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TriWest CEO warns of looming financial catastrophe if VA Choice runs out of money

Omaha VA Medical Center (Veterans Health/Flickr)

TriWest Healthcare Alliance, which contracts with the Department of Veterans Affairs to arrange private-sector care for veterans through the VA Choice program, warned Tuesday in an apocalyptic letter to lawmakers that another funding shortfall could lead to restricted care for veterans, as well as layoffs and financial ruin for the alliance.

In a letter sent to leaders on the House and Senate VA committees and congressional appropriators, TriWest President and CEO David McIntyre Jr. criticized Congress for failing to address the shortfall in the massive spending bill passed March 23. The funding uncertainty threatens TriWest’s network of private-sector medical providers, he wrote.

“I cannot predict how much longer this company’s owners and employees are going to be willing or able to stay at this work,” McIntyre wrote.

Former VA Secretary David Shulkin warned lawmakers during his last few appearances on Capitol Hill that funds for the Choice program would be depleted by early June. The program allows veterans to receive care in the private sector if they live more than 40 miles driving distance from a VA facility or have to wait more than 30 days for an appointment.

If Congress doesn’t approve more funding soon, Shulkin has said, the VA must further limit the number of veterans who could use private-sector medical care.

TriWest, based in Phoenix, is one of the third-party administrators that run the program. The company works with the VA and approximately 200,000 private-sector medical providers to schedule appointments for veterans in 28 states in the Midwest and along the West Coast. It also operates in Guam, American Samoa and the Northern Mariana Islands.

As the June deadline approaches, TriWest faces a “very real financial threat,” McIntyre wrote. The company is preparing to lay off up to 25 percent of its workforce, which accounts for 700 people.

“Veterans will be denied access to the community provider network we have constructed to support VA, providers likely will experience substantial claims payment delays, and TriWest will be forced to reduce as much as 25 percent of our workforce just to survive, if that’s even possible,” McIntyre wrote.

This marks the third instance in one year that the Choice program has faced a funding crisis. The last time, in December 2017, Congress approved $2.1 billion to keep the program going. As of mid-March, about $1 billion remained, and the VA was spending about $370 million through the program each month.

Because of financial instability and other problems with the program, Congress has been working on a larger overhaul of how veterans receive private-sector care.

Negotiations for a new program have extended long past when leaders wanted to have it complete, due to disagreements among lawmakers, veterans organizations, the VA and White House over how aggressively veterans’ care should be expanded into the private sector. Shulkin blames the debate for his recent ouster from the VA.

Congress had an opportunity last month to quickly push through reforms. A deal was formed to include a Choice overhaul in the spending bill that Congress passed to avoid a government shutdown, but the agreement collapsed.

House Democrats opposed the deal, asserting they didn’t believe the Choice overhaul included in it was enough of a revamp from the current program. Rep. Tim Walz, D-Minn., the ranking Democrat on the House Committee on Veterans’ Affairs, told USA Today that the White House demanded concessions that tanked the deal.

With the leadership shakeup at the VA, it’s uncertain when Congress might address the looming funding shortfall – or get back to work on broader reforms to the Choice program.

President Donald Trump’s pick to lead the VA – Rear Adm. Ronny Jackson – is likely to face an arduous confirmation process in the Senate, as doubts have been raised by lawmakers and veterans organizations about his qualifications to lead the second-largest federal agency. Acting VA Secretary Robert Wilkie, who is leading the agency while Jackson goes through confirmation, is also new to the agency.

“Any time you have transition, things at least slow down, if not come to a stop,” said Joe Chenelly, executive director of the veterans organization AMVETS. “We’ll lose a lot of momentum, and veterans will sit around waiting for reform.”

This latest shortfall in the Choice program could “not come at a more unwelcome time” for TriWest, McIntyre wrote. The company’s fiscal year began April 1.

In addition to the funding shortfall, TriWest is dealing with longstanding problems working with the VA that haven’t been resolved, McIntyre wrote. He was working with Shulkin to address the problems before Shulkin was replaced.

Through the Choice program, TriWest fronts payments to private-sector medical providers and is reimbursed by the VA. The VA is slow to reimburse TriWest, McIntyre wrote. The VA owes the company approximately $100 million.

Because of that, TriWest will soon slow down its payments to private-sector providers, he predicted.

“Such action will cause providers to become concerned about the viability of caring for veterans and decline treating them,” McIntyre wrote.

TriWest has recently come under fire for collecting tens of millions in overpayments from the VA. The VA Office of Inspector General found late last year that TriWest and another third-party administrator, Health Net Federal Services, received more than they should have by collecting money twice for the same treatment and billing the VA at improper rates. In the letter, McIntyre blamed the VA for the overpayments, stating it was “largely due to the way in which VA’s system adjudicates claims.”

“VA still lacks an effective process for which we can return the nearly $70 million of claims overpayments that we have reserved on our books,” he wrote.

Together, the problems are creating “irreparable financial harm” and the latest funding shortfall “will send us into a financial free fall,” McIntyre wrote. Several weeks ago, TriWest laid off 225 staff.

TriWest’s financial concerns come as more veterans are using the Choice program. Shulkin recently said the VA authorized 6.1 million appointments in the private sector in 2017 – a 64 percent increase from the 3.7 million in 2016.


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