Estimating private sector professional fees for VA providers

Area of Science:

• Health Services Research
• Healthcare Economics
• Veterans Affairs Healthcare

Background:

• Estimating professional fees for Veterans Health Administration (VA) services is crucial for financial analysis.
• Understanding potential discrepancies between VA reimbursements and private sector fees is important for resource allocation.

Purpose of the Study:

• To describe novel methodologies for calculating inpatient and outpatient Medicare-based professional fees for VA services.
• To provide a framework for comparing VA professional service costs against private sector benchmarks.

Main Methods:

• Utilized national VA utilization files for inpatient physician services.
• Employed local provider and utilization files for outpatient services across various provider types.
• Coded specific services (ambulatory surgery, emergency room, clinics) and edited VA billing against Medicare guidelines.
• Sourced external commercial data for VA services lacking Medicare fee comparability.

Main Results:

• Hypothetical professional fees for VA services exceeded the VA physician budget by 17% ($109 million vs. $93 million) in one fiscal year across six sites.
• Generated nearly $21 million in total payments for VA inpatient care.
• Detailed inpatient utilization statistics for fiscal year 1999, including admissions, discharges, inpatient days, critical care days, and surgical days.

Conclusions:

• Observed differences between VA and private sector fees may be overstated due to the exclusion of nonphysician VA salaries from VA budgets.
• Potential undercounting of VA professional services in existing VA information systems may understate the actual fee differences.
• Recommended future research focusing on enhanced data collection and information system improvements for accurate enumeration of reimbursable provider services.