VA Long-Term Care: Trends and Planning Challenges in Providing Nursing Home Care to Veterans
Published: 2006-01-09T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Department of Veterans Affairs (VA) operates a nursing home program that provides or pays for veterans' care in three nursing home settings: VA-operated nursing homes, community nursing homes, and state veterans' nursing homes. In addition, veterans needing nursing home care may also receive it from non-VA providers that are not funded by VA. VA is faced with a large elderly veteran population, many of whom may be in need of nursing home care. In 2004, 38 percent of the nation's veteran population was over the age of 65, compared with 12 percent of the general population. The Veterans Millennium Health Care and Benefits Act (Millennium Act) of 1999 and VA policy require that VA provide nursing home care to certain veterans. This statement focuses on VA's nursing home program and trends in nursing home expenditures, trends in the number of patients served, or "patient workload," and key challenges VA faces in planning for nursing home care for veterans. To examine these trends, GAO updated information from prior work with spending and patient workload data for fiscal year 2005 that VA provided. In a November 2004 report, GAO presented spending and patient workload data through fiscal year 2003. GAO discussed the updated information with VA and incorporated comments as appropriate.
section_title: What GAO Found
paragraphs: VA's reported overall nursing home care expenditures in its three settings increased from $2.3 billion to almost $3.2 billion from fiscal year 2003 through fiscal year 2005. VA officials attributed the expenditure increase from fiscal year 2003 to fiscal year 2005, in part, to a change in the cost accounting system used to develop expenditure totals for each nursing home setting. Based on VA's reported expenditures, VA-operated nursing homes continued to account for about three-quarters of VA's overall nursing home care expenditures in fiscal year 2005, as they did in fiscal year 2003. In fiscal year 2005, 77 percent of nursing home care expenditures were accounted for by VA-operated nursing homes, compared to 73 percent in 2003. VA spent the remainder on state veterans' nursing homes and community nursing homes. From fiscal year 2003 through fiscal year 2005, the percentage of overall expenditures for state veterans' nursing homes declined from 15 to 12 percent and the percentage of overall expenditures for community nursing homes declined from 12 to 11 percent. VA's overall patient workload in nursing homes increased to an average of 34,375 patients per day by fiscal year 2005, 3.5 percent above the fiscal year 2003 workload. State veterans' nursing homes accounted for over half of VA's patient workload in fiscal year 2005. The workload percent is higher than the 12 percent expenditure in state veterans' nursing homes partly because VA pays on average about one-third of the costs for care veterans receive in state veterans' nursing homes, compared to the full cost in other settings. From fiscal year 2003 through fiscal year 2005, the percentage of workload provided in state veterans' nursing homes increased from 50 to 52 percent. In contrast, the percentage of patient workload provided in VA-operated nursing homes declined from 37 to 35 percent. The percentage of workload in community nursing homes stayed the same at 13 percent. VA faces two key challenges in planning for the provision of nursing home care. The first challenge is estimating who will seek care from VA and what their nursing home care needs will be. This includes estimating the number of veterans that will be eligible for nursing home care, based on law and VA policy, and the extent to which these veterans will be seeking care for short-stay postacute needs or long-stay chronic needs. A second key challenge VA faces is determining whether it will maintain or increase the proportion of nursing home care demand it meets in each of the three nursing home settings or whether veterans will need to rely more on other non-VA nursing home care providers that are funded by other programs, such as Medicaid and Medicare.

section_title: Letter
paragraphs: We are pleased to be here today as you discuss issues regarding the  Department of Veterans Affairs (VA) health care program for veterans.  One important part of that program is nursing home care, which accounts  for about 9 percent of VA’s health care expenditures. The VA nursing home  program provides care in three settings. It operates its own nursing homes  in 134 locations, including a nursing home in Honolulu; it pays for care  under contract in non-VA nursing homes, referred to as community  nursing homes, including two community nursing homes on the island of  Oahu; and it pays about one-third of the costs per day for veterans in state  veterans’ nursing homes, one of which will be built in Hilo. In addition,  veterans needing nursing home care may also receive it from non-VA  providers that are not funded by VA. In its three settings, a range of  nursing home services is provided to veterans, including short-stay  postacute care for patients recovering from a condition such as a stroke to  long-stay care for patients who cannot be cared for at home because of  severe, chronic physical or mental limitations. VA nursing home care is  part of a continuum of long-term care services that VA provides, including  services to veterans in the community and in veterans’ own homes.
As you know, meeting veterans’ nursing home care needs is a key issue for  VA nationally, and here in Hawaii, because of the large elderly veteran  population, many of whom are in need of such care. Nationwide, the issue  of meeting nursing home needs is even more urgent for the veteran  population than for the general population because the veteran population  is older. In 2004, 38 percent of the nation’s veteran population was over  the age of 65, compared with 12 percent of the general population.  Similarly, in Hawaii, 38 percent of the veteran population was over the age  of 65, compared with almost 14 percent of the general population.
In my remarks today I will discuss trends in VA’s overall nursing home  care expenditures, trends in the number of patients served, or “patient  workload,” and key challenges VA faces in planning for nursing home care  for veterans. Examination of data on trends in the provision of nursing  home care and of challenges VA faces in planning for nursing home care is  important for oversight and strategic planning. Examination of these data  is also useful in assessing whether the nursing home program is meeting  current goals. My comments today are based primarily on work we have  previously completed. We updated information from our prior work with  spending and patient workload data for fiscal year 2005 that VA provided.  Thus we present the most current information available at the time of our  November 2004 report alongside the most current information available  now to assess trends between these two points in time. For fiscal year  2005, VA used a different cost accounting system to develop expenditure  totals for each nursing home setting. VA told us that the accounting system  used in fiscal year 2005 would result in higher expenditures than the  accounting system VA used in fiscal year 2003. VA could not provide the  2005 expenditure totals using the 2003 cost accounting system, which  could be used to determine the extent to which the change in expenditures  resulted from real changes in the level of nursing home care expenditures  or from the change in cost accounting systems. As in our previous work,  we measured patient workload by using the average daily census, which  reflects the average number of veterans receiving nursing home care on  any given day during the course of the year. In doing our work, we  discussed the updated information with VA, determined the information  was adequate for our purposes, and incorporated comments from VA as  appropriate. We conducted our review from December 2005 through  January 2006 in accordance with generally accepted government auditing  standards.
In summary, VA’s reported overall nursing home care expenditures in its  three settings increased from $2.3 billion to almost $3.2 billion from fiscal  year 2003 through fiscal year 2005. VA officials attributed the expenditure  increase from fiscal year 2003 to fiscal year 2005, in part, to a change in the  cost accounting system used to develop expenditure totals for each  nursing home setting. Based on VA’s reported expenditures, VA-operated  nursing homes continued to account for about three-quarters of VA’s  overall nursing home care expenditures in fiscal year 2005, as they did in  fiscal year 2003. In fiscal year 2005, 77 percent of nursing home care  expenditures were accounted for by VA-operated nursing homes,  compared to 73 percent in 2003. VA spent the remainder on state veterans’  nursing homes and community nursing homes. From fiscal year 2003  through fiscal year 2005, the percentage of overall expenditures for state  veterans’ nursing homes declined from 15 to 12 percent and the  percentage of overall expenditures for community nursing homes declined  from 12 to 11 percent.
VA’s overall patient workload in nursing homes increased to an average of  34,375 patients per day by fiscal year 2005, 3.5 percent above the fiscal  year 2003 workload. State veterans’ nursing homes accounted for over half  of VA’s patient workload in fiscal year 2005. The workload percent is  higher than the 12 percent expenditure in state veterans’ nursing homes  partly because VA pays on average about one-third of the costs for care  veterans receive in state veterans’ nursing homes, compared to the full  cost in other settings. From fiscal year 2003 through fiscal year 2005, the  percentage of workload provided in state veterans’ nursing homes  increased from 50 to 52 percent. In contrast, the percentage of patient  workload provided in VA-operated nursing homes declined from 37 to   35 percent. The percentage of workload in community nursing homes  stayed the same at 13 percent.
VA faces two key challenges in planning for the provision of nursing home  care. The first challenge is estimating who will seek care from VA and  what their nursing home care needs will be. This includes estimating the  number of veterans that will be eligible for nursing home care, based on  law and VA policy, and the extent to which these veterans will be seeking  care for short-stay postacute needs or long-stay chronic needs. A second  key challenge VA faces is determining whether it will maintain or increase  the proportion of nursing home care demand it meets in each of the three  nursing home settings or whether veterans will need to rely more on other  non-VA nursing home care providers that are funded by other programs,  such as Medicaid and Medicare.
subsections: section_title: Background
paragraphs: VA has provided nursing home care to veterans for over 40 years. The  Veterans Millennium Health Care and Benefits Act (Millennium Act) made  important changes in VA’s nursing home program. This act required that  through December 31, 2003, VA provide nursing home care to veterans  with a service-connected disability rating of 70 percent or greater,  veterans requiring nursing home care because of a condition related to  their service, and veterans who were receiving care in a VA nursing home  on November 30, 1999. Subsequent law extended these provisions through  December 31, 2008. VA also has established a policy to provide nursing  home care to veterans with a 60 percent service-connected disability rating  who also were classified as unemployable or permanently and totally  disabled. For all other veterans, VA provides care in VA-operated nursing  homes and contract community nursing homes on a discretionary basis,  depending on available resources, with certain patients having higher  priority, including veterans who require postacute care after a hospital  stay. VA pays a portion of the cost to treat veterans who seek care in state  veterans’ nursing homes.
The state veterans’ nursing homes receive VA funds as part of their  participation in VA’s program. As of fiscal year 2005, 116 state veterans’  nursing homes in 44 states and Puerto Rico received payment from VA to  provide care. In fiscal year 2005, VA paid $59.36 per day per veteran to  these state veterans’ nursing homes and awarded grants to states for  renovations to existing facilities or construction of new state veterans’  homes. States are responsible for obtaining financing sources to pay for  their portion of veterans’ daily cost of care and for their portion related to  renovations to existing facilities or construction of new state veterans’  homes.
Most veterans, however, do not receive their nursing home care from the  VA program but instead receive it from other providers. Care from others  includes both long-stay nursing home care to assist with daily activities,  such as eating and bathing, and short-stay care requiring skilled nursing  home care following hospitalization. For veterans who do not receive their  nursing home care from the VA program, care is financed by programs  such as Medicaid, Medicare, private health or long-term care insurance, or  “self-financing” by the patients. States administer Medicaid programs that  include coverage for long-stay nursing home care. State Medicaid  programs are the primary funders of nursing homes, and self-financing is  the next most common source. Medicare primarily covers acute care  health costs and therefore limits its nursing home coverage to short stays.  Private health insurance pays for a smaller portion of nursing home  expenditures than the other three main sources.
section_title: Reported Overall Nursing Home Expenditures Increased, with VA- Operated Nursing Homes Continuing to Account for Almost Three-Quarters of Expenditures
paragraphs: VA’s reported overall nursing home care expenditures increased from $2.3  billion to almost $3.2 billion from fiscal year 2003 through fiscal year 2005.  (See table 1.) Expenditures increased in each nursing home setting. From  fiscal year 2003 through fiscal year 2005, expenditures increased by $743  million in VA-operated nursing homes, $80 million in community nursing  homes, and $30 million in state veterans’ nursing homes. VA officials  attributed the expenditure increase from fiscal year 2003 to fiscal year  2005, in part, to a change in the cost accounting system used to develop  expenditure totals for each nursing home setting.
Based on VA’s reported nursing home care expenditures, VA-operated  nursing homes continued to account for about three-quarters of VA’s  overall nursing home care expenditures in fiscal year 2005, as they did in  fiscal year 2003. (See fig. 1.) In fiscal year 2005, 77 percent of nursing home  care expenditures were accounted for by VA-operated nursing homes,  compared to 73 percent in 2003. From fiscal year 2003 to fiscal year 2005,  the percentage of overall expenditures for state veterans’ nursing homes  and community nursing homes declined. The percentage of overall  expenditures for state veterans’ nursing homes declined during this period  because expenditures in VA-operated nursing homes increased more  rapidly than expenditures for state veterans’ nursing homes. Growth in the  percentage of overall nursing home expenditures accounted for by VA- operated nursing homes, as well as the decline in community nursing  homes during this 3-year period, was similar to the pattern we observed  from fiscal year 1998 through fiscal year 2003. In contrast, the percentage  of overall nursing home expenditures accounted for by state veterans’  nursing homes increased in the prior period, but decreased from fiscal  year 2003 through fiscal year 2005.
section_title: Overall Patient Workload Increased Slightly, with State Veterans’ Nursing Homes Continuing to Account for about Half of VA’s Overall Patient Workload
paragraphs: VA’s overall patient workload in all three nursing home settings, as  measured by average daily census, increased to an average of 34,375  patients per day by fiscal year 2005, 3.5 percent above the fiscal year 2003  workload. (See table 2.) However, the small increase in overall workload  masked different workload trends in VA’s three settings. Strong growth in  state veterans’ patient workload offset a small increase in community  patient workload and a decline in VA-operated patient workload. From  fiscal year 2003 through fiscal year 2005, average daily patient workload in  the nursing homes VA operated declined by 215, whereas workload in  community nursing homes increased by 221 and workload in state  veterans’ nursing homes increased by 1,155. The continued strong growth  in workload in state veterans’ nursing homes largely contributed to growth  in overall patient workload during this 3-year period and was consistent  with the trends that we observed from fiscal year 1998 through fiscal year  2003.
The percentage of workload provided in state veterans’ nursing homes  continued to account for about half of VA’s overall patient workload,  increasing from 50 percent in fiscal year 2003 to 52 percent in fiscal year  2005. In contrast, the percentage of patient workload provided in VA- operated nursing homes declined. The percentage provided in community  nursing homes stayed the same. (See fig. 2.) In fiscal year 2005, state  veterans’ nursing homes accounted for over half of VA’s overall workload,  and they accounted for 12 percent of overall expenditures for patient care.  The relatively low proportion of expenditures can be explained in large  part by VA’s per-diem rate for care in state veterans’ nursing homes, which  on average accounts for about one-third of the cost for care in this setting.  Continued growth in the percentage of overall patient workload accounted  for by state veterans’ nursing homes during this 3-year period was similar  to the pattern we observed from fiscal year 1998 through fiscal year 2003.
section_title: VA Faces Two Key Challenges in Planning for Nursing Home Care
paragraphs: VA faces two key challenges in planning for the provision of nursing home  care. The first challenge is estimating who will seek care from VA and  what their nursing home care needs will be. To do this, VA will need to  estimate the number of veterans that will be eligible for nursing home care  based on the Millennium Act and VA policy or that will be able to receive  such care on a discretionary basis, based on available resources.  Moreover, VA will need to estimate the extent to which these veterans will  be seeking care for short-stay postacute needs or long-stay chronic needs.  To meet this challenge, VA needs to establish a baseline for current  nursing home needs being met by obtaining more complete information on  the eligibility of veterans currently receiving services and on whether they  are using short-stay or long-stay nursing home care. Although VA collects  data on eligibility and length of stay for its VA-operated nursing homes, it  lacks comparable data on eligibility and length of stay for state veterans’  nursing homes and on length of stay for community nursing homes. We  recommended in November 2004 that VA work to close this gap. VA  agreed to do so, but has not fully implemented our recommendations. VA  has begun to collect and report eligibility data on veterans receiving care  in VA community nursing homes. Data on eligibility and length of stay for  state veterans’ nursing homes and community nursing homes are  especially critical because these two settings account for almost two- thirds of VA’s overall nursing home workload. Without these data, VA does  not know how the three settings in combination are being used to serve  veterans of different eligibility, and what proportion of short-stay and long- stay needs are being met in all three settings. As a result, VA does not have  a baseline from which to estimate future demand for nursing home care in  each setting as the overall veteran population and its needs change over  time.
A second key challenge VA faces is determining whether it will maintain or  increase the proportion of nursing home care demand it meets in each of  the three nursing home settings or whether veterans will need to rely more  on other non-VA nursing home care providers that are funded by other  programs, such as Medicaid and Medicare. To meet this challenge, VA  needs to make policy determinations concerning which veterans it will  provide nursing home care to in the future and the mix of short-stay and  long-stay services it will offer. For example, to what extent will VA  continue to provide nursing home care to veterans in addition to those  that it is required to serve under the Millennium Act? To what extent will  VA provide short-stay nursing home care, and to what extent will it  provide long-stay nursing home care? VA told us that such policy decisions  have not been made. These policy decisions are needed to establish  criteria to be used to identify which veterans VA will serve and what  nursing home services it will offer as a matter of policy, in addition to  those required by law. Then VA can begin to generate the information it  needs for planning. This may include, for example, how many nursing  homes are needed in each setting and where they should be located.
VA is working on these challenges and has developed a draft long-term  care strategic plan. Completing the long-term care strategic plan could  help VA determine how to maximize the use of resources for meeting  nursing home needs of veterans across the country in each of the three  nursing home settings. VA has not given a timeline for completion of the  long-term care strategic plan. In May 2004, the Secretary of Veterans  Affairs acknowledged that a strategic plan would be necessary to help  achieve VA’s goals, including ensuring that veterans have access to an  appropriate range of services.
Mr. Chairman, this concludes my prepared remarks. I will be pleased to  answer any questions you or other Members of the Committee may have.
section_title: Contact and Acknowledgments
paragraphs: For further information, please contact Laurie E. Ekstrand at (202) 512- 7101 or ekstrandl@gao.gov. Individuals making key contributions to this  testimony include James C. Musselwhite, assistant director, Roseanne  Price, and Thomas A. Walke.
section_title: Related GAO Products
paragraphs: 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.
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