Vet News: VA Recovers Millions from Health Insurers For Treating Non Service-Connected Veterans

WASHINGTON – Empowered by Congress to seek reimbursement from third-party health insurers for the cost of medical care provided to unsured, non-service-connected Veterans, the VA now collects in excess of $100 million a month. In May, the VA received a record $123 million.

Public Law 99-272, enacted in April 1986, gave the VA the authority to collects reimbursements from insurance companies and co-payments from certain Veterans for medical treatment of nonservice-connected conditions. In addition, the VA collects co-payments for medications provided on an outpatient basis to treat nonservice-connected conditions.

Throughout most of fiscal year 2002, collections have exceeded $100 million monthly. In fiscal year 1987, the first year of billing, revenue collections totaled $24 million. Since then, the VA’s collections have totaled more than $7.1 billion. This figure includes an estimated $1.2 billion expected in fiscal year 2002.

In November 1990, Public Law 101-508 expanded the VA’s cost recovery program by providing authority to seek reimbursement from third-party payers for the cost of care provided to insured, service-connected Veterans treated for nonservice-connected conditions. This law also authorized the VA to assess per diem and medication co-payments.

Public Law 105-33, enacted in August 1997, allowed the VA to retain its collections from health insurers and Veterans’ co-payments at local medical centers or in its regional networks. Before this law, these collections were returned to the Department of Treasury.

This law also gave the VA the authority to use "reasonable charges" in submitting claims to insurance carriers, rather than using VA cost-based per diems. Reasonable charges are based on amounts that third parties pay for the same services furnished by private-sector health care providers in the same geographic area. Previously, the VA had used average cost-based per diem rates for billing insurers. Reasonable charges are calculated for inpatient and outpatient facility charges and for professional or clinician charges for inpatient and outpatient care.

Since the VA has been permitted to retain collected funds, it has collected $3.8 billion, all used to enhance medical care.

Federal law authorizes the VA to recover the cost of medical care for nonservice-connected conditions from health insurance programs (except Medicare and Medicaid) providing coverage for Veterans, including policies held by Veterans, spouses, or guardians. Therefore, when applying for treatment at VA medical facilities, Veterans are asked about their insurance coverage. Even for Veterans with service-connected disability ratings of 40% or less, the VA collects insurance reimbursement for treating their nonservice-connected conditions. The VA contacts their insurance carrier to verify coverage and submits claims to the carrier for the billable services.

Further enhancing revenue collections, the VA this year provided software to medical facilities to implement electronic data interchange (EDI), allowing them to automatically send claims to health insurance carriers through a national clearinghouse (WebMD). These electronic exchanges result in faster claims to insurers and faster payment to the VA because the software edits claims for errors, eliminating time-consuming reworking.

The VA plans to replace its current billing and receivables software systems with commercial, off-the-shelf software that will streamline processes at medical centers by removing the potential for human error. Medical centers will be able to generate more accurate claims to health insurance companies.

SOURCE: VA press release