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Justice, Fairness, Inclusion, and Performance.


Veterans Health Administration Fee Care Program

In March 2011, the U.S. Department of Veterans Affairs (VA) contracted with the Academy for a review of the Veterans Health Administration (VHA)’s Fee Care Program after the department’s Inspector General identified problems with inaccurate payments and inefficient claims processing by the program. Although VHA provides most of its medical services to veterans within its healthcare system, Fee Care pays for veterans to go outside of the VA system when a VA medical center cannot provide a clinical service, when a veteran does not have a VA healthcare facility that is geographically accessible, or in emergencies. Over the past decade, this program has grown significantly to become a critical element of veterans’ clinical care delivery. With projected expenditures of $5.1 billion in FY 2012, the Fee Care program will constitute nearly 10 percent of VA’s veteran healthcare budget. The Academy reviewed relevant reports, studies, and audits of the Fee Care program. Additionally, the Academy conducted targeted interviews with more than 70 knowledgeable individuals, including VA senior leaders, program staff, and officials from other federal and commercial health care payer programs. The Academy study team visited the VHA Chief Field Office and National Fee Care Program Office in Denver; Veterans Integrated Services Networks (VISNs) with consolidated claims processing centers; and VISNs that still process claims in individual medical centers.

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Key Findings

The Academy Panel found that the corporate management of the Fee Care Program has improved significantly over the last several years. However, the program continues to face major challenges, including VA having a limited understanding of the quality of services procured through the program and their costs; erroneous payments at unacceptably high levels; error rates greater than comparable federal programs; and program productivity varying widely across operating sites.


Based on the findings outlined in a White Paper, the Panel recommended that VHA consolidate its Fee Care Program from the more than 100 claims processing locations to no more than 3 to 5 strategically located regional sites; senior VA officials should provide clearer policy direction about performance goals and expectations for purchased care; and VHA should procure and implement an enterprise-wide technology solution that would reduce errors and increase efficiency.

Study Fellows