Veterans' Health Care: Proper Plan Needed to Modernize System for Paying Community Providers
Published: 2016-05-11T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Due to recent increases in utilization of VA care in the community, VHA has had difficulty processing claims in a timely manner.
Congress included a provision in law for GAO to review VHA's payment timeliness and to compare it to that of Medicare and TRICARE. This report examines, among other objectives, (1) VHA's, Medicare's, and TRICARE's claims processing timeliness; (2) factors that have impeded VHA's claims processing timeliness and community providers' experiences; and (3) VHA's recent actions and plans to improve its claims processing timeliness. GAO obtained fiscal year 2015 data on VHA's, Medicare's, and TRICARE's claims processing timeliness. GAO also visited 4 of 95 VHA claims processing locations (selected based on variation in geographic location, performance, and workload); reviewed VHA documents and 156 claims from the 4 locations; and interviewed officials from VHA, Medicare, TRICARE, and selected community providers and state hospital associations. Results from GAO's analysis cannot be generalized to all VHA claims processing locations or community providers.
section_title: What GAO Found
paragraphs: To help ensure that veterans are provided timely and accessible health care services, the Veterans Health Administration (VHA) of the Department of Veterans Affairs (VA) has purchased care from non-VA community providers through its care in the community programs since as early as 1945. VHA's agency-wide data show that in fiscal year 2015, it processed about 66 percent of claims within the agency's required time frame of 30 days or less, whereas data from Medicare and TRICARE (the Department of Defense's health care system) show that their contractors processed about 99 percent of claims within 30 days or less. However, VHA's data likely overstate its performance because they do not account for delays in scanning paper claims, which officials say account for approximately 60 percent of claims. GAO's analysis of 156 claims from four VHA claims processing locations indicated that it took an average of 2 weeks for VHA staff to scan paper claims into VHA's claims processing system, and GAO observed multiple bins of paper claims that had been awaiting scanning at one site for over a month. In a 2014 report, GAO recommended that VHA take action to ensure that all of its claims processing locations comply with its policy of scanning claims into VHA's claims processing system upon receipt. While VHA agreed with this recommendation and attempted to reiterate the policy through various means, GAO's more recent findings suggest that VHA did not monitor the operational effectiveness of these corrective actions. VHA officials said that they have since begun 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.
VHA officials and claims processing staff from the four locations GAO visited indicated that technology limitations, manual processes, and staffing shortages have delayed VHA's claims processing. For example, VHA's claims processing system lacks the capacity to automatically adjudicate claims. VHA staff instead must rely on manual processes, which they say delay payments to community providers. In addition, community providers and state hospital association respondents who participated in GAO's review said they had experienced various issues with VHA's claims processing system. For example, almost all providers described the administrative burden of submitting claims and related medical documentation to VHA and a lack of responsiveness from VHA's claims processing locations when the providers contacted them to follow up on claims.
While VHA has recently implemented interim measures to address challenges that have delayed claims processing—such as eliminating certain medical documentation requirements and filling staff vacancies—the agency does not expect to deploy solutions to address all challenges until fiscal year 2018 or later. VHA is currently examining options for modernizing its claims processing system but has not yet communicated to Congress or other external stakeholders a sound plan that clearly addresses the components identified in past GAO work (such as a detailed schedule, estimated costs, and measures of progress). This is concerning, given VA's past failed attempts to modernize key information technology systems. While the agency expects to significantly increase its reliance on community providers to deliver care to veterans in the future, it risks losing their cooperation if it does not improve its payment timeliness.
section_title: What GAO Recommends
paragraphs: GAO recommends that VA develop a written plan for modernizing its claims processing system that includes a detailed schedule, costs, and performance measures. VA concurred with this recommendation and plans to address it through the planned consolidation of its VA care in the community programs.

section_title: Letter
paragraphs: The majority of veterans utilizing health care services delivered by the  Veterans Health Administration (VHA) of the Department of Veterans  Affairs (VA) receive care in VHA-operated medical facilities, such as VA  medical centers or community-based outpatient clinics. However, some  VA medical facilities have faced problems with long wait times for  providing care to veterans, and others may be unable to provide certain  specialty care services. To help ensure that veterans are provided timely  and accessible care, the agency has purchased health care services from  non-VA community providers through its care in the community programs  since as early as 1945. 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 reimburse community providers for emergency care they  deliver to veterans. 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.
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 all grown considerably in recent years. In fiscal  year 2015, VA obligated about $10.1 billion for care in the community for  about 1.5 million veterans. Three years earlier, in fiscal year 2012, VA  spent about $4.5 billion on care in the community 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. In 2011,  the National Academy for Public Administration described numerous  weaknesses in VHA’s claims processing system, which delayed  payments to community providers. 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 the  House Committee on Veterans’ Affairs’ Subcommittee on Health, several  witnesses testified about VHA’s continued lack of timeliness in paying  claims for VA care in the community services. 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. As part  of this plan, VHA said it would examine potential strategies for improving  the timeliness and accuracy of its payments to community providers.
The 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 to 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. In February 2016,  we presented preliminary observations from this work at a hearing of the  House Committee on Veterans’ Affairs’ Subcommittee on Health. This  report examines:  1.  similarities and differences between VHA’s, Medicare’s, and  TRICARE’s systems for processing health care claims;  2.  how VHA’s claims processing timeliness in fiscal year 2015 compared  to Medicare’s and TRICARE’s, and whether these entities pay interest  penalties on late payments;  3.  the factors that have impeded the timeliness of VHA’s claims  4.  providers’ experiences with VHA’s claims processing; and  5.  VHA’s recent actions and plans to improve the timeliness of claims  processing and payments for VA care in the community.
To describe the similarities and differences between VHA’s, Medicare’s,  and TRICARE’s systems for processing health care claims, we reviewed  applicable policies and other documentation and interviewed officials from  VHA; the Centers for Medicare & Medicaid Services (CMS), the  Department of Health and Human Services (HHS) agency that  administers Medicare; and the Defense Health Agency (DHA), the DOD  agency that administers TRICARE. We also interviewed officials from the  contractor that is responsible for processing all TRICARE claims and  officials from 1 of the 16 contractors that are responsible for processing  Medicare claims.
To examine how VHA’s claims processing timeliness compared to  Medicare’s and TRICARE’s, and whether these entities pay interest on  late claims, we reviewed applicable policies, interviewed agency officials,  and obtained fiscal year 2015 data on claims processing timeliness.  Agency officials reported to us the amounts that VHA, CMS, and DHA  spent in fiscal year 2014 for interest penalties paid on late payments to  providers. The claims processing timeliness data we obtained provided  information on the percentage of paid and denied claims in fiscal year  2015 that met each agency’s claims processing timeliness requirements.  To assess the reliability of these data, we interviewed knowledgeable  agency officials about their respective data sources and methods for  collecting data. We found CMS’s 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 report, we determined  that VHA’s timeliness 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 in fiscal year  2015, but we also note the limitations of VHA’s data in making the  comparisons.
To examine factors that have impeded the timeliness of VHA’s claims  processing and payment, we used VHA data on the timeliness of  payments for claims that were processed between February 2014 and  February 2015—the most recent data that were available when we began  our study—to select a non-random sample of four VHA claims processing  locations where we conducted site visits in May and June 2015. (See  table 1.)
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. We reviewed documentation for 156 claims in all  and interviewed managers or staff at the four VHA claims processing  locations to identify factors affecting the timeliness of payments for these  claims. 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.
To gather information about community providers’ experiences with  obtaining payments for their VA care in the community claims, we (1)  interviewed officials from a non-random sample of 12 community  providers that had submitted claims to the four 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. 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 four VHA claims processing locations we visited.  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.
To examine VHA’s recent actions and plans to improve its claims  processing and payment timeliness for VA care in the community, we  reviewed relevant VA and VHA documentation and interviewed VHA  officials. We also assessed VHA’s plans in the context of (1) best  practices for planning, as reported in our prior work and (2) federal  standards for internal control for information and communication. The  internal control standard for information and communication relates to an  agency’s ability to internally and externally communicate the necessary  quality information to achieve the entity’s objectives.
We conducted this performance audit from January 2015 to April 2016 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.
subsections: section_title: Background
subsections: section_title: Choice Act Provisions Related to Oversight of VA Care in the Community and Payment for Community Providers
paragraphs: In response to a provision of the 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 (VISN) and VA medical centers to VHA’s  Chief Business Office for Purchased Care. Previously, VISNs and  medical facilities were responsible for managing both 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.
The Choice Act also expressed the sense of Congress that VA shall  comply with the Prompt Payment Act’s implementing regulations (or any  corresponding similar regulation or ruling) when paying for health care  pursuant to contracts entered into with community providers. Generally,  these regulations require executive branch agencies to add interest  penalties to payments made to vendors after the contractually established  payment date, or 30 days after the date the agencies receive a proper  invoice, if the contract specifies no due date.
section_title: Types of VA Care in the Community Services, Reimbursement Rates, and Medical Documentation Requirements
paragraphs: VHA has numerous programs through which it purchases VA care in the  community services. As described in a recent independent assessment of  VHA’s health care system, which was mandated by the Choice Act, these  programs offer different types of services, have varying eligibility criteria  for veterans and community providers, and establish different rules  governing payment rates. In addition, 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 its third party administrators (TPA). (See appendix  I for a side-by-side comparison of various features of these VA care in the  community programs.) In what follows we describe the primary ways VHA  purchases care in the community services, the applicable payment rates,  and the extent to which VHA requires community providers to submit  medical documentation as a condition of claims payment.
Individually authorized care. The primary means by which VHA has  traditionally purchased care from community providers is through  individual authorizations. 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 pay the provider on a fee-for- service basis. Generally, VA pays Medicare’s applicable rates for  these services, unless the community provider has an existing  contract and negotiated rates with a VA medical facility. For  individually authorized inpatient care, VHA requires community  providers to submit discharge summaries, at a minimum, as a  condition of payment. For individually authorized outpatient care, the  authorization itself states whether the community provider must  submit any medical documentation as a condition of payment.
Emergency care. When care in the community is not preauthorized,  VA may reimburse community providers for two different types of  emergency care: 1) emergency care for a condition related to a  veteran’s service-connected disability and 2) emergency care for a  condition not related to a veteran’s service-connected disability. The  latter care is commonly referred to as Millennium Act emergency  care.
For service-connected emergency care, VA generally pays applicable  Medicare rates, unless the community provider has an existing  contract and negotiated rates with a VA medical facility. For  Millennium Act emergency care, VA generally pays the lesser of the  amount for which the veteran is personally liable (if a third party such  as motor vehicle insurance or workers’ compensation insurance first  paid for some portion of the care) or 70 percent of applicable  Medicare rates. For claims for both types of emergency care,  community providers are required to submit accompanying medical  documentation, so that clinicians at VHA’s claims processing locations  can determine whether or not the condition treated is related to the  veteran’s service-connected disability and whether it meets the  prudent layperson standard of an emergency. (See appendix II for a  more detailed description of the criteria that must be met before VHA  will pay claims for these two types of emergency care.)
Patient-Centered Community Care (PC3). In September 2013, VA  awarded contracts to two TPAs to develop regional networks of  community providers of specialty care, mental health care, limited  emergency care, and maternity and limited newborn care when such  care is not feasibly available from a VA medical facility. VA and the  TPAs began implementing the PC3 program in October 2013, and it  was fully implemented nationwide as of April 2014. In August 2014,  VA expanded the PC3 program to allow community providers of  primary care to join the networks. PC3 is a program VA created under  existing statutory authorities, not a program specifically enacted by  law. To be eligible to obtain care from PC3 providers, veterans must  meet the same criteria that are required for individually authorized VA  care in the community services.
When they join the PC3 networks, community providers agree to be  reimbursed at rates they negotiate with the TPAs, which are  reportedly a percentage of applicable Medicare rates. As a condition  of their contracts with VA, the two TPAs are required to collect  medical documentation from the community providers and return it to  VA in a timely manner. Upon receipt, staff at VA facilities are  responsible for scanning the associated medical documentation and  entering it into the veteran’s VA electronic health record so that it is  available for VA clinicians to view.
Veterans Choice Program. The Choice Act provides, among other  things, temporary authority and funding for veterans to obtain health  care services from community providers to address long wait times,  lengthy travel distances, or other challenges accessing care at a VA  medical facility. Under this authority, VHA introduced the Veterans  Choice Program in November 2014. As stated in VA’s December  2015 guidance, the program currently allows eligible veterans to  obtain health care services from community providers if the veteran  meets any of the following criteria:  the next available medical appointment with a VA provider is more  than 30 days from the veteran’s preferred date or the date the  veteran’s physician determines he or she should be seen; the veteran lives more than 40 miles driving distance from the  nearest VA facility with a full-time primary care physician;  the veteran needs to travel by air, boat, or ferry to the VA facility  that is closest to his or her home;  the veteran faces an unusual or excessive burden in traveling to a  VA facility based on geographic challenges, environmental  factors, or a medical condition;   the veteran’s specific health care needs, including the nature and  frequency of care needed, warrants participation in the program;  or  the veteran lives in a state or territory without a full-service VA  medical facility.
To administer the Veterans Choice Program, VHA modified its contracts  with the two TPAs it selected to administer the PC3 program. These  contractors are responsible for enrolling community providers in their  networks or establishing Choice Provider Agreements with the providers.  Veterans Choice Program providers are generally paid Medicare rates.
section_title: VHA’s System for Processing Claims from Community Providers
paragraphs: 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. For PC3 and Veterans  Choice Program care, community 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 2 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.
For an illustration of the steps VHA staff must take to process claims from  community providers and the TPAs, including which steps require manual  intervention from staff, see appendix III.
section_title: VHA, Medicare, and TRICARE Claims Processing Timeliness Requirements
paragraphs: VHA, CMS, and DHA all have requirements for claims processing  timeliness. See table 3.
section_title: While Steps for Processing Claims are Similar, VHA’s Claims Processing System Is Considerably Less Automated than Medicare’s and TRICARE’s Systems
paragraphs: VHA, Medicare, and TRICARE follow similar steps to process claims for  care they purchase on behalf of their beneficiaries. For example—even  though paper claims account for a relatively small proportion of the overall  number of claims submitted by Medicare and TRICARE providers— Medicare’s and TRICARE’s claims processors must scan incoming paper  claims and verify that information from the claims was captured  accurately when the claims were scanned, just as staff at VHA’s claims  processing locations must do. In addition, like VHA, Medicare’s and  TRICARE’s claims processors send notifications to providers after claims  have been processed, to inform them of whether payments were  approved or denied for each service listed on the claim.
Even though these three agencies follow similar steps to process claims,  the volume of claims that the agencies process varies widely, and the  actual systems they use to carry out these steps differ markedly in  several key respects. (For a summary of selected similarities and  differences between VHA’s, Medicare’s, and TRICARE’s systems for  processing health care claims, see appendix IV.) Based on our review of  applicable documentation and interviews with officials from CMS, DHA,  and two contractors that process Medicare and TRICARE claims, we  identified the following key differences between VHA’s claims processing  system and those of Medicare and TRICARE. These key differences  are described below.
Use of contractors. Unlike VHA, which employs its own staff to  process claims for VA care in the community services, both Medicare  and TRICARE use contractors to process claims for care purchased  from community providers. CMS uses contractors called Medicare  Administrative Contractors (MAC) to process claims for health care  items and services. For TRICARE, DHA contracts with three managed  care support contractors (MCSC), which are responsible for  establishing regional networks of civilian providers, managing  referrals, and providing customer service, among other things. To pay  claims submitted by TRICARE’s network providers, the three MCSCs  have each subcontracted with a single claims processing contractor.
Number of claims processing locations. Contractors responsible  for processing Medicare and TRICARE claims operate in fewer  locations than do staff at VHA’s claims processing locations. Most  Medicare Part A and Part B claims are processed by one of 12  jurisdiction-based MACs or 4 MACs that specialize in processing  durable medical equipment claims, and all TRICARE claims are  processed by a single contractor. In contrast, VHA employed claims  processing staff in 95 different locations as of November 2015, and  community providers in a given state may submit claims to multiple  VHA claims processing locations depending on the type of VA care in  the community and where they render services. As we have reported  previously, CMS established its current regional model for MACs in  2006 to improve services to beneficiaries and providers and achieve  operational efficiencies and cost savings by better balancing claims  processing workloads among fewer contractors than it had used in the  past. Prior to that time, there were 51 contractors responsible for  processing Medicare claims.
Rate of electronic claim submission and the capacity to accept  medical documentation electronically. While VHA’s, Medicare’s,  and TRICARE’s claims processing systems can all accept claims  submitted by providers electronically, the rate of electronic submission  is much higher in Medicare and TRICARE. According to CMS and  DHA officials, the vast majority of Medicare and TRICARE claims are  submitted electronically. The officials said that providers submit about  99 percent of Medicare Part A claims, 98 percent of Medicare Part B  claims, and between 91 and 95 percent of TRICARE claims  electronically. In contrast, according to VHA officials, about 40 percent  of claims from providers participating in VA care in the community are  submitted electronically. In addition, Medicare and TRICARE  contractors’ systems can accept medical documentation  electronically, unlike VHA’s claims processing system. VHA’s inability  to accept medical documentation electronically discourages  community providers from submitting claims electronically because  VHA cannot process many types of VA care in the community claims  until medical documentation is received. Given the high rates of  electronic submission of claims and medical documentation among  Medicare and TRICARE providers, the Medicare and TRICARE  contractors do not need to devote as many staff resources to  scanning paper claims and medical documentation and verifying that  information was captured accurately as do VHA’s claims processing  locations.
Prior authorization. Unless services delivered by community  providers meet the coverage criteria for one of VHA’s two emergency  care programs, all VA care in the community services must be  authorized in advance of when veterans access the care in order for  claims to be paid. Medicare, on the other hand, generally does not  require prior authorization for the services it covers, and TRICARE  generally only requires prior authorization for specialty care  services.
Automatic claim adjudication. Compared to VHA’s system, the  claims processing systems used in Medicare and TRICARE are more  automated. While staff at VHA’s claims processing locations must  manually apply administrative and clinical criteria to every claim to  determine whether the claims should be paid, officials from the  Medicare and TRICARE contractors we interviewed described their  organizations’ high degrees of automatic claim adjudication. Medicare  officials estimated that the MACs process about 95 percent of claims  with no manual intervention, while officials from the contractor  responsible for processing TRICARE claims estimated that their  organization has automated about 75 percent of the claims  adjudication process.
Medical documentation as a condition of payment. While VHA  requires providers to submit medical documentation for most types of  claims for VA care in the community services, Medicare and  TRICARE do not. According to CMS and DHA officials, Medicare and  TRICARE providers are only required to submit medical  documentation for a small percentage of claims, such as those  flagged during a prepayment review for an examination of medical  necessity.
Web-based provider self-service portals. Unlike VHA, Medicare  and TRICARE contractors both offer Web-based provider self-service  portals. Officials from both of the Medicare and TRICARE contractors  we interviewed said that their organizations had established Web- based provider self-service portals, which officials told us have  decreased providers’ reliance on telephone-based customer service.  With these portals, providers are able to access information about the  status of their claims 24 hours a day, 7 days a week. In contrast,  VHA’s claims processing locations only offer telephone-based  provider customer service.
Dedicated customer service staff. Unlike VHA, Medicare and  TRICARE have dedicated customer service staff. The two Medicare  and TRICARE contractors each maintain units with dedicated  customer service staff, while staff in other units focus on claims  processing. Officials from the two contractors said that within their  customer service units, certain individuals are designated to handle  calls from providers with more specialized, complex inquiries, while  others focus on calls from providers who are inquiring about more  routine issues. In contrast, at VHA’s claims processing locations, staff  who process claims are also responsible for delivering telephone- based provider customer service.
section_title: VHA’s Fiscal Year 2015 Claims Processing Was Significantly Less Timely Than Medicare’s and TRICARE’s, and VHA Has Generally Not Paid Interest Penalties on Late Payments
subsections: section_title: VHA’s Claims Processing and Payments Were Significantly Less Timely Than Medicare’s and TRICARE’s in Fiscal Year 2015, and VHA’s Data Likely Overstate VHA’s Performance
paragraphs: 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. 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. According to CMS  and DHA officials, the vast majority of Medicare and TRICARE claims are  submitted electronically.
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, and VHA officials told us that paper claims 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  VHA’s systems can only calculate timeliness on the basis of the date the  claim is entered into FBCS. 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.  Because FBCS cannot electronically read the dates that are manually  stamped on paper claims, the scan date becomes the date used to  calculate claims processing timeliness. To the extent that paper claims  are not scanned into FBCS upon receipt, this elapsed time is not reflected  in VHA’s timeliness calculations.
Our review raises questions about whether staff at VHA’s claims  processing locations are following the agency’s policy for scanning paper  claims into FBCS upon receipt. We do not know the extent of delays in  scanning paper claims at all of VHA’s claims processing locations.  However, our analysis of the non-generalizable 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 dates  that community providers created 86 of the 94 paper claims in our sample  and the dates the claims were scanned into FBCS. 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 our analysis of the sampled claims. 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. However, the staff said they do  not date-stamp non-emergency care claims because to do so would be  too time-consuming. Staff at the other two claims processing locations  told us that they did not date-stamp any claims.
These 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. 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 our 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.
section_title: Unlike Medicare and TRICARE, VHA Has Historically Not Paid Interest Penalties on Most Late Payments to Community Providers but Recently Changed This Policy
paragraphs: Prior to October 2015, VHA did not pay interest penalties on most late  payments to community providers, while Medicare and TRICARE have  done so. Specifically, until October 2015, VHA paid no interest on claims  it paid late for community care delivered by non-contract providers  through individual authorizations. According to VHA officials, the agency  had not paid interest penalties on these individually authorized services  because VA did not interpret the Prompt Payment Act as applying to  these payments. However, in October 2015, VA’s Office of General  Counsel issued a new legal opinion specifying that the Prompt Payment  Act does apply to claims for VA care in the community services that were  (1) individually authorized in advance, or (2) delivered by community  providers who have contracted with the TPAs to participate in Veterans  Choice Program networks. Since then, from October 2, 2015 through  November 21, 2015, VHA paid approximately $409,000 in interest  penalties on claims for this care, according to VHA officials.
To facilitate interest penalty payments on claims for individually  authorized VA care in the community services, VHA established a  process to automatically pay the penalties when these claims are paid  more than 30 days after receipt. However, as we noted earlier in this  report, paper claims that officially meet VHA’s timeliness standard could  have been in VHA’s possession weeks before being scanned into FCBS,  so VHA may not be paying interest on all claims that are paid more than  30 days after the claims were actually received. This issue will likely  persist until VHA ensures that all incoming paper claims are date- stamped and scanned into FBCS on the date of receipt, as we  recommended in 2014.
While VHA has not historically paid interest penalties on claims that are  paid late, Medicare and TRICARE officials said their agencies have for  many years considered the care provided under their programs to be  subject to the Prompt Payment Act. In fiscal year 2014, CMS reported it  paid about $3.3 million in interest penalties to Medicare providers (with  overall payments for fee-for-service Medicare services totaling $357.3  billion), and DHA reported it paid about $386,000 in interest penalties to  TRICARE providers (with overall payments for TRICARE services totaling  about $10.5 billion). For both Medicare and TRICARE, the sum of  interest penalties—relative to overall expenditures for services—was  relatively low in fiscal year 2014 because these programs generally paid  providers in a timely manner. See table 4.
section_title: Technology Limitations and Related Staffing Challenges Have Delayed VHA’s Claims Processing
paragraphs: During the course of our work, VHA officials and staff at three of the four  claims processing locations we visited told us that the limitations of the  existing information technology systems VHA uses for claims  processing—and related workload challenges—have delayed 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.  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 then 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 a veteran  obtains services from a community provider, staff at a VA medical  facility must indicate in the veteran’s VA electronic health record (a  system separate from FBCS) that the services have been authorized,  and then these staff 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.
In our non-generalizable 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 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 centralize 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 VISNs  and VA medical centers to VHA’s Chief Business Office for Purchased  Care, a change VA implemented in October 2014. However,  according to VHA officials from that office, monitoring the use of  funds—at a national level—has remained largely a manual process  due to limitations of FBCS and the use of separate systems to track  obligations and expenditures. According to VHA officials, VHA uses  historical data from FBCS to estimate obligations in VHA’s financial  management systems on a monthly basis, and 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, these officials said that FBCS  does not fully interface with VHA’s financial management 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. We found that payments for 5 of the 156 claims we  reviewed from four claims processing locations were delayed because  of these issues, resulting in payment delays that ranged from 1 to 215  days.
Inadequate equipment delays scanning of both 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 from fiscal year 2012 through 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.
section_title: VA Care in the Community Providers Cite Administrative Burden, Lack of Notification, and Problems with Poor Customer Service
paragraphs: The 12 community providers and 12 state hospital association  respondents who participated in our 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 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 the  provider’s 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, known as preliminary fee remittance advice reports, and  mail them to the providers and TPAs. 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 claims; however, if they connect with a different VHA  staff member, they may be able to inquire about additional  claims.
section_title: While VHA Has Implemented Interim Measures, the Agency Does Not Expect to Address All Claims Processing Challenges until Fiscal Year 2018 or Later
subsections: section_title: VHA Has Recently Eliminated Certain Medical Documentation Requirements, Filled Staff Vacancies, and Taken Other Steps to Improve Claims Processing Timeliness
paragraphs: In the course of our 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.
Elimination of certain medical documentation requirements. On  March 1, 2016, VA announced that it had modified its contracts with  the TPAs so that community providers participating in the Choice  Program will no longer be required to submit medical documentation  before their VA care in the community claims can be paid. VA expects  this will expedite the processing of claims from Choice Program  providers. VHA’s data indicate that the number of VA care in the  community authorizations routed to the Choice Program first  exceeded the number of authorizations for other types of VA care in  the community in November 2015, and in January 2016 (the most  recent month for which data were available) about 56 percent of VA  care in the community authorizations were routed to the Choice  Program. VHA has not eliminated the medical documentation  requirement for all other types of VA care in the community, requiring  community providers to submit medical documentation before VHA  will pay claims for (1) individually authorized inpatient VA care in the  community, (2) PC3 care, (3) Millennium Act emergency care, and (4)  service-connected emergency care. As discussed earlier in this  report, VHA’s inability to electronically accept medical documentation  from most community providers and the administrative burden of  scanning a high volume of paper medical documentation have caused  delays in VHA’s processing of claims for VA care in the community.
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.
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 should help them better estimate costs  to help 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.
section_title: VHA is Examining Options for Modernizing Its Claims Processing System and Estimates Implementing New Technology and Other Solutions Will Take At Least 2 Years
paragraphs: VHA officials we interviewed in the course of our 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. The 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 as  part of a broader effort to consolidate VA care in the community  programs. However, 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. 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 plan, 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 Web- based 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 plan, in fiscal year 2016 VHA will examine potential  strategies for developing these capabilities—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).
Based on statements made by community providers that participated in  our review, it is critical for VA to succeed in achieving its goal of deploying  a modernized claims processing system. Without (1) significantly  improving the timeliness of its payments and (2) 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 risks 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.
Since the release of its October 2015 plan for consolidating VA care in  the community programs, VHA has done some of the preliminary work  needed to modernize its claims processing system. After issuing a  request for interested parties to share information, VHA held an industry  day in December 2015, where about 80 participants discussed with VHA  the extent to which contractors could help support core functions— including claims processing—for the consolidated VA care in the  community program VHA plans to establish. VHA officials said they used  information gathered from this industry day to inform the development of  a draft performance work statement and a draft operations manual for a  consolidated VA care in the community program. VA publicly posted  these documents in February 2016 and accepted written comments,  questions, and other feedback from industry for about two weeks. VA  plans to use these responses to help inform any future requests for  proposals related to the consolidation of VA care in the community  programs and the improvement of claims processing timeliness.
VA’s plan for consolidating its care in the community programs outlines its  approach to addressing deficiencies in VHA’s claims processing system.  VA’s consolidation plan represents a major undertaking that depends, in  part, on obtaining congressional approval for legislative changes and  budget requests and revamping VA’s information technology systems.  Leading practices call for careful planning and for developing an  implementation strategy to help ensure that needed changes are made in  a timely and cost-effective manner. When facing major challenges similar  to the ones VHA faces to modernize its claims processing system,  leading practices call for results-oriented organizations to focus on  developing robust, comprehensive plans that (1) define the goals the  organization is seeking to accomplish, (2) identify specific activities to  obtain desired results, and (3) provide tools to help ensure accountability  and mitigate risks. In prior work, we have determined that sound plans  include the following components (among others):
Goals, objectives, activities, and performance measures. This  component addresses what the plan is trying to achieve and how it  will achieve those results, as well as the priorities, milestones, and  performance measures to monitor and gauge results.
Resources, investments, and risks. This component addresses  what the plan will cost, the sources and types of resources and  investments needed, and where resources and investments should be  targeted while assessing and managing risks.
To date, VHA has not communicated to Congress or other external  stakeholders a plan for modernizing its claims processing system that  clearly addresses the components of a sound plan identified above. In  particular, VHA has not communicated (1) a detailed schedule for  developing and implementing each aspect of its new claims processing  system; (2) the estimated costs for developing and implementing each  aspect of the system; and (3) performance goals, measures, and interim  milestones that VHA will use to evaluate progress, hold staff accountable  for achieving desired results, and report to stakeholders the agency’s  progress in modernizing its claims processing system. The  communication of such a plan is also consistent with federal internal  control standards for information and communication, which call for  agencies to internally and externally communicate the necessary quality  information to achieve the entity’s objectives.
That VHA has not yet communicated a detailed plan but has stated that it  expects to deploy a modernized claims processing system as early as  fiscal year 2018 is cause for concern, especially 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.  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 at the time was  estimated to cost between $300 million and $400 million. 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 modernize 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, 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.
section_title: Conclusions
paragraphs: 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. If  this situation persists, it could have very real consequences on veterans’  access to care. Presently, VHA (through its TPAs), is attempting to  improve veterans’ access to care by establishing a robust network of  community health providers under its VA care in the community  programs. However, absent a responsive provider customer service  component and timely payment of claims, many community providers  may opt not to participate in VA’s network, thereby narrowing the choices  veterans have for seeking care from community providers. In turn, this  could lead to longer wait times for veterans to receive care and a greater  reliance on VA medical centers, some of which have already experienced  long wait times for veterans seeking care. Moreover, millions of dollars in  interest penalties resulting from the late payment of claims by VHA could  dilute the funding available for the direct delivery of care to veterans.
To its credit, VHA has implemented several short-term initiatives intended  to address ongoing challenges and improve its timeliness in paying  community providers. These initiatives include increasing the number of  staff processing claims, purchasing new scanning equipment, holding  claims processing staff accountable through new productivity standards,  and developing a tracking system to monitor claims processing  performance. By VHA’s own admission, however, these short-term  initiatives will not resolve all challenges that have long impeded its claims  processing timeliness, and many of these initiatives are not sustainable  over the longer term. 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.
VHA’s sweeping changes are likely to be costly, and to achieve the goals  of this initiative it will be important to have a high level of planning and  effective project management, and communication with multiple  stakeholders. As we have reported in prior work, VHA’s plans to achieve  goals of a similar magnitude—such as the modernization of its systems  for outpatient appointment scheduling, financial management, and  inventory and asset management—have been derailed by weaknesses in  project management and a lack of effective oversight. Therefore, if VHA’s  current initiative is to be successful, it is essential that VHA develop a  sound implementation plan and an effective project management strategy  as it proceeds. Otherwise, the agency risks spending valuable resources  on new systems and processes that may not significantly improve VHA’s  claims processing timeliness. As part of its implementation plan, it is  critical that VHA identify implementation steps and develop the ability to  measure and externally communicate its progress to the Congress and  other stakeholders. It is also important that VHA be held accountable for  achieving major components of the initiative and adhering to its timeline,  as stated in its 2015 plan for consolidating VA care in the community  programs.
section_title: Recommendation for Executive Action
paragraphs: To help provide reasonable assurance that VHA achieves its long-term  goal of modernizing its claims processing system, the Secretary of  Veterans Affairs should direct the Under Secretary for Health to ensure  that the agency develops a sound written plan that includes the following  elements: a detailed schedule for when VHA intends to complete development  and implementation of each major aspect of its new claims processing  system;  the estimated costs for implementing each major aspect of the  system; and  the performance goals, measures, and interim milestones that VHA  will use to evaluate progress, hold staff accountable for achieving  desired results, and report to stakeholders the agency’s progress in  modernizing its claims processing system.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to VA, HHS, and DOD for comment. VA  provided written comments on the draft report, and we have reprinted  these comments in Appendix V. In its comments, VA concurred with our  recommendation and said that VHA plans to address it when the agency  develops an implementation strategy for the future consolidation of its VA  care in the community programs. VA also provided technical comments,  which we have incorporated as appropriate. HHS had no general  comments on the draft report but provided technical comments, which we  have addressed as appropriate. DOD had no general or technical  comments on the draft report.
We are sending copies of this report to the Secretary of Veterans Affairs,  the Secretary of Health and Human Services, the Secretary of Defense,  appropriate congressional committees, and other interested parties. This  report is also available at no charge on the GAO Web site at  http://www.gao.gov.
If you or your staffs have any questions about this report, please contact  Randall B. Williamson at (202) 512-7114 or williamsonr@gao.gov.  Contact points for our Offices of Congressional Relations and Public  Affairs are on the last page of this report. GAO staff who made major  contributions to this report are listed in appendix VI.
section_title: Appendix I: Characteristics of Selected Care in the Community Programs of the Department of Veterans Affairs (VA)
paragraphs: Appendix I: Characteristics of Selected Care in  the Community Programs of the Department of  Veterans Affairs (VA)
Individually authorized  care   VHA was first authorized  to grant veterans  individual authorizations to  receive care in the  community in 1945, and  the current statutory  authority was codified in  1986. This is the primary  means by which VHA has  traditionally purchased  care from community  providers.
Patient-Centered  Community Care (PC3)  VA created PC3 in 2013  under existing statutory  authority, and fully  implemented the  program in April 2014.  Under PC3, two third  party administrators  (TPA) developed regional  networks of community  providers to deliver care  to veterans. related to a veteran’s  service-connected  disability. This program  was established by the  Veterans Millennium  Health Care and  Benefits Act in 1999  and is commonly  referred to as  Millennium Act  emergency care.
Veterans Choice  Program  The Veterans Choice  Program was created by  the Veterans Access,  Choice, and  Accountability Act of  2014. VHA introduced  the program in November  2014 and expanded it in  April 2015 and December  2015. To administer this  program, VHA modified its  contracts with the two  TPAs it selected to  administer the PC3  program. These  contractors are  responsible for enrolling  community providers in  their networks or  establishing Choice  Provider Agreements with  the providers.
Individually authorized  care   A veteran may be  individually authorized to  receive care when they  cannot access a particular  specialty care service  from a VA medical center  (because the service is  not offered), they would  have to wait too long for  an appointment, or they  would have to travel a  long distance to a VA  medical center.
Patient-Centered  Community Care (PC3)  The criteria for a veteran  to be eligible to access  the PC3 program are the  same as those for  individually authorized  care.
Veterans Choice  Program  A veteran is eligible for  this program when they:  condition as an  emergency, and would have deemed it  unreasonable for the  veteran to access the  care at a VA or other  federal facility.
In addition to meeting the  above criteria, a veteran  may access Millennium Act  emergency care (for a  condition not related to a  service-connected  disability) if services were  rendered before they were  stable for transfer to a VA  or other federal facility, and  when the veteran: was enrolled in and would have to travel  by air, boat, or ferry to  the VA medical center  closest to their home;  or  face unusual or  excessive burden  (such as geographic  challenges) in  traveling to a VA  medical center; or  have specific health  care needs that  warrant participation  (including the nature  and frequency of  care); or  live in a state or  territory without a full- service VA medical  center. accessed care from a  VA clinician in the 24  months preceding the  emergency care,  is financially liable to  the community  provider,  has no entitlement  under another health  plan contract (such as  Medicare), and  has no recourse  against a third party  that would wholly  extinguish liability to  the community  provider.
Individually authorized  care   Providers have 6 years  after the date of service to  submit a claim to VHA.
For emergency care  related to a veteran’s  service-connected  disability, providers  must submit claims  within 2 years of the  date of service.  For care unrelated to a  veteran’s service- connected disability,  providers must submit  claims within 90 days  of the date of service.
Patient-Centered  Community Care (PC3)  Providers must submit  claims electronically  within 180 business days  of the end of the episode  of care.
Veterans Choice  Program  Providers must submit  claims electronically within  180 business days of the  end of the episode of  care.
Rates are negotiated  between community  providers and VA’s  TPAs. These are  reportedly a negotiated  percentage of local  Medicare rates.
For individually  authorized outpatient  care: the  authorization will  indicate whether  documentation is  required.  For individually  authorized inpatient  care: at a minimum,  providers must submit  the discharge  summary to VA.
Yes.  Community providers must  submit medical  documentation so that VA  clinicians can determine  whether the care was  related to the veteran’s  service-connected disability  and whether the condition  for which the veteran  sought treatment meets the  prudent layperson standard  of an emergency.
Yes.  Under their contracts with  VA, the TPAs must  collect medical  documentation from  community providers and  return it to VA in a timely  manner.
No.  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.
section_title: Appendix II: Requirements for the Department of Veterans Affairs’ (VA) Payment of Emergency Claims from Community Providers
paragraphs: Service-connected  emergency care  Claim must be filed within  2 years of the date  services were rendered.
Nonservice-connected  emergency care  (Millennium Act care)  Claim must be filed within  90 days of the date  services were rendered.
Condition meets the prudent layperson standard of an emergency  A VA or other federal medical 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 for  transfer to a VA or other federal medical facility and before the VA or other  federal medical facility agreed to accept the transfer  Veteran was enrolled in the VA health care system  Veteran had received care from a VA clinician within the 24 months preceding  the emergency care episode  Veteran is financially liable to the community provider of the emergency care  Veteran has no entitlement under another health plan contract (such as  Medicare or a private health insurance plan)
Veteran has no recourse against a third party that would wholly extinguish his  or her liability to the community provider (e.g., motor vehicle insurance or  workers’ compensation)
section_title: Appendix III: Veterans Health Administration’s (VHA) Steps for Processing Claims for the Department of Veterans Affairs’ (VA) Care in the Community Services as of March 2016
paragraphs: Appendix III: Veterans Health Administration’s  (VHA) Steps for Processing Claims for the  Department of Veterans Affairs’ (VA) Care in  the Community Services as of March 2016 VHA has numerous programs through which it purchases VA care in the community services, and  these programs have varying rules governing payment rates and requirements for claims processing.  The primary means by which VHA has traditionally purchased care from community providers is  through individual authorizations. When a veteran cannot access a particular specialty care service  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. In addition, 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 and 2) emergency care for a condition not related to a veteran’s service-connected  disability. The latter care is commonly referred to as Millennium Act emergency care. See 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 service-connected disability. See  38 U.S.C. § 1728 for emergency care related to a service-connected disability.  Medical documentation may not be in the Fee Basis Claims System (FBCS) because either (1) the  community provider has not yet submitted the documentation or because (2) staff at the VHA claims  processing location have not yet scanned it into FBCS. According to VHA officials, if a claim has been  submitted electronically and a community provider does not submit medical documentation within 45  days of the claim being suspended, FBCS will automatically reject the claim. In these cases, the  community provider must resubmit both the claim and medical documentation.  Examples of relevant administrative and clinical criteria include whether the claim met VA’s timely  filing requirement, whether the veteran has other insurance or legal recourse against a third party,  and whether services were rendered beyond the point at which the veteran was stable enough to be  transferred to a VA or other federal facility.  VHA staff use FBCS to generate notifications for the community provider and veteran about whether  the claim was paid or rejected. These notifications are called preliminary fee remittance advice  reports and include a listing of claim dates and services, the reasons why payments for any services  were rejected, and the payment amounts for approved services.
section_title: Appendix IV: Comparison of the Veterans Health Administration’s (VHA), Medicare’s, and TRICARE’s Systems for Processing Claims for Health Care Purchased in the Community
paragraphs: One contractor subcontracted by  the three managed care support  contractors (MCSC).  According to officials from this  contractor, they employ about 650  staff in 3 locations who are  responsible for processing claims  from the 3 MCSCs.
Yes.  A VHA directive states that 90  percent of all claims must be  processed within 30 days of  receipt.
Yes.  By law, 95 percent of clean claims  must be processed (either paid or  denied) within 30 days of receipt.  In accordance with statute, the  Centers for Medicare & Medicaid  Services’ (CMS) manual for  processing Medicare claims states  that the remaining claims must be  processed within 45 days of  receipt.
Medicare  Yes.
TRICARE  Yes.
CMS monitors two key  performance metrics:  a.
The Defense Health Agency  (DHA) monitors two key  performance metrics:  the percentage of all  claims that have been  processed—either paid,  rejected, or denied—in 30  days or less;  the percentage of claims  awaiting processing that  were received less than 30  days ago;  the percentage of claims  for individually authorized  VA care in the community  that were processed in 30  days or less; and  the percentage of claims  for other-than-individually  authorized care that were  processed in 45 days or  less. b. the percentage of clean  claims processed within 30  days of receipt, and  the percentage of other- than-clean claims  processed within 45 days  of receipt.
According to CMS officials, the  MACs submit monthly reports to  CMS, which include data on  claims processing timeliness.  These reports are generated by a  module within CMS’s claims  processing software and can be  independently verified by CMS. that initially lacked sufficient  information to be processed  that were processed within  90 days of receipt.
According to DHA officials,  MCSCs submit monthly reports to  DHA that include data on the  subcontractor’s timeliness of  claims processing. These data can  be independently verified by DHA.
According to Chief Business Office  for Purchased Care officials, they  have a real-time data tracking  system that allows them to monitor  claims processing productivity and  other aspects of claims processing  performance at a national level, for  individual claims processing  locations, and for individual claims  processing staff members.
VHA  Officials from VHA’s Chief  Business Office for Purchased  Care told GAO that they  introduced nationwide staff  productivity standards on October  1, 2015.
Medicare  CMS officials said that they  previously included financial  incentives in the MACs’ contracts  to encourage the MACs to meet  requirements for claims  processing timeliness. After all  MACs demonstrated that they  were easily meeting these  requirements, these financial  incentives were removed from the  MACs’ contracts and replaced by  financial incentives to meet other  requirements.  Officials from one MAC GAO  visited reported that they have  productivity standards in place for  their claims processing staff.
TRICARE  DHA officials said that the MCSCs  are penalized $1 for every claim  that the subcontractor does not  process in a timely manner.  The subcontractor that processes  TRICARE claims reported that it  has productivity standards in place  for its claims processing staff.
Yes, and less than half of claims  are submitted electronically.  Officials from VHA’s Chief  Business Office for Purchased  Care reported that community  providers submit about 40 percent  of claims electronically.
Yes, and nearly all claims are  submitted electronically.  CMS officials said that as of fiscal  year 2014, more than 99 percent  of institutional providers and more  than 98 percent of practitioners  and suppliers submitted claims  electronically.
Yes, and nearly all claims are  submitted electronically.  DHA officials estimate that  between 91 and 95 percent of  claims are submitted  electronically.
Yes, according to VA policy,  providers are required to submit  medical documentation for some  specific types of claims.
Individually authorized  outpatient care: the  authorization will indicate  whether documentation is  required.  Individually authorized  inpatient care: at a minimum,  providers must submit the  discharge summary to VA.
No.  According to CMS officials,  providers only submit medical  documentation when requested to  do so by a MAC, which would only  request the documents if claims  were flagged for prepayment  review (e.g., a clinical review to  determine the medical necessity of  the services).
No.  According to DHA officials,  providers are not required to  submit medical documentation in  order for claims to be processed,  unless a claim is flagged for a  prepayment review (such as a  claim for an experimental  treatment).
Emergency care: medical  documentation must be  submitted so that the claim  can be clinically reviewed to  determine whether it meets  eligibility criteria for payment.
Patient-Centered Community  Care (PC3): As a condition of  their contracts, VA’s third  party administrators are  required to submit medical  documentation for all claims.
VHA  No.  According to VA officials, the  agency does not have the capacity  to receive medical documentation  electronically from community  providers.
Medicare  Yes.  According to CMS officials, when  medical documentation is  requested, the MACs can receive  the information electronically via a  Web-based portal.
TRICARE  Yes.  According to DHA officials, when  medical documentation is  requested, the TRICARE  contractor can receive the  information electronically via a  Web-based portal.
Veterans Health Administration, Timeliness Standards for Processing Non-VA Provider Claims, VHA  Directive 2010-005 (Washington, D.C.: Jan. 27, 2010).  TRICARE MCSCs are subject to claims processing timeliness requirements outlined in law and in  the TRICARE Operations Manual. The requirements listed in the Operations Manual are more  stringent than in the law, which states that 95 percent of clean claims must be processed within 30  days of submission to the claims processor and that all clean claims must be processed within 100  days of submission to the claims processor. 10 U.S.C. § 1095c(a).
section_title: Appendix V: Comments from the Department of Veterans Affairs
section_title: Appendix VI: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Marcia A. Mann, Assistant  Director; Elizabeth Conklin; Christine Davis; Krister Friday; Jacquelyn  Hamilton; Alexis C. MacDonald, and Vikki Porter were major contributors  to this report.
section_title: Related GAO Products
paragraphs: Veterans’ Health Care: Preliminary Observations on VHA’s Claims  Processing Delays and Efforts to Improve the Timeliness of Payments to  Community Providers. GAO-16-380T. (Washington, D.C.: Feb. 11, 2016).
VA’s Health Care Budget: Preliminary Observations on Efforts to Improve  Tracking of Obligations and Projected Utilization, GAO-16-374T  (Washington, D.C.: Feb. 10, 2016).
VA Health Care: Actions Needed to Improve Monitoring and Oversight of  Non-VA and Contract Care. GAO-15-654T. (Washington, D.C.: June 1,  2015).
VA Health Care: Further Action Needed to Address Weaknesses in  Management and Oversight of Non-VA Medical Care. GAO-14-696T.  (Washington, D.C.: June 18, 2014).
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).
VA Health Care: Management and Oversight of Fee Basis Care Need  Improvement. GAO-13-441. (Washington, D.C.: May 31, 2013).