Overhaul Veterans Care by Working with More Private-Sector Firms, Panel Says

A congressionally chartered panel released its vision on Wednesday for a vastly different veterans health care system that integrates more private sector facilities and eases the hiring and firing of employees, but declined to strip the Veterans Health Administration of its status as a government agency.

The Commission on Care, created by a 2014 Veterans Affairs Department reform law to provide future recommendations for the health care component that houses 90 percent of VA’s employees, issued its final report calling for a “transformational” reform of VHA. The report contained 17 broad recommendations — each filled with a series of more specific suggestions — focusing on three areas: health care delivery; governance, leadership and workforce; and eligibility.

Even before the commission wrapped up its work, alternative proposals emerged in Congress, the veteran community, from representatives of the VA workforce and even within the panel itself. Only 12 of the 15 commissioners signed their name on the report, with the remaining members issuing a dissenting view the commission’s chairwoman declined to include in the final document.

The commission proposed a new VHA Care system, made up of government-owned, VA and Defense Department facilities, as well as “VHA-credentialed community providers.”

Those partners would be “fully credentialed with appropriate education, training and experience, provide veteran access that meets VHA standards, demonstrate high-quality clinical and utilization outcomes, demonstrate military cultural competency, and have capability for interoperable data exchange,” the commission said.

The panelists noted a lot of the VA health care system functions well, but the problems were too deeply embedded for cosmetic fixes.

“The recommendations in this report acknowledge that although VHA provides health care that is in many ways comparable or better in clinical quality to that generally available in the private sector,” the commissioners wrote, “it is inconsistent from facility to facility, and can be substantially compromised by problems with access, service, and poorly functioning operational systems and processes.”

The new care system would be phased in throughout the country and use “contemporary payment approaches” to reimburse private clinicians. The commission said distance and wait time criteria for outside care eligibility established by the 2014 Veterans Access, Choice and Accountability Act should be eliminated and service-connected disabled veterans should receive top appointment priority.

In a controversial recommendation, the commission called for a VA equivalent of the Pentagon’s Base Realignment and Closure process so the department could divest itself from unneeded buildings. As they have for many of the proposals floated by commissioners, lawmakers and others in recent months, the American Federation of Government Employees and other federal employee and veteran advocates lobbied fervently against closing down VA facilities.

The panel acknowledged, however, it intentionally designed its proposals to disrupt the status quo.

“The commission does not intend for these recommendations to be piecemeal fixes to everyday problems,” it wrote. “Instead, they are presented as the foundation for far-reaching organizational transformation that adheres to a systems approach.”

A new, 11-member board of directors would supervise the care system to direct the transformation and set long-term strategy. The directors would be nominated by the care system chief and confirmed by the president for a five-year term, and serve an additional five years pending the board’s approval.

The commission also called for a new performance management system that could benchmark VHA leaders to the private sector and create performance measures that reward top performers with awards. The panel suggested Congress empower VA with more direct hiring authority and temporary rotations to allow more health experts to cycle through the department.

The final report included a proposal to shift all 300,000 VHA employees away from Title Five and onto Title 38 to provide the department with more flexibility in pay, benefits and recruiting. While the change would be designed to ease hiring and firing at the agency, the panel said the new system should maintain due process appeal rights and merit system principles. It suggested, however, removing the Office of Personnel Management’s oversight of the new system.

The commission said Congress and VA should craft the new structure in consultation with unions, employees and managers. The panelists deplored the current system as antiquated and rigid.

“VHA lacks competitive pay, must use inflexible hiring processes, and continues to use a talent management approach from the last century,” they wrote. “A confusing mix of personnel authorities and position standards make staffing and management a struggle for both supervisors and human resources personnel.”

VA leadership and many lawmakers already support shifting more employees into Title 38 so the department can pay top officials more -- and fire poor performers faster. The Veterans First Act, introduced in April by Senate Veterans’ Affairs Committee Chairman Johnny Isakson, R-Ga., and Ranking Member Richard Blumenthal, D-Conn., would move senior health care executives into Title 38, and take away the MSPB appeal rights of all VA senior executives, including those remaining under Title 5. The bill would give senior executives the opportunity to appeal adverse actions to an internal department review board, the same right those currently under Title 38 have. Under that scenario, the secretary would have the final say over the type of punishment meted out, including firing, suspension and demotion.

The report included a recommendation to allow former military personnel with “other than honorable discharges” to use VA health care facilities if they served considerable time honorably.

Darin Selnick, one of the dissenting commissioners who refused to sign the final report, said on Wednesday the commission itself was broken and the suggestions represented nothing new or bold. He decried Chairwoman Nancy Schlichting’s leadership and the claim that the report represented consensus. He likened her governance to a “dictatorship,” and said any health care expert could have come up with the commission’s recommendations “over lunch on a napkin.”

Selnick said the suggestions would fix the choice provisions of the 2014 VA reform law, but the commission was tasked with exploring much more foundational change. He called the personnel provisions “a nice halfway step,” but said by leaving VHA employees in the civil service system unions would maintain their control and the Merit Systems Protection Board would still prevent accountability.

Instead, he said, VHA should be moved into a government-chartered nonprofit corporation, similar to the proposalfloated by Rep. Cathy McMorris Rodgers, R-Wash. The third-highest ranking House member put forward draft legislation last month to task one part of the new nonprofit with managing VA’s brick and mortar facilities and the other to manage insurance programs, creating two separate entities to handle payer and provider functions.

The discussion draft would expand choice for veterans by creating a “premium support” model to receive care from non-VA sources. Critics contend that premium support is a voucher system that cuts benefits and leaves veterans on their own to receive care. Veterans would be able to choose either the VetsCare Federal program -- allowing them to continue receiving care exclusively though the traditional VA system -- or VetsCare Choice -- which would provide them with subsidized private care. Those choosing the latter option could still opt to go to facilities run by the corporation to receive care for service-related injuries.

A McMorris Rodgers aide said on Tuesday the measure was designed not to expand on current choice options, but instead give veterans complete discretion over where they receive care. The aide rejected any claims of privatization, saying the bill would simply reorganize an existing component into a different government structure for the delivery of health care services.

A group of more than two dozen veterans service organizations -- including Disabled Veterans of America, the American Legion and Veterans of Foreign Wars -- sent aletter to McMorris Rodgers, who chairs the House Republican Conference, and other members of House leadership, to voice “grave concerns” with the draft. The VSOs said the bill was built upon false premises, ignored the improving circumstances at the department since 2014 and would inflict “immediate and permanent negative consequences for millions of veterans” if enacted.

The McMorris Rodgers aide said the congresswoman’s staff has held “substantive and productive” meetings with those groups in recent weeks and is working to identify areas of consensus. The aide also said there were areas of overlap between the commission’s report and the draft bill, and its release would provide momentum for enacting the congresswoman’s proposals.

VA Secreatary Bob McDonald said on Wednesday he is currently reviewing the commission’s proposals, thanking the panelists for their work and for making several recommendations in line with the reform efforts he has already put in place. He called on Congress to approve his preferred reform measures, including the Senate’s Veterans First Act.

President Obama said he would review the commission’s report “over the coming weeks.”

We will continue to work with veterans, Congress and our partners in the veteran advocacy community to further our ongoing transformation of the veterans’ health care system,” Obama said. “Our veterans deserve nothing less for their sacrifices and their service.”

Rep. Jeff Miller, R-Fla., who chairs the House Veterans' Affairs Committee and co-authored the 2014 VA law, said he would hold a hearing on the proposals in September. He also said he would need time to “review and digest” the report, but noted VA still has pervasive problems and “fixing them will require dramatic changes in how VA does business, to include expanding partnerships with community providers in order to give veterans more health care choices.”

Miller introduced a bill of his own on Wednesday to remove MSPB appeal rights for VA’s senior executives and other measures to improve accountability.