Thursday, August 8, 2019

Veteran: Non-VA Emergency Care Claims Inappropriately Denied and Rejected

Response to the VA Inspector General Report of 8/6/2019

The VA Office of Inspector General on August 6, 2019, released a report "The VA Office of Inspector General on August 6, 2019, released a report "Non-VA Emergency Care Claims Inappropriately Denied and Rejected".  While thorough and the recommendations are valid, it's incomplete because the recommendations avoid fixing the main source of the problems. Claims Inappropriately Denied and Rejected".  While the recommendations are valid, it's incomplete because the recommendations avoid fixing the main source of the problems.

The report covers several topics related to VA operations, but it does not identify the specific source and cause that prompted the need for the report. The report recommends 11 corrective actions (below). None of the actions fix the source of the problems responsible for the business and financial disaster. When trauma occurs under adverse conditions,  and the veteran uses reasonable person judgment to obtain emergency medical treatment a non-VA facility, the Law instructs the VA to either pay-the-provider or reimburse-the-veteran for unpaid medical expenses.
The Law has statutes on eligibility and limitations.  This report is about one statute and the VA concocting a regulation the VA used to deny benefits. This concoction is a source of millions of dollars denying benefits to veterans.

The VA contrived a regulation not compliant with the Law -- it's a lie. The OIG report exposes the consequences of the lie.

Here is the regulation:

CFR 17.1005 (5) "VA will not reimburse a veteran under this section for any copayment, deductible, coinsurance, or similar payment that the veteran owes the third party or is obligated to pay under a health-plan contract.” The bayonet policy.

Here is the Law:

The Law's statute 38 USC 1725 (c) (4) (D) states “The Secretary may
not reimburse a veteran under this section for any copayment or similar payment
that the veteran owes the third party or for which the veteran is responsible
under a health-plan contract."

What should have happened:

If the veteran is eligible and used a reasonable person's decision for adverse conditions had emergency room treatment at a non-VA facility, then the Law instructs the VA to pay-the-provider for the unpaid medical expenses. The Law instructs the provider to reconcile all other payments before invoicing the VA. VA Form 10-7078 is the invoice form providers submit that lists the unpaid medical expenses. Neither Title 38 nor Privacy Law grant the VA privilege to demand details of the provider's reconciliations. Once the VA establishes eligibility and adverse conditions with the veteran, the Law permits payment to the provider. The business process includes the execution of two contracts. The first, between the VA and the veteran, establishes rights to benefits. The second, between the VA and the provider, provides the benefit payout.

The statute means:

When the veteran’s insurance company pays a provider the insurance’s
share of copayment, the VA will not pay back a veteran for the money insurance
paid to a provider. That is all it means, that is all it can mean.  It is elegant.

1. The Law prevents a veteran from double-dipping on an insurance copayment.  The veteran cannot file for reimbursement using the insurance copay as the veteran's money. 

2. The Law does not include the term deductible. 

3. Without a reimbursement invoice, Form 10-7078, the rest of the statute is meaningless.


With any insurance, the insured contracts with an insurance company to reduce the insured payout on claims against the insured. When insurance pays out, the money belongs to the insured. Without the statute, the veteran can claim the insurance share of the copay is the veteran's money, and the veteran can invoice for reimbursement.  Statute, 38 USC 1725 (f)(3), is specific, third party (veteran, provider, insurance) means the insurance company and the veteran is responsible for the insurance contract. That responsibility means the veteran has title to the insurance payout.

The VA lie. The VA regulation twisted the statute to mean the insured copay and the provider as the 3rd party.  VA policy uses a self-centric relationship with other parties by claiming to be the 1st party (VA, vet, provider).  The Law clearly defines third-party as an insurance company. And the definition includes "A person or entity obligated to provide or to pay the expenses of, health services under a health-plan contract." The expense of insurance is the premium cost.  Payment of the premium establishes the insured, the veteran, has title to the money. The VA contrived the term expense to mean medical expense, which is a fee for a medical expense.

Title 38 USC 1725 includes other statutes the OIG report ignored. For an episode of care, a medical expense is a fee for a service. The VA fee payout is the maximum allowable amount (MAA). The VA uses the Medicare fee as the MAA and payment of the MAA exhausts other fees for the service.  The stack of papers in the OIG is because the VA does not have proper data systems to calculate a VA explanation of benefits.   The Law requires all payments be reconciled before invoicing the VA.  The invoice form does not include an entry for other payments. Without the data for the payments, the VA cannot determine the VA responsibility amount for the MAA. Consequently, staff intervenes on every claim. And the paperwork stack piles up.

The OIG report fixes nothing. It just creates more unnecessary procedures. Changing the regulation to be compliant with the Law will have an immediate self-correcting system-wide waterfall effect. The OIG report insists the recommendations use the same audit standards derived from a fanciful regulation. But the standards are wrong! An invalid standard makes the audit invalid.

OIG 11 Recommendations

For each recommendation is a jelly bean tag that exposes the nonsense in the recommendation. While the intent of the recommendation has some merit meant to improve business processes, the means test fails due to faults in the standards that contribute to the reason for a recommendation in the first place.

 1. The Under Secretary for Health reevaluates all claims denied after April 8, 2016, for the reason of “other health insurance” for appropriate corrective action. --- jelly beans*. What are there corrective actions, who writes this nonsense?  

2. Veterans Appeals Improvement and Modernization Act of 2017, Pub. L. No. 115-55. 22 Recommendations directed to the Under Secretary for Health were submitted to the Executive in Charge, who has the authority to perform the functions and duties of the Under Secretary for Health. --- jelly beans - nothing fixes the regulation.

3. The Under Secretary for Health develops and implements a control to ensure claims processors have the appropriate options in the claims-processing system of record to request evidence necessary to substantiate third-party liability claims. --- more jelly beans. Staff already has control procedures and they are stuck with jelly beans.

4. The Under Secretary for Health reevaluates all sample claims identified in this audit as inappropriately denied and rejected for appropriate corrective action. --- jelly beans staff uses the same reasons for denial the VA will not pay the copay per regulations.

5. The Under Secretary for Health reevaluates production targets, work production credits, and application of non-processing time for voucher examiners to ensure the production targets include claims research.  --- use good business practice even to make jelly beans? Sure redefine targets so the business can melt jelly beans.

6. The Under Secretary for Health requests and ensures the Office of Resolution Management conduct an organizational assessment of the Claims Adjudication and Reimbursement processing locations where staff reported they were directed or encouraged to improperly process claims and to take appropriate action. --- yahoo management can hawk jelly beans in a bigger bag.

7. The Under Secretary for Health implements strategic plans to ensure the Office of Community Care, Claims Adjudication and Reimbursement Directorate, emphasizes the accuracy of claims-processing decisions.  ---  the strategic plan is to invent more flavors for jelly beans. Reimbursement Directorate? The VA uses the term reimbursement as some type of spiritual gratuity. 

8. The Under Secretary for Health implements controls to ensure eligibility for overtime, telework, and annual performance bonuses for Claims Adjudication and Reimbursement staff includes all facets of performance  --- jelly bean manufactures know quality is the perceived use of labor, facilities, finance, and delivery. jelly beans have quality standards. Is the OIG telling the VA  management to implement quality controls?

9. The Under Secretary for Health develops and implements a clearly defined and effective quality assurance program that encompasses all claims decisions and includes a standardized process for supervisors to determine and effectively monitor the extent to which claims processors accurately rejected and denied non-VA emergency care claims. --- in jelly bean manufacturing production requires cost, schedule, and quality be balanced. Cost is the resource expense or man (labor), money, materials, and machines. Schedule means delivery of a quantity within a timeframe. Quality is the perception of the use of resources and of delivery fulfillment.  Quality assurance is a matrix management strategy. Before adding more staff, correct the tactical problems that caused the problems. The VA business is the distribution of money to pay a veteran's benefit. The information processing behind the distribution operation is a production business. The VA's quality assurance basis is compliance to the Law, not more staff.

10. The Under Secretary for Health develops and implements clearly defined controls to ensure Claims Adjudication and Reimbursement processing facilities routinely communicate backlogs of incoming mail to Office of Community Care leaders with associated action plans to accurately record the date the documents were received---  So the OIG wants more VA staff? When the VA implements a business process, the result is more jelly beans.  

11. The Under Secretary for Health develops and implements clearly defined controls to ensure Claims Adjudication and Reimbursement processing facilities and VA medical centers timely communicate claims decisions to veterans and providers to ensure veterans are notified of what VA needs to adjudicate the claims and what actions the veteran may take in response. --- the Law clearly states what information the VA needs to pay ER claims. The VA's business failure is not generating an Explanation of Benefits for every invoice. Privacy Law prohibits the VA from demanding details of a private contract between the patient, the provider and the patient's insurance company. This recommendation is so far off any business sense, it cannot receive a jelly bean.

If was a priest, I will tell the OIG to say three Hail Marys, a good Act of Contrition, and offer absolution after replacing jelly beans with right conduct. 

On page 11 is a footnote: 

18 Under 38 U.S.C. § 1728, VA acts as secondary payer when a third party is financially responsible for coverage of emergency treatment expenses received for service-connected conditions. Third-party means veteran, provider, other payers like private health insurance.

In some cases, under 38 U.S.C. § 1725, VA may, the Law says "shall be the secondary payer",  act as secondary payer,  when certain third-party liability exists for emergency treatment received for nonservice-connected conditions (e.g., situations involving auto insurance or workers’ compensation claims). For such instances, VA coverage is limited to the amount for which the veteran is personally liable after the amount of third-party coverage (e.g., exhausting coverage of automobile personal injury protection insurance coverage). The Bulletin, 3, no. 13 (June 26, 2014), states the rejection reason included “clarification of auto insurance vs. other 3rd party liability processes and requirements. It is imperative that sites utilize this rejection reason and forward the letter prior to denying a claim for third party liability.”


Because the OIG does not understand the business transactions, the OIG cannot see the truth behind the problems the report identifies. 38 USC 1725 requires the  VA to either pay-the-provider or reimburse-the-veteran. In either case, contracts must exist to make payments.  Money transfers depend on at least five contracts, two government and three private: veteran & VA, VA & provider, and patient & provider, insured & insurer, provider & insurance. The contract between the VA and veteran are two separate agreements.  Title 38 defines the first agreement by granting benefits to the veteran, and the Congress assigns the VA as its agent to use the Federal Budget to pay for the benefits. This agreement is a pay-the-provider condition.

Reimburse-the-veteran is a separate agreement because the veteran pays the provider, and the VA pays back the veteran. Under pay-the-provider, the provider invoices the VA. Under reimburse-the-veteran, the veteran invoices the VA. Both agreements meet Congress's intended use of the money, but follow-the-money is different. The Law prohibits the veteran from invoicing the VA for the insurance's share of copayment. The Law instructs the provider to reconcile all payouts before invoicing the VA.

Warning. Because the veteran-patient does not have the Law instructing the provider to reconcile other payouts, the provider can invoice the patient for the full medical expense. As an ethical business practice, the provider will reconcile before invoicing the patient. If the provider has an in-network agreement with the insurance company, and the only payout is from the insurance company, the patient will be charged the unpaid medical expenses. Under pay-the-provider, the VHA limits the provider's medical expense payout to the MAA. Under reimburse-the-veteran Congress assigns the payout limit to the Secretary. DANGER. The MAA is lower than the provider can charge the patient, and if the Secretary chooses the payout limit for reimburse-the-veteran, the veteran will not recover the full amount paid to the provider.

Congress assigns the VA the responsibility for the veteran's share of the Federal budget, a follow-the-money analysis tracks the sequence of payouts.

Pay-the-provider Track Steps:

 1. veteran registers with VA

 2. insurance and provider determine in-network fees.

 3. insurance invoices insured

 4. insured pays the insurance premium

 5. provider invoices insurance

 6. insurance pays provider per explanation of benefits

 7. provider invoices VA

 8. VA determines the maximum allowable amount

 9. VA pays provider

Each step has multiple eligibilities, dependencies, constraints and other conditions that affect the flow of money. Each invoice is a request to transfer title to money. Each payment is a transfer of the title to the money.

The OIG reports details some of the VA's administrative problems during Step 8.

Step 8 not only determines the maximum allowable amount (MAA); it also exhausts further provider fees for the same service.

The Latrine detail:

For some reason the VA considers reimbursement to be some type of gratuitous spiritual act. Reimbursement is a business transaction. Rather than following a business process, the VA presupposes a condition, like the veteran, has private insurance and the VA has rights right to the terms of the private insurance, that the VA claims to be an immediate basis for the denial.

The latrine detail is a name for the VA bypassing the reimburse-the-veteran process. For some reason, the VA considers reimbursement to be some type of spiritual gratuitous act and grants themselves diety procedures including the purported right to demand information from the provider about private contract terms the provider has with other parties.

The OIG report reflects the consequences of not understanding reimbursement is a formal business process.

Reimburse-the-veteran steps:

 1. Steps 1-7 are the same as pay-the-provider.

 2. VA denies provider invoice

 3. Provider invoices patient per insurance EOB

 4. Patient pays provider

 5. Veteran invoices VA

 6. VA pays the veteran the maximum allowable amount.

 7. If the patient's insurance unpaid copay is greater than the MAA. the veteran cannot recover the out-of-pocket difference cost.

The difference between what the veteran paid the provider and what the VA will pay based the MAA is the latrine deposit.  In a data sample comparing an insurance copayment compared to Medicare fee for the same service, the VA would have paid several thousand less than the insurance copay. Plus, if the patient paid the patient copay, that is more money in the latrine.

Bad data, bad VA:

A critical document in the follow-the-money process is the data on the invoice the provider or veteran submits to the VA. The cost of an episode of care is a medical treatment that involves one or more medical expenses.  A medical expense is a fee for a service.

In order for the VA to calculate payout,  the VA needs:

 a. the fee for unpaid medical expenses

 b. the medical service code

 c. total of other payouts for the service

The current Form 10-7078 only includes the unpaid medical expense for the service. By Law, the provider must reconcile other payouts before invoicing the VA.

By Law, all payouts for the same medical expense reduce the MAA the VA can pay. The invoice form does not have a data entry that totals other payouts for the same service. Without the provider including the total, every invoice requires manual intervention.

Please fix it:

The OIG report's recommendations aid in grief experience relief.  Unless the OIG and the Secretary take action to close the wound that caused the trauma in the first place, the reconnections are like sand in an hourglass.

I. Correct the regulation

II. Recognize reimbursement is a formal business process.

III. Change the invoice form to include other payouts.

IV.  Respect private contracts

V. Honor the Goodwill Grant as private to the VA and not shared with others unless the use is for VA medical services.

The Goodwill Grant

If a veteran has a private health plan contract for medical insurance, the Goodwill Grant is the veteran's volunteered permission of the veteran's private health insurance for VA's direct cost recovery at VA facilities. 38 U.S. Code § 1729 - Recovery by the United States of the cost of certain care and services.

Author's Note:

I am not a lawyer, I am a good information analyst.  Everybody is an information modeler.  When a patient sees a doctor, the patient's normal information model experiences trauma. The doctor uses medical information models to create affinity information model about the trauma to create a diagnoses information model. 

An information analyst uses diagnostic and affinity tools to develop models for information science. When analyzing commercial business processes, contracts provide a formal definition of activity between two principals.  A principal can one and individual or group acting as an individual. A follow-the-money analysis tracks the title to money across contracts. An invoice is a demand to transfer title to money. A payment is a transfer of title to the money.

Title 38 Veterans' Benefits is a grant to a veteran for national service. The Federal Budget pays for government operations. Congress assigns the DVA to be Congress's agent to use the Federal Budget to pay for the veteran's benefits. Title 38 is a set of business rules Congress approved for the money's use. By following the business rules, the VA is a formal business activity. Behind 1725 is a least 5 contracts, VA & veteran, patient & provider, insured & insurer, provider & insurer, VA & provider where the title to money crosses. 

*jelly beans - the candy is firm and colorful on the outside, but soft and squishy on the inside.  In writing, a jelly bean is a comment about a statement that uses words that appear solid but lacks substance behind the words.

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