United States General Accounting Office Report to the Ranking Minority . GAO Member, Committee on Veterans’ Affairs, U.S. Senate March 1990 VA HEALTH CARE. Medical Centers Need to Improve Collection of Veterans’ l Copayments GAO United States General Accounting Office Washington, D.C. 20548 Human Resources Division B-238822 March 28,199O The Honorable Frank H. Murkowski Ranking Minority Member Committee on Veterans’ Affairs United States Senate Dear Senator Murkowski: The Veterans’ Health-Care Amendments of 1986 (P.L. 99-272) require the Department of Veterans Affairs (VA) to collect a fee, commonly referred to as a copayment, from certain veterans who receive health care at its facilities. This requirement applies to any veteran who has income or assets above prescribed amounts, unless he or she has a service-connected disability or other special circumstances.’ At your request, we assessed whether VA implemented a cost-effective process for billing and collecting copayments.’ VA operates 172 hospitals and 233 outpatient clinics, most of which are organized into 159 medical centers. These centers provided about 1.1 million inpatient stays and 2 1.5 million outpatient visits during fiscal year 1988, at a cost of about $10.2 billion. The centers reported that in fiscal year 1988 less than 3 percent of the veterans receiving health care owed copayments and almost $10 million was collected. Copayment rates in that year were $25 a visit for outpatient care and $540 for the first 90 days of inpatient care. Using a questionnaire,:’ we obtained information from the 159 medical centers on their collection activities during fiscal years 1987 and 1988-the first 2 years after the act’s pas- sage. During visits to five centers, we interviewed officials and reviewed records of randomly selected veterans who received inpatient or outpa- tient care during the first 6 months of fiscal year 1988. We also reviewed VA’S copayment policies and procedures and interviewed VA headquarters officials and representatives of private health care provid- ers, including the Healthcare Financial Management Association4 ‘The incomethreshold for a veteran without dependentswas $21.111in calenderyear 1988.It increased$5,278for the first dependentand $1,055for each additional dependent.Appendix 1lists the specialcircumstancesunder which veteranswhoseincomesexceedthesethresholdswould not owe copayments. ‘The portion of the requestrelating to collectionsfrom third party insurers is discussedin VA Health Care:Better ProceduresNeededto MaximizeCollectionsfrom Health Insurers (GAOIHRD-9044, Apr. 1990). .‘AppendixesIV and V contain selectedresponsesto the questionnaire ‘This associationprovides information on effective billing proceduresto hospitals nationwide Page 1 GAO/HRlHO-77 Veterans’ Copayments B-238822 Figure 1: Medical Centers’ Collections and Estimated Costs for the Copayment Recovery Effort (Fiscal Year 1988) Inpatbnl Typoof Cam - u CQllecDons Estimated Cc&z Although the five medical centers we visited should have collected an Medical Centers estimated $386,000 during the first 6 months of fiscal year 1988, they Should Have Collected collected only about $188,000. Most of the unpaid copayments resulted Significantly More from the centers’ failure to bill veterans for amounts owed, as figure 2 shows. Page 3 GAO/HRIW377 Veterans’ Copayments Figure 3: Estimated Value of Copayments Billed and Not Billed at Five Centers Visited (Ott 19WMar 1988) r l- Outpatient Care Amount Billed Amount Not Billed Many Veterans Did Not At the five centers, veterans had not paid about $23,900 (22 percent) of Pay Amounts Billed the copayments billed for inpatient care and $15,300 (13 percent) of the copayments billed for outpatient care. Officials at these centers cited several reasons for the unpaid bills: veterans could not be located, they refused to pay, or they stated they could not afford to pay. Nationwide, 112 other centers, in responding to our questionnaire, said they had often or very often encountered similar difficulties. Additional informa- tion on the reasons for centers’ collection problems is shown in appendix v. Page 6 GAO/HflB9O-77 Veterans’ Copayments B-233322 The Healthcare Financial Management Association recommends that hospitals attempt to collect amounts owed before patients are dis- charged-a practice that private sector hospitals normally adopt. Offi- cials at four of the five centers did not encourage veterans to pay their copayment while receiving care at the center. They said, however, that payments would be accepted if veterans wished to pay while still at the center. Similar policies were reported by 133 other centers. VA should help its centers improve their billing and collection practices Conclusions through changes that will both increase copayment collections and reduce collection costs. One such change would be for VA to adopt an approach similar to that followed in many private hospitals, that is, col- lecting from or making payment arrangements with patients before they leave the center. VA’S adoption of such an approach would reduce or eliminate many of the labor-intensive and time-consuming tasks now experienced by staffs responsible for collecting copayments. In addition, many of the collec- tion difficulties-such as centers’ inability to locate obligated veter- ans-should be minimized and timeliness of billings should be less of an issue. We recommend that the Secretary require VA medical centers to collect Recommendation to copayments from veterans or make payment arrangements while veter- the Secretary of ans are still at the centers. Veterans Affairs VA commented on a draft of this report on March 8, 1990 (see app. VI). Agency Comments The Department agreed with our recommendation and stated that actions are already underway to improve the process and increase copayment billings and collections from veterans before they depart VA health care facilities. Actions the Department said it was taking included l Convening a medical care costs recovery task force, charged with devel- oping a strategy to improve identification, billing, and collection procedures. l Reporting the veteran copayment collection system as a material weak- ness in its 1989 Federal Managers’ Financial Integrity Act report, The Page 7 GAO/HRD90-77 Veterans’ Copayments Page 9 GAO/HRD-90.77Veterans’ Copayments Contents Appendix VI Comments From the Department of Veterans Affairs Appendix VII 21 Major Contributors to This Report Tables Table II. 1: Total Copayment Collections and Collections Per Average Occupied Bed for the Five Centers Visited (Fiscal Year 1988) Table 111.1:Veterans Receiving Inpatient Care 15 Table 111.2:Veterans Receiving Outpatient Care 16 Table IV. 1: Factors Affecting Recoveries 17 Table V. 1: Reasons a Center Might Have Difficulty 18 Collecting From Veterans Figures Figure 1: Medical Centers’ Collections and Estimated 3 Costs for the Copayment Recovery Effort (Fiscal Year 1988) Figure 2: Estimated Value of Copayments Owed at Five Centers Visited (Oct. 1987-Mar. 1988) Figure 3: Estimated Value of Copayments Billed and Not Billed at Five Centers Visited (Oct. 1987-Mar. 1988) Figure 4: Average Time Taken to Bill Inpatient Veterans Sampled (Oct. 1987-Mar. 1988) Abbreviations VA Department of Veterans Affairs page 11 GAO/HRLM?@77 Veterans’ Capaymenb Scopeand Methodology We visited five medical centers to assess the effectiveness of VA’S efforts to collect copayments from veterans. We judgmentally selected the cen- ters to gain a mix of key operational and performance factors. Table II.1 provides information on two of the factors: size (number of beds) and collections per average daily occupied bed’ for the five centers visited. Table 11.1:Total Copayment Collections and Collections Per Average Occupied Ranked m order of collections per bed Bed for the Five Centers Visited (Fiscal -Average nu;i;r Collections pr+r Year 1988) Total average dally Medical center collections occupied beds occupied bed Minneapolm. MN $286,152 484 $591 Martinsburg. WV 115,026 287 401 Seattle, WA 53,027 290 183 Bay Pmes, FL 83,108 473 176 West Los Angeles, CA 17,039 824 21 Total (5 centers) $554,352 2,358 $235 Total (all 159 centers) 89,884,350 52,111 $190 At each of the five medical centers visited, we interviewed officials in the Office of the Director, Medical Administration Service, and Fiscal Service to discuss the process for billing and collecting from veterans. We also discussed factors that aided or impeded the centers’ recovery efforts. To assess each center’s billing and collection procedures, we reviewed medical and administrative records for a random sample of about 30 veterans subject to copayments from each of two universes: l Veterans discharged from inpatient care between October 1, 1987, and March 31, 1988. l Veterans provided outpatient care between October 1, 1987, and March 31, 1988. For those veterans sampled, we documented (1) whether the medical centers billed for all copayments owed and sent the bills in a timely manner, (2) how much the centers collected, and (3) why centers col- lected less than the full amount. We used our sample results to estimate the value of copayments for inpatient and outpatient care not billed by the medical centers. Because our estimates are based on samples, there ‘We usedcollectionsper averagedaily occupiedbedrather than total collectionsbecausethis inarpo- rated the sizeof the center into the evaluation of its collectionperfonnancr. Page 13 GAO/HRD-9037Veterans’ Copayments k&mated Value of Copayments Not Billed, Billed, and Collected for Care Provided to Veterans Subject to Copayments (Oct. 1, 1987- Mar. 31,1988:, The following tables show, for each of the five medical centers we vis- ited, the estimated amounts of copayments (1) not billed, (2) billed, and (3) collected for care provided to veterans during the first 6 months of fiscal year 1988. Because these figures are estimated using the results from our reviews of samples of veterans who received care during the period, there are sampling errors. The chances are 95 out of 100 that the true value for the population of veterans lies within the confidence interval shown. Table 111.1:Veterans Receiving Inpatient Care Estimate Confidence level Bay Pines: ~~ -~ Not bllled $4,697 $946 ___-__ $10,410 Billed 53,474 --~---__ 43,232 63,716 Collected 37,212 25,387 49,037 Martinsbura: Not bllled $24,860 $12,327 $37.393 BIlled --._ 13.978 4,903 23.053 Collected 11,441 3,052 19,830 Minneapolis: Got bllled $3,905 $2,052 $6,361 Bllled 27,395 24,507 30,283 Collected 25,425 22,108 28,742 Seattle: Not bllled $8,408 $5,711 $11,105 ElIled __~ 13,532 10,820 16,244 Collected 10,411 7,799 13,023 West Los Angeles: Not billed $31.676 $29.166 $34.186 EMled 1,044 473 2,557 Collected 1.044 473 2.557 Total: Not bllled $73.547 $59,079a $88.015” Bllled - 109,442 95,096” 123,748” Collected 85,533 70.3578 100,709” aThese figures are the range for the estimated total, not the sum of the values llsted for the mdudual medlcal centers Page 16 GAO/HBD90-77 Veterans’ Copayments Appendix IV Factors Affecting Recoveries In our questionnaire, we asked medical centers to consider various fac- tors that may influence how effectively the centers were able to recover copayments from veterans. Center officials indicated whether each fac- tor was more than, about, or less than adequate to enable the center to effectively recover copayments from veterans. Table IV.l: Factors Affecting Recoveries More than About Less than Factor adequate __- adequate adequate Number of avallable staff 1 51 107 Computer software 6 71 76 Computer hardware 7 74 75 Veterans’ cooperation with center efforts 9 97 48 Trarnlno center able to orovrde staff 9 103 46 Gutdance from VA headquarters 3 112 - 44 Dlstnct counsel’s efforts to pursue referred cases 26 86 24 Staff’s skills/experience 31 110 18 Note The responses do not always add to 159 because not all centers answered each question Page 17 GAO/HRB90-77 Veterans’ Copayments Appendix VI Comments From the Department of Veterans Affairs THE SECRETARY OF VETERANS AFFAIRS WASHINGTON MAR 8 1990 Hr. David P. Baine Director, Federal Health Care Delivery Issues U. S. General Accounting Office Washington, DC 20548 Dear Wr. Baine: I am pleased to respond to your January 19, 1990, draft report V A . Veterans' Cooavments (GAO/HRD-90-77). As the report states, VA has already begun to collect copayments from veterans. In addition, these collections exceed the costs of collection although this is a fundamentally new program for our facilities. I recognize that more can be done to improve the collection process. I agree with your recommendation, and actions are already underway that should improve the process and increase copayment billings to and collections from veterans prior to their departing VA health care facilities. The actions being taken on your report are outlined in the e@closure. Thank you for the opportunity to comment on this report. Enclosure EJD/jev L page19 GAO/HRD&S77Veteran~'Copaymenta Appendix VII Major Contributors to This Report Paul R. Reynolds, Assistant Director, (202) 233-5281 Human Resources Frank C. Ackley, Technical Advisor Division, Walter P. Gembacz, Assignment Manager Washington, D.C. Randall Williamson, Regional Management Representative Seattle Regional Office Janet E. Frisch, Evaluator-in-Charge Peter J. Bylsma, Evaluator Patricia K. Yamane, Evaluator Octavia V. Parks, Evaluator Atlanta Regional Mark J. Huber, Evaluator Chicago Regional Office (401987) Page 21 GAO/lJRDSC-77Veterans’ Copayments Requests for copies of GAO reports should be sent to: U.S. General Accounting Office Post Office Box 6016 Gaithersburg, Maryland 20877 Telephone 202-275-6241 The fiit five copies of each report are free. Additional $2.00 each. There is a 25% discount on orders for 100 or more copie single address. Orders must be prepaid by cash or by check or money o out to the Superintendent of Documents. AppendixVI CommentsFrom the Department of Veterans Affairs Enclosure DEPARTMENT OF VETERANS AFFAIRS COMMENTS ON THE JANUARY 19, 1990, GAO DRAFT REPORT VA HEALTH CARE: MHDICAL CENTERS NEED TO IMPROVE COLLECTIONS OF VETERANS’ COPAYMENTS SAO recommends that I require VA medical Centers to collect copayments from veterans or make payment arrangements while veterans are still at the centers receiving care. I concur with the recommendation and have proposed a multifaceted plan to correct the situation. The Department has listed this finding as a material weakness in VA's 1989 Federal Manager's Financial Integrity Act Report that tasks the Veterans Health Services and Research Administration (VHSSRA) to identify deficiencies and follow through with an action plan. We anticipate that the first results of this action will be completed by March 1990. Additional efforts include: 0 The Department has convened a Medical Care Cost Recovery Task Force charged with developing a strategy to improve identification, billing, and collection procedures as quickly as possible. 0 We have proposed additional resources necessary to bill and collect properly in our 1991 budget legislation. 0 We recently completed an internal audit of copayment billing delays. As a result, we are considering several methods of patient control and more timely preparation of copayment bills. 0 We will request input from field stations to insure that our debt collection procedures are effective at the field station level once an accounts receivable module is installed at all stations. Installation is expected this calendar year. page20 GAO/HRD90-77 Veterans' Copayments Appendix V Reasons a Center Might Have Difficulty Collecting From Veterans In our questionnaire, we asked medical centers to consider the reasons they have experienced difficulty collecting from veterans. Center offi- cials indicated how often they experienced difficulty collecting from veterans for each of the following reasons. One hundred twenty-five centers reported often having difficulty collecting from veterans. Table V.l: Reasons a Center Might Have Difficulty Collecting From Veterans Very Reason ___.~ ~-. often Often Sometimes -__- Rarely Never Veteran does not respond _____ 51 42 59 6 1 Veteran claims he/she cannot afford to pay 22 49 70 16 2 Veteran cannot be located 14 21 66 56 2 Veteran refuses to oav 16 19 64 45 13 Veteran claims the amount bllled IS not reasonable 7 18 50 58 18 Other .___~..~___ ~~~ 4 7 4 2 1 Veteran has already pard maxrmum copayment amount at another VA medlcal center 0 0 11 59 89 Note The responses do not always add to 159 because not all centers answered each questm Page 18 GAO/HRB90-77 Vewrans’ Copayments Appendix III Estimated Value of Copayments Not Billed, Billed, and C!ollected for Care Rovided to Veterans Subject to Copayments (Oct. 1, 1987.Mar. 31,1988) Table 111.2:Veterans Receiving Outpatient Care Estimate Confidence level Bay Pines: Not billed $9,525 $3,654 $15,396 Billed 13,547 9,595 17,499 Collected 11,853 7,861 15,845 Martinsburg: Not bllled $2,467 $461 $4,473 BIlled - ..~~~~-~ 35,853 26,083 45,623 Collected 34,467 24,463 44,471 Minneapolis: Not billed $22,420 $9.819 $35,021 Billed 34,220 22,377 46,063 Collected 31,270 19,797 42,743 Seattle: Not billed $7,383 $2,251 $12,515 Billed 34.461 11,336 57,586 Collected 25,230 7,951 42,509 West Los Angeles: Not bllled $43,230 $27,094 $59,366 Billed 0 0 0 Collected 0 0 0 Total: Not bllled $85,025 $63,025” $107,025” Billed 118,081 90,044” 146,118” Collected 102,820 79,449” 126.191a ‘These figures are the range for the estimated total, not the sum of the values INed for the indwidual medlcal centers Page 16 GAO/BBLWO-77 Veterans’ Copayments Appendix II Scope and Methodology are sampling errors associated with them. We used a 95-percent confi- dence level for our estimates. All estimates are for the first 6 months of fiscal year 1988. Appendix III provides additional information about our projections. Our review was performed from August 1988 to November 1989 in accordance with generally accepted government auditing standards. Page 14 GAO/HRJNW77 Veterans’ Copayments Appendix I Special Circumstances Under Which Veterans Do Not Owe Copayments The Veterans’ Health-Care Amendments of 1986 (38 USC. SlO), enacted in April 1986, provide that, regardless of income, veterans are not required to make copayments for health care received at a VA medi- cal center if they meet one of the following special circumstances: l have service-connected disabilities; l are former prisoners of war; l are veterans of World War I, the Spanish-American War, or the Mexican border period; l incurred service-connected exposure to toxic substances or radiation; l are eligible for VA care as a result of a judgment or settlement against the United States; l are eligible for Medicaid; or . are receiving a VA pension. Page 12 GAO/Mu)-90-77 Veterans’ Copayments Contents Appendix I Special Circumstances Under Which Veterans Do Not Owe Copayments Appendix II 13 Scopeand Methodology Appendix III 15 Estimated Value of Copayments Not Billed, Billed, and Collected for Care Provided to Veterans Subject to Copayments (Oct. 1, 1987-Mar. 31, 1988) Appendix IV 17 Factors Affecting Recoveries Appendix V 18 Reasonsa Center Might Have Difficulty Collecting From Veterans Page 10 GAO/HRD90-77 Veterans’ Capayments B-238822 report specifies responsibility for identifying deficiencies and develop- ing an action plan. . Completing an internal audit of copayment billing delays and consider- ing several methods of patient control and more timely bill preparations. Unless you publicly announce its contents earlier, we plan no further distribution of this report for 30 days. At that time, we will send copies to the Secretary of Veterans Affairs and interested congressional com- mittees. We will also make copies available to others upon request. The report was prepared under the direction of David P. Baine, Director, Federal Health Care Delivery Issues. If you have any questions, you may contact him at (202) 275-6207. Other major contributors are listed in appendix VII. Sincerely yours, Lawrence H. Thompson Assistant Comptroller General Page 8 GAO/HBD%77 Veterans’ Copayments 5238822 Although VA guidelines direct centers to bill veterans as soon as debts are identified, the five centers waited until after the veterans were dis- charged before starting the billing process. Overall, three of every four inpatient bills were sent more than 30 days after the veterans were dis- charged. There were also delays in billing for outpatient care. None of the inpatients or outpatients sampled at these centers paid before they left. These delays appear to have contributed to veterans’ nonpayment. Vet- erans in our sample who paid the full copayment had bills sent, on aver- age, about 57 days after they were discharged. In contrast, those who did not pay had bills sent, on average, about 120 days after they were discharged. The average number of days from inpatient discharge to billing for sample veterans ranged from 56 days to 111 days at the five centers, as figure 4 shows. Figure 4: Average Time Taken to Bill Inpatient Veterans Sampled (Oct. 1987. 125 Average Number of Days Fmm Dkcharga to Billing Mar. 1988) - im VA Mdkal Center Page 6 GAO/HRD9077 Veterans’ Copayments 5238822 Figure 2: Estimated Value of Copayments Owed at Five Centers Visited (Oct. 1987.Mar. 1988) Billed/Collected Not Billed Billed/Not Collected The five centers had billing processes that were labor intensive and time consuming. Rather than billing veterans at the time the centers provided care, generally the admissions clerks prepared a monthly listing of vet- erans who owed copayments and then sent it to the billing clerks. To determine the amount owed, the billing clerks reviewed individual medi- cal records and verified the type of care provided. These records had to be retrieved from storage and then returned. In addition to being costly, this approach contributed to the missed collections, as the following sec- tions discuss. Many Veterans Not Billed The five centers did not bill veterans for an estimated $158,500 in copayments-$73,500 for inpatient care and $85,000 for outpatient care. Because of weaknesses in procedures, billing clerks at four of the five centers were frequently not notified when veterans owed copay- ments. In some instances, veterans who owed copayments were not included on the billing lists. Officials at the fifth center, Seattle, assigned the copayment billing clerk to other duties for several months. Missed billings varied widely among the centers, as figure 3 shows. Page 4 GAO/HRDW77 Veterans’ Copayments B-233322 Appendix II provides additional information on our scope and methodology. The 159 VA medical centers’ collections exceeded costs, yielding a return Results in Brief of $1.36 for each $1 spent during fiscal year 1988. The centers’ return for inpatient care was significantly higher than for outpatient care- $1.74 compared to $1.08. The five medical centers we visited collected only about half of the copayments that veterans owed. This occurred primarily because the centers failed to bill these veterans. Some veterans, however, did not pay when billed. The bills were usually sent several weeks to months after care was provided, contributing to the centers’ collection difficulties. During fiscal year 1988, VA centers collected about $9.9 million from vet- VA’s Collections erans at a cost of $7.3 million, a net return of $2.6 million. Collections Exceeded Costs for inpatient care accounted for most of this return, as figure 1 shows. I ‘Medical centersreport collectionsto VAheadquartersmonthly, but information is not maintainedon collectioncosts.Using a questionnaire,we collectedeachcenter’sestimateof staffing levels and time spwt on copaymentactivities during a typical weekin fiscal yeiear1988.Wedetermmedsalary rates for the staff identified and usedthis information to estimatethe centers’annual costs. Page 2 GAO/HRD-90.77Veterans’ Copayments
VA Health Care: Medical Centers Need to Improve Collection of Veterans' Copayments
Published by the Government Accountability Office on 1990-03-28.
Below is a raw (and likely hideous) rendition of the original report. (PDF)