Estimating the Cost of Surgical Care Purchased in the Community by the Veterans Health Administration

Background. Veterans’ access to Veterans Affairs (VA)-purchased community care expanded due to large increases in funding provided in the 2014 Veterans Choice Act. Objectives. To compare costs between VA-delivered care and VA payments for purchased care for two commonly performed surgeries: total knee arthroplasties (TKAs) and cataract surgeries. Research Design. Descriptive statistics and regressions examining costs in VA-delivered and VA-purchased care (fiscal year [FY] 2018 [October 2017 to September 2018]). Subjects. A total of 13,718 TKAs, of which 6,293 (46%) were performed in VA. A total of 91,659 cataract surgeries, of which 65,799 (72%) were performed in VA. Measures. Costs of VA-delivered care based on activity-based cost estimates; costs of VA-purchased care based on approved and paid claims. Results. Ninety-eight percent of VA-delivered TKAs occurred in inpatient hospitals, with an average cost of $28,969 (SD $10,778). The majority (86%) of VA-purchased TKAs were also performed at inpatient hospitals, with an average payment of $13,339 (SD $23,698). VA-delivered cataract surgeries were performed at hospitals as outpatient procedures, with an average cost of $4,301 (SD $2,835). VA-purchased cataract surgeries performed at hospitals averaged $1,585 (SD $629); those performed at ambulatory surgical centers cost an average of $1,346 (SD $463). We also found significantly higher Nosos risk scores for patients who used VA-delivered versus VA-purchased care. Conclusions. Costs of VA-delivered care were higher than payments for VA-purchased care, but this partly reflects legislative caps limiting VA payments to community providers to Medicare amounts. Higher patient risk scores in the VA could indicate that community providers are reluctant to accept high-risk patients because of Medicare reimbursements, or that VA providers prefer to keep the more complex patients in VA.