STATEMENT
OF
KENNETH W. KIZER, M.D., M.P.H.
UNDER SECRETARY FOR HEALTH
DEPARTMENT OF VETERANS AFFAIRS
ON
PROPOSED LEGISLATION
BEFORE THE
SUBCOMMITEE ON HEALTH
COMMITTEE ON VETERANS' AFFAIRS
UNITED STATES HOUSE OF REPRESENTATIVES

May 19, 1999

Mr. Chairman and Members of the Subcommittee, I am pleased to be here this morning to comment on two draft bills that, if enacted, would have far reaching effects on VA health care. The first measure is an omnibus bill that would establish an extended care services program for veterans. It would improve access to VA health care for some groups of veterans and enhance the Department’s ability to provide health care services more cost efficiently. The second draft bill would establish a pilot program under which VA would test its ability to provide care to dependents of enrolled veterans. We generally support these proposed measures, although we have concerns about their costs.

DRAFT BILL - VETERANS MILLENNIUM HEALTH CARE ACT

Extended Care Services Program

The draft bill would require the Department to operate and maintain an extended care services program for veterans. Extended care services under the program would include a number of inpatient and outpatient services currently available, such as geriatric evaluation, nursing home care (in VA and community facilities), domiciliary services, adult day health care, non-institutional alternatives to nursing home care such as homemaker services, and respite care.

The bill specifies that VA "shall" furnish extended care services for veterans in need of such care for a service-connected disability and those who need such care for any reason if they have a service-connected disability rated 50% or higher. The draft bill further requires the Secretary to give the highest placement priority in Department facilities to veterans needing nursing home care for service-connected disabilities and veterans who have a service-connected disability rating of 50% or higher. Any veteran in either of those two groups who is receiving care in a Department nursing home facility and who continues to need such care could be transferred out of the facility only with that veteran’s consent. The bill would also require the Secretary to promulgate regulations giving priority for placement in Department nursing homes to those in need of nursing home care for rehabilitation, those in clinically complex patient populations, and those for whom no other suitable placement options exist.

The draft bill would provide that all veterans other than noted above could receive extended care services only if they agree to pay the United States a copayment for extended care services furnished in excess of 21 days in any year. The draft bill would require the Secretary to promulgate regulations establishing a methodology for determining the copayment amounts required of those veterans for extended care services. Such methodology would have to provide for a maximum monthly copayment, provide protection from financial hardship for the veteran’s spouse, and provide a monthly personal allowance for the veteran. The new copayment requirements would not be effective until promulgation of the regulations.

The draft bill would also establish a new Veterans Affairs Extended Care Fund. All copayments recovered in connection with the provision of extended care services would be deposited in this fund. Such funds would be available without any fiscal year limitations and would be available exclusively for providing extended care services. Finally, the draft bill would give the Secretary authority to recover any copayments owed to the United States through existing recovery methods.

We are generally supportive of the creation of an extended care program, although various technical issues need to be clarified (e.g., discharge of mentally incompetent patients and what is a clinically complex patient). The draft bill would serve to clarify eligibility for VA long-term care services for those veterans who have traditionally had a high claim to VA health care benefits. It would also establish clear priorities for receipt of such care. It also would provide funding mechanisms, although we have significant reservations about the adequacy of the proposed co-payment funding methodology.

VA is currently in the process of developing a long-term care strategy in response to the recommendations made by VHA’s Federal Advisory Committee on the Future of VA Long-Term Care. However, we believe that significant costs would be associated with this provision.

Long-Term Care Planning

The draft bill would require the Secretary to develop and begin implementation, not later than January 1, 2000, of a plan to carry out the recommendations of the Federal Advisory Committee on the Future of Long-Term Care. Specifically, it would require VA to plan for an increase in the options and services available for home and community-based care for eligible veterans from levels provided at the end of FY ’98. The bill would also require VA to increase the percentage of the VA medical care budget dedicated to such care from the level provided at the end of FY ‘98. In implementing such a plan, the draft bill would require the Secretary to ensure that, nationally, the staffing and level of extended care services during any fiscal year is not less that that provided nationally in VA facilities during FY ‘98.

In our view, these latter provisions of the draft bill are unnecessary. We asked the Advisory Committee to assist us in our long-term care strategic planning, and we have used their advice in developing a strategic plan which is now undergoing comment both internally in the VA and among stakeholders. It is premature and unnecessary to mandate an additional planning process. Moreover, the Department is already committed to increasing home and community-based care funding levels in the FY 2000 budget, and we intend to continue to shift funds to these programs as recommended by the Federal Advisory Committee on the Future of Long Term Care. The requirement to maintain a certain level of staffing and specified extended care services is unnecessary and is unduly burdensome.

Miscellaneous Extended Care Provisions

The draft bill would clarify that Adult Day Health Care shall be available under the Extended Care Services Program only for enrolled veterans who would otherwise need nursing home care. The bill would also permit VA to furnish respite care under the program to enrolled veterans in any appropriate setting, including the home. Finally, the bill would authorize VA to pay a per diem to State Homes for all forms of extended care. This provision would give VA and the states greater flexibility to work together in furnishing a wider array of long-term care services, a goal the Administration supports. It would continue to enhance the role of states in meeting the needs of older veterans. The VA is supportive of these concepts, which are consistent with recommendations made by the Federal Advisory Committee on the Future of Long-Term Care. Issues of cost, however, remain to be resolved.

Eligibility for VA Health Care for Combat-Injured Veterans

The Eligibility Reform Act of 1996 (Public Law 104-262) directed VA to establish a system of patient enrollment and to enroll veterans in accordance with statutorily established priorities. The draft bill would give a new group of veterans, those who were injured in combat, a specific priority for enrollment and receipt of care. These individuals would have the same priority for enrollment as former prisoners of war and veterans with service-connected disabilities rated 10% or 20%. Veterans included in the definition of "injured in combat" would be those who were wounded in action as the result of an act of any enemy of the United States or otherwise wounded in action by weapon fire while directly engaged in armed conflict. While we philosophically support this provision, which would ensure a high priority for enrollment and VA health care for those most deserving veterans, we also have concerns about the operability of defining "injured in combat". I note, for example, that we have no data on the number of veterans that fall into this category, and consequently cannot assess its impact on resources.

Care for Retired Military Service Members

Retirees eligible for TRICARE are already veterans potentially eligible for VA care. However, many of these veterans do not have a service-connected disability and have an income and net worth such that they have the lowest priority for enrollment in VA’s health care system. The draft bill would provide these veterans, who provided the nation with long and valuable service, with priority for VA health care that is higher than those currently placed in priority category VII. In other words, they would have a priority above non-service-connected veterans whose income and net worth exceed VA’s means test threshold.

More specifically, the draft bill would establish a new program under which military retirees eligible for DOD’s TRICARE program could elect to receive care from VA. Under this new program, DOD would directly reimburse VA for any such care. To carry out the new program, the draft bill would require the Secretary of Veterans Affairs and the Secretary of Defense to enter into an agreement no later than May 1, 2000, under which DoD would agree to reimburse VA for care provided to such military retirees. Such reimbursement would be at the same rates that DoD would pay to contractors under the TRICARE program in the regions in which the retiree resides. The proposed bill would require that all such DoD payments be deposited in a new "Health Services Improvement Fund" which would be established under another provision of the draft bill to be later discussed in this statement.

This proposed measure is still currently under review by the Administration. Once that review is completed, I will be glad to provide the Department's views on this proposal.

Copayments

The draft bill would give the Department the authority to establish new copayments and flexibility to alter existing copayment requirements. First, the draft bill would require the Secretary to promulgate regulations by which the Secretary may increase above $2.00 the current copayment amount applicable for each 30 day supply of medication furnished on an outpatient basis for the treatment of a non-service-connected disability or condition. Second, the draft bill would permit the Secretary to establish an annual maximum copayment amount for veterans who have multiple outpatient prescriptions.

In addition, the draft bill would authorize the Secretary to establish reasonable new copayment requirements for veterans receiving sensory-neural aids (e.g. eyeglasses and hearing aids), electronic equipment, and other costly items or equipment furnished for non-service-connected conditions. However, VA could not impose copayments in connection with receipt of a wheel chair or artificial limb. Also, as with the pharmacy copayment requirement, low income veterans and those needing the aid, item, or equipment for a service-connected disability would be exempt from these new copayment requirements. We concur with this measure, which would provide VA with an additional tool to help ensure that we have the ability to provide these items and equipment to more veterans.

The draft bill would further provide that increased revenues from the pharmacy copayments and new copayment(s) imposed by regulation in connection with sensory-neural aids, electronic equipment, and other costly items or equipment would be deposited in a new Health Services Improvement Fund. (Further discussed later in the statement)

Finally, the draft bill would amend current law to give the Department the flexibility to adjust the copayment that is now paid by priority VII veterans when they receive outpatient care. Under current law, these veterans are required to pay 20% of the average cost of an outpatient visit per treatment episode. VA supports these new co-payment flexibilities. We welcome this change, which will allow the Department to consider imposing copayments that are more consistent with prevailing norms in the health care industry.

Health Services Improvement Fund

The draft bill would establish the "Department of Veterans Affairs Health Services Improvement Fund." VA would be required to deposit into the fund any amount(s) received or collected from four different sources. First, VA would deposit into the fund the amounts collected as a result of any increase in the pharmacy copayment. Second, VA would deposit amounts received from new copayments associated with the provision of sensory-neural aids and costly equipment. Third, VA would deposit amounts generated under VA’s amended enhanced use-lease authority. Finally, VA would deposit amounts received under an agreement with DOD for the proposed provision of care to military retirees.

Amounts in the fund would be available without fiscal year limitation for furnishing medical care and services and for recovering amounts owed the United States by reason of such furnished care and services. We support the authorities providing for increased revenues noted in this section, however, we have some concerns about establishing a new fund with essentially the same purpose as the Medical Care Cost Recovery Fund (MCCF). We have particular concerns about the administrative burden that would result from splitting each pharmacy copayment between two separate funds.

Tobacco Trust Fund

The draft bill sets forth several findings that generally explain that widespread tobacco use by veterans has resulted in many veterans suffering from serious chronic diseases and adverse health effects resulting from their tobacco use. Additional findings address VA’s continued obligation to treat and manage these veterans’ tobacco-related conditions and the ever-increasing demand these costs place on the Department’s medical care budget.

The draft bill would establish a Veterans Tobacco Trust Fund. The fund would be created as a depository for funds that VA may receive in the event the Government pursues litigation against the tobacco manufacturers and is successful. The amount to be credited to the fund would be the Department’s appropriate portion of any amount recovered by the United States. That amount would be based on the ratio that VA’s costs for treating tobacco-related illnesses for which recovery is sought in the lawsuit bear to the Government’s total costs for treating tobacco-related illnesses for which recovery is sought. The fund would be available, without fiscal year limitation, for furnishing medical treatment to veterans. It could also be used for the conduct of research, especially that relating to tobacco addiction and the prevention and treatment of diseases and illnesses associated with tobacco use. The Administration supports dedicating the portion of recoveries from any Federal tobacco litigation that are attributable to veterans costs, to the VA health care system. As this is a cross-agency coordination issue, we are currently looking at the mechanisms through which this might be accomplished, and look forward to working with you on it.

Compensation Benefits under 38 U.S.C. 1151 for CWT participants

VA’s Compensated Work Therapy (CWT) program is a therapeutic work program for veterans receiving VA care. These CWT programs are aimed at furthering the veterans’ full rehabilitation. Veterans participate in this therapeutic program in diverse workplace settings. In the event of a work-place injury, these veterans are not eligible for any compensation benefits for the injury absent a finding of negligence. The draft bill would remedy this situation by making a veteran eligible for compensation benefits under section 1151 of title 38, United States Code, for any injury proximately caused by the veteran’s receipt of care through this therapeutic work program.

We feel this provision is reasonable since it would help ensure that veterans participating in this health care work program have a remedy similar to other individuals injured in the workplace. However, under pay-as-you-go (paygo) rules, the cost of this provision would have to be offset. We are currently in the process of calculating a paygo estimate.

Adding an Education Mission for Research Corporations

The draft bill would broaden the activities of VA research corporations to include education and training. The corporations, organized under state law pursuant to the power of the Secretary to authorize them, currently exist solely to support VA-approved research. They serve as a "flexible funding mechanism" to accept donations and grants and apply them in support of specified VA research projects. Each is managed under a board of directors that includes, ex officio, the VAMC director and chief of staff, and the associate chief of staff for research at the VA medical center it supports. The research corporations are subject to Inspector General audit and are required to obtain independent audits as well, and each year to report, formally and in detail, to the Secretary.

Congress originally authorized the research corporations in 1988. They did so on the basis that the VA lacked explicit authorization to administer research funds from non-VA sources. Corporations were viewed as offering needed flexibility because they were not limited by Government hiring ceilings and their administrative charges could be held below those imposed by the academic institutions which had been handling support for some research. Research corporations have fulfilled much of their promise. In the last reporting year, 89 corporations had administered some $98.5 million dollars in donations or grants. Their flexibility has been a significant factor in the success of VA research.

This proposal would convey an alternative corporate mechanism for bringing donations to bear in support of VHA education activities. Under current law, VHA administers such donated support through the General Post Fund, pursuant to VA’s statutory gift authority. VHA concurs with these provisions.

Enhanced Services Program

The draft bill would establish a new health services program to improve veterans’ access to, and receipt of, quality health care. It would, in effect, permit the Secretary to identify better uses for Department medical centers that do not adequately and efficiently furnish quality hospital care or services, while ensuring the veteran populations served by those centers receive improved access to quality care.

To carry out the program, the draft bill would require the Secretary to designate each medical center that the Secretary finds is no longer able (in whole or in part) to provide hospital or other care efficiently and of optimal quality. In designating any such center, the Secretary must find that the center is located either near a community hospital(s) that has the capacity to provide veterans in the affected catchment area with needed hospital care or another VA hospital that can absorb the center’s patient workload.

The Secretary must develop a plan aimed at improving veterans’ access to, and receipt of, quality health care at each designated center. Under the draft bill, the Secretary would be permitted to propose any of following different actions with respect to each such center. The plan could provide for the Secretary to contract for needed hospital care for enrolled veterans residing in the affected catchment area. It could also provide that the designated center cease providing hospital care and other medical services. It would permit the Secretary to lease, if practicable, the center’s land and improvements that are no longer needed for furnishing health care. Finally, such plan could permit the Secretary to convert the center into a facility that provides other forms of care, including outpatient care and services that may obviate the need for nursing home care or other long-term institutional care.

Any such plan would have to be consistent with VHA’s network strategic planning requirements. The draft bill would require the Secretary, in developing each such plan, to permit stakeholders to participate in the process and to take their views into consideration. It would also require the Secretary to submit each plan to the appropriate congressional committees and would prohibit the Secretary from implementing any plan until 45 days after its submission, 30 days of which shall be during a continuous session of Congress.

In carrying out a plan under the new program, the draft bill would authorize the Secretary to contract for the provision of care for veterans residing in the affected catchment areas using either fee-basis authority or sharing authority. Importantly, the draft bill would permit use of fee-basis authority without regard to existing statutory limitations on that authority. The authority would be limited, however, to providing care to veterans with mandatory eligibility, i.e., those who are enrolled in priority levels 1 through 6 of VA’s health care system. The Secretary, in exercising such authority, must manage and oversee any such contracts.

As to any plan under which hospital care or services would no longer be furnished by the designated medical center, the draft bill would require the Secretary to ensure that reemployment assistance is provided to the center’s employees. In those facilities, the Secretary would also have to ensure that not less than 90% of the funds that would have otherwise been made available to the designated medical center is made available to the appropriate health care region such that the plan will show demonstrable improvement in the affected veterans’ access to health care and in the quality of the care that is furnished.

Finally, the Secretary, in carrying out this program, must continue to maintain VA’s capacity to provide for the specialized treatment and rehabilitation needs of certain disabled veterans receiving care within distinct programs or facilities dedicated to their specialized needs.

We support the concept of the Enhanced Services Program proposed in the draft legislation. The concept is consistent, in principle, with the OMB Capital Programming Guide, GAO's recommendations regarding a market based capital asset restructuring plan, as well as VHA's Mission Realignment proposal. The goal of the Enhanced Services program appears to be "improved access and quality of services provided to veterans through better alignment of mission and capital resources at VA facilities."

The key to good capital planning is good strategic planning. VA's capital assets have not always been appropriately matched with the missions and need for veterans services in the markets in which they are located. In order to maximize the benefit and minimize the cost of VA's vast capital asset inventory, it is necessary to assess the compatibility of both VA owned as well as other "market assets" with the veterans' health care needs in those markets. As noted during the HVAC March 10, 1999, hearing on VA's Capital Asset Planning, we believe consultant studies would cost as much as $35 million in FY 2000 to support the recommended market based capital asset restructuring plans in the 40 multiple market locations identified in GAO's report. The criteria for these capital asset restructuring studies would necessarily be essentially the same as those identified in the draft legislation as well as in VHA's Mission Realignment Proposal. Pursuant to the findings and results of those studies, additional future funds would be requested to complete similar market based asset restructuring plans in the remaining 66 health care markets in which VA operates multiple health care facilities.

One potential shortcoming of the draft legislation is that the draft appears to focus on enhanced service programs at individual facilities or "centers". To get the maximum benefit from such studies and realignment of capital resources, the scope of the assessments should be geographic areas, multiple facility markets or preferably VHA Networks rather than individual facilities or centers. We would note that VHA is also considering establishing advisory committees in each VISN to oversee our planning efforts to assure appropriate participation and local stakeholder buy-in to such plans. Further, the period of time specified for congressional review is excessive and should be reduced to 30 days, maximum.

Expanded Enhanced-Use Lease Authority

The draft bill would expand the existing enhanced-use leasing authority to add as an eligible purpose for an enhanced-use lease a finding by the Secretary that the application of the consideration being offered by a proposed lessee would result in a demonstrable improvement of services to eligible veterans in the geographic service-delivery area where the property is located. It would also increase the maximum length of the lease term to 75 years from the current maximum of 35 years where the lease requires new construction and 20 years where the lease involves minimal rehabilitation. In addition, the draft bill would delete the current limitations on the accounts from which payments for the use of space on the leased premises may be made and by inserting in lieu thereof specific authority for the Department to obtain facilities, space and services on the leased premises, and to make capital contribution payments to the lessee for such space and services from the VA’s minor construction funds.

The proposed legislation would also amend existing authority relative to the notice of a public hearing on the proposed designation of a site available for enhanced-use leasing, and the notice to Congress of a proposed enhanced-use lease to address the expanded eligibility, if appropriate, that the application of the consideration being offered by a proposed lessee would result in a demonstrable improvement of services to eligible veterans in the geographic service-delivery area where the property is located.

The draft bill would further provide that funds received by the Department from enhanced-use lease proceeds would be deposited into a new fund, the "Department of Veterans Affairs Health Services Improvement Fund". A minimum of 75% of the funds earned from a particular lease would be made available to the VISN within which the leased property is located.

This section would provide a 3-year extension of VA’s enhanced-use leasing authority until December 31, 2004. This authority has provided a highly beneficial tool for VA. However, a number of questions have arisen regarding the specific form such legislation should take, which are being actively considered within the Administration. When those discussions have been completed, we will be in a position to comment on the Committee’s proposal.

Extensions of Various Program Authorities

The draft bill includes four provisions that would extend existing program authorities, committee, and reporting requirements. First, the draft bill would extend, through December 2002, the Department’s authority to provide readjustment counseling to Vietnam era veterans who served on active duty but did not serve in combat or in an area of hostilities after May 7, 1975. We support this provision. Currently, this authority is set to expire on January 1, 2000, unless such veterans seek or receive readjustment counseling services before that date.

Second, the draft bill would extend for two more years the Secretary’s requirement to submit to Congress updated reports (including Departmental responses) on the activities, plans, findings and recommendations of the Department’s Committee on Care of Severely Chronically Mentally Ill Veterans. VA concurs with this provision. This Committee was established by Congress in 1996, and was charged to report annually to the Under Secretary for Health on VHA’s capacity to effectively meet the treatment and rehabilitation needs of severely, chronically mentally ill veterans. In carrying out this task, the Committee supports VA mission goals of Excellence in Health care Value and Excellence in Customer Service espoused in the Prescription for Change (1996). Among the issues addressed by the Committee are: the impact of deinstitutionalization of patients with psychoses, the impact of integration of VA facilities, the development of VISN-based consumer liaison councils, and the impact of VHA’s reorganization of health care delivery on special emphasis populations such as homeless veterans and those suffering from addictive disorders. The Committee plans to focus its attention on the proposed enhanced collaboration of mental health and medical/ surgical services in VHA. These are all issues that are evolving, and it is reasonable to assume that the input of the Committee, whose membership includes both mental health clinician/administrators and facility and VISN leadership, will continue to be needed for the increased time proposed in the draft legislation.

Third, the draft bill would renew the requirement of the Secretary to submit a report to the Congressional Committees on Veterans’ Affairs on the Department’s special programs for the diagnosis and treatment of post-traumatic stress disorder. This would, in effect, require the Secretary to re-establish the Special Committee on Post-Traumatic Stress Disorder. The report must also address the activities, reports, and recommendations of the Committee and must be submitted not later than March 1, 2000. The draft bill would further require the Secretary to update that report not later than February 1, 2001, and by every February 1 of each of the following three years.

VHA does not object to establishing such a committee and submitting the reports, however, it believes that a better alternative is available. In 1996, Congress created the Advisory Committee on Care of Severely Chronically Mentally Ill Veterans for similar purposes. The Advisory Committee on Care of Severely Chronically Mentally Ill Veterans has specific responsibilities to advise VA on it’s assessment of VA’s effectiveness and capacity for meeting the health care needs of Severely Chronically Mentally Ill veterans, including those suffering with PTSD. Although a new committee could be established under the auspices of the National Center for PTSD & with funding support from the Center, we believe a better alternative would be to establish a sub-committee or working group on PTSD of the Committee on Care of Severely Chronically Mentally Ill Veterans. This arrangement would keep the role of advising VA and Congress on the capacity and effectiveness of mental health programs within one advisory committee structure.

Finally, the draft bill would amend VA’s Homeless Providers Grant and Per Diem Program by extending the program’s authority through September 30, 2002. We support this proposed change. During the last five rounds of funding, more than 600 applications were received, requesting approximately $150 million to acquire, renovate, or construct supportive housing or service center facilities for homeless veterans or to purchase vans for outreach and transportation. In FY 94 through FY 98, 127 grants were awarded to 101 non-profit organizations, state or local government agencies, and Indian Tribal Governments in 39 states and the District of Columbia. Currently, over 30 programs now operate, providing over 1004 transitional housing beds for homeless veterans. During FY 98, over 2,580 veterans received services from these community-based programs for a total of 208,102 days of residential care.

The Grant/Per Diem Program gives VA authority to collaborate with community providers to assist homeless veterans. These collaborations have direct implications for VHA Strategic Goals of decreasing the average cost per patient (e.g., the availability of supportive housing for homeless veterans gives VA Medical Centers, for some patients, other alternatives rather than more costly inpatient treatment); increasing the number of users (e.g., a primary service component necessary for community providers funded under the Grant/Per Diem Program is "targeting" veterans that would not usually have access to VA care. These outreach endeavors increase new user access.); and increasing the percent of operating budget obtained from non-appropriated sources (e.g., each grant recipient must match VA moneys with local or state resources.)

The draft bill would also lift the current restriction on the number of grants that may be awarded to programs that provide for the procurement of vans. Currently, VA may award only 20 grants to programs for the procurement of vans. This proposed change would enable the Homeless Providers Grant and Per Diem Program to provide funds for community providers to procure vans. These vans will be utilized to provide outreach to and transportation for homeless veterans. The need for these vans is exemplified by the fact that over sixty community providers applied for vans in the first two years of the program. Additionally, the VA Inspector General’s report "The Impact of Downsizing Inpatient Substance Abuse Rehabilitation Programs on Homeless Veterans and other Frequent Users" (Report 7H1-A28-108) emphasized the importance of transportation resources for homeless veterans to continue courses of treatment or to pursue treatment options. Also, the need for outreach to and transportation for homeless veterans has also been identified as a community priority on yearly CHALENG surveys. VA supports this provision.

Canteen Service Authority

The draft bill would grant the Veterans Canteen Service (VCS) the authority to offer its full product line to all Department patients, regardless of whether the patient is receiving care on an inpatient, domiciled, or outpatient basis. The proposed legislation would also expand the authority of the VCS to provide support services, such as inpatient feeding, to Department medical facilities on a reimbursable basis.

In recent years, the Department has made dramatic changes in how it delivers health care to veterans. The focus has shifted to providing care on an outpatient basis rather than on an inpatient basis. As a result, a greater number of veterans are receiving their care at medical facilities other than VA "hospitals or homes." Current law restricts the sale of VCS items which cannot be used or consumed on the premises at Department facilities which are not "hospitals or homes," such as outpatient clinics. This restriction hinders VCS’ ability to provide full service to veteran outpatients. The proposed amendments would remove this restriction by eliminating the "consumable on premises" requirement and replace the words "hospitals and homes" with the words "medical facilities" or "treatment facilities." The draft bill would also authorize VCS to provide the Department support services, such as inpatient feeding, on a reimbursable basis. This change would afford VA the flexibility of merging services that now exist in parallel, such as food preparation by both the Nutrition and Food Service and VCS, where appropriate to decrease duplicative costs and increase Department efficiency. Initial test sites have indicated that eliminating duplication in as few as ten locations could yield annual savings well in excess of two million dollars. The savings are realized in areas such as employee wages and benefits, equipment cost, and raw food cost.

The changes proposed in the draft bill would enhance the services VCS would be able to provide to veterans and the Department without limiting existing VCS obligations under other laws in any way. Moreover, the VA Office of General Counsel advises that this proposal does not limit VA’s obligations under the Randolph-Sheppard Act. Accordingly, VA supports this section.

Feasibility Study on the Provision of Assisted Living Services

The final provision of the draft bill would require the Secretary to submit a report not later than April 1, 2000, to the Congressional Committees on Veterans Affairs on the feasibility of establishing a pilot program to provide veterans assisted living services. The Federal Advisory Committee on the Future of Long Term Care recommends an enhanced role for the Department in providing assisted living services. We support this section.

Reimbursement for Non-VA Emergency Treatment

The draft bill would authorize the Secretary of the Department of Veterans Affairs to reimburse a limited number of veterans enrolled in VA’s health care system for emergency treatment furnished by non-VA facilities for any disability. Generally, VA can now reimburse for emergency care only for service-connected disabilities. The proposal would limit eligibility for this benefit to veterans who are enrolled in priority levels (1)-(6) of VA’s health care system and who have received VA care within the twelve-month period preceding the emergency treatment.

The draft bill provides that VA would be a payer of last resort. VA would pay for non-VA emergency treatment only when no other third party is liable, in whole or in part, for payment for the treatment. Thus, if the veteran has any insurance coverage that would pay for any of the furnished emergency treatment, no reimbursement would be authorized under the proposal. Moreover, if the veteran were eligible for Medicare or Medicaid, VA would not provide reimbursement for the care.

The Secretary, in lieu of reimbursing the veteran, may directly pay a person who paid for the treatment on the veteran’s behalf or pay the provider of the emergency treatment for its reasonable value as determined by the Secretary. If the provider of emergency treatment accepts the VA payment, the provider must consider that as payment in full and may not bill the veteran for any additional amount. Should a third party subsequently make any payment for the veteran’s emergency treatment, the bill would give the United States an independent right to recover its payment.

This provision would expand the Administration’s proposal to also provide out-of network emergency care to lower-priority veterans. The President’s FY 2000 Budget recommends funding for categories 1-3, but does not include funding for out-of-network emergency care for priority groups 4-6. The Administration is supportive of efforts to address the issue and will work with you in this regard.

Changes to VHA Operations

The draft bill would prohibit the Secretary from closing more than 50% of the Department’s beds in any bed section having at least 20 beds until the Secretary submits a justification for such closure to Congress and waits 45 days. The justification would have to include an explanation as to why the closure is appropriate, a description of the changes in the functions to be carried out, the means by which VA would continue to provide care and services to eligible veterans, and a description of the anticipated effects of the closure on veterans and their access to care. The bill would also impose quarterly reporting requirements regarding any medical center’s change in the mission of any bed section.

VA opposes this provision. The proposal establishes extensive oversight and reporting requirements for just one healthcare resource -- inpatient beds. The imposition of this level of congressional oversight would be burdensome and would impede the Department's ability to effectively manage the delivery of health care. The emphasis on keeping beds open as a way of assuring availability of healthcare is outdated. Since 1995, VA has been reengineering its healthcare system to place the emphasis on providing the right care to veterans in the right location at the right cost. In essence, VA has developed integrated healthcare delivery networks that focus on providing coordinated care to the patient and improving patient outcomes. This section focuses more on existing facilities than on having VA provide high quality healthcare that improves patient outcomes, is cost effective and allows more veterans to be treated. We believe the loss of flexibility to manage bed levels that this provision portends will result in delayed or denied actions to improve the effectiveness of VA healthcare; increased and unnecessary costs; and less than optimal management actions in trying to comply with these new requirements.

Pilot Program to Evaluate Chiropractic Treatment

The draft bill would allow the Secretary to operate from October 1, 2000, through September 30, 2001, a demonstration program to evaluate the effectiveness of providing chiropractic treatment to enrolled veterans. The program could be established at up to five medical facilities, and VA could hire, and contract for, chiropractors or chiropractic treatment for the duration of the program. Chiropractors would also have to be involved in planning the program. The proposal would require the Secretary to submit a report to Congress before July 1, 2000, on the plans to implement this program. A final report on the program’s operation, evaluation, and cost would be due not later than June 1, 2003.

VA opposes this provision. It is not necessary and creates additional paperwork. Currently, VA can hire chiropractors, or can contract for chiropractic care, and is supportive of such.

DRAFT BILL - PILOT PROGRAM FOR CARE OF DEPENDENTS

The draft legislation would authorize the Secretary to conduct a pilot program allowing certain eligible dependents of enrolled veterans to receive medical care from VA. The pilot program would last for three years and would take place at no more than four VISNs designated by the Secretary. The Secretary’s designation would have to be based on a number of factors, including the VISN’s capacity to participate in the program without limiting care and services for veterans, its success in billings and collections, the support for the pilot program among the veteran population, and "other appropriate criteria" identified by the Secretary.

Under the pilot program, dependents could receive "primary health care services" from VA, including primary hospital care services and other primary medical services authorized by the Secretary. The services could be furnished directly by VA or pursuant to a contract or other agreement with a non-VA facility. "Eligible dependents" would include the spouse or child of an enrolled veteran. The dependent must be able to pay for services either directly or through reimbursement or third party indemnification. The dependent would have to agree to pay for reasonable charges, including copayments, and must assign benefits and authorize the release of medical records or other "executed documents, information or evidence" needed by the Secretary to recover payment.

The Secretary could not provide services to dependents if doing so would result in a denial or delay in providing care to enrolled veterans. The proposed legislation states that any funds collected will be deposited into the VA Medical Care Collections Fund.

VA supports conducting this pilot effort. The pilot would support VHA’s efforts to acquire 10% of resources from non-appropriated sources. Veterans frequently express interest in having their dependents also receive health care through the VA. The pilot would assess the impact of providing such services on VA health care. VA supports these provisions.

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