Research Questions

  1. What authorities and mechanisms does VA have to purchase care?
  2. Are these authorities and mechanisms appropriate for VA's mission of providing health care to veterans?
  3. Should VA have the authority to purchase care through the completion of episodes of care? What constitutes an episode of care?

The Veterans Access, Choice, and Accountability Act of 2014 addressed the need for access to timely, high-quality health care for veterans. Section 201 of the legislation called for an independent assessment of various aspects of veterans' health care. The RAND Corporation was tasked with an assessment of the authorities and mechanisms by which the Department of Veterans Affairs (VA) pays for health care services from non-VA providers. Purchased care accounted for 10 percent, or around $5.6 billion, of VA's health care budget in fiscal year 2014, and the amount of care purchased from outside VA is growing rapidly. VA purchases non-VA care through an array of programs, each with different payment processes and eligibility requirements for veterans and outside providers. A review and analysis of statutes, regulations, legislation, and literature on VA purchased care, along with interviews with expert stakeholders, a survey of VA medical facilities, and an evaluation of local-level policy documents revealed that VA's purchased care system is complex and decentralized. Inconsistencies in procedures, unclear goals, and a lack of cohesive strategy for purchased care could have ramifications for veterans' access to care. Adding to the complexity of VA's purchased care system is a lack of systematic data collection on access to and quality of care provided through VA's purchased care programs. The analysis also explored concepts of "episodes of care" and their implications for purchased care by the VA.

Key Findings

VA's Purchased Care System Is Complex

  • VA has long had the ability to purchase care to fill gaps in capabilities and meet veterans' health care needs. However, the program has evolved in a piecemeal fashion, with inconsistent requirements and conflicting aims.
  • Under the Veterans Choice Act, VA can purchase care from non-VA facilities through the completion of an "episode of care," with a per-authorization limit of 60 days. Future refinements in defining episodes of care may be critical to supporting cost-effective care purchases in the future.
  • There are inconsistencies in purchased care procedures and data collection, particularly at the local level. Local VA facilities handle referral and contract decisions differently, and that could affect both veterans' treatment and VA costs.

The Use of Purchased Care Is Increasing, and the Purchased Care Landscape Is Being Transformed

  • The use of purchased care services has increased steadily since 2002, and the cost to VA has grown alongside this utilization. Purchased care accounted for 10 percent of VA's health care budget in fiscal year 2014, or around $5.6 billion.
  • Numerous changes to VA's authorities and mechanisms have been proposed, planned, and implemented. While the proposed policy changes seek to address many recognized problems, their sheer multiplicity suggests that the landscape of purchased care is not just complex but dynamic, adding to confusion among veterans and providers.

VA Lacks an Overall Strategy for Purchased Care

  • The intended role of purchased care in the delivery of health care to veterans is unclear. Depending on the objectives for purchasing care outside VA, there may be implications for VA's authority to implement changes.

Recommendations

  • Policymakers and VA should articulate a clear strategy for purchased care and a set of goals for how it should be used and how it should fit into VA's broader health care mission.
  • VA should strengthen its data collection on purchased care processes and outcomes to improve monitoring of care provided to veterans. To maintain better oversight and quality, VA should ensure that purchased care contracts include requirements for data sharing, quality monitoring, and care coordination.
  • VA should develop a stronger management structure for purchased care and allocate responsibility and authority to the most appropriate administrative levels. VA leadership should issue clear policies and procedural requirements while allowing some administrative flexibility at the local level.
  • VA should evaluate the third-party contracts for its major purchased care programs. Performance evaluation should be based on explicit criteria, including network strength, process efficiency, and veterans' experiences.
  • VA should consider adopting innovative (but tested) ways to purchase care, including those used by Medicare.
  • Policymakers and VA should resolve inconsistencies in current authorities and provide flexibility for VA to implement a purchased care strategy. VA's purchased care authorities should be consolidated and harmonized to reduce confusion and ambiguity.
  • VA should review and revise how episodes of care are defined to better accommodate veterans' needs.

Table of Contents

  • Part I

    Introduction and Methods

    • Chapter One

      Introduction

    • Chapter Two

      Methods

  • Part II

    Current Authorities, Mechanisms, and Framework for VHA Purchased Care

    • Chapter Three

      Authorities and Mechanisms for Purchased Care

    • Chapter Four

      VA Purchased Care Authorities and Mechanisms in Practice

    • Chapter Five

      Procurement and Episodes of Care

  • Part III

    Considerations for Future VA Purchased Care Authorities and Mechanisms

    • Chapter Six

      A Review of Whether the Secretary Needs New Authorities for Purchased Care

    • Chapter Seven

      Alternative Government Health Care Payer Models

    • Chapter Eight

      Conclusions and Recommendations

  • Appendix A

    Growth in Purchased Care Utilization Rates and Authorizations

  • Appendix B

    Statutory and Regulatory Authorities for the Provision of Purchased Care to Veterans

  • Appendix C

    Responses to Request for Local VA Policy Documents and Data

  • Appendix D

    Facility Survey Questions and Frequency Response Data

  • Appendix E

    Veteran Health Benefits and Priority Grouping

Research conducted by

The research described in this report was sponsored by the U.S. Department of Veterans Affairs and conducted by RAND Health, a division of the RAND Corporation.

This report is part of the RAND Corporation research report series. RAND reports present research findings and objective analysis that address the challenges facing the public and private sectors. All RAND reports undergo rigorous peer review to ensure high standards for research quality and objectivity.

Permission is given to duplicate this electronic document for personal use only, as long as it is unaltered and complete. Copies may not be duplicated for commercial purposes. Unauthorized posting of RAND PDFs to a non-RAND Web site is prohibited. RAND PDFs are protected under copyright law. For information on reprint and linking permissions, please visit the RAND Permissions page.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.