Government and Regulations

Budget Hole Narrowly Averted for VA

Newly passed legislation gives the VA flexibility to dip into the Veterans Choice Fund to meet a budget shortfall driven by increased demand and higher than expected hepatitis C care costs.



With just a day to spare, the Senate has passed a budget fix that will keep VA facilities running in August. Before recessing, the U.S. House of Representatives passed legislation on Wednesday to help the VA meet its budgetary crunch. The Senate passed similar legislation Thursday afternoon. The provision was combined with a short-term fix of highway funding and gives the VA the flexibility to shift up to $3.3 billion from the Veterans Choice Fund for veterans’ health care. The bill is expected to be signed by President Obama.

Earlier this month, the VA warned that it was facing a significant budgetary shortfall and would be forced to close facilities or reduce services if the funding gap is not addressed by Congress. The VA had the money, but it was tied directly to providing access to care outside the VA. The Veterans Access, Choice, and Accountability Act of 2014 provided $10 billion for the newly established Veterans Choice Fund to cover the costs of access to non-VA care. But until this fix, the VA was unable to use those funds for other purposes.

“It is essential that Congress pass legislation to provide the requested budget flexibility by the end of July 2015,” Deputy Secretary Sloan Gibson wrote. “This is necessary to replenish critical operations funding that VA had to reallocate from other medical services programs to sustain Care in the Community, after those funds were depleted. If these program funds are not restored, VA will face shutting down hospital operations during August 2015.”

One of the key drivers of the VA’s fiscal woes has been a $500 million shortfall in meetings its obligations for hepatitis C (HCV) care. According to the VA, of 180,000 enrolled veterans diagnosed with HCV, VA only has treated 15%. During fiscal year (FY) 2015, 19,600 veterans were treated, up from 7,644 in FY 2014. Already the VA has allocated nearly $700 million for HCV care, but nevertheless anticipates needing another $500 million, based in part on FDA approval of new treatments this year.

According to a letter to Congress requesting budgetary flexibility, the VA has completed > 56.2 million appointments between June 1, 2014, and May 31, 2015, an increase of 2.6 million appointments from the previous year. In addition, the VA has made > 3 million authorizations for veterans to receive care in the private sector.

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