VA to institute Medicare-based fees for certain services

The Veterans Affairs Department is instituting standard fees based on Medicare rates for certain medical services performed at non-VA facilities to gain greater price consistency. But the change may restrict access to care for some retired military members with kidney problems, according to some members of the Senate Veterans Affairs committee, patient advocacy groups and health care providers.

The new regulations, expected to be announced Thursday, will affect coverage of veterans who obtain treatments from non-VA clinicians for end stage renal disease, ambulatory surgical center care, anesthesia and clinical laboratory services. The rules will take effect Feb. 16.

After VA proposed the Medicare payment model last February, the department received about 20 public comments, including concerns about access to kidney care in rural communities, the rapid switch to a complex payment system, and potentially higher costs for kidney patients. About 10,500 veterans receive dialysis at non-VA facilities.

Non-VA doctors and facilities will be reimbursed for services they provide to veterans at rates set by the Centers for Medicare and Medicaid Services Prospective Payment Systems and Fee Schedules. The adjustments will reduce payments for dialysis services by about 39 percent, laboratory services by about 75 percent and ambulatory surgery center services by about 11 percent.

Department officials anticipate that the accrued savings of about $1.8 billion over five years will allow the VA healthcare system to invest more in modern kidney treatments, such as wearable artificial kidneys and home dialysis, as well as to expand care access through stand-alone clinics.

"That money isn't going to just disappear or be handed back to the Treasury," said Gary Baker, chief business officer at the Veterans Health Administration.

In addition, existing contracts are excluded from the new rule. "The contracts will not disappear. As they come up for renewal it does not mean they will necessarily be changed," Baker said. The Medicare rates will help ensure predictable medical costs for VA and private providers, while also controlling the government's expenses, he added.

"We're not going to jeopardize veterans' access to services through this rule," Baker said. "We do not lose the ability to negotiate with contractors to go above the CMS rates if that's necessary for veterans."

A 60-day congressional review period for the rule starts Dec. 17.

Sen. Daniel Akaka, D-Hawaii, chairman of the Veterans Affairs Committee, previously expressed concerns about the regulations in an April 15 letter co-signed by Alaska Democrat Mark Begich: "I applaud VA's efforts to address the current inconsistent and unpredictable fee-basis reimbursement rates. …. I urge VA to consider carefully, though, the complexities and potential future impact that such efforts to contain costs too swiftly could have on immediate access to care for veterans residing in rural or otherwise underserved communities where VA care may be unavailable, especially for those veterans receiving laboratory and dialysis services." The lawmakers cited an August 2009 VA inspector general audit that showed the department was having trouble overseeing the current simpler fee program.

In fiscal 2008, 37 percent of claims were improperly paid for a variety of services because of, for example, duplicate payments and checks for incorrect amounts, according to the IG report. Akaka wrote that the new rate system "causes me serious concern regarding how VA would accurately pay providers under the evolving and significantly more complex Medicare payment methodology."

Joe Swearingen, the director of reimbursement at Dialysis Clinic, a non-profit corporation that administers more than 40,000 dialysis treatments annually to VA patients, said in his comments on the rule that it could prevent the clinic's dialysis centers from accepting VA patients. "We believe that the new rules will shift providers' focus from quality care to cost containment," he wrote.

Chad Lennox, executive director of Dialysis Patient Citizens, an advocacy group, said there is "a serious concern that thousands of veterans will be forced to pay additional coverage premiums, co-pays or seek state assistance through Medicaid" in order to continue treatment.

Members of the Disabled American Veterans group routinely tell the organization's leaders that some private physicians attempt to bill them for costs above the current VA reimbursement rates, according to Edward Reese, the association's national service director.

If VA were to embrace the Medicare model, he wrote, "we believe these reports would grow, and that potentially some service-disabled veterans without reasonable access to VA facilities would be detrimentally affected by either a loss of access to needed care, or be forced to pay additional charges that VA has 'saved' as a consequence of promulgation of this regulation."

Veterans Affairs officials said they are strongly committed to ensuring the new rule does not diminish access to care for veterans, especially those who live in rural areas and depend on limited service providers. A study by the department found that private clinicians currently provide Medicare patients with renal disease services at the Medicare rate, and there is no evidence the clinicians will refuse to keep treating veterans simply because their payment rate will now be the same as the level for Medicare patients, they noted.

The department will make sure providers are properly reimbursed in a timely fashion by hiring a third-party payment processor, as CMS and the Defense Department have successfully done to price their Medicare claims, VA officials said. The contractor will be responsible for determining the appropriate Medicare fee, including contemplated changes to the dialysis rate that are expected to kick in next year.

"This regulation will have no impact on the veterans we care for," said VA Undersecretary for Health Robert A. Petzel in a statement. "VA will now have the ability to better plan budgets and place more money into access to health care for the veterans VA is honored to serve."