA providers, the non-VA providers 

submit claims to VA for payment. See table 1 for a description of the 

types of non-VA medical care claims processed by VA.

Background

Types of Non-VA Medical 

Care
 

Page 4 GAO-14-696T

Table 1: Types of Non-VA Medical Care Claims and Relevant Payment Authority

Type of claim Description and relevant payment authority

Preauthorized care Services with prior VA authorization meeting criteria under 38 U.S.C. § 1703 

(e.g., cancer treatment, mammography)

a

Emergency care Services without VA preauthorization (e.g., heart attack care, treatment of 

injuries from a motor vehicle crash)

Veterans Millennium Health Care and Benefits 

Act (emergency care for conditions not related 

to service-connected disabilities)

Services meeting criteria under 38 U.S.C. § 1725

Emergency care for conditions related to 

service-connected disabilities

Services meeting criteria under 38 U.S.C. § 1728

Source: GAO analysis of VA policies. | GAO-14-696T. 

a

In certain circumstances, emergency care provided by non-VA providers can be deemed 

preauthorized if the non-VA providers provide notification of a veteran’s admission within 72 hours.

Emergency care by non-VA providers may also be preauthorized for veterans receiving medical 

services in a VA facility or nursing home up to the point that the veteran can be safely returned to the 

VA facility following the emergency care treatment at the non-VA provider. 

Preauthorizing non-VA medical care involves a multistep process 

conducted by the VA facility that regularly serves a veteran.7 The 

preauthorization process is initiated by a VA provider who submits a 

request for non-VA medical care to the VA facility’s non-VA medical care 

unit, which is an administrative department within each VA facility that 

processes VA providers’ non-VA medical care requests and verifies that 

non-VA medical care is necessary. Once approved by the VA facility’s 

Chief of Staff or his or her designee, the veteran is notified of the approval 

and can choose any non-VA provider willing to accept VA payment at 

predetermined rates.8

 

7

VA uses this same preauthorization process for nonemergency inpatient and outpatient 

care, dental care, nursing home care, compensation and pension exams, and most 

pharmacy expenses paid for through the Non-VA Medical Care Program.

(See fig. 1.)

8

VA uses this process to preauthorize non-VA medical care from a number of different 

types of non-VA providers, including community-based hospitals and Department of 

Defense medical facilities that collaborate with VA facilities to provide some veterans’ 

care.

Preauthorization Process 

for Non-VA Medical Care
 

Page 5 GAO-14-696T

Figure 1: VA Facility Process for Preauthorizing Non-VA Medical Care

a

In some VA facilities the non-VA medical care unit may assist veterans in setting up their 

appointments with the non-VA provider of their choice.

For claims that are emergent in nature and therefore would not have gone 

through the traditional VA preauthorization process, VA is authorized to 

pay claims for emergency care from non-VA providers under certain 

conditions, which vary depending on whether the care was related to the 

veteran’s service-connected disability.

If a non-VA emergency care claim is related to a veteran’s serviceconnected disability, the following criteria must be met in order for the 

services to be paid for by VA.

• First, the non-VA emergency care must have been rendered to treat 

one of the following: (a) a veteran’s service-connected disability; (b) a 

condition that is associated with and aggravating the veteran’s 

service-connected disability; (c) any condition for a veteran who has 

been rated by VA as permanently and totally disabled due to a 

service-connected disability; or (d) any condition for a veteran 

participating in a vocational rehabilitation program who needs care to 

participate in a course of training.

• Second, the non-VA emergency care must also meet all of these 

criteria:

• the claim must be filed within 2 years of the date the care or 

services were rendered;

Criteria for VA Coverage of 

Emergency Care from 

Non-VA Providers
 

Page 6 GAO-14-696T

• the services were rendered in a medical emergency, as 

determined using the prudent layperson standard;9

• a VA or other federal facility was not feasibly available to provide 

the needed care, and an attempt to use either would not have

been considered reasonable; and

• the services were needed before the veteran was stable enough 

to be transferred to a VA or other federal facility and before the VA 

or other federal facility agreed to accept the transfer.

If a claim for non-VA emergency care is not related to a veteran’s serviceconnected disability, there are different criteria that must be met in order 

for the services to be paid for by VA. The Millennium Act, which was 

enacted in 1999, provides a safety net for veterans when they do not 

have other insurance and need emergency care that is not related to a 

service-connected disability. Specifically, all of the following criteria must 

be met for VA to cover Millennium Act claims:

• The claim is not payable under the payment authority for emergency 

care related to service-connected disabilities.

• The claim must be filed within 90 days of the latest of the following: 

the date of discharge, date of death, or date that the veteran 

exhausted, without success, action to obtain payment or 

reimbursement from a third party.

• The veteran must be enrolled in the VA health care system and have 

received treatment from a VA clinician within 24 months of the 

emergency care episode.

• The veteran must be financially liable to the non-VA provider of 

emergency care.

 

9

A medical emergency exists when the condition is of such a nature that a prudent 

layperson would reasonably expect that delay in seeking immediate medical attention 

would be hazardous to life or health. The standard would be met if there was an 

emergency medical condition manifesting itself by acute symptoms of sufficient severity 

(including severe pain) that a prudent layperson who possesses an average knowledge of 

health and medicine could reasonably expect the absence of immediate medical attention 

to 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). The prudent layperson standard emphasizes the patient’s presenting 

symptoms, rather than the final diagnosis, when determining whether to pay emergency 

medical claims.
 

Page 7 GAO-14-696T

• The veteran can have no entitlement to care under a health plan 

contract (such as Medicare or a private health insurance plan).10

• The veteran can have no other contractual or legal recourse against a 

third party that would in whole extinguish his or her liability to the nonVA provider.11

• The services must be rendered in a hospital emergency department 

or a similar facility providing emergency care to the public.

• The services must be rendered in a medical emergency as 

determined using the prudent layperson standard.12

• A VA or other federal facility was not feasibly available to provide the 

needed care, and an attempt to use either would not have been 

considered reasonable by a prudent layperson.

• The services were rendered before the veteran was stable enough to 

be transferred to a VA or other federal facility and before the VA or 

other federal facility agreed to accept the transfer.

Regardless of whether a veteran’s non-VA medical care was 

preauthorized or the result of an emergency, the steps for processing 

payments to non-VA providers are the same. Specifically, the non-VA 

provider submits a claim to either a Veterans Integrated Service Network 

(VISN) or a VA facility for payment following the veteran’s treatment.13

 

10The 2010 amendments to the Millennium Act changed the definition of a health plan 

contract to exclude state laws requiring motor vehicle drivers to have auto insurance as a 

source of coverage. Act of Feb. 1, 2010, Pub. L. No. 111-137, §1(a)(2),123 Stat. 3495.

In 

some VISNs, claims processing activities are centralized in a VISN-level 

department that is responsible for reviewing claims from non-VA 

providers, obtaining copies of medical records for veterans’ non-VA 

medical care, and approving payment to non-VA providers. In other 

11The 2010 amendments to the Millennium Act also authorized VA to pay for treatment 

when a veteran has recourse against a third party for a portion, but not all, of the veteran’s 

liability. In such cases, VA becomes the secondary payer, such as when auto insurance 

only partly covers the veteran’s liability to the non-VA provider.

1238 C.F.R. § 17.1002(b).

13VA’s health care system is divided into 21 areas called VISNs, each responsible for 

managing and overseeing medical facilities within a defined geographic area. VISNs 

oversee the day-to-day functions of VA facilities that are within their network. Each VA 

facility is assigned to a single VISN.

Process for Paying NonVA Medical Care Claims
 

Page 8 GAO-14-696T

VISNs, these claims-processing activities are decentralized and are the 

responsibility of individual VA facilities. After VA facility or VISN officials 

review the claims for accuracy, non-VA providers are reimbursed by VA. 

(See fig. 2.)

Figure 2: Veterans Integrated Service Network (VISN) or VA Facility Steps for 

Processing Approved Claims for Non-VA Medical Care

To process all claims for non-VA medical care, VA facilities use software 

called the Fee Basis Claims System (FBCS).14 FBCS is primarily a 

system that helps VA facilities administer payments to non-VA providers, 

as opposed to a system that automatically applies relevant criteria and 

determines whether claims are eligible for payment. As a result, VA relies 

on staff in the VISNs and VA facilities that process claims, such as 

administrative clerks and clinicians (typically nurses), to make decisions 

about which payment authority applies to the claim and which claims 

meet the criteria for VA payment.

If VA denies payment for a claim for non-VA medical care, the 

Department must provide written notice to the veteran and the claimant 

(usually, the non-VA provider) regarding the reason for the denial and 

inform them of their rights to request a reconsideration or to formally 

appeal the denial. If a veteran or non-VA provider has questions about a 

denied claim, claims should be reconsidered by a supervisor at the same 

VISN or VA facility that denied the claim. If the denial decision is upheld, 

 

14The Non-VA Medical Care Program was previously known as the Fee Basis Care 

Program. 

Notifying Veterans and 

Non-VA Providers of 

Denials of Claims for NonVA Medical Care
 

Page 9 GAO-14-696T

the veteran or non-VA provider has the right to file an appeal through the 

Board of Veterans’ Appeals.15

Critical data limitations related to the wait times veterans face in obtaining 

care from non-VA providers and the cost-effectiveness of such services 

limit VA’s efforts to oversee the Non-VA Medical Care Program in an 

effective manner. Most notably, VA does not collect data on how long 

veterans must wait to be seen by non-VA providers. We previously 

reported that the amount of time veterans wait for appointments in VA 

facilities influenced VA’s utilization of non-VA medical care. For example, 

in our May 2013 report, VA officials from all six facilities we reviewed 

reported that they routinely referred veterans to non-VA providers to help 

ensure that veterans receive timely care and their facilities meet 

performance goals for wait times for VA facility-based care.16

In fiscal year 2012, VA performance goals for wait times for care in VA 

facilities called for veterans’ primary care appointments to be completed 

within 7 days of their desired appointment date and veterans’ specialty 

care appointments to be scheduled within 14 days of their desired 

appointment date. However, since VA did not track wait times for non-VA 

providers, little was known about how often veterans’ wait times for nonVA medical care appointments exceeded VA facility-based appointment 

wait time goals. Officials from one VA facility we reviewed explained that 

non-VA providers in their community also faced capacity limitations and 

may not be able to schedule appointments for veterans any sooner than 

the VA facility.

 Officials 

from one of these VA facilities explained that veterans needing treatment 

in several specialties—including audiology, cardiology, and 

ophthalmology—were referred to non-VA providers for this reason.

Limitations in the way VA collects non-VA medical care data also did not 

allow the Department to analyze the cost-effectiveness of non-VA medical 

care provided to veterans. In our May 2013 report, we found that VA 

 

15Based in Washington, D.C., the Board of Veterans’ Appeals is composed of judges 

experienced in veterans’ law. The Board reviews benefit determinations made by local VA 

offices and issues final decisions on appeals.

16See GAO-13-441. These six facilities were located in Durham and Salisbury, North 

Carolina; Alexandria, Louisiana; Biloxi, Mississippi; Las Vegas, Nevada; and Loma Linda,

California.

VA Lacks Critical Data 

on Wait Times and 

Cost-Effectiveness of 

Non-VA Medical Care
 

Page 10 GAO-14-696T

lacked a data system to group medical care delivered by non-VA 

providers by episode of care—a combined total of all care provided to a 

veteran during a single office visit or inpatient stay.17

Without cost-effectiveness data, VA is unable to efficiently compare VA 

and non-VA options for delivering care in areas with high utilization and 

spending for non-VA medical care. Two VA facilities we reviewed had 

undertaken such assessments, despite the limitations of current data.

Officials at one facility reported that they expanded their operating room 

capacity to reduce their reliance on non-VA surgical services, saving an 

estimated $18 million annually in non-VA medical care costs. Similarly, 

officials from the second facility reported that they were able to reduce 

their reliance on non-VA medical care by hiring additional VA staff and 

purchasing additional equipment to perform pulmonary function tests, an 

effort that reduced related non-VA medical care costs by about $112,000 

between fiscal years 2010 and 2012. The lack of non-VA medical care 

data available on an episode of care basis also prevents VA from 

efficiently assessing the appropriateness of non-VA provider 

reimbursement. Specifically, VA officials cannot conduct retrospective 

reviews of VA facilities’ claims to determine if the appropriate rate was 

applied for the care provided by non-VA providers.

For example, during 

an office visit to an orthopedic surgeon for a joint replacement evaluation, 

an X-ray for the affected joint may be ordered, the veteran may be given 

a blood test, and the veteran may receive a physical evaluation from the 

orthopedic surgeon. The non-VA provider would submit a claim to VA for 

the office visit, and separate claims would be submitted by the radiologist 

that X-rayed the affected joint and the lab that performed the veteran’s 

blood test. However, VA’s non-VA medical care data system was not able 

to link the charges for these three treatments together. We found that this 

left VA without data for comparing the total non-VA medical care costs for 

various types of services with the VA facility-based alternative.

To help VA address these concerns, we made two recommendations in 

our May 2013 report that directed VA to (1) analyze the amount of time 

 

17In March 2013, VA officials told us that for inpatient claims they could construct a 

program to group inpatient and inpatient ancillary claims together by linking all the records 

of individual services provided to veterans during a particular date range. However, this 

method relies on correct data entry by VISNs and VA facilities into FBCS and correct 

information to be furnished by non-VA providers. VA officials acknowledged that there is 

no way to link outpatient services together to create a record of a single outpatient 

episode of care.
 

Page 11 GAO-14-696T

veterans wait to see non-VA providers and apply the same wait time 

goals to non-VA medical care that have been used to assess VA facilitybased wait times, and (2) establish a mechanism for analyzing the 

episode of care costs for non-VA medical care. VA concurred with these 

recommendations. In June 2014, we discussed VA’s progress in 

implementing these recommendations with VA officials. These officials

indicated that the Department anticipated being able to track some wait 

time information for veterans seen by non-VA providers that VA contracts 

with under its new Patient Centered Community Care (PCCC) initiative in 

the near term.18 However, wait time information for all non-VA medical 

care will not be readily available until VA completes a redesign of its 

claims processing system, which is expected to occur in fiscal year 2016.

With respect to establishing a mechanism to analyze the episode of care 

costs for non-VA medical care, VA officials explained that they are in the 

process of fully implementing this recommendation by (1) improving 

existing data systems to systematically audit claims that include billing 

codes typically included in bundled payments while the claims are in a 

pre-payment status and to require VA facilities to review these claims 

prior to payment, and by (2) making improvements to its Non-VA Medical 

Care Program data that would allow all non-VA medical care data to be 

analyzed on an episode of care basis. However, VA officials did not 

provide a time frame for when all non-VA medical care would be routinely 

analyzed by episode of care.

 

18Under PCCC, VA facilities have the ability to purchase non-VA medical care through 

contracted non-VA providers when they cannot readily provide the needed care due to 

geographic inaccessibility or limited capacity. VA has awarded two PCCC contracts, one 

to Health Net Federal Services, LLC, and another to TriWest Health Alliance Corporation. 

Under these contracts, these companies are setting up networks in six regions covering 

the entire country.
 

Page 12 GAO-14-696T

In March 2014, we reported that four VA facilities we visited had patterns 

of noncompliance with VA claims processing requirements, which led to 

the inappropriate denial of some Millennium Act emergency care claims 

and the failure to notify some veterans that their claims had been 

denied.19 We also found that VA’s existing oversight mechanisms for nonVA medical care claims processing were not sufficiently focused on 

whether VA facilities were inappropriately approving or denying claims.

For our March 2014 report, we examined a sample of 128 Millennium Act 

emergency care claims that the four VA facilities we visited had denied in 

fiscal year 2012 and found 66 instances of noncompliance with VA policy 

requirements. We determined that about 20 percent of the claims we 

examined had been denied inappropriately, and almost 65 percent of the 

claims we examined lacked documentation showing that the veteran was 

notified that their claim was denied. As a result of our review, these four 

VA facilities reconsidered and paid 25 claims that they had 

inappropriately denied.

We found that there are no automated processes for determining whether 

a claim for non-VA medical care meets criteria for payment or ensuring 

that veterans are notified when a claim is denied; instead these 

processes rely on the judgment of VA staff reviewing each claim and 

adherence to VA policies. There are a number of steps in the claims 

review process that were susceptible to errors that could lead to 

inappropriate denials of non-VA medical care claims. For example, we 

found nine instances where VA staff incorrectly determined that non-VA 

medical care was not preauthorized when, in fact, a VA clinician had 

 

19See GAO-14-175. We visited the North Texas VA Health Care System; the Washington, 

D.C., VA medical center; the White River Junction VA medical center; and the Black Hills 

VA Health Care System.

Selected VA Facilities 

Failed to Comply with 

Applicable Millennium 

Act Claims 

Processing 

Requirements, and 

Weaknesses Were 

Identified in VA’s 

Oversight of Claims 

Processing Activities

Selected VA Facilities 

Frequently Did Not 

Comply with Claims 

Processing Requirements, 

Which Led to the 

Inappropriate Denial of 

Claims
 

Page 13 GAO-14-696T

referred the veteran to the non-VA provider.20

These findings from our March 2014 report raise concerns about 

compliance with claims processing requirements at other VA facilities 

nationwide. To help VA address these concerns, we made six 

recommendations aimed at improving VA’s processing of non-VA medical 

care claims, specifically Millennium Act emergency care claims. These 

recommendations directed the Department to establish or clarify its 

policies or take other actions to improve VA facilities’ compliance with 

existing policy requirements. VA concurred with these six 

recommendations. Based on discussions with VA officials in June 2014 to 

obtain information about the status of their planned actions for 

implementing these recommendations, we believe that VA is making 

progress on the implementation of three of the six recommendations. 

However, VA needs to take additional steps to revise its policies on 

claims processing roles and responsibilities in order to address our 

remaining three recommendations.

In addition, VA policy states 

that VA must notify veterans in writing about denied claims and their 

appeal rights. However, we found that one facility we visited could not 

produce documentation of veteran notification for any of the 30 denied 

claims we reviewed. We concluded that when veterans are not informed 

that their claims for non-VA medical care have been denied, and VA has 

inappropriately denied the claims, then veterans could become financially 

liable for care that VA should have covered. Under such circumstances, 

veterans’ credit ratings may be negatively affected, and they may face 

personal financial hardships if they are unable to pay the bills they receive 

from non-VA providers.

One of VA’s primary methods for monitoring its facilities’ compliance with 

applicable requirements for processing non-VA medical care claims is 

field assistance visits. In fiscal year 2013, VA conducted these visits at 30 

out of 140 VA facilities that processed non-VA medical care claims. 

These 30 facilities were selected for review by VA based on their claims 

 

20In eight of these nine instances, VA clinicians did not properly document their referrals in 

VA’s electronic medical record, as required by VA policy. As a result, non-VA medical care 

unit staff were not alerted to create authorizations in FBCS, which is a necessary step for 

the payment of preauthorized non-VA medical care claims. In the remaining instance, staff 

who processed the claim did not have access to any authorizations in FBCS that had 

been issued by other VA facilities and did not know that a VA clinician from a different VA 

facility had referred the veteran to the non-VA provider.

Weaknesses Found in 

VA’s Oversight of Non-VA 

Medical Care Claims 

Processing
 

Page 14 GAO-14-696T

processing timeliness. However, we reported in March 2014 that the 

criteria VA used to select facilities for review may not direct VA to the 

facilities most in need of a field assistance visit because VA does not take 

into account the accuracy of claims processing activity. Moreover, we 

found that the checklist VA uses for its field assistance visits does not 

examine all practices that could lead VA facilities to inappropriately deny 

claims.21 Further, VA does not hold facilities accountable for correcting 

deficiencies identified during these visits, and it does not validate facilities’ 

self-reported corrections to address field assistance visit deficiencies. 

According to VA officials, these visits are meant to be consultative in 

nature and assist facilities in improving their non-VA medical care claims 

processing. However, we found weaknesses in VA’s reliance on facilities’ 

self-reported actions when we reviewed the Department’s fiscal year 

2012 and 2013 field assistance visit data and found unresolved problems 

in fiscal year 2013 that originated in fiscal year 2012.22

Further, VA implemented automated processes for auditing approved 

non-VA medical care claims to ensure that VA facilities apply the correct 

payment rates and no duplicate versions of the claims were previously 

paid. However, VA has no systematic process for auditing claims to 

ensure that they were appropriately approved or denied. VA officials 

stated that they recommend, but do not require, that managers of non-VA

medical care claims processing units at VA facilities audit samples of 

processed claims—including both approved and denied claims—to 

determine whether staff processed claims appropriately. However, we 

found that VA does not know how many facilities conduct such audits, 

and none of the four VA facilities we visited reported conducting such 

audits.

 

21For example, VA’s checklist does not examine VA facilities’ practices for determining 

whether veterans are enrolled at a different VA facility and whether they have been seen 

by providers at another VA facility in the last 24 months—a critical criteria for determining 

whether veterans are eligible for Millennium Act emergency care coverage. 

22For example, when we reviewed these data, we found that one VA facility had been 

cited in fiscal year 2012 because it was not entering authorizations for referrals to non-VA 

providers in a timely fashion into FBCS—a practice that could lead to the inappropriate 

denial of claims. When we reviewed VA’s fiscal year 2013 field assistance visit data for 

this facility, we noted that VA observed this same deficiency again that year, even though 

facility officials had reported after the previous year’s visit that the problem had been 

resolved.
 

Page 15 GAO-14-696T

In our March 2014 report, we concluded that ensuring VA facilities correct 

deficiencies identified during field assistance visits and conduct 

systematic audits of the accuracy of claims processing decisions would 

provide necessary transparency and stability to the Non-VA Medical Care 

Program. To help VA address these issues, we made three 

recommendations aimed at revising the scope of the field assistance 

visits, ensuring deficiencies identified during these visits are corrected, 

and instituting systematic audits of the appropriateness of claims 

processing decisions. VA concurred with these recommendations and 

detailed its plans to address them. In June 2014, VA officials detailed the 

Department’s progress implementing these recommendations. However, 

we do not believe the Department’s actions have sufficiently addressed

these recommendations. To fully implement these three 

recommendations, VA needs to ensure field assistance visits include a 

review of a sample of processed claims in order to determine whether 

staff are complying with applicable requirements for claims processing 

and needs to establish systematic audits of claims processing decisions, 

among other things. 

In March 2014, we found that despite VA’s communication efforts with 

veterans and non-VA providers, knowledge gaps exist for veterans about 

eligibility for Millennium Act emergency care, and communication 

weaknesses exist between VA and non-VA providers.23

 

23GAO-14-175. 

Veterans Lack 

Knowledge about 

Millennium Act 

Emergency Care 

Eligibility, and 

Selected Non-VA 

Providers Have 

Reported 

Communication 

Challenges with VA
 

Page 16 GAO-14-696T

In March 2014, we reported that veterans may still be unaware of the 

criteria that must be met in order for VA to pay claims for non-VA medical 

care; specifically, Millennium Act emergency care. VA primarily educates 

veterans about their eligibility for non-VA medical care through patient 

orientation sessions and written materials, such as the Veteran Health 

Benefits Handbook. However, VA patient benefits and enrollment officials 

at two of the four VA facilities we visited said that patient orientation 

sessions were generally not well-attended. Also, written materials we 

reviewed did not always provide a complete listing of all criteria that must 

be met for Millennium Act emergency care claims to be covered, which 

may create confusion about whether veterans should seek treatment from 

a VA facility or a non-VA provider in the event of an emergency. VA 

officials said that the primary intent of the written materials was to 

communicate the importance of promptly seeking care and to discourage 

veterans from delaying care by bypassing non-VA providers in the event 

of an emergency. However, some VA officials acknowledged that they 

were aware of specific recent cases where veterans delayed or avoided 

seeking treatment at non-VA providers to go to a VA facility instead. For 

example,

• one VA official explained that a veteran experiencing chest pains 

drove over 100 miles to a VA facility rather than going to the nearest 

emergency department; 

• two VA officials said the wife of a veteran who had gunshot wounds 

drove him to a VA facility about 30 miles away, bypassing a number of 

non-VA emergency departments; and

• another VA official explained that a veteran experiencing chest pains 

died during a weekend as he waited to seek care until the local VA 

community-based outpatient clinic opened on Monday.

Alternatively, we found that without knowledge of specific criteria for VA 

payment of non-VA medical care, specifically Millennium Act emergency 

care, veterans may seek treatment in situations where the Department 

cannot pay. For example, veterans may seek care at a non-VA provider 

for conditions they believe require immediate attention—such as one for 

which they have not been able to obtain timely treatment from a VA 

facility. However, VA staff reviewing the claim may decide that the 

condition does not meet the prudent layperson standard for emergency 

care and deny payment. Veterans that are admitted as inpatients to nonVA providers also may not be aware that they should be transferred to VA 

facilities once their conditions have stabilized and a VA facility has 

Veterans Lack Knowledge 

about Eligibility for 

Coverage of Millennium 

Act Emergency Care
 

Page 17 GAO-14-696T

notified the non-VA provider that a bed is available for their care at the VA 

facility.

To help VA address concerns about veterans’ lack of knowledge of nonVA medical care—specifically, Millennium Act emergency care—we 

recommended in March 2014 that VA take steps to better understand 

gaps in veterans’ knowledge regarding eligibility for non-VA coverage by 

surveying them about their health care benefits knowledge and using 

information from those surveys to tailor the Department’s veteran 

education efforts. While VA concurred with this recommendation, in June 

2014 VA officials indicated that the Department has decided not to pursue 

veteran surveys but instead will promote veteran education by appearing 

at conferences and town halls with veterans service organizations and 

updating the information on its public website. We remain concerned that, 

without surveying veterans directly, VA will not be able to identify specific 

veteran knowledge gaps regarding coverage of non-VA medical care or 

determine ways to better target VA’s veteran education efforts.

For our March 2014 report, all four non-VA providers we visited cited 

problems in their non-VA medical care claims processing communication 

with VA regarding the following issues:

• Points-of-contact not designated. Two of the four non-VA providers 

said they did not have a specific point-of-contact at their VA facilities 

who could answer concerns and issues about claims they had 

submitted, which led to problems resolving their issues in a timely 

manner.

• Delays in claims processing. Billing officials at one non-VA provider 

described lengthy delays in the processing of their claims, which in 

some cases went on for years.

• Lack of responsiveness when trying to transfer veterans and 

failure to document discussions about potential transfers. 

Officials at one non-VA provider said they had experienced 

challenges connecting with the inpatient admissions staff at their local 

VA facility, making it difficult for them to transfer veterans to the VA 

facility after the veterans were stabilized. According to this provider, 

the VA facility did not consistently answer calls during business hours 

or weekends. Officials from a non-VA provider also described cases 

where they had attempted to transfer stable veterans to the VA 

facility, but the VA facility informed them that there were no beds 

available. Later, the VA facility denied these claims because VA could 

Non-VA Providers 

Reported Communication 

Problems with VA
 

Page 18 GAO-14-696T

find no record of this contact with the non-VA provider or 

authorizations for continued care.24

VA officials said they have attempted to improve communications with 

non-VA providers. Specifically, they have established a website and 

electronic newsletter for non-VA providers in order to disseminate 

information about non-VA medical care requirements. In addition, VA 

mailed letters to all non-VA providers that had submitted claims during the 

previous 2 years to inform them of these online resources. However, 

none of the four non-VA providers included in our March 2014 review 

recalled receiving the letter that VA mailed. Two non-VA providers were 

familiar with the website, but one commented that it lacked some 

necessary information and was not useful. None of these four non-VA 

providers were aware of VA’s electronic newsletter, and VA officials 

acknowledged that a very small percentage of the non-VA providers who 

submit claims to VA had signed up for it. While these communications 

have not always reached their intended audience, VA is continuing its 

efforts to improve communications with non-VA providers. Specifically, 

VA has been conducting satisfaction surveys to continue monitoring its 

communications with non-VA providers and has been holding training 

sessions for VA staff on improving outreach with non-VA providers.

Chairman Miller, Ranking Member Michaud, and Members of the 

Committee, this completes my prepared statement. I would be pleased to 

respond to any questions that you may have.

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; Emily Beller; 

Cathleen Hamann; Katherine Nicole Laubacher; Alexis C. MacDonald; 

and Jennifer Whitworth.

 

24Unless VA authorizes continued care, it cannot pay for non-VA medical care past the 

point at which the veteran was medically stable for transfer to a VA facility.

GAO Contact and 

Staff 

Acknowledgments

(291230)
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