VA Plan To End Rural Health Program Raises Hospital, Lawmaker Hackles

The U.S. Veteran Affairs Department appears to have no plans to continue a pilot program that it launched three years ago to give rural veterans access to private healthcare, despite calls for its continuance from some providers and lawmakers. Instead, it intends to transition the vets now using the pilot to a different program that some hospitals say puts them at financial risk since it reimburses at rates lower than Medicare’s.

The pilot initiative, known as Project ARCH (Access Received Closer to Home) began in 2011 and allowed some veterans to seek care with a private provider that had contracted with the VA. The pilot was available to veterans in certain areas who resided more than an hour’s drive from the nearest VA healthcare facility providing primary-care services and more than two hours’ drive from the nearest VA facility providing acute hospital care.

The Altarum Institute, a research organization, was hired in 2011 to evaluate the program throughout the pilot, offering tracking information on cost, quality and accessibility of care offered through the non-VA care providers. Depending on its findings, the expectation was the program would expand, the company says. ARCH had a 90% approval rate by veterans, according to Altarum.

But ARCH is coming to an end while lawmakers are working on combining a House and Senate veterans’ health bill that, among other things, would allow veterans to visit private doctors at VA’s expense if they are unable to get an appointment in a timely manner or live more than 40 miles from a VA facility.

Some lawmakers want ARCH to continue because they fear vets now using it could see a lapse in care before any new program is put in place as a result of congressional action. Even if a deal on a bill can be reached, and it passes both houses and is signed by the president by early July, the subsequent rulemaking process to implement the law could be lengthy.

The VA is concerned about its ability to handle the administrative burden of implementation of the non-VA provisions in the House and Senate bills, Philip Matkovsky, assistant deputy undersecretary for health for administrative operations at the Veterans Health Administration, testified Wednesday at a House Veterans’ Affairs Committee hearing.

ARCH was limited to five pilot sites: Billings, Mont.; Farmville, Va.; Flagstaff, Ariz.; Pratt, Kan.; and northern Maine. Had the program expanded, as many as 3.2 million rural veterans now enrolled in the VA healthcare system could have potentially benefited.

The program will end Aug. 29. The VA is creating individual transition plans for each veteran in the pilot, Matkovsky said at the hearing Wednesday. The agency did not release data on how many vets are currently in the program or the amount of money spent on ARCH to date.

The VA feels that an initiative it launched late last year, known as Patient-Centered Community Care, or PC3, will largely fill the void left by ARCH. PC3, among other provisions, provides rural veterans coverage for inpatient and outpatient medical and surgical specialty care. The agency however, is still investigating how to best help those relying on ARCH for primary care, as that’s not currently covered in the PC3 program.

Under PC3, the Veterans Health Administration contracts with managed healthcare organizations Health Net and TriWest to develop and oversee a network of providers who deliver specialty, mental health and limited emergency care.

However, some of the hospital participants in ARCH contend switching to PC3 could hurt their bottom lines. During the Wednesday hearing, Kris Doody, CEO of Cary Medical Center in Caribou, Maine, said that her facility has thus far declined to become part of PC3 because of its low reimbursement rates.

She preferred ARCH, she said, because in it a hospital contracts directly with the VA and receives Medicare equivalent rates. Health Net, which is overseeing PC3 in her area, is offering payments below Medicare rates. Lawmakers anecdotally had heard concerns that this was happening in other parts of the country.

Since Maine already has Medicare rates lower than many other states, it wouldn’t be financially feasible to accept Health Net’s offer, Doody said. A report released earlier this month by the CMS revealed that Maine’s total Medicare expenditures per capita were 17% lower than the national average.

Doody had relayed similar concerns to Sens. Susan Collins (R-Maine) and Angus King (I-Maine), who in turn sent a letter (PDF) June 9 to acting Secretary of Veterans Affairs Sloan Gibson asking that he extend ARCH. Early indications are that PC3 is not being used in Maine, they said.

“PC3 has been operational in Maine for two months, but statistics show that it is not meeting the needs of highly rural veterans who are most in need of this program,” the lawmakers say. “According to the VA’s own data, in the first month of its operation not one veteran in Maine had used PC3 during this time period. We are concerned that the low rate of reimbursement offered by Health Net could preclude PC3 from being an adequate successor to ARCH.”

Collins and King sent another letter a few days later co-signed by Sens. Jerry Moran (R-Kan.) Jon Tester (D-Mont.) and John McCain (R-Ariz.) also pushing to continue ARCH.

“For reasons we do not understand, the VHA is choosing—at VHA’s own initiative—to end this successful program,” the letter (PDF) reads. “All along, the VHA gave us the impression that it was waiting on analysis about the success of ARCH to inform its decision about extending the program. We are deeply disappointed by this breach of trust because those who suffer from this recklessness are veterans.”

Lori Forster

Lori is the Executive Creative & Communications Director for PSN and and article contributor for the Premier Specialty Network website.