The initiative is centered on two five-year contracts worth a combined $9.3 billion and awarded Tuesday to separate health management companies tasked with consolidating and standardizing quality of providers that veterans are referred to when the VA can't deliver in-house care in a timely way.
Health Net Federal Services LLC of Arlington, Va., and TriWest Healthcare Alliance Corp. of Phoenix, Ariz., will establish vast non-VA provider networks across all six VA medical regions, taking three apiece.
Health Net, the current Tricare support contractor for military beneficiaries in that system's North Region, will be responsible for VA regions that span the New England states, the Northern Midwest states and all Eastern seaboard states down through Florida and Alabama. Health Net's combined regional contracts are valued at $5 billion.
TriWest, which supported a provider network across the Tricare West Region until last April, landed VA contracts worth $4.4 billion to provide networks of mental health and specialty care in Western states, including Alaska, Hawaii, and all South Central states from Texas to Mississippi.
State borders don't neatly define VA's six regions, so Health Net will have responsibility for 38 states or parts of states as well as Puerto Rico. TriWest will provide non-VA provider networks for 28 states or parts of states as well as U.S. territories in the Pacific.
Today, when VA facilities lack capacity to provide care in house, patients are referred to private sector care under different purchased care mechanisms including local contracts, sharing agreements and medical care authorizations. This is viewed as inefficient.
Future referrals will be consolidated under PC3 contracts so veterans see more coordinated and timely access to comprehensive networks of providers, all of them screened to meet uniform VA quality standards.
The contractors will provide inpatient and outpatient specialty care and mental health care services when local VA medical centers cannot, either because VA specialists aren't available except after long waits for appointments or because veterans live far from the nearest VA facilities.
The new networks must screen providers to meet or exceed VA standards for credentialing, licensing and specialty care requirements. They must establish customer service and complaint procedures, and they must see patients within a specified period and be geographically convenient. Also, medical files generated by network specialists must be shared with VA promptly to ensure that all VA care is closely monitored and coordinated.
The Veterans Health Administration has conducted a pilot program of non-VA provider networks since 2009 called Project Hero. It involves only four of 56 VISNs (Veteran Integrated Service Networks). Through 2012, it reportedly saved VHA $27 million by more effectively purchasing care from private sector specialists using pre-negotiated rates.
The PC3 contracts will take six months to implement starting next month. Networks are to be operating across the country by April 2014.
Rep. Jeff Miller (R-Fla.) has pushed for Tricare-like provider networks for VA patients since he became chairman of the House Veterans Affairs Committee in 2011, noting how far veterans in his own district have to travel to get VA care, which so many quality providers available locally. Some veteran service organizations have worried that a big shift to private sector care, over time, will dilute VA medical expertise and also impact continuity of care being delivered to veterans having multiple medical conditions.
VHA officials said they heard these concerns during meetings with stakeholders last year and they helped to shape final design of the contracts.
Joseph Violante, legislative director of Disabled American Veterans, said his organization wants VA to ensure all enrolled veterans get "quality medical care when they need it and in the appropriate setting."
That will require VA closely managing any care provided including, as circumstances warrant, care delivered in the private sector, he said.
"DAV would be concerned if VA merely sent veterans out into the private sector without overseeing and managing the medical care to ensure veterans' needs are being met," said Violante.
David J. McIntyre, Jr., chief executive officer and president of TriWest, recalled in a phone interview how the military came to rely more heavily on Tricare support contractors during the Iraq and Afghanistan wars when so many providers in the direct care system had to be deployed.
The new non-VA provider networks will give VA the same sort of flexibility to respond to gaps in timely care including mental health treatments for veterans with post-traumatic stress, McIntyre said.
"The first step for the VA is much like it was for DoD when they started doing Tricare. That is to buy care on an efficient and effective basis across a broad geographic space [and] from one entity that can provide what they need," said McIntyre. It will take a while for VA to figure out its demand for civilian health care and what volume of care should be bought through these networks for maximum quality and efficiency, he added.
"But this gives them the ability, like DoD has, to turn on the spigot pretty quickly if they need to," said McIntyre.
"I hold to the same philosophy I have held for 18 years" operating provider networks for military beneficiaries, McIntyre said. "That is, the government should determine where government resources, taxpayer dollars, optimally are used. And if there's enough demand, the government should provide that service directly."
But there will be times when it is cheaper, and for patients more convenient, for VA to buy care from the civilian networks, said McIntyre.
VA does buy care "in the marketplace right now. They just don't do it on a consolidated basis. And that's what this is going to give them," he said.
"We're there to supplement the direct care system, not to replace it."
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