Indian Health Service:

Updated Policies and Procedures and Increased Oversight Needed for Billings and Collections from Private Insurers

GAO-10-42R: Published: Oct 22, 2009. Publicly Released: Nov 23, 2009.

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The Indian Health Service (IHS), an agency in the Department of Health and Human Services (HHS), provides health care services to American Indians and Alaskan Natives. For fiscal year 2009, Congress appropriated approximately $3.6 billion for health care services to be made available through IHS. The agency provides direct medical care, including primary care services, ancillary services, and some specialty services, through its network of facilities, including hospitals, health centers, and clinics. IHS also provides funding to direct care facilities that are operated by tribes. IHS headquarters oversees 12 area offices that cover 161 service units in 35 states. The Indian Health Care Improvement Act of 1976, as amended, authorizes IHS to collect reimbursement for services provided at IHS facilities from third-party insurers, including Medicare, the federal health insurance program for elderly and disabled individuals; Medicaid, a joint federal and state health financing program for certain low-income families and individuals; and private health insurers. IHS is allowed to retain funds collected from these insurers without a corresponding offset against its appropriations, so that all revenue collected by a facility remains with that facility, supplementing its appropriations. For fiscal year 2008, IHS reported that it collected about $795 million from all third-party insurers, of which about $94 million, or 12 percent, was collected from private insurers. The remaining 88 percent was collected from the Medicare and Medicaid programs. According to IHS, these funds were used to purchase new medical equipment and medical supplies, and to provide compensation and benefits for IHS employees. Given the importance of these collections to IHS's mission, Congress asked us to examine several areas related to IHS's billings and collections activities. Specifically, Congress asked us to review IHS's policies and procedures for writing off amounts owed to the agency by private insurers, internal control procedures related to billing and collection, and the amounts and reasons for denied claims and claims written off as uncollectible by IHS. Because IHS was unable to provide much of the information we requested on the amounts of denied and adjusted claims and amounts written off for more than 6 months after our requests for these data, this report examines (1) the design of IHS's policies and procedures for billing and collecting revenue from private insurers including write-offs of uncollectible claims, and (2) the adequacy of IHS headquarters' monitoring of area office and service unit compliance with policies and procedures for the billing and collection of revenue from private insurers.

The design of IHS's policies and procedures for billing and collection activities--as reflected in Part 5 and Part 9 of the Indian Health Manual, and IHS's Revenue Operations Manual--is generally consistent with FSIO's standard business processes for managing federal accounts receivable, which include key processes related to the four phases of IHS's business revenue cycle. For example, FSIO specifies that there typically are triggering events that require establishing a receivable as well as processes for capturing, verifying, and reviewing customer information. Consistent with these expectations, IHS's policies and procedures include specific guidance on obtaining and verifying patient data at registration and for recording these data in RPMS. IHS headquarters' monitoring activities of area office and service unit compliance with billing and collection policies and procedures are inadequate, but agency officials told us they are taking steps to increase oversight. Federal internal control standards require agency management to conduct monitoring of program quality and performance. Part 5 of the Indian Health Manual requires the Director of ORAP to monitor area office and service unit compliance with IHS policies and procedures for billing and collecting revenue through IHS-wide policy compliance reviews and internal audits. Before implementing the Web-based tool, ORAP's monitoring of policy compliance had consisted of a small number of on-site compliance reviews at IHS service units and through regular meetings with field staff.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: On February 6, 2015, IHS issued a revised Third Party Revenue Accounts Management and Internal Controls policy, which identifies the UFMS as IHS' official accounting system. Financial management officers are required to develop, implement, and maintain processes and procedures for the timely recording and execution of all third-party transactions into UFMS, while Business Office officials are required to provide coordination, oversight and management of UFMS transmissions to ensure that the information is submitted accurately and timely. Finally, Service Unit (SU) officials are required to monitor and ensure successful transmission of financial information to UFMS, correct any errors, and ensure that subsidiary records reconcile with UFMS records.

    Recommendation: The Director of IHS should strengthen IHS's management and oversight of billing and collection activities by updating and providing additional guidance in the agency's policies and procedures for billing and collection from private insurers. As part of this effort, the Director of IHS should direct IHS officials to review and update the outdated parts of the Indian Health Manual to reflect IHS's implementation of Unified Financial Management System (UFMS).

    Agency Affected: Department of Health and Human Services: Health Services Administration: Indian Health Service

  2. Status: Closed - Implemented

    Comments: On February 6, 2015, the Indian Health Service (IHS) issued a revised Third Party Revenue Accounts Management and Internal Controls policy which requires Business Office Coordinators (BOC) to collaborate with area or service unit officials to establish and document specific procedures for the revenue cycle, including debt management. The guidance also requires offices to coordinate with service unit managers to provide training on all patient-related revenue operations. In consultation with the Assistant Director, we concluded that the new requirements and guidance should improve IHS' debt management and staff training.

    Recommendation: The Director of IHS should strengthen IHS's management and oversight of billing and collection activities by updating and providing additional guidance in the agency's policies and procedures for billing and collection from private insurers. As part of this effort, the Director of IHS should direct IHS officials to develop and establish location-specific guidance for implementing the requirements in Part 9 of the Indian Health Manual for area offices and service units to individually develop and implement debt management programs and operational plans, and direct the Area Office Directors and Service Unit CEOs to provide training at the local level to ensure the programs and plans are effectively implemented.

    Agency Affected: Department of Health and Human Services: Health Services Administration: Indian Health Service

  3. Status: Closed - Implemented

    Comments: On February 6, 2015, the Indian Health Service (IHS) issued a revised Third Party Revenue Accounts Management and Internal Controls policy which states that all healthcare related claims and bills must be recorded in the Resource and Patient Management System (RPMS), a subsidiary system to IHS' Unified Financial Management System (UFMS), when services are provided. The Director of the Office of Information Technology (OIT) must provide RPMS program applications that support the third-party revenue cycle (including debt management) on a continuing basis. AO officials must also ensure that SU transmissions from RPMS to UFMS are completed and that the two systems are reconciled. In consultation with the Assistant Director, we concluded that the new requirements and guidance will help improve IHS' monitoring of billing and collection, and debt management efforts.

    Recommendation: The Director of IHS should strengthen IHS's management and oversight of billing and collection activities by updating and providing additional guidance in the agency's policies and procedures for billing and collection from private insurers. As part of this effort, the Director of IHS should direct IHS officials to develop specific tools and reporting mechanisms to monitor and manage the business revenue cycle, including billing and collection, and debt management activities.

    Agency Affected: Department of Health and Human Services: Health Services Administration: Indian Health Service

  4. Status: Closed - Implemented

    Comments: The Department of Health and Human Services' (HHS) Indian Health Service (IHS) agreed with our recommendation and took corrective action. On February 6, 2015, IHS issued a revised Third Party Revenue Accounts Management and Internal Controls policy which states that the ORAP Director is responsible for the annual IHS-wide policy compliance reviews and internal audits for all categories of patient-related revenue. Specifically, ORAP staff will use data provided through the Third-Party Internal Controls Online Tool and other national reporting mechanisms (i.e., UFMS Accounts Receivable (A/R) dashboard, Days to A/R) to evaluate progress of facilities, accuracy of data and determine if additional resources are needed at the facilities in the form of onsite reviews, consultations, or external assistance. In consultation with the Assistant Director, we concluded that the new requirements and guidance will help the implementation of IHS' compliance reviews and satisfied the recommendation.

    Recommendation: The Director of IHS should strengthen IHS's management and oversight of billing and collection activities by updating and providing additional guidance in the agency's policies and procedures for billing and collection from private insurers. As part of this effort, the Director of IHS should direct IHS officials to develop a risk-based approach using the information obtained from the new data sources (i.e., the UFMS database and Web-based tool) to prioritize which service units receive future on-site compliance reviews.

    Agency Affected: Department of Health and Human Services: Health Services Administration: Indian Health Service

 

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