Audit of VHA’s Timeliness and Accuracy of Choice Payments Processed Through the Fee Basis Claims System

Congress required that the OIG report on the accuracy and timeliness of VA payments for medical care provided under Choice. This report addresses payments processed through VA’s Fee Basis Claims System from November 2014 through September 2016. The Veterans Health Administration’s (VHA’s) Office of Community Care (OCC) contracted with Third Party Administrators (TPAs) to process claims and pay Choice medical providers. During the 23-month audit period, OIG sampled from a population of 2 million Choice claims. Of those claims, an estimated 224,000 were paid in error, and 1 million were processed in excess of the 30-day Prompt Payment Standard. The OIG determined weak internal controls over the payment process contributed to these errors. Also, the OCC did not establish clear written policies for Choice claim payments, ensure quality information was available to payment staff, use an information system that could adequately address overpayment of medical claims, establish monitoring activities to determine if payment controls worked, or accurately estimate staffing needs for claims processing. The OIG estimated OCC made $39 million in overpayments to TPAs. The OIG recommended that VHA management ensure systems used for processing medical claims from TPAs have the ability to adjudicate reimbursement rates accurately and issue written payment policies to claims-processing staff. The OIG also recommended that OCC establish expectations and obligations for TPAs that submit invoices for payment, develop sufficient claims-processing capacity to meet expected TPA claim volume, and ensure future TPA contracts contain timeliness standards for processing payments. The Executive in Charge, VHA, concurred and agreed that a full review of Choice payments and recovery of all identified overpayments is essential.