Military medical facilities are missing out on millions of dollars in reimbursements that could be used to support the quality of health care, according to a new report from the Defense Department Inspector General.

The report calls for the Defense Health Agency to conduct a sweeping review of all military medical facilities to determine whether they’re following procedures for seeking reimbursements from other health insurers that are providing coverage for beneficiaries through their employer or other private insurance providers.

In some cases, the lack of procedures and oversight in seeking reimbursements may be costing patients money, too. For example, auditors cited an instance where an error resulted in billing a Navy retiree for the total charges of his medication, $95.30. But because that retiree had other health insurance, the Navy Hospital Bremerton should have billed that insurer instead, at no cost to the retiree. It was later corrected, and the insurer was billed.

Auditors reviewed records and processes at nine military medical facilities: Naval Hospital Bremerton, Washington; Naval Medical Center San Diego; Madigan Army Medical Center, Washington; Brooke Army Medical Center, Texas; Kimbrough Ambulatory Care Center, Fort Meade, Maryland; 75th Medical Group, Hill Air Force Base, Utah; 59th Medical Wing, Lackland Air Force Base, Texas; Walter Reed National Military Medical Center in Maryland; and Fort Belvoir Community Hospital, Virginia.

Based on their sampling of delinquent medical claims at the nine military medical facilities from October 2015 through June 2018, the IG auditors estimated that those nine medical facilities alone didn’t collect up to $71 million of about $87 million in claims that were more than 120 days old. According to the report, the longest period without following up that was noted on a sample claim for reimbursement was 863 days, at 75th Medical Group.

Some beneficiaries have what DoD refers to as Other Health Insurance, through their employer or through private insurance providers, covering medical, dental or pharmacy services. Just a few examples are CVS Caremark, Blue Cross and Cigna.

That Other Health Insurance provider, or OHI, is the first payer, and the military treatment facility is the second, so the MTF can bill that insurer for services performed at the MTF.

By law, military medical facilities are allowed to recover the cost from that other health insurance company for providing health care services to DoD beneficiaries. (Tricare, Tricare Supplemental plans, Medicare, Medicaid or other government-sponsored programs aren’t considered part of that Other Health Insurance category.)

The services operate uniform business offices at all medical facilities that manage the third-party collections, making sure that billable services are identified, payer information is available, accurate claims are submitted and the reimbursement is collected.

These programs recover an average of $400 million a year for DoD medical facilities, but clearly that number should be higher, according to the IG report, which comes at a time of massive DoD health care reform, as well as scrutiny of health care costs.

That money from the reimbursements is used for the operation and maintenance of the military medical facility where the care was received, and intended to improve the quality of health care.

Defense officials are in the process of transferring all the military treatment facilities from the control of the services, to the control of the Defense Health Agency. Information was not immediately available from the Defense Health Agency about whether there will be changes in the procedures for managing claims to other health insurers.

Defense Health Agency did not submit a response to the IG’s recommendations; but the service branches responded to the recommendations for their specific military treatment facilities.

What you can do: Fill out DD Form 2569

In some cases, the military treatment facilities are not collecting the information from patients about their Other Health Insurance, the auditors found. Sometimes patients don’t understand that the military can seek reimbursement from other insurers, and refuse to provide information about their other health insurer. In other cases, personnel aren’t collecting it because of time constraints or various other reasons.

Military health officials collect the information on hard copy or electronic versions of DD Form 2569.

The absence of information about other insurance coverage affects costs in various ways — for example, when a patient is required by the other insurer to have pre-authorization in order for a procedure to be covered by that insurer, but the MTF is not aware of the other insurance, and thus, the pre-authorization requirement. If there’s not pre-authorization, the other insurer generally wouldn’t pay.

Some other findings:

  • At three medical facilities, personnel didn’t collect on three pharmaceutical claims, valued at $82,740, because the military pharmacies dispensed more than the 300-day supply of drugs allowed by the civilian insurer.
  • MTFs didn’t process and generate bills for services rendered on 26,236 potentially billable patient visits processed through the new electronic health record system, Genesis, that manages patient information for the Military Health System, because of inaccurate coding. In one response by the Army, it was noted that there is a “known system defect” in MHS Genesis that’s part of this problem, and officials were working on a solution expected to be completed by August.
  • MTF personnel didn’t submit timely, accurate claims and didn’t follow up on claims, because the medical commands didn’t establish standard procedures to implement the regulation for collecting third-party claims. Nor did they use the Department of Treasury or local judge advocate support to collect delinquent debt. The medical facility commanders didn’t implement procedures for transferring delinquent debt to the Treasury Department.
  • The Army, Air Force and National Capital Region Medical Directorate have used contracts to help some medical treatment facilities with third-party collections, but the contract terms weren’t sufficient to comply with DoD and federal regulations, and the government oversight was lacking, to make sure they collected all available reimbursement from other health insurance companies.
  • Conversely, personnel weren’t always following DoD procedures for processing refunds that were due to insurance providers who had overpaid the MTF for claims.

In their review, IG auditors selected two medical facilities within each military service with a low collection rate, and a medical facility with a high collection rate for claims billed between fiscal 2015 and fiscal 2017, and two medical facilities in the National Capital Region Medical Directorate.

Auditors made 72 recommendations to the commanders or directors of the nine medical facilities they reviewed.

Out of 250,932 claims, valued at $86.9 million, that were more than 120 days old at the nine medical facilities, they nonstatistically selected and reviewed 70 claims, valued at $3.6 million. In those 70 claims, auditors identified up to $1 million in missed opportunities for reimbursement.