VA Health Care: Third-Party Charges Based on Sound Methodology; Implementation Challenges Remain

VA is planning to revise its charges to make them more precisely reflect local markets. Inpatient facility charges are to be based on 3-digit zip-code areas rather than by larger metropolitan statistical areas (MSAs) because average charges can vary considerably across areas found in the larger MSAs. In this way, VA will more adequately assure that it does not forego some of the amount that insurers usually pay other providers for the same service in the same locality, which would occur if VA set its charges too low for that locality. On August 13, 2003, VA reported that it continues to update its charges to be more reflective of local markets. The last rate increase was published in the Federal Register in April 2003, and the next version is expected in October 2003.

VA concurred with the recommendations. On August 13, 2003, VA reported that it has begun to implement a payer relations program to ensure that health plan payments are made according to federal regulations. The program will be rolled out by the end of fiscal year 2003. Health plans may pay either 100 percent of billed charges or an amount paid to other providers for the same services.