Ready to partner with the VA?

Nursing home/hospital networks and alliances are all the talk these days, and -- not to be left out -- the 104th Congress has been working up its own contribution to the trend. As Congress wound down to its election year break, legislation to bring portions of the Veterans Administration hospital system into a managed care alliance with long-term care facilities was moving rapidly through the House of Representatives. The so-called G.I. Bill of Health, developed largely by the American Legion, is designed to provide veterans with greater access to the VA health care system by changing the revenue streams for the hospitals that are the core of the system.

The VA hospital system currently is the largest hospital system in the United States. Unlike many other Federal programs, its budget has continued to grow in real terms during both Clinton's first two years and the period after the Republican Revolution." Nevertheless, over the past 15 years, the percentage of armed services veterans who are eligible to receive care from "their" health care system has shrunk, just at the point that most surviving World War II and Korean War veterans are developing chronic age-related illnesses.

The small number of veterans who succeed in entering the VA system find that the hospitals will not treat all of their illnesses. A diabetic Korean War veteran with a service-related injury, for example, residing in a Medicaid-financed longterm care facility, would be expected to visit the nearest VA hospital for care of the injury and another hospital for Medicare-financed treatment of his diabetes.

All of these restrictions made the leadership of the American Legion and other veterans, groups increasingly unhappy with the Federal government's commitment to meeting the "promise" of health care for all honorably-discharged veterans. At the same time, the lack of ties between the VA hospitals and long-term care facilities outside of the VA system complicated referrals and compromised continuity of care.

An attempt to correct these problems through the Veterans Health Care Security Act of 1995 failed to break through last year's legislative logjam. The proposal focused on the establishment of Veterans Health Plans for all eligible veterans, but was vague on how these plans would create a network of care and facilities. In effect, last years bill called for an immediate major restructuring of VA health care without detailing what this meant.

This years G.I. Bill of Health takes a more limited approach. It would establish a two-year pilot program focusing on no more than 30 VA hospitals. These hospitals would be authorized to accept a variety of revenue streams, including private insurance and Medicare, in addition to their current sources of income from the departments of Defense and Veterans Affairs. The local Veterans Health Plans,, would receive reimbursement from these multiple sources, and would then use the combined funds to pay for care at either a VA or privately-contracted facility, depending on the patient's needs.

One likely result of the test, according to a consultant analyst for the American Legion, is that the Department of Veterans Affairs will stop the rapid conversion of VA hospital beds into long-term care beds. The hoped-for increase in the number of veterans eligible for care and the variety of conditions that VA hospitals will treat would generate greater demand for retention of the hospital beds as acute care facilities. If so, more long-term care for veterans, including sub-acute care, would be contracted out to the private sector.

The centerpiece of the bill is the creation of a congressional commission to act as an oversight and review body. The commission would report to the President and Congress on the costs of delivering care to client-veterans. As explained by one of the authors of the draft legislation, this will not only confirm or deny the present cost guesstimates of the Congressional Budget Office and the General Accounting Office regarding proposed eligibility reform legislation, but would also confirm the strength of the new revenues generated. Assuming such positive findings, the commission's report would provide the vehicle for the VA's entry into the competitive, managed care-oriented medical marketplace.

The G.I. Bill of Health was sponsored in the House of Representatives by conservative upstate New York Congressman Gerold Solomon who -- fortuitously for the legislations chairman of the House Rules Committee. Solomon had the influence to take the legislation directly from his committee to the full House, without diversions to other Congressional committees. Moreover, Secretary of Veterans Affairs Jesse Brown joined the Republicans in endorsing a test run for the managed care approach in VA operations. Insiders observed that this was a powerful combination for gaining adoption of the legislation this fall. "The Clinton Administration hasn't liked this at all," noted one, "but they aren't going to let this popular idea slip by without taking some credit for it."

This observer, a former senior Republican appointee to the Department of Veterans Affairs, added a sobering note: "This may be the last chance to save the VA from extinction. Unless we do something to make it accessible to today's veterans, the VA cannot survive."