Critics charge that Veterans Health Administration (VA) medical centers are inefficient and the cost of veteran health care would be reduced if VApurchased care for its patients directly from private-sector providers. This analysis compares VAmedical care expenditures with estimates of total payments under a hypothetical Medicare fee-for-service payment system reimbursing providers for the same counts of each service VA medical centers provided in fiscal 1999. At six study sites, hypothetical payments were more than 20 percent greater than actual budgets. Nationally, this represented more than $3 billion in 1999 and more than $5 billion in 2003. Data limitations suggest the estimate is conservative. Less than half of the difference is due to VA’s low pharmacy costs. The study demonstrates the potential savings to patients and taxpayers of the VA health care system.
Brotherton, S. E., F. A. Simon, and S. C. Tomany. 2000. U.S. graduate medical education, 1999-2000. Journal of the American Medical Association284:1121-1126.
2.
Department of Health and Human Services, Office of Inspector General. 1998. Comparing drug reimbursement: Medicare and the Department of Veterans Affairs. Report no. OEI-03-97-00293.
3.
Department of Health and Human Services, Office of Inspector General. 2001. Medicare reimbursement of prescription drugs. Report no. OEI-03-00-00310.
4.
Department of Veterans Affairs. 1998. VistA veterans health information management and technology architecture. Monograph.
5.
Freedberg, S. J., Jr.2003. Veterans Affairs suspends enrollment in health program. Congress Daily. January 17. www.govexec.com/dailyfed/0103/011703cdam1.htm.
6.
Hendricks, A.2003. VA extended care: VA’s experience under the Millennium Act. Report to Congress. Bedford, MA: CHQOER.
7.
Hendricks, A. M., D. Remler, and M. Prashker. 1999. More or less?Medical Care37 (4): AS54-AS62.
8.
Hendricks, A., J. Whitford, and G. Nugent. 2003. What would VA nursing home care cost? Methods for estimating private sector payments. Medical Care41 (6): II52-II60.
9.
Hendricks, A., J. Whitford, and L. Nugent. 2003. Estimating private sector payments for VA specialized inpatient care. Medical Care41 (6): II43-II51.
10.
Hurley, J., D. Linz, and E. Swint. 1990. Assessing the effects of the Medicare prospective payment system on thedemandforVAinpatient services. HSR25 (1 Pt. 2): 239-255.
11.
Huskamp, H. A., A. M. Epstein, and D. Blumenthal. 2003. The impact of national prescription drug formulary on prices, market share, and spending. Health Affairs22 (3): 149-158.
12.
Iglehart, J. K.1996. Reform of the VAhealth care system. New England Journal of Medicine335:1407-1412.
13.
Iha, A. K., M. G. Shlipak, W. Hosmer, C. D. Frances, andW. S. Browner. 2001. Racial differences in mortality among men hospitalized in the Veterans Affairs health care system. Journal of the American Medical Association285 (3): 297-303.
14.
Ingenix, Inc.2000. Evaluating VHA costs for professional services. Salt Lake City, UT: Author.
15.
Molloy, M., M. J. Sorrell, R. H. Bower, P. O. Hasselgren, and B. J. Dalton. 1999. Patterns of morbidity and resource consumption associated with laparoscopic cholecystectomy in a VA medical center. Journal of Surgical Research81:15-20.
16.
Moskowitz, D. W.1995. Future of the Department of Veterans Affairs. Journal of the American Medical Association274 (14): 130-131.
17.
Nugent, G., and A. Hendricks. 2003. Estimating private sector values for VA health care: An overview. Medical Care41 (6): II2-II10.
18.
Nugent, G., E. Franchi, L. Nugent, S. Schehr, A. Rodriguez, and C. Nadeja. 2000. Third party billing in the VHA: A look at cost and policy. Federal Practitioner11:31-41.
19.
Nugent, G. N., G. Grippen, Y. C. Parris, and M. Mitchell. 2003. Using the Cost Distribution Report in estimating private sector payments: What adjustments should researchers make?Medical Care41 (6): II80-II90.
20.
Petersen, L. A., S. L. Normand, J. Daley, and B. J. McNeil. 2000. Outcome ofmyocardial infarction in Veterans Health Administration patients as compared with Medicare patients. New England Journal of Medicine343 (26): 1934-1935.
21.
Pittman, J. A., Jr.1995. The future of the VA: Centralization, costs, politics, and presentism. Journal of the American Medical Association273 (8): 667-668.
22.
Randall, M., K. E. Kilpatrick, J. F. Pendergast, K. R. Jones, andW. B. Vogel. 1987. Differences in patient characteristics between Veterans Administration and community hospitals: Implications for VA planning. Medical Care25 (11): 1099-1104.
23.
Render, M. L., G. Roselle, E. Franchi, and L. B. Nugent. 2003. Methods for estimating private sector payments for VA acute inpatient stays. Medical Care41 (6): II11-II22.
24.
Render, M. L., J. Nowak, E. K. Hammond, and G. Roselle. 2003. Methods for estimating and comparing theVAoutpatient drug benefits with the private sector. Medical Care41 (6): II61-II69.
25.
Render, M. L., P. Taylor, J. Plunkett, and G. N. Nugent. 2003. Methods tocompareVAexpenditures for assistive devices to Medicare payments. Medical Care41 (6): II70-II79.
26.
Roselle, G., M. L. Render, L. B. Nugent, and G. N. Nugent. 2003. Estimating private sector professional fees for VA providers. Medical Care41 (6): II23-II32.
27.
Staffs of the ManagementDecision and Research Center and the Association for Health Services Research. 1996. Resources for research and decision making: An annotated database inventory. Medical Care34:MS111-MS146.
28.
Stiglitz, J. E.1986. Economics of the public sector. New York: Norton.
29.
U.S. General Accounting Office. 2000. Prescription drugs: Expanding access to federal prices could cause other price changes. Report no. GAO/HEHS-00-118.
30.
Wolinsky, F. D., R. M. Coe, R. R. Mosley, II, and S. M. Homan. 1985. Veterans’ and nonveterans’ use of health services: A comparative analysis. Medical Care23 (12): 1358-1371.
31.
Wright, S. M., J. Daley, E. D. Peterson, and G. E. Thibault. 1997. On terms of acute myocardial infarction in the Department of Veterans Affairs: Does regionalization of health care work?Medical Care35 (2): 128-141.
