Veterans Affairs officials promised Congress this week that they will fix longstanding problems involving delayed payments to private-sector medical providers. Officials say a recent overhaul of VA’s reimbursement system already is improving matters.

But health care providers tell a different story, saying they’re still trying to get the department to pay for services they rendered many months ago, and in some cases, several years ago.

There is no reliable dollar estimate of the overall backlog of delayed payments to non-VA medical providers, partially because management of VA reimbursements historically has been decentralized to geographic regions and local medical centers. But in testimony to the House Veterans Affairs Committee, several private providers and associations said they’re still carrying past-due VA balances dating back months or years which in some cases run into the tens of millions of dollars.

That’s a major problem for many providers, many of whom are small businesses or county hospitals without large cash cushions, but also for VA’s compliance with the federal Prompt Payment Act, which generally requires agencies to pay suppliers within 30 days.

Dr. Gene Migliaccio, VA’s deputy chief business officer for purchased care, said the department is aware of the problem and is addressing it.

“First, we own the problem of aged claims. Second, we are fixing the problem, and third, we will lean forward with continuous improvement and accountability,” he told the House Veterans Affairs Committee.

VA’s ability to reliably and promptly pay its vendors will become even more important as the department boosts its reliance on non-VA providers to deliver health services.

Expanding claims processing staff

In 2013, the department already was spending $4.8 billion per year on purchased care, about 11 percent of its overall health care budget. But to address the recent patient wait time scandal, Congress authorized another $10 billion to outsource veterans’ health care to the private sector.

That same law ordered VA to centralize its management of provider reimbursement, and 2,000 VA employees were quickly transitioned from regional offices known as Veterans Integrated Services Networks (VISNs) to the new management structure. Migliaccio said the department used the new Veterans Choice Act to improve and standardize its business processes, create a new claims processing center in Denver to pick up the slack from areas of the country where claims volume is too high to meet timeliness standards and hired new workers to staff it: 145 employees and contractors have been hired so far and 40 more are expected to come onboard within the next month. VA plans to hire 220 more people in the coming months.

The department says it already has begun to see positive results: VA processed 21 percent more reimbursement claims in the first six months of this year compared to the same period in 2014.

But several of VA’s providers said that despite years of attempts to improve VA’s reimbursement process, they’ve yet to see any tangible signs of progress.

Asbel Montes, the vice president of Acadian Ambulance Service, a Louisiana-based medical transport company, said he and several other ambulance companies are collectively owed $30 million in VA reimbursements — and that’s just the claims that have been waiting for 90 days or longer.

“The failure to pay providers in a timely and accurate manner puts providers in the difficult position of having to bill veterans for emergency treatment, placing an unfair financial burden on the veterans due to the lack of response, invalid denial or payment by the VA,” he said. “The responses from the VA have remained wholly inaccurate and inadequate. My colleagues and I are not ignorant to the magnitude that this issue presents for the VA. But after numerous offers of assistance and requests for relief from the private and public sector, we have seen very little change.”

Too much bad debt from VA

Montes and others said they are increasingly reluctant to work with VA because they worry that their claims may be not just delayed, but never paid at all.

As part of a long running effort to improve the payment process, Montes said his company asked the VISN office in Jackson, Miss. to send a listing of all past- due accounts with his firm so they could reconcile their records. After comparing those records side by side, company auditors determined 768 unpaid claims were absent from VA’s systems even though they had been sent by certified mail and signed for by VA representatives.

“We do recognize that we have some internal process issues,” said Joseph Enderle, VA’s director for purchased care operations. “Paper claims come in, and we must have the clinical documentation to adjudicate those claims. Sometimes those claims are delivered directly to our file room, those claims are subsequently again scanned in our VistA imaging system. We acknowledge that we’ve had difficulty in pockets of the country where the processes aren’t, you might say, functioning seamlessly and timely.”

Representatives from other health care organizations gave similar accounts.

Vince Leist, the president and CEO of the North Arkansas Regional Medical Center, said his hospital had decided not to participate in the new Veterans Choice program solely because it was worried about unwilling to rack up more “bad debt” from the VA.

VA owes his 122-bed facility $750,000 in past-due claims, and across Arkansas, more than 4,400 overdue claims are awaiting payment to 60 hospitals with a total dollar value of $24 million, he said. Some date back more than three years.

“We are also concerned about the process in which VA handles claims,” said Leist, who was also testifying on behalf of the American Hospital Association. “Medical records have been lost or unaccounted for, leading to questions about the privacy of our veterans records. In addition, many veterans worry about their claims that are not paid promptly or left unpaid completely and they are left in a difficult position of trying to get their claims paid while they’re battling illness. This is an untenable position for both the hospital and for the veterans.”

Sam Cook, the president of the National Mobility Dealers Association, a group which represents firms that supply vehicles and assistive devices for people with physical disabilities, said his group also has tried to work with VA to fix the backlog.

He said officials at the central office have been somewhat responsive and have created a process that allows companies consolidate their old, unpaid claims into larger packages and resubmit them once-per-quarter for expedited payment. But he said those maneuvers were treating the symptom, not VA’s underlying inability to process initial claims in a timely manner. As of now, the vendors in that group have $34 million in past-due invoices with VA. The average age of those claims is five months, but some are three-years overdue.

“While $34 million may not seem like a lot in terms of federal budgeting, it’s a huge amount to small business owners to have the bankroll the VA’s inability to manage the payment process,” Cook said. “We admit that not all VA facilities are guilty of slow payment. The dealers appreciate those who pay promptly, but our experience is that the majority foster a culture of inconsistent, unenforced or ignored policy.”

Improvements with caveats

VA officials said recent improvements have led to reimbursements being issued to private providers within an average of 22 days, but there are several important caveats: that figure only includes claims that had gotten prior VA approval and involved no little-to-no doubt about whether they were valid.

For more complicated cases, including all patients sent to inpatient treatment, VA requires clinical documentation from a private medical facility so it can verify that the care a veteran received is legally covered by their benefits. And the department’s own systems which scan the paper documentation into its electronic databases are currently backlogged by between 90 and 120 days, meaning a claim can’t even begin to be adjudicated by VA experts until that delay is overcome.

Several members of Congress suggest that VA get out of the medical claims process entirely and turn it over to third-party payers who do that sort of thing as part of their core business.

TRICARE, the Defense Department’s health system, already relies on three regional contractors to handle most aspects of entire private provider system, including billing and reimbursement.

“There’s one solution here, and that’s to outsource it to people that professionally do this,” said Rep. Mike Coffman (R-Colo.). I’m a retired military person, I’m in TRICARE, and they do this efficiently. It’s not being done efficiently by the VA and I can’t imagine that it will be done. But we’ll make changes on the margins, I hope. I guess that’s considered progress here in Washington.”

Migliaccio, who joined VA just four weeks ago after having served as a Health and Human Services official said the department recently had released a request for information to industry in pursuit of a brand new in-house billing and reimbursement system, but conceded the department might be willing to consider outsourcing the process entirely.

“It’s something to think about. We can do a cost-benefit analysis to see where it makes sense,” he said.

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