Report 2012-119 Recommendation 2 Responses

Report 2012-119: California Department of Veterans Affairs: It Has Initiated Plans to Serve Veterans Better and More Cost-Efficiently, but Further Improvements Are Needed (Release Date: May 2013)

Recommendation #2 To: Veterans Affairs, Department of

To ensure that it maximizes its ability to generate revenue at all the veterans homes and better cover the costs of providing care to its members, CalVet should analyze its cost-recovery model, including an evaluation of the state laws that limit the amount of revenue that CalVet can collect for the care it provides to its members at the veterans homes.

Annual Follow-Up Agency Response From November 2016

In the last three years, CalVet conducted multiple surveys of other states to analyze their Veterans Homes' cost-recovery models. Survey results revealed that California differs from other states in terms of the type of veteran admitted, services offered and the fees charged to recover the cost of care. CalVet has educated external stakeholder about the differences in California law on tours of the Veterans Homes and in policy meetings for the last three years. Legislation was introduced in 2016 that captured many of the cost recovery model changes that were needed. CalVet worked with the author and sponsors of this legislation, SB 980. The amendments included in the bill would have defined a fee schedule enabling the CalVet to create a benefit plan, institute penalties for non-payment of fees, require participation in insurance plans, give priority to those with service-connected disabilities, and clarify several other areas of the law which would have improved revenue and cost recovery. The bill was approved in the house of origin and in the Veterans Affairs Committee of the second house. However, it was held in the Appropriations Committee at the end of the legislation session. Other significant CalVet accomplishments impacting cost recovery are the successful implementation of the ICD-10 codes for medical billing, which were required across the nation. CalVet is in the process of conducting a post-implementation audit to ensure that the best coding and documentation practices are being utilized. Finally, CalVet has successfully obtained CMS certification in two of the three newest Homes. This will result in Medicare and Medi-Cal revenue to offset the General Fund.

  • Completion Date: August 2016

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

CalVet conducted multiple studies to analyze how its revenue and cost-recovery models compare to other states. CalVet then used that analysis to help propose legislation in 2016 (SB 980) that would strengthen its ability to generate revenue and bring its cost-recovery model more in line with the models of other states' veteran homes systems. However, SB 980 did not pass, and CalVet's Chief Financial Officer told us that the department plans to resubmit a similar bill for 2017. Further, in June 2016 it entered into a collections contract with a third party to provide debt collection services for delinquent member fee accounts. Moreover, as reported in Recommendation #1, in 2013 CalVet Homes Division revised its procedures to increase veteran resident enrollment in Medicare to help reduce medical costs at the homes, among other cost saving and revenue increasing practices.


Annual Follow-Up Agency Response From September 2015

CalVet entered into a partnership with the California Research Bureau to conduct a study on the cost-recovery models used by veterans homes systems throughout the country. CalVet is evaluating the data in the Research Bureau's report and determining next steps. Additionally, CalVet has entered into a collections contract to assist in the pursuit of unpaid fees.

  • Estimated Completion Date: January 2016

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented


Annual Follow-Up Agency Response From October 2014

CalVet has entered into a partnership with the State Library to gather data from veterans homes across the nation on their cost recovery models, to help CalVet determine best practices. Results are expected by December 1, 2014. Also, CalVet has started the process to establish income verification through the Social Security Administration to ensure the correct fees are being assessed. Finally, CalVet has entered into a collections contract to assist in the pursuit of unpaid fees.

  • Estimated Completion Date: January 2016

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented


1-Year Agency Response

1. CalVet will implement the recommendation in the January 31, 2014 management Letter from the Department of Finance. 2. CalVet will work with its stakeholders to make legislative changes as needed.

  • Estimated Completion Date: Jan 2016
  • Response Date: May 2014

California State Auditor's Assessment of 1-Year Status: Pending


6-Month Agency Response

We are currently examining different fee models and will determine the impact they would have on residents. Based on most recent BSA Investigation we are amending our action plan related to MWR and will be reporting our corrective action and changes to MWR usage. We are currently examining the fee structure and the impact changes would have on residents.

  • Estimated Completion Date: 6/1/2017
  • Response Date: November 2013

California State Auditor's Assessment of 6-Month Status: Pending


60-Day Agency Response

CalVet will analyze the impact a revised fee structure would have on veterans, and develop legislative recommendations after collaboration with the CalVet Board and veteran stakeholders. In addition, CalVet will examine the laws creating the Morale, Welfare, and Recreation Fund at each of the veterans homes as recommended to determine if each of these funds could sustain themselves.

1) Implemented new room and board rate based on level of care by home as of July 1, 2013. This will enable CalVet to recover a more accurate unreimbursed cost of care from the deceased residents estate.

2) Working on updating Military and Veterans Code and Regulations on Fee structure.

  • Estimated Completion Date: Unknown
  • Response Date: July 2013

California State Auditor's Assessment of 60-Day Status: Partially Implemented


All Recommendations in 2012-119

Agency responses received after June 2013 are posted verbatim.


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