Hospitals concerned about reimbursement as they prepare for influx of vets

Hospitals around the country face a tough dilemma: Does their duty to serve U.S. military veterans who are unable to get timely care at Veterans Affairs Department healthcare facilities outweigh the headache of dealing with the VA's relatively low and slow payments? For some, the answer is no.

Under the VA's new Accelerating Care Initiative, VA facilities must offer a referral to a non-VA provider for any new patients who are on a wait list or have an appointment more than 30 days out. The first referrals were expected to start May 30. Veterans will only be able to seek VA-paid care at private clinics and hospitals in areas where the agency's capacity to expand its own services is limited. The VA did not provide an estimate of how many patients might be referred under the policy.

Under that initiative, the Veterans Affairs Department is expected to reimburse providers at the equivalent of Medicare rates. That has been the VA's reimbursement policy for years, private hospital officials say. They complain that those rates cover only about 88% of their costs in treating veterans.

“Imposing Medicare rates, especially for complex cases, will likely not create open doors for veterans at many hospitals,” said Colette Lasack, vice president of revenue cycle at Kansas City-based University of Kansas Hospital. “Adding capacity to accommodate an influx of patients from the VA system requires financial investment in people, technology and facilities, (which is) something that is not likely to happen with Medicare rates.”

Last year, the types of services performed most frequently for VA-referred patients at Roper St. Francis Healthcare, Charleston, S.C., were cancer treatment and physical therapy. “For those two highly specialized services, Medicare reimbursement does not adequately cover the cost of the high-quality care that we provide,” said Justin Davis, director of financial planning for Roper St. Francis.

Even if the VA wanted to pay more than Medicare rates as part of its accelerated care initiative, some members of Congress want to take away that flexibility. On June 3, Sen. Richard Burr (R-N.C.), ranking member of the Senate Committee on Veteran Affairs, introduced the Veterans Choice Act, which would require that VA reimbursement for care in non-VA facilities “not be more than the rates paid…under Medicare.”

But Dr. Robert Berenson, a senior fellow at the Urban Institute and former member of Medicare Payment Advisory Commission, scoffed at the idea that hospitals would reject serving VA patients at Medicare rates. In some cases, he noted, Medicare pays as much as 95% of hospitals' costs, and that percentage can reach 100% at hospitals with lower cost structures. “It's sort of an idle threat,” he said. “Most hospitals have empty beds and for the most part, they think, 'If we fill a bedwe can recoup 95% of our costs rather than keeping it empty.' ”

Despite that real consideration, hospitals also worry about the sometimes-difficult bureaucratic process of getting and complying with a VA contract, which usually is required before non-VA facilities can get reimbursed for treating VA patients. The contract process has been so difficult that some hospitals ultimately have turned down the chance to work with VA patients, said Don McBeath, director of government relations at the Texas Organization of Rural & Community Hospitals. “If the VA continues to have a complicated reporting system, convoluted contracts and is more complex to work with than (Medicare), some small hospitals just don't have the resources to deal with that and will decline contracting with the VA,” he said. For the VA's accelerated care initiative to be successful, rural hospitals must participate because 40% of veterans live in rural areas, he added.

In 2011, the VA launched the Access Received Closer to Home initiative, which allowed veterans living in rural areas to go to private healthcare providers when there was no VA facility located nearby. But administrative hassles prompted some private hospitals to quit the program.

Pratt Regional Medical Center in Kansas joined but soon dropped out. The program “quickly fell out of favor with physicians due to too much bureaucracy from the VA,” said Cindy Samuelson, vice president of member services and public relations at Kansas Hospital Association. “It just became too much of a burden.”

The VA also has developed a reputation among some hospitals as a problematic payer. “The VA is pretty much our worst payer at this point,” said Tim Wolters, director of reimbursement at Citizens Memorial Hospital, Bolivar, Mo. “We have a number of accounts that are over a year old, where we repeatedly bill and rebill, and get told the claim was lost.”

In March, before the VA wait list scandal reached high pitch, the U.S. Government Accountability Office released a report detailing instances of claims from non-VA hospitals that were wrongly denied because of poor administrative processes. “We found that VA lacks sufficient oversight mechanisms and data to ensure that VA facilities do not inappropriately deny claims,” the report read. When private hospitals were not reimbursed by the VA, they billed veterans directly, the GAO said.

Still, some hospital officials say they would welcome more VA patients, whether or not they are happy with the rates. “We'd be very open to that, we have the capacity and are more than willing to care for those in our community,” said Mark Hepler, CFO of ‎Munson Healthcare, Traverse City, Mich. “To us, helping veterans is more important than bureaucracy.”

Dave Mohr, administrator for payer relations and decision support at Wichita, Kan.-based Via Christi Health, said the VA's rates “are similar to what we receive from Medicare. Depending on what services are provided, some may cover our costs while others may not. As a Catholic, non-profit provider, we stand ready to supplement the services provided by our local Veteran's Administration hospital as may be needed.”

Dr. John Feussner, executive senior associate dean for clinical affairs at the Medical University of South Carolina who formerly served as the VA's chief research and development officer, said the VA already has contracts with 114 academic medical centers and those centers hope the VA will use them more heavily to help reduce wait times for veterans.

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