Volume III - Obligations
Chapter 03 – Obligation at Claims Approval
Questions concerning this policy chapter should be directed to:
- Veterans Health Administration
- Veterans Benefits Administration
- National Cemetery Administration
- Debt Management Center
- Financial Services Center
- Construction and Facilities Management
- All others
0301 Overview
This chapter establishes the Department of Veterans Affairs’ (VA) financial policies regarding Obligation at Claims Approval.
Prior to FY 2019, VA recorded obligations for Community Care at the time the care was authorized by a VA health care provider. The recorded obligation reflected the total value of care a Veteran might receive under the authorization, which resulted in significant over-obligation. For example, in the case of a knee injury, a VA health care provider’s authorization would cover a variety of possible medical interventions, to include up to ten physical therapy sessions, an MRI, and even surgery, at a total cost of thousands of dollars. VA would record the obligation for the total care possible under the authorization, but the Veteran might complete only three physical therapy sessions, costing only a few hundred dollars. Several months or years later VA would de-obligate the unused funds, making it more difficult to efficiently optimize resource allocation and planning, and increasing the risk that funds could expire instead of being available to provide care for Veterans.
In FY 2019, VA began to record obligations for Community Care at the time of approval of payment to providers, rather than the prior practice of obligating at the time of authorization for care. When VA changed its practice, it applied the recording change to all types of Community Care acquisitions, which meant that VA recorded obligations not only when it approved claims received directly from health care providers but also when it approved vouchers, invoices, and requests for payment received from a Third-Party Administrator (TPA) who acquired healthcare services for Veterans from the TPA’s network of health care providers.
In FY 2020, VA determined that its revised accounting practice was not allowed under current law and that a change in law was required to continue the practice. In the FY 2021 appropriations act (P.L. 116-260), Congress provided VA with the necessary legislative authority to continue to record Community Care obligations at the time of approval of payment to providers, retroactive to FY 2019.
Key points covered in this chapter:
- Obligation at Claims Approval may only be used to carry out section 1601 of division FF of Public Law 116-260 in alignment with Congress’ intent when providing VA with the necessary legislative authority to continue to record Community Care obligations at the time of approval of payment.
- This policy authorizes the Veterans Health Administration (VHA) to establish obligations under Obligation at Claims Approval authority.
- For the purposes of establishing an obligation under Obligation at Claims Approval authority, VA defines hospital care or medical services furnished at non- Departmental facilities as hospital care or medical services delivered by community providers. VA uses the term community care when referring to these services.
- Obligation at Claims Approval authority is applicable to all VA obligations owed for hospital care or medical services delivered by community providers regardless of the appropriation used to fund this care, the type of care provided, or the physical location where the veteran receives care.
- The definitions, roles and responsibilities, and statements within this policy are limited to the application of Obligation at Claims Approval authority used to establish financial obligations; they should not be applied outside the specified scope and context.
0302 Revisions
| Section | Revision | Office | Reason for Change | Effective Date |
|---|---|---|---|---|
| Various | Move policy to Volume III Chapter 3 | OFP (047G) | Realignment of obligation policies to Volume III | March 2024 |
| Various | New Chapter | OFP (047G) | Implementation of policy for recording obligations at approval | October 2022 |
0303 Definitions
Community Care – Hospital care, medical services, and extended care services to covered Veterans and family members delivered by community providers.
Community Providers – A 38 U.S.C. § 1703 provider, external to VA, that delivers hospital care, medical services, or extended care services to covered Veterans and family members through a third-party administrator (TPA) contract, community care contract, or Veteran Care Agreement.
Departmental Facilities – A point of care where VA delivers hospital care, medical services, or extended care services to covered individuals.
Hospital Care and Medical Services at Non-Department Facilities/Community Care – Hospital care, medical services, and extended care services delivered to covered Veterans and family members by community providers. This definition only applies to obligations recorded under Public Law 116-260, the Consolidated Appropriations Act, 2021, Division FF, Title XVI, Section 1601, Recording of Obligations.
Non-Departmental Facilities – Facilities other than those designated as Departmental Facilities.
Obligation – A legally binding agreement that will result in outlays, immediately or in the future. An obligation is a legal liability of the Government against an available appropriation.
Obligation at Claims Approval – Occurs when a liability does not arise until the agency formally reviews, applies all established business rules, and approves payment of the healthcare claim or invoice. In these instances, the agency should not record an obligation until it approves the claim or invoiced for payment. (See discussion at Government Accountability Office (GAO) Redbook Chapter 7, Obligation of Appropriations, Administrative Approval of Payment).
0304 Roles and Responsibilities
Under Secretary of Health is responsible for ensuring compliance with and issuing standard operating procedures to implement the policies set forth in this chapter.
Delegated Accountable Officer receives the Secretary’s delegated authority, through the Under Secretary for Health, to certify that all VA claims and invoice processing systems apply business rules to claims, vouchers, invoices, or requests for payment for services provided by community providers or State Homes.
VHA CFO is responsible for establishing a system of internal controls that support obligations subject to Obligation at Claims Approval authority, ensuring appropriations are spent in accordance with the Congressional intent and limits and identifying the Delegated Accountable Officer(s).
VHA Finance Offices are responsible for carrying out the responsibilities assigned by the VHA CFO and performing reconciliations and providing oversight of open obligations to ensure funds are expended appropriately and proper amounts are reflected in VA’s financial statements.
0305 Policies
030501 General Policies
- In accordance with section 1601 of division FF of Public Law 116-260, VHA will establish “Obligation at Claims Approval” processes and procedures.
- Obligation at Claims Approval authority is applicable to all VA obligations owed for hospital care or medical services delivered by community providers regardless of the appropriation used to fund this care, the type of care provided, or the physical location where the veteran receives care.
- The term “all services” includes both clinical and administrative. Accordingly, contract administrative services for hospital care or medical services delivered by community providers will be accounted for as Obligation at Claims Approval.
- VA considers hospital care or medical services furnished at non-Departmental facilities as hospital care or medical services delivered by community providers.
- Under the Obligation at Claims Approval authority, VA recognizes an obligation for community care when it receives, validates, and approves a healthcare claim. VA does not record estimated obligations subject to Obligation at Claims Approval authority.
- To avoid potential violations of the Antideficiency Act (ADA), VA will ensure that adequate funding is available to pay all claims, vouchers, invoices, and requests for payment VA anticipates approving.
- VA will not issue new authorizations or orders for care or services for any fiscal year in which an appropriation for the payment of hospital care or medical services furnished at non-Departmental facilities has been exhausted or has yet to be enacted.
- VA will post fiscal end of year accruals to capture the full value of all approved claims and invoices, including claims and invoices approved but not yet established in VA’s accounting system. By calculating the end of year accruals based on all approved claims and invoices, VA represents the full value of all obligations recognized under Obligation at Claims Approval authority.
- Except as established in VA Financial Policy Volume III, Chapter 2B,1358 Obligations, each obligation must be individually obligated; lump-sum obligations are not permitted.
030502 Documentation Requirements
- VA will ensure sufficient documentary evidence exists for each obligation as established in 31 U.S.C. § 1501, Documentary evidence requirement for Government obligations. Such evidence will provide a clear audit trail and substantiate the validity of the obligation. Evidence constitutes a received, validated, and approved payment claim.
- See VA Financial Policy Volume III, Chapter 2 – Obligations Policy for further information on obligation documentation requirements.
- VA will comply with National Archives and Records Administration (NARA) General Records Schedule for financial management and reporting records.
0306 Authorities and References
- 38 C.F.R. § 17.4030 – Eligible entities and providers
- 38 U.S.C. § 1701 – Definitions
- 38 U.S.C. § 1703 – Veterans Community Care Program
- 38 U.S.C. § 1717. Home health services; invalid lifts and other devices
- 38 U.S.C. § 1718, Therapeutic and Rehabilitative Activities
- Measures of Quality for Different Health Care Settings | Agency for Healthcare Research and Quality (ahrq.gov))
- National Archives and Records Administration (NARA) General Records Schedule
- Public Law 115–182, the VA MISSION Act of 2018
- Public Law 116-260, the Consolidated Appropriations Act, 2021, Division FF, Title XVI, Section 1601
- The Caregivers and Veterans Omnibus Health Services Act of 2010
- VA Financial Policy
0307 Rescissions
Volume II, Chapter 5C – Obligation at Claims Approval, October 2022
0308 Questions
Questions concerning this policy chapter should be directed to:
- Veterans Health Administration
- Veterans Benefits Administration
- National Cemetery Administration
- Debt Management Center
- Financial Services Center
- Construction and Facilities Management
- All others
Appendix A: Obligation at Claims Approval Categories of Care Examples
VA aggregates costs for hospital care or medical services delivered by community providers into Categories of Care. The list below shows examples of current Categories of Care that record obligations under Obligation at Claims Approval. Obligation at Claims Approval authority is applied to a Category of Care independent of the medical appropriation used to fund the care, the type of care provided, or the physical location where the veteran receives care.
Categories of Care
- Medical Community Care Funded
- Behavioral/Mental Health
- Dental
- Department of Defense
- Camp Lejeune
- CHAMPVA
- Children of Women Vietnam Veterans
- Contract Nursing Home
- Dialysis
- Foreign Med
- Geriatrics
- Home Health Care
- Indian Health
- Inpatient
- Medical Contract Administrative Services
- Outpatient
- Pharmacy
- Prosthetics
- State Home
- Tribal Health
- Unauthorized Care
- Urgent Care
- Vaccinations
- Medical Services Funded:
- Caregiver Support programs (Non-VA Caregiver Respite and Non-VA Oversight)
- CHAMPVA Caregivers
- Outpatient In Vitro Fertilization
