Will VA Incompetence Keep Cost-Conscious Hospitals From Caring For Veterans?

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It’s likely in the wake of the Veterans Affairs scandal that Congress will send veterans to private providers for health care and send the VA the bill — but hospitals are warning that after failing to receive payments from the VA for years, some providers may not be able to afford to work with the agency.

A bipartisan group of senators reached a deal Thursday to send veterans experiencing long wait times or who live further than 40 miles from a VA facility to a private health care provider. But Modern Healthcare reports that some hospitals have turned down the opportunity to work with VA patients during initiatives with private health care providers in the past, because the bureaucratic and corrupted VA is so difficult for physicians and hospitals to deal with.

“If the VA continues to have a complicated reporting system, convoluted contracts and is more complex to work with than [Medicare], some small hospitals just don’t have the resources to deal with that and will decline contracting with the VA,” Don McBeath, director of government relations at the Texas Organization of Rural & Community Hospitals, told Modern Healthcare. He reported that 40 percent of veterans live in rural areas, making rural hospitals’ participation vital.

In 2011, the VA launched Access Received Closer to Home, an initiative for rural-based veterans to seek private health care if a VA clinic wasn’t nearby. Some hospitals reportedly dropped out of the program because the VA didn’t make getting private hospitals their payments a priority.

Pratt Regional Medical Center in Kansas left the program due to its bureaucratic ineptitude. The initiative “quickly fell out of favor with physicians due to too much bureaucracy from the VA,” Cindy Samuelson, a vice president at the Kansas Hospital Association said according to Modern Healthcare. “It just became too much of a burden.”

But even worse than an inefficient system, the VA allegedly was inconsistent in actually paying hospitals for taking care of veterans under the initiative.

“The VA is pretty much our worst payer at this point,” Tim Wolters, director of reimbursement at Citizens Memorial Hospital in Missouri, told Modern Healthcare. “We have a number of accounts that are over a year old, where we repeatedly bill and rebill, and get told the claim was lost.”

It’s not a new complaint. In a March 2014 report the General Accountability Office highlighted the VA’s problems with improperly denying claims under the Millennium Act, an older VA initiative which also partnered the agency with private health care providers. The GAO found that some claims were inappropriately denied and the agency did not have a system to prevent it. The problems, according to the report, could result in veterans being forced to pay for care that should have been covered.

Many hospitals dispute the claim that they’d deny veterans health care out of fear, even in the face of worries about too-low rates and the possibility of having claims go unanswered. It’s probable that most health care providers would continue to take on veterans as patients, even at a small loss — as long as the hospitals remain financially viable.

But rural hospitals are facing more and more financial challenges. The Wall Street Journal reported in May that rural hospitals, already under financial pressure from rising costs and the movement of profitable services such as cardiac care to larger, more specialized medical care, are being hit even harder by the Obama administration’s cuts to Medicare payments.

The Obama administration is considering cutting $2.1 billion in Medicare payments to hospitals that provide “crucial access.” Obamacare itself cuts safety net payments to hospitals that provide care to uninsured patients under the argument that more patients should be covered by Medicaid. Rural hospitals, starting off with lower margins, will be hardest hit.

While most hospital associations will likely care for veterans if at all possible, VA’s documented inability to ensure that private providers are properly paid for taking care of veterans is likely to put further pressures on rural hospitals. With a tentative deal on the table, it’s not yet clear how Congress will assuage any fears that the VA will succumb to its history of failing to pay private hospitals.

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