The Department of Veterans Affairs would ease its healthcare eligibility rules to shift care from inpatient settings to less-expensive outpatient care under a reform initiative announced last week.
The initiative also calls on the VA and the Department of Defense to report to Vice President Al Gore in three months on encouraging more shared services throughout both government-run healthcare systems.
The proposals aim to save money and bring new revenues into the VA system, often criticized as wasteful and bureaucratic, at a time when the VA also is attempting to reform its 721 medical facilities into 22 integrated service networks.
The VA must obtain approval from Congress to implement the proposals unveiled last week.
Changing the VA healthcare system's eligibility rules has been a high priority for many veterans groups, as well as members of Congress, because the current rules add to the cost of the $16.2 billion healthcare system by keeping veterans in inpatient beds.
In many cases, veterans can be admitted to hospital beds more easily than they can get appointments at outpatient clinics.
By changing the system's eligibility rules, however, the VA says it can reduce inpatient costs by $761 million over two years while saving $39 million in beneficiary travel costs and payments to private providers for contract care.
Outpatient costs would rise only by $533 million as a result of the shift from inpatient beds to outpatient clinics. That would leave the VA with $268 million in savings that it could use to treat veterans not now receiving care at VA institutions.
Meanwhile, the VA estimates that if it's allowed to keep 25% of the net revenues collected from third-party payers, the system will take in $81.3 million over five years and the U.S. Treasury would receive an extra $244.1 million.
VA officials say that keeping a share of the excess revenues will give the department an incentive to increase its third-party collections.
Medicare reimbursement for VA care would be studied under a pilot project by HCFA and White House budget planners. The VA wants to treat Medicare-eligible veterans who don't meet income or diasbility guidelines that would qualify them for VA care, with Medicare picking up the tab.
The VA argues that the increased revenues will improve healthcare choices for veterans and offer less-expensive care for Medicare than the private market.