[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
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
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COMMITTEE ON VETERANS' AFFAIRS
BOB FILNER, California, Chairman
CORRINE BROWN, Florida STEVE BUYER, Indiana, Ranking
VIC SNYDER, Arkansas CLIFF STEARNS, Florida
MICHAEL H. MICHAUD, Maine JERRY MORAN, Kansas
STEPHANIE HERSETH SANDLIN, South HENRY E. BROWN, Jr., South
Dakota Carolina
HARRY E. MITCHELL, Arizona JEFF MILLER, Florida
JOHN J. HALL, New York JOHN BOOZMAN, Arkansas
DEBORAH L. HALVORSON, Illinois BRIAN P. BILBRAY, California
THOMAS S.P. PERRIELLO, Virginia DOUG LAMBORN, Colorado
HARRY TEAGUE, New Mexico GUS M. BILIRAKIS, Florida
CIRO D. RODRIGUEZ, Texas VERN BUCHANAN, Florida
JOE DONNELLY, Indiana DAVID P. ROE, Tennessee
JERRY McNERNEY, California
ZACHARY T. SPACE, Ohio
TIMOTHY J. WALZ, Minnesota
JOHN H. ADLER, New Jersey
ANN KIRKPATRICK, Arizona
GLENN C. NYE, Virginia
Malcom A. Shorter, Staff Director
______
SUBCOMMITTEE ON HEALTH
MICHAEL H. MICHAUD, Maine, Chairman
CORRINE BROWN, Florida HENRY E. BROWN, Jr., South
VIC SNYDER, Arkansas Carolina, Ranking
HARRY TEAGUE, New Mexico CLIFF STEARNS, Florida
CIRO D. RODRIGUEZ, Texas JERRY MORAN, Kansas
JOE DONNELLY, Indiana JOHN BOOZMAN, Arkansas
JERRY McNERNEY, California GUS M. BILIRAKIS, Florida
GLENN C. NYE, Virginia VERN BUCHANAN, Florida
DEBORAH L. HALVORSON, Illinois
THOMAS S.P. PERRIELLO, Virginia
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
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of converting between various electronic formats may introduce
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further refined.
C O N T E N T S
__________
February 3, 2010
Page
Review of the U.S. Department of Veterans Affairs Contract Health
Care: Project HERO............................................. 1
OPENING STATEMENTS
Chairman Michael Michaud......................................... 1
Prepared statement of Chairman Michaud....................... 35
Hon. Henry E. Brown, Jr., Ranking Republican Member, prepared
statement of................................................... 35
WITNESSES
Congressional Research Service, Library of Congress, Sidath
Viranga Panangala, Specialist in Veterans Policy............... 14
Prepared statement of Mr. Panangala.......................... 46
U.S. Department of Veterans Affairs:
Belinda J. Finn, Assistant Inspector General for Audits and
Evaluations, Office of Inspector General................... 15
Prepared statement of Ms. Finn........................... 62
Gary M. Baker, MA, Chief Business Officer, Veterans Health
Administration............................................. 27
Prepared statement of Mr. Baker.......................... 74
______
American Legion, Denise A. Williams, Assistant Director, Veterans
Affairs and Rehabilitation Commission.......................... 2
Prepared statement of Ms. Williams........................... 36
Blinded Veterans Association, Thomas Zampieri, Ph.D., Director of
Government Relations........................................... 5
Prepared statement of Dr. Zampieri........................... 42
Delta Dental of California, P.T. Henry, Senior Vice President,
Federal Government Programs.................................... 23
Prepared statement of Mr. Henry.............................. 73
Disabled American Veterans, Adrian Atizado, Assistant National
Legislative Director........................................... 4
Prepared statement of Mr. Atizado............................ 37
Humana Veterans Healthcare Services, Inc., Tim S. McClain,
President and Chief Executive Officer.......................... 22
Prepared statement of Mr. McClain............................ 65
Vietnam Veterans of America, Bernard Edelman, Deputy Executive
Director for Policy and Government Affairs..................... 7
Prepared statement of Mr. Edelman............................ 45
MATERIAL SUBMITTED FOR THE RECORD
Hon. Michael H. Michaud, Chairman, Subcommittee on Health,
Committee on Veterans' Affairs, to Sidath V. Panangala,
Specialist in Veterans Policy, Congressional Research Service,
The Library of Congress, letter dated February 16, 2010, and
response memorandum dated May 14, 2010......................... 77
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] 81
Hon. Michael H. Michaud, Chairman, Subcommittee on Health,
Committee on Veterans' Affairs, to Tim S. McClain, President
and Chief Executive Officer, Humana Veterans Healthcare
Services, Inc., letter dated February 16, 2010, and response
letter dated March 29, 2010.................................... 83
Hon. Michael H. Michaud, Chairman, Subcommittee on Health,
Committee on Veterans' Affairs, to P.T. Henry, Senior Vice
President, Federal Government Programs, Delta Dental of
California, letter dated February 16, 2010, and Delta Dental
responses...................................................... 90
Hon. Michael H. Michaud, Chairman, Subcommittee on Health,
Committee on Veterans' Affairs, to Hon. Eric K. Shinseki,
Secretary, U.S. Department of Veterans Affairs, letter dated
February 16, 2010, and VA responses............................ 91
REVIEW OF THE
U.S. DEPARTMENT OF VETERANS AFFAIRS
CONTRACT HEALTH CARE: PROJECT HERO
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WEDNESDAY, FEBRUARY 3, 2010
U.S. House of Representatives,
Committee on Veterans' Affairs,
Subcommittee on Health,
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 on p.
35.]
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 ensure 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 meets 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 on p. 36.]
Mr. Michaud. Thank you very much. Mr. Atizado.
STATEMENT OF ADRIAN 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 on p. 37.]
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
health care 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 on p. 42.]
Mr. Michaud. Thank you very much, Dr. Zampieri.
Mr. Edelman.
STATEMENT OF BERNARD 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 on p. 45.]
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
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-pound 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 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, 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 on p. 46.]
Mr. Michaud. Thank you.
Ms. Finn.
STATEMENT OF BELINDA J. 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 on p. 62.]
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 services, and other
overhead.
The current Code of Federal Regulation does not authorize
VA to use Medicare payment methodologies to pay facility costs.
Because VHA does not have the regulatory authority to support
payment of these outpatient facility charges, we found that
clear guidance on how to pay for the facility charges to be
lacking.
Consequently, VHA has no assurance that the amounts--
medical centers pay for facility charges are consistent,
reasonable, or proper.
Mr. Brown of South Carolina. Let me interrupt you just a
minute again. Do you think it might be better than if the VA
contracted a third-party collection?
Ms. Finn. That certainly is an option that they could use.
Having a third party would give you a professional staff to do
this all the time. Although the VA staff does do it all the
time.
Mr. Brown of South Carolina. But are they in each VISN? Are
they----
Ms. Finn. Yes, sir.
Mr. Brown of South Carolina [continuing]. In some kind of
central?
Ms. Finn. There are a few centralized billing centers at
some of the VISNs. But for the most part, the medical centers
all handle the bills from the fee providers at each medical
center.
Mr. Brown of South Carolina. Like in my case in Charleston,
you know, the local VA hospital is the--they collect the bills
and disperse the costs, the payments, I guess?
Ms. Finn. Yes.
Mr. Brown of South Carolina. Is that right?
Ms. Finn. That is correct.
Mr. Brown of South Carolina. Wow, I can understand then how
that would be, you know, tough to control.
Ms. Finn. It makes it tougher. Yes, much more difficult.
Mr. Abe. It makes it tougher for the facilities as well as
for the VA.
Mr. Brown of South Carolina. Right. But it looked like to
me they would have some kind of--did you all look into some
kind of a central for the group?
Ms. Finn. Yes, we did. There are some centralized payment
facilities. And we did visit them I believe. But we didn't find
any particularly different results.
Mr. Brown of South Carolina. Really, 30 something percent?
Ms. Finn. That is an overall rate.
Mr. Brown of South Carolina. With the collection groups,
too?
Mr. Abe. Pardon?
Mr. Brown of South Carolina. If you contract a third-party
collection group, the error rate was no different?
Mr. Abe. Oh, I think we misunderstood what you said. Are
you asking whether or not we went to a third-party collection
group?
Ms. Finn. There are none.
Mr. Abe. No, we did not.
Mr. Brown of South Carolina. Okay. Are you all looking into
maybe doing that?
Ms. Finn. I believe VHA is evaluating the possibility of
centralizing more of their payment process. I don't know that
they are considering contracting.
Mr. Brown of South Carolina. I know your nursing homes and
these other, you know, facilities are included as $5 or $7
billion. Their way of collecting is the same as the HERO's
program?
Ms. Finn. I believe the nursing homes bill to the medical
centers, also. Sorry, that is correct.
Mr. Brown of South Carolina. Okay, thank you.
Mr. Michaud. Mr. McNerney.
Mr. McNerney. Thank you, Mr. Chairman.
Ms. Finn, interesting testimony for sure. You use some
strong language I think, insufficient oversight, inadequate
management. It is sort of subjective judgment.
How do you think this compares as a whole to what you would
find in a Medicare investigation or Medicare? Is it going to
be--I know it is a smaller set of Federal programs. But, in
general, is it comparable in terms of what you are seeing
there, or is it worse, or what would be your feeling on that?
Ms. Finn. I don't have any data on what type of payment
error rate they have in the Medicare program. I would suspect
that some of the issues we found in terms of duplicate payments
in that both a medical facility like a hospital would bill for
medical services and then the doctor would bill separately. I
think we would have the same kind of issues even in a Medicare
billing or any kind of insurance programs.
The problem is the ability to take those bills and handle
them accurately on the other end. In VA it is a very manual
process. For our auditors, when they were comparing bills, they
had to manually look through transactions to determine that the
payment for that physician services had already been paid as
part of a medical facility bill or separately.
Mr. McNerney. You know, my understanding is that actual
human eyes that reduces the fraud, you know, the opportunity
for fraud is that born out here in any way?
Ms. Finn. Mr. Abe will answer.
Mr. Abe. One of the problems with comparing Medicare and
the VA system is that the VA system is very--their automation
systems are very old.
And when you talk about Medicare or any other third-party
billing or paying claims processing centers, their automation
is much more sophisticated, such as artificial intelligence.
They have software edits that in itself will identify duplicate
payments for example.
Under the VA system, what happens in order to identify a
duplicate payment is that the fee clerk has to manually look
through this whole payment history.
Mr. McNerney. Right.
Mr. Abe. And it is very, very difficult, and it is very,
very time consuming.
Mr. McNerney. So it takes more time.
Mr. Abe. Oh, very much so.
Mr. McNerney. But it may be more able to capture misuse of
funds.
Mr. Abe. It is not that accurate.
Mr. McNerney. Okay.
Mr. Abe. I mean, it is very----
Mr. McNerney. Ms. Finn, again, you mentioned in your
testimony growth of a 4-year period--over a 4-year period from
2005 to 2008 from $740 million to $1.6 billion.
Do you have any idea what sort of causes of that explosive
growth are for outpatient fees?
Ms. Finn. I would be speculating if I were to give you an
answer. I believe it would probably be due to the increase in
claims in the veteran population and the need for more
specialized services.
I will note one of the things that we were kind of looking
for and did not find was for VHA to be using the information on
what it was paying out for fee-based services. We would hope
that they would use that information to drive improvements in
their medical centers and make decisions on where to provide
the care, you know, and in various specialty areas. And we did
not see that anywhere.
Mr. McNerney. Okay. Let me see here. Mr. Panangala, could
you shed some light on what the criteria was that distinguished
what cases were sent to HERO and what cases were handled by the
fee-based program?
Mr. Panangala. Yes. Thank you for that question.
Generally the way the fee basis care works is that when you
are presented with a situation that because of some reason you
can't provide that care, then the clinician makes a choice
whether the consult should be sent outside.
The way the Project HERO decision is then made is first
they look at can it be provided within network, within our own
facilities. Do we have an affiliate that is already having a
contract with us to do that? In cases we cannot do that, then
we will send it to the Project HERO network, which is already
contracted out.
So I think that is what we heard in some of the VISNs we
went to and when we had briefings with them. Now some had
mentioned that they are trying to have a penetration rate of
about 15 percent so that they can send some of them outside the
Project HERO.
But the decision generally relies on can we do it inside
first. If not, can we send it out.
Mr. McNerney. Can I ask one more question, Mr. Chairman?
You mentioned that the clinician looks at the case first.
So what you are saying is that a qualified medical person is
looking at these cases before it decides to go out to the VA in
the first place; is that correct?
Mr. Panangala. Well, the qualified physician says I need to
perform this test, or I need to perform this procedure. Can the
VA provide it within its network, within its facility.
Mr. McNerney. So is that----
Mr. Panangala. So that when I say I need this procedure
performed----
Mr. McNerney. Right.
Mr. Panangala [continuing]. That goes to a central fee
basis office to make that decision, yes, this needs to go
outside, because we don't have it in house, or we don't have it
with a group already under contract with us, so let us go to
Project HERO.
Mr. McNerney. Okay. Thank you, Mr. Chairman.
Mr. Michaud. Thank you.
Mr. Panangala, can you share your thoughts on the cost
effectiveness of Project HERO compared to the regular fee basis
care program?
Mr. Panangala. Let me try to attempt to answer that
question. Thank you for that.
The VA briefed us about a couple of months back on looking
at trying to cost compare within, let us say, the certain
number of Current Procedural Terminology (CPT) procedures, of
course, they use with what they pay Project HERO.
Now the way VA fee basis works is that once we give an
authorization to a veteran, the veteran then goes out and finds
a physician and gets the service. And then the physician bills
the VA. And then there is sort of a Medicare rate that they
use.
In the Project HERO, the way it works is that you send it
to a network that has already been contracted with Humana. So
Humana has already negotiated the rate with that physician of
what we are going to pay for that service.
So at the end of the day, we are sending those claims to
the VA. And then the VA pays it back to Humana, saying here is
the contract.
So based on what VA has shown us or has at least briefed
us, they say that is a cost savings when the valued added fees
are added in of about $3 million or so in savings. So, I mean,
the VA would be better able to answer that question. But that
is what they have told us. So with the cost fee, because that
is a value added fee added onto these considered services that
they are providing.
Mr. Michaud. Thank you. This question is actually for both
of you.
Project HERO is located in four VISNs. But when you look at
the four VISNs, they have a fee-based care program as well. So
is Project HERO really a pilot project? If we are looking to
compare, should we, for the remaining time for this project,
mandate that they all have to go through Project HERO versus a
fee basis model?
Ms. Finn. My thought would be that you need to look at the
volume of transactions that are coming through Project HERO as
opposed to regular fee-based care.
I don't know that I would recommend that you totally go to
Project HERO in a VISN. I think you might get a better view
across a VISN by having both Project HERO and regular fee basis
care. But I do think you have to have enough basis of both to
make a comparison.
Mr. Panangala. Again, the pilot project--the VA cannot or
the pilot project as it is, HERO, cannot take on all the
services. I think that there is a need for the VA to continue
to provide those services. There are official agreements
already in place. There are contracts already in place. You
cannot say, well, we are now going to send the universities--we
are not going to honor those agreements that have already been
put into place.
So it won't be practical to completely eliminate the VA fee
basis program at the same time.
I think the bottom line here is that we have learned
certain things that could be applied to improve the fee basis
program. There are quality metrics, there is where the claims
are processed, the way the decisions are made.
A lot of things that the VA never learned before, have come
out of this demonstration. And I think there is an opportunity
to apply some of that to standardize under the fee basis care
program, because it is such a diverse program. It is very
local. It varies from VISN to VISN, from medical facility to
medical facility.
And learning those lessons from Project HERO, and, again,
it is still in the third year. We still don't know a lot of
information. It has varied over a period of time in the
contract. So as we move forward, I think there is the potential
to learn from the contract and then apply to the fee basis care
program.
Just to add another thing. I mean, the VA's also working
with Kaiser and other folks to have an integrated medical
record system. And how that is going to play into this type of
network providers will be an interesting question to look at
down the road.
Mr. Michaud. Thank you. Once again, I want to thank the
three of you for your testimony today and I look forward to
working with you as we move forward to further examine whether
or not Project HERO is a good program, and what we can learn
from it.
So once again, thank you.
I would ask the third panel to come up. Tim McClain is
President and CEO of Humana Veterans Healthcare Services, Inc.,
and Patrick Henry is the Senior Vice President for Federal
Government Programs for Delta Dental of California.
We will start off with Mr. McClain.
STATEMENTS OF TIM S. MCCLAIN, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, HUMANA VETERANS HEALTHCARE SERVICES, INC.; AND P.T.
HENRY, SENIOR VICE PRESIDENT, FEDERAL GOVERNMENT PROGRAMS,
DELTA DENTAL OF CALIFORNIA
STATEMENT OF TIM S. MCCLAIN
Mr. McClain. Mr. Chairman, thank you very much. Chairman
Michaud, Ranking Member Brown, and distinguished Members of the
Committee, I am Tim McClain. I am the President and CEO of
Humana Veterans Healthcare Services, the contract partner with
VA in Project HERO. I am accompanied today by my Chief
Operating Officer, Mr. Brad Jones.
On behalf of the dedicated employees of Humana Veterans
Healthcare Services, we appreciate the opportunity to discuss
this very important demonstration project.
Mr. Chairman, I do ask that my written statement be made a
part of the record.
Mr. Michaud. Without objection, so ordered.
Mr. McClain. And also Ranking Member Brown, from all of the
employees of Humana Veterans and from all of the veterans
nationwide, we would like to thank you for everything that you
have done on this Committee. I know that you have made the
announcement that you will not be seeking another term. But I
wanted to convey from this side of the table our thanks for
everything you have done for veterans nationwide.
As this Committee is aware, the veteran-friendly concept
for Project HERO was inspired by this Committee. And it was to
develop a pilot project in partnership with a commercial
company to focus on improved access to care and quality
outcomes for veterans referred to community providers for
specialty health care or other services.
Through collaborative efforts and a very close partnership
with Humana Veterans and VA, we concentrated on three areas
that became hallmarks for this program.
Quality health care services, as I have outlined on page 7
of my statement, timely access to care, and cost effective
care.
Our collaboration with VA has resulted in what we describe
as the HERO model. The model is described more fully in my
written statement beginning on page 3, but it is specifically
designed to enhance the veteran's overall health care
experience and to ensure that quality health care is delivered
to the veteran through a community provider.
As you heard from the Inspector General's testimony and
from the last panel, they make several recommendations for
improvements in VA's administration of fee-based care. I just
want to note that the report that they published, that the OIG
published on August 3rd, 2009, and the testimony today, did not
refer to Project HERO. That was to the regular fee-based
program within VA.
In particular, Project HERO currently addresses many of the
issues that were raised in the Inspector General's report
regarding quality, timely access, clinical return, and
especially the improper payments issue that was discussed by
the previous panel.
And we believe that Project HERO actually could be a part
of the solution for many of these problems in the fee-based
office.
Mr. Chairman, we believe the HERO model should be part of
the solution for several other pressing initiatives within VA.
The HERO model should be standard procedure, first of all, we
believe, in all VA fee offices.
The model already has been shown effectively--its
effectiveness when deployed in rural and highly rural areas as
defined by VA and could be effectively employed to address
women's health care issues in many of the geographic areas.
I would like to give an example. We did an analysis of all
the referrals we have received in VISN 20, which is a fairly
rural area. And of those referrals, 68 percent of the referrals
that we have handled under this contract have been for rural
and highly rural veterans as defined by the VA's Office of
Rural Health Care initiatives.
I also believe that this HERO model can be effectively
employed to handle women's health care issues, women veterans
health care issues. And many of the issues that are regarding
rural health care such as, Mr. Chairman, I know Maine is a
very, very rural area as Ranking Member Brown had mentioned.
And I believe that the HERO model could really be of assistance
in those types of areas.
Mr. Chairman, thank you again for the opportunity to
discuss Project HERO and the important contributions it is
making to quality veterans health care. And I would be glad to
answer any questions from the Committee.
[The prepared statement of Mr. McClain appears on p. 65.]
Mr. Michaud. Thank you.
Mr. Henry.
STATEMENT OF P.T. HENRY
Mr. Henry. Mr. Chairman, Ranking Member Brown, Members of
the Subcommittee. As the Chairman indicated, I am P.T. Henry,
and I am the Senior Vice President for Federal Government
Programs, Delta Dental of California.
And I would like to thank you for inviting me to join you
this morning to talk about our partnership with the Department
of Veterans Affairs in the execution of the demonstration
project we refer to as Project HERO.
Delta Dental is the Nation's oldest and largest provider of
dental services. Through our 39 independent member plans, we
provide dental insurance coverage to over 54 million people in
all 50 States, the Commonwealth of Puerto Rico, the
territories, and other overseas locations.
Approximately four out of every five dentists in the Nation
are affiliated with Delta Dental. And our network of
approximately 140,000 highly qualified dentists is second to
none. Of those, approximately 19,000 are located in the four
Project HERO VISNs.
We at Delta began our journey with the VA when it was then
the Veterans Administration in the late 70s when we
administered the VA Outpatient Dental Care Program in
California.
Over the years, our involvement with the Department has
ebbed and flowed. But what has not changed, however, is our
total commitment to the tremendous men and women who serve our
Nation in uniform.
Today, it is both a privilege and an honor for us to
administer this program in collaboration with the Veterans
Health Administration and the four participating VISNs.
We fully understand and are committed to the goals of
Project HERO as articulated in the underlying statute, the
implementing contract, and the related documents.
At Delta, we see our role not as a substitute for VA care
but rather as an extension of that care when, for whatever
reason, required care cannot be provided at the VA's dental
clinics.
By making our network of providers available, we complement
VHA's in-house capability with high-quality, credentialed
providers with whom we have negotiated discounted rates.
Basically, we believe Project HERO will, in the long run, lay
the foundation that will allow the VHA to provide necessary
care to more veterans for less money than is currently paid for
fee care.
We are working in close collaboration with our partners in
the dental clinics, in the VISNs, and the VHA to improve the
exchange of clinical information between our network providers
and the various elements of the VHA.
While fostering high-quality care and patient safety, we
improve veteran satisfaction and can provide avenues to control
costs while eliminating waiting lists based on commercial
practices.
We see this as being in contrast to the traditional fee
care in which the VA has little influence over the quality of
care yet pays billed charges for all the work that is done.
During the period from January 2008 through December 2009,
we received 20,898 viable authorizations, which resulted in our
making 20,753 appointments for care. Of those, 18,772 have been
seen by a dentist and we have received a claim for the dental
services rendered.
Once treatment is authorized, our veterans are in the
dentist chair on average in 18 days. And during calendar year
2009, over 99 percent were seen in less than 30 days from the
day we first received the authorization.
We see this as a clear indication that the program is
meeting the established objectives. We are proud of this track
record and expect it to improve as we work through the
remaining years of the demonstration.
We believe that the key to this success has been the
partnership forged between Delta Dental and the VHA to ensure
that this demonstration program provides a solid foundation for
future decisions about veteran's dental care.
During the 25 months since contract award, we have worked
to better understand the culture, the attitudes, and the
expectations of our partners, while exposing them to the
benefits that private sector dental plans can provide.
There have been, and will be in the future, bumps in the
road. But together we are working our way through them so we
can move towards the common goals of Project HERO.
As we go forward, we look forward to working together with
our partners at VHA to enhance the overall contribution that
the dental portion of Project HERO can make to the care
provided to our veterans.
We at Delta, from the mailroom to the Executive Offices,
appreciate all you have done and continue to do for the great
men and women who have served our Nation. And, again, I thank
you for the opportunity to appear before you today.
[The prepared statement of Mr. Henry appears on p. 73.]
Mr. Michaud. I want to thank you both for your testimony.
It is my understanding we will have votes at noon, so hopefully
we will get through the last panel. I have a couple of very
quick questions.
Mr. McClain, it is my understanding that Project HERO
reimburses the non-VA providers at the negotiated percentage of
Centers for Medicare and Medical Services (CMS). What is that
negotiated percentage? And how does that apply to all four
VISNs? Because I know that each State gets different Medicare
reimbursement rates. So how is it applied to all four VISNs,
and what is it?
Mr. McClain. Mr. Chairman, it is a very complicated answer
to a very simple question. It is different everywhere you go.
Our contracted rates with the provider are not a standard in
any particular geographic area. It is indeed a negotiated
contract rate with the provider.
So it might be different per provider. And it is certainly
going to be different across the board in all four VISNs.
Essentially under the HERO contract, we have contracted
with VA to provide services by clinical numbers by what are
called Contact Line Item Numbers (CLINs). And they may be
different procedures. They may be several numbers connected
with a particular procedure. So when the VA decides to refer
that procedure out to the HERO network, it would go to our
provider. The provider is credentialed by our network. They
have agreed to see the veteran within 30 days. And they have
agreed that the veteran will not spend more than 20 minutes in
their waiting room.
After the care is delivered, the veteran returns to VA. And
the provider then submits the claim for payment to Humana. So
Humana Veterans actually pays the provider our contracted rate.
And then we submit claims to the VA under the HERO contract.
Mr. Michaud. My second question is what are the driving
costs in rural areas? Is it the availability of providers?
The full Committee actually had a hearing examining how
money is distributed within the VISNs. And quite frankly, when
you look at some of the rural areas, I think they are getting
shortchanged when receiving money from the different VISNs.
So what are the driving costs as you see so far?
Mr. McClain. Well certainly if you have very few or even
only one provider in a particular area, they can drive the
costs as to what they can charge for a particular procedure.
So certainly provider costs are an issue. Trying to get
them under a contract is another issue. And then having some
supporting infrastructure from a network point of view such as
Humana's network, also there is a cost connected with that.
And so the one area that sometimes is overlooked I think in
the rural costs is the cost of getting to care. In other words,
the travel expenses. And I know this Committee recently passed
an increase in the travel reimbursement. That now needs to be
factored into the overall costs of care, no matter whether it
is with VA or outside.
Mr. Michaud. Thank you.
Mr. Henry, in your testimony you noted that from January of
2008 to September of 2009, you received over 18,375
authorizations, which resulted in Delta Dental making 18,205
appointments. What happened to the remaining 170
authorizations? Was it because you lacked the dentist in the
network to provide those, or the veteran decided they no longer
needed it?
Mr. Henry. No. The difference between the authorizations
received and the appointments we make basically fall into a
category of individuals who either have chosen not to make the
appointment, individuals we have been unable to contact, which
by the way is the largest percentage of those who don't seek
the care once we have received the authorization. The next
largest would be those who just made an appointment and didn't
keep it.
So there is a list of--I wouldn't say problems--list of
circumstances under which we would receive an authorization
from the VA, attempt to make an appointment for the individual,
but at the end of the day the appointment is not kept.
Mr. Michaud. Thank you.
Mr. Brown.
Mr. Brown of South Carolina. This is a quick question to
both of you. I know that--well, first of all, Mr. Henry, you
said--I think both of you might have alluded to that you get to
see a doctor, a dentist in your case within 30 days after
authorization. How long does the authorization process take?
Mr. Henry. It would vary. Unfortunately, I would have to
defer that question to our colleagues from VHA, because
basically we start our clock to measure against our contract
metrics once we receive it.
Mr. Brown of South Carolina. And how about once you provide
the service? How long does it take to get you paid? And are you
caught up in that 37 percent error factor?
Mr. Henry. No. Since day one of the contract, we have been
working collaboratively with our partners at VHA to smooth out
the payment process to ensure that we bill accurately and that
we get paid when we are due. And it is an ongoing process. And
the best part about it is that you have two teams working
together to come up with the right answer.
Mr. McClain. Mr. Brown, if I could address that also. That
is one of the advantage of the Project HERO structure is that
you have much fewer improper payments.
One of the issues with improper payments identified by the
Inspector General's report was the fact that there had to do
calculations on their part as to what the appropriate
reimbursement would be for this particular provider.
Under Project HERO, there are contract rates. And so there
is much less of an opportunity to have an improper or an
overpayment.
Mr. Brown of South Carolina. Do you think it would be
better if we went to some kind of a centralized collection
system?
Mr. McClain. That is certainly something VA should look at,
I believe. But I really don't have an opinion as to whether VA
should move to that.
Mr. Brown of South Carolina. All right. Thank you both.
Mr. Michaud. Once again I would like to thank you both for
your testimony this morning. I am sure that we will have
additional questions in writing as well. So once again, thank
you.
Our last panel is Mr. Gary Baker from the Veterans Health
Administration, who is accompanied by Ms. Patricia Gheen and
Mr. Craig Robinson.
I want to thank all three of you for coming today. I look
forward to hearing your testimony.
STATEMENT OF GARY M. BAKER, MA, CHIEF BUSINESS OFFICER,
VETERANS HEALTH ADMINISTRATION, U.S. DEPARTMENT OF VETERANS
AFFAIRS; ACCOMPANIED BY PATRICIA GHEEN, DEPUTY CHIEF BUSINESS
OFFICER FOR PURCHASED CARE, VETERANS HEALTH ADMINISTRATION,
U.S. DEPARTMENT OF VETERANS AFFAIRS; AND CRAIG ROBINSON,
EXECUTIVE DIRECTOR AND CHIEF OPERATIONS OFFICER, NATIONAL
ACQUISITION CENTER, OFFICE OF ACQUISITION AND LOGISTICS, U.S.
DEPARTMENT OF VETERANS AFFAIRS
Mr. Baker. Mr. Chairman, Mr. Ranking Member, and Members of
the Subcommittee, thank you for providing me this opportunity
to discuss the Department of Veterans Affairs' demonstration
Project on Healthcare Effectiveness through Resource
Optimization or as we call it Project HERO.
I am accompanied today by Ms. Patricia Gheen, Deputy Chief
Business Officer for Purchased Care, and Mr. Craig Robinson,
Executive Director and Chief Operations Officer for VA's
National Acquisition Center.
VA recognizes there is an ongoing need for non-VA services
and that purchasing such services is a key component of our
continuum of care. We understand the importance of being good
stewards and carefully managing our programs for purchasing
non-VA services. We have multiple initiatives focused on
improving that management. And Project HERO is a cornerstone of
those efforts.
Congress directed that VA establish at least three managed
care demonstration locations to satisfy a set of health care
objectives related to arranging for and managing purchased care
as has been noted earlier.
Project HERO is now in year 3 of a proposed 5-year pilot
using a contract approach to increase the quality oversight and
decrease the costs of purchased that is fee care.
This pilot is operational in VISNs 8, 16, 20, and 23. These
VISNs have historically high expenditures for fee care and have
substantial Veteran enrollee populations.
Through Project HERO, VA contracts with Humana Veterans
Healthcare Services and Delta Dental Federal Services to
provide veterans with pre-screened networks of doctors and
dentists who meet VA quality standards at negotiated contract
rates.
VA has identified the following objectives for Project
HERO. Provide as much care for Veterans within VA as is
practical.
We are sensitive to the issues and concerns of the VSO
community and the veteran community in general and do try to
provide as much care within VA as possible.
When we refer veterans, we refer them to high-quality
community-based care when necessary to improve the exchange of
medical information between VA and non-VA providers, to foster
high-quality care and patient safety, to control operating
costs, increase veteran satisfaction, secure an accountable
evaluation of the demonstration project itself, and sustain
partnerships with our university affiliates.
Project HERO contracts with Humana and Delta Dental to meet
VA standards for credentialing and accreditation; timely
reporting of access to care; timely return of clinical
information to VA; reporting patient safety issues, patient
complaints and patient satisfaction; and a robust quality
programs including peer review with VA participation, while
meeting Joint Commission and other health care industry
standards and requirements.
Humana uses patient safety indicators, patient complaints,
and referrals as sources for initiating peer review. VA
monitors contract performance, audits credentialing and
accreditation, and evaluates Humana and Delta Dental
performance compared to VA facilities on a range of measures.
This analysis indicates that Project HERO facilities are
equal to or better than the national average for all non-VA
hospitals that report to the Joint Commission.
VA has found that 89 percent of Project HERO contracted
medical prices with Humana are at or below Medicare rates. And
contracted rates with Delta Dental are less than 80 percent of
the National Dental Registry Advisory Service Comprehensive Fee
Report level.
We believe that Project HERO is meeting its objectives by
improving quality oversight, access, accountability, and care
coordination.
Specifically we have found that patient satisfaction is
comparable to that within VA.
Costs for Project HERO are generally comparable to or
slightly below VA costs for other non-VA services.
Humana and Delta Dental providers meet VA credentialing
standards, quality standards, and maintain extensive quality
programs.
Humana and Delta Dental provide timely access to care,
providing specialty or routine care within 30 days 89 percent
of the time for Humana and 100 percent of the time for Delta
Dental.
Both vendors are contracted to return medical documentation
to VA within 30 days. Thereby enabling VA to provide informed
and continuous patient care.
While Humana and Delta Dental are not meeting this 100
percent standard, the contracts provide a vehicle for tracking
medical documentation return that did not previously exist in
our fee program.
We are seeing regular improvement as we work with both
vendors on this particular issue. VA has worked with Humana,
Delta Dental, and participating VA medical centers to make
electronic clinical information sharing available to all
Project HERO participating sites.
While VA recognizes the need to learn from and act upon the
valuable lessons learned through Project HERO, this pilot has
confirmed our ability to address key oversight issues that have
been identified as a program goal.
Mr. Chairman, we appreciate the opportunity to discuss this
initiative with you. My colleagues and I are available for your
questions.
[The prepared statement of Mr. Baker appears on p. 74.]
Mr. Michaud. Thank you very much, Mr. Baker.
So do you believe that Project HERO has actually improved
access to care and has led to a positive change in the quality
of care provided to our veterans?
Mr. Baker. We believe that the HERO model provides better
access to care in a couple of ways, sir.
One, the concierge service, that is where our vendors make
contact with the veteran and individually arrange for them to
have their appointments is certainly a service that is not
available in routine fee care.
Additionally, we are able to monitor that access and the
timeliest of access in a way that we simply can't do for our
regular fee program.
So the fact that I am able in my testimony to address the
specific percentage of time in which the veteran is seen within
30 days is a reflection of the benefit that we get from the
HERO contract approach.
Mr. Michaud. I have heard that Humana does not have access
to the VA's computerized patient record system. The timely
exchange of medical information, is important in ensuring a
high quality of care for our veterans. Is there a reason for
Humana not having this access?
Mr. Baker. Well, VA has recognized the need for providing
access to Humana so that in those instances where sufficient
information isn't initially sent, they have access to the VA
medical record.
We have been working through that. For longer certainly we
would desire. But my understanding is if not this month, next
month that access will be granted. There are security issues
and a number of requirements that have to be met. We have been
working through those over the last several months.
Mr. Michaud. And since this is a pilot program--and you
heard my question to a previous panel about whether or not we
might take one VISN or all four and say it mandates that they
have to all go to Project HERO--my question would be, what
percentage of medical care cases were referred to Humana versus
the fee-based program, and similar for Delta Dental?
Mr. Baker. Right. The aggregate number I am familiar with.
We have compared that. And as a percent of overall fee care for
the combination of the 2, approximately 22 percent over the
last 6 months have gone to HERO as opposed to the fee program.
I also was looking at some of our statistics. And for
quarter one in 2009, the number of veterans who were seen in
HERO was nine percent of the number that we are seeing for fee.
In quarter one of 2010, 31 percent of the veterans seen for
outside care were seen in HERO as opposed to fee.
So there has been an increased utilization and penetration
of our utilization of HERO. We have seen as we have continued
to work with our contract partners and with the medical centers
involved working to smooth out issues of referral and
understanding of the program.
Mr. Michaud. We heard that Humana actually negotiates some
of the rates with the providers. In your fee-based service, did
you negotiate for those rates as well?
Mr. Baker. If we contract for care then clearly there is a
negotiation and agreed upon rate that is identified in the
contract. There are opportunities as we issue individual
authorizations for care for VA to identify an anticipated cost.
But unless the vendor accepts that, we are required to pay them
based on their bill charged and on our fee schedule, which is
75 percent of usual and customary charges.
Mr. Michaud. Thank you.
Mr. Brown.
Mr. Brown of South Carolina. Thank you.
Mr. Baker, you heard testimony I guess from the other
panels and the concerns about how the billing was going and
this sort of thing. Would you consider maybe some kind of a
third-party billing to help the VISNs out?
Mr. Baker. We have performed, actually had an outside
agency perform, a review of options long term for VA in terms
of its management of the non-VA purchase care program claims
processing piece in particular.
That analysis included using an outside vendor, improving
or purchasing a new technology for VA to use to support its
processing of claims, as well as building IT systems in house.
The evaluation was predicated on VA moving towards a more
consolidated or centralized claims processing piece.
While there haven't been any final decisions on that,
certainly we think that in the long term, there is an
opportunity for VA to gain economies of scale, and improve
internal controls by consolidating and centralizing some of its
claims processing activities.
Mr. Brown of South Carolina. Let me go further on this.
What criteria, if any, do participating VISNs use to determine
whether to use Project HERO or traditional fee basis care? And
number two, does it vary from VISN to VISN? And if so, should
there be consistent criteria across the four VISNs?
And then also a follow-up, too. In distributing the payment
to the fee service or to the HERO service, does that come
directly out of the local hospital, or is that--do you have
some kind of collective fund that the--let us say under your
jurisdiction that pays it? How is that?
Mr. Baker. Payment for the services obtained through HERO
are considered part of the operating budget for the individual
facilities. So it is paid locally. It is not paid by any
central fund per se.
In terms of the determination for whether to use fee or
HERO, it is a local determination. It is one of the areas where
as the program office responsible for overall coordination, we
have worked to educate and worked with individual facilities to
make sure they are aware of the HERO contract, the benefits of
the contract.
In some circumstances, there are existing patterns of care
or individual veteran desire that have an impact on where the
veteran is referred. Availability of network resources for our
contract partners are also a factor that is taken into
consideration.
Mr. Brown of South Carolina. So in my case down in
Charleston, I think we go through the Johnson VA Center, a
veteran would call and get authorization then to go to a
private provider?
Mr. Baker. Generally, no. The use of and concept of HERO is
that it is an extension of VA services, not something used in
lieu of that.
So generally the individual is being seen by a VA provider,
their care is being provided by VA, and there is a
determination that they need a specialty care or diagnostic
service that is not available at VA.
In that circumstance then the individual practitioner will
request or recommend that the service be obtained and then
there will be a decision process as to whether or not that is
performed and obtained through a fee-basis activity, through an
alternate existing contract, because some of our participating
facilities have local contracts that had previously been
negotiated, and patterns of referral, or whether they would be
referred to a Project HERO provider through the HERO contract.
Mr. Brown of South Carolina. So that particular entity
would have to bear the costs of the----
Mr. Baker. The local facility bears the costs of the
referral. Whether they choose to do it in-house if they have
that capability, refer them to Columbia or Atlanta if they are
going somewhere in the VA network. Whether they went to a
contract provider, if they contracted with the local affiliate
as an example. Whether they went to HERO or whether they went
to a fee provider in a case where VA provided fee authorization
and possibly a list of known providers who could support that
care.
Mr. Brown of South Carolina. Do you think they are better
served doing that than say having some kind of a central fund
so that they wouldn't look like they would be competing with
their own internal budget?
Mr. Baker. Well we think that management of health care is
a local requirement. And that when you have some of your own
money in the mix, you are apt to be a better financial steward
in terms of managing the care and the budget for delivery of
that care.
I am not sure that there was ever any intent to consider a
centralized payment process for Project HERO per se.
Mr. Michaud. I would like to follow up on Mr. Brown's
question. If you have some of your own money, it would probably
be better managed.
The concern I have comes from a mini-MAC meeting I attended
in Maine just recently. A concern that the VSOs had brought
forward was that fee-based services in rural areas, because of
the demographics, and a lack of availability of providers in
rural areas, and the mileage, for instance, actually costs
more.
However, under the Veterans Equitable Resource Allocation
(VERA), when VA distributes the money to different regions
within that VISN, if they are inadequately funded in the first
place, it is going to prove problematic.
Here is an example. In Maine, for instance, we heard
earlier that one of the costs is mileage reimbursement. The
mileage reimbursement rate went from 11 cents to 41 cents. Now
in Boston, it is a lot cheaper to go to the facility in Boston.
In Maine where you have miles to go, you tend to rack up a lot
of mileage.
So, for instance, Togus paid out $1.5 million in
reimbursement for mileage. It cost, I believe, over $5 million.
So they are operating in the red automatically, because the
funding model is not adequate.
And, likewise, in rural States you have to probably do more
fee-based services than you would have to in Boston, and that
tends to increase costs as well.
So they will have to make a determination of whether or not
they are going to have to cut back on hiring doctors and nurses
or put off purchasing equipment at the medical facility, which
actually doesn't help the veterans out or where we are supposed
to be helping the veterans out, whether you live in an urban or
rural area.
So it may not be true that having a little of their money
in the process will make it more efficient, if they are not
being adequately funded in the first place.
Mr. Baker. Well, I don't profess to be the expert on the
VERA allocation model. And I know that there have been
discussions about that with our financial officer and others.
The VERA model is an aggregate distribution mechanism. And
certainly as an aggregation, there are variations based on a
number of factors that when taken individually can be
questionable. But I think whether or not the aggregate is
equitable and provides sufficient funding is something that is
being tested over time. And VA continues to try and tweak the
model.
In terms of HERO per se and fee care, they are considered
an integral component of managing the care of the veteran. And
as such, the individual facilities are responsible for
delivering that care and management.
We try to balance the needs of the individual with the
available resources at our individual medical centers. And we
know that there are variations based on urban versus rural, et
cetera.
There was previous discussion, I think, by one of the panel
members, previous panel members, asserting that HERO supports
rural care and makes resources more available.
We have done some analysis there. There is some slight
improvement in availability of resources and network through
using HERO as opposed to straight fee. And certainly VA is very
aware of rural issues and has a rural health office. We are
partnering with them in working on a rural fee pilot going
forward.
Mr. Michaud. And when is that fee pilot expected to get up
and----
Mr. Baker. We have been working with Ms. Vandenberg and her
shop in terms of that. While they have the lead for that, we
are providing program expertise. Part of the issue has been
developing a specific criteria and some of the requirements
that were in the law in terms of when exceptions can be made,
et cetera.
I understand that regulatory process is in process and that
those rules hope to be promulgated in the near future.
Mr. Michaud. Looking at fee-for-service and other issues
can you tell me the driving costs in rural areas? Do you feel
that the VERA model is adequate to make sure that those costs
are addressed?
Mr. Baker. I really can't give an opinion on whether VERA
is adequate or not adequate in terms of rural health. Certainly
the drivers for rural health have been mentioned earlier. One
is access and another is simple availability.
And if there is availability, whether or not there is
competition when there is availability, so that there is
potential for some price competition.
Additionally, as you indicated earlier, transport of the
individual, even if they have a car or ready transport, the
cost of that transport has to be taken into consideration. And
VA is sensitive to those both in terms of costs, but also in
terms of delivering quality service to veterans and a
satisfactory experience to them as well.
Mr. Michaud. My last question, which actually was brought
up by the previous panel, is when you look at access issues and
availability in rural areas and the fact that Project HERO
actually negotiates for their rates, and they are based on CMS
rates, have you looked at where that actually might be a
disincentive, as in Maine and I am sure other States as well
for providers? When you look at reimbursement rates, we have
providers who are refusing to take on any more Medicare or
Medicaid patients, because Medicare pays anywhere from 20 to 30
percent less than what it actually costs to provide the
service. Medicaid pays only about 65 percent of what Medicare
pays.
So a provider is only going to be able to operate on the
fringe for so long. And we have heard that some providers are
refusing to take any more Medicare or Medicaid patients.
So what are you looking at when you look at rural health
care, particularly if you have to negotiate for rates? That
might be a disincentive to providers that actually provide the
service for our veterans.
Mr. Baker. Right. Well, VA is sensitive to the issues of
the marketplace, rural and other factors are taken into
consideration. As a national strategy, we are trying to link
our reimbursement schedules to CMS rates, so that their
standardization helps in communication with our vendor
participants and helps in terms of internal controls, et
cetera.
But our authority to provide fee services and contract
services allows us to exceed that standard if that is necessary
for us to gain access and assure veteran access for the
services that they require.
And we have examples where we contract for services and
those services are contracted at rates above and in some cases
well above CMS to assure that veterans have access to the
services they needed. And we would expect to continue that in
the future as necessary.
Mr. Michaud. Great. Thank you very much all three of you
for your comments this morning, as well as the previous panels.
I look forward to working with you as we address some of these
very important issues on access and quality care for our
veterans.
So without any further questions, I now adjourn the
hearing.
[Whereupon, at 11:56 a.m. the hearing was adjourned.]
A P P E N D I X
----------
Prepared Statement of Hon. Michael H. Michaud, Chairman,
Subcommittee on Health
The Subcommittee on Health will now come to order. I would like to
thank everyone for attending this hearing. Today, we will examine
whether Project HERO (Healthcare Effectiveness through Resource
Optimization) is meeting the goals of delivering efficient, high
quality contract care to our veterans.
Each year, the 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 are geographically inaccessible to the veteran. 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, that continuity of care is monitored and is part of a
seamless continuum of services, and that clinical information flows
back 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 stages of developing and implementing Project HERO, the Full
Committee held a hearing on this issue in March, 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 on-going communication with the VSO community.
We have since learned that the VA is implementing Project HERO in
VISNs 8, 16, 20, and 23. On October 1, 2007, the VA awarded the Project
HERO contract to Humana Veterans Healthcare Services and Delta Dental
Federal Services. We understand that the health care services became
available through Humana on January 1, 2008 and that 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
pilot program and was the VSO community informed and involved? 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 hearing the
testimonies of our witnesses.
Prepared Statement of Hon. Henry E. Brown, Jr.,
Ranking Republican Member, Subcommittee on Health
Thank you Mr. Chairman.
I appreciate your holding this hearing today to examine how well
the Department of Veterans Affairs (VA) is providing health care to our
veterans within their communities--when a VA facility is too far from a
veteran's home or a service is not available within VA.
The use of local, non-VA providers offers greater access to
services and is vital to ensuring that our veterans get the care they
need in a patient-centered manner. Known as the fee-basis program, VA
spent over $3 billion dollars last year, with more than half of this
spending for outpatient care.
Recognizing the size and scope of the fee-basis program, in 2006,
Congress directed VA to establish a pilot program to better manage the
care VA purchases. In response, VA developed Project Healthcare
Effectiveness through Resource Optimization or Project HERO.
The purpose of the Project HERO pilot program is to more
effectively refer and better coordinate fee-basis care, improve the
exchange of information between VA and community providers, and
increase veteran patient satisfaction.
As we enter the third year of the Project HERO pilot, it is
important that we take a critical look at the implementation of the
pilot--its successes and challenges.
VA does not have a standardized method to monitor fee-basis care,
outside of Project HERO. And, it is very troubling that a VA Office of
Inspector General audit of VA's outpatient fee care program last August
revealed significant payment errors and oversight vulnerabilities.
I look forward to hearing from our witnesses today and to examine
how to strengthen controls over VA's fee-basis program to ensure both
high quality care and good management and oversight.
Thank you Mr. Chairman, I yield back the balance of my time.
Prepared Statement of Denise A. Williams, Assistant Director,
Veterans Affairs and Rehabilitation Commission, American Legion
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 (VA) health care contract
program known as Project HERO. These views are based on quarterly
update briefings given to Veterans' Service Organizations (VSOs) by VA
as to status of the Project HERO project.
In 2007, VA began the Project HERO (Healthcare Effectiveness
through Resource Optimization) program as a pilot study. This study, at
the direction of Congress, required VA to examine and execute health
care management strategies. The strategies captured were deemed a
success in the private and public sector. The overall purpose of the
program was to closely manage health care services purchased by VA.
Project HERO, now in its second year of a 5-year pilot to increase the
quality of care and decrease the cost for fee care, is currently
available in four Veterans Integrated Services Networks (VISNs): 8, 16,
20, and 23.
In accordance with congressional oversight, health care purchased
for veterans from the private sector providers must be secured in a
cost effective manner that compliments the Veterans Health
Administration (VHA) system of care as well as maintains a strong
affiliation with medical universities throughout the VA system.
VA's objectives for Project HERO included:
increase the efficiency of VHA processes associated with
purchased care from outside sources;
reduce growth of costs associated with purchased care;
implement management systems and processes that foster
quality and patient safety;
make contracted providers virtual, high-quality
extensions of VHA;
control administrative costs and limit administrative
growth;
increase net collections of medical care revenues where
applicable; and
increase enrollee satisfaction with VHA services.
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 meets the
quality of care standards received at a VA facility. This oversight
would not only assure quality health care, but it will improve customer
satisfaction in the overall process. That 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 preformed, the service provider should
be charged back or decertified for repeat infractions.
As the Department of Defense (DoD) turns to the Reserve components
for additional manpower, the number of veterans residing in rural and
highly rural areas significantly increases. Veterans from Operation
Enduring Freedom and Operation Iraqi Freedom are authorized enrollment
in VA's health care delivery system for 5 years after separation.
Clearly, veterans in rural and highly rural areas continue to be
underserved. These veterans should not be penalized because of their
choice of geographical location. The American Legion urges VA to
improve access to quality primary and specialty health care services,
using all available means at their disposal, especially for veterans
living in rural and highly rural areas.
While not originally designed to address rural health care, initial
results from the four VISNs in the pilot project indicate that Project
HERO process could in fact be an important component to addressing this
health care access issue.
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 most rural and highly rural areas to provide
all veterans with timely access to quality health care in the proper
settings.
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 delivery 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.
That concludes my written statement and I would welcome any
questions you may have.
Prepared Statement of Adrian Atizado, Assistant National
Legislative Director, Disabled American Veterans
Mr. Chairman and Members of the Subcommittee:
Thank you for inviting the Disabled American Veterans (DAV) to
testify at this important oversight hearing of the Subcommittee on
Health. 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 appreciates your leadership in enhancing Department of
Veterans Affairs (VA) health care programs on which many service-
connected disabled veterans must rely. At the Subcommittee's request,
the DAV is pleased to present our views on the VA's Health care
Effectiveness through Resource Optimization (HERO) project. This
demonstration project was directed to be carried out by the Conference
Report on VA's fiscal year (FY) 2006 appropriation, Public Law 109-114.
Congress deemed it essential that care purchased from private sector
providers for enrollees of the VA health care system be secured in a
cost effective manner, in a way that complements the larger Veterans
Health Administration (VHA) system of care, and preserves important
agency interest, such as sustaining a partnership with academic
affiliates.
As this Subcommittee is aware, the Department revamped the Project
HERO solicitation from its original form and later awarded a contract
in October 2007 to Humana Veterans Health care Services (HVHS), a
national managed care corporation that was a major fiscal intermediary
and private network manager under the Department of Defense (DoD)
TRICARE program. In January 2008, contract services for dental care
were to be made available through Delta Dental. Under this
demonstration, participating Veterans Integrated Services Network
(VISNs) are to provide primary care and, when circumstances warrant,
must authorize referrals to HVHS for specialized services in the
community. These specialty services initially included medical/
surgical, diagnostics, mental health, dialysis, and dental.
VA indicated VISNs 8, 16, 20 and 23 were selected as they had the
highest expenditures for community-based care, particularly relative to
the number of enrollees in the VISN. In addition, these VISNs are some
of the larger VA networks, together representing 25 percent of total
enrollment and 30 percent of annual out of network expenditures. These
selection factors were used to ensure the demonstration results are
representative of the larger VA population and to facilitate
measurement of proof of concept under Project HERO. Contracts for this
demonstration project have a base year and 4 option years. Having
recently exercised the second 1-year option, the demonstration project
is now on its third year.
DAV believes Project HERO is timely considering the escalating rise
in spending for non-VA purchased care and the manner by which such care
is managed. According to VA, total expenditure for VHA Fee Basis
programs in FY 2007 was $2.227 billion.\1\ VA spent approximately $3
billion in FY 2008 in non-VA purchased care and estimates it will spend
$3.8 billion for FY 2009.\2\ Despite the growth of the program, well
known weaknesses in VA's fee-based care program remain and have been
subject to criticism by the veteran community,\3\ VAOIG,\4\ and the
GAO.\5,6\ For example, VA does not track fee-based care, its related
costs, outcomes, access, or veteran satisfaction levels.\7,8\ Also,
unlike the contract's medical reimbursement prices under Project HERO,
VA's fee-based care program is highly decentralized, lacks sufficient
guidance, and subsequently suffers from wide variation in reimbursement
prices for both facility and professional charges.
---------------------------------------------------------------------------
\1\ Department of Veterans Affairs, Veterans Health Administration
Directive 2009-033, Resolving Adverse Credit History Reports for
Veterans Receiving Late Payments for Purchased Non-VA Care, July 15,
2009.
\2\ Joseph A. Williams, Jr., Acting Under Secretary for Operations
and Management, VHA, testimony for hearing on ``VA's Contracts for
Health Services'' before the Senate Committee on Veterans' Affairs,
September 30, 2009.
\3\ The Independent Budget for Fiscal Year 2010.
\4\ Department of Veterans Affairs Office of Inspector General,
Audit of Veterans Health Administration's Non-VA Outpatient Fee Care
Program, August 3, 2009.
\5\ Government Accountability Office, VA Health Care: Third-Party
Collections Rising as VA Continues to Address Problems in Its
Collections Operations, January 31, 2003.
\6\ Government Accountability Office, VA Health Care: Preliminary
Findings on VA's Provision of Health Care Services to Women Veterans,
July 14, 2009.
\7\ Washington D, ``Ambulatory Care Among Women Veterans: Access
and Utilization,'' VA Office of Research & Development, Health Services
R&D Service, November 2008.
\8\ Elizabeth Yano, ``Translating Research Into Practice--
Redesigning VA Primary Care for Women Veterans,'' PowerPoint
Presentation, DAV National Convention, Las Vegas, NV, August 2008.
---------------------------------------------------------------------------
Mr. Chairman, we mention this because in testimony before the
Senate Committee on Veterans' Affairs on September 30, 2009, VA has
begun to compare Project HERO to fee-based care.\9\ Our concern here is
that VA's fee-basis care program sets such a low bar that a comparison
to any other non-VA purchased care program would excel almost by
default. We believe the objectives outlined by Congress address similar
concerns DAV has that VA has no systematic process for contracted care
services to ensure that:
---------------------------------------------------------------------------
\9\ Ibid.
care is safely delivered by certified, licensed,
credentialed providers;
continuity of care is sufficiently monitored, and that
patients are properly directed back to the VA health care system
following private care;
veterans' medical records accurately reflect the care
provided and the associated pharmaceutical, laboratory, radiology and
other key information relevant to the episode(s) of care; and
the care received is consistent with a continuum of VA
care.
If Project HERO is to achieve all of the above, the result could
offer our Nation's veterans a truly integrated, seamless health care
delivery system, improved veteran satisfaction, and optimized workload
for VA facilities and their academic affiliates while cost for non-VA
care is reduced. For the hearing today, we wish to share with you key
features of Project HERO that DAV believes are important for your
consideration.
Patient Safety and Quality of Care
Mr. Chairman, the reality of veterans who are enrolled in the VA
health care system and receive care purchased by VA is that they lose
many safeguards built into the Department's system through its
evidence-based medicine, electronic medical records, and bar code
medication administration. VHA's health care quality improvements over
more than a decade have been lauded by many independent and outside
observers, including the Institute of Medicine of the National Academy
of Sciences, the Joint Commission on Accreditation of Healthcare
Organizations (JCAHO), the National Quality Forum, and the Agency for
Health Care Quality and Research (AHRQ) of the Department of Health and
Human Services. In addition, VHA emphasizes a culture of safety by
allocating resources toward establishment of special centers, enhancing
employee education on patient safety, and providing incentives to
promote safety. Its voluntary adverse event reporting system allows the
reporter to remain anonymous and VHA's patient safety initiatives and
reporting on systems issues associated with adverse events are used to
improve its own patient safety programs.
These unique features culminate in the highest quality care
available, public or private. Loss of these safeguards, which are
generally not available in private sector systems, would equate to
diminished oversight and coordination of care, and, ultimately, may
result in lower quality of care for those who deserve it most.
Having communicated these concerns to VHA since the early stages of
developing the concept of this demonstration project, VA has
continually assured the veteran community that the quality of care
provided through Project HERO would be equal to or better than the care
provide directly by VA. To follow such assurances, Project HERO
contracts require HVHS and Delta Dental to meet VA's patient safety and
quality of care standards, which include:
HVHS and Delta Dental providers must be credentialed;
HVHS providers under Project HERO must practice in
facilities accredited by JCAHO, or one of the following: the Commission
on Accreditation of Rehabilitation Facilities, the Intersocietal
Commission for the Accreditation of Vascular Laboratories, or the
American Osteopathic Association;
Establish a process for reporting patient safety,
complaints, and satisfaction; and
Utilize a peer review process within HVHS with VA
participation for any such reported cases.
The DAV believes these standards as required by VHA are an
important step in the right direction to acquire high quality health
care from the private sector, and should be part of all non-VA
purchased care. However, if this demonstration project is to complement
the VA health care system, patient safety and quality of care under
Project HERO will continue to remain a concern of DAV until such time
as it is determined that the required standards and processes listed
above yield care that is in fact equal to or better than the care
directly provided by VA.
In addition to Patient Safety and Quality of Care, DAV has chosen
to focus on specific domains regarding Project HERO: Patient
Satisfaction, Access to Care (distance and timeliness), and Clinical
Information Sharing. We understand these areas are directly affected by
workload, which we have included in the table below. From January 2008
through May 2009, comparing Project HERO to fee-based care on the
number of patients served and the number of services paid in each
program, VISN 16 is the highest user of Project HERO services, followed
by VISN 23, VISN 20, and VISN 8.
----------------------------------------------------------------------------------------------------------------
Service Items Paid Number of Patients
-----------------------------------------------------------------------
Project Other Fee Project
Other Fee HERO Percent HERO Percent
----------------------------------------------------------------------------------------------------------------
VISN 16 751,193 52,474 6.99% 53,544 13,430 25.08%
----------------------------------------------------------------------------------------------------------------
VISN 23 586,673 33,980 5.79% 48,785 5,787 11.86%
----------------------------------------------------------------------------------------------------------------
VISN 20 388,543 15,446 3.98% 35,734 4,099 11.47%
----------------------------------------------------------------------------------------------------------------
VISN 8 724,632 6,302 0.87% 77,516 5,765 7.44%
----------------------------------------------------------------------------------------------------------------
TOTAL 2,451,041 108,202 4.41% 162,035 15,651 9.66%
----------------------------------------------------------------------------------------------------------------
Patient Satisfaction
Questions from VHA's Survey of Healthcare Experiences of Patients
(SHEP) are being used to determine patient satisfaction for Project
HERO. While HVHS providers received a 79 percent average rating from
veterans who indicated the ``overall quality of visit'' was very good
or excellent and Delta Dental providers received an 85 percent average
rating, we would like to point out the low scores ranging from 54 to 61
percent among the four VISNs for the same survey question.
Interestingly, the trend for patient satisfaction scores for outpatient
HVHS services have been increasing over FY 2009 as volume of authorized
services has decreased (but the number of patients served has increased
from about 6,000 to over 15,500 and the amount disbursed to HVHS
roughly $5 million to $12 million). Unfortunately, even though the
volume of authorizations for Delta Dental services has been declining
since the beginning of FY 2009 (veterans served rose from 2,286 to
3,303 and the amount disbursed from about $2.5 million to $4 million),
the overall satisfaction for Delta Dental care has been declining.
When determining how satisfied patients were with regards to the
location of HVHS, Delta Dental, and VA facilities, surveys indicate
patients are overwhelmingly satisfied with the location of Delta Dental
facilities when compared to VA and HVHS facilities in all four VISNs.
VISN 20 is the only region for which patients are more satisfied with
the location of VA facilities versus HVHS. However, as the table below
indicates veteran satisfaction for contractor's facility locations are
comparable to VA across all four VISNs, the trend through May 2009 in
rating the convenience of their locations has gone down.
------------------------------------------------------------------------
Patient Satisfaction with Facility Location
-------------------------------------------------------------------------
VISN 16 VISN 20 VISN 23 VISN 8
------------------------------------------------------------------------
Project HERO HVHS 87% 89% 83% 82%
Outpatient
------------------------------------------------------------------------
Project HERO Delta 95% 96% 98% 90%
Dental
------------------------------------------------------------------------
VA--SHEP 89% 86% 91% 87%
------------------------------------------------------------------------
It should be noted that, unlike SHEP, which is aimed at overall
quality throughout the year in 12 VA service areas, including access to
care, coordination of care, and courtesy, Project HERO patient
satisfaction is based on only one episode of care. The IBVSOs encourage
VA to ensure such comparisons are indeed valid and to separate these
comparisons for each of the four VISNs and by specific survey questions
rather than the average.
Access to Care
While it is an intensive exercise, VA is able to determine access
to care by distance. Moreover, VA is able to determine by survey a
veteran patient's satisfaction with travel time. According to VA,
Project HERO patients travel roughly the same distance (27.44 median
miles) as patients under the Department's fee-basis program (29.81
miles). No data for travel to VA facilities has been provided. For FY
2009 to date, 95 percent of respondents rated the convenience of the
Delta Dental location as good, very good or excellent, 85 percent rated
HVHS, and 88 percent rated VA facility locations similarly. No data for
patient satisfaction with travel to VA facilities has been provided.
Project HERO contract providers are also obligated to meet
timeliness access-to-care standards that include appointment scheduling
within 5 days, completing appointments within 30 days (once all
information needed to authorize the care is provided by VA), and
veteran patient office wait time of 20 minute or less. Data for the
latter standard is gathered by survey and results indicate both HVHS
and Delta Dental continue to meet or exceed VA's performance to see the
patient once at the provider's office within 20 minute or less. Delta
Dental's compliance to provide care within 30 days has a median of 99.7
percent, whereas HVHS has 88.5 percent. Unfortunately, we do not have
information on the four VISNs' own compliance for either VA provided
care or other non-VA purchased care to compare the appointment
scheduling within 5 days, completing appointments within 30 days, and
veteran patient office wait time of 20 minute or less.
DAV appreciates VA's concern over and actions taken regarding
patients traveling farther for care under Project HERO than what is
available for fee care. We would like to highlight that under Project
HERO, VA is now able to capture timeliness of care data that VA
purchases from the private sector through Project HERO.
Clinical Information Sharing
Contracts require clinical information sharing and timelines be
adhered to for each episode of care. HVHS and Delta Dental are to
receive all necessary clinical information of the patient to complete
the requested medical care from the authorizing VAMC. HVHS and Delta
Dental are to upload the patient's clinical data, which includes
digital images and/or scanned clinical notes and treatment plans for
services rendered, to a secure server site. The referring VAMC's fee
claims office downloads patient medical records from the secure server
site, sends the clinical information to its Health Information
Management Service (HIMS) and attaches these records to the consult in
VA's Computerized Patient Record System (CPRS).
Clinical inpatient and outpatient data generated as a result of
referral to HVHS and Delta Dental for authorized care is to be provided
to the VAMC within 30 days of the appointment date or inpatient
discharge date. With 30 days for the appointment to be completed and 30
days to return the clinical information, this metric has a lag time of
approximately 60 days. HVHS radiology reports are to be electronically
signed within 48 hours, and initial treatment plans from Delta Dental
are to be submitted to VA for approval within 10 days.
On average, HVHS compliance in FY 2009 for returning within 30 of
``inpatient care'' and ``routine and diagnostic'' clinical data had
been 82 and 86 percent respectively. The average HVHS compliance for
returning ``radiology reports'' within 48 hours has been 89 percent.
Delta Dental had a 70 percent average compliance for FY 2009 for
submitting initial treatment plans to VA within 10 days. According to
VA, submission of initial treatment plans is not a normal procedure for
dental treatment in the community resulting in the consistently low
compliance with this requirement.
While much work needs to be done to ensure contractors meet
compliance standards, the efforts by all parties to make this a key
performance measure in Project HERO should be commended. All
participating VA facilities have electronic clinical information
sharing available with HVHS and Delta Dental--unheard of in other non-
VA purchased care programs. Moreover, HVHS is to have read-only access
to VA CPRS by the end of January 2010. DAV applauds VA for piloting a
program to electronically share through a secure Web site scanned
radiological images performed by Delta Dental as well as piloting at
limited sites read-only access to VA's electronic health records by the
contractors. However, DAV believes electronic clinical information
sharing is an important component to contract care coordination. Since
meeting these contract standards is one component to consider in
exercising optional years beyond the current contract, we expect HVHS
and Delta Dental to continue its upward trend to meet these targets and
if not, VA should take appropriate action.
Cost Analysis
Mr. Chairman, some concern have been raised about the ``Value Added
Fee'' for additional administrative services performed by HVHS and
Delta Dental. These services include credentialed providers, accredited
facilities, return of clinical information to VA, timely provider
claims processing and transmission to VA for reimbursement, monitoring
and reporting of access to care, appointment timeliness, patient safety
and satisfaction, coordinated appointment-setting services and other
patient advocate services.
The DAV believes these costs should be included in any cost
analysis performed for Project HERO. Indeed these may not be actual
medical care per se; however, it is an inextricable part of the overall
quality and coordination of care provided to veteran patients in this
demonstration project. VA has indicated its contract pricing is
comparable to or lower than market rates; however, when factoring in
the value-added fee per claim, aggregate price exceeds market rates.
Moreover, while we have limited information about VA's claims auditing
procedures, but appears in need of refinement to minimize the risk of
overpayments. Thus, our fear remains that under this demonstration
project, VA will pay significantly more for contract care without the
safeguards of VA's high quality standards.
Impact on VA Facilities and Affiliates
VA has chosen to measure any impact Project HERO may have on VA
facilities within the VISNs 8, 16, 20, and 23 and their academic
affiliates by reporting on ``VHA full-time equivalent employees in
Project HERO VISNs'' and the ``volume of authorizations to academic
affiliates.'' To date, we are waiting for data from VA in order to
determine whether such reporting accurately measures whether or not
important Departmental interests are preserved, such as sustaining a
partnership with university affiliates, and that Project HERO
complements rather than supplants the larger VHA system of care.
Conclusion
Mr. Chairman, as DAV testified before the full House Committee on
Veterans' Affairs in March 2006, VA's unmanaged programs in purchased
care were not only expensive and growing but were entirely
discontinuous from VA's excellent internal health care programs and
were absent the numerous protections and safeguards that are the
hallmarks of VA health care today. DAV believes that more proactive
management of fee and contract services by VA can provide greater
continuity of care for veterans, better clinical record-keeping, higher
quality outcomes and reduced expense to the Department.
The delegates to our most recent National Convention passed
Resolution No. 232 to improve VA's purchase care program. Under this
resolution, DAV urges Congress and the Administration to conduct strong
oversight of the non-VA purchased care program to ensure service-
connected disabled veterans are not encumbered in receiving non-VA care
at VA's expense. Furthermore, the resolution urges VA to establish a
non-VA purchased care coordination program that complements the
capabilities and capacities of each VAMC and includes care and case
management, non-VA quality of care and patient safety standards equal
to or better than VA, timely claims processing, adequate reimbursement
rates, health records management and centralized appointment
scheduling.
VA has demonstrated through Project HERO its ability to deliver on
the ideas we expressed previously and still now to improve VA contract
care coordination:
1. Oversight of clinical care quality is provided by the
contractors and care is delivered by fully licensed and credentialed
providers and must meet VA-defined quality standards;
2. Coordination of care is performed by the contractors by
communicating directly with the veteran and prospective provider;
3. 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; and
4. Clinical information necessary to provide the care under
Project HERO is provided by VA to the contractors, and records of care
are scanned by the contractors and sent to VA for annotation in its
Computerized Patient Record System (CPRS).
Unfortunately, this list is not complete and thus our concerns
remain. Since this matter first emerged in the FY 2006 Congressional
appropriations arena, it has remained a significant concern that
Project HERO, as with all other non-VA purchased care programs, does
not become a basis to downsize or to privatize VA health care. To that
end, DAV would like to express our appreciation for VA's effort to
address our concerns and those of the veteran community. However, as
indicated in our testimony, VA's goals for the Project, while laudable,
require greater specificity to include validated and comparable data.
The quarterly updates VA has provided to the veterans service
organizations have been informative and DAV is working closely with
VHA's Chief Business Office to ensure these reports provide more
consistent and meaningful data.
As DAV continues its 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 DAV's
testimony and I would be pleased to address your questions, or those of
other Subcommittee Members.
Prepared Statement of Thomas Zampieri, Ph.D.,
Director of Government Relations, Blinded Veterans Association
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 health care
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 5 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 health care
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 health care 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 health care 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 health care delivery and access to quality care.
Contracted health care 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 20 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.
Prepared Statement of Bernard Edelman, Deputy Executive Director for
Policy and Government Affairs, Vietnam Veterans of America
Good morning, Chairman Michaud, Ranking Member Miller, and other
Members of this distinguished Subcommittee. Vietnam Veterans of America
(VVA) thanks you for holding this very important hearing today, and we
appreciate the opportunity to offer our views on Project HERO.
Project HERO, as you know, was born of a congressional mandate in
Public Law 109-114, the Military Construction, Military Quality of Life
and Veterans Affairs Appropriations Act of 2006, for the Department of
Veterans Affairs to get a handle on the expenditures out of the VA
system for veterans health care by establishing a comprehensive managed
care demonstration program in at least three VISNs. While the amount
spent outside the system varies from VISN to VISN, and the cost per
service varies dramatically, it totals at least one out of every 10
dollars spent by the VA on health care--not an insignificant amount of
money--and Congress was concerned, correctly, that a lot of this money
was not properly tracked, nor was there any evidence of efforts to
standardize costs and secure the most quality service for the best
price.
The VA, to comply with this mandate, initiated in four VISNs what
was conceived as a 5-year pilot cleverly dubbed Project HERO, its
acronym for Healthcare Effectiveness through Resource Optimization.
With shooting wars ongoing in Afghanistan and Iraq, ``HERO'' had a
nice, patriotic ring. Of course, this only served to raise our
suspicions about what the VA was planning to do and how they were
planning to do it.
VVA was concerned then that the pilot project would not fill in the
gaps in care, e.g., for veterans living in rural or remote areas of the
country, or in emergency situations, such as when a VA Medical Center's
MRI breaks down.
Our suspicions were further incited initially when VA officials
shared with the VSOs a list of companies, many of them small veteran-
owned businesses, which were interested in bidding on the contract. We
felt that this was an attempt to quell our concerns or objections;
after all, this could mean government contracts for these businesses,
which too often are shut out of such contracts because of a variety of
roadblocks.
As you know, it turns out that Humana and Delta Dental, two large
entities, won the contracts. This was hardly a surprise. What was a
surprise, however, was that Humana, certainly, did not have in place
the network of providers in the areas, the rural and remote areas of
the VISNs, in which the VA was hard-pressed to provide health care
services on a timely basis.
After 1 year spent recruiting clinicians for its networks, several
of whom, we believe, had already been providing fee-basis health care
to veterans, Humana seems pretty well geared up. But many of its
providers appear to be located pretty close geographically to the VAMCs
whose services they are supposed to supplement. So the question is: Are
the health care services rendered by Humana, and by Delta Dental,
``enhancing'' the health care at the VAMCs and CBOCs? Further, while
this project was supposed to ``fill in'' services when VA had trouble
recruiting key specialties for a reasonable time, is there is
indication that the ``temporary'' fixes have now become permanent, and
that VHA is no longer trying to fill the vacancies on its own staff at
the relevant VAMC? And are they succeeding in filling in the gaps in VA
service at a significant cost saving to VA?
We are not convinced that they are.
During our quarterly briefings with VA officials, we are given
thick reports festooned with charts and graphs and lots of numbers.
What we are not given is any real evidence that HERO is enhancing care
available at VAMCs and/or CBOCs. What seems to have evolved is a
parallel health sub-system in these VISNs. What was supposed to
supplement 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 in essence are, the
VAMCs and 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 VISNs and VAMCs can't
assemble a roster of clinicians and ``regulate'' fee-basis care,
insuring that such care is available, of high quality, and can be
integrated into the VA's electronic health record system.
Just as important, as we have written in the past, the entire
business model of HERO threatens the underpinning of the VA health care
system. VISN and VAMC directors can find it is 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 VA medical centers.
In fairness, VA officials who are overseeing Project HERO
acknowledge that they are learning from their experiences with HERO,
and that, with hindsight, they would have structured the contracts
differently. For this, we applaud them. But we do not believe that any
wholesale outsourcing of health care services is either warranted or
justified by the experiences of HERO.
We agree with a 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, not an
answer.
Thank you.
Prepared Statement of Sidath Viranga Panangala, Specialist in Veterans
Policy, Congressional Research Service, Library of Congress
Introduction
Chairman Michaud, Ranking Member Brown, and distinguished Members
of the Subcommittee on Health, my name is Sidath Panangala, from the
Congressional Research Service (CRS). I am honored to appear before the
Subcommittee today. As requested by the Committee, my testimony will
highlight observations on the implementation of Project Healthcare
Effectiveness through Resource Optimization (Project HERO). My
testimony today is based on the CRS report on Project HERO which has
been submitted for the record.
Background
In general, the Department of Veterans Affairs (VA), through the
Veterans Health Administration (VHA), provides a majority of medical
services to veterans within its health care system. However, in some
instances, such as when a clinical service cannot be provided by a VA
medical center, when a veteran is unable to access VA health care
facilities due to geographic inaccessibility, or in emergencies when
delays could lead to life threatening situations, VHA is authorized by
law to send the veteran outside of VA's health care system to seek
care.
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 needed care in facilities under
the direct jurisdiction of the VA. On the other hand, some see the use
of private sector providers as important in assuring veterans' access
to a comprehensive slate of services (in particular, to 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 VA providers in VA-owned facilities are concerned that
private sector options for providing care to veterans will lead to a
dilution of quality of care in the VA health care system, and could
fail to leverage key strengths of the VHA network, such as its system
of electronic medical records. 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 VA's health care network
and through non-VA providers is an issue for policymakers, as well as
for the VHA and other stakeholders.
Congress established the Project HERO demonstration to determine if
it could provide better management of non-VA provided care. At least
two policy questions about Project HERO may be of interest to Congress:
1. Has Project HERO enhanced the existing fee basis care program?
\1\
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\1\ S.Rept. 111-40 to accompany the Military Construction and
Veterans Affairs and Related Agencies Appropriations Act, 2010 (S.
1407) expressed concern about the oversight and scope of Project HERO.
See U.S. Congress, Senate Committee on Appropriations, Military
Construction and Veterans Affairs and Related Agencies Appropriation
Bill, 2010, report to accompany S. 1407, 111th Cong., 1st sess., July
7, 2009, p. 53.
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2. Are there findings from the Project HERO that could be applied
to standardize the fee basis care program throughout the VA health care
system?
Project HERO is primarily an outpatient program. According to VHA
data, between January 2008 and September 30, 2009 approximately 51,000
veteran patients have received fee basis care through Project HERO
within the four participating Veterans Integrated Service Networks
(VISNs) representing approximately 111,000 outpatient visits.
The CRS report submitted for the record describes the current fee
basis care program, how Project HERO works compared to the fee basis
care program, and quality of care measures used in Project HERO to
ensure that veterans receive high quality care even when that care is
provided by non-VA providers in the community. Now let me turn to the
two broad policy questions that were raised previously.
Has Project HERO enhanced the fee basis care program?
During our visits to three of the four demonstration sites we heard
mixed reviews about the pilot program. Some categorized it as a ``tool
in a toolbox'' meaning that Project HERO was one of many options a VA
medical facility could use to provide care outside the VA health care
system. Some officials categorized Project HERO as a ``concierge
service'' where Humana Veterans Health Care Services (hereafter
referred to as HVHS) guides the veterans in scheduling appointments and
ensures that clinical information is provided to a network provider and
then transferred back to the VA, maintains a credentialed network of
providers, and provides claims payment to the health care providers.
The demonstration pilot provides a single point of contact for
those veterans who are authorized to receive care outside the VA health
care system. Under the demonstration HVHS works with the veteran and
the network provider in scheduling the appointment. It also ensures the
veteran seeks care from a credentialed provider, as well as facilitates
the transfer of medical information, thereby assisting with care
coordination. Furthermore, under Project HERO, VA does not have the
responsibility for directly paying for care provided outside the system
to non-VA providers. However, VA pays for these services through value
added fees to HVHS. In FY2009 VA paid approximately $3.3 million in
value added fees.
Are there lessons to be learned from the pilot program?
The following observations are drawn from our visits to the Project
HERO demonstration sites:
1. Establishing a robust network of providers takes time, even when
dealing with a health care services provider such as HVHS.
Most VISNs stated that early on in the pilot HVHS had fair to
moderate success building its network of providers within the VISN, and
that the short implementation period between the time the contract was
awarded in October 2007 and when it became operational in January 2008
was inadequate to establish a robust network of providers. This was
especially true in VISNs that had rural or highly rural areas.
According to some VISN officials, in some instances this lack of a
network of providers has resulted in ongoing challenges in providing
timely access to medical care. HVHS has asserted that based on feedback
received from the Project HERO Program Management Office, it has worked
with VA to resolve most of these issues. For example, HVHS has adapted
to the changing clinical needs of each VISN and has attempted to
recruit a provider network to meet those clinical needs.
2. 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 and 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 that some services are cost-prohibitive when the value-added fees
are applied. However, the Project HERO Program Management Office has
noted that 89 percent of Project HERO prices are at or below Medicare
rates. Furthermore, the amounts paid by HVHS to providers are less than
7 percent of the regular fee basis care program.\2\
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\2\ Communication received from Department of Veterans Affairs,
Veterans Health Administration, Chief Business Office, September 29,
2009.
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3. Education is key to a successful functioning network.
Almost all VISNs stated that there has been organizational
resistance to change. According to VISN staff, the primary
implementation challenge has been in providing training to staff at all
levels of the organization, especially educating providers and fee
basis care office staff. This has been true even for providers
recruited by HVHS, especially when they are required to send clinical
information back to the VA.
4. The project has yielded information that could be applied to the
existing regular fee basis care program.
First, without the 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 based on a diagnosis or laboratory
result. This applies to both Project HERO and the regular 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. Lastly, VA could develop a provider network within each
VISN that the veteran could be referred to so that the veteran receives
care from a provider who has been credentialed similarly to a VA
provider. However, prior to implementing this pilot demonstration
throughout the VA health care system, 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.
__________
Veterans Health Care: Project HERO Implementation
February 3, 2010
Sidath Viranga Panangala, Specialist in Veterans Policy,
Congressional Research Service, 202-707-5700, www.crs.gov
Summary
In general, the Department of Veterans Affairs (VA), through the
Veterans Health Administration (VHA), provides a majority of medical
services to veterans within its health care system. However, in some
instances, such as when a clinical service cannot be provided by a VA
medical center, when a veteran is unable to access VA health care
facilities due to geographic inaccessibility, or in emergencies when
delays could lead to life threatening situations, VHA is authorized by
law to send the veteran outside of VA's health care system to seek
care. In 2006, the conference report to accompany the Military Quality
of Life and Veterans Affairs Appropriations Act of 2006 (P.L. 109-114,
H.Rept. 109-305) directed the VA to implement a cost effective
purchased care management program and to develop at least three pilot
programs to encourage collaboration with industry and academia. In
response to this requirement, VHA established a demonstration program
to enhance the existing fee basis care program that was named Project
HERO (Healthcare Effectiveness through Resource Optimization).
In October 2007, VA awarded a contract to Humana Veterans
Healthcare Services (HVHS) for medical/surgical, mental health,
diagnostic and dialysis services, and the contract became operational
in January 2008. Under Project HERO, HVHS maintains a prescreened
network of health care providers who meet VA quality standards.
In general, when a patient requires a specific service, and the
local VA medical center does not have the specific medical expertise or
the technologies to meet that necessity, the local VA medical center
authorizes the specific service to be provided under Project HERO. Once
the veteran receives care, HVHS is contractually required to return the
patient's medical record to the local VA medical center, and HVHS sends
the claims data to VA for reimbursement.
VHA's contract and fee basis care expenditures are of interest to
Congress for at least two reasons. First, expenditures for contract and
fee basis care services are increasing, and second, concerns have been
raised about the fee basis care program. Specifically, VA's Office of
Inspector General (OIG) has reported that VHA has made a significant
number of improper payments for fee basis care as well as in some
instances has not properly justified and authorized fee basis care.
Given these concerns, and the establishment of the Project HERO
demonstration as a means to better manage non-VA provided care, at
least two broad policy questions may be of interest to Congress: (1)
Has Project HERO enhanced the existing fee basis care program? And (2)
Are there lessons to be learned from the Project HERO demonstration
that could be applied to standardize the fee basis care program
throughout the VA health care system?
This report will first provide a brief overview of the VA health
care system, followed by a overview of Project HERO. Second, it will
discuss the current fee basis care process as well as the
implementation of Project HERO. The report concludes with a discussion
of observations on the implementation of Project HERO based on VHA and
HVHS perspectives. It should be noted that although dental care
services are a component of Project HERO, and are provided through
Dental Federal Services (Delta Dental), this report does not discuss
dental care services provided under Project HERO. This report will be
updated if events warrant.
__________
Contents
Page
Introduction and Overview of the VA Health Care System........... 50
Project Healthcare Effectiveness through Resource Optimization 52
(Project HERO)..................................................
Overview of Fee Basis Care....................................... 53
How Project HERO Works Compared to Fee Basis Care................ 55
Project HERO Implementation...................................... 56
Utilization.................................................... 56
Quality of Care................................................ 58
Costs and Reimbursements....................................... 59
Discussion....................................................... 60
Has Project HERO enhanced the fee basis care program?.......... 61
Are there lessons to be learned from the pilot program?........ 61
Figures
Figure 1. Non-VA Outpatient Fee Basis Care, Pre-Authorization 54
Phase...........................................................
Figure 2. Receipt and Processing of Fee Claims................... 54
Figure 3. Authorization Process For Non-VA Care Under Project 56
HERO............................................................
Figure 4. Receipt and Processing of Fee Claims Under Project HERO 56
Figure 5. Number and Percent Distribution of Unique Veteran 57
Patients Receiving Outpatient Care..............................
Figure 6. Number and Percent Distribution of Outpatient Visits... 57
Tables
Table 1. Value Added Fee Amounts, FY2009......................... 60
Table 2. Project HERO Payments Including Value Added Fees........ 60 AppendixesAppendix A. Veterans Integrated Services Network (VISNs)......... 62 ContactsAuthor Contact Information....................................... 62
__________
Introduction and Overview of the VA Health Care System
The Department of Veterans Affairs (VA), through the Veterans
Health Administration (VHA), operates the Nation's largest integrated
direct health care delivery system. While Medicare, Medicaid, and the
Children's Health Insurance Program (CHIP) are also publicly funded,
most health care services under these programs are delivered by private
providers in private facilities. In contrast, the VA health care system
is a truly public health care system in that the Federal Government
owns the medical facilities and employs the health care providers.\1\
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\1\ U.S. Congress, House, Economic Report of the President, 110th
Cong., 2nd sess., February 2008, H. Doc. 110-83 (Washington: GPO,
2008), p. 106.
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The VA's health care system is organized into 21 geographically
defined Veterans Integrated Services Network (VISNs) (See Appendix A.).
Although policies and guidelines are developed at VA headquarters, to
be applied throughout the system, management authority for basic
decision-making and budgetary responsibilities are delegated to the
VISNs. VHA's health care delivery network includes 153 hospitals
(medical centers), 135 nursing homes, 803 community-based outpatient
clinics (CBOCs), 6 independent outpatient clinics, and 271 Readjustment
Counseling Centers (Vet Centers), which are supported by more than
242,000 employees.
In general, eligibility for VA health care is based on veteran
status, service-connected disabilities or exposures, income, and other
factors such as former prisoner of war (POW) status or receipt of the
Purple Heart. As required by the Veterans Health Care Eligibility
Reform Act of 1996 (P.L. 104-262), most veterans are required to enroll
in the VA health care system to receive care. Once enrolled, veterans
are assigned into one of the eight priority groups based on various
criteria. For instance, veterans who are rated 50 percent or more
service-connected disabled or who are unemployable due to service-
connected disabilities are enrolled in Priority Group 1.\2\ According
to VA, there are approximately 23.1 million living veterans in the U.S.
Of these, approximately 8.3 million (36 percent) were enrolled in the
VA health care system, and over 5.0 million unique veteran patients
received care from the VA in FY2009.\3\
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\2\ For a complete discussion of eligibility for VA health care,
priority groups, and enrollment, see CRS Report R40737, Veterans
Medical Care: FY2010 Appropriations, by Sidath Viranga Panangala.
\3\ Department of Veterans Affairs, FY2009 Performance and
Accountability Report, Washington, DC, November 16, 2009, pp. I-16-I17.
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Generally, veterans have a choice of where they receive their care.
While some veterans rely more heavily on care through the VA health
care system, the majority of veterans not enrolled in the VA health
care system receive care through the private sector which is financed
by Medicare, private health insurance, or the military health care
system.\4\ VHA is a direct health care provider, but it is not
generally a third-party payer of care. For veterans who are eligible to
receive care through the VA health care system, the decision on whether
to receive care from the VA may depend on a variety of factors such as
out-of-pocket costs, distance, and waiting times for appointments,
among other things.\5\
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\4\ Congressional Budget Office, Quality Initiatives Undertaken by
the Veterans Health Administration, August 2009, p. 5. Veterans who are
military retirees have access to TRICARE, the Department of Defense
health care plan. For more information, see CRS Report RL33537,
Military Medical Care: Questions and Answers, by Don J. Jansen, and CRS
Report RS22402, Increases in Tricare Costs: Background and Options for
Congress, by Don J. Jansen.
\5\ Congressional Budget Office, Quality Initiatives Undertaken by
the Veterans Health Administration, August 2009, p. 7.
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In general, VHA provides a majority of medical services to enrolled
veterans within its health care system. However, in some instances,
such as when a clinical service cannot be provided by a VA medical
center, and the patient cannot be transferred to another VA medical
facility; or when VA cannot recruit a needed clinician; or when a
veteran is unable to access VA health care facilities due to geographic
inaccessibility; or in emergencies when delays could lead to life
threatening situations; VA is authorized to send the veteran outside of
its health care system to seek care.\6\
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\6\ 38 U.S.C. Sec. 1703 authorizes non-VA inpatient and outpatient
medical services on a preauthorized basis by contract or individual
authorization; 38 U.S.C. Sec. 1725 authorizes reimbursement for
emergency treatment of nonservice-connected conditions in a non-VA
facility without prior authorization; 38 U.S.C. Sec. 1728 authorizes
reimbursement for emergency treatment of service-connected or related
conditions in a non-VA facility without prior authorization.
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VHA uses two major mechanisms to provide care outside its health
care system. These include contracts to purchase care, or non-
contracted medical care purchased on a fee for service basis from
providers in the community. See the box below for a brief description
of these methods.
Methods Used to Provide Care Outside the VA Health Care System
-------------------------------------------------------------------------------------------------------------------------------------------------
Contracts to Purchase Care: Generally, VA uses two approaches under this
method. One is regular commercial contracts that follow Federal
Acquisition Regulations, and are awarded on a competitive basis. The
second is contracts or agreements with academic affiliates. VA's
academic affiliates (schools of medicine, academic medical centers and
their associated clinical practices) provide contracted clinical care.
Generally, these are non-competitive sharing agreements, and details
vary considerably from agreement to agreement. Most cover specialty
services such as anesthesiology, cardiology, neurosurgery,
ophthalmology, orthopedic surgery, or radiology. Sharing agreements can
be based on full-time-equivalent (FTE) employment, or on specific
procedures. Compared to fee basis care these contracts involve many
patients, and are longer term contracts.Fee Basis Care: Generally, fee basis care is used to provide outpatient
care, and is authorized on a fee-for-service basis per episode of care.
VA manages the authorization, claims processing and reimbursement for
services acquired from non-VA health care providers. Fee basis care is
sometimes referred to as ``purchased care.''
------------------------------------------------------------------------
In 2006, Congress directed VHA to implement a contracting pilot
program, that was later named Project Healthcare Effectiveness through
Resource Optimization (Project HERO) to better manage the fee basis
care program (discussed later in this report).
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 needed care in facilities under
the direct jurisdiction of the VA. On the other hand, some see the use
of private sector providers as important in assuring veterans' access
to a comprehensive slate of services (in particular, to specialty
services that are needed infrequently), or in addressing geographic or
other access barriers. In addition, those who believe that all needed
care should be provided by VA providers in VA-owned facilities are
concerned that private sector options for providing care to veterans
will lead to a dilution of quality of care in the VA health care
system, and could fail to leverage key strengths of the VHA network,
such as its system of electronic medical records. However, some propose
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 VA's health
care network and through non-VA providers is an issue for policymakers,
as well as for the VHA and other stakeholders.
In addition to these broad concerns, Congress has been interested
in specific aspects of VHA's use of private health care services.
First, expenditures for contract and fee basis care services are
increasing. In FY2008, VHA spent approximately $3.0 billion for
contract and fee basis care. By FY2009, that amount had increased by 27
percent to approximately $3.8 billion.\7\ These expenditures now
comprise an estimated 9 percent of VHA's $41.9 billion total
appropriations.\8\
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\7\ U.S. Congress, Senate Committee on Veterans' Affairs, A Hearing
on VA's Contracts for Health Services, 111th Cong., 1st sess.,
September 30, 2009. Answer provided by Gary Baker, Chief Business
Officer,Veterans Health Administration, U.S. Department of Veterans
Affairs, to a question posed by Senator Daniel Akaka.
\8\ CRS Report R40737, Veterans Medical Care: FY2010
Appropriations, by Sidath Viranga Panangala.
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Second, specific concerns have been raised about the fee basis care
program. The program is complex, highly decentralized, and lacks a
standardized implementation process across the VA health care system.
Specifically, VA's Office of Inspector General (OIG) has reported that
VHA has made a significant number of improper payments for fee basis
care, and in some instances has not properly justified and authorized
care.\9\
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\9\ Department of Veterans Affairs, Office of Inspector General,
Audit of Veterans Health Administration's Non-VA Outpatient Fee Care
Program, Report No. 08-02901-185, Washington, DC, August 23, 2009, pp.
4-10.
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Congress established the Project HERO demonstration to determine if
it could provide better management of non-VA provided care. At least
two policy questions about Project HERO may be of interest to Congress:
1. Has Project HERO enhanced the existing fee basis care program?
\10\
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\10\ S.Rept. 111-40 to accompany the Military Construction and
Veterans Affairs and Related Agencies Appropriations Act, 2010 (S.
1407) expressed concern about the oversight and scope of Project HERO.
See U.S. Congress, Senate Committee on Appropriations, Military
Construction and Veterans Affairs and Related Agencies Appropriation
Bill, 2010, report to accompany S. 1407, 111th Cong., 1st sess., July
7, 2009, p. 53.
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2. Are there findings from Project HERO that could be applied to
standardize the fee basis care program throughout the VA health care
system?
To provide some context to the discussion of these questions, this
report will first provide an overview of Project HERO. Second, it will
discuss the current fee basis care process as well as the
implementation of Project HERO. The report concludes with a discussion
of observations on the implementation of Project HERO based on VHA and
Humana Veterans Healthcare Services Inc. (HVHS) perspectives. This
report is based on information received during visits to three of the
four Project HERO demonstration sites as well as discussions with
officials from HVHS.\11\ Although the provision of dental care through
Delta Dental Federal Services is part of Project HERO, this report does
not discuss this aspect of the program.
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\11\ To better understand Project HERO implementation, on April 22,
2009, August 7, 2009, and August 26, 2009, Congressional Research
Service (CRS) staff visited VISNs 8, 16, and 20 respectively. CRS staff
did not visit VISN 23. During these meetings, CRS staff received
briefings from VHA program staff at the respective VISNs, and held
discussions on how the project has been implemented within each VISN.
Lastly, on September 17, 2009, CRS staff spoke with officials of Humana
Veterans Health Care Services Inc. (HVHS).
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Project Healthcare Effectiveness through Resource Optimization (Project
HERO)
As stated earlier, in 2006, Congress directed VHA to implement a
contracting pilot program, to better manage the fee basis care program.
The conference report (H.Rept. 109-305) to accompany the Military
Quality of Life and Veterans Affairs Appropriations Act, 2006 (P.L.
109-114) directed the VA to implement a cost effective purchased care
management program and to develop at least three objectives-oriented
demonstrations (pilot programs) to encourage collaboration with
industry and academia. According to the conference report:
The conferees support expeditious action by the Department to
implement care management strategies that have proven valuable in the
broader public and private sectors. It is essential that care purchased
for enrollees from private sector providers be secured in a cost
effective manner, in a way that complements the larger Veterans Health
Administration system of care, and preserves an important agency
interest, such as sustaining a partnership with university affiliates.
In that interest, the VHA shall establish, through competitive award by
the end of calendar year 2006, at least three managed care
demonstration programs designed to satisfy a set of health system
objectives related to arranging and managing care.\12\
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\12\ U.S. Congress, Conference Committee, Making Appropriations for
Military Quality of Life Functions, of the Department Of Defense,
Military Construction, the Department Of Veterans Affairs, and Related
Agencies for The Fiscal Year Ending September 30, 2006, and for Other
Purposes, Report to accompany H.R. 2528, 109th Cong., 1st sess.,
November 18, 2005, H. Rept. 109-305, pp. 43-44.
The VA began developing plans based on this requirement. However,
although the conference report language directed VA to implement a
managed care demonstration, after meetings with various stakeholders
VHA developed a set of objectives that led to a demonstration program
to enhance the existing fee basis care program. Its goals were to: \13\
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\13\ Based on briefings provided to CRS Staff by VISN 16 and VISN
20 program staff on August 7, 2009, and August 26, 2009 respectively.
For a list of initial objectives see U.S. Congress, House Committee on
Veterans' Affairs, Project Healthcare Effectiveness Through Resource
Optimization, 109th Cong., 2nd sess., March 29, 2006 (Washington: GPO,
2007), p. 66.
Provide as much care for veterans within the VHA system
as possible;
When necessary, efficiently refer veterans to high-
quality community-based care;
Improve exchange of information between VA and community
providers;
Increase veteran patient satisfaction;
Foster high-quality care and patient safety;
Sustain partnership with university affiliates; and
Secure an accountable evaluation of demonstration
results.
To implement this demonstration VHA selected four Veterans
Integrated Services Network (VISNs),\14\ based on data that showed that
these four networks had the highest expenditures for community-based
care relative to the number of veterans enrolled for care. In addition,
these areas included some of VHA's largest networks representing 25
percent of VHA's total enrollment.\15\ A contract for medical services
was awarded on October 1, 2007 to Humana Veterans Healthcare Services
Inc. (HVHS).\16\ Medical, surgical, mental health, diagnostic, and
dialysis services became available through a network of providers
recruited by HVHS. The demonstration program became operational on
January 1, 2008.
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\14\ The VA's health care system is organized into 21
geographically defined Veterans Integrated Services Network (VISNs).
Although policies and guidelines are developed at VA headquarters to be
applied throughout the VA health care system, management authority for
basic decision-making and budgetary responsibilities is delegated to
the VISNs (see Kenneth Kizer, John Demakis, and John Feussner,
``Reinventing VA Health Care: Systematizing Quality Improvement and
Quality Innovation.'' Medical Care. vol. 38, no. 6 (June 2000), Suppl.
1:I7-16.
\15\ U.S. Congress, House Committee on Veterans' Affairs, Project
Healthcare Effectiveness Through Resource Optimization, 109th Cong.,
2nd sess., March 29, 2006 (Washington: GPO, 2007), p. 16.
\16\ The VA contract with HVHS is an indefinite delivery,
indefinite quantity (IDIQ) 1-year contract with 4 option years. In
general, an IDIQ contract is a type of indefinite delivery contract
that provides for an indefinite quantity of supplies or services within
stated limits, during a fixed period. The government places orders for
individual requirements. Quantity limits may be stated as number of
units or as dollar values. Federal Acquisition Regulation (FAR) 16.504.
---------------------------------------------------------------------------
Overview of Fee Basis Care \17\
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\17\ Major portions of this section were drawn from Department of
Veterans Affairs, Office of Inspector General, Audit of Veterans Health
Administration's Non-VA Outpatient Fee Care Program, Report No. 08-
02901-185, Washington, DC, August 23, 2009, pp. 20-21.
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Services provided in non-VA health care facilities and by non-VA
providers fall into two broad categories: contract care and fee basis
care. Since Project HERO is a pilot to enhance fee basis care, this
part of the report will first provide an overview of the current fee
basis care process in the VHA. Under this system VA health care
facilities are authorized to pay for health care services acquired from
non-VA health care providers. VA manages the authorization, claims
processing and reimbursement for services acquired from non-VA health
care providers through the fee basis care program.\18\
---------------------------------------------------------------------------
\18\ The fee basis care program is sometimes referred to as the
purchased care program.
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The fee basis care program is used predominantly to provide
outpatient care. Outpatient fee care involves two major phases: (1)
pre-authorization of care and
(2) claims processing. Figure 1 provides a generalized depiction of the
pre-authorization phase.
Figure 1. Non-VA Outpatient Fee Basis Care, Pre-Authorization Phase
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: Congressional Research Service graphic based on Department
of Veterans Affairs, Office of Inspector General, Audit of Veterans
Health Administration's Non-VA Outpatient Fee Care Program, Report No.
08-02901-185, Washington, DC, August 23, 2009, p. 20, and Project HERO
briefing by Alvin S. Haynes Jr., M.D., Chief Medical Officer, Fee Basis
Program, Bay Pines VA Health Care System, April 22, 2009.
As seen in Figure 1 a VA health care provider (generally a
clinician) requests a specific health care service or procedure for the
veteran and justifies use of non-VA care because of the lack of
clinical capacity or capability to provide the service to the veteran.
After the initial consult is received by the fee basis care program
office at the local VA medical center (VAMC), the Chief Medical Officer
(CMO) at the program office, or a designated official, reviews the
request and authorizes the care if it is determined to be appropriate.
Following this first stage of review, fee basis care program office
staff reviews the authorization. They review it to see if the veteran
is eligible for the program and whether an appropriate justification
has been provided. Once the veteran is notified that the service is
authorized, he or she selects a provider and receives services.
The next phase of the fee basis care program is the processing of
fee claims. Figure 2 provides a generalized depiction of receipt and
payment of claims.
Figure 2. Receipt and Processing of Fee Claims
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: Congressional Research Service graphic based on Department
of Veterans Affairs, Office of Inspector General, Audit of Veterans
Health Administration's Non-VA Outpatient Fee Care Program, Report No.
08-02901-185, Washington, DC, August 23, 2009, p. 20, and Project HERO
briefing by Alvin S. Haynes Jr., M.D., Chief Medical Officer, Fee Basis
Program, Bay Pines VA Health Care System, April 22, 2009.
Notes: Claims ``scrubbing'' broadly means a process whereby medical
claims are validated against a set of established rules such as correct
diagnostic codes (International Classification of Diseases, 9th
Revision; ICD-9 codes) and procedure codes (such as Current Procedural
Terminology (CPT) codes--a list of descriptive terms and identifying
codes for reporting medical services and procedures).
Once the veteran receives care from a non-VA provider, the provider
sends a claim to the fee basis care program office at the VAMC that
authorized the care. The fee basis care program office staff then
reviews the claim to ensure that billed services match the services
that were authorized. Following this review, staff determines the
correct pricing methodology and payment rate based on the type and
location of care provided. In the next step the claims are
``scrubbed,'' or validated, to ensure that they are properly coded.
After this step staff releases the claim to the Finance Services Center
in Austin, Texas to certify fee disbursements to the Department of the
Treasury, and the non-VA provider receives an electronic payment.
How Project HERO Works Compared to Fee Basis Care
Under Project HERO, veterans receive primary care at their local VA
health care facility, as is the case under the regular fee basis care
program. Similarly, if a VA health care provider determines that the
specific medical expertise or technology is not readily available at
the local facility then the provider requests that the service be
obtained from a non-VA provider. The consult request is reviewed by the
fee basis care CMO and, if the CMO concurs, the request proceeds to the
fee basis care program office. At this point in the process, the fee
basis care program office determines whether to send the referral to
Project HERO (based on whether the services are provided within a
reasonable distance under Project HERO), and if so sends an
authorization for care to HVHS.\19\
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\19\ It should be noted that each of the pilot VISNs has inter- and
intra-VISN referral policies. For example, if a specific VA medical
facility cannot provide the required services, the next step would be
to see if another facility within the VISN, and within reasonable
distance to the veteran, could provide that specific service or if an
academic affiliate or Department of Defense (DoD) sharing agreement
could be used to provide that service. If these options are not
available then the referring VA medical facility could authorize the
use of Project HERO or non-Project HERO fee basis care.
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Generally, authorizations are provided to HVHS for each episode of
required care. In contrast to the regular fee basis care program in
which the veteran selects his or her own provider, under Project HERO
HVHS contacts the veteran by phone to schedule an appointment with an
HVHS network provider. During this process appointment details are
communicated back to the referring VA health care facility, and the
veteran receives a letter with appointment details and instructions.
According to HVHS officials, the veteran receives a reminder call prior
to the appointment.
HVHS coordinates the transfer of any required pre-visit clinical
information from the local VA medical facility to the HVHS network
provider. After the veteran is seen by the HVHS network provider, and
if additional services are needed, HVHS sends a request back to the
referring VAMC for authorization. Under the contract, HVHS is required
to return clinical information from the visit back to the referring VA
medical facility--typically within 30 days of the appointment. In
contrast to regular fee basis care, where clinical information is
received directly from the non-VA provider to the referring medical
facility, under Project HERO all clinical information is channeled
through HVHS. When possible, the information is returned in an
electronic format. Otherwise, the information is sent through fax or in
hard copy format. Once the clinical information is received, the
referring VA medical center reviews it for coordination of care and
uploads it into the Computerized Patient Record System (CPRS).\20\
Timely return of clinical information to the referring VA medical
center is not a requirement under the regular fee-basis care program.
Moreover, there is a simplification of claims payment under Project
HERO compared to the regular fee basis care process (see Figure 2),
whereby under Project HERO the network provider submits a claim to HVHS
and is paid within about 30 days, and HVHS then submits electronic
claims to VA for payment. A general depiction of this process is
provided in Figure 3 and Figure 4.
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\20\ The CPRS is a single integrated system for VA health care
providers, and a package within the Veterans Health Information Systems
and Technology Architecture (VistA). All aspects of a patient's medical
record are integrated, including active problems, allergies, current
medications, laboratory results, vital signs, hospitalizations and
outpatient clinic history, alerts of abnormal results, among other
things. It is used in about 1,300 VHA facilities around the country.
CPRS also incorporates data from scheduling, laboratory, radiology,
consults and clinic notes into a single integrated patient record.
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Figure 3. Authorization Process For Non-VA Care Under Project HERO
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: Congressional Research Service graphic based on Department
of Veterans Affairs, Office of Inspector General, Audit of Veterans
Health Administration's Non-VA Outpatient Fee Care Program, Report No.
08-02901-185, Washington, DC, August 23, 2009, p. 20, and Project HERO
briefing by Alvin S. Haynes Jr., M.D., Chief Medical Officer, Fee Basis
Program, Bay Pines VA Health Care System.
Notes: HVHS is Humana Veterans Health Care Services Inc. Also note
that this is a generalized depiction and the decision-making process
could vary from location to location.
Figure 4. Receipt and Processing of Fee Claims Under Project HERO
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: Congressional Research Service graphic based on Project
HERO briefing by Alvin S. Haynes Jr., M.D., Chief Medical Officer, Fee
Basis Program, Bay Pines VA Health Care System, April 22, 2009.
Project HERO Implementation
This section provides a brief overview of implementation of the
Project HERO demonstration in the four pilot VISNs. This section will
discuss utilization of the program compared to regular fee basis care
and VA provided care, quality of care under Project HERO, and
reimbursement and cost of care under the demonstration program.
Utilization
Project HERO is primarily an outpatient program. According to VHA
data, between January 2008 and September 30, 2009 approximately 51,000
veteran patients received care through Project HERO within the four
participating VISNs, compared to approximately 481,000 patients who
received care through VHA's regular fee basis care program (Figure 5).
During this same time period there were approximately 111,000
outpatient visits under Project HERO authorizations compared to
approximately 1.8 million outpatient visits under regular fee basis
care authorizations (Figure 6). As seen in the figures below, Project
HERO represents a small percentage of all outpatient medical care
provided by VHA.
Figure 5. Number and Percent Distribution of Unique
Veteran Patients Receiving Outpatient Care
(Total Patients in VISNs 8,16, 20, and 23)
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: Chart prepared by Congressional Research Service based on
data from Department of Veterans Affairs, Veterans Health
Administration, Chief Business Office.
Notes: Outpatient care provided from January 1, 2008 thru September
30, 2009.
Figure 6. Number and Percent Distribution of Outpatient Visits
(Total Outpatient Visits in VISNs 8,16, 20, and 23)
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: Chart prepared by Congressional Research Service based on
data from Department of Veterans Affairs, Veterans Health
Administration, Chief Business Office.
Notes: Outpatient visits from January 1, 2008 thru September 30,
2009.
Quality of Care
One objective for Project HERO is to ensure that veterans receive
high quality care, even when that care is provided by non-VA providers
in the community. The Project HERO demonstration includes measures of
care along five dimensions:
(1) timeliness of access to care, (2) return of clinical information,
(3) facility accreditation, (4) patient safety, and (5) complaints.\21\
In addition, the demonstration also conducts patient satisfaction
surveys. The demonstration project is in its early stages, and the
metrics are evolving. However, CRS was able to obtain some preliminary
information.
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\21\ Department of Veterans Affairs, Veterans Health
Administration, Chief Business Office, Project HERO Demonstration
Evaluation Monthly Report, July 2009.
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Project HERO is used to provide quality health care when needed
health care services are not available. ``Not available'' means that
services are not offered at all, are not available within a reasonable
amount of time, or are not available within a reasonable distance,
within the VA health care system. Currently, VHA policy has established
a goal of scheduling appointments within 30 days of the desired
appointment but not more than 4 months beyond the desired appointment
date. When a specific appointment date is not requested, VHA policy
requires the scheduler to use the next available appointment.
Furthermore, VHA policy also requires that all appointment requests,
including consult referrals to a specialist, must be acted on by the
medical facility within 7 days.\22\ The contract requires that HVHS
report the following metrics as part of the standard evaluation of
access to care: number of times care is provided within 30 days, number
of appointments scheduled within 5 days, and number of patients seen
within 20 minutes of appointment time. HVHS reports that in August
2009, 93.9 percent of appointments were scheduled within 5 days of
receipt of authorization, and that the average time it took to schedule
an appointment was 2.1 business days once an authorization was
received. HVHS also claims that in the same month 88.2 percent of the
referred patients were seen by a HVHS provider within 30 days.\23\
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\22\ U.S. Congress, House Committee on Veterans' Affairs,
Subcommittee on Health and Subcommittee on Oversight and
Investigations, Outpatient Waiting Times, 110th Cong., 1st sess.,
December 12, 2007. p. 35.
\23\ Humana Veterans Health Care Services briefing, September 17,
2009.
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Under Project HERO, VHA did not establish drive time or distance
requirements in the contract with HVHS. However, due to the need for
such a standard, a business process has been mutually agreed upon by
VHA and HVHS. HVHS notifies the referring VA medical center if the care
provider is more than 50 miles from the veteran's home address. The
referring VA medical center can determine if it is a reasonable
distance based on where the veteran lives. If the VA medical center
staff believes they can obtain care closer to the veteran, they can
cancel the HVHS authorization and issue a regular fee basis care
authorization.
With respect to the return of clinical information, under the
Project HERO demonstration HVHS is required to provide clinical data
generated as result of a routine referral for authorized care to the
referring medical facility within 30 days of the appointment date,
although this is not a requirement under the regular fee basis care
program. Early reports from the Project HERO Program Management Office
indicated that HVHS did not meet the 100 percent standard, and showed a
downward trend in this measure, meaning that the percentage of records
returned within 30 days was declining.\24\ In September 2009, HVHS
claimed that it was working on process improvements and on educating
noncompliant providers. HVHS reported in August that average business
days to return clinical information is 14.3 days.\25\
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\24\ Department of Veterans Affairs, Veterans Health
Administration, Chief Business Office, Project HERO Demonstration
Evaluation Monthly Report, July 2009.
\25\ Humana Veterans Health Care Services briefing, September 17,
2009.
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Accreditation of facilities and credentialing of providers are seen
as proxy measures to evaluate quality of clinical care provided.
Generally, under the regular fee basis care program, once a veteran is
authorized to receive care outside the VA health care system, the
veteran is free to choose a provider within the community. Therefore,
although the provider may be licensed to practice medicine within the
State, he or she is not necessarily credentialed in a manner similar to
the credentialing process that VHA uses to credential its own health
care providers.\26\ However, under Project HERO requirements, HVHS has
stated that it recruits credentialed providers using the same
guidelines that VHA uses for its providers. Credentialing includes
verification of appropriate education, certificates, licensing,
criminal record, registrations and insurance. According to HVHS it only
sends veterans to providers who meet VA credentialing requirements.\27\
In addition, the Project HERO HVHS network of providers is required to
practice at Joint Commission accredited facilities. Currently all
facilities providing inpatient care within the contractor network are
accredited by one of the following organizations: The Joint Commission,
the Commission on Accreditation of Rehabilitation Facilities (CARF),
The Intersocietal Commission for the Accreditation of Vascular
Laboratories (ICVAL), or the American Osteopathic Association (AOA).
According to the VA, the Project HERO Program Management Office audits
HVHS for provider credentialing and facility accreditation, and to
date, the VA has stated that the audit results have shown that HVHS
providers are compliant with credentialing requirements.
---------------------------------------------------------------------------
\26\ VHA policy requires that all VHA health care professionals who
are permitted by law and the facility to provide patient care services
independently must be credentialed and privileged. Credentialing is
done to ensure that a provider has the required education, training,
experience, physical and mental health, and skill to fulfill the
requirements of the position and to support the requested clinical
privileges (see VHA HANDBOOK 1100.19, November 14, 2008).
\27\ Humana Veterans Health Care Services briefing September 17,
2009.
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According to the VHA National Patient Improvement Handbook, patient
safety is ensuring freedom from accidental or inadvertent injury during
health care processes.\28\ Under Project HERO patient safety incidents
must be reported within one business day to the referring VA medical
facility, and these violations are required to be investigated and
resolved by VHA and HVHS. In its July 2009 monthly report, the Project
HERO Program Management Office did not report any patient safety
violations.
---------------------------------------------------------------------------
\28\ Department of Veterans Affairs, Veterans Health
Administration, VHA HANDBOOK 1050.01, May 23, 2008.
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With respect to complaints, a majority of complaints in the July
2009 report were related to the authorization process. For example:
``one veteran was sent to a provider who could not perform the
procedure needed,'' ``another veteran had an appointment rescheduled
and his medical records were not requested,'' and ``another veteran
went to an appointment and was told that the appointment was not
scheduled for him.'' \29\
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\29\ Department of Veterans Affairs, Veterans Health
Administration, Chief Business Office, Project HERO Demonstration
Evaluation Monthly Report, July 2009.
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As part of Project HERO, HVHS conducts surveys of patients to
measure patient satisfaction, and these are reported to the Project
HERO Program Management Office. In its July 2009 report (representing
averaged data from October 2008-March 2009), the Project HERO Program
Management Office indicated that over 75 percent of patients were very
or completely satisfied with their visit and 80 percent rated the
overall quality of the visit as very good or excellent. However, only
52 percent were satisfied with their appointment wait times.\30\
---------------------------------------------------------------------------
\30\ Ibid, pp. 9-11.
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Costs and Reimbursements
Project HERO prices for medical care are a negotiated percentage of
U.S. Department of Health and Human Services (HHS), Centers for
Medicare and Medicaid Services (CMS) rates based on the local market
rates where the services are provided. In contrast, under the regular
fee basis care, with the exception of physician services, dialysis and
laboratory testing, VHA does not have authority to pay at CMS rates.
VHA pays for regular fee basis outpatient care based on the lesser of
the amount billed by the provider or the amount calculated using a
formula developed by CMS' participating physician fee schedule for the
period in which the service is provided. If there is no calculated
amount under the CMS' participating physician fee schedule,
reimbursements are based on the lesser of the actual amount billed or
the amount calculated using the VA's 75th percentile methodology or the
usual and customary rate.\31\ Under Project HERO, VHA pays HVHS a value
added fee that ranges from $30.75 to $48.09 per claim, and these
amounts vary by VISN and type of service (See Table 1.).
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\31\ 38 CFR Sec. 17.56. Reimbursement under the 75th percentile
methodology is determined for each VA medical facility by ranking all
treatment occurrences of a medical procedure (with a minimum of eight)
under the corresponding Current Procedural Terminology
(CPT') codes during the previous fiscal year with charges
ranked from the highest to the lowest rate billed and the charge
falling at the 75th percentile as the maximum amount to be paid. If
there are fewer than eight treatment occurrences for a procedure during
the previous fiscal year then VA pays based on the provider's usual or
customary charges.
Table 1. Value Added Fee Amounts, FY2009
------------------------------------------------------------------------
VISN 8 VISN 16 VISN 20 VISN 23
------------------------------------------------------------------------
Medical or Surgical $30.75 $30.75 $39.50 $39.24
Care Services
------------------------------------------------------------------------
Mental Health Care $36.89 $36.89 $45.74 $48.09
Services
------------------------------------------------------------------------
Diagnostic Services $30.75 $30.75 $39.50 $39.24
------------------------------------------------------------------------
Dialysis $30.75 $30.75 $39.50 $39.24
------------------------------------------------------------------------
Source: Humana Veterans Healthcare Services.
The value added fee supports provision of such services as:
coordinating appointments for veterans; returning clinical information
(for example medical records) to VHA; processing provider invoices for
reimbursement to providers; and monitoring and reporting access to
care, appointment timeliness and patient safety. As seen in Table 2, in
FY2008 VHA paid approximately $69,000, and for FY2009 it paid HVHS
approximately $3.3 million in value added fees.
Table 2. Project HERO Payments Including Value Added Fees
----------------------------------------------------------------------------------------------------------------
Project HERO Value Added Total
Payments for Health Project HERO Total Fees as a % Project HERO
Care, Excluding Value Added Project of Project VISN Budgets Payments as
Value-Added Fees Fees \b\ HERO HERO \c\ % of VISN
\a\ Payments Payments Budgets
----------------------------------------------------------------------------------------------------------------
FY2008 $5,223,422 $69,089 $5,292,511 1.30% $8,973,617,617 0.06%
----------------------------------------------------------------------------------------------------------------
FY2009 $38,669,257 $3,305,067 $41,974,324 7.87% $9,685,045,154 0.43%
----------------------------------------------------------------------------------------------------------------
Source: Department of Veterans Affairs, Veterans Health Administration, Chief Business Office.Notes:
a. Project HERO Payments are VHA payments to Humana Veterans Health Care Services Inc. excluding any value
added fees (VISNs 8, 16, 20, and 23), and do not include dental care payments to Delta Dental. Payments for
FY2008 are from January 2008 through September 2008, and payments for FY2009 are from October 1, 2008 through
September 30, 2009.
b. Value added fees are payments made by VHA to Humana Veterans Health Care Services Inc (HVHS) for services
such as coordinating appointments for veterans; returning clinical information to VHA on a timely basis;
processing provider invoices for quick reimbursement to providers; and monitoring and reporting access to
care, appointment, timeliness and patient safety. Data are based on HVHS reporting of value added fees.
c. FY2008 VISN budgets (total VISN budgets for 8, 16, 20, and 23) are obligations as of September 30, 2008 and
FY2009 VISN budgets are as of July 31, 2009.
Discussion
Stakeholders have voiced various concerns about care provided
outside the VA health care system, and these concerns have been voiced
regarding both contract care and fee basis care. Some Veterans Service
Organizations (VSO) are concerned that a mixture of government
providers and private providers could grow over time and place at risk
the VA health care system as a whole.\32\ Unions are concerned that
care provided by non-VA providers would eventually lead to
``outsourcing of functions that have traditionally been performed in-
house.'' \33\
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\32\ U.S. Congress, House Committee on Veterans' Affairs, Project
Healthcare Effectiveness Through Resource Optimization, 109th Cong.,
2nd sess., March 29, 2006 (Washington: GPO, 2007), p. 76.
\33\ U.S. Congress, Senate Committee on Veterans' Affairs, A
Hearing on VA's Contracts for Health Services, 111th Cong., 1st sess.,
September 30, 2009. Testimony by Mary A. Curtis, Psychiatric Clinical
Nurse Specialist and Clinical Application Coordinator Boise VA Medical
Center Boise, Idaho, on Behalf of American Federation of Government
Employees, AFL-CIO.
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Congress has expressed concern with the growth of non-VA provided
care, and whether VHA is prudently using taxpayer dollars to purchase
care for veterans. Congress has also expressed concern about whether
VHA can ensure timely access to quality care when that care is provided
by outside providers.\34\ The Project HERO demonstration is
characterized by the VA as an effort to address these concerns and in
the early stage of its implementation is perceived to have achieved
mixed results. The next part of this report addresses the two questions
posed at the beginning of this report.
---------------------------------------------------------------------------
\34\ U.S. Congress, Senate Committee on Veterans' Affairs, A
Hearing on VA's Contracts for Health Services, 111th Cong., 1st sess.,
September 30, 2009.
---------------------------------------------------------------------------
Has Project HERO enhanced the fee basis care program?
During visits to three of the four demonstration sites CRS heard
mixed reviews about the pilot program. Some categorized it as a ``tool
in a toolbox'' meaning that Project HERO was one of many options a VA
medical facility could use to provide care outside the VA health care
system (other options include care through medical school affiliates or
through existing contracts with local providers, among others). Some
officials categorized Project HERO as a ``concierge service'' where
HVHS guides the veterans in scheduling appointments and ensuring that
clinical information is provided to a network provider and then
transferred back to the VA, as well as maintaining a credentialed
network of providers, and claims payment to providers.
The current Project HERO demonstration could be categorized as an
enhancement of the regular fee basis care program. The demonstration
pilot provides a single point of contact for those veterans who are
authorized to receive care outside the VA health care system. Under the
demonstration HVHS works with the veterans and the HVHS network
provider in scheduling the appointment. It also allows the veteran to
seek care from a credentialed provider, as well as facilitates the
transfer of medical information, thereby assisting with care
coordination. Furthermore, under Project HERO, VA does not have the
responsibility for paying for care provided outside the system directly
to non-VA providers. However, VA pays for these services through value
added fees to HVHS.
Are there lessons to be learned from the pilot program?
1. Establishing a robust network of providers takes time, even when
dealing with an established health care services provider.
Most VISNs stated that early on in the pilot HVHS had fair to
moderate success building its network of providers within the VISN, and
that the short implementation period between the time the contract was
awarded in October 2007 to when it became operational in January 2008,
was inadequate to establish a robust network of providers. This was
especially true in VISNs that had rural or highly rural areas.
According to some VISN officials, in some instances this lack of a
network of providers has resulted in ongoing challenges in providing
timely access to medical care. HVHS has asserted that based on feedback
received from the Project HERO Program Management Office, it has worked
with VA to resolve most of these issues. For example, HVHS has adapted
to the changing clinical needs of each VISN and has attempted to
recruit a provider network to meet those clinical needs.
2. 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 and did not meet the current needs
of the network. Some VISNs also raised the issue that some contract
pricing is higher than what VA would have paid under the regular fee
basis care, and that some services are cost-prohibitive when the value-
added fees are applied. However, the Project HERO Program Management
Office has noted that 89 percent of Project HERO prices are at or below
CMS rates, and that amounts paid to providers are less than 7 percent
of the regular fee basis care program.\35\
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\35\ Communication received from Department of Veterans Affairs,
Veterans Health Administration, Chief Business Office, September 29,
2009.
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3. Education is key to a successful functioning network.
Almost all VISNs stated that there has been organizational
resistance to change. According to VISN staff, the primary
implementation challenge has been providing training to staff at all
levels of the organization, especially educating providers and fee
basis care office staff. This has been true even for providers
recruited by HVHS, especially when they are required to send clinical
information back to the VA.
4. The project has yielded information that could be applied to the
existing regular fee basis care program.
First, without the 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 based on a diagnosis or laboratory result.
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. Lastly, VA
could develop a provider network within each VISN that the veteran
could be referred to so that the veteran receives care from provider
who has been credentialed similarly to a VA provider. However, prior to
implementing this pilot demonstration throughout the VA health care
system, it may be useful to conduct an independent evaluation to
conclusively measure if Project HERO has been a worthwhile effort.
Appendix A. Veterans Integrated Services Network (VISNs)
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: Department of Veterans Affairs, adapted by Congressional
Research Service.
Author Contact Information
Sidath Viranga Panangala
Specialist in Veterans Policy
[email protected], 7-0623
Prepared Statement of Belinda J. Finn, Assistant Inspector General
for Audits and Evaluations, Office of Inspector General,
U.S. Department of Veterans Affairs
INTRODUCTION
Mr. Chairman and Members of the Subcommittee, thank you for the
opportunity to discuss our findings related to how the Veterans Health
Administration (VHA) purchases health care services for veterans from
non-VA providers. I am accompanied by Gary Abe, Director, Seattle
Office for Audits and Evaluations, Office of Inspector General (OIG).
As health care costs continue to increase in VA and elsewhere, ensuring
that VA has strong controls over purchased care activities is a
critical aspect of providing the care veterans need. To address this
concern, over the past 2 years, we have issued two reports--Audit of
Veterans Health Administration Noncompetitive Clinical Sharing
Agreements and Audit of Veterans Health Administration's Non-VA
Outpatient Fee Care Program. In addition, we are currently reviewing
the Inpatient Fee Care Program and FSS contracts for professional and
allied health services; we plan to issue audit reports on these issues
later in FY 2010. To date, our audits of purchased care have identified
significant weaknesses and inefficiencies. Specifically, we have found
that VHA has not established effective policies and procedures to
oversee and monitor services provided by non-VA providers to ensure
they are necessary, timely, high quality, and properly billed.
BACKGROUND
When we initiated our audits in fiscal year (FY) 2008, VHA's
medical care budget totaled approximately $39 billion. In FY 2009, the
medical care budget increased to about $44 billion. We estimate that of
this amount, VHA spent about $5.3 billion (12 percent) to purchase
health care services from non-VA entities such as other government
agencies; affiliated universities; community hospitals; nursing homes;
and individual providers. VHA uses various mechanisms to purchase
health care services, including sharing agreements with affiliated
universities and the Department of Defense, Federal Supply Schedule
(FSS) contracts, the Non-VA Fee Care Program, Project HERO, and the
Foreign Medical Program. According to VHA managers, the authority to
purchase services from non-VA sources helps to improve veterans' access
to needed health care services, in particular specialty care that may
not be available at VA medical centers (VAMCs) or that VAMCs have a
difficult time recruiting and retaining specialists to provide.
Audit of Noncompetitive Clinical Sharing Agreements
Title 38 of the United States Code (USC), Section 8153, authorizes
VA to enter into noncompetitive sharing agreements with affiliated
institutions and entities associated with these institutions. In
practice, many sharing agreements are ones in which VA buys specialized
clinical services, such as anesthesiologists or cardiac surgeons, from
affiliated medical schools, university hospitals, clinical departments,
and associated medical practice groups. These medical specialists
provide services onsite in VAMC operating rooms, clinics, and inpatient
medical wards. When we initiated the audit in FY 2008, VHA reported
having about 670 noncompetitive clinical sharing agreements valued at
$575 million.
Performance monitoring controls over noncompetitive clinical
sharing agreements were not effective; as a result, VHA lacked
reasonable assurance it received the services it paid for. Our review
of 58 high cost surgical and anesthesiology sharing agreements at 8
randomly selected VAMCs found that controls over contract performance
monitoring for services provided onsite at the VAMCs under all 58
agreements needed strengthening.
For 34 full-time equivalent employee (FTE) based
agreements, contracting officers' technical representatives (COTRs) did
not monitor the actual amount of time contractors worked or whether the
hours worked met the FTE levels required by the agreements. For
example, one VAMC paid for 2.0 FTE vascular surgeons, but our review
determined that the time provided by contract vascular surgeons equated
to less than 1.2 FTE. The COTR acknowledged that while she reviewed the
surgeons' workload, she did not monitor their time. As a result, the
VAMC overpaid $333,030 for time the vascular surgeons were not at the
VAMC.
For 24 procedure-based agreements, COTRs did not always
ensure that all of the services were actually received or needed and
that contractors correctly calculated Medicare-based charges. For
example, at one VAMC, a contractor overcharged $1,022 for 31 procedures
because it billed rates that were higher than the Medicare rates
applicable to the geographical area. The COTR did not review the
charges or verify the accuracy of the rates prior to certifying
payments. If left unmonitored, even routine procedure billings with low
value financial errors can build over time into significant
overpayments.
Because of these weaknesses in performance monitoring, VAMCs
overpaid contractors on 30 (52 percent) of the 58 agreements.
Strengthening controls over performance monitoring would save VHA about
$9.5 million annually or $47.4 million over 5 years.
Specifically, we identified three areas that required
strengthening:
Specify Performance Requirements. The sharing agreements
did not specifically and accurately state performance requirements for
the contractors. Clear performance requirements tell the COTRs what
services will be provided, who will provide the services, and the rates
to be charged.
Improve Oversight of COTRs. Contracting officers and VHA
officials did not adequately oversee COTR activities. Contracting
officers did not provide the COTRs clear guidance about their
monitoring responsibilities, nor did they implement procedures to
routinely review the COTRs' activities to ensure they were effective.
Provide Specialized Training to COTRs. COTRs did not have
sufficient training to monitor clinical sharing agreements. Although
most of the COTRs had general contract monitoring training, they had
not received any specialized training on how to establish effective
monitoring systems for FTE-based and procedure-based clinical sharing
agreements. For example, many of the COTRs were unfamiliar with
Medicare-based charges commonly used in procedure-based agreements.
We made seven recommendations to strengthen controls over sharing
agreement performance monitoring. The Under Secretary for Health agreed
with our findings and recommendations and provided acceptable
implementation plans to address the recommendations. VHA is still in
the process of implementing the recommendations.
Audit of Non-VA Outpatient Fee Care Program
Title 38 of the USC, Sections 1703, 1725, and 1728, permits VA to
purchase health care services on a fee-for-service or contract basis
when services are unavailable at VA facilities, when VAMCs cannot
provide services economically due to geographical inaccessibility, or
in emergencies when delays may be hazardous to a veteran's life or
health. The Non-VA Fee Care Program accounts for the bulk of VHA's
purchased care spending with estimated FY 2008 expenditures exceeding
$2.6 billion; it is also VA's fastest growing purchased care activity.
For example, outpatient fee costs have more than doubled during the 4-
year period FY 2005-2008, from $740 million to $1.6 billion, and in FY
2009, outpatient fee costs were just under $2 billion.
Our recently issued audit report focused on the Outpatient Fee Care
Program. In FY 2008, 137 VAMCs processed an estimated 3.2 million
outpatient fee claims. These claims were for a wide range of diagnostic
and therapeutic services including visits to primary care physicians,
x-rays and diagnostic imaging procedures, chemotherapy and radiation
therapy, dialysis, physical therapy, and outpatient surgical
procedures. Based on our review of a statistical sample of 800 claims,
we concluded that VHA had not established adequate management controls
and oversight procedures to ensure that claims for outpatient fee
services were accurately paid, justifications for services were
adequately documented, and services were properly pre-authorized.
VAMCs improperly paid 37 percent of outpatient fee claims
by making duplicate payments, paying incorrect rates, and making other
less frequent payment errors, such as paying for the wrong quantity of
services. As a result, we estimated that in FY 2008, VAMCs overpaid
$225 million and underpaid $52 million to fee providers, or about $1.13
billion in overpayments and $260 million in underpayments over 5 years.
For 80 percent of outpatient fee claims we reviewed VAMCs
did not adequately document justifications for use of outpatient fee
care or properly pre-authorize services as required by VHA policy,
thereby increasing the risk of additional improper payments. However,
our audit did not assess or question the clinical necessity of
services.
We concluded that the improper payments, justifications, and
authorizations occurred because VHA had not established an adequate
organizational structure to support and control the complex, highly
decentralized, and rapidly growing fee program. We identified three
specific areas that required strengthening:
Develop Comprehensive Fee Policies and Procedures. VHA
does not have a centralized source of comprehensive, clearly written
policies and procedures for the Fee Program. Instead, fee supervisors
and staff must rely on an assortment of resources including the Code of
Federal Regulations, outdated VA policy manuals, and other procedure
guides, training materials, or informal guidance.
Identify Core Competencies and Require Training for Fee
Staff. Because the Fee Program is very complex and requires significant
judgment by fee staff to ensure correct payments, processing fee claims
requires specialized knowledge and skills, such as understanding
medical records, insurance billing concepts, and medical procedure
coding. However, VHA does not require fee staff or their supervisors to
attend initial or refresher training.
Establish Clear Oversight Responsibilities and
Procedures. Strong oversight of the Fee Program should include
procedures and performance metrics for assessing compliance with
program requirements, conducting risk assessments, assessing program
controls, and monitoring accuracy and quality of claims processing.
However, no one from VHA's Chief Business Office, National Fee Program
Office, Veterans Integrated Services Network, or Compliance and
Business Integrity Office is routinely performing oversight activities
of the Fee Program.
We made eight recommendations to strengthen controls over the
Outpatient Fee Care Program. The Under Secretary for Health agreed with
the findings and recommendations and provided acceptable implementation
plans to address the recommendations. In his response, he also stated
that information technology (IT) gaps were ``key drivers in the
erroneous payments'' identified by our audit. He pointed out that fee
staff manually process many claims and that few upgrades have been made
to the VistA Fee system in the past 10 years. As part of our ongoing
audit of inpatient fee care, we are examining the Under Secretary's
concern about IT gaps and assessing the impact of IT systems on claims
processing accuracy and efficiency.
CONCLUSION
While purchasing health care services from non-VA providers may
afford VHA flexibility in terms of expanded access to care and services
that are not readily available at VAMCs, it also poses a significant
risk to VA when adequate controls are not in place. With non-VA health
care costs of about $4.8 billion in FY 2008 and future costs expected
to increase, VHA needs to strengthen performance monitoring over
clinical sharing agreements and improve controls over claims processing
and the justification and authorization of fee services. Without
adequate controls, VHA lacks reasonable assurance that it is receiving
the services it pays for, that the services are needed, or that the
prices paid for services are correct. Furthermore, it does not have the
information it needs to assess whether this approach for delivering
health care to veterans is efficient and economical.
Mr. Chairman, thank you for the opportunity to discuss these
important issues. We would be pleased to answer any questions that you
or other Members of the Subcommittee may have.
Prepared Statement of Tim S. McClain, President and Chief Executive
Officer, Humana Veterans Healthcare Services, Inc.
INTRODUCTION
Chairman Michaud, Ranking Member Brown, and distinguished Committee
Members, thank you for the opportunity to address the Committee on
Project HERO (Health Care Effectiveness through Resource Optimization)
and the supporting role Humana Veterans Healthcare Services plays in
the delivery of excellent health care to our Nation's veterans.
On behalf of the dedicated men and women of Humana Veterans, I
appreciate the opportunity to provide information to the Committee on
the three hallmarks of Project HERO: (1) Quality health care solutions
for veterans, including personalized services tailored for each
veteran; (2) timely Access to care; and, (3) Cost effective care.
I am President and CEO of Humana Veterans, the company responsible
for providing health care services for the Veterans Affairs Project
HERO demonstration and welcome this opportunity to discuss the
objectives, successes and efficiencies of Project HERO that make it a
clear benefit to the Department, and most importantly, to the veterans
relying on VA for excellent medical care.
OVERVIEW OF PROJECT HERO CONTRACT
Project HERO is a demonstration project (pilot) currently
implemented in four Veteran Integrated Service Networks: VISN 8, 16, 20
and 23. The project is congressionally inspired and has developed into
a partnership between the U.S. Department of Veterans Affairs, Veterans
Health Administration (VHA) and Humana Veterans.
Humana Veterans was awarded the contract for medical/surgical,
mental health, diagnostics and dialysis for Project HERO on October 1,
2007. Delta Dental Federal Services (Delta Dental) was awarded the
contract for dental services. My testimony today addresses only the
partnership between the VA and Humana Veterans and does not intend to
address the contract awarded to Delta Dental.
The purpose of the project is to determine how a personalized
services approach to care provided outside the VA (traditionally termed
``fee-based care'') can improve and complement the timely access and
quality of care, preserve the fiscal integrity of VA health care
expenditures, while maintaining high customer satisfaction. We at
Humana Veterans believe Project HERO has succeeded in all of these
areas.
As displayed on the map in Exhibit A (attached), HERO is currently
a four-VISN demonstration including the Sunshine Healthcare Network
(VISN 8); South Central Healthcare Network (VISN 16); Northwest
Healthcare Network (VISN 20); and the Midwest Healthcare Network (VISN
23). We understand VA selected these four VISNs for Project HERO based
on their considerable fee-based populations and the significant amount
of health care funds expended on veterans care through the VA's regular
fee-basis program.
CONTRACT STATUS
Humana Veterans contract, which was awarded October 2007, consists
of a base contract with 4 option years. Performance under the contract
commenced on January 1, 2008 and VA has exercised an option extending
the term of the current contract through September 30, 2010.
OBJECTIVES
The Project HERO solicitation, sent out to bid in late December
2006, clearly identified a number of overall objectives for the
demonstration. These objectives remain steadfast today and are
objectives Humana Veterans strives to attain as we collaborate with VA
to improve the level of care provided to our Nation's veterans outside
VA facilities. The objectives outlined in the solicitation included:
Cost--providing cost-effective, consistent, and
competitive pricing.
Quality of Care--ensuring the quality of community care
provided.
Patient Satisfaction--achieving high patient
satisfaction.
Clinical Information--improving the exchange of patient
care information between community providers and the VA.
Patient Safety--fostering high quality care and patient
safety.
Transparency--improving care coordination so all care,
including care provided outside of the VA, is perceived by the patient
as VA care.
Clinical Coordination--ensuring efficiency in the VA
referral process and timely appointments for patients.
Coverage--providing health services to veterans where and
when the VA does not have capacity or capability to deliver services
internally.
It is important to highlight that we believe Humana Veterans has
met or exceeded each of the contract objectives to date. The result is
better health care services to veterans. While these objectives are
crucial in providing services for the men and women who have honorably
served our Nation, there is a more implicit goal of Project HERO. That
goal is to combine all of these elements and create a standardized
method of providing fee-basis care to ensure eligible veterans gain
timely access to care, in a manner that is cost-effective to the VA,
and most importantly, preserves the level of service veterans have come
to rely on inside the VA. After nearly 18 months of working diligently
with our partners at VA, we are delivering on these objectives.
PROJECT HERO MODEL
Humana Veterans, in collaboration with VA, coordinates quality,
timely access to health care services through Project HERO. VA refers
patients to community health care providers when there is a need for
specialty care or other treatment that is not readily available at the
VA facility. This is accomplished through a model developed by Humana
Veterans, in partnership with VA.
The Project HERO Model includes a personalized service process for
veterans and is outlined below:
a. First, the veteran receives authorization for care from the VA.
Before issuing an authorization, the VA determines if the specialty or
other care is available at a VA facility, if the veteran lives a
significant distance from that facility, or makes a determination based
on other medical reasons. The VA then determines whether to send the
authorization directly to the veteran, send it to the Project HERO
office at Humana Veterans, or refer the veteran directly to a community
provider.
b. When an authorization is sent to Project HERO, the veteran
receives personal assistance and specialized services. Initial contact
with the veteran is made by a Customer Care Representative (CCR) at
Humana Veterans. This appointment specialist provides an explanation of
the HERO process and determines when the veteran is available for the
medical appointment. In terms of making the encounter more veteran-
friendly, we developed our personalized services approach for three
reasons: (a) to ensure the veteran is comfortable with what the medical
appointment will entail; (b) the veteran understands where the civilian
provider is located; and, (c) ensure maximum reliability in terms of
the appointment date established between the veteran and HERO contract
provider.
c. The CCR then conducts a three-way conference call with the
veteran and a Humana Veterans network provider's office. This call
occurs within 5 days of receiving the authorization form from the VA.
As part of the Humana Veterans network agreement, network providers
must schedule appointments within 30 days of the conference call. In
any event, the veteran must agree to the scheduled date.
d. The veteran receives a letter confirming the provider's name,
address, telephone number, date and time of appointment, including how
to obtain directions to the provider's office and Humana Veterans
customer service number should questions or problems arise. The
referring VA facility is also informed of the appointment details.
e. The veteran goes to the scheduled appointment. An agreement
with our network providers limits the veteran's wait time to no longer
than 20 minutes when they are in the office for their scheduled
appointment. If a copy of the veteran's medical records is required, we
contact the VA to inform them of the provider's request.
f. After the appointment, we actively track the provider's written
consult report and ensure it is returned to the VA for inclusion in the
veteran's electronic health record. The average time for a consult
report to be returned to VA is 16 days.
g. If the provider recommends the veteran have additional tests,
procedures or services, Humana Veterans communicates the recommendation
to the VA for review and action. When providers submit their claims to
us, we pay the provider directly within 30 days of receipt of the
claim. We then submit the claim for services under the contract and VA
pays Humana Veterans.
h. Finally, we are committed to a seamless ``hand-off'' of the
veteran back into the VA system and their primary care providers. This
personalized approach is beneficial to the veteran. The return of
clinical information in a timely manner ensures quality and continuity
of care.
CONTRACT PERFORMANCE REQUIREMENTS
The following are the specific performance metrics enumerated in
the Project HERO contract:
Access. Appointments with specialists and routine diagnostics
are scheduled for veterans within 30 days of receipt of the referral by
the provider and the provider will see veterans within 20 minutes of
their scheduled appointment.
Accreditation. Unless a waiver exists, all facilities providing
inpatient care must be accredited by the Joint Commission (JCAHO), the
Commission on Accreditation of Rehabilitation Facilities (CARF), the
Intersocietal Commission on the Accreditation of Vascular Laboratories
(ICAVL), or the American Osteopathic Association (AOA). Humana Veterans
must provide proof of accreditation to the VA for providers.
Clinical Information. All routine clinical information and test
results must be returned within 30 days from the day of care. For
inpatient care, clinical information must be returned within 30 days of
the veteran's discharge.
Credentialing. Humana Veterans provides written certification to
the VA validating network providers are credentialed, including
physician assistants, registered professional nurses, nurse
practitioners, and other personnel in the network providing health care
services to veterans. The VA conducts random inspections of our
credentialing files guaranteeing this compliance.
Patient Safety. Humana Veterans reports all patient safety
reports/incidents to the VA and Contracting Officer Technical
Representative (COTR). All safety events are investigated, confirmed,
and resolved and the VA informed of the progress in resolving safety
events.
Patient Satisfaction. Humana Veterans designated a Patient
Advocate with the responsibility of receiving veteran grievances. We
submit all patient complaints regarding quality of care to the VISN
Patient Advocate and COTR. We developed materials outlining the
grievance process and assist veterans with complaints.
Reporting Requirements. Humana Veterans submits a monthly report
to the VA including metrics on contract performance standards plus a
variety of other metrics. We maintain a data repository (Data Mart) and
provide unlimited access to the VA. Anyone in the Project Management
Office (PMO) or Fee Office at the VAMC level has access to the data and
may pull reports on the metrics, after access is granted by the COTR.
MISCONCEPTIONS
Mr. Chairman, now that I have established the rationale for the
development of the demonstration, at this point I feel it is also
important to address some serious, ongoing misconceptions regarding
Project HERO. I firmly believe the perpetuation of these misconceptions
is a disservice to veterans enjoying the many benefits of Project HERO,
to VA as it executes this demonstration project, and to Humana Veterans
as we continue serving veterans through our HERO Model. I will address
two misconceptions that emerged early on in the demonstration project
and continue to linger to some degree today. It is a ``Myth vs. Fact''
phenomenon.
Myth Number 1
Project HERO seeks to undermine the care currently provided inside
VA facilities, leading to greater levels of care in the community, and
ultimately diminishing the VA health care delivery system as a national
treasure for veterans.
Fact
VA and Humana Veterans are clearly in agreement that is false. I
want to explain why this claim is erroneous. As you know, traditional
VA fee-basis care, and care now provided through Project HERO, are
authorized and provided only when the requisite capacity inside VA does
not support the timely access to care or a specialty is not available
in VA. Simply translated, this means the VA retains ultimate control
over who enters the community for care, including which patients are
referred to HERO for personalized services. We understand the statutory
mandate that the VA must provide care inside its' proverbial four walls
whenever possible. HERO, and the processes developed under it, was
created to serve as an effective complement to the high quality care VA
provides internally, not an initiative to supplant it.
Having said that, we are also aware the VA spends more than three
billion dollars per year nationally on care outside VA facilities. We
recognize that the demand for services is often times beyond the
control of the VA--in such instances as veterans residing in rural
areas or the lack of specialty providers available to the VA in a given
geographic area. HERO could serve as an effective backstop at times
when the VA's internal capacity is limited and the veterans' needs
temporarily exceed the VA's ability to deliver services in a timely
fashion. This is a clear advantage to the veteran.
Myth Number 2
Project HERO reduces the need for the VA's current fee-basis
offices and staff due to services being ``outsourced.''
Fact
Mr. Chairman, we have heard this concern for some time, and while
at face value it may sound like a reasonable suggestion, there is one
major reason it is not accurate. The reason is the way referrals or
authorizations for care outside VA are provided to Humana Veterans
under the HERO Model. All referrals provided to Humana Veterans are
generated out of the fee-basis offices at local VA facilities. Once a
VA physician sends a referral to the fee office, it has already been
determined that the VA does not have the capacity to provide for the
care of the veteran. In response, the fee office determines what
specific services are required for a veteran, and then decides what
avenues are available to the veteran for care rendered outside the VA.
In contrast to the myth, and based on these well-established, long-
standing processes, the fee office becomes indispensable in the process
of generating HERO referrals or authorizations, not endangered by it.
Humana Veterans supports the Veterans Health Administration (VHA)
in achieving delivery of high quality, accessible, seamless, and cost
effective health care solutions to our Nation's veterans.
COST SAVINGS AND EFFICIENCIES
Efficiencies
The topic of efficiencies as it relates to health care for veterans
generally results in a discussion about timeliness of the care
provided. While that is undeniably one of the most important metrics
and successes of HERO to date, efficiencies go well beyond how quickly
a veteran is seen in a clinician's office.
A great deal of work goes into scheduling an appointment and making
the veteran comfortable with the nature and location of his or her
appointment. Having a reliable, credentialed network of providers
sufficient to handle the care required in the community and providing a
smooth clinical transition of the veteran back to their primary care
provider at the VA is equally important.
The Humana Veterans provider network has grown to include over
30,000 providers across the four VISNs, including about 5,900 in rural
and highly rural areas. A greater concentration of potential VA
providers exists today than at any time in the past--for both urban and
rural areas--because of Project HERO.
Cost Savings
Although we are not able to make a direct comparison to VA's costs
for fee-based care, VA is benefiting from cost savings through Project
HERO. Health care services provided under HERO are priced as a
percentage of the applicable Medicare Fee Schedule. Under the current
contract, 92 percent of all contract line items for health care
services are priced below the corresponding Medicare Fee Schedule.
A comparison of our network costs to Medicare rates shows
significant savings. Subjectively speaking, reimbursement rates under
HERO are generally more favorable than the traditional fee-based
structure at the VA, and commonly below Medicare reimbursement rates in
the geographic regions where HERO is operational. We attribute this to:
1. Humana Veterans is respected in the civilian community and has
developed a reputation for on-time payments to providers; and,
2. Even with the indefinite delivery/indefinite quantity (IDIQ)
nature of the contract, Humana Veterans is successful in garnering
deeper discounts, across the four VISNs, due to corporate presence,
reputation and on-going relationships with provider groups.
It is important to state that even if the costs were the same for
VA between Project HERO and the regular fee-based program, the
advantage to Veterans through the HERO Model ensures personalized
service, quality, timely access, and convenience resulting in superior
value to the VA and veterans. There is a clear advantage in the HERO
Model, which should be extended beyond the four VISNs and
institutionalized nationally across VA facilities.
WHAT IS QUALITY VA HEALTH CARE?
I am sure that if you asked 10 veterans for their definition of
quality health care in VA you would receive many different answers. The
answers may differ significantly from a medical professional's
definition. There are certain attributes, however, that would be common
in most responses from veterans and form elements of quality VA health
care. The elements would likely include:
1. Respect for the individual veteran and her or his service to
our Nation.
2. State-of-the-art services from the health care provider.
3. A level of comfort that the provider is licensed and
credentialed for the services provided.
4. Timely and convenient access to the provider.
5. Assurance that the community provider has access to the
veteran's medical records, if needed, to ensure excellent continuity of
care and to avoid the need for multiple incidents of the same test or
procedure.
6. Timely return of the clinical information to the VA primary
provider and inclusion in the electronic health record.
Humana Veterans works tirelessly with VA to ensure care provided
through our HERO networks reflect the level of quality provided inside
VA facilities, but our goal and the real goal of the demonstration, is
to raise the bar compared to VA's traditional fee-basis care. A number
of existing initiatives undertaken in the Project HERO Model contribute
to this goal including personalized appointment services, timely access
to care and the return of vital clinical information to VA.
Return of Clinical Information
Accurate accounting for outside consult reports and other clinical
information is a critical component of quality health care. VA's
decentralized approach to its normal fee-based care makes it difficult
to track metrics on the timeliness of outside provider consult reports.
Humana Veterans, in partnership with VA, has established a benchmark
requirement for the return of clinical information to VA. Humana
Veterans expends considerable administrative effort in tracking
clinical consult reports and has established a standard for reports to
be returned to VA within 30 days. This ensures that treatment
information and test results contained in the clinical consult reports
are available to the primary care VA providers. This is simply another
indication of the quality that Project HERO brings to care delivered
outside of VA facilities.
Currently, the process of entering clinical consult reports into
VA's electronic health record is a manual process. In the future, the
Project HERO Model could be institutionalized across VA, electronic
consult records could be contractually required, entered directly into
the system, and directed to the VA primary provider's desktop.
I would like to share some metrics associated with this largely
electronic exchange. Based on our latest data extraction, reporting all
data from the beginning of HERO in January 2008 through the end of
December 2009 shows:
Seventy-one percent of clinical information is returned
within 15 days;
Eighty-eight percent return of routine clinical
information to the VA within 30 days of the HERO encounter;
Ninety-five percent return of routine clinical
information within 45 days; and
For the return of clinical information to the VA, the
median is 9 days.
More needs to be done to facilitate an increasingly electronic,
workable exchange with Veterans Health Information Systems and
Technology Architecture (VistA)/Computerized Patient Record System
(CPRS), the VA's electronic health record. However, we are convinced
efforts made to date represent significant progress in enhancing the
continuum of care for veterans outside of VA facilities through this
project.
FUTURE OF THE HERO MODEL
I want to emphasize at this point that Humana Veterans and the VHA
PMO for Project HERO have an excellent working relationship. The
following recommendations are put forth to enhance Project HERO and are
submitted for your consideration in legislating for a 21st Century
Project HERO.
Approach Project HERO as a true demonstration project.
Demonstration projects take on many forms, but most have the common
attribute of implementing a procedure or set of procedures, an
evaluation of the processes with sufficient workload to emulate real
world conditions, and ultimately, the implementation of identified
improvements. Then the process is replicated, using the newly-
identified best practices and continually improving the model. We
believe Congress desired such a demonstration process with the ultimate
goal of improved service to veterans who are referred for evaluation or
care in the community. VA implemented the Congressional directive by
awarding a single contract for all four VISNs and simply administering
the contract. There is currently no provision or contractual mechanism
that allows for a mandatory workload adjustment after either (1) a
specific period of performance; or (2) the effective implementation of
improved processes. In other words, VA is not required to improve their
larger, institutional processes as lessons are learned during the
demonstration. Further, they are required only to send a minimal
workload to the demonstration, thereby defeating the true purpose of a
demonstration project, (i.e., testing new and innovative management
initiatives and implementing best practices and lessons learned). There
is still plenty of time, under HERO, to conduct a true demonstration
project within the existing contract. Three years remain on the 5-year
demonstration and a world class fee-based process can be realized if VA
is willing to commit to realistic workloads and process adjustments to
test proposed process improvements.
It is difficult to run a demonstration project when there is a
competing process in the same fee office. We suggest that Project HERO
become a first and preferred option in at least one VISN, perhaps VISN
8 or 16. Project HERO currently runs alongside VA's normal fee-based
processes. The only manner to truly test the demonstration concept is
to make referral to Project HERO the first or preferred option in a
busy VISN fee office.
Access to VHA's CPRS. Currently, Humana Veterans as the project
HERO contractor does not have access to VHA's Computerized Patient
Record System (CPRS). The written consult reports of the outside
medical specialists are transmitted via secure email or faxed to VHA
and either manually downloaded or scanned into CPRS. While this
represents significant progress beyond VA's current fee-based efforts,
this imperfect process can result in delay or lost records and remains
subject to human error. VHA should be directed to provide direct access
to CPRS for the Project HERO contractor. This will result in increased
efficiencies, reduce the time for the written consult to be returned to
the primary VA provider, and reduce delay in providing vital diagnostic
and expert opinions to the veteran's VA primary provider. With direct
access to CPRS, the contractor can enter an electronic or scanned
consult into CPRS and send it directly to the VA primary care provider.
It will also reduce the time it takes to provide a veteran's medical
records required for the outside consult.
VA would benefit from standardized processes, procedures and forms.
The existing fee-based process in VA is completely decentralized.
Standard forms exist, but many are locally modified. Further, there is
no standard language for authorizations for care outside VA. The phrase
``Evaluate and Treat'' means different things in different fee offices.
Standard electronic forms and language would greatly enhance VA's
legacy, fee-based system. Given the attributes mentioned in my
testimony, Project HERO has the potential to go beyond its current
form. However, the Model has not been adequately tested under
conditions of a full-load of referrals. The numbers of Project HERO
referrals continue to steadily decline and have for the past 6 months.
It would be difficult to draw many conclusions on the ultimate future
of HERO without a true test of its capabilities. The average monthly
volume over the past 6 months has been 6,186 total from all four VISNs.
A minimum number of referrals per month should be 10,000-12,000 in
order to validate the HERO Model. We encourage the Committee to
recommend VA utilize the services offered in Project HERO to the
greatest extent practicable to enhance the demonstration project and
validate the HERO Model.
In addition to increasing usage of the current HERO contract, we
see other potential areas of benefit to veterans. These include:
1. Humana Veterans has established networks in areas VA might
consider rural or highly rural. Given the emerging demographics as it
relates to new veterans from Operations Iraqi and Enduring Freedom, our
rural footprint could be advantageous as VA seeks to provide care
closer to where the veteran population.
2. Women's health is another example of where we can positively
affect the emerging requirements of the VA. Women are among the fastest
growing segment of eligible veterans and their numbers are expected to
double over the next 5 years. The VA may be at a disadvantage when it
comes to building the requisite infrastructure to meet the emerging
demands and requirements of women depending on the VA for care. Humana
Veterans, due to our large reach into the provider community, could be
an effective ``backstop'' for the VA when they lack the capacity to
deliver this care.
3. Finally, we have made great progress ensuring veterans'
clinical information is returned in a timely fashion to the VA after a
clinical encounter with a HERO provider. It would be more effective if
we could provide it electronically through VistA and have it compatible
with CPRS as the VA is at the forefront of enterprise-wide electronic
health records. We want to partner with the VA to ensure clinical
information associated with the more than three billion dollars spent
in clinical care provided outside of VA facilities, is increasingly
available to providers inside the VA, thus improving the clinical
continuum of care for our Veterans.
CONCLUSION
Mr. Chairman and Ranking Member Brown, I would again like to thank
you for the opportunity to come before the Committee today to discuss,
for the first time, the value Project HERO brings to veterans, and the
value Humana Veterans adds through the HERO Model. I am confident at
this early stage in the demonstration contract that Project HERO has
delivered, and will continue to deliver, value on its three hallmarks:
Quality, Access and Cost effectiveness. Our Nation's heroes deserve
quality health care solutions and that is our ultimate mission at
Humana Veterans.
Thank you, Mr. Chairman. I would be glad to answer any questions
from the Committee.
__________
EXHIBITS
Exhibit A: Project HERO Demonstration VISNs
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Exhibit B: Management of Quality Care
Clinical Quality Management Committee (CQMC)
Humana Veterans understands the importance of ensuring quality
health care delivery to our Nation's veterans. As a result, we
initiated the Humana Veterans Clinical Quality Management Committee
(CQMC).
The CQMC is an interdisciplinary committee that meets at least
quarterly and comprised of Humana associates, VA representatives, and
representatives of delegated CQM and Credentialing services. The CQMC
oversees and directs activities of the Clinical Quality Management
Program (CQMP) on behalf of the Humana Veterans Executive Committee.
The CQMC acts as an interface between the VA and delegated
subcontractors and ensures compliance with the VA contract. The
findings of the CQMC are reported quarterly to the Humana Veterans
Executive Committee.
Credentialing Committee (CC)
Credentialing of Humana Veterans providers is performed by the
Credentialing Committee. The Credentialing Committee is responsible for
evaluating the qualifications of professional health care practitioners
based on appropriate industry standards. Evaluations may include data
related to alleged misconduct, performance or competence of a provider.
The committee reviews credentialing reports and makes final
determinations on all provider applicants and delegated groups. The re-
credentialing of contracted providers is conducted at least every 3
years. The decision to accept, retain, deny or terminate a provider
shall be at the discretion of the committee, which meets as often as
necessary to fulfill its responsibilities.
Patient Safety Peer Review Committee (PSPRC)
The Humana Veterans PSPRC provides peer review for any potential
clinical quality of care issue identified and delineates steps to
resolve problems and the on-going monitoring of these issues. The
committee performs peer review of patient safety and quality of care
issues identified through the Potential Quality Indicator (PQI) process
and provides input for communicating and educating providers of
concerns related to patient safety or clinical improvement. Upon
confirmation of a quality issue the PSPRC will assign an appropriate
severity level, determine intervention(s) to address the issue, and
review and monitor intervention(s) to completion.
The levels of severity utilizes by Humana Veterans include:
1 Quality
issue is
present
with
minimal
potential
for
significa
nt
adverse
effects
on the
patient.
----------------------------------------------------------------------------------------------------------------
2 Quality
issue is
present
with the
potential
for
significa
nt
adverse
effects
on the
patient.
----------------------------------------------------------------------------------------------------------------
3 Quality
issue is
present
with
significa
nt
adverse
effects
on the
patient.
----------------------------------------------------------------------------------------------------------------
4 Quality
issue
with the
most
severe
adverse
effect(s)
and
warrants
exhaustiv
e review.
----------------------------------------------------------------------------------------------------------------
Quality issues with minimal potential for significant adverse
effects on the patient are assigned a Severity Level 1 by the Chief
Medical Officer. This information is entered into the Provider Trend
Database (PTD) for tracking and trending purposes. Cases assigned a
Severity Level 2 are presented in summary to the committee for
informational purposes and entered into the PTD. Cases recommended as a
Severity Level 3 or 4 are presented to the committee for peer review
and final determination.
Prepared Statement of P.T. Henry, Senior Vice President, Federal
Government Programs, Delta Dental of California
Mr. Chairman, Members of the Subcommittee, I would like to thank
you for inviting us to join you this morning to talk about our
Partnership with the Department of Veterans Affairs in the execution of
the demonstration project on Healthcare Effectiveness through Resource
Optimization (Project HERO).
Delta Dental is the Nation's oldest and largest provider of Dental
Services. Through our 39 independent member plans, we provide dental
insurance coverage to over 54 million people in all 50 States, the
Commonwealth of Puerto Rico, the Territories and other overseas
locations. Four out of every five dentists are affiliated with Delta
Dental and our network of approximately 140 thousand highly qualified
dentists is second to none. Of those, approximately 19,000 are located
in the four Project HERO Veteran Integrated Service Networks (VISNs).
Delta Dental first began a journey in the late 1970s with the then
Veterans Administration when we administered the VA Outpatient Dental
Care Program (Fee Basis) in California. Over the years our involvement
with the Department has ebbed and flowed. What has not changed,
however, is our total commitment to the tremendous men and women who
serve our Nation in uniform. Today, it is both a privilege and an honor
for us to administer this program in collaboration with the Veterans
Health Administration and the four participating VISNs.
We fully understand and are committed to the goals of Project HERO
as articulated in the underlying statute, the implementing contract and
related documents. At Delta, we see our role not as a substitute for VA
Care but rather as an extension of that care when, for whatever reason,
required care cannot be provided at the VA's dental treatment
facilities.
By making available our networks of Delta Dental providers, we
complement VHA's in-house capacity with high quality, credentialed
providers with whom we have negotiated discounted rates. Basically, we
believe Project HERO will, in the long run, lay the foundation that
will allow the VHA to provide necessary care to more veterans for less
money than is currently paid for Fee Care.
We work in close collaboration with our partners in the Dental
Clinics, in the VISNs, and the VHA to improve the exchange of clinical
information between our network community providers and the various
elements of the VHA. While fostering high quality care and patient
safety, we improve veteran satisfaction and can provide avenues based
on commercial business practices to control costs and eliminate waiting
lists. We see this in stark contrast to traditional ``FEE CARE'' in
which the VA has no influence over the quality of care yet pays
``Billed Charges'' for all work done.
During the period from January 2008 through December 2009 we have
received 20,898 viable authorizations which resulted in our making
20,753 appointments for care. Of those, about 18,772 have been seen by
a dentist and we have received a claim for the dental services
rendered. The remainder has received treatment for which we have not
yet been billed or are awaiting their scheduled appointment.
Once treatment has been authorized, our veterans are in the dentist
chair on average in 18 days and, 99.82 percent are seen in less than 30
days for the calendar year 2009. We see this as a clear indication that
the program is meeting the established objectives. We are proud of this
track record and expect it to improve as we work through the remaining
years of the demonstration.
We believe that a key to this success has been the partnership
forged between Delta Dental and the VHA to ensure that this
demonstration program provides a solid foundation for future decisions
about veteran's dental care.
During the 25 months since contract award, we have worked to better
understand the culture, attitudes and expectations of our partners
while exposing them to the benefits that private sector dental plans
can provide. There have been, and will be of course, bumps in the road.
Together we are working our way through them so we move towards the
common goals of Project HERO.
As we look forward, together with our partners in VHA, we have
identified specific areas for procedural improvements that will enhance
the overall contribution of the dental portion of Project HERO to the
care provided to our veterans.
These areas include:
Empowering the Chief, Business Office and Project HERO PMO,
under the oversight of the VHA and VA's Office of Dentistry, to manage
the administration of the program and enhance the standardization of
policies and procedures across VISNs and Medical Centers. If Project
HERO is to successfully harness the benefits of leveraging a nationwide
private sector resource, the Project cannot be operated like 32
individual dental plans, each operating with its own rules and
expectations.
Maximizing the referral of patients, who would otherwise be
referred to Fee Care, to Project HERO network dentists. Artificially
limiting at a local level the selection of veterans referred to Project
HERO dentists while continuing to rely on Fee Care for a preponderance
of those veterans authorized to receive care outside the VA hospitals
and clinics will skew the results of the pilot and magnify the impact
of adverse selection on the overall results.
We at Delta, from the mailroom to the Executive Offices, appreciate
all you have done and continue to do for the tremendous men and women
who have served our Nation in uniform. Thank you, again, for the
opportunity to appear before you today.
Prepared Statement of Gary M. Baker, MA, Chief Business Officer,
Veterans Health Administration, U.S. Department of Veterans Affairs
Mr. Chairman, Mr. Ranking Member, Members of the Subcommittee:
thank you for providing me this opportunity to discuss the Department
of Veterans Affairs' (VA) demonstration Project on Healthcare
Effectiveness through Resource Optimization (Project HERO). I am
accompanied today by Ms. Patricia Gheen, Deputy Chief Business Officer
for Purchased Care, and Mr. Craig Robinson, Executive Director and
Chief Operations Officer for VA's National Acquisition Center.
Given our focus on providing patient-centered care and recognizing
that we may not always be able to provide Veterans in every location
with ready access to care within our facilities, VA has a continued
need for non-VA services. This purchasing of health care services
represents a key component in our health care delivery continuum. VA
understands the importance of closely managing the services purchased
and has initiated multiple efforts focused upon improving that
management. Project HERO is a cornerstone of those efforts.
House Report 109-305, the conference report to accompany the
Military Quality of Life and Veterans Affairs Appropriations Act of
2006 (Public Law 109-114), provided that VA establish at least three
managed care demonstration programs to satisfy a set of health care
objectives related to arranging and managing care. The conferees
supported VA's expeditious implementation of care management strategies
that have proven valuable in the broader public and private sectors,
and to ensure care purchased for enrollees from community providers is
cost-effective and complementary to the larger VA health care system.
The conferees also encouraged VA to collaborate with industry,
academia, and other organizations to incorporate a variety of public-
private partnerships.
Project HERO is in year 3 of a proposed 5-year contracting pilot to
increase quality oversight and decrease the cost of purchased (fee)
care. The program is currently available in four Veterans Integrated
Services Network (VISNs): VA Sunshine Healthcare Network (VISN 8),
South Central VA Health Care Network (VISN 16), Northwest Network (VISN
20) and VA Midwest Health Care Network (VISN 23). Historically, these
VISNs have had high expenditures for non-VA purchased (fee) care and
substantial Veteran enrollee populations. When VA cannot readily
provide the care Veterans need internally, VA Medical Centers utilize
the traditional Fee-basis program or, in selected VISNs, Project HERO.
Project HERO is our most comprehensive and ambitious pilot program.
It is intended to improve the management and oversight of the purchase
of non-VA health care services. Through Project HERO, VA contracts with
Humana Veterans Healthcare Services (HVHS) and Delta Dental Federal
Services (Delta Dental) to provide Veterans with pre-screened networks
of providers, principally doctors and dentists who meet VA quality
standards at negotiated contract rates.
Project HERO is predominantly an outpatient program for specialty
services, such as dental, ophthalmology, physical therapy, diagnostic
and other services that are not always available in VA. For every
patient, VA Medical Centers determine and authorize specific services
and treatments referred to Project HERO contracted network doctors and
dentists.
Project HERO's demonstration objectives have been shared with a
number of key stakeholders, including Veterans Service Organizations,
the American Federation of Government Employees, Academic Affiliates
and industry. The VHA Project HERO Program Management Office (PMO)
presented the following objectives to the House Appropriations
Committee and House Veterans' Affairs Committee in the second quarter
of 2006:
Provide as much care for Veterans within VHA, as
practical;
Refer Veterans efficiently to high-quality community-
based care when necessary;
Improve the exchange of medical information between VA
and non-VA providers;
Foster high-quality care and patient safety;
Control operating costs;
Increase Veteran satisfaction;
Secure accountable evaluation of the demonstration; and
Sustain partnerships with Academic Affiliates.
The VHA Chief Business Office oversees purchased care programs,
including fee care and Project HERO. The Chief Business Office meets
with internal and external stakeholders and monitors and evaluates
program metrics. VA established a Project HERO Governing Board which
oversees program activities. It is composed of the Deputy Under
Secretary for Health Operations and Management, the VHA Chief Business
Officer, and Network Directors from the four participating VISNs. The
Governing Board also has advisors from General Counsel, the Office of
Academic Affiliations, and the Office of Acquisition, Logistics, and
Construction.
The Contract Administration Board provides contract guidance, as
needed, and includes contracting and legal representatives. The Project
HERO Program Management Office (PMO) oversees the contracts to help
ensure quality care, timely access to care, timely return of medical
documentation to VA, patient safety and satisfaction. The PMO conducts
contract administration, project management, performance and quality
management; data analysis, reporting and auditing; and communication
and training.
Project HERO contracts require that HVHS and Delta Dental meet VA
standards for:
Credentialing and accreditation;
Timely reporting of access to care;
Timely return of medical documentation to VA;
Reporting patient safety issues, patient complaints and
patient satisfaction; and
Robust quality programs including peer review with VA
participation, while meeting Joint Commission and other industry
requirements.
HVHS uses patient safety indicators, developed by the Agency for
Healthcare Research and Quality, as well as complaints and referrals as
sources for initiating peer review. The Project HERO PMO monitors
contract performance, audits credentialing and accreditation, and
evaluates HVHS and Delta Dental performance compared to the VA Survey
of Healthcare Experiences of Patients (SHEP), Joint Commission
measures, and proxy measures based on Healthcare Effectiveness and Data
Information Set (HEDIS) measures. This analysis indicates that Project
HERO facilities are equal to or better than the national average for
all non-VA hospitals that report to the Joint Commission.
Project HERO has negotiated contract rates with HVHS and Delta
Dental. Eighty-nine percent of Project HERO contracted medical prices
with HVHS are at or below Medicare rates, and contracted rates with
Delta Dental are less than 80 percent of rates in the National
Dentistry Advisory Service Comprehensive Fee Report for dental
services.
While Project HERO is only in the third year of a 5-year pilot, the
program is meeting its objectives of improving quality oversight,
access, accountability and care coordination. As a demonstration
project, Project HERO has provided VA with invaluable experience in
developing future health care contracts, managing both the timely
delivery of health care and the quality of the care provided.
Specifically, VA has found:
Patient satisfaction is comparable to VA. Through the
third quarter of FY 2009, overall satisfaction with Project HERO care
through HVHS was 77 percent and 86 percent for Delta Dental.
Costs are generally comparable to VA costs for other non-
VA fee care. Project HERO savings, including value-added fees, are
estimated at more than $2.5 million from January 2008 to September
2009.
HVHS and Delta Dental providers meet VA credentialing
standards and quality standards, and maintain extensive quality
programs. The Project HERO PMO audits for compliance and participates
in their quality councils and peer review committees.
HVHS and Delta Dental provide timely access to care,
defined as within 30 days, providing specialty or routine care 90
percent and 100 percent of the time respectively.
Both vendors are contracted to return medical
documentation to VA within 30 days for more informed, continuous
patient care. While HVHS and Delta Dental are not meeting the 100
percent standard, the contracts provide a vehicle for tracking return
of medical documentation that did not exist previously in fee care and
we are seeing monthly progress. In November 2009, HVHS met this metric
more than 90 percent of the time, while Delta Dental returned requested
treatment plans to VA within 10 calendar days more than 74 percent of
the time.
The Project HERO PMO worked with HVHS, Delta Dental and
VA Medical Centers to make electronic clinical information sharing
available at all Project HERO sites.
Additionally, participating VA Medical Centers report
that they have not reduced staff due to the introduction of the Project
HERO contracts.
Using a contract vehicle allows VA to impose these specific and
rigorous requirements consistently among providers, resulting in a more
robust oversight of these key programs. While VHA recognizes the
continuous need for improvement, the initial demonstration has
validated our ability to resolve the key oversight issues identified as
a program goal.
Mr. Chairman, we appreciate the opportunity to discuss this
initiative with you. My colleagues and I are available for your
questions.
MATERIAL SUBMITTED FOR THE RECORD
Committee on Veterans' Affairs
Subcommittee on Health
Washington, DC.
February 16, 2010
Mr. Sidath V. Panangala
Specialist in Veterans Policy
Congressional Research Service
The Library of Congress
101 Independence Avenue, SE
Washington, D.C. 20540
Dear Mr. Panangala:
Thank you for your testimony at the U.S. House of Representatives
Committee on Veterans' Affairs Subcommittee on Health oversight hearing
on ``Review of VA Contract Health Care: Project HERO'' that took place
on February 3, 2010.
Please provide answers to the following questions by March 30,
2010, to Jeff Burdette, Legislative Assistant to the Subcommittee on
Health.
1. In your testimony, you explained that the conference report
language accompanying the 2006 Appropriations Act for Veterans Affairs
directed VA to establish ``managed care'' demonstrations. However, the
VA developed a set of objectives that led to a demonstration project to
enhance the existing fee basis care program.
a. Please expand on their point. Since VA awarded the Project
HERO contract to Humana and Humana is a managed care company,
isn't VA testing the ``managed care'' model as required by the
conference report language?
b. Is VA were to implement a purely ``managed care'' model,
how would it differ from the current implementation of Project
HERO?
Thank you again for taking the time to answer these questions. The
Committee looks forward to receiving your answers by March 30, 2010.
Sincerely,
MICHAEL H. MICHAUD
Chairman
__________
Congressional Research Service
Washington, DC.
Memorandum
May 14, 2010
To: House Committee on Veterans' Affairs, Subcommittee on
Health
Attention: Jeff Burdette
From: Sidath Viranga Panangala, Specialist in Veterans Policy, 7-
0623
Subject: Review of VA [Department of Veterans Affairs] Contract
Health Care: Project HERO--Responses to Post-Hearing Questions
Introduction
This memorandum is provided in response to the post hearing
questions submitted to the Congressional Research Service (CRS) by the
House Committee on Veterans' Affairs, Subcommittee on Health, following
the oversight hearing on Project HERO (Health Care Effectiveness
through Resource Optimization) held on February 3, 2010, where CRS
provided testimony on the implementation of Project HERO. The questions
have been restated here and the response follows each question.
Questions and Responses
Question 1: ``In your testimony you explain that the conference
report language accompanying the 2006 Appropriations Act for Veterans
Affairs directed VA [Department of Veterans Affairs] to establish
``managed care'' demonstrations. However, the VA developed a set of
objectives that led to a demonstration project to enhance the existing
fee basis care program.''
Question 1 (a) ``Please expand on [this] point. Since VA awarded
the Project HERO contract to Humana and Humana is a managed care
company, isn't VA testing the ``managed care'' model as required by the
conference report language?''
Answer: Prior to addressing this question it is essential to
briefly discuss the characteristics and types of managed care. Current
managed care plans are based on managed care concepts that have been
evolving over time. While there is no specific definition of managed
care in the academic literature, most definitions generally
characterize ``managed care as a range of utilization and reimbursement
techniques designed to limit costs while ensuring quality of care.''
\1\ Managed care can involve a wide variety of techniques which
includes, among other things, various forms of financial incentives for
providers, early identification of disease, and promotion of
wellness.\2\ A wide variety of organizations could implement managed
care techniques.\3\ In general, managed care organizations (MCOs)
attempt to reduce costs by focusing on lowering the price paid to
providers, limiting the volume of care rendered to beneficiaries, and
reducing the intensity of health services used.\4\
---------------------------------------------------------------------------
\1\ Steven Berger, Fundamentals of Health Care Financial
Management: A Practical Guide to Fiscal Issues and Management, 3rd ed.
(San Francisco, CA: Jossey-Bass, 2008), p. 146.
\2\ Peter D. Fox, ``An Overview of Managed Care,'' in The
Essentials of Managed Health Care, ed. Peter R. Kongstvedt, 4th ed.
(Gaithersburg, MD: Aspen Publishers, 2001), p. 4.
\3\ Ibid.
\4\ Steven Berger, Fundamentals of Health Care Financial
Management: A Practical Guide to Fiscal Issues and Management, 3rd ed.
(San Francisco, CA: Jossey-Bass, 2008), p. 92.
---------------------------------------------------------------------------
In the early 1990's the various types of MCOs were somewhat
distinct. Since then the differences between traditional forms of
health insurance and MCOs have narrowed to the point where it is very
difficult to distinguish whether an entity is an insurance company or
an MCO. On one end of the continuum are managed indemnity plans which
require some level of precertification of care especially for elective
procedures.\5\ Further along the continuum are preferred provider
organizations (PPOs) \6\ and point of service plans (POS).\7\ Towards
the other end of the continuum are Health Maintenance Organizations
(HMOs).\8\ It should be noted here that the structure of HMOs has also
expanded to include models such as group-model HMOs and network-model
HMOs, among others. A thorough discussion of these models is beyond the
scope of this memorandum.\9\ In general, PPOs POSs, and HMOs, have an
established provider network, negotiated payment rates for providers,
utilization management programs to control the cost and use of health
care services, and a gatekeeper function for coordinating and
authorizing all medical services, laboratory studies, specialty
referrals and hospitalizations referrals, among other characteristics.
It should be noted that since the mid 1990's the VA health care system
has utilized managed care principles that have been tailored to the
complex needs of the VA's service population.\10\
---------------------------------------------------------------------------
\5\ Eric R. Wagner, ``Types of Managed Care Organizations,'' in The
Essentials of Managed Health Care, ed. Peter R. Kongstvedt, 4th ed.
(Gaithersburg, MD: Aspen Publishers, 2001), p. 19.
\6\ A PPO is an entity through which employer health benefit plans
and health insurance carriers contract to purchase health care services
for covered beneficiaries from a selected network of participating
providers. Typically, participating providers in PPOs agree to abide by
utilization management and other procedures implemented by the PPO and
agree to accept the PPO's reimbursement structure and payment levels
(Eric R. Wagner, ``Types of Managed Care Organizations,'' in The
Essentials of Managed Health Care, ed. Peter R. Kongstvedt, 4th ed.
(Gaithersburg, MD: Aspen Publishers, 2001), p. 20).
\7\ A POS is a plan in which members do not have to choose how to
receive services until they need them, and are allowed to choose a
provider outside the main panel of providers without the referral from
a primary care physician. Services received outside of the main panel
include higher deductible, coinsurance or copayments (Eric R. Wagner,
``Types of Managed Care Organizations,'' in The Essentials of Managed
Health Care, ed. Peter R. Kongstvedt, 4th ed. (Gaithersburg, MD: Aspen
Publishers, 2001), p. 22; and Steven Berger, Fundamentals of Health
Care Financial Management: A Practical Guide to Fiscal Issues and
Management, 3rd ed. (San Francisco, CA: Jossey-Bass, 2008), p. 150).
\8\ HMOs are organized health care systems that are responsible for
both the financing and delivery of a broad range of comprehensive
health services to an enrolled population. In general an HMO can be
viewed as a combination of a health insurer and health care delivery
management system (Eric R. Wagner, ``Types of Managed Care
Organizations,'' in The Essentials of Managed Health Care, ed. Peter R.
Kongstvedt, 4th ed. (Gaithersburg, MD: Aspen Publishers, 2001), p. 23).
\9\ For more details on managed care, see CRS Report RL32237,
Health Insurance: A Primer, by Bernadette Fernandez.
\10\ Kenneth W. Kizer, John G. Demakis, and John R. Feussner,
``Reinventing VA Health Care: Systematizing Quality Improvement and
Quality Innovation,'' Medical Care, vol. 38, no. 6 (June 2000), p. I10.
---------------------------------------------------------------------------
As stated in the CRS report on Project HERO (which was submitted
for the record), in 2006, Congress directed VHA to implement a
contracting pilot program to better manage the fee basis care
program.\11\ The conference report (H. Rept. 109-305) to accompany the
Military Quality of Life and Veterans Affairs Appropriations Act, 2006
(P.L. 109-114) called for VA to: \12\
---------------------------------------------------------------------------
\11\ CRS Report R41065, Veterans Health Care: Project HERO
Implementation, by Sidath Viranga Panangala.
\12\ U.S. Congress, Conference Committee, Making Appropriations for
Military Quality of Life Functions, of the Department Of Defense,
Military Construction, the Department Of Veterans Affairs, and Related
Agencies for The Fiscal Year Ending September 30, 2006, and for Other
Purposes, Report to accompany H.R. 2528, 109th Cong., 1st sess.,
November 18, 2005, H. Rept 109-305, pp. 43-44.
Implement care management strategies proven valuable in
public and private sectors;
Ensure care purchased for enrollees from community
providers is cost-effective and complementary to the larger VA system
of care;
Preserve important agency interests, such as sustaining
partnerships with university affiliates;
Establish at least three care management demonstration
programs through competitive award; and
Collaborate with industry, academic, and other
organizations to incorporate a variety of public-private partnerships.
As stated before, the VA health care system utilizes managed care
principles. Project HERO is a demonstration program that is being
piloted in Veterans Integrated Services Network (VISNs) 8, 16, 20 and
23 to improve the ability of VA to care for the Department's enrolled
veterans.\13\ According to the contract, under the demonstration, VA is
to take steps to maximize the care it provides directly and better
manage fee basis care.\14\ A central goal of Project HERO is to ensure
that all care delivered by VA--whether through VA providers or through
community providers--is of the same quality and consistency for
veterans. Under Project HERO, VA continues to manage the care of
individual patients. Humana Veterans Healthcare Services (HVHS), Inc.
maintains a network of providers in the local community who are
intended to be responsive to the care needs identified by each of the
participating VISNs and to complement the care provided within each
VISN. Furthermore, according to the contract, services will only be
acquired when VA staff cannot provide the service. Therefore, under the
contract with HVHS, the Department continues to manage the care of the
individual patient. HVHS does not control the utilization of services
nor does it function as a gatekeeper, which generally are
characteristics of MCOs. Based on the characteristics of MCOs, as
previously described, it appears that the current contractual
relationship with HVHS cannot be directly categorized as a managed care
demonstration.
---------------------------------------------------------------------------
\13\ The conference report (H. Rept. 109-305) to accompany the
Military Quality of Life and Veterans Affairs Appropriations Act, 2006
(P.L. 109-114) called for VA to establish at least three demonstration
programs. VA established the demonstration in four sites under the
umbrella of one program.
\14\ Amendment of Solicitation/Modification of Contract,
VAI01049A3-P-0270, October 1, 2007.
Question 1 (b) ``[If] the VA were to implement a purely ``managed
care'' model, how would it differ from the current implementation of
---------------------------------------------------------------------------
Project HERO?''
Answer: As discussed previously, there is no clear distinction or
boundary between various managed care models and traditional indemnity
insurance plans. Furthermore, some controversy exists over whether the
term ``managed care'' accurately describes the new generation of health
care delivery and financing mechanisms.\15\ Currently, under Project
HERO, veterans receive primary care at their local VA health care
facility. If a VA health care provider determines that the specific
medical expertise or technology is not readily available at the local
facility then the provider requests that the service be obtained from a
non-VA provider. The consult request is reviewed by the fee basis care
Chief Medical Officer (CMO) and, if the CMO concurs, the request
proceeds to the fee basis care program office. At this point in the
process, the fee basis care program office determines whether to send
the referral to Project HERO (based on whether the services are
provided within a reasonable distance under Project HERO), and if so
sends an authorization for care to HVHS.\16\
---------------------------------------------------------------------------
\15\ Eric R. Wagner, ``Types of Managed Care Organizations,'' in
The Essentials of Managed Health Care, ed. Peter R. Kongstvedt, 4th ed.
(Gaithersburg, MD: Aspen Publishers, 2001), p. 19.
\16\ It should be noted that each of the pilot VISNs has inter- and
intra-VISN referral policies. For example, if a specific VA medical
facility cannot provide the required services, the next step would be
to see if another facility within the VISN, and within reasonable
distance to the veteran, could provide that specific service or if an
academic affiliate or Department of Defense (DoD) sharing agreement
could be used to provide that service. If these options are not
available then the referring VA medical facility could authorize the
use of Project HERO or non-Project HERO fee basis care.
---------------------------------------------------------------------------
Generally, authorizations are provided to HVHS for each episode of
required care. In contrast to the regular fee basis care program in
which the veteran selects his or her own provider, under Project HERO
HVHS contacts the veteran by phone to schedule an appointment with an
HVHS network provider. During this process appointment details are
communicated back to the referring VA health care facility, and the
veteran receives a letter with appointment details and instructions.
HVHS coordinates the transfer of any required pre-visit clinical
information from the local VA medical facility to the HVHS network
provider. After the veteran is seen by the HVHS network provider, and
if additional services are needed, HVHS sends a request back to the
referring VA medical center for authorization. Under the contract, HVHS
is required to return clinical information from the visit back to the
referring VA medical facility--typically within 30 days of the
appointment. Therefore, under the current Project HERO implementation
model, HVHS enhances the care coordination for veterans who receive
authorized care outside of the VA health care system.
Implementing Project HERO under any one of the three broad MCO
models (that is, PPO, POS, or HMO), would mean that the VA would enroll
a certain number of veteran patients with a MCO. The MCO would then be
responsible for the provision of all health care services to those
veteran patients, compared to an episode by episode basis as it is
currently done under Project HERO. VA could reimburse the MCO based on
a negotiated rate or on under a capitated payment system.\17\ Shifting
the responsibility of care to a MCO, could raise potential issues on
how care is delivered to veteran patients. For instance, the MCO could
employ utilization management techniques to control costs of health
services provided to their covered veteran patients, and have a greater
degree of control over the care of those veteran patients. Whereas
under the current Project HERO implementation model, utilization of
health care services by veterans rests exclusively with the VA, since
authorizations are provided to HVHS for each episode of required care.
---------------------------------------------------------------------------
\17\ Capitation payment systems are based on the number of people
to be served by the provider. Here, the VA pays a monthly per-capita
payment to the provider institution to deliver a package of services to
enrolled veterans.
---------------------------------------------------------------------------
Furthermore, potential access issues could arise depending on how
the MCO negotiates reimbursement rates with a provider network. For
instance, if the MCO is unable to recruit a provider network due to low
reimbursement rates, veterans may be faced with delays in accessing
care. However, if the MCO has a large credentialed provider network,
veterans could receive care closer to where they reside.
Currently, VA uses health information technology in the management
of patient care. All services received from VA are recorded in the
patient's medical record; this information is available to the patients
primary care provider as well as other VA providers who see the
patient. By moving care outside the VA health care system to a MCO
there could be potential situations where medical information may not
be readily available for VA health care providers when veterans seek
more specialized care from the VA. Although, currently HVHS is required
to return clinical information from the visit back to the referring VA
medical facility--typically within 30 days of the appointment, there
may be less of an incentive for a MCO to return clinical information to
the VA once it has a larger enrollee veteran population and a greater
degree of control over the care of those veteran patients.
Lastly, the VA health care system also has affiliations with
academic medical institutions. VA's clinical training program is the
largest provider of health care training in the United States. Of the
total U.S. physician residents about 31 percent (34,075) receive some
or all of their training from the VA annually.\18\ Under affiliation
agreements, VA clinicians may be granted academic appointments to
medical school faculty at the discretion of the academic institution
based on the clinician's credentials. Currently, about 67 percent of VA
clinicians at affiliated VA medical centers have faculty
appointments.\19\ Shifting veteran patients to a MCO could potentially
affect VA's existing relationships with academic health systems in the
U.S., and may hinder the recruitment of clinicians to the VA as well.
---------------------------------------------------------------------------
\18\ Department of Veterans Affairs, Veterans Health
Administration, Office of Academic Affiliations, Briefing to the
Congressional Research Service, April 15, 2009.
\19\ Ibid.
Committee on Veterans' Affairs
Subcommittee on Health
Washington, DC.
February 16, 2010
Ms. Belinda Finn
Assistant Inspector General for Audit and Evaluations
Office of the Inspector General
U.S Department of Veterans Affairs
1114 I Street, N.W.
Washington, D.C. 20002
Dear Ms. Finn:
Thank you for your testimony at the U.S. House of Representatives
Committee on Veterans' Affairs Subcommittee on Health oversight hearing
on ``Review of VA Contract Health Care: Project HERO'' that took place
on February 3, 2010.
Please provide answers to the following questions by March 30,
2010, to Jeff Burdette, Legislative Assistant to the Subcommittee on
Health.
1. In Ms. Finn's audit of the non-VA Outpatient Fee Care Program,
she identified improper payments and found that the VA lacked documents
justifying the use of the Outpatient Fee Care Program. Do your findings
suggest that the VA may have improperly authorized the use of fee basis
care, thereby improperly violating the statutory requirements that
certain conditions must be met before the VA can authorize fee basis
care?
2. Do you believe that the issues identified in your audit would
be alleviated if the VA were to enhance the existing fee-basis care
program with certain elements of the Project HERO demonstration
project?
3. Clearly some of the VAMCs did not properly follow VHA policy
regarding outpatient fee claims. It is hard to imagine that at the
director level, there is not more compliance with the policy that is in
place and more oversight. Besides an adequate follow-up plan and
implementation by VA to correct some of the issues, does the IG have
plans to go back and look at this program to see if improvements have
been made?
Thank you again for taking the time to answer these questions. The
Committee looks forward to receiving your answers by March 30, 2010.
Sincerely,
MICHAEL H. MICHAUD
Chairman
__________
U.S. Department of Veterans Affairs
Office of Inspector General
Washington, DC.
March 25, 2010
The Honorable Michael H. Michaud
Chairman, Subcommittee on Health
Committee on Veterans' Affairs
United States House of Representatives
Washington, DC 20515
Dear Mr. Chairman:
This is in response to your February 16, 2010, letter following the
February 3, 2010, hearing on Review of VA Contract Health Care: Project
HERO. Enclosed is our response to the additional hearing questions.
This information has also been provided to Congressman Henry E. Brown,
Jr., Ranking Republican Member, Subcommittee on Health.
Thank you for your interest in the Department of Veterans Affairs.
Sincerely,
GEORGE J. OPFER
Inspector General
Enclosure
[An identical letter was sent to Hon. Henry E. Brown, Jr., Ranking
Republican Member, Subcommittee on Health, Committee on Veterans'
Affairs.]
__________
Questions for Ms. Belinda Finn, Assistant Inspector General for
Audits and Evaluations, Office of Inspector General,
U.S. Department of Veterans Affairs, Before the Subcommittee on Health,
Committee on Veterans' Affairs
Hearing on Review of VA Contract Health Care: Project HERO
Question #1: In Ms. Finn's audit of the Non-VA Outpatient Fee Care
Program, she identified improper payments and found that the VA lacked
documents justifying the use of the Outpatient Fee Care Program. Do
your findings suggest that the VA may have improperly authorized the
use of fee basis care, thereby improperly violating the statutory
requirements that certain conditions must be met before the VA can
authorize fee basis care?
Response: Although the Veterans Health Administration (VHA) was not
complying with their policy of formally documenting the justification
and authorization of fee care in the veteran's medical records, we
concluded they met the justification conditions of the statute.
VA can justify the use of fee care if VA does not have the
capability or capacity to provide the service or the service is
geographically inaccessible for the veteran. In the absence of a
formally documented justification, we reviewed each veteran's medical
record to determine if the attending physician's comments, the
veteran's medical condition, and the distance from a VA facility would
justify the use of fee care. We concluded that the justifications were
adequate for the claims reviewed.
The authorization process is a control that ensures that the fee
request is appropriate and medical facility management is aware of fee
services being utilized. Although we found that VHA did not
consistently follow its authorization process, we did not consider this
a violation of statutory requirements.
We have an audit in progress examining the effectiveness of VHA's
management of the non-VA inpatient fee care program. The audit includes
a review of whether VHA is authorizing inpatient fee care according to
the statutory requirements as well as determining the accuracy of
claims payment. We plan to issue a report in late May 2010.
Question #2: Do you believe that the issues identified in your
audit would be alleviated if the VA were to enhance the existing fee-
basis care program with certain elements of the Project HERO
demonstration project?
Response: Using certain elements of Project HERO could improve some
of the payment issues discussed in the report. For example, the
consistent use of contracted rates, such as in Project HERO, would make
it easier for fee staff to determine the correct payment amount with
fewer errors. Fee staff would only need to ensure that care provided
and billed by Project HERO matches the care VA authorized.
Using a Project HERO approach would not, however, improve other
issues discussed in the report. VHA would still remain responsible for
properly justifying and authorizing appropriate fee care. Further,
duplicate payments would not automatically improve under a Project HERO
approach.
Question #3: Clearly some of the VAMCs did not properly follow VHA
policy regarding outpatient fee claims. It is hard to imagine that at
the director level, there is not more compliance with the policy that
is in place and more oversight. Besides an adequate follow-up plan and
implementation by VA to correct some of the issues, does the IG have
plans to go back and look at this program to see if improvements have
been made?
Response: We are currently reviewing VA's fraud management program
for the fee care programs and auditing payments for inpatient fee care.
We will continue to follow-up on actions from this audit and conduct
future audits of the fee care program to determine how well corrective
actions are leading to program improvements.
Committee on Veterans' Affairs
Subcommittee on Health
Washington, DC.
February 16, 2010
Mr. Tim S. McClain
President and Chief Executive Officer
Humana Veterans Healthcare Services, Inc.
500 W. Main Street
Louisville, KY 40201
Dear Mr. McClain:
Thank you for your testimony at the U.S. House of Representatives
Committee on Veterans' Affairs Subcommittee on Health oversight hearing
on ``Review of VA Contract Health Care: Project HERO'' that took place
on February 3, 2010.
Please provide answers to the following questions by March 30,
2010, to Jeff Burdette, Legislative Assistant to the Subcommittee on
Health.
1. An independent evaluation is needed to fully assess whether
Project HERO improved access to care and led to positive changes in the
quality of care provided to our veterans. In the absence of such an
evaluation, do you have supporting data and specific examples to
support Project HERO having accomplished or having the potential to
accomplish improved access and quality of care?
2. Some of the VA staff implementing Project HERO have shared with
the Subcommittee their personal impressions that they do not see
significant differences in administrative costs associated with Project
HERO compared to traditional fee care. We have also heard stories of
Project HERO not being necessarily more efficient, since the staff
spends the same amount of time on Project HERO case as fee-basis cases.
How do you response to these concerns?
3. The Subcommittee has also heard concerns from VA personnel
about the lack of continuity of care. This is because VA primary care
doctors cannot have direct contact with Humana providers, as the
contractual relationship is between Humana and the non-VA provider. Is
this a valid concern?
4. Subcommittee staff have been told that some non-VA providers
are interested in participating in Project HERO but are unaware of how
to be a part of the network. Related to this, we learned of some VISNs
that had informal networks for specialty care but that Humana had a
difficult time expanding its network in the same area. Has Humana
largely addressed the network development concerns or does this
continue to be a challenge?
5. It is apparent that you see the promise and potential of
Project HERO to improve care for our veterans. Do you believe that the
Project HERO model is ripe for implementation in other VISNs? Or, do
you believe that the model needs to be fine-tuned more before it is
expanded to other VISNs? If further refinements are needed, what are
some examples of these refinements?
6. In your testimony you stated that you have seen a decline in
the number of Project HERO referrals for the past 6 months when there
should be about 10-12,000 in order to validate the HERO model. Can you
explain what you mean and provide practical solutions on how to
increase referrals?
Thank you again for taking the time to answer these questions. The
Committee looks forward to receiving your answers by March 30, 2010.
Sincerely,
MICHAEL H. MICHAUD
Chairman
__________
Humana Veterans Healthcare Services
Louisville, KY
March 29, 2010
Honorable Michael H. Michaud
Chairman, Subcommittee on Health
House Committee on Veterans' Affairs
335 Cannon House Office Building
Washington, DC 20515
Dear Chairman Michaud:
Thank you for the opportunity to testify at the Subcommittee's
hearing on February 3, 2010 entitled ``Review of VA Contract Health
Care: Project HERO.'' This letter is in response to your correspondence
dated February 16, 2010 requesting responses to certain post-hearing
questions. The attached provides your questions and my specific
responses for the record.
Thank you again, Mr. Chairman, for the opportunity to address these
very important issues for Veterans. Humana Veterans considers it an
honor each day to serve America's heroes in such a personal manner. We
look forward to continuing our vital role in veterans health care
services and expanding the Humana Veterans Personalized Services Model
in VA. If you have any further questions, please do not hesitate to
contact me at [email protected] or (502) 301-6984.
Sincerely,
Tim S. McClain
President and CEO
Attachment
__________
Responses of Tim S. McClain, President and CEO, Humana Veterans
Healthcare Services, Inc. to Post-Hearing Questions from
Subcommittee on Health hearing on Feb. 3, 2010 entitled
``Review of VA Contract Health Care: Project HERO''
Question #1: An independent evaluation is needed to fully assess
whether Project HERO improved access to care and led to positive
changes in the quality of care provided to our veterans. In the absence
of such an evaluation, do you have supporting data and specific
examples to support Project HERO having accomplished or having the
potential to accomplish improved access and quality of care?
Response: Humana Veterans has specific data on improved access and
quality of care under the Project HERO contract. Humana Veterans
maintains a data repository called DataMart which contains the data for
all contract performance metrics plus additional data that is designed
to enhance delivery of services. Unfortunately, Humana Veterans
possesses very little internal VA data on metrics related to access to
care for Veterans under traditional fee basis care, which makes it
difficult to make direct comparisons that illustrate improved access
and quality of care under Project HERO. However, Humana Veterans offers
the following supporting data and comments concerning performance under
Project HERO.
Access Highlights:
In February 2010, 93.4 percent of Veterans were seen by a
community provider within 30 days of the VA authorization under Project
HERO. Once Veterans were at the provider's office, 99.9 percent waited
less than 20 minutes to be seen by the provider.
For Project HERO inception-to-date performance, 90
percent of Veterans were seen by a community provider within 30 days of
the VA authorization and 99.9 percent of all Veteran appointments
required a wait time of less than 20 minutes.
The `access' supporting data is all the more impressive
considering 43 percent of Veterans seen through Project HERO live in
rural or highly rural communities where access to quality health care
is scarce and in high demand.
Quality of Care Highlights:
In February 2010, 92.9 percent of Veterans' clinical
information was returned to the ordering VAMC within 30 days and 98
percent was returned within 45 days.
For Project HERO inception-to-date performance, 89
percent of Veterans' clinical information was returned to the ordering
VAMC within 30 days and 95 percent was returned within 45 days.
Monthly complaints against providers and/or provider
staff are less than 0.2 percent of appointments.
Over 30,000 providers participate in Humana Veterans'
credentialed provider network.
Veteran Satisfaction:
Veterans provided an overall rating of 64 percent for Humana
Veterans provider specialists. The overall satisfaction rate with VA
health care reported in the Survey of Healthcare Experiences of
Patients (SHEP) was 62 percent. Overall quality of Project HERO is
rated higher than VA SHEP.
Improving Veteran Access to Outside Services:
The Humana Veterans Personalized Services Model provides
assistance to veterans in accessing qualified providers and scheduling
appointments with those specialists. Humana Veterans facilitates access
to a credentialed network of providers that currently totals in excess
of 30,000 in the four demonstration VISNs. This personal touch has
resulted in a very low ``No-Show Rate,'' which is one indication of
access to quality care. Although we do not have reliable no-show rate
for VA's Fee Based Care, we can compare the Project HERO rate with a
comparable population (e.g., TRICARE beneficiaries with specialist
appointments with civilian providers outside of military treatment
facilities). The No-Show Rate for TRICARE beneficiaries is estimated
from various sources as 24 percent, whereas the No-Show rate for
Veterans under Project HERO is only 8 percent. The Patient Appointing
component of Project HERO not only offers Veterans an appointment with
an outside provider within 30 days of Humana Veterans' receipt of the
referral 92 percent of the time, but it also utilizes a live person to
coordinate appointments between the provider and the Veteran, thereby
resulting in a remarkably low No-Show rate.
I believe the Personalized Services Model adds significant value
to the Veterans patient and reduces the stress to the Veteran when
referred for specialty care or diagnosis. In many instances in VA's
regular Fee Based Care program, a Veteran is given an authorization by
the Fee Office and told to find a provider, schedule an appointment and
return to the VA afterwards. Many Veterans are not familiar with how
medical offices function or how they schedule appointments. The
Personalized Services Model provides the Veterans with an advocate for
patient appointing and consult return. The Model significantly improves
the Veteran's overall experience and ensures the timely return of the
specialist's consult report, thereby contributing to continuity of care
in the VA.
Communications between VA and Outside Providers:
VAMC providers often send Veterans to outside providers to
obtain specialist and subspecialist clinical opinions. Those written
opinions (written consults) are of limited value to VAMC providers
unless they are returned in a timely fashion. In the consult return
component of the Project HERO program, Humana Veterans actively
searches for and retrieves those consults from outside providers and
sends them via secure e-mail back to the VAMCs where they are entered
into CPRS so that primary care providers have timely and ready access
to them. Humana Veterans returns these consults to VAMCs within 30 days
89 percent of the time. This landmark contractual requirement of
Project HERO dramatically enhances the continuity of care for Veterans
and represents significant progress beyond traditional VA Fee-Based
Care, where little clinical data is shared between outside providers
and VA primary care providers.
Addressing Special Provider Needs of VAMC Providers:
In order to extend the same level of exemplary VAMC care to
Veterans when services are required from providers outside of the VAMC,
VA providers frequently request special services or providers with
special requirements. Humana Veterans has been able to fulfill these
special requests.
Some of those recent efforts are listed below.
----------------------------------------------------------------------------------------------------------------
Special Services Requested Location
----------------------------------------------------------------------------------------------------------------
Sleep study interpretations from providers certified by American Academy of Sleep Tampa
Medicine
----------------------------------------------------------------------------------------------------------------
MOHS (i.e., skin cancer surgery) providers who are certified by American College of Tampa
MOHS Surgery
----------------------------------------------------------------------------------------------------------------
Open MRI studies stratified by magnet strength Fayetteville
----------------------------------------------------------------------------------------------------------------
Neuromuscular & Electrodiagnostic Medicine studies matched to providers New Orleans
----------------------------------------------------------------------------------------------------------------
Certification requirements for sleep labs Fargo
----------------------------------------------------------------------------------------------------------------
Uniformity in the Delivery of Fee Based Care:
With Project HERO, a degree of uniform access to care across the
four VISNs that has heretofore been unavailable is now achieved:
Outside providers have been subjected to a rigorous and
uniform credentialing process based upon URAC accredited credentialing
processes;
Standards of practice have been adopted on behalf of
all VISNs for certain services (i.e., dermatology referrals and
biopsies, neurodiagnostic studies, split sleep studies);
Providers are subject to continuous clinical oversight
by a Patient Safety and Peer Review Committee composed of civilian and
VAMC providers; and,
Standards for patient appointing, consult returns,
urgent referrals, and Standards of Practice protocols are applied
uniformly to all VAMCs in all four VISNs.
Conclusion:
Without available data from the VA addressing ``No-Show rates'',
consult return performance, and responsiveness of outside providers to
the VA's special requirements, it is difficult to make direct
quantitative comparisons of Project HERO and VA's normal fee based
procedures. However, based upon our experience to date, we believe
there is no doubt that Project HERO has significantly improved Veterans
access to care and improved quality. Indirect measures (e.g., patient
satisfaction) and proxy measures from related programs (e.g., TRICARE)
indicate that the improvements are substantial.
Question #2: Some of the VA staff implementing Project HERO have
shared with the Subcommittee their personal impressions that they do
not see significant differences in administrative costs associated with
Project HERO compared to traditional fee care. We have also heard
stories of Project HERO not being necessarily more efficient, since the
staff spends the same amount of time on Project HERO case as fee-basis
cases. How do you respond to these concerns?
Response: The administrative services provided by Humana Veterans
under Project HERO are far superior to the administrative services
performed by the individual VA Fee Offices. The VA maintains extensive
records (spreadsheets, performance measured reports, etc.) for any
contract purchased service, but they do not have similar requirements
in traditional fee based care.
The administrative services provided by Humana Veterans are
directly related to communication with the Veteran and the non-VA
provider such as appointment setting, personal telephone contact with
the Veteran, providing driving directions, and follow-up reminder
calls. While there are a few VA Fee Offices that provide some
appointment setting services, these functions are not normally
performed by the VA in traditional fee care. Therefore, the perception
that administrative costs are comparable between Project HERO and
traditional fee care is misleading since Project HERO offers
significantly more administrative services to Veterans. We have heard
some VA Fee Offices state that it is easier for them to put an
authorization in the mail to the Veteran than to use Project HERO.
However, this traditional fee care procedure places the administrative
burden on the Veteran. The Veteran must find a provider within the
community, make sure that the provider can treat the specific
condition, schedule the appointment, and request that the clinical
information be returned to the VA. Project HERO ensures that the
administrative burden rests on Humana Veterans instead of the
individual Veteran. After an appointment with a network provider is
established for the Veteran, the VA Fee Office is notified of the date,
time, and location of the Veteran's appointment. Humana Veterans stays
in constant contact with the VA Fee Office to provide notification of
additional appointments and to return clinical information from each
visit the Veteran has with the network provider.
Another important aspect that causes administrative burden for the
VAMCs is the way that they authorize care within the community.
Authorizations are very limited in scope in a majority of cases. The
network provider has very little latitude in terms of what he or she
can do to actually treat the Veteran. The provider must evaluate and
request that additional services be approved by the VA through Humana
Veterans. This process of receiving approval from the VA for additional
services can be long and arduous. If the VAMCs allowed the network
providers to truly evaluate and treat the Veterans, the administrative
burden of the additional services process would be significantly
minimized.
The concern about how efficient Project HERO is compared to
traditional fee care is dependent upon the individual VA Fee Office.
The differences in management of individual VA Fee Offices are an
ongoing issue within the VA since there are no standards for staffing,
workflow, and processes. In addition, the arrangement of the VA Fee
Office within the overall hierarchy of management can differ from VAMC
to VAMC. The Fee Offices can be under the direction of the Business
Office, Fiscal Office, or in the Clinical chain of command. All
contracted services are perceived as an additional burden on those
offices which lack appropriate staffing. The lack of performance
standards within the VA Fee Offices makes it difficult, if not
impossible, to perform a true comparison of Project HERO's efficiency
versus traditional fee care. However, the significance of the enhanced
administrative services that Veterans receive under Project HERO must
be considered in the comparison with traditional fee care.
Question #3: The Subcommittee has also heard concerns from VA
personnel about the lack of continuity of care. This is because VA
primary care doctors cannot have direct contact with Humana providers,
as the contractual relationship is between Humana and the non-VA
provider. Is this a valid concern?
Response: This is not a valid concern. There is nothing that
prevents VA primary care doctors from having direct contact with Humana
Veterans' providers to discuss the care of Veterans. In fact, Project
HERO enhances a VA primary care physician's ability to discuss a
Veteran's care with the non-VA specialist since Humana Veterans
communicates the details of the Veteran's appointment back to the
referring VA Medical Center. These details include the identity of the
specialist, as well as the date and time of the appointment.
Humana Veterans heard this concern from one of the VISNs in October
2009. Tim McClain, President and CEO of Humana Veterans, wrote a memo
to all associates on October 13, 2009 in order to ensure that there was
no confusion regarding our policy. The policy memo, copies of which
were provided to the VA Program Office, reiterates our policy:
``VA, our contract partner, has raised a concern regarding
communications between the VA primary care physician and our
HVHS network physicians. Apparently, some VA offices have the
impression that HVHS discourages any direct communication
between VA physicians and Humana Veterans network providers.
In fact, HVHS encourages communication between our network
physicians and VA physicians at any time, and especially when
required by the standard of care. Our role is to administer and
provide a health care network of professional providers and
services, but never to proscribe or discourage communication
between medical professionals.
HVHS recognizes the absolute necessity of physician-to-
physician communication as an important part of excellent
health care services. We encourage and expect HVHS network
physicians to communicate with VA physicians, and vice versa,
whenever necessary in providing the most appropriate care to
our Nation's Veterans.
If there is ever any question on the appropriateness of
physician-to-physician communications, please immediately raise
the issue to your supervisor.''
Continuity of care is significantly enhanced through Project HERO.
First, Veterans are much more likely to get and keep timely
appointments with outside specialists because of the facilitation of
the appointing process under Project HERO. For example, servicemen and
their families who receive care from outside providers under the
Department of Defense's TRICARE program have an estimated No-Show rate
of 24 percent, which is three times higher than the 8 percent rate
observed under Project HERO.
Second, Humana Veterans directly solicits VA medical leadership on
their specific and special needs and then locates the providers to meet
their needs. Examples include sleep labs with American Society of Sleep
Medicine sleep specialists (Tampa) and Open MRIs of specified magnetic
strength (Fayetteville).
Third, Humana Veterans invites VA physicians to participate in the
quality oversight of network providers in order to extend the exacting
standards of quality VAMC care into Project HERO. Not only is
continuity of care maintained with Project HERO, more importantly,
continuity of quality of care is also maintained.
Question #4: Subcommittee staff have been told that some non-VA
providers are interested in participating in Project HERO but are
unaware of how to be a part of the network. Related to this, we learned
of some VISNs that had informal networks for specialty care but that
Humana had a difficult time expanding its network in the same area. Has
Humana largely addressed the network development concerns or does this
continue to be a challenge?
Response: Humana Veterans Healthcare Services, Inc. is interested
in obtaining as many high quality network providers as required to meet
the needs of the VA and, in particular, to address the VA's rural
health care access needs. Since future specific medical services and
quantities, and the Veterans locations, are generally unknown to Humana
Veterans until we receive an actual request from VA, we are constantly
working to increase the network provider inventory. Humana Veterans
network service representatives are responsible for recruitment of
providers within their respective VISNs and catchments. Humana has toll
free phone numbers available for providers to call a network service
representative who can initiate the contracting process. We also have a
Web site with a section dedicated specifically for providers. We have
created several avenues for providers to find us and become part of the
Humana Veterans network.
Some catchments within VISNs have informal specialty care networks.
This was a difficult issue to address and overcome during the start up
of the Project HERO contract, and it impacted all VISNs to some degree.
In some cases, Humana Veterans was able to impart knowledge and
understanding of our purpose and the intent of the Project HERO program
which enabled us to successfully recruit the provider to our network.
However, this was not achievable in every case. In many of the
unsuccessful cases, the providers were reimbursed by the local VA at
rates that exceeded the Project HERO contract rates. These providers
lacked incentive to contract with Humana Veterans at the reimbursement
rates we were able to offer. In addition, the VA in some instances
informed providers that they would continue to use the provider
directly and did not intend on using Humana Veterans under the Project
HERO contract. Although we have addressed and surpassed this problem to
a large degree, the problem still remains today especially in VISN 20.
This competition by the VA for the same providers has caused our
network to not be as robust as desired in some areas and specialties.
It is counterproductive and inefficient for the VA to compete with
Humana Veterans for the same providers for services offered under the
VA's Project HERO contract.
Question #5: It is apparent that you see the promise and potential
of Project HERO to improve care for our veterans. Do you believe that
the Project HERO model is ripe for implementation in other VISNs? Or,
do you believe that the model needs to be fine-tuned more before it is
expanded to other VISNs? If further refinements are needed, what are
some examples of these refinements?
Response: We strongly believe that the Project HERO model is ready
for implementation in other VISNs because we agree with VA's testimony
that Project HERO is meeting its objectives of improving quality
oversight, access, accountability and care coordination. In its current
form, it represents a vast improvement for Veterans over regular non-VA
fee care. With that said, there certainly have been some valuable
lessons learned from the first 2 years of this demonstration pilot that
could be applied to further improve future implementations. Some
examples of these refinements include the following:
The HERO model should be the first choice when care is
needed outside of VA. We recommend implementing a Right of First
Refusal (``ROFR'') process that would require VA to submit non-urgent
referrals to the HERO contractor first. If the contractor is unable to
provide the care according to contractual standards, then VA has the
option to cancel the authorization. Timeliness standards can be built
into the contract to ensure that this process does not delay care for
Veterans. This would ensure that the benefits of the HERO model are
maximized and that the program is being used to the greatest extent
possible.
When implementing the model in a new geographic area, a
longer implementation period is needed in order to fully establish and
credential the provider network. Even in cases where there is already
an established commercial network, time is needed to educate providers
about VA requirements related to access and timeliness, and providers
must agree to meet those standards. Additional credentialing may be
needed in cases where VA requirements exceed commercial practices. We
recommend an implementation period of no less than 6 to 9 months.
The overall performance of the model could be improved if
the contractor was provided reliable estimates of VA anticipated demand
by specialty and location on some regular frequency (at least
annually). This would allow VA to ensure that the needed services are
on the contract, and it would allow the contractor to ensure that the
appropriate provider network and administrative staffing are in place
to meet the demand.
The demonstration has shown that 100 percent standards
are not achievable on certain metrics such as appointments in 30 days
and return of clinical information in 30 days. We recommend setting
those standards at very high but achievable levels, not to exceed
similar standards for care rendered inside VA.
We believe that there are other programs that could be
piloted in future implementations that could further enhance the care
coordination benefits of the model. Examples include
Improving the coordination and delivery of post-
discharge care, such as home health care, by allowing the
contractor to arrange and provide this care.
Piloting a utilization management program where
the contractor assumes responsibility for applying standardized
medical necessity criteria to all services requested through
the HERO model.
Piloting disease management programs.
Unfortunately, the current HERO contract does not contain
mechanisms to evaluate lessons learned and make adjustments in the
middle of the current demonstration. However, we believe that these
adjustments, along with any recommendations that VA offers, can
certainly be applied to future implementations of the HERO model, and
we see no reason that this model should not be made available to all
Veterans with these improvements sooner rather than later.
Question #6: In your testimony you stated that you have seen a
decline in the number of Project HERO referrals for the past 6 months
when there should be about 10-12,000 in order to validate the HERO
model. Can you explain what you mean and provide practical solutions on
how to increase referrals?
Response: According to the report published by the Congressional
Research Service on February 3, 2010, only 5.8 percent of outpatient
visits to non-VA providers in the VISNs covered by Project HERO were
sent to Project HERO. We believe it would be a better test of the
program if VA took steps to ensure that HERO was the primary model in
use in the four demonstration VISNs for providing care outside of VA.
This would allow for a more meaningful comparison of results in these
VISNs to VISNs that do not utilize the HERO model. As it stands today,
there are competing models for providing non-VA fee care in each of the
facilities participating in the HERO demonstration, and HERO is not the
predominant model in use.
Low utilization also impacts the financial viability of the model
for the contractor. Under the current contract, administrative fees are
paid on a per-claim basis for services provided under Project HERO.
More volume is needed to cover the contractor's administrative overhead
of establishing and maintaining a robust provider network, operating a
call center, etc.
A practical solution to increase referrals is the ROFR process
described in our response to question #5. This approach would maximize
the benefits of the HERO model while recognizing that VA has to be able
to make other arrangements for Veterans' care in those rare cases where
it cannot be provided under HERO according to the terms of the
contract.
Committee on Veterans' Affairs
Subcommittee on Health
Washington, DC.
February 16, 2010
Mr. P.T. Henry
Senior Vice President, Federal Government Programs
Delta Dental of California
11155 International Drive
Rancho Cordova, CA 95670
Dear Mr. Henry:
Thank you for your testimony at the U.S. House of Representatives
Committee on Veterans' Affairs Subcommittee on Health oversight hearing
on ``Review of VA Contract Health Care: Project HERO'' that took place
on February 3, 2010.
Please provide answers to the following questions by March 30,
2010, to Jeff Burdette, Legislative Assistant to the Subcommittee on
Health.
1. Does Delta Dental have the capacity to meet additional Project
HERO authorizations beyond what you currently handle? If so, how many
more authorizations can the current Delta Dental system handle?
2. You identified specific areas for procedural improvements that
will enhance the overall contribution of the dental portion of Project
HERO to the care provided to our veterans. Specifically, you cited the
need to empower the Chief Business Office to manage the administration
of the program and to enhance the standardization of policies and
procedures across VISNs and medical centers.
a. Do you believe that the dental portion of Project HERO has
accomplished this so that there are standardized policies and
procedures across the four VISNs and their medical centers?
b. If so, what are some lessons to be learned to help enhance
the standardization of policies and procedures if Project HERO
were implemented in additional VISNs?
Thank you again for taking the time to answer these questions. The
Committee looks forward to receiving your answers by March 30, 2010.
Sincerely,
MICHAEL H. MICHAUD
Chairman
__________
Questions for the Record
The Honorable Michael H. Michaud, Chairman, Subcommittee on
Health, House Committee on Veterans' Affairs ``Review of
VA Contract Health Care: Project HERO''
February 3, 2010
Question #1: Does Delta Dental have the capacity to meet additional
Project HERO authorizations beyond what you currently handle? If so,
how many more authorizations can the current Delta Dental system
handle?
Answer: The ability for Delta Dental to handle additional
authorizations is not limited by our existing systems. Our ability to
accept additional authorizations is, however, limited by the
administrative costs associated with processing each authorization in
accordance with Project HERO's requirements. Unanticipated challenges
in contacting veterans to schedule care coupled with burdensome
authorization processes, and case tracking and reporting requirements
not envisioned in the program solicitation have proven to be labor
intensive, expensive components of the program. A viable expansion of
the current contract to additional VISNs would require either an
increase in the Value Add Fee to reflect actual costs, or program
revisions to streamline the administrative activities. (Note: Value Add
Fee is the fee paid to the contractor intended to cover administrative
costs.)
Question #2: You identified specific areas for procedural
improvements that will enhance the overall contribution of the dental
portion of Project HERO to the care provided to our veterans.
Specifically, you cited the need to empower the Chief Business Office
to manage the administration of the program and to enhance the
standardization of policies and procedures across VISNs and medical
centers.
a. Do you believe that the dental portion of Project HERO has
accomplished this so that there are standardized policies and
procedures across the four VISNs and medical centers?
b. If so, what are some lessons to be learned to help enhance the
standardization of policies and procedures if Project HERO were
implemented in additional VISNs?
Answer a: No. Despite the efforts of the Chief of the Business
Office and the Program Office to standardize policies and procedures
across the four VISNs and medical centers, the policies and procedures
governing the dental portion of Project HERO remain largely the lowest
common denominator to which all 32 dental clinics will agree and
adhere. The institutionalized and well-intentioned autonomy with which
individual clinics operate, if left unchecked, will preclude Project
HERO, and the Department of Veterans Affairs, from leveraging the
advantages provided by private sector network-based care.
Answer b: Based on our experience, we would suggest that, prior to
implementing Project HERO in additional VISNs, consideration be given
to certain program modifications intended to:
1. Streamline patient contact and appointing by empowering the
veteran, when feasible, to take a more active role in the process and
requiring the veteran make first contact with the Project HERO
contractor and encouraging the veteran to keep scheduled appointments;
2. Streamline authorization processing to recognize the quality
and professionalism of credentialed network dentists and reduce
unnecessary delays in providing care. This could be accompanied by the
application of performance standards more in accordance with private
sector network-based care;
3. Simplify and centralize the funding and billing processes;
4. Standardize authorization forms and associated reports; and
5. Require clinics to give priority to Project HERO when referring
patients to Fee Care to facilitate VA's ability to link program
objectives to cost effective management.
Committee on Veterans' Affairs
Subcommittee on Health
Washington, DC.
February 16, 2010
Honorable Eric K. Shinseki
Secretary
U.S. Department of Veterans Affairs
810 Vermont Avenue, NW
Washington, D.C. 20240
Dear Secretary Shinseki:
Thank you for the testimony of Gary M. Baker, Chief Business
Officer for the Veterans Health Administration, at the U.S. House of
Representatives Committee on Veterans' Affairs Subcommittee on Health
oversight hearing on ``Review of VA Contract Health Care: Project
HERO'' that took place on February 3, 2010.
Please provide answers to the following questions by March 30,
2010, to Jeff Burdette, Legislative Assistant to the Subcommittee on
Health.
1. Mr. Baker's testimony noted that costs for Project HERO are
generally comparable to VA costs for other non-VA fee care. Is it
possible to compare the cost per referral for Project HERO versus fee-
basis care? What other cost comparison data are available?
2. Please list the types of outpatient services that the four
VISNs have most often referred to Project HERO. How does this compare
to the list of outpatient care services that the VA most commonly
refers to the fee-basis care program?
3. What guidance did the central VA office provide to the four
Project HERO VISNs on the criteria that should be used for making
referrals to Project HERO versus fee-basis care? In addition, please
explain the criteria that the four VISNs use in determining whether the
referral goes to Project HERO or fee-basis care.
4. Humana testified that it is difficult to run a demonstration
project when there is a competing process in the same fee office. To
this end, Humana suggested that Project HERO become a first and
preferred option in at least one VISN. Do you believe that a valid and
independent impact evaluation cannot be conducted unless VA changes the
implementation of Project HERO as suggested by Humana?
5. Several witnesses provided testimony pointing to the need for
an independent evaluation of the Project HERO demonstration. Please
walk us through the VA's evaluation plans. If the plan does not include
a rigorous evaluation comparing a control and experimental group, how
will the VA properly advise on the future of Project HERO?
Thank you again for taking the time to answer these questions. The
Committee looks forward to receiving your answers by March 30, 2010.
Sincerely,
MICHAEL H. MICHAUD
Chairman
__________
Questions for the Record
The Honorable Michael H. Michaud, Chairman, Subcommittee on
Health, House Committee on Veterans' Affairs ``Review of
VA Contract Health Care: Project HERO''
February 3, 2010
Question 1: Mr. Baker's testimony noted that costs of Project HERO
are generally comparable to VA costs for other non-VA care. Is it
possible to compare the cost per referral for Project Hero versus fee-
basis care? What cost comparison data are available?
Response: The Chief Business Office conducts detailed analyses
concerning the cost of care provided under the HERO contract compared
with the cost of care purchased under the traditional Fee Basis
Program. These analyses use industry standard comparisons of specific
services purchased. The assessment of costs by referral does not
provide enough information to allow a complete understanding of the
variation. Referrals may be for one or many services, which impacts the
usefulness of any analysis. The analyses conducted show specific cost
data, such as costs of a chest x-ray purchased under the HERO contracts
compared with that same chest x-ray purchased under the traditional Fee
Basis Program.
Question 2: Please list the types of outpatient services that the
four VISNs have most often referred to Project HERO. How does this
compare to the list of outpatient care services that VA most commonly
refers to the Fee-basis care program?
Response: The outpatient services most often referred to Project
HERO and the Fee-basis care program in Veterans Integrated Services
Network (VISNs) 8, 16, 20, and 23 are detailed in the following charts.
The count in the far right column refers to the number of claim line
items authorized from demonstration inception through fiscal year 2009.
All data is based on transaction data.
----------------------------------------------------------------------------------------------------------------
Project HERO VISN 8 Other Fee VISN 8
----------------------------------------------------------------------------------------------------------------
Procedure Procedure
Rank CCS Description Count Rank CCS Description Count
----------------------------------------------------------------------------------------------------------------
1 Therapeutic radiology 23,292 1 Home Health Services 114,733
----------------------------------------------------------------------------------------------------------------
2 Physical therapy exercises, 20,763 2 Physical therapy exercises, 109,657
manipulation, and other manipulation, and other
procedures procedures
----------------------------------------------------------------------------------------------------------------
3 Dental Services 12,695 3 Ophthalmologic and otologic 76,040
diagnosis and treatment
----------------------------------------------------------------------------------------------------------------
4 Other diagnostic procedures 9,560 4 Therapeutic radiology 75,667
(interview, evaluation,
consultation)
----------------------------------------------------------------------------------------------------------------
5 Hemodialysis 5,630 5 Other diagnostic procedures 62,292
(interview, evaluation,
consultation)
----------------------------------------------------------------------------------------------------------------
6 Other CT scan 3,256 6 Laboratory--Chemistry and 57,219
Hematology
----------------------------------------------------------------------------------------------------------------
7 Excision of skin lesion 2,806 7 DME and supplies 51,207
----------------------------------------------------------------------------------------------------------------
8 Other diagnostic nervous 1,910 8 Hemodialysis 49,951
system procedures
----------------------------------------------------------------------------------------------------------------
9 Pathology 1,505 9 Psychological and 43,876
psychiatric evaluation and
therapy
----------------------------------------------------------------------------------------------------------------
10 Other non-OR therapeutic 1,399 10 Other therapeutic procedures 33,557
procedures on skin and
breast
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Project HERO VISN 16 Other Fee VISN 16
----------------------------------------------------------------------------------------------------------------
Procedure Procedure
Rank CCS Description Count Rank CCS Description Count
----------------------------------------------------------------------------------------------------------------
1 Other diagnostic procedures 19,964 1 Physical therapy exercises, 143,547
(interview, evaluation, manipulation, and other
consultation) procedures
----------------------------------------------------------------------------------------------------------------
2 Dental Services 18,751 2 Laboratory--Chemistry and 104,078
Hematology
----------------------------------------------------------------------------------------------------------------
3 Colonoscopy and biopsy 8,575 3 Home Health Services 89,288
----------------------------------------------------------------------------------------------------------------
4 Physical therapy exercises, 8,149 4 Therapeutic radiology 83,518
manipulation, and other
procedures
----------------------------------------------------------------------------------------------------------------
5 Ophthalmologic and otologic 7,108 5 Peritoneal dialysis 74,885
diagnosis and treatment
----------------------------------------------------------------------------------------------------------------
6 Other diagnostic radiology 5,492 6 Other diagnostic procedures 62,746
and related techniques (interview, evaluation,
consultation)
----------------------------------------------------------------------------------------------------------------
7 Therapeutic radiology 4,888 7 Dental Services 33,218
----------------------------------------------------------------------------------------------------------------
8 Pathology 4,164 8 Other diagnostic radiology 27,427
and related techniques
----------------------------------------------------------------------------------------------------------------
9 Laboratory--Chemistry and 3,613 9 Hemodialysis 27,079
Hematology
----------------------------------------------------------------------------------------------------------------
10 Magnetic resonance imaging 3,491 10 Other therapeutic procedures 25, 248
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Project HERO VISN 20 Other Fee VISN 20
----------------------------------------------------------------------------------------------------------------
Procedure Procedure
Rank CCS Description Count Rank CCS Description Count
----------------------------------------------------------------------------------------------------------------
1 Dental Services 6,649 1 Physical therapy exercises, 74,266
manipulation, and other
procedures
----------------------------------------------------------------------------------------------------------------
2 Other diagnostic procedures 4,919 2 Other diagnostic procedures 49,566
(interview, evaluation, (interview, evaluation,
consultation) consultation)
----------------------------------------------------------------------------------------------------------------
3 Physical therapy exercises, 3,351 3 Laboratory--Chemistry and 49,313
manipulation, and other Hematology
procedures
----------------------------------------------------------------------------------------------------------------
4 Magnetic resonance imaging 1,644 4 Psychological and 34,397
psychiatric evaluation and
therapy
----------------------------------------------------------------------------------------------------------------
5 Other diagnostic radiology 1,519 5 Therapeutic radiology 32,985
and related techniques
----------------------------------------------------------------------------------------------------------------
6 Mammography 894 6 Dental Services 25,094
----------------------------------------------------------------------------------------------------------------
7 Therapeutic radiology 884 7 DME and supplies 24,602
----------------------------------------------------------------------------------------------------------------
8 Colonoscopy and biopsy 808 8 Other diagnostic radiology 24,016
and related techniques
----------------------------------------------------------------------------------------------------------------
9 Ophthalmologic and otologic 704 9 Home Health Services 21,520
diagnosis and treatment
----------------------------------------------------------------------------------------------------------------
10 CT scan abdomen 657 10 Ophthalmologic and otologic 14,085
diagnosis and treatment
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Project HERO VISN 23 Other Fee VISN 23
----------------------------------------------------------------------------------------------------------------
Procedure Procedure
Rank CCS Description Count Rank CCS Description Count
----------------------------------------------------------------------------------------------------------------
1 Dental Services 18,025 1 Physical therapy exercises, 143,056
manipulation, and other
procedures
----------------------------------------------------------------------------------------------------------------
2 Physical therapy exercises, 11,002 2 Laboratory--Chemistry and 59,871
manipulation, and other Hematology
procedures
----------------------------------------------------------------------------------------------------------------
3 Other diagnostic procedures 5,719 3 Other diagnostic procedures 55,674
(interview, evaluation, (interview, evaluation,
consultation) consultation)
----------------------------------------------------------------------------------------------------------------
4 Ophthalmologic and otologic 5,522 4 Therapeutic radiology 38,909
diagnosis and treatment
----------------------------------------------------------------------------------------------------------------
5 Hemodialysis 2,547 5 Peritoneal dialysis 36,446
----------------------------------------------------------------------------------------------------------------
6 Hearing devices and audiology 2,057 6 DME and supplies 32,642
supplies
----------------------------------------------------------------------------------------------------------------
7 Diagnostic physical therapy 935 7 Home Health Services 27,510
----------------------------------------------------------------------------------------------------------------
8 Laboratory--Chemistry and 896 8 Ophthalmologic and otologic 25,571
Hematology diagnosis and treatment
----------------------------------------------------------------------------------------------------------------
9 Pathology 814 9 Dental Services 25,033
----------------------------------------------------------------------------------------------------------------
10 Other non-OR therapeutic 803 10 Other diagnostic radiology 23,727
procedures on and related techniques
musculoskeletal system
----------------------------------------------------------------------------------------------------------------
Question 3: What guidance did the central office provide to the
four Project HERO VISNs on the criteria that should be used for making
referrals to Project HERO versus Fee-basis care? In addition, please
explain the criteria that the four VISNs use in determining whether the
referral goes to Project HERO or Fee-basis care.
Response: In general, guidance on the use of Project HERO referrals
as well as other Fee referrals is outlined below. It is a hierarchical
process centered around the clinical needs of the Veteran. Key
activities in the process include:
1. Assessing the clinical status of the patient (e.g. is the
Veteran stable enough to travel if necessary);
2. Assessing VA internal capacity (e.g. can we refer to another
VA);
3. Assessing other agreements in place such as University
affiliation agreements, DoD/Sharing Agreements etc.; and
4. If the above options exist, does Project HERO have network
capacity; if yes, refer to Project HERO provider.
Question 4: Humana testified that it is difficult to run a
demonstration project when there is a competing process in the same Fee
office. To this end, Humana suggested that Project HERO become a first
and preferred option in at least one VISN. Do you believe that a valid
and independent impact evaluation cannot be conducted unless VA changes
the implementation of Project HERO as suggested by Humana?
Response: While VA understands the Humana Veterans Healthcare
Services (HVHS) desire to consider a mandate, our experience has shown
that the capacity is not available for 100 percent of all cases that
require services outside VA. VA has seen significant increases in the
use of the contracts, with some sites at greater than 30 percent of
their referrals using HERO.
Question 5: Several witnesses provided testimony pointing to the
need for an independent evaluation of the Project HERO demonstration.
Please walk us through the VA's evaluation plans. If the plan does not
include a rigorous evaluation comparing a control and experimental
group, how will the VA properly advise on the future of Project HERO?
Response: VA has conducted one independent analysis of the project
which identified additional lessons learned and provided suggestions
for consideration as the Chief Business Office decides how to move
forward with future contracts. Significant results are included in the
listing below:
The contracts are cumbersome and not easy to change or
adapt to changing VA and Veteran needs.
The inclusion of only some medical specialty services
rather than all inpatient and outpatient services greatly reduces the
contracts ability to meet all VA purchased care needs.
The pricing structure is difficult to understand and
requires more clarity and definition for all parties involved in
serving and using the contracts.
The administrative fee (value added fee) approach does
not work well or fit industry standards for service fees.
The contract does not have distance or time travel
standards defined.
The VA does not have an optimal way to determine quality
of providers in the contracted networks.
There is a lack of standard processes within the VA that
create an inefficient model for the contracted networks to work within.
Stronger quality reporting and monitoring processes are
needed to meet VA provider expectations.
A perception exists that VA providers cannot communicate
directly with the contracted network providers. (additional information
contained in clarifications section of attached summary of external
assessment report)
Because the contracts are not ``mandatory'' use contracts
it has been difficult to reach a volume of care purchased through the
contracts to perform as strong of an evaluation as could be with larger
volumes.
The inability to accurately estimate volumes of care that
will be purchased creates a difficult setting for the contracted
networks to know how many specific provider types are needed in any
given market.
The perception of cost effectiveness and desire to pay
less than market rates or what other Fee mechanisms for purchasing care
has cost historically could be limiting the ability of the contracted
networks to obtain more providers willing to serve our Veterans.
There is a lack of industry standard claim auditing
procedures in place. (additional information contained in
clarifications section of attached summary of external assessment
report)
We currently are in the process of assessing future options, using
a lessons learned survey to begin this process. We intend to use the
results of the lessons learned survey to begin an additional
independent evaluation of the pilot. Both the prior evaluation
(completed by Corrigo--attached) as well as our future evaluations will
be comparing the Project HERO results with our control group
(traditional Fee Basis). Throughout our evaluations we have used this
control group to assess impacts of change as well as determine future
options for improving health care purchasing. Our next independent
evaluation will assist VA in understanding the full results of the
demonstration and how these results will inform future health care
purchasing processes. As the demonstration contract has two remaining
years, we intend to initiate this external review in Q1, FY11.