I know that somewhere out there there is case law or a statute or a regulation or something that limits the extent to which an employer health plan can exclude benefits for services provided in a VA hospital. But I cannot remember or locate the source of this rule. Can anyone help me out with a cite or a lead?

Try 38 USC Section 1729 and the VA’s website at www.va.gov/mccr. My understanding is that when a veteran gets treatment at a VA facility for a non-service connected medical condition, the VA can bill the veteran’s group health plan for the treatment. In the past, the VA billed group health plans based on the VA’s cost of providing treatment. Due to a change in the law, the VA will start billing what it deems to be reasonable charges, in accordance with schedules developed by the VA. (On the website I think but I haven't checked.) If less than the VA’s billed charge, a plan may pay the amount it would have paid for the same treatment from a private-sector provider in the same geographic area. The VA may ask for substantiation of the lesser amount.

Thanks Linda!! That's exactly what I was looking for.