VA Health Care: Third-Party Charges Based on Sound Methodology; Implementation Challenges Remain Page: 4 of 25
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$560.1 million from collections and users' fees, 79 percent of which came
from collections from insurers.
On April 27, 1999, VA published the final rule reflecting the change in its
medical billing rates to private insurers from a reasonable cost to a
reasonable charge basis. The method VA used to develop reasonable
charges was designed to estimate the 80th percentile of local charges so
that its reasonable charges to private insurers would typically equal or
exceed 80 percent of all charges submitted for the services provided. VA
received six comments on its proposed rule (published on October 13,
1998), which generally did not discuss in detail the validity of vA's
methodology. An association of insurers asked for additional time to
submit comments on VA's methodology and prepare their claims systems
to process VA's new reasonable charge claims. VA delayed implementation
of the final rule until September 1, 1999.
In response to the requirements of 38 U.S.C. 1729(c)(2)(C), this report
provides our findings concerning (1) the soundness of vA's methodology
for setting reasonable charges for inpatient facility, skilled nursing,
outpatient facility, physician, and nonphysician services and (2) potential
effects of the new charge-based system on VA, insurers, and veterans. We
performed our evaluation from September 1998 through May 1999 in
accordance with generally accepted government auditing standards. For
details on our scope and methodology, see appendix I.
Results in Brief
We believe VA's methodology provides a sound basis for setting reasonable
charges and optimizing its collection revenues. Its methodology logically
applies available data to set local market charges for each geographic area
where VA provides care. In cases where VA's charges are higher than the
insurers' usual payments to other providers for the same care, insurers are
permitted by law to pay VA these usual amounts rather than VA's billed
charges. However, if VA submits charges that are less than the insurers'
usual payments, the insurers may pay the lower amounts. Therefore, ifVA
sets its charges below market prices, it will forego some of the revenue it
could collect from private insurers. VA is currently working with a
contractor to establish a way to identify charges that need to be modified
to better reflect market prices.
VA expects that the shift to reasonable charges will increase collections
from private insurers, but it cannot accurately project the amount. The
potential revenue gain is dependent on the difference between the
GAO/HEHS-99-124 VA Reasonable Charges
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United States. General Accounting Office. VA Health Care: Third-Party Charges Based on Sound Methodology; Implementation Challenges Remain, report, June 11, 1999; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc290493/m1/4/: accessed October 16, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.