The measure includes $10 billion in emergency spending to help veterans who can't get prompt appointments with VA doctors to obtain outside care; $5 billion to hire doctors, nurses and other medical staff and about $1.3 billion to lease 27 new clinics across the country.
The House vote came one day after the Senate confirmed former Procter & Gamble CEO Robert McDonald to lead the sprawling agency, which provides healthcare to nearly 9 million enrolled veterans and disability compensation to nearly 4 million veterans.
McDonald, 61, of Cincinnati, will replace Acting VA Secretary Sloan Gibson, who took over in May after Eric Shinseki resigned amid a growing uproar over reports of long veterans' waits for healthcare and VA workers falsifying records to cover up delays.
McDonald has pledged to transform the VA and promised that "systematic failures" must be addressed. He said improving patient access to healthcare was a top priority, along with restoring transparency, accountability and integrity to the VA.
Congressional budget analysts estimated the bill would cost about $16.3 billion over three years, slightly less than a $17 billion estimate provided by the bill's sponsors.
The bill is expected to add $10 billion to the federal deficit over 10 years after cost-savings such as changes in a veterans' retirement program and reimbursements by insurance companies are included, the nonpartisan Congressional Budget Office said.
Rep. Jeff Miller (R-Fla.), chairman of the House Veterans' Affairs Committee, said the reform bill was urgently needed in the wake of what he called "the biggest scandal in the history of the Department of Veterans Affairs."
While the bill's cost is steep, it is needed to ensure that veterans receive proper care, Miller said.
"The VA has caused this problem and one of the ways that we can help solve it is to give veterans a choice, a choice to stay in the system or a choice to go out of the system" to get government-paid healthcare from a private doctor, he said.
"No veteran should be forced to wait for the healthcare or benefits they have earned," said House Minority Leader Nancy Pelosi (D-Calif.), adding that the bipartisan bill "will help us serve our veterans as well as they have served us."
Rep. Steny Hoyer of Maryland, the second-ranking Democrat in the House, said he was concerned about a provision in the bill that makes it easier to fire senior executives judged to be negligent or underperforming. Hoyer, whose suburban Washington district includes thousands of government workers, said the bill "undermines civil service protections that have been in place for decades."
Existing protections "strike the right balance between giving agencies the authority to remove personnel without trampling on the due process rights of (senior) employees that they need to do their job without fear of political reprisal or arbitrary removal," Hoyer said.
The VA has been rocked in recent months by reports of patients dying while awaiting treatment and mounting evidence that workers falsified or omitted appointment schedules to mask frequent, long delays. In many cases, high-ranking officials received bonuses for meeting performance goals that later proved to be based on false information.
The compromise measure would require the VA to pay private doctors to treat qualifying veterans who can't get prompt appointments at the VA's nearly 1,000 hospitals and outpatient clinics, or those who live at least 40 miles from one of them. Only veterans who are enrolled in VA care as of Aug. 1 or live at least 40 miles away would be eligible to get outside care.
The proposed restrictions are important in controlling costs for the program. Congressional budget analysts had projected that tens of thousands of veterans who currently are not treated by the VA would likely seek VA care if they could see a private doctor paid for by the government.