Purpose: The reimbursement rate that eligible veterans receive for travel to Department of Veterans Affairs (VA) facilities increased from 11 to 28.5 cents per mile on February 1, 2008. We examined the effect of this policy change on utilization of outpatient, inpatient, and pharmacy services, stratifying veterans based on distance from a VA facility. Methods: We compared health care utilization and costs on a sample of VA patients in the 10.5 months before the reimbursement rate increase and the 10.5 months after the reimbursement rate increase. Using a difference-in-difference technique, we ran multivariable logistic and count regressions for utilization and generalized linear models (GLM) for cost outcomes. Regressions were stratified based on urban and rural residence, as well as by distance thresholds. Findings: Our cohort contained 250,958 veterans, 76.7% (n = 192,559) of whom were eligible to receive a travel reimbursement. After the reimbursement rate increase, eligible veterans at all distances were 6.8% more likely to have an outpatient encounter and had 2.6% more outpatient encounters in the VA compared to those not eligible for the reimbursement (P less than 0.001). Similar results were found for prescription fills at all distances, but inpatient encounters remained generally unaffected. Conclusions: Our results suggest that this policy change was successful in increasing access to VA care for patients regardless of location of residence.