Elucidation: Changes in VA Healthcare Pose New Implications for Drug Companies

Cheryl Nagowski

December 14, 2018

6 Min Read

Veterans of the US military still struggle to access healthcare despite the 2014 congressional passing of the Veteran’s Choice Program (VCP), a US$10 billion-dollar “fix” that allows qualifying veterans to see community physicians who have contracted with the Department of Veterans Affairs (VA) to provide care. Veterans who enrolled in VCP to avoid long wait times at department medical facilities still have faced month-long delays before seeing a doctor, according to a 2018 GAO report. Investigators have found that the VA protocol for scheduling VCP appointments caused veterans to wait up to 81 days for treatment and an average 51 days to receive care, despite the VA’s own standard to administer care within 30 days of a patient’s request.

One key factor in the failed implementation of VCP could be the excessive delay in physician reimbursement that ultimately is driving away community provider participation in the program. Hospitals, clinics, and doctors across the country have complained about not getting paid, and many healthcare centers have stopped participating in VCP altogether. A lack of trust in VCP reimbursement also may discourage the use of physician-administered drugs for veterans. Under VCP, physicians are expected to purchase high-cost specialty drugs through their normal office protocol and submit for reimbursement from one of two VA contracted program administers.

Veterans who receive community care also are required to fill prescriptions at a VA pharmacy or use the VA mail-order system. Only urgent medications can be accessed through a retail channel at veterans’ own expense (and with 14-day quantity limits) until they are able to successfully navigate a complex and lengthy reimbursement process through the VA.

A new era of healthcare may be in store thanks to the VA Maintaining Systems and Strengthening Integrated Outside Networks (MISSION) Act, the most comprehensive healthcare reform bill passed by Congress in over 25 years. It will provide for a new, streamlined community care expansion program that replaces the VCP and consolidates multiple community care programs into one program. Changes will include

  • Expanding the VA’s comprehensive caregiver support program, opening the program to eligible pre-9/11 veterans

  • Allowing veterans and their doctors to determine the best option for where a veteran should receive care (inside VA or in the community)

  • Increasing telehealth programs

  • Establishing walk-in healthcare services with local community providers.

A Closer Look at the Legislation
The MISSION Act is the first real step toward incentivizing a growing number of community providers to treat VA patients. Physicians will be paid Medicare rates within 30 days of claim submission rather than having to wait up to a year for reimbursement. The act will provide $5.2 billion for VCP expansion, consolidate community care programs, and remove the 40-mile, 30-day rule previously required for VCP enrollment.

Some healthcare experts have suggested that the VA should contemplate adopting a system similar to the Department of Defense (DoD) healthcare model. This hybrid system provides two channels of care: integrated healthcare facilities that specialize in the treatment of military-related trauma and illnesses, as well as an open community network option called Tricare. Currently, two-thirds of all DoD beneficiary care is provided by community physicians. Physicians participating in the new VA community care program will be required to adhere to the VA National Formulary when prescribing medications.

However, unlike what Tricare allows, all VA prescriptions must continue to be filled through local VA pharmacies or through the VA’s mail-order program rather than through a nearby retail pharmacy. Although the MISSION act contains provisions related to improving the safety of opioid prescribing practices (to include associated data integrity), it does little to protect physicians with regard to reimbursement assurance for office-administered products and veterans’ access to medications through a means that complements the community care practice (retail channels).

Implications for Drug Manufacturers
Although the new legislation is meaningful progress, more is needed — and soon. The VA healthcare system needs reform well beyond that provided by the MISSION Act. The common suggestion for total privatization of the VA is problematic because many ailments applicable to this population (e.g., service-related disease states) benefit from specialty medical centers

Adopting the DoD’s dual-channel model of care to include adequate and accessible prescription drug coverage, however, would be a crucial step toward a standard of care that US veterans deserve. The MISSION Act brings them a step closer to this, but to a much lesser scope. Although it opens a new chapter in care options for veterans, whether the VA can implement a viable community access to care program remains to be seen. Pharmaceutical companies should begin thinking about how this access-to-care expansion might affect current market access strategies for the federal segment.

Better Formulary Positioning: If a prescription does not follow the VA National Formulary (VANF), a VA pharmacist will follow up with the prescribing provider to determine whether that prescription can be rewritten for one that is available on the VANF — or whether certain criteria are met to qualify for access under medical necessity.

Nonformulary drugs are reviewed case by case. Few other health systems — e.g., DoD, Medicare, and Medicaid — have formularies as restrictive as the VA’s formulary. However, manufacturers can pull multiple levers to improve their VA formulary preference. Overall, the increased community physician spillover created by the MISSION Act may incentivize drug manufacturers to improve their products’ positioning on the VANF, especially because formulary controls and adherence under this expanded system remain to be tested.

Greater Exposure to Providers: The MISSION Act provides funding dedicated to better administration of the Choice Act program, which is expected to result in better physician reimbursement, and therefore improved rates of physician participation. Community providers are required to adhere to the VANF, which includes working directly with the VA to adjudicate nonformulary medical exceptions. This may lead to improved exposure for manufacturers with community physicians for therapies that are preferred on the VANF, especially in regions with a high concentration of veterans.

Potential for Improved Retail Access: The time and effort involved in coordinating prescriptions and adjudicating reimbursement under the current model may prove too cumbersome for the VA’s already overburdened system, prompting the VA to allow a more meaningful retail access option in the future.

More Influence: If the VA patient set is significantly different from the civilian population seen by a physician or at a community hospital/clinic, drug manufacturers with treatments for related conditions might have a larger amount of overall exposure and influence.

Better Data Exchange and Insights: The MISSION Act will improve health data exchanged for veterans seeking care through the community care program. The VA has long been reluctant to share patient data. The Act mandates the VA share health economics research (HER) data with non-VA providers to include medication prescription information, with the intention of improving prescription drug monitoring. This could provide insights related to the VA Choice population volume and other relevant data, which has been difficult to obtain with the DoD Tricare model.

Continuing a push for better access to care and vital medications for the nation’s veterans will be important going forward. They face a range of personal, societal, and logistical barriers in accessing care. Every stakeholder across the healthcare continuum should recognize the importance of removing barriers to care and improving quality of life for those who have sacrificed their well-being for the good of their nation.

Cheryl Nagowski is senior director of Federal Markets at D2 Consulting; 1-650-296-9216; [email protected].

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