A malfunctioning online tool for managing third-party insurance billing and copayments for veterans health care outside the Department of Veterans Affairs has resulted in $665 million in uncollected revenue since 2023, House lawmakers said. (Stars and Stripes)

WASHINGTON — A malfunctioning online tool for managing third-party insurance billing and copayments for veterans health care outside the Department of Veterans Affairs has resulted in $665 million in uncollected revenue since 2023, House lawmakers said Thursday.

VA leaders vowed to collect the past-due bills, though some lawmakers questioned whether the problems with the billing system point to budget mismanagement at the agency.

“These medical collections are an important part of the budget that pays for care for our veterans,” Rep. Matt Rosendale, R-Mont., said at an oversight hearing of the House Veterans’ Affairs Committee’s subpanel on technology modernization.

Insurance companies represent more than 90% of the debt, he said.

The VA uses the web-based system called the program integrity tool to identify and consolidate data about medical claims, billing and payments for veterans health care that is unrelated to injuries and illnesses incurred during military service.

“Without the program integrity tool, VA is essentially operating an open cash register,” said Rosendale, who is chairman of the subcommittee, which looked at billing problems that resulted when the online tool was taken down in February 2023. The tool is still not fully operational.

An estimated 40 million claims make up a backlog of overdue payments due from third-party insurers and veterans who owe copayments while the tool was offline for 18 months, VA leaders said at the two-hour hearing.

“IT system failures are no excuse to waste taxpayer money,” Rosendale said.

But VA leaders could not quantify the amount of debt owed by veterans or the number of individuals with overdue copayments.

Veterans are not charged a copayment for treatment of health conditions that are related to military service, catastrophic disabilities or other pre-determined factors, according to the VA.

The VA has come under criticism for how it manages third-party collections.

A May 2022 audit by the VA Office of Inspector General found more than half of billable claims to insurance companies in a three-year period were not submitted before filing deadlines expired.

The VA, as a result, did not collect an estimated $217.5 million that should have been recovered during the audit period, according to the inspector general.

When a veteran’s care is not connected to their military service, the Veterans Health Administration is responsible for billing the veteran’s insurance company. Veterans also can receive bills for copayments.

Kurt DelBene, VA assistant secretary for information and technology, said the online tool has been restored so the VA has begun identifying and collecting outstanding payments from third-party insurance companies for non-VA community care. He said more than $171 million was collected from insurers in July and August. He expects the program integrity tool will be fully operational by the end of fiscal 2025.

But Rep. Sheila Cherfilus-McCormick, D-Fla., said she is concerned about veterans on fixed incomes receiving old bills for copayments. She said the notices might come as a surprise to veterans who are not aware that they have unpaid medical bills.

Laura Duke, the VA’s chief financial officer, said as the VA notifies veterans, it is working with them to set up payment plans. She said the VA also is exploring a regulatory change that would enable the agency to forgive overdue copayments or provide other relief.

“We try to make it as easy as possible on the veterans, as we have seen delayed payments incurring,” Duke said. “We would need additional authority to waive the debt.”

But Cherfilus-McCormick urged the VA not to move ahead with billing veterans without a greater understanding of the impact on individuals with fixed incomes.

“I understand the VA’s desire to collect on these bills after such a lengthy pause. But we must keep in mind how this could affect veterans,” she said.

The program integrity tool was turned off in February 2023 because a defective computer code was causing claims to be duplicated in the system. It was partially brought back online in the summer but is still not operating fully, according to the VA.

The program integrity tool is used as a data repository for community care claims after they’re paid, according to Jennifer McDonald, community care division director at the VA Office of Inspector General.

McDonald estimated the VA’s bill collections from private insurers will continue to lag until the computer system is fully operational. She estimated potential lost revenue at about $55 million per month.

Billing for veterans copayments was approximately $23 million lower for the first two quarters of fiscal 2024 compared to the same period in 2023, McDonald said.

Rosendale questioned whether the problems with the online data tool reflect budget mismanagement at the VA.

“VA’s struggles with budgeting and management have existed for many years and will not be resolved overnight,” he said.

But DelBene said the VA is committed to collecting the entire debt and making the online tool fully operational.

“We’ve made strides and remain committed to full recovery of the tool. We will continue to provide this subcommittee with updates on the progress,” he said. “While $665 million is significant, this revenue will be collected.”