{"id":1248,"date":"2025-12-22T13:59:33","date_gmt":"2025-12-22T13:59:33","guid":{"rendered":"https:\/\/department.va.gov\/vha\/?page_id=1248"},"modified":"2026-09-23T16:35:30","modified_gmt":"2026-09-23T16:35:30","slug":"payers","status":"publish","type":"page","link":"https:\/\/department.va.gov\/vha\/payers\/","title":{"rendered":"Payers"},"content":{"rendered":"\n
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For Payers<\/h1>\n<\/div><\/div>\n\n\n
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Introduction<\/h2>\n\n\n
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By law, the Department of Veterans Affairs (VA) can bill an eligible Veteran\u2019s private health insurance company (third party) for care furnished or paid for by VA for a nonservice-connected condition. In addition, public law granted the VA the authority to bill reasonable charges instead of average cost-based per diems for care provided to Veterans. Implementation of reasonable charges not only changed the amount billed for services but also impacted the VA\u2019s method of doing business. Payer information and annual updates to VA\u2019s reasonable charges and rates can be found below.<\/p>\n\n\n\n

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Third party
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Payer rates
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Average administrative cost for prescriptions<\/h3>\n<\/div>\n\n\n\n
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Third party payers<\/h2>\n\n\n
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By law, the Department of Veterans Affairs (VA) can bill an eligible Veteran\u2019s private health insurance company for care furnished or paid for by VA for a nonservice-connected condition. For the purposes of billing, a Veteran\u2019s health insurance company is known as a Third Party Payer (TPP). Reimbursements VA receives from TPPs supplement appropriations by Congress to pay for VA health care.<\/p>\n\n\n\n

For more details, read Code of Federal Regulations Title 38 \u00a717.101, Collection or Recovery by VA for Medical Care or Services Provided or Furnished to a Veteran for a Nonservice-Connected Disability.<\/a><\/p>\n\n\n\n

TPPs must pay VA billed charges or the amount TPPs pay commercial providers for the same services in the same geographic area, which is subject to verification by VA. TPPs aren\u2019t subject to a rate verification so long as they pay billed charges.<\/p>\n\n\n\n

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Methodology<\/h3>\n<\/div>\n\n\n\n
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Federal regulations (38 C.F.R \u00a717.101) stipulate the basic methodology by which VA bills third party payers. To generate a charge for medical services, VA establishes national reasonable charges which are then adjusted locally by each VA medical center based on their Geographical Area Adjustment Factor (GAAF). Reasonable charges are developed for five categories of care: inpatient facility, outpatient facility, skilled nursing facility, physicians, and nonphysician providers.<\/p>\n\n\n\n

Inpatient facility and skilled nursing facility care are billed on a per diem basis. For inpatient facility charges, the per diem charges vary by the treated condition as classified by Medicare Severity Diagnosis Related Groups (MS-DRG) codes.<\/p>\n\n\n\n

Billing for outpatient facility care and provider charges vary by procedure performed as classified by Current Procedural Terminology (CPT) codes and Healthcare Common Procedure Coding System (HCPCS) Level II codes.<\/p>\n\n\n\n

Billing for third party outpatient pharmacy prescription drugs not administered during treatments and furnished by the VA to a Veteran for a nonservice-connected disability are calculated using the actual VA cost of a drug, which is the actual amount expended by the VA facility for the purchase of the specific drug plus the Pharmacy Administrative cost.<\/p>\n\n\n\n

The administrative cost is determined annually using VA’s managerial cost accounting system. Under this accounting system, the average administrative cost is determined by adding the total VA national drug general overhead costs (such as costs of buildings and maintenance, utilities, billing, and collections) to the total VA national drug dispensing costs (such as costs of the labor of the pharmacy department, packaging, and mailing) with the sum divided by the actual number of VA prescriptions filled nationally.<\/p>\n\n\n\n

Based on this accounting system, VA determines the amount of the average administrative cost annually for the prior fiscal year (October through September) and then applies the charge at the start of the next calendar year. The annual Outpatient Pharmacy Average Administrative charge is posted on the Average Administrative Cost for Prescriptions page.<\/p>\n\n\n\n

Data for calculating actual charge amounts are published in a Federal Register notice, available on the Payer Rates and Charges page. VA bills using the most recently published or posted charge based on the date of service for the treatment provided.<\/p>\n\n\n\n

Link to: 38 C.F.R \u00a717.101<\/a><\/p>\n<\/div>\n\n<\/div>\n\n\n

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Agreements<\/h3>\n<\/div>\n\n\n\n
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In some cases, VA may enter into an agreement with a TPP related to billed charges for eligible Veterans to ensure a more predictable business relationship subject ultimately to federal law.<\/p>\n\n\n\n

Email us at RevenueOperationsPR@va.gov<\/strong><\/a> for more information.<\/p>\n\n\n\n

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Frequently asked questions<\/h3>\n<\/div>\n\n\n\n
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Do Veterans have to provide VA with their private health insurance information?<\/strong>
Yes. Veterans are required to provide information to VA about health insurance coverage, including coverage provided under their spouse\u2019s policies.<\/p>\n\n\n\n

See the VA page on Health Insurance for more information.<\/a><\/p>\n\n\n\n

Does VA collect copayments on behalf of Third Party Payers?<\/strong>
No, VA cannot collect third party insurance copayments on behalf of the TPP. However, VA can charge certain Veterans a VA copayment for care or services provided for non-service connected conditions.<\/p>\n\n\n\n

Review the VA copayments page for more information.<\/a><\/p>\n\n\n\n

Do Veterans have to pay for the remaining balance on the Explanation of Benefits?<\/strong>
No, Veterans are not responsible for the remaining balance shown as patient responsibility on the explanation of benefits from their insurance carrier. Veterans are only responsible for the required VA copayment.<\/p>\n\n\n\n

Review the VA copayments page for more information.<\/a><\/p>\n\n\n\n

Do Veterans need to complete a Coordination of Benefit (COB) form?<\/strong>
No. The obligation of the third-party payer to pay is not dependent upon the Veteran executing an assignment of benefits to VA or any other submission by the Veteran. In other words, denials from Third Party Payers for Coordination of Benefits violates Federal regulations, and the payer is still obligated to pay VA.<\/p>\n\n\n\n

Read 38 CFR \u00a717.106(d) on the govinfo.gov website.<\/a><\/p>\n<\/div>\n\n<\/div>\n\n\n

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Resources<\/h3>\n<\/div>\n\n\n\n
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Vendor Webform User Guide<\/a><\/strong>  Details steps guiding payers through completion and set up of the vendor file.<\/p>\n\n\n\n

38 C.F.R \u00a717.101<\/strong><\/a><\/p>\n\n\n\n

38 CFR Section17<\/strong><\/a>,<\/em>
Charges Billed to Third Parties for Prescription Drugs Furnished by VA to a Veteran for a Nonservice-Connected Disability<\/em><\/p>\n<\/div>\n\n<\/div>\n\n\n

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Contact us<\/h3>\n\n\n\n

Pharmacy Benefit Managers and Third Party Payers may email questions to: RevenueOperationsPR@va.gov<\/strong><\/a><\/a><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n\n<\/div><\/div>\n\n

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Payer rates and charges<\/h2>\n\n\n
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Reasonable Charges are based on amounts that third parties pay for the same services furnished by private-sector health care providers in the same geographic area. In the past, VA used average cost-based, per diem rates for billing insurers. Reasonable charges are calculated for inpatient and outpatient facility charges, and for professional or clinician charges for inpatient and outpatient care.<\/p>\n\n\n\n

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Reasonable charges data tables<\/strong><\/h3>\n<\/div>\n\n\n\n
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Continue to the agreement and acceptance page<\/a><\/div>\n<\/div>\n<\/div>\n\n<\/div>\n\n\n
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Reasonable charges data sources<\/strong><\/h3>\n<\/div>\n\n\n\n
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Excel files<\/strong><\/p>\n\n\n\n