The Department of Veterans Affairs' healthcare system could be more vulnerable to fraud under proposals allowing VA hospitals to contract more easily with private-sector healthcare providers, a congressional watchdog agency warns.
The General Accounting Office report, requested by Alan Simpson (R-Wyo.), retiring Senate Veterans Affairs Committee chairman, comes at the end of a session in which Congress gave its most serious consideration ever to so-called "eligibility reform" legislation, which includes expanded contracting authority.
Congress approved such legislation late last month, and it is awaiting President Clinton's signature.
The GAO's report, however, raises many cautionary flags for congressional leaders to consider next year.
Under the expansive contracting provisions of an eligibility reform proposal drafted by the American Legion, the VA would be able to hire private-sector providers, health plans, insurers and suppliers to care for veterans.
But the GAO said that under such a provision, senior VA healthcare managers potentially could face a conflict of interest.
That's because those managers often are part-time employees of medical schools that already receive millions of dollars through VA contracts, and the managers could favor more contracts for their schools, the GAO said.
Other eligibility reform proposals also expand contracting authority, but not as much as the American Legion's proposal would.
Legion spokesman Phil Budahn said contracting authority is necessary to save money by preventing the VA from duplicating healthcare services already provided in the community. If ethical "loopholes" arise, Budahn said, "we expect them to be plugged rather rapidly."
The GAO report also warns that "extensive" rationing or increased costs could result from proposals that would ease the VA's rules determining the care for which veterans are eligible.
The GAO said such proposals could increase demand for services, limiting what the VA can do within existing budget constraints.