The medical documentation  process involves properly documenting the health care provided to  patients by physicians and other health care providers. Collections Are Increasing, but Operational Problems Limit Insurance Payments

For fiscal year 2002, VA collected third-party payments of $687 million, a  32 percent increase over its fiscal year 2001 collections. Nevertheless, VA’s ability  to collect was limited by problems such as missed billing opportunities. Increased collections for fiscal year 2002 reflected VA’s improved ability to  manage the volume and billing processes required to produce multiple  bills under reasonable charges, according to three network revenue  managers. Operational Problems Limit Collections, but VA Lacks an Estimate of Uncollected Dollars

Studies have suggested that operational problems—missed billing  opportunities, billing backlogs, and inadequate pursuit of accounts  receivable—limited VA’s collections in the years following the  implementation of reasonable charges. VA Is Implementing Planned Actions and Developing Other Initiatives to Address Problems in Collections Operations

VA continues to implement its 2001 improvement plan and is planning  more improvements. These problems include unidentified insurance for some patients,  insufficient documentation for billing, shortages of coding staff, gaps in  the automated capture of billing data, insufficient pursuit of accounts  receivable, and uneven performance across collections sites. The plan had scheduled 15 of the 24  actions for completion through May 25, 2002, but, as shown in figure 3, VA  had designated only 8 as completed, as of the last formal status report on  the plan in May 2002. VA has been improving its billing and collecting under the new fee  schedule established in 1999, but VA has not completed its efforts to  address problems in collections operations. However, it  is too early to evaluate the extent to which VA will be able to address  operational problems and further increase collections by fully  implementing its 2001 plan and new approach. VA generally agreed with  our findings that it continues to make improvements in increased  collections and VHA’s Business Office is developing new initiatives to  further enhance collections. VA’s new initiatives also address problems, such as gaps in automated  capture of billing data, that have been previously identified. Appendix I: Scope and Methodology

To assess the Department of Veterans Affairs’ (VA’s) progress with  collections in fiscal year 2002, we obtained and examined data on VA’s  third-party bills and collections.
Why GAO Did This Study

The Department of Veterans Affairs (VA) collects health insurance payments, known as third-party collections, for veterans' health care conditions it treats that are not a result of injuries or illnesses incurred or aggravated during military service. In September 1999, VA adopted a new fee schedule, called "reasonable charges," that it anticipated would increase revenues from third-party collections. In 2001, GAO testified that problems in VA's collections operations diminished VA's collections. For this report, GAO was asked to examine VA's third-party collections and problems in collections operations for fiscal year 2002 as well as its initiatives to improve collections.

What GAO Found

VA's fiscal year 2002 third-party collections rose by 32 percent, continuing an upward trend that began in fiscal year 2001. The increase in collections reflected VA's improved ability to manage the larger billing volume and more itemized bills required under its new fee schedule. Billings increased mainly due to a reduction of billing backlogs and improved collections processes--such as better medical documentation prepared by physicians, more complete identification of billable care by coders, and more bills prepared per biller--according to VA managers in three regional health care networks. However, VA continues to address operational problems, such as missed billing opportunities, that limit the amount VA collects. To address operational problems and further increase collections, VA has several initiatives under way and is developing additional ones. VA has been implementing initiatives in its 2001 improvement plan that was designed to address operational problems, such as unidentified insurance for some patients, insufficient documentation of services for billing, shortages of coding staff, and insufficient pursuit of accounts receivable. VA's last formal status report in May 2002 designated only 8 of the plan's 15 initiatives scheduled for completion by that time as having been completed. VA continues implementation of this plan and is also developing new initiatives, such as an automated financial system to better serve billing needs. It is too early to evaluate the extent to which VA's full implementation of its 2001 plan and new initiatives will be able to address operational problems and further increase third-party collections. In commenting on a draft of this report, VA generally agreed with our findings.