Creativity Over Hammers


Over the last several years, the US Department of Veterans Affairs (VA) has experienced numerous high profile problems with its operations and the delivery of care to our veterans. The recent discovery of the depletion of the Veterans Choice Fund is just one example of issues with the delivery system of care at the VA having a significant impact on veterans and health care providers. The VA’s strategy for addressing the depletion of the Choice Fund is also becoming very controversial. The VA has decided to use a strategy that initiated a Recovery Audit Contractor (RAC) audit against Choice Program providers and is claiming back millions of dollars from providers who took care of veterans at the request of the VA.

A brief look into the history of the causes of the Choice Program fiscal problems and an understanding of the mechanics of a RAC audit against providers that volunteered to treat veterans under the Choice Program will help bring into focus potentially more palatable solutions.

On September 17, 2017, the Office of Inspector General (OIG) released a memorandum of an investigation and audit of the VA Choice Program going on for the prior year that found:

  • 75% of the $10 billion allocated to the Choice Program had been depleted in two years;
  • Inadequate payment processing guidance by the VA to third party administrators (TPAs) caused multiple process changes and significant delays in payments to providers;
  • Specific claims processing errors of (a) duplicate payments, (b) improper payment amounts when other health insurance provided some coverage, (c) improper payments to TPAs, and (d) payments made in excess of Medicare or contract adjusted rates; and
  • The VA should institute a post-payment audit of Choice Program claims paid to providers.

On January 30, 2017, CGI Federal announced they had been awarded the RAC contract to audit providers improperly paid under the Choice Program. Although a Freedom of Information Act (FOIA) request for a copy of CGI’s contract has not yet been fulfilled, communications with CGI have established:

  • CGI is auditing Choice Program providers that did not have a provider/enrollment contract with the VA;
  • Providers that participated in a preauthorized, per patient basis, are the focus;
  • CGI will be auditing on a claim-by-claim basis, providers will only have the opportunity to appeal back to CGI for reconsideration before being referred to the VA for a final decision;
  • CGI has no authority to negotiate resolutions with providers and must defer to the VA; and
  • CGI is being paid on a contingent percentage of collections.

The participating Choice Program providers believed they were providing a valuable service to their veterans because:

  • The VA could not provide the services the veteran needed;
  • The VA could not make an appointment for the veteran within 30 days;
  • The veteran lived more than a 40-mile drive to the nearest appropriate VA facility;
  • The veteran would have had to travel by air, boat or ferry to the VA facility; or
  • The veteran faced an excessive burden in traveling to the nearest VA facility.

CGI began auditing in late 2017, and within a few months hundreds of Choice Program providers had: (a) hundreds of thousands of dollars of current claims being held without explanation; (b) received recoupment demands that quickly grew into millions of dollars of exposure; (c) were forced to hire more staff just to keep up with the audit and appeal process; and (d) were forced with the very difficult decisions of whether they could continue treating veterans and if they could even financially survive the audit process, let alone the overpayment demands.

The collision of the VA’s significant errors in claims payments, CGI’s intrusive audit practices and the potentially catastrophic financial burden on Choice Program providers could affect veterans’ abilities to get access to much needed and could financially ruin the providers who were willing to treat those veterans, under the Choice Program. There is an immediate need for infusion of a creative solution into a situation that will otherwise, undoubtedly, end in negative consequences to all parties involved.

The proposed solution is a long-term partnership between the VA and the providers in question. Let’s consider the elements necessary:

  • CGI has the ability to aggregate providers’ claims to determine the overall exposure and eliminate the claim-by-claim audit;
  • Providers have the ability to aggregate their own claims for comparison to CGI findings;
  • The VA has full authority to determine if an overpayment is, or is not, appropriate based on the aggregation of claims and evidence presented on a per provider basis; and
  • The VA, with independent authority to determine paid provider rates, could contract with providers for continued participation in the Choice Program at rates that would allow for payment of costs, professional, technical and supplies, with sufficient margin for the VA to recoup any assessed overpayment and continue to provide the services.

Why is renegotiating long-term VA relationships the best solution?

  • The expense of the VA providing services still far outweighs the cost of permitting these providers to continue;
  • Veterans can continue to receive treatment by their current providers in their current location without the VA spending significant time and resources to locate new providers willing to perform the services at Medicare rates in medically underserved areas; and
  • Elimination of the expense of CGI, appeals or potential litigation far outweighs the expense of implementing a mediation program for providers willing to continue serving veterans.

Currently, oncology, ophthalmology, rheumatology, nephrology, neurology and other specialty private practices across the country that served veterans in geographic regions where the VA could not supply services are being forced into the extremely difficult position of choosing to terminate service to veterans and consider legal avenues to defend the alleged overpayments.

Choice Program providers, their associations and their representatives are asking the VA for a seat at the table before other options are necessary.

Matthew Roberts,Esq., is a Member ofNexsen Pruet based in Columbia, South Carolina. He leads thefirm's Health Care Practice Group and is admitted in North and South Carolina.

Stephen Bittinger, Esq. is a Member of Nexsen Pruet based in Charleston, South Carolina. Stephen is admitted in North Carolina, Ohio and the District of Columbia. He is not licensed to practice law in South Carolina. Stephen has a unique, national practice in health care reimbursement defense and litigation.


About Maynard Nexsen

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