Double-Billing for Private Care Cost VA $101 Million, IG Finds

More than 250,000 double-billings by medical contractors for private care in the Department of Veterans Affairs' Choice program -- and other accounting errors -- cost the department $101 million in overcharges from March 2016 through March 2017, a VA Office of Inspector General audit found.

During that one-year period, 142,493 duplicate payments were made to Health Net Federal Services and 111,148 to TriWest Healthcare Alliance Corp., for a total of 253,641 duplicate claims out of 4,758,759 medical claims submitted, the audit, released Thursday by the IG's office, revealed.

The double-billings by Health Net and TriWest cost the VA $66.1 million in overcharges, and three other types of accounting errors by the two contractors cost $35.3 million, for a total of $101.4 million in losses to the Department of Veterans Affairs, the report said.

The VA's Office of Community Care (OCC) shared the blame with the two contractors for lack of oversight, the audit found.

"Because of ineffective controls, OCC failed to identify improper claims," an executive summary for the audit said.

OCC failed to provide the contractors with a policy and procedure manual to guide them in processing medical claims, the audit said.

As a result, both Health Net and TriWest said the absence of a manual was a "cause of a substantial amount of confusion and lack of clarity, leading to payment delays and payment errors."

However, both contractors have "acknowledged receiving overpayments from VA and their obligation to repay all such overpayments."

The audit on double-billings in the Choice program was released as the VA and the Trump administration press ahead with an overhaul of the Choice program aimed at greatly expanding private health care options for veterans under the new VA Mission Act signed into law by President Donald Trump in early June.

The bill provided about $5 billion to extend the current Choice program for one year while the system was streamlined to eliminate inefficiencies. Congress has yet to appropriate funds for the new program under the Mission Act. Cost estimates for the new program run to more than $50 billion over five years.

The IG's audit and executive summary attributed part of the billing problems to the urgency in which the Choice program was implemented in 2014 in response to the wait-times scandals at the VA's Phoenix Medical Center.

The system set up gave contracts to third-party administrators, in this case Health Net Federal Services and TriWest Healthcare Alliance Corp, to provide patient-centered community care, or private care, to veterans.

The goal was to "enable veterans to obtain care from providers in their community" when the VA could not meet their needs.

The system broke down, the audit said, when processing claims individually proved to be taking too much time, resulting in a backlog of payments to the contractors.

The VA's Office of Community Care then went to a system of bulk payments, but "OCC did not implement effective internal controls to detect the submission of duplicate claims by [third-party administrators] and to prevent payment," the IG's audit said.

-- Richard Sisk can be reached at Richard.Sisk@Military.com.