- Contact the Committee

Mr. Chairman and members of the committee, thank you for the opportunity to testify today on behalf of the National Association of State Veterans Homes (“NASVH”) on the issue of long-term care for veterans. I am pleased to serve as the 2003–2004 President of NASVH. Since 1999, I have been the administrator of the Scarborough Maine Veterans’ Home. In that role, I oversee a 150-bed facility which provides skilled nursing care, skilled rehabilitation, long-term care, Alzheimer’s care, respite care, residential care, and end of life care to veterans, their spouses, widows, widowers, and gold star parents.
I am joined today by two of my colleagues from across the country. Robert L. Shaw is the Administrator of the Colorado State Veterans Nursing Home at Rifle and the Legislative Officer of NASVH. John M. King is the Director of the Washington State Department of Veterans Affairs and Vice President of the National Association of State Directors of Veterans Affairs.
As the largest deliverers of long-term care to our nation’s veterans, the State Veterans Homes system plays a substantial role in ensuring that eligible veterans receive the benefits, services, long-term health care, and respect that they have rightfully earned by their service and sacrifice to our country. We greatly appreciate this Committee’s commitment to the long-term care needs of veterans, your understanding of the role that State Veterans Homes play, and your strong support for our programs.
NASVH is made up of the administrators and staff of State-operated veterans homes throughout the United States. We currently operate 117 veterans homes in 48 States and territories. Nursing home care is provided in 111 homes, domiciliary care in 52 homes, and hospital-type care in 5 homes. These homes presently have over 27,500 beds and in the most recent fiscal year provided nearly 6 million days of care. Attachment A to my testimony lists the homes and number of beds in each State.
We work closely with the Department of Veterans Affairs (“VA”), State governments, the National Association of State Directors of Veterans Affairs, veterans service organizations, and all other entities dedicated to the long-term care of our veterans. Our goal is to ensure that the level of care and services provided by State Veterans Homes meets or exceeds the highest standards available.
Role of the State Veterans Homes
State Veterans Homes first began serving veterans in the wake of the Civil War. Faced with a staggering number of soldiers and sailors in critical need of long-term medical care, and with the capacity of the Federal veterans home system unable to meet the demand, several States established veterans homes to provide for those residents who had served honorably in the military.
In 1888, Congress authorized Federal aid to States which maintained homes in which certain disabled American soldiers and sailors received long-term care. At the time, the payments amounted to about 30 cents per resident per day. In the years since, Congress has made several major revisions to the State Veterans Homes program to expand the base of payments to include specialized hospital, nursing home, and domiciliary care.
Today, State Veterans Homes operate under a program administered by the Federal Department of Veterans Affairs (“VA”), which offers construction grants and per diem payments to support State Veterans Homes. Both the VA construction grants and the VA per diem payments are essential components of support. Each State Veterans Home meets stringent VA-prescribed standards of care, which exceed standards prescribed for other long-term care facilities. The VA conducts annual inspections to ensure that these standards are met and to certify the proper disbursement of funds. Together, the VA and the State Homes represent a very effective and financially-efficient Federal-State collaboration in the service of our veterans.
Construction grants are authorized by 38 U.S.C. §§ 8131–8137. The objective of such grants is to assist the States in constructing or acquiring State Home facilities. Construction grants also can be utilized to renovate existing facilities, and this recently has become a more important activity. Construction grants made by the VA may not exceed 65 percent of the estimated cost of construction or renovation of facilities, including the provision of initial equipment for any such project.
The per diem payments to State Homes are authorized by 38 U.S.C. §§ 1741–1743. They are intended to assist the States in providing for the higher level of care and treatment for eligible veterans in recognized State Veterans Homes which meet standards prescribed by the Secretary of Veterans Affairs. As you know, the per diem rates are established annually by Congress. They are currently $56.24 per day for nursing home care and $26.95 per day for domiciliary care.
State Veterans Homes are in a period of sustained managed growth – the result of increasing numbers of elderly veterans who have reached that time in life when long-term care is needed. In fact, we face the largest aging veterans population in our nation’s history, with our veteran population growing substantially each year, and creating a growing demand for service to long-term care veterans. The State Veterans Homes program must continue to grow in a managed fashion to fill the existing unmet need for long-term care beds for veterans in certain States, and to meet generally the annual absolute increase in the number of veterans eligible for such long-term care nationally.
Specifically, the VA has identified six States as having either a “great” or “significant” need to build new State Veterans Homes beds immediately. These six States are Florida, Texas, California, Pennsylvania, Ohio, and New York. In response to this need, Florida has five new homes in the planning stages, and Texas has five additional homes in the planning stages and a sixth new home under construction. California has three new homes approved. Pennsylvania has one new facility under construction, Ohio has two new facilities underway, and New York has one new facility pending construction.
The VA State Veterans Homes construction program is working well. According to priorities set by the VA, 37 construction projects that will add needed new beds to the State Veterans Homes system are either underway or planned in 20 States, including Florida, New York, Louisiana, Connecticut, Arkansas, Pennsylvania, California, Texas, Maine, and Ohio. In addition, numerous other renovation projects within the State Veterans Homes system are either underway or planned in several other States, including Illinois, Kansas, South Carolina, and Colorado. Attachment B to my testimony lists the projects in progress.
Most importantly, the State Veterans Homes system can construct and operate these long-term care facilities for veterans at less cost to taxpayers than can the Federal government. For example, the average daily cost of care for a veteran at a long-term care facility run directly by the VA is estimated nationally to be $376.55 per day. The same average daily cost of care at a State Veterans long-term care facility is estimated to be far less. For example, the average daily cost for long-term nursing care at Maine Veterans’ Homes is only $185.51. The same cost of care at a Washington State Veterans Home is $231 per day, while Florida’s cost of care is estimated to be in the range of $200–243 per day.
These total costs per day for long-term veterans nursing care are all significantly less than what it costs the VA to deliver a similar service. This, in part, prompted the VA Office of Inspector General to conclude in a 1999 report: “the SVH [State Veterans Home] program provides an economical alternative to Contract Nursing Home (CNH) placements, and VAMC [VA Medical Center] Nursing Home Care Unit (NHCU) care” (emphasis added). In this same report, the VA Office of Inspector General went on to say:
A growing portion of the aging and infirm veteran population requires domiciliary and nursing home care. The SVH [State Veterans Home] option has become increasingly necessary in the era of VAMC [VA Medical Center] downsizing and the increasing need to discharge long-term care patients to community based facilities. VA’s contribution to SVH per diem rates, which does not exceed 50 percent of the cost to treat patients, is significantly less than the cost of care in VA and community facilities.
Threat to State Veterans Homes Program
Unfortunately, there now exists an immediate and severe threat to the State Veterans Homes program that we hope the Members of this committee will consider and address this year. The use of VA per diem payments by many States is threatened by interpretations of Medicaid rules by the Centers for Medicare & Medicaid Services (“CMS”). This threat is applicable to States that have elected to fund their State Veterans Homes in part through Medicaid.
The State Veterans Homes are financed in many different ways, but in recent years, a growing number of State Veterans Homes have decided to become Medicaid-certified nursing homes. This provides the opportunity for those homes to use Medicaid funds to help defray costs. There are approximately 20 States where the State Veterans Homes are Medicaid-certified.
For those States, there is some ambiguity regarding the treatment of the VA per diem. Under the interpretation of its Medicaid rules being advanced by CMS, VA per diem payments would be considered a third party payment in the Medicaid-certified States. This would require that the entire amount of the VA per diem be offset against Medicaid payments, thereby denying veterans who receive Medicaid in these States any benefit whatsoever of the VA per diem payments.
This result obviously frustrates the intent of Congress in establishing the VA per diem payment system in the first place. For more than 100 years, the Federal government has provided support for the State Veterans Homes. Since 1960, this support largely has been in form of the VA per diem payment. State Veterans Homes are required to meet very stringent and very costly VA standards for veterans care as a condition for receiving these per diem payments. The CMS interpretation, however, would deny the State Veterans Homes system and the veterans residing in it any benefit whatsoever from such VA per diem payments, thus effectively treating veterans no differently than non-veterans, conflicting directly with the intent of Congress to provide our veterans with a stricter standard of care.
In my own State of Maine, this interpretation is also contrary to State law, which provides that “the Maine Veterans’ Homes retain as direct income revenue any stipend funds they may receive from the Federal Veterans’ Administration for the homes’ entire eligible resident population.” Other States have also determined to treat the per diem stipend in this same manner, while still other States have chosen to offset the payments against their Medicaid funding.
The result of the CMS interpretation would be to force the State Veterans Homes that do not currently offset the VA per diem payments against Medicaid funding to look for alternative funding sources, reduce their standard of care, and possibly to close certain State Veterans Homes. At the Maine Veterans’ Homes, the VA per diem payments are the difference between our Veterans’ Homes system operating in the black or operating in the red. We simply could not provide the level of service we currently provide to our veterans if Medicaid funding were to be offset against the VA per diem amount.
Many costs of care are not covered by Medicaid or other Federal programs and must nonetheless be paid for by the State Veterans Homes. Our fear is that an insistence by CMS on the current CMS interpretation would jeopardize the funding balance for many Medicaid-certified State Veterans Homes across the country, particularly during a period when States face severe fiscal crises. In other States, the per diem offset issue is a looming financial threat that will severely limit funding choices for State Veterans Homes in those States until the problem is solved.
Proposed Legislative Solution
A clarification to the law to solve this problem would make clear that VA per diem payments would not be required to be treated as a third party payment under Medicaid. Federal law already includes exceptions for similar payments, including those made under the Indian Health, Community Health, and Migrant Health programs. Clarifying that the VA per diem similarly should not be treated automatically as a third party payment would eliminate the threat to States that are Medicaid-certified. For the majority of States, which are not Medicaid-certified, there would be no effect. And because such proposed legislation would clarify the law as it is currently being implemented and applied, there would be no new costs to the Federal government.
Legislation to clarify this issue was considered previously by Congress, in 1986. The legislation was approved in the Senate but not enacted. In the intervening years, the number of affected States has increased and the confusion surrounding the treatment of per diem payments within the Medicaid system has grown. It is essential and urgent that Congress clarify the matter now and ensure that the long-term care promises that we have made to our veterans are kept. If this issue is not dealt with promptly, many States will face serious financial crises in the funding for State Veterans Homes. Mr. Chairman, we look forward to working with you and Members of the Committee on this important matter, and I thank you for the opportunity to testify today.
Attachments