Patient Care

The first mission of the VA is to provide health care to eligible veterans. In light of the changes in the veteran population, the role of safety net provider has assumed prominence. Typically, veterans who utilize VA services are older, poorer, and more likely to have a psychiatric diagnosis, and they have a high incidence of substance abuse disorders. Homeless veterans accounted for 13.5 percent of all hospital admissions in FY 1996 and 47 percent of substance abuse admissions.⁹ In fact, the VA is the nation’s largest direct provider of services to the homeless.¹⁰ This function is often referred to as the VA’s “fifth mission” although it is not mandated by statute. Of the more than 2.5 million veterans served annually, 70 percent have incomes under $21,610 per year.¹¹ The GAO notes, “From its roots as a system to treat war injuries, VA health care has increasingly shifted toward a system focused on treating low-income veterans with medical conditions unrelated to military service.”¹² In FY 1995, only about 12 percent of the patients treated in VA hospitals received treatment for service-connected disabilities and another 28 percent had service-connected disabilities but were treated for conditions not related to those problems. Almost all the rest were poor and had no service-connected condition. It is for just these patients, asserts Kizer, that a role will always exist for the VHA. He estimates that about a quarter of the veteran population, those who are most socially compromised—the poor, the homeless, the mentally ill, and substance abusers—will never be attractive to private-sector providers. Writing in Health Affairs, Nancy J. Wilson and Kizer note that “as long as local market forces dominate the healthcare industry and state and local funding vary, the stabilizing influence of a national safety net like the VA healthcare system becomes ever more important.”¹³

The shift in the site of care from in-hospital to outpatient services is reflected in utilization patterns. Between FY 1994 and FY 1997, the number of acute care admissions to VA hospitals fell 247,412, or 24 percent. During that same period, the number of outpatient visits increased by 23 percent, from 26.0 million to 32.6 million, according to the VHA.

The aging of the veteran population is evidenced by the increase in nursing home care. The number of veterans in VA nursing homes and VA-supported state nursing homes increased 27 percent between 1990 and 1996, from 42,175 to 53,550 veterans. Most of that increase was in VA-supported state nursing homes. Demand for the Blind Rehabilitation Service is increasing too as a result of the aging population. The service was initially developed to rehabilitate veterans blinded in combat. Most blind veterans currently using these services have lost their sight as a result of degenerative conditions. It has been suggested that the safety net provider role will become even more significant for this population as conventional insurance does not adequately cover blind rehabilitation.¹⁴

Health Professions Education

The second statutory mission of the VA is health professions education and training. The VA provides clinical opportunities to more than 100,000 students and trainees in more than 40 disciplines. About 54,000 nurse, dentist, optometrist, podiatrist, physical and occupational therapist, psychologist, and other trainees rotate through VA programs each year. In addition, the VHA reports that 34,000 medical residents and 22,000 medical students rotate through the VA healthcare system annually.

Currently, according to the VHA, 107 of the nation’s 125 medical schools have affiliation agreements with 131 VA medical centers. Ten thousand VA clinicians have academic appointments and a similar number of academic faculty direct or provide care for veterans and teach residents and students. The VA funds over 8,500 medical residency positions, approximately 11 percent of all positions in the nation. The role of the VA in medical training is so pervasive that, according to VA estimates, more than 65 percent of all physicians currently practicing in the United States have received all or part of their training through the VA.

This arrangement benefits the VA by strengthening the VHA’s workforce, supplementing its clinical expertise, and increasing its ability to attract high-quality talent. In fact, one VA neurologist has noted that medical school affiliations have been the salvation of the VA and that quality standards would not be maintained without these relationships.¹⁵ In return, the VA- supported residency positions have provided medical schools with additional sources of support for patient care, teaching, and clinical research. The VA also provides medical schools with training sites and, especially important at this time, with ambulatory training sites.

The response to consolidation of services in Chicago VA hospitals is one illustration of the significance of the VA to medical schools. The strategy of consolidation is being pursued by the VA to promote efficiency. There is general agreement that duplication within the system can be eliminated and that savings can be achieved by hospital consolidation, or as the VA calls it, integrations. However, according to an article in the Chicago Tribune, efforts to consolidate two VA hospitals met with a “howl” of protest from the Chicago campus of the University of Illinois School of Medicine, which has enjoyed a long affiliation with the VA’s West Side Hospital. School officials were fearful that the VHA planned to transfer West Side’s medical and surgical units to the VA’s North Side facility, Lakeside Hospital, an affiliate of the University of Illinois’ rival, Northwestern University Medical School. The dean of the University of Illinois warned that if West Side Hospital were left as an ambulatory care facility, “it would gut the medical program at the country’s largest medical school.”¹⁶ In July 1997, Chicago congressional representatives forced a hearing that put the entire process of consolidations on trial. The GAO testified on behalf of a more comprehensive approach rather than the incremental one being used by the VA. Although the GAO, as well as all others testified to the importance of stakeholder involvement, they acknowledged how difficult it had been for the competing medical schools to address this issue and suggested using independent planners with no vested interests in the geographic area.¹⁷

The alignment of the affiliations between medical schools and VA medical centers and the nature of residency training have been caught up in the whirl of change that is affecting all segments of the VA. Like the rest of American medicine, the VA’s healthcare system has been dominated by specialists. Now, however, the mandate to enroll all eligible veterans and assign each to a primary care provider is increasing the demand for primary care physicians and diminishing the need for specialists. In some cases, specialists are assuming these primary care responsibilities; in other cases, the ranks of specialists are being decreased through attrition or release.

To further support the shift to primary care, the VHA’s Residency Realignment Committee, chaired by Robert Petersdorf, M.D., a noted former medical school dean and past chairman of the Association of American Medical Colleges, recommended eliminating 250 residency positions in disciplines other than primary care. The committee further recommended shifting 750 residency positions from specialty disciplines to primary care as defined by the VA. This realignment would increase the number of primary care positions to 49 percent of all VA residency positions.¹⁸

The VHA is in the process of implementing the recommendations contained within the committee’s final report. However, in so doing, primary care has been defined as a “philosophy and method of care delivery” and not as a set of disciplines. Noting that it may be more appropriate for specialists with primary care skills to care for patients with chronic illnesses, the VA has launched two new initiatives to train specialists in primary care. The first program focuses on eight specialty areas, among which are rheumatology, gastroenterology, and neurology. The second program covers residency training in general psychiatry, geriatric psychiatry, and addiction psychiatry. It is anticipated that residents completing those programs will demonstrate primary care competencies such as the ability to assess and manage common diseases and the ability to implement health promotion and disease prevention strategies.¹⁹

Research

The statutory mission of research was added to the VHA in 1958. Its programs have been responsible for many innovations in medical practice that go beyond the veteran community. Among the many break throughs developed through the VA have been the first artificial kidney, the development of the cardiac pace maker and the first successful liver transplant; isotopic medicine procedures that detect thyroid disorders; and prosthetic devices, such as hydraulic knees and the robotic arm. The Geriatric Research, Education, and Clinical Centers (GRECCs) that integrate service, education, and research for the aging veteran population have made the VA a leader in geriatric care.

By congressional mandate, the VHA’s research program is obligated to include biomedical research, mental illness research, prosthetic and other rehabilitative research, and health services research. It is also stipulated that the research be consonant with the VA’s healthcare mission and correspond to veterans’ specific needs. Aggregate support for the research program is approximately $1 billion. Included in that amount in FY 1997, according to the VHA, was $262 million from a specific congressional appropriation for the VA’s intramural research program, $397 million from extra-mural grants, and $320 million in indirect support from the medical care budget. It is expected that the percentage of funding for research from sources outside of the VHA will increase as it pursues collaborative partnerships. One example of this collaboration is the VHA’s partnership with the Juvenile Diabetes Foundation, which is providing matching funding for diabetes-related research.

Vision for Change, the blueprint for the VHA’s restructuring, called for an examination of the VHA’s research effort and a determination of whether research dollars were being properly allocated. The report of the Research Realignment Committee, issued in October 1996, suggested a reordering of research priorities by establishing designated research areas (DRAs). These areas would be those in which

the VA has a particularly strong strategic interest because of the prevalence of conditions within the VA patient population, the uniqueness of a specific patient population and its disease burden to the VA system, or the importance of the question to health care delivery within the VA.

The ability to monitor the nature of research priori ties will be a challenge for the VHA. However, as the veteran population ages and the disease burden in-creases or shifts, it will be critical for the VHA to address these issues through research and service. The GRECCs in particular have been a successful model for coordinating research, education, and service although they have never been expanded to their full complement of 25. The VSOs have recommended establishing one GRECC dedicated to research on the care of elderly patients with spinal cord injuries.²¹ A new series of specialized mental health centers, Mental Illness Research, Education, and Clinical Centers, modeled on the GRECCS, are now being established.

Medical Preparedness

The final mission, added to the VA in 1982, designates the VA as backup to the Department of Defense medical care system and to the Public Health Service and the National Disaster Medical System in times of natural and technological disasters. The VA has coordinated significant medical support during the hurricanes and flooding disasters of recent years. It is anticipated that this function will become even more significant because of the “devolution of the military healthcare system … [and] because the VA provides many of the physical resources needed to operationalize federal disaster plans.”²² In fact, Kizer asserted recently, the VHA is

for all intents and purposes the federal government’s only direct response capability. The U.S. Public Health Service no longer has any resources with which to respond to a disaster or national emergency. Likewise, as a result of DOD’s downsizing and its needs for continuous military readiness, they are increasingly less able to respond to civilian disasters or national emergencies.

Decentralization

As a first step toward restructuring the VA, its 173 hospitals have been organized into 22 regional systems known as Veterans Integrated Services Networks (VISNs). Each network (drawn primarily on the basis of patient referral patterns) of providers and facilities assumes responsibility for the health of a population of eligible veterans in defined geographic areas. VISN directors are responsible for budgeting and decision- making within their jurisdictions.

While this organizational restructuring may produce efficiencies and greater flexibility in responding to local needs, concern is being voiced regarding accountability and variability in quality. Veterans advocacy groups are especially concerned about the integrity of the VA’s specialized services, such as spinal cord injury programs and prosthetics services. A primary goal of these groups is to maintain and improve these programs. Even before reforms were instituted, the GAO cautioned that increasing the demand for routine outpatient services could hinder the VA’s capacity to provide specialized services. While they noted that data on unmet needs were not maintained by the VA, they pointed to several examples to support their contention that not all veterans’ needs were being met. Among the examples they provided were post-traumatic stress disorder (PTSD) programs. Although the Vietnam War ended 20 years earlier, the number of veterans seeking services for PTSD has been increasing and programs are operating at or above capacity, with waiting lists of 900 to 1,000.²⁵

Management and Oversight

In transferring the authority from headquarters to the 22 VISNs, the number of staff members in Washington was cut by 25 percent, and their role has changed from program management to policy development and oversight. Some observers have referred to this as the balkanization of the VA and have suggested that 22 independent fiefdoms are operating without adequate central oversight. Although the VISNs have been instructed to communicate their plans to VA headquarters, decisions are not consistently communicated and stakeholders are not consistently included in discussions at the VISN level. At a recent congressional hearing, the American Legion testified that clinical programs were being closed without notifying headquarters in advance.²⁶ One VA official commented that inpatient substance abuse programs are sometimes closed without prior notification. In a Senate report (105-53) addressing the VA appropriations bill for 1998, it was suggested that current oversight may be inadequate, and the VA was requested to submit a plan for improved monitoring of the networks.

Resource Allocation

There is wide variation in expenditures for patient care in regions across the country. To address these marked variations in costs and their inherent inequities, the VA has moved to an allocation methodology based not on historical costs but on a prospective capitation rate per veteran. The new allocation method abolishes the practice of directly funding each of the VA’s 173 hospitals. The reformed payment method, mandated by Congress, funds each of the 22 VISNs, with the goal of securing access for veterans with similar eligibility priority and economic status, regardless of where they reside. Funding is based on the number and type of veterans served, adjusted for factors such as regional labor costs and case mix. Network directors are responsible for distributing the funds among hospitals, ambulatory care clinics, nursing homes, domiciliaries, and other treatment facilities within their catchment area. The funds are provided to the network at the beginning of the fiscal year with no restrictions on their distribution. Eighty-eight percent of the VA’s medical appropriation is allocated to the networks in this way. The remaining 12 percent of the appropriation is for central administration and for restricted clinical uses, such as for prosthetics and Persian Gulf referral centers.

Under the Veterans Equitable Resource Allocation System (VERA), implemented in April 1997, two patient care groups have been established, one for basic care patients and one for special care patients. Basic care patients are those with relatively routine healthcare needs who receive their care primarily in outpatient settings. Ninety-six percent of the VA’s patients receive basic care, but these patients represent 62 percent of the dollars allocated. Special care patients—such as terminally ill HIV-positive veterans and those with spinal cord injuries or chronic mental illness—are high- intensity users of VHA services. Although they constitute only 4 percent of VA patients, special care patients account for 38 percent of the dollars.²⁷

The new allocation methodology will allow the system to adapt to change and allow funding to follow the veteran. However, it will also result in losses for the northern industrial states, the Rust Belt, and increased funding for the Sunbelt states. States such as New York, Pennsylvania, Illinois, and Michigan stand to lose 7 to 15 percent of their funds over the next three years. States such as Florida, Texas, and Arizona could gain as much as 16 percent.²⁸

Like any managed care capitated system, VERA gives the VISNs incentives to attract veterans who do not require extensive services. VA officials, aware that there is a potential for gaming, have developed performance measures to discern any unusual changes in workload, increases in waiting times, or changes in customer satisfaction.

Eligibility Reform

When queried, about 18 percent of veterans who do not use the VA health system cited “didn’t know was eligible” as a reason.²⁹ In fact, Congress has created a notoriously complex system of eligibility. Especially prior to 1996, determination of eligibility had been particularly onerous for both veterans and providers. VA health care is not an entitlement program like Medicare or Medicaid. And eligibility for VA services does not guarantee a defined package of services. Until 1996, all veterans were technically eligible for some care, although the actual provision of care was based on the availability of space and resources. But most otherwise eligible veterans had limited access to outpatient services and the provision of still other services, such as dental care, was tied to a prior hospital stay.

Reforms enacted in the Veterans Health Care Eligibility Reform Act of 1996 eliminated the distinctions between inpatient and outpatient care. This erased the complicated eligibility restrictions previously applied to outpatient care. It established two eligibility categories and seven enrollment priority categories. The first eligibility category includes veterans to whom the VA shall furnish needed hospital and outpatient care. However, as was historically the case, the obligation of the VA to this group of eligible veterans is effective only to the extent of appropriated resources. The second category includes veterans to whom the VA may furnish care, but only to the extent that resources are available and only if the veteran pays a copayment for care. This group comprises higher-income veterans with non-service-connected disabilities.

Eligibility rules for VA nursing homes and domiciliaries are unchanged. The VA may provide these services as clinically appropriate, within available resources. Veterans with the highest priority for these services are those with service-connected disabilities rated at 10 percent or more. Lowest priority is assigned to veterans who have no other special eligibility status and whose income exceeds the means test. Currently, for an individual with no dependents, that income level is above $21,610.

This legislation also requires the VA to enroll patients based on priority categories, with the highest priority given to veterans with service-connected conditions and indigent veterans. It requires the VA to maintain system-wide capacity for the 12 special-emphasis programs that include treatment for spinal cord injury, blindness, amputation, and mental illness. The legislation permits the VA to provide a continuum of services by permitting preventive health services to be delivered even if the veteran is not currently undergoing treatment.

Both the Congressional Budget Office (CBO) and GAO concluded that eligibility reform would generate additional demand for services, primarily due to increased use of outpatient services. The CBO also estimated that rising utilization would, by extension, produce dramatically increased costs. GAO noted, however, that eligibility reform would not address most veterans’ unmet service needs because

many of the problems veterans face in obtaining healthcare services appear to relate to distance from a VA facility or the availability of the specialized services they need rather than their eligibility to receive those services from VA.³⁰

Despite the expansion of eligibility, it is not clear that greater numbers of veterans will be served as, generally, appropriations have been adequate only for those veterans in the high-priority groups, such as service-connected disabled or indigent veterans. How ever, since enactment of eligibility reform legislation, the VA has been treating increasing numbers of veterans supporting these new patients through economies generated from its shift from expensive inpatient care to outpatient services. Further, eligibility reform legislation did not address the needs of an aging veteran population or expanded access to nursing home care or other non-institutional long-term care alternatives.

Primary Care/Ambulatory Care

In the reconfigured system, emphasis is being placed on primary care as the entry point into a system providing a continuum of services. In FY 1994, less than 20 percent of VA patients were followed by a primary care provider. Within a two-year period, 77 percent of patients reported that they were being followed by a primary care provider, and the VHA reports that, in actuality, more than 95 percent of patients are enrolled with a primary care provider. It is anticipated that universal primary care will be achieved within the next year.

In the reconfigured system, ambulatory settings are the preferred site of care. The following statistics confirm the extent to which this goal has been achieved.³¹

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Since 1994, 22,580, or 42 percent, of all acute care hospital beds have been closed.

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Ambulatory surgery increased from 35 percent of all surgery performed in FY 1995 to 69 percent in FY 1997.

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Twenty-seven of 121 PTSD programs (22 percent) have shifted or are in the process of shifting from inpatient to outpatient.

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One hundred and twelve of 190 substance abuse programs (59 percent) have shifted or are in the process of shifting from inpatient to outpatient.