Hospital and veterans groups are protesting Congress' preliminary approval of a plan to financially bolster the Department of Veterans Affairs healthcare system.
Hospital lobbyists contend the plan could drain patients from private facilities, while veterans argue the arrangement actually will drain the VA system of capital, not feed it.
The House and Senate late last month approved budget legislation containing provisions that would allow the VA to keep payments it collects from private health insurers.
The legislation estimates the 776-facility VA healthcare system would save more than $3 billion between 1998 and 2002 under the plan, compared with what it would spend under current law. The system would be permitted to retain the payments collected from the insurers of veterans who aren't entitled to free care at VA facilities.
Today, the VA can collect those funds, but any collections in excess of the recovery cost are sent to the Treasury Department.
Under the proposal, the VA healthcare system's annual appropriation would drop more than $50 million in 1998, to just less than $17 billion, and then would be frozen at that level through 2002. Any budget increases would result from retaining insurance collections.
When it was proposed as part of President Clinton's budget request in February, top VA officials said the cost-recovery provision would encourage VA hospitals to compete with private providers to draw veterans who now don't seek care at VA facilities.
But an official of the American Hospital Association said that will only shift problems of overcapacity within the entire healthcare system.
"You can't solve the problem of excess capacity by simply trying to take patients from the private sector," said Carmela Coyle, vice president for policy with the AHA. "We need to look at excess capacity over the whole (healthcare) system."
Veterans groups, meanwhile, fumed at the budget proposal because of the reduction and freeze in the VA healthcare appropriation. They also warned that the VA's projections of third-party collections may not turn out to be true and could play havoc with individual hospital finances.
"Where are the dollars going to come from?" asked Richard Fuller, health policy program development director with Paralyzed Veterans of America, which last week bought newspaper advertisements objecting to the budget deal.