VA Health Care: VA Has Not Sufficiently Explored Alternatives for Optimizing Third-Party Collections Page: 3 of 16
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house staff while the other would have used contractor staff.5 My
testimony today will focus on the status of VA's collections this past year
and VA's progress in pursuing its business plan. To assess VA's efforts, we
visited revenue operations at four facilities' and one network;7 surveyed all
facilities and networks and interviewed headquarters officials; obtained
and analyzed private sector benchmarks;8 and reviewed relevant VA
studies and plans, including its September 2001 Revenue Cycle
In summary, this fiscal year, for the first time since fiscal year 1995, VA has
reversed the general decline in its third-party collections. However, the
fiscal year 2001 increase appears to be largely the result of VA's
implementation of a new system, known as the reasonable charges billing
system, which allowed VA to move from a flat-rate billing system to one
that itemizes charges for the care it provides to veterans. However, long-
standing problems in VA's revenue operations appear to persist, and when
compared to private sector standards, VA's collections performance is
poor. For example, VA takes 14 times longer to bill, on average, than a
benchmark for private sector hospitals. Moreover, VA's various attempts
to try consolidation using either in-house or contractor staff have provided
little basis for selecting the best alternative to address VA's collections
problems. For example, VA initiated a pilot to test the relative cost-
effectiveness of contracting out or using in-house staff, but as a result of
changes in the pilot's design for contracting, this test is unlikely to yield
data needed to compare the two alternatives and determine which option
is best. In addition, VA's recent 2001 Revenue Cycle Improvement Plan
does not call for a comprehensive comparison of alternatives nor does it
focus on net revenues-collections minus operations costs. To collect the
5VA could competitively determine whether it would be more cost-effective to retain the
work in-house or contract it out through the use of Office of Management and Budget's
(OMB) Circular A-76 process. In the A-76 process, the government identifies the work to be
performed-described in the performance work statement-and prepares an in-house cost
estimate, based on its most efficient organization, to compare with the winning offer from
the private sector.
'For this report, facilities will only refer to VA medical centers that have revenue
The management of VA's hospitals and other health care facilities is decentralized to 22
regional networks, known as Veterans Integrated Service Networks.
8Based on a national quarterly survey of private sector hospitals, the Hospital Accounts
Receivable Analysis report provides averages for various billing and collections activities
that can serve as benchmarks of performance.
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United States. General Accounting Office. VA Health Care: VA Has Not Sufficiently Explored Alternatives for Optimizing Third-Party Collections, text, September 20, 2001; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc290048/m1/3/: accessed December 19, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.