Service utilization of veterans dually eligible for VA and Medicare fee-for-service: 1999-2004.

In 1996, the Veterans' Health Care Eligibility Reform Act (the Act) opened up eligibility for Veterans Affairs (VA) health care services to a larger population of Veterans than was previously served. Prior to the Act, Veterans were generally only eligible for VA health care services on the basis of a service-connected disability (H.R. 3118, 1996). Veterans who would have, in the absence of the Act, only been eligible for Medicare now found themselves eligible for health care services through both Medicare and the VA. Thus, some newly-eligible Veterans chose to receive care exclusively through the Medicare system, while some chose to use care exclusively in the VA system and others used care under both systems. The purpose of this paper is to examine how the population receiving care in the VA changed from 1999 to 2004, and how Veterans who found themselves newly eligible for VA and Medicare chose to receive care. The Veterans Health Care Eligibility Reform Act and other VA Policy Changes Following the implementation of the Act, any Veteran could apply for VA health care services. Veterans were assigned to priority groups to determine eligibility and cost-sharing. During the initial implementation of the Act, Veterans were classified into seven priority groups for enrollment eligibility. Assignment to the priority groups is based on level of service-connected disability and income (see Exhibit 1 for detailed criteria). The higher VA priority groups pay no co-payments, while the lower priority groups incur small co-payments. At the beginning of FY 2003 (October 1, 2002), eligibility was further expanded by the addition of higher-income Veterans who were classified into a new priority group 8. However, by January 2003, VA stopped enrolling new Veterans in group 8 (though enrollment was reinstated in June 2009). The expanded VA eligibility allowed many Veterans who had previously been eligible only for Medicare to become eligible for health care services under both VA and Medicare. Furthermore, the Act expanded VA health care services to include a greater emphasis on primary care, mental health care and women's health than had previously been offered through the VA. Exhibit 1 Veterans Administration enrollment category by high (1–6) and low (7–8) priority groups (Jan. 2010) Mechanisms Influencing Choice of Health Care System Conflicting mechanisms can influence the choice to receive care under the VA or under Medicare. Cost-sharing is higher under Medicare fee-for-service (FFS) than under the VA. During the study time period, Medicare FFS required cost-sharing of 20% of charges for most outpatient services, and 50% of charges for mental health and substance abuse treatment (CMS, 2011a), though cost-sharing rates varied based on the type of service. Under the VA system, the level of co-payments can vary by year, priority group, and the type of medical service; many Veterans pay no co-payments and, among those who do, co-payments for outpatient care (including mental health care) have been set at $15 for primary care and $50 for specialty care since 2001 (VA, 2001, 2012). Thus, many patients pay no co-payments under the VA system, and those who do generally incur far less cost-sharing than under Medicare FFS. Beyond cost-sharing, other factors such as convenience and perceived quality may influence the choice of health care system. Distance from a VA facility relative to a Medicare facility might affect a person's choice (Hynes et al., 2007; Petersen et al., 2010). Additionally, the VA may be perceived as providing inferior quality of care compared to community providers, despite the advancements made by the VA in the past twenty years (Longman, 2010). Furthermore, persons who had an established relationship with a Medicare health care provider prior to VA enrollment may want to maintain that relationship. Previous Research on Persons with Dual VA and Medicare Eligibility A number of studies have examined health care utilization among dually-eligible Veterans. Hynes and colleagues (2007) provided one of the first analyses of utilization among dually-eligible Veterans in 1999, and found that Veterans who are Black, who lived closer to a VA facility, or who were assigned to a higher VA priority group, had greater probability of reliance on VA exclusively, while Veterans with greater medical risk were more likely to use services under both the VA and Medicare. The findings regarding distance from a VA facility and VA priority group have been confirmed by others (Petersen et al., 2010; Berke et al., 2009; Maciejewski et al.; 2009, Zhu et al.; 2010). Petersen and colleagues (2010) examined inpatient, outpatient, and overall utilization among dually-eligible Veterans in 2003 and 2004 and found that, while most health conditions were associated with lower reliance on the VA health care system, mental health and substance abuse disorders were associated with higher reliance on the VA system. Liu and colleagues (2010) examined outpatient utilization among dually-eligible Veterans from 2000–2004 and found that, while many VA patients received care under the Medicare system for primary care (30%) and specialty care (60%), very few received mental health care under Medicare (3–4%). Liu and colleagues also found that patients receiving care in VA community-based outpatient clinics (CBOCs) had higher rates of care from Medicare, raising the question of whether the establishment of CBOCs has improved access to care or simply led to fragmented care among that population. Furthermore, Liu and colleagues (2011) found that the population relying exclusively on the VA for primary and specialty outpatient services declined from 2000–2004. Other studies have examined utilization among dually-eligible Veterans with kidney disease (Fischer et al., 2010), dementia (Zhu et al., 2009, 2010), and propensity to enroll in a Medicare managed care plan (Maciejewski et al., 2009). In this study, we examine how the population of Veterans receiving outpatient care in the VA health care system and the health care usage patterns have changed from 1999 to 2004. Throughout the study time period, VA policies have resulted in expanded eligibility, particularly for Veterans without service-connected disabilities. These policies can influence the type of population served at any given time. As clinicians and policymakers seek to understand the utilization choices of this population, understanding trends in service utilization can help to identify areas of unmet health care need, or alternatively, areas in which there are duplications of services.