U.S. Overpaying for Veterans' Healthcare

Cheryl Clark, June 26, 2012

The federal government is wasting more than $3.2 billion a year because it is paying twice to provide the same care for veterans, once through capitated rates to Medicare Advantage plans, and again to finance the VA healthcare system, which actually provides the care.

That's according to a report in the Journal of the American Medical Association, which found that the Veterans Healthcare System spent $13 billion—from 1.3 billion in 2004 to $3.2 billion in 2009—providing care for 1.25 million "dual-eligible" vets covered by Medicare Advantage plans.

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"The Medicare Advantage plan is being paid to provide comprehensive care, but they provided no care (or only partial care), and still are able to pocket the difference," says Kenneth Kizer, MD, one of the study's authors and the former Under Secretary for Health in the U.S. Department of Veterans Affairs between 1994 and 1999.

Because of their military service, the system allows veterans to choose between receiving care through a Medicare Advantage Plan or through the VA. "They may live far away from the VA, in rural areas, or the VA may have a waiting list for elective surgical procedures," Kizer says. "And since they do have choices, they can utilize what works best for them."



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