VA Health Care

Use of Private Providers Should Be Better Controlled Gao ID: HRD-92-109 September 28, 1992

The Department of Veterans Affairs (VA) continues to grapple with soaring medical costs. In fiscal year 1990, the agency spent about $112 million for outpatient medical care purchased from private health care providers on a fee-for-service basis. GAO found that VA is not adequately controlling medical centers' purchases of private outpatient medical care for veterans. Centers may turn to private providers only if the needed care is unavailable at the VA center or private providers are less expensive due to geography. VA, however, has not issued clear guidance to medical centers on how this requirement should be implemented. As a result, the cost-effectiveness of private care has not been evaluated, and centers may be needlessly buying millions of dollars of medical care from private providers when the care could be more economically delivered in VA facilities.

GAO found that: (1) in fiscal year 1990, VA spent about $112 million for over 1 million private outpatient visits for 223,000 veterans; (2) some VA jurisdictions routinely authorized private care for veterans without determining whether VA facilities could more economically provide the services; (3) VA staff did not require or consider cost comparisons and based decisions on such other factors as medical condition and distance from residences to VA facilities; (4) VA staff inappropriately authorized veterans to receive private care for treatment of any medical condition, rather than authorizing private treatment plans for existing conditions; (5) VA staff routinely extended long-term authorizations for private medical care without evaluating veterans' continued eligibility for private care; (6) VA staff lacked adequate guidance for conducting cost comparisons; (7) neither VA headquarters nor regional offices monitor medical centers' private-care authorization practices and procedures, relying on VA Inspector General audits as their primary oversight mechanism, and VA did not routinely follow up on those medical centers reported to have deficiencies in private-care authorization procedures; and (8) VA medical centers attempted to improve private-care authorization procedures by reducing the number of long-term authorizations, improving collaborative review of authorizations, and assigning personnel to assist in evaluating needs for private care.


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