The Department of Veterans Affairs warned Wednesday it was unexpectedly running out of money for a program that offers veterans private-sector healthcare, forcing it to hold back on some services that lawmakers worry could cause delays in medical treatment.
It is making an urgent request to Congress to allow it to shift money from other programs to fill the sudden budget gap.
VA Secretary David Shulkin made the surprising revelation at a Senate hearing. He cited a shortfall of more than $1 billion in the Choice program due to increased demand from veterans for federally-paid medical care outside the VA. The VA had previously assured Congress that funding for Choice would last until early next year.
"We need your help on the best solution to get more money into the Choice account," Shulkin told the Senate Veterans' Affairs Committee. "If there is no action at all by Congress, then the Choice program will dry up by mid-August."
The department began instructing VA medical centers late last week to limit the number of veterans it sent to private doctors so it can slow spending in the Choice account. Some veterans were being sent to Defense Department hospitals, VA facilities located farther away, or other alternative locations "when care is not offered in VA," according to a June 7 internal VA memorandum.
The VA is also scrambling to tap other parts of its budget, including about $620 million in carry-over money that it had set aside for use in the next fiscal year beginning Oct. 1. It was asking field offices to hold off on spending for certain medical equipment to help cover costs, according to a call the department held with several congressional committees Tuesday night.
It did not rule out taking money from VA hospitals.
Shulkin on Wednesday insisted that veterans will not see an impact in their healthcare. He blamed in part the department's excessive use of an exception in the Choice program that allowed veterans to go to private doctors if they faced an "excessive burden" in traveling to a VA facility. Typically, Choice restricts use of private doctors only when veterans must wait 30 days or more for an appointment or drive more than 40 miles to a facility.
Medical centers were now being asked to hew more closely to Choice's restrictions before sending veterans to private doctors, Shulkin said.
He described the shortfall in the Choice program as mostly logistical, amounting to different checking accounts within the VA that needed to be combined to meet various payments.
Some senators were in disbelief.
They noted that VA had failed to anticipate or fix budget problems many times before. Two years ago, the VA endured sharp criticism from Congress when it was forced to seek emergency help to cover a $2.5 billion budget shortfall due in part to expensive hepatitis C treatments, or face closing some VA hospitals. Congress allowed VA to shift money from its Choice account.
"I am deeply concerned," said Sen. Patty Murray (D-Wash.), explaining that VA should have "seen this coming." She said veterans in her state were already reporting delays in care and being asked to travel to VA facilities more than 4 hours away.
Sen. Jon Tester of Montana, the top Democrat on the panel, expressed impatience.
"For months we've been asking about the Choice spend rate and we were never provided those answers to make an informed decision," he said. "No one wants to delay care for veterans — no one — so we will act appropriately. For that to happen this late in the game is frustrating to me."
Major veterans' organizations said they worried the shortfall was the latest sign of poor budget planning.
Carl Blake, an associate executive director at Paralyzed Veterans of America, said the VA has yet to address how it intends to address a growing appeals backlog as well as increased demands for care. "The VA could be staring at a huge hole in its budget for 2018," he said. "It's not enough to say we have enough money, that we can move it around. That is simply not true."
The shortfall surfaced just weeks after lawmakers were still being assured the Choice program was under budget, with $1.1 billion estimated to be left over in the account on Aug. 7, when the program was originally set to expire. That VA estimate prompted Congress to pass legislation last March to extend the program until the Choice money ran out.
Shulkin said he learned about the shortfall just last Thursday.
Currently, more than 30% of VA appointments are made in the private sector, up from fewer than 20% in 2014, as the VA's 1,700 health facilities struggle to meet growing demands for medical care. During the 2016 campaign, President Donald Trump criticized the VA for long wait times and mismanagement, pledging to give veterans more choice in seeing outside providers.