May212013
Hearing Transcript on Review of the U.S. Department of Veterans Affairs Contract Health Care: Project HERO.
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REVIEW OF THE U.S. DEPARTMENT OF VETERANS AFFAIRS CONTRACT HEALTH CARE: PROJECT HERO
HEARING BEFORE THE SUBCOMMITTEE ON HEALTH OF THE COMMITTEE ON VETERANS' AFFAIRS U.S. HOUSE OF REPRESENTATIVES ONE HUNDRED ELEVENTH CONGRESS SECOND SESSION FEBRUARY 3, 2010 SERIAL No. 111-57 Printed for the use of the Committee on Veterans' Affairs
U.S. GOVERNMENT PRINTING OFFICE For sale by the Superintendent of Documents, U.S. Government Printing Office
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CORRINE BROWN, Florida |
STEVE BUYER, Indiana, Ranking |
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Malcom A. Shorter, Staff Director SUBCOMMITTEE ON HEALTH
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records of the Committee on Veterans' Affairs are also published in electronic form. The printed hearing record remains the official version. Because electronic submissions are used to prepare both printed and electronic versions of the hearing record, the process of converting between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process is further refined. |
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C O N T E N T S
February 3, 2010
Review of the U.S. Department of Veterans Affairs Contract Health Care: Project HERO
OPENING STATEMENTS
Chairman Michael Michaud
Prepared statement of Chairman Michaud
Hon. Henry E. Brown, Jr., Ranking Republican Member, prepared statement of
WITNESSES
Congressional Research Service, Library of Congress, Sidath Viranga Panangala, Specialist in Veterans Policy
Prepared statement of Mr. Panangala
U.S. Department of Veterans Affairs:
Belinda J. Finn, Assistant Inspector General for Audits and Evaluations, Office of Inspector General
Prepared statement of Ms. Finn
Gary M. Baker, MA, Chief Business Officer, Veterans Health Administration
Prepared statement of Mr. Baker
American Legion, Denise A. Williams, Assistant Director, Veterans Affairs and Rehabilitation Commission
Prepared statement of Ms. Williams
Blinded Veterans Association, Thomas Zampieri, Ph.D., Director of Government Relations
Prepared statement of Dr. Zampieri
Delta Dental of California, P.T. Henry, Senior Vice President, Federal Government Programs
Prepared statement of Mr. Henry
Disabled American Veterans, Adrian Atizado, Assistant National Legislative Director
Prepared statement of Mr. Atizado
Humana Veterans Healthcare Services, Inc., Tim S. McClain, President and Chief Executive Officer
Prepared statement of Mr. McClain
Vietnam Veterans of America, Bernard Edelman, Deputy Executive Director for Policy and Government Affairs
Prepared statement of Mr. Edelman
MATERIAL SUBMITTED FOR THE RECORD
Hon. Michael H. Michaud, Chairman, Subcommittee on Health, Committee on Veterans' Affairs, to Ms. Belinda Finn, Assistant Inspector General for Audit and Evaluations, Office of the Inspector General, U.S Department of Veterans Affairs, letter dated February 16, 2010, and response from Hon. George Opfer, Inspector General, letter dated March 25, 2010 [An identical letter was sent to Hon. Henry E. Brown, Jr., Ranking Republican Member, Subcommittee on Health, Committee on Veterans' Affairs]
REVIEW OF THE U.S. DEPARTMENT OF VETERANS AFFAIRS CONTRACT HEALTH CARE: PROJECT HERO
Wednesday, February 3, 2010
U. S. House of Representatives,
Subcommittee on Health,
Committee on Veterans' Affairs,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:03 a.m., in Room 334, Cannon House Office Building, Hon. Michael H. Michaud [Chairman of the Subcommittee] presiding.
Present: Representatives Michaud, Teague, McNerney, Perriello, Brown of South Carolina, and Boozman.
OPENING STATEMENT OF CHAIRMAN MICHAUD
Mr. MICHAUD. I would like to call the Subcommittee on Health to order. Mr. Brown will be here shortly. I would also like to ask the first panel to come forward as well. The Subcommittee on Health today will examine whether the VA's Project on Health Care Effectiveness Through Resource Optimization, known as Project HERO, is meeting the goal of delivering efficient, high-quality contract care to our veterans.
Each year, the U.S. Department of Veterans Affairs (VA) spends more than $2 billion to purchase private, non-VA health care for eligible veterans. The VA has the authority to do this when VA facilities are not able to provide the necessary health care or geographic accessibility to our veterans.
There is room for improvement in the way that the VA manages and coordinates contract care. Specifically, there is no consistent process in place to ensure that care is delivered by fully licensed and credentialed non-VA providers. This continuity of care is monitored and is part of a seamless continuum of services that ensures clinical information flows to the VA.
It is under these circumstances that the VA developed the Project HERO pilot program in response to the language in the Conference Report accompanying the VA's 2006 Appropriations Act.
As the VA was in the initial stage of developing and implementing Project HERO, the full Committee held a hearing on this issue in March of 2006. At this full Committee hearing, the VA testified that Project HERO aimed to provide quality cost-effective care, which is complementary to the larger VA health care system. In this endeavor, the VA also testified that they would sustain ongoing communication with the VSO community.
We have since learned that the VA is implementing Project HERO in Veterans Integrated Services Networks (VISNs) 8, 16, 20, and 23. On October 1, 2007, the VA awarded the Project HERO contract to Humana Veterans Healthcare Services (HVHS) and Delta Dental Federal Services.
We understand that the health care services became available through Humana on January 1, 2008. And that the dental services became available through Delta Dental soon thereafter on January 14, 2008.
With nearly 2 years of rich program data, our hearing today will examine whether the VA has delivered on the promises of Project HERO. For example, was Project HERO implemented properly to meet the pilot program's objectives to provide improved access, quality, and cost-effective care? Was there transparency in the implementation of this program? And was the VSOs community informed and involved in the process? Finally, what has Project HERO achieved and what are the potential next steps moving forward?
To help us answer these questions, I look forward to the testimony of the different panels today. And at this time, I would ask Mr. McNerney if he has an opening statement.
[The prepared statement of Chairman Michaud appears in the Appendix.]
Mr. MCNERNEY. Thank you, Mr. Chairman. I'll waive my opening statement.
Mr. MICHAUD. Mr. Perriello?
Mr. PERRIELLO. No.
Mr. MICHAUD. Once again, Mr. Brown should be here shortly. I figured if I read my statement slowly that he would make it. But he will be here shortly.
On our first panel, we have Denise Williams from the American Legion, Adrian Atizado from the Disabled American Veterans (DAV), Tom Zampieri who is from the Blinded Veterans Association (BVA), and Bernard Edelman from the Vietnam Veterans of America (VVA).
We will start with Ms. Williams.
STATEMENTS OF DENISE A. WILLIAMS, ASSISTANT DIRECTOR, VETERANS AFFAIRS AND REHABILITATION COMMISSION, AMERICAN LEGION; ADRIAN ATIZADO, ASSISTANT NATIONAL LEGISLATIVE DIRECTOR, DISABLED AMERICAN VETERANS; THOMAS ZAMPIERI, PH.D., DIRECTOR OF GOVERNMENT RELATIONS, BLINDED VETERANS ASSOCIATION; AND BERNARD EDELMAN, DEPUTY EXECUTIVE DIRECTOR FOR POLICY AND GOVERNMENT AFFAIRS, VIETNAM VETERANS OF AMERICA
STATEMENT OF DENISE A. WILLIAMS
Ms. WILLIAMS. Good morning. Mr. Chairman and Members of the Subcommittee, thank you for this opportunity to present the American Legion's views on the Department of Veterans Affairs health care contract program known as Project HERO. These views are based on quarterly update briefings given to Veterans Service Organizations (VSOs) by VA.
The American Legion is concerned with quality of care, the timeliness of access to care, and patient satisfaction. The stated goals of Project HERO deal with managing the "fee based" health care services.
If I may paraphrase, "In order to streamline the process, reduce cost, and insure security of records, of contracted health care." In briefings received by VSOs from VA, these goals seem to be in reach.
The American Legion reiterates the priority need is for quality health care in a timely manner to be provided. Currently, Project HERO sets up appointments with "certified" caregivers. It is our opinion that VA should increase its efforts to enforce criteria for the certification of caregivers, do follow-up investigations, and conduct training to assure care given by contracted caregivers meet the quality of care standards received at the VA facility.
This oversight would not only assure quality health care, but it will improve customer satisfaction in the overall process. This is once caregivers are VA "certified", the need for extended review of recommended treatment by VA experts, as is now the case, would not be necessary.
The American Legion recommends that under Project HERO, VA consider mirroring the private sector's approval practices for treatment between doctors and insurance companies; allowing veterans to have timely access to quality health care as opposed to waiting for an extensive VA review of the recommended treatment.
Since patients would only be sent to "VA approved and certified" commercial facilities for treatment, it would be generally accepted that recommended procedures be allowed and conducted. These treatment procedures should be reviewed after patients are treated. If it is found that excessively expensive or unnecessary treatments have been performed, the service provider should be charged back or decertified for repeat infractions.
The American Legion urges VA to expand access to Project HERO to veterans in other VISNs, particularly those VISNs with extensive rural veteran's populations or limited access to VA facilities, such as Alaska and Hawaii.
This is to assure that veterans residing in areas with limited access to VA medical facilities are not subjected to insufficient health care. Knowledge and understanding of existing programs by veterans is critical to success.
The American Legion urges that every measure be taken to assure these advances are communicated and implemented within the rural and higher rural areas to provide all veterans with timely access to quality care, quality health care in the proper settings.
While not originally designed to address the rural health care, initial results from four VISNs in the pilot project indicate that Project HERO could, in fact, be an important component to addressing the health care access issue.
Finally, the American Legion would like to emphasize that this program should not be utilized as a means to control the VA Medical Center's budget by referring veterans to Project HERO resources in order to save on equipment repair or purchases. For example, if the emphasis on cost savings becomes too great, we could see a scenario where an administrator would delay repair or purchase of a piece of equipment, justifying it by utilizing Project HERO health care and thereby enhancing budget numbers.
We would like to encourage VA to continue to maintain a health care system which 8 million veterans rely on for their care. It is imperative to note that the Project HERO should not be intended to replace the VA health care system.
Mr. Chairman and Members of the Subcommittee, the American Legion sincerely appreciates the opportunity to submit testimony and looks forward to working with you and your colleagues on this important matter. This concludes my statement.
[The prepared statement of Ms. Williams appears in the Appendix.]
Mr. MICHAUD. Thank you very much. Mr. Atizado?
Mr. ATIZADO. Chairman Michaud, Ranking Member Brown, Members of the Subcommittee, I would like to thank you for inviting the Disabled American Veterans to testify at this important oversight hearing on VA's Project Hero.
The DAV is an organization of 1.2 million service-disabled veterans and devotes its energies to rebuilding the lives of disabled veterans and their families.
The DAV believes Project HERO is timely considering about 40 percent of veterans receive some of their care from a non-VA health care provider. Also considering the escalating rise in VA spending for purchased care and the manner by which such care is currently managed.
As you had mentioned, Mr. Chairman, VISNs 8, 16, 20, and 23 were selected to ensure that demonstration results are representative of the larger VA population and to facilitate measurement of the proof of concept under Project HERO.
Contracts for this demonstration project have a base year and is now in its 3rd of 4th option years. DAV believes VA has demonstrated, through Project HERO, its ability to deliver on the ideas our organization has expressed previously and still now to improve VA contract care coordination.
I'll name four items in particular: Oversight of clinical care quality provided by the contractors and care is delivered by fully-licensed and credentialed providers and must meet VA-defined quality standards.
Coordination of care is performed by the contractors by communicating directly with the veteran and the prospective provider.
Continuity of care is monitored by the contractors and VA as patients are directed back to the VA health care system for follow-up when appropriate.
Clinical information necessary to provide care under Project HERO is provided by VA to the contractors. And records of care are scanned by contractors and sent to VA for annotation in its Computerized Patient Record System or CPRS.
While this list is certainly a tremendous improvement over VA's Purchase Care Program, it is not complete. And thus, our organization's concerns remain.
As indicated in my written testimony, evaluating Project HERO requires greater detail than is currently being provided to include validated and comparable data.
For example, access to care, we have not been provided data to compare VISN facility versus HERO providers on travel distance or patient satisfaction for convenience of provider location.
In addition, we do not have information on VISN compliance for either VA provided or VA purchased care to compare timeliness to access to care standards under Project HERO. Now these standards include appointment scheduling being done within 5 days, completed appointments within 30 days, or office wait times of less than 20 minutes.
It remains uncertain whether measurements and Project HERO's impact on VA facilities and academic affiliates accurately capture whether or not Project HERO compliments rather than supplants the VA's health care system. And whether partnerships with university affiliates have been sustained.
Further, VA employees in the field have raised concerns to DAV about VA's claims auditing procedure, which may need refinement to minimize risk of overpayment.
Mr. Chairman, the quarterly updates VA has provided to veteran service organizations have indeed been informative. And DAV is working closely with Veterans Health Administration's (VHA's) Chief Business Office to ensure future reports provide more consistent and meaningful data.
Now since this matter first emerged in the fiscal year 2006, Congressional appropriations arena, it has remained a significant concern, as with our colleagues, that Project HERO, as with all other non-VA purchased care programs, does not become a basis to downsize or privatize VA health care. Now to that end, DAV would like to express our appreciation for VA's effort to address these concerns and those of the veteran community.
As DAV continues to work to ensure Project HERO achieves the goals we have advocated, we encourage this Subcommittee to continue its oversight, which would help ensure this demonstration project will provide a model for contract care coordination.
This concludes my statement. And I would be pleased to answer any questions you or the other Members may have.
[The prepared statement of Mr. Atizado appears in the Appendix.]
Mr. MICHAUD. Thank you very much, Mr. Atizado.
Dr. Zampieri. I'll just call you Doctor for short.
STATEMENT OF THOMAS ZAMPIERI, PH.D.
Dr. ZAMPIERI. Mr. Chairman you were close.
I appreciate the opportunity to testify here today before you and the other Members of the Subcommittee on Health.
Blinded Veterans Association, along with the other veteran service organizations today that appear here that support the Independent Budget (IB) has been concerned about contracted care services within the VA's system for a long time.
And actually, how we ended up here today was I think individuals looked at IB report language and decided that this was an avenue of approach.
Our testimony here basically, you know, we are concerned about the old fee-based system and that VA move to more coordinated, high-quality care with improved access and cost-effective delivery of those services for veterans.
Along with that, any contracted care should essentially ensure full development of bidirectional compatible electronic healthcare record (EHR) so that VA clinicians and health care providers can access all of the clinical notes or diagnostic services being provided by any outside contracted care.
The IB stressed that participating preferred providers should use a provider pricing program to receive discounted rates for services rendered to veterans with only credentialed, high-quality providers utilized in contracted care. Customized provider networks should complement the capabilities of and the capacity of each VA Medical Center and not replace those as the veterans' first choice of care. The VA health care system has undergone tremendous positive changes in the past decade, bringing it high acclaim for its leadership in quality and for its outstanding utilization of information technology and electronic health care records in advancing health care for our Nation's veterans.
We are concerned about the impact of this on academic affiliations. And again I want to stress on the impact of staffing decisions made at local VA medical centers within the four networks where Project HERO is currently going on. We want to make sure that there is full transparency in regards to the costs in the program and the reporting of the records to the VA in a timely fashion on any outside tests that are done, or consults, or procedures that are done.
The VA's confronted with an extremely complex social medical system challenge today. The American health care system, as everyone in this room knows, has been brought before Congress this past year in regards to recommendations on changing health care access. And all of this is going to have an impact on the VA system. And these are all difficult challenges.
Long-term comorbidities, unique mental health problems, the triad of access, cost, and quality that all impact the decision making practice and health care environment are all impacting this.
We have some recommendations here. And rather than read through all those, I think I will go to my conclusion and to just say that we, again, appreciate the opportunity to be able to present the testimony here today.
It is sort of interesting in the fact that today we are not sure where exactly health care reform is going to end up, and what specific changes may occur, and how those will impact the VA's system.
And hopefully, Project HERO and other contracted care will be looked at closely in regards to how the VA improves its services and the ability of veterans to access the system.
Thank you again for the invitation to testify today. I would be happy to answer any questions.
[The prepared statement of Dr. Zampieri appears in the Appendix.]
Mr. MICHAUD. Thank you very much, Dr. Zampieri.
Mr. Edelman?
Mr. EDELMAN. Yes, sir. Good morning, Mr. Chairman, Mr. Brown, other Members of this distinguished Subcommittee. First off, Vietnam Veterans of America wants to thank all of you for the work you have done and continue to do on behalf of America's veterans. It is critical. And we appreciate it. I think I can speak for every veteran in this room.
You are going to be given or have been given a lot of information with a lot of numbers about Project HERO. And we would caution that you do not be bedazzled by the numbers. Yes, there are lots of them.
We believe that it was the intent of Congress to get a handle on, to optimize the money spent for fee-basis care, understanding, of course, that what costs $100 let us say in Boston or in Bangor, Maine, might cost $80 in Dubuque or Duluth.
A commendable purpose from Congress for not an inconsiderable amount of money, as you pointed out, Mr. Chairman, more than $2 billion a year goes to fee-basis care from the Department of Veterans Affairs.
The goal, though, is not to transmogrify the VA health care system. It is to fill in gaps, not to replace wholesale a variety of services in various VISNs. It is to be, to use your words, sir, complementary.
Are the health care services rendered by Humana and by Delta Dental enhancing health care delivery at the Veterans Affairs Medical Centers (VAMCs) and the Community-Based Outpatient Centers (CBOCs) in which this pilot project is ongoing?
Further, while this project was supposed to fill in services when the VA had trouble recruiting key specialists in a reasonable time, are these temporary fixes now becoming permanent? And is the VA, Veterans Health Administration, no longer trying to fill the vacancies on its own staff at relevant VA medical centers? Are they succeeding in filling in the gaps in VA service at a significant cost savings to the VA? We are really not convinced they have, despite the numbers.
During our quarterly briefings with VA officials, we are given thick reports festooned with charts and graphs and numbers. What we are not given is any real evidence that HERO is improving or enhancing care available at the VAMCs and CBOCs.
What seems to have evolved is a parallel health sub-system in these VISNs. This is our concern. What was supposed to supplement or complement VA health care seems to be supplanting basic care and not only in rural and remote areas. This was not, we believe, the intent of Congress.
Through the fiscal largesse of Congress for VA health care operations over the past 3 years, it seems to us that rather than pay a middleman, which is what Humana and Delta Dental are, the VAMCs and the VISNs ought to be able, on their own, to get a handle on dollars for doctors and other clinicians whose fee-basis services are necessary for the provision of timely health care to veterans who either reside inconveniently away from VA facilities or who cannot get appointments in a reasonable amount of time, either with primary care providers or with specialists.
VVA sees no reason why internal units at these VISNs and VA medical centers can't assemble a roster of clinicians and regulate fee-basis care, insuring that such care is available, is of high quality, and can be integrated into the VA's electronic health record system.
Just as important, the entire business model of HERO threatens the underpinning of the VA health care system. VISN and VAMC directors can find it fiscally advantageous in the short term to outsource more and more of their services. This can, and we believe will, eventuate in the shuttering of outpatient clinics as well as, potentially, VA medical centers.
We agree with the statement by then Chairman Steve Buyer who stated on March 29, 2006, "This initiative is not intended to undermine our affiliations, or lead to expanded outsourcing or the replacement of existing VA facilities. It should instead help us learn how to improve some of the contracted care we now provide and the way we provide it."
If Project HERO accomplishes this, then it will have been a worthy experiment. But that is all it ought to be, an experiment, and not an answer.
Thank you.
[The prepared statement of Mr. Edelman appears in the Appendix.]
Mr. MICHAUD. Thank you very much. I appreciate all of your testimony this morning. I have one quick question for Mr. Atizado.
You provided some examples of instances where Project HERO does more for our veterans than the existing fee-basis programs, most notably the collection and tracking of certain data. Can you summarize for us the elements of Project HERO you believe have the potential to improve the current fee-based programs if they were to be applied systemwide?
Mr. ATIZADO. Thank you for that question, Mr. Chairman.
One thing I would like to point out at the outset is that Project HERO is a contract-based system, health care?is contract based. Fee based on the other hand is more like fee services, much more passive.
While there are lessons learned and proven concepts that have been gathered out of Project HERO, as I listed in my oral testimony, whether that can be applied to fee basis I think may be prove more difficult, simply because it is a different program all together.
Although, the idea that VA can track and manage the care that a veteran receives in the private sector I think should be the end goal of any non-VA purchase care program that VA manages.
Fee basis is fraught with problems. And to compare Project HERO to fee basis, in my opinion, it sets such a low bar that a comparison with it is going to turn out good regardless.
So I don't know if I was able to answer your question. But it is very hard to do that, sort of to transport what we have learned with Project HERO to fee basis in my opinion.
Mr. MICHAUD. Thank you. This question is for everyone on the panel. As you know, the VA was supposed to involve the VSO community as it was implementing Project HERO.
Do you feel the VA has adequately involved your different organizations as they have moved forward with Project HERO? If not, how could they do so, so that there is more transparency?
I will start with Ms. Williams.
Ms. WILLIAMS. They have been transparent as far as the quarterly updates with the information. I think the only thing that they could perhaps do is be more in depth with the patient satisfaction.
As Adrian stated, you know, we should have some kind of way to find out definitely. We are getting numbers, and we are getting charts. But, you know, we need more in-depth analysis of the care that they are receiving.
Mr. MICHAUD. Mr. Atizado?
Mr. ATIZADO. Mr. Chairman, as my colleague, Mr. Edelman and Denise, had mentioned, these quarterly briefings are most definitely heavy with data.
My only critique is that the information that is provided to us on a quarterly basis is not necessarily presented consistently. There are certain things that they want to present to us. There are certain things that the VSO Committee wants to find out.
And, unfortunately, things such as access to care, travel time, patient satisfaction, as well as contract requirements the information that VA has provided to us we cannot compare across the board.
Whether it is comparing to HVHS, Delta Dental, the VA facilities by VISN, or by non-VA provider, it just?we can't do?I can't?personally can't do a spreadsheet to show the scoring for each one of those. It is very hard to do a very good comparison under Project HERO.
But I must say the Chief Business Office has been working extremely hard to do that. Even though at times for the information that we ask they don't have the structure or the means to do it, they still try and provide surrogate information.
Mr. MICHAUD. Doctor?
Dr. ZAMPIERI. Yes. I just concur with my colleagues here on that. The briefings are very good. There is a tremendous amount of data.
You know, the 800-pounds gorilla in this room right now, that it would be interesting to see if anybody dares say this is, you know, you look at the total costs of VA's contracted care and fee basis in the last 3 years.
I mean you talk about health care costs in this country and escalating and inflation rates. And where are we going to be in 2 years? What is the total cost going to be for all this?
See nobody wants to, oh, well, you know, we will go into microscopic details of the numbers of veterans in each medical center that has been referred or whatever. You know, the reports are huge. Where are we going? Are we going to spend $5 billion in 2 years?
You know, that is what is going to impact the system. That is what the medical center directors who are bold enough to talk in confidentiality about this are afraid of.
You know, I mentioned in my testimony, and I don't want to go too long here, but, you know, health care in this country and everything else associated with it, you know, if we start to cut Medicare plans, what happens in that impact with, you know, veterans? Is it going to force more veterans into the system and more enrollment, and, therefore, you know, more utilization, more costs?
I am not sure where we are headed. And I don't think?well, we will leave it to others to see where we are headed. Thank you.
Mr. MICHAUD. Thank you.
Mr. EDELMAN. Mr. Chairman, let me say that initially the VA was not transparent at all. HERO was a done deal, period, end of story. It was only when the VSOs basically demanded that we get quarterly updates, quarterly briefings, that we finally got them.
This wasn't any largesse on the part of the VA. Now we do get quarterly briefings in which we listen to the numbers. We do criticize. We do ask questions. And I believe that many of our questions do get responses, replies. And they are trying to understand our concerns, because I think they realize we are all in this together.
And they also are under the glare of the floodlights. so to speak, in Congress.
Mr. MICHAUD. Thank you.
Mr. Brown?
Mr. BROWN OF SOUTH CAROLINA. Thank you very much for your insight.
Let me just ask a couple of general questions. And this will be to all the members of the panel.
You expressed concern that under this demonstration project VA will pay significantly, expand contract care without safeguards of VA high-quality standards. What safeguards are missing? And what recommendations do you have to ensure that the necessary safeguards are in place?
I guess number one, let me preface this by saying, do you think this is a good idea or not a good idea?
Ms. WILLIAMS. We believe Project HERO is an excellent project program, especially for the veterans in the rural areas.
As stated in my testimony, we see where the veterans in rural areas are little utilized in this program. And, you know, with the current conflict going on, a lot of veterans they tend to move away from the urban areas into the rural areas.
And so this has really enhanced the care that they are receiving. So I would say that it is an excellent program. And the concern is that Project HERO will not remain permanent and it won't eliminate the veterans health care system for veterans. It is a temporary fix and that the VA should be able to meet the desires for the veterans to receive their care at a facility. So I do believe it is an excellent program.
Mr. BROWN OF SOUTH CAROLINA. I know I had the opportunity to go up to the Chairman's district in Maine about 5 or 6 years ago and had some town hall meetings with the veterans there.
I don't know whether you have been to Maine or not. But it is a pretty big expansive territory. Is it half as big as Texas? It is the next largest State to Texas?
Mr. MICHAUD. Correct.
Mr. BROWN OF SOUTH CAROLINA. But not including, you know, Alaska. But they have got like 1.1 million?
Mr. MICHAUD. 1.3.
Mr. BROWN OF SOUTH CAROLINA. 1.3, oh it is growing some. And so that is a major problem to try to, you know, address the health care for those veterans that might be 300 miles away from a facility? And so this was just kind of an idea to try to bridge that.
But I certainly, you know, appreciate everybody's input. I have a couple of other questions. But if anybody else would like to fill in. Do you think the quality of care is being sacrificed doing this?
Mr. ATIZADO. Ranking Member Brown, that is the million dollar question, one of I should say. There hasn't been any, as far as I know, I don't think VA has actually looked at comparing the quality of care. I mean, there are a number of ways to measure that and to compare it. But I don't think it has been done.
I think the idea that resting on credentialed providers, licensed providers, and having set up a patient safety process whereby is a patient has a complaint of has an adverse event, that the current Project HERO has something to address that I think is one thing. And to actually compare to actual VA care is another.
I certainly don't have the information nor can I tell you here today that, in fact, it is as good or better than VA care.
Mr. BROWN OF SOUTH CAROLINA. Do you think the 2 billion is too much? I know that somebody expressed maybe it might grow even more. But do you think the money that is being spent in this program is diminishing the care in the conventional VA health care delivery? Do you think they are competing against each other or supplementing each other?
Mr. ATIZADO. That is a very complex question, Ranking Member Brown. The problem with?in my opinion, the problem with trying to ascertain whether or not a non-purchase care program that VA has is supplanting or complimenting the overall VA health care system.
It really depends on how you want to measure that. If you talk about, as my colleague, Mr. Edelman, here had mentioned, that there are staffing vacancies that haven't been filled. If you want to use volume of services, if you want to use cost that is being expended for these services, there are a number of ways to answer that.
But I really think it is a dangerous position. It is a hard position to be in to make that call, because that really depends on the facility and the VISN and their responsibilities to protect the VA.
When we start getting down that road, if it gets very complicated very quickly, because we are, in fact, making a judgment call on how well the facility and the financial officer of that facility or the VISN is doing its job.
Mr. BROWN OF SOUTH CAROLINA. Mr. Chairman, I notice my time has expired.
Mr. MICHAUD. Thank you.
Mr. McNerney?
Mr. MCNERNEY. Thank you, Mr. Chairman. You know, it is gratifying after all the complaints we hear from various parts of the country about the VA. How the real experts are saying our veterans want to stay in the VA system. The VA hospital really provides the best care.
So it is really gratifying to hear that from you. I appreciate those sorts of comments.
And I am hearing that overall Project HERO is satisfactory. Veterans are getting reasonable treatment, reasonable expectation. One thing I am concerned about is outreach. How effective is the message out there to veterans that aren't within some enactment area? How effective is the message that they can take part or participate in this sort of a program?
Whoever wants to answer that question. Mr. Edelman, do you have a comment?
Mr. EDELMAN. I am not sure I have an answer to that, sir. We don't know what their outreach precisely is in any of the four VISNs. So I really find it difficult to answer that question.
But if I might, I just would like to reply to something that Mr. Brown said. HERO is an experiment. It is a pilot project. But we still believe that the safeguards for health care for veterans is better provided within the VA health care system, not out of it.
Yes, there is a need for out-of-system services. But the VA itself ought to be able to recruit these health care providers in rural and remote areas as well as in inner cities and get the word out to the veterans residing in these places.
Mr. MCNERNEY. Thank you.
Ms. Williams, I think I understood you to say that there were unnecessary delays in proving cases for Project HERO. And that it is better to go ahead and make those assessments quickly and then later decide if that was a problem or not. Is that what I understood you to be getting at there?
Ms. WILLIAMS. Yes, sir. That was my recommendation. Instead of having the veteran wait around to receive the care, perhaps they should mirror the practices of the private sector. Allow the veteran to receive the care and then later on do the reimbursement and oversight.
And if the physician in fact over provided care to the veteran, then they can go back and take actions later on instead of having them sit around, because as we know, the wait time was one of the main concerns in the VA system. And if Project HERO is supposed to be a fix for that, we feel like we should try to eliminate that.
Mr. MCNERNEY. Thank you.
One of the themes that I hear from this panel, and I am sure the other panels as well, is that we don't want Project HERO and the other fee-for-service type programs to replace VA services.
And Mr. Edelman just reinforced that with his statement. And I think that that is excellent feedback from you all. And I am sure that we will try to do our best to make sure that that doesn't happen.
But there are cases, obviously, where it is not practical to put up a VA facility. And I think everybody understands it. And also it has been difficult to recruit qualified people to be in the VA.
So there is certainly a need for this. And I am happy to hear that the program is moving along okay.
Dr. Zampieri, you did mention that you had some concern about this elephant of the cost increase in the next few years. And I think that is an excellent point. Is your concern that the increase in health care costs in general is going to drive veterans that are not in the system now to come into the system, driving up the cost to the VA? Was that sort of what you were getting at there?
Dr. ZAMPIERI. I think it is a combination of different things that are impacting the system.
You know, it is interesting most of the health care dollars are spent for procedure for encounter driven types of services. In other words, the more patients that come in for?
Mr. MCNERNEY. Right.
Dr. ZAMPIERI[continuing]. X-rays, or lab, or for whatever, the more, you know, collections occur or, are paid for that way.
And then, you know, whereas, if you look at a different way of maybe managing this is comparative and concurrent performance data, which is not a usual part of health care culture. Reimbursement that instead of it being procedure or encounter driven is more geared towards outcome and bundle the payment, you know, which is going on some?
Mr. MCNERNEY. So are you referring to services within the VA, or HERO type services, or services in the health care system in general?
Dr. ZAMPIERI. Yes, outside of the VA. Yes, outside of the system, and how it is currently done, and how that impacts VA's fee basis and contracting of services.
Are you just going to keep?let me make it more clear. Are you just going to keep paying for individual encounters and individual procedures, or are you going to try to really, if you want to do a pilot study, you create something where you say, okay, I have got, you know, X number of patients and they have congestive heart failure, diabetes or whatever. And we are going to give you a performance kind of payment for, you know, the care for that person for a year.
Mr. MCNERNEY. Right.
Dr. ZAMPIERI. Or, you know, they do that like I said with surgical procedures now.
Mr. MCNERNEY. Well, I have sort of outrun my time here, so I need to ask you to wrap it up. And then I am going to yield back.
Mr. MICHAUD. You finished?
Dr. ZAMPIERI. Yes.
Mr. MICHAUD. Okay. Mr. Teague?
Mr. TEAGUE. No, thank you. I will pass.
Mr. MICHAUD. Well thank you very much.
Once again, I want to thank the members of this panel for their testimony this morning. We look forward to working with you as we move forward to try to get our questions relating to Project HERO answered.
I am quite confident there will be some more written questions coming your way. So please get the replies in as soon as you can.
So once again, thank you very much.
Mr. EDELMAN. Thank you.
Mr. MICHAUD. I would ask the second panel to come on up.
We have Mr. Panangala who is from the Congressional Research Service (CRS) and Ms. Finn from the Inspector General's Office (VA OIG). Ms. Finn is accompanied by Mr. Abe.
I want to thank the second panel for coming forward. I look forward to your testimony. We will start with Mr. Panangala.
STATEMENTS OF SIDATH VIRANGA PANANGALA, SPECIALIST IN VETERANS POLICY, CONGRESSIONAL RESEARCH SERVICE, LIBRARY OF CONGRESS; AND BELINDA J. FINN, ASSISTANT INSPECTOR GENERAL FOR AUDITS AND EVALUATIONS, OFFICE OF INSPECTOR GENERAL, U.S. DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY GARY ABE, DIRECTOR, SEATTLE OFFICE OF AUDITS AND EVALUATION, OFFICE OF INSPECTOR GENERAL, U.S. DEPARTMENT OF VETERANS AFFAIRS
STATEMENT OF SIDATH VIRANGA PANANGALA
Mr. PANANGALA. Chairman Michaud, Ranking Member Brown, and distinguished Members of the Subcommittee on Health, my name is Sidath Panangala. I am from the Congressional Research Service.
I am honored to appear before the Subcommittee today. As requested by the Committee, my testimony will highlight observations on the implementation of Project HERO. My testimony is based on the CRS report that has been submitted for the record.
Let me just lay out some of the policy discussion here and then jump into some of the questions that we were trying to answer.
Policymakers and other stakeholders hold a variety of views regarding the appropriate role of the private sector in meeting the health care needs of eligible veterans. Some believe that the best course for veterans is to provide all their needed care in VA facilities under the direct jurisdiction of the VA.
On the other hand, some see the use of the private sector as important in assuring the veterans' access to a comprehensive slate of services, in particular, specialty services that are needed infrequently or in addressing geographic or other access barriers.
Those who believe that all needed care should be provided by the VA and VA-owned facilities are concerned that the private sector options for providing care to veterans will lead to a dilution of quality of the health care system and could fail to leverage the key strengths of the VA's health care network.
Still others hold the view that over the long term, having private sector options could improve the quality of services within the VHA network through competition.
Reaching the correct balance between providing care through the VA's network and through non-VA providers is an issue for policymakers, as well as for the VHA and other stakeholders.
There are at least two policy questions about Project HERO that may be of interest to Congress. Has Project HERO enhanced the existing fee basis care program? Are there findings from Project HERO that could be applied to standardize the fee basis care program throughout the VA health care system?
Now let me attempt to answer these questions. Has Project HERO enhanced fee basis care? During our visits to three of the four demonstration sites, we heard mixed reviews about the pilot. Some categorized it as a "tool in a toolbox," meaning that Project HERO was one of many options the VA medical facilities could use to provide care outside the VA health care system.
Some officials categorized Project HERO as a "concierge service" where Humana Health Care guides the veteran in scheduling the appointments, ensures that the clinical information is provided back from the network provider to the VA, maintains a credentialed network of providers, and then provides claims payment to the health care providers.
Are there lessons to be learned from the pilot? Establishing a robust network of providers takes time, even when dealing with a health care system that has already been established like Humana.
Most VISNs stated that early on in the pilot Humana had a fair to moderate success in building its network of providers within the VISN. And that the short implementation period between the time the contract was first awarded and then became operational in January 2008 was inadequate to establish a robust network.
Second, establishing services and pricing and keeping them up-to-date is a challenge. Some VISNs stated that clinical care services included in the contract were based on prior needs that did not meet the current needs of the network. Some VISNs maintained that some contract pricing is higher than what VA would have paid under the regular fee basis care and some were cost-prohibitive when the value-added fees were included.
Education is needed for a successful functioning of the program. And most of the VISNs we spoke to mentioned that educating providers about the program was a challenge.
And finally, the project has yielded information that could be applied to the existing fee basis care program.
First, without electronic sharing of medical records between the VA health care system and non-VA providers, there are delays in the transfer of clinical information. In some instances this delay may result in a VA provider not being alerted to the need for immediate follow-up care required on a diagnosis or a laboratory result. And this applies to both Project HERO and fee basis care.
Second, VHA's regular fee basis care program could adopt certain quality metrics that are currently used under Project HERO, such as how far the veteran travels to receive his or her care as well as how long the veteran waits once he or she arrives for an appointment.
Last, VA could develop a provider network within each VISN that the veteran could be referred to so that the veteran receives the care from a provider who has been credentialed similarly to a VA provider.
However, prior to implementing this pilot demonstration throughout the VA, it may be useful to conduct an independent evaluation to conclusively measure if Project HERO has been a worthwhile effort.
This concludes my statement. I will be happy to answer any questions the Committee may have.
[The prepared statement of Mr. Panangala appears in the Appendix.]
Mr. MICHAUD. Thank you.
Ms. Finn?
Ms. FINN. Thank you. Chairman Michaud, Mr. Brown, and Members of the Subcommittee, thank you for the opportunity to discuss our findings related to the Veterans Health Administration's purchases of health care services for non-VA providers.
I am accompanied today by Mr. Gary Abe who is the Director of our Seattle Audits and Evaluations Office.
In fiscal year 2009, VHA's medical care budget totaled about $44 billion. We estimate that VHA spent about $5.3 billion, that is 12 percent, to purchase health care services from non-VA entities. They used various mechanisms, including sharing agreements, Federal Supply Schedule contracts, the Non-VA Fee Care Program, Project HERO, and the Foreign Medical Program.
According to the VHA managers, the authority to purchase services from non-VA sources helps to improve veterans' access to needed health care services.
Our audits have found that VHA has not established effective policies and procedures to oversee and monitor the services provided by non-VA providers.
As a result, they cannot ensure that the services are necessary, timely, high quality, and appropriately billed and paid for.
During our audit of non-competitive clinical sharing agreements, we found that performance monitoring for surgical and anesthesiology services provided by contracted physicians at the VA medical centers needed strengthening.
For agreements based on providing a specified number of medical professionals, the contracting officers technical representatives did not monitor the actual amount of time worked or whether the hours worked met the requirements.
For procedure-based agreements, the oversight personnel did not always ensure that VHA actually received or needed the services and that contractors correctly calculated Medicare-based charges.
We projected that strengthening controls over the performance monitoring would save VHA about $9.5 million annually or $47.4 million over 5 years.
Our 2009 audit of the non-VA outpatient fee-care program found that VA had not established adequate management controls and oversight procedures to ensure that it accurately documented, authorized, and paid for outpatient fee services.
In fact, the medical centers improperly paid 37 percent of outpatient fee claims by making duplicate payments and paying incorrect rates. As a result, we estimated that in fiscal year 2008, the medical centers overpaid $225 million and underpaid $52 million to fee providers.
When we look at the impact over 5 years, VHA would overpay $1.13 billion and underpay $260 million for a net overpayment of almost $865 million.
In addition, for 80 percent of outpatient fee claims we reviewed, the medical centers did not adequately document the justification for using fee care or properly preauthorize the services. This increases the risk of additional improper payments.
While purchasing health care services from non-VA providers affords VHA flexibility in terms of expanded access to care and services, it also poses a significant financial risk when adequate controls are not in place.
With non-VA health care costs expected to increase, VHA needs to strengthen performance monitoring over the clinical sharing agreements and improve controls over claims processing and the authorization of fee services.
Without adequate control, VHA lacks reasonable assurance that it is receiving the services it pays for, that the services are needed, or that the prices paid are correct.
In both of our audits we recommended internal control improvements to increase accountability for purchased health care activities.
Mr. Chairman, thank you for the opportunity to testify today. Mr. Abe and I would both be pleased to answer any questions that you or the other Members of the Subcommittee may have.
[The prepared statement of Ms. Finn appears in the Appendix.]
Mr. MICHAUD. Thank you very much.
Mr. Brown?
Mr. BROWN OF SOUTH CAROLINA. Ms. Finn, could you tell me what you think the major reason was for the underpayment/overpayment of those fees?
Ms. FINN. Yes. Mr. Abe is going to answer that.
Mr. ABE. Basically, our outpatient fee audit identified two major issues that contributed to the improper fee care payments.
The first one is the VHA had not identified core competencies or established mandatory training for the fee clerks. During our interviews with the fee staff, fee staff expressed frustration that they did not have the necessary training to do their jobs. Thus did not have a thorough understanding on how and when to apply the various fee payment methodologies.
For example, fee staff incorrectly paid professional charges. When paying of fee services, medical centers may incur two types of charges, professional charges and facility charges. Professional charges are the fees paid to clinicians for services provided.
Professional charges are paid using a payment hierarchy. The hierarchy requires that the medical centers reimburse providers at the lowest rate between the Medicare physician fee schedule and the VA fee schedule.
Mr. BROWN OF SOUTH CAROLINA. So they establish the reimbursement rate based on those factors?
Mr. ABE. Right, based upon the hierarchy.
Mr. BROWN OF SOUTH CAROLINA. Right. And will the supporting service provider agree to those terms?
Mr. ABE. Yes. There could also be a contract rate if VA established a contract with a provider or a hospital. This contract rate for fee services supersedes the scheduled rates that I mentioned before, even if it is higher. So you have this payment hierarchy.
What our audit found is that VHA did not have a specific training module that provides the in-depth training on the specific payment methodologies I discussed.
Additionally, what we found is that only 53 percent of the fee staff at the medical centers that we visited had attended any basic fee training.
The second issue is VHA's lack of regulatory authority to support payment of outpatient facility charges. Facility charges include space, supplies, ancillary servi
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