Mr. Chairman, and Members of the Subcommittee, thank you for inviting me to testify here today at this hearing on H.R. 4241. My name is Kelley J. Kash, and I am the Chief Executive Officer of the Maine Veterans’ Homes. The Maine Veterans’ Homes strongly supports H.R. 4241.

The Maine Veterans’ Homes is a public non-profit system of State Veterans Homes established by the government of the State of Maine. We currently operate 640 skilled nursing, long-term care nursing, and domiciliary beds at six locations throughout the State of Maine, at Augusta, Bangor, Caribou, Scarborough, South Paris, and Machias. The Maine Veterans Homes operates its nursing facilities entirely with its own employees, under a Board of Trustees appointed by the Governor of Maine, and we have no management arrangements with private corporate entities.

The Maine Veterans’ Homes is located in one of the 30 States in the nation that have Medicare-certified and /or Medicaid-certified State Veterans Homes. In fact, all nursing facilities of the Maine Veterans’ Homes are both Medicare and Medicaid certified, and we have operated successfully in this manner for almost 30 years. As such, the Maine Veterans’ Homes provides in conjunction with the Medicare and Medicaid payment systems a wide range of post-acute, post-operative, and rehabilitative services to Maine veterans, at no cost, or at very low cost, to such veterans. Such post-acute, post-operative and therapeutic care is known in the health care community as “skilled nursing care.”  The Maine Veterans’ Homes provides a lot of skilled nursing care to Maine veterans, and as you have heard here today, skilled nursing care is precisely the type of nursing care for which the VA’s new 70 Percent Program causes a State Veterans Home to incur the greatest financial losses.

The more skilled nursing care that a State Veterans Home provides to veterans under the 70 Percent Program, the larger are its losses. In fact, the Maine Veterans’ Homes has estimated that, based on the demographics of the Maine Veteran Population, if we were to admit every veteran in Maine that reasonably could seek admission to the Maine Veterans’ Homes under the 70 Percent Program, the Maine Veterans’ Homes would sustain a net loss of between $8 and $16 million per year, and be bankrupt within 1 ½ to 3 years. Concerning this fact, it is important to note that the 70 Percent Program in its final form, contrary to Senator Akaka’s original intent, does not serve only those “severely-disabled service-connected veterans” with a 70 percent or greater disability. The 70 Percent Program serves any veteran with a service-connected disability of as low as 10 percent if that service-connected disability in any way requires nursing home care. Furthermore, if a State Veterans Home were to provide any significant amount of skilled nursing care, post-acute care, post-operative care, or therapeutic care to a veteran under the 70 Percent Program (to say nothing of kidney dialysis services, hospice services, therapeutic radiation, oncology services, expensive drugs, or even dentistry) a State Veterans Home is almost guaranteed of incurring substantial financial losses under the 70 Percent Program.

This is why the testimony of the President of the National Association of State Veterans Homes (NASVH), Colleen Rundell, from the State of Vermont, argues the VA’s numbers simply do not add up and that the VA’s 70 Percent Program substantially underpays a State Veterans Home for providing skilled nursing care to service-connected disabled veterans. This is why the testimony from the State of Hawaii State Veterans Home demonstrates that it is losing money at the rate of more than $600,000 per year, in its only home, under the 70 Percent Program, and has lost money consistently under the 70 Percent Program since the Program became effective on May 29, 2009. This is why the State of Hawaii previously has called the 70 Percent Program a “financial disaster.” This is why the State of Tennessee reports that its State Veterans Homes are currently incurring losses of approximately $1.4 million per year under the 70 Percent Program and anticipates that these losses will increase. This is why NASVH’s National Legislative Director from the State of Nevada has called the reimbursement methods under the VA’s 70 Percent Program a “nation-wide problem,” and why the Nevada State Veterans Home has entirely avoided admitting any service-connected disabled veteran under the 70 Percent Program since the Program became effective. This is also why the Maine Veterans’ Homes has admitted no veteran intentionally under the 70 Percent Program since the Program became effective. This is exactly the opposite result that Congress hoped to achieve by the enactment of the legislation that became the 70 Percent Program.

In order to illustrate the financial losses that would be incurred by the Maine Veterans’ Homes if we were to provide skilled nursing care to substantial numbers of service-connected disabled veterans at our nursing facilities under the 70 Percent Program, as opposed to being reimbursed under Medicare or Medicaid, we pulled the files of six typical skilled nursing residents at our facilities.  These files showed that we would lose an average of $238 per resident per day under the VA’s 70 Percent Program compared to existing sources of funds such as Medicare or Medicaid. These data are consistent with the facts being reported here today by other Medicare-certified and Medicaid-certified State Veterans Homes and also by such homes in other States throughout the nation. The only State Veterans Homes in the nation that have any hope of not incurring substantial financial losses under the VA’s new 70 Percent Program are those State Veterans Homes which are not Medicare or Medicaid-certified or which only provide a minimal amount of skilled nursing care. The financial summary of our investigations of actual resident records is appended to my testimony.

Since the 70 Percent Program became effective on May 29, 2009, we have met several times with VA officials including Dr. James Burris, who testified before you today. Frankly, Dr. Burris does not understand the problem that the 70 Percent Program poses for State Veterans Homes that provide skilled nursing services under Medicare and Medicaid, and he does not understand the enormity of this problem for the majority of the States in the nation. In simple language, the VA’s 70 Percent Program does not pay State Veterans Homes enough to provide skilled nursing care to veterans. 

In short, in implementing the 70 Percent Program, the VA replaced a payment system that pays adequately for skilled nursing care at State Veterans Homes (Medicare/Medicaid) with a payment system that pays inadequately for skilled nursing care at State Veterans Homes (the 70 Percent Program). This has caused Medicare and Medicaid-certified State Veterans Homes to avoid or refuse admission to service-connected disabled veterans requiring skilled nursing. This is clearly not what was intended by Congress when it passed the legislation that eventually became the 70 Percent Program.

To make matters worse, shortly after this hearing was scheduled, the Togus VA Medical Center at Augusta, Maine, on February 1, 2010, advised the Maine Veterans’ Homes by telephone, that upon the oral “direction” of the VA central office, it was withholding all VA per diem payments from the Maine Veterans’ Homes because it suspected that some eligible veterans in Maine were not being enrolled mandatorily in the 70 Percent Program – the same program that could cost Maine Veterans’ Homes an estimated minimum of $8 million per year. The VA’s illegitimate and wholesale withholding of all VA per diem payments without justification by itself could have cost the Maine Veterans’ Homes an estimated $800,000 per month unless we had successfully complained to the VA that it was unlawfully withholding funds from us. The VA in the past has said that it could cure the problems with the 70 Percent Program administratively, but it has not done so. The result has been a 70 Percent Program in chaos. We have simply run out of patience with the VA. The VA can no longer hide its head in the sand from the disarray that it has created for our nation’s veterans and our nation’s State Veterans Homes.

What should be done about this? First, Congress should allow State Veterans Homes the option of continuing to receive payments from Medicare or Medicaid, plus the basic (lower) VA per diem rate for the care of service-connected disabled veterans, until the VA can devise a permanent system and adopt regulations under the 70 Percent Program to pay State Veterans Homes at rates comparable to those available from Medicare and Medicaid, plus the basic (lower) VA per diem rate. The VA should be required also to pay any co-pay required by a veteran for the receipt of Medicare or Medicaid benefits under the 70 Percent Program, so that such care is at no cost to the veteran. “Payment in full” by the VA to a State Veterans Home for a veteran’s nursing home care means “payment in full” to a State Veterans Home for a veteran’s nursing home care. Second, Congress should allow State Veterans Homes to use the existing VA Community Nursing Home Contract program so that we can provide immediate long-term care services to service-connected disabled veterans at no cost to such veterans.

The enactment of H.R. 4241 would give the VA the authority to accomplish both of these goals quickly, and we urge its speedy passage. We thank the Chairman and members of the Subcommittee for the opportunity to testify today, and we look forward to working with both Congress and the VA to effect a permanent solution to the substantial financial problems of the VA’s current 70 Percent Program.

Maine Veterans Homes-Sample of 70 Percent Disabled Veterans Admissions

Maine Veterans Homes-Projected Losses from 70 Percent Disabled Veterans Program Admissions