MANTENIMIENTO PREVENTIVO DEL MOTOR

FINDINGS,CONCLUSIONSANDRECOMMENDATIONS

PANEL FINDINGS

The Department of Veterans Affairs’ Fee Care Program needs to change. Historically, this program constituted a small fraction of health care resources. By 2012, it will be approximately 10 percent of the VA’s total health care budget. During this period of unprecedented growth, the organizational, administrative, and technological systems used to operate and manage the program simply have not kept pace. VA is different from most federal health care systems in that it is both a provider of health care and a payer of health care claims. The Panel finds that there are a number of important factors that need to be understood when considering the reasons for the Fee Care Program’s current challenges, as well as possible solutions:

1. Given the significant organizational and productivity challenges within the Fee Care

Program, VHA has limited understanding of the services it is procuring through this

program or their costs. The Fee Care Program has not been effectively managed at the

senior VHA, Chief Business Office, or VISN levels. VHA provides limited VISN-wide executive oversight of the Fee care program. The program lacks clearly defined operational objectives or goals, and is not guided by an effective strategy for optimally managing program expenditures.

2. The Fee Care Program is significantly more inefficient and has higher error rates than

benchmarked organizations. Productivity across operating sites varies considerably.

The Chief Business Office (CBO) estimates the error rates (that is, erroneous payments23) at 12 percent per year, or approximately $500 million in FY 2011. By contrast, TRICARE has a reported error rate of 0.42 percent.24 Productivity varies so greatly across operating sites that the productivity of the most efficient processing site is nearly 10 times greater than the most inefficient site.

 The Fee Care Program’s decentralized mode of operation across VA hospitals and networks results in inefficient operations and high payment error rates.

 Fee Care organizational alignment, staffing, grade profiles, education, training, training certification, performance standards and performance expectations vary significantly across VISNs and Fee operating sites.

 Interpretation and application of rules vary across Fee operating sites

23 _{Erroneous payments are net of overpayments and underpayments.}

24 _{Information provided by TRICARE officials for FY 2010. TRICARE has service level agreements with their}

contractors mandating that payment errors shall not exceed 2 percent of the total billed charges for the first two option periods of the contract. In all remaining option periods, the absolute value of the payment errors cannot exceed 1.75 percent of the total billed charges. This reported error rate of .42 percent is based on billed charges, as opposed to actual paid amounts used in calculating the error rate for the Fee program. Actual amounts paid are typically less than billed amounts. For example, if most payers pay at a rate of $1 in payment for every $3 to $5 in billed charges, a comparable error rate for the TRICARE program might be in the range of 1.26 percent to 2.1 percent

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 Fee claims technology, while improving, still falls well short of benchmarked organizations’ standards as well as what is needed for improvement.

 There is no coordinated effort to effectively capitalize on the expertise, resources and economies of scale of the VISN structure in VHA’s field organization.

3. The Fee Care Program has grown haphazardly over the years and the technology and

administration of Fee care claims have been neglected. As VA’s Fee Care Program has

grown, the Department has been playing catch-up in its attempts to modernize and improve its decentralized and inefficient claims processing system. Despite a number of initiatives being undertaken to improve the current situation, the organization responsible for improving the system, the Chief Business Office, has limited control because:

 People actually processing claims work for local medical centers or VISNs are not necessarily responsive to CBO business requirements.

 CBO does not have the traditional tools for strong headquarters program management of field operations: solid performance metrics; accurate and timely data reporting systems; and, strong program integrity mechanisms.

 Acquiring new claims technologies is an essential requirement for making significant improvements in the system but is seen as very difficult in the current VA IT environment. The Panel believes that given the importance of the Fee Care Program and the significant financial losses it suffers because of inadequate technology, VA leaders need to find a way to support and fund the needed new technologies.

4. VA has an opportunity to create a markedly improved Fee claims system but faces major

challenges. In addition to the significant changes recommended for VHA field

operations outlined below and the needed technology enhancements, the Panel also believes that CBO needs to change the organizational alignment within the Fee office to achieve more focus, effective leadership, and improved lines of authority to bring about the necessary changes.

5. The Chief Business Office has struggled to meet its mandate to provide a single

accountable authority to develop administrative processes, policy, regulations, and directives regarding the delivery of VA health benefit programs, including the Fee Care Program.25 One factor in this observation is the divide between a highly centralized headquarters structure and a highly decentralized VISN structure that impedes a well- functioning business model. Examples of this divide can be seen in the varying approaches in the field with respect to Fee organization, staffing, management, and ultimately, performance. A second factor is that VHA's clinical focus sometimes leads to the under-resourcing of business systems, ample evidence of which can be found in the current archaic Fee Care Program IT infrastructure.

6. The support environment within VA and VHA—particularly IT, HR and Contracting—

plays key roles in improving the functioning of the Fee Care Program. The Panel

believes that strong leadership support from senior VA and VHA officials will be

59 required to provide the Fee Care Program with the institutional support required to bring about the recommended changes.

7. The Fee Care Program can significantly improve just by changing its organizational and

administrative processes; however, the most significant performance breakthroughs can

take place only through technology. Two excellent examples of how technology can do

this are the Medicare and TRICARE programs, which respectively handle 90 percent plus and 75 percent of their claims without human intervention. VA in contrast, cannot process any claims without human intervention.

8. CBO also needs to develop stronger program management capabilities. Although CBO

does not exercise direct line authority over field Fee operations, they still can develop mechanisms that can help to drive desired outcomes by using the traditional tools available to program managers:

 Metrics – CBO needs a balanced set of metrics to oversee Fee operations in the field. This would include measures of speed, accuracy, costs and customer satisfaction.

 Data – reliable performance data is essential for Fee Care Program oversight. This study found numerous examples of questionable and clearly erroneous data used in Fee Care Program reports. It was also clear that this information was not being adequately reviewed by Program officials.

 Program integrity – CBO should create and manage a program integrity component in each of the consolidated operating centers as well as at its headquarters for determining whether work is being done in the prescribed manner.

 Use existing authority – both CBO and all VISN directors report to the Deputy Under Secretary for Health/Operations and Management. In matters of insuring field business office structural and business process consistency, this office should exercise more direct control.

Over the past decade, the Fee Care Program has grown from a small, relatively infrequently used adjunct to traditional VA health care services, into a critical element of clinical care for veterans. While the Fee Care Program has grown exponentially in terms of volume and budget outlays, there has been insufficient strategic oversight of the program and its administrative and support systems have languished.

PANEL RECOMMENDATIONS

A consolidation effort should be undertaken in order to maximize efficiency and reduce staffing levels. After reviewing the costs and conducting a ROI analysis, the Panel has concluded that consolidating the Fee Care Program at the VISN level while implementing a more standardized claim processing technology platform would be the best option. The standardization of the IT infrastructure along with consolidation will allow a smaller number of employees to work more efficiently and with a more structured rule-based environment which will drive a decrease in claims processing errors. This will result in substantial savings for VA, which can be redirected into care for veterans.

60 As a result of this study, the Academy Panel has concluded that VHA should take the following steps to strengthen the Fee Care Program:

Organizational Consolidation and Management Changes

1. VA should consolidate its Fee Care Program from the current 100+ locations to the

smallest number possible that will provide necessary redundancy and workload surge capabilities. This should result in no more than 3 to 5 regional locations.

 Organizational consolidations should take place within the existing VISN alignment.

 VHA should set up a competitive business plan process to identify the leading operating Fee centers for further consolidation. VISNs should be encouraged to seek out partnerships with each other and structure the consolidation to avoid layoffs.

 Consolidation would include the administrative requirements of the authorization function in addition to claims processing. Clinical decision-making would remain at the local facilities.

 Fee Care Program funding would remain with the local facilities to ensure accountability and buy-in using a governance model similar to the one used by the Consolidated Mail Outpatient Pharmacy (CMOP) program which includes both a national and local advisory boards.

2. Senior level VHA management (Under Secretary for Health, Deputy Under Secretary

for Health for Operations and Management, and Deputy Under Secretary for Health for Policy and Services) should provide policy clarification on goals and expectations for VA purchased care, including the allocation of resources between VA-provided and purchased care to best meet strategic goals.

3. VHA should build greater program management expertise within its organization to

better manage the Fee Care Program and to provide support to the consolidated operating centers. Both internal VA and external non-VA organizations should be benchmarked in this effort.

 The Chief Business Office should create and manage a program integrity component in each of the consolidated operating centers as well as at its headquarters.

 The Chief Business Office should create more balanced performance management systems and robust Fee Care Program metrics that include measures of productivity/costs, customer satisfaction, and accuracy as well as timelines. Accuracy, management, and accountability for data need to be improved.

 Accountability and responsibility for Fee management and outcomes need to be better defined, communicated, clearly understood and executed by all line and staff elements in the Fee process, Staffing standards, business rules, and standard operating procedures should be enacted and enforced. Clear lines of authority should span the office of the Deputy Under Secretary for Health for Operations and Management, the Chief Business Office, the VISNs, and consolidated centers.

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Technology and Virtual Consolidation

4. VHA should put an enterprise-wide technology solution in place that achieves virtual

consolidation.

 VA has struggled with large scale IT implementation efforts, as recently noted by the Government Accountability Office. 26 To ensure the success of this recommendation, the minimum requirements are careful planning, the provision of sufficient resources, and support from senior leaders of both VHA and Office of Information & Technology (OI&T).

 The Chief Business Office should specify business rules in greater detail and incorporate them into the technology platform to significantly reduce opportunities for interpretation or judgment by claims processors.

 The Chief Business Office should put more resources, emphasis and priority in facilitating standardization in processing claims through templates, standard operating procedures, training, and technology tools.

 CBO should continue to create a single national database for Fee Care Program operations.

 VHA leaders need to work closely with the leadership of the VA OI&T to establish a way forward for the development of the resources and authorities to implement a new technology platform. CBO should host a technology “bake-off” to get the process underway.

Other Considerations

5. Conduct a cost-benefit analysis of contracting out the processing of claims as with

other payer models (TRICARE, Medicare, Medicaid, Blue Cross Blue Shield, etc.) and their applicability for VA.

While outside the scope of this study, the Panel believes that an independent analysis of the costs and benefits for contracting out similar to TRICARE or Medicare would provide important information for VA policymakers when considering the long-term cost projections for the Fee Care Program.

By implementing these recommendations, the Panel believes that VA will improve service to Fee care providers, which will help ensure maximal participation in the Fee Care Program and consequently, more available health care options for veterans. The savings gained from more efficient administration and more accurate payments can be redirected back into improving other health care services for veterans.

26 _{“VA has, however, experienced challenges in managing its IT.” Information Technology: Department Of}

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IMPLEMENTATION

VA needs to move quickly to implement changes to the Fee Care Program, particularly the consolidation of field operations and technological enhancements. The program is projected to continue to grow and the unnecessary costs to VA’s budget waste money that could be used to provide health care to veterans.

Certain steps should be taken by CBO to accelerate the current momentum that VISNs have to consolidate and form partnerships with each other. Active communication between CBO and VISNs and high level VA management endorsement would help to accomplish this. CBO could set up a competitive process to identify the leading five or six operating centers for further consolidation. VISNs would be encouraged to seek out partnerships with other VISNs in order to attain no more than five or six consolidated centers. The Fee Care Program’s Advisory Board could provide a forum to obtain input from all the VISNs for the consolidation prior to any formal competition taking place.

VISN 18 and VISN 19 should continue with their partnership for a consolidated center. VISN 17 should continue with its consolidation. Any further consolidation among VISNs should involve multiple VISNs. All elements of the reorganization should be overseen by the Deputy Under Secretary for Health/Operations and Management (10N) with policy guidance from the Chief Business Office. Consolidation would be implemented such that lay-offs would not occur. Normal turnover and reassignment of current Fee staff would minimize the need for lay-offs. CBO should procure an enterprise-wide technology solution through the competitive process. Contractors who could do this include those who administer Medicare, Medicaid, and/or TRICARE claims as well as FSC and the developers of FBCS and 3M. Virtual consolidation should include the development of a single system that replaces the current FBCS and VistA Fee Care Programs, implementation of a rules engine to automate the processing of claims, and a robust program integrity component.

Even without physical consolidation, virtual consolidation should be able to accomplish the following:

 Share work, when necessary, between varying Fee processing sites

 Streamline the assignment and allocation of work as the workload and number of employees at each site change

 Provide tracking of performance at an employee level, group level, or Fee processing operation level

 Generate reporting for the enter Fee Processing operation with the ability to drill down. To implement virtual consolidation, further study and a competitive bidding process would be needed to determine the requirements in greater detail and select the vendor(s). Further study would entail a detailed assessment of current systems in place and analysis of business requirements. VHA is encouraged to use a technology “bake-off” type competition to determine which vendors’ solutions best meet their needs.

63 Virtual consolidation would change the business process for the Fee processing program. Adequate training would be crucial to the success of the program. Study would be required to determine new user roles for workers using the system and to determine what permissions should be assigned to each individual. An implementation plan for the rollout of the new system should be developed to ensure adequate training and allow for User Acceptance Testing to ensure the system is correctly configured and continue work during the transition.

As a key finding of this study, the Fee Care Program lacks clarity on policies and direction, and field operations lack standardization and interpret rules differently, to varying degree. In response VA management should take the Fee Care Program more explicitly into account when formulating strategies, developing capital investment plans, and providing guidance on how to allocate overall resources between VA and non-VA purchased care, particularly now that the Fee Care Program has grown so rapidly in recent years and now constitutes approximately ten percent of the health care budget for veterans. Attention should be given to assessing the business case for purchased care and assessing the trade-offs among competing goals such as cost-effectiveness, access, and speed of appointment. Once the trade-offs are acknowledged and understood, policy direction can be made more deliberate and clear.

For establishing clear lines of authority, CBO and the VISNs operate under the Deputy Under Secretary for Health for Operations and Management. This office can provide the authoritative control for central management of the Fee program. Authoritative control can be established independently of whether physical consolidation takes place in one centralized operation.

The VISNs would manage the consolidations down to a greatly reduced number (e.g., five or possibly three centers). CBO will exercise increasing direction, standards, technology, and quality review. As CBO and the VISNs report to the same boss, CBO should be able to ensure that their directives on Fee claims are adhered to by field offices. The Deputy Under Secretary for Health for Operations and Management should make that clear to VISN directors.

Virtual consolidation will also enable central direction and management by CBO. A centralized database and a common technology platform being used across all the operation sites, in particular, will greatly enhance standardization.

Performance metrics for productivity should be implemented on a nation-wide basis with comparisons made at both the VISN level and operating site level. Productivity should be measured separately for front-end authorizations versus back-end claims processing. Measures of