Ross D. Franklin/AP Photo
The VA MISSION Act of 2018 greatly expanded the outsourcing of veterans’ health care to the private sector.
When allies of the Koch brothers, among them the Concerned Veterans for America, worked with the Trump administration and Congress to pass the VA MISSION Act of 2018, they made sure the legislation, which greatly expanded the outsourcing of veterans’ health care, contained few mechanisms for holding private-sector providers accountable for the quality of care delivered to millions of veterans. Critics of the MISSION Act warned that the door was being opened for the bilking of the VA by private doctors and hospitals long known to engage in fraudulent billing practices.
In a new report entitled “VHA Risks Overpaying Community Care Providers for Evaluation and Management Services,” the Office of the Inspector General (OIG) of the Department of Veterans Affairs (VA), which runs the Veterans Health Administration (VHA), confirms that privatization has made veterans’ care more costly, with fewer financial controls. According to the report, payments to thousands of contractors assembled in what’s called the Veterans Community Care Program (VCCP) and its Community Care Network (CCN)—a network of thousands of private-sector providers who deliver everything from surgery and hospital care to mental-health care and physical therapy—have, between 2017 and 2020, jumped a whopping 500 percent. Between FY2017 and FY2020, the OIG estimated that payments just for non-VA evaluation and management services jumped by about 350 percent, from $67.5 million to $303.6 million.
The investigation revealed that in FY2020, 37,900 non-VA providers received $39.1 million for patient evaluation and management services, like taking a medical history, examining a patient, or making medical decisions about that care. These services, were, however, never actually provided. In FY2020, another 45,600 providers received $37.8 million for such services that were provided, which amounted to “more than costs that are generally included … in the global surgery package.” In other words, surgeons charged the VA for procedures they performed but included separate charges for evaluation and management services before, during, and after a procedure, even though those activities were included in bundled payments made by the VA. Some physicians in the same group practice, who were supposed to be paid “as if they were a single physician,” also charged separately.
According to the figures cited by the OIG, that would mean that 38 percent of the 218,000 participants in the VA’s Community Care Network have engaged in a fraudulent billing practice known as “upcoding.” The OIG describes upcoding as “the improper practice of assigning an inaccurate billing code to a medical procedure to increase reimbursement.” The billing codes referred to here are the CPT (current procedural terminology) codes that are used by providers in our non-VA fee-for-service system to bill for services rendered.
The VA has also paid billions to two private insurance companies, TriWest and Optum, to serve as third-party administrators of the VCCP. They were tasked with assembling and administering networks of private-sector providers and training them in such matters as how to properly care for veterans and bill for that care. According to the report, the OIG found there was “no evidence” that this kind of oversight and training ever occurred. That’s hardly surprising. When TriWest, along with another private insurer, Health Net, served as the third-party administrator for the Veterans Choice Program—the precursor of the VCCP—the OIG found that the two companies had engaged in millions of dollars in improper billing of their own. In 2020, TriWest alone later agreed to pay the U.S. government $179.7 million to resolve overpayments from the VA. Despite this record of abuse, the Trump administration hired TriWest to run the MISSION Act’s outsourcing program.
After documenting the latest fraudulent practices, the VA OIG recommends that the VA set up a continuing-education program to train non-VA providers in the proper billing of evaluation and management services. This suggests that the OIG believes that the upcoding practices engaged in by almost 40 percent of CCN providers represent some kind of rookie error that can be remedied by spending a couple of hours in front of a computer reviewing how to accurately use CPT codes.
In fact, providers who are part of the Community Care Network have been working for years, if not decades, in an American health care system in which fraudulent billing practices are not just an art but a science.
As Alan Sager, professor of health care financing and management at the Boston University School of Public Health, explains, “in a healthcare system in which chaos reigns and no one is held accountable for anything, upcoding is one of the most common techniques for generating unwarranted revenue. This is called theft.”
Even the Medicare program, which is notoriously lax in prosecuting such theft, states unequivocally that “Defrauding the Federal Government and its programs is illegal. Committing Medicare fraud exposes individuals or entities to potential criminal, civil, and administrative liability, and may lead to imprisonment, fines, and penalties.”
Instead of a slap on the wrist, Sager argues, what the OIG should have demanded are criminal penalties for fraudulent overbilling. “If upcoding is a crime in the Medicare program, it should be defined as such in the VA.”
The OIG does recommend that the VA increase its oversight of private-sector providers by dedicating more time to assessing the quality of medical services they deliver and overseeing their billing practices. That would be a very useful reform if the OIG also recommended that Congress provide the VA with additional funding to hire more staff who could more effectively monitor non-VA providers. That monitoring would only be possible if CCN providers were also required to provide the VA with full documentation of services rendered before they receive payment or authorization for those services.
But the OIG fails to recommend these reforms. In fact, the OIG fails to acknowledge the results of several surveys done by VA nurses and psychologists that highlight the difficulties VHA’s current professional staff members have had obtaining requested documentation from non-VA providers. As a Congressional Budget Office report recently confirmed, the quality of care delivered by VCCP providers is not only “unknown” but unknowable, because the government lacks any standardized system of quality reporting.
To protect VA patients and U.S. taxpayers from MISSION-enabled fraud and abuse, the Biden administration must crack down on private-sector providers. Although the OIG naïvely notes that these providers are acting on “behalf of the VHA,” their own report makes it crystal clear that many are instead seeking their own financial gain.
