The Challenge of Privatizing VA Care

When you cut through the political clutter, you find that everyone agrees on the simple notion of giving veterans what they deserve. But that is where the simplicity ends. How to get there is not so straightforward. Among the possible paths: 

• Make the Veterans Choice Program permanent. This has been a temporary fix in response to the so-called “wait time scandal.” It enables veterans who either live more than 40 miles from the nearest VA clinic or can’t get an appointment within 30 days to receive care in their community. Proponents advocate for making initiative permanent and adding it to the other private-sector programs developed over the years. 
• Keep the VA in charge. Some believe that the private sector has its role, particularly in places where services are not readily available at the VA, or with patients who need highly specialized care, such as those with rare malignancies. But the private sector’s responsibility should end there, given the unique needs of veterans and potential for uncoordinated care if veterans shuffle extensively between private and VA care.  There is also a belief that if more care is moved to the community, care at the VA will suffer as the VA system becomes a shell of its former self. 
• Move to an enhanced hybrid privatization model. The Mission Act opens the door for this, as it will allow veterans even more choice about where veterans receive care. It also eliminates the 40-mile/30-day limits, ensures prompt payments to private care providers, and consolidates all private initiatives into one program. Plus, it establishes an innovation center similar to what exists at the CMS, which would test new payment approaches and service delivery models. 

Funding for VA Programs

Adding to the complexity is the fact that even though the Mission Act is now law, there is disagreement about how to fund it. Furthermore, even those who believe the private-sector’s role in the VA needs to increase have different ideas about how fast to go, and what specific role community care should play. Should it supplement VA care, or should it be one of the choices veterans make about what type of program to sign up for (similar to the choice seniors have between Medicare and Medicare Advantage)? And further, there are bubbling disagreements between stakeholders about what is truly motivating the push towards increased privatization of VA care.  

Count Former VA Secretary David Shulkin, MD, among those who favor private hybridization, but with deliberate pacing and the VA still firmly in charge. In an interview with USA Today last spring, he noted that he would have liked to see change occur more quickly under his watch, but that “big organizations take longer than people want to see this type of change.” Another reason to proceed cautiously, he noted in an Op-Ed in The New York Times, is to make sure privatization does not “reward… select people and companies with profits, even if it undermines care for veterans.” 

That stance is what Dr Shulkin—who was appointed undersecretary by President Obama in 2015 and then secretary by President Trump in 2017—said led to his ouster from the VA. He believes that certain administration officials wished to move faster. Additionally, even though these officials maintain that they have the veterans’ best interests at heart (and indeed actually might), the aforementioned profit motive remains a question. For that reason, he wrote in the Times, “I believe differences in philosophy deserve robust debate, and solutions should be determined based on the merits of the arguments.”

In the spirit of that robust debate, First Report Managed Care spoke with Dr Shulkin, who agreed to shed more light on his perspective. We also spoke with other experts to gain their insights, in an effort to present a nonpoliticized analysis of the issues facing the VA. 

Building A “High-Performing Network”

Dr Shulkin noted that his goal from the start was to align clinical need with good access to care, starting with a strong base of VA-driven care. 

“I put the focus on access first on meeting the urgent needs of veterans seeking care,” he said.  “That is, if a patient had an urgent clinical need, they should have immediate access, but if their need was not urgent or elective, they could potentially wait longer.” 

Indeed, the VA announced in January that all of its medical facilities now offer same-day services for urgent primary care and mental health needs. 

Dr Shulkin said that had he remained in charge of the VA, he would have preferred to build a hybrid model with “a strong VA system that is focused on those services that it can do best, supplemented with [care from] the private-sector [concentrating on] what it can perform best.”  In other words, evolve the current system by expanding private partnerships. Dr Shulkin noted that the approach is not one size fits all, but rather a different mix of services depending on the unique needs of local markets. The one commonality would be an integrated seamless experience for veterans going from within the VA to the private-sector and back.”

Dr Shulkin has previously written about what he calls a “high-performance network,” in the New England Journal of Medicine. Such an arrangement would include (1) private-sector delivery systems that make it through a highly competitive process (involving measurement of access standards, service levels, and clinical outcomes); and (2) additional community providers (who are subjected to specific quality care requirements) to meet the needs of veterans who live too far from VA-available care. 

 “[This type of system is] outcomes-based and allows veterans to access the best care anywhere that is available,” Dr Shulkin said.

The Money Should Follow the Veteran

Rory Riley, principal at Riley-Topping Consulting and former staff director and counsel for the US House of Representatives Committee on Veterans Affairs, said she agrees with Dr Shulkin’s hybrid approach, but not without fundamental change to both the VA’s health care payment structure and culture. 

“We need to switch to a system where the money follows the veteran,” she explained.  “[In] other government-run plans the money follows the enrollee, not the government.”  Currently, whether care is delivered at the VA, in the community, or in both settings, “the money goes to the VA, and the VA pays itself first.”  Even when a veteran is referred for community care, “the [community] provider gets paid second.” Changing the system in this way removes an administrative layer that would ensure more timely reimbursement and save money, Ms Riley explained. 

She called the VA “an isolated bureaucracy,” noting that the mindset of the agency is often: “We are the VA and we do what we want.” 

“But they need to be a truly integrated health care system,” she said. “They advertise themselves as such, but in reality, they are not.” 

She added that she believes changing the reimbursement structure and culture will have a positive effect downstream, allowing for meaningful integration and better access with more willing private partners. The bottom line: “Shift [the VA] from a government services provider to a funder and manager of those services.”

Ms Riley acknowledged that veterans have unique and complex needs that the VA is best equipped to treat, which is why she backs the hybrid model. But she said using this premise to argue against private sector involvement is misguided. “There are nearly 24 million veterans in the United States, and their health care needs mirror those of the general population.” Older veterans comprise the largest VA demographic. “It's ridiculous to say that physicians in the private sector don't know how to care for the aged.” 

Broaden Plan Choice?

Ms Riley’s logic leads her spouse, who himself is a veteran, to wonder why vets are not allowed even more choice about where they receive care. “I would like to see a pilot program that lets me choose between accessing the VA as I do today or getting a private plan,” explained Richard Topping, CEO of Shao. He likened the choice to that which seniors have between Medicare and Medicare Advantage. “Allow veterans to enroll in a capitated plan if they wish. I am a younger veteran, and we tend to think more in terms of choice and flexibility. Older veterans and even some my age have certain conditions and, thus, would rather be treated at the VA.” 

Some are leery of allowing the private sector’s role in the care of veterans to expand in this way. We spoke to a physician who has worked for more than 40 years both in and outside the VA system as a physician and health policy expert.  He currently works in the emergency department of a VA hospital. Also, a veteran, he requested anonymity so he could present his views candidly. 

For starters, he said he does not buy into the notion that you can port the Medicare-Medicare Advantage concept to the VA. 

“I worked at HHS for 15 years and know Medicare inside and out,” he said. “Neither Medicare nor Medicare Advantage has anything in place that is going to make sure you get the right amount of care when you need it. Veterans are accustomed to being in a system that cares for them and doesn't require a lot of action on their part.” 

Even the simple process of getting a colonoscopy (scheduling, prepping etc) is something that he said “many veterans are not capable of coordinating.” 

Care Coordination Problems

That frank assessment, he noted, is grounded in what he sees regularly at work. “Just last night a woman came in and told me she was seen at a private clinic the week before, but there was nothing in her record about it.” She could only recall being told she had neuropathy but could not say who saw her. “This person is now thrown back into the VA system [but] the physician at the VA has no idea” about her recent medical history. 

He explained that he examined her, diagnosed scleroderma, and scheduled a consult at the VA’s rheumatology clinic. Because that care will continue in the VA system, she will be continuously reminded about the appointment until she shows up. If she happens to not show, the rheumatology clinic will contact her to reschedule and notify her VA primary care physician’s office. She might also be sent to a neurology clinic if she is found to have neuropathy. “Everything is in one central record and everyone involved in her care is apprised of the results of each of her consultations.”

Such care is exemplary, but Ms Riley said she worries about others who can easily slip through the cracks. 

“Anyone who is experiencing severe depression, to the point where they are suicidal, should have immediate access to care and services” inside or outside the VA, particularly if they don’t live close to a VA facility, she said. “They should have the ability to walk into a private clinic that is close to their house and immediately get services.” 

Still, the VA physician who requested anonymity said he sees a very narrow role for the private sector in the care of veterans. If a VA hospital is just opening, he understands the need to use the private sector for services that are not yet available. “But once the services are offered within the VA, patients are far better served there because the medical records are integrated and scheduling and coordination is so resourced.” 

He also acknowledged that veterans with rare malignancies should be treated at a specialized center in the community if needed. But, in general, “if we are going to invest dollars to take care of veterans, those dollars are better spent to expand services within the system rather than on sending veterans out of the system.”

He also said he worries that moving more veterans to private care will undercut the VA’s ability to offer specialized care. He pointed out that this has already occurred in the military health system, noting that the Andrews Air Force Base Hospital has been turned into a treatment facility with no subspecialty care. “The military kept farming out care and eventually reached a point where all they offer is primary care.” 

Unfettered Access: A Path Towards Dismantling

“Unfettered access, where VA is not involved in the coordination of care, is a path towards dismantling, and is a bad idea,” Dr Shulkin told First Report Managed Care. He said he wants veterans to have more choice, but not without tools “to ensure safe coordination of care [and] to modernize its systems.” 

He added that while the right blend of VA and private sector care can result in cost reductions, unfettered access will not. The fee-for-service benefit design for veterans’ health care does not lend itself well to the private sector. 

“A setting [with] little or no utilization controls or care coordination would potentially create an opportunity for over-utilization that could lead to poor quality and high costs,” he said.

Those who disagree, including Mr Topping, return to the Mission Act and its innovation center, which, he said “will allow tools that HHS has used in other government-funded health programs, including risk-based payments,” to be tested in the VA setting. 

Ideas like this are all well and good, said Dr Shulkin, as long as such testing does not merely evaluate that which is least costly. 

“The best care is not just the least costly care, but [considers both] cost and quality. That is value,” he concluded. “We need to ensure the appropriateness of care being delivered and the best outcome, in order to achieve the best value for veterans and taxpayers.” 

So simple and yet so complex.