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104th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 104-690
_______________________________________________________________________
VETERANS' HEALTH CARE ELIGIBILITY REFORM ACT OF 1996
_______________________________________________________________________
July 18, 1996.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Stump, from the Committee on Veterans' Affairs, submitted the
following
R E P O R T
[To accompany H.R. 3118]
[Including cost estimate of the Congressional Budget Office]
The Committee on Veterans' Affairs, to whom was referred the
bill (H.R. 3118) to amend title 38, United States Code, to
reform eligibility for health care provided by the Department
of Veterans Affairs, having considered the same, reports
favorably thereon without amendment and recommends that the
bill do pass.
Introduction
On July 19, 1995, the Committee received testimony about
the need to reform health care eligibility of the Department of
Veterans Affairs, Veterans Health Administration. Those
testifying included the Under Secretary for Health, Kenneth W.
Kizer, M.D., who was accompanied by Ms. Mary Lou Keener, the
General Counsel of the Department. Also testifying were Mr.
David P. Baine, Director, Federal Health Care Delivery, Health,
Education and Human Services Division, the General Accounting
Office (GAO), who was accompanied by Messrs. James Linz and
Paul Reynolds, assistant directors of GAO. Subsequent panels of
individuals offering testimony were Gregory A. Bresser,
National Service Director, of the Military Order of the Purple
Heart; Frank C. Buxton, Deputy Director for Veterans Affairs
and Rehabilitation of The American Legion; David W. Gorman,
Deputy Legislative Director of the Disabled American Veterans;
Robert I. Keimowitz, M.D., Dean for Academic Affairs of the
George Washington University School of Medicine and Health
Sciences representing the Association of American Medical
Colleges; James N. Magill, National Legislative Service
Director of the Veterans of Foreign Wars; Gordon H. Mansfield,
Executive Director of the Paralyzed Veterans of America; Larry
D. Rhea, Deputy Director of Legislative Affairs of the Non-
Commissioned Officers Association; Lynna C. Smith, MN, RN, CS,
ARNP, President of the Nurses Organization of Veterans Affairs;
and Kelli R. Willard West, Deputy Director, Government
Relations of the Vietnam Veterans of America.
The Subcommittee on Hospitals and Health Care met on May 8,
1996, and ordered H.R. 3118 reported favorably to the full
Committee by unanimous voice vote.
The full Committee also met on May 8, 1996, and ordered
H.R. 3118 reported favorably to the House by unanimous voice
vote.
Summary of the Reported Bill
H.R. 3118 would:
1. LWithin appropriations, authorize the VA to provide all
needed hospital care and medical services (including preventive
and home health care) to veterans with compensable service-
connected disabilities, former prisoners of war, veterans
exposed to toxic substances and environmental hazards (for care
of conditions specified in existing law), veterans meeting the
``means test'' as provided under existing law, and veterans of
World War I.
2. LEliminate restrictions on VA providing prosthetic
devices, subject to a requirement that VA furnish hearing aids
and eyeglasses to veterans only in accordance with guidelines
to be prescribed.
3. LRequire VA to manage the provision of hospital care and
medical services through an enrollment or registration system
based on a system of priorities. Priority is assigned in the
following order: (a) veterans 30 percent or more service-
connected disabled, (b) former POWs and veterans with service-
connected disabilities rated 10 or 20 percent, (c) veterans
receiving aid and attendance or housebound benefits and
otherwise eligible veterans who suffer from a catastrophic
disability, (d) veterans who are unable to defray the cost of
their care, and (e) all others. The VA is authorized to
establish additional priorities within the above groups.
4. LClarify that service-connected veterans continue to be
eligible for any benefit for which they are eligible under
existing law.
5. LPermit VA to contract, pursuant to VA-prescribed
acquisition procedures and policies, for hospital care and
medical services for any enrolled veteran when VA facilities
are not capable of furnishing the care or services
economically.
6. LExtend indefinitely VA's authority to provide services
to dependents of active-duty members and retired servicemembers
under contract arrangements with the Department of Defense
(DOD) or a DOD contractor; clarify VA's authority to collect
from insurance plans of DOD beneficiaries cared for by VA to
the same extent as DOD recovers for care rendered to those
beneficiaries in its facilities; and authorize VA to retain
such funds.
7. LExpand VA's authority to execute ``sharing'' agreements
by permitting any medical resource to be provided under such an
agreement; authorize the VA to develop such arrangements with
any entity; authorize flexibility in establishment of payment
levels; and exempt personnel involved in providing services
under such arrangements from the otherwise applicable
Department personnel floor.
8. LDirect VA to maintain its capacity to provide for the
specialized treatment and rehabilitation of disabled veterans
within distinct programs or facilities dedicated to the
specialized needs of those veterans.
Background and Discussion
HISTORICAL PERSPECTIVE
The veterans medical system was first developed to provide
needed care to veterans injured or ill as a result of service
during wartime. At the end of World War II, the federal
government undertook the task of increasing the number of
Veterans Administration (VA) medical facilities to meet the
expected demand for health care for veterans returning with
injuries or illnesses sustained during hostilities. The primary
focus of the expansion was to immediately tend to the medical
needs of returning combatants for acute care and then to
address the longer term rehabilitation needs of more seriously
injured veterans. Within a few years after the cessation of
hostilities, the initial demand for acute care services for
service-connected conditions diminished and the VA initiated
what was later to become its specialized services mission.
Services such as spinal cord injury care, blind rehabilitation,
and prosthetics were very limited and almost non-existent in
the private medical market of the late 1940s.
The VA system has evolved and expanded since World War II.
Congress has enlarged the scope of the Department's health care
mission and has enacted legislation requiring the establishment
of new programs and services. Through numerous laws, some
narrowly focused, others more comprehensive, Congress has also
extended to additional categories of veterans eligibility for
the many levels of care the VA now provides. No longer a health
care system targeted just to the service-connected veteran, the
VA has also become a ``safety net'' for the many lower-income
veterans who have come to depend upon it. Legislative proposals
aimed at ensuring access to comprehensive care and service
through the VA for any veteran, or even just service-connected
and indigent veterans, have been unsuccessful. Budget
considerations have been a frequent brake on such legislative
initiatives. The resulting body of VA health care eligibility
law is one which many view as more of a patchwork than a
rational, comprehensive system.
The longstanding call for ``eligibility reform'' reflects
frustration with provisions of current law which are widely
regarded as complex, confusing, and in some respects,
inconsistent with sound medical practice.
With the Administration's submission in 1993 of its
proposed national health care reform bill, the Congress was
presented for the first time with a proposal for comprehensive
reform of VA eligibility laws. Those proposed VA reforms were
tied, however, to the broader goals of the legislation and did
not survive the Health Security Act's demise. It was not until
1995 that the VA submitted for the first time an ``eligibility
reform'' proposal directed exclusively at veterans' law. In
transmitting the draft legislation to the Speaker of the House,
the Secretary of Veterans Affairs identified the following
objectives that should be achieved by a revised eligibility
system:
First, the eligibility system should be one that both
the persons seeking care and those providing the care
are able to understand.
Second, the eligibility system should ensure that the
VA is able to furnish patients the most appropriate
care and treatment that is medically needed, cost
effective and in the most appropriate setting.
Third, veterans should retain eligibility for those
benefits that they are now eligible to receive.
Fourth, VA management should gain the flexibility
needed to manage the system effectively.
Fifth, the proposal should be budget neutral.
Sixth, the proposal should not create any new and
unnecessary bureaucracy.
VETERANS' HEALTH CARE ELIGIBLITY REFORM ACT OF 1996
The reported bill would revise provisions of chapter 17 of
title 38, United States Code, governing eligibility for VA
hospital and outpatient care, and would achieve the objectives
set forth by the Secretary. It would substitute a single
uniform eligibility standard for the complex array of standards
governing access to VA hospital and outpatient care. While the
new standard is a simple one, more importantly, it would employ
a clinically appropriate ``need for care'' test, thereby
ensuring that medical judgment rather than legal criteria will
determine when care will be provided and the level at which
that care will be furnished.
Section 2. Hospital and medical services
Section 2 of the reported bill would strike the complex
provisions of law governing eligibility for outpatient care.
Those provisions, set forth in section 1712(a) of title 38,
require the VA to apply at least four different legal tests to
distinct veteran classifications. Specifically, under section
1712(a), the VA ``shall furnish'' comprehensive treatment to
certain service-connected veterans, ``may furnish'' such broad
treatment to certain other classes of veterans, and either
``shall'' or ``may'' furnish treatment of more limited scope
(to ``obviate'' the need of hospital admission or to complete
treatment begun during hospitalization) to still other groups
of veterans. In contrast, in the case of each of these groups
(the service-connected, former prisoners of war, etc.), the VA
is required under section 1710 of title 38 to provide needed
hospital care for any health problem.
Section 2 would authorize the VA to provide any needed
hospital care and medical services (including preventive
services and home care) to the service-connected disabled, low-
income veterans, former prisoners of war, and World War I
veterans who enroll with VA for needed care. These changes
would expand the array of services that VA could provide to
many of these beneficiaries, while eliminating statutory
barriers to providing care in the most economical manner.
As amended, section 1710(a)(1) would qualify the
Secretary's obligation to provide care as follows: ``to the
extent and in the amount provided in advance in appropriations
Acts for these purposes''. Such language is intended to clarify
that these services would continue to depend upon discretionary
appropriations; the Act would not require a certain level of
appropriations. The qualifying phrase, quoted above, is
identical to the language the Secretary of Veterans Affairs has
employed in the legislation submitted to the Speaker of the
House.
While expanding the scope of services which VA would be
authorized to provide to many of its core ``category A''
veterans (those described in section 1710(a)(1) of title 38),
section 2 would not reduce any veterans' eligibility for health
care benefits. The measure would explicitly address the status
of a veteran with a service-connected disability which is not
compensable in degree. In the case where such a veteran is not
otherwise afforded eligibility for hospital and medical
services under section 1710(a)(1), as amended in section 2 of
the Act, new section 1706(d) would provide that such a veteran
would continue to be eligible for health care benefits for
which that veteran had been eligible prior to the enactment of
the Veterans' Health Care Eligibility Reform Act of 1996. Other
veterans--both higher-income individuals and veterans with
special eligibility based on exposure to toxic substances--
would continue to be eligible for services under existing law.
Section 3. Prosthetics
Section 3 would remedy a frequently cited anomaly in VA
health care eligibility law which poses a statutory barrier to
providing many veterans who rely on VA health care with needed
prosthetics. The measure would eliminate a restriction in
current law which effectively prohibits the VA from furnishing
such needed devices to most nonservice-connected veterans
unless the VA has hospitalized the individual. Under the
amendment, however, VA prosthetics may be furnished only as
part of ongoing VA care (regardless of the level at which that
care is furnished). This would clarify that the Committee does
not intend that the VA provide costly prosthetics to
nonservice-connected veterans who do not otherwise rely on VA
care and simply view the VA as a means to obtain services not
covered by their health care insurer.
Section 4. Management of health care
Section 4 of the Act would meet the Secretary's objective
of gaining needed flexibility to manage VA health care
effectively. Its provisions would both improve the VA's ability
to plan and budget for meeting its medical care mission, and
foster flexibility in delivering needed services.
The provisions of this section would not only enable the VA
to plan for treating patients in a comprehensive manner rather
than episodically responding to acute problems, but would also
authorize the VA to establish a system or systems of patient
enrollment and thereby improve substantially the management of
care delivery. Moreover, the Act would alleviate the
restrictions currently imposed on administrators in contracting
for veterans' treatment. In place of a body of law limiting who
could be provided treatment from a private physician and for
what conditions, the Act would vest the VA with authority to
contract for hospital care and medical services on behalf of
any enrollee described in new section 1710(a)(1) when it is
less costly to provide needed care and services by contract.
Further, the Act would lift restrictions which bar VA
facilities from entering into arrangements with other
institutions for shared use of VA resources, subject to
reimbursement. Finally, the Act would explicitly recognize that
the extent of the Secretary's obligations under law are limited
by the funds made available in advance by appropriations acts.
Enrollment.--Section 4 of the Act would in new section 1705
of title 38 provide the VA with an important tool, the
authority to design and manage access to care through a system
of patient enrollment. The authority to enroll patients is a
logical extension of the longstanding statutory requirement
that outpatient care be provided in accordance with specified
priorities.
While an enrollment mechanism has not previously been
specifically authorized by law, the VA has clearly embraced
that concept in its recent planning and has begun to employ it.
A directive issued by the Office of the Under Secretary for
Health in October 1994, Guidance for the Implementation of
Primary Care in the Veterans Health Administration (VHA), for
example, includes among facilities' responsibilities in
instituting a primary care program the responsibility to
``define the patient population . . . to be treated'' and to
ensure that ``every patient enrolled in primary care must have
a primary care provider.'' As currently instituted at many VA
facilities, an enrollment system does not involve a contractual
relationship between the VA and the enrollee or otherwise
guarantee the enrollee that the VA will necessarily deliver all
needed care. Enrollment, however, would help the VA plan more
effectively, so that facilities can better calculate and
dedicate the resources needed to provide the care its enrollees
require.
The Act would direct the Secretary, in providing for the
care of ``core'' veterans (described in new section 1710(a)(1)
of title 38), to establish and operate a system of annual
patient enrollment and require that veterans be enrolled in a
manner giving relative degrees of preference in accordance with
specified priorities. At the same time, it would vest
discretion in the Secretary to determine the manner in which
such enrollment (or registration) system would operate. For
example, the VA would be able to establish a system which
simply registers patients throughout all or part of a fiscal
year, or could employ a time-limited registration period.
Significantly, the Act would permit the Secretary to set
priorities within the specified priority classifications
established in the Act. The Secretary could, for example,
establish a policy which, within any priority classification,
gives veterans who have previously been ``enrolled'' as VA
patients priority over new applicants. However, the Committee
expects any enrollment system to be designed and administered
to assure that any veteran with a service-connected condition
would receive priority treatment for that condition whether or
not that veteran had enrolled for VA care.
The relative priority classifications in new section 1705,
which assigns highest priority to veterans with service-
connected disabilities rated 30 percent or greater, are derived
substantially from the prioritization requirement in current
law at section 1712(i) of title 38. In refining that
prioritization requirement, the measure would make noteworthy
changes. First, the measure would elevate to a second tier the
priority of former prisoners of war, who under current law
occupy a third priority tier. And second, it would create a
category of priority for those otherwise eligible veterans
under a new section 1710(a) who are catastrophically disabled,
such as veterans with spinal cord injuries. Such veterans would
be included in a third tier priority with other profoundly
disabled nonservice-connected veterans who receive increased
pension based on a need of regular aid and attendance or
permanent housebound status.
Contracting for services.--In providing a new statutory
framework to assist the VA in meeting the nation's commitment
to provide health care services to its most deserving veterans,
the Act for the first time would lift rigid limits on which
patients can receive VA-sponsored care through contract
arrangements with community providers. In the context of the
broad policies of the Act, such limits on contracting are
unnecessary constraints. They serve, at best, as a crude means
of limiting expenditures; in their place, the Act would
authorize, but not require, the VA to contract for hospital
care and medical services when VA facilities cannot furnish
such care and services economically. Such a provision is also
intended to encourage VA facilities to assess the relative
costs of in-house and contractor-provided services, with an eye
to contracting where significant savings can be achieved at
comparable quality of service.
The Act in new section 1706 of title 38 would also vest the
Secretary with broad discretion to make such rules and
regulations regarding acquisition procedures and policies as
deemed necessary to provide needed care and services. This
provision is intended to enable the Secretary to tailor
contracting policies and process to the unique needs of cost-
effective care delivery and to free contracting officials from
cumbersome procedures which would impede that objective.
While it would generally ease restrictions in current law,
the Act would limit the Secretary in some respects. For one, it
would provide that in designing an enrollment system and
providing care, the VA may not enroll or otherwise attempt to
treat so many patients as to result either in diminishing the
quality of care to an unacceptable level or unreasonably
delaying the timeliness of VA's care delivery.
Specialized services.--The Act would further limit the VA's
discretion as it relates to the Department's important mission
of providing for the specialized treatment and rehabilitative
needs of disabled veterans. While provisions of the Act would
otherwise vest considerable discretion in the Secretary,
considerations unique to the VA's specialized treatment
programs would require a far more prescriptive response, in the
Committee's view.
The provision of specialized services, identified generally
in the Act as the VA's service capacity to provide for the
specialized treatment and rehabilitative needs of disabled
veterans (including veterans with spinal cord dysfunction,
blindness, amputations, and mental illness), constitutes a
vital core of the VA's health care mission. The development and
refinement over decades of specialized treatment and
rehabilitation programs to serve these disabled populations has
greatly enhanced veterans' lives. The scope and quality of
those programs is not matched in the private sector, where,
because of the great expense associated with such care, there
has generally been little incentive to tailor programs for
these chronic conditions.
Budgetary pressures and an ongoing reorganization within
the Veterans Health Administration (VHA) raise concern on the
Committee's part that the VA's costly specialized programs may
be particularly vulnerable and disproportionately subject to
budget-cutting. On April 6, 1995, a hearing before the
Subcommittee on Hospitals and Health Care on the proposed VHA
reorganization produced testimony on this issue. In the
Committee's view, neither the Department's testimony nor
subsequent actions have altogether alleviated the widespread
concern that a newly decentralized organization, under budget
pressures and focused heavily on instituting new primary care
programs, will not respond to these pressures at the expense of
the very programs on which some of the Department's most
vulnerable beneficiaries depend.
To avoid erosion of its specialized capacities, the Act
would require the Secretary to ensure that the Department's
systemwide capacity to provide for the needs of this disabled
population would be maintained. In setting this requirement,
the Committee does not seek or discourage the development of
new or refined treatment modes that may change the mix of VA
services, or in any way discourage an appropriate shift of care
from inpatient to outpatient settings, but only to ensure that
the resource levels devoted to these services remain at least
stable.
Given the importance of permitting programs and treatment
methods to evolve, the Committee has not sought to identify or
catalogue specific ``programs'' in either the Act or in this
discussion. Its intent is to ensure that specialized treatment
and rehabilitation continue to be available to serve unique
populations who suffer from the kind of profound, costly-to-
treat disabilities cited in the Act. The Committee notes that
the Department has from time to time employed terms like
``special programs'' which are more inclusive than the Act's
provision and may employ the term ``special'' for reasons
unrelated to the profound nature of a disability. Such
``special'' programs are not necessarily within the ambit of
this provision.
Impact of the Act.--Although the Act would revise
substantially the body of law governing VA health-care
eligibility, its impact would be less far-reaching in practice
than it appears on its face. While the Committee believes the
revision of law proposed in the Act is necessary and overdue,
it appears that many VA medical facilities have, on their own,
instituted changes in delivery practice that largely mirror
changes proposed in the Act.
To test this thesis, the Committee's ranking member
requested that the Veterans Health Administration conduct a
survey of VA medical centers. The survey, conducted in
September 1995, was intended to explore the possible impact of
eligibility reform legislation. The survey sought to document
the extent to which the VA facilities were already providing
primary care to patients and to obtain some current measure of
demand for care which might be sparked by enactment of reform
legislation.
In that regard, the Committee took note of a 1995 analysis
prepared by the Congressional Budget Office (CBO). For example,
in trying to estimate the costs associated with a legislative
initiative which would have expanded the scope of outpatient
care for service-connected veterans rated 30 percent and 40
percent disabled, CBO analysts, in attempting to derive an
estimate of minimum costs, ``assumed that the number of
veterans refused outpatient care equals the number turned down
for inpatient care.'' The analysts cited data derived from the
1992 Survey of Veterans to the effect that ``about 61,000
veterans were denied inpatient care who should have received
care'' and concluded that number would rise to almost 70,000 in
1996. CBO continues to cite the 1992 survey data in estimating
additional costs deemed to arise from an extension of
outpatient care.
The VHA survey posed the following questions:
a. LHas your facility instituted a primary care program
(i.e., a clinic which includes at least intake and
initial assessment, treatment/management of acute
conditions, patient education/health promotion,
continuity of care, and access to other components of
VA-provided or sponsored health care)?
b. LIf so, please estimate the percentage of total
facility unique patients enrolled in primary care.
c. LPlease identify any classes of ``category A''
veterans who are not currently enrolled or being
enrolled in a primary care program.
d. LDuring the period of FY 1994, did your facility
find it necessary because of limited resources to turn
away (or provide only one-time, limited treatment to)
any category A veterans who needed hospital or
outpatient care?
e. LIf so, please estimate by needed level of care the
numbers turned away.
The VA survey indicated that with respect to needed
hospital care, only six of 162 facilities either turned away
category A veterans or provided one-time, limited treatment to
such individuals. With respect to outpatient treatment, only 22
facilities denied treatment or provided only one-time
treatment, according to the survey.
As GAO noted in testimony, only veterans with service-
connected disabilities rated at 50 percent or more--about
450,000 veterans--are entitled to comprehensive outpatient
treatment. (Another GAO report, profiling veterans who used VA
medical centers in 1991, stated that of veterans receiving VA
care in 1991, only 300,000 were 50 percent service-connected
disabled.) GAO noted that ``eligibility rules impede the
provision of efficient health care to other veterans in that
they may not be eligible for preventive services or treatment
of medical conditions until such conditions, if left untreated,
warrant hospital care or specialized outpatient treatment.''
The survey showed, however, that despite the limited
numbers entitled to routine outpatient treatment, VA facilities
are providing routine care to substantial percentages of their
patients. For example, of the 162 facilities responding to the
survey, 62 reported that 60 percent or more of their patients
had been enrolled in primary care programs; 25 facilities
reported that 80 percent or more of their patients were
enrolled. In most instances these programs are relatively new
and were established pursuant to the above-cited October 1994
VA directive, Guidance for the Implementation of Primary Care
in the Veterans Health Administration. In expressing a ``need
to implement primary care throughout VHA,'' the directive cited
a 1993 survey which ``revealed that VA does not currently
provide primary care to a large number of veterans.'' The new
policy pronouncement expressly directed that ``[t]he VHA will
implement the Primary Care Program to provide primary care to
all eligible veterans requiring coordinated care.'' The policy
did not define the term ``eligible veterans'', but in
identifying the need to implement primary care, cited ``the
development of eligibility reform proposals, the managed care
task force report, and . . . the VA National health care reform
report Meeting the Challenge of Health Care Reform.''
In essence, a health care system often criticized in prior
years for its failure to provide routine outpatient care is
undergoing a much-needed reform and is increasingly delivering
care at the least costly level. The change in practice has
resulted in widespread anticipation of a change in law.
Section 5. Improved efficiency in health care resource management
Title II of Public Law 102-585 authorized an expansion of
the cooperative arrangements between VA and DOD facilities
instituted under Public Law 97-174. P.L. 102-585 authorized the
Departments to enter into agreements under which VA facilities
could provide medical services to beneficiaries of DOD's
CHAMPUS program. Under this new authority, the VA has begun to
provide care to dependents of active-duty members and retirees.
Section 5 would repeal section 204 of P.L. 102-585, under which
expanded VA/DOD sharing authority would have expired.
Section 5 of the reported bill would in new section 207 of
Public Law 102-585 also clarify VA's authority to recover or
collect from the insurance plans (including so-called ``CHAMPUS
supplemental'' plans) of CHAMPUS beneficiaries cared for by the
VA to the same extent as DOD recovers for care rendered to
these beneficiaries in its facilities. This section would also
direct that all funds received by the VA from insurance plans
of CHAMPUS beneficiaries be credited to the VA facility that
furnished the care.
Section 6. Sharing agreements for health care resources
While revising VA law governing health care eligibility,
the Act would help the VA achieve greater efficiencies inherent
in shifting more care from costly hospital beds to outpatient
clinics and also would help the VA achieve greater economies
through improved resource utilization.
Under existing law, the VA may, subject to reimbursement,
enter into agreements with specified health care entities for
the mutual use or exchange of use of ``specialized medical
resources,'' a narrowly defined term. Among the changes
proposed by the reported bill, section 6 would authorize VA
facilities to enter into such ``sharing agreements'' not only
with health care facilities but with health insurers or any
other entity or individual and would expand to include, for
example, support services, the scope of resources which might
be sold or purchased under such a contract to any health care
entity. The Committee contemplates that the Department would
broadly construe this new authority.
Section 6, developed with an eye to both the difficult
budget environment and the dynamic marketplace within which the
VA health care facilities are operating, reflects a belief that
these facilities need far greater flexibility than existing law
affords them to work out contractual arrangements with other
providers, institutions, and entities to ``share'' health care
resources. Both veterans organizations and the Department have
cited the importance such expanded VA sharing authority holds
to achieve efficiencies and new revenues.
Section 7. Personnel furnishing shared resources
The provisions of section 7 are companion provisions to
sections 5 and 6, and are intended to overcome disincentives in
existing law to initiate or maintain arrangements to ``share''
resources, and thus, to achieve needed efficiencies. Under
current law, VA facilities have operated under employment
ceilings conforming to section 712 of title 38. Such ceilings
have created a dilemma for many medical center directors
because they have often forced a choice between dedicating
staff solely to internal service delivery, regardless of the
level of efficiency of such service, or to providing as well
some level of service delivery to other entities under the
auspices of efficiency-driven ``sharing'' agreements. Faced
with such a choice, many directors have opted not to embark on
any new sharing agreements or have questioned the merits of
maintaining those in place. This tension can easily lead
facilities to operate inefficiently simply to avoid the
perverse impact of an employment ceiling. Section 7 would
remedy this problem by exempting from the applicable personnel
ceiling those staff involved in providing services under
sharing agreements.
Section-By-Section
Section 1 would provide that this title may be cited as the
``Veterans' Health Care Eligibility Reform Act of 1996.''
Section 2 would: (1) amend sections 1710 and 1712 of title
38, United States Code, to establish medical need as the sole
criterion of eligibility for VA hospital care and medical
services for any veteran who (a) has a compensable service-
connected disability, (b) is a former prisoner of war, (c) is
unable to defray the cost of care, or (d) is a veteran of World
War I; (2) provide that such care shall be furnished subject to
the availability of appropriations; and (3) recodify other
veterans' eligibility for care in accordance with existing
criteria.
Section 3 would: (1) amend the definition of medical
services in chapter 17 of title 38, to strike language
conditioning certain veterans' eligibility for prosthetics on
the individual's being hospitalized; (2) provide that a veteran
may be furnished such devices in the course of his or her VA
care or treatment; and (3) require that eyeglasses and hearing
aids may only be furnished in accordance with guidelines to be
prescribed by VA.
Section 4 would first add a new section 1705 applicable to
managing delivery of care under new section 1710(a)(1) to: (1)
require the VA to administer care-delivery through an annual
patient enrollment, with a veterans' ability to enroll to be
governed by the availability of appropriations and by reference
to a system of listed priorities; (2) require that the size of
the enrollment pool be governed by the requirement that
provision of care to enrollees be timely and acceptable in
quality; (3) require that the VA promote cost-effective
delivery of care in the most clinically appropriate setting;
and (4) require the VA to maintain its capacity to provide for
the specialized treatment needs of disabled veterans; and
second add a new section 1706 which would (1) permit VA to
contract for care when its facilities cannot furnish care and
services economically; (2) strike other limitations in current
law on contracting for care of a veteran; and (3) require that
any service-connected veteran is provided all benefits to which
that individual had been eligible before the Act's enactment.
Section 5 would repeal section 204 of Public Law 102-585
under which VA's authority to provide care and services through
contract arrangements to Department of Defense beneficiaries
under chapter 55 of title 10, United States Code, would have
expired, and would clarify VA's authority to recover or collect
from insurance plans of CHAMPUS beneficiaries cared for by the
VA.
Section 6 would amend provisions of subchapter IV of
chapter 81, title 38, to: (1) expand both the range of health
care resources which can be the subject of mutual use or
exchange of use contracts, and the kind of entities with which
VA may so contract; (2) provide that VA may execute such
contracts involving any health care resource, and may contract
with any individual or entity, including a health plan; (3)
provide greater flexibility as to when a VA facility may enter
into such a contract, and what payment requirements it may
negotiate in selling services, while conditioning the
circumstances under which VA furnishes services to non-veterans
to those (a) that would not delay or deny veterans' care and
(b) that would result in improving the care of veterans, or is
necessary to maintain an acceptable level or quality of service
at that facility; and (4) clarify that the VA is to be
reimbursed when it provides services under a ``sharing
agreement'' to a Medicare-covered patient.
Section 7 would amend section 712 of title 38, to provide
that for purposes of determining the minimum number of
positions to be maintained in the Department of Veterans
Affairs during a fiscal year, the number of positions in the
Department in any fiscal year (to be reduced under existing law
by reference to specified categories of positions) is to be
further reduced by the number of positions in that fiscal year
held by persons involved in providing health care resources
under ``sharing agreements'' executed under section 8111 (as
expanded by section 201 of Public Law 102-585) or section 8152
of title 38.
Oversight Findings
With respect to clause 2(l)(3)(A) of rule XI of the Rules
of the House of Representatives, this legislation results from
hearings and other oversight activities conducted by the
Committee pursuant to clause 2(b)(1) of rule X. The Committee's
oversight findings are generally contained in the Background
and Discussion portion of the bill report. The relevant
oversight activities of the Committee have included the
following:
On February 24, 1995, the Committee held a hearing on the
Administration's fiscal year 1996 budget request and its
deficit reduction proposals;
On April 6, 1995, the Subcommittee on Hospitals and Health
Care of the Committee held a hearing on the reorganization of
the Veterans Health Administration;
On July 19, 1995, the Committee held a hearing on health
care eligibility reform;
On March 21, 1996, the Subcommittee on Hospitals and Health
Care held a hearing on VA medical care and construction
priorities;
On March 29, 1996, the Committee held a hearing on the
Administration's fiscal year 1997 budget request.
With respect to clause 2(l)(3)(B) of rule XI of the Rules
of the House of Representatives and section 308(a)(1) of the
Congressional Budget Act of 1974, this legislation does not
include any new spending or credit authority, nor does it
provide for any increase or decrease in tax revenues or
expenditures. The bill does, however, authorize appropriations.
Oversight Findings of the Committee on Government Reform and Oversight
No oversight findings have been submitted to the Committee
by the Committee on Government Reform and Oversight.
Committee Cost Estimate
H.R. 3118 would substitute a single, streamlined
eligibility provision--based on clinical need for care--for the
complex array of disparate rules currently governing veterans'
eligibility for hospital and outpatient care. In so doing, it
would lift restrictions on VA's providing ambulatory treatment.
Those restrictions currently tie many veterans' eligibility for
outpatient treatment to determinations that the care would
either ``obviate the need for hospital admission'' or provide
services needed to complete treatment initiated during
hospitalization. The application of these medically indefinable
standards has contributed substantially, in the Committee's
view, to relative disparities veterans experience in different
areas of the country in gaining access to VA care.
An analysis of the budgetary impact of H.R. 3118 should
take account of two components: potential costs stemming from
anticipated new demand for outpatient care, and potential
savings from an anticipated shift in delivery patterns from
inappropriately furnished inpatient care to ambulatory
treatment. In reviewing this bill, the Congressional Budget
Office expressed the view that the costs associated with ``new
demand'' for care ``would far outweigh'' the savings. (CBO's
cost estimate follows the Committee's cost estimate.)
CBO's estimate of July 15, 1996, states that the costs
associated with the reported bill's proposed changes to VA
eligibility law ``are very uncertain''. Yet CBO offers
estimates of cost. There is little in the way of a methodology
for those estimates and seemingly little more than speculation
supporting its projections. In the Committee's view, CBO's
estimate reflects a fundamental misunderstanding of the scope
of services VA is already providing, the savings it has
achieved through changes in medical practice, and the demand
for VA services from those not now served.
In CBO's estimation, ``demand-for-VA-outpatient-care'' has
two elements. First, by lifting the major restriction on VA's
providing veterans outpatient treatment (that is, eliminating
the eligibility requirement applicable to many veterans that
treatment must be necessary to ``obviate the need of hospital
admission''), VA might experience an increase in the number of
outpatient visits by current users for treatment previously
barred under the ``obviate'' requirement. Second, with a
revision of eligibility law, veterans not now receiving VA care
might turn to VA in greater numbers.
The Committee finds that neither component of demand is
likely to increase dramatically. First, the hypothesis that
lifting statutory restrictions on outpatient care would cause
VA to expand substantially the services it provides to current
patients has little evidentiary support. That hypothesis,
however, is central to CBO's analysis, which begins as follows:
Currently, nearly 10 million veterans are eligible for
outpatient care only if it involves pre- or post-
hospitalization visits or if it obviates the need for
inpatient care. Section 2 of H.R. 3118 would remove
current restrictions and would enable VA to provide
these veterans with a full range of outpatient
treatments. As a result, a substantial number of
veterans who have been denied access to outpatient
care, or have been discouraged from seeking treatment
at VA outpatient clinics, could demand care.
That hypothesis assumes that existing statutory
requirements have in fact been a major barrier to clinicians
and administrators, and have resulted in VA's not providing
veterans needed services. Though not well documented by VA, all
indications are that VA facilities have for some time been
meeting patients' medical needs--sometimes hospitalizing
patients, but most frequently providing care on an ambulatory
basis. The growth annually in the volume of VA-provided
outpatient care (as reflected in the steady increase in
outpatient visits from some 22 million in fiscal year 1991 to
an estimated 28 million in fiscal year 1996) calls into
question the view that existing law is a major barrier to VA
provision of outpatient treatment.
There appear to be differing views as to the precise
breadth of VA's outpatient authority, but little to suggest
that eligibility law has been a complete obstacle to category A
veterans receiving needed outpatient services. Recent General
Accounting Office (GAO) testimony at an April 24, 1996 hearing
before the Subcommittee on Hospitals and Health Care on
``Efforts to Improve Veterans' Access to Primary Care
Services'' reflects a narrow reading of the law, but, more
importantly, effectively rebuts CBO's central premise that
because the law restricts many veterans' eligibility to ``pre-,
post-, and obviate'' care, VA must be denying these veterans
outpatient care which is outside the ``pre-,post-, obviate''
limits. GAO, in fact, explicitly recognizes that VA is
providing outpatient care without regard to the very
restrictions CBO assumes are in place:
VA is not adhering to statutory limitations that govern
what services VA may provide and who may be served. As
a result veterans are receiving more services than
current statutes allow.
In contrast, as the Congressional Budget Office noted in
analyzing H.R. 901 (101st Congress), a bill which would have
required the VA to provide needed outpatient care to all
``Category A'' veterans, ``[t]here is very little medically
necessary outpatient care that cannot be viewed as obviating
the need for inpatient care.'' (House Report 101-107.) CBO's
estimate on H.R. 3118 stands in striking contrast to its 1989
cost estimate of H.R. 901, for which it projected annual costs
ranging from $40 million in the first year to $60 million in
the fifth. Of this bill, CBO states that it ``estimates that
the new benefit for outpatient care would entail net costs of
about $3 billion each year.''
CBO now projects that increased outpatient costs would
arise both from expanded benefits provided to existing users as
well as demand from new users. With respect to the question of
``new demand'', the CBO's 1989 estimate on H.R. 901--a more
expansive bill than H.R. 3118--is illustrative. Of H.R. 901,
CBO reasoned that ``[t]he fact that these [category A] veterans
would now be entitled to care and the publicity surrounding the
change could draw veterans to VA facilities who might otherwise
have sought non-VA care.'' However, CBO projected only a
relatively slight increase in workload associated with new
demand, pointing to the fact that ``[w]hen Category A veterans
were granted entitlement to inpatient care in P.L. 99-272, the
Consolidated Omnibus Budget Reconciliation Act of 1985, an
increase of about 1.5 percent in the number of inpatient
episodes of these veterans appears to have resulted from the
change in law.''
In contrast to H.R. 901, which CBO characterized as an
entitlement to outpatient care, H.R. 3118 specifically and
substantially limits VA's obligations to provide care. The
scope of VA's mandate reaches only ``to the extent and in the
amount provided in advance in appropriations Acts for these
purposes.'' Moreover, unlike H.R. 901, under which category A
veterans could seek and expect to receive services, whether
comprehensively or simply on an episodic basis, H.R. 3118
creates no such expectation. The ``new demand'' which CBO
projects does not assure every veteran access to care. In fact,
the bill specifically requires the VA, in managing care
delivery, to establish and operate a system of annual patient
enrollment, with enrollment to be managed in accordance with
specified statutory priorities and within any additional
priority classifications in the specified priorities which VA
may promulgate. With respect to ``new demand'', therefore, the
reported bill gives VA new tools both to limit demand
consistent with available funding and to discourage veterans
from seeking VA care simply to fill an occasional need not met
by a private health plan.
The view of VA being besieged by a large wave of new
enrollees for VA care is unrealistic. Studies and focus groups
indicate that health care consumers tend to seek out and select
health care plans which cover themselves and family members,
and do not tend to switch plans simply because another
alternative exists or becomes available. In that regard, GAO's
estimate that nine out of ten veterans have some form of health
care coverage is noteworthy. In the absence of data suggesting
that large numbers of veterans are being denied VA outpatient
services, the view that many new category A veterans would seek
to enroll for VA care is at odds with studies on health
consumers' behaviors, formal surveys of veterans, and focus
group studies.
Focus groups conducted by GAO, for example, led GAO to the
conclusion that ``veterans, other than those without health
insurance, seem to use VA only for certain services such as the
treatment of service-connected disabilities, rather than
relying on VA for all their care. (Hearing before the
Subcommittee on Oversight and Investigations of the Committee
on Veterans Affairs on ``Veterans Perceptions of VA Health
Care'', April 20, 1994). Even if H.R. 3118 enticed some
veterans who had not previously sought VA care to enroll, GAO
and other focus group studies would lead one to conclude that
VA would attract relatively few ``new users''. At the
Committee's April 1994 hearing on veterans' perceptions on VA
care, the Paralyzed Veterans of America (PVA) testified on the
findings of the 14 focus groups they conducted in six
locations. The PVA study attempted to look at several cross-
sections of the veterans' community, including veterans who had
never used the VA system and others who had used the system but
had ceased to do so. PVA found that:
Like VA, we found that VA's best potential market is
those who have the most familiarity with the system--
that is, those currently using the system and, perhaps
also, their dependents. Some veterans who have fallen
away from the system because of access issues are also
eager to regain access to the system--in our groups
this was particularly true of rural veterans (we
happened to choose a community that was distraught over
the recent closure of its VA satellite clinic.)
Regardless of past utilization, veterans without other
insurance options were receptive to the idea of
enrolling in VA health plans. Other veterans from our
studies were not anxious to enroll. By and large, our
discussions with lapsed users indicated that they were
the least favorably disposed to enrolling in VA. Non-
users did not have much familiarity with VA one way or
the other, but negative portrayals of VA in the press
seem to have hurt its image with these individuals . .
. Most often, resistance to the idea of using VA
services came from the fact that it was not likely they
would be able to choose their own physician. Choice of
physician was of the utmost importance to veterans and
this importance increased with veterans' ages . . .
Many veterans had established bonds with their
community physicians that would be difficult to break.
Many veterans claimed that even with significant
financial incentives . . . they would not be parted
from their physicians.
VA's National Survey of Veterans, published in 1995,
provides further support for the view that there does not exist
a large unmet demand for VA care. Most veterans have other
alternatives to VA care. The survey data ``indicate that a
large proportion of veterans would rather go to a non-VA
facility for their medical care if given a choice.'' Thus, when
the survey asked veterans who had been hospitalized in a non-VA
facility in 1992 the reason for not choosing a VA hospital for
needed care, 78.4 percent responded that they had adequate
health insurance.
In its ongoing efforts to effect a shift in VA practices
from bed-based care to still greater reliance on ambulatory
care, VA has apparently induced some additional demand for
services in creating ``new access points''. In testifying
before the Subcommittee on Hospitals and Health Care on April
24, 1996, on efforts to improve access to primary care, GAO
stated that VA, in establishing its first fifteen community-
based ``access-points'', had enrolled nearly 5,000 veterans
(representing unspecified numbers of both current and new
users). As discussed in that hearing, however, VA's policy on
the establishment of new community-based clinics is evolving.
But VA's testimony made it clear that one key aspect of that
policy is firm--that the development and activation of new
community clinics (whether a VA-established clinic or
contractual arrangement with a community provider) must be
``within available resources'' (VHA Directive 10-95-017,
February 8, 1995). Whatever theoretical level of demand could
be induced by the presence of a VA facility or ``access
point'', availability of funding will necessarily limit the
number of ``access points'' VA can open, and thus the level of
demand VA would experience.
CBO further suggests that there might be substantial new
demand from potential new users who might seek to avail
themselves of services not covered under their health benefit
plans. It is hypothesized, for example, that veterans might
turn to the VA to get prosthetic devices. The suggestion that
``eligibility reform'' would provoke heightened demand from
those seeking prosthetic devices is unfounded. It is critical
to note that H.R. 3118, like existing law, would not permit the
VA simply to serve as a veterans' ``drug store'', providing
medications, prosthetic devices, or other medical supplies
prescribed by a private physician who has no affiliation or
contractual relationship with the VA.
CBO's projections regarding ``new demand'' also fail to
take account of veterans who cease to use VA services. For
example, there is evidence that as veterans reach age 65 a
significant percentage cease to rely on VA health care
benefits. A 1993 VA Statistical Brief shows that approximately
10 percent of VA system users elect to receive their care
through Medicare providers upon reaching the age of 65. That VA
analysis projected a decline in VA usage continuing for those
over 65 at an estimated rate of 4 to 6 percent. It is
conceivable that such factors as improved customer service
might diminish the attrition rate of such veterans from the VA
to Medicare providers, but one cannot with any degree of
confidence project that H.R. 3118 would produce any significant
increase in demand for VA services on the part of Medicare-
eligible veterans.
H.R. 3118 does not assume that the VA system would remain
static. To the contrary, it assumes that system reforms the VA
has adopted in recent years, documented in hearings conducted
by the Subcommittee on Hospitals and Health Care as well as the
full Committee, would continue and accelerate with the
enactment of the reported bill. The VA has made significant
progress in developing a primary care capacity within existing
budget levels, even in the face of statutory ambiguities. The
expansion of the VA's ambulatory care capacity and resultant
increased volume of VA-provided outpatient care has been funded
by redirecting resources. The funds which the VA has deployed
to outpatient care have stemmed from such management
initiatives as hospital ``mergers'', ward closures, and
establishment of managed-care practices, such as telephone
triage systems, increased use of physician extenders, and
diminished reliance on physician specialists. The enactment of
H.R. 3118 would enable VA to expand such practices and achieve
additional efficiencies to offset further expansion of its
ambulatory care capacity.
The VA has advised the Committee of its projection that the
enactment of H.R. 3118 would result in a 5 percent reduction in
the number of episodes of inpatient care in the first year
after enactment. The VA further projects that the bill would
yield its full impact in terms of a shift in care, with a 15
percent reduction in inpatient care in the second year after
enactment. This 20 percent shift over two years is projected to
represent a reduction of approximately 1.2 million days of bed-
care and, thus, a reduction of more than $700 million. The
savings associated with these reductions would be partially
offset by the shift in such care to the far less costly
outpatient arena with a resultant increase in total outpatient
care costs. The VA's analysis assumes that each inpatient
episode which is ``shifted'' to outpatient care would result in
an increase in VA outpatient costs representing 70 percent of
the inpatient episode, for a total of some $500 million.
The Committee concludes that the approximately $200 million
in annual savings associated with these anticipated shifts in
workload under the reported bill would be largely absorbed by
the additional demand for VA care, primarily from ``new
users''. Most of this new demand would arise from VA
establishment of new community-based clinics which would
provide convenient access for category A veterans in currently
underserved areas. The Committee expects that the numbers and
capacities of such clinics would be managed to maintain
expenditures, including expenditures for inpatient services,
within available resources, as provided under the bill. As a
result, the Committee estimates, pursuant to clause 7 of rule
XIII of the Rules of the House of Representatives, that H.R.
3118 would be budget neutral for annual outlays in fiscal year
1996 and in each of the five following fiscal years.
Congressional Budget Office Cost Estimate
The following letter was received from the Congressional
Budget Office concerning the cost of the reported bill:
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 15, 1996.
Hon. Bob Stump,
Chairman, Committee on Veterans' Affairs,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3118, the
Veterans' Health Care Eligibility Reform Act of 1996, as
ordered reported by the House Committee on Veterans' Affairs on
May 8, 1996. The bill would affect direct spending and is
subject to pay-as-you-go procedures under section 252 of the
Balanced Budget and Emergency Deficit Control Act of 1985.
The bill contains no intergovernmental or private-sector
mandates as defined in Public Law 104-4 and would impose no
direct costs on State, local, or tribal governments.
If you wish further details on this estimate, we will be
pleased to provide them.
Sincerely,
June E. O'Neill,
Director.
Attachment
Congressional Budget Office Cost Estimate
1. Bill number: H.R. 3118
2. Bill title: Veterans' Health Care Eligibility Reform Act
of 1996
3. Bill status: As ordered reported by the House Committee
on Veterans' Affairs on May 8, 1996.
4. Bill purpose: The bill would expand eligibility for
veterans outpatient care and prosthetics and authorize certain
management practices.
5. Estimated cost to the Federal Government:
Expanding eligibility for outpatient services would ultimately
increase the cost of veterans medical care by about $3 billion
a year, assuming appropriation of the necessary amounts. The
bill's provisions affecting direct spending would have no net
budgetary impact.
6. Basis of estimate:
The estimate assumes enactment of the bill and appropriation of
the authorized amounts for each fiscal year.
Spending subject to appropriations action
The bill contains several sections that would be subject to
annual appropriations action.
Hospital care and medical services
Currently, nearly 10 million veterans are eligible for
outpatient care only if it involves pre- or post-
hospitalization visits or if it obviates the need for inpatient
care. Section 2 of H.R. 3118 would remove current restrictions
and would enable VA to provide these veterans with a full range
of outpatient treatments. As a result, a substantial number of
veterans who have been denied access to outpatient care, or
have been discouraged from seeking treatment at VA outpatient
clinics, could demand care
The budgetary impact of this provision has two parts--
savings from shifting the current workload from unauthorized
inpatient care to outpatient care, and costs from the increased
demand for outpatient care. Anecdotal evidence suggests that
some VA hospitals admit some veterans as inpatients to
circumvent the restrictions on outpatient care. VA estimates
suggest that shifting the currently unauthorized inpatient
workload to the less costly outpatient setting would save about
$214 million annually. CBO estimates that new demand for
outpatient care, accompanying new demand for inpatient care,
and additional costs from long-term care would far outweigh
these savings. CBO estimates that expanding eligibility for
outpatient care would raise VA's costs by about $3 billion for
1997 if the bill took full effect in that year.
The costs of this section, however, are very uncertain.
Many factors influence a veteran's decision on where to seek
medical care, including income, insurance, special health
needs, personal tastes, and, in this case, eligibility for care
and distance from a VA facility. Although the population of
veterans is getting smaller, older veterans have greater health
care needs, and may seek services from VA that are not provided
under Medicare or other insurance programs. These factors are
major sources of uncertainty for estimates of veterans medical
programs.
Which Veterans Would Be Affected? H.R. 3118 would provide a
new benefit for outpatient care to certain veterans, mostly
those with service-connected disabilities rated less than 50
percent and those with annual incomes below thresholds set in
law. (The threshold for 1996 is $21,001 for a single veteran.)
Thus, the bill would allow nearly 10 million veterans who now
have very limited access to VA outpatient facilities to receive
unrestricted outpatient care. Many would turn to VA for care,
although some would continue to use their current sources of
medical care based on economic considerations and personal
tastes.
How Many Veterans would Use the New Benefits? CBO estimates
that about 1.2 million additional veterans would be drawn to VA
for medical care each year by the new benefit. This estimate
reflects the pattern of usage among more severely disabled
veterans who now have unlimited outpatient benefits. According
to the 1992 Survey of Veterans (SOV), 43 percent of these
veterans who used health care services and were eligible for VA
outpatient benefits received at least some of their care from
VA.
Based on the 1992 survey, CBO estimates that the bill would
make approximately 10 million veterans eligible for outpatient
benefits based on their income or disability. Of this number,
approximately 5.2 million used health care services in 1992,
including 1.1 million who received at least some care from VA.
Under H.R. 3118, the number of these veterans seeking health
care from VA would double to about 2.3 million, if newly
eligible veterans sought care from VA and non-VA sources in the
same proportions as the more severely disabled veterans
currently eligible for outpatient care. An additional 0.9
million veterans would seek only outpatient services, 0.2
million would seek both outpatient and inpatient care, and
fewer than 0.1 million more would seek care only in VA
hospitals.
Costs of the New Benefit. CBO estimates that the new
benefit for outpatient care would entail net costs of about $3
billion each year. The new benefit would allow VA to treat some
veterans as outpatients that it now sees as inpatients, saving
about $0.2 billion a year. But the new benefit would also lead
these and other veterans to come to VA for outpatient care they
receive from other sources under current law. The related
increase in costs has three parts--the cost of extra outpatient
visits, the cost of additional hospital admissions that would
stem from those visits, and the cost of additional long-term
care.
Savings from shifting workload.--VA expects that expanding
eligibility for outpatient care would allow it to shift some of
its inpatient workload to less costly care on an outpatient
basis. Under current law, some VA facilities admit veterans to
hospitals even though outpatient care would be more efficient
because eligibility rules prohibit the less costly means of
care. CBO cannot independently measure the extent that this
takes place, and thus uses VA's estimate of the savings--about
$0.2 billion a year--for purposes of this estimate.
Added costs for outpatient care.--H.R. 3118 would cost
about $1.5 billion each year for outpatient visits alone. CBO
estimates that about 1.1 million veterans would expect
outpatient care from VA each year under the bill. Based on
budgetary information obtained from VA, the estimate assumes
that 435,000 veterans would visit an outpatient facility 10 to
12 times a year at a cost of about $189 a visit. Another
630,000 veterans who now come to VA for some of their
outpatient care would increase their use of VA, but they would
also continue to receive care from non-VA sources. In both
cases, the additional outpatient visits would also lead to a
greater number of hospital admissions, which would cost
additional sums.
Added costs for induced inpatient care.--Additional
hospital admissions would also cost about $1.5 billion each
year. Veterans who would be drawn to VA for outpatient care by
the bill could also be expected to add to the workload in VA
hospitals. Under current law, many such veterans would be
admitted to a non-VA hospital, but by going to VA for their
outpatient care they would be more likely to enter a VA
hospital. CBO estimates that an additional 115,000 veterans
would be admitted to a VA hospital during a year for an average
of about 13 days. Another 95,000 veterans would add to the
workload of VA hospitals by a smaller amount because VA already
meets some of their need for hospital care.
Long-term care.--This estimate does not include any added
costs for long-term care because most new users of VA under the
bill would have low incomes, and Medicaid would tend to cover
those costs under current law. CBO assumes VA would continue
its current policy of helping Medicaid- and Medicare-eligible
veterans apply for these benefits and also find appropriate
long-term care. However, it seems plausible that there would be
some new users whom VA would have to place in nursing homes or
non-institutional care programs at its expense.
Prosthetics
VA currently furnishes prosthetic devices-including
artificial limbs, braces, orthotics, eye glasses, hearing aids,
and wheel chairs--to veterans only as part of their inpatient
care. Section 3 would make prosthetics available on an
outpatient or ambulatory care basis and would direct VA to
issue new regulations to reflect this expanded access within 30
days.
Because insurance coverage for assistive technology in the
private and public sectors is not generous, and because the
costs to consumers are high, this change would increase the
demand on VA to provide prosthetics and other aids. CBO used
the 1987 National Medical Expenditure Survey to determine the
need for eyeglasses, orthotic devices, hearing aids, and other
assistive technology by veterans in various age groups. CBO
estimates that this provision would cost about $50 million in
1997 and $62 million in 2002 if eligibility for outpatient care
is expanded at the same time. Costs of this provision would
grow faster than prices for prosthetic devices because the
veteran population is aging and the incidence and severity of
disabilities increase with age.
Management of health care
Section 4 would require that VA establish a patient
enrollment system for hospital care and medical services, and
it would define priorities for which veterans should receive
care when resources are scarce. It would not, however,
authorize any copayments or cost sharing that would affect
veterans' demand for health care or the costs of providing that
care.
Sharing agreements with the Department of Defense
Section 5 would extend indefinitely an expansion of sharing
agreements between VA and the Department of Defense (DOD) that
enable the two agencies to treat patients eligible for each
other's programs. Because current agreements cover a relatively
small number of beneficiaries, this provision by itself would
probably involve relatively low costs. But sharing agreements
could ultimately make it easier to treat veterans who do not
use their benefits under current law and those who would become
eligible under section 2 of the bill.
Sharing agreements for health care resources
Section 6 would allow VA to agree to share equipment and
other resources with a broad range of individuals and entities.
These agreements would allow the resources to be used more
efficiently and lead to budgetary savings or costs depending on
the extent that VA would otherwise purchase or forgo the
resource. CBO cannot estimate the budgetary impact of this
provision.
Personnel furnishing shared resources
Under section 7, personnel furnishing services under
sharing agreements would no longer be counted under employment
ceilings. This section would allow VA to employ more people
under sharing agreements and to employ more regular VA workers
to the extent that VA currently employs and counts these
personnel against its ceilings. The necessary data, however,
for a specific estimate are not available.
Direct spending
Section 5 of the bill would allow VA medical facilities to
continue to treat certain beneficiaries of the Department of
Defense's health care program; these costs would be subject to
appropriations action. This section would also allow VA to bill
third party insurers of these beneficiaries and to spend the
proceeds. The receipts and the outlays would constitute direct
spending but would offset each other over time and would have
no net budgetary impact.
Section 6 would grant VA broad authority to share resources
with other entities and individuals. These sharing agreements
would allow VA to collect and spend receipts derived from
allowing nonveterans to use its equipment, facilities, or
services. This spending would not be subject to appropriations
action. Like the previous section, this section would have no
net budgetary impact in the long run.
7. Pay-as-you-go considerations:
The Balanced Budget and Emergency Deficit Control Act of 1985
sets up pay-as-you-go procedures for legislation affecting
direct spending or receipts through 1998. The bill would have
the following pay-as-you-go impact:
[By fiscal years, in millions of dollars]
------------------------------------------------------------------------
1996 1997 1998
------------------------------------------------------------------------
Change in outlays............................ 0 0 0
Change in receipts .......................... Not applicable
8. Estimated cost to State, local, and tribal governments:
CBO estimates that this bill would impose no intergovernmental
mandates as defined by Public Law 104-4 and would have no
direct budgetary impact on State, local, or tribal governments.
9. Estimated impact on the private sector:
CBO estimates that H.R. 3118 would impose no private-sector
mandates as defined in Public Law 104-4.
10. Previous CBO estimate: None.
11. Estimate prepared by:
Federal cost estimate: Michael Groarke and Mary Helen
Petrus. Ellen Breslin Davidson and Nathan Stacy.
Impact on State, local, and tribal governments: Marc
Nicole.
Impact on private sector: Ellen Breslin Davidson.
12. Estimate approved by: Paul N. Van de Water, Assistant
Director for Budget Analysis.
Inflationary Impact Statement
Pursuant to clause 2(l)(4) of rule XI of the Rules of the
House of Representatives, the Committee concludes that the bill
would have no inflationary impact.
Applicability to Legislative Branch
The reported bill would not be applicable to the
legislative branch under the Congressional Accountability Act,
Public Law 104-1, because it would apply only to certain
Department of Veterans Affairs programs and benefits
recipients.
Statement of Federal Mandates
Pursuant to section 423 of Public Law 104-4, this
legislation contains no federal mandates with respect to state,
local, and tribal governments, nor with respect to the private
sector. Similarly, the bill provides no federal
intergovernmental mandates.
Views of the Administration
The following letter was received from the Department of
Veterans Affairs concerning the reported bill:
Department of Veterans Affairs,
Under Secretary for Health,
Washington, DC, May 7, 1996.
Hon. Bob Stump,
Chairman, Committee on Veterans' Affairs,
House of Representatives, Washington, DC.
Dear Mr. Chairman: We have reviewed the Committee's VA
health care eligibility reform legislation, H.R. 3118. A
principal objective of the legislation is to make the delivery
of health care to eligible veterans more rational by
eliminating the current ``pre-, post-, and obviate''
restrictions on outpatient care. In that respect, H.R. 3118 is
consistent with VA's Reinventing Government II initiative and
with the following objectives which we consider essential to
beneficial reform:
First, the eligibility system should be
understandable to the ordinary person. Both the persons seeking
care and those providing the care should be able to understand
what is covered and what is not.
Second, the eligibility system should provide
incentives to ensure that practitioners and health care
managers provide patients the most medically appropriate care
in the most economical setting.
Third, veterans should retain eligibility for
those benefits they are now eligible to receive.
Fourth, VA management should be given the
flexibility needed to manage the system effectively.
Fifth, the new system should not cost taxpayers
more; that is, the reform proposal should be budget neutral.
Sixth, the new system should not create any new or
unnecessary bureaucracy.
According to the costing methodology we applied to the
Administration's eligibility reform proposal and to the
Committee's proposed bill, VA believes that H.R. 3118 is indeed
budget neutral. A copy of that methodology is enclosed.
I hope this information is helpful to the Committee. If we
can provide additional information or assistance, please let us
know.
Sincerely,
Kenneth W. Kizer, M.D., M.P.H.,
Under Secretary for Health.
Attachments:
REFORMING VA HEALTH CARE ELIGIBILITY AND TREATMENT
As yet VA has no experience with eligibility reform on
which to base reasonable cost estimates. Therefore, a formula
has been developed which includes significant assumptions and
results in rough estimates based on these assumptions. The
operating premise for the formula and the VA proposal is that
eligibility reform will be budget neutral.
Overall, eligibility reform will assist VA in achieving
greater efficiencies through effective management of the care
of the veteran patients. The proposed action does not alter the
definition of the mandatory category (``Core'' or Category A)
of veterans. As a result of the application of a variety of
managed care practices, in combination with the removal of the
statutory barriers to effecting managed care, VA expects that
there will be a shift in workload from inpatient to outpatient.
The attached analysis depicts the application of the formula
and the related assumptions. Since full efficiency should not
be expected in the first year, it is roughly estimated that
approximately 5 percent of VA inpatient workload will be
shifted to outpatient care in year one, and an additional 15
percent will be shifted in year two. This 20 percent shift over
two years could equate to a reduction of roughly 1.2 million
inpatient days of care and an inpatient cost avoidance of $761
million which would be applied to the increased costs of
outpatient care. For purposes of estimating, VA has assumed
that for every ``shifted'' inpatient episode, outpatient care
will increase by 70 percent of the average cost of the shifted
inpatient admissions. This ``guesstimate'' results in a total
increase over the two years of roughly $533 million in
outpatient costs. In addition to the deferred inpatient
dollars, VA estimates that 10 percent of current contract fee
care and 10 percent of beneficiary travel will also be avoided
as a result of improved access to VA outpatient services. These
additional ``saving'' are roughly estimated at $39 million.
Applying the total of the ``savings'' from the shifted
inpatient care, reduced contract fee care, and reduced
beneficiary travel to the new outpatient cost estimate, $268
million over two years may possibly be available for new
outpatient workload (and concomitant inpatient workload), new
non-institutional care, and greater access to primary care.
Therefore, VA expects this proposal to be budget neutral and it
does not affect adjustments for pay and inflation through the
year 2000.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3 of rule XIII of the Rules of the
House of Representatives, changes in existing law made by the
bill, as reported, are shown as follows (existing law proposed
to be omitted is enclosed in black brackets, new matter is
printed in italics, existing law in which no change is proposed
is shown in roman):
TITLE 38, UNITED STATES CODE
* * * * * * *
PART I--GENERAL PROVISIONS
* * * * * * *
CHAPTER 7--EMPLOYEES
* * * * * * *
Sec. 712. Full-time equivalent positions: limitation on reduction
(a) * * *
(b) In determining the number of full-time equivalent
positions in the Department of Veterans Affairs during a fiscal
year for purposes of ensuring under section 5(b) of the Federal
Workforce Restructuring Act of 1994 (Public Law 103-226; 108
Stat. 115; 5 U.S.C. 3101 note) that the total number of full-
time equivalent positions in all agencies of the Federal
Government during a fiscal year covered by that section does
not exceed the limit prescribed for that fiscal year under that
section, the total number of full-time equivalent positions in
the Department of Veterans Affairs during that fiscal year
shall be the number equal to--
(1) the number of such positions in the Department
during that fiscal year, reduced by
(2) [the sum of--] the sum of the following:
(A) [the] The number of such positions in the
Department during that fiscal year that are
filled by employees whose salaries and benefits
are paid primarily from funds other than
appropriated funds[; and].
(B) [the] The number of such positions held
during that fiscal year by persons involved in
medical care cost recovery activities under
section 1729 of this title.
(C) The number of such positions in the
Department during that fiscal year held by
persons involved in providing health-care
resources under section 8111 or 8152 of this
title.
* * * * * * *
PART II--GENERAL BENEFITS
* * * * * * *
CHAPTER 17--HOSPITAL, NURSING HOME, DOMICILIARY, AND MEDICAL CARE
subchapter i--general
Sec.
1701. Definitions.
1702. Presumption relating to psychosis.
[1703. Contracts for hospital care and medical services in non-
Department facilities.]
1703. Annual report on furnishing of care and services by contract.
* * * * * * *
1705. Management of health care: patient enrollment system.
1706. Management of health care: other requirements.
* * * * * * *
SUBCHAPTER I--GENERAL
Sec. 1701. Definitions
For the purposes of this chapter--
(1) * * *
* * * * * * *
(6) The term ``medical services'' includes, in addition to
medical examination, treatment, and rehabilitative services--
(A)(i) surgical services, dental services and
appliances as described in sections 1710 and 1712 of
this title, optometric and podiatric services [(in the
case of a person otherwise receiving care or services
under this chapter)], preventive health services, and
[(except under the conditions described in section
1712(a)(5)(A) of this title),] (in the case of a person
otherwise receiving care or services under this
chapter) wheelchairs, artificial limbs, trusses, and
similar appliances, special clothing made necessary by
the wearing of prosthetic appliances, and such other
supplies or services as the Secretary determines to be
reasonable and necessary, except that the Secretary may
not furnish sensori-neural aids other than in
accordance with guidelines which the Secretary shall
prescribe, and (ii) travel and incidental expenses
pursuant to the provisions of section 111 of this
title; and
* * * * * * *
[Sec. 1703. Contracts for hospital care and medical services in non-
Department facilities]
Sec. 1703. Annual report on furnishing of care and services by contract
[(a) When Department facilities are not capable of furnishing
economical hospital care or medical services because of
geographical inaccessibility or are not capable of furnishing
the care or services required, the Secretary, as authorized in
section 1710 or 1712 of this title, may contract with non-
Department facilities in order to furnish any of the following:
[(1) Hospital care or medical services to a veteran
for the treatment of--
[(A) a service-connected disability;
[(B) a disability for which a veteran was
discharged or released from the active
military, naval, or air service; or
[(C) a disability of a veteran who has a
total disability permanent in nature from a
service-connected disability.
[(2) Medical services for the treatment of any
disability of--
[(A) a veteran described in section
1712(a)(1)(B) of this title;
[(B) a veteran described in paragraph (2),
(3), or (4) of section 1712(a) of this title,
for a purpose described in section
1712(a)(5)(B) of this title; or
[(C) a veteran described in section
1712(a)(3) (other than a veteran who is a
former prisoner of war) of this title if the
Secretary has determined, based on an
examination by a physician employed by the
Department (or, in areas where no such
physician is available, by a physician carrying
out such function under a contract or fee
arrangement), that the medical condition of
such veteran precludes appropriate treatment in
Department facilities.
[(3) Hospital care or medical services for the
treatment of medical emergencies which pose a serious
threat to the life or health of a veteran receiving
medical services in a Department facility or nursing
home care under section 1720 of this title until such
time following the furnishing of care in the non-
Department facility as the veteran can be safely
transferred to a Department facility.
[(4) Hospital care for women veterans.
[(5) Hospital care, or medical services that will
obviate the need for hospital admission, for veterans
in a State (other than the Commonwealth of Puerto Rico)
not contiguous to the contiguous States, except that
the annually determined hospital patient load and
incidence of the furnishing of medical services to
veterans hospitalized or treated at the expense of the
Department in Government and non-Department facilities
in each such noncontiguous State shall be consistent
with the patient load or incidence of the furnishing of
medical services for veterans hospitalized or treated
by the Department within the 48 contiguous States and
the Commonwealth of Puerto Rico.
[(6) Diagnostic services necessary for determination
of eligibility for, or of the appropriate course of
treatment in connection with, furnishing medical
services at independent Department out-patient clinics
to obviate the need for hospital admission.
[(7) Outpatient dental services and treatment, and
related dental appliances, for a veteran described in
section 1712(b)(1)(F) of this title.
[(8) Diagnostic services (on an inpatient or
outpatient basis) for observation or examination of a
person to determine eligibility for a benefit or
service under laws administered by the Secretary.
[(b) In the case of any veteran for whom the Secretary
contracts to furnish care or services in a non-Department
facility pursuant to a provision of subsection (a) of this
section, the Secretary shall periodically review the necessity
for continuing such contractual arrangement pursuant to such
provision.]
[(c)] The Secretary shall include in the budget documents
which the Secretary submits to Congress for any fiscal year a
detailed report on the furnishing of contract care and services
during the most recently completed fiscal year under [this
section, sections] sections 1710, 1712A, 1720, 1720A, 1724, and
1732 of this title, and section 115 of the Veterans' Benefits
and Services Act of 1988 (Public Law 100-322; 102 Stat. 501).
* * * * * * *
Sec. 1705. Management of health care: patient enrollment system
(a) In managing the provision of hospital care and medical
services under section 1710(a)(1) of this title, the Secretary,
in accordance with regulations the Secretary shall prescribe,
shall establish and operate a system of annual patient
enrollment. The Secretary shall manage the enrollment of
veterans in accordance with the following priorities, in the
order listed:
(1) Veterans with service-connected disabilities
rated 30 percent or greater.
(2) Veterans who are former prisoners of war and
veterans with service connected disabilities rated 10
percent or 20 percent.
(3) Veterans who are in receipt of increased pension
based on a need of regular aid and attendance or by
reason of being permanently housebound and other
veterans who are catastrophically disabled.
(4) Veterans not covered by paragraphs (1) through
(3) who are unable to defray the expenses of necessary
care as determined under section 1722(a) of this title.
(5) All other veterans eligible for hospital care,
medical services, and nursing home care under section
1710(a)(1) of this title.
(b) In the design of an enrollment system under subsection
(a), the Secretary--
(1) shall ensure that the system will be managed in a
manner to ensure that the provision of care to
enrollees is timely and acceptable in quality;
(2) may establish additional priorities within each
priority group specified in subsection (a), as the
Secretary determines necessary; and
(3) may provide for exceptions to the specified
priorities where dictated by compelling medical
reasons.
Sec. 1706. Management of health care: other requirements
(a) In managing the provision of hospital care and medical
services under section 1710(a) of this title, the Secretary
shall, to the extent feasible, design, establish and manage
health care programs in such a manner as to promote cost-
effective delivery of health care services in the most
clinically appropriate setting.
(b) In managing the provision of hospital care and medical
services under section 1710(a) of this title, the Secretary--
(1) may contract for hospital care and medical
services when Department facilities are not capable of
furnishing such care and services economically, and
(2) shall make such rules and regulations regarding
acquisition procedures or policies as the Secretary
considers appropriate to provide such needed care and
services.
(c) In managing the provision of hospital care and medical
services under section 1710(a) of this title, the Secretary
shall ensure that the Department maintains its capacity to
provide for the specialized treatment and rehabilitative needs
of disabled veterans described in section 1710(a) of this title
(including veterans with spinal cord dysfunction, blindness,
amputations, and mental illness) within distinct programs or
facilities of the Department that are dedicated to the
specialized needs of those veterans in a manner that (1)
affords those veterans reasonable access to care and services
for those specialized needs, and (2) ensures that overall
capacity of the Department to provide such services is not
reduced below the capacity of the Department, nationwide, to
provide those services, as of the date of the enactment of this
section.
(d) In managing the provision of hospital care and medical
services under section 1710(a) of this title, the Secretary
shall ensure that any veteran with a service-connected
disability is provided all benefits under this chapter for
which that veteran was eligible before the date of the
enactment of this section.
SUBCHAPTER II--HOSPITAL, NURSING HOME OR DOMICILIARY CARE AND MEDICAL
TREATMENT
Sec. 1710. Eligibility for hospital, nursing home, and domiciliary care
[(a)(1) The Secretary shall furnish hospital care, and may
furnish nursing home care, which the Secretary determines is
needed--
[(A) to any veteran for a service-connected
disability;
[(B) to a veteran whose discharge or release from the
active military, naval, or air service was for a
disability incurred or aggravated in line of duty, for
any disability;
[(C) to a veteran who is in receipt of, or who, but
for a suspension pursuant to section 1151 of this title
(or both such a suspension and the receipt of retired
pay), would be entitled to disability compensation, but
only to the extent that such veteran's continuing
eligibility for such care is provided for in the
judgment or settlement described in such section, for
any disability;
[(D) to a veteran who has a service-connected
disability rated at 50 percent or more, for any
disability;
[(E) to any other veteran who has a service-connected
disability, for any disability;
[(F) to a veteran who is a former prisoner of war,
for any disability;
[(G) to a veteran exposed to a toxic substance,
radiation, or environmental hazard, as provided in
subsection (e) of this section;
[(H) to a veteran of the Mexican border period or
World War I, for any disability; and
[(I) to a veteran for a non-service-connected
disability, if the veteran is unable to defray the
expenses of necessary care as determined under section
1722(a) of this title.
[(2) In the case of a veteran who is not described in
paragraph (1) of this subsection, the Secretary may, to the
extent resources and facilities are available, furnish hospital
care and nursing home care to a veteran which the Secretary
determines is needed for a nonservice-connected disability,
subject to the provisions of subsection (f) of this section.]
(a)(1) The Secretary shall, to the extent and in the amount
provided in advance in appropriations Acts for these purposes,
provide hospital care and medical services, and may provide
nursing home care, which the Secretary determines is needed to
any veteran--
(A) with a compensable service-connected disability;
(B) whose discharge or release from active military,
naval, or air service was for a compensable disability
that was incurred or aggravated in the line of duty;
(C) who is in receipt of, or who, but for a
suspension pursuant to section 1151 of this title (or
both a suspension and the receipt of retired pay),
would be entitled to disability compensation, but only
to the extent that such veteran's continuing
eligibility for such care is provided for in the
judgment or settlement provided for in such section;
(D) who is a former prisoner of war;
(E) of the Mexican border period or of World War I;
(F) who was exposed to a toxic substance, radiation,
or environmental hazard, as provided in subsection (e);
and
(G) who is unable to defray the expenses of necessary
care as determined under section 1722(a) of this title.
(2) In the case of a veteran who is not described in
paragraph (1), the Secretary may, to the extent resources and
facilities are available and subject to the provisions of
subsection (f), furnish hospital care, medical services, and
nursing home care which the Secretary determines is needed.
* * * * * * *
(e)(1)(A) Subject to paragraphs (2) and (3) of this
subsection, a veteran--
(i) who served on active duty in the Republic of
Vietnam during the Vietnam era, and
(ii) who the Secretary finds may have been exposed
during such service to dioxin or was exposed during
such service to a toxic substance found in a herbicide
or defoliant used in connection with military purposes
during such era,
is eligible for [hospital care and nursing home care] hospital
care, medical services, and nursing home care under [subsection
(a)(1)(G) of this section] subsection (a)(1)(F) for any
disability, notwithstanding that there is insufficient medical
evidence to conclude that such disability may be associated
with such exposure.
(B) Subject to paragraphs (2) and (3) of this subsection, a
veteran who the Secretary finds was exposed while serving on
active duty to ionizing radiation from the detonation of a
nuclear device in connection with such veteran's participation
in the test of such a device or with the American occupation of
Hiroshima and Nagasaki, Japan, during the period beginning on
September 11, 1945, and ending on July 1, 1946, is eligible for
[hospital care and nursing home care] hospital care, medical
services, and nursing home care under [subsection (a)(1)(G) of
this section] subsection (a)(1)(F) for any disability,
notwithstanding that there is insufficient medical evidence to
conclude that such disability may be associated with such
exposure.
(C) Subject to paragraphs (2) and (3) of this subsection, a
veteran who the Secretary finds may have been exposed while
serving on active duty in the Southwest Asia theater of
operations during the Persian Gulf War to a toxic substance or
environmental hazard is eligible for [hospital care and nursing
home care] hospital care, medical services, and nursing home
care under [subsection (a)(1)(G) of this section] subsection
(a)(1)(F) for any disability, notwithstanding that there is
insufficient medical evidence to conclude that such disability
may be associated with such exposure.
(2) Hospital and nursing home care and medical services may
not be provided under [subsection (a)(1)(G) of this section]
subsection (a)(1)(F) with respect to a disability that is
found, in accordance with guidelines issued by the Under
Secretary for Health, to have resulted from a cause other than
an exposure described in subparagraph (A), (B), or (C) of
paragraph (1) of this subsection.
* * * * * * *
[(f)](g)(1) The Secretary may not furnish medical services
under subsection (a) of this section (including home health
services under section 1717 of this title) to a veteran who is
eligible for hospital care under this chapter by reason of
[section 1710(a)(2) of this title] subsection (a)(2) of this
section unless the veteran agrees to pay to the United States
the amount determined under paragraph (2) of this subsection.
(2) A veteran who is furnished medical services under
subsection (a) of this section and who is required under
paragraph (1) of this subsection to agree to pay an amount to
the United States in order to be furnished such services shall
be liable to the United States, in the case of each visit in
which such services are furnished to the veteran, for an amount
equal to 20 percent of the estimated average cost (during the
calendar year in which the services are furnished) of an
outpatient visit in a Department facility. Such estimated
average cost shall be determined by the Secretary.
(3) This subsection does not apply with respect to home
health services under section 1717 of this title to the extent
that such services are for improvements and structural
alterations.
(4) Amounts collected or received by the Department under
this subsection shall be deposited in the Treasury as
miscellaneous receipts.
[(g)] (h) Nothing in this section requires the Secretary to
furnish care to a veteran to whom another agency of Federal,
State, or local government has a duty under law to provide care
in an institution of such government.
* * * * * * *
Sec. 1712. Eligibility for outpatient services
[(a)(1) Except as provided in subsection (b) of this section,
the Secretary shall furnish on an ambulatory or outpatient
basis such medical services as the Secretary determines are
needed--
[(A) to any veteran for a service-connected
disability (including a disability that was incurred or
aggravated in line of duty and for which the veteran
was discharged or released from the active military,
naval, or air service);
[(B) for any disability of a veteran who has a
service-connected disability rated at 50 percent or
more;
[(C) to any veteran for a disability for which the
veteran is in receipt of compensation under section
1151 of this title or for which the veteran would be
entitled to compensation under that section but for a
suspension pursuant to that section (but in the case of
such a suspension, such medical services may be
furnished only to the extent that such person's
continuing eligibility for medical services is provided
for in the judgment or settlement described in that
section); and
[(D) during the period before December 31, 1996, for
any disability in the case of a veteran who served on
active duty in the Southwest Asia theater of operations
during the Persian Gulf War and who the Secretary finds
may have been exposed to a toxic substance or
environmental hazard during such service,
notwithstanding that there is insufficient medical
evidence to conclude that the disability may be
associated with such exposure.
[(2) The Secretary shall furnish on an ambulatory or
outpatient basis medical services for a purpose described in
paragraph (5) of this subsection--
[(A) to any veteran who has a service-connected
disability rated at 30 percent or 40 percent; and
[(B) to any veteran who is eligible for hospital care
under section 1710(a) of this title and whose annual
income (as determined under section 1503 of this title)
does not exceed the maximum annual rate of pension that
would be applicable to the veteran if the veteran were
eligible for pension under section 1521(d) of this
title.
[(3) The Administrator may furnish on an ambulatory or
outpatient basis medical services which the Secretary
determines are needed--
[(A) to any veteran who is a former prisoner of war;
[(B) to any veteran of the Mexican border period or
of World War I; and
[(C) to any veteran who is in receipt of increased
pension or additional compensation or allowances based
on the need of regular aid and attendance or by reason
of being permanently housebound (or who, but for the
receipt of retired pay, would be in receipt of such
pension, compensation, or allowance).
[(4) Subject to subsection (f) of this section, the Secretary
may furnish on an ambulatory or outpatient basis medical
services for a purpose described in paragraph (5) of this
subsection to any veteran who is eligible for hospital care
under section 1710 of this title and who is not otherwise
eligible for such services under this subsection.
[(5)(A) Medical services for a purpose described in this
paragraph are medical services reasonably necessary in
preparation for hospital admission or to obviate the need of
hospital admission. In the case of a veteran described in
paragraph (4) of this subsection, services to obviate the need
of hospital admission may be furnished only to the extent that
facilities are available.
[(B) In the case of a veteran who has been furnished hospital
care, nursing home care, or domiciliary care, medical services
for a purpose described in this paragraph include medical
services reasonably necessary to complete treatment incident to
such care. Such medical services may not be provided for a
period in excess of 12 months after discharge from such care.
However, the Secretary may authorize a longer period in any
case if the Secretary finds that a longer period is required by
reason of the disability being treated.
[(6) In addition to furnishing medical services under this
subsection through Department facilities, the Secretary may
furnish such services in accordance with section 1503 of this
title.
[(7) Medical services may not be furnished under paragraph
(1)(D) with respect to a disability that is found, in
accordance with guidelines issued by the Under Secretary for
Health, to have resulted from a cause other than an exposure
described in that paragraph.]
[(b)] (a)(1) Outpatient dental services and treatment, and
related dental appliances, shall be furnished under this
section only for a dental condition or disability--
(A) * * *
* * * * * * *
[(c)] (b) Dental services and related appliances for a dental
condition or disability described in paragraph (1)(B) of
subsection (b) of this section shall be furnished on a one-time
completion basis, unless the services rendered on a one-time
completion basis are found unacceptable within the limitations
of good professional standards, in which event such additional
services may be afforded as are required to complete
professionally acceptable treatment.
[(d)] (c) Dental appliances, wheelchairs, artificial limbs,
trusses, special clothing, and similar appliances to be
furnished by the Secretary under this section may be procured
by the Secretary either by purchase or by manufacture,
whichever the Secretary determines may be advantageous and
reasonably necessary.
[(f)(1) The Secretary may not furnish medical services under
subsection (a) of this section (including home health services
under section 1717 of this title) to a veteran who is eligible
for hospital care under this chapter by reason of section
1710(a)(2) of this title unless the veteran agrees to pay to
the United States the amount determined under paragraph (2) of
this subsection.
[(2) A veteran who is furnished medical services under
subsection (a) of this section and who is required under
paragraph (1) of this subsection to agree to pay an amount to
the United States in order to be furnished such services shall
be liable to the United States, in the case of each visit in
which such services are furnished to the veteran, for an amount
equal to 20 percent of the estimated average cost (during the
calendar year in which the services are furnished) of an
outpatient visit in a Department facility. Such estimated
average cost shall be determined by the Secretary.
[(3) This subsection does not apply with respect to home
health services under section 1717 of this title to the extent
that such services are for improvements and structural
alterations.
[(4) Amounts collected or received by the Department under
this subsection shall be deposited in the Treasury as
miscellaneous receipts.]
[(h)] (d) The Secretary shall furnish to each veteran who is
receiving additional compensation or allowance under chapter 11
of this title, or increased pension as a veteran of a period of
war, by reason of being permanently housebound or in need of
regular aid and attendance, such drugs and medicines as may be
ordered on prescription of a duly licensed physician as
specific therapy in the treatment of any illness or injury
suffered by such veteran. The Secretary shall continue to
furnish such drugs and medicines so ordered to any such veteran
in need of regular aid and attendance whose pension payments
have been discontinued solely because such veteran's annual
income is greater than the applicable maximum annual income
limitation, but only so long as such veteran's annual income
does not exceed such maximum annual income limitation by more
than $1,000.
[(i) The Secretary shall prescribe regulations to ensure that
special priority in furnishing medical services under this
section and any other outpatient care with funds appropriated
for the medical care of veterans shall be accorded in the
following order, unless compelling medical reasons require that
such care be provided more expeditiously:
[(1) To a veteran (A) who is entitled to such
services under paragraph (1) or (2) of subsection (a)
of this section, or (B) who is eligible for counseling
and care and services under section 1720D of this
title, for the purposes of such counseling and care and
services.
[(2) To a veteran (A) who has a service-connected
disability rated at less than 30-percent disabling or
(B) who is being examined to determine the existence or
severity of a service-connected disability.
[(3) To a veteran (A) who is a former prisoner of
war, or (B) who is eligible for hospital care under
section 1710(e) of this title.
[(4) To a veteran eligible for medical services under
subsection (a)(3)(B) or (a)(3)(C) of this section.
[(5) To a veteran not covered by paragraphs (1)
through (4) of this subsection who is unable to defray
the expenses of necessary care as determined under
section 1722(a)(3) of this title.]
[(j)] (e) In order to assist the Secretary of Health and
Human Services in carrying out national immunization programs
under other provisions of law, the Secretary may authorize the
administration of immunizations to eligible veterans who
voluntarily request such immunizations in connection with the
provision of care for a disability under this chapter in any
Department health care facility. Any such immunization shall be
made using vaccine furnished by the Secretary of Health and
Human Services at no cost to the Department. For such purpose,
notwithstanding any other provision of law, the Secretary of
Health and Human Services may provide such vaccine to the
Department at no cost. Section 7316 of this title shall apply
to claims alleging negligence or malpractice on the part of
Department personnel granted immunity under such section.
* * * * * * *
PART VI--ACQUISITION AND DISPOSITION OF PROPERTY
* * * * * * *
CHAPTER 81--ACQUISITION AND OPERATION OF HOSPITAL AND DOMICILIARY
FACILITIES; PROCUREMENT AND SUPPLY; ENHANCED-USE LEASES OF REAL
PROPERTY
subchapter i--acquisition and operation of medical facilities
Sec.
8101. Definitions.
* * * * * * *
subchapter iv--sharing of medical facilities, equipment, and information
[8151. Statement of congressional purpose.]
[8152] 8151. Definitions.
[8153] 8152. Specialized medical resources.
[8154] 8153. Exchange of medical information.
[8155] 8154. Pilot programs; grants to medical schools.
[8156] 8155. Coordination with health services development activities
carried out under the National Health Planning and Resources
Development Act of 1974.
[8157] 8156. Joint title to medical equipment.
[8158] 8157. Deposit in escrow.
* * * * * * *
SUBCHAPTER I--ACQUISITION AND OPERATION OF MEDICAL FACILITIES
Sec. 8110. Operation of medical facilities
(a) * * *
* * * * * * *
(c)(1) * * *
* * * * * * *
(3) The provisions of paragraph (1) of this subsection do not
apply--
(A) to a contract or agreement under chapter 17 or
section 8111, 8111A, or [8153] 8152 of this title or
under section 1535 of title 31; or
* * * * * * *
SUBCHAPTER IV--SHARING OF MEDICAL FACILITIES, EQUIPMENT, AND
INFORMATION
* * * * * * *
[Sec. 8151. Statement of congressional purpose
[It is the purpose of this subchapter to improve the quality
of hospital care and other medical service provided veterans
under this title, by authorizing the Secretary to enter into
agreements with medical schools, health-care facilities, and
research centers throughout the country in order to receive
from and share with such medical schools, health-care
facilities, and research centers the most advanced medical
techniques and information, as well as certain specialized
medical resources which otherwise might not be feasibly
available or to effectively utilize other medical resources
with the surrounding medical community, without diminution of
services to veterans. Among other things, it is intended, by
these means, to strengthen the medical programs at those
Department hospitals which are located in small cities or rural
areas and thus are remote from major medical centers. It is
further the purpose of this subchapter to improve the provision
of care to veterans under this title by authorizing the
Secretary to enter into agreements with State veterans
facilities for the sharing of health-care resources.]
Sec. [8152.] 8151. Definitions
For the purposes of this subchapter--
(1) The term ``research center'' means an institution
(or part of an institution), the primary function of
which is research, training of specialists, and
demonstrations and which, in connection therewith,
provides specialized, high quality diagnostic and
treatment services for inpatients and outpatients.
(2) The term ``specialized medical resources'' means
medical resources (whether equipment, space, or
personnel) which, because of cost, limited
availability, or unusual nature, are either unique in
the medical community or are subject to maximum
utilization only through mutual use.
(3) The term ``health-care resource'' includes
hospital care, medical services, and rehabilitative
services, as those terms are defined in paragraphs (5),
(6), and (8), respectively, of section 1701 of this
title, any other health-care service, and any health-
care support or administrative resource.
(4) The term ``hospital'', unless otherwise
specified, includes any Federal, State, local, or other
public or private hospital.
Sec. [8153.] 8152. Specialized medical resources
(a)(1) To secure certain specialized medical resources which
otherwise might not be feasibly available, or to effectively
utilize certain other medical resources, the Secretary may,
when the Secretary determines it to be in the best interest of
the prevailing standards of the Department medical care
program, make arrangements, by contract or other form of
agreement for the mutual use, or exchange of use, of--
(A) [specialized medical resources] health-care
resources between Department health-care facilities and
[other health-care facilities (including organ banks,
blood banks, or similar institutions), research
centers, or medical schools] any medical school,
health-care provider, health-care plan, insurer, or
other entity or individual; and
(B) health-care resources between Department health-
care facilities and State home facilities recognized
under section 1742(a) of this title.
(2) The Secretary may enter into a contract or other
agreement under paragraph (1) [only if (A) such an agreement
will obviate the need for a similar resource to be provided in
a Department health care facility, or (B) the Department
resources which are the subject of the agreement and which have
been justified on the basis of veterans' care are not] if such
resources are not, or would not be, used to their maximum
effective capacity.
(b) Arrangements entered into under this section shall
provide for [reciprocal reimbursement based on a methodology
that provides appropriate flexibility to the heads of the
facilities concerned to establish an appropriate reimbursement
rate after taking into account local conditions and needs and
the actual costs to the providing facility of the resource
involved.] payment to the Department in accordance with
procedures that provide appropriate flexibility to negotiate
payment which is in the best interest of the Government. Any
proceeds to the Government received therefrom shall be credited
to the applicable Department medical appropriation and to funds
that have been allotted to the facility that furnished the
resource involved.
(c) Eligibility for hospital care and medical services
furnished any veteran pursuant to this section shall be subject
to the same terms as though provided in a Department health
care facility, and provisions of this title applicable to
persons receiving hospital care or medical services in a
Department health care facility shall apply to veterans treated
under this subsection.
(d) When a Department health care facility provides hospital
care or medical services, pursuant to a contract or agreement
authorized by this section, to an individual who is not
eligible for such care or services under chapter 17 of this
title and who is entitled to hospital or medical insurance
benefits under title XVIII of the Social Security Act (42
U.S.C. 1395 et seq.), such benefits shall be paid,
notwithstanding any condition, limitation, or other provision
in that title which would otherwise [preclude such payment, in
accordance with--
[(1) rates prescribed by the Secretary of Health and
Human Services, after consultation with the Secretary,
and
[(2) procedures jointly prescribed by the two
Secretaries to assure reasonable quality of care and
services and efficient and economical utilization of
resources,
to such facility therefor] preclude such payment to such
facility for such care or services or, if the contract or
agreement so provides, to the community health care facility
which is a party to the contract or agreement.
(e) The Secretary may make an arrangement that authorizes the
furnishing of services by the Secretary under this section to
individuals who are not veterans only if the Secretary
determines--
(1) that such an arrangement will not result in the
denial of, or a delay in providing access to, care to
any veteran at that facility; and
(2) that such an arrangement--
(A) is necessary to maintain an acceptable
level and quality of service to veterans at
that facility; or
(B) will result in the improvement of
services to eligible veterans at that facility.
[(e)] (f) The Secretary shall submit to the Congress not more
than 60 days after the end of each fiscal year a report on the
activities carried out under this section. Each report shall
include--
(1) an appraisal of the effectiveness of the
activities authorized in this section and the degree of
cooperation from other sources, financial and
otherwise; and
(2) recommendations for the improvement or more
effective administration of such activities.
Sec. [8154.] 8153. Exchange of medical information
(a) The Secretary is authorized to enter into agreements with
medical schools, hospitals, research centers, and individual
members of the medical profession under which medical
information and techniques will be freely exchanged and the
medical information services of all parties to the agreement
will be available for use by any party to the agreement under
conditions specified in the agreement. In carrying out the
purposes of this section, the Secretary shall utilize recent
developments in electronic equipment to provide a close
educational, scientific, and professional link between
Department hospitals and major medical centers. Such agreements
shall be utilized by the Secretary to the maximum extent
practicable to create, at each Department hospital which is a
part of any such agreement, an environment of academic medicine
which will help such hospital attract and retain highly trained
and qualified members of the medical profession.
(b) In order to bring about utilization of all medical
information in the surrounding medical community, particularly
in remote areas, and to foster and encourage the widest
possible cooperation and consultation among all members of the
medical profession in such community, the educational
facilities and programs established at Department hospitals and
the electronic link to medical centers shall be made available
for use by the surrounding medical community (including State
home facilities furnishing domiciliary, nursing home, or
hospital care to veterans). The Secretary may charge a fee for
such services (on annual or like basis) at rates which the
Secretary determines, after appropriate study, to be fair and
equitable. The financial status of any user of such services
shall be taken into consideration by the Secretary in
establishing the amount of the fee to be paid. Any proceeds to
the Government received therefrom shall be credited to the
applicable Department medical appropriation.
(c) The Secretary is authorized to enter into agreements with
public and nonprofit private institutions, organizations,
corporations, and other entities in order to participate in
cooperative health-care personnel education programs within the
geographical area of any Department health-care facility
located in an area remote from major academic health centers.
Sec. [8155.] 8154. Pilot programs; grants to medical schools
(a) The Secretary may establish an Advisory Subcommittee on
Programs for Exchange of Medical Information, of the Special
Medical Advisory Group, established under section 7312 of this
title, to advise the Secretary on matters regarding the
administration of this section and to coordinate these
functions with other research and education programs in the
Department of Medicine and Surgery. The Assistant Under
Secretary for Health charged with administration of the
Department of Medicine and Surgery medical research program
shall be an ex officio member of this Subcommittee.
(b) The Secretary, upon the recommendation of the
Subcommittee, is authorized to make grants to medical schools,
hospitals, and research centers to assist such medical schools,
hospitals, and research centers in planning and carrying out
agreements authorized by section [8154] 8153 of this title.
Such grants may be used for the employment of personnel, the
construction of facilities, the purchasing of equipment when
necessary to implement such programs, and for such other
purposes as will facilitate the administration of this section.
(c)(1) There is hereby authorized to be appropriated an
amount not to exceed $3,500,000 for fiscal year 1976;
$1,700,000 for the period beginning July 1, 1976, and ending
September 30, 1976; $4,000,000 for fiscal year 1977; $4,000,000
for fiscal year 1978; and $4,000,000 for fiscal year 1979 and
for each of the three succeeding fiscal years, for the purpose
of developing and carrying out medical information programs
under this section on a pilot program basis and for the grants
authority in subsection (b) of this section. Pilot programs
authorized by this subsection shall be carried out at
Department hospitals in geographically dispersed areas of the
United States.
(2) Funds authorized under this section shall not be
available to pay the cost of hospital, medical, or other care
of patients except to the extent that such cost is determined
by the Secretary to be incident to research, training, or
demonstration activities carried out under this section.
(d) The Secretary, after consultation with the Subcommittee
shall prescribe regulations covering the terms and conditions
for making grants under this section.
(e) Each recipient of a grant under this section shall keep
such records as the Secretary may prescribe, including records
which fully disclose the amount and disposition by such
recipient of the proceeds of such grant, the total cost of the
project or undertaking in connection with which such grant is
made or used, and the amount of that portion of the cost of the
project or undertaking supplied by other sources, and such
records as will facilitate an effective audit.
(f) The Secretary and the Comptroller General of the United
States, or any of their duly authorized representatives, shall
have access, for the purpose of audit and examination, to any
books, documents, papers, and records of the recipient of any
grant under this section which are pertinent to any such grant.
Sec. [8156.] 8155. Coordination with health services development
activities carried out under the National Health
Planning and Resources Development Act of 1974
The Secretary and the Secretary of Health and Human Services
shall, to the maximum extent practicable, coordinate programs
carried out under this subchapter and programs carried out
under part F of title XVI of the Public Health Service Act (42
U.S.C. 300 et seq.).
Sec. [8157.] 8156. Joint title to medical equipment
(a) Subject to subsection (b), the Secretary may enter into
agreements with institutions described in section [8153(a)]
8152(a) of this title for the joint acquisition of medical
equipment.
(b)(1) The Secretary may not pay more than one-half of the
purchase price of equipment acquired through an agreement under
subsection (a).
(2) Any equipment to be procured under such an agreement
shall be procured by the Secretary. Title to such equipment
shall be held jointly by the United States and the institution.
(3) Before equipment acquired under such an agreement may be
used, the parties to the agreement shall arrange by contract
under section [8153] 8152 of this title for the exchange or use
of the equipment.
(4) The Secretary may not contract for the acquisition of
medical equipment to be purchased jointly under an agreement
under subsection (a) until the institution which enters into
the agreement provides to the Secretary its share of the
purchase price of the medical equipment.
(c)(1) Notwithstanding any other provision of law, the
Secretary may transfer the interest of the Department in
equipment acquired through an agreement under subsection (a) to
the institution which holds joint title to the equipment if the
Secretary determines that the transfer would be justified by
compelling clinical considerations or the economic interest of
the Department. Any such transfer may only be made upon
agreement by the institution to pay to the Department the
amount equal to one-half of the depreciated purchase price of
the equipment. Any such payment when received shall be credited
to the applicable Department medical appropriation.
(2) Notwithstanding any other provision of law, the Secretary
may acquire the interest of an institution in equipment
acquired under subsection (a) if the Secretary determines that
the acquisition would be justified by compelling clinical
considerations or the economic interests of the Department. The
Secretary may not pay more than one-half the depreciated
purchase price of that equipment.
Sec. [8158.] 8157. Deposit in escrow
(a) To facilitate the procurement of medical equipment
pursuant to section [8157] 8156 of this title, the Secretary
may enter into escrow agreements with institutions described in
section [8153(a)] 8152(a) of this title. Any such agreement
shall provide that--
(1) the institutions shall pay to the Secretary the
funds necessary to make a payment under section
[8157(b)(4)] 8156(b)(4) of this title;
(2) the Secretary, as escrow agent, shall administer
those funds in an escrow account; and
(3) the Secretary shall disburse the escrowed funds
to pay for such equipment upon its delivery or in
accordance with the contract to procure the equipment
and shall disburse all accrued interest or other
earnings on the escrowed funds to the institution.
(b) As escrow agent for funds placed in escrow pursuant to an
agreement under subsection (a), the Secretary may--
(1) invest the escrowed funds in obligations of the
Federal Government or obligations which are insured or
guaranteed by the Federal Government;
(2) retain in the escrow account interest or other
earnings on such investments;
(3) disburse the funds pursuant to the escrow
agreement; and
(4) return undisbursed funds to the institution.
(c)(1) If the Secretary enters into an escrow agreement under
this section, the Secretary may enter into an agreement to
procure medical equipment if one-half the purchase price of the
equipment is available in an appropriation or fund for the
expenditure or obligation.
(2) Funds held in an escrow account under this section shall
not be considered to be public funds.
* * * * * * *
----------
VETERANS HEALTH CARE ACT OF 1992
* * * * * * *
TITLE II--HEALTH-CARE SHARING AGREEMENTS BETWEEN DEPARTMENT OF VETERANS
AFFAIRS AND DEPARTMENT OF DEFENSE
* * * * * * *
[SEC. 204. EXPIRATION OF AUTHORITY.
[The authority to provide services pursuant to agreements
entered into under section 201 expires on October 1, 1996.]
* * * * * * *
SEC. 207. AUTHORITY TO BILL HEALTH-PLAN CONTRACTS.
(a) Right To Recover.--In the case of a primary beneficiary
(as described in section 201(2)(B)) who has coverage under a
health-plan contract, as defined in section 1729(i)(1)(A) of
title 38, United States Code, and who is furnished care or
services by a Department medical facility pursuant to this
title, the United States shall have the right to recover or
collect charges for such care or services from such health-plan
contract to the extent that the beneficiary (or the provider of
the care or services) would be eligible to receive payment for
such care or services from such health-plan contract if the
care or services had not been furnished by a department or
agency of the United States. Any funds received from such
health-plan contract shall be credited to funds that have been
allotted to the facility that furnished the care or services.
(b) Enforcement.--The right of the United States to recover
under such a beneficiary's health-plan contract shall be
enforceable in the same manner as that provided by subsections
(a)(3), (b), (c)(1), (d), (f), (h), and (i) of section 1729 of
title 38, United States Code.
* * * * * * *
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