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Isaac Arnsdorf and Jon Greenberg, Pacific Standard:

Since 2014, 1.9 million former service members have received private medical care through a program called Veterans Choice. It was supposed to give veterans a way around long wait times in the VA. But their average waits using the Choice Program were still longer than allowed by law, according to examinations by the VA inspector general and the Government Accountability Office. The watchdogs also found widespread blunders, such as booking a veteran in Idaho with a doctor in New York and telling a Florida veteran to see a specialist in California. Once, the VA referred a veteran to the Choice Program to see a urologist, but instead he got an appointment with a neurologist.

The winners have been two private companies hired to run the program, which began under the Obama administration and is poised to grow significantly under Trump. ProPublica and PolitiFact obtained VA data showing how much the agency has paid in medical claims and administrative fees for the Choice Program. Since 2014, the two companies have been paid nearly $2 billion for overhead, including profit. That’s about 24 percent of the companies’ total program expenses—a rate that would exceed the federal cap that governs how much most insurance plans can spend on administration in the private sector.

According to the agency’s inspector general, the VA was paying the contractors at least $295 every time it authorized private care for a veteran. The fee was so high because the VA hurriedly launched the Choice Program as a short-term response to a crisis. Four years later, the fee never subsided—it went up to as much as $318 per referral.

“This is what happens when people try and privatize the VA,” Senator Jon Tester of Montana, the ranking Democrat on the Senate veterans committee, said in a statement responding to these findings. “The VA has an obligation to taxpayers to spend its limited resources on caring for veterans, not paying excessive fees to a government contractor. When VA does need the help of a middleman, it needs to do a better job of holding contractors accountable for missing the mark.”

Trump’s promises to veterans were a central message of his campaign. But his plans to shift their health care to the private sector put him on a collision course with veterans groups, whose members generally support the VA’s medical system and don’t want to see it privatized. The controversy around privatization, and the outsize influence of three Trump associates at Mar-a-Lago, has sown turmoil at the VA, endangering critical services from paying student stipends to preventing suicides and upgrading electronic medical records.

In many cases, the contractors’ $295-plus processing fee for every referral was bigger than the doctor’s bill for services rendered, the analysis of agency data showed. In the three months ending January 31st, 2018, the Choice Program made 49,144 referrals for primary care totaling $9.9 million in medical costs, for an average cost per referral of $201.16. A few other types of care also cost less on average than the handling fee: chiropractic care ($286.32 per referral) and optometry ($189.25). There were certainly other instances where the medical services cost much more than the handling fee: TriWest said its average cost per referral was about $2,100 in the past six months.

Beyond what the contractors were entitled to, audits by the VA inspector general found that they overcharged the government by $140 million from November of 2014 to March of 2017. Both companies are now under federal investigation arising from these overpayments. Health Net’s parent company, Centene, disclosed a Department of Justice civil investigation into “excessive, duplicative or otherwise improper claims.” A federal grand jury in Arizona is investigating TriWest for “wire fraud and misused government funds,” according to a court decision on a subpoena connected to the case. Both companies said they are cooperating with the inquiries.

Despite the criminal investigation into TriWest’s management of the Choice Program, the Trump administration recently expanded the company’s contract without competitive bidding. Now, TriWest stands to collect even more fees as the administration prepares to fulfill Trump’s campaign promise to send more veterans to private doctors.

Even though the whole point of the Choice Program was to avoid 30-day waits in the VA, a convoluted process made it hard for veterans to see private doctors any faster. Getting care through the Choice Program took longer than 30 days 41 percent of the time, according to the inspector general’s estimate. The GAO found that, in 2016, using the Choice Program could take as long as 70 days, with an average of 50 days.

Sometimes the contractors failed to make appointments at all. Over a three-month period in 2018, Health Net sent back between 9 percent and 13 percent of its referrals, according to agency data. TriWest failed to make appointments on 5 percent to 8 percent of referrals, the data shows.

Many veterans had frustrating experiences with the contractors.

Thousands of veterans have had to contend with bill collectors and credit bureaus because the contractors failed to pay providers on time, according to the inspector general. Doctors have been frustrated with the Choice Program too. The inspector general found that 15 providers in North Carolina stopped accepting patients from the VA because Health Net wasn’t paying them on time.

The VA tried to tackle the backlog of unpaid doctors, but it had a problem: The agency didn’t know who was performing the services arranged by the contractors. That’s because Health Net and TriWest controlled the provider networks, and the medical claims they submit to the VA do not include any provider information.

The contractors’ role as middlemen created the opportunity for payment errors, according to the inspector general’s audit. The inspector general found 77,700 cases where the contractors billed the VA for more than they paid providers and pocketed the difference, totaling about $2 million. The inspector general also identified $69.9 million in duplicate payments and $68.5 million in other errors.

The grand jury proceedings involving TriWest are secret, but the investigation became public because prosecutors sought to obtain the identities of anonymous commenters on the jobs website Glassdoor.com who accused TriWest of “mak[ing] money unethically off of veterans/VA.” Glassdoor fought the subpoena but lost, in November of 2017. The court’s opinion doesn’t name TriWest, but it describes the subject of the investigation as “a government contractor that administers veterans’ healthcare programs” and quotes the Glassdoor reviews about TriWest. The federal prosecutor’s office in Arizona declined to comment.

“There’s still not a clear timeline moving forward,” said Giddens, the former VA contracting executive. “They need to move forward with the next program. The longer they stay with the current one, and now that it’s down to TriWest, that’s not the best model.”

Meanwhile, TriWest will continue receiving a fee for every referral. And the number of referrals is poised to grow as the administration plans to shift more veterans to the private sector.

Paul Ciano

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