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. 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. 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. VHA, CMS, and DHA all have requirements for claims processing timeliness. See table 3. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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) 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. 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). 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. 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).

Summary: 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. 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. 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.