Healthcare Business News

VA expands new care program, but providers may balk at the low rates it pays

By Virgil Dickson
Posted: August 14, 2014 - 7:00 pm ET

(This article has been updated with a correction.)

The Veterans Affairs Department has decided to expand, to include primary-care services, a relatively new program that allows vets to seek certain types of care from non-VA providers. The move likely will enhance the possibility of quicker access to care for veterans, but for how many is unclear. That's because some providers may decline to join the program because of what they see as financially unviable reimbursement rates.

The Patient-Centered Community Care program began in January, following a VA award in September 2013 of contracts worth up to $9.4 billion over five years to managed-healthcare organizations Health Net and TriWest to develop and oversee a network of providers who deliver specialty, mental health and limited emergency care to veterans.

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Despite the latest expansion in scope to include primary care, “the dollar impact of this change remains within scope of the original contract award and requires no change to the overall contract maximums,” the VA said in a contract notice.

Expanding the scope of the PC3 program to include primary care “is another example of how we are working to ensure veterans get the care they need, when they need it and where they want to be seen,” Veterans Affairs Secretary Robert McDonald said in a statement.

Providers are mixed as to how widespread the buy-in will be from primary-care physicians because Health Net and TriWest are, in some instances, paying below Medicare rates.

The new VA emergency funding law signed by President Barack Obama on Aug. 7 does nothing to stop companies from doing so as it states that “rates negotiated shall not be more than the rates paid … under the Medicare program.” It does allow the VA to pay above Medicare in instances when a doctor is serving a highly rural area, which the law defines as having fewer than seven individuals residing in a county per square mile.

“It is true that our providers are accepting a discount of Medicare rates,” said Bill Cahill, vice president of government relations and general counsel at TriWest. “The value we provide is that we pay on time and accurately.”

A longstanding criticism that providers who contract directly with the VA have expressed is that they sometimes wait up to a year to be paid, and even then, they may get less money than they were expecting.

Paying below Medicare rates is a necessary part of being good stewards of taxpayer funds the company is managing, Cahill said. In some instances, TriWest actually pays more than Medicare rates, but is prohibited from providing details, he said.

A Health Net spokeswoman said the VA allowable is largely based on Medicare rates and the company works with providers to negotiate rates within the boundaries of the contract.

For some providers, patriotic duty will outweigh concerns of taking on an influx of new patients at low rates, others say.

“What's more important is that these folks are getting in front of a doctor,” said Craig Becker, president of the Tennessee Hospital Association. “I don't know of any hospital that wouldn't take care of a veteran.”

While members of the American Academy of Family Physicians would prefer to receive at least Medicare rates, “they are still eager to serve and already have a strong history of seeing patients who are either under or uninsured,” the group's president, Dr. Reid Blackwelder, said.

Not all Medicare rates are created equal across the country, so providers in some states may be in a better position to take a discounted rate than others, said Kris Doody, CEO of Cary Medical Center in Caribou, Maine. Her hospital has thus far resisted advances from Health Net to join the PC3 program.

“In Maine, our Medicare rates are already 17% below the national average, so getting reimbursed under that is not financially feasible for the hospital,” Doody said.

Her hospital still does serve veterans, but under Project ARCH (Access Received Closer to Home), a pilot initiative started in 2011 by the VA to provide private care for veterans living in rural areas. As part of the program, her hospital contracts directly with the VA, which pays Medicare equivalent rates, she said.

If a doctor makes the hard choice to not take on new veterans because of low reimbursement, he shouldn't be looked at despairingly, said Dr. Asa Lockhart, an anesthesiologist from Tyler, Texas, who authored a resolution that was backed by the American Medical Association House of Delegates in June, calling for the president to allow greater access to non-VA care.

“It's not because they don't want to take veterans, it's just many private practices are in the precarious position of barely hanging on,” Lockhart said. “An under-reimbursed influx of patients can put a practice under water, and if they are not in business, they can't take care of anyone.”

A spokeswoman from the VA did not respond to request for comment.

Follow Virgil Dickson on Twitter: @MHvdickson

(An earlier version incorrectly paraphrased Health Net's position.)

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