Use of VA and Medicare services by dually eligible veterans with psychiatric problems.

Non-VA services may provide an important alternative to veterans affairs (VA) services for VA patients who are eligible for Medicare coverage, especially in areas with poor geographic access to the VA. As Medicare and the VA are legally prohibited from billing each other for services provided to dually eligible veterans, cost-shifting may occur, especially as the population ages and increasingly more veterans become Medicare eligible. It is of strong interest to understand which VA patients are also obtaining services outside of the VA and how their outside utilization responds to the allocation of VA resources. That is, where access to VA services becomes more limited, do dually eligible veterans increasingly turn to the Medicare sector for their care (substitution), or do they actually receive fewer Medicare services, e.g., due to fewer VA referrals (complementarity)? Veterans 65 and older use Medicare for their medical care (Borowsky and Cowper 1999; Wright et al. 1999; Weeks et al. 2005, 2006), but only one previous study, limited to elderly veterans in northern New England (Weeks et al. 2005), has examined use of Medicare for behavioral health care among dually eligible veterans. The question of cost-shifting and substitution is particularly interesting for veterans with mental health and substance abuse (MH/SA) disorders. The prevalence of mental disorders is generally higher in the VA than in other health care systems, with approximately 29 percent of veterans having at least one MH/SA disorder (Hankin et al. 1999; Piette, Baisden, and Moos 1999). Psychiatric comorbidities are common as well. Although the VA is sometimes viewed as a “provider of last resort” for medical care, due to its limited choice of providers and lack of resources, the limitations of Medicare coverage on behavioral health care (Ettner 1997), in conjunction with the wide array of services provided by VA in this area, makes the VA an indispensable source of care for many veterans with behavioral health problems. The VA operates the largest mental health service delivery system in the nation, servicing over 900,000 veterans annually at a cost of more than $2.5 billion. Special emphasis programs target populations including the severely mentally ill, the homeless, and those with posttraumatic stress disorder (PTSD) and SA problems. Furthermore, the VA provides more comprehensive prescription drug coverage than Medicare, so patients have a strong financial incentive to receive pharmacotherapy from VA providers. Yet, the greater relative distance to VA versus Medicare providers may impede some veterans from taking advantage of VA's unique MH/SA services. Proximity to care has been shown to influence medical utilization in the general population (Nemet and Bailey 2000; Shahain et al. 2000; Arcury et al. 2005) as well as in the VA (Mooney et al. 2000; Fortney et al. 2005). For mental health care, earlier studies found that VA patients living further from VA facilities used fewer VA resources (Fortney et al. 1995, 1998; Rosenheck and Stolar 1998; Druss and Rosenheck 2000), but were unable to determine whether the reduction in the use of VA services was offset by increased Medicare utilization. Another paper found that rural veterans experience changes in policy that restrict access to SA services more dramatically than urban veterans, without substituting private-sector care (Wallace et al. 2007). Similarly, studies have identified a role of distance to provider in determining treatment patterns of Medicare patients with psychiatric conditions (Ettner and Hermann 1997; Ettner 1999; Ettner, Hermann, and Tang 1999), but did not look at crossover between the VA and Medicare among patients who had a choice between the two. A recent study showed that dual eligibles who lived farther from VA hospitals were less likely to rely on VA health care, particularly inpatient care (Hynes et al. 2007). However, this study focused on patient characteristics and did not examine behavioral health care. This research uses a national linked VA-Medicare database to examine health care sector choices among VA patients diagnosed with MH/SA disorders who are dually eligible for Medicare. We focus on the effects of geographic proximity to care on utilization of services in each sector. Our goal is to establish whether veterans with more limited geographic access to VA behavioral health services reduce their utilization of these services and whether their use of Medicare behavioral health services increases or decreases concomitantly. This issue has important policy implications regarding allocation of MH/SA resources within the VA system. If Medicare behavioral health care serves as a substitute for VA care, then an understanding of the nature of the cost-shifting involved is important information for VA managers in their budget allocation decisions. If Medicare services are complementary to VA services, then the VA may need to increase its outreach efforts to identify veterans who are in need of behavioral care but not receiving it.