Medicaid Eligibility: Accurate Beneficiary Enrollment Requires Improvements in Oversight, Data, and Collaboration

Medicaid, a joint federal-state health care program, is one of the nation's largest sources of funding for medical and other health-related services for tens of millions of low income and medically needy individuals. In fiscal year 2018, estimated federal and state expenditures for Medicaid were $629 billion. The size and complexity of Medicaid make the program particularly vulnerable to improper payments—including payments made for people not eligible for Medicaid.

States have significant flexibility to design and implement their Medicaid programs based on their unique needs. These programs are administered at the state level, overseen at the federal level by CMS, and jointly funded by the states and federal government. The federal government matches most state expenditures for Medicaid services based on a statutory formula. Under the Patient Protection and Affordable Care Act, states have the option to expand their Medicaid programs to cover nearly all adults with incomes at or below 133 percent of the federal poverty level. States that choose to expand their programs receive a higher federal matching rate for the Medicaid expansion enrollees.

This testimony will cover improvements needed to ensure accurate eligibility determinations and focuses on (1) CMS's oversight of Medicaid eligibility and related expenditures; (2) CMS's efforts to improve Medicaid data; and (3) other opportunities to improve oversight and ensure appropriate enrollment. This testimony is generally based on GAO findings and recommendations on the Medicaid program issued from 2015 through 2018, and steps taken to address them through September 2019.

The Centers for Medicare & Medicaid Services (CMS) has taken steps to improve its oversight of the Medicaid program; however, GAO has identified areas where additional actions could improve program oversight and ensure that only eligible individuals are enrolled in the Medicaid program. These actions include closing gaps in oversight of eligibility determinations and related expenses, improving data, and furthering federal-state collaboration.

Gaps in oversight of Medicaid eligibility determinations and related expenses. Since 2014, CMS has not estimated improper payments due to erroneous eligibility determinations; it plans to report these estimates in November 2019. GAO found that for fiscal year 2017 Medicaid expansion enrollees accounted for nearly a quarter of all Medicaid enrollees and federal Medicaid expenditures. GAO's prior work has identified gaps in CMS oversight, which affects the federal match. An accurate determination of eligibility is critical to ensuring that only eligible individuals are enrolled, that they are enrolled in the correct eligibility group, and that states' expenditures are appropriately matched with federal funds for Medicaid enrollees. GAO recommended that CMS conduct reviews of federal Medicaid eligibility determinations to ascertain their accuracy and institute corrective actions where necessary, and revise the sampling methodology for reviewing expenditures for the expansion population. CMS concurred with these recommendations, though has since indicated that it will not revise the sampling methodology. We continue to believe that additional steps are needed to fully implement these recommendations.

Better Medicaid data. Improvements in Medicaid data could aid program oversight to ensure that only eligible beneficiaries are enrolled. CMS officials acknowledged the need for improved data and cited the Transformed Medicaid Statistical Information System (T-MSIS) initiative as its primary effort—conducted jointly with states—to improve the collection of Medicaid expenditure and utilization data. According to CMS officials, aspects of T-MSIS are designed to broaden the scope and improve the quality of state-reported data, as well as the data's usefulness to states. GAO made a series of recommendations related to T-MSIS. CMS concurred with the recommendations, but some have not been fully implemented, including expediting the use of T-MSIS data for oversight, and outlining a plan and associated time frames for using the data for oversight.

Further federal-state collaboration needed for oversight and appropriate enrollment. GAO has previously reported that collaborative activities between the federal government and the states are important to improving oversight of the Medicaid program. CMS has ongoing efforts to engage state agencies and others through a national Medicaid training program for state officials and partnerships to combat Medicaid fraud. Recently, steps were taken to better enable state auditors to audit states' eligibility determinations to ensure beneficiaries qualify for the Medicaid program and are enrolled in the correct eligibility group. GAO has previously suggested that CMS could leverage the unique qualifications of state auditors and help improve program integrity by further providing state auditors with a substantive and ongoing role in auditing state Medicaid programs.

I am pleased to be here today to discuss the importance of ensuring that  only eligible individuals are enrolled in the Medicaid program. This  federal-state program is one of the nation’s largest sources of funding for  medical and other health-related services for over 75 million low-income  and medically needy individuals. In fiscal year 2018, estimated federal  and state Medicaid expenditures for Medicaid were $629 billion. The size  and complexity of Medicaid make the program particularly vulnerable to  improper payments—including payments made for people not eligible for  Medicaid. In fiscal year 2018, the national Medicaid improper payment  estimate was approximately $36 billion—nearly 10 percent of federal  Medicaid expenditures. Due to concerns about the adequacy of fiscal  oversight, Medicaid has been on our list of high-risk programs since  2003.

The Medicaid program is a partnership between the federal government  and the states, with the federal government matching most state  expenditures for Medicaid services on the basis of a statutory formula  known as the Federal Medical Assistance Percentage (FMAP). Within  broad federal requirements, states have significant flexibility to design  and implement their programs based on their unique needs, resulting in  over 50 distinct state Medicaid programs. These programs are  administered at the state level and overseen at the federal level by the  Centers for Medicare & Medicaid Services (CMS), within the Department  of Health and Human Services (HHS).

The Patient Protection and Affordable Care Act (PPACA) gave states the  option to expand their Medicaid programs by covering nearly all adults  with incomes at or below 133 percent of the federal poverty level (FPL)  beginning January 1, 2014. States choosing to expand their programs  receive a higher federal matching rate for these Medicaid expansion  enrollees. PPACA also includes a new approach to assessing  individuals’ financial eligibility for Medicaid.

My testimony today will cover improvements needed to ensure accurate  beneficiary enrollment and will focus on:  1.  CMS oversight of Medicaid eligibility and related expenditures;  2.  CMS’s efforts to improve Medicaid data; and  3.  other opportunities to improve Medicaid oversight and ensure  appropriate enrollment.

My remarks are based on our large body of work examining the Medicaid  program, specifically our reports issued and recommendations made from  2015 through 2018, and steps HHS and CMS have taken to address  these recommendations through September 2019. Those reports provide  further details on our scope and methodology. (See app. I for selected  recommendations and a list of related GAO reports at the end of this  statement.) For further context, my remarks reference the most recently  available data from CMS on Medicaid beneficiary enrollment and  expenditures, including enrollment and expenditures for Medicaid  expansion enrollees in fiscal year 2017, information reported by state  auditors, and the Office of Management and Budget’s (OMB) 2019  Compliance Supplement. We conducted all of the work on which this  statement is based in accordance with generally accepted government  auditing standards. Those standards require that we plan and perform the  audit to obtain sufficient, appropriate evidence to provide a reasonable  basis for our findings and conclusions based on our audit objectives. We  believe that the evidence obtained provides a reasonable basis for our  findings and conclusions based on our audit objectives.

The federal government and states share responsibility for the financing  and administration of the Medicaid program. With regard to financing,  Medicaid is funded jointly by the federal government and states, with  FMAP rates ranging from a statutory minimum of 50 percent to a statutory  maximum of 83 percent. Under PPACA, expenditures for Medicaid  expansion enrollees are matched at 90 percent for fiscal year 2020.

Program administrative responsibilities are shared between states and  the federal government. State administrative responsibilities include,  among other things, determining eligibility, enrolling beneficiaries, and  adjudicating claims. With regard to eligibility, states are primarily  responsible for verifying eligibility and enrolling Medicaid beneficiaries.  These responsibilities include  verifying and validating individuals’ eligibility at the time of application  and periodically thereafter, accurately assigning enrollees to the appropriate eligibility group, and promptly disenrolling individuals who are not eligible.

PPACA requires states to use third-party sources of data to verify  eligibility to the extent practicable. Consequently, states have had to  make changes to their eligibility systems, including implementing  electronic systems for eligibility determination and coordinating systems  to share information. In addition, states have had to make changes to  reflect new sources of documentation and income used for verification. In  certain circumstances, states may delegate responsibility to the federal  government to make eligibility determinations.

At the federal level, CMS is responsible for overseeing states’ design and  operation of their Medicaid programs and ensuring that federal funds are  appropriately spent. CMS oversees state enrollment of beneficiaries and  reporting of expenditures. For example:

CMS reviews and approves states’ Medicaid eligibility verification  plans, which rely primarily on information available through data  sources—including federal data sources such as the Social Security  Administration and the Internal Revenue Services, or state data  sources such as state tax records or unemployment information— rather than paper documentation from families.

CMS has various review processes in place to ensure that  expenditures reported by states are supported and consistent with  Medicaid requirements. The agency also has processes to check  whether the correct federal matching rates were applied only to  expenditures receiving a higher than standard federal matching rate,  which can include certain types of services and populations.

CMS estimates Medicaid improper payments, including improper  payments due to erroneous beneficiary eligibility determinations.  Although CMS has not calculated the improper payments related to  beneficiary eligibility determinations since 2014, it plans to begin  reporting this estimate in November 2019.

CMS Oversight of Medicaid Eligibility Determinations and Related Expenditures Has Gaps

Our previous work has identified gaps in CMS oversight of Medicaid  eligibility determinations, which affect the federal matching rate. An  accurate determination of eligibility is critical to ensuring that only eligible  individuals are enrolled, that they are enrolled in the correct eligibility  group, and that states’ expenditures are appropriately matched with  federal funds for Medicaid enrollees. The implications of inaccurate  eligibility determinations can be significant, especially given the growth in  enrollment and spending of the expansion population, which represented  nearly one quarter of program enrollment and federal expenditures in  fiscal year 2017. (See fig. 1.)

In September 2016, we reported on our undercover testing for  determining Medicaid eligibility and the vulnerabilities we found. We  found weaknesses that led to inaccurate eligibility determinations. For  example, three of eight fictitious applications we submitted to federal and  state marketplaces were approved for Medicaid, despite having identity  information that did not match Social Security Administration records.  These results, while illustrative of the challenges of assuring accurate  eligibility determinations, cannot be generalized.

With respect to CMS’s reviews of eligibility determinations, in 2015, we  also found that CMS did not review federal Medicaid eligibility  determinations in the states that delegated such authority to the federal  government. Based on our findings, we made the following  recommendations.

CMS should use information obtained from state and federal eligibility  reviews to inform the agency’s review of expenditures for different  eligibility groups in order to ensure that expenditures are reported  correctly and matched appropriately. In February 2019, we considered  this recommendation implemented, as CMS confirmed that it was  sharing information between its eligibility reviews and quarterly  expenditure reviews regarding Medicaid expansion enrollees.

CMS should conduct reviews of federal Medicaid eligibility  determinations to ascertain their accuracy and institute corrective  action plans where necessary. CMS has taken some action to review  federal eligibility determinations; however, until the review results are  publicly reported, which CMS expects to occur in November 2019, this  recommendation is not fully implemented. We will continue to monitor  CMS’s implementation of this recommendation.

In August 2018, we reported that improvements in oversight of state  expenditures could help CMS ensure that individuals are enrolled in the  correct Medicaid eligibility group. CMS processes for reviewing  expenditures reported by states and FMAP rates collectively have had a  considerable federal financial benefit, with CMS resolving errors that  reduced federal spending by over $5.1 billion in fiscal years 2014 through  2017. However, we identified weaknesses in how CMS targets its  resources to address risks when reviewing whether states’ expenditures  are supported and consistent with Medicaid requirements. For example:

CMS devotes similar levels of staff resources to review expenditures  despite differing levels of risk across states. For example, the number  of staff reviewing California’s expenditures—which represent 15  percent of federal Medicaid spending—is similar to the number  reviewing Arkansas’ expenditures, which represents 1 percent of  federal Medicaid spending.

Additionally, CMS reviews a sample of claims for expansion enrollees  to examine Medicaid expansion expenditures, but the sample size  does not account for previously identified risks in a state’s program.  Specifically, as we noted in a 2015 report, CMS’s sampling review of  expansion expenditures was not linked to or informed by reviews of  eligibility determinations conducted by CMS, some of which identified  high levels of eligibility determination errors.

To address these weaknesses, we made three recommendations,  including that the Administrator of CMS revise the sampling methodology  for reviewing expenditures for the Medicaid expansion population to  better target reviews to areas of high risk. CMS concurred with this  recommendation, but in November 2018, CMS officials indicated that  given the agency’s resources, they believe the current sampling  methodology is sufficient and have no plans to revise it. However, we  continue to believe action is needed to better target areas of high risk and  this recommendation remains unimplemented.

Our examination of Medicaid eligibility determinations will continue as we  have work underway that will describe how selected states decide the basis of eligibility for individuals who  may qualify for Medicaid under more than one category of eligibility,  such as a low-income individual with a disability; what is known about the accuracy of Medicaid eligibility  determinations and selected states’ processes to improve the  accuracy of determinations; and

CMS efforts to recoup funds related to eligibility errors.

We expect to complete this work early next year.

CMS Efforts to Improve Medicaid Data Could Benefit Program Oversight

Improvements in Medicaid data could benefit program oversight, including  ensuring that only eligible beneficiaries are enrolled. CMS has  acknowledged the need for improved Medicaid data and the Transformed  Medicaid Statistical Information System (T-MSIS) initiative is the agency’s  primary effort—conducted jointly with states—to improve its collection of  Medicaid expenditure and utilization data. According to CMS officials,  aspects of T-MSIS are designed to broaden the scope and improve the  quality of state-reported data, as well as the data’s usefulness for states.  T-MSIS also includes automated quality checks that should improve the  quality of data that states report. In addition,

T-MSIS is designed to capture significantly more data from states  than was previously reported. For example, T-MSIS will include a  beneficiary eligibility file that will have expanded information on  enrollees, such as their citizenship, immigration, and disability status;  and expanded diagnosis and procedure codes associated with their  treatments.

T-MSIS also is intended to benefit states by reducing the number of  reports CMS requires them to submit, and by improving program  efficiency by allowing states to compare their data with other states’  data in the national repository or with information in other CMS  repositories, including Medicare data.

With the continued implementation of T-MSIS, CMS has taken an  important step toward developing a reliable national repository for  Medicaid data. While recognizing CMS’s progress, we have made several  recommendations aimed at improving the quality and usefulness of T- MSIS data. For example, we recommended in 2017 that CMS refine its T- MSIS data priority areas to identify those that are critical for reducing  improper payments and expedite efforts to assess and ensure their  quality. CMS has implemented this recommendation, yet other  recommendations that CMS concurred with related to T-MSIS have not  been fully implemented, including outlining a specific plan and associated  time frames for using T-MSIS data for oversight.

Further Collaboration with Stakeholders Could Improve Program Oversight and Better Ensure Appropriate Enrollment

We have previously reported that oversight of the Medicaid program  could be further improved through leveraging and coordinating program  integrity efforts with state agencies, state auditors, and other partners.  CMS has engaged state agencies and other partners to promote program  integrity through the Medicaid Integrity Institute, a national training  program for states, and other partnerships to combat Medicaid fraud.  These efforts have created more opportunities for program integrity  professionals to collaborate, share best practices, and ultimately increase  the effectiveness of their oversight activities.

We have also testified that state auditors are uniquely positioned to help  CMS in its oversight of state Medicaid programs, because of their roles  and responsibilities—which can include carrying out or overseeing their  state’s single audits. Through their program integrity reviews, state  auditors have identified improper payments in the Medicaid program and  deficiencies in the processes used to identify them. For example, state  auditors have found that in some cases their state Medicaid agencies’  eligibility determinations did not identify or address beneficiaries’ changes  in circumstances, and in other cases relied on incorrect or incomplete  income or asset information.

A 2018 audit of New Jersey’s Medicaid program found the state was  not identifying and disenrolling some deceased individuals. When  state auditors conducted a data match to a Social Security number  verification service, they found managed care payments of $510,834  and fee-for-service claims of $217,913 for 41 individuals after their  reported date of death. Auditors recommended that the eligibility  system be reconciled with a Social Security number validation service  on a periodic basis to better identify deceased individuals.

In 2017, state auditors in North Carolina found that most of the 10  sample county departments of social services did not consistently  provide adequate oversight or controls for the eligibility determination  of new applications and re-certifications. For new applications, the  auditors showed accuracy error rates ranging from 1 percent to nearly  19 percent; for redeterminations of eligibility, accuracy error rates  ranged from 1 percent to 23 percent.

Based on information from an independent verification service, state  auditors in New York found, during a 9-month period in 2014, that 354  Medicaid enrollees were actually deceased, and that the state made  $325,030 in Medicaid payments for a subset of these individuals.  Auditors noted that the state’s eligibility system did not have a  standard process to periodically verify the life status of all enrollees  and end coverage for deceased individuals.

In April 2019, the Comptroller General and representatives from the  National State Auditors Association sent a letter to CMS requesting  changes to the Compliance Supplement to leverage state auditors’ ability  to examine key areas of Medicaid, including improvements in the  oversight of Medicaid eligibility processes. The Compliance  Supplement—which is issued by the OMB based on agency input and  direction—is used by state auditors during their annual audit of state  entities that administer federal financial assistance programs, including  Medicaid.

In June 2019, OMB issued the 2019 Compliance Supplement, which  included changes related to overseeing testing of eligibility determinations  that GAO and the state auditors had proposed. Specifically, the  supplement now permits state auditors to test eligibility determinations to  ensure that beneficiaries qualify for the Medicaid program and are in the  appropriate enrollment category. The supplement also notes a  requirement for states to coordinate with other state and federal  insurance affordability programs, including the federally facilitated  exchanges.

These changes to the Compliance Supplement will better enable state  auditors to audit states’ eligibility determinations to ensure beneficiaries  qualify for the Medicaid program and are enrolled in the correct eligibility  group. Such eligibility determinations will supplement CMS’s eligibility  determination reviews and may yield insights into program weaknesses  that CMS could learn from and potentially address nationally. We  continue to believe that CMS could help improve program integrity by  further providing state auditors with a substantive and ongoing role in  auditing their state Medicaid programs.

Chairman Toomey, Ranking Member Stabenow, and Members of the  Subcommittee, this concludes my prepared statement. I would be  pleased to respond to any questions you may have.

If you or your staff members have any questions concerning this  testimony, please contact me at (202) 512-7114 or yocomc@gao.gov.  Contact points for our Office of Congressional Relations and Public  Affairs may be found on the last page of this statement. Other individuals  who made key contributions to this testimony include Leslie V. Gordon  (Assistant Director), Kristin Ekelund (Analyst-in-Charge), Michael Erhardt,  Arushi Kumar, and Drew Long. Also contributing were Susan Anthony,  Vikki Porter, and Emily Wilson.

Appendix I: Selected GAO Recommendations to Strengthen Oversight of Medicaid Beneficiary Enrollment

Take immediate steps to assess and improve the data available for  Medicaid program oversight, including, but not limited to, the  Transformed Medicaid Statistical Information System (T-MSIS). Such  steps could include (1) refining the overall data priority areas in T- MSIS to better identify those variables that are most critical for  reducing improper payments, and (2) expediting efforts to assess and  ensure the quality of these T-MSIS data. (GAO-17-173)

Recommendation implemented; no action needed.

Take additional steps to expedite the use of data for program  oversight. Such steps should include, but are not limited to, efforts to  (1) obtain complete information from all states on unreported T-MSIS  data elements and their plans to report applicable data elements; (2)  identify and share information across states on known T-MSIS data  limitations to improve data comparability; and (3) implement  mechanisms, such as the Learning Collaborative, by which states can  collaborate on an ongoing basis to improve the completeness,  comparability, and utility of T-MSIS data. (GAO-18-70)

Status of recommendation; actions needed to implement  recommendations  Not fully implemented.  Continue taking steps to make T-MSIS data usable for  Medicaid program oversight, such as (1) obtaining information  on the completeness and comparability of T-MSIS data, (2)  notifying states of their compliance status and obtaining  corrective action plans, and (3) establishing mechanisms for  ongoing feedback and collaboration across states.

Articulate a specific plan and associated time frames for using T-MSIS  data for oversight. (GAO-18-70)

Not fully implemented.  Outline a specific plan and associate time frames for using T- MSIS data for oversight.

GAO, Medicaid: Additional Efforts Needed to Ensure that State Spending is Appropriately Matched  with Federal Funds, GAO-16-53 (Washington, D.C.: Oct. 16, 2015).  GAO, Medicaid: Further Action Needed to Expedite Use of National Data for Program Oversight,  GAO-18-70 (Washington, D.C.: Dec. 8, 2017).

Medicaid: CMS Has Taken Steps to Address Program Risks but Further  Actions Needed to Strengthen Program Integrity. GAO-18-687T.  Washington, D.C.: August 21, 2018.

Medicaid: CMS Needs to Better Target Risks to Improve Oversight of  Expenditures. GAO-18-564. Washington, D.C.: August 6, 2018.

Medicaid: Actions Needed to Mitigate Billions in Improper Payments and  Program Integrity Risks. GAO-18-598T. Washington, D.C.: June 27,  2018.

Medicaid: Opportunities for Improving Program Oversight. GAO-18-444T.  Washington, D.C.: April 12, 2018.

Federal Health-Insurance Marketplace: Analysis of Plan Year 2015  Application, Enrollment, and Eligibility-Verification Process. GAO-18-169.  Washington, D.C.: December 21, 2017.

Medicaid: Further Action Needed to Expedite Use of National Data for  Program Oversight. GAO-18-70. Washington, D.C.: December 8, 2017.

Improper Payments: Improvements Needed in CMS and IRS Controls  over Health Insurance Premium Tax Credit. GAO-17-467. Washington,  D.C.: July 13, 2017.

Medicaid: Program Oversight Hampered by Data Challenges,  Underscoring Need for Continued Improvements. GAO-17-173.  Washington, D.C.: January 6, 2017.

Patient Protection and Affordable Care Act: Results of Enrollment Testing  for the 2016 Special Enrollment Period. GAO-17-78. Washington, D.C.:  November 17, 2016.

Health Care: Results of Recent Undercover Testing for Patient Protection  and Affordable Care Act Coverage, and Review of Market Concentration  in the Private Insurance Markets. GAO-16-882T. Washington, D.C.:  September 14, 2016.

Patient Protection and Affordable Care Act: Results of Undercover  Enrollment Testing for the Federal Marketplace and a Selected State  Marketplace for the 2016 Coverage Year. GAO-16-784. Washington,  D.C.: September 12, 2016.

Patient Protection and Affordable Care Act: Final Results of Undercover  Testing of the Federal Marketplace and Selected State Marketplaces for  Coverage Year 2015. GAO-16-792. Washington, D.C.: September 9,  2016.

Patient Protection and Affordable Care Act: CMS Should Act to  Strengthen Enrollment Controls and Manage Fraud Risk. GAO-16-29.  Washington, D.C.: February 23, 2016.

Medicaid: Additional Efforts Needed to Ensure that State Spending is  Appropriately Matched with Federal Funds. GAO-16-53. Washington,  D.C.: October 16, 2015.

Medicaid: Additional Actions Needed to Help Improve Provider and  Beneficiary Fraud Controls. GAO-15-313. Washington, D.C.: May 14,  2015.

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Medicaid is a joint federal-state health care program that serves more than 75 million low income people nationwide. The size and complexity of the program make it vulnerable to improper payments.

We testified about our 2015-2018 reports on Medicaid beneficiary eligibility and related expenditures, and discussed progress on our prior recommendations to improve program oversight. Topics include:

Oversight: Gaps in eligibility determinations may increase federal spending

Data: Improvements in federal-state data could aid oversight

Collaboration: State auditors could help identify program weaknesses


VA Health Care: VA Faces Challenges in Meeting Demand for Long-Term Care

The Department of Veterans Affairs (VA) provides or purchases long-term care for eligible veterans through 14 long-term care programs in institutional settings like nursing homes and noninstitutional settings like veterans' homes. From fiscal years 2014 through 2018, VA data show that the number of veterans receiving long-term care in these programs increased 14 percent (from 464,071 to 530,327 veterans), and obligations for the programs increased 33 percent (from $6.8 to $9.1 billion). VA projects demand for long-term care will continue to increase, driven in part by growing numbers of aging veterans and veterans with service-connected disabilities. Expenditures for long-term care are projected to double by 2037, as shown below. According to VA officials, VA plans to expand veterans' access to noninstitutional programs, when appropriate, to prevent or delay nursing home care and to reduce costs.

VA currently faces three key challenges meeting the growing demand for long-term care: workforce shortages, geographic alignment of care (particularly for veterans in rural areas), and difficulty meeting veterans' needs for specialty care. VA's Geriatrics and Extended Care office (GEC) recognizes these challenges and has developed some plans to address them. However, GEC has not established measurable goals for these efforts, such as specific staffing targets for programs with waitlists or specific targets for providing telehealth to veterans in rural areas. Without measurable goals, VA is limited in its ability to address the challenges it faces meeting veterans' long-term care needs.

I am pleased to be here today to discuss our recent report on the  challenges faced by the Department of Veterans Affairs (VA) in meeting  veterans’ growing demand for long-term care. Veterans—like millions of  other Americans—rely on long-term care to help meet their health and  personal care needs. Long-term care can address a broad spectrum of  needs, from providing occasional help around the house to extensive,  round-the-clock clinical care. VA provides or pays for long-term care  through a range of institutional and noninstitutional programs for eligible  veterans. Institutional programs, such as nursing homes, typically provide  acute skilled nursing care in a residential facility. Noninstitutional  programs, such as the Home-Based Primary Care program, provide care  to veterans in their homes or communities. In fiscal year 2018, VA  provided or paid for long-term care for over 500,000 veterans.

As one of the largest health care systems in the United States, VA faces  challenges similar to other health care providers when seeking to meet  the growing need for long-term care as the U.S. population ages – for  example shortages in nursing assistants and home health aides that are  critical for supporting long-term care programs. VA recognizes it faces  challenges meeting the demand for long-term care and has taken some  steps to address these challenges in its strategic planning process, for  example by proposing to expand access to long-term care services  through telehealth.

My testimony today highlights key findings from our February 2020 report,  which described the (1) use of and spending for VA long-term care, and (2) challenges VA faces to meet veterans’ demand for long-term care and  examines VA’s plans to address those challenges. We made three  recommendations in our report aimed at strengthening VA’s efforts to  address long-term care challenges. VA concurred with our  recommendations.

To describe the use of and spending for VA long-term care, we reviewed  VA data on the utilization of and obligations for long-term care for fiscal  years 2014 through 2018 and projections of utilization and expenditures  developed by VA’s Enrollee Health Care Projection Model (EHCPM) for  fiscal years 2017 through 2037. To discuss the challenges VA faces in  meeting veterans’ demand for long-term care, we reviewed relevant VA  documents and interviewed VA officials about VA’s capacity to provide  long-term care, including officials from VA’s Geriatrics and Extended Care  office (GEC) which oversees the long-term care programs, and officials  from the Office of Policy and Planning. Further details on our scope and  methodology are included in our report. The work on which this statement  is based was performed in accordance with generally accepted  government auditing standards.

VA provides or pays for long-term care—ranging from assistance with  dressing and bathing to clinical care for spinal injuries or dementia— through three institutional and 11 noninstitutional programs. (See fig. 1 for  a list of VA’s institutional and noninstitutional long-term care programs  and app. I for brief descriptions of these programs.)

VA’s long-term care programs serve over 500,000 veterans with a wide  range of characteristics and needs. Further, certain Community Nursing  Homes, Adult Day Health Care, and Hospice and Respite Care programs  have specially trained staff to serve veterans with dementia, and the  Spinal Cord Injury and Disability Home Care program and certain VA  Community Living Centers are equipped to serve veterans needing  ventilator care.

All veterans enrolled in the VA health care system are eligible for VA’s  basic medical benefits package, which includes coverage for certain  institutional and noninstitutional long-term care services. A veteran’s  eligibility for fully or partially covered nursing home care is determined by  the veteran’s priority for care, which is generally based on the veteran’s  service-connected disability status. VA must cover the full cost of nursing  home care for veterans who need this care for a service-connected  disability and for veterans with service-connected disabilities rated at 70  percent or more. Veterans’ placement into particular long-term care  programs may depend on their clinical needs, disability ratings,  preferences, and the availability of VA programs. When funds are limited,  the agency may prioritize program placement based on veterans’ service- connected disability ratings. Decisions about which long-term care  programs may be the best fit are made at the VA medical center (VAMC)  level between VA providers, veterans, and their families.

Utilization of and Spending for VA Long-Term Care Have Increased in Recent Years and Are Projected to Increase

As we reported in February 2020, VA data shows that utilization of and  spending for VA long-term care programs generally increased from fiscal  years 2014 through 2018. Specifically, the number of veterans receiving  care in VA’s long-term care programs increased 14 percent from fiscal  years 2014 through 2018, from 464,071 to 530,327 veterans, while  spending grew 33 percent from $6.8 billion to $9.1 billion. Further, we  found that VA projects utilization and expenditures for long-term care to  increase for most of the programs included in VA’s EHCPM from fiscal  years 2017 through 2037. Specifically, over that time period VA’s model  projects the following:

Utilization of long-term care—in terms of various VA workload units— is projected to grow in one of the two institutional programs and nine  of the 10 noninstitutional programs included in the EHCPM from fiscal  years 2017 through 2037.

Spending, which VA reports as expenditures, is projected to more  than double from fiscal years 2017 through 2037, increasing from $6.9  billion to $14.3 billion. (See fig. 2.) VA also projects that the  proportion of expenditures for institutional long-term care will  decrease from 63 percent to 53 percent while the proportion of  noninstitutional program expenditures is projected to grow from 37  percent to 47 percent in that same time period.

According to VA officials, these projected increases are due to a variety of  factors, including that VA plans to continue expanding the availability of  noninstitutional care, and plans on providing care to an increasing  number of aging veterans and veterans rated in the highest service- connected disability groups. Officials also noted that expanding veterans’  access to noninstitutional care programs is less costly than institutional  care, and veterans prefer to delay or reduce the amount of institutional  care they receive. VA’s strategies to meet the growing demand for long- term care are operationalized by GEC at the program level and  implemented at the regional and VAMC level.

VA Has Identified Several Key Challenges to Meeting the Demand for Long-Term Care, but Lacks Measurable Goals for Addressing Them

In our February 2020 report, we found that VA faces a number of key  challenges in meeting veterans’ growing demand for long-term care:  workforce shortages, geographic alignment of care, and difficulty meeting  veterans’ needs for specialty care.

While GEC recognizes and has taken some steps to address the  challenges it faces, it has not established measurable goals for its efforts  to address these three key challenges:

GEC has not established measurable goals to address workforce  shortages, such as staffing targets to address the waitlist for the  Home-Based Primary Care program.

GEC has not established measurable goals for its efforts to address  the geographic alignment of care, such as specific targets for  providing long-term care within the Home Telehealth and Veteran  Directed Care programs.

GEC has not established measurable goals for its efforts to address  difficulties meeting veterans’ needs for specialty care, such as specific  targets for the number of available ventilators or the number of  caregivers educated to help veterans with dementia.

As we noted in our report, without measurable goals, VA is limited in its  ability to better plan for and understand progress towards addressing the  challenges it faces meeting veterans’ long-term care needs. To address  this issue, we recommended that GEC develop measurable goals for its  efforts to address these key long-term care challenges. VA concurred  with this recommendation.

In our February 2020 report we also found that VA had identified, but had  not planned to take steps to fully address, challenges at the VAMC level  that affect VA’s ability to meet veterans’ long-term care needs:

VA identified that VAMCs do not have a consistent approach to  managing VA’s 14 long-term care programs. At VAMCs where there  are not GEC staff, long-term care programs could be run by one or  more departments within the VAMC, for example the Nursing  department or the Social Work department. GEC officials told us that  this fragmentation hinders standardization and the ability to get  veterans the appropriate care.

VA also identified that VAMCs use different approaches to assess the  amount of noninstitutional long-term care services veterans need.  While GEC has developed a tool to improve the consistency in these  determinations, VA has not required the tool be used in all VAMCs, as  of October 2019. As a result, decisions about the amount of services  veterans receive may vary by VAMC.

To address these issues, we recommended that GEC leadership set time  frames for and implement (1) a consistent GEC structure at the VAMC  level and (2) VAMC-wide standardization of the tool for assessing  noninstitutional program needs of veterans. VA concurred with our  recommendations.

Chairwoman Brownley, Ranking Member Dunn, and Members of the  Subcommittee, this completes my prepared statement. I would be  pleased to respond to any questions that you may have at this time.

If you or your staff have any questions about this testimony, please  contact A. Nicole Clowers, Managing Director, Health Care at (202) 512- 7114 or clowersa@gao.gov or Sharon Silas, Director, Health Care, at  (202) 512-7114 or silass@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this statement. In addition to the contacts named above, key  contributors to this statement were Karin Wallestad (Assistant Director),  Luke Baron (Analyst-in-Charge), Summar C. Corley, and Laurie Pachter.  Also contributing to the underlying report for this statement were Kye  Briesath, Vikki Porter, Corinne Quinones, and Jennifer Rudisill.

Appendix I: Department of Veterans Affairs’  (VA) Institutional and Noninstitutional Long- Term Care Program Descriptions This is a work of the U.S. government and is not subject to copyright protection in the  United States. The published product may be reproduced and distributed in its entirety  without further permission from GAO. However, because this work may contain  copyrighted images or other material, permission from the copyright holder may be  necessary if you wish to reproduce this material separately.

Veterans rely on long-term care from the VA for everything from occasional help around the house to round-the-clock care. Eligibility is mostly based on the extent of a service-connected disability.

We testified that demand for long-term care increased 14% and VA’s spending went up 33% from FY 2014-2018. VA projects that demand will continue to increase and spending will double by 2037.

VA faces 3 key challenges to meeting long-term care needs: finding enough workers, providing care where geographically needed, and providing specialty care.

We previously made 3 recommendations, including that VA develop measurable goals in these areas.


Indian Health Service: Facilities Reported Expanding Services Following Increases in Health Insurance Coverage and Collections

IHS provides care to American Indians and Alaska Natives through a system of health care facilities. The Patient Protection and Affordable Care Act (PPACA) provided states with the option to expand their Medicaid programs, and created new coverage options beginning in 2014, including for American Indians and Alaska Natives. GAO was asked to review how PPACA has affected health care coverage and services for American Indians and Alaska Natives. In this report, GAO describes (1) trends in health insurance coverage and third-party collections at federally operated and tribally operated facilities from fiscal years 2013 through 2018, and (2) the effects of any changes in coverage and collections on these facilities.

To address these objectives, GAO analyzed IHS data on coverage, third-party collections, and PRC. GAO interviewed IHS officials from headquarters and all 12 area offices, as well as from 17 facilities selected to include a mix of federally operated and tribally operated hospitals and health centers in states that both had and had not expanded their Medicaid programs as of September 2018. GAO interviewed officials from 11 federally operated IHS facilities and 6 tribally operated facilities.

GAO provided a draft of this report to the Secretary of Health and Human Services for comment. The Department did not have any comments on the draft report.

GAO's analysis of Indian Health Service (IHS) data shows that from fiscal years 2013 through 2018, the percent of patients at federally operated IHS hospitals and health centers that reported having health insurance coverage increased an average of 14 percentage points. While all federally operated IHS facilities reported coverage increases, the magnitude of these changes differed by facility, with those located in states that expanded access to Medicaid experiencing the largest increases. Federally operated IHS facilities' third-party collections—that is, payments for enrollees' medical care from public programs such as Medicaid and Medicare, or from private insurers—totaled $1.07 billion in fiscal year 2018, increasing 51 percent from fiscal year 2013. Although exact figures were not available, tribally operated facilities, which include hospitals and health centers not run by IHS, also experienced increases in coverage and collections over this period, according to officials from selected facilities and national tribal organizations.

Increases in health insurance coverage and third-party collections helped federally operated and tribally operated facilities continue their operations and expand the services offered, according to officials from 17 selected facilities. These officials told GAO that their facilities have been increasingly relying on third-party collections to pay for ongoing operations including staff payroll and facility maintenance. Officials at most facilities with increases in third-party collections also stated that they expanded their onsite services, including increasing the volume or scope of services offered by, for example, adding new providers or purchasing medical equipment. Increased coverage and collections also allowed for an expansion in the complexity of services provided offsite through the Purchased/Referred Care (PRC) program, which enables patients to obtain needed care from private providers if the patients meet certain requirements and funding is available. According to IHS and facility officials, increases in coverage have allowed some patients to access care offsite using their coverage, and an expansion of onsite services has reduced the need for some patients to access PRC. Officials GAO interviewed from federally operated and tribally operated facilities stated that facilities' expansion of onsite and offsite services has led to enhancements in patients' access to care in some instances.

The Indian Health Service (IHS) is responsible for providing health care  for over two million American Indians and Alaska Natives (AI/AN) who are  members or descendants of federally recognized tribes. According to  IHS, its mission is to raise the physical, mental, social, and spiritual health  of AI/AN to the highest level. IHS provides health care services to AI/AN  either directly through a system of federally operated IHS facilities or  indirectly through facilities that are operated by tribes or others. As of  February 2019, IHS, tribes, and tribal organizations operated 46 hospitals  and 353 health centers as well as a range of other types of health  facilities—of which 24 hospitals and 50 health centers were federally  operated IHS facilities. With almost 5 million outpatient visits in fiscal year  2017, federally operated IHS facilities provide mostly primary and  emergency care, as well as some other services, and are located in ten of  IHS’s twelve geographic areas. In certain circumstances when needed  health care services are not available at federally operated or tribally  operated facilities, care may be obtained from private providers and paid  for through IHS’s Purchased/Referred Care (PRC) program.

AI/AN have experienced long-standing problems accessing needed  health care services and have historically had poorer health than the U.S.  general population, as evidenced by a shorter average life span and  higher incidence of certain medical conditions—many of which can be  mitigated through access to effective preventive primary care services. In  prior reports we have noted that IHS has not been able to pay for all  eligible health care services, leading to an unmet need for health care  among AI/AN. In February 2017, GAO added federal management of  programs that serve Indian tribes and their members to our High Risk List  because inadequate oversight hindered IHS’s ability to ensure that Indian  communities have timely access to quality health care, among other  reasons.

Like most federal agencies, IHS receives funding through annual  appropriations, which it uses to fund federally operated and tribally  operated facilities throughout the country. These facilities may also bill  public programs such as Medicaid (the federal-state health insurance  program for certain low-income individuals), Medicare (the federal health  insurance program for persons aged 65 and over, and certain others),  and the Department of Veterans Affairs (which provides health care  services for veterans), as well as private insurance, for care provided to  patients. Federally operated and tribally operated facilities are allowed to  retain collections from these payers—referred to as third-party  collections—without an offset to any other appropriations made to IHS.  Unlike funds made available through annual appropriations acts, which  generally must be obligated during the fiscal year for which they were appropriated, third-party collections are available to facilities until  expended.

Beginning in 2014, the Patient Protection and Affordable Care Act  (PPACA) provided opportunities to expand coverage of AI/AN through  Medicaid and private health insurance. PPACA also provided that IHS is  the payer of last resort for all health services provided at federally  operated and tribally operated facilities—meaning that enrollees’ health  insurance coverage should pay for care, to the extent of its liability, before  IHS. Increased AI/AN enrollment in health insurance such as Medicaid  may increase revenue for federally operated and tribally operated  facilities, even if the patient population remains constant, if those with  coverage seek care at such facilities. Health insurance may also provide  AI/AN with options to obtain care outside of federally operated or tribally  operated facilities, including more comprehensive health services, if such  options exist in their community.

In 2013, we reported that most AI/AN were potentially eligible for  expanded coverage created by PPACA, but action was needed to  increase enrollment. You asked us to review how PPACA has affected  AI/AN access to health care. In this report we describe, for fiscal years  2013 through 2018,  1.  trends in health insurance coverage among AI/AN populations served  by federally operated and tribally operated facilities as well as trends  in third-party collections at these facilities, and  2.  the effects of any changes in health insurance coverage and third- party collections on federally operated and tribally operated facilities.

To describe trends in health insurance coverage among AI/AN  populations served by federally operated and tribally operated facilities, we analyzed IHS data representing the self-reported health insurance  status of patients seeking care at all 73 federally operated IHS hospitals  and health centers that were in operation from fiscal years 2013 through  2018. We also analyzed IHS data on the amount and source of third- party collections at all IHS facilities—including hospitals, health centers,  health clinics or other types of facilities—that were federally operated  throughout this period. We assessed the reliability of these data by  reviewing related documentation, interviewing IHS officials, and  examining the data for missing values and outliers. On the basis of these  steps, we concluded that the data were sufficiently reliable for the  purposes of our reporting objective. Similar aggregate data on trends in  health insurance coverage and collections at tribally operated facilities are  not available because these facilities are not required to report coverage  and collections data to IHS. For information and context on trends in  coverage and collection at federally operated and tribally operated  facilities, we interviewed officials from IHS headquarters and all 12 area  offices, as well as those from 17 facilities, which we selected to include a  mix of federally operated and tribally operated facilities, including  hospitals and health centers ranging in size and location and those  operating in states that had expanded their Medicaid programs as of  September 2018 as well as those that had not. In total, we interviewed  officials from 11 federally operated facilities and 6 tribally operated facilities across 7 states, with 14 facilities located in states that expanded  Medicaid, and 3 located in states that had not. Our findings from these  interviews cannot be generalized to all federally operated or tribally  operated facilities. For context, we also interviewed officials from the  National Indian Health Board, five area Indian health boards which we  selected to include a mix of areas with predominantly tribal facilities as  well as those with federally operated and tribally operated facilities, as  well as officials from the National Congress of American Indians and the  Tribal Self-Governance Advisory Committee.

To describe the effects of any changes in health insurance coverage and  third-party collections on federally operated and tribally operated facilities  from fiscal years 2013 through 2018, we interviewed IHS officials,  including those at headquarters and all 12 area offices, as well as officials  from the 17 selected facilities. We also interviewed officials from the five  selected area Indian health boards, and the three selected national tribal  organizations. We asked these officials to identify the effects of changes  in coverage and collections. Our findings from these interviews cannot be  generalized to all federally operated or tribally operated facilities. We also  analyzed IHS data on the scope of care provided through IHS’s PRC  program from fiscal year 2015—the first year data were available— through fiscal year 2018. This IHS data reflect care provided through  IHS-administered PRC programs, which represented 39 percent of total  PRC appropriations in fiscal year 2018; similar data on the scope of care  provided through tribally-administered PRC programs, which account for  the remaining portion of PRC appropriations, were not available because  such data are not required to be reported to IHS. We assessed the  reliability of these data by interviewing IHS officials and examining the  data for missing values and outliers. On the basis of these steps, we  concluded that the data were sufficiently reliable for the purposes of our  reporting objective.

We conducted this performance audit from July 2018 through September  2019 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.

IHS was established within the Public Health Service in 1955 in order to  meet federal treaty obligations to provide health services to members of  federally recognized AI/AN tribes primarily in rural areas on or near  reservations. IHS oversees its provision of health care services through a  decentralized system of 12 area offices, which are led by area directors  and located in 12 geographic areas. IHS’s headquarters office is  responsible for setting national health care policy, ensuring the delivery of  quality comprehensive health services, and advocating for the health  needs and concerns of AI/AN people. The area offices are responsible for  monitoring federally operated IHS facilities’ operations and finances, and  providing guidance and technical assistance.

IHS’s 12 area offices oversee 168 service units which provide care at the  local level through a total of 742 federally operated and tribally operated  hospitals, health centers, and other health facilities. The types of services  offered by these facilities vary, but most commonly include primary care  and emergency care, as well as some ancillary and specialty services.  Table 1 displays the number of federally operated and tribally operated  facilities as of February 2019.

If federally operated or tribally operated facilities are unable to provide  needed care, they may contract for health services from private providers  through the PRC program. Patients must meet certain eligibility and  administrative requirements in order to qualify for this care—including  having exhausted all other health care resources available to them and  living on a federally recognized Indian reservation or within a designated  PRC delivery area.

The PRC program is funded through the annual appropriations process  and administered at the local level by individual PRC programs that are  often affiliated with local facilities. Individual PRC programs may be  federally or tribally administered, and as of fiscal year 2018, IHS  administered 39 percent of PRC appropriations, and tribes administered  the remaining 61 percent.

PRC funding is limited and has traditionally been reserved for the most  critical cases. IHS has established five medical priority levels. Funds  permitting, federally administered PRC programs first pay for all of the  highest priority services, and then all or some of the lower priority  services. IHS’s five PRC medical priority levels are  1.  Emergent and acutely urgent care services, which include  treatment for threats to life, limb, or senses;  2.  Preventive care services, which include prenatal care and  3.  Primary and secondary care services, which include scheduled  ambulatory services for nonemergent conditions, and specialty  consultations;  4.  Chronic tertiary and extended care services, which include  rehabilitation care, skilled nursing facility care, and organ transplants;  and  5.  Excluded services, which include cosmetic and experimental  procedures.

PPACA Health Coverage Expansion Provisions for AI/AN

Beginning in 2014, PPACA allowed states to expand Medicaid eligibility to  non-elderly, non-pregnant adults who are not eligible for Medicare and  whose income does not exceed 133 percent of the federal poverty level.  As of September 2018, there were 32 “expansion states”—those states  including the District of Columbia that chose to expand Medicaid eligibility  to this additional adult population—and 19 “non-expansion states”—those  that had not expanded Medicaid eligibility.

PPACA also required the establishment of health insurance exchanges in  2014—marketplaces where individuals may compare and select among  health insurance plans offered by participating private insurers. PPACA  included a number of provisions that reduced these plans’ costs— including premiums and cost-sharing, such as deductibles and  copayments—for eligible enrollees, including certain AI/AN.

Health Insurance Coverage and Third- Party Collections at Federally Operated IHS Facilities Increased from 2013 to 2018; Tribal Facility Officials Also Reported Increases

IHS Data Show Increase in Percent of Patients with Health Insurance Coverage at Federally Operated IHS Facilities from 2013 through 2018

Our analysis of IHS data shows that from fiscal year 2013 through fiscal  year 2018, the percent of patients at 73 federally operated IHS hospitals  and health centers who reported having health insurance coverage  increased an average of 14 percentage points, from 64 percent in fiscal  year 2013 to 78 percent in fiscal year 2018. The majority of coverage  gains occurred in fiscal years 2014 through 2016 (see fig. 1).

Patients at federally operated IHS facilities reported obtaining health  insurance coverage from several sources. The largest increase in  coverage occurred among those reporting Medicaid coverage. On  average, 41 percent of IHS patients in fiscal year 2013 reported they had  coverage through Medicaid at some point during the year; this number  increased to 53 percent in fiscal year 2018. In comparison, the percent of  patients at each facility who reported having Medicare and the percent  who reported having private insurance at some point during the year each  increased an average of two percentage points from fiscal years 2013 to  2018. (See fig. 2.)

While the average percent of patients reporting health care coverage  increased across all federally operated IHS facilities, our analysis of IHS  data showed substantial variation in the magnitude of these increases.  Specifically, from fiscal year 2013 through fiscal year 2018, increases at  each of the 73 facilities ranged from a low of 2 to a high of 31 percentage  points. Forty-four federally operated IHS facilities experienced an  increase in the percent of patients with coverage over this time period of  more than 10 percentage points (see fig. 3).

Our analysis of IHS data shows that federally operated IHS facilities in  states that expanded Medicaid had larger increases in health insurance  coverage compared with such facilities in states that had not expanded  Medicaid. Specifically, federally operated IHS facilities in Medicaid  expansion states experienced an average 17 percentage point increase  in patients reporting any form of health coverage, compared with an  average 8 percentage point increase at federally operated IHS facilities in  states that did not expand Medicaid. However, these increases in  coverage were not spread evenly among the facilities. (See fig. 4.)

IHS officials we interviewed also reported that a variety of factors in  addition to Medicaid expansion likely affected the number of patients at  federally operated IHS facilities who reported having health insurance  coverage. Specifically, officials we interviewed at all of the 11 selected  federally operated IHS facilities cited efforts at their facilities that helped  increase coverage, such as increasing the number of onsite patient  benefits coordinators to help enroll patients in all forms of health coverage  and enhancing efforts to ensure that all patients were screened for  coverage. For example, one federally operated IHS facility reported  renovating its office to, among other things, move the patient benefits  coordinator near the waiting room, which allowed patients to be  immediately screened after walking in for an appointment. Officials we  interviewed at nearly all of the selected federally operated IHS facilities  also noted that their outreach and education efforts about the importance  of health insurance coverage may have helped to increase enrollment.  Officials we interviewed at all of the selected federally operated IHS  facilities said they were engaged in such activities which included  broadcasting public service announcements, posting newspaper  advertisements, and promoting insurance during community events.  Officials from most of the 12 IHS area offices also reported collaborating  with tribes to conduct outreach and education to enhance enrollment.

Officials at many IHS area offices also noted that external factors may  have also played a role in increasing coverage levels, such as  improvements in the local economy, which officials said led to increases  in the number of patients with private health insurance. Additionally,  entities outside of IHS also implemented initiatives to increase coverage  for patients at federally operated IHS facilities. For example, IHS officials  stated that some patients obtained health insurance through the health  insurance exchanges, and in some cases, the tribe paid all premiums,  coinsurance, and deductibles for these plans. In addition, a number of  area Indian health boards worked together to develop a train-the-trainer  program to disseminate information and resources to encourage  enrollment and share information on the benefits of having health  coverage.

Total Third-Party Collections at Federally Operated IHS Facilities Increased 51 Percent from Fiscal Years 2013 through 2018

Third-party collections across all federally operated IHS facilities  increased 51 percent from fiscal year 2013 through fiscal year 2018,  according to our analysis of IHS data. Specifically, total third-party  collections increased from $708 million in fiscal year 2013 to about $1.07  billion in fiscal year 2018 while the number of patients seeking care  remained constant. Medicaid collections accounted for 65 percent of the  total $360 million increase, though collections from Medicare, private  insurance, and Veterans Affairs also increased during this period. For  example, Medicaid collections grew 47 percent, from $496 million in fiscal  year 2013 to $729 million in fiscal year 2018. (See fig. 5.)

While third-party collections at federally operated IHS facilities collectively  increased from fiscal year 2013 through 2018, there was significant  variation in changes for individual facilities. IHS officials we interviewed  noted several reasons why third-party collections may vary over time and  by location, including  the size of the facility and any changes in the number of providers,  patients, or business office staff that process billing and collections;  the ability to collect payment from certain tribal health insurance,  which may opt to not pay for services provided to enrolled members;  and  the number of patients enrolled in Medicaid managed care plans,  which may identify IHS facilities as out-of-network providers and not  pay for covered services.

IHS and federally operated facility officials we interviewed noted that  gains in health insurance coverage during this time period contributed to  increases in collections. In addition, officials we interviewed from most of  the 12 area offices and 11 selected federally operated IHS facilities  described steps they took to enhance collections. More specifically,  officials from seven area offices discussed initiating steps to improve  billing and collections functions for federally operated IHS facilities in their  area; at one area office this involved creating a new area-level position  focused on revenue enhancement at federally operated IHS facilities.  Additionally, officials we interviewed at six federally operated IHS facilities  identified steps they took to enhance the accuracy and efficiency of  facilities’ collections, noting efforts such as improving training related to  coding and billing. For example, officials at one of these facilities  described convening a team to review why all claims related to a specific  service were being rejected. The team then instituted changes to their  billing procedures that resulted in the facility collecting payments for these  services.

Officials from Selected Tribally Operated Facilities and Tribal Organizations Described Increases in Health Insurance Coverage and Third-Party Collections at Some Tribal Facilities

Officials we interviewed at selected tribally operated facilities and tribal  organizations—including national tribal organizations and area Indian  health boards—described increases in health insurance coverage and  collections at some tribally operated facilities that occurred from 2013  through 2018. Specifically, some tribal organization officials reported  increases in coverage at facilities located in states that had expanded  their Medicaid programs, compared with those that had not. For example,  officials at one tribally operated facility noted that the percent of their  patients with health coverage increased by 10 percentage points from  2013 to 2018.

Similar to federally operated IHS facilities, officials we interviewed from  some tribally operated facilities said they focused on screening patients  for coverage at the time of service, including by increasing the number of  patient benefits coordinators and always having staff available to help  enroll patients in coverage. These officials also noted that they conducted  outreach and enrollment activities to inform patients of the importance of  having coverage and benefitting from outreach and education activities  conducted directly by local tribes, including through messages that  emphasized the importance of coverage for the tribe and tribally operated  facility. Officials from a national tribal organization told us that one tribally  operated facility placed stickers on all equipment purchased with third- party collections as a way to educate patients about the benefits of having  health insurance coverage and to encourage further enrollment in  coverage.

Officials we interviewed at selected tribally operated facilities and national  tribal organizations also described increases in third-party collections that  occurred from 2013 through 2018 at many tribally operated facilities— particularly those located in Medicaid expansion states. For example,  officials from one tribally operated facility told us that they anticipated that  their third-party collections for 2018 would be more than twice the amount  they collected for 2013. Similar to federally operated IHS facilities,  officials we interviewed from some tribally operated facilities noted that  their facilities had enhanced collections by making improvements to their  billing processes and taking steps to increase patient volume. For  example, officials at one tribally operated facility said they recently began  allowing non-tribal members to receive care at their facility—an option  available to tribally operated facilities but not to federally operated IHS  facilities—as a way to increase third-party collections and bolster the  facility’s long-term sustainability.

Some officials also noted that not all tribally operated facilities  experienced increases in collections, in part because of decreases or  limitations in the number of providers, patients, or business office staff  that process billing and collections. Similar to federally operated IHS  facilities, officials from tribally operated facilities noted that the enrollment  of patients in Medicaid managed care plans also reduced their ability to  collect payment for covered services because these plans often identify  the facilities as out-of-network providers and therefore do not pay for  covered services provided onsite.

Increases in Coverage and Collections Reportedly Helped Selected Federally Operated and Tribally Operated Facilities to Continue Operations and Expand Services

Officials we interviewed from selected federally operated and tribally  operated facilities stated that increases in coverage and third-party  collections helped them to (1) continue their facilities’ operations, (2)  expand the services they offer onsite at their facilities, and (3) expand the  services they cover offsite through IHS’s PRC program.

Officials we interviewed from all 17 selected federally operated and  tribally operated facilities noted that they used increased third-party  collections to fund their continued operations. Even as officials we  interviewed from nearly all of the 11 selected federally operated IHS  facilities reported that their facilities’ third-party collections had grown  from fiscal years 2013 to 2018, officials from most of these facilities also  said they relied more heavily on these collections to support their  continued operations. Officials we interviewed from all of the IHS area  offices told us that third-party collections provide a vital source of funding  for federally operated IHS facilities in their area. These collections  allowed them to maintain a level of operations that would otherwise be  challenging, for reasons such as increasing costs of payroll and of  maintaining an aging infrastructure. In addition, officials we interviewed  from most of the selected federally operated IHS facilities reported using  third-party collections to fund a substantial and increasing portion of their  payroll costs. Officials at many of the IHS area offices and most of the  selected federally operated IHS facilities we interviewed also reported  using third-party collections to ensure that their facility met all required  standards, including those required for ongoing accreditation, or to  undertake any needed maintenance such as by repairing roofs and  heating systems. Some of these officials also reported using third-party  collections to repair or replace medical equipment that was broken or had  exceeded its intended lifespan. Table 2 displays examples of how  selected federally operated and tribally operated facilities reported using  third-party collections.

Officials we interviewed from most of the 17 selected federally operated  and tribally operated facilities told us they used increased third-party  collections to expand the volume or scope of services they offered onsite  as a way to better meet patients’ medical needs. With respect to  increasing the volume of services provided, officials at most of these  facilities said they added providers and medical equipment to provide  patients with more timely access to services. In one example, officials  from a federally operated IHS hospital said they added about 30  additional nurses from 2013 to 2018 as a result of increased third-party  collections. As a result of increases in the number of providers at their  facilities, officials we interviewed from several federally operated IHS  facilities said they were able to schedule appointments for patients more  quickly, which reduced wait times for an appointment—including two  facilities that reported being able to newly offer same-day appointments.  Officials from facilities that expanded the scope of services provided said  they did so by adding new specialties, such as behavioral health and  dentistry, purchasing new medical equipment such as hospital beds,  dental chairs, and magnetic resonance imaging machines, and funding  health promotion and education activities such as those related to  diabetes education. (See fig. 6.)

To support efforts to expand services and bolster their sustainability,  officials from most of the 17 federally operated and tribally operated  facilities said they used third-party collections to offer more competitive  salaries and bonuses for providers. In addition, officials from a few of the  12 IHS area offices told us that federally operated facilities in their area  used third-party collections to fund projects to construct nearby housing  for providers. In another example, officials from a national tribal  organization noted that the use of third-party collections to enhance  provider salaries at one facility led to a decrease in provider turnover from  about 40 percent prior to 2014 to 14 percent in 2018. In addition, officials  from many of the IHS area offices told us that some federally operated  facilities in their area reported using third-party collections accumulated  over multiple years to make investments in expanding their facilities to  provide the space necessary to support these additional services. For  example, according to IHS officials, one federally operated IHS facility reported using $7 million in third- party collections to fund an over 11,000 square foot expansion to  house an expanded emergency room and a new urgent care clinic;  two federally operated IHS facilities reported using third-party  collections to purchase modular buildings to provide medical services  such as audiology, behavioral health, and dental services; and one federally operated IHS facility reported saving third-party  collections for six years to fund the construction of a new 23,000  square foot building to provide additional space for an increased  volume of services, including dental, optometry and physical therapy  services, and to pay for the new medical equipment to support these  services (see fig. 7).

Officials from some IHS area offices stated that the extent to which  federally operated IHS facilities in their area invested in expanding onsite  services largely depended on the level of facilities’ third-party collections.  Specifically, facilities experiencing larger increases in collections, such as  larger facilities or those located in Medicaid expansion states, were able  to invest more heavily in an expansion of onsite services compared to  those that had lower increases in collections, according to these officials.

To identify their facilities’ needs, officials from federally operated and  tribally operated facilities reported using a variety of approaches. For  example, officials from three IHS area offices and one tribally operated  facility said they analyzed PRC data to identify the services that patients  were obtaining through that program, and worked to bring those services  onsite. Officials from two federally operated IHS facilities also noted that  they incorporated local tribal input as they identified local needs and  projects to fund. For example, these officials told us that their facilities  were in the process of adding new specialty services onsite, including  acupuncture, chiropractor, and eye clinic services, at the request of their  local tribes.

The recent growth in third-party collections has made it possible for many  federally operated IHS facilities to consider funding a range of projects,  and IHS officials said they relied on established procedures to fund these  projects. According to IHS officials, local facility officials draft annual  spending proposals to identify the resources, including third-party  collections, that they would like to use to address their facilities’ needs.  These proposals are provided to each facility’s governing board for  review; the governing board is comprised of area office and facility  officials whose top priority is maintaining accreditation and ensuring  patient safety at each facility, according to IHS officials. Once these basic  needs are met, IHS officials told us that facilities may begin to identify and  fund projects to expand access to health services.

Officials from IHS, as well as some of the 17 selected federally operated  and tribally operated facilities, told us that increased coverage and  collections allowed for an expansion in the complexity of services  provided offsite through the PRC program. Specifically, officials reported  that an increase in the percent of patients with health insurance, coupled  with facilities’ enhanced onsite services, has led PRC programs to be  able to expand the level of care that they can offer. For example, they  stated that increases in the health insurance coverage of patients have  led to a smaller percent of patients needing to access PRC, since patients  may use their coverage to obtain needed services directly from other  private providers. In addition, an expansion of available services onsite at  federally operated and tribally operated facilities resulting from increased  collections reduced the need for some patients to use PRC.

From 2013 through 2018, most IHS-administered PRC programs moved  from covering only the most acute and emergent cases to funding nearly  all types of care covered through the PRC program, according to our  analysis of IHS data and interviews with agency officials. Specifically, IHS  officials we interviewed told us that prior to 2014, most PRC programs  administered by the agency were only able to fund care for the most  acute and emergent cases—referred to as priority level 1. Our analysis of  IHS data showed that these PRC programs were increasingly able to fund  additional medical priority levels of care each year from fiscal year 2015— the first year that such data were available—through fiscal year 2018,  with most IHS-administered programs funding care through priority level 4  in fiscal year 2018. (See fig. 8.)

Officials we interviewed at some of the 17 selected federally operated and  tribally operated facilities that had been able to both expand services  onsite and offsite through PRC funds told us that these changes have  made a large impact on patients’ health and quality of life. For example,  officials at some federally operated IHS facilities reported that having  more providers onsite has allowed them to offer patients more rapid  access to care, and officials from some tribally operated facilities reported  that an expansion of onsite services has allowed them to serve more  patients. Officials at some of the selected federally operated and tribally  operated facilities reported that an expansion of onsite services has also  reduced the need for some patients to travel long distances to obtain  diagnostic services and specialty care through the PRC program. In  addition, officials from two IHS area offices noted that PRC has been able  to pay for services such as patients’ long-awaited knee and hip  replacements, which have enabled patients to return to normal activities  of life and reduce their need for pain management.

We provided a draft of this report for review and comment to the  Secretary of Health and Human Services. The Department did not have  any comments on the draft report.

As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the Secretary of the  Department of Health and Human Services and other interested parties.  In addition, the report will be available at no charge on the GAO website  at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-7114 or farbj@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made key contributions to this report are  listed in appendix II.

Appendix I: Estimated Health Insurance Coverage of the American Indian and Alaska Native Population, 2013 through 2017

In the years since the Patient Protection and Affordable Care Act  (PPACA) authorized states to expand access to Medicaid and offer health  insurance through the exchanges in 2014, the percent of American Indian  and Alaska Native (AI/AN) in the general population with health insurance  has increased. Specifically, according to an analysis of U.S. Census  Bureau’s American Community Survey data, the percent of nonelderly  AI/ANs with health insurance coverage increased from 70 percent in 2013  to 78 percent in 2017. (See fig. 9.)

While the estimated percent of AI/AN nationwide reporting health  insurance coverage increased from 2013 to 2017, these increases in  coverage were not evenly distributed among the states, according to an  analysis of U.S. Census Bureau’s American Community Survey data.  The estimated percent of AI/AN reporting health insurance increased  more in states that expanded Medicaid compared to those that did not.  (See fig. 10.)

Appendix II: GAO Contact and Staff Acknowledgments

In addition to the contact named above, Kristi Peterson, Assistant  Director; Patricia Roy, Analyst-in-Charge; Michelle Duren; and Lisa  Rogers made key contributions to this report. Also contributing were Todd  Anderson, Krister Friday, Ethiene Salgado-Rodriguez, and Emily Wilson  Schwark.

Tribal Consultation: Additional Federal Actions Needed for Infrastructure  Projects. GAO-19-22. Washington, D.C.: March 20, 2019.

Indian Health Service: Spending Levels and Characteristics of IHS and  Three Other Federal Health Care Programs. GAO-19-74R. Washington,  D.C.: December 10, 2018.

Indian Health Service: Considerations Related to Providing Advance  Appropriation Authority. GAO-18-652. Washington, D.C.: September 13,  2018.

Indian Health Service: Agency Faces Ongoing Challenges Filling Provider  Vacancies. GAO-18-580. Washington, D.C.: August 15, 2018.

High-Risk Series: Progress on Many High-Risk Areas, While Substantial  Efforts Needed on Others. GAO-17-317. Washington, D.C.: February 15,  2017.

Indian Health Service: Actions Needed to Improve Oversight of Quality of  Care. GAO-17-181. Washington, D.C.: January 9, 2017.

Indian Health Service: Actions Needed to Improve Oversight of Patient  Wait Times. GAO-16-333. Washington, D.C.: March 29, 2016.

Indian Health Service: Opportunities May Exist to Improve the Contract  Health Services Program. GAO-14-57. Washington, D.C.: December 11,  2013.

Indian Health Service: Most American Indians and Alaska Natives  Potentially Eligible for Expanded Health Coverage, but Action Needed to  Increase Enrollment. GAO-13-553. Washington, D.C.: September 5,  2013.

Indian Health Service: Increased Oversight Needed to Ensure Accuracy  of Data Used for Estimating Contract Health Service Need. GAO-11-767.  Washington, D.C.: September 23, 2011.

Indian Health Service: Updated Policies and Procedures and Increased  Oversight Needed for Billings and Collections from Private Insurers.  GAO-10-42R. Washington, D.C.: October 22, 2009.

Indian Health Service: Health Care Services Are Not Always Available to  Native Americans. GAO-05-789. Washington, D.C.: August 31, 2005.

The Indian Health Service provides care to American Indians and Alaska Natives through a system of health care facilities. We looked at health care coverage at IHS facilities from 2013 to 2018.

Federal facility data showed that the proportion of patients with insurance grew from 64% to 78% from fiscal years 2013 through 2018. Facilities in states that expanded access to Medicaid saw the largest increases.

Officials we interviewed from 17 facilities told us the increased coverage helped federally and tribally operated facilities expand services.