U.S. Overpaying for Veterans' Healthcare

Cheryl Clark, for HealthLeaders Media , June 26, 2012

But half of these veterans are getting significant portions of their care from the federally funded Veterans Affairs healthcare system rather than through their Medicare Advantage network. And 10% go to the VA for all their care.

But Medicare pays Medicare Advantage health plan network collects a monthly amount for each enrollee, regardless of whether the Advantage plan absorbed any costs.

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Kizer, now director of the Institute for Population Health Improvement at UC Davis Health System, says that the way the system is set up, "undermines the concept of being at risk," which the Medicare Advantage plans are supposed to assume in exchange for the monthly capitated payment for each enrollee.

"Another interesting wrinkle is that the majority of these plans are for-profit—nine out of 10—so they're basically getting a federal subsidy to provide care for veterans who are getting the care at the VA, and some might argue that gives them (the Medicare Advantage plans) an advantage in the marketplace."

Kizer adds that because an increasing number of veteran Medicare beneficiaries are choosing Medicare Advantage plans, the amount of healthcare spending absorbed by the VA for their care is at least $4 billion in the current year, and growing annually.

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