The Rampant Fraudulent Billing in Outsourced Veterans’ Health Care


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.

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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…



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