[Congressional Record Volume 148, Number 46 (Tuesday, April 23, 2002)]
[Senate]
[Pages S3171-S3172]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. THOMAS (for himself, Mr. Rockefeller, Mr. Jeffords, Mr. 
        Specter, Mrs. Carnahan, Ms. Snowe, and Mr. Cleland):
  S. 2233. A bill to amend title XVIII of the Social Security Act to 
establish a medicare subvention demonstration project for veterans; to 
the Committee on Finance.
  Mr. THOMAS. Mr. President, I am pleased to rise today to introduce 
the Medicare Equity for Veterans Act of 2002 with Senators Rockefeller, 
Jeffords, Specter, Carnahan, Snowe, and Cleland. This legislation, 
known as Medicare Subvention, will require the Centers for Medicare and 
Medicaid Services, (CMS), to reimburse VA facilities for services 
provided to certain Medicare-eligible veterans. These servicemen and 
women have paid into the Medicare system over the course of their 
careers, just as every other American has done, but are prohibited from 
utilizing the program when treated at a VA facility. It is only fair 
that they be allowed to use their Medicare coverage in the private 
sector or at a VA facility.
  The number of veterans enrolled in the VA health system has more than 
doubled since 1996. In many VA facilities, Medicare-eligible veterans, 
called Priority 7 or Category C veterans, compose the largest increase 
in patient caseloads. At the VA facility in Cheyenne, WY, only 131 
Priority 7 veterans were treated in fiscal year 1997. However, in 
fiscal year 2001 the same facility treated over 2,200 Priority 7 
veterans. Clearly, the VA is experiencing substantial growth and even 
more obvious is the fact that veterans want to receive their health 
care services at a VA facility. Unfortunately, funding for the VA 
health care system has not kept pace. In my state, Medicare Subvention 
would expand access to services as most communities are designated 
primary care health professional shortage areas. Private sector 
physicians and other primary care providers are not as readily 
available as they are in other part of the country, which means that 
the VA is sometimes the only option.
  Specifically, the Medicare Equity for Veterans Act of 2002 
establishes a three-year demonstration program at ten VA sites, three 
of which must be in rural areas. The Secretaries of VA and HHS may 
either choose Medicare+Choice or Preferred Provider Option model for 
the sites. These options give the Secretaries flexibility to determine 
which model works best for each particular site--ensuring veterans 
receive quality and timely care.
  The VA can provide Medicare covered services more efficiently and 
cost effectively than the private sector, which could potentially save 
the Medicare program money. Under the Preferred Provider Option, the VA 
would be reimbursed at 95 percent of the comparable private sector rate 
and 100 percent of the Medicare+Choice applicable rate, after excluding 
such targeted private hospital adjustments as Medicare Disproportionate 
Share Hospital payments, Graduate Medical Education, Indirect Medical 
Education and capital-related costs.
  The VA will be responsible for continuing to pay for services 
provided to Medicare-eligible veterans who have been treated prior to 
fiscal year 1998. This ensures a good faith effort on the part of the 
VA, but will also allow the agency to immediately begin billing 
Medicare for services provided to Medicare-eligible veterans after 
fiscal year 1998. Additionally, this bill protects the Medicare Trust 
Fund by capping Medicare payments to the VA at $75 million a year for 
the duration of the three-year demonstration.
  Prior to the end of the demonstration, the Government Accounting 
Office, GAO, must conduct a thorough program evaluation. The GAO report 
ensures the demonstration met its goal of providing quality and cost 
effective care to our nation's veterans. The GAO is further required to 
provide specific recommendations to the Secretaries of VA and HHS on 
how best to expand Medicare Subvention nationwide.
  Veterans deserve quality, efficient and equitable health care 
treatment. Enactment of this legislation is the first step toward 
attaining that goal. I urge all my colleagues to consider cosponsoring 
the Medicare Equity for Veterans Act of 2002.
  Mr. ROCKEFELLER. Mr. President, I am pleased to join with Senators 
Thomas and Jeffords to introduce the Medicare Equity for Veterans Act 
of 2002. This bill will authorize a demonstration project to allow VA 
to bill Medicare for health care services provided to certain dual 
eligible beneficiaries. The legislation, known as VA subvention, is a 
concept that has been discussed over the years by many of us in 
Congress, by veterans service organizations, and by advisory bodies 
studying the VA health care system. Although the VA subvention proposal 
is a small effort compared to the other changes that must be made to 
the Medicare program, it is enormously important to our veterans and 
the health care system they depend upon.
  Until recently, when we looked at the VA health care budget, we 
focused on the declining veteran population and declining demand. We 
are in a totally different predicament today. More and more veterans 
are turning to the VA health care system, and that is a success story. 
More than 38 percent of all veterans are Medicare eligible; 
unfortunately, many of these veterans are seeking VA care because of 
the lack of drug benefits in the Medicare program. An uncertain economy 
and the collapse of many HMOs have also contributed to the rising 
number of veterans turning to VA. While I will continue to push for 
Medicare prescription drug benefits, something must be done to 
alleviate the pressure on the VA health care system. VA simply does not 
have unlimited resources to meet this demand.

[[Page S3172]]

  VA now has more than 6 million veterans enrolled in health care 
services. That's more than double the figure in 1996. Not surprisingly, 
access to care has been affected by the high demand for services. It is 
not unusual for some veterans in certain pockets of the country to have 
to wait for more than a year to have their initial appointment with a 
VA primary care physician. Because of concerns about access and quality 
of care, last fall the VA was prepared to cease enrolling new higher 
income veterans, so called Category C or Priority 7 veterans, into the 
VA health care system. Their decision was based simply upon budgetary 
constraints, as VA suffered from a $400 million shortfall. Except for a 
last minute approval of supplemental funding, veterans would have been 
turned away from VA health care services.
  This legislation would allow VA and HHS to either choose a Medi- 
care+Choice or Preferred Provider Option at ten VA sites, three of 
these sites must be in rural areas. Several years ago the Department of 
Defense attempted a Medicare subvention pilot and lost money, primarily 
on the restrictive nature of the capitation model they set up. This 
proposal will give VA the opportunity to look at both the preferred 
provider and Medicare+Choice model, and in the end select the model 
that works best for them.
  For veterans, approval of this veterans subvention would mean the 
infusion of new revenue to their health care system and, thus, greater 
access to care. For the Department of Health and Human Services, a VA 
subvention demonstration project will provide the opportunity to assess 
the effects of coordination on improving efficiency, access, and 
quality of care for dual-eligible beneficiaries. In addition, it would 
also present an opportunity to reduce Medicare expenditures. Under the 
Medicare+Choice option in our legislation, the reimbursable rate will 
be 100 percent of the rate normally paid to a Medicare+Choice provider. 
However, under the Preferred Provider Option, reimbursement rates would 
be 95 percent of otherwise applicable rates. For both options the rates 
would be further discounted by excluding Disproportionate Hospital 
Share adjustments, VA's direct graduate medical education costs, its 
indirect medical education costs, and 67 percent of capital-related 
costs. As a further way to limit exposure to the Trust Fund during the 
three year demonstration portion of this bill, this proposal caps all 
Medicare payments to the VA at $75 million per year. Allowing VA to 
bill Medicare is good for the Federal health care system overall. It's 
a classic ``win-win'' situation.
  VA would also be required to maintain its current level of services 
to Medicare-eligible veterans who have been served prior to 1998, and 
would be effectively limited to reimbursement for care provided to new 
patients since then. In 1998, Congress allowed all veterans to enroll 
for VA care and receive a standard benefits package, which includes 
prescription drugs.
  Prior to the end of the three year demonstration, GAO will do a 
thorough evaluation of the program and submit a report to Congress, 
complete with details on performance measures and justification for 
planned expansion. Based upon the GAO recommendations, VA and HHS will 
jointly determine the most appropriate health care delivery models for 
the expansion of the program through the entire VA health care system. 
GAO will continue to evaluate the expansion of the program for an 
additional six years.
  During the first session of the 106th Congress, Senator Jeffords and 
I successfully pushed a similar proposal through the Senate Finance 
Committee. Indeed, over the last couple years, we have tried to enact 
this proposal several times. Unfortunately, we have continually met 
resistance. Our goal is to overcome this resistance and enact this 
proposal without delay. I believe that without enactment of a Medicare 
subvention program, VA may well choose to bar middle-income veterans 
without a service-connected disability from coming to the VA for care. 
I think we all want to avoid that prospect.
  There are over 33 thousand Medicare eligible veterans enrolled in the 
VA health benefits program in my State of West Virginia. The VA spent 
almost $116 million providing health care to them last year. Though 
this is telling information, I cannot provide my colleagues with the 
truly crucial piece of the story, that is, the number of these 
Medicare-eligible veterans who aren't coming to VA because of long 
waiting lines and lack of adequate resources. This demonstration 
project would encourage these eligible veterans, who have not 
previously received care from the Huntington, Beckley, Martinsburg, and 
Clarksburg VAMCs, to do so.
  Truly, this VA/Medicare proposal is a way to provide quality health 
care to veterans who are eligible for both systems of care, while at 
the same time preserving and protecting the Medicare Trust Fund. Let us 
not delay any longer.
  I wish to remind my colleagues of the burden VA now carries in 
providing health care to Medicare-eligible veterans. Many Senators have 
asked me for a solution to the financial woes of the hospitals in their 
States. Enacting this proposal is part of the answer.
  Veterans deserve the opportunity to come to VA facilities for their 
care and bring their Medicare coverage with them. It makes sense for 
all parties.
  Mr. GRASSLEY. Mr. President, today, Senator Thomas has introduced a 
bill to establish a medicare subvention demonstration project for 
veterans and I would like to take this opportunity to say a few words 
about the issue of medicare subvention for Department of Veterans 
Affairs (VA) health care. I have heard from many Iowa veterans who are 
frustrated that Medicare does not reimburse for medical care provided 
by the VA. While veterans who have a disability connected to military 
service have their health care paid for in whole or in part by the VA, 
veterans who do not have a service connected disability are listed as 
``priority 7'' and are required to pay co-payments for the receipt of 
VA health care. Many of these priority 7 veterans are Medicare 
eligible, yet they cannot use their Medicare benefits to pay for VA 
health care.
  The number of priority 7 veterans enrolled in VA health care has 
increased greatly in recent years, especially in my state of Iowa. This 
is only the tip of the iceberg in terms of the number of veterans 
eligible to enroll in the VA health system as priority 7. However, the 
current VA funding formula does not allocate resources to pay for the 
care of priority 7 veterans. These costs are intended to be recouped by 
billing private insurance or through out-of-pocket co-pays charged to 
the veteran, which in fact fall far short of covering the additional 
costs to the VA system of serving priority 7 veterans. Allowing 
Medicare to reimburse for health care provided in VA facilities would 
help alleviate this funding short-fall in the VA system while giving 
Medicare eligible veterans greater choice and flexibilty in meeting 
their health care needs. Medicare subvention for VA health care would 
be a win-win situation for veterans, which is why I strongly support 
the concept of Medicare subvention for VA health care.
  Questions remain about what effect Medicare subvention for VA health 
care could have on the Medicare trust fund. It is possible that 
Medicare outlays will increase if Medicare begins to pay for health 
care at VA facilities for Medicare eligible veterans currently using 
the VA. However, if veterans who are covered by Medicare begin to use 
the VA in lieu of private health care and the VA is able to provide 
those services at a lower cost, Medicare could actually see savings.
  In the 106th Congress, the Senate Finance Committee reported a bill, 
S. 1928, which included a Medicare subvention demonstration program 
similar to the one introduced by Senator Thomas today. The CBO scored 
the Medicare subvention portion of this bill as costing Medicare $70 
million over five years. This is a matter that should be studied 
further and is an issue that would be closely examined in a 
demonstration program such as the one Senator Thomas has proposed.
  At the end of the day, Medicare subvention for VA health care is a 
good idea. I believe that Senator Thomas is on the right track with his 
proposed Medicare subvention demonstration program and I look forward 
to working with him and other members of the Senate Finance Committee 
to move forward on this important issue.




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