To examine how service accessibility measured by geographic distance affects service sector choices for veterans who are dually eligible for veterans affairs (VA) and Medicare services and who are diagnosed with mental health and/or substance abuse (MH/SA) disorders.
Primary VA data sources were the Patient Treatment (acute care), Extended Care (long‐term care), and Outpatient Clinic files. VA cost data were obtained from (1) inpatient and outpatient cost files developed by the VA Health Economics and Resource Center and (2) outpatient VA Decision Support System files. Medicare data sources were the denominator, Medicare Provider Analysis Review (MEDPAR), Provider‐of‐Service, Outpatient Standard Analytic and Physician/Supplier Standard Analytic files. Additional sources included the Area Resource File and Census Bureau data.
We identified dually eligible veterans who had either an inpatient or outpatient MH/SA diagnosis in the VA system during fiscal year (FY)'99. We then estimated one‐ and two‐part regression models to explain the effects of geographic distance on both VA and Medicare total and MH/SA costs.
Results provide evidence for substitution between the VA and Medicare, demonstrating that poorer geographic access to VA inpatient and outpatient clinics decreased VA expenditures but increased Medicare expenditures, while poorer access to Medicare‐certified general and psychiatric hospitals decreased Medicare expenditures but increased VA expenditures.
As geographic distance to VA medical facility increases, Medicare plays an increasingly important role in providing mental health services to veterans.