VA Long-Term Care: Data Gaps Impede Strategic Planning for and	 
Oversight of State Veterans' Nursing Homes (31-MAR-06,		 
GAO-06-264).							 
                                                                 
The Department of Veterans Affairs (VA) provides or pays for	 
veterans' nursing home care in three settings: VA-operated	 
nursing homes, privately owned nursing homes in the community	 
from which VA purchases services, and state veterans' nursing	 
homes. VA supports state veterans' nursing homes in a number of  
ways, including reimbursement for a portion of the cost of	 
providing nursing home services to veterans, issuance of policy  
guidance, and oversight of their nursing home operations. GAO was
asked to determine the extent to which VA collects information on
veterans in state veterans' nursing homes and the type of care	 
they receive, to assess whether VA's reimbursement policy has	 
been applied consistently, and to identify revenue sources such  
homes use.							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-264 					        
    ACCNO:   A50540						        
  TITLE:     VA Long-Term Care: Data Gaps Impede Strategic Planning   
for and Oversight of State Veterans' Nursing Homes		 
     DATE:   03/31/2006 
  SUBJECT:   Data collection					 
	     Federal/state relations				 
	     Health care services				 
	     Nursing homes					 
	     Per diem allowances				 
	     Statistical data					 
	     Veterans' medical care				 
	     Health policies					 
	     Reimbursements					 

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GAO-06-264

     

     * Results in Brief
     * Background
     * Selected States Have Admission Criteria That Differ in Two K
     * State Veterans' Nursing Homes in Selected States Vary in the
     * VA Does Not Compile Information on State Veterans' Nursing H
     * VA's Per Diem Reimbursement Policy Has Not Been Applied Cons
     * Conclusions
     * Recommendations for Executive Action
     * Agency Comments and Our Evaluation
     * GAO Contact
     * Acknowledgments
     * GAO's Mission
     * Obtaining Copies of GAO Reports and Testimony
          * Order by Mail or Phone
     * To Report Fraud, Waste, and Abuse in Federal Programs
     * Congressional Relations
     * Public Affairs

Report to Congressional Requesters

United States Government Accountability Office

GAO

March 2006

VA LONG-TERM CARE

Data Gaps Impede Strategic Planning for and Oversight of State Veterans'
Nursing Homes

GAO-06-264

Contents

Letter 1

Results in Brief 5
Background 7
Selected States Have Admission Criteria That Differ in Two Key Respects 13
State Veterans' Nursing Homes in Selected States Vary in the Extent to
Which They Rely on Revenue from VA and Other Sources 14
VA Does Not Compile Information on State Veterans' Nursing Home
Populations Needed for Strategic Planning 18
VA's Per Diem Reimbursement Policy Has Not Been Applied Consistently 24
Conclusions 25
Recommendations for Executive Action 26
Agency Comments and Our Evaluation 27
Appendix I Scope and Methodology 29
Appendix II Comments from the Department of Veterans Affairs 30
Appendix III GAO Contact and Staff Acknowledgments 33
Related GAO Products 34

Tables

Table 1: Veteran and Nonveteran Workload (Average Daily Census) in State
Veterans' Nursing Homes, Fiscal Year 2004 13
Table 2: Sources and Percentage of State Veterans' Nursing Home Revenues
Used for Veterans' Care, Fiscal Year 2004 15

Figures

Figure 1: State Veterans' Nursing Home Locations, Fiscal Year 2005 8
Figure 2: Number of State Veterans' Nursing Home Beds, Fiscal Year 2005 9
Figure 3: Projected Veteran Population Age 65 and Older, Fiscal Year 2005
through Fiscal Year 2030 12
Figure 4: Percentage of Veterans' Nursing Home Stays That Were Long Stay
(90 Days or More) and Short Stay (Less Than 90 days), Fiscal Year 2004 19
Figure 5: States with State Veterans' Nursing Homes Certified for Medicare
Reimbursement, Fiscal Year 2005 20
Figure 6: Age Distribution of Veterans in State Veterans' Nursing Homes,
Fiscal Year 2004 23

Abbreviations

CARES Capital Asset Realignment for Enhanced Services CMS Centers for
Medicare & Medicaid Services  VA Department of Veterans Affairs

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separately.

United States Government Accountability Office

Washington, DC 20548

March 31, 2006

The Honorable Larry E. Craig Chairman Committee on Veterans' Affairs
United States Senate

The Honorable Christopher H. Smith House of Representatives

The Department of Veterans Affairs (VA) operates a nursing home program
that provides or pays for veterans' care in three different settings: VA
nursing homes operated directly by VA, privately owned nursing homes in
the community from which VA purchases services, and state veterans'
nursing homes. State veterans' nursing homes, which numbered 116 by the
close of fiscal year 2005, are joint federal-state partnerships in which
VA pays a portion of the cost of providing nursing home care for eligible
veterans in these homes,1 provides grants to cover part of the cost of
construction, acquisition, or renovation of these homes, and has oversight
responsibilities for certain aspects of costs and services. By fiscal year
2003, state veterans' nursing homes had become responsible for the largest
share of VA's nursing home workload2 among the three settings of VA's
nursing home program. In fiscal year 2005, state veterans' nursing homes
accounted for almost 52 percent of VA's nursing home workload. In
contrast, about 35 percent of the workload was provided in VA-operated
nursing homes and about 13 percent was provided in privately owned nursing
homes from which VA purchases services. That same year, VA spent about
$382 million to support the delivery of care to veterans in state
veterans' nursing homes and over $123 million to support capital
construction and renovation in 23 states.

1VA supports the nursing home care provided to eligible veterans in state
veterans' nursing homes through per diem reimbursements to these homes.
Per diem reimbursements are based on the number of veterans in each home
who are (1) discharged under conditions other than dishonorable and (2)
certified by a physician as needing nursing home care.

2Nursing home workload is measured in terms of average daily census, which
reflects the average number of veterans receiving nursing home care on any
given day during the course of the year.

In 2004, we reported, in part, that VA lacked key information on veterans
in state veterans' nursing homes, as well as on the type of nursing home
care delivered in this setting.3 We found that VA did not collect data on
the proportion of veterans in state veterans' nursing homes for whom VA is
required to provide nursing home care in accordance with the Veterans
Millennium Health Care and Benefits Act4 (Millennium Act veterans), as
well as other veterans for whom VA provides such care on a discretionary
basis. We also found that VA did not collect data on the extent to which
veterans in state veterans' nursing homes received long-stay, chronic
nursing home care that typically lasts 90 days or more, nor did VA collect
data on short-stay, postacute nursing home care that typically lasts less
than 90 days. In contrast, we found that VA collects such data from
VA-operated nursing homes, both on the number of Millennium Act veterans
and other veterans in these homes and on the extent to which veterans in
this setting receive long and short-stay nursing home care. We concluded
that VA's lack of uniform, comparable data across the three settings of
its nursing home program impeded VA's strategic planning for nursing home
care. As a result, we recommended that VA collect data on the number of
Millennium Act veterans and other veterans receiving care in state
veterans' nursing homes and the type of care they receive. VA concurred in
principle with our recommendations.

In commenting on our 2004 report, the Secretary of the Department of
Veterans Affairs indicated that patient populations served in state
veterans' nursing homes are relatively similar nationwide and that
patients receive predominantly long-stay nursing home care.5 Comprehensive
information on state veterans' nursing home populations would enable VA to
develop a baseline for tracking changes in the veteran populations and
care provided in this setting. Such information-along with comparable
information from VA nursing homes and for veterans for whom VA purchases
services in privately owned nursing homes-would allow VA to strategically
plan how to best use the three settings of its nursing home program to
meet the needs of veterans. Moreover, when used in conjunction with
forecasts of the likely demand for VA's nursing home care in the future,
such data could allow VA to make informed policy decisions about which
groups of veterans VA will serve in the future and therefore the extent to
which VA will need to provide long and short-stay nursing home care. Such
decisions are important because most veterans who need nursing home care
do not receive it from VA, but instead receive it from non-VA providers
primarily funded by Medicare and Medicaid. Although VA is in the process
of developing its strategic plan for nursing home care, it has not
finalized its strategic plan for its long-term care services, which
includes nursing home care.6

3See GAO, VA Long-Term Care: Oversight of Nursing Home Program Impeded by
Data Gaps, GAO-05-65 (Washington, D.C.: Nov. 10, 2004).

4In November 1999, the Congress passed the Veterans Millennium Health Care
and Benefits Act, Pub. L. No 106-117, 113 Stat. 1545, which required VA to
provide nursing home care to veterans requiring such care with a
service-connected disability rated at 70 percent or greater, those
requiring nursing home care because of a condition related to their
military service who do not have a service-connected disability rating of
70 percent of greater, and those who were receiving care in VA nursing
homes on the enactment date of the act and continue to need that care. For
all other veterans in VA's nursing home program who are not covered under
the act, VA provides care on a discretionary basis. In our 2004 report, we
found that about three-quarters of veterans in VA-operated nursing homes
received such care on a discretionary basis.

5See GAO-05-65 .

Comprehensive data on the veterans served in state veterans' nursing homes
could also help VA assess the impact of proposed changes to its per diem
reimbursements for state veterans' nursing homes. The President's 2006
budget request for VA contained a proposal to change per diem
reimbursement to take into account veterans' VA priority group status7 and
the type of nursing home care veterans need. You have expressed concern
over the potential impact of these changes on the veterans receiving care
in state veterans' nursing homes. Comprehensive information on the veteran
populations served in state veterans' nursing homes-including the number
of veterans in this setting in each of VA's priority groups-could help VA
and the Congress by providing better information to assess the impact of
such proposed policy changes.

6See GAO, VA Long-Term Care: Trends and Planning Challenges in Providing
Nursing Home Care to Veterans, GAO-06-333T (Washington, D.C.: Jan. 9,
2006) and GAO, VA Health Care: Key Challenges to Aligning Capital Assets
and Enhancing Veterans' Care, GAO-05-429 (Washington, D.C.: Aug. 5, 2005)
for a discussion of VA's challenge in completing a strategic plan for
long-term care services.

7VA assigns veterans who have enrolled for VA hospital and outpatient
medical services to one of eight priority groups. Priority is generally
determined by a veteran's degree of service-connected or other disability
or on financial need. VA gives veterans in Priority Group 1 (50 percent or
more service-connected disabled) the highest preference for services and
gives lowest preference to those in Priority Group 8 (no disability, with
income exceeding VA guidelines, and who were enrolled as of January 16,
2003). Veterans who met the criteria for Priority Group 8 and applied for
enrollment on or after January 17, 2003, are considered "new" Priority
Group 8 veterans and are not eligible for VA hospital and outpatient
medical services. Enrollment is not required to receive nursing home care
in any of VA's three nursing home settings.

You requested that we provide information on state veterans' nursing homes
and the extent to which VA collects information on veterans and the type
of care they receive in this setting. During the course of our work, we
also found inconsistencies in certain practices related to VA's per diem
reimbursements to state veterans' nursing homes. In this report, we (1)
describe the extent to which key admission criteria for state veterans'
nursing homes in selected states differ, (2) describe the extent to which
state veterans' nursing homes in the selected states rely on VA and non-VA
sources of revenue, (3) examine whether VA compiles information on state
veterans' nursing home populations needed for VA's strategic planning of
its nursing home care, and (4) assess whether VA's per diem reimbursement
policy has been applied consistently.

To perform our work, we collected information on state veterans' nursing
homes primarily from four states-Florida, Maine, Oklahoma, and
Pennsylvania-and supplemented this information with data from national
sources. We selected these four states based on geographic region,
population density, plans to expand the number of state veterans' nursing
homes, and whether the state veterans' nursing homes in these states
receive Medicare and Medicaid reimbursements. We used a data collection
instrument to obtain data from each of the four states on all of their
state veterans' nursing homes and reviewed VA and state veterans' nursing
home documents. In the four states we conducted site visits to a total of
nine state veterans' nursing homes: two of Florida's five state veterans'
nursing homes, two of Maine's five homes, three of Oklahoma's seven homes,
and two of Pennsylvania's six homes. We interviewed state veterans'
nursing home program officials, the administrators of the nine state
veterans' nursing homes we visited, officials at VA headquarters, and
staff at six VA medical centers of jurisdiction. Staff from VA medical
centers of jurisdiction oversee the state veterans' nursing homes in their
geographic areas through annual on-site inspections and through reviewing
and approving requests from these homes for per diem reimbursements. To
identify the characteristics of veteran nursing home populations needed
for VA's strategic planning, we identified several of the key
characteristics of nursing home populations that are useful for long-term
care planning and collected data on these characteristics from state
veterans' nursing home patient populations in the selected states. During
the course of our work-in interviews with staff of VA medical centers of
jurisdiction, state veterans nursing home officials, and VA headquarters
staff-we found inconsistencies in certain practices related to VA's per
diem reimbursements. These practices involved determining which veterans
can be counted for per diem reimbursements. To examine these issues
further, we reviewed VA's policy and guidance for overseeing state
veterans' nursing home operations. To identify states that have state
veterans' nursing homes certified for Medicare or Medicaid reimbursement
we also used data from the Centers for Medicare & Medicaid Services (CMS)
Nursing Home Compare national database. For additional information on VA's
national per diem and construction grant programs, we interviewed VA
headquarters staff who administer these programs. We also reviewed our
previous reports on VA long-term care as well as those related to
strategic planning (see Related GAO Products at the end of this report).
We took steps to ensure that data we obtained from selected state
veterans' nursing homes were sufficiently reliable for our purposes. For
example, we verified the accuracy of state veterans' nursing home
programs' data for internal consistency and compared this information with
available VA national data as well as information we obtained through
interviews with officials and visits to the selected states. Because we
limited our review to four states, the results are not generalizable to
other states with state veterans' nursing homes. We performed our work
from December 2004 through March 2006 in accordance with generally
accepted government auditing standards. For additional details of our
scope and methodology, see appendix I.

                                Results in Brief

Criteria for granting admission to state veterans' nursing homes differ in
two key respects, because states have the flexibility to establish their
own admission criteria. Florida, Maine, and Pennsylvania admit both
wartime and peacetime veterans. In contrast, Oklahoma admits wartime
veterans only. Maine and Pennsylvania admit both veterans and certain
nonveterans, such as widows of veterans or parents of veterans who died in
the line of military duty. In contrast, Florida and Oklahoma admit
veterans only. The selected states also have some key admission criteria
in common. Each state requires veterans to have been discharged from the
military under honorable conditions and requires all patients to be
certified by a physician as having a medical basis for admission to a
nursing home.

State veterans' nursing homes in the four selected states rely on VA and
non-VA sources of revenue to varying degrees. In each of these states,
VA's per diem reimbursements accounted for about one-fourth to one-third
of state veterans' nursing home revenues used for veterans' care in fiscal
year 2004. VA reimburses state veterans' nursing homes for services
provided to eligible veterans-in general, those who were discharged from
military service under conditions other than dishonorable and who have
been determined by a physician as requiring nursing home care. In addition
to revenues from VA, state veterans' nursing homes in two of the four
selected states-Florida and Maine-receive reimbursement from Medicare and
Medicaid for the inpatient nursing home care they provided to veterans.
Additionally, state veterans' nursing homes in three of the four selected
states-Pennsylvania, Oklahoma, and Florida-receive funds directly from
their states for veterans' care. In fiscal year 2004, this source
accounted for 54 percent of the revenues used to provide care to veterans
in Pennsylvania, 32 percent in Oklahoma, and 10 percent in Florida.

VA does not compile the information it needs for strategic planning on
several key characteristics of the veteran populations receiving care in
state veterans' nursing homes: veterans' length of stay, VA priority group
status, age, and gender. VA does not have information, for example, on the
extent to which veterans in state veterans' nursing homes receive long and
short-stay care. Patients' length of stay is a predictor of the amount and
type of medical resources devoted to their care. VA officials have assumed
that state veterans' nursing homes predominantly provide long-stay care,
but our review of selected states and national data suggests that this may
not always be the case. VA concurred in principle with our 2004
recommendation to collect data on veterans' lengths of stay in state
veterans' nursing homes nationwide, and the agency informed us in 2005
that it will report these data to its policymakers and planners in fiscal
year 2007. In our visits to selected states, we found that state veterans'
nursing homes in Pennsylvania, Oklahoma, and Florida generally provide
long-stay care. In contrast, we found that 60 percent of the stays in
Maine state veterans' nursing homes are short. VA also does not compile
information it needs on the VA priority group status of veterans admitted
to state veterans' nursing homes. The availability of priority group
status information may differ among the states. Veterans in state
veterans' nursing homes who have previously enrolled for VA hospital and
outpatient medical services will have been assigned to a priority group.
However, veterans in state veterans' nursing homes who have not enrolled
will not have been assigned a priority group. The extent to which veterans
without a priority group designation enroll with VA upon admission to
state veterans' nursing homes may vary because not all states require
veterans to enroll for VA hospital and outpatient medical services.

During the course of our work, we found that certain aspects of VA's per
diem reimbursement policy had not been applied consistently. For example,
staff from a VA medical center of jurisdiction told us that they approved
reimbursements to state veterans' nursing homes only for care provided to
veterans whose military service occurred during VA-designated periods of
military conflict (wartime veterans). However, VA's policy does not limit
per diem reimbursements to such veterans. We also found that VA
headquarters officials have provided inconsistent instructions on VA's
reimbursement policy. Specifically, staff at a VA medical center of
jurisdiction were told by a VA headquarters official that they could not
approve per diem reimbursements to state veterans' nursing homes for care
provided to new Priority Group 8 veterans, but were told by a different
headquarters official that they could approve such care. Lacking clear
guidance on whether they should approve reimbursement for services
provided to new Priority Group 8 veterans admitted to state veterans'
nursing homes, the medical center staff decided to approve such
reimbursements.

To help ensure that VA can conduct adequate strategic planning for its
nursing home care and strengthen its administration and oversight, we are
recommending that VA compile and report data on the age and gender of
veterans admitted to state veterans' nursing homes, compile available data
on the priority group status of veterans in state veterans' nursing homes,
and explore with these nursing homes options for estimating the number of
unenrolled veterans in each priority group, clarify that VA policy allows
state veterans' nursing homes to receive reimbursement for both wartime
and peacetime veterans, and clarify whether VA policy allows reimbursement
for new Priority Group 8 veterans.

VA stated that it agreed with our overall findings and generally concurred
with our recommendations. VA stated that it plans to collect demographic
information on state veterans' nursing home patients on a more structured,
routine basis. VA indicated that the collection of state veterans' nursing
home demographic information on a more structured, routine basis requires
the development of new software, which VA anticipates might be completed
by the end of fiscal year 2007. VA agreed with our recommendations to
clarify reimbursement policy on the state veterans' nursing homes and
stated that it plans to do so by issuing a national information letter to
VA medical centers of jurisdiction by the end of fiscal year 2006.

                                   Background

VA provides or pays for nursing home care for veterans in three settings.
VA reports that it operates 134 nursing homes of its own, which in fiscal
year 2005 accounted for about 35 percent of VA's nursing home care
workload. Almost all of these nursing homes are attached or in close
proximity to a VA medical center. VA also contracts for care of veterans
in over 2,000 VA-approved, privately owned nursing homes located in
communities across the country. In fiscal year 2005, these homes provided
services to nearly 13 percent of VA's nursing home workload. In fiscal
year 2005, about 52 percent of VA's nursing home workload was provided in
a third setting-state veterans' nursing homes located in 44 states and
Puerto Rico (see fig. 1).8

Figure 1: State Veterans' Nursing Home Locations, Fiscal Year 2005

8As of fiscal year 2005, six states-Alaska, Connecticut, Delaware, Hawaii,
West Virginia, and Wyoming-and the District of Columbia did not operate
state veterans' nursing homes. Three of these states-Connecticut,
Delaware, and Hawaii-plan to construct their first state veterans' nursing
homes. Alaska, West Virginia, and Wyoming operate state veterans'
domiciliaries only. Domiciliaries are facilities that care for veterans
who do not require hospital or nursing home care but are unable to live
independently because of medical or psychiatric disabilities.

Across the country, there is wide variation in the capacity of state
veterans' nursing home programs, as determined by the number of beds in
state veterans' nursing homes. For example, in the 44 states and Puerto
Rico that operate state veterans' nursing homes, the number of state
veterans' nursing home beds ranged from 38 in North Dakota to 1,439 in
Oklahoma in fiscal year 2005 (see fig. 2).

Figure 2: Number of State Veterans' Nursing Home Beds, Fiscal Year 2005

State veterans' nursing homes provide long and short-stay care. Generally,
long-stay care involves care of 90 days or more needed by veterans who
cannot be cared for at home because of severe, chronic physical or mental
limitations. Such care includes assistance with activities of daily
living.9 Short-stay care typically involves care of less than 90 days and
includes skilled nursing services for rehabilitative care following
hospitalization or serious illness.

9Activities of daily living are tasks relating to independent living and
personal care, such as feeding oneself, bathing, toileting, dressing, and
getting in and out of bed or a chair.

VA funds state veterans' nursing homes through per diem reimbursements
that cover a portion of the costs of the nursing home care provided to
veterans. In fiscal year 2005, VA paid $382 million in per diem payments
for patient care. VA annually adjusts its per diem reimbursement rate for
all state veterans' nursing homes, which in fiscal year 2005 was $59.36
per veteran. As part of VA's support and oversight of state veterans'
nursing homes, VA medical centers of jurisdiction process and approve per
diem reimbursements for the state veterans' nursing homes located in their
geographic areas.10 In addition to paying for a portion of the cost of
providing nursing home care to veterans, VA supports state veterans'
nursing homes through grants for construction, acquisition,11 or
renovation of existing structures. VA provides grants to states for
nursing home construction, acquisition, or renovation following its review
and approval of proposals submitted by state officials.12 In fiscal year
2005, VA spent over $123 million for construction or renovation
projects.13 VA requires states with state veterans' nursing homes that
were constructed, acquired, or renovated with VA construction grants to
operate these homes as state veterans' nursing homes for a period of 20
years.

In addition to per diem payments and construction grants from VA, state
veterans' nursing homes may receive payments from a number of different
sources, including Medicare and Medicaid. CMS, an agency within the U.S.
Department of Health and Human Services, certifies that nursing
homes-including state veterans' nursing homes-are qualified to receive
Medicare and Medicaid reimbursement.14 For state veterans' nursing homes
that are certified to receive Medicaid reimbursement, the state's Medicaid
funding may be one source of a state's support for its state veterans'
nursing homes.15

10In states with multiple VA medical centers of jurisdiction, such centers
may oversee one or more state veterans' nursing homes; other states may
have a single VA medical center of jurisdiction overseeing one or more
state veterans' nursing homes.

11Acquisition refers to the purchase of a facility for the purpose of
operating it as a state veterans' nursing home. No state has requested a
grant from VA for this purpose.

12If a state veterans' home was constructed or renovated with a grant from
VA, at least 75 percent of that nursing home's residents must be eligible
veterans in order for the home to receive VA per diem reimbursements. If
the state veterans' nursing home did not receive a construction grant from
VA, VA requires that more than 50 percent of the residents be eligible
veterans in order for the home to receive VA per diem reimbursements. See
38 CFR S: 51.210(d)(2005).

13Because some states have nursing home and domiciliary facilities in the
same location, some VA grants are for projects to improve facilities that
provide both veterans' nursing home care and domiciliary services.

Medicare and Medicaid typically reimburse state veterans' nursing homes
for different types of nursing home care provided to veterans. Medicare
primarily covers costs for acute health care services, and, therefore,
limits its nursing home coverage to short stays requiring skilled nursing
care following hospitalization. In contrast, Medicaid programs provide
coverage for long-stay nursing home care for patients who require
assistance with activities of daily living, such as eating and bathing.
Although VA is not authorized in most cases to bill and collect payments
from Medicare and Medicaid, state veterans' nursing homes are not
prohibited from doing so. As a result, in addition to per diem
reimbursement from VA, state veterans' nursing homes may receive
reimbursement from other sources such as Medicare or Medicaid for care
provided to an individual veteran.

The number of veterans aged 65 and older is expected to decrease after
2013 through 2030 (see fig. 3). From 2005 to 2013, the number of these
veterans first declines then increases until 2013, in part, because of the
aging of Vietnam-era veterans. In contrast, the number of persons aged 65
and older in the general population is expected to increase steadily from
2005 through 2030.

14Medicare is the federal health insurance program that serves the
nation's elderly and disabled. Medicare covers skilled nursing services
for stays lasting up to 100 days, per spell of illness. Medicaid is the
joint federal-state health care financing program that covers basic health
and long-term care services for certain low-income individuals.

15Medicaid funding is derived from a combination of funds contributed by
the state and the federal government. The federal government provides
funds to match a percentage of a state's Medicaid expenditures. The amount
of federal matching funds is determined by a formula that provides a
higher federal matching rate for states with lower per capita incomes.

Figure 3: Projected Veteran Population Age 65 and Older, Fiscal Year 2005
through Fiscal Year 2030

VA has recognized the importance of accounting for demographic changes in
the veteran population and strategically planning the future delivery of
nursing home care to veterans. In May 2004, in an announcement of
realignment decisions resulting from VA's Capital Asset Realignment for
Enhanced Services (CARES) process,16 the Secretary of Veterans Affairs
identified the need for VA to plan to meet the needs of an aging veteran
population. In his CARES announcement, the Secretary noted that VA was in
the process of developing a strategic plan for long-term care, including
nursing home services. A strategic plan for long-term care would, for
instance, incorporate forecasts of the likely demand for VA's nursing home
care, help determine which veterans VA will serve-as a matter of
policy-among those seeking nursing home care from VA, and help determine
the extent to which VA should provide long and short-stay nursing home
care to the veterans it has chosen to serve.

16VA initiated the CARES process in response to our recommendations in
1999 for improving the department's capital asset planning and budgeting
(see GAO, VA Health Care: Improvements Needed in Capital Asset Planning
and Budgeting, GAO/HEHS-99-145 (Washington, D.C.: Aug. 13, 1999)). The
CARES process identified what health care services VA should provide in
which locations through fiscal year 2022. CARES resulted in decisions to
realign inpatient services at some VA facilities and to leave services as
currently aligned at others.

    Selected States Have Admission Criteria That Differ in Two Key Respects

The selected states we reviewed have criteria for granting admission to
their state veterans' nursing homes that differ in two key respects.
States have the flexibility to establish their own admission criteria
because VA does not control the admission process or specify the admission
criteria that states should use. The selected states differ in whether
their state veterans' nursing homes admit peacetime veterans. Florida,
Maine, and Pennsylvania admit both wartime and peacetime veterans. In
contrast, Oklahoma admits wartime veterans only. The selected states also
differ in that some admit certain nonveterans. Maine and Pennsylvania
admit certain nonveterans-such as widows of veterans or parents of
veterans who died in the line of military duty. In contrast, Florida and
Oklahoma admit veterans only (see table 1).

Table 1: Veteran and Nonveteran Workload (Average Daily Census) in State
Veterans' Nursing Homes, Fiscal Year 2004

                  Floridaa Maine Oklahoma Pennsylvania 
Veterans            327   320     1140          947 
Nonveterans          0b   108       0b           87 
Total workload      327   428     1140         1034 

Source: GAO analysis of Florida, Maine, Oklahoma, and Pennsylvania data.

aIn fiscal year 2004, Florida was in the process of opening two new state
veterans' nursing homes; workload at these two homes is not included in
this table.

bFlorida and Oklahoma do not admit nonveteran patients.

The four states we visited all share two other key admission criteria.
Each state requires veterans to have been discharged from the military
under honorable conditions and requires all patients to be certified by a
physician as having a medical basis for admission to a nursing home. In
the selected states, this latter requirement is met if a physician
certifies that the patient either requires some form of skilled nursing
care or needs assistance with activities of daily living. For example,
patients in Maine's state veterans' nursing homes must be certified by a
physician as requiring skilled nursing care or assistance with at least
three such activities of daily living. Similarly, Pennsylvania admits
patients to its state veterans' nursing homes if they have been certified
as needing skilled nursing care or assistance with activities of daily
living. In Florida, admission to a state veterans' nursing home requires
that a VA physician certify that the patient requires nursing home care.
In Oklahoma, a physician from a state veterans' nursing home must conduct
a physical exam and certify that any veteran admitted to a state veterans'
nursing home is disabled or diseased to a degree that requires nursing
home care.

  State Veterans' Nursing Homes in Selected States Vary in the Extent to Which
                 They Rely on Revenue from VA and Other Sources

State veterans' nursing homes in the four states we visited rely, to
varying degrees, on VA and non-VA sources of revenue. (See table 2 for a
summary of the sources of revenue used for veterans' care in state
veterans' nursing homes in the four selected states.) In fiscal year 2004
about one-fourth to one-third of the revenue used by these nursing homes
for veterans' care17 came from VA per diem reimbursements. This source
accounted for 34 percent of revenues used to provide care to veterans in
Oklahoma, 29 percent in Florida, 24 percent in Maine, and 22 percent in
Pennsylvania. VA reimburses state veterans' nursing homes for services
provided to eligible veterans-those who were discharged from military
service under conditions other than dishonorable and who have been
determined by a physician as requiring nursing home care. VA, however,
does not provide per diem reimbursement for services provided to
nonveterans admitted to a state veterans' nursing home-such as a veteran's
spouse or parent of a veteran killed in the line of military duty.

17In this report, state veterans' nursing home revenue used for patient
care does not include grants from VA for construction, acquisition, and
renovation.

Table 2: Sources and Percentage of State Veterans' Nursing Home Revenues
Used for Veterans' Care, Fiscal Year 2004

Sources of revenue for veterans' care Oklahoma Florida Maine Pennsylvania 
VA per diem                                34%     29%   24%          22% 
Self-payment and other sourcesa            33%     30%   25%          23% 
State funds                                32%     10%     0          54% 
Medicaidb                                   0c     22%   37%           0c 
Medicare, Parts A & B                       0c     9%d  15%e     <1% c, e 

Source: GAO analysis of Florida, Maine, Oklahoma, and Pennsylvania data.

Notes: This table does not include revenues received for nonveteran
nursing home residents in Maine and Pennsylvania. In addition, funds
obtained from VA construction, acquisition, or renovation grants are not
included.

aMay include revenue sources such as Social Security, pensions, and
private insurance.

bIncludes funds provided by states through their Medicaid programs.

cHas not applied for CMS certification for Medicaid or Medicare Part A
reimbursement.

dTotals for Medicare Part A and Part B could not be separately identified.

eMedicare Part B was a small portion of revenue in Maine and Pennsylvania,
representing less than 1 percent in each state. Medicare revenue in
Pennsylvania is from Medicare Part B only.

Another important source of revenue for the state veterans' nursing homes
in the selected states is revenue obtained from patients paying for their
nursing home care. These payments come from a patient's own resources,
such as Social Security, pensions, and private insurance. In fiscal year
2004 self-payment on the part of patients accounted for 33 percent of
patient care revenues in Oklahoma, 30 percent in Florida, 25 percent in
Maine, and 23 percent in Pennsylvania. In addition, some state veterans'
nursing homes receive funds directly from their states for veterans' care.
In the states we visited, Oklahoma, Pennsylvania, and Florida state
veterans' nursing homes receive such funds.

Two other sources of revenue for some state veterans' nursing home
programs are reimbursements from Medicare and Medicaid. State veterans'
nursing homes may receive funding concurrently from VA, Medicaid, and
Medicare for the costs of providing services to an individual veteran.
State veterans' nursing homes in two of the selected states-Florida and
Maine-are certified to receive Medicaid or Medicare Part A reimbursement
for inpatient services.18 Additionally, Medicare Part B is another source
of revenue for some state veterans' nursing homes, but represents a small
portion of revenue.19 In fiscal year 2004, Florida's state veterans'
nursing homes relied on Medicaid for 22 percent of revenue and Medicare
Parts A and B for 9 percent of their revenue for veterans' care. In that
same year, Maine's state veterans' nursing homes relied on Medicaid for 37
percent of their veterans' care revenue and Medicare Parts A and B for
about 15 percent of such revenue. State veterans' nursing homes in
Oklahoma and Pennsylvania have not applied for CMS certification and
therefore do not receive reimbursement from Medicaid or Medicare Part A
for inpatient services. Medicare Part B payments represent a small portion
of revenue for Pennsylvania state veterans' nursing homes. However,
Oklahoma state veterans' nursing home officials do not consider Medicare
Part B payments to be revenue because such payments are made directly to
private contractors who provide services such as physical or speech
therapies.

In addition to revenues used for veterans' care, the four states we
visited also have received revenue in the form of grants from VA that pay
up to 65 percent of the cost of constructing new state veterans' nursing
homes or renovating existing homes. Using VA construction grants, Florida
has expanded the number of its state veterans' nursing homes from one
location to five since 1993. Oklahoma operates a total of seven state
veterans' nursing homes, having recently constructed a new home in Lawton
in 2003. Pennsylvania opened a new state veterans' nursing home in
Philadelphia in 2003, increasing the number of its homes to six. Many of
the state veterans' nursing homes in Oklahoma and Pennsylvania are old-the
Ardmore, Oklahoma home opened in 1910 as a home for civil war veterans and
the Pennsylvania Soldiers and Sailors Home, in Erie, opened in 1886. Both
states have used VA renovation grants to upgrade existing state veterans'
nursing homes and plan to use such grants to improve others. Similarly,
Maine has expanded three of its five state veterans' nursing homes since
2002. Since 1964, VA has contributed to the construction or renovation of
homes in each of the 44 states and Puerto Rico that operate state
veterans' nursing homes and has approved grants to the 3 states that plan
to construct their first homes. VA has provided approximately $607 million
in grants for the construction and renovation of state veterans' homes
since 1999.

18To receive Medicaid or Medicare Part A reimbursement, nursing homes,
including state veterans' nursing homes, must be certified by CMS.
Medicaid coverage of nursing home services varies from state to state and
may include reimbursement for services such as basic custodial care,
medical social services, and rehabilitative therapies. Medicare Part A
provides payment for skilled nursing facility, inpatient hospital,
hospice, and certain home health services.

19Medicare Part B provides payment for physician services, diagnostic
tests, related services and supplies, and medical equipment. Nursing homes
do not need CMS certification to receive reimbursement under Medicare Part
B.

State veterans' nursing home officials in two of the states we visited
were cautious in making plans to construct new veterans' nursing homes,
while officials in the two other states were planning no new construction.
Officials in all four states explained that while veterans' need for
nursing home care is increasing, the projected decrease after 2013 in the
number of veterans over age 65 and continued expansion of state veterans'
nursing homes could lead to excess nursing home capacity. Florida
officials told us that VA's requirement that states agree to operate state
veterans' nursing homes for 20 years if using a VA construction grant
creates a substantial financial commitment. As a result, these officials
stated that they were likely to limit their request for VA construction
grants to 5 new nursing homes, although VA's nursing home capacity
projections would allow Florida to request grants for as many as 31 new
state veterans' nursing homes. Similarly, Pennsylvania state veterans'
nursing home officials told us that they were weighing the benefits
associated with constructing new homes against the long-term costs of
their operation. Pennsylvania officials told us they were considering
constructing only one new nursing home. Also, officials from Maine and
Oklahoma state veterans' nursing homes stated that they have no plans to
expand the number of state veterans' nursing homes in their states.
According to a VA program official, most states have completed
constructing nursing homes and now have a greater need for VA grants to
renovate existing nursing homes. As a result, the focus of VA's
construction grant program has shifted away from constructing new state
veterans' nursing homes toward renovating existing nursing homes. This
official anticipates that only states with large veteran populations, such
as Florida and California, will construct new state veterans' nursing
homes.

  VA Does Not Compile Information on State Veterans' Nursing Home Populations
                         Needed for Strategic Planning

VA does not compile the information it needs on several key
characteristics of the veteran populations receiving care in state
veterans' nursing homes: veterans' length of stay, VA priority group
status, age, and gender. Without this information, VA cannot develop
baseline data of characteristics of veterans in state veterans' nursing
homes and the care provided to them, which can help VA estimate the
proportion of nursing home need it currently meets and the need it may be
asked to meet as the number of older veterans changes over time. These
estimates can help VA plan the delivery of nursing home care across its
three nursing home settings. Based on our visits to four states, we
obtained information on key characteristics of state veterans' nursing
home populations, which showed that these populations differed to varying
degrees across the states.

VA does not have the information it needs on the extent to which veterans
in state veterans' nursing homes receive long-stay care (90 days or more)
and short-stay care (less than 90 days). Patients' length of stay is a
predictor of the amount and type of medical resources devoted to their
care. For example, short-stay care often requires skilled nursing services
for recovery from surgery such as hip replacement, or from serious
illnesses such as a stroke. Long-stay care typically involves less intense
nursing care for daily assistance with personal care tasks. Having
information on the length of stays across state veterans' nursing homes
would help VA in tracking the medical resources used across its three
nursing home settings, thereby enabling VA to more accurately forecast the
amount of medical resources needed in the future. VA concurred in
principle with our 2004 recommendation that it collect and make available
to VA policymakers and planners data on the number of veterans who have
long and short stays in state veterans' nursing homes nationwide. VA
informed us in 2005 that it will report these data in fiscal year 2007.

From our visits to selected states, we obtained information on the extent
to which veterans in state veterans' nursing homes received long and
short-stay care. The state veterans' nursing homes in these four states
varied widely in terms of the lengths of their veterans' stays (see fig.
4).

Figure 4: Percentage of Veterans' Nursing Home Stays That Were Long Stay
(90 Days or More) and Short Stay (Less Than 90 days), Fiscal Year 2004

Three of the four states-Florida, Oklahoma, and Pennsylvania-generally
provide what may be considered more traditional nursing home
services-predominantly long-stay, chronic care for individuals who require
24-hour care for activities of daily living. Between 66 and 89 percent of
veterans' stays in state veterans' nursing homes in these three states was
long stay in duration. State veterans' nursing home officials from these
states stated that their nursing homes were structured-in terms of the
type of care for which their homes are staffed and equipped-to deliver
primarily long-stay services. In contrast, program officials from Maine
stated that their state veterans' nursing homes were staffed and equipped
to provide both long-stay and short-stay care services. In fiscal year
2004, 60 percent of veterans' stays in Maine state veterans' nursing homes
were short stay.

Despite VA officials' assertion that state veterans' nursing homes provide
predominantly long-stay care, the amount of short-stay nursing home care
provided in Maine raises questions about the extent to which VA's
assertion is accurate. Like Maine, state veterans' nursing homes in other
states may be providing significant amounts of short-stay care. As
indicated by national CMS data, 23 states, including Maine and Florida,
have state veterans' nursing homes that are certified to receive Medicare
reimbursement (see fig. 5). Medicare typically reimburses CMS-certified
nursing homes for short-stay, postacute services provided to patients
enrolled in Medicare. CMS data, along with data we collected in our
review, suggest that state veterans' nursing homes in the 23 states may be
providing short-stay care to veterans in amounts that may be significant.

Figure 5: States with State Veterans' Nursing Homes Certified for Medicare
Reimbursement, Fiscal Year 2005

VA also does not compile information it needs on the VA priority group
status of veterans admitted to state veterans' nursing homes. VA does not
compile this information in its headquarters, and in the four states we
visited, neither the VA medical centers of jurisdiction nor the state
veterans' nursing homes compile information on veterans' priority group
status. VA needs this information to be able to determine which priority
groups of veterans it is serving in this setting. This information can
help VA in its strategic planning, especially when making policy decisions
regarding which veterans to serve in its nursing home program and how many
veterans such policies could affect.

The availability of priority group information on veterans in state
veterans' nursing homes may vary. Veterans in state veterans' nursing
homes who have previously enrolled for VA hospital and outpatient medical
services will have been assigned to a priority group. However, veterans in
state veterans' nursing homes who have not enrolled will not have been
assigned a priority group. The extent to which veterans without a priority
group designation enroll with VA upon admission to state veterans' nursing
homes may vary because not all states require veterans to enroll. For
example, Florida requires veterans to enroll for VA hospital and
outpatient medical services as part of the admission process to their
state veterans' nursing homes. The other three states encourage-but do not
require-enrollment upon admission.

Because VA does not collect information on the priority group status of
veterans in state veterans' nursing homes, it cannot, for example, assess
the potential impact of proposed changes to per diem reimbursement, such
as the proposal contained in VA's 2006 budget submission. VA proposed
changing per diem reimbursements to be based on whether a veterans'
priority group status is considered high or low.20 VA proposed reimbursing
state veterans' nursing home for long-stay and short-stay care provided to
veterans in the higher priority groups. However, the proposal restricted
VA reimbursement for services provided to veterans in lower priority
groups to short-stay services only. Without information on veterans'
priority group status-as well as information on veterans' length of
stay-VA is limited in its ability to determine the impact of such policy
proposals on veterans and on state veterans' nursing homes.

20In its proposal, VA identified as high-priority veterans those assigned
to Priority Groups 1 through 3, and those in Priority Group 4 who are
catastrophically disabled. VA identified low-priority veterans as those
assigned to Priority Group 4 who are not catastrophically disabled and
those in Priority Groups 5 through 8.

VA also does not have information it needs on the age of veterans served
in state veterans' nursing homes. The likelihood of needing nursing
services increases with age; persons aged 65 or older are more likely to
need nursing home services. Knowing the number of veterans in this age
group that VA is currently serving in state veterans' nursing homes could
help VA estimate its market share-that is, the number of veterans aged 65
or older VA is serving in its entire nursing home program, compared to the
total number of veterans aged 65 or older nationwide. With this
information, VA can track how the proportion of older veterans served by
VA's nursing home program changes over time. As a result, VA would be
better able to predict-and plan for-changes in the demand for its nursing
home care.

The distribution of veterans by age group in state veterans' nursing homes
varied somewhat across the selected states, according to our analysis of
data obtained from the states (see fig. 6). In all cases across the four
selected states, most veterans receiving care in state veterans' nursing
homes were in the 65 to 84 age group. Nonetheless, we noted the greatest
variation in the proportion of veterans in the group under age 65.

Figure 6: Age Distribution of Veterans in State Veterans' Nursing Homes,
Fiscal Year 2004

Finally, VA does not compile the information it needs on the gender of
veterans admitted to state veterans' nursing homes. Although VA asks for
this information on forms filled out by veterans upon admission to state
veterans' nursing homes, it does not routinely analyze or report this
information to VA policymakers and planners. Such information can be used
as an indicator of the likely need for nursing home services, because
females tend to require nursing home services more commonly than males.
Therefore, knowing the proportion of females relative to males in the
populations served in state veterans' nursing homes-and the degree to
which this proportion changes over time-would help VA understand the
extent to which it will need to adjust the amount of nursing home services
it offers.

Based on information we collected from the states we visited, state
veterans' nursing homes in the four states varied somewhat in the extent
to which their veteran patients included female veterans, ranging from 3
to 10 percent of all veteran patients. This is generally consistent with
the percentage of elderly female veterans in three of the four states.
Florida's female veteran population was 10 percent, Maine's 6 percent,
Pennsylvania's 4 percent, and Oklahoma's 3 percent.

      VA's Per Diem Reimbursement Policy Has Not Been Applied Consistently

During the course of our work, we found that certain aspects of VA's per
diem reimbursement policy had not been applied consistently. We found that
staff at a VA medical center of jurisdiction were misapplying VA's policy
regarding whether peacetime veterans could be counted for reimbursement.
In another instance, VA headquarters staff provided inconsistent
instructions on whether nursing home services provided to new Priority
Group 8 veterans could be approved for reimbursement.

During our visit to Maine, we found that VA staff in Maine misapplied VA's
per diem reimbursement policy concerning which veterans may be considered
for reimbursements. Specifically, staff from this VA medical center told
us that they only approved reimbursement for care provided to veterans
admitted to state veterans' nursing homes who have had wartime military
service.21 However, VA's policy does not limit per diem reimbursements to
such veterans. The VA medical center staff told us that the wartime
limitation had been a long-standing VA policy which had been confirmed by
an official in VA's New England Healthcare network.22 Similarly, Maine's
state veterans' nursing home program officials told us that it was their
practice to apply to VA for per diem reimbursements on behalf of only
those veterans in their nursing homes who had wartime military service.
During our visit, we told officials from both the VA medical center of
jurisdiction and the state veterans' nursing homes that the practice in
Maine of not approving the per diem for peacetime veterans was
inconsistent with reimbursement practices of medical centers in other
states we visited. These officials later informed us that as of September
2005 Maine state veterans' nursing homes have billed for-and VA will
approve reimbursement of-care provided to both wartime and peacetime
veterans.

21Wartime military service refers to specific VA-designated periods of
military conflict, such as World War II, Vietnam War, Korean War, and Gulf
War. All other periods of military service are designated as peacetime
service.

22VA's health care facilities nationwide are organized into 21 regional
networks that are structured to manage and allocate resources to VA health
care facilities. The New England Healthcare network is one of VA's 21
regional networks.

We also found that VA headquarters officials provided inconsistent
instructions on VA's reimbursement policy. According to staff at a VA
medical center of jurisdiction in Pennsylvania, VA headquarters officials
have not been consistent in explaining whether VA medical centers of
jurisdiction could approve per diem reimbursements for nursing home care
provided to new Priority Group 8 veterans. Staff at this medical center
sought guidance from VA headquarters regarding approval of reimbursement
for new Priority Group 8 veterans in state veterans' nursing homes after
VA announced that new Priority Group 8 veterans would not be eligible for
VA hospital and outpatient medical services as of January 17, 2003. The
medical center staff told us that an official at VA headquarters advised
them that such reimbursements were appropriate, but that on another
occasion a different VA headquarters official advised them that state
veterans' nursing homes could not be reimbursed for care provided to new
Priority Group 8 veterans. Lacking clear guidance on whether this policy
applied to new Priority Group 8 veterans admitted to state veterans'
nursing homes, the Pennsylvania VA medical center staff decided to approve
reimbursement for nursing home services provided to these veterans.

                                  Conclusions

With state veterans' nursing homes now accounting for over half of VA's
nursing home workload, it is especially important that VA have
comprehensive information on the veterans being served and the care
provided in this setting. VA needs this information to develop a baseline
of these data in order to track changes in these variables over time, as
part of VA's strategic planning process. A strategic plan, in turn, would
help VA determine which veterans it will serve and the type of care to
provide across the three settings of its nursing home program as a matter
of policy. In addition, VA will be better able to identify the locations
where it should or should not invest in the construction, acquisition, or
renovation of state veterans' nursing homes to best meet the needs of
veterans.

VA does not compile the comprehensive information it needs on veterans in
state veterans' nursing homes. In response to our 2004 recommendation, VA
has stated that it will report data on the number of veterans who have
long and short stays in state veterans' nursing homes nationwide in fiscal
year 2007. However, VA does not compile other information it needs on
veterans in state veterans' nursing homes nationwide-information on
veterans' gender, age, and priority group status. The availability of
priority group information may differ depending on the extent to which
states require or encourage veterans to enroll for VA hospital and
outpatient medical services. VA can compile available information on
veterans' priority group status for those veterans who have enrolled.
Without comprehensive information on veterans in this setting, VA cannot
determine, for example, how many veterans may be affected by proposals to
change which veterans will be served through VA's per diem reimbursements.
Lacking comprehensive information on veterans served and the care
delivered in state veterans' nursing homes, VA officials have assumed that
the patient populations served in state veterans' nursing homes are
relatively similar nationwide and that this setting provides predominantly
long-stay nursing home care. The fact that we found-contrary to these
assumptions-differences in the veteran populations served by state
veterans' nursing homes, as well as in veterans' lengths of stay,
underscores the importance of VA compiling national data on state
veterans' nursing homes.

In addition, we found that VA's oversight of its per diem reimbursements
could be strengthened. VA needs to ensure that state veteran nursing home
programs are consistent in their billing practices and that VA is paying
appropriately to support the nursing home care veterans receive in state
veterans' nursing homes. However, in our visits to selected states we
found inconsistencies in the application of VA's per diem reimbursement
policy, which have generated uncertainty over which veterans may be
included in per diem reimbursement calculations.

                      Recommendations for Executive Action

To help ensure that VA can conduct adequate strategic planning for nursing
home care and strengthen its administration and oversight of the state
veterans' nursing homes, we recommend that the Secretary of Veterans
Affairs direct the Under Secretary for Health to take the following four
actions:

           o  compile and report data on the age and gender of veterans
           admitted to state veterans' nursing homes;
           o  compile available data on the priority group status of veterans
           in state veterans' nursing homes, and explore with these nursing
           homes options for estimating the number of unenrolled veterans in
           each priority group;
           o  clarify that state veterans' nursing homes may receive
           reimbursement from VA for services provided to veterans who have
           either wartime or peacetime military service; and
           o  clarify VA policy regarding whether state veterans' nursing
           homes may receive reimbursement from VA for nursing home services
           provided to new Priority Group 8 veterans admitted to state
           veterans' nursing homes.

           We received comments on a draft of this report from VA (reproduced
           in app. II). In commenting on the draft, VA stated that it agrees
           with our overall findings and generally concurs with the
           recommendations. VA stated that it concurs in principle that data
           on age, gender, and priority group status of veterans admitted to
           state veterans' nursing homes might be useful for strategic
           planning purposes, but contended that such data would have minimal
           value in strengthening the administration and oversight of state
           veterans' nursing homes. VA stated that it plans to collect
           demographic information on state veterans' nursing home patients
           on a more structured, routine basis. VA indicated that the
           collection of state veterans' nursing home demographic information
           on a more structured, routine basis requires the development of
           new software, which VA anticipates might be completed by the end
           of fiscal year 2007. In addition, VA agreed with our
           recommendations to clarify reimbursement policy on state veterans'
           nursing homes and stated that it plans to do so by issuing a
           national information letter to VA medical centers of jurisdiction
           by the end of fiscal year 2006.

           VA stated that the data we recommended for strategic planning
           might be useful, but in its detailed comments said that VA has no
           authority to direct the location of state homes, restrict
           admissions to them, or limit per diem payments to particular
           categories of veterans. We believe, however, that VA can use these
           data to have substantial impact on strategic planning. First, VA
           can work with state veterans' nursing home programs on a
           cooperative basis to develop data and strategic planning
           initiatives. State veterans' nursing home officials in the four
           states we examined and in the National Association of State
           Veterans Homes indicated to us that they were willing to work with
           VA officials on strategic planning issues. Second, with
           comprehensive data on the three settings of its nursing home
           program-VA-operated nursing homes, privately owned nursing homes
           in the community from which VA purchases services, and state
           veterans' nursing homes-VA can provide Congress with strategic
           planning options and their potential impact on access and costs.
           As a result, decisionmakers can make more informed strategic
           planning decisions regarding VA-financed nursing care.

           VA also commented that our report appears to reflect a
           misunderstanding about the nature of the state veterans' nursing
           home programs and VA's role in overseeing these programs. VA
           pointed out that states make decisions independently about their
           respective programs and as a result have admission criteria,
           financial arrangements, workload, and other aspects of their
           programs that differ. VA also said that it is prohibited by
           statute from intervening in the operations or management of state
           veterans' nursing homes and characterized its role as limited to
           per diem reimbursements, construction grants, and program
           oversight through on-site inspections and financial audits. We
           substantially agree with VA on these points. Indeed, as we stated
           in the draft report, state veterans' nursing homes are managed and
           controlled by state entities, and states have the flexibility to
           establish different admission criteria and financial arrangements
           and choose the composition of their patient populations. Moreover,
           we do not believe that VA needs to directly intervene in state
           veterans' nursing home operations or management to respond to our
           recommendations.

           We are sending copies of this report to the Secretary of Veterans
           Affairs, appropriate congressional committees, and other
           interested parties. We will also make copies available to others
           upon request. In addition, this report will be available at no
           charge on GAO's Web site at http://www.gao.gov . If you or your
           staff have any questions about this report, please contact me at
           (202) 512-7101 or at [email protected]. Contact points for our
           Offices of Congressional Relations and Public Affairs may be found
           on the last page of this report. GAO staff who made major
           contributions to this report are listed in appendix III.

           Laurie E. Ekstrand Director, Health Care

           To address the reporting objectives, we reviewed available
           national data on state veterans' nursing homes and obtained
           information from state veterans' nursing home programs in four
           states: Florida, Maine, Oklahoma, and Pennsylvania. We selected
           these states to reflect regional variations, differences in
           population density, whether or not state veterans' nursing homes
           in the state are certified for reimbursement by the Centers for
           Medicare & Medicaid Services (CMS), whether the state's nursing
           home program is stable or expanding in size, and whether the
           nursing homes tend to be of older or new construction. We
           discussed our selection with officials from the National
           Association of State Veterans Homes, who provided us with
           additional information on these programs.

           To obtain information on admission criteria for state veterans'
           nursing homes, patients' age and gender, patients' lengths of
           stay, and sources of revenue for nursing home operations, we
           conducted site visits to nine state veterans' nursing homes in
           four states. We interviewed officials who manage the state
           veterans' nursing home programs in the four states. During the
           site visits, we also interviewed staff at the six Department of
           Veterans Affairs (VA) medical centers that perform oversight of
           these nine state veterans' nursing homes and obtained copies of
           VA's inspection protocol and interpretive guidelines for
           conducting oversight.

           In addition to site visits, we used a data collection instrument
           to obtain data regarding age and gender of state veterans' nursing
           home patients, lengths of stay, and to identify sources and
           amounts of revenue used by the four states to finance their
           nursing home operations. We took steps to ensure that data we
           obtained from selected state veterans' nursing homes were
           sufficiently reliable for our purposes. For example, we verified
           the accuracy of state veterans' nursing home programs' data for
           internal consistency and correlated these data to information we
           obtained through interviews with officials and visits to the
           selected states. We also used data from the CMS Nursing Home
           Compare national database to identify states that have state
           veterans' nursing homes certified for Medicare or Medicaid
           reimbursement. For additional information on VA's national per
           diem and construction grant programs, we interviewed VA
           headquarters staff who administer these programs. To augment the
           information we collected, we reviewed state program Web sites and
           state veterans' nursing home program documents. We performed our
           review from December 2004 through March 2006 in accordance with
           generally accepted government auditing standards.

           Laurie E. Ekstrand, (202) 512-7101 or [email protected]

           In addition to the contact mentioned above, James C. Musselwhite,
           Assistant Director; Cheryl A. Brand; Fredrick K. Caison; Krister
           P. Friday; and Steven R. Gregory made key contributions to this
           report.

           VA Long-Term Care: Trends and Planning Challenges in Providing
           Nursing Home Care to Veterans. GAO-06-333T . Washington, D.C.:
           January 9, 2006.

           VA Health Care: Key Challenges to Aligning Capital Assets and
           Enhancing Veterans' Care. GAO-05-429 . Washington, D.C.: August 5,
           2005.

           VA Long-Term Care: Oversight of Nursing Home Program Impeded by
           Data Gaps. GAO-05-65 . Washington, D.C.: November 10, 2004.

           VA Long-Term Care: More Accurate Measure of Home-Based Primary
           Care Workload Is Needed. GAO-04-913 . Washington, D.C.: September
           8, 2004.

           VA Long-Term Care: Changes in Service Delivery Raise Important
           Questions. GAO-04-425T . Washington, D.C.: January 28, 2004.

           VA Long-Term Care: Veterans' Access to Noninstitutional Care Is
           Limited by Service Gaps and Facility Restrictions. GAO-03-815T .
           Washington, D.C.: May 22, 2003.

           VA Long-Term Care: Service Gaps and Facility Restrictions Limit
           Veterans' Access to Noninstitutional Care. GAO-03-487 .
           Washington, D.C.: May 9, 2003.

           Department of Veterans Affairs: Key Management Challenges in
           Health and Disability Programs. GAO-03-756T . Washington, D.C.:
           May 8, 2003.

           VA Long-Term Care: The Availability of Noninstitutional Services
           Is Uneven. GAO-02-652T . Washington, D.C.: April 25, 2002.

           VA Long-Term Care: Implementation of Certain Millennium Act
           Provisions Is Incomplete, and Availability of Noninstitutional
           Services Is Uneven. GAO-02-510R . Washington, D.C.: March 29,
           2002.

           VA Long-Term Care: Oversight of Community Nursing Homes Needs
           Strengthening. GAO-01-768 . Washington, D.C.: July 27, 2001.

           Managing for Results: Critical Issues for Improving Federal
           Agencies' Strategic Plans. GAO/GGD-97-180 . Washington, D.C.:
           September 16, 1997.

           Business Process Reengineering Assessment Guide, Version 3.
           GAO/AIMD-10.1.15. Washington, D.C.: May 1997.

           Agencies' Strategic Plans Under GPRA: Key Questions to Facilitate
           Congressional Review, Version 1. GAO/GGD-10.1.16. Washington,
           D.C.: May 1997.

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                       Agency Comments and Our Evaluation

Appendix I: Scope and Methodology Appendix I: Scope and Methodology

Appendix II: Comments from the Department of Veterans Affairs Appendix II:
Comments from the Department of Veterans Affairs

Appendix III: GAOSt Appendix III: GAO Contact and Staff Acknowledgments

                                  GAO Contact

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Highlights of GAO-06-264 , a report to congressional requesters

March 2006

VA LONG-TERM CARE

Data Gaps Impede Strategic Planning for and Oversight of State Veterans'
Nursing Homes

The Department of Veterans Affairs (VA) provides or pays for veterans'
nursing home care in three settings: VA-operated nursing homes, privately
owned nursing homes in the community from which VA purchases services, and
state veterans' nursing homes. VA supports state veterans' nursing homes
in a number of ways, including reimbursement for a portion of the cost of
providing nursing home services to veterans, issuance of policy guidance,
and oversight of their nursing home operations.

GAO was asked to determine the extent to which VA collects information on
veterans in state veterans' nursing homes and the type of care they
receive, to assess whether VA's reimbursement policy has been applied
consistently, and to identify revenue sources such homes use.

What GAO Recommends

To promote adequate strategic planning and stronger oversight, GAO
recommends that VA compile and report data on state veterans' nursing home
populations and clarify certain aspects of its reimbursement policy. VA
stated that it agreed with GAO's overall findings and generally concurred
with GAO's recommendations.

VA does not compile information on key characteristics of veterans
receiving care in state veterans' nursing homes: veterans' length of stay,
priority group status for VA hospital and outpatient services, age, and
gender. VA needs such information for strategic planning, in order to
develop baseline data of characteristics of veterans in state veterans'
nursing homes and the care provided to them, which can help VA estimate
the proportion of nursing home need it currently meets and the need it may
be asked to meet as the number of older veterans changes over time. Based
on visits to four states-Florida, Maine, Oklahoma, and Pennsylvania-GAO
obtained information on key characteristics of state veterans' nursing
home populations, which showed that these populations differed to varying
degrees across the states. For example, state veterans' nursing homes in
three of the four states generally were providing long-stay care (90 days
or more), but 60 percent of stays in state veterans' nursing homes in
Maine were short (less than 90 days).

GAO also found that certain aspects of VA's per diem reimbursement policy
had not been applied consistently. For example, a VA medical center in one
of the four states GAO visited approved reimbursement only for care
provided to veterans admitted to state veterans' nursing homes who have
had wartime military service. VA's policy does not limit reimbursement on
this basis. GAO also found that VA headquarters officials have not been
consistent in explaining to VA medical centers whether they could approve
reimbursement to state veterans' nursing homes for care provided to
veterans determined to have lowest priority for VA hospital and outpatient
services.

In the states that GAO visited, state veterans' nursing homes rely on VA
and non-VA revenue sources to varying degrees. In fiscal year 2004, per
diem reimbursement from VA accounted for about one-fourth to one-third of
revenues used for veterans' care. In addition to revenue from VA, state
veterans' nursing homes in two of the four states GAO visited received
reimbursement from Medicare and Medicaid for inpatient nursing home care
provided to veterans. State veterans' nursing homes in three of the four
states received funding directly from their states, ranging from 54
percent to 10 percent of revenues used for veterans' care in fiscal year
2004. In all the states GAO examined, the remainder of revenues comes from
veterans' resources, such as Social Security and private pensions.
*** End of document. ***