The Urgent Need to Address VHA Community Care Spending and Access Strategies — The Red Team Report: Annotated
The VA Asked Its Own Experts for Help. Then Did the Opposite. Now Community Care Is Eating the VA Alive.
Annotated by Theresa "Tbird" Aldrich (HadIt.com) and Suzanne Gordon (Veterans Healthcare Policy Institute) | February 2026
Original report: March 30, 2024 | Source: Veterans Healthcare Policy Institute
In March 2024, the VA's own handpicked panel of health care leaders unanimously warned that runaway community care spending was an "existential threat" to the VA health system. They laid out specific recommendations to fix it.
None were implemented. Most have been inverted.
This is an annotated companion to the original report, produced in collaboration by VHPI and HadIt.com. We've preserved the panel's key findings and recommendations and added Status: February 2026 annotations showing what actually happened — sourced and verified.
The original unmodified report is available via VHPI (PDF).
Implemented
Inverted
Left on the Table
The Red Team identified specific policy changes with estimated savings. None have been implemented. These are the VA's own numbers.
| Policy Change | Annual Savings |
|---|---|
| Make VHA secondary payer for non-service-connected emergency care | $1.73B |
| Refine drive time / wait time access standards | $424M – $1.14B |
| Expand Tele-Emergency Care system-wide | $44M – $88M |
| Expand VHA ER use | $10.9B |
Credit where it's due: The Red Team Executive Roundtable Report was authored by Dr. Kenneth W. Kizer (Chair), Dr. Jonathan B. Perlin, Dr. Karen Guice, MG Elder Granger (Ret.), Dr. Debra Friesen, and Dr. Dana Gelb Safran. It was published by the Veterans Healthcare Policy Institute after the VA declined to release it publicly.
Suzanne Gordon and Steve Early broke the story in The American Prospect in April 2024. VHPI analysts and writers including Russell Lemle and Jasper Craven, along with Suzanne Gordon, have been tracking the VA privatization trajectory for over a decade.
This annotated version is a VHPI + HadIt.com collaborative analysis. It does not modify the original text — it adds context about what happened after the warnings were ignored.
How We Got Here
About the Panel
In the fall of 2023, VHA Under Secretary for Health Dr. Shereef Elnahal convened six nationally recognized health care executives for a "Red Team" Executive Roundtable. Using existing data, they were asked to independently assess the trends and drivers of increasing community care spending and recommend actions.
The panel wasn't stacked with critics. These were establishment leaders with decades of experience running the largest health systems in the country:
The Panel Members
Dr. Kenneth W. Kizer (Chair) — Former Under Secretary for Health, VA. Engineered what is widely regarded as the largest and most successful health care turnaround in U.S. history. Stanford Senior Scholar. Navy veteran and former undersea medical officer.
Dr. Jonathan B. Perlin — Former Under Secretary for Health, VA. Current President and CEO of The Joint Commission (the body that accredits U.S. hospitals).
Dr. Karen Guice — Former Acting Assistant Secretary of Defense for Health Affairs. Oversaw the $50 billion Defense Health Program and the TRICARE system.
MG Elder Granger, USA (Ret.) — Former Deputy Director of TRICARE Management Activity. Led the largest U.S. battlefield health system as Command Surgeon for Multinational Corps Iraq.
Dr. Debra Friesen — Physician Advisor, Kaiser Permanente. Former Board Chair of the Colorado Permanente Medical Group.
Dr. Dana Gelb Safran — President and CEO, National Quality Forum. Former MedPAC Commissioner. Lead architect of the Blue Cross Blue Shield Alternative Quality Contract.
These aren't people who make alarmist claims for political points. They're the kind of people who get called when institutions need saving.
Key Findings
The report opened with 12 key findings. Below is a summary of each with annotations on what has happened since.
Community care costs have risen to nearly $30 billion in FY2023 and may now threaten funding needed to support VA's direct care system. Research data show that community care is often no more timely, accessible, nor of superior quality to VA care — and in many instances has been shown to be of lower quality. Roundtable members were in unanimous agreement that VA urgently needs to take action.
The FY2026 House appropriations bill proposes community care funding at $33 billion — a 50% increase from FY2025. They implemented an unprecedented 17% decrease in funding for in-house care. No action has been taken to control spending. The trajectory the panel warned about has accelerated.
In FY2022, more than 40% of enrolled veterans were provided care through the Veterans Community Care Program. Referrals have grown 15–20% per year.
Community care costs rose from $14.8 billion in FY2018 to $28.5 billion in FY2023 — a 19% increase from FY2023 to FY2024 alone. These rising costs will decrease available funds for VHA's direct care system absent a corresponding increase in funding or reductions in services.
Rather than increasing direct care funding to offset rising community care costs, the current administration has cut tens of thousands of direct care employees. The budget trajectory prioritizes community care over direct care — the exact scenario this finding warned would erode the system.
VHA has a stated goal of providing veterans with "the soonest and best care," but the community care program has insufficient information to know whether referrals to community providers will result in either. Private sector providers are not required to report wait time or quality data to VHA, nor are they required to demonstrate competency in treating veteran-specific conditions.
Community care providers are still not required to report quality or access data to VHA. No quality monitoring framework has been implemented. Veterans are still being referred to providers with no demonstrated competency in veteran-specific care.
The community care program has an implicit obligation to inform veterans about the pros and cons of a referral — to allow an informed choice. Currently, the program does not provide veterans with quality or accessibility data. Referrals are managed by mid-level administrative personnel without clinician involvement. The report cited a study showing that women veterans receiving non-cardiac surgery at VA hospitals had half the risk of postoperative death compared to the same surgeries in community settings. (George et al., JAMA Surgery, 2024)
Veterans are still not provided comparative quality data when being referred to community care. Referral Coordination Teams — the mechanism the panel recommended to address this — have not been implemented system-wide. Veterans are making blind choices about their care.
The amount of care referred to community providers varies widely across VA facilities and regions, with limited understanding of why. VHA has launched some promising initiatives (Access Sprints, Referral Coordination Teams, Tele-Emergency Care, Tele-Oncology) that should be expeditiously scaled system-wide. Emergency care is the single largest category of community care spending.
Rather than scaling promising VHA initiatives, the staffing collapse has reduced the capacity to operate them. The loss of tens of thousands of VHA employees means fewer staff to run the programs the panel recommended expanding.
VHA's Center for Care and Payment Innovation (CCPI) — analogous to CMS's innovation center — does not appear to be actively involved in testing new care models that could make direct care more accessible or community care more cost-effective.
No evidence that CCPI has been activated for this purpose.
Increased community care referrals are impacting VHA's healthcare professional training and research programs — both statutorily required missions with benefits for the entire American population, not just veterans.
VA research funding faces cuts. The staffing collapse threatens healthcare professional training programs that depend, for their accreditation, on having enough supervising clinicians. The pipeline for healthcare professionals for both VHA and the nation as a whole is being disrupted.
The VHA is the nation's only truly national healthcare system and has a statutory "Fourth Mission" to provide backup to civilian sector healthcare facilities during national emergencies like COVID-19 and to backup the military health system during wars and terrorist attacks. How community care growth will impact this mandate is unknown.
With tens of thousands fewer employees and 18 VISNs being collapsed to 5, the VA's emergency surge capacity has almost certainly been degraded. No assessment has been publicly released.
Increasing community care referrals and rising costs threaten to materially erode VA's direct care system and create the unintended consequence of eliminating choice for the millions of veterans who prefer VA care.
"Roundtable members believe that increased community care spending is a potential existential threat to the VA Health System and addressing this matter should be an urgent priority for VA/VHA leadership."
— Red Team Executive Roundtable Report, p. 6Every member of this panel agreed. Unanimously. No hedging, no qualifications.
The Predicted Downward Spiral
The panel described a specific mechanism by which the VA health system would collapse if nothing changed:
"This could create a self-perpetuating cycle in which increased community care spending results in less direct care funding that negatively impacts direct care capacity, leading to increased community care reliance, and a continuous 'downward spiral' for VHA's direct care system."
— Red Team Executive Roundtable Report, p. 10Staff cut → capacity drops → wait times increase → more veterans sent to community care → costs surge → less money for direct care → more cuts. The cycle the panel predicted is now the operating model.
See the VHPI VA Privatization Threat Map for how every thread connects.
Recommendations
The Red Team offered specific recommendations for addressing the crisis. Below is each recommendation with its current status.
1. Build an "attraction strategy" focused on quality
VHA should leverage its quality of care and patient satisfaction data to build trust and attract veterans to the direct care system. This includes educating staff, creating accountability at all levels, and sharing referral data with providers. VA/VHA leadership should make this a top organizational priority.
The narrative under current leadership is that the VA is bloated and inefficient. Secretary Collins told Congress that "adding more employees to the system does not automatically mean better results." The PACT Act hiring surge was reframed as "overhiring." No quality-based attraction campaign has been launched. The message to veterans isn't "VA care keeps you safer" — it's "the private sector is your future."
2. Refine drive time and wait time standards
Current eligibility criteria can lead veterans to receive community care that involves a longer drive or wait than what VHA could offer. These criteria should be refined. VHA estimated potential savings of $424 million to $1.14 billion by reducing instances where veterans drive farther for community care when comparable VA services are closer.
No refinement of access standards has been announced. The flawed criteria continue to route veterans — and money — out of the VA system even when VA care is closer and faster.
3. Require quality and value reporting from Community Care Network providers
Value-based contracts with quality metrics should replace the current arrangement. Episode-of-care payment bundles, outcome-based incentives, and financial incentives (like co-pay waivers) could encourage veterans to stay within the direct care system where quality is demonstrably higher. The TRICARE monitoring contract could serve as a model.
Community care providers still face no quality reporting requirements. No value-based contracts have been implemented. Veterans still cannot compare VA vs. community care quality before choosing.
4. Reconsider Standard Episode of Care (SEOC) referral authorizations
SEOCs are open-ended authorizations that allow extensive services without real-time oversight. A veteran referred for possible knee replacement gets blanket authorization for imaging, physical therapy, and surgery with little monitoring of whether each service is medically warranted. VHA should more closely manage utilization consistent with well-managed private health plans.
No changes to SEOC management have been announced. Open-ended authorizations continue to drive costs without oversight.
5. Expand partnerships with academic health systems
Many VA hospitals are near academic medical centers with overlapping missions. Priority partnerships could ensure higher quality referrals, support training and research, and enable value-based care models.
No expanded academic partnership initiative has been announced. The staffing collapse and VISN reorganization have disrupted existing academic affiliations.
6. Implement Referral Coordination Teams system-wide
RCTs — clinical and administrative teams that discuss care options with veterans and empower informed choices — should be standardized and deployed across the entire enterprise. Before a veteran is referred out, RCTs could conduct screenings to confirm whether the referral is the best option or if a telehealth visit within VHA is a viable alternative.
RCTs have not been implemented system-wide. Veterans are still referred to community care by administrative staff without clinician involvement and without comparative quality data. The staffing losses make system-wide implementation even less likely now.
7. Enhance real-time data and analytic capabilities
VHA needs robust understanding of community care cost drivers, fully loaded unit costs of direct vs. community care, demographics of veterans using community care, and predictive analytics to intervene before veterans go to the community. Advanced data analysis methods including machine learning and AI could materially help.
No enhanced analytics platform for community care cost management has been announced. Meanwhile, the VA has been deploying AI in other contexts without the safety oversight infrastructure these tools require.
8. Mitigate emergency care spending (largest cost category — ~30%)
The panel recommended four specific actions:
- Expand Tele-Emergency Care (Tele-EC) system-wide. VHA estimated 50% of veterans in community ERs could have been resolved through Tele-EC, saving $44.6–$88.2 million annually.
- Make VHA the secondary payer for non-service-connected emergency care. The veteran's other insurance pays first; VHA covers the rest. Potential annual savings: $1.73 billion from one policy change.
- Enable more repatriation of veterans admitted to community hospitals back to VA hospitals when medically appropriate. (84% of community emergency spending is inpatient care.)
- Deploy consistent intensive case management for veterans with high likelihood of ER visits, leveraging existing Patient Aligned Care Teams.
None of these four initiatives have been implemented at scale. The secondary payer policy alone would save $1.73 billion annually. Combined with Tele-EC expansion, the panel identified potential savings exceeding $1.8 billion per year — from two policy changes. Neither has been made.
9. Expand Geriatrics and Extended Care within VHA
Second-largest community care spend category (~20%). Nearly all geriatric care is directed to the community because VHA has limited capacity — ironic given VHA's historic role in developing the medical specialty of geriatrics. Expanded home-based care could maintain continuity and prevent hospitalizations.
No expansion of VHA geriatric capacity has been announced. Home health aide costs increased over 40% from FY2021 to FY2023 in community settings. The money continues to flow out.
10. Enhance oncology cost mitigation
Third-largest spend category (~5%), driven by pharmaceutical costs. Community infusion centers charge substantially higher prices than VHA. The panel recommended expanding Tele-Oncology, expanding Close to Me infusion services, renegotiating referral terms, requiring community infusion centers to obtain drugs through VA pharmacy pricing, and exploring DoD partnerships.
No pharmaceutical pricing leverage has been applied to community infusion centers. Tele-Oncology and Close to Me infusion services have not been expanded at the pace recommended. Veterans with cancer continue to be referred to community providers at higher cost.
11. Enhance mental health care within VHA
Fourth-largest spend category (~5%) — "somewhat ironic given VHA's status of being the nation's largest provider of mental health care services and the generally woeful state of private sector mental health care." The panel recommended building internal capacity, expanding tele-mental health, and comparing quality of community vs. VHA mental health outcomes.
Rather than building internal mental health capacity, VHA has lost providers. A Senate Veterans' Affairs Committee investigation reports mental health wait times averaging 35 days (VA disputes this figure). The staffing collapse directly reduces the capacity the panel said needed to grow.
12. Enhance orthopedic and cardiology cost mitigation
Enhanced referral coordination, revised prior-authorization criteria, and analysis of ambulatory surgical center impact on patient preference and cost.
No changes to orthopedic or cardiology referral management have been announced.
13. Utilize VHA's Center for Care and Payment Innovation (CCPI)
Analogous to CMS's Center for Medicare and Medicaid Innovation, VHA's CCPI should be actively testing new care models. Based on information presented to the Roundtable, it was not being utilized for this purpose.
No evidence that CCPI has been activated to test community care cost reduction or direct care expansion models.
Other Areas of Concern
Education and Research Missions
Community care growth is adversely impacting VHA's graduate medical education, training programs, and research activities. These are statutorily required missions with benefits for the entire American population — not just veterans.
VA research funding has been cut across the board. The loss of thousands of physicians, nurses, psychologists, and other professionals threatens the programs that train the next generation of clinicians — programs that depend, for accreditation, on having enough supervising clinicians to operate. The pipeline of future healthcare professionals for the VHA and the country is being disrupted. Current punitive employment policies in VHA are also discouraging people from choosing careers in the VHA.
Fourth Mission: National Emergency Response
The VHA is the nation's only genuine national healthcare system and, as such, goes far beyond delivering fragmented medical care. It is mandated to backup the civilian sector system during local, regional, and national emergencies. It's also mandated to serve as backup to the military health system in time of war and terrorist attack. It is unknown, the Red Team warned, how the growth of community care impacts these mandates.
With tens of thousands fewer employees, 18 VISNs collapsing to 5, and direct care capacity declining, the VA's ability to surge during a national emergency has almost certainly been degraded. No public assessment has been released. The next pandemic, natural disaster, or mass casualty event will test a system that is overburdened, demoralized, and less able to coordinate than it was two years ago.
What This Means for Your Claim
The dramatic growth of community care and the under-funding of VHA isn't just a healthcare problem. It's a claims and benefits problem.
Every time a veteran gets pushed from VA direct care to a community provider, the evidence trail for their disability claim gets weaker. Here's why:
- No nexus documentation. Private providers aren't trained to connect your current condition to your military service. They diagnose and treat — they don't build the evidentiary bridge a VA rater needs to grant service connection.
- No DBQs. Community providers don't use VA's Disability Benefits Questionnaires. When your C&P exam or claim file relies on outside medical records, the evidence may not contain the specific findings VA needs to rate your disability.
- No military culture competency. The Red Team found that community care providers aren't required to understand veteran-specific conditions, military sexual trauma, toxic exposure history, or how service-connected conditions interact. Training is voluntary, and almost nobody takes it.
- No quality tracking. You can't know whether the community provider you're being sent to delivers better or worse outcomes than the VA. The data doesn't exist. The Red Team flagged this in 2024. It still hasn't been fixed.
The bottom line: If you're fighting a VA claim, the provider who knows your service history, uses the right forms, and understands how to document for VA purposes is almost always the VA provider — not the community referral. Every staffing cut that pushes you outside the VA system makes your claim harder to win.
For more on protecting your claim, visit the HadIt.com community — where veterans have been helping each other navigate this for 29 years.
The Pattern
Thirteen specific recommendations. Zero implemented. Most actively inverted.
The panel identified changes that could produce over $23 billion in savings each year. Over $2 billion could be saved each year from just three policy changes (secondary payer, drive time fixes, and Tele-EC expansion). None were made.
Instead, community care funding has surged to a proposed $33 billion while the VA's own workforce — the people who deliver the care the panel's research showed was better — has been gutted by tens of thousands.
For VHPI's full analysis of how the Red Team warnings connect to the current dismantling of VA health care, see: VA Privatization Threat Map.
DOWNLOAD ORIGINAL REPORT (PDF)
References
Below are the 25 references cited in the original Red Team Report with clickable links where available.
- U.S. Department of Veterans Affairs FY 2024 Budget Submission. Budget in Brief. March 2023.
- Congressional Budget Office. The Veterans Community Care Program: Background and Early Effects. October 1, 2021.
- Kizer KW, Dudley RA. Extreme makeover: transformation of the Veterans Health Care System. Ann Rev Pub Health. 2009;30:313-339.
- George EL, Jacobs MA, Reitz KM, et al. Outcomes of women undergoing noncardiac surgery in Veterans Affairs compared with non-Veterans Affairs Care Settings. JAMA Surgery. 2024. doi:10.1001/jamasurg.2023.8081
- George EL, Massarweh NN, Youk A, et al. Comparing Veterans Affairs and private sector perioperative outcomes after noncardiac surgery. JAMA Surgery. 2022;157(3):231-239. doi:10.1001/jamasurg.2021.6486
- Yoon J, Phibbs CS, Ong MK, et al. Outcomes of veterans treated in Veterans Affairs hospitals vs non-Veterans Affairs hospitals. JAMA Network Open. 2023;6(12):e2345898. doi:10.1001/jamanetworkopen.2023.45898
- Price RA, Sloss EM, Cefalu M, Farmer CM, Hussey PS. Comparing quality of care in Veterans Affairs and non-Veterans Affairs settings. J Gen Intern Med. 2018;33(10):1631-1638. doi:10.1007/s11606-018-4433-7
- Eid MA, Barnes JA, Trooboff SW, Goodney PP, Wong SL. A comparison of surgical quality and patient satisfaction indicators between VA hospitals and hospitals near VA hospitals. J Surg Res. 2020;255:339-345. doi:10.1016/j.jss.2020.05.017
- Chan DC, Danesh K, Costantini S, Card D, Taylor L, Studdert DM. Mortality among U.S. veterans after emergency visits to Veterans Affairs and other hospitals: retrospective cohort study. BMJ. 2022;376:e068099. doi:10.1136/bmj-2021.068099
- Shekelle P, Maggard-Gibbons M, Blegen M, et al. VA versus non-VA quality of care: a living systematic review. Washington, DC: Evidence Synthesis Program, VA ESP Project #05-226; 2023.
- Blegen M, Ko J, Salzman G, et al. Comparing quality of surgical care between the US Department of Veterans Affairs and non-Veterans Affairs settings: a systematic review. J Am Coll Surg. 2023;237(2):352-361. doi:10.1097/XCS.0000000000000720
- Cullen SW, Xie M, Vermeulen JM, Marcus SC. Comparing rates of adverse events and medical errors on inpatient psychiatric units at Veterans Health Administration (VHA) and community-based general hospitals. Med Care. 2019;57(11):911-920. doi:10.1097/MLR.0000000000001215
- VA News. Nationwide patient survey shows VA hospitals outperform non-VA hospitals. U.S. Department of Veterans Affairs. June 14, 2023.
- Majority of VA health care facilities receive 4 or 5 stars in CMS quality ratings, outperforming non-VA facilities. VA News. July 26, 2023.
- Waldo S, Glorioso T, Barón A, et al. Outcomes among patients undergoing elective percutaneous coronary intervention at Veterans Affairs and community care hospitals. J Am Coll Cardiol. 2020;76(9):1112-1116. doi:10.1016/j.jacc.2020.05.086
- Gidwani-Marszowski R, Faricy-Anderson K, Asch SM, et al. Potentially avoidable hospitalizations after chemotherapy. Cancer. 2020;126(14):3297-3302. doi:10.1002/cncr.32896
- Rosen AK, Vanneman ME, O'Brien WJ, et al. Comparing cataract surgery complication rates in veterans receiving VA and community care. Health Serv Res. 2020;55:690-700. doi:10.1111/1475-6773.13320
- Woolhandler S, Toporek A, Gao J, Moran E, Wilper A, Himmelstein DU. Administration's share of personnel in Veterans Health Administration and private sector care. JAMA Network Open. 2024;7(1):e2352104. doi:10.1001/jamanetworkopen.2023.52104
- Penn M, Bhatnagar S, Kuy S, et al. Comparison of wait times for new patients between the private sector and US Department of Veterans Affairs Medical Centers. JAMA Network Open. 2019;2(1):e187096. doi:10.1001/jamanetworkopen.2018.7096
- Griffin KN, Ndugga NJ, Pizer SD. Appointment wait times for specialty care in Veterans Health Administration facilities vs community medical centers. JAMA Network Open. 2020;3(8):e2014313. doi:10.1001/jamanetworkopen.2020.14313
- Feyman Y, Legler A, Griffith KN. Appointment wait time data for primary & specialty care in veterans health administration vs community medical centers. Data in Brief. 2021;36:107134. doi:10.1016/j.dib.2021.107134
- Pettey WBP, Wagner TH, Rosen AK, et al. Comparing driving miles for Department of Veterans Affairs-delivered versus Department of Veterans Affairs-purchased cataract surgery. Med Care. 2021;59(6)Suppl 3:S307-S313.
- Farmer CM. Wait times for veterans scheduling health care appointments. Testimony before the Committee on Veterans Affairs, United States Senate. The RAND Corporation. September 21, 2022.
- Rasmussen P, Farmer CM. The promise and challenges of VA community care. RAND Health Quarterly, 2023. Available at RAND.
- Vashi AA, Urech T, Tran LD. Community emergency care use by veterans in an era of expanding choice. JAMA Network Open. 2024;7(3):e241626. doi:10.1001/jamanetworkopen.2024.1626