INTRODUCTION

Chairman Michaud, Ranking member Congressman Brown, and members of the House Veterans Affairs Subcommittee on Health, on behalf of the Blinded Veterans Association (BVA), thank you for this opportunity to present our testimony today on the Healthcare Effectiveness through Resource Optimization Project “HERO.” BVA is the only congressionally chartered Veterans Service Organization (VSO) exclusively dedicated to serving the needs of our Nation’s blinded veterans and their families for over 64 years.

The Veteran Service Organization Independent Budget (VSOIB) stresses how important and critical it is that VA solve the growing problem of contracted care from the old fee basis services system into a more coordinated, high quality care system with improved access, and cost effective delivery of those services for veterans. Along with this, any contracted care must eventually ensure full development of bidirectional compatible Electronic Health Record (EHR) where VA clinicians can immediately access all contracted care clinical notes or diagnostic services provided by contractors. These changes will improve the coordination of care plans between VA and private providers. BVA also believes that contracted care must not negatively impact current VA clinical capacity or existing specialized rehabilitative or academic affiliated training programs.  The VA track record on the fee basis billing  has not been good and we point to the recent VA OIG Report No 08-02901-185 released August 3, 2009 “Audit of Veterans Health Administration’s Non-VA Outpatient Fee Care Program” as evidence of the problems associated with the current contract system.

During 4-year period of fiscal years FY 2005-2008, outpatient Fee Care Program costs have more than doubled from $740 million to over $1.6 billion and in FY 2008 VA paid about 3.2 million out-patient fee claims. VA IG reports, “made significant number of improper payments (37 percent of paid claims reviewed), such as duplicate claim payments, and incorrect payment amounts.” If the current contracted Fee programs have these issues, BVA requests assurances that the diversion of funds into the on going HERO project has full transparency and accounting of the total costs. Of concern is reports from local VA medical facilities of complaints that VA centers are having budgetary related staffing problems today, even after the large increases provided by this congress. One fear is expansion of contracted services hurts VA internal staffing more as more care is outsourced. While we appreciate that VHA business office staff have provided regular briefings to the VSOs about the status of Project HERO, there has certainly been concerns on information regarding total costs, types of healthcare provided to veterans ranging from primary care services verses expansion into specialist care, and what will determine which veterans are further enrolled (other than four VISN networks general geography being the deciding point). There should be further questions of VA about how Project HERO is going to evolve in the next year. Some should today still ask “Why was only one large contractor used for all four VISN networks instead of two or more managed care competitive organizations for comparison purposes of access, quality outcomes, clinical care costs, and meeting VA contract goals?” VHA started the contract of outsourcing services for Project HERO with Humana in 2007 with this five year pilot now half way completed with some questions about if this meets the needs of VA for contracted care for evaluation purposes.

In the midst of leadership changes now in VHA we stress accountability and transparency as essential for this healthcare program before any further decision is made on contracted care services. We notice one report that some 27 percent of all CBOC’s now are contracted medical staffed clinics along with what Project HERO is performing for VA. In rolling out this project, some frequently referenced the section of the Independent Budget (IB) that recommended changes in the fee-basis system and current contracting of services as the justification. Nevertheless, the IB recommended that “contracted care be used judiciously and only in specific circumstances when VA facilities are incapable of providing the necessary care or geographically inaccessible to the veteran, and in certain emergency situations so as not to endanger VA facilities’ ability to maintain a full range of specialized services for all veterans.” The idea behind Project HERO now at times seems to be advancing towards enrolling as many veterans in entire geographical regions into managed care for medical services possible. This idea is different from the concept of improving the current system with Preferred Providers so that VA’s integrated clinical and claims information technology system becomes efficient, cost effective, and with high-quality processing.

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 capacity of each VA Medical Center and not replace those ever as the veterans’ first choice of care. The VA health care system has undergone tremendous positive changes in the past decade, bringing it recent high acclaim for its leadership in quality and for its outstanding utilization of information technology EHR in advancing health care for our Nation’s veterans.

What veterans request from Congress is the ability to obtain local primary care services in certain geographical locations if no VA-based outpatient services currently exist and those providers have the technological ability to interact with the VA facility that has provided them with other specialized services, medications, or diagnostic care. Having an elderly or disabled veteran who has difficulty traveling long distances for VA care receive locally contracted care and preventative medical services is an extremely different proposition than opening “enrollment of veterans in a widespread geographical area” to managed-care organizations. In an industry in which CEOs search for competitive advantages in the marketplace, one must ask why there were so many for-profit health care management organizations lined up initially in a bidding contest for the main contract—unless of course the profit margins- were going to meet the needs of the bottom line as a first priority. Now that in 2009 all contracted VA services is going over $ 3.4 billion it is a growing economic target of opportunity especially with proposed large Medicare managed care cuts inserted into health care reform.

Reforms have been implemented by private, for-profit managed care health organizations outside of VA during the past couple of decades and these reforms, some critics would argue, have caused consumer revolts. The critics also claim that such reforms have forced many new federal and state regulations, more tort claims, rising inflation rates of 11 percent in 2003-2004 period premiums, growing deductibles, and an increase in for-profit corporate mergers.  Strategic plans are frequently based on the best economic interests of investors, not the consumers. Stories of healthcare providers within HMOs being forced to order profitable laboratory or technological tests in order to increase revenue have not been uncommon.  Demands to increase productivity by mandating minimum numbers of daily encounters in order to generate sufficient revenue have also occurred. VA administrators may claim that these are outside private sector issues, but we recommend careful consideration of this track record, while VA moves closer to this method of care in the next couple years.   

With Project HERO we do applaud that the Program Management Office (PMO) monitors quality by access to care, provider credentialing, facility accreditation, clinical information sharing patient satisfaction surveys, and peer reviewed triggers for safety. There is high level of Clinical Quality Management oversight on the care provided and frequent meetings between HVHS, Humana, and VA on reviewing the services provided is good news. Satisfaction rates from surveys are reported to be at 77 percent from veterans surveyed slightly higher than VA care surveys. The average disbursed amount per outpatient is $1,064 for Project HERO and higher $1,782 for other Fee Service care is a positive sign in the reports we have received..

VA is confronted with extremely complex medical-social service challenge, in the face of American health care reform before congress today. With an aging veteran population with multiple conditions along with the returning war wounded requiring specialized resources and the requirement to meet rural health care access demands of veterans, while improving quality and increasing enrollment. These are all difficult challenges, with long term co morbidities and unique mental health problems, the triad of access, cost, and quality continues. These challenges abound within the environment of the VA budgeting system and we thank the members of this congress for passage of Advanced Appropriations, as one step to lower stress on the system. Project HERO may show some cost savings with Humana but this requires more assessment. Reforms driven by cost-conscious market forces without adequate oversight are often complex, chaotic, and disabling to those caught up in these changes. According to the “chaos theory” a small change in input can quickly translate into overwhelming differences in output. As has already has been demonstrated in this country’s history, any changes in the three basic tenets of healthcare delivery—quality, access, and cost—results in significant changes in one or more of the others.

RECOMMENDATIONS

VA should establish a contracted care coordination program that incorporates the Preferred Pricing Program based on principles of sound medical management and to meet veterans’ specific needs for services.

The components of a care coordination program should include claims processing, health records management, and centralized appointment scheduling. VHA must establish current and comprehensive policies and procedures, core competencies with training for fee staff, and clear oversight procedures for the Fee Program.

Veterans’ electronic medical records are properly updated with data regarding any care provided by non-VA providers so records are fully integrated, there is seamless continuum of care that facilitates improved healthcare delivery and access to quality care.

Contracted healthcare services must be able to move a veteran from outpatient clinic care to ambulatory care diagnostic services, and into all other VA medical care service, while avoiding fragmentation of the care. VA also should develop a series of tailored pilot programs to provide VA-coordinated care in a selected group of rural communities. As part of these pilots, VA should measure the relative costs, quality, satisfaction, degree of access improvements, and other appropriate variables, as compared to similar measurements of a like group of veterans in VA health care. Local VAMC budgets for staffing must be maintained and contracted costs should be incorporated into VISN budgets to prevent internal cuts in services for veterans dependent on the VAMC.

In addition, the national Preferred Pricing Program’s network of providers should be leveraged in this effort. Each pilot also should be closely monitored by the VA’s Rural Veterans Advisory Committee. These same pilots can in turn be tailored to create a more formal surge capability addressing future access needs.

Congress should request GAO study assessing the effectiveness of contracted care services, costs analysis, VA impact on staffing, and provide evaluation of the efficiency of Project HERO is meeting goals in FY 2010.

The VHA provides a uniform medical benefits package to all enrolled veterans, regardless of their enrollment priority group, that emphasizes preventive and primary care, and offers a full range of outpatient and inpatient services and prescription medications.  Accordingly, enrollment in the VHA health care program must be considered acceptable health care coverage and VA protected in any health care legislation before congress, in the same manner as members of the uniformed services and their dependents, including Civilian Health and Medical Program of the VA (CHAMPVA) coverage furnished under section 1781 of title 38 United States Code, so that they will not be subject to any tax or penalty for lack of health care coverage. Further the VA should be protected from other federal agencies administration of new health care panels or exchanges. We require that specific language is inserted assuring protection of the VA system of health care.  

 CONCLUSION

Once again, Mr. Chairman, thank you for this opportunity to present our testimony on Project HERO. Health care problems confronting the nation are complex and are going to continue to be cause of heated debate in this session and the VA will be impacted just like Medicare, Medicaid, along with the uninsured, regardless of how the final bill is written. The future of managed-care organizations, once considered the answer for many of the health care issues twenty years ago has dimmed considerably as rising costs still dominate every aspect of the system and the numbers of uninsured hit estimates of 49 million. Veterans who served and defended this country deserve to be guarded from being increased market shares. BVA again expresses thanks to the committee for this opportunity to present our testimony and will answer any questions you have.