Future collaboration between the Department of Veterans Affairs and military hospitals is jeopardized by conflicts with the Defense Department's managed-care plan, according to a congressional report released last week.
A Defense Department legal opinion issued last year determined that sharing agreements in which military treatment facilities refer patients to VA hospitals are in violation of the Pentagon's contracts with providers serving the military's Tricare managed-care plans, said the report from the General Accounting Office.
In effect, the legal opinion nullified many sharing agreements in which the VA provides direct medical care to enrollees in the Tricare plans. The legal opinion argued that sharing agreements represent a network that competes with the Tricare network, in violation of military hospitals' contract with Tricare.
The VA operates an $18 billion healthcare system that treats 4.1 million veterans a year. The Defense Department spends $16 billion on a system that cares for 5 million active duty personnel, retirees and dependents a year.
In its report, the GAO recommended that the Pentagon review and clarify when military hospitals can share resources with VA facilities. Without that clarification, VA facilities and military hospitals will be unable to make the most effective use of excess resources.
The VA and military hospitals have had the authority to share resources since 1982. An example is when a military hospital pays a VA facility to treat active-duty personnel or their dependents. Support services such as laundry or ancillary services such as laboratory testing often are involved.
The advantages of such sharing arrangements are: increased use of underused equipment, increased revenue for the provider and discounted prices--compared with private-sector prices--for the purchaser of the shared services.
Some $29 million exchanged hands between the VA and Defense Department through sharing agreements for patient care at stand-alone military and VA facilities during fiscal 1998. Three-quarters of those dollars were concentrated at 26 of the 145 facilities that have active sharing agreements, particularly facilities in Louisville, Ky., Palo Alto, Calif., and Richmond, Va.
Another $21 million in services was exchanged in fiscal 1998 at sites where the VA and Pentagon jointly operate facilities.