Skin cancer surgery at the VA. A new study suggested that double-dipping by some Medicare Advantage plans meant that the VA was billed for surgery already being reimbursed by other government agencies for veterans dual enrolled in both types of care.
SAN DIEGO — VHA enrollees enrolled in Medicare Advantage (MA) plans with high-veteran enrollment were significantly less likely to have surgeries paid by MA. Instead, those beneficiaries were more likely to receive surgical care paid by the VHA compared with other MA plans with lower veteran enrollment.
That is a problem, according to a report in JAMA Health Forum, because the trend revealed substantial payment shifting from MA to VHA among high-veteran MA plans. The authors strongly suggested the need for policy reforms to ensure more efficient allocation of federal resources to care for veterans.1
“There is growing concern that Medicare Advantage (MA) plans are shifting the costs of care to the Veterans Health Administration (VHA) for veterans dually enrolled in both systems, particularly in high-veteran MA plans that disproportionately enroll veterans,” wrote University of California San Diego researchers and colleagues, including the VA Boston Healthcare System.
The team sought to evaluate the differences in payment sources for surgical care between high-veteran MA plans and other MA plans. Their cross-sectional study used 2021 U.S. national MA and VHA data from veterans dually enrolled in MA and VHA care for inpatient surgical episodes at VHA facilities (VHA-paid direct care), non-VHA community hospitals paid by VHA (VHA-paid community care), and community hospitals paid by MA (MA-paid community care) among veterans dually enrolled in MA and VHA care. Data were analyzed from April 1, 2024, to Nov. 30, 2024.
The focus was on the likelihood of utilizing VHA-direct care, VHA-paid community care and MA-paid community surgical care. For purposes of the study, high-veteran MA plans were defined as plans with 20% or more veteran enrollees; others were categorized as other MA plans.
Click to Enlarge: Adjusted Inpatient Surgery Payment Sources for Veterans Health Administration (VHA) Enrollees in High-Veteran MA Plans vs Other Medicare Advantage (MA) Plans, 2021High-veteran MA plans are defined as MA plans that enroll VHA enrollees exceeding 20% of their total enrollment in 2021. Employer-direct private fee-for-service plans, cost plans, Medicare Medical Savings Account plans, and plans with fewer than 100 enrollees were excluded from the analyses. Adjusted share represents the proportion of surgical episodes that are covered by MA plans, VHA-paid community care, and VHA-paid direct care, estimated using a multinomial logistic regression model that regress payment source on enrollment in high-veteran MA plan, adjusting for VHA enrollees’ age, gender, race and ethnicity, Medicare and Medicaid dual eligibility, rurality, priority group designations, surgical complexity, and state fixed effects. HVMA indicates high-veteran Medicare Advantage. Whiskers indicate the 95% CIs of the estimated value. Source: JAMA Network Open
The study team analyzed 54,754 inpatient surgical episodes. Patients were 96.9% male, with 78.4% non-Hispanic white, 13.4% non-Hispanic Black, 5.7% Hispanic and 2.5% unknown race and ethnicity. Only 1.1% were younger than 55 years, 6% aged 55 to 64 years, 40.9% aged 65 to 74 years and 52% aged 75 or older.
Results indicated that, of the surgical episodes, 52.1% were through MA-paid community care, 18.8% through VHA-direct care and 29.1% through VHA-paid community care.
“Veteran enrollees in high-veteran MA plans were significantly less likely to have MA-paid surgeries (adjusted difference, -25.7 percentage points; 95% CI, -26.7 to 24.6 percentage points) and more likely to have surgeries paid through VHA-direct care (adjusted difference, 11.0 percentage points; 95% CI, 10.0-12.0 percentage points) and VHA-paid community care (adjusted difference, 14.7 percentage points; 95% CI, 13.6-15.8 percentage points) compared with veterans in other MA plans,” the authors pointed out. “As surgical complexity increased, differences in the use of VHA-paid direct care narrowed between high-veteran MA and other MA plans. Payment source differences were also less pronounced for nonelective surgeries admitted through emergency departments.”
Background information in the article noted that an increasing number of Medicare-eligible veterans are enrolling in Medicare Advantage (MA) over traditional Medicare (TM). In 2022, nearly 1.3 million veterans enrolled in MA plans, accounting for approximately 34% of the Medicare-enrolled veteran population.
Veterans dually covered by the VHA and MA plans have three primary payment sources if they require inpatient hospital care:
- direct care through VHA inpatient hospitals (VHA-direct care),
- VHA-paid care in non-VHA hospitals commonly referred to as community hospitals (VHA-paid community care), and
- MA-paid care provided in non-VHA community hospitals (MA-paid community care) similar to nonveteran MA enrollees.
“Amid ongoing MA growth, there are questions about increases in duplicative wasteful federal spending for the care of veterans,” the authors suggested. “This is because the Centers for Medicare & Medicaid Services (CMS) pays MA plans fixed capitated per-member-per-month rates for comprehensive care regardless of the actual volume of services, while the VHA does not bill MA plans for Medicare-covered services provided to MA-enrolled veterans.”
The study advised that, between 2011 and 2020, the VHA paid more than $78 billion for veterans enrolled in MA despite MA receiving full payments from CMS.
Duplicate Payments
“Such duplicative payments for MA-enrolled veterans are even more notable with the passage of the VHA Maintaining Internal Systems and Strengthening Integrated Outside Networks (MISSION) Act of 2018, which substantially expanded veterans’ access to VHA-paid community care,” the researchers explained.
Recently, MA plans have begun specifically marketing to and enrolling veterans in what are known as high-veteran MA plans, the study team noted, adding, “From 2016 to 2022, the number of high-veteran MA plans almost doubled; by 2022, these plans enrolled nearly 1 in 5 MA-enrolled veterans. Compared with other MA plans, veterans enrolled in high-veteran MA plans were significantly less likely to submit a single Medicare service claim, raising questions about whether these plans may be shifting the cost of care to the VHA system while keeping the CMS fixed per-member-per-month payments that would otherwise have been spent on veterans’ care. Additionally, there is no clear evidence that these plans offer tangible health care benefits for veterans.”
Inpatient surgical care might be particularly susceptible to duplicative spending among MA-enrolled veterans because of the high costs associated with those procedures, which are projected to make up more than half of Medicare expenditures in 2025.
The authors noted that past research has primarily focused on comparing the quality and outcomes of veteran surgical care across different settings or examining the average cost to the VHA for specific procedures. They suggested that data on the source of payment for surgeries among veterans dually enrolled in MA could help inform federal policy efforts to reduce waste and streamline healthcare spending for the older veteran population.
The researchers wrote that, overall, their findings “raise questions about the potential for duplicative spending by the federal government. Specifically, when veterans enrolled in MA plans also seek inpatient surgical care through the VHA, the federal government ends up effectively paying twice, both for the care financed by the VHA and the full capitation rates to the MA plans regardless of the actual volume of health care services provided by the plan.”
They said that their results were consistent across surgical procedures of varying surgical complexity and source of admission.
While VHA enrollees were more likely to receive surgical care in the community for surgical episodes of higher complexity, the difference in the use of VHA-paid community care was wider among high-veteran MA plans than other MA plans for high-risk surgeries compared with lower risk surgeries,” they added. “Considering known trends of veterans increasingly receiving high risk surgery in the community rather than VHA facilities, these results suggest that the high costs of complex surgery may continue to be shifted to the VHA if the enrollment growth in high-veteran MA plans continues.”
The study advised that it would be helpful if the VHA created referral hubs that centralize resources and expertise for complex surgeries, “which could help enhance the VHA’s capacity to manage high-risk procedures, reduce care fragmentation, and lower overall costs.”
The study noted that high-veteran MA plans tend to enroll veterans from highest priority group who face zero cost sharing when receiving care paid by the VHA, either at VHA facilities or in the community.
“However, these veterans from the highest priority group may face stricter prior authorization, referral requirements, or out-of-pocket costs if MA were to cover their surgical procedure,” it added. “Prior work has found that MA plans use aggressive utilization management strategies and maintain narrow networks to control utilization of health care services, including surgical care. It is possible that such administrative barriers may encourage veterans and hospitals to use veterans’ VHA benefits for surgical care.”
The authors also posited that community hospitals might opt to bill the VHA system over MA plans for surgical care because the VHA typically reimburses community hospitals at the Medicare fee-for-service rate, which is higher than many MA plans.
“Our findings have several policy implications. First, to improve the financial efficiency of caring for veterans, policymakers could consider legislative efforts that allow the VHA to bill MA plans for services that fall under Medicare’s purview, which can reduce duplicative spending,” they concluded. “However, MA plans and the VHA each manage their own networks, which complicates billing for shared services and raises questions about who would be ultimately responsible for managing and paying for a veteran’s care.”
Among their suggestions is that CMS and the VHA could consider a system that establishes MA plans as the primary payer for any care that occurs in community hospitals, and the VHA can serve as the secondary payer to help primarily with cost-sharing for inpatient services—an arrangement that already exists between the Medicare and the Medicaid program for those who are dually eligible for both programs.
Another possibility is that CMS could lower the capitation rates paid to MA plans for veterans who predominantly get their care at the VHA, although that poses the danger of disincentivizing MA plans from enrolling veterans who may prefer Medicare over VHA care, the researchers pointed out.
- Mehtsun WT, Ma Y, Latsko E, Zheng J, et. Al. Payment Source Shift for Surgical Care Among Veterans Enrolled in Medicare Advantage Plans. JAMA Health Forum. 2025 Jun 7;6(6):e250827. doi: 10.1001/jamahealthforum.2025.0827. PMID: 40489967; PMCID: PMC12150190.
