Veterans Affairs officials don't know how many veterans are using the new "choice card" program, but it's a small enough total that they want to start taking money out of the program.
The move is likely to ignite a lengthy fight on Capitol Hill with lawmakers who created the program last summer following the department's patient-wait-time scandal and who doubt VA's ability to serve veterans in a timely and effective manner.
As part of the agency's nearly $169 billion fiscal 2016 budget plan, White House officials said they will submit legislation to "reallocate a portion of Veterans Choice Program funding to support essential investments in VA system priorities in a fiscally-responsible, budget-neutral manner."
Congress approved $15 billion in funding for two years of the program, with $5 billion for physician hiring and the rest to establish a temporary program making it easier for veterans to seek private, non-VA health care.
The goal was to provide quicker appointments, after tens of thousands of veterans nationwide were found to be waiting more than a month for medical visits and physician consults.
But on Monday, VA assistant secretary for management Helen Tierney said officials have "a strong indication that this is not their preferred choice" and "would prefer to remain in the VA" for medical care.
About 8.5 million choice cards have been issued to veterans, who are eligible for the program if they live in rural areas or face more than a month wait for medical appointments.
Tierney could not say how many veterans are using the program, how many are eligible but preferred to stay in VA care, or how much money might be moved around.
But she said the funding could be used to supplement more "essential" services at the department.
House Veterans Affairs Committee Chairman Jeff Miller, R-Fla., blasted the department's announcement as short-sighted and potentially harmful to veterans.
"If there's one thing we've learned over the last year, it's that VA's numbers cannot be trusted," he said in a statement. "The president's idea to reallocate a portion of Veterans Choice Program funding to other areas of VA is a complete non-starter, which I will not support.
"When a near-unanimous Congress worked with President Obama last year to create the choice program, we made a promise to veterans to give them more freedom in their health care decisions. I will not stand idly by while the president attempts to renege on that promise."
Tierney promised to lay out a stronger case for using the money elsewhere in months to come.
But in recent weeks, several Republicans on Capitol Hill have questioned whether VA should be shifting more health care appointments outside their facilities, not bringing veterans back in. The issue is likely to become the most controversial aspect of the VA budget discussions, even before any specific figures are outlined.
The VA budget grew almost $100 million from fiscal 2004 to to fiscal 2014, and lawmakers have promised to more closely scrutinize that spending in wake of last year's scandal.