To obtain VHA health care, most veterans submit an application by mail or online to VHA’s Health Eligibility Center (HEC) in Atlanta or in person at a local VHA medical center. Generally, the nature and extent of an individual veteran’s service-connected medical conditions are established through VBA. HEC processes applications and assigns veterans to one of eight priority groups based on their service-connected disabilities; special treatment authorities, such as exposure to Agent Orange or ionizing radiation; and income level. Whether VHA charges a veteran a copayment for medical services it provides is determined, in part, by the veteran’s priority group. For example, veterans in priority group 1 are not required to pay any copayments, and veterans in priority groups 7 and 8 are generally required to pay copayments for all types of medical services. See appendix II for additional details on the enrollment and eligibility process, including priority groups and requirements for copayments. When VHA is notified by VBA of a change in a veteran’s service- connected conditions or disability rating, VHA is responsible for reevaluating the veteran’s priority group status and reviewing the veteran’s account to determine whether any copayment charges that were assessed after the effective date of the VBA award should be canceled or refunded, if applicable, or whether any copayments should be charged. Veterans’ health records are stored in the Computerized Patient Record System (CPRS) application of the Veterans Health Information Services and Technology Architecture (VistA) system. CPRS includes information on veterans’ rated service-connected conditions and special treatment authorities. When a veteran receives a VHA-provided medical service, the provider identifies in CPRS whether the service provided was related to the veteran’s service-connected conditions or provided under a special treatment authority. When medical services provided to a veteran are not otherwise precluded from copayment billing, VistA automatically establishes a copayment charge to the veteran’s account. VistA prevents copayment charges to a veteran when  a provider indicates in CPRS that the medical service provided was related to a veteran’s service-connected conditions or special authority; the medical service provided is one that is exempt from copayments for all veterans, such as preventive screenings, immunizations, and some laboratory services; and  a veteran receives more than one medical service in a single day. If a veteran has third-party medical insurance, VistA puts the copayment charge placed on the veteran’s account on hold for up to 90 days to allow time for VHA to process a claim for reimbursement from the third-party insurer. To the extent that VHA receives third-party reimbursement attributable to the medical service that resulted in a copayment being charged to a veteran’s account, VHA’s policy is to apply the insurance reimbursement to reduce or eliminate the related pending copayment charge. The third-party insurance offset process is a manual process that is to be performed, according to VHA policy, on a daily basis by local medical center staff. See appendix II for additional details on the copayment billing process. According to fiscal year 2010 VA information, VHA provided approximately 576 million medical services to over 5.6 million veterans through VHA’s 21 health care networks composed of 153 medical centers, 768 outpatient clinics, and 134 nursing homes located in all 50 states, the District of Columbia, and territories including Puerto Rico and the Virgin Islands. When VHA facilities are not capable of furnishing economical hospital care or medical services because of geographic inaccessibility or are not capable of furnishing the care or services required, VHA may authorize and pay a non-VHA provider to provide certain veterans hospital care and medical services. When authorized, VHA identified these as fee basis services. Table 1 shows the types, number, and percentage of medical services provided by type— outpatient, prescription, inpatient, extended care, and fee basis. VA is also authorized, by statute to bill certain veterans for medical service copayments (38 U.S.C. § 1710, 1710B, 1722A), and, if applicable, their third-party medical insurance when the medical services VHA provides are not related to the veteran’s service-connected medical conditions or associated with special treatment authorities (38 U.S.C. § 1729). These collections supplement VA’s appropriations and are used to fund VHA medical services to veterans. When VHA provides medical services that are not associated with a veteran’s service-connected conditions or special treatment authorities and the veteran has third-party medical insurance, VHA is authorized by statute (38 U.S.C. § 1729) to pursue insurance reimbursement to the extent available under the veteran’s coverage from the veteran’s third- party insurance. Veterans who owe copayment charges for medical services for non-service-connected conditions or for conditions not related to special treatment authorities must be allowed to benefit from their third- party insurance to satisfy their VHA obligations. Therefore, VHA is required to apply any insurance reimbursement it receives from a veteran’s third-party insurance to the related copayment charge to reduce or eliminate the copayment charge owed by the veteran. VHA billed veterans for over 56.5 million copayment charges totaling over $1 billion in fiscal year 2010. These copayment charges were related to approximately 9.8 percent of the total of approximately 576 million VHA medical services provided. Individual veteran copayment amounts in fiscal year 2010 ranged from a low of $5 for some extended care services to a high of $1,100 for the first 90 days of an inpatient hospital stay. Most billed copayment charges (88 percent) were for prescription medications, for which the copayment charge is generally $8 or $9 for up to a 30-day supply of medication. Table 2 shows the number, amounts, and related percentages associated with the copayment charges billed to veterans in fiscal year 2010 by type of service. Based on our tests of a probability sample of billed copayment charges, we estimate that 96 percent of VHA’s fiscal year 2010 copayment charges were accurate and 4 percent were inaccurate or erroneous. We selected a probability sample of 100 fiscal year 2010 copayment charges billed to veterans, which included only prescription and outpatient services, and found 4 erroneous copayment charges, each of which resulted in an overbilling to a veteran. Based on these test results, we estimate that of VHA’s 56.5 million fiscal year 2010 copayment charges, approximately 54.2 million (96 percent) were accurate and approximately 2.3 million (4 percent) were inaccurate. In addition, none of the four copayment errors we found involved underbilling of veterans. In fiscal year 2010, more than 90 percent of VHA’s medical services did not result in billed copayment charges. To assess the completeness of the billed copayment charge population and the extent of possible underbilling errors associated with those medical services, we also selected a second probability sample of 100 unbilled medical services to assess whether VHA had correctly determined that each of the tested medical services should not have been billed. We did so because incorrect “no bill” determinations by VHA would represent underbilling inaccuracies associated with VHA’s fiscal year 2010 copayment charges. Our tests of 100 unbilled medical services found that VHA correctly determined that each of the medical services should not have resulted in a veteran copayment charge—a 100 percent accuracy rate for this probability sample. As a result, we are 95 percent confident that for fiscal year 2010, VHA’s rate of error in the population of unbilled medical services associated with incorrectly determining that medical services should not have resulted in a copayment charge was between 0 percent and 3 percent. (See table 3.) With respect to erroneous copayment charges and our estimated error rate of 4 percent, we found that each of the four copayment errors occurred in overbilling to a veteran because the veteran was billed for an incorrect amount, the charge should have been reversed or offset, or if paid, the amount should have been refunded to the veteran. Also, three of the four errors we found had not been identified by VHA prior to our selection of the copayment charges for testing. For the fourth error, VHA learned about the error when the veteran notified VHA after receiving a monthly statement containing the wrong copayment charge amount. The four overbilling errors we found resulted from three causes. For one of the errors, the copayment should not have been billed to the veteran because, prior to billing the veteran, VHA had received sufficient third- party insurance reimbursement to offset the copayment and eliminate any amount owed by the veteran. Two of the errors involved copayment charges that were paid by the veterans but were not later refunded by VHA as would have been correct following VBA decisions that resulted in a retroactive change to the veterans’ priority group status. VBA had informed VHA that it had retroactively awarded the veterans either an additional service-connected condition or increased a veteran’s disability rating, which led VHA to change the two veterans’ priority groups. With a (retroactive) change in priority group back to an effective date prior to the medical service that led to the copayment charge we tested, each of the veterans was no longer responsible for the copayment charge they had paid. Once VHA revised the veterans’ priority group status in response to VBA’s retroactive decisions, the veterans were due refunds for the two paid copayment charges we tested.