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VA Hospital Scandal

VA Improperly Billing Insurers for Veterans’ Service-Related Care

VA medical facilities are improperly billing private insurers for treatment of service-related injuries and disabilities, according to veterans groups and a spot check of veterans’ medical records by NBC News.

Linda Byard, a 20-year Army veteran who was certified as 100 percent disabled because of injuries that occurred during her service, says she experiences misdirected bills nearly every time she has an appointment at a VA medical facility. “I have questioned this until I'm blue in the face,” she said.

The Veterans Administration is required under Title 38 of the U.S. Code to pay the cost of treating any illness or injury that either resulted from or occurred during military service.

The practice, which is barred by federal law, is another sign of the dysfunction plaguing the federal agency’s sprawling health-care system, said John Rowan, president and CEO of Vietnam Veterans of America.

"Veterans should never be billed for service-connected issues, but I know it happens,” he said. “It's happened to friends of mine."

The Veterans Administration is required under Title 38 of the U.S. Code to pay the cost of treating any illness or injury that either resulted from or occurred during military service.

No one can say how prevalent the improper billing is. An insurance industry source told NBC News that there is no reliable data on the extent of VA billing errors, adding that “an insurer would not know whether an injury is service-related or not unless it's specifically coded or identified as such.”

But a recent Government Accountability Office review of treatment reimbursement cases may offer a clue.

Randy Williamson, the GAO’s director or health care issues, testified last month before the House Committee on Veterans Affairs that the GAO review found that clerical errors were responsible for the wrongful denial of one-fifth of the 128 emergency claims submitted to four VA facilities.

“Moreover, VA did not always notify veterans, as required, that their claims had been denied. Therefore, some veterans were likely billed for care that VA should have paid for and those not notified by VA were denied their appeal rights and were unaware they were liable for paying bills for non-VA providers,” he said, referring to claims that were mistakenly referred to supplemental insurers or the veterans themselves.

Committee staff tell NBC News that they are planning another session to examine VA business practices – both in terms of reimbursement of non-VA providers for covered care and the improper billing of private insurers. No date has been set for the hearing.

Unlike the VA scandal where agency officials are accused of “cooking the books” to conceal long wait times for benefits or medical appointments, the improper billing results from sloppiness, said Tom Tarantino, chief policy officer for the Iraq and Afghanistan Veterans of America (IAVA).

“It’s not so widespread. … It’s more about the VA having an antiquated inefficient internal administrative process,” he said.

Watch CNBC’s documentary, Death and Dishonor: Crisis at the VA

In a statement provided in response to an inquiry by NBC News, the VA said, “Only veterans treated for nonservice-connected conditions should see their insurance company billed for their treatment. Veterans who are treated for service-connected conditions should not have their insurance company billed for treatment. VA encourages veterans to contact us if they believe their insurance plan has been billed in error by calling us at 1-877-222-8387.”

The revenue the VA collects from third-party insurers for nonservice-related treatment is deposited into the Medical Care Collections Fund (MCCF), which is the second biggest source of funding for the agency.

NBC News spoke with dozens of veterans about VA billing practices and reviewed the medical records of four vets that contained what appeared to be improper charges to insurers for appointments and medications that were service-connected.

Byard, 54, who suffered a stroke, battled cancer and incurred back injuries during her time in the U.S. Army, where she served as a computer technician, provided bills and explanations of benefits showing that the VA’s Malcolm Randall Medical Center in Gainesville, Florida, billed Blue Cross Blue Shield $1,175 for treatment of her health issues from June 2013 through June 2014.

This occurred even though she is 100 percent disabled and her VA health care is supposed to be fully covered.

Byard said she received no response when she asked her insurance provider whether the VA charges were valid.

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Similarly, Vietnam veteran Bob Slater sent NBC News records showing more than $21,500 in bills from the G.V. (Sonny) Montgomery VA Medical Center in Jackson, Mississippi, to Blue Cross Blue Shield for emergency room visits, medications and doctors’ appointments in September and October of last year.

Another document, obtained by NBC News from a veteran who requested anonymity, showed the VA charging his third-party insurance, Blue Cross Blue Shield, $337.79 for items related to his annual medical checkup, which is required due to his service-connected disabilities.

“When I bring it to VA’s attention, they refund the money to Blue Cross Blue Shield. If I don’t mention it, VA keeps the money,” said the veteran.

Neither Blue Cross Blue Shield Association nor its regional offices in Florida and Mississippi responded to requests for comment.

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While there is no indication that the improper billing of private insurers by the VA is deliberate, Byard said the practice adds to her aggravation with the medical center, which she contends provides substandard health care due to lengthy wait times for appointments.

“It’s not free,” she said of her 100 percent coverage. “I’m paying in my health and they are charging my insurance.”