Authorizing the VA to Recover Payments from Medicare Advantage Plans for Dually Enrolled Veterans’ Care

Our team has conducted a series of studies that link national VA and Medicare enrollment and claims data to quantify the number of veterans concurrently enrolled in an MA plan and the VA, the magnitude of spending for dual VA-MA enrollees, and the proportion of VA's federal appropriation that was spent on care for MA enrollees. Key findings are as follows:

Rapid Growth in Dual Enrollment

Between 2011 and 2023, the number of veterans concurrently enrolled in both VA and MA who used VA services approximately doubled, from 634,000 in 2011 to over 1.28 million in 2023. Thus, in 2023, approximately 21% of all users of VA health care were simultaneously enrolled in an MA plan.

Rising VA Costs for MA Enrollees

From 2019 to 2023, the VA spent $86.9 billion caring for MA enrollees. Inflation-adjusted annual spending rose from $12.8 billion in 2019 to $22.7 billion in 2023, a 77% increase. Outpatient services were the largest spending category, while community care—private-sector care paid for by the VA—was the fastest-growing component, increasing 221%.

Significant Share of VA Budget

By 2023, spending on veterans enrolled in MA accounted for 19% of the VA’s total Congressional appropriation for health care. In practical terms, nearly one dollar of every five appropriated for VA health care supported beneficiaries whose insurers were already receiving Medicare payments for their care.

Two potential policies could reduce duplication of payments to MA plans for veterans enrolled in the VA. They include:

1. Permit the VA to recover payments from MA plans for VA-delivered health care 

Congress could amend current law to allow the VA to bill MA insurers for Medicare-covered services delivered to enrolled veterans, just as the VA bills private commercial insurers. Reimbursement rates could be tied to traditional Medicare fee-for-service payment rates for comparable services, while retaining the prohibition on traditional fee-for-service Medicare reimbursement for VA-covered services. 

2. For Medicare-covered services provided in the community, designate MA as the primary payer with VA as a potential secondary payer.

VA Community Care, in which the VA finances care for veterans who receive services from private-sector providers, was the fastest growing component of spending among veterans enrolled in MA, reaching $3.2 billion in 2023. These include services that MA plans have been paid prospectively to cover for their enrollees. Currently, however, MA plans do not pay for VA Community Care provided to dually enrolled veterans. Congress could require MA plans to be the primary payer of care received outside the VA, with the VA covering cost-sharing for veterans as a secondary payer. Under such a policy, MA plans could either be required to treat all VA Community Care providers as in-network for covered episodes of care or reimburse these providers under existing MA regulations governing out-of-network care.

The goal of these reforms is payment neutrality, not to penalize plans for enrolling veterans. Just as MA plans are paid to cover Medicare-covered services for other enrollees, they should bear the same responsibility for veterans. In other words, a plan should be no better and no worse off enrolling a veteran than a comparable non-veteran. The aim is to end payment for care the plan did not provide, not to make veteran enrollment unprofitable or to discourage plans from serving veterans. Whether veterans are, on balance, more or less costly than their MA payments reflect is ultimately an empirical question that can be monitored as reforms take effect. If needed, policymakers have other tools to modify the size of capitation payments paid to MA plans for covering veterans, e.g. the risk adjustment system.

In 2023, VA spending for MA-enrolled veterans totaled $22.7 billion, which comprised about 19% of the VA’s congressional appropriation for health care in Fiscal Year 2023 and 0.4% of total health care spending in 2023. Not all of this spending would be recoverable from MA plans, since some services may not be covered under Medicare. However, $22.7 billion excludes categories that aren’t covered by Medicare (e.g., long-term services and supports) and includes covered categories like hospital care, post-acute care, outpatient care, and prescription drugs.

Further, in response to reimbursing the VA for care provided to dually enrolled veterans, MA plans may increase their bids to enroll Medicare beneficiaries. MA plans may also change practices related to marketing coverage to veterans, since allowing the VA to recover payments from MA insurers may reduce plans' incentives to enroll veterans. In 2022, there were known to be 188 veteran MA “affinity plans” marketing to VA-Medicare dually-enrolled veterans. These estimates also assume the current structure of MA payment. CMS already adjusts the fee-for-service costs underlying MA county benchmarks to account for veterans’ lower Medicare utilization (CMS 2020). Were CMS to price veterans’ VA reliance more directly into capitation or risk adjustment, the recoverable savings could be smaller.

An estimate for the GUARD Veterans’ Health Care Act projects $357 billion in savings over ten years from 2026-2035, again suggesting that these reforms could produce substantial savings. Recovered payments would supplement the VA’s appropriation through the VA Medical Care Collections Fund, an account that holds money the VA collects from private health insurance companies (other than MA insurers) as well as veteran copayments. These funds are then used to provide medical care and services to veterans. Savings to taxpayers accrue to the extent these collections reduce future VA appropriations, or if recoveries fund VA care that would otherwise require new appropriations. Across the federal government as a whole, the logic is straightforward: today the government pays twice for these veterans, once through MA capitation and again through VA appropriations, so allowing the VA to recover MA payments for VA-delivered care lowers net federal outlays for this population.

As referenced above, the GUARD Veterans’ Health Care Act—introduced in June 2025 in the US House of Representatives and US Senate—would authorize the VA to recover payments from MA plans for care delivered to dually enrolled veterans, among other provisions beyond the scope of this brief. The bill was introduced by members of the House Ways & Means Committee, House Veterans’ Affairs Committee, and Senate leadership from both parties, reflecting bipartisan concern over duplicate payments.