The Department of Veterans Affairs failed to pay non-VA doctors, leaving veterans without care, in debt and sending them to collections agencies, according to a newly released report from the U.S. Office of Special Counsel.

A whistleblower sparked a 2018 Office of Special Counsel investigation which found that VA hospitals did fail to make payments to those private doctors on time, “which resulted in some of those providers terminating services for veterans and referring veterans to collection agencies,” investigators said.

In 2017 alone more than 2,500 veterans contacted VA about credit and collection issues because of VA’s failure to pay their claims.

VA has known about veterans being sent to collections or having care cut off because of the department’s flawed reimbursement system since at least 2014, when the whistleblower first reported, according to a letter sent to the president Thursday by Henry Kerner of the Special Counsel, who called it “gross mismanagement” in another letter to VA Secretary Robert Wilkie.

Both problems are further examples of department failures linked to outdated technology and information systems and a lack of accountability for spending or resolving veteran claims. Many of those issues have come to a head as VA expands veterans’ opportunities to seek care in their communities rather than in VA hospitals and clinics.

Part of the confusion often is the result of a complex VA reimbursement system -- VA both reimburses private doctors directly and sometimes uses a third-party system to pay providers.

“Despite widespread communication and education strategies (most involved) find it difficult to understand the complexities of healthcare billing and payment,” investigators said.

The investigation discovered about 51 percent of claims submitted to the central VA billing center were considered clean and accepted for payment.

The investigation focused on the mid-Atlantic region of VA healthcare facilities, where the whistleblower worked, beginning with VA medical facilities and staff in Durham and Asheville, N.C. and in Salem, Va. That region is working to reduce its claims backlog, investigators said, but the claims are coming in faster than its system and staff can keep up.

VA’s Office of the Medical Inspector made multiple recommendations to clean up the claims process to prevent veterans from having their care cut off or from being sent to collections in the future, and VA said it expected to deploy a new claims management system by the end of this month and hire “additional support staff” by March 2020. VA also stood up a call center in 2015 to help veterans with credit and collections issues from VA’s failure to pay claims.

Improper travel payments

The report also showed a “gross waste of funds,” including hundreds of millions of dollars spent on improper travel claims at VA, according to the report released publicly Thursday by the Special Counsel, the leading federal whistleblower-protection agency.

VA’s Fiscal Year 2017 financial report included $223.76 million in improper travel payments, Kerner’s letter and the report said.

VA sometimes pays veterans who live far from VA facilities and have to travel for care. But that program uses accounting software to process claims that is antiquated, dating back nearly 30 years ago. That system isn’t planned for updates -- needed to reduce the number of improper payments -- until 2022. The Inspector General has reported that the system was outdated and did not comply with federal regulations every year since 2012 when reporting began, investigators said.

“I commend the whistleblower for coming forward to identify this gross waste of federal taxpayer dollars and the unwarranted hardships placed on veterans as a result of the VA’s longstanding failure to properly pay provider claims,” Kerner said in his letter to the president, adding that he was “disappointed that it has taken multiple reports and hundreds of millions of dollars in wasted taxpayer funds for the VA to address the flaws in its accounting software.”

Kerner noted that VA’s report in response to the investigation “appears reasonable” and said he was “encouraged” by the department’s response and that “the agency is now taking steps to ensure these problems are addressed.”

VA spokeswoman Christina Mandreucci told Connecting Vets that the investigation "highlights allegations that date to the previous administration" and that the department is pleased with Kerner's recognition of their efforts to address the problems.

Since the allegations surfaced several years ago, Mandreucci said VA has:

Implemented a departmentwide electronic claims management system;

Launched a campaign to educate private providers on how to submit claims;

Hired more contracted staff to process claims;

Developed a departmentwide plan to reduce improper travel payments.

Last month, an Inspector General report revealed that VA kept thousands of veterans' appeals claims in boxes, file cabinets, cubicles and mailrooms -- some for years -- rather than send them to offices that had staff to process them.

Reach Abbie Bennett: abbie@connectingvets.com or @AbbieRBennett.

Want to get more connected to the stories and resources Connecting Vets has to offer? Click here to sign up for our weekly newsletter.