United States Government Accountability Office

GAO Report to Congressional Requesters

VA LONG-TERM 

CARE 

Data Gaps Impede 

Strategic Planning for 

and Oversight of State 

Veterans’ Nursing 

Homes 

March 2006 

 

GAO-06-264 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

March 2006

VA LONG-TERM CARE

Data Gaps Impede Strategic Planning for 

and Oversight of State Veterans’ Nursing 

Homes 

Highlights of GAO-06-264, a report to 

congressional requesters 

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. 

www.gao.gov/cgi-bin/getrpt?GAO-06-264.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Laurie E. 

Ekstrand (202) 512-7101 or

ekstrandl@gao.gov. 
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 

Page i GAO-06-264 State Veterans’ Nursing Homes 
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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Page ii GAO-06-264 State Veterans’ Nursing Homes 
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. 

 1

VA 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. 

2

Nursing 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. 

Page 1 GAO-06-264 State Veterans’ Nursing Homes 
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 VAoperated 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

 3

See GAO, VA Long-Term Care: Oversight of Nursing Home Program Impeded by Data

Gaps, GAO-05-65 (Washington, D.C.: Nov. 10, 2004). 

4

In 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.

5

See GAO-05-65. 

Page 2 GAO-06-264 State Veterans’ Nursing Homes 
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

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. 

 6

See 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. 

7

VA 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. 

Page 3 GAO-06-264 State Veterans’ Nursing Homes 
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 longterm 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 

Page 4 GAO-06-264 State Veterans’ Nursing Homes 
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. 

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. 

Results in Brief 

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 

Page 5 GAO-06-264 State Veterans’ Nursing Homes 
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 VAdesignated periods of military conflict (wartime veterans). However, VA’s 

policy does not limit per diem reimbursements to such veterans. We also

Page 6 GAO-06-264 State Veterans’ Nursing Homes 
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. 

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

Background 

Page 7 GAO-06-264 State Veterans’ Nursing Homes 
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

 8

As 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. 

Page 8 GAO-06-264 State Veterans’ Nursing Homes 
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 

 9

Activities 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. 

Page 9 GAO-06-264 State Veterans’ Nursing Homes 
skilled nursing services for rehabilitative care following hospitalization or 

serious illness. 

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 

 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 

§ 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. 

Page 10 GAO-06-264 State Veterans’ Nursing Homes 
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

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. 

Page 11 GAO-06-264 State Veterans’ Nursing Homes 
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 

 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.

Page 12 GAO-06-264 State Veterans’ Nursing Homes 
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.

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). 

Selected States Have 

Admission Criteria 

That Differ in Two 

Key Respects 

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. 

a

In 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. 

b

Florida 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 

Page 13 GAO-06-264 State Veterans’ Nursing Homes 
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 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. 

State Veterans’ 

Nursing Homes in 

Selected States Vary 

in the Extent to 

Which They Rely on 

Revenue from VA and 

Other Sources 

 17In this report, state veterans’ nursing home revenue used for patient care does not include 

grants from VA for construction, acquisition, and renovation.

Page 14 GAO-06-264 State Veterans’ Nursing Homes 
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 sources

a

33% 30% 25% 23%

State funds 32% 10% 0 54%

Medicaidb0c22% 37% 0c

Medicare, Parts A & B 0c9%d15%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.

a

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

b

Includes funds provided by states through their Medicaid programs.

c

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

d

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

e

Medicare 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 

Page 15 GAO-06-264 State Veterans’ Nursing Homes 
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’ 

 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. 

Page 16 GAO-06-264 State Veterans’ Nursing Homes 
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. 

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. 

Page 17 GAO-06-264 State Veterans’ Nursing Homes 
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 Compile 

Information on State 

Veterans’ Nursing

Home Populations 

Needed for Strategic 

Planning 

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). 

Page 18 GAO-06-264 State Veterans’ Nursing Homes 
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 longstay 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 

Page 19 GAO-06-264 State Veterans’ Nursing Homes 
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

Page 20 GAO-06-264 State Veterans’ Nursing Homes 
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. 

Page 21 GAO-06-264 State Veterans’ Nursing Homes 
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. 

Page 22 GAO-06-264 State Veterans’ Nursing Homes 
Figure 6: Age Distribution of Veterans in State Veterans’ Nursing Homes, Fiscal 

Year 2004 

0

10

20

30

40

50

60

70

80

90

100

Florida Maine Oklahoma Pennsylvania

Percent

State

Age 85 and over

Age 65 to 84

Under age 65

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

18

65

19

5

74

21

13

69 74

16

16 10

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 

Page 23 GAO-06-264 State Veterans’ Nursing Homes 
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. 

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. 

VA’s Per Diem

Reimbursement 

Policy Has Not Been 

Applied Consistently 

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. 

Page 24 GAO-06-264 State Veterans’ Nursing Homes 
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. 

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. 

Conclusions 

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’ 

Page 25 GAO-06-264 State Veterans’ Nursing Homes 
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. 

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: 

Recommendations for 

Executive Action 

• 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 state veterans’ nursing homes may receive reimbursement 

from VA for services provided to veterans who have either wartime or 

peacetime military service; and 

• 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. 

Page 26 GAO-06-264 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 VAfinanced 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 

Agency Comments 

and Our Evaluation 

Page 27 GAO-06-264 State Veterans’ Nursing Homes 
veterans’ nursing homes and characterized its role as limited to per diem 

reimbursements, construction grants, and program oversight through onsite 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 ekstrandl@gao.gov.

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 

Page 28 GAO-06-264 State Veterans’ Nursing Homes 
Appendix I: Scope and Methodology 

Page 29 GAO-06-264 State Veterans’ Nursing Homes 

Appendix I: Scope and Methodology 

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. 
Appendix II: Comments from the Department of Veterans 

Affairs 

Page 30 GAO-06-264 State Veterans’ Nursing Homes 

Appendix II: Comments from the Department 

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

Affairs 

Page 31 GAO-06-264 State Veterans’ Nursing Homes 
Appendix II: Comments from the Department of Veterans 

Affairs 

Page 32 GAO-06-264 State Veterans’ Nursing Homes 
Appendix III: GAO

St

 Contact and 

aff Acknowledgments

Page 33 GAO-06-264 State Veterans’ Nursing Homes 

Appendix III: GAO Contact and Staff 

Acknowledgments 

Laurie E. Ekstrand, (202) 512-7101 or ekstrandl@gao.gov 

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. 

GAO Contact 

Acknowledgments 
Related GAO Products 

Page 34 GAO-06-264 State Veterans’ Nursing Homes 

Related GAO Products 

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.
Related GAO Products 

Agencies’ Strategic Plans Under GPRA: Key Questions to Facilitate 

Congressional Review, Version 1. GAO/GGD-10.1.16. Washington, D.C.: 

May 1997. 

(290432) Page 35 GAO-06-264 State Veterans’ Nursing Homes 
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