VA and Defense Health Care

The criteria and conditions that make resource sharing cost-effective for the Department of Veterans Affairs (VA) and the Department of Defense (DOD) need to be reviewed and the strategies for sharing rethought. Several questions require answers. Does treatment of TRICARE patients in VA medical centers result in a lower overall cost for the government than contracting with private providers? Would requiring that the medical centers be considered the equivalent of military treatment facilities yield a more efficient and cost-effective way to provide needed care to beneficiaries? Are there additional joint contracting opportunities that would provide needed services to VA's and DOD's populations more cost-effectively than each agency providing such care itself? If sharing is to be optimized, can significant and long-standing barriers be overcome, such as the need for processes that facilitate billing, reimbursement, budgeting, and the timely approval of sharing agreements? VA and DOD need to work in concert to answer such questions. However, reaching timely agreement could prove difficult given the different business models VA and DOD use to provide health care services to their beneficiaries. Therefore, GAO advises that if an agreement is not reached, Congress may need to provide guidance to VA and DOD that clarifies the criteria, conditions, and collaboration. GAO also identifies specific steps each agency needs to take to stabilize the current sharing program until its direction, goals, structure, and criteria can be reassessed. GAO summarized this report in testimony before Congress; see: VA and Defense Health Care: Rethinking of Resource Sharing Strategies Is Needed, by Stephen P. Backhus, Director of Veterans' Affairs and Military Health Care Issues, before the House Subcommittee on Health, Committee on Veterans Affairs. GAO/T-HEHS-00-117, May 17 (8 pages).

GAO noted that: (1) as a provider of services, VA most frequently cited increased revenue as a benefit and DOD most often cited the opportunity to enhance staff proficiency; (2) VA and DOD providers also cited fuller utilization of staff and equipment as benefits; (3) as a receiver of services, VA cited improved beneficiary access and DOD cited reduced cost of services as benefits; (4) for fiscal year (FY) 1998, sharing activity occurred under 412, or about three-quarters, of the existing local sharing agreements; (5) direct medical care accounted for about two-thirds of services exchanged--the remaining one-third included ancillary services, such as laboratory testing, and support services, such as laundry; (6) most of this activity occurred under a few agreements and at a few facilities, usually in locations where multiple DOD facilities were near VA hospitals or where DOD facilities provided specialized services; (7) overall, 75 percent of direct medical care episodes occurred under just 12 agreements for inpatient care, 19 agreements for outpatient care, and 12 agreements for ancillary care; (8) reimbursements for care provided under sharing agreements were similarly concentrated; (9) in FY 1998, three-quarters of the $29 million in reimbursements for provided care was collected by only 26 of the 145 facilities participating in active agreements; (10) at the joint venture sites, where another $21 million in services was exchanged, GAO found activity was concentrated at the two locations where VA and DOD integrated many hospital services and administrative processes; (11) specifically, almost 300,000 episodes of care were provided, and $3.2 million in cost avoidance was measured at these two locations; (12) two barriers identified most often by both VA and DOD are: (a) inconsistent reimbursement and budgeting policies; and (b) burdensome agreement approval processes; (13) a more recent barrier centers on DOD policies and guidance in implementing its managed care program; (14) a DOD legal opinion and subsequent policy in effect prohibits military treatment facilities from using existing sharing agreements with VA for direct medical care; (15) consequently, DOD's contracts with private health care companies may supersede the sharing of direct medical care between VA and DOD facilities; and (16) while the policy supports VA facilities' participation in the contractors' health care networks, the military Surgeons General and local VA and DOD officials told GAO that the policy is causing confusion over what services can be shared.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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