McDonough Denies That Veterans Are Improperly Refused Community Care

Then-U.S. Sens. Johnny Isakson, R-GA, who died in December, and Jon Tester, D-Mont., chairman and ranking member of the Senate Committee on Veterans’ Affairs, respectively, urged the Senate to pass landmark legislation to improve care and services at the U.S. Department of Veterans Affairs (VA) in 2018.

WASHINGTON — Media reports that veterans were being denied community care for financial reasons once again raised questions about how the Mission Act is being administered.

An investigation conducted by inewsource, a nonprofit newsroom in San Diego, and USA Today and published in the Nov. 1 issue of that newspaper found evidence that VA administrators in San Diego were overruling physicians’ recommendations to send veterans to community care. The story alleged that these administrators were concerned with the financial impact of veterans being funneled away from VA and made clinical decisions based on the potential that their own budgets would be cut.

Testifying before the Senate Veterans’ Affairs Committee last month, VA Secretary Denis McDonough said the allegations made in the article were not true and that VA was not short-changing veterans’ healthcare in an attempt to protect the budget of individual facilities. 

“When I find a problem, I snuff it out,” McDonough declared. “But to suggest that by design we’re breaking the law is an overstatement. That’s what the article suggests. We took it very seriously, including meeting with the team in San Diego to get to the bottom of it.”

McDonough said that it is ultimately up to the veteran whether to stay at VA or seek community care, if they are eligible for it. He also testified that, when VA physicians urge veterans to stay with VA, that advocacy is not motivated by money but by to the department’s ability to provide better care overall.

“What I believe is that we are giving the best available care to our veterans, including historically high levels of care in the community. I think that ultimately reflects the veteran’s interest. I want us to compete for access to that veteran,” McDonough told legislators. 

The MISSION Act, which went into effect in June of 2019, consolidated VA’s community care programs and requires the agency to pay for veterans to receive non-VA care if they are prohibitively far away from a VA facility or VA is unable to provide care in a timely manner. In 2014, VA spent about $7.9 billion on community care–about 12% of VHA’s budget. By 2021, that number had risen to $17.6 billion and accounted for 20% of VHA’s budget.

According to McDonough, VA spent $2 billion on community care in the month of September 2021 alone.

Overpaying for Services

Whether that money is being well spent is unknown. A recent VA Office of the Inspector General report suggests that VA may be overpaying for some of those community care services.

The OIG analysis found that some community providers are billing for a “significantly higher rate of high-level evaluation and management services than their peers in the same specialty.” This suggests to IG investigators that providers may be improperly “upcoding,” either intentionally or unintentionally. Upcoding is the practice of assigning an inaccurate billing code for a medical procedure in order to receive higher compensation.

“OIG determined that, in FY2020, more than 37,900 non-VA providers billed and were paid for significantly more high-level evaluation and management codes than were all providers in that specialty on average,” the report states. “[For those codes] the community providers received bout $39.1 million (13%) of about $303.6 million VHA paid for all non-VA evaluation and management services.”

The report also found that providers were billing separately for evaluation and management services that should have been part of a “global surgery package” which generally encompasses all charges related to a surgery. 

The investigators note that some of these charges may be understandable, such as when an orthopedist charges for a shoulder problem a patient experiences after hip surgery. However, their investigation found that the majority of this separated billing is likely improper. The review team identified more than 45,600 providers who were paid about $37.8 million in FY2020 for these evaluation and management services while the global surgery package was in effect.

These improper payments are not easily detected, because staff at VA medical facilities do not retrospectively audit medical documentation to determine whether the evaluation and management service was billed at an appropriate level, even though such reviews are required by VA guidance. 

The MISSION Act requires VA to train providers on how to properly administer non-VA programs. However, VHA relies on third-party contractors to assist in administering community care programs. The OIG investigators found no evidence that these contractors provided any such training to non-VA providers.

In response to the report, VA officials said they would be conducting retrospective audits of billed outpatient services and will take corrective actions based on any billing issues they discover.