VA Pays Billions for Costs Shifted From Medicare

In Fiscal Year (FY) 2023, > 40% of veterans enrolled by the US Department of Veterans Affairs (VA) received care from private practice, mainly for emergency services. Costs associated with that care have shifted from Medicare to the VA to the tune of billions of dollars, according to a recent study published in JAMA Health Forum.

The expenses are a result of the Maintaining Internal Systems and Strengthening Integrated Outside Networks (MISSION) Act of 2018, which established the Veterans Community Care Program (VCCP) and allowed the VA to contract with private clinicians. This provided veterans enrolled in both the Veterans Health Administration (VHA) and Medicare to have 2 government sources of health care financing. The VHA is billed if the veteran receives care at one of its facilities or is referred to a community facility; Medicare is billed only if the veteran is treated for a service not covered by VHA.

These shifts are concerning, according to Kenneth W. Kizer, MD, MPH, and Said Ibrahim, MD, MPH. In an accompanying editorial, they outline how the changes affect whether VHA care will have adequate funding to provide care for the additional 740,000 enrollees who have entered the system in the past 2 years. 

“This has created a $12 billion medical care budget shortfall for FY 2024,” Kizer and Ibrahim argue. The resulting “substantial budgetary tumult … is adversely impacting the front lines of care delivery at individual VA facilities, leading to delays in hiring caregivers and impeding access to VA care and timely care delivery, as well as greatly straining the traditional roles of VA staff and clinicians trying to manage the challenging cross-system referral processes.”

The study calculated the number of yearly emergency department (ED) visits per 1000 veterans in Medicare overall and by VA ED visits, VA-purchased community ED visits, and Medicare-purchased community ED visits. Estimated total costs shifted from Medicare to the VA after the MISSION Act between 2016 and 2021 were then calculated.

Of the 4,960,189 VA and Medicare enrollees in 2016, 37.0% presented to the ED at least once. Of the 4,837,436 dual enrollees in 2021, 37.6% presented to the ED at least once. ED visits increased 8%, from 820 per 1000 veterans in 2016, to 886 per 1000 veterans in 2019. The COVID-19 pandemic caused a dip in ED visits in 2020 by veterans (769 per 1000), but the number rose 2021 (852 per 1000 veterans).

Between 2016 and 2021, the percentage of VA-purchased community ED visits more than doubled, from 8.0% to 21.1%, while Medicare-purchased community ED visits dropped from 65.2% to 52.6%. Patterns were similar among veterans enrolled in traditional Medicare vs Medicare Advantage (MA). The study estimated that in 2021 at least $2 billion of VA community ED spending was due to payer shift from Medicare. 

The shift is “particularly concerning” among veterans enrolled in MA since insurance plans receive capitated payments regardless of actual use of VA- or Medicare-covered services. However, the study’s observational design “limited our ability to infer causality between MISSION Act implementation and payer change.”

The cost shifting is “symptomatic of the fiscally undisciplined implementation of the VCCP and the lack of financially sound policy on payment for VA-Medicare dual enrollees,” according to Drs. Kizer and Ibrahim. “Addressing this matter seems especially important in light of numerous studies showing that the quality of community care often may be inferior to VA care, as well as less timely.”

Kizer and Ibrahim point out that when a veteran who is jointly enrolled in VA and MA plans receives care from the VA, the VA incurs the cost of providing those services even though the MA plan is being paid to provide them. The VA is not allowed to recoup its costs from Medicare. Thus, the government pays twice for the care of the same person. 

A recent study reported > $78 billion in duplicate VA-MA spending between 2011 and 2020, with $12 billion in FY 2020. Kizer and Ibrahim suggest the current VA-MA duplicate spending is likely to be significantly more than the reported amounts.

“[No] evidence shows that this duplicate spending yields a demonstrable health benefit for veterans, although undoubtedly it benefits the financial well-being of the MA plans,” they write.

It’s a “challenging policy and programmatic conundrum,” the co-authors say, noting that eligible veterans often have military service-related conditions that the VA is uniquely experienced in treating.

“Policies and programs need to be designed and aligned to ensure that veterans have timely access to emergency and other services and that rising community care costs do not jeopardize veterans’ choice to access and use VA services, nor compromise the nationally vital roles of the VA in graduate medical education and other health professional training, research, and emergency preparedness.”

In Fiscal Year (FY) 2023, > 40% of veterans enrolled by the US Department of Veterans Affairs (VA) received care from private practice, mainly for emergency services. Costs associated with that care have shifted from Medicare to the VA to the tune of billions of dollars, according to a recent study published in JAMA Health Forum.

The expenses are a result of the Maintaining Internal Systems and Strengthening Integrated Outside Networks (MISSION) Act of 2018, which established the Veterans Community Care Program (VCCP) and allowed the VA to contract with private clinicians. This provided veterans enrolled in both the Veterans Health Administration (VHA) and Medicare to have 2 government sources of health care financing. The VHA is billed if the veteran receives care at one of its facilities or is referred to a community facility; Medicare is billed only if the veteran is treated for a service not covered by VHA.

These shifts are concerning, according to Kenneth W. Kizer, MD, MPH, and Said Ibrahim, MD, MPH. In an accompanying editorial, they outline how the changes affect whether VHA care will have adequate funding to provide care for the additional 740,000 enrollees who have entered the system in the past 2 years. 

“This has created a $12 billion medical care budget shortfall for FY 2024,” Kizer and Ibrahim argue. The resulting “substantial budgetary tumult … is adversely impacting the front lines of care delivery at individual VA facilities, leading to delays in hiring caregivers and impeding access to VA care and timely care delivery, as well as greatly straining the traditional roles of VA staff and clinicians trying to manage the challenging cross-system referral processes.”

The study calculated the number of yearly emergency department (ED) visits per 1000 veterans in Medicare overall and by VA ED visits, VA-purchased community ED visits, and Medicare-purchased community ED visits. Estimated total costs shifted from Medicare to the VA after the MISSION Act between 2016 and 2021 were then calculated.

Of the 4,960,189 VA and Medicare enrollees in 2016, 37.0% presented to the ED at least once. Of the 4,837,436 dual enrollees in 2021, 37.6% presented to the ED at least once. ED visits increased 8%, from 820 per 1000 veterans in 2016, to 886 per 1000 veterans in 2019. The COVID-19 pandemic caused a dip in ED visits in 2020 by veterans (769 per 1000), but the number rose 2021 (852 per 1000 veterans).

Between 2016 and 2021, the percentage of VA-purchased community ED visits more than doubled, from 8.0% to 21.1%, while Medicare-purchased community ED visits dropped from 65.2% to 52.6%. Patterns were similar among veterans enrolled in traditional Medicare vs Medicare Advantage (MA). The study estimated that in 2021 at least $2 billion of VA community ED spending was due to payer shift from Medicare. 

The shift is “particularly concerning” among veterans enrolled in MA since insurance plans receive capitated payments regardless of actual use of VA- or Medicare-covered services. However, the study’s observational design “limited our ability to infer causality between MISSION Act implementation and payer change.”

The cost shifting is “symptomatic of the fiscally undisciplined implementation of the VCCP and the lack of financially sound policy on payment for VA-Medicare dual enrollees,” according to Drs. Kizer and Ibrahim. “Addressing this matter seems especially important in light of numerous studies showing that the quality of community care often may be inferior to VA care, as well as less timely.”

Kizer and Ibrahim point out that when a veteran who is jointly enrolled in VA and MA plans receives care from the VA, the VA incurs the cost of providing those services even though the MA plan is being paid to provide them. The VA is not allowed to recoup its costs from Medicare. Thus, the government pays twice for the care of the same person. 

A recent study reported > $78 billion in duplicate VA-MA spending between 2011 and 2020, with $12 billion in FY 2020. Kizer and Ibrahim suggest the current VA-MA duplicate spending is likely to be significantly more than the reported amounts.

“[No] evidence shows that this duplicate spending yields a demonstrable health benefit for veterans, although undoubtedly it benefits the financial well-being of the MA plans,” they write.

It’s a “challenging policy and programmatic conundrum,” the co-authors say, noting that eligible veterans often have military service-related conditions that the VA is uniquely experienced in treating.

“Policies and programs need to be designed and aligned to ensure that veterans have timely access to emergency and other services and that rising community care costs do not jeopardize veterans’ choice to access and use VA services, nor compromise the nationally vital roles of the VA in graduate medical education and other health professional training, research, and emergency preparedness.”

In Fiscal Year (FY) 2023, > 40% of veterans enrolled by the US Department of Veterans Affairs (VA) received care from private practice, mainly for emergency services. Costs associated with that care have shifted from Medicare to the VA to the tune of billions of dollars, according to a recent study published in JAMA Health Forum.

The expenses are a result of the Maintaining Internal Systems and Strengthening Integrated Outside Networks (MISSION) Act of 2018, which established the Veterans Community Care Program (VCCP) and allowed the VA to contract with private clinicians. This provided veterans enrolled in both the Veterans Health Administration (VHA) and Medicare to have 2 government sources of health care financing. The VHA is billed if the veteran receives care at one of its facilities or is referred to a community facility; Medicare is billed only if the veteran is treated for a service not covered by VHA.

These shifts are concerning, according to Kenneth W. Kizer, MD, MPH, and Said Ibrahim, MD, MPH. In an accompanying editorial, they outline how the changes affect whether VHA care will have adequate funding to provide care for the additional 740,000 enrollees who have entered the system in the past 2 years. 

“This has created a $12 billion medical care budget shortfall for FY 2024,” Kizer and Ibrahim argue. The resulting “substantial budgetary tumult … is adversely impacting the front lines of care delivery at individual VA facilities, leading to delays in hiring caregivers and impeding access to VA care and timely care delivery, as well as greatly straining the traditional roles of VA staff and clinicians trying to manage the challenging cross-system referral processes.”

The study calculated the number of yearly emergency department (ED) visits per 1000 veterans in Medicare overall and by VA ED visits, VA-purchased community ED visits, and Medicare-purchased community ED visits. Estimated total costs shifted from Medicare to the VA after the MISSION Act between 2016 and 2021 were then calculated.

Of the 4,960,189 VA and Medicare enrollees in 2016, 37.0% presented to the ED at least once. Of the 4,837,436 dual enrollees in 2021, 37.6% presented to the ED at least once. ED visits increased 8%, from 820 per 1000 veterans in 2016, to 886 per 1000 veterans in 2019. The COVID-19 pandemic caused a dip in ED visits in 2020 by veterans (769 per 1000), but the number rose 2021 (852 per 1000 veterans).

Between 2016 and 2021, the percentage of VA-purchased community ED visits more than doubled, from 8.0% to 21.1%, while Medicare-purchased community ED visits dropped from 65.2% to 52.6%. Patterns were similar among veterans enrolled in traditional Medicare vs Medicare Advantage (MA). The study estimated that in 2021 at least $2 billion of VA community ED spending was due to payer shift from Medicare. 

The shift is “particularly concerning” among veterans enrolled in MA since insurance plans receive capitated payments regardless of actual use of VA- or Medicare-covered services. However, the study’s observational design “limited our ability to infer causality between MISSION Act implementation and payer change.”

The cost shifting is “symptomatic of the fiscally undisciplined implementation of the VCCP and the lack of financially sound policy on payment for VA-Medicare dual enrollees,” according to Drs. Kizer and Ibrahim. “Addressing this matter seems especially important in light of numerous studies showing that the quality of community care often may be inferior to VA care, as well as less timely.”

Kizer and Ibrahim point out that when a veteran who is jointly enrolled in VA and MA plans receives care from the VA, the VA incurs the cost of providing those services even though the MA plan is being paid to provide them. The VA is not allowed to recoup its costs from Medicare. Thus, the government pays twice for the care of the same person. 

A recent study reported > $78 billion in duplicate VA-MA spending between 2011 and 2020, with $12 billion in FY 2020. Kizer and Ibrahim suggest the current VA-MA duplicate spending is likely to be significantly more than the reported amounts.

“[No] evidence shows that this duplicate spending yields a demonstrable health benefit for veterans, although undoubtedly it benefits the financial well-being of the MA plans,” they write.

It’s a “challenging policy and programmatic conundrum,” the co-authors say, noting that eligible veterans often have military service-related conditions that the VA is uniquely experienced in treating.

“Policies and programs need to be designed and aligned to ensure that veterans have timely access to emergency and other services and that rising community care costs do not jeopardize veterans’ choice to access and use VA services, nor compromise the nationally vital roles of the VA in graduate medical education and other health professional training, research, and emergency preparedness.”