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VA Bears Brunt of Costs for Beneficiaries Also in Medicare Plans

by U.S. Medicine

September 6, 2012

By Brenda L. Mooney

PROVIDENCE, RI — An overlap of services between the VA and some Medicare managed-care plans is costly for the federal government, which is effectively double-paying for the same services. A new study estimates the cost as $3.2 billion in 2009 alone.

The study, “Duplicate Federal Payments for Dual Enrollees in Medicare Advantage Plans and the Veterans Affairs Health Care System,” was published online last month by JAMA.1

The authors, from the Providence, RI, VA Medical Center, and Brown University in  Providence, note that some veterans can legally enroll in both VHA and a Medicare Advantage (MA) plan, which are administered by private insurance companies and used by about one-fourth of all Medicare beneficiaries.

“This scenario produces the potential for redundant federal spending, because MA plans would receive payments to insure veterans who receive care from the VA, another taxpayer-funded health plan,” they point out.

Furthermore, the number of joint beneficiaries is increasing. From 2004 to 2009, the number of patients simultaneously enrolled increased from 485,651 to 924,792.

More than 8% of Medicare Advantage beneficiaries were enrolled at VA, and 5% used the services. The VA costs for those patients over six years totaled $13 billion, increasing from $1.3 billion in 2004 to $3.2 billion in 2009.

How Services Were Used

Here’s the breakdown of how dual enrollees used the services:

  • 10% exclusively used the VA for outpatient and acute inpatient services;
  • 35% exclusively used the MA plan;
  • 50% used both the VA and MA; and
  • 4% received no services during the calendar year.

VA Bears Brunt of Costs for Beneficiaries Also in Medicare Plans

For the patients enrolled in both health plans, VA paid for 44% of all outpatient visits, totaling 21.3 million; 15% of all acute medical and surgical admissions, totaling 177, 663, and 18% of all acute medical and surgical inpatient days, totaling 1.1 million.

Private insurers reimbursed VA $9.4 million of the $52.3 million for which they were billed for this population. Section 1862 of the Social Security Act prohibits the VA from collecting any reimbursements from the Medicare program.

“Dual enrollment in the VA and MA presents a vexing policy problem,” the authors write. “The federal government’s payments to private MA plans assume that these plans are responsible for providing comprehensive care for their enrollees and are solely responsible for paying the costs of Medicare-covered services.

“If enrollees in MA plans simultaneously receive Medicare-covered services from another federally-funded hospital or other healthcare facility, and this facility cannot be reimbursed, then the government has made two payments for the same service. In this scenario, private Medicare plans receive taxpayer-funded subsidies to insure veterans who, in turn, use another government-funded health system to receive medical care.”

Because VA bears the brunt of the costs, dual enrollment might not be such a bad deal for the MA programs, the authors note, citing that any risk of “paying for health services for veterans is mitigated, because these same services are delivered by another tax-funded healthcare program.”

Patterns of usage, meanwhile, point to a problem that plagues VA: medical centers that are inconveniently located for beneficiaries. The study found that VA was used more often for outpatient care by dual enrollees but less for acute inpatient care. In addition, patients who exclusively used VA services had 180% more annual outpatient visits but 37% fewer annual acute inpatient days compared with those exclusively using MA services.

“This phenomenon may result from the larger distances that some veterans must travel to receive care in VA medical centers, which may reduce use of VA care for urgently or emergently needed treatments,” the authors suggest.

The study proposes some solutions to the joint-enrollment dilemma, including allowing VA to collect reimbursement from Medicare Advantage plans. The authors suggest the prohibition, enacted before managed-care plans were introduced into Medicare, is “anachronistic.”

Another possibility, they note, is adjusting payments to Medicare Advantage plans for beneficiaries who receive the bulk of their care from VA.

1.  Trivedi AN, Grebla RC, Jiang L, Yoon J, Mor V, Kizer KW. Duplicate federal payments for dual enrollees in Medicare Advantage plans and the Veterans Affairs health care system. JAMA. 2012 Jul 4;308(1):67-72. PubMed PMID: 22735360.

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