Two key House Republican leaders and the Clinton administration have agreed in principle to allow Medicare to pay Department of Veterans Affairs hospitals for treating Medicare-eligible veterans.
Under the agreement between Rep. Bob Stump (R-Ariz.), chairman of the House Veterans Affairs Committee, and Rep. William Thomas (R-Calif.), chairman of the House Ways and Means health subcommittee, Medicare would pay for enrolling in VA health plans veterans 65 and older who are not otherwise entitled to VA care.
The proposal still must survive the legislative process.
Enrollment of those veterans would be restricted to three-year pilot projects in three of the VA's 22 healthcare networks and $50 million in Medicare spending.
Medicare money also will be used to pay contract providers who treat veterans who are entitled to care but cannot receive VA treatment because they live too far from VA hospitals or clinics. That would not be a part of the pilot projects.
Veterans are entitled to care if they have low incomes or they have a disability related to their military service.
The agreement would clear the way for the VA to tap a new stream of money as it seeks to become less dependent on an annual appropriated budget. The VA would be paid roughly 90% of the risk-plan capitation rate under the agreement.
Under the federal balanced-budget law, the VA has been allowed to keep an estimated $3 billion in third-party insurance payments for treating veterans not entitled to care over the next five years.
Kenneth Kizer, M.D., the VA's health undersecretary, called the plan "a good thing for the VA and a good thing for Medicare."
He said the agreement should save the Medicare program money because two studies have shown that veterans enrolled in Medicare risk HMOs are being referred to VA facilities.
That means the federal government is paying twice for those veterans' healthcare-once when Medicare pays the risk plan, and once at the VA facilities.
An American Hospital Association lobbyist, who asked not to be identified, said the plan would not address overall hospital overcapacity but would shift patients from private hospitals to VA facilities.