VA Community Care and Medicare Reimbursement Comparison for Top Ten Ophthalmic Procedures

The views expressed in this article are those of the authors and do not necessarily reflect the position or policy of the Department of Veterans Affairs or the United States government.

This research was supported by funding from Research to Prevent Blindness, New York, New York.

Congress enacted the United States Department of Veterans Affairs (VA) Maintaining Internal Systems and Strengthening Integrated Outside Networks (MISSION) Act in June of 2018. In addition to increasing access to care at VA facilities and expanding benefits for caregivers, the MISSION Act aimed to improve availability of care for enrollees from the private sector (officially termed community care by the VA). Some strategies intended to achieve this goal include the establishment of maximal travel and wait time criteria as well as the option of allowing veterans to elect community care when pertinent quality standards are not met at a designated VA facility. In 2020, $15.2 billion was allocated for community care, amounting to nearly 7% of the total VA budget, and the VA expects that this allotment will increase to $20.1 billion by fiscal year 2022.(1) These funds are managed primarily by two private sector entities: Optum Public Sector Solutions (a United Health Care Group subsidiary) for Community Care Network (CCN) Regions 1–3, and TriWest Healthcare Alliance for CCN Regions 4 and 5.(2-4)

Methods and Results

Considering the evolving landscape of government-payer health systems in the United States, it is worthwhile to examine how the recently modified community care program guidelines translate in practice—especially when compared to other federal programs. To this end, we investigated how reimbursement rates for the VA community care program compare with those for Medicare in fiscal year 2020. Table 1 shows average VA fees and Medicare reimbursement rates for the 10 most common ophthalmic procedures. Current national mean Medicare reimbursements (i.e., physician and facility fees, patient copayments) were obtained through the Procedure Price Lookup tool for both hospital outpatient and ambulatory surgical center settings, and VA reimbursement data were obtained from the 2020 VA National Fee Schedule.(5,6) The VA reimbursement schedule is site-specific, allowing for variability calculations that were not possible for Medicare data. However, the VA schedule does not distinguish between hospital outpatient and ambulatory surgical center settings. Any reimbursements in the VA schedule with CPT modifiers indicative of care transfer or unrelated procedures were excluded from our calculations.

Upon analysis, we identified that negotiated community care fees regularly exceed their respective Medicare reimbursements—a relationship that holds true across both outpatient hospital and surgical center settings. One pertinent example of this trend is seen with intravitreal injections, the most commonly performed ophthalmic procedure in our dataset. The average cost of this procedure was 4.5-fold higher under the VA fee schedule as compared with Medicare surgical center reimbursement ($662 versus $147), with the third quartile exceeding mean Medicare reimbursement by a factor of 5.4. Likewise, the average VA reimbursement for the second most commonly performed procedure, routine cataract surgery, was higher than that of Medicare by a factor of 2.1 ($3235 versus $1569), with the third quartile exceeding mean Medicare reimbursement by a factor of 2.6.

Discussion

Several explanations for these disparities are possible. One possibility is the enactment of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which aimed to lower Medicare expenditures by transitioning reimbursements away from a fee-for-service model and toward a more value-based approach. MACRA ended the use of the sustainable growth rate formula and led to the establishment of the Quality Payment Program (QPP), which created incentive-based reimbursement plans such as the Merit-based Incentive Payment System (MIPS).(7) By adjusting reimbursements based on a composite score that considers quality (45% of score), promotion of interoperability (25%), improvement activities (15%), and cost (15%), MIPS encourages the delivery of high-quality care that is also cost-effective.(8,9) Within the delivery of eye care specifically, the use of MIPS scores is particularly helpful, because it allows for quality and value comparisons between ophthalmology and optometry for applicable procedures—ensuring that the most clinically and economically appropriate care decision can be made.(10) Additionally, the QPP could have further contributed to price disparities with its introduction of Advanced Alternative Payment Models (APMs), which offer an alternate avenue for Medicare providers to commit to delivering high-value coordinated care. Two examples of advanced APMs are the Bundled Payments for Care Improvement (BPCI) Advanced and Comprehensive Primary Care Plus (CPC+).(11) Lastly, the existence of managed care plan options within Medicare may serve as yet another driver of the variance in fee schedules.

The substantial price disparity between VA community care and Medicare reimbursements has important economic consequences that will be compounded by the growing VA budget. A 2018 Congressional Budget Office report predicted that, with expanding MISSION Act expenditures in consideration, the VA budget will grow by 2.6% above the rate of inflation annually until 2028 if current policies are extended.(12) The 2020 VA budget exceeded the Congressional Budget Office projection by $14.1 billion. The proposed 2021 VA budget therefore was raised by the Congressional Budget Office to $25.1 billion (both figures adjusted for inflation). It is estimated that over half of the increase is due to the rising costs of the healthcare program. It is important to be aware of how comparatively elevated community care expenditures can contribute to the progression of this trend.(12)

To ensure effective budget allocation and the success of the community care program, the VA can employ a number of cost-reduction strategies. One of those would be adopting some of the aforementioned incentive-based and managed care reimbursement models from Medicare. This is particularly important as the utilization of private sector services continues to grow, with the Government Accountability Office estimating that community care expenditures will rise to $21.3 billion by 2022, an increase of 45% from fiscal year 2018.(13)

Conclusions

In summary, comparison of VA community care with Medicare reimbursement data reveals that community care expenditures regularly exceed those of Medicare for 10 common ophthalmic procedures. Considering that additional funding for community care reduces the budget available for internal VA healthcare improvements, it will be crucial to strike a decisional balance that ensures the delivery of both high-quality and cost-effective care for veterans. Further research is suggested to determine which of the strategies we have suggested could be most effective in improving community care value and reducing the price disparity with Medicare. Additionally, future studies should compare clinical outcomes between community care and Medicare to determine whether a correlation exists relative to expenditures.

References

1. U.S. Department of Veterans Affairs, Office of the Budget. Fiscal Year (FY) 2021 Budget Submission. In Brief, Table Veterans Health Administration and Medicare Care, Appropriations and Collections (BiB-8). Veterans Community Care Program. www.va.gov/budget/docs/summary/fy2021VAbudgetInBrief.pdf. Accessed November 27, 2020.

2. Optum Serve. www.optum.com/business/solutions/government/federal.html Accessed November 27, 2020.

3. Tri-West Healthcare Alliance. www.triwest.com/en/about-triwest/. Accessed November 27, 2020.

4. U.S. Department of Veterans Affairs. Fact Sheet: Community Care Network–Regions 1-4. www.va.gov/COMMUNITYCARE/docs/pubfiles/factsheets/FactSheet_26-03.pdf . Accessed November 27, 2020.

5. Centers for Medicare and Medicaid Services. Price look-up. www.medicare.gov/procedure-price-lookup/ . Accessed October 12, 2020.

6. U.S. Department of Veterans Affairs. Community Care Fee Schedule. www.va.gov/COMMUNITYCARE/revenue_ops/Fee_schedule.asp . Accessed October 12, 2020.

7. Centers for Medicare and Medicaid Services. Quality Payment Program. www.cms.gov/Medicare/Quality-Payment-Program/Quality-Payment-Program . Accessed November 28, 2020.

8. Centers for Medicare and Medicaid Services Quality Payment Program. MIPS Overview. https://qpp.cms.gov/mips/overview . Accessed November 28, 2020.

9. Physicians Advocacy Institute. MIPS Scoring Overview. www.physiciansadvocacyinstitute.org/Portals/0/assets/docs/MIPS-Pathway/MIPS%20Scoring%20Overview.pdf . Accessed November 28, 2020.

10. Sheth N, French DD, Tanna AP. Merit-Based Incentive Payment System scores in ophthalmology and optometry. Ophthalmology. 2020;S0161-6420.

11. Centers for Medicare and Medicaid Services Quality Payment Program. Advanced Alternative Payment Models (APMs). https://qpp.cms.gov/apms/advanced-apms . Accessed November 28, 2020.

12. U.S. Congressional Budget Office. Possible Higher Spending Paths for Veterans’ Benefits. www.cbo.gov/publication/54881 . Accessed November 28, 2020.

13. U.S. Government Accountability Office. VA Health Care: additional steps could help improve community care budget estimates. www.gao.gov/products/GAO-20-669 . Accessed November 29, 2020.