<DOC>
[107 Senate Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:82502.wais]
S. Hrg. 107-744
THE FISCAL YEAR 2003 BUDGET FOR VETERANS' PROGRAMS
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON VETERANS' AFFAIRS
UNITED STATES SENATE
ONE HUNDRED SEVENTH CONGRESS
SECOND SESSION
__________
FEBRUARY 14, 2002
__________
Printed for the use of the Committee on Veterans' Affairs
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COMMITTEE ON VETERANS' AFFAIRS
JOHN D. ROCKEFELLER IV, West Virginia, Chairman
BOB GRAHAM, Florida ARLEN SPECTER, Pennsylvania
JAMES M. JEFFORDS (I), Vermont STROM THURMOND, South Carolina
DANIEL K. AKAKA, Hawaii FRANK H. MURKOWSKI, Alaska
PAUL WELLSTONE, Minnesota BEN NIGHTHORSE CAMPBELL, Colorado
PATTY MURRAY, Washington LARRY E. CRAIG, Idaho
ZELL MILLER, Georgia TIM HUTCHINSON, Arkansas
E. BENJAMIN NELSON, Nebraska KAY BAILEY HUTCHISON, Texas
William E. Brew, Chief Counsel
William F. Tuerk, Minority Chief Counsel and Staff Director
(ii)
C O N T E N T S
----------
February 14, 2002
SENATORS
Page
Rockefeller, Hon. John D. IV, U.S. Senator from West Virginia,
prepared statement............................................. 3
Specter, Hon. Arlen, U.S. Senator from Pennsylvania, prepared
statement...................................................... 6
Thurmond, Hon. Strom, U.S. Senator from South Carolina, prepared
statement...................................................... 7
WITNESSES
Bollinger, John C., Deputy Executive Director, Paralyzed Veterans
of America, prepared statement................................. 77
Fischl, James, Director, National Veterans Affairs and
Rehabilitation Commission, The American Legion................. 91
Prepared statement........................................... 93
Response to written questions submitted by Hon. John D.
Rockefeller IV............................................. 101
Fuller, Richard, National Legislative Director, Paralyzed
Veterans of America............................................ 76
Hayden, Paul, Associate Director, National Legislative Service,
Veterans of Foreign Wars....................................... 85
Prepared statement........................................... 87
Jones, Bob, National Executive Director, AMVETS.................. 74
Prepared statement........................................... 75
Jones, Richard, National Legislative Director, AMVETS............ 88
Prepared statement........................................... 90
Principi, Hon. Anthony, Secretary of Veterans Affairs,
accompanied by Frances Murphy, M.D., Acting Under Secretary for
Health; Guy H. McMichael III, Acting Under Secretary for
Benefits; Robin L. Higgins, Under Secretary for Memorial
Affairs; Tim S. McClain, General Counsel; and D. Mark Catlett,
Acting Assistant Secretary for Management...................... 10
Prepared statement........................................... 13
Response to written questions submitted by:
Hon. John D. Rockefeller IV.............................. 18
Hon. James M. Jeffords................................... 61
Surratt, Rick, Deputy National Legislative Director, Disabled
American Veterans.............................................. 80
Prepared statement........................................... 81
APPENDIX
Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado,
prepared statement............................................. 117
Craig, Hon. Larry E., U.S. Senator from Idaho, prepared statement 117
Friends of VA Medical Care and Health Research, prepared
statement...................................................... 118
Weidman, Richard, Director of Government Relations, Vietnam
Veterans of America, prepared statement........................ 123
(iii)
THE FISCAL YEAR 2003 BUDGET FOR VETERANS' PROGRAMS
----------
THURSDAY, FEBRUARY 14, 2002
U.S. Senate,
Committee on Veterans' Affairs,
Washington, DC.
The committee met, pursuant to notice, at 10:09 a.m., in
room SR-418, Russell Senate Office Building, Hon. John D.
Rockefeller IV (chairman of the committee) presiding.
Present: Senators Rockefeller, Jeffords, Akaka, Wellstone,
Nelson, Specter, Thurmond, and Hutchison.
Chairman Rockefeller. Good morning, and I apologize, as I
often have to, for being a little bit late. And I welcome our
witnesses to our hearing today. I look forward to working, as I
always do, with Senator Specter, with Secretary Principi and
with other veteran service organizations and all parties
concerned to try to make some sense and do some good with the
2003 fiscal budget.
This is a process that we start today, and it is a crucial
process. While other issues come up, and I think Senator
Specter would agree with me, ultimately, nothing is more
important than the budget. The early reviews of the
administration's budget for the VA are mixed, and some have
characterized it as the biggest increase in history for the VA
and others as the best that can be expected during this
difficult time.
In my view, we can do better, and in the process, we can be
more forthcoming with veterans. And I think that is important.
Regardless of how good or how bad a budget might be, it is
important to be forthcoming.
I have a number of concerns that I will discuss today and
work on in the weeks ahead with my colleague, Senator Specter,
and my colleagues on the committee, because we always want to
make the budget better. No one should object to that. For
years, when we looked at the health care budget, we focused on
the declining veteran population and therefore the declining
demand. We are in a totally different predicament today. More
veterans are turning to the VA health care system, and one can
say that is a success story. But, of course, it carries with it
budget consequences.
There can be little doubt that the proposed funding for
medical care is below the amount needed to fund current
services. The proposed shift of funding for retirement and
other staff costs from OPM is cause for a great deal of
uncertainty in this Senator's mind as is the proposed
deductible, which is designed at its heart, to be blunt, to
drive veterans away. I will be exploring these matters in some
detail during the course of this and future meetings.
At the time Congress was enacting eligibility reform, I
spoke about the dilemma that we would face in opening up the
doors and providing a rich benefit package and how, down the
road, we would have to face the music. Well, we are now facing
the music. In my view, we and the administration have a choice:
either own up to the demand for health care services and
provide funding--my preference--or manage enrollment to cut
back those who can receive services. This budget seems to
choose the second path, but really does neither in the view of
this Senator.
The administration has not requested additional
appropriations sufficient to cover demand. That is, of course,
the great game that we play in Washington, to claim that there
is this big increase. And, of course, if the big increase is
less than the cost of medical inflation, it is not really an
increase and is in fact a decrease in terms of the veterans.
So, you know, one can work that however one wants, but that is
why I think being straight with veterans is important.
VA, but when I say VA, I suspect it is not really VA or
Tony Principi. What I really mean is that OMB has chosen
instead to artificially suppress demand. That is a fairly harsh
thing to say, but I want it out there so we can talk about it.
I will be exploring the rationale behind this as well as the
likely impact if it were to be enacted.
I also express my concerns that there is much in this
budget which is misleading. We seem to have an agreement on a
certain level of funding but not a commitment to appropriate
that amount. I intend to explore in detail how we can be
certain that the VA will achieve the level of funding, get the
money which is requested in the budget documents and what
consequences will there be if we fail to actually get that
money, authorizing and appropriating.
While there seems to be a lot of activity and energy at VBA
these days, I am very concerned about the state of benefits
adjudication. Some indicators show improvement, but there is a
long way to go. So that is positive yet still raises a
question. My comments are not all intended to be negative. I
completely agree that veterans should not have to wait an
average of 208 days for their claims to be decided. We have
been discussing this issue of timeliness for my 18 years on
this committee, but I want to be clear that gains in timeliness
cannot come at the expense of the quality of the decisions, et
cetera, that are made. I note that Admiral Cooper has stated in
a couple of settings that he cannot justify a staffing
increase, and I hope that the limited increase that you are
requesting is sufficient to implement the VISN for VBA.
I am very concerned about the administration's proposal to
shift the veterans' employment grant programs from the
Department of Labor and, at the same time, convert them to
competitive grant programs. I do not believe this proposal is
sufficiently thought out to have already been included as a
fait accompli, so to speak, in the President's budget; again,
this is simply my view. While logistics are something that can
be worked through, it is not clear to me that it makes sense to
take employment programs away from the department, that is,
Labor, that knows employment best.
So again, to my colleague, Senator Specter and my
colleagues, we welcome you all here today. These are some of
the things that I will want to talk about. I look forward to
trying to get the best fiscal year 2003 budget for you to be
able to care for the veterans that you so badly want to care
for, and I call now upon my distinguished colleague, Senator
Specter.
[The prepared statement of Senator Rockefeller follows:]
Prepared Statement of Hon. John D. Rockefeller IV, U.S. Senator From
West Virginia
I welcome our witnesses to today's hearing. I look forward
to working with Senator Specter and the other Members,
Secretary Principi, and with the veterans service organizations
on this critical FY 2003 budget. Today is only one step in a
process that will continue through the year.
The early reviews of the Administration's budget for VA
have been mixed. Some have characterized it as the biggest
increase in history for VA, others as the best that can be
expected during this difficult time. In my view, we can do
better and, in the process, be more forthcoming with veterans.
I have a number of concerns that I will discuss today and
work on in the weeks ahead as we seek to shape the Department's
budget for next year.
For years, when we looked at the health care budget, we
focused on the declining veteran population and declining
demand. We are in a totally different predicament today. More
veterans are turning to the VA health care system, and that is
a success story.
There can be little doubt that the proposed funding for
medical care is below the amount needed to fund current
services. The proposed shift of funding for retirement and
other staff costs from OPM is cause for a great deal of
uncertainty, as is the proposed deductible which is designed--
at its heart--to drive veterans away. I will be exploring these
matters in some detail.
At the time Congress was enacting eligibility reform, I
spoke about the dilemma that we would face in opening up the
doors and providing a rich benefit package and how, down the
road, we would have to face the consequences. That time has
arrived.
In my view, the Administration has a choice: Either own up
to the demand for health care services and provide funding--my
preference--or manage enrollment to cut back on those who can
receive services. This budget seems to choose the second path,
but really does neither.
The Administration has not requested additional
appropriations sufficient to cover demand, nor was there a
decision to manage enrollment last Fall. VA has chosen instead
to artificially suppress demand with the new deductible. I will
be exploring the rationale behind this, as well as the likely
impact if it were to be enacted.
I am concerned that the VA is expecting to collect $1.5
billion in third party collections, deductibles and copayments
in FY 2003. That is almost $500 million more than they expect
to collect this year, and it means that they will have to
average about $125 million a month in collections. This would
be an incredible improvement over the $76 million a month in
collections that they are averaging so far this year.
The Administration's budget also counts on new revenue
generated by the proposed $1,500 deductible that all
nonservice-connected veterans with incomes over $24,000 would
have to pay for health care services. The purpose is obviously
to keep health care enrollment open to all veterans, but the VA
predicts that more than 100,000 veterans would not use VA
health care services because of the new deductible. I am
concerned about what will happen to these veterans. How many of
them are currently using the VA system? How many are uninsured?
And how many will have to turn to the already over-burdened
Medicare system?
I also express my concerns up front that there is much in
this budget which is misleading. What we seem to have is
agreement on a certain level of funding but not a commitment to
appropriate that amount. I intend to explore in detail how we
can be certain that VA will achieve the level of funding which
is included in the budget documents and what the consequences
will be if we fail.
The Administration's proposal to include the full costs of
the accrual of retirement and health care benefits in each
agency's discretionary spending account is being touted to
``correct a longstanding understatement of the true cost of''
these programs. I realize that this is a government-wide
initiative with which VA is complying. However, if the amount
was previously aggregated in a central account and the budget
books say the ``proposal does not increase or decrease total
budget outlays government wide,'' I don't understand how the
costs were previously underestimated. Further, it has the added
consequence of obscuring the actual funding provided for
veterans services and creating a seeming competition among
discretionary accounts for what had previously been a mandatory
account.
While there seems to be a lot of activity and energy at the
Veterans Benefits Administration these days, I am very
concerned about the state of benefits adjudication. Some
indicators show improvement, but there is a long, long way to
go. I completely agree that veterans should not have to wait an
average of 208 days for their claims to be decided, but I want
to be clear that gains in timeliness cannot come at the expense
of quality, which was already questionable.
I note that Admiral Cooper has stated in a couple of
settings that he cannot justify a staffing increase. I hope
that the limited increase VA is requesting is sufficient to
implement the vision for the system's future. I do not believe
that every problem can be solved by throwing more money at it,
but the possibility of additional funding should not be
foreclosed for what has been heralded as a Presidential
priority.
I am also very concerned about the Administration's
proposal to shift the veterans employment grant programs from
the Department of Labor, and at the same time, convert them to
competitive grant programs. I don't believe this proposal is
sufficiently thought-out to have already been included in the
President's budget. While logistics are something that can be
worked through, it is not clear to me, that it makes sense to
take employment programs away from the Department that knows
employment best. I anticipate hearing much more on this before
it can be considered.
Again, welcome to all of you here today. I look forward to
our work on behalf of the nation's veterans in the weeks and
months ahead, as the Committee continues in our efforts to get
a good FY 2003 budget for veterans programs.
Senator Specter. Thank you very much, Mr. Chairman, and may
I say at the outset that I believe you and I have made a good
team. We have passed the gavel back and forth as chairman and
ranking member, but Senator Rockefeller and I, the chairman and
I, concur that partisanship has no place on veterans' issues,
and I think we would also concur that there is too much
partisanship on other matters.
I learned a long time ago that if you want to get something
done in Washington, you have to be willing to cross party
lines. With Senator Harkin on the LHHS Subcommittee of the
Appropriations Committee, and with Senator Rockefeller on this
committee, I think I have done that, and I think it is to the
benefit of veterans. Chairman Rockefeller and I see virtually
eye-to-eye in our efforts to improve services for veterans.
Let me thank Senator Thurmond for being here. Senator
Thurmond created the Veterans' Committee, just as he created so
many of the institutions in the U.S. Senate. Among the many
colleagues who are on this committee, Senator Thurmond is here
regularly, as he is on the floor of the Senate regularly
voting, notwithstanding the fact that Strom celebrated his 99th
birthday last December 5. We are looking forward to the 100th
anniversary of his birth this December 5.
When I say others are not here, I am not being critical of
them. We all have many conflicting assignments; I have to
excuse myself early this morning due to another commitment, a
budget hearing on the Coast Guard and homeland security. We all
have so many competing assignments, so I do not mean my comment
about the absence of others to be critical in any way.
Everybody is hard at work, I know, as we speak.
With respect to the VA budget, I would like my full
statement included in the record, Mr. Chairman, if I may. And I
would like to make a couple of supplementary comments. Since
1996, the VA medical care enrollment has increased 62 percent
from 2.9 million to 4.7 million patients, while funding for
medical care has gone up only 24 percent. And there is also an
inflation factor which makes it even more difficult. We had a
budget proposal last year which requested an added $700
million, but the Congress upped that figure, on a bipartisan
basis under the leadership of Chairman Rockefeller, to add $1.1
billion to VA medical care funding. Candidly, even that has
been insufficient to provide the kind of care which is
necessary.
I have served on the Veterans' Committee for all of my 22
years in the Congress, and I consider it a heavy
responsibility. I serve here in recognition of my father, Harry
Specter, who was a veteran of World War I. He came from Russia,
literally walked across Europe, with barely a ruble in his
pocket. He did not know he had a round-trip ticket to France,
not to Paris and the Follies, but to the Argonne Forest where
he was wounded in action. During the Depression days, he
received care from the Veterans Administration. He had an
automobile accident; a spindle bolt broke on a defective car;
crushing his right arm. And in 1937, he was cared for at the
Veterans hospital in Wichita, KS. I used to ride a bicycle
miles out of town to visit him there. Now, the city of Wichita
has all grown up. But knowing what VA care meant to my own
father, I am very concerned that VA care is adequate for
veterans. We have a duty to care for veterans.
With respect to VA's proposed budget, there are a couple of
opportunities, I think, for supplements, and I have discussed
them with the Secretary. And let me commend you, Secretary
Principi, for the outstanding job that are doing. You came to
this job perhaps better prepared than any other Secretary,
having been a Senate staffer. Nothing like having been a Senate
staffer. It is a lofty position, loftier than Senator----
[Laughter.]
Senator Specter [continuing]. In many people's minds,
especially in staffers' minds. [Laughter.]
But as you and I have discussed, on medical care insurance
collections, a lot more can be done. You have candidly said
that VA doctors are not as concerned with filling out the forms
to collect insurance as they should be. And I have suggested to
you that you might terminate some doctors who do not fill out
the forms--fire them--because there is a lot of extra money out
there that could, and should, come back to the VA. And on the
Medicare subvention issue: there ought to be an allocation of
Medicare funds to VA for the care of Medicare-eligible
veterans. I know there is resistance to that in the House, but
there ought to be a real effort to secure passage of Medicare
subvention legislation.
VA has suggested that certain veterans pay a $1,500 annual
deductible. I am opposed to that in the form you have
articulated. You state it is going to be paid by those who can
afford it, but it starts at an income level of $28,000 a year.
I do not know anybody at $28,000 a year who can afford much of
anything. I asked the Secretary what his salary was, and he
told me $161,000. And I commented that he made more than
Senators. He quickly adjusted the figure; said he was not sure.
[Laughter.]
But I do know--stop blushing, Mr. Secretary. [Laughter.]
But I do know that someone who makes $28,000 a year is not
in a position to pay a $1,500 annual deductable.
And the final comment I want to make relates to homeland
security. I would like to see your department, Mr. Secretary,
more involved. You get drugs, pharmaceutical supplies, at
wholesale minus 24 percent.
Secretary Principi. As a starting point.
Senator Specter. As a starting point. Well, I think that
you are in a good position to negotiate on those purchases, and
I think that we ought to see you more deeply involved in
procuring drugs to meet our homeland security needs.
Thank you very much, Mr. Chairman.
[The prepared statement of Senator Specter follows:]
Prepared Statement of Hon. Arlen Specter, U.S. Senator From
Pennsylvania
Thank you, Mr. Chairman. I join you in welcoming our
witnesses to this important hearing. And I look forward to
hearing the testimony of Secretary Principi and his colleagues.
Welcome, Tony.
I also look forward to hearing from the service
organizations that will testify today. Of course, we are always
eager to hear their views on the Administration's budget
request--and on other issues that concern the organizations'
members. Welcome, gentlemen. We very much value your work in
preparing the ``Independent Budget.''
I start by commending the Administration for a proposal
that very much improves on last year's budget submission. Last
year, VA requested an increase of only $700 million in medical
care funding. The Republican members of this Committee
unanimously urged, in writing, that VA medical care funding be
increased by $1.8 billion--more than double the
Administration's requested increase. We did not fully prevail--
but Congress did significantly improve on VA's request by
adding over $1.1 billion in VA medical care funding, more than
$\1/2\ billion more than the request VA submitted.
Even so, last November, the Secretary nearly ordered a
moratorium on new enrollments of non-service-connected, non-
poor--so-called, ``Priority 7''--veterans in VA. One point
needs to be emphasized now: last year, Congress needed to know
how much of a medical care funding increase VA actually
needed--and we did not get that information. As a result, even
though Congress exceeded VA's budget request by a substantial
margin, VA nearly declared a moratorium on new enrollments. Mr.
Secretary, we need to know the amount of funding that you will
need this year to avoid that result.
It would seem that while VA requests an additional $1.4
billion for medical care spending, it actually needs more than
this. Otherwise, VA would not be up here asking that the
Congress act to deter ``Priority 7'' enrollments by imposing a
new $1,500 per year copayment obligation. You need to tell us,
Mr. Secretary, what you actually need to avoid an enrollment
moratorium. And you need to tell us what you actually need to
avoid the imposition of arbitrary fees designed solely to scare
veterans away from VA. VA should welcome the opportunity to
treat veterans--even supposedly ``low priority'' veterans.
A further word, if I may, on VA's proposal that Congress
impose new fees on veterans--fees over and above the increased
drug copayments promulgated by VA last year--in order to raise
money and deter ``low priority'' demand. VA is doing poorly--
I'm told pitifully--in collecting funds due from veterans'
insurance carriers. As I understand it, VA collects only one-
quarter of what is owed to it. By my reckoning, VA could raise
an additional $1 billion per year just by increasing
collections from 25% to 50% of the amount owed. That, it seems
to me, would be a low bar to clear.
So I must say, Mr. Secretary, that I will seriously
consider your proposal to impose new fees on veterans. But I
will insist that VA do better on collecting what is already
owed to it by non-veterans--the insurance companies--before I
will become very receptive to the idea of new fees on veterans.
And I will also suggest that VA advise this Committee what
it will need to meet projected demand in fiscal year 2003--and
that it ask for funding at that level. It seems plain to me
that before we attempt to drive veterans away from VA by
imposing fees--and that is what these fees are really all about
. . . they are not about raising money--VA ought to try to get
the level of funding that is needed to meet projected demand.
That is what I expect the service organizations will propose. I
will be hard pressed to oppose that suggestion. After all, that
has always been my position in the past. And it has always been
the position of this Committee.
Mr. Chairman, that concludes my opening remarks. I look
forward to an informative hearing.
Chairman Rockefeller. Thank you, Senator Specter.
Senator Thurmond?
Senator Thurmond. Welcome, Mr. Secretary.
[The prepared statement of Senator Thurmond follows:]
Prepared Statement of Hon. Strom Thurmond, U.S. Senator From South
Carolina
Mr. Chairman: It is a pleasure to be here this morning to
consider the budget requests for the Department of Veterans
Affairs for fiscal year 2003. I join you and the members of the
Committee in welcoming Secretary Principi and representatives
of the Veterans Service Organizations.
Mr. Chairman, I support the President's budget plan for
fighting terrorism, for our homeland defense, and for economic
revitalization. I am pleased that among the President's
priorities is his commitment to revitalize National Defense and
to our Veterans. The President's Budget request allows the
Administration to continue its focus on high-quality health
care and timely benefits.
I look forward to working with you, other members of this
Committee, and the Administration in providing our Veterans
with the services and benefits they deserve.
Mr. Chairman, I thank the witnesses for appearing here
today and I look forward to reviewing the testimony.
Chairman Rockefeller. All right; Senator Akaka?
Senator Akaka. Thank you very much, Mr. Chairman. I want to
add my warm welcome to the witnesses from Veterans Affairs
appearing before the committee this morning, particularly
Secretary Principi, whom I have enjoyed working with to improve
the benefits and services for our country's veterans.
I also want to welcome the witnesses from the Disabled
American Veterans, Veterans of Foreign Wars, Paralyzed Veterans
of America, AMVETS, and the American Legion. While, Mr.
Chairman, I will not be able to stay for the duration of this
hearing, please be assured that I will review today's record
and work with my colleagues on the matters raised by the
administration in its fiscal year 2003 budget request.
Mr. Chairman, I am concerned with the level of what I call
true funding in this year's budget request. While the VA fiscal
year 03 budget has been hailed as one of the best ever, the
true increases in funding I feel are disappointing. While all
Federal agencies have been required to shift payments for
employee retirements and benefits from mandatory to
discretionary funds, these shifts are being characterized as
increases in funding, in the case before us for benefits and
services for all veterans, when they are not increases at all.
I am also concerned with the proposal to create the $1,500
deductible for Priority 7 veterans and look forward to
testimony today about this issue.
Mr. Chairman, I am pleased, however, to see continued
collaboration between the VA and the Department of Defense.
There are some exciting projects on the horizon that will truly
meet the needs of those who serve in the defense of our great
nation. Thank you, Mr. Chairman, and I will look forward to the
testimony today.
Chairman Rockefeller. Thank you, Senator Akaka.
Senator Jeffords?
Senator Jeffords. Thank you, Mr. Chairman.
First of all, I want to thank you for the excellent job
that you are doing. In working with you over the years, I have
full confidence you are going to be the best. And I really
deeply appreciate that.
I also talked a little bit about the budget that you have
fought so hard for, a budget that calls for an increase in
veterans health services and veterans benefits. And I am
concerned that in a climate of increasing health costs, the
overall level of funding may not be sufficient to provide the
services that veterans are entitled to and deserve. I would
like to discuss your plans for requesting supplemental funding
for the current year.
While I strongly support the President's decision to
continue to provide care for Priority 7 veterans, I am
concerned that the funding is insufficient to cover the actual
costs incurred by VA medical centers, leaving them in a
precarious position. When one takes into account the historic
shortfalls in health care funding, I believe that it is
critical that we fully support the system this year. I hope to
pursue these issues later on.
Chairman Rockefeller. Senator Jeffords has concluded his
statement.
Senator Jeffords. Yes.
Chairman Rockefeller. Senator Nelson?
Senator Nelson. Thank you, Mr. Chairman, and I apologize
for being tardy. The Senate Armed Services Committee is also
meeting at this very moment.
I want to begin by saying to my good friend Secretary
Principi that it is good to see you, and I have enjoyed the
working relationship. I look forward to learning more about the
current budget proposal. I have certainly been impressed with
your personal commitment and attention to the issues and the
workings of your administration and your agency. I think you
continue to work to maintain a high level of care and
compassion for the veterans who are within your jurisdiction.
And certainly, I appreciate your efforts on behalf of
Nebraska's veterans.
I want to personally thank you for your work on the
renovation issue in Grand Island, NE. It was critical to
ensuring that a project that was not working necessarily in the
right way; had been passed over but certainly now is in the
right frame of renovation.
I have a question for you, though, about the proposed--
which I understand today from further discussion with members
of your staff that it may not be proposed; it may be a fait
accompli--but integration of VISN's 13 and 14. And as we are
looking at the budget today, the questions that will be raised,
the comments that you are going to hear will always be about
whether or not we are doing the right thing or enough of the
right thing for our veterans.
We sent a letter on January 24 addressing my concerns about
this. The mail being what it is in Washington today, that may
or may not have gotten to you, but it may be there with the
pile of letters from the rest of the Nebraska Congressional
delegation raising questions about the merger of these two
VISN's. My concern is whether or not, in a State like Nebraska
that is geographically challenged or States like the Dakotas,
where we have broad expanses of geography and few people, that
we have capacity and that we have not only availability and
affordability but the expectation that care is within some
proximity of the location of our veterans.
And so, I was concerned with what appeared to me to be a
unilateral decision made within a bureaucracy rather than
brought to this body for consideration, and I have even
considered a field hearing to try to go into what this means to
people who have to travel the broad distances. Going to
Minneapolis-St. Paul is a joyful experience--I say that even
though Senator Wellstone is not here. [Laughter.]
But to go there because you have to for care, hundreds and
hundreds of miles, may change your view of that travel. And so,
I thought about what we could try to do to get the kind of
information we need both as to budgets and as to care from the
people on the ground, those who are the veterans or otherwise
served. But I really do appreciate the willingness that you
have had to step in to these areas, and I hope you will
continue to have that kind of commitment to these line item
budgets.
As one who has put budgets together in the past at the
State level, I know that they are not easy. I know that you are
aware as I became aware that there are faces behind these
numbers. And I am looking at what we might do to put faces
behind the VISN's merger that is apparently a fait accompli,
and I hope it is not.
Thank you, Mr. Chairman.
Chairman Rockefeller. Thank you, Senator Nelson.
Senator Hutchison, welcome.
Senator Hutchison. Thank you.
Thank you, Mr. Chairman, and I wish to thank each of the
witnesses for being here. I just would like to say that the
main part of the budget that I looked at is Gulf War illness
about which we have spoken many times, and I want to thank you,
Mr. Secretary, for creating the research review committee that
would start looking at this. But in your budget, you have $14
million in research on military occupations and environmental
exposures, which is a pretty big category. It is the right
approach, because we know that environmental concerns are going
to be part of the new wars that we fight. Chemical warfare is
very much a hazard that our service members are going to face.
I want to ask you if part of this $14 million will go for
research into the Gulf War Syndrome? Do you intend to continue
the commitment to looking at the causes of 1 in 7 Gulf
veterans' maladies and thus try to protect those who are in the
field today and will be in the field tomorrow from the chemical
warfare that we know they may face?
That is the major point that I want to clarify. Certainly,
your spending level is greater, and we are pleased with that. I
do have one facility in Texas that I think needs attention. The
VA Hospital in Dallas certainly has a need for improvement. I
relate to what Mr. Nelson says, that many of my veterans--and
Texas has a huge number of veterans, as you know--have to
travel for miles and miles and miles. From the Valley to San
Antonio is probably the same as from Omaha to Minneapolis, and
this travel is difficult. I think that, as we have closed
bases, we have shut off some of the veterans' care and retiree
care that had been available before.
I think we really have to make sure that our veterans'
facilities are accessible and would hope that this would also
be one of the priorities that you should be looking at.
So with that, I thank you for being here, and I thank you,
Mr. Chairman.
Chairman Rockefeller. Thank you, Senator Hutchison.
We should probably go to the 5-minute rule on all of us all
around the table, and Mr. Secretary, I join others who
congratulate you for your work----
Secretary Principi. Thank you, sir.
Chairman Rockefeller [continuing]. And look forward to what
you have to say.
STATEMENT OF HON. ANTHONY PRINCIPI, SECRETARY OF VETERANS
AFFAIRS, ACCOMPANIED BY FRANCES MURPHY, M.D., ACTING UNDER
SECRETARY FOR HEALTH; GUY H. McMICHAEL III, ACTING UNDER
SECRETARY FOR BENEFITS; ROBIN L. HIGGINS, UNDER SECRETARY FOR
MEMORIAL AFFAIRS; TIM S. McCLAIN, GENERAL COUNSEL; AND D. MARK
CATLETT, ACTING ASSISTANT SECRETARY FOR MANAGEMENT
Secretary Principi. Thank you, Mr. Chairman, Senator
Specter, members of the committee, it is a pleasure to be with
you today.
I am accompanied by Dr. Murphy, our Acting Under Secretary
of Health; Robin Higgins, our Under Secretary of Memorial
Affairs; Judge Guy McMichael, our Acting Under Secretary of
Benefits; Tim McClain, our General Counsel; and, of course Mark
Catlett, who, many of you know, is our Chief Financial Officer.
Mr. Chairman, Senator Specter, committee members, I will be
brief and try to highlight my prepared testimony so we can get
on with the questions. Again, I am pleased to talk with you
today about our 2003 budget request. We are requesting $58
billion for the VA for fiscal year 2003; $30.1 billion for our
entitlement programs and $27.9 billion for our discretionary
programs. Overall, for both discretionary and entitlement
spending, this budget request represents a $6.1 billion
increase over 2002 as enacted.
I know there has been some discussion: is it the largest
increase in health care or not? Overall, it is a $2.7 billion
increase, but to be fair and to be real and for an apples-to-
apples comparison, you really have to take $793 million from
that figure, because that is the accrual to cover health care
costs and retirement costs for our employees. That amount is
coming over from OPM to the VA. It is really not fair to
include that in the increased funding requested for health
care. Also, $260 million of the request would be revenues from
the deductible, which leaves us with an actual increase, if you
will, of $1.57 billion in medical care increase for 2003.
I am very proud and thankful to the President that we have
been able to achieve this level of increase. I think it is the
largest requested increase for VA health care. But as you
mentioned, Mr. Chairman, and Senator Specter, VA faces a
tremendous demand for health care in the years ahead and
tremendous challenges in trying to accommodate all of the
veterans who are coming to us for care.
We are also requesting $536 million for our capital funding
program. That is our construction and our grant program. It is
the largest request since fiscal year 1996. I think it will
help us with the backlog of some of our construction projects
and seismic deficiencies, and some of the extended care
projects that we hope to get going in the future.
In our research program, we are requesting $409 million
overall. This amount, coupled with the supplement from the
medical care appropriation, funding from other departments of
Government and from NIH, will give us an overall research
budget of $1.46 billion for the VA to continue our important
research in all areas focusing on veterans' illnesses, diseases
and, as Senator Hutchison has said, to look at the
environmental hazards of the battlefield as well.
Members of the committee, clearly VA has faced
extraordinary growth in recent years. Since the enactment of
eligibility reform in 1996, the number Priority 1-6's has grown
38 percent. The number of our patients treated has increased 11
percent between 2000 and 2001, and we project continuing
increases in 2002. Concerning Priority 7 veterans--and I do not
mean to pit Priority 7 veterans against the other six
categories of veterans, but that is the way the distinction has
been formulated in law--I am asked each year to make an
enrollment decision with regard to Priority 7 veterans based
upon resources available.
The growth in Priority 7's has been staggering: 500 percent
since 1996. That was basically 3 percent of our workload.
Today, it has grown to over a million, and the Priority 7
veterans represent 33 percent of our enrollees. With no change
in law, that number will grow to almost 50 percent by the year
2010. That is what the projections say. The cumulative cost
between 2003 and 2007 for Priority 7 veterans we estimate will
be about $20 billion.
So I think patients are coming to us. I think we are the
victim of our own success. I think quality in VA has never been
better. Patient safety has never been better. We have opened
about 600 outpatient clinics around the country in almost every
community throughout the country so that veterans only have to
drive about 30 minutes for primary care. And coupled with this,
we have a lot of Medicare HMO's that have closed down
throughout the country. There also are fluctuations in the
economy where veterans have lost their health insurance. They
may have taken a lower-paying job; the pay may still be above
$28,000, which, as Senator Specter rightly said, is not a lot
of money, but they fall into this category of Priority 7's.
So we are faced with a real dilemma of how we meet this
growing demand for care. There are options. And let me be
truthful about it: This budget does not provide the resouces to
care for every veteran who wants to use VA--notwithstanding the
fact that $1.57 billion is, in actual dollars, the largest
increase ever requested--not the largest increase Congress has
ever given us. Congress has given us more money than $1.57
billion, but the $1.57 billion is the largest increase
requested by an administration.
But it is not enough money to take care of every veteran
who wants to come to VA for care. Consider the pharmacy benefit
that we have. Whether you are 100 percent service connected or
non-service connected with higher income, you get the same
benefits, from primary care all the way to nursing home care
and extended care. We have a very generous benefit health care
program.
So there is not enough money, notwithstanding this
increase. There is another option: Medicare subvention. Senator
Specter and I talked a little bit about that. That issue has
been raised in the past. I think when the decision was made for
eligibility reform and open enrollment and to open up all these
outpatient clinics, there was an assumption that the VA was
going to get outside funding, and that funding was going to
come from the Medicare Trust Fund. Well, guess what happened?
The outside funding never happened. Congress never passed it.
President Clinton may have requested it; I am not sure, but it
never occurred.
The issue of Medicare subvention is a key one, because the
majority of our veterans are Medicare-eligible. They have paid
into the Medicare Trust Fund. And we are working very hard with
Secretary Thompson. I am working with Tom Scully and Dr. Murphy
to look at coordination of benefits between VA and HHS. It just
simply needs to be done. Whether it will be in the form of
Medicare subvention or not, I do not know, but we need to
coordinate our care.
Another option is to suspend enrollment for Category 7's.
That is the option you have given me. I certainly do not want
to say diminished quality is an option. I think we have worked
hard; VHA has worked hard to improve the quality of VA health
care. I think we need to maintain that at all costs, and I was
prepared to suspend enrollment for new Priority 7's enrollees
if we did not get enough money. In the 11th hour, we did get
enough money. We can talk later about the supplemental. But the
fact of the matter is that I thought suspending enrollment of
Category 7's was something that I had to do to ensure quality
and to ensure that the issue of waiting time to get an
appointment at a primary care clinic did not continue to get
worse, and indeed, it has been getting worse.
Another option is to change the benefit package; to
consider whether Priority 7's should get the full range of
benefits. But that is another tough issue. Another option is a
deductible to let the higher-income non-service connected share
in the cost of their care.
I guess my bottom line, Senator, is--can we get more money?
I am not here to ask for more money; I am loyal to my
administration, and the President has given me a good budget.
But I think we all collectively have to make some tough
decisions as to how we are going to meet this growing demand
for care. A lot of Priority 7 veterans come to us for pharmacy
medication benefits only because of our great, great program.
But somehow, we have to grapple with this, and I am prepared to
make the tough decisions, because I thought that without
additional funding, the deductible was the best way; rather
than cutting off enrollment--I cannot enact Medicare subvention
or change the benefit package, so I went with the deductible as
the best of the alternatives available to me to ensure that
every veteran can come to the VA.
The deductible is not a standard deductible, either--and
Senator Specter, again, alluded to this. I want to point out
that I want the insurance companies to pay as much of that
deductible as possible. Not all veterans have insurance, and
Medicare is the best insurance company in the Nation, and--as
we discussed, we cannot get any money from Medicare, so those
factors do limit our reimbursements.
But we will go to the insurance companies when we can. I
think the deductible will be an incentive for veterans to tell
us if they have insurance rather than having to pay it out of
their own pockets. If a veteran does not have insurance, we are
not going to deny care. They may only be able to pay $10 a
month, and we will have a payment plan, because I do not want
to deny veterans the opportunity to come to the VA for care.
But somehow, we have to make ends meet. There is a disconnect
between authorization and appropriation. I worked up here. We
know that; we authorize, but then, sometimes, appropriation
does not always follow through. And then, VA is stuck trying to
balance the demands.
We are not even in compliance with the Mill bill on the
number of VA nursing home beds. You have told me we must have
13,000-plus nursing home beds. We do not have them. Now, we can
do that, but I am going to have to take money from some other
program to pay for that. So there is a real crunch here. And I
have not even talked about benefits. [Laughter.]
I will stop at that point, Mr. Chairman, members of the
committee. I appreciate this opportunity, and I know we will
have an opportunity to engage in this dialog a little further.
Thank you, Mr. Chairman.
[The prepared statement of Secretary Principi follows:]
Prepared Statement of Hon. Anthony J. Principi, Secretary of Veterans
Affairs
Mr. Chairman, and members of the Committee, good morning. I am
pleased to be here today to discuss the President's 2003 budget
proposal for the Department of Veterans Affairs (VA) and tell you about
the significant progress we are making on behalf of the Nation's
veterans.
Our budget reflects the largest increase ever proposed for
veterans' discretionary programs. It ensures more veterans will receive
high-quality health care, that we will provide more timely and accurate
benefit claim determinations, and that we will maintain a dignified and
respectful setting for deceased veterans. Our proposal reflects the
debt of gratitude we owe to those who have served our country with
honor. It also signals our enduring commitment to the men and women in
uniform who today defend our freedom many miles away.
We are requesting $58 billion for veterans' benefits and services--
$30.1 billion for entitlement programs and $27.9 billion for
discretionary programs. This is an increase of $6.1 billion over the
2002 enacted level. Our budget increases VA's discretionary funding by
$3.1 billion over the 2002 level, including medical care collections.
Increases for specific programs are as follows: $2.7 billion for
medical programs; $17 million for burial services; $94 million for the
administration of veterans' benefits; and $64 million for capital
programs and other departmental administration.
Our budget request includes $197 million for a new grant activity
that replaces programs currently administered by the Department of
Labor and $892 million for certain Federal retiree and health benefits
as proposed by the Administration's Managerial Flexibility Act of 2001.
Excluding these new activities, our budget for discretionary programs
reflects an increase of $1.9 billion, or 7.8 percent over last year's
funding level.
medical care
For Medical Care, we are requesting budgetary resources of $25
billion, including $1.5 billion in collections. This increase will
provide health care for nearly 4.9 million unique patients--an increase
of 156 thousand, or 3.3 percent, over the current 2002 estimate.
Mr. Chairman, I'm pleased to report that we are making substantial
improvements to our billing and collection from third party insurers.
In a collaborative effort with an external contractor, we have
identified 24 actions that will yield significant enhancements to our
ability to collect revenue. While many of these actions require time
and investment, we have already begun improvements to the revenue
collection process. I have directed that we begin the process of
consolidating billing and collection services, and that we explore the
cost and benefits of outsourcing these services. In addition, we are
aggressively pursuing insurance identification by obtaining new HIPAA
compliant software to facilitate exchange of medical information with
non-VA entities. We are also mounting increased veteran and employee
awareness and training campaigns. Further, we have developed a web-
based performance metrics program that is used by central office and
medical center staff to monitor and evaluate the critical steps in the
revenue cycle. Following the original implementation of reasonable
charges in September 1999, we have implemented two updates. Work is
nearly complete on the next reasonable charges update, which we expect
to publish in the Federal Register as an Interim Final Rule and
implement during Spring 2002. We expect to collect over $1 billion this
year with continuing increases in 2003 and beyond. We are committed to
maximizing our revenue opportunities from this source.
VA has experienced unprecedented growth in the medical system
workload over the past few years. The total number of patients treated
increased by over 11 percent from 2000 to 2001--more than twice the
prior year's rate of growth. For the first quarter of 2002, we
experienced a similar growth rate when compared to the same period last
year. The growth rate for Priority 7 medical care users has averaged
more than 30 percent annually for the last 6 years, and they now
comprise 33 percent of enrollees in the VA health care system. Based on
current law, this percentage is expected to increase to 42 percent by
2010.
I am proud that an increasing number of veterans are choosing to
receive their health care in the VA system. Despite this success, we
have much to accomplish. Patient access to our medical facilities must
be improved and this budget reaffirms our commitment to do so. Our goal
is for veterans to receive non-urgent appointments for primary and
specialty care in 30 days or less, while being seen within 20 minutes
of their scheduled appointment. We have included an additional $159
million in our request to work toward this goal.
Mr. Chairman, I know you agree that VA's health care system should
maintain timely, high quality care for service-connected and low income
veterans and remain open to all veterans. To effectively manage
participation in the system, we are proposing a $1,500 medical
deductible for Priority 7 veterans. With no change in policy, the cost
of care for Priority 7 veterans would grow from $1 billion in 2000 to
over $5 billion in 2007. To assure that rising workload does not dilute
the quality of care, Priority 7 veterans are being asked to pay for a
greater portion of their health care than in the past. We are
recommending that these veterans be assessed a deductible for their
health care at a percentage of the reasonable charges up to a $1,500
annual ceiling. This is not a standard deductible that must be paid
upfront and veterans' insurance may cover all charges. If all
projections, funding levels, and the new deductible are realized, VA
anticipates continued open enrollment to all veterans in 2003 without
detriment to our traditional core patients--those with service-
connected disabilities and lower incomes.
VA is working to meet the challenges in long-term care for
veterans. However, we believe that a literal interpretation of P.L.
106-117, the ``Veteran's Millennium Health Care and Benefits Act of
1999'' will result in less than optimal solutions for increasing our
long-term care capacity. The number of individual veterans who received
care in VA increased from more than 3 million veterans in 1998 to more
than 4 million veterans in 2001, due primarily to VA's efforts to
expand access for primary care. During that same time period, efforts
have been made to meet the increased demand for long-term care.
Although the average daily census in VA nursing homes declined,
veterans mandated under P.L. 106-117 to receive such care are being
served in VA and contract community nursing homes. VA is also
supporting a significantly increased census of veterans in state
veterans nursing homes. At the same time, VA has been expanding care
for veterans in home and community-based extended care, consistent with
the mandates of P.L. 106-117. Indications we have received from
veterans show that they are pleased with options providing long-term
care closer to home, as well as alternatives to more traditional
skilled-nursing environments. We look forward to working with Congress
to pursue the best options to provide veterans with long-term care.
Our rapidly aging veteran population requires more health care
services. Our request includes $817 million to address this rising
demand. These funds will support our emphasis on access and service
delivery, pharmaceutical support, prosthetics, CHAMPVA for Life, and
information technology. Management savings of over $316 million will
partially offset resource needs. For example, I am establishing a
program across the VA system that will implement ``best practice''
standards for dispensing and prescribing pharmaceuticals.
The 2003 budget supports our cooperative efforts with the
Department of Defense (DoD) to improve federal health care delivery
services. Over the past year, we have undertaken unprecedented efforts
to improve cooperation and sharing in a variety of areas through a
reinvigorated VA and DoD Executive Council. VA and DoD entered into a
Memorandum of Understanding (MOU) in December 1999, with the objective
of reducing contract duplication. The first addendum to that MOU
resulted in the conversion of DoD's Pharmaceutical Distribution and
Pricing Agreements (DAPAs) to reliance on VA's Federal Supply Schedule
(FSS) contracts for pharmaceuticals, which was completed in December
2000. The second addendum is an agreement to convert DoD's DAPAs for
medical/surgical products to reliance on VA's FSS. This effort was
completed in December 2001. To address some of the remaining
challenges, the Departments have identified four high-priority items
for improved coordination: veteran enrollment, computerized patient
records, cooperation on air transportation of patients, and facility
sharing instead of construction.
medical and prosthetic research
VA's clinical research program is funded at the highest level in
history with a partnership of government, universities and the private
sector. Over $1.46 billion will be invested in 2003: $409 million in
direct appropriation; $401 million in support from the VA Medical Care
appropriation primarily in the form of salary support for the clinical
researchers; $460 million from federal organizations such as DoD and
NIH; and $196 million from universities and other private institutions.
This investment will allow VA to expand knowledge in areas critical to
veterans' and other citizens' health care needs including
schizophrenia, diabetes, further implementation of cholesterol and
other guidelines, aging, renal failure treatment, and clinical drug
treatment evaluations. This investment is relevant to the medical needs
of the entire Nation and will enhance future quality of life.
capital asset realignment for enhanced services (cares)
We continue our effort to transform the veterans' health care
system under the Capital Asset Realignment for Enhanced Services
(CARES) initiative. We are evaluating the health care services we
provide, identifying the best ways to meet veterans' future medical
needs, and realigning our facilities and services to meet those needs
more effectively.
Mr. Chairman, this initiative is not a perfunctory exercise. The
CARES process has already had a significant impact on our planning
process. Last week, I announced my decision on realigning VA health
care facilities in VISN 12. For example, we will shift inpatient
services to a remodeled Chicago West Side Division, and maintain a
Lakeside Division multi-specialty outpatient clinic in the downtown
area. The Hines VA Medical Center will be renovated, including the
Blind Rehabilitation and Spinal Cord Injury Centers. Sharing
opportunities between the North Chicago VA Medical Center and the
adjacent Naval Hospital Great Lakes will be enhanced.
CARES is critical to the future of VA health care. It will allow us
to redirect funds from the maintenance and operation of facilities we
no longer need to direct patient care. I am prepared to make the
difficult choices necessary to ensure accessible care to more veterans
in the most convenient and appropriate settings. We will complete CARES
studies of our remaining health care networks within two years. Any
savings that result from CARES will be put back into the community to
provide higher quality care and more services to veterans. Changes will
affect only the way VA delivers care--health care services will not be
reduced.
major and minor construction programs
For all capital programs (construction and grants) this is the
largest request since 1996. Specifically for major construction, new
budget authority of $194 million is requested. We are requesting funds
for four seismic projects in exceptionally high-risk areas: two in Palo
Alto, one in San Francisco, and one in West Los Angeles, CA. These
projects involve primary care buildings and a consolidated research
facility--all of which will be part of any service delivery option
resulting from the CARES process. Seismic improvements will ensure
veterans and their families, and VA staff, will continue to be cared
for, and work in a safe environment. The 2003 Major request also
addresses critical National Cemetery needs. Resources are included for
new cemeteries in Pittsburgh, PA and Southern Florida and a columbaria
and cemetery improvements project at the Willamette National Cemetery,
OR. Design funds are provided in the amount of $3.4 million for the
design of new cemeteries in Detroit, MI and Sacramento, CA. We are also
requesting funds to remove hazardous waste and asbestos from
Department-owned buildings, perform an emergency response security
study, reimburse the judgment fund, and support other construction-
related activities.
To date, we have received $80 million in Major Construction funding
to support the design and construction of projects that result from
CARES studies. Our Major request for 2003 includes $5 million to
continue efforts to realign our facilities.
New budget authority in the amount of $211 million is requested for
the Minor Construction program. Particular emphasis will be placed on
outpatient improvements, patient environment, and infrastructure
improvements. A total of $35 million is earmarked for CARES-related
design and construction needs. These funds have been proposed to allow
VA to immediately implement CARES options that can be accomplished
through the minor construction program (i.e., capital projects costing
more than $500 thousand and a total project cost less than $4 million).
In addition, $20 million is dedicated to a newly created category to
fund minor seismic projects, which will allow VA to further address its
seismic corrections needs.
veterans' benefits
For the administration of veterans' benefits, we are requesting
$1.2 billion and an additional 125 employees over the 2002 level. The
President has promised to improve the timeliness and quality of claims
processing. Last year, I established a claims processing task force to
recommend changes that would improve the time it takes to process
claims. The results of that task force, as well as implementation
plans, have been presented to me and we have already begun to execute
many of the recommendations.
I have set a goal of reaching 100 days to process compensation and
pension claims by the summer of 2003. While the annual average number
of days for these claims is projected to be 165 for 2003, we expect to
achieve the 100-day goal by the last quarter of the year. Four months
ago, we began a major effort to resolve 81,000 of the oldest
Compensation and Pension claims. A key element of this effort involves
a ``Tiger Team'' at the Cleveland Regional Office that will tackle many
of these claims over an 18-month period. The team became fully
operational in November 2001. Additionally, consolidation of pension
benefit maintenance at three sites will allow VBA to free up employees
to focus on rating compensation claims.
At the same time we are reducing the time it takes to process
claims, we continue to improve the quality of claims processing. During
2003, the national accuracy rate for compensation and pension claims is
projected to grow to 88 percent--a significant improvement from the 59
percent rate evidenced in 2000. This budget contains $3.5 million to
support 64 additional employees dedicated to the Systematic Individual
Performance Assessment (SIPA) initiative. This is an important
contribution to enhance internal control mechanisms and bring
accountability to the accuracy of claims processing.
This budget provides additional staff and resources to continue the
development of information technology tools to support improved claims
processing. Over the last several years, VBA has developed and
implemented major initiatives, established cooperative ventures with
other agencies, and used technology and training to address accuracy
and timeliness. This budget continues to focus on initiatives in these
high payoff areas. For example, this budget requests $6 million in
support of the Virtual VA initiative. This effort, when complete, will
replace the current intensive paper-based claims folder with electronic
images and data that can be accessed and transferred through a web-
based application.
Our budget also addresses the mandate to ensure that Montgomery GI
Bill (MGIB) education benefits provide meaningful transition assistance
and aid in the recruitment and retention of our Armed Forces. Recent
legislation has improved these benefits and our priority is to deliver
them as efficiently as possible. I am pleased to report that the
Imaging Management System (TIMS) is now functioning in all four
Regional Processing Offices. The electronic folders that result from
this effort have expanded access points, improved data access, and
enhanced customer satisfaction. This budget requests $6.2 million to
develop and install the Education Expert System (TEES). Among other
benefits, this expert system will enable us to automate a greater
portion of the education claims process and expand enrollment
certification. In 2003, we will continue to improve the accuracy and
timeliness of education claims and improve blocked call rates.
Mr. Chairman, I would like to take this opportunity to mention one
of VA's great success stories--the administration of more than 4
million insurance policies in force. The American Customer Satisfaction
Index (ASCI) and the University of Michigan conducted a study of the
insurance death claims process and the satisfaction of beneficiaries
who received awards. This study gave the VA's insurance program a score
of 90 on a scale of 100. This is one of the highest scores ever
recorded for either government or private industry. This budget
provides funding to continue the Insurance Center's history of
excellence. Our request includes a paperless processing initiative,
which improves timeliness and quality of service while reducing the
cost to policyholders.
new veterans employment grants program
Veterans represent a unique and invaluable human resource for
American society and the economy. Service personnel leave the military
knowing they have made a vital contribution to their country. Veterans
want to continue making meaningful contributions as they return to
civilian life. However, in 21 states, fewer than 10 percent of veterans
between the ages of 22 and 44 were placed in employment after seeking
job search assistance from state service providers; during 2001, there
was an average of 519,000 unemployed veterans, and in the same time
period, 32 percent of unemployed veterans experienced 15 or more
consecutive weeks of unemployment.
America's labor exchange market has evolved in the time since the
foundation for current programs was laid. This budget proposes
legislation that will allow VA to create a new competitive grant
program to help veterans obtain employment. VA is working with the
Department of Labor (DOL), veterans' service organizations and others
to propose a veterans' employment program tailored to the needs of 21st
century veterans seeking assistance in finding suitable employment. The
details of the legislative proposal to implement this initiative are
not yet final. If authorized by Congress, the new program will broaden
our ability to assist veterans with employment and training services.
Our first priority will be serving unemployed service-connected
disabled veterans and those recently separated from military service.
We will also help other veterans searching for employment. Our budget
request for discretionary programs includes $197 million for the grant
initiative.
We have the flexibility to design a program that will incorporate
elements currently contained in the DOL grant program--transition
assistance; disabled veterans' outreach; local veterans' employment
representatives; and homeless veterans reintegration. Veterans look to
the VA for education benefits, home loan assistance and, in some
instances, rehabilitation and employment, medical care and compensation
benefits in the transition years after leaving active duty. Later in
life, many veterans may return to the VA for health care and ultimately
burial benefits. Adding an enhanced employment opportunity program to
the spectrum of care and services provided by VA would provide veterans
with a single access point to a full continuum of benefits and services
throughout their lifetime.
I know there are many questions left unanswered regarding this new
program. We are in the process of finalizing our legislative proposal
within the Administration and will submit it to you in the near future.
At that time, we will be prepared to address your questions in greater
detail.
national cemetery administration
The budget proposal includes $138 million to operate the National
Cemetery Administration. The request preserves our commitment to
maintain VA's cemeteries as National shrines, dedicated to preserving
our Nation's history, nurturing patriotism, and honoring the service
and sacrifice of our veterans. It provides a total of $10 million to
continue renovation of gravesites, as well as clean, raise, and realign
headstones and markers.
As noted earlier in my testimony, our budget request for Major
Construction includes funds for the development of two new national
cemeteries in the vicinity of Pittsburgh, PA and Miami, FL. Operating
funds also are requested to prepare for interment operations in 2004 at
these two locations and to begin interment operations at new cemeteries
at Fort Sill, OK, and near Atlanta, GA.
management improvements
Mr. Chairman, last year I stated my commitment to reform VA's use
of information technology. I am pleased to report that we have made
substantial progress in this area and will continue our reform efforts.
As VA moves forward with implementation of the One-VA Enterprise
Architecture developed in 2001, we will manage information technology
resources to account for all expenditures and ensure our scarce
resources are spent in compliance with this Enterprise Architecture. A
strong program is under development for Cyber Security. We are re-
engineering our IT workforce to ensure we have the proper skill sets to
support our program needs. I have recently approved a comprehensive
change in how we manage our IT projects to ensure they deliver high
quality products, meet performance requirements, and are delivered on
time and within budget.
VA is bringing enterprise-wide discipline and integration of our
telecommunications capability to increase security, performance, and
value. Command and control capabilities are being established to
support the Department in times of emergency. Electronic government
will be expanded and internet capabilities will be enhanced to improve
the delivery of services and the sharing of knowledge for the benefit
of the veteran. All of these efforts will focus on meeting the
objectives of the President's Management Agenda.
We are pursuing other important initiatives that will promote
better management practices throughout the Department. For example, I
recently convened the VA Procurement Reform Task Force to examine our
acquisition process and develop recommendations for improvement. The
Task Force has presented 60 recommendations to accomplish several major
goals that will enhance our ability to: 1) leverage purchasing power;
2) obtain comprehensive VA procurement information; 3) improve VA
procurement organizational effectiveness; and 4) ensure a sufficient
and talented VA acquisition workforce. Mandatory use of the Federal
Supply Schedule, reorganization and elevation of the VHA logistics
function to more quickly standardize medical and surgical supplies, and
establishment of a National Item File are some of the more prominent
recommendations being made in order to maximize savings in our medical
care procurements. We are well on our way to achieving savings and
increased effectiveness in VA's acquisition arena.
Finally, our 2003 request includes funds for a new Office of
Operations, Security and Preparedness (OS&P). Since the tragic events
of September 11, 2001, we have made substantial investments to address
the Department's security and preparedness, and to meet our primary and
critical emergency response missions. VA is the only pre-deployed
nationwide health care system. We must be prepared for any disaster
response. OS&P will play an important role in the Federal government's
continuity of operations in the event of an emergency situation. The
new office is formed with the specific intent of improving VA's ability
to respond to any contingency with minimal disruption to services for
veterans and their families. This office will coordinate all VA
involvement with the Office of Homeland Security, FEMA, the Department
of Health and Human Services and DoD.
Mr. Chairman, that concludes my formal remarks. Although many
challenges lie ahead, I am proud of the accomplishments that have taken
place over the past year. Our budget request for 2003 is a good budget
for veterans and positions us for continued success. I thank you and
the members of this Committee for your dedication to our Nation's
veterans. I look forward to working with you. My staff and I would be
pleased to answer any questions.
______
Response to Written Questions Submitted by Hon. John D. Rockefeller IV
to Anthony J. Principi
health care
Question 1. What is the actual amount in requested appropriations
for medical care and what is that as a percentage increase? How does
that compare to the projected increase in medical inflation?
Answer. The FY 2003 appropriations request for medical care is
$22,743,761,000, which represents a 6.6 percent increase over the FY
2002 appropriation of $21,330,078,000. This amount excludes medical
collections ($1,448,874,000), the Civil Service Retirement System
(CSRS) accrual ($251,515,000) and the Federal Employee Health Benefits
(FEHB) accrual ($541,907,000). The Medical CPIU inflation rate for FY
2003 is projected to be 3.9 percent.
Question 2. Based on VA's best analysis, what is the amount the VA
health care system would need next year to operate without any
suppression of demand?
Answer. Twenty five billion, eight hundred seventy one million,
three hundred four thousand dollars ($25,871,304,000), including the
retirement liability, would be required in FY 2003 if the $1,500
deductible legislation is not passed. This amount includes
$24,682,304,000 in appropriations and $1,189,000,000 in projected
collections from the Health Services Improvement and Medical Care
Collections Funds and an additional $40 million in reimbursements from
the Extended Care Revolving Fund.
Question 3a. Please provide additional information on the budget
and the effect on staffing. What staffing adjustments/RIFs will be
required based upon the FY 2003 budget?
Answer. The FY 2003 staffing levels will decrease from 181,500 in
FY 2002 to 181,331 in FY 2003, a 169 decrease in full-time equivalents
due to attrition. RIFs are not anticipated and are always considered
only as a last resort.
Question 3b. Will VA offer early outs/buyouts in FY 2003? What are
the potential cost savings associated with these incentives?
Answer. VA has been authorized by the Office of Personnel
Management (OPM) to offer early outs through September 30, 2002. We
expect to ask OPM for new authority for FY 2003. Legislation
authorizing current buyout authority for VA expires December 31, 2002.
Legislative action would be necessary for VA to offer buyouts beyond
that date.
Buyouts generally achieve immediate cost savings when used as
incentives to get more highly paid employees to leave sooner than
planned. Cost of the buyout, when paid early in the fiscal year, is
less than the continued cost of the employee's salary.
Question 3c. Does the budget include any anticipated request to
raise physician special pay?
Answer. No, the FY 2003 budget does not include any costs
associated with additional increases in physician special pay. Any
increases that may be proposed would be paid from existing resources.
The Administration is getting ready to propose legislation (for the
short term) to address physician pay. This legislation will allow VA to
save money from contracts and use it for physician pay.
Question 4a. As you know, I remain concerned about the CARES
process, and its effect on critical construction needs within VA's
health care system. Please provide the list of medical facilities, and
describe what constitutes a facility.
Answer: Attached is a list of medical facilities, ``VA Facilities
by Type.'' The following glossary, extracted from the end of year
report for FY 2001 VA Site Tracking (VAST) describes each type of
facility. These definitions were set by the VHA Policy Board in
December 1998 and are the basis for defining the category and the
additional service types for each VHA service site. These definitions
cover sites generally owned by the VA with the exception of leased and
contracted CBOCs.
VA Hospital--An institution owned, staffed, and operated by VA that
provides inpatient services. Each division of an integrated medical
center is counted as a separate hospital.
VA Nursing Home--A Nursing Home Care Unit (NHCU) provides care to
individuals who are not in need of hospital care, but who require
nursing care and related medical or psychosocial services in an
institutional setting. A VA NHCU is designed to care for patients who
require a comprehensive care management system coordinated by an
interdisciplinary team. Services provided include nursing, medical,
rehabilitative, recreational, dietetic, psychosocial, pharmaceutical,
radiological, laboratory, dental and spiritual.
VA Domiciliary--A VA facility that provides comprehensive health
and social services to eligible veterans who are ambulatory and do not
require the level of care provided in nursing homes.
VA Outpatient Clinics:
Hospital-Based Outpatient Clinic (HBOC)--A clinic located within a
hospital that provides outpatient clinic functions.
Independent Outpatient Clinic (IOC)--A full-time, self-contained,
freestanding, ambulatory care clinic that provides primary and
specialty health care services in an outpatient setting. IOCs have no
management, program, or fiscal relationship to a VA hospital.
Mobile Outpatient Clinic (MOC)--A specially equipped van with
multiple scheduled stops that provides outpatient care. A mobile clinic
is under the jurisdiction of a parent medical facility.
Community-based Outpatient Clinic (CBOC)--A VA operated, VA funded,
or VA reimbursed health care facility or site geographically distinct
or separate from a parent medical facility. This term encompasses all
types of VA outpatient clinics, except hospital-based, independent, and
mobile clinics. Satellite, community-based, and outreach clinics have
been redefined as community-based outpatient clinics.
VA Owned--A CBOC owned and staffed by the VA.
Leased--A CBOC where the space is leased (contracted), but is
staffed by the VA.
Contracted--A CBOC where the space and staff are not VA. This is
typically an HMO type provider where multiple sites can be associated
with a single station identifier.
Not Operational--A CBOC that has been approved by Congress, but has
not yet become operational. CBOCs opened after March 1995 require
Congressional approval.
Veterans Center--A center, managed by VHA's Readjustment Counseling
Service, that provides professional readjustment counseling, community
education, outreach to special populations, brokering of services with
community agencies, and access to links between the veteran and the VA.
Attachment--VA Facilities by Type (as of December 2001)
employee education centers (19)
Alabama: Birmingham; Tuskegee
Arizona: Prescott
Arkansas: North Little Rock
California: Long Beach
District of Columbia: Washington
Georgia: Dublin
Idaho: Boise
Maine: Togus
Maryland: Perry Point
Minnesota: Minneapolis
Missouri: St. Louis (Jefferson Barracks Division)
Nebraska: Lincoln
New York: Northport
North Carolina: Durham
Ohio: Cleveland (Brecksville Div.)
Pennsylvania: Erie
South Dakota: Fort Meade
Utah: Salt Lake City
canteen service central office and finance center (1)
Missouri: St. Louis
canteen service field offices (3)
California (Western): Sepulveda
Maryland (Eastern): Ft. Howard
Missouri (Central): St. Louis (Jefferson Barracks)
geriatric research, education, and clinical centers (21)
Alabama/Georgia: Birmingham/Atlanta
Arkansas: Little Rock
California: Palo Alto; Sepulveda; West Los Angeles
Florida: Gainesville; Miami
Maryland: Baltimore
Massachusetts: Boston
Michigan: Ann Arbor
Minnesota: Minneapolis
Missouri: St. Louis (John J. Cochran Division)
New York: Bronx/New York Harbor
North Carolina: Durham
Ohio: Cleveland
Pennsylvania: Pittsburgh
Tennessee: Murfreesboro/Nashville
Texas: San Antonio
Utah: Salt Lake City
Washington: Seattle (Puget Sound HCS)
Wisconsin: Madison
service and distribution center (1)
Illinois: Hines
central office (1)
District of Columbia: Washington
finance centers (2)
Texas: Austin
Illinois: Hines
records management center (1)
Missouri: St. Louis
automation center (1)
Texas: Austin
national acquisition center (1)
Illinois: Hines
systems development centers (2)
Illinois: Hines
Texas: Austin
denver distribution center (1)
Colorado: Denver
central dental laboratories (2)
District of Columbia: Washington
Texas: Dallas
preventive dental support center (1)
Texas: Houston
miami development center for dental operations (1)
Florida: Miami
prosthetic and sensory aids restoration clinics (6)
California: West Los Angeles
Georgia: Decatur (Atlanta)
Missouri: St. Louis (Jefferson Barracks Division)
New York: New York
Ohio: Cleveland
Oregon: Portland
law enforcement training center (1)
Arkansas: Little Rock
health administration management center (1)
Colorado: Denver
orthotic/prosthetic laboratories (59)
Alabama: Montgomery
Arizona: Tucson
Arkansas: Little Rock
California: Long Beach; Palo Alto; San Diego; San Francisco;
Sepulveda; West Los Angeles
Colorado: Denver
Florida: Bay Pines; Gainesville; Miami; Tampa; West Palm Beach
Georgia: Decatur (Atlanta)
Illinois: Chicago (Westside); Hines
Indiana: Indianapolis
Kansas: Wichita
Kentucky: Louisville
Louisiana: New Orleans
Maine: Togus
Maryland: Ft. Howard
Massachusetts: Boston; Brockton (West Roxbury)
Michigan: Detroit
Minnesota: Minneapolis
Missouri: Kansas City; St. Louis
New Jersey: East Orange
New Mexico: Albuquerque
New York: Albany; Bronx; Brooklyn; Buffalo; Castle Point; New York;
Northport
Ohio: Cincinnati; Cleveland; Dayton
Oklahoma: Oklahoma City
Oregon: Portland
Pennsylvania: Pittsburgh (UD); Wilkes Barre
Puerto Rico: San Juan
South Carolina: Columbia
Tennessee: Memphis; Nashville
Texas: Dallas; Houston; San Antonio; Temple
Virginia: Hampton; Richmond
Washington: Seattle
West Virginia: Martinsburg
Wisconsin: Milwaukee
health eligibility center (1)
Georgia: Atlanta
domiciliaries (43)
Alabama: Tuskegee
Alaska: Anchorage
Arizona: Prescott
Arkansas: North Little Rock
California: Palo Alto-Menlo Park; West Los Angeles
Florida: Bay Pines; Orlando
Georgia: Augusta; Dublin
Illinois: N. Chicago
Iowa: Des Moines; Knoxville
Kansas: Leavenworth
Maryland: Perry Point
Massachusetts: Bedford; Brockton
Minnesota: St. Cloud
Mississippi: Biloxi
Missouri: St. Louis
New Jersey: Lyons
New York: Bath; Canandaigua; Montrose; St. Albans
Ohio: Chilicothe; Cincinnati; Cleveland; Dayton
Oregon: Portland; White City
Pennsylvania: Butler; Coatesville; Pittsburgh
South Dakota: Hot Springs
Tennessee: Mountain Home
Texas: Bonham; Dallas; Temple
Virginia: Hampton
Washington: Tacoma
West Virginia: Martinsburg
Wisconsin: Milwaukee
va hospitals (172)
Alabama: Birmingham; Montgomery; Tuscaloosa; Tuskegee
Arizona: Northern Arizona HCS Phoenix; Southern Arizona HCS
Arkansas: Central Arkansas Veterans HCS LR; Central Arkansas
Veterans HCS NLR; Fayetteville
California: Fresno; Livermore; Loma Linda; Long Beach HCS; Palo
Alto (Menlo Park); Palo Alto (Palo Alto); San Diego HCS; San Francisco;
West Los Angeles (Brentwood); West Los Angeles (Wadsworth)
Colorado: Denver; Fort Lyon; Grand Junction
Connecticut: Newington; West Haven
Delaware: Wilmington
District of Columbia: Washington
Florida: Bay Pines; Lake City; Miami; North Florida/South Georgia
HCS; Tampa; West Palm Beach
Georgia: Augusta; Decatur; Dublin; Lenwood (Uptown)
Idaho: Boise
Illinois: Chicago (Westside); Chicago (Lakeside Division);
Danville; Hines; Marion; North Chicago
Indiana: Indianapolis (Cold Springs); Indianapolis (West 10th
Street); North Indiana HCS-Ft. Wayne; North Indiana-Marion
Iowa: Des Moines; Iowa City--Central Plains HCS; Knoxville
Kansas: Leavenworth; Topeka-Colmery-O'Neil; Wichita
Kentucky: Lexington (Cooper Drive); Lexington (Leestown);
Louisville
Louisiana: Alexandria; New Orleans; Shreveport (Overton Brooks)
Maine: Togus
Maryland: Baltimore; Fort Howard; Perry Point
Massachusetts: Bedford; Boston VAMC; Brockton Division; Brockton
(West Roxbury); Northampton
Michigan: Ann Arbor HCS; Battle Creek; Detroit (John D. Dingell);
Iron Mountain; Saginaw
Minnesota: Minneapolis; St. Cloud
Mississippi: Biloxi (Gulfport); Gulf Coast HCS; Jackson (G. V.
(Sonny) Montgomery)
Missouri: Columbia; Kansas City; Poplar Bluff; St. Louis (Jefferson
Barracks); St. Louis (John J. Cochran)
Montana: Fort Harrison; Miles City
Nebraska: Grand Island; Lincoln; Omaha
Nevada: Sierra Nevada HCS (Reno); Southern Nevada HCS (Las Vegas)
New Hampshire: Manchester
New Jersey: Lyons; East Orange
New Mexico: New Mexico HCS
New York: Albany; Bath; Bronx; Brooklyn (Poly PI.)--New York Harbor
HCS; Canandaigua; Castle Point; Hudson Valley HCS; New York Harbor HCS;
New York Harbor HCS (St. Albans Campus); Northport; Saracuse; Upstate
New York HCS (Buffalo); Upstate New York HCS (Batavia)
North Carolina: Asheville--Oteen; Durham; Fayetteville; Salisbury--
W. G. (Bill) Hefner
North Dakota: Fargo
Ohio: Chilicothe; Cincinnati; Cleveland (Brecksville); Cleveland
(Wade Park); Dayton
Oklahoma: Muskogee; Oklahoma City
Oregon: Portland; Roseburg (HCS)
Pennsylvania: Altoona--James E. Van Zandt; Butler; Coatesville;
Erie; Lebanon; Philadelphia; Pittsburgh HCS--(Aspinwall); Pittsburgh
HCS--(Highland Drive); Pittsburgh HCS--(University Drive); Wilkes-Barre
Rhode Island: Providence
South Carolina: Charleston; Columbia
South Dakota: Fort Meade; Hot Springs; Sioux Falls
Tennessee: Memphis; Middle Tennessee HCS; Middle (Nashville);
Tennessee HCS--(Murfreesboro); Mountain Home
Texas: Amarillo HCS; Bonham; Dallas; Houston; Kerrville; Marlin;
San Antonio; Temple; Waco; West Texas HCS
Utah: Salt Lake City HCS
Vermont: White River Junction
Virginia: Hampton; Richmond; Salem
Washington: American Lake (Tacoma); Seattle; Spokane; Vancouver;
Walla Walla
West Virginia: Beckley; Clarksburg; Huntington; Martinsburg
Wisconsin: Madison; Milwaukee; Tomah
Wyoming: Cheyenne; Sheridan
nursing home units (137)
Alabama: Tuscaloosa; Tuskegee
Arizona: Phoenix; Prescott; Tucson
Arkansas: Little Rock
California: Fresno; Livermore; Loma Linda; Long Beach; Martinez;
Palo Alto; San Diego; San Francisco; Sepulveda; Greater Los Angeles
Colorado: Denver; Southern Colorado HCS; Grand Junction
Connecticut: West Haven
Delaware: Wilmington
District of Columbia: Washington
Florida: Bay Pines; Gainesville; Lake City; Miami; Orlando; Tampa;
West Palm Beach
Georgia: Augusta; Decatur; Dublin; Lenwood
Hawaii: Honolulu
Idaho: Boise
Illinois: Danville; Hines; Marion; North Chicago
Indiana: Fort Wayne; Indianapolis; Marion
Iowa: Knoxville
Kansas: Leavenworth; Topeka; Wichita
Kentucky: Lexington
Louisiana: Alexandria; New Orleans
Maine: Togus
Maryland: Baltimore; Loch Raven; Perry Point
Massachusetts: Bedford; Brockton; Northampton
Michigan: Ann Arbor; Battle Creek; Detroit; Iron Mountain; Saginaw
Minnesota: Minneapolis; St. Cloud
Mississippi: Biloxi; Jackson
Missouri: Columbia; Poplar Bluff; St. Louis
Montana: Fort Harrison; Miles City
Nebraska: Grand Island
Nevada: Reno
New Hampshire: Manchester
New Jersey: East Orange; Lyons
New Mexico: Albuquerque
New York: Albany; Batavia; Bath; Bronx; Buffalo; Canandaigua;
Castle Point; Montrose; Northport; St. Albans; Syracuse
North Carolina: Asheville; Durham; Fayetteville; Salisbury
North Dakota: Fargo
Ohio: Chilicothe; Cincinnati; Cleveland; Dayton
Oklahoma: Oklahoma City
Oregon: Roseburg
Pennsylvania: Altoona; Butler; Coatesville; Erie; Lebanon;
Philadelphia; Pittsburgh (Aspinwall); Pittsburgh (HD); Wilkes Barre
Puerto Rico: San Juan
South Carolina: Columbia; Charleston
South Dakota: Fort Meade; Sioux Falls
Tennessee: Mountain Home; Murfreesboro
Texas: Amarillo; Big Spring; Bonham; Dallas; Houston; Kerrville;
Marlin; San Antonio; Temple
Virginia: Hampton; Richmond; Salem
Washington: Seattle; Spokane; Tacoma; Vancouver; Walla Walla
West Virginia: Beckley; Martinsburg
Wisconsin: Milwaukee; Tomah
Wyoming: Cheyenne; Sheridan
vet centers (206)
Alabama: Birmingham; Mobile
Alaska: Anchorage; Fairbanks; Soldotna; Wasilla
Arizona: Phoenix; Prescott; Tucson
Arkansas: North Little Rock
California: Anaheim; Capitola; Chico; Commerce; Concord; Culver
City; Eureka; Fresno; Gardena; North Bay; Oakland; Peninsula (Redwood
City); Riverside; Rohnert Park; Sacramento; San Bemadino; San San
Diego; San Francisco; San Jose; Santa Barbara; Sepulveda; Vista
Colorado: Boulder; Colorado Springs; Denver
Connecticut: Hartford; New Haven; Norwich
Delaware: Wilmington
District of Columbia: Washington, DC
Florida: Fort Lauderdale; Jacksonville; Lake Worth; Miami; Orlando;
Pensacola; Sarasota; St. Petersburg; Tallahassee; Tampa
Georgia: Atlanta; Savannah
Guam: Agana
Hawaii: Hilo; Honolulu; Kailua-Kona; Lihue; Wailuku
Idaho: Boise; Pocatello
Illinois: Chicago; Chicago Heights; East St. Louis; Evanston;
Moline; Oak Park; Peoria; Springfield
Indiana: Evansville; Fort Wayne; Highland (Gary); Indianapolis
Iowa: Cedar Rapids; Des Moines; Sioux City
Kansas: Wichita
Kentucky: Lexington; Louisville
Louisiana: New Orleans; Shreveport
Maine: Bangor; Caribou; Lewiston; Portland; Sanford
Maryland: Baltimore; Bel Air; Silver Spring
Massachusetts: Boston; Brockton; Lowell; New Bedford; Springfield;
Worcester
Michigan: Detroit; Grand Rapids; Lincoln Park (Detroit)
Minnesota: Duluth; St. Paul
Mississippi: Biloxi; Jackson
Missouri: Kansas City; St. Louis
Montana: Billings; Missoula
Nebraska: Lincoln; Omaha
Nevada: Las Vegas; Reno
New Hampshire: Manchester
New Jersey: Jersey City; Newark; Trenton; Ventnor
New Mexico: Albuquerque; Farmington; Sante Fe
New York: Albany; Babylon (Long Island); Bronx; Brooklyn; Buffalo;
Harlem; Manhattan; Rochester; Staten Island; Syracuse; White Plains;
Woodhaven
North Carolina: Charlotte; Fayetteville; Greensboro; Greenville;
Raleigh
North Dakota: Fargo; Minot
Ohio: Cincinnati; Cleveland; Columbus; Dayton; Parma (Cleveland)
Oklahoma: Oklahoma City; Tulsa
Oregon: Eugene; Grants Pass; Portland; Salem
Pennsylvania: Erie; Harrisburg; McKeesport; Philadelphia (2);
Pittsburgh; Scranton; Williamsport
Rhode Island: Cranston (Providence)
South Carolina: Columbia; Greenville; North Charleston
South Dakota: Rapid City; Sioux Falls
Tennessee: Chattanooga; Johnson City; Knoxville; Memphis
Texas: Amarillo; Austin; Corpus Christi; Dallas; El Paso; Fort
Worth; Houston (2); Laredo; Lubbock; McAllen; Midland; San Antonio
Utah: Provo; Salt Lake City
Vermont: South Burlington; White River Junction
Virginia: Alexandria; Norfolk; Richmond; Roanoke
Washington: Bellingham; Seattle; Spokane; Tacoma; Yakama Valley
West Virginia: Beckley; Charleston; Huntington; Martinsburg;
Morgantown; Princeton; Wheeling
Wisconsin: Madison; Milwaukee
Wyoming: Casper; Cheyenne
Puerto Rico: Arecibo; Ponce; Rio Piedras
Virgin Islands: St. Coix; St. Thomas
va outpatient clinics (684) (excludes clinics located at va medical
centers (as of december 31, 2001))
Alabama: Anniston; Decatur; Dothan; Florence; Gadsden; Huntsville;
Jasper; Mobile
Alaska: Fairbanks; Kenai
Arizona: Bellemont; Casa Grande; Green Valley; Kingman; Lake
Havasu; Mesa; Safford; Show Low; Sierra Vista; Sun City; Yuma
Arkansas: Eldorado; Ft. Smith; Harrison; Hot Springs; Jonesboro;
Mountain Home; Paragould
California: Anaheim; Antelope Valley; Bakersfield; Cabrillo; Chico;
Chula Vista; Corona; Culver City; East Los Angeles Clinic; El Centro;
Eureka; Fairfield; Gardena; Lompoc; Los Angeles; Martinez; McClellan;
Merced; Mission Valley; Modesto; Monterey; Oakland; *** Palm Desert;
Palo Alto HCS (Capitola); Port Hueneme; Redding; San Francisco; San
Jose; San Luis Obispo; Santa Ana; Santa Barbara; Santa Rosa; Sepulveda;
Sierra Foothills; Stockton; Sun City; Travis; ** Tulare; Ukiah;
Vallejo/Mare Island; Victorville; Vista
Colorado: Alamosa; Aurora; Colorado Springs; Ft. Collins (LaPorte);
Greeley; La Junta; Lakewood; Lamar County; Montrose; Pueblo; Southern
Colorado HCS
Connecticut: New London; * Newington Campus; Norwich Screening
Clinic; Stamford; * Waterbury; * Windham; * Winsted
Delaware: Dover AFB; Millsboro
District of Columbia: Southeast Washington
Florida: Avon Park; Brooksville; Clearwater; Daytona Beach; Delray
Beach; Fort Pierce; Ft. Myers; Homestead; Inverness; Jacksonville; Key
West; Kissimmee; Lakeland; Leesburg; Manatee; Miami; Naples; Oakland
Park; Ocala; Okeechobee; Orlando; Panama City; Pembrook Pines;
Pensacola; Port Charlotte; Port Richey; Sanford; Sarasota; South St.
Petersburg; St. Augustine; Stuart; Tallahassee; Vero Beach; Viera;
Zephyrhills
Georgia: Albany; Atlanta (Midtown); Cobb County; Columbus;
Lawrenceville; Macon; NE Georgia/Oakwood; Savannah; Valdosta
Guam: Agana Heights
Hawaii: Hilo; Kailua-Kona; Lihue; Wailuku
Idaho: Lewiston; Ontario; Pocatello; Twin Falls
Illinois: Aurora; Bellville; Chicago Heights; Decatur; Effingham;
Elgin; Evanston; Galesburg; Joliet; LaSalle; Manteno; McHenry; Mt.
Vernon; Oak Lawn; Oak Park; Peoria; Quincy; Rockford; Springfield;
Woodlawn
Indiana: Bloomington; Crown Point; Evansville; Lafayette; Muncie;
New Albany; Richmond; South Bend; Terre Haute
Iowa: Bettendorf; Dubuque; Ft. Dodge; Marshalltown; Mason City;
Sioux City; Waterloo
Kansas: Abilene; Chanute; Dodge City; Emporia; Fort Riley; Fort
Scott; Garnett; Hays; Holton; Junction City; Lawrence; Liberal; Paola;
Parsons; Seneca; Russell; Wyandotte County
Kentucky: Bellvue; Bowling Green; Fort Knox; Hopkinsville;
Louisville; Paducah; Prestonburg; Somerset; Whitesburg
Louisiana: Baton Rouge; Jennings; Lafayette Parish; Monroe
Maine: Aroostook County; Bangor; Calais; Machias; Portland;
Rumford; Saco
Maryland: Cambridge; Cumberland; Glen Burnie; Hagerstown; Landover;
Loch Raven; Southern Maryland
Massachusetts: Causeway Clinic; Dorchester; Edgartown; Framingham;
* Greenfield; Haverhill; Hyannis; ** Lowell; Nantucket; New Bedford; **
North Shore; Pittsfield; **** Quincy; Springfield (2); Winchendon;
Worcester
Michigan: Benton Harbor; Flint; Gaylord; Grand Rapids; Hancock;
Ironwood; Jackson; Lansing; Marquette; Menominee; Muskegon; Oscoda;
Pontiac; Sault Ste. Marie; Traverse City; Yale
Minnesota: Brainerd; Fergus Fall; Hibbing (4); Mankato (10);
Maplewood (St. Paul)
Mississippi: Byhalia; Greenville; Hattiesburg; Meridian; Smithville
(2)
Missouri: Belton; Cape Girardeau; Ft. Leonard Wood; Gene Taylor;
Kirksville; Lake of the Ozarks; Nevada; St. Charles County; St. Joseph;
St. Louis CBOC; West Plains
Montana: Anaconda; Billings; Bozeman; Glasgow; Great Falls; Lame
Deer; Miles City; Missoula; Northeast (Sidney); Whitefish
Nebraska: Alliance; Gering; Grand Island; Lincoln; Norfolk; North
Platte; Rushville; Sidney
Nevada: Carson City; Ely; Henderson; Las Vegas Homeless; Pahrump
New Hampshire: Conway; Portsmouth; Tilton; Wolfeboro
New Jersey: Brick; Cape May; Elizabeth; Ft. Dix; Hackensack; Jersey
City; Morristown; Newark; New Brunswick; State Soliders Home; Trenton;
Ventnor
New Mexico: Alamogordo; Artesia; Clovis; Espanola (6); Farmington;
Gallup; Hobbs; Las Cruces; Las Vegas (6); Raton; Santa Rosa; Sante Fe
County; Silver City; Truth or Consequences
New York: Auburn; Batavia; Binghamton Community; Buffalo; Brooklyn
(Bedford); Brooklyn (Sister Boman); Carmel (Putnam County); Catskill;
Chapel St; Clifton Park; Courtland; Dunkirk; East Buffalo;
Elizabethtown; Elmira; Far Rockaway; Fonda; Geneseo; Geneva; Glen Falls
(2); Harlem; Harlem Homeless; Harris; Islip; Ithaca; Jamestown;
Kingston; Lackwanna; Lindenhurst; Lockport; Lynbrook; Lyons; Malone;
Massena; Middletown; Mt. Morris; Mt. Sinai; New City; New York SOC;
Olean; Oswego; Patchoque; Plainview; Plattsburg; Port Jervis;
Poughkeepsie; Queens; Riverhead; Rochester; Rome; Sayville;
Schenectady; Sidney; Soho; Sonyea; South Bronx; Staten Island; Troy;
Watertown; Wellsville; White Plains; Yonkers
North Carolina: Charlotte; Greenville; Jacksonville (2); Raleigh;
Wilmington; Winston-Salem
North Dakota: Bismarck; Grafton; Minot
Ohio: Akron; Ashtabula County; Athens; Canton; East Liverpool;
Grove City; Lancaster; Lima; Lorain; Mansfield; Marietta; McCafferty;
Middletown; Painesville; Portsmouth; Sandusky; Springfield; St.
Clairsville; Toledo; Warren; Youngstown; Zanesville
Oklahoma: Ardmore; Clinton; Konawa; Lawton; McAlister; Ponca City;
Tulsa
Oregon: Bandon; Bend; Brookings; Eugene; Klamath Falls; Salem;
White City
Pennsylvania: Aliquippa; Allentown; Berwick; Camp Hill; # Clarion
County; Coatesville; Crawford County; ** Dubois (Clearfield); Good
Samaritan; ### Greensburg; Health Place; Jamison Health Center;
Johnstown; Kittanning; Lancaster; Mckean County Media; Philadelphia;
Reading; Sayre; Spring City; State College; Tobyhanna; Washington Co.;
Williamsport; York
Puerto Rico: Arecibo; Mayaguez; Ponce
Rhode Island: Middletown
South Carolina: Beaufort; Florence; Greenville; Myrtle Beach;
Orangeburg Co.
South Dakota: Aberdeen; Eagle Butte; Kyle; McLaughlin; Pierre; Pine
Ridge; Rapid City; Rosebud; Winner
Tennessee: Chattanooga; Clarksville; Cookeville; Dover; Knoxville;
Mountain City; Rogersville; Savannah; Tullahoma
Texas: Abilene; Alice; Austin Satellite; Beaumont; Beeville; Bonham
Care; Network ## (20); Brownsville; Brownwood; Camp-Fannin; Cedar Park;
Childress; Cleburne ## (3); College Station (Bryan); Corpus Christi
Satellite; Dallas County; ## Decatur Area ## (3); Del Rio; Denton Area
##; Eagle Pass; Eastland Area ## (3); Ft. Stockton; Fort Worth
Satellite; Greenville Area ## (4); Kingsville; Laredo; Longview;
Lubbock; Lufkin; Marlin VAMC; McAllen Satellite; Odessa; Palestine; San
Angelo; San Antonio (5); San Marcos; Sanquin; South Bexar County;
Stamford; Stratford; Tarrant County ## (4); Frank M. Tejeda; Texarkana;
Uvalde; Victoria; Wichita Falls
Utah: Ogden; Orem; Roosevelt; Saint George
Vermont: Bennington; Burlington; VICC--Newport; VICC--St.
Johnsbury; Wilder
Virgin Islands: St. Croix; St. Thomas
Virginia: Alexandria; Covington; Danville (Riverside Drive) (2);
Danville (A.L. Post 325); Harrisonburg; Hillsville; Lynchburg; Marion;
Martinsville; Norton (2); Pulaski; St Charles (8); Stephens City;
Stuarts Draft; Tazewell
Washington: Bremerton; King County (2); Longview; Richland;
Vancouver; Yakima
West Virginia: Charleston; Franklin; Gassaway; Logan County;
Petersburg; Tucker County; Wood County
Wisconsin: Appleton; Baraboo; Beaver Dam; Chippewa Falls;
Cleveland; Eau Claire; Edgerton; La Crosse; Loyal; Rhinelander;
Superior; Union Grove; Wausau
Wyoming: Casper; Gillette; Green River; Newcastle; Powell; Riverton
* VA Primary Care Center
** Primary Care Clinic
*** Substance Abuse Treatment Clinic
**** Veterans Community Care Center
# Outpatient Clinic
## Primary Care Network
### Regional Medical Center
independent (4)
Alaska: Alaska HCS
Ohio: Columbus
Manila: Passay City
Texas: El Paso HCS
mobile clinic (8)
District of Columbia: Washington
Maryland: Baltimore
Missouri: Poplar Bluff
North Carolina: Fayetteville
Pennsylvania: Northeastern Pennsylvania
Washington: Spokane
West Virginia: Martinsburg
Wisconsin: Milwaukee
medical and regional office centers (11)
Alaska: Anchorage
Delaware: Wilmington
Hawaii: Honolulu
Kansas: Wichita
Maine: Togus
Montana: Fort Harrison
North Dakota: Fargo
South Dakota: Sioux Falls
Vermont: White River Junction
Wyoming: Cheyene
Manila: * Pasay City
* Manila is classified as an Independent Outpatient Clinic not a
Medical Center
Question 4b. What were the costs of the Phase I CARES study?
Answer. Current payments to the Booz-Allen and Hamilton CARES
contractor, actuary, and facility condition assessment contractors are
$4.8 million.
Question 4c. Will you be doing a Phase II and Phase III CARES study
and if so, what is the schedule and funding?
Answer. VA is exploring performing all remaining CARES studies
simultaneously in Phase II. The initial target date for completing the
remaining studies is calendar year 2003. During Phase I, VA staff
played a key role in the CARES process; as a result consideration is
being given to VA staff performing the majority of the work in future
studies. Until the overall process is finalized, cost information for
the future studies will not be available.
Question 5a. In FY 2001, VHA collected $771 million in copayments
and third party collections. In FY 2003, VHA has estimated that it will
collect $1.5 billion. Part of this increase will be based upon new
revenues generated by raising the prescription copayment from $2 to $7
and part of the increase will be due to anticipated improved collection
processes. With that in mind: VA is estimating $1.5 billion in
collections for FY 2003, doubling the amount from the FY 2001 level of
$771 million. What is the primary reason for this increase, and can we
realistically anticipate this level of collections?
Answer. The primary reasons for the increase from $771 million in
FY 2001 to the projected $1.5 billion in FY 2003 are as follows:
$364 million for the $5 (from $2 to $7) increase in
medication copayment;
$260 million for proposed legislative initiative for the
$1,500 deductible;
$40 million for the long term care copayment;
Improvements derived from the Revenue Improvement Plan; and
Four broad-sweeping activities (Electronic Data Interchange
(EDI), Centralization & Consolidation, Outsourcing &
Contracting Medicare remittance advice for a project)--all of
which will have a profound impact upon the MCCF program to help
increase collections.
Question 5b. Please provide all background assumptions,
spreadsheets and analyses used in the determination that 121,000
veterans would no longer use VA health care services and that an
estimated annual savings of $885 million in reduced workload will be
realized due to the proposed annual $1,500 deductible to Priority 7
veterans. Please also include how many of the 121,000 are current users
and how many are potential enrollees.
Answer. The attachment, ``Background on VA's $1,500 Deductible
Proposal for Priority 7 Veterans'', provides the background assumptions
and details of this proposal.
attachment--background on va's $1,500 deductible proposal for priority
7 patients
VA's estimate of the financial and programmatic impact of the
$1,500 deductible upon Priority 7 veterans was based upon the Milliman
USA, Inc. actuarial estimates for projections of enrollees and
resources that were used as the foundation of the FY 2002 enrollment
decision. The actuarial estimates were based upon FY 2000 actual
experience and did not reflect increased utilization by Priority 7
veterans seen in FY 2001. The actuarial estimates were first available
in late summer of 2001.
Future Year Projections
This deductible policy would not have been proposed if the growth
in Priority 7 veterans was estimated to be a one or two year anomaly.
As the chart below shows, the Priority 7 workload is estimated to
continue to rise through 2010.
Projected Enrollment by Patient Priority
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
VA's primary reason for proposing a significant policy change is to
assure that quality of care is maintained.
The Deductible Proposal
The table below shows the forecast of key workload factors
including associated workload expenditures. Estimates are shown with
and without the deductible in place for 2003. Priorities 1-6 veterans
are VA's core veterans-service connected and low income--Priority 7
veterans--(higher income veterans, about $25,000 for a single veteran
and $28,000 for a married veteran). As the table indicates, Priority 7
users are projected to rise by 43 percent from 2001 to 2003 and
resource requirements by 61 percent without the $1,500 deductible. With
the $1,500 deductible, the growth is held to 29 percent and 12 percent
respectively
----------------------------------------------------------------------------------------------------------------
2003 Without 2003 With
2001 Estimate 2002 Estimate Deductible Deductible
----------------------------------------------------------------------------------------------------------------
Priority 7 Enrollees (Average) in millions...... 1.4 1.9 2.2 2.1
Patients (unique)............................... 841,153 1,060,482 1,206,860 1,085,074
Workload Expenditures in millions............... $1,790 $2,320 $2,885 $2,000
Deductible Revenue in millions.................. .............. .............. .............. $260
----------------------------------------------------------------------------------------------------------------
Application of the deductible proposal reduces Priority 7 veterans
by 10 percent and their related workload expenditures by 31 percent in
2003. Their expenditures decline by a greater amount because a large
portion of the veterans will seek fewer medical services from VA and
will shift some of their care to other providers. The following graphic
displays the Priority 7 expenditures projected for 2000-2007 with and
without the proposed deductible starting in 2003.
Deductible Impact on Priority 7 Expenditures
[Assumes Actuary's FY 2003 Percentage Impact for Outyears]
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
The actuarial estimate concentrates on medical procedures workload
(outpatient visits--CPT codes and inpatient episodes of care--DRG) of
Priority 7 patients, as this factor is more directly related to
expenditures than the number of patients or enrollees. The actuarial
expectation is that, with the application of the $1,500 deductible, VA
will experience a 10 percent reduction in unique medical users
(122,000), a 50 percent decline in outpatient procedures, a 40 percent
decline in inpatient episodes of care, and a 10 percent decline in
pharmacy utilization. The overall effect on resources is expected to be
a 31 percent decline in cost.
Because this type of policy change has not been seen in any large
health care system before, or in a system with similar characteristics
to the VA--a system where the patient pays only a small fraction of
their health care costs, the change in Priority 7 veterans behavior due
to the introduction of a $1,500 deductible could be different than that
forecasted. The ramification of expenditure savings and the impact on
budgets in the future is very significant.
Revenue Estimate
The actuary estimates that this proposal will bring in an
additional $260 million in revenue in addition to the $885 million in
cost reduction for an overall reduction to the appropriation request of
$1.145 billion.
Why This Proposal Was Chosen?
Continued growth in the demand for VA health care services will
require significant increases in budget resources. Without significant
increases in resources or the implementation of an alternative policy/
policies (limit enrollment, change uniform benefits package, cost share
proposal), VA would face critical issues impacting quality, such as,
increasing waiting times, increasing system congestion impacting all
patients, inability to meet demand. VA considered these policies and
determined that the deductible (cost sharing) proposal seemed to be the
preferable option that addresses the following most overarching
concerns:
<bullet> Maintain quality of care for all those that VA serves
<bullet> Continue VA open enrollment for all veterans
<bullet> Maintain, not reduce, the basic benefit package of medical
services for core veterans
<bullet> Provide veterans appropriate access to outpatient,
inpatient, and non-institutional long-term care services
<bullet> Require veterans that have higher incomes to contribute
more to their cost of care than other veterans
<bullet> Assess a charge for use of healthcare services as opposed
to assessing an upfront charge or enrollment fee
<bullet> Allow veterans to benefit from private insurance coverage
and encourage veterans to identify their insurance coverage and improve
third party collections
<bullet> Continue VA long-term services, especially non-
institutional care
<bullet> Provide catastrophic coverage for those with high annual
medical costs
How does the Deductible Work?
Who pays the deductible?
<bullet> All Priority 7s for non-preventive, non-service connected
care
<bullet> Insurance will help offset deductible charge to veterans
Dollar for dollar
Veteran will not be billed until insurance payment is made
How much is the deductible?
<bullet> Pay only for care received (no upfront charge)
<bullet> Once annual deductible ($1,500) is met, no more deductible
for that year
<bullet> Excludes pharmacy (only $7 copay applies)
How do co-payments work with the deductible?
<bullet> Inpatient and outpatient copays start after deductible cap
is reached
<bullet> Pharmacy copays will be in effect the entire year
How was the $1,500 cap determined?
<bullet> The deductible amount is below the average overall cost
for priority 7 veterans ($1,900)
<bullet> Would encourage veterans to identify insurance
<bullet> The cap provides catastrophic coverage for those with huge
annual medical costs
<bullet> Not likely to devastate those without insurance who need
health care as the cost of most Priority 7's care is low, a greater
share of their total cost is for pharmacy and a small percentage have
large medical costs
Question 5c. Last year Congress passed Public Law 107-135, the
Department of Veterans Affairs Health Care Programs Enhancement Act of
2001, and one of the provisions in this legislation was geographic
means testing for inpatient care copayments. How will this adjustment
to inpatient copayments be affected by the new $1,500 deductible?
Answer. If VA is given legislative authority to implement the
$1,500 deductible, a veteran will be required to meet the entire
deductible amount prior to paying for regular VA copayments. There will
be no change in procedure for veterans who will be subject to the
geographic means test inpatient copayment. They will be charged the
full amount of the deductible until that amount has been satisfied.
Once that amount has been satisfied, then the geographic means test
copayments for inpatient care will be assessed. At that time, veterans
impacted by the geographic means test will be assessed regular VA
copayments for outpatient care and extended care services.
Question 6. Considering last year's funding shortfall, does this
budget provide for full and complete funding--above the FY 2002
baseline (which will not include the additional amount that was
provided)--for veterans' health care, so that VA does not again face
the dilemma of choosing which veterans to serve?
Answer. There are many variables that impact health care in general
(new diseases, new treatments, inflation changes, etc.) and impact
veteran enrollment in VA health care (other health care alternatives,
availability and accessibility of VA services, etc.). This budget
incorporates a ``Base Health Care Demand Adjustment'' initiative that
identifies and requests the resources required to support an actuarial
estimate of the demand and case mix changes needed for all seven
patient priorities in FY 2003. Based on this initiative, this year's
budget estimates should better account for the relationship of planned
workload requirements and the full funding needed.
Question 7. Although I am pleased with the decision to continue
enrolling new Priority 7 veterans in the current fiscal year, I remain
very concerned about where the additional funding came from. I
understand that a supplemental will be coming in the amount of $142
million to cover unforeseen costs in FY 2002. I understand, however,
that the VA health care system was running a $400 million deficit. It
seems that this supplemental is not sufficient. Where will the
additional money come from?
Answer. Based on the continuation of full enrollment, VHA
determined there would be a shortage of about $441 million in FY 2002,
after available resources were subtracted from projected expenditures.
Approximately $300 million in management savings is anticipated in FY
2002. These savings are expected to be generated from a multi-year
effort to improve standardization and compliance in the procurement of
equipment, pharmacy, and medical supplies. Other savings are expected
from program efficiencies related to new criteria to assess community-
based outpatient clinics and centrally managed programs. The balance of
the shortfall, $142 million, is required as supplemental funding in FY
2002 to continue enrollment of new priority 7 veterans.
Question 8a. The Medical Care Cost Fund takes on new importance in
the budget. What is the status of the 24 initiatives in the Revenue
Improvement Plan?
Answer. Attached is our Status of Revenue Improvement Plan
Recommendations.
----------------------------------------------------------------------------------------------------------------
Date
Rpt Item and Description Action/Status -------------------------- Chg Due Comments
Complt Due
----------------------------------------------------------------------------------------------------------------
1. Mandate pre-registration VHA Directive 98-042 12/01/01 12/01/01 ........... Completed. Addtl
of veterans. issued 9/23/98. followup required
ADUSH memo dtd 12/ to monitor
10/01 to network compliance.
and facility
directors re-
emphasizing
requirement.
Project Team will
serve as Focus
Group for the EDI
Insurance Team.
ADUSH issued memo
dtd 12/26/01
summarizing Revenue
Office action(s).
Re-issue Directive
scheduled for 2nd
Qtr, presently in
concurrence.
Article for Fast
Track Newsletter
drafted, pending
publication.
2. Define standards for Project team 12/31/01 ........... 10/30/03 * In-Progress. EDI
complete/accurate established 12/01; Team addressing
(insurance) data capture. Team meeting (conf long-range
call) conducted Feb conversion. *
2002. Project Team Indicates revised
will serve as Focus HIPAA deadline.
Group for EDI
Insurance Team.
Team Report on
intake requirements
for insurance data
issued 02/02, and
presently in
clearance process.
Guidelines to
address procedural
requirements during
interim period
prior to EDI
implementation
being drafted.
Completion date is
revised HIPAA
deadline coinciding
w/EDI
implementation.
3. Implement veteran Pamphlets and 12/31/01 1/31/02 ........... Initial distribution
education program posters on new completed 1/02.
copay amounts Additional
developed. education/training
Statement inserts program development
distributed in in-progress.
January 2002
mailing. Inter/
Intranet websites
updated 01/02. An
Education workgroup
was formed 02/02 to
collaborate WEES on
education/awareness
campaign.
4. Implement employee Project team 12/31/01 ........... ........... In-Progress. EDI
education program. established 12/01; Team addressing
Team meeting (conf long-range
call) conducted Jan conversion
and Feb 2002. requirements for
Additionally, the IPAA
Education workgroup implementation.
is coordinating
with the (HEC) pre-
registration
workgroup in
collaborating w/EES
on education/
awareness campaign.
5. Implement electronic Project team 3/1/02 ........... 10/30/03 * In-Progress. EDI
insurance identification and established 12/01; Team addressing
verification. Team meeting (conf long-range
call) conducted Feb conversion. *
2002. Pilot in- Indicates revised
progress in VISN 2. HIPAA deadline.
Project Team will
serve as Focus
Group for EDI
Insurance Team.
Completion date is
the revised HIPAA
deadline which
coincides w/EDI
implementation.
Conference call
with the EDI Team
was held 02/02 to
coordinate
integration of both
team's efforts in
identifying system
requirements and
establishing
business rules and
models.
6. Consolidate insurance Project team 7/1/02 ........... ........... In-Progress.
information at the established
enterprise level. December 2001.
Results from VISN 2
Pilot (in-progress)
may provide support
to this item.
Discussions w/St
Anthony's
Publishing and
Ingenix ref:
electronic
insurance directory
file in progress.
7. Develop an employer master Project team 12/1/02 ........... ........... In-Progress.
file. established
December 2001.
Project team
meeting (conf call)
conducted Feb 2002.
Identification of
systems
requirements in
progress.
8. Enforce national ADUSH memo dtd 12/10/ 11/30/01 12/10/01 ........... Completed. Addtl
documentation policy. 01 issued to followup and
network and monitoring
facility directors. required.
Contract awarded to
PwC on national
documentation
policy. Draft VHA
Directive in
progress.
9. Mandate use of electronic ADUSH memo dtd 12/10/ 6/30/02 ........... 8/30/02 Performance
medical records (CPRS). 01 issued reminding indicators to
network and monitor CPRS
facility directors compliance in
of this approval process.
requirement.
Additional guidance
published 1/30/02
mandating full
implementation via
EDMS (166245).
10. Develop national clinical Mtg scheduled 02/11- 12/31/02 ........... 2/2/02 In-Progress.
education program. 12/02 in
Minneapolis for
development of
(education/
training) tool kit
which is in
progress.
11. Develop and mandate use One encounter form 1/1/03 ........... ........... In-Progress.
of electronic encounter form developed and is in
and documentation template. testing. Other
encounter forms
anticipated due by
2/28/02.
12. Develop and implement Requirements 12/31/03 ........... ........... In-Progress.
Documentation tracking identification in
system. progress by Project
team. Draft of VHA
Directive in
progress.
13. Develop staffing plan for Requirements 12/1/01 ........... 3/30/02 Questionnaire in-
coding resources. identification in progress. Recruit/ progress by Project Retention Handbook
team. Questionnaire in draft.
in-progress.
Recruitment and
Retention Handbook
in draft. Extension
requested thru 3/30/
02.
14. Mandate use of encoder ADUSH memo dtd 12/10/ 12/31/01 12/10/01 ........... emo drafted on use
software. 01 issued to of standard
network and software in review
facility directors. by CIO.
Followup required
to monitor
implementation of
encoder software.
15. Develop national standard Project Lab and 3/29/02 ........... ........... In-Progress.
for laboratory, radiology Radiology subteams
and other ancillary test reviewing (VistA)
names and corresponding CPR clinical packages
codes. to determine
feasibility of
subroutines tied to
national annual CPT
roll out to update
all xray/lab and
ancillary codes.
16. Mandate minimum access ADUSH memo dtd 12/10/ 12/1/01 12/10/01 ........... Completed. Addtl
policy to VistA ancillary 01 issued to followup via joint
packages. network and CIO/ADUSH memo
facility directors. scheduled for 02/02
Additional guidance
in draft to network
and facility
directors to
provide minimum
access to field
Revenue Staff is in
progress.
17. Complete implementation
of:
EDI Billing Project........ National training 12/31/01 12/31/01 ........... In-Progress. Systems
completed in capacity testing
Chicago and successfully
Atlanta. Site completed 02/02.
testing in progress.
MRA Project................ Alpha testing in 4/30/02 ........... 10/01/03 * In-Progress. *
progress. Indicates revised
Identification of HIPAA deadline.
Systems
Requirements
Specifications
anticipated 05/02.
Completion date is
revised HIPAA
deadline.
18. Implement claims analyzer .................... 3/29/02 ........... ........... In-Progress. See
tools. Item #14.
19. Improve the charge Project Subteams 10/1/03 ........... ........... In-Progress.
capture process. reviewing high
dollar volume
clinical packages
for billable
events. CIO billing
package plan
development in
progress. Project
Team meeting
scheduled for 03/02
to conduct
requirements
analysis and
develop systems
specifications.
20. Consolidate/outsource VHA ADUSH memo dtd 12/10/ 12/31/01 ........... 8/30/02
3rd party accounts 01 issued to
receivable follow-up. network and
facility directors,
RFI closes 2/6, RFP
follows. Extension
due to contracting
and budget
constraints. PwC
contract for
development of CIP
for nationwide
contract solution,
Requirements
analysis and draft
of proposal in
progress. 90 day
pilot in VISN 12 in
progress to collect
on aged receivables
thru private vendor.
21. Develop utilization Project Team 3/29/02 ........... 9/30/02 In-Progress.
review program. drafting SOPs, Questionaire
policy, position results under
description & review.
identifying
software
enhancements.
Project Scope
change to include
Web-based training
module, national UR
training initiative
& proposing more
software
enhancements for UR
activities extends
due date to 9/30/
02. Questionaire
administered 12/01.
22. Request VA GC more Discussions w/OGC 4/1/02 ........... ........... In progress. On 03/
aggressively pursue referred held Dec 2001, Jan 05/02, the Office
3rd party AR. and Feb 2002. of General Counsel
Meeting planned for released
Jan/Feb w/Project instructions to
Subteam Leaders. Regional Counsels
for reconciling
accounts with VA
Medical Centers.
23. Implement 3rd party Project team (Mellon 1/1/03 ........... 10/01/03 In-Progress.
payment and remittance Bank, AAC and
program (EDI Lockbox). Technical
Development Staff
of Revenue Office)
established.
Systems
requirements
identified,
currently in
design. Systems
stress testing
completed 2/19/02.
Software deployment
anticipated Apr/May
02.
24. Implement accounts UNISYS providing 6/2/03 ........... ........... In-Progress.
receivable management DEMO of product
software. currently in use in
Pitts VAMC. Visit
to Asheville CRU
scheduled January
2002. RFI in
progress for
assessment of
additional vendor/
products. Other
CRUs to view demo @
Pitts, VAMC 03/02.
----------------------------------------------------------------------------------------------------------------
Question 8b. What is VHA doing to reduce the third party accounts
receivable backlog?
Answer. VHA is currently in the process of conducting market
research through a Request for Information (RFI) to identify private
sector practices that can readily be adapted to VA's business
operations and thereby align VA with industry hallmarks. VHA plans to
release a Request for Proposal (RFP) soliciting bids for third-party
accounts receivable management by Spring 2002 and to award one or more
contracts by Fall 2002. Simultaneously, VHA initiated a contractor
pilot in VISN 12 to resolve third-party accounts receivables greater
than 90 days. The contractor will be doing all follow-up actions on
these accounts.
Question 8c. Despite the recent improvements in developing better
billing methods, I think there is general recognition that VA's
collections efforts could be much better. Please compare VA's costs to
collect third party revenue with the costs of private industry.
Answer. VA's cost to collect from third-parties is very difficult
to compare with private industry's cost to collect. VA's measurement
for this process is a cost to operate. VA's data systems cannot provide
data for collections and costs to differentiate between first and
third-parties. The cost accounting system records only total
collections and cannot identify cost expenditures to the first and
third-party level. There have been cost assessment studies done in
prior years by contractors and one currently underway; both of which
have shown (show) how the cost to collect/operate has declined over the
past few years. This decrease in cost to operate can be attributed to a
number of improvements in the process for billing and collecting of
first and third-party receivables. These enhancements include the
electronic generation of patient statements from one location, the
receipt of payments for first party charges through a lock box bank,
and the automatic posting of those payments to a patient's account.
Additionally, improvements made to the third-party billing process
include facilities using an Electronic Data Interchange (EDI) process
to submit a bill to an insurance company in the near future,
centralization/consolidation of like functions, and outsourcing/
contracting out.
Systems Flow, Inc., has been contracted to study and develop annual
reports to Congress on an assessment and an interim evaluation of
alternative business models presented in VHA's Business Plan for
Revenue Collection. Systems Flow, Inc. reviewed three VISNs on various
subject matters including cost to collect data. A draft based on
preliminary data results (using December 2001 data) was issued February
12, 2002. The cost to operate on average for three VISNs for third-
party collections averaged 22 cents to collect $1 and averaged 16 cents
to collect $1 of total collections (first and third-party).
Question 8d. Three years ago VA began an initiative to test
contracting out its Revenue Process. I understand that this effort
never achieved its intended goal of a complete contracting out of all
billing and collection activities in two VISNs. Why wasn't it fully
contracted out and when will we see the report on this pilot?
Answer. As you note, several years ago VHA undertook an initiative
to evaluate whether it was feasible to contract out the Revenue process
or parts of the process. Unfortunately, that initiative has not
produced the positive results that were anticipated. Volunteer VISNs
were sought to pilot the contract and franchise revenue collection
models, and VISN Directors provided constructive comments and
recommendations. This approach, however, did not provide as many
positive results as expected. Many VISNs sought autonomy in tailoring
the models to their organizations. That later turned out to be a major
impediment to the pilot's efficacy. Nevertheless, other contracting-out
related initiatives are currently being pursued.
Question 8e. Does VA anticipate changing the prescription or
outpatient copayment amounts in FY 2003?
Answer. As VHA indicated in the final regulation regarding the
medication copayment, the medication copayment will be reviewed on an
annual basis and increases will be based on the Prescription Drug
Component of the Medical Consumer Price Index. This is most relevant to
the cost of prescriptions and should be relevant to any general
increases in medication copayments in the private sector. VHA will also
periodically review the outpatient copayments and will recommend
adjustments as appropriate.
Question 9. I understand that the VA is considering requesting
legislation to authorize Medicare Subvention. How much did DOD gain or
lose in revenue as a result of their pilot program? Given DOD's
experience, how do you believe VA would fare?
Answer. VA is currently in the process of discussing some options
for Medicare coordination of benefits with the Centers for Medicare and
Medicaid Services (CMS). CMS and VA are positioned to begin exploring
some options for improving federal efficiencies through the provision
of choices for the veteran beneficiary. These efforts could result in
high quality, comprehensive, unduplicated, and coordinated care within
a national health care environment.
While the overall gains or losses from the DOD demonstration are
not available (only FY 1999 figures have been released by GAO), reports
have been released addressing the increased costs to DOD as a result of
the demonstration. DOD faced significant challenges during the
demonstration. VA expects to face some of the same, and some very
different challenges. The Administration is studying the issues.
Question 10. What efficiencies could be gained from centralizing
contracting decisions for CBOC's, personal services, and other clinical
services? What oversight does headquarters staff currently exercise on
these issues?
Answer. Efficiencies could be gained in developing a pool of
acquisition specialists who are expert at this type of contracting.
Additionally, standardized quality and patient safety requirements
could be included in all contracts. However, it would be difficult to
determine specific requirements because those issues are driven by
local clinical circumstances. VHA is developing a policy directive on
health care contracts that will require a review process for
significant dollar volume health care contracts. Additionally, pursuant
to the policy directive VHA will require specific language that
addresses quality and safety in all health care contracts.
Currently, headquarters staff review and approve all 38 U.S.C. 8153
contracts for clinical services, including CBOC contracts, that satisfy
certain monetary thresholds. As a result, headquarters staff, including
Strategic Healthcare Group Chief Consultants, Office of Acquisition and
Materiel Management, and General Counsel, thoroughly review all CBOC
contracts that exceed the monetary thresholds prior to approval. Such
reviews include the submission of veteran population data, alternative
methods for delivering care, and estimated costs associated with the
proposed CBOC. Once expert headquarters staff reviews the submitted
information, the National Leadership Board does the same. Moreover,
subsequent to awarding a CBOC contract, the CBOC contract may be
audited by the Office of Acquisition and Materiel Management. This
subsequent audit is considered part of the ongoing Business Review
performed at the VHA contracting activity.
Question 11. What mechanism do you have in place to guarantee
quality of care in contracted CBOCs and how much money is in the budget
for quality management programs at CBOCs?
Answer. VHA's ability to measure and report on quality of care
allows VHA to identify areas for improvement at all system levels.
Quality management is embedded in VHA's core processes through
performance measurement. Recent initiatives are underway to enhance the
value of performance data provided. For example, the VHA Office of
Quality and Performance (OQP) provides field and Central Office
leadership with routine reports on actual and comparative performance
data at the network level, coupled with information on successful
approaches for improving performance. This synergistic approach
supports management by linking strategy with relevant measurement
regarding actions intended to improve the quality of care.
In late FY 2002, OQP will increase the frequency of outpatient
satisfaction, functional assessment, and health behavior surveys (from
annually and semiannually) to quarterly to improve the timeliness of
data. Analyses will include not only Network comparisons of
performance, but also periodic CBOC, special population, or cohort
analyses to assure that data provides more valuable guidance and
clearer direction for improving care. Finally, sampling methods are
being modified to assure that OQP is maximizing the power of analyses
wherever possible. Performance analyses, powered for specificity at the
particular CBOC level, would require additional funding and would be
predicated on adverse finds at a more aggregated level.
There is no specific line item in VHA's budget identified as CBOC
quality management. The quality management activity is matrixed
throughout the organization and quality is monitored at all sites of
care through the activities of many employees at the Central, Network,
and local level. The costs that could be attributed to CBOC quality
management within Central Office's Quality and Performance Office are
roughly $3.5 million. This figure includes costs associated with
External Peer Review Activities, veteran satisfaction and functional
status surveys, utilization management guidance, and credentialing
support. It does not include Joint Commission on Accreditation of
Healthcare Organizations (JCAHO) accreditation costs--which are
difficult to attribute because they are facility-wide expenses. It also
does not reflect the local and Network operational costs (e.g., medical
center quality managers, network quality management officers, local
training, etc.). There is no local quality manager at the CBOC-rather,
this function is subsumed by the local quality management staff that
are responsible for managing the quality at all sites of care
affiliated with the local facility. Additionally, CBOC contracts
include requirements designed to ensure quality care for veterans.
Question 12. Is there a central data bank that VA field contract
specialists can use to assess the value of the contracts that they are
negotiating?
Answer. Yes. Contract Specialists are given information on how to
assess the value of contracts they negotiate. Examples include salary
schedules for medical school affiliate physicians and Medicare websites
with specific rate schedules for their vicinity. Another tool for
negotiating costs is use of Medicare rates for both technical and
professional medical services for the local area. These are established
and verified rates and can greatly assist the contract specialists in
awarding cost-effective contracts.
Question 13. What are the cost estimates for implementation of the
chiropractic provisions of Public Law 107-135 in FY 2003?
Answer. VHA estimates that $7.5 million will be required in FY 2003
for this program.
Question 14a. Sharing between VA and DOD is a key element in this
budget. What is the status of the VA relocation to Fitzsimons? How does
this impact CARES?
Answer. Since its inception the Denver VAMC has had an affiliation
with the University of Colorado Health Sciences Center (UCHSC). This
affiliation has served to enhance the provision of health care to
veterans. UCHSC is now moving to the former Fitzsimons army base in
Aurora, which is in the eastern part of the Denver metropolitan area.
The University of Colorado Hospital (UCH) will soon be part of this
move. In fact, it has already established a major presence with the
Anschutz Center for Advanced Medicine, a major ambulatory facility, and
has begun construction of a 12-story inpatient facility at the
location. The University and LICH will be part of a larger complex that
is anticipated to draw world-class research and developmental talent
and resources.
The move of the University and UCH to Fitzsimons presents both
challenges and opportunities for the VA. The future of the VA at the
present location is problematic. Continued remodeling will not yield an
optimal result and the recruitment of physicians and other medical
staff will be much more difficult without the University adjacent to
the Denver VAMC. These concerns have led VA leadership to examine the
possibility of moving VA health care to Fitzsimons through enhanced
partnership with UCH. Three options are under study by the VA.
Option A--Build a freestanding VA Hospital adjacent to UCH
Option B--Build a VA Bed Tower/VA Clinic attached to UCH
Option C--VA Outpatient Clinic and merged Hospital
VA has contracted with a consultant to help us further evaluate the
pros and cons and the costs of relocation of the Denver VA Medical
Center to the Fitzsimons campus. They are also assisting in preparing a
Capital Investment Application for this project, which will include a
financial analysis of several scenarios for relocation. The analysis
will include demand projections and service needs through the year
2020. It will also consider the residual value of the existing land and
facility as well as the cost associated with each scenario. Their work
is scheduled for completion in late Spring 2002. Until that work is
completed, VA is not able to make a decision about the optimal solution
for the future location on the Denver VAMC. This timetable did not
permit the project to be included in the President's budget for FY
2003.
The consultants who are assisting the VA and the University are
familiar with the CARES process and criteria. As noted, projections of
demand and service needs are being made through the year 2020. The
ongoing evaluation of the potential relocation of the Denver VAMC to
Fitzsimons is highly compatible with the letter and the spirit of the
CARES initiative. The planning for this project will be incorporated
into the CARES study for VISN 19 and assessed during the CARES review
process.
Question 14b. What is the status of the VA/Tripler joint venture?
How does this impact CARES?
Answer. In May 2000, the VA activated a new Ambulatory Care Center
on the Tripler campus and relocated the administrative offices of the
VAMROC. In addition, VA has a 60-bed Center for Aging on the campus and
staffs a 20-bed psychiatric unit within the Tripler Medical Center. The
VA continues to contract with Tripler for most of its inpatient medical
and surgical needs.
The recent relocation of VAMROC Honolulu to Tripler campus has
increased congressional interest in moving towards creation of an
integrated federal medical center to provide seamless health care
services to active duty members, retirees, military dependents,
veterans and other federal beneficiaries in Hawaii.
Congress is requiring that three sites be selected as pilot
projects to pursue additional integration of services between VA and
DOD facilities. Tripler Army Medical Center was mentioned in
congressional language as a site that should be considered for one of
the pilots. VHA supports including Tripler, which is one of the most
functionally integrated VA/DOD joint venture sites in the nation.
The planning and potential changes to the VA/DOD joint venture will
be incorporated into the CARES study for VISN 21 and assessed during
the CARES review process.
Question 14c. How much progress has been made on the VA-DOD joint
efforts to develop a compatible computer-based patient record to
support post-separation health care delivery and claims processing?
Answer. VA and DOD began a substantially expanded effort last fall
entitled HealthePeople (VA, DOD, Indian Health Service (IHS), other
agencies) and Federal Health Information Exchange (DOD, VA and IHS),
to: improve sharing of health information; develop and adopt common
standards; seek appropriate opportunities for joint procurements and/or
building of systems; work toward improved, model health information
systems; and explore the potential convergence of VA and DOD health
information software applications.
The specific actions that are being taken include the following:
<bullet> DOD is establishing a national patient record using a
Health Data Repository product from 3M;
<bullet> VHA intends to pursue a comparable solution and has staff
working with DOD on a regular basis;
<bullet> DOD and VA will have separate repositories in order to
ensure privacy, security, and reduce the consequence of any failures.
Both DOD and VA repositories should be up and running by 2005 and would
use common data standards and support retention of records from DOD and
VHA;
<bullet> VHA intends to explore with DOD the potential to create a
second phase to this effort that supports creation of government-owned
repository architecture/software, not dependent on vendor technology.
This architecture/software could also be used throughout government to
create health care repositories that can easily share patient
information;
<bullet> VHA and DOD are also standing up a national repository,
which may be temporary, under Government Computer Patient Record (GCPR)
that allows for sharing of select DOD patient data at VHA locations.
Additional phases of this project will support DOD viewing of VHA
information.
The VA/DOD Executive Council Information Management and Information
Technology Work Group manages the VA/DOD interagency Government
Computer Patient Record (GCPR) program, to be renamed the Federal
Health Information Exchange. The goal is to make DOD data available to
VA clinicians with the highest functionality at the lowest cost. The
transfer of DOD data to VA is in the testing phase. As part of the FY
2002 budget process, VA and DOD funding has been apportioned for
development of a business case plan and implementation plan to address
the interoperability of GCPR with CHCS II (DOD's new system in
development) and VistA (VA's patient information system).
Additionally, the VA Deputy Secretary and the DOD Under Secretary
for Personnel and Readiness have agreed to conduct quarterly reviews of
VA-DOD coordination initiatives. Other information technology sharing
efforts underway between DOD and VA include: Health Insurance
Portability and Accountability Act of 1996 (HIPAA); standards
development; pharmacy initiatives; technology integration laboratories;
VA/DOD Laboratory Data Sharing and Interoperability; and collaboration
for a VA/DOD Consolidated Mail Order Pharmacy (CMOP) pilot.
We have provided a list of additional joint efforts in the
attachment accompanying this question. Additional details are available
for each.
attachment
Specific joint IT efforts between VA and DOD intended to ultimately
support post-separation health care delivery by VA are:
<bullet> IT sharing efforts underway between DOD and VA, including:
Health Insurance Portability and Accountability Act of 1996
(HIPAA) implications for IT
IT Standards Development
Pharmacy Initiatives (more details below)
VA/DOD Laboratory Data Sharing and Interoperability (more
details below)
Software Technology Integration Laboratory
Support for VA/DOD joint venture local R&D initiatives
TRAC<SUP>2</SUP>ES System (more details below)
Collaborating in such areas as Scheduling System Replacement,
Billing System, VA/DOD Consolidated Mail Order Pharmacy (CMOP),
Health Data Repository, Web Based Consumer Health Information
System, IT Architecture and Standards
<bullet> VA/DoD Consolidated Mail Order Pharmacy (CMOP) Pilot
Project
Progress is being made to enable DoD to use VA's Consolidated
Mail Order Pharmacy. A prototype will be tested late in FY 2002
<bullet> Other Pharmacy Initiatives
The MHS is discussing VA participation in the Pharmacy Data
Transaction Service (PDTS), which allows DoD to build a patient
medication profile for all beneficiaries regardless of the
point of services
<bullet> VA/DoD Laboratory Data Sharing and Interoperability
This project focuses on development of an interface for
electronic transfer of reference laboratory data between
federal health care systems (various DoD Composite Health Care
System sites, VA's Veterans Health Information Systems and
Technology Architecture sites, and commercial reference
laboratories) to replace current manual methods. The
Preliminary System Testing is underway.
<bullet> The TRANSCOM Regulating and Command and Control Evacuation
System (TRAC<SUP>2</SUP>ES)
Provides global patient evacuation planning in an integrated
system. It facilitates the decision-making process of
evacuating military casualties from a combat theater to a
source of definitive medical care within the continental United
States. Emergency management personnel within VHA facilities
have the ability to use TRAC<SUP>2</SUP>ES to submit bed
reporting and contingency data information to DOD.
Per the ``Report of the Preparedness Review Working Group to
the Secretary of Veterans Affairs'' recommendation in October,
2001: Goal is to provide information on the capabilities of VA
health care facilities to the Global Patient Movements
Requirements Center (GPMRC) and incorporate that data into
TRAC<SUP>2</SUP>ES so that the U.S. military can evacuate
wounded military personnel to an appropriate VA facility.
Question 15. What are the implementation costs associated with the
consolidation of VISNs 13 and 14? What are the first year savings?
Answer. The start-up costs associated with the integration of the
two VISNs are not anticipated to be significant. While the merger, in
and of itself, will not bring financial stability to VISN 13 and 14,
the integration is expected to generate cost savings through economies
of scale and reduced administrative overhead. The precise programs
where these efficiencies will be obtained is not determined at this
point, but the leadership at the network and facility level have
already begun the task of sharing best practices and possible avenues
through collaboration that they can obtain management efficiencies. The
cost savings gained will be redirected into veterans healthcare
services throughout the integrated network.
Question 16. What adjustments to VERA will be put into place in FY
2003 and what is being done by headquarters to reduce the need for
supplemental funding by VISNs?
Answer. For the FY 2003, VHA is continuing to review VERA to
improve the equitable allocation of funds, including all Priority 7 and
improving the case-mix weighting and risk adjustment elements of VERA.
Decisions on these adjustments will be made later this fiscal year.
Also, during FY 2001, VHA re-engineered its VERA adjustment
(supplemental funding) process. The process now involves a thorough
review of each networks' financial plan by assessing projected revenues
versus expenses in a systematic standardized approach across networks.
VHA plans to complete the FY 2003 VERA adjustment process prior to
distribution of the FY 2003 network allocations, after VA receives its
FY 2003 Medical Care Appropriation.
Question 17. As I understand it, under the proposed long-term care
copayment regulations, the monthly long-term care copayment can be over
$3,000. A veteran whose annual income is just over $9,000 is required
to make these copayments. With the average long-term care stay being 13
months, the proposed copayment structure could either bankrupt veterans
or, even worse, deter them from using VA services. What, if anything,
is VA doing to ensure that this does not happen?
Answer. VA has developed procedures, through the calculation of the
financial cap, to avoid a veteran and spouse from incurring a financial
hardship.
For any month, the maximum copayment amount a veteran will be
charged is $97/day times the number of days in the month ($3,007 for 31
days; $2,910 for 30 days). A veteran's calculated monthly copayment cap
amount for extended care services is determined by a formula using
financial data provided by the veteran. The amount will vary from
veteran to veteran and can range from $0 to the maximum copayment
amount.
A veteran will be obligated to pay the extended care copayment only
to the extent the veteran and the veteran's spouse have available
resources. Available resources would mean the sum of the value of the
liquid assets, fixed assets, and income of the veteran and the
veteran's spouse minus the sum of the veteran allowance and the spousal
allowance. Liquid and fixed assets are not included in the copayment
calculations until a veteran reaches the 181st day of institutional/
inpatient extended care. The primary residence is a fixed asset, the
value of which is only included in the veteran's copayment calculation
on the 181st day of institutional/inpatient extended care if there is
no spouse or dependent residing in the primary residence.
Question 18. VA is moving its National Centers for War-Related
Illnesses. However, a final action plan to implement the National
Center for Military Health and Deployment Readiness is long overdue.
The law requires that VA, DOD, and HHS submit a report to Congress
about how they will implement the center. Both VA and DOD seem to be
satisfied with the current activities of the Military and Veterans
Health Coordinating Board, which does not incorporate the National
Academy of Sciences' recommendations as mandated. Although it is
certainly difficult for three large departments to focus on a matter of
joint concern, this is critically important to service members. When
can I expect to see your action plan on this?
Answer. In compliance with section 103(c) of Public Law 105-368,
the Departments of Veterans Affairs, Health and Human Services, and
Defense prepared a report to Congress responding to the IOM report
``National Center for Military Deployment Health Research.'' That
report, signed by the Secretaries for the three agencies, was submitted
to Congress in September 2000. That report concluded that the new
National Center be composed of the existing Research Working Group
(RWG) of the interagency Military and Veterans Health Coordinating
Board (MVHCB). Since that report, the RWG has partially fulfilled the
role envisioned for the National Center, in terms of generating
research reports on existing Gulf War research, identifying gaps, and
making recommendations for improving research in this area.
The MVHCB was decommissioned in February of this year. The future
of the RWG under these circumstances has not been decided. However, we
expect that the RWG will continue in some form, and that it will be
responsible for the activities envisioned for the National Center, as
it has over the last several years.
Question 19. Last fall, VA commissioned a working group to review
VA's readiness for the potential medical consequences of terrorism. The
group recommended a budget of $118 million for health care preparedness
needs alone; this budget proposes to accomplish these goals, plus
boosting VA's other readiness activities, with less than half of that
amount. Given the discrepancy between VA's own internal recommendations
and the budget, how many of these emergency preparedness goals will VA
realistically be able to meet? Will VA be able to protect staff and
veterans adequately during a medical crisis?
Answer. Following the September 11 attack, as well as the
bioterrorism campaign using the anthrax sent in the U.S. Mail, VA
critically re-examined the potential medical consequences of terrorism
and looked at gaps in the protection of VA's capital assets, its
infrastructure, as well as patients and staff. VA needs to insure
adequate supplies, pharmaceuticals, and decontamination and Personnel
Protective Equipment (PPE) are available in case of mass casualties
from chemical, biological, or radiological (CBR) terrorism.
VHA is currently upgrading its pharmaceutical caches, PPE, and
training in FY 2002. We are committed to making this program fully
operational in the near-term.
Question 20. The CARES process went on in the Great Lakes Network
as planned, despite new emphasis on the VA's Fourth Mission and its
role as a Federal support agency during disasters. This budget
continues to cite CARES as a source of significant savings, while
funding for VA's contingency roles remains woefully inadequate,
especially as compared to the large sums budgeted to other agencies for
emergency response. How does VA plan to weigh DOD contingency and
emergency care criteria, including community needs, as you continue
with the next phases of the CARES process, and how will other planning
aspects be affected?
Answer. VHA re-evaluated the Great Lakes Network ability to meet
its Fourth Mission responsibilities during the review and public
comment period on the CARES recommendations. In particular, the overall
CARES Criteria was re-structured by VA's Policy Board to raise the
Fourth Mission priority from an 8 percent to a 20 percent weighted
score. This 2.5 fold increase was then applied for impact and analysis
to each of the options considered. It was found that no decrease in bed
numbers or ability to deliver health care by VA exceeded the projected
overall decrease in veteran population. In other words, if the veteran
demand for services in the next ten years decreased by 28 percent, a
comparable adjustment in inpatient and outpatient services resulted. No
reductions above the 28 percent were made. VA continues to interact
with DOD to determine if there is a threshold or minimum number of
services necessary for backup contingency. At this point, no such
minimum level has been determined by DOD. Future CARES studies will
undergo increased emphasis on VA's Fourth Mission. A new VA/DOD
Executive Committee has been formed to fully coordinate VA CARES and
DOD strategic planning efforts. All of these efforts combine to provide
significant additional emphasis and attention to our Fourth Mission.
The VISN 12 CARES plan has sufficient flexibility to address DOD
contingency and responses to chemical, biological and radiological
emergencies.
Question 21. I understand that VA is moving both substance abuse
and PTSD funds from special purpose funds into VERA. What is the reason
for this and won't this have a negative effect on these programs in
that they won't get the attention that goes along with being a specific
budget item?
Answer. Substance Abuse and PTSD have always been included in the
VERA General Purpose Funding and distributed through the VERA model.
Both classes are included in both Basic Care and Complex Care
components of VERA. This has had no demonstrated negative impact on
these programs. These programs receive positive attention not only in
VERA, but also through quarterly monitoring of cost and utilization of
special programs in operating plans and special disabilities reports to
Congress.
Question 22. Please provide a list and a description of the
management efficiencies that VA is counting on to save $316 million in
medical care funding in FY 2003.
Answer. The savings of $316 million will be achieved through
standardization and compliance in the procurement of supplies,
pharmaceuticals, equipment, and other capital purchases and through
efficiencies in centrally managed programs and Community-Based
Outpatient Clinics.
Question 23. Please provide a list, by state, of all enrolled
veterans by priority group.
Answer. See attached table.
attachment--summary by state & priority
End of Fiscal Year 2001 Geocoded Enrollment Data
--------------------------------------------------------------------------------------------------------------------------------------------------------
Priority Group
State ------------------------------------------------------------------------------------------------ Total
P1 P2 P3 P4 P5 P6 P7A P7C Enrollees
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alaska...................................... 3,177 2,126 3,149 337 6,059 325 409 4,671 20,253
Alabama..................................... 11,446 9,042 16,932 5,060 42,179 2,006 1,410 24,051 112,126
Arkansas.................................... 10,444 6,334 11,769 3,879 34,092 1,536 1,178 21,359 90,591
Arizona..................................... 13,344 9,689 19,747 3,667 44,620 2,765 2,005 30,603 126,440
California.................................. 44,136 32,990 64,746 13,855 185,116 8,538 7,230 115,309 471,920
Colorado.................................... 9,507 6,886 11,940 2,415 25,470 1,487 1,377 17,618 76,700
Connecticut................................. 4,248 3,079 7,073 2,291 21,683 837 898 25,679 65,788
Delaware.................................... 1,459 1,170 2,257 439 6,632 204 233 5,854 18,248
Florida..................................... 47,283 30,888 65,001 14,090 162,135 7,233 7,772 138,250 472,652
Georgia..................................... 16,548 12,720 24,032 5,762 55,861 3,093 2,579 36,269 156,864
Hawaii...................................... 3,085 2,449 4,310 491 7,356 273 660 6,315 24,939
Iowa........................................ 4,706 3,590 7,586 2,336 22,847 1,869 796 29,958 73,688
Idaho....................................... 3,320 2,440 4,910 1,184 11,239 637 660 7,870 32,260
Illinois.................................... 11,667 9,941 23,487 8,634 90,699 4,243 2,651 79,126 230,448
Indiana..................................... 8,521 6,746 14,553 3,587 43,451 2,251 1,216 37,738 118,063
Kansas...................................... 4,937 3,700 7,780 2,085 19,338 1,201 1,107 20,540 60,688
Kentucky.................................... 9,096 6,634 12,365 3,447 40,253 1,832 1,025 24,170 98,822
Louisiana................................... 9,259 6,368 12,537 4,817 45,244 2,278 1,069 19,157 100,729
Massachusetts............................... 13,161 8,448 16,847 3,913 37,125 1,832 1,290 30,386 113,002
Maryland.................................... 8,694 6,751 12,608 2,898 38,141 1,603 1,034 24,904 96,633
Maine....................................... 5,855 2,791 4,859 1,267 12,378 632 483 10,279 38,544
Michigan.................................... 10,771 8,185 16,819 4,543 55,072 2,142 1,503 31,672 130,707
Minnesota................................... 8,794 5,825 12,443 2,853 25,708 2,423 1,984 29,889 89,919
Missouri.................................... 10,514 7,946 15,735 4,955 50,419 2,966 1,540 32,786 126,861
Mississippi................................. 7,344 4,802 9,384 3,217 31,760 987 1,042 17,677 76,213
Montana..................................... 3,000 2,044 3,866 844 10,449 638 491 9,281 30,613
North Carolina.............................. 19,445 14,603 25,373 5,999 56,758 3,738 2,106 38,234 166,256
North Dakota................................ 1,400 1,066 2,408 586 5,584 345 370 8,857 20,616
Nebraska.................................... 4,527 3,314 5,895 1,513 14,818 717 791 16,659 48,234
New Hampshire............................... 3,407 2,336 4,517 819 8,393 489 516 8,351 28,828
New Jersey.................................. 10,389 7,596 17,297 2,995 37,274 1,476 1,753 57,747 136,527
New Mexico.................................. 6,697 3,799 6,768 1,648 20,501 1,124 823 10,678 52,038
Nevada...................................... 4,811 3,818 7,952 2,016 24,508 1,094 1,015 15,513 60,727
New York.................................... 26,025 18,627 46,557 11,388 148,286 6,509 6,003 175,111 438,506
Ohio........................................ 16,463 13,093 27,683 7,589 102,292 4,022 2,442 57,416 231,000
Oklahoma.................................... 13,446 7,657 12,279 4,192 35,165 1,887 1,002 17,625 93,253
Oregon...................................... 9,505 5,765 9,888 3,112 31,144 1,737 1,055 22,646 84,852
Pennsylvania................................ 21,049 15,034 31,840 8,741 114,788 4,503 3,845 101,078 300,878
Rhode Island................................ 2,505 1,600 3,355 737 8,063 353 214 6,128 22,955
South Carolina.............................. 10,184 7,653 15,083 4,264 37,717 2,517 1,824 26,354 105,596
South Dakota................................ 2,249 1,681 3,638 1,023 9,149 797 603 11,585 30,725
Tennessee................................... 12,920 9,406 17,795 5,191 46,138 2,907 1,638 26,771 122,766
Texas....................................... 46,057 33,250 62,664 14,075 153,685 8,549 6,019 84,808 409,107
Utah........................................ 3,153 2,217 4,261 1,069 11,524 767 542 8,501 32,034
Virginia.................................... 16,149 13,473 23,016 4,510 48,761 2,567 2,656 36,891 148,023
Vermont..................................... 1,441 993 1,926 411 5,696 361 307 6,095 17,230
Washington.................................. 17,672 12,093 20,163 4,224 34,751 2,283 1,554 21,117 113,857
Wisconsin................................... 9,628 6,758 13,111 3,399 ,32,710 2,083 1,724 34,966 104,379
West Virginia............................... 6,291 3,786 7,098 2,168 30,986 1,957 626 20,133 73,045
Wyoming..................................... 1,327 1,080 2,241 524 6,260 347 367 6,707 18,853
Unknown..................................... 426 261 503 92 1,299 45 39 1,395 4,060
Guam........................................ 216 189 325 16 386 31 49 219 1,431
Philippines................................. 261 345 529 17 207 24 38 105 1,526
Puerto Rico................................. 7,978 3,622 7,078 4,424 43,156 1,041 484 6,878 74,661
Virgin Islands.............................. 103 95 263 66 1,050 31 45 930 2,583
Washington, DC.............................. 1,187 855 1,715 721 7,102 346 135 2,455 14,516
-----------------------------------------------------------------------------------------------------------
Total................................... 561,227 399,649 789,956 200,395 2,203,477 110,478 84,227 1,663,364 6,012,773
--------------------------------------------------------------------------------------------------------------------------------------------------------
P7A 0% Service-Connected Priority 7s.
P7C Non-Service-Connected Priority 7s.
Question 24. This budget breaks out and requests funds for the
accrued employee costs such as retirement and health benefits that use
to be consolidated government-wide, in compliance with the
Administration-proposed ``Managerial Flexibility Act.'' The budget
reflects this change as an increase to the various accounts such as
health care, general operating expenses, or research. But it is not a
real increase. Are you expecting additional money on top of the 2.9
percent to cover these accrued benefits costs to fund VA programs such
as research, at the touted $409 million, or will the real number be $38
million less--$394 million?
Answer. The FY 2003 appropriation request for research excluding
the CSRS accrual ($6,258,000) and the FEHB accrual ($8,444,000) is
$394,373,000, which represents a 6.3 percent increase over the FY 2002
appropriation of $371,000,000.
benefits
Question 25. The budget request calls for an increase of 125 FTE
for benefits programs, but according to a briefing by the Department of
Labor, 200 FTE are required to administer the VETS programs that are
proposed to be transferred. Do you anticipate additional FTE if the
transfer is authorized, or would the net effect be a loss of 75 FTE to
VBA?
Answer. The FY 2003 budget request does not include any FTE or
funding to support the transfer of the VETS programs to VA. The
Administration will transmit legislation that will establish a new
competitive grant program in VA that will assist the States in
establishing, expanding, or improving training services for veterans.
If enacted, 199 FTE and $20 million will be transferred from the
Department of Labor to VA to administer the program.
The increase of 125 FTE shown in VA's budget request supports
initiatives in the C&P, Education, and Vocational Rehabilitation and
Employment programs.
Question 26. In evaluating the success of VA programs and crafting
new legislative initiatives, Congress depends on VBA's Data Management
Office to deliver accurate information--for example, the regular
reports on Gulf War veterans' claims, which in the past proved to be
less than reliable. What will you do to ensure the validity of the data
you provide to Congress?
Answer. The creation of the Data Management Office reflects the
organizational recognition of the value and importance of quality data
and information management across VBA. We intend to build on the
established data management foundation, refining and enhancing existing
capabilities and carefully exploring opportunities for blending
organizational knowledge with emerging technologies. All of this is
being pursued to improve the quality, integrity and availability of
data that speak to VBA workload and productivity, organizational
performance, and service quality.
Consistent with themes expressed in the recently released VA Claims
Processing Task Force Report, efforts are also being directed toward
the development of data that accurately gauge accountability,
communications and change management compliance. Plans are being
formulated to expand the current scope of data management by formally
establishing internal analysis and evaluation, planning, and program
integrity capabilities to further identify data-driven process and
service improvement opportunities.
Understanding that multiple factors (including volume, source,
input accuracy and timeliness) ultimately influence data validity, we
believe the strategy being executed within VBA to better qualify and
define the variables affecting data validity and to engage staff and
stakeholders in decision dialogue is an appropriate course of action.
Since November 1997, the Gulf War Veteran Information System has
been reliably reporting data specific to the outcomes of compensation
claims including those for undiagnosed illnesses, prevalence of
service-connected conditions, and detailed benefit utilization data
regarding other unique cohorts of the Gulf War veteran population. We
will continue to work to refine and improve the quality and reliability
of data collected and reported.
Question 27. Under the budget's VBA-wide initiatives, you list the
``Procedures Manual Rewrite'' to reorganize and make more readable the
procedural manuals used in decision making for the Education, Loan
Guaranty, and Vocational Rehabilitation and Employment programs. Why is
the Compensation and Pension (C&P) program manual not part of this
initiative? How does the regulation rewrite lead by General Huffman
underway in C&P fit in with this manual rewrite?
Answer. The Compensation and Pension Service began an initiative to
rewrite its procedural manual 14 months ago. All of the adjudicative
manuals used to process C&P claims are being rewritten for clarity,
readability, and ease of use in an on-line environment. Initial
feedback has been positive and VIBA is therefore undertaking similar
projects in the other business lines (Education, Loan Guaranty, and
Vocational Rehabilitation and Employment).
The C&P manual rewrite initiative is being coordinated with General
Huffman's effort to reorganize and clarify the regulations. Any
regulatory changes affecting the manual will be incorporated
effectively and timely.
Question 28. Please describe the collocation/relocation projects in
the budget request for VBA.
Answer. VIBA is pursuing public/private partnerships for enhanced-
use leasing at several Regional Office locations. The FY 2003 budget
request supports co-locating the following VA Regional Offices through
enhanced-use leases:
----------------------------------------------------------------------------------------------------------------
Location Activation Date Amount Purpose
----------------------------------------------------------------------------------------------------------------
Chicago.............................. FY 2003................ $472,000 [GOE]......... Move from leased GSA
space into a new
enhanced-use facility.
The funds will be used
for security
equipment, LAN
electronics, shipment
of files, and
equipment to the new
location.
Milwaukee............................ FY 2003................ $471,000 [GOE]......... Move from a 120-year-
old VA Regional Office
into a new enhanced-
use facility. The
funds will be used for
security equipment,
LAN electronics,
shipment of files, and
equipment to the new
location.
Los Angeles.......................... FY 2004................ $3,000 [GOE]........... Move from a GSA leased
facility into a new
enhanced-use facility.
The funds will be used
for the groundbreaking
ceremony.
Indianapolis......................... FY 2005................ $1,000,000 [Minor]..... Move from leased GSA
space into new
enhanced-use facility.
The funds will be
applied towards the
purchase of furniture,
the telephone switch,
and LAN electronics
for the new facility.
Nashville............................ FY 2005................ $1,000,000 [Minor]..... Move from leased GSA
space into a new
enhanced-use facility.
The funds will be
applied towards the
purchase of furniture,
the telephone switch,
and LAN electronics
for the new facility.
Buffalo.............................. FY 2003................ $1,331,000............. Move into another GSA
facility. Existing GSA
building is asbestos
contaminated and not
large enough to
support station
operations. Funding is
for security
equipment, LAN
electronics, guard
service, and shipment
of files and equipment
to new location.
Louisville........................... FY 2003................ $1,357,000............. Move to another GSA
facility. Lease is
expiring and
facilities are
inadequate. Funding is
for security
equipment, LAN
electronics, guard
service, and the
shipment of files and
equipment to new
location.
Phoenix.............................. FY 2003................ $3,189,000............. Move to VA-leased
facility. Current GSA?
leased facility is
inadequate in both
size and quality.
Funding is requested
for security
equipment, LAN
electronics,
furniture, guard
service, and shipment
of files and equipment
to new location.
----------------------------------------------------------------------------------------------------------------
The FY 2003 Budget request supports relocating the following VA
Offices:
----------------------------------------------------------------------------------------------------------------
Location Activation Date Amount Purpose
----------------------------------------------------------------------------------------------------------------
Las Vegas............................ FY 2003................ $72,000................ Relocated from
temporary trailers to
a new co? located
Enhanced Use facility.
Funding is for guard
service and shipment
of files and equipment
to new location.
Sacramento........................... FY 2003................ $520,000............... Move from GSA-leased to
new VA-leased
facility. VBA will be
shifting workload from
the more expensive
Oakland area to
Sacramento. The
existing Sacramento
lease expires and the
current building
cannot support the
planned expanded
operations. Funding is
for security
equipment, LAN
electronics,
furniture, and
shipment of files and
equipment to new
location.
----------------------------------------------------------------------------------------------------------------
Question 29a. Your budget assumes that the vendee loan program will
be terminated administratively. What savings are you projecting and
where are the savings being redirected?
Answer. The VA estimates that 22 FTE ($1.4 million) will be saved
in administrative funding by eliminating vendee financing in FY 2003.
However, this funding was removed from the base recognizing savings
from this action.
Question 29b. What is the basis for assuming that there will be
savings from the elimination of the vendee loan program when VA's study
from Booz Allen found that properties sold with vendee loans ``achieve
a higher net value to VA than do properties sold for cash.''
Answer. Vendee loans extend the government's liability for many
years. By selling all properties on a cash basis, future expenses due
to foreclosure of vendee loans will be eliminated.
Question 29c. Assuming the vendee loan program were eliminated,
have you considered the impact of a declining economy which would boost
inventory or reduced flexibility on financing which could result in
lower selling prices?
Answer. We believe that there is sufficient private mortgage
financing available to allow VA to sell all properties for cash without
a build up of inventory.
Question 29d. Your budget assumes the administrative elimination of
the vendee loan program, after years of requesting legislation to
implement this proposal. What is the basis for the change in the
assumption that this action required legislation?
Answer. Public Law 98-369, enacted on July 18, 1984, specified both
a minimum and maximum percentage of sales of VA-owned properties that
had to be sold with vendee financing. Public Law 102-54, effective
October 1, 1990, repealed those percentage limitations. Since that
date, the Secretary has the authority to sell acquired properties on
terms the Secretary determined appropriate. Elimination of vendee
financing would be a significant change. Therefore the Department
requested that Congress consider whether this should be a legal
restriction on the Secretary's authority.
Question 29e. Does the elimination of the vendee loan program
affect the A-76 study on VA Loan Guaranty property management?
Answer. The elimination of vendee financing will have no
significant impact on the outcome of the A-76 cost comparison.
Question 30. What is the status of the A-76 study on VA Loan
Guaranty property management?
Answer. VA's Property Management A-76 Cost Comparison Study is in
the solicitation phase. The deadline for the receipt of the proposals
was October 3, 2001. The evaluation of the private proposals was
completed in late January 2002. Currently, we are projecting a
tentative decision on the winner of the competition in April or May of
2002. Meeting this milestone will depend upon completing the final
evaluation, making any necessary modifications to the Government's bid,
and conducting an independent review.
Question 31. In 1998, Congress created a pilot project designed to
increase the availability of transitional housing for homeless
veterans. To date, no loans have been approved and disbursed. Please
provide detailed information on the status of the program and describe
the reasons it has not been put in place.
Answer. The Loan Guaranty for Multifamily Transitional Housing for
Homeless Veterans was established under Public Law 105-368, ``Veterans
Benefits Enhancement Act of 1998.'' This program is to provide large-
scale transitional housing for homeless veterans. The law authorizes VA
to establish a pilot program to guarantee no more than 15 loans with an
aggregate value of $100 million for construction, renovation of
existing property, land, refinancing of existing loans, facility
furnishing and working capital. By law, the loan cannot exceed 90
percent of costs. It is hoped that up to 5,000 transitional housing
units will be created using this initiative.
Eligible transitional projects are those that: (1) provide
supportive services, including job counseling; (2) require veterans to
seek and maintain employment; (3) require veterans to pay reasonable
rent; (4) require sobriety as a condition of occupancy; and (5) serve
other veterans in need of housing or other homeless people on a space
available basis.
In determining whether to guarantee each loan, the Secretary of
Veterans Affairs must consider the availability of VA medical services
to residents of the housing project and the extent to which a variety
of needs of homeless veterans are met in a community.
This new initiative requires significant collaboration among VA
offices, including: the Veterans Benefits Administration's Loan
Guaranty Division; VHA's Office of Facilities Management; VA's Office
of Acquisition and Materiel Management and Office of General Counsel;
Office of Public and Intergovernmental Affairs; and other offices.
As mandated by law, VA entered into a contract with the consulting
firm, Birch and Davis Associates, in January 2000. Birch and Davis
Associates, in turn subcontracted with Century Housing Corporation,
Culver City, CA, for their expertise in financing and development of
transitional housing for homeless veterans. The role of the contractor
is to assist in designing a guarantee program.
VA has held numerous meetings with the contractor reviewing their
work and suggesting modifications consistent with the goals established
by the Congress. The unique nature of this program has meant that we
have proceeded with great care trying to balance our fiduciary
responsibilities for this program, as well as trying to ensure the
needed supportive services will exist to aid those veterans in their
transition.
This Department remains hopeful that this complicated review is
near completion. It is anticipated that this program will become
available, to a limited number of sites later this year, and that we
may have one or more proposals that may be reviewed and approved next
year.
Question 32a. In 2000, Congress passed significant enhancements to
the GI Bill--increasing the basic monthly benefit, paying for licensure
and certification exams, and covering the remaining costs of service
members' courses after payment from DOD's tuition assistance. Your
projections last year predicted that these provisions would double the
workload of the education service, adding further stress on top of some
recent increases in your backlog due to the imaging of claims at one of
your four processing centers. In 2001, Congress again, expanded and
increased educational benefits. What are your workload projections from
the new changes?
Answer. In 2001, we made payments to 421,078 eligible individuals
under the various GI Bill education programs, a six percent increase
over the previous year. The 500,000 beneficiaries we expected to serve
did not materialize, primarily because claims for the new programs did
not begin arriving until March and April. The pace of incoming work
increased as FY 2002 began. If it continues, more than 600,000
beneficiaries will seek GI Bill benefits this year.
Question 32b. What are your plans to address increased claims?
Answer. In anticipation of the increased workload, VA hired over
100 new employees to handle education claims. Because incoming work was
less than expected, we were able to reduce the backlog and provide the
new employees adequate training. Those employees are becoming more
proficient with each passing day. As 2002 progresses, we expect the
staff we have hired and trained to be able to process the anticipated
workload.
Question 32c. What are you doing to decrease the current backlog of
education claims, particularly at the time of fall enrollment?
Answer. When compared to the prior year, performance improved
significantly during the most recent fall enrollment (August through
October 2001). Claims were processed more timely during that period and
output improved by more than ten percent. Several actions contributed
to this improved performance. First, adequate overtime was authorized
earlier in the fall and was focused on achieving production targets.
Second, seasonal employees were hired to perform certain tasks during
peak periods, allowing station managers to shift their experienced
staff to areas in claims processing. Third, the new employees gained
experience throughout the period, resulting in increased per capita
output. We will continue to appropriately target our overtime and use
seasonal employees during peak enrollment cycles to effectively manage
our workload.
Question 33a. This budget request includes a proposal to shift the
Veterans Employment Training Service grant programs to VA and convert
them to a competitive grant. What short-term and long-term effects will
the proposed transfer of employment and training services have on
veterans? How will you prevent a gap in service for veterans using
these programs?
Answer. Because of the lead-time required to implement grants, VA
plans to keep the Department of Labor (DOL) funded grants in place
during the first year after transfer. DOL staff transferring to the VA
will bring with them the requisite expertise and familiarity to
effectively continue the Disabled Veterans Outreach Program (DVOP) and
Local Veterans Employment Representative (LVER) program grants thus
ensuring no degradation of service to veterans during the initial
transition year.
Because the current DOL grants are staffing grants, continuity of
the existing programs during the first year after transfer is also
important to DOL's ability to maintain current services level in FY
2002.
In succeeding years, changing the federally funded employment and
training program non-competitive, staffing grants to competitive,
performance-based grants will have the positive effect of both
increasing the number of veterans who are served and improving the
service effectiveness resulting in more veterans obtaining employment
as a result of these services.
Regarding the Homeless Veterans' Reintegration Program (HVRP), VA's
relationship with DOL's grantees under HVRP has been good, however, the
proposed transfer will allow VA to improve coordination with the
employment programs. This enhanced relationship should help to ensure
that the expensive and extensive health care services VA provides to
tens of thousands of veterans will have enhanced opportunities to
succeed by obtaining and retaining employment with a more collaborative
program design.
VA and DOL are in the process of developing a program transition
plan that will keep the DOL funded DVOP, LVER and HVRP grants in place
during the first year after transfer. This should ensure continuity of
service.
Regarding HVRP, veterans who have been homeless and are discharged
from VA programs will be in better position to succeed since the effort
will allow us as the funding source to demand collaborative efforts to
assist those hardest to serve veterans.
Question 33b. The VA is already facing many of its own challenges,
including a significant claims backlog and a new focus on employment in
the Vocational Rehabilitation and Employment program. How is the VA,
having little job placement expertise equipped to administer these
programs at this time?
Answer. VA has extensive experience in grant administration. The
immediate tasks facing the VA are designing a new program that is
significantly more cost-effective and to organize an employment,
business opportunity and training office within VA that will provide
effective oversight of the grant program. Effective oversight of
performance-based, competitive grants is critical to VA's efforts to
transform veterans' employment programs. VA expects that the DOL
federal staff who transfer to VA when the program transfers will bring
their expertise to support administration of the program at VA.
Question 33c. What was the basis for determining that VA was better
equipped than the Department of Labor to provide employment and
training services? What outside entities, if any, was consulted in
developing this proposal?
Answer. It is clear that the DVOP and LVER programs have not served
veterans' job search assistance needs well for a long time. The
Commission on Servicemembers and Veterans Transition Assistance
(Commission) report and at least six GAO reports issued in the past
five years extensively document long-standing shortfalls with the DVOP
and LVER programs. In spite of the public awareness that these two
programs, as currently administered, are falling far short of the
excellence we should demand of programs so important to many veterans'
ability to enjoy the secure and productive life that their service
defended for all Americans, change to the programs has not occurred.
While VA can much more easily step ``outside the box'' when
evaluating veterans' employment assistance needs and develop a program
that better meets the needs of today's veterans and ensures adequate
flexibility in design to allow for adapting to the needs of tomorrow's
veterans.
Specifically pertaining to HVRP, VA expects to expand upon what we
believe have been highly successful partnering with states, local
governments, Native American Tribal governments, faith-based and non-
profit organizations under the State Cemetery, State Home and Homeless
Service Providers Grant and Per Diem Program.
To ensure that the VA program is able to provide optimal job search
services to veterans VA is informally consulting with veterans'
representatives, employers, governors, and service providers regarding:
<bullet> What employment and training services do America's
veterans of the 21st Century need most?
<bullet> What is the most cost-effective way to provide these
services?
<bullet> How can the new program better meet the needs of
employers?
Question 33d. Were smaller-scale modifications to the program
considered, such as a pilot competitive grant program?
Answer. As mentioned earlier, the shortfalls of the DVOP and LVER
programs are so extensive that marginal changes will not produce the
degree of change essential for meeting the job search assistance needs
of today's veterans and effectively linking employers in the global
economy with highly qualified veteran job applicants.
VA intends to work with Governors to ensure that veterans in every
state have equal access to high quality core services regardless of
where they live or where they want to work. VA is considering an option
to seek legislative authority to reserve up to 25 percent of the total
available funding for competitive grants to finance pilot programs and
demonstration projects of innovative service types and delivery
systems. Successful pilot projects will be incorporated into flexible
national baseline service delivery systems.
Question 33e. How does VA plan on partnering with the Department of
Labor to ensure that veterans are getting access to all appropriate
employment programs?
Answer. As pointed out in the Commission's 1999 report, a close
working relationship between VA, DOL and the Department of Defense
(DOD) is essential for ensuring seamless job search assistance and
training, particularly for recently separated veterans. The more
successful we are in ensuring that the highly trained and motivated
separating service members are able to secure employment that leads to
a successful career the less likely they will become dependent on our
services later in life.
VA looks forward to developing a long and mature relationship with
DOL at both the administrative and policy levels. VA expects that the
requirement that veterans will receive priority in all DOL funded
employment programs will continue as national policy. VA intends to
meet shortly with DOL's Employment and Training Administration (ETA) to
discuss the most cost-effective way for VA to link its employment
program to the several electronic labor market systems funded by ETA.
VA anticipates that in the future, as necessary, issues of national
employment policy as they affect veterans will be addressed at the
Cabinet level thus adding the weight of two Secretaries to any ensuing
policy decisions.
Question 33f. One of the criticisms of the program at the
Department of Labor has been a lack of accurate performance measures.
If the Administration's plan is implemented, how will the shift to VA
affect performance and cost-effectiveness measurement?
Answer. There are two essential components directly affecting
grantee performance. First, VA intends to set clear, obtainable and
easily measured outcome performance standards. Measures such as the
number of veterans who obtain a job and duration of employment are
examples of such outcome measures.
Second, there must be something at risk for the grantees in order
for VA's grant oversight to be effective. Simply stated-rewards for
exceptionally high performance and a cost for failing to deliver agreed
upon outcomes. Quite frankly, a new grant program that is not
competitive in nature can only fare marginally better than the existing
programs. This is not to suggest that the competition must be at the
national level, competition within states can be just as effective.
As to the HVRP, employment has always been a measure of success for
veterans who have been homeless. Without health care, housing and
employment the likelihood of long term success for the veteran is
greatly handicapped. While VA has done a creditable job in responding
to the health care needs, housing and employment are largely outside of
VA's direct efforts. While our homeless veterans grant and per them
program has greatly aided the need for housing with supportive
services, the longer term need of employment and independent living has
largely been outside of our direct line of responsibility.
Combining the health care, housing and employment outcomes for
homeless veterans will enhance VA's opportunities to effectively
monitor not only costs, but also the long-term values of each.
Question 33g. This budget basically asks for level funding for the
VETS program. Without increased resources for improving this program,
does the Administration seek to merely transfer the current program to
a different agency? How does VA know that this budget request for the
transfer is adequate without a specific implementation design? How does
VA plan to administer the new competitive grant program without
additional FTEs?
Answer. As discussed in an earlier answer, because of the lead-time
required to implement grants, VA has little choice but to keep the
Department of Labor (DOL) funded grants in place during the first year
after transfer. Thus, program costs should remain constant for the
first year--FY 2003.
In the long term, there would be no advantage to merely transfer
the grant programs from DOL to VA. The Administration acknowledges that
the DVOP and LVER programs have not served our nation's veterans well
for a long time as evidenced by DOL's report that the national average
percentage of registered veterans between the ages 22-44 who were
placed in a job steadily declined from an unacceptable low of 16
percent in PY 1997 to an unbelievable 12 percent in PY 2000. This
performance, during a period of historically low unemployment, simply
cannot continue.
Through this initiative, the Administration seeks to redesign and
reenergize our national job search assistance services in such a way as
to ensure that all veterans and eligible service members have equal
access to the services they need to secure employment regardless of
where they live or are stationed. VA believes that this goal can be
accomplished, without substantial increases in funding, by connecting
things (technology, systems and service providers) that exist presently
and managing them in a way that transforms our national employment
service delivery system for veterans.
VA intends to ensure that the design of the new grant program will
focus available resources and effort at the veteran in need of services
and employers, not on bureaucracy. Quantifiable results rather than
status quo will be our measuring stick.
As stated above, because of the lead-time required to implement
grants, VA intends to keep the Department of Labor (DOL) funded grants
in place during the first year after transfer. Thus, program costs
should remain constant for the first year.
VA believes that the 199 DOL FTE projected to-transfer with the
program are adequate to administer the grant program at VA.
Question 33h. Will the Administration's plan include outreach to
help current state employees working for existing grant recipients meet
requirements to apply for the new competitive grants?
Answer. It is in everyone's best interest, but most certainly the
veterans seeking assistance and employers looking for good applicants,
that highly qualified service providers seek and are awarded service
grants. VA is committed to do everything possible to ensure that it
happens. It seems logical that where the current grantee (State
Employment Security Agency) is performing well that they will be
competitive when seeking future veterans grants.
The first year after transfer VA will continue all existing DOL
funded grants. VA is considering a program structure that would award
new grants (replacing the DVOP & LVER grants) to the Governors in the
second year with the requirement that the States sub-award competitive
grants or contracts to service providers. The VA awarded State grants
will include provisions requiring the States to conduct ``bidders
conferences'' intended to assist potential offerors to understand the
new program service requirements and better enable them to be fully
responsive to the State's solicitation for grant applications (SGA).
Additionally, VA will consider conducting a national forum to
communicate program changes and expectations directly to interested
potential service providers.
Question 34a. The Employment Specialist pilot program within the
Vocational Rehabilitation and Employment program has improved disabled
veterans placement numbers, but in order to broaden its reach, VA will
require personnel with specialized expertise in employment markets and
job markets. How will VA recruit such personnel? Does your budget
request of 15 additional FTEs cover needed specialists?
Answer. The Employment Specialist Pilot Program has proven to be
highly successful. We recruited nearly 40 Employment Specialists to
help us more rapidly shift the focus of the Vocational Rehabilitation
and Employment Program to employment. We believe that the request for
15 FTE in 2003, along with the flexibility provided by the transfer of
funds from the Readjustment Benefits account to the General Operating
Expense account, provides opportunities for further realignment of the
staff and recruitment of additional Employment Specialists. The
Employment Specialist Pilot Program helped us identify the skills sets
needed to focus on marketing and placement of people with disabilities
and made it easier to find individuals to fill this gap.
Question 34b. Improving outcome-based performance measures of the
VR&E program is needed to determine why a significant percentage of
program participants eventually drop out. However, VA states in the
budget that this cannot be accomplished until Corporate WINRS is fully
implemented. What is the status of Corporate WINRS and does VA have the
funding necessary to support rapid development?
Answer. To gain a better understanding of why people leave the
program without a successful outcome, we asked our in-house
rehabilitation staff to identify the reasons based on their
experiences. Through this in-house survey, we identified the top five
reasons why veterans leave the program. We validated this information
through a third-party study. The top five reasons for participants
leaving the program are:
Medical reasons
Family responsibilities
Financial issues
Participant took a job
Disabilities
Since the time of this study, we have developed a number of
strategies (e.g., Case Management, Corporate WINIRS, the Employment
Specialist Pilot Program) that will help us better assist participants
who are at-risk for leaving the program due to these or other reasons.
While we believe that any veteran leaving the program without a
positive outcome is a lost opportunity, we are pleased to report that
the rehabilitation rate last year was 65 percent, the highest in the
program's history. Conversely, our drop out rate was the lowest in the
program's history.
In September 2001, VBA nationally deployed Phase I of Corporate
WINRS. This represented the first phase of a multi-year information
technology initiative. Our FY 2002 funds will permit us to develop and
deploy new enhancements that will enable us to extract data to conduct
a myriad of analyses to include the characteristics of veterans leaving
the program. With approval of future funding, we expect to continue to
increase the functionality of Corporate WINIRS to support future
program strategies and build on our capacity to collect meaningful
program data about disabled veterans who participate in the VR&E
program.
information technology
Question 35. Is VA running into any unforeseen problems in
implementing the One-VA Enterprise Architecture?
Answer. No. The One-VA Enterprise Architecture has been embraced
across the Department. While there remains a great deal to be done to
develop this architecture, remarkable progress has been made in a very
short period of time, given that full funding for Enterprise
Architecture will not begin until FY 2003.
The following progress has been made between October 2001 and
February 2002, in developing the Enterprise Architecture:
<bullet> The Department of Veterans Affairs ``Enterprise
Architecture: Strategy, Governance & Implementation'' was approved in
September 2001.
<bullet> The Information Technology Board (1713), which is a
critical element of the Enterprise Architecture Governance, was
established in October 2001.
<bullet> VA's ITB has chartered an Enterprise Architecture Council
(EAC), and an Enterprise Architecture Working Group has been
established.
<bullet> An Acting Chief Architect has been appointed; we are in
the process of establishing and recruiting for a VA Chief Architect
(SES level); and a program-staffing plan has been developed.
<bullet> The top-level definition of the VA functional enterprise
has been completed.
<bullet> A technical model for the implementation of new IT
projects has been defined.
<bullet> A comprehensive change in how we oversee the management of
our IT Projects has recently been approved. This new oversight process
will ensure that all new IT projects are developed in compliance with
the Enterprise Architecture.
<bullet> Two prototype applications are being developed to
integrate the Enterprise Architecture and VA's new IT Management
Process. Both applications are paperless and intranet-accessible. The
current proof-of-concept prototype implementation is functional on the
VA-Intranet and was presented to GAO on January 30, 2002. This
implementation will be followed by a more robust and extensive
implementation when FY2003 funding is received.
For the remainder of FY2002, using in house resources:
<bullet> The EAC will undertake a preliminary analysis of the
requirements, business functions and business processes and complete
the initial functional allocation of VA's business functions this
summer. This is a major, long-term effort involving both business and
technical leadership across VA.
Question 36. Has VA effectively instituted a central review process
to guard against individualized and non-compatible technology
investments, which may not fit into VA's strategic plan?
Answer. VA has instituted a new process that integrates IT project
planning, budgeting, Enterprise Architecture, Project Management
Oversight and project execution. This new process is applied to all
investments in information technology. The process includes periodic
senior management reviews to determine how well a project is
performing. These senior management reviews approve project initiation,
approve proceeding with a prototype or pilot, approve proceeding to
full-scale development based on the results of the prototype, approve
project deployment, and review in-service performance. At each of these
reviews the project manager must demonstrate that the project meets
objectives of the VA Strategic Plan, is not duplicative, and meets the
requirements of the Enterprise Architecture from both a business and
technical perspective. Adherence to the standards will cause
compatibility issues to be sharply reduced. In addition, we have
implemented a tracking system to ensure that all funds expended on IT
meet the requirements of only approved projects.
Question 37. VA has been criticized by its Inspector General and
GAO for failing to ensure data confidentiality and allowing
vulnerabilities within its information technology systems. It is clear
that VA must rapidly implement initiatives to secure mission-critical
systems and beneficiary data. There is not enough specific discussion
of VA's long-term cyber security plans in the budget submission. Is
this really a priority, and does the proposed budget provide sufficient
funds to cover these needs?
Answer. The protection of the Department of Veterans Affairs'
information assets is a top priority, and through continued senior
management attention, we can institute effective computer security.
During the past year, the Department has made significant progress
in institutionalizing IT security as a priority issue. In March 2001,
the Office of Cyber Security (OCS) was established to serve as the
much-needed focal point for leveraging existing resources and
implementing security initiatives on a global basis within the
Department. In August, the Secretary appointed the Department's first
Chief Information Officer, who also serves as the Assistant Secretary
for Information and Technology. In September, the Department completed
its first ever cyber security program review under the provisions of
the Government Information Security Reform Act.
In December, OCS, in conjunction with VA components, requested the
advice of the VA OIG in determining those key deficiencies that should
take immediate precedence for remediation in order to maximize
resources and make the most significant improvement in the Department's
overall security posture in the near term (next twelve months).
Discussions with the OIG identified ``key weakness areas'' that were
deemed to require priority action. These weakness areas included
fielding Department-wide intrusion detection system and anti-virus
capabilities; integrating critical infrastructure protection into IT
security planning; updating and testing disaster recovery plans at VA
Data Centers; upgrading security features on VA Internet Gateways; and
remediating deficiencies relating to the areas of application software
development, change controls, and system software controls.
With the above priorities in mind, we have made substantial
progress in correcting these weaknesses. In FY2003, we will have a
Department wide, integrated cyber security execution plan that
optimizes and prioritizes the expenditure of all Department and
Administration Cyber Security funding to continue correcting these
weaknesses. As the integrated FY2003 execution plan is being developed,
we will determine the levels of funding necessary in FY2004 and beyond
to complete the job of removing all cyber security material weaknesses
and institutionalizing cyber security as a critical element in each of
our IT projects.
franchise fund enterprise centers
Question 38. Have the Franchise Fund Enterprise Centers been able
to successfully market services to other Federal agencies? Please
provide specific customers and describe efforts to reach new government
customers.
Answer. Most of our customers come from within VA--which accounts
for 94.5 percent ($141.8 million) of our FY 2001 revenue. The
individual Enterprise Centers have encountered varied success in their
ability to attract outside business. In FY 2001, 5.5 percent ($8.2
million) of our revenue came from cross servicing arrangements with
Other Government Agencies (OGAs). In FY 2001, the Austin Automation
Center accounted for most of this OGA revenue, i.e., $6.7 million. We
estimate that our FY 2002 revenue will be approximately $148 million
($140 million from VA business and $8 million for OGA).
We have made significant enhancements to the Enterprise Center
Websites and to our marketing materials, e.g., corporate brochures.
Website enhancements include compliance with Federal Government
standards and the incorporation of a common navigation scheme with
links to each other. Our corporate brochure vividly conveys the product
offerings of our Enterprise Centers. In addition, the Enterprise
Centers exhibit and speak at various conferences that attract Federal
agencies (Association of Government Accountants Professional
Development Conference, Excellence in Government Conference, E-Gov
Conference, FOSE Conference, etc).
Website URLs
Enterprise Fund Office--http://www.va.gov/fund
Austin Automation Center--http://www.aac.va.gov
Debt Management Center--http://www.va.gov/debtman
Financial Services Center--http://www.fsc.va.gov
Law Enforcement Training Center--http://www.va.gov/osle/valetc
Security and Investigations Center--http://www.va.gov/sic
VA Records Center and Vault--http://www.va.gov/vault
Specific Customers
------------------------------------------------------------------------
Enterprise Center Other Federal Customers
------------------------------------------------------------------------
Austin Automation Center.................. Department of Commerce
Departments of Defense
Department of Labor
Department of Justice
Department of the Treasury
Federal Highway
Administration
Federal Energy Rate
Commission
General Accounting Office
General Services
Administration
National Aeronautics and
Space Administration
National Archives and
Records Administration
National Oceanic &
Atmospheric Administration
Office of Federal Housing
Enterprise Oversight
U.S. Army Medical Command
Debt Management Center.................... Department of Agriculture
Drug Enforcement
Administration
Federal Bureau of
Investigation
Immigration and
Naturalization Service
Minnesota Cooperative
Administrative Support Unit
Financial Services Center................. Department of the Interior
Federal Energy Regulatory
Commission
Immigrant Health Services
Indian Health Services
Office of Federal Housing
Enterprise Oversight
U.S. Mint
U.S. Naval Home
Law Enforcement Training Center........... Indian Health Service
National Guard
National Museum of Art
Walter Reed Army Medical
Center
Washington Navy Yard
Security and Investigations Center........ Export/Import Bank
Office of Federal Housing
Enterprise Oversight
Office of Occupational
Safety Health Review
Commission
National Council on
Disability
VA Records Center and Vault............... Defense Finance and
Accounting Services (DFAS)
DFAS--Cleveland (Navy)
DFAS--Indianapolis (Army)
Defense Technical
Information Center
Department of Energy
Postal Rate Commission
------------------------------------------------------------------------
vetsnet
Question 39. The VA Claims Processing Task Force recommended that
VA take a close look at the viability of VETSNET, an 8-year-old
enterprise solution project that is still not operational. The Task
Force implementation team has determined that VETSNET is a necessary
stepping stone to migrating to new technologies that allow greater
interoperability and seamless data access. Have other system solutions
been sufficiently demonstrated? What is VA's long-term replacement
strategy for VETSNET?
Answer. In accordance with the VA Capital Investment process, VA
identified a total of five alternatives and conducted a comprehensive
analysis of each before choosing the VETSNET approach. The five
alternatives are (1) upgrading the Benefits Delivery Network, (2)
continue designing and developing a custom built system, (3) outsource
or obtain cross-servicing for at least some of the VETSNET processes,
(4) acquiring COTS software and (5) a combination of custom building
and COTS. After an extensive analysis of these alternatives, VA chose
to continue designing and developing a custom built system--i.e.,
VETSNET.
VA has identified a three-phased approach to support a redesigned
and integrated claims process. The three-phased approach includes (1)
determining viability, (2) internally implementing an integrated claims
process, and (3) addressing the strategic plans of VA in regard to
integrating the claims process.
VA's Enterprise Architecture (EA) is the blueprint for
systematically and completely defining and documenting the
organization's current (baseline) and desired (target) environment, and
includes a sequencing plan for transitioning from the baseline
environment to the target environment.
VA's Enterprise Architecture strategy is essential for evolving VA
information systems such as VETSNET. Therefore, as an initial step,
VETSNET application development will be continued in the VETSNET
architecture and integrated into the VA Enterprise Architecture. As the
next step, VA will conduct studies leading to the development of an
integrated claims process, which will determine the precise manner of
the VETSNET ``replacement'' for the long-term.
office of inspector general
Question 40. The Office of Inspector General (OIG) is tasked with
increasing internal audits, investigations and inspections, but this
budget does not include an increase in the OIG FTE's or any significant
increase, outside of personal services. How can the OIG effectively
meet the goals set forth in the budget documents without additional
resources?
Answer. The VA recognizes that the record-setting accomplishments
of the VA OIG during the past few years clearly demonstrate the cost
effectiveness and value added from an investment in the OIG. The final
numbers for FY 2001 were even higher than expected. The OIG identified
over $4 billion in funds put to better use, for a return on investment
of $86 to $1. They also recovered $33.7 million in fines, penalties,
restitutions and civil judgments in FY 2001, and generated contract
audit hard dollar returns in excess of $42 million that went directly
back to VA during the past year alone. As impressive as these numbers
are, they do not capture other important performance results. The OIG
achieved a 300 percent increase in investigative actions since 1998.
This performance includes a 34 percent increase in indictments in 2001
and the successful conclusion of high profile cases that led to the
conviction of two serial killers who murdered veterans.
For 2002, the OIG received a $6 million or 13 percent increase over
the previous year's funding level. The 2003 request provides an
additional $2.7 million (excluding CSRS and FEHB funds). The request is
consistent with the level of performance the OIG expects to achieve in
2003. The strategic targets represent the ideal level of performance
that each VA organization--including the OIG--is striving to
accomplish.
office of general counsel
Question 41a. The budget request for the Office of General Counsel
(OGC) cites that the funding level will enable OGC to continue to meet
the increasing demand for legal services by the VA, while still
managing its representation responsibilities at the U.S. Court of
Appeals for Veterans Claims (CAVC). Please provide a breakdown of the
type and volume of work that OGC is performing.
Answer. The Office of General Counsel (OGC) provides legal advice
and representation to the Secretary and subordinate managers in VA
headquarters and field locations. In the field, twenty-three Regional
Counsels and their staffs provide such legal advice and representation.
Six Assistant General Counsels and their staffs act on behalf of
headquarters managers. The following charts in spreadsheet format
provide the numbers of cases that OGC field attorneys are responsible
for or have completed during the current fiscal year (October 2001
through January 2002), arranged by subject matter categories.
Combined Workload Summary for Regional Counsel Offices (Chart 1)--
The Regional Counsel Offices provide comprehensive legal services to
Veterans Health Administration (VHA), Veterans Benefit Administration
(VBA) and National Cemetery Administration (NCA) managers throughout
the United States and in Puerto Rico. The major subjects (minus Medical
Care Cost Recovery) for which Regional Counsel provide advice and
representation are represented on Chart 1.
CHART 1.--COMBINED WORKLOAD SUMMARY FOR REGIONAL COUNSEL OFFICES
----------------------------------------------------------------------------------------------------------------
ADMIN ADMIN LIT LIT TOTAL TOTAL TOTAL
NATIONWIDE [thru January 2002] PENDING COMPLETED PENDING COMPLETED PENDING COMPLETED WORKLOAD
----------------------------------------------------------------------------------------------------------------
1 Medical Malpractice.................. 1,989 352 527 100 2,516 452 2,968
2 Personal Injury...................... 327 84 86 16 413 100 513
3 Property Damage...................... 398 205 12 2 410 207 617
4 FMCRA................................ 5,953 1,199 91 9 6,044 1,208 7,252
5 Workers Compensation................. 2,558 615 18 1 2,576 616 3,192
6 Health Insurance..................... 232,346 5,415 263,388 1,455 495,734 6,870 502,604
7 Category C (Co-Payment).............. 191 17 26 7 217 24 241
8 Ineligible/Humanitarian.............. 51 0 5 0 56 0 56
9 Auto Reparations..................... 827 337 2 0 829 337 1,166
10 Crime Victims Act................... 3 0 0 0 3 0 3
11 Debt Collection..................... 205 52 68 28 273 80 353
12 Bankruptcy.......................... 2,115 2,564 872 306 2,987 2,870 5,857
13 Escheat/General Post Fund........... 145 48 3 0 148 48 196
14 Probate Claims...................... 1,158 441 37 14 1,195 455 1,650
15 VA Rroperty Damage.................. 44 8 1 0 45 8 53
16 Other Recoveries.................... 197 155 21 3 218 158 376
17 Commitment.......................... 599 100 12 40 611 140 751
18 Guardianship........................ 599 831 162 176 761 1,007 1,768
19 VA Benefits......................... 0 134 9 9 134 143
20 Contracts........................... 327 371 14 0 341 371 712
21 VABCA............................... 6 1 0 0 6 1 7
22 Personnel Actions................... 2,236 614 355 45 2,591 659 3,250
23 Law Enforcement..................... 80 33 7 1 87 34 121
24 MPCE Claims......................... 113 62 1 0 114 62 176
25 Loan Guaranty Actions0.............. 0 0 0 0 0 0
a. Acquisitions...................... 1,406 6,300 108 13 1,514 6,313 7,827
b. Assumption Agreements............. 3 9 0 0 3 9 12
c. Evictions......................... 560 501 81 67 641 568 1,209
d. Mortgage Releases................. 53 58 0 0 53 58 111
e. Sale Of VA Loans.................. 90 629 1 0 91 629 720
f. Sales VA Properties............... 398 1,789 7 3 405 1,792 2,197
g. Multi-Units....................... 29 97 0 0 29 97 126
h. Other Loan Guaranty............... 823 1,351 77 49 900 1,400 2,300
26 Written Opinions.................... 196 203 0 0 196 203 399
27 Other Cases......................... 3,793 7,797 101 63 3,894 7,860 11,754
Total.............................. ........ ......... ........ ......... 30,176 27,900 58,076
----------------------------------------------------------------------------------------------------------------
Combined Medical Care Cost Recovery Statistics for the Office of
General Counsel (Chart 2)--The Regional Counsel Offices and
Professional Staff Group I advise VHA managers concerning the
collection of monies due VA from insurance carriers, tortfeasors,
worker's compensation insurance carriers and others. These entities owe
monies to VHA for care provided veterans (or others on a humanitarian
basis) at VA medical centers on a partially or fully reimbursable
basis.
CHART 2.--COMBINED MEDICAL CARE COST RECOVERY
------------------------------------------------------------------------
Nationwide [thru January 2002]
------------------------------------------------------------------------
FMCRA................................................ $2,721,745.50
Workers Compensation................................. 1,094,025.52
Health Insurance..................................... 918,117.00
Category C (Co-Payment).............................. 2,350.70
Ineligible/Humanitarian.............................. 25.00
Auto Reparations..................................... 291,617.89
Crime Victims Act.................................... 995.38
Debt Collection...................................... 52,782.09
Bankruptcy........................................... 134,722.15
Escheat/General Post Fund............................ 285,375.57
Probate Claims....................................... 1,334,287.
VA Property Damage................................... 14,160.95
Other Recoveries..................................... 514,016.89
------------------
Total............................................ 7,364,221.67
------------------------------------------------------------------------
Information regarding Professional Staff Group VII's workload is
provided in the answer below. OGC does not currently have a reliable
method for capturing the complete workloads of its other headquarters
elements. Recognizing the problem, OGC is now field-testing a new
computer-based workload-reporting system that will accurately capture
the varied administrative, legal and representational activities
performed by the attorneys at VA headquarters. OGC will be able to
report reliably on its workload in the near future.
Question 41b. What is the current caseload of Group VII before the
CAVC?
Answer. There were 1,822 cases pending as of January 31, 2002.
Group VII is responsible for preparing the record and submitting
the proper pleadings in all appeals filed in the CAVC. In addition,
Group VII is responsible for answering petitions for extraordinary
relief under the All Writs Act filed with the Court, and answering all
applications for attorney fees under the Equal Access to Justice Act
filed with the Court.
In fiscal year 2001, there were 3,521 new cases filed with the
Court, comprised of 2,203 appeals, 105 petitions for extraordinary
relief, and 1,213 applications for attorney fees. On top of these new
cases, when the fiscal year commenced in October 2000, there were 2,580
cases carried over as pending from the previous fiscal year. The Court
closed 4,118 cases during the year.
In the first one-third of fiscal year 2002 (October 1, 2001 through
January 31, 2002), there were 795 new cases filed with the CAVC,
comprised of 548 appeals, 67 petitions for extraordinary relief, and
180 applications for attorney fees. There were 1,982 cases carried over
as pending from the preceding fiscal year. The Court closed 955 cases
in the first four months of fiscal year 2002. Hence, there were 1,822
cases pending as of January 31, 2002.
Question 41c. Veterans issues are a very limited specialty. When
veteran's cases are appealed from the CAVC to the U.S. Court of Appeals
for the Federal Circuit, Department of Justice attorneys represent the
government. However, VA cases are a smaller part of their caseload.
What is your opinion of the VA representing the government in these
cases at the Federal Circuit?
Answer. Because cases involving VA benefit claims are heard only in
the CAVC and in the Federal Circuit, those two courts have most
affected the development of case law governing veterans' benefits. The
Federal Circuit in particular has been taking an increasingly active
role in formulating that law. It has issued many precedential decisions
during the past year with far-reaching and fundamental effect on VA's
processing of claims. For that reason, it is important that VA's
position in litigation, including all the background information
necessary to put the position into context, be presented to the Federal
Circuit as fully and persuasively as possible.
VA administers many programs established by law for the benefit of
veterans, their dependents, and their survivors. The claim process is
extensive and complicated. Consequently, it takes a number of years of
working with the system to develop familiarity with, and expertise in,
the system.
VA attorneys can provide valuable assistance throughout all stages
of appellate litigation involving veterans' benefits especially at oral
arguments because of their familiarity with VA regulations and
procedures and their detailed knowledge of the intricacies of the VA
adjudication system. As VA has opened a discussion with DOJ on this
issue, and we intend to work with DOJ to continually improve United
States' representation in the Federal Circuit.
board of veterans' appeals
Question 42a. Now that the regulations to implement the direction
to the Board of Veterans' Appeals (BVA) to develop claims that lack
some key piece of evidence are in place: How is the BVA implementing
this new activity?
Answer. The Board restructured to provide dedicated BVA assets for
case development. Our efforts have been coordinated with the Veterans
Benefits Administration (VBA) which will provide co-located
adjudicators for benefit awards. BVA has authority to begin developing
cases as of February 25, 2002. Initial receipt and processing of
appeals will continue as before. When a decision team reviews a case
and determines that a decision cannot be entered without additional
evidence, a team member will prepare a development order setting out
the development required (in the past this would have been a remand
decision). The case is then forwarded to the Board's Development Team
which will obtain the needed information. (Individuals comprising this
team had 30 days of classroom training with a VBA trainer and 30 days
of hands-on training developing cases at the Washington regional
office.) BVA has been given access to VBA and VHA systems development
software. These programs have been installed and/or enhanced to permit
development to be accomplished effectively and efficiently at the
Board. When all requested development has been completed and
information received by the Board, the case will be returned to the
decision team for review and preparation of a decision.
Question 42b. What is the projected impact on BVA output?
Answer. It is unclear what the extent of this new workload will be.
The Board's best estimates indicate that initially about 25 percent of
the appeals caseload will require development, thus reducing the
decision output by that amount.
Question 43a. In the past year, since the passage of the ``Veterans
Claims Assistance Act,'' VBA has slowed the volume of cases it sends to
the BVA as it reworked affected claims. Please provide the monthly
input and output of cases for the last 12 months.
Answer.
------------------------------------------------------------------------
Month Receipts * Decisions
------------------------------------------------------------------------
February 2001................................. 1,396 3,023
March 2001.................................... 1,155 3,503
April 2001.................................... 1,315 2,720
May 2001...................................... 1,827 2,798
June 2001..................................... 971 2,396
July 2001..................................... 1,737 2,233
August 2001................................... 1,669 2,215
September 2001................................ 1,096 1,780
October 2001.................................. 1,392 1,878
November 2001................................. 688 1,228
December 2001................................. 1,620 881
January 2002.................................. 1,620 1,077
-------------------------
Total..................................... 16,486 25,732
------------------------------------------------------------------------
* Consists of all cases physically received at the Board, including
original appeals and cases returned to the Board's docket (i.e., cases
returned following remand development, cases remanded by the Court,
and cases received for reconsideration or vacate actions).
Question 43b. Describe the number of travel board and satellite
hearings conducted, and requests still outstanding.
Answer. Shown below is the number of travel board and video
hearings conducted over the last several years:
------------------------------------------------------------------------
Travel
Fiscal Year Board Video
------------------------------------------------------------------------
1997.......................................... 4,564 233
1998.......................................... 2,469 1,151
1999.......................................... 3,512 1,282
2000.......................................... 2,505 1,385
2001.......................................... 3,336 1,308
2002 [Four Months]............................ 600 479
------------------------------------------------------------------------
At the end of January 2002, there were 6,975 pending requests for
travel board hearings. Of those, 1,558 were certified by VBA as ready.
There were 1,523 pending requests for video hearings. Of those, 310
were certified as ready.
national cemetery administration
Question 44. What is the status of each of the six new cemeteries
authorized in 1999? Is the funding requested for FTE sufficient to
staff the new facilities that will be open and is the construction
funding sufficient to complete the last two projects?
Answer. The status of the efforts to establish six new national
cemeteries is described below. The 2003 budget request for the National
Cemetery Administration (NCA) includes sufficient funding ($4.8 million
and 30 FTE) for four facilities which will require operational funding
in 2003. These resources will support interment operations on fast-
track parcels completed as a part of Phase I construction of new
cemeteries at Ft. Sill, Oklahoma, and Atlanta, Georgia, and to prepare
for the activation of interment operations in 2004 on fast-track
parcels to be completed for new cemeteries in Southern Florida, and in
the vicinity of Pittsburgh, Pennsylvania. There are no 2003 operational
funding requirements for the two remaining sites at Detroit and
Sacramento.
The 2003 Major Construction budget for NCA includes sufficient
funding to continue progress in developing new national cemeteries.
Resources are requested for Phase I construction of the new cemeteries
in Southern Florida and near Pittsburgh, Pennsylvania. The 2003 budget
also includes additional funding for design of the new cemeteries
planned in the areas of Detroit, Michigan, and Sacramento, California.
Full construction funding for the new cemeteries at Ft. Sill, Oklahoma
and Atlanta, Georgia was provided in the 2001 and 2002 budgets
respectively.
The status of development of the six new national cemeteries
follows:
Ft. Sill, Oklahoma: A fast-track burial section was dedicated in
November 2001, which will allow interments to begin prior to full
completion of all construction activities at the new cemetery. The
Phase I construction contract is planned to be awarded in March 2002.
Funding for all Phase I design and construction costs was provided in
prior year appropriations.
Atlanta, Georgia: An Architectural/Engineering (A/E) firm has been
selected to develop the master plan for the new cemetery. The contract
should be awarded in March 2002. Funding for all Phase I design and
construction costs was provided in prior year appropriations.
Pittsburgh, Pennsylvania: The environmental assessment process on
the preferred site was completed. The land acquisition process is
currently underway. When this process is complete, master planning will
begin. Resources for master planning and land acquisition were included
in the 2001 and 2002 appropriations respectively. The 2003 President's
construction budget requests $16.4 million for Phase I construction.
South Florida area: The environmental assessment public comment
period for the evaluated sites ended in January 2002. A boundary survey
and title search is currently being conducted. When land acquisition is
complete, master planning will begin. Resources for master planning and
land acquisition were included in the 2001 appropriation. Funding for
design was included in the 2002 appropriation. The 2003 President's
budget includes $23.3 million for Phase I construction.
Detroit, Michigan: The environmental assessment public comment
period for the evaluated sites ended in January 2002. A boundary survey
and title search is currently being conducted. When land acquisition is
complete, master planning will begin. Resources for master planning and
land acquisition were included in the 2001 and 2002 appropriations
respectively. The 2003 President's construction budget requests $1.7
million for the design of this new national cemetery.
Sacramento, California: The environmental assessment of potential
sites is in process. This process should be completed in March 2002.
Resources for master planning and land acquisition were included in the
2001 and 2002 appropriations respectively. The 2003 President's
construction budget requests $1.7 million for the design of this new
national cemetery.
Question 45. Please provide a breakdown of the minor construction
NCA projects. How does this compare to the findings in the study that
is to be submitted pursuant to Public Law 106-117?
Answer. The 2003 President's budget requests $21 million of Minor
Construction funding for the National Cemetery Administration. Of the
requested amount, $18.9 million is for projects to continue service
delivery by providing additional gravesites or columbaria niches at
existing national cemeteries that are nearing depletion of their
inventory of burial space; $1.6 million is for irrigation projects
which will improve national cemetery appearance; and the remaining
$500,000 is for building construction and other site improvement
projects.
Data from the facility condition assessment study required by
Public Law 106-117 is not yet available. A draft report submitted by
the contractor conducting the study is currently under review. We
anticipate that the study findings will be transmitted to Congress in
May 2002. When the study is completed, a comparison with the minor
construction request will be performed. The study will identify repairs
needed to ensure that national cemeteries are maintained as national
shrines. The study will not address gravesite expansion projects
necessary to provide burial space for veterans and their eligible
family members.
Question 46. The State Cemetery Grants Program has proven to be a
popular alternative for states with diffused or small veteran
populations as a way to honor and commemorate their veterans. I'm
pleased to see that the budget request provides a $7 million increase
in the funding for the program.
Have any requests been denied in the last two years due to lack of
funds?
How many projects is this increased appropriation expected to
finance?
Do you anticipate an increased demand for the program since the
increase in the plot allowance provided in Public Law 107-103 that will
go to offset the states' operational costs?
Answer. The State Cemetery Grant Program appropriations provided in
2000 and 2001 have met program needs. There were no grant requests
denied due to lack of funds. The $32 million requested in the 2003
budget is expected to fund nine projects.
The change in the plot allowance resulting from enactment of Public
Law 107-103 increases the amount paid for an eligible veteran not
buried in a national cemetery from $150 to $300. This increase should
encourage states to participate in the State Cemetery Grants Program,
but it is too soon to determine the extent of the impact this increase
will have on demand for State Cemetery Grant Program funding. Texas,
Washington, Michigan, Mississippi and New York, among others, have
expressed interest in requesting funding for state veterans cemeteries.
______
Response to Written Questions Submitted by Hon. James M. Jeffords to
Anthony J. Principi
Question 1. I appreciate that you have had to press hard for the
funding increases for veterans programs, but I am concerned that the
budget before us is not adequate to meet our needs. While it contains
an increase of $1.4 billion over last year's levels, the Independent
Budget estimates that an additional $1.7 billion is needed to adequate
funds current services. Your budget also contains some pretty rosy
assumptions, such as an additional $500 million in third-party
collections above this year's projected level.
I am also concerned about the decision to request a new annual
$1,500 deductible from all Priority 7 veterans. Many VISNs, and New
England is one of them, have worked hard to enroll new veterans and to
reach the large population of veterans who have never stepped foot in a
VA facility. It would seem that this initiative could seriously
undercut that effort.
I would appreciate you commenting on both of these matters.
Answer. An additional $1.4 billion in appropriation (excluding the
retirement accrual transfer and including management savings, $1,500
cost share deductible and increases in revenue, reimbursement, and
unobligated balances availability) provides funding for:
<bullet> Current service requirements
<bullet> Our enrolled population, which is requiring more health
services as that population ages
<bullet> Pharmaceutical increases as a result of new patients
accessing the system for their pharmaceuticals coupled with the
increased treatment of enrolled patients in the ambulatory care
environment
<bullet> Prosthetics and sensory aids due to the continuing impact
of mandated eligibility reform
<bullet> CHAMPVA for Life,
<bullet> Continuing open enrollment
<bullet> Faith-based and other Community-based programs
<bullet> Outpatient dental care for former Prisoners of War
<bullet> Newborn care as a part of basic benefits
The Independent Budget recommends a $3.1 billion increase over the
FY 2002 appropriation. The Independent Budget does not take into
consideration the effects of management efficiencies, the $1,500 annual
deductible for Priority 7 veterans, or improved collections on the
appropriation level.
The FY 2003 budget projects a $418 million increase for the Health
Services Improvement (HSIF) and Medical Care Collections Funds (MCCF)
over the FY 2002 current estimate. The primary reasons for the increase
are the medication copayment (increase from $2 to $7), proposed
legislative initiative for the $1,500 deductible, anticipated revenue
from the long term care copayment, and improvements derived from the
Revenue Improvement Plan, Electronic Data Interchange (EDI),
Centralization & Consolidation, and Outsourcing & Contracting. All of
these will all have a profound impact upon the HSIF and MCCF programs
to help increase the level of collections.
Recent collections have increased significantly from earlier
estimates. For example, actual collections in FY 2001 exceeded the
original budget estimate by over 26 percent.
The following addresses the policy considerations made in regards
to the $1,500 deductible proposal. Continued growth in the demand for
VA health care services will require significant increases in budget
resources. Without significant increases in resources or the
implementation of an alternative policy/policies (e.g., limit
enrollment, change uniform benefits package, cost share proposal), VA
would face critical issues impacting quality, such as, increasing
waiting times, increasing system congestion impacting all patients,
inability to meet demand. VA considered these policies and determined
that the deductible (cost sharing) proposal seemed to be the preferable
option that addresses the following most overarching concerns:
<bullet> Maintain quality of care for all those that VA serves.
<bullet> Continue VA open enrollment for all veterans.
<bullet> Maintain, not reduce, the basic benefit package of medical
services for core veterans.
<bullet> Provide veterans appropriate access to outpatient,
inpatient, and non-institutional long-term care services.
<bullet> Require veterans that have higher incomes to contribute
more to their cost of care than other veterans.
<bullet> Assess a charge for use of healthcare services as opposed
to assessing an upfront charge or enrollment fee.
<bullet> Allow veterans to benefit from private insurance coverage
and would encourage veterans to identify their insurance coverage.
<bullet> Continue VA long-term services, especially non-
institutional care.
<bullet> Provide catastrophic coverage for those with high annual
medical costs.
Question 2. Your budget proposes to move employment and training
services for veterans out of the Department of Labor and into the VA.
While I appreciate the effort to avoid duplication of services, I do
not believe a strong case has been made by the VA to explain how they
could run this program better. In fact, having worked for many years on
job training issues, I would prefer to see the focus on improving the
program at DOL. That is where the expertise on job training lies and I
believe we would be wise to first try a through reform effort before
uprooting the program entirely. I would appreciate your views on this.
Answer. It is clear that the DVOP and LVER programs have not served
veterans' job search assistance needs well for a long time.
The Commission on Servicemembers and Veterans Transition Assistance
(Commission) report and at least six GAO reports issued in the past
five years extensively document long-standing shortfalls with the DVOP
and LVER programs. In spite of the public awareness that these two
programs, as currently administered, are failing far short of the
excellence we should demand of programs so important to many veterans'
ability to enjoy the secure and productive life that their service
defended for all Americans, change to the programs has not occurred.
While the challenges to VA are real we are confident that the
mission of this Department to serve veterans is clear and focused. That
is an important distinction since the programs involved are limited to
and focused specifically on veterans. Unencumbered by a long history
and long-standing relationships, VA can much more easily evaluate
veterans' employment assistance needs and develop a program that better
meets the needs of today's veterans and ensures adequate flexibility in
design to allow for adapting to the needs of tomorrow's veterans.
Question 3. As you know, many VA hospitals are having a very hard
time recruiting procedural specialists. The VA has always had a lower
pay scale than the private sector. But because a VA job brings other
advantages, the VA has usually had good success in recruiting top
specialists. But as the gap widens between VA salaries and the private
sector, many medical centers are finding it increasingly difficult to
hire procedural specialists. This could have a very significant effect
on the level of care the institution is able to provide.
Have you examined this issue of the competitive pay scale? How big
a problem do you see it to be? How can this issue be addressed before
it has a significant effect on health care quality?
Answer. The amounts of special pay authorized for physicians have
not been adjusted since 1991 and are less competitive for many
specialties and categories of physicians. After 1991, physician
staffing stabilized or improved in most medical categories. However,
VA's current competitive situation is eroding in many areas of the
country and will continue to erode due to the 11-year old limits on
special pay amounts. The Administration is about ready to propose
legislation (for the short term) to address physician's special pay. We
are also exploring long-term solutions.
VA salaries for some scarce subspecialties, such as anesthesiology,
radiology, cardiology, and surgical subspecialties, are far behind the
salaries offered by non-Federal institutional employers. VA is able to
assure quality care to veterans through the use of contracts. When VA
cannot offer a competitive salary to a highly paid specialist, then VA
must obtain the service on scarce specialty contracts, often at
significantly higher cost.
VA is in the process of developing its findings for the Quadrennial
Report to the President on the Adequacy of Physician and Dentist
Special Pay. Those findings will form the basis for recommendations for
comprehensive compensation reform to ensure that VA is able to
capitalize on its advantages in attracting and employing specialists
and other direct care providers.
Chairman Rockefeller. Thank you, thank you very much, Mr.
Secretary, and that was candid. When you were up for
confirmation, I asked if you would be candid? And today you
were candid. You were doing two things. You were saying I am a
member of the administration, but I want to take care of the
veterans. I do not think that we can ask for more candor than
that.
I want to bring up something which is sort of out of order,
and that is long-term care. Here we are, talking about the year
2002, when Congress passed long-term care changes in 1999. It
took 2 years to get interim guidance, and that guidance is
weak. The question I am going to ask you is when are we going
to get a final directive? I am speaking about noninstitutional
long-term care--the first long-term care benefit involving the
Federal Government that has been passed since Medicare.
Along with the lack of mental health parity--long-term care
is 1 of the 2 great health care needs that we consistently
ignore in this country. But in the law, we said under section
101, VA is required to provide noninstitutional extended care
services. In the interim guidance which came out after 2 years,
you have very different language--and that is all VHA
facilities are either to have these services available to their
veterans or to incorporate into their strategic plan a process
for establishing the access of these services.
I am really concerned and upset about the inaction, because
long-term care was a very serious matter that Senator Specter
and I negotiated in conference. We thought we were going to
meet resistance on the other side of the Capitol, we did not.
And it is something that is tremendously important for the
veterans. I want to know when are we going to get a final
directive? And is it going to follow the law?
Secretary Principi. Yes, Senator, I will try to be brief.
We are not in compliance with the law. I apologize for
that. I have asked the Acting Under Secretary for Health to
give me a plan by March 15 on how we will be in compliance with
the law. I want to know where the additional nursing home beds
will be; a timeline for activating those nursing home beds; the
cost of activating those nursing home beds, both recurrent and
nonrecurring costs; and what will we use to pay for them? In
other words, there will have to be an offsetting program
savings somewhere within our budget.
It will cost us approximately $150 million to be in
compliance with the law. We will have to take that money from
other programs. At the same time, I will request that the
committee seriously consider changing the law so that it does
not put just a floor on VA nursing home beds but looks at our
state nursing home program, our community nursing home program
and the advances we are making in noninstitutional care. We
have expanded our state nursing home beds census rather
significantly over the past several years, but that does not
count. We have to have a floor on VA nursing home beds.
Chairman Rockefeller. Are those equal beds on par, as you
describe it?
Secretary Principi. Are they equal? Let me ask Dr. Murphy
to answer whether the services are actually equal. I do not
think that is true in community nursing home beds. I think VA
is the best, but I think the State----
Chairman Rockefeller. But I want to make sure that when you
are talking about beds, you are talking about services.
Dr. Murphy. As long as the beds are staffed, they would be
equivalent. To be absolutely clear, we are looking for a level
of the average daily census to be the same as 1998. That way,
we know that veterans are actually getting the long-term care
that you have determined they are entitled to.
Secretary Principi. Does that answer the question?
Chairman Rockefeller. Yes, and I will just need to wait.
You say it is going to be March?
Secretary Principi. Yes. I have asked this morning--earlier
this morning, I asked for a plan by March 15. I think the
time----
Chairman Rockefeller. You need to. You need to.
Secretary Principi. If we cannot reach an agreement that we
need to change the law to reflect noninstitutional and non-VA
provided care, then we need to be in compliance. But there will
be costs. We know that.
Chairman Rockefeller. And you do agree that that is the
direction of veterans' health care?
Secretary Principi. Noninstitutional?
Chairman Rockefeller. Yes.
Secretary Principi. Absolutely.
Chairman Rockefeller. Yes.
Secretary Principi. I think we do need institutional
nursing home beds. Veterans with Alzheimer's and dementia
cannot be easily kept in the home. So I think we do need to
fulfill a certain commitment, in VA, the State, and in the
community. But at the same time, veterans and their families
benefit the longer we can keep them in their own homes with the
noninstitutional programs: the hospital-based home care; the
respite care, where the veteran goes into an institutional
setting for a couple of weeks so the caregiver can get some
rest; the adult day programs where veterans go into the
hospital for 8 hours so that they can exercise and be involved
therapeutically and then return home in the afternoon. Those
are wonderful programs.
Dr. Murphy. Senator, if I could add, I think you would be
pleased to know, that VA has projected that in 2002, the number
of veterans receiving home-based care, noninstitutional care,
will increase by 54 percent. Also the current budget requests
additional resources for the 2003 allocation, and we project a
91 percent increase or over 26,000 ADC for noninstitutional
programs. So we are very aggressively building our home-based
extended care programs, and we know that that was the mandate
in the Mill bill. In addition to addressing the institutional
VA nursing home beds, we will be aggressively addressing the
noninstitutional care.
Chairman Rockefeller. My time is up. I want to get behind
this. It is the law. I recognize the costs involved, but
together, we have an obligation to work that out.
Senator Specter?
Senator Specter. Thank you very much, Mr. Chairman.
Secretary Principi, I start with the business about the
$1,500 deductible, starting at $28,000 a year annual income. On
its face, that is simply not acceptable. Somebody who earns
$28,000 a year is not in the position to undertake a $1,500
deductible. Means testing is something which is generally
rejected as a matter of Federal policy, and to impose a
deductible on veterans seems to me to be unduly harsh because
veterans are not getting gifts or gratuities. They are being
given medical services as a contractual matter for the service
which they performed for their country.
When you say that no veteran will go without benefits and
medical services, and if they can only pay $10 a month, so be
it, that kind of approach is not realistic or doable under the
proposal which has been made. If you call for a $1,500
deductible, that is that. And the veteran is going to have to
pay that amount of money in order to receive any benefits. So
what I would like to see you do is go back to the drawing
board. Figure out what this deductible would produce by way of
revenues, and figure out what you can produce from other
sources, and then determine whether it really is necessary, or
indispensable, to impose a deductible. When other alternatives
have been exhausted, then determine what is the income line
where VA ought to impose a deductible. I know it is not
$28,000. It may be your salary. What did you say your salary
was? [Laughter.]
Secretary Principi. Same as yours, Senator.
Senator Specter. Next time you appear, I want you better
prepared. I want you to know your salary, Mr. Secretary.
[Laughter.]
And on the issue of insurance collections, you stated that
not all veterans have insurance coverage. And you stated that
the amount of money collected from the insurance company might
be offset against the proposed annual deductible. Well, that
really is not a practical way of dealing with the issue to try
to deal with veterans that have insurance. But to return to the
issue of doctors not filling out forms to submit to the
insurance companies: that situation is intolerable. They do not
miss a beat on filling out forms when their compensation is at
stake and I understand their motivation for doing that. But
they are part of the system, and I would like to know what your
thoughts are about imposing a little discipline to require the
doctors to fill out those forms, and if not, then what? How
about a little threat here? How about a little discipline here?
Secretary Principi. Certainly, it is very important that
the documentation take place. If we do not code, then without
the proper documentation, we cannot bill. And the physicians
are the only ones who can ensure proper documentation. If they
are not doing that, then, I do think we have to take some
action, because the veterans are being penalized because we are
not able to collect from insurance companies.
Senator Specter. Would you give some thought to that?
Secretary Principi. I will.
Senator Specter. And give us a written response within 2
weeks as to what you propose to do to get VA doctors to do
their duty and fill out these forms?
Secretary Principi. Yes, sir.
[The information referred to follows:]
I am considering a variety of alternatives that will lead
to significant improvements in VA's third party billing
operations.
The tool that I believe will be most effective is to
identify specific performance goals related to the timeliness
and accuracy of each component of our billing process, and to
establish performance standards pertaining to documentation for
medical center directors, chiefs of staff, and attending
physicians. We are currently exploring options to link
physician pay to performance. If needed, we will seek
legislation to provide us the authority to implement this,
possibly as part of a broader legislative package we will
submit later this year on a variety of special pay provisions
for VA physicians.
I fully expect that incorporating billing documentation
requirements into physician performance standards and linking
these to pay will improve compliance. However, I expect the
Under Secretary for Health to turn to traditional disciplinary
measures in instances where any physician repeatedly fails to
meet documentation standards. If a specific provider does not
comply with requirements following education/training and
feedback from monitoring efforts, specific management actions
would include validating the understanding of requirements and
determining willfulness of noncompliance. Disciplinary steps
for a full-time permanent physician could then include formal
counseling, admonishment, reprimand, 15-day suspension and,
finally, removal depending upon the seriousness and nature of
the non-compliance. For part-time, temporary or physicians in a
probationary period, only one or two warnings are required
before moving for termination.
As noted, the most significant requirement for physicians
is to provide thorough and timely documentation in the process
of cost recovery. For outpatient care, this includes notes
describing the treatment provided during the visit in order to
allow billing for an office visit or consultation. With regard
to inpatient care, documentation requirements apply to notes
regarding the reason for the admission so as to allow
professional billing for the first day of the stay; notes
during an inpatient stay as the patient's condition changes;
operating reports completed immediately after surgery; and
notes at the time of patient discharge. To assist physicians,
we have developed and implemented software allowing the
electronic entry of practitioner identification, lists of
patient problems, diagnosis, and treatment provided.
While setting clear performance requirements and holding
physicians accountable for their performance will be the most
effective strategy to use in improving our billing process,
there are other important steps we are taking that will lead to
better outcomes. For example, we have already established
compliance policies and guidelines through official directives
issued to all Veterans Integrated Service Networks (VISN) and
medical centers. We are supplementing this with ongoing staff
education and training to reinforce the requirements outlined
in the directives. In addition, we established a physician
education task force charged with developing a toolkit that
will provide physicians with easy-to-use references and
reminder materials. Recognizing the importance of monitoring
compliance with key policies and procedures, we are
implementing a national monitoring program that will be
instituted in all VISNs and medical centers. The results of
this monthly monitoring program will be reported to VA Central
Office for review and follow-up action.
I am firmly committed to improving all facets of the
Department's billing and collections operations. As a result of
new steps to enhance physician accountability for performance
as well as the other improvement strategies I have outlined
above, I am confident that our performance will be markedly
better in the future.
Senator Specter. Let me pick up on the issue of homeland
security for the very brief time that I have left. Congress
last year appropriated more than $3 billion for homeland
security. We did not want to wait for this year's budget to
fund homeland security. We put up $1.050 billion for public
health services and then very substantial additional money for
smallpox vaccinations and for purchases of Cipro to guard
against anthrax, and for other items.
You have, as you describe it--how do you describe it--the
largest public health system in the world?
Secretary Principi. Certainly the largest integrated health
care system in the world and a system completely under Federal
control in every community in America. So all of our employees
are Federal employees, and I think are a wonderful resource in
the event of a man-made or a natural disaster.
Senator Specter. Senator Harkin and I are going to be
meeting this afternoon with Health and Human Services Secretary
Thompson about preliminaries for his budget, and I am going to
ask him to call you, and I am going to ask you to call him--
your calls may intercept one another--to get your department
involved. You have a great public health system all set up, and
$1 billion is a good start on public health in America, but it
is not going to do the whole job. When you get wholesale minus
24 percent--that is what you get on pharmaceuticals?
Secretary Principi. That is a starting point because we can
negotiate below that price.
Senator Specter. Well, that is a starting point. You ought
to be involved in expending the large sums of money which are
going to be spent on pharmaceuticals for homeland defense.
Secretary Principi. Absolutely.
Senator Specter. My staff will be here to hear the balance
of the testimony. We will follow very carefully what the
service organizations have to say. Bill Tuerk, who is a veteran
of these committee hearings, has already talked to the service
organizations, and we will give very heavy weight to what the
service organizations have to say. I regret that I have got to
go to a budget hearing on Coast Guard, again, on homeland
defense, and I thank you, Mr. Chairman.
Chairman Rockefeller. Thank you, Senator Specter, and thank
you for coming. And we were talking earlier about how busy it
is around here, when many of us serve on five committees and
everything takes place at the same time. So we appear rude, and
perhaps sometimes, we are, but we do not intend to be.
Senator Jeffords. Mr. Secretary, I am very concerned about
the funding situation in the current year. Overall, the VA
health care system may be as much as $400 million short. We are
expecting a deficit of over $40 million. Even assuming we meet
the optimistic third-party collection targets, coming on the
heels of several years of inadequate funding, most medical
centers have already squeezed as much as they can out of their
programs and put off needed maintenance and repairs.
We in VISN 1 are committed to serving the Priority 7
veteran population, it should not have to come out of the
expense of other programs. I understand that the administration
plans to request additional funding for VA care somewhere in
the neighborhood of $140 million. Do you believe this amount
will cover the actual cost of Priority 7 veterans' care?
Secretary Principi. The $142 million will not entirely
cover those costs. I think the $142 million will certainly go a
long way to meeting the workload growth of Priority 7's in
2002. We are taking other steps to be more efficient, both
medical care cost recovery--I will let Dr. Murphy talk in a
moment about the additional money that will be going up to the
Vermont VISN this year.
Senator Jeffords. My back of the envelope calculations--it
looks like it would be about $40 million short up there. I just
want to leave that----
Dr. Murphy. Senator Jeffords, we know that VISN 1 is making
the best use of their resources, and they are challenged this
year. We have sent them an adjustment to their VERA budget
allocation already, as you know. And in looking at how we can
deal with the shortfall in the 2002 budget, we made some
efficiencies in our centralized funds, and we will be
reallocating over $160 million out to the field through VERA.
In addition, we expect to be getting a supplement of at
least $142 million. With the combination of those two
additional funding sources, VISN 1 will be getting at least $14
million in addition to the adjustment that has already been
made. We know that if they could complete the Boston
integration between the West Roxbury Medical Center and Jamaica
Plains that they would save a substantial amount of money. And
we will be sending some additional minor construction dollars
to speed that integration along and to allow them to become
more efficient and hopefully to live within their VERA
allocation in future years.
Senator Jeffords. I appreciate that information.
Thank you, Mr. Chairman.
Chairman Rockefeller. Thank you, Senator Jeffords.
Senator Nelson?
Senator Nelson. Thank you, Mr. Chairman.
Mr. Secretary, as I indicated earlier, I am concerned about
VISN's 13 and 14 being merged together and having it presented
as a done deal as opposed to a proposal that might come before
this committee as part of the budget. And as I look at what is
being proposed, I question whether or not merging two VISN's
together that neither is doing well will somehow make a healthy
VISN to begin with.
And I think part of the shortfall that is projected is on
the basis of determining what the needs for that VISN are to
begin with. If you look at the $1,500 deductibility in the
Priority 7 veteran category, we may have a false assumption at
the very beginning as to what the needs truly are, whether or
not people in the farm states truly should be in Category 7
based on assets. Do they have to sell the farm to get care?
And I think that is, in fact, a part of the difficulty in
determining what resources should have been put into the VISN
in the first place which I think were underfunded because of a
basic false assumption as to the ability of some of the
veterans in the area to pay. I would like to have us go back
and address that. I would like to invite you to Nebraska to
talk to people on the ground, either informally or through a
field hearing or in some capacity to truly find what the
challenges are, because there are three As about it.
Affordability is obviously one of them; availability and
accessibility, and if it is not accessible, I can assure you it
is not available. And if it is not affordable, then the other
As are in doubt as well.
So I am hopeful that we can work through this. I am
concerned about the ability of people to pay, and certainly,
Category 7 or Priority 7 veterans need to be addressed. I am
also mindful of finding a way to stretch dollars to meet the
needs. I am not callous toward that, nor am I particularly
parochial about Nebraska or our surrounding area. This problem
exists in other states as well, and so, we are committed to
work with you in every way that we can, but the bottom line is
we have to find a solution. And if we can do it together, I
think it is better than if we are trying to find it separately
and work it at counterpurposes with one another.
And so, I appreciate this opportunity; thank you, Mr.
Chairman, and we will be getting back in touch with your office
about the possibility of a field hearing on this merger.
Secretary Principi. I would be happy, Senator Nelson, to
visit Nebraska with you and to do a town hall meeting together
or to do a field hearing. Call the chairman, and we can work
out a mutually convenient date, I am sure, in the very near
future.
Perhaps Dr. Murphy can add, but I would just like to say at
the outset in case there is a misunderstanding: at one time, we
had seven what you might call VISN's. We then went down to four
regional headquarters. Then, a change was made in the mid-
1990's to go to--we called them regions back then--to go to 22
VISN's or networks. So there is really no magic number, sir. I
tend to think that we have too many, but the cost and the
instability of consolidating more are important factors. We had
an opportunity to take two very small networks, Networks 13 and
14, and bring them together. But, sir, all we did was combine
the administrative overhead, about 15 or 20 people in each
office. None of the hospitals or the clinics were, so to speak,
merged. None were closed.
The only thing we did was to take a look at the admin
offices that oversaw the respective VISN's and put them
together. Even with the combined admin office, 13 and 14
combined is one of the smallest networks. I thought a
compelling business case was made to put that overhead together
and I certainly made that decision. But I would be more than
happy to come out to Nebraska and talk about the decision and
the rationale and what we need.
I visited Omaha not too long ago. We have a wonderful
hospital in Omaha, and it will stay as a vibrant hospital.
Senator Nelson. Thank you, Mr. Chairman.
Thank you, Mr. Secretary.
Dr. Murphy. I think the Secretary has made a very important
point. The merger of Networks 13 and 14 into a single network
hopefully should be completely transparent to the veteran,
because they will be seeing their same doctor at the same
clinic or medical center that they did prior to the merger.
This is really an administrative efficiency and hopefully will
allow us to recruit an energetic leader who will help solve
some of the financial problems.
The other thing that you mentioned was the Priority 7
funding issue. We will be looking at some adjustments to the
VERA allocation model this year with the help of the RAND
Corporation Study. And we may be looking at a mechanism to fund
Priority 7 veterans and a way to risk-adjust for the most
complex patients and to appropriately fund networks who have
both more Priority 7's and more seriously ill patients. I think
both of those will help the funding levels in the new Network
23.
Senator Nelson. Mr. Chairman, if I might, just 1 second. I
heard you say and I have heard it as well that one of the
reasons for merging the VISN's is that it might be easier to
find a more energetic person. I think there are energetic
people in Nebraska. I know that is not what you are suggesting,
but I heard that as part of the explanation, that we could not
find somebody where the VISN's were currently located to do it,
but we might be able to find somebody by merging them.
And I do not understand that logic. I really do not. I will
help you find somebody if----
[Laughter.]
Senator Nelson. I am not in that business, but I can sure
get into that business real quickly if that seems to be the
challenge. But I know that it is more than that, but I did not
understand that at the beginning. You do not need to respond to
it. It is just something--I just want the record to reflect
that there are energetic, well-educated and talented people in
our area as well. [Laughter.]
Thank you.
Dr. Murphy. And I did not mean to suggest otherwise.
Senator Nelson. I know you did not. I know you did not.
Chairman Rockefeller. Nobody will dispute that.
Senator Nelson. OK; thank you.
Chairman Rockefeller. Is that all, Senator Nelson?
Senator Nelson. That will do it. Thank you.
Chairman Rockefeller. OK.
Senator Nelson. And I have to get back to the Armed
Services, too, so thank you.
Chairman Rockefeller. I am very interested when you talk
about Nebraska as being geographically challenged, because I
think of all of the flat land in Nebraska, and I think of West
Virginia as having only 4 percent flat land and 96 percent
mountains. I am trying to figure out how you are challenged.
[Laughter.]
Senator Nelson. Well, the difference, Senator, may be that
your population lives on that 4 percent of your land that is
not mountainous. Ours is flat, and people live everywhere. It
is just that there are not very many of them. [Laughter.]
And it is as far from the western part of the State to the
eastern part of the State, from the Wyoming border to the
Missouri River as it is from the Missouri River in Nebraska to
Chicago. So it is a challenge. Thank you. I invite you to come
out.
Chairman Rockefeller. Thank you, Senator.
Mr. Secretary, there are four more questions now that I
have the place to myself--that I wanted to ask. And one is to
followup on something that Senator Specter was talking about,
and that is the homeland security aspect. I mean, let us face
it: philosophically, what makes this year so hard--and probably
the next 25 years so hard--is that we are fighting a war on
terrorism. This takes an enormous amount of resources, and
nobody questions, in general terms, those resources. And yet,
you do not stop the work of being a country, and people do not
stop having needs.
So we go into budget deficits. I cannot object to that,
because we have to get things done, and veterans really need to
be at the head of that list. So, I mean, things become harder,
but it cannot ultimately be an excuse for us not doing what
needs to be done. So with that as a preface: let's talk about
your internal committee recommended for preparedness. Emergency
preparedness is huge in the present-day context. I mean, you
know, that we have got an alert out now, and will for many
years to come.
You recommend a minimum budget of $118 million to equip
hospitals with necessary staff, training and materials for
disasters, particularly for bioterrorism. And there is just a
lot of talk about that happening. VA's 2003 budget includes
only $55 million for all emergency preparedness, and VA got $2
million, barely enough for its existing HHS obligations, from
the Defense supplemental. How do you work that? I mean,
everybody has got to get to the table on this subject of
preparedness. Everybody agrees that the VA hospitals are an
absolute national resource, which a lot of even my colleagues
do not recognize, because they are thinking in sort of more
conventional terms. But this is an enormous resource, and we
have been talking about it for awhile.
How do you justify this?
Secretary Principi. Unfortunately, the VA is not thought of
when some of the decisions are being made, if you will, on
homeland security. You think of addressing the health care
needs, and rightfully so, the funding goes to HHS and other
security needs, homeland security. It is not that we are not at
the table discussing these issues. We are fighting; we are
working with HHS and Homeland Security for part of the
resources that are being made available to those agencies to
address the bioterrorism threat.
I just believe that the VA has such enormous capability and
size that we can bring great value and preparedness to this
area. But like everything else, to build toxicologic capacity,
burn capacity, decontamination and the other capacities, you
have to invest resources. And I am very reluctant to take
scarce resources, obviously, from treatment of veterans to
devote to this area without the additional resources necessary
to do so.
Chairman Rockefeller. So, then, should you not go scare the
dickens out of the appropriators? VA is a national resource,
and therefore we need to take them through what the other
alternatives are. Private hospitals cannot do it alone. A
couple of them are preparing in my state of West Virginia, but
they cannot afford to do everything--80 percent of our
hospitals are losing money.
You are on a budget. It is strictly up to the
Appropriations Committee. They purport to be highly interested
in national security and homeland security, and VA is central
to that. I mean it is sort of a question of being sort of
brutal with them, is it not?
Secretary Principi. Absolutely; I agree, and we will.
Perhaps we need to articulate our case better. That is not to
say we are not working with them. I do not want to misrepresent
the situation--we are working very, very closely with HHS and
Homeland Security. Dr. Murphy can talk more about the
specifics. But clearly, the funding has not been what we
believe is necessary to have that level of readiness, if you
will. And again, I think the beauty of the VA is the fact
that--not only that we are dispersed throughout America but
that we are under complete Federal control, and Dr. Murphy, or
whomever, can direct people to do things if it is necessary.
That is a little different than in the private sector. The
private sector does not have that level of control and
direction. We do. I believe we procure the pharmaceuticals for
the caches that are prepositioned around the country in the
event of a national emergency. I also believe we have
purchased--you can go into more of the detail, Dr. Murphy--
other drugs that are needed by HHS. Clearly, more needs to be
done, and it requires funding.
Dr. Murphy. If I could add to what the Secretary said, I
think there is a basic lack of understanding of the VA health
care system. We are part of the Federal public health
infrastructure. And when you talk about planning for improving
the public health infrastructure of this country, VA needs to
be seen as a core part of that. The public health resources are
now going out to the States and the communities. Well, VA is
part of those communities, and we need to be an active player.
If we are going to provide the kind of matrix needed for a
Federal cadre of health care providers in this country, the one
organization that can do that--that is on the ground, taking
care of patients and can help lead in a time of national
emergency--it is the VA. It is the VA health care providers and
their expertise.
We have begun a national training program for all of our
health care providers in emergency preparedness. Each of our
medical centers has been given a guidebook on how to develop an
all-hazards plan. We have made a proposal and begun putting
together pharmaceutical caches that will be located at each of
our medical centers, and depending on the size of the community
or the size of the veteran population, they will be prepared to
take care of either 2,000 or 1,000 individuals who might have
been exposed to a chemical or a biological attack.
So far, we have purchased enough for 22 sites, and over
time, we will be, you know, as quickly as possible, putting
them together and locating them at each of our medical centers.
Why do that if we have national caches? Well, because if
there is an emergency, we want to be able to take care of
veterans who are hospitalized and our staff, so that they can
continue providing care. It is a necessary part of being a
health care provider. We need to do that. We also need to have
decontamination equipment, and we need to have personal
protective equipment so that our staff can be protected and
continue to provide the care that is so important not only for
the veterans but for the communities that we work in.
And I think that it is a deficiency of the current plan
that VA has not been given a more active role. It is part of
our primary mission, and it is part of our fourth mission.
Chairman Rockefeller. So make your case.
Secretary Principi. Will do.
Chairman Rockefeller. And I know you will. I know you will.
One thing on copayments--I have already made a point, as
has Senator Specter, but this is interesting to me. I think
this is the first budget where you anticipate collecting more
revenue from veterans than you do from insurance companies.
Secretary Principi. That is correct.
Chairman Rockefeller. And it is a little bit odd, because,
on the one hand, we can say we are providing more money to VA,
but then, VA turns around and collects huge amounts from
veterans, rather than insurance companies.
Secretary Principi. Yes, of course, and that increase
includes the deductible; you are right.
Chairman Rockefeller. I know that, and you were very candid
about that in your opening statement. You were very candid
about all of that.
On claims processing, your goal for the coming fiscal year
is to go to 100 days, down from 208 days, while still
increasing the accuracy of the decisionmaking, and perhaps this
is you, Mr. McMichael. What specific measures do you expect
will shave that kind of time off? Whenever I hear something
that is that good, I want to hear how it happens without
sacrificing the accuracy factor.
Secretary Principi. Important point, Senator, and that is
by the end of the third quarter of 2003, we hope to have
achieved that goal. I will let Guy McMichael talk about the
particulars. I think that there are a couple of factors that
Guy can build on. First, Congress and the administration gave
us over 1,000 people last year: 1,100 or 1,200 people, the vast
majority in our disability compensation arena. Those folks have
been trained. That will make a big difference.
Chairman Rockefeller. And I have seen some of the
technology. You have unique technology.
Secretary Principi. They are good, young, talented people
that I see around the country. We will hire another 100 to 125
people in 2003. If I need more, I will come to you and ask for
more. We have those people now on board, getting them trained.
And I believe that Admiral Cooper's task force has come up with
some excellent recommendations that, by triaging,
specialization, the tiger team to address the claims of the
oldest veterans, I believe will help us get there.
Am I convinced that we are going to achieve it? I am
optimistic, but are watching it very carefully. Every month,
Guy briefs me on where we are, what our performance has been
for the previous month, and our production goals. We are
looking at measuring quality. We are adding people to our
review teams. Our quality has never been higher--at least I
should say our accuracy, because our quality is timeliness,
too, but our accuracy is at 88 percent. You know, it was 59
percent in the year 2000, so our accuracy is very, very good.
It is going to take a lot of disciplined, focused
leadership, and people are going to be held to high performance
levels. There have not been performance standards in the past,
and we have those now. People are responding. I am very, very
gratified by what have I seen. Guy, could you add to that,
please?
Mr. McMichael. Well, the Claims Task Force had 34 principal
recommendations which we have translated into 66 action items.
I have had the opportunity to brief your staff on these
matters, Mr. Chairman. I think the important thing is there is
accountability. I would like to simply indicate that in January
2002, we made some 62,000 rating decisions. That is compared to
29,000 rating decisions for the previous January. So I think we
are beginning to see the workload turn around. As new employees
gain greater experience and as we are able to fit them into
specialized teams so that we can use the appropriate experience
they have to buildup expertise in particular areas, I think we
will see increased productivity and a decline in the average
number of days.
There is a great deal we can do in reducing cycle time
processing. We now have inventory management systems in place
which we can pinpoint how long it takes to get a claim under
control; how long it takes to initiate development. I was
astounded to find, for example, that getting a claim under
control took an average of 30 days and that the average time
for initiating development on a claim was close to 68 days.
These are real opportunities to reduce processing time. We are
watching this very closely through an inventory management
system so that we can track the status of cases at the regional
office, team, or individual employee level.
Chairman Rockefeller. Gentlemen and ladies, thank you very,
very much. Thank you for your patience, and thank you for your
candor. Thanks, Tony.
Our second panel will be veterans service organizations. If
I could have order, please. The gentleman on the right, please.
The second panel includes representatives of the
independent budget, who will be introduced by Bob Jones, who is
Executive Director of AMVETS; Richard Fuller, National
Legislative Director, Paralyzed Veterans of America; Rick
Surratt, Deputy Legislative Director, Disabled American
Veterans; Paul Hayden, Associate Director of Legislation, VFW;
and Rick Jones, Legislative Director, AMVETS; and here also is
Jim Fischl, National Veterans Affairs and Rehabilitation
Commission, the American Legion. We will start with Mr. Jones.
STATEMENT OF BOB JONES, NATIONAL EXECUTIVE DIRECTOR, AMVETS
Mr. Bob Jones. Mr. Chairman, thank you so very much for
having us here this morning. Sir, I would request that my
prepared testimony be entered into the official records,
please.
Chairman Rockefeller. That is always the case.
Mr. Bob Jones. Thank you, sir. Sir, I would like to thank
you and Ranking Member Specter and the rest of the committee
for their continuing invaluable support for the independent
budget. As you are aware, this is the 16th year for the
independent budget, and it has been endorsed by over 40
veteran, military, and medical associations.
We believe that the independent budget provides rational,
rigorous and sound review of our veterans' needs. We believe
that the VA is an excellent investment for America, and with
proper resourcing, it is essential to maintain a well-
functioning system. VA services should not suffer with unfunded
mandates. We do not want to see the possibility of rationed
health care in the future. The President expressed in his State
of the Union support for an improved medical care program
within the Department of Veterans Affairs, and we are pleased
with that.
However, Mr. Chairman, we believe that the administration's
proposed $22.75 billion for health care is approximately $1.75
billion lower than we in the independent budget organizations
believe is required for maintaining that health care system.
Yesterday, we heard from the Chairman of the House Veterans'
Affairs Committee and Ranking Member Evans who pledged their
opposition to the $1,500 deductible for Category 7s that has
been proposed by the administration. We sincerely appreciate
your comments of concern, and we hope that the Congress will
overturn that administration proposal.
Sir, though the independent budget does not have a position
concerning the transfer of VETS, we do have a position
concerning the adequate resourcing and the outcomes of service
delivery. I would like to stress that AMVETS as a national
organization strongly opposes the transfer of the Veterans'
Employment and Training Service from the Department of Labor to
the Department of Veterans Affairs. We do believe that improved
service delivery outcomes that are based on performance
standards are absolutely critical, and we believe that the
current proposal has been ill-defined and do not support that
proposal.
Sir, with your concurrence, I would like to yield the rest
of my time to my colleagues so that we can get to the core of
the independent budget.
Chairman Rockefeller. Certainly.
[The prepared statement of Mr. Bob Jones follows:]
Prepared Statement of Bob Jones, National Executive Director, AMVETS
Mr. Chairman, Ranking Member Specter, and Members of the
Committee.
I am Mr. Bob Jones, Executive Director of AMVETS and
Chairman of The Independent Budget for Fiscal Year 2003.
Thank you for the opportunity to be here today to present
The Independent Budget, co-authored AMVETS, Disabled American
Veterans, Paralyzed American Veterans and the Veterans of
Foreign Wars. As you know, this is the 16th annual budget
presented by our coalition, and we are proud that more than 40
veteran, military and medical service organizations endorse
these recommendations. In whole, these recommendations provide
Congress with a rational, rigorous and sound review of the
budget required to support the vital programs for our nation's
veterans.
In developing this document, we believe in certain guiding
principles. Veterans must not be forced to wait for the
benefits promised them. Veterans must be assured of access to
high quality healthcare. Veterans must be guaranteed access to
a full continuation of healthcare services, including long-term
care. And, veterans must be assured burial in state or national
cemetery in every state.
It is our firm belief that the mission of the VA must
continue to include support of our military in times of
emergency and war. Just as this support of our military is
essential to national security, the focus of the VA medical
system must remain centered on specialized care. VA's mission
to conduct medical and prosthetics research in areas of
veterans' special needs is critical to the integrity of the
veterans healthcare system and to the advancement of American
medicine.
In addition, it must be recognized that VA trains most of
the nation's healthcare workforce. The VA healthcare system is
responsible for great advances in medical science, and these
advanced benefits all Americans. The VHA is the most cost
effective application of federal healthcare dollars, providing
benefits at 25 percent lower cost than other comparable medical
services. In times of national emergency, VA medical services
can function as an effective backup to the DoD and FEMA. In the
State of the Union Address, the President stated his support
for increased funding for VA healthcare services.
After mentioning the important mission of the VA, I must
now point to the areas where VA funding must be increased. The
VA budget must address the pending wage increases for VA
employees. It must also address VA's large casework backlog.
There are severely disabled veterans and those needing home-
based healthcare in those backlogs and I think we can all agree
that this situation should be reversed.
Without adequate funding, healthcare services may need to
be rationed. The funding shortfall of the FY '02 budget, paired
with continued open enrollment makes it very difficult for VA
to provide quality healthcare in a timely manner.
On the administration's legislative proposal, we call on
Congress to provide adequate funding to avoid implementation of
the $1,500 deductible on priority seven veterans.
The bottom line Mr. Chairman is that VA is an excellent
investment for America. Proper funding levels for the VA makes
good fiscal sense to maintain a well functioning system. To
this end, the administration must increase VA medical care
funding to $24.5B for FY '03, an increase of $3 billion over
last year's VA budget.
One more point that deserves comment is the proposed
transfer of the Veterans Employment and Training Services
(VETS) to VA. Clearly, VA has its own challenges with
healthcare waiting lists and backlogs in claims processing. VA
is ill prepared to accept a program, which is so naturally
suited to the Department of Labor (DOL). DOL has the
departmental knowledge regarding the job-market. It knows where
the jobs are and the skill required to fill them. Shifting VETS
from one department to another is not a ``magic bullet,'' and
it will not serve veterans better. Now is not the time to cut
VETS programs from DOL.
Mr. Chairman, this concludes my remarks. I will now
introduce the gentleman who will testify to specific
recommendations of The Independent Budget for FY '03. Rick
Surratt, representing the Disabled Americans Veterans, will
brief you on The Independent Budget's benefits priorities.
Harley Thomas, of the Paralyzed Veterans of America, will
address the vital needs in the VA healthcare system. Fred
Burns, of the Veterans of Foreign Wars, will inform you of the
critical problems of the VA's infrastructure and construction
needs, and Rick Jones, of AMVETS, will offer you The
Independent Budget concerns regarding our nation's veterans
cemeteries.
STATEMENT OF RICHARD FULLER, NATIONAL LEGISLATIVE DIRECTOR,
PARALYZED VETERANS OF AMERICA
Mr. Fuller. Good morning, Mr. Chairman. I am Richard
Fuller, National Legislative Director of Paralyzed Veterans of
America. I am sitting in today for our Deputy Executive
Director, Mr. John Bollinger.
As we have for the past 16 years, Paralyzed Veterans of
America is once again pleased to be responsible for the health
care recommendations and analysis for the Department of
Veterans Affairs, Veterans Health Administration budget. I
shall address these today in my testimony. For fiscal year
2003, ``The Independent Budget'' recommends a medical care
appropriation of $24.468 billion. That is an increase of $3.1
billion over fiscal year 2002. This proposed increase does not
assume any new initiatives or work load increases.
Over the last 5 years, the VA has served a constantly
growing number of veterans with appropriations that have
steadily declined in purchasing power. The fiscal year 2001
health care appropriation was $564 million short of the amount
recommended by ``The Independent Budget,'' and the fiscal year
2002 budget falls $1.5 billion short. Already a few months into
fiscal year 2002, the administration has reported a shortfall
of close to $500 million and is seeking supplementary funding,
which is a step we fully support.
Nationally, Mr. Chairman, we are witnessing an explosion in
health care costs, especially in pharmaceutical costs, which
have been discussed today. The VA has not been immune to this
trend, even though it does purchase pharmaceuticals at discount
rates. According to a report from the Department of Health and
Human Services, national health care spending increased 6.9
percent in the year 2000, and the fastest-growing segment of
health care spending is, of course, prescription drugs, which
increased 17.3 percent in 2000.
This represents the sixth consecutive year of double-digit
increases in pharmaceutical costs. Spending on prescription
drugs has doubled between 1995 and 2000 and has tripled between
1990 and 2000. VA health care budgets have not kept pace with
this explosive spending growth. The real effect of inadequate
health care appropriations is felt by sick and disabled
veterans every day, and inadequate appropriations force the VA
to ration care by lengthening waiting times and delaying
services.
As has been discussed here this morning, when you subtract
all of the window dressing from the administration's budget,
the administration has proposed a medical care appropriation of
$22.7 billion, an increase of only $1.4 billion over fiscal
year 2002. Although veterans appreciate any increase, we are
also cognizant of the fact that this does not meet the needs of
the VA in the coming fiscal year and does not provide the
resources necessary to ameliorate the recent effects of
inadequate appropriations.
Again this year, Mr. Chairman, we have not included
collections as part of our recommendations concerning
appropriated dollars. As we state in ``The Independent
Budget,'' we recognize that nonappropriated funding may be
available to expand VHA operations and ultimately improve care
for veterans, but we are strongly committed to the principle
that the cost of VA health care is a Federal responsibility
that must be met in full by Congress and the administration
through adequate appropriations. VA must not be forced to rely
on subsidies from veterans or their insurance to cover the cost
of caring for veterans, and veterans must not be held hostage
through collection estimates that very well may be far-fetched
or issued solely to cover budgetary holes left by inadequate
appropriations or other budget requests.
As discussed earlier as well, ``The Independent Budget'' is
opposed to the administration's proposal to begin charging a
$1,500 deductible for health care for Category 7 veterans. The
only reason, I believe we would concur with you, Mr. Chairman,
for the imposition of a deductible requirement is not to raise
money, but is just a means of discouraging currently eligible
veterans from seeking VA health care. Last year, the
administration announced that it would continue to enroll
Category 7 veterans, and it said that it would find the money
someplace. But instead of finding the additional resources, it
has proposed to have veterans pay for this care out of their
own pockets or disenroll themselves.
The VA itself estimates that a deductible will deter
121,000 veterans from seeking health care. Requiring the
deductible could adversely affect lower-income veterans,
veterans whose insurance will not pay the deductible and who
want and need to go to the VA.
I would just like to, in closing, Mr. Chairman, say that
``The Independent Budget'' fully concurs with the comments that
were made here about the VA's role in homeland defense. The
Secretary requested $250 million last year. That was the
estimate he gave. We strongly believe that potentially, that
could be part of a supplemental appropriation going through the
Congress. The VA has an enormous role to play.
We would also like to underscore our support for the VA
research program. VA research needs consistent and steady
funding from year to year and not funding ups and downs and ups
and downs. ``The Independent Budget'' recommends $460 million
for VA research, which is an increase of $89 million over
fiscal year 2002.
That concludes my part of the testimony, Mr. Chairman.
[The prepared statement of the Paralyzed Veterans of
America follows:]
Prepared Statement of John C. Bollinger, Deputy Executive Director,
Paralyzed Veterans of America
Mr. Chairman, Ranking Minority Member Specter, members of
the Committee, the Paralyzed Veterans of America (PVA) is
honored, on behalf of our members and the Independent Budget,
to present our views on the Department of Veterans Affairs'
(VA) budget for fiscal year (FY) 2003. We are proud to be one
of the four co-authors, along with AMVETS, the Disabled
American Veterans, and the Veterans of Foreign Wars, of the
16th Independent Budget, a comprehensive policy document
created by veterans for veterans.
The Independent Budget is an annual budget and policy
review for veterans programs and represents an unprecedented
joint effort by the veterans' community to identify the major
issues facing the veterans' community today while serving as an
independent assessment of the true resource and policy needs
facing veterans. As we have for the past 16 years, it is our
distinct pleasure, once again, to be responsible for the health
care recommendations and analysis, and I shall address these in
my testimony today.
For FY 2003, the Independent Budget recommends a medical
care appropriation of $24.468 billion, an increase of $3.1
billion over FY 2002. This proposed increase does not assume
any new initiatives or workload increases. Unfortunately, we
are seeing the effects of an inadequate budget for FY 2002, a
budget that we estimate to be $1.5 billion less than the amount
required. To address this shortfall, and to provide for the
current services requirements of the VA, the Independent Budget
has requested this $3.1billion increase.
This amount is a realistic assessment of what the VA must
have in order to meet its obligations, both statutorily and
morally. This recommended increase addresses the ``current
services'' requirements of VA health care for FY 2003, while
recognizing the cumulative funding shortfalls faced by the
system over the last two years.
Over the last five years, the VA has served a constantly
growing number of veterans with appropriations that have
steadily declined in purchasing power. The FY 2001 health care
appropriation was $564 million short of the amount recommended
by the Independent Budget, and the FY 2002 budget falls $1.5
billion short. Already, a few months into FY 2002, the
Administration has reported a shortfall of close to $500
million, and is seeking supplementary funding, a step we fully
support.
Nationally, we are witnessing an explosion in health care
costs, especially in pharmaceutical costs. The VA has not been
immune to this national trend. According to a report from the
Department of Health and Human Services, national health care
spending increased 6.9 percent in 2000. The fastest growing
segment of health care spending is prescription drugs, which
increased 17.3 percent in 2000. This represents the sixth
consecutive year of double-digit increases. Spending on
prescription drugs has doubled between 1995 to 2000, and has
tripled between 1990 and 2000. VA health care budgets have not
kept pace with this explosive spending growth.
The real effect of inadequate health care appropriations is
felt by sick and disabled veterans every day. Inadequate
appropriations force the VA to ration care by lengthening
waiting times and delaying services.
The Administration has proposed a medical care
appropriation of $22.744 billion,\1\ an increase of $1.4
billion over FY 2002. Although veterans appreciate any
increase, we are also cognizant of the fact that this does not
meet the needs of the VA in the coming fiscal year, and does
not provide the resources necessary to ameliorate the effects
of recent inadequate appropriations. Unless additional
resources are provided, the current situation, as intolerable
as it is, will continue into the foreseeable future, and sick
and disabled veterans will once again be shortchanged by the
very government they have served, and rely upon to care for
them.
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\1\ We have subtracted, from all Administration requests, amounts
attributable to the legislative proposal put forth by the
Administration that would include accrual costs for pension and post-
retirement benefits for federal retirees. For medical care, this figure
is estimated to be $793 million for FY 2003.
---------------------------------------------------------------------------
Again, we note that the Administration's budget relies upon
``management efficiencies'' to address real budgetary needs. It
seems that every year ``management efficiencies'' are a handy
way of making the budgets seemingly balance. As the Independent
Budget states, ``there are no more `efficiencies' to be wrung
out of the system. For the last five years, VHA [Veterans
Health Administration] has served a constantly growing number
of veterans with appropriations that have been steadily
declining in purchasing power.''
Again this year we have not included collections as part of
our recommendations concerning appropriated dollars. As we
state in the Independent Budget, we recognize ``that
nonappropriated funding may be available to expand VHA
operations and ultimately improve care for veterans, we are
strongly committed to the principle that the cost of VA health
care is a federal responsibility that must be met in full by
Congress and the Administration through adequate
appropriations. VA must not be forced to rely on subsidies from
veterans or their insurers to cover the costs of caring for
veterans.'' Veterans must not be held hostage through
collection estimates that very well may be far-fetched or
issued solely to cover budgetary holes left by inadequate
appropriations.
The Independent Budget is opposed to the Administration's
proposal to begin charging a $1500 deductible for health care
for category 7 veterans. The primary reason we can see for the
imposition of a deductible requirement is to discourage
currently eligible veterans from seeking VA health care.
Recently, the Administration announced that it would continue
enrolling category 7 veterans. It said that it would find the
resources to cover the costs of these health care services.
Instead of providing the additional resources, it has proposed
to have veterans pay for this care out of their own pockets.
The VA itself estimates that a deductible will deter 121,000
veterans from seeking health care. Requiring a $1500 deductible
could adversely affect lower-income veterans, veterans whose
insurance will not pay the deductible, and who want and need to
go to the VA particularly to provide services they cannot find
elsewhere in the private sector or on Medicare, for instance
long-term care, prescription drugs, or specialized services.
Finally, we are concerned about the perverse disincentive that
this deductible scheme could have on veterans who represent the
core mission of the VA. The Independent Budget proposal fully
covers the cost of providing care for these category 7
veterans.
We are very concerned that the Administration has failed to
provide funding for the VA to meet its critical fourth
mission--to serve as a backup to the Department of Defense in
times of war or national emergency. The VA is also a critical
component of the federal government's emergency response
capabilities, and an integral part of our national homeland
defense efforts. Headlines read ``Bush's Budget Doubles
Homeland Funds,'' and ``Bush to Request Big Spending Push on
Bioterrorism,'' but there are no resources made available to
the VA. As the Washington Post reports, ``while police and
firefighters, border security agents, bioterrorism experts and
intelligence agencies understandably were among the biggest
winners in the new budget--which contains nearly $38 billion
for domestic security activities--agencies that once had only
the most remote links to homeland security would be showered
with funds for that purpose.'' Pianin and Miller, ``Security
Permeates Budget,'' Washington Post, February 5, 2002, A7. But
the VA has been forgotten.
This national emergency entails not only a crisis abroad,
but a crisis here at home. As the VA serves as a backup to our
Armed forces, it also serves as a backup to, and an integral
part of, our Nation's health care system. When terrorists
struck New York City, the VA was there, caring for victims. In
fact, the Government Accounting Office, in its January 2001
report entitled ``Major Management Challenges and Program
Risks'' (GAO-01-255) characterizes the VA's role as the
``primary backup to other federal agencies during national
emergencies.'' The VA must be prepared, and provided with the
resources it needs, to accomplish this comprehensive and vital
mission.
Taking its lead from requirements detailed in Congressional
testimony by Secretary Principi, the Independent Budget has
requested $250 million to meet its duties in this area.
The stresses on the VA system will only become more severe.
The VA plays an indispensable role as part of the federal
commitment to states and local communities in times of national
emergency and disaster. The VA does not have the resources to
meet its responsibilities to sick and disabled veterans, and
the Independent Budget fears that the VA will not be able to
fulfill its important responsibilities under this critical
fourth mission.
The Independent Budget has recommended an increase for
Medical Administration and Miscellaneous Operating Expenses
(MAMOE) of $9 million, bringing this account up to $76 million.
The Administration has requested $70 million, an increase of
only $3 million. Funding shortfalls in the MAMOE account have
left the VA unable to adequately implement quality assurance
efforts or to provide adequate policy guidance within the 22
Veterans Integrated Service Networks (VISN). Veterans Health
Administration headquarters staff play the essential role of
providing leadership, policy guidance, and quality assurance
monitoring under the decentralized VA health care system. It is
important that these important roles be strengthened.
Although VA Medical and Prosthetic Research has not
suffered the same budget pressures that have beset health care,
it is still suffering from the uncertainty it faces each budget
cycle. Research, which is essential to VA's continuing
partnerships with medical schools and universities, requires a
long-term commitment and stable, reliable funding. This needed
stability is undermined by the annual budget game, where the
Administration submits an unreasonably low budget for this
vital program and relies upon Congress to partially redress the
shortfall. This has a direct impact upon the research
community, hampering its planning and funding decisions as it
tries to adjust to this yearly funding whiplash. This game must
stop. VA research must receive consistent and adequate budget
increases in order to keep pace with our national research
effort. For FY 2003, the Independent Budget recommends an
appropriation of $460 million, an increase of $89 million over
FY 2002.
The Administration has proposed $394 million for VA
research, an increase of $23 million over the amount provided
in FY 2002, but a full $66 million below the $460 million
recommended by the Independent Budget.
We recognize that this Committee does not appropriate
dollars, but you do authorize them. You serve as a resource,
and as advocates, to the appropriators as they fashion
budgetary policy. The authorization process must recognize the
real resource requirements of the VA. We look to you, and your
expertise in veterans' issues, to help us carry this message
forward, to your colleagues and to the public.
The VA is facing a crucial hour in a critical time. As a
Nation we must not forget the sacrifices, and the service, of
the men and women who served on the ramparts of freedom. If we
provide inadequate budgets we are sending a clear message
concerning what we value as a society. Let us make sure that
the message we send is consistent with what we believe
ourselves to be.
We need your help, and we offer our assistance, to ensure
that the VA receives the funding it needs to ensure that
veterans receive the health care they have earned, and the
health care they have been promised. Let us move forward from
our accomplishments of the last couple of years and build a
strong, and continuing base, for the national asset that is the
VA.
On behalf of the co-authors of the Independent Budget, I
thank you for this opportunity to testify concerning the
resource requirements of VA health care for FY 2003. I will be
happy to answer any questions you might have.
Chairman Rockefeller. Thank you.
STATEMENT OF RICK SURRATT, DEPUTY NATIONAL LEGISLATIVE
DIRECTOR, DISABLED AMERICAN VETERANS
Mr. Surratt. Mr. Chairman, good morning. I am Rick Surratt
with the DAV. I will focus on the benefit programs, the DAV's
primary area of responsibility in the independent budget. Other
than permanent authority for income-matching between the
agencies for pension purposes, the President's budget includes
only one legislative proposal for the benefit programs, and
that is for an annual compensation COLA. In addition to
recommending a COLA to keep compensation in line with the
increase in the cost of living, the IB makes a number of
recommendations to improve the benefit programs.
Last year, you enacted several of the things recommended by
the IB, and we appreciate that. In this year's IB, we have
identified other areas where we think the benefits need changes
to make them better or more equitably serve veterans. I will
not cover those several recommendations here, but we hope you
will give them careful consideration.
Of course, the President's budget includes no funding to
cover the cost of these improvements, and that is always an
issue for this committee. No matter how carefully the benefit
programs are crafted, they lose effectiveness if they are not
administered well. If claims are not decided correctly, and
benefits are not delivered timely, veterans suffer, especially
veterans seeking compensation to make up for the economic
losses caused by service-connected disabilities and
impoverished veterans, totally disabled veterans seeking
pensions.
VA has struggled unsuccessfully for years to overcome
serious deficiencies in its processing of compensation and
pension claims. There is no longer any question about the
magnitude of the problem. The question is whether VA has the
will and the resolve to take the necessary steps to correct the
problem. In the context of the budget, there is a question of
whether VA must have additional resources to enable it to gain
control over its quality problems and its enormous volume of
long-pending claims. The IB has recommended to the VA that it
concentrate its focus first on solving the root causes of its
claims processing problems. We have identified those root
causes as inadequately trained adjudicators or lack of
accountability for proper actions and legally correct claims
decisions and management weaknesses.
The IB observes that VA's repeated failures to successfully
overcome its claims processing problems stem from its failure
to tackle the toughest problems, that is, the root causes and
stay the course until those problems are resolved.
Chairman Rockefeller. What are the toughest problems you've
identified?
Mr. Surratt. Well, it is quality, and quality stems
somewhat from resources and from a lack of accountability and a
lack of strong management, and the quality, in turn, causes
rework and overburdens in an already heavily loaded system.
VA must also resist its self-defeating tendency to rush
decisionmaking to reduce its claims backlog only to rework a
substantial portion of these cases because of errors and add to
the volume of work and ultimately to the backlog. While the IB
agrees with the argument that VA must get more serious about
implementing meaningful reforms and follow through until those
reforms are fully achieved, we do not agree with the convenient
suggestion that VA needs no increase in staffing to accomplish
this. To allow it to take the necessary steps to properly train
its work force and monitor quality without reducing the number
of employees working on pending claims, VA still needs to
increase staffing in its claims processing system.
VA cannot succeed without properly training those who
decide claims and without enforcing quality standards. With the
large volume of pending claims, VA must at the same time
maintain full claims processing capacity. The IB, therefore,
recommends that 350 additional FTE be authorized for VA's
Compensation and Pension Service. The President's budget seeks
only 96 additional employees for C&P.
Even with the very best administrative process, mistakes
are inevitable in a mass adjudication system like VA's. That is
why an effective judicial review process is essential to ensure
that veterans receive the benefits to which they are entitled.
The IB has made three recommendations to improve judicial
review in veterans benefits matters, and we hope this committee
will take action on these recommendations this year.
Mr. Chairman, let me now turn to the $1,500 medical
deductible scheme to make a point. It is a sad day when VA's
new mission is to drive veterans away from the system.
Regrettably, that tactic is not new to the benefits area. VA's
new regulations these days seem designed to freeze veterans out
of the system. VA attempts to inhibit what it cannot prohibit.
The DAV and other veterans' organizations have begun to
challenge VA regulations more frequently in court; in fact, it
is becoming commonplace because of that reason. We hope this
committee will work with us to ensure VA maintains its mission
of service to veterans.
Mr. Chairman, that concludes my statement. Thank you for
allowing us to come before you today to offer our views on the
fiscal year 2003 budget.
[The prepared statement of Mr. Surratt follows:]
Prepared Statement of Rick Surratt, Deputy National Legislative
Director, Disabled American Veterans
Mr. Chairman and Members of the Committee:
Representing the Disabled American Veterans (DAV) as a
participant in The Independent Budget (IB), I am pleased to
appear before you to discuss the President's fiscal year (FY)
2003 budget proposal for the Department of Veterans Affairs
(VA). The budget is, of course, a matter of paramount
importance to the more than one million disabled veterans who
are members of our organization and to the members of our
Women's Auxiliary. The effectiveness of essentially all
veterans' programs--and therefore the welfare of veterans and
their families--is dependent upon full funding for the benefits
and services and resources adequate to allow for their timely,
efficient delivery.
Joining with AMVETS, the Paralyzed Veterans of America
(PVA), and the Veterans of Foreign Wars of the United States
(VFW), the DAV incorporates its annual recommendations for
funding of veterans' programs, and many of its legislative and
policy proposals, in the IB. With the shared goal of ensuring
that the needs of America's veterans are adequately addressed,
the four organizations pool their resources and work together
to assess and present the budgetary requirements and related
issues facing veterans' programs.
Each of the four organizations takes primary responsibility
for selected portions of the IB. Here, I will focus on Benefit
Programs, General Operating Expenses (GOE), and Judicial Review
in Veterans' Benefits, the DAV's assigned areas of the IB. The
members of the IB group appreciate the courtesy this Committee
has extended in permitting us to present our views together in
this format.
The President's total budget of $58 billion includes nearly
$1.5 billion VA projects it will realize by offset from medical
care collections, $892 million to pay a newly assumed
obligation to fund employee health care and retirement costs,
and $197 million for a new grant program for veterans'
employment services to replace those veterans' employment
programs now administered by the Department of Labor. The $58
billion in budget authority for VA includes $29.6 billion for
the benefit programs and $1.3 billion for GOE. Within the GOE
appropriation, the President's budget would provide $1.2
billion for the delivery of benefits in the Veterans Benefits
Administration (VBA) and $278 million in budget authority for
General Administration.
For the benefit programs, the President's budget includes
funding for its legislative recommendation to increase
compensation, which includes dependency and indemnity
compensation and the clothing allowance, to meet a projected
increase in the cost of living of 1.8% this year. The IB also
recommends a cost-of-living adjustment (COLA) for these
benefits /and urges Congress not to extend provisions for
rounding down the compensation COLA beyond the current sunset
date.
Regrettably, the President's budget does not propose any
other improvements to compensation and related benefits,
readjustment benefits, or insurance programs. For these benefit
programs, the IB makes the following recommendations for
legislation:
<bullet> to exclude compensation from countable income for
Federal Programs
<bullet> to repeal the prohibition of service connection
for disabilities related to tobacco use
<bullet> to authorize a presumption of service connection
for noise-induced hearing loss and tinnitus suffered by combat
veterans and veterans who had military duties with typically
high levels of noise exposure
<bullet> to repeal delayed beginning dates for payment of
increased compensation based on temporary total disability
<bullet> to authorize payment of fees under the Equal
Access to Justice Act (EAJA) to nonattorneys who represent
appellants before the United States Court of Appeals for
Veterans Claims
<bullet> to authorize refund of contributions to veterans
who become ineligible for the Montgomery GI Bill by reason of
discharges characterized as ``general'' or ``under honorable
conditions''
<bullet> to increase the amount of the specially adapted
housing grants and to provide for automatic annual adjustments
for increased costs
<bullet> to provide a grant for adaptations to a home that
replaces the first specially adapted home
<bullet> to increase the amount of the automobile grant and
to provide for automatic annual adjustments for increased costs
<bullet> to exempt the dividends and proceeds from and cash
value of VA life insurance policies from consideration in
determining entitlement under other Federal programs
<bullet> to authorize VA to use modern mortality tables
instead of 1941 mortality tables to determine life expectancy
for purposes of computing premiums for Service-Disabled
Veterans' Insurance
<bullet> to increase the face value of Veterans' Mortgage
Life Insurance
<bullet> to repeal the 2-year limitation on payment of
accrued benefits
<bullet> to protect veterans' benefits from unwarranted
court-ordered awards to third parties in divorce actions
The IB also recommends legislation to remove the offset
between military retired pay and disability compensation and
legislation to extend the 3-year limitation on recovery of
taxes withheld from disability severance pay and military
retired pay later determined exempt from taxable income.
The coauthors of the IB carefully identify areas in the
benefit programs that need adjustment or improvement to make
the benefits more effectively or equitably fulfill the purposes
for which Congress established them. Last year, Congress
enacted legislation that addressed several IB recommendations.
We appreciate your action on these matters. Although it is in a
position to know where beneficial legislative changes could
better serve our Nation's veterans, the Administration has not
taken the lead in recommending legislation to improve veterans'
programs. Therefore, if meritorious improvements are to be
made, the members of this Committee must initiate action on
them. In developing your legislative agenda this year, we ask
that you again give thorough consideration to the
recommendations we have included in this year's IB.
Unlike the lack of positive recommendations in the budget
to improve the benefit programs, VA Secretary Principi has made
improving VA's administration of the benefit programs,
especially compensation and pension claims processing, one of
his foremost priorities. We are confident of his sincerity and
determination on this issue. We have not seen great progress in
this area to date, however, and despite this budget's stated
focus on improving claims processing, it does not request
resources to match actions with words.
Although the President's budget recommends a $94-million
increase in funding for VBA under the GOE account, $53.9
million of that would cover a new obligation to fund employees'
retirement and health benefits. With the net increase of $40.2
million above last year's funding, the increase for VBA is
approximately 3.6%, which is well below the average increase of
approximately 10% requested by the President over the past 5
years. The President's budget recommends only 96 additional
employees for compensation and pension (C&P) service. Within
this budget, VA promises to reduce the average time for rating
actions on C&P claims from 208 days to 100 days in the last
quarter of FY 2003, while improving training for claims
processors and increasing the accuracy rate for core rating
work from 78% in FY 2001 to 88% in FY 2003. Other initiatives
in C&P include:
<bullet> begin to transition from a paper-based to an
electronic claims record
<bullet> consolidate pension cases in three pension centers
<bullet> continue the implementation of four new training
and support systems for adjudicators
<bullet> analyze the needs of the C&P claims development
and adjudication process and design a new system known as C&P
Evaluation Redesign (CAPER)
<bullet> deploy an individual performance assessment
program to measure and enforce employee proficiency, known as
the Systematic Individual Performance Assessment (SIPA)
<bullet> pursue development of a modern system to replace
the existing benefit payment system
<bullet> expand the Veterans On-Line Application program,
which allows veterans to apply for benefits over the Internet
While improved processes, new technology, better training,
and real accountability for legally correct decisions--if
properly, timely, and completely implemented--will enable VA to
eventually increase efficiency and overcome its intolerable
claims backlog, VA still needs additional employees for C&P in
the short term. Training new employees, retraining VA's
existing workforce, and conducting quality reviews of the work
of individual adjudicators will require substantial numbers of
employees who will not be devoted to production and reducing
the backlog. We believe the President's request for only 96
additional employees for C&P is tied more to budget targets
than to the real needs of VA. The IB recommends funding for 350
additional employees in C&P Service. Additionally, based on
unofficial estimates, the IB recommends $4.5 million, instead
of the $2 million requested in the President's budget, to fund
CAPER.
Unless VA makes other reforms in management and takes a
more direct and decisive approach to tackling the claims
backlog, it is likely to continue to fail in its efforts to
make meaningful improvements in the accuracy and timeliness of
its claims processing. Currently, the head of VA's C&P service
and VBA's other program directors do not have management
authority over their employees in VA field offices. The C&P
director is powerless to enforce quality standards and C&P
policy. Higher-level officials in VA's Central Office are more
removed from and do not have the daily hands-on experience that
the C&P director has in the C&P programs. The IB recommends
that the C&P director and other VBA program directors be given
line authority over field offices to strengthen VBA's
management structure and allow for more effective enforcement
of quality and performance standards.
Those who have witnessed C&P's repeated failures to
overcome its claims processing deficiencies know that those
failures involve repetitive patterns in which VA develops plans
but fails to follow through with decisive steps to solve the
difficult problems. VA attempts to overcome its serious
deficiencies by fine-tuning its procedures and employing new
technology. While those efforts may aid in improving claims
processing, alone or in combination they are not enough to
enable VA to overcome its longstanding problem. The coauthors
of the IB believe that it is obvious VA must resolve to focus
primarily on eliminating the root causes of its claims backlog
if it is to ever succeed in restoring the system to acceptable
levels of performance and service. As noted, we believe that
adequate resources are key to the effort. However, VA's
adjudicators make erroneous decisions because they have not
been properly trained in the law, they have operated in a
culture that tolerated indifference to the law, and they have
not been held accountable for poor performance and proficiency.
Accordingly, in conjunction with the deployment of better
training, VA must take bold steps to change its institutional
culture, and it must make its decisionmakers and managers truly
accountable.
If VA's ambitious goal of improving timeliness takes
precedence over its goal of improving quality, VA will merely
repeat the failures of the past. Speeding up the process with
the single goal of reducing claims processing times and claims
backlogs is self-defeating if, because quality is compromised,
a substantial portion of the cases must be reworked. In this
respect, VA has shown some inability to learn from its past
mistakes.
VA has made similar mistakes in its efforts to avoid
meeting some of the obligations Congress has imposed upon it
and in its efforts to avoid fully implementing legislation
enacted by Congress. In exploiting an erroneous line of
decisions by the courts to avoid its duty to assist claimants
in developing and prosecuting claims, VA made additional work
for itself in the end because it had to rework thousands of
these claims after Congress intervened and restored the duty to
assist. Several veterans' organizations have now challenged in
court VA's rules to implement this legislation. While courts
tend to indulge agencies in rulemaking, the veterans'
organizations challenging the validity of VA's regulation in
this instance have a high level of confidence about the
prospects for having VA's regulations set aside because of
their clearly arbitrary nature and conflict with the law. If
the Court of Appeals for the Federal Circuit finds that VA's
regulations do not fulfill the mandates of the law, VA may once
again be saddled with the task or reviewing thousands of cases
to apply the law properly. These self-inflicted setbacks
complicate VA's efforts to overcome its claims backlog. In this
vein and because of the adverse effects upon veterans' rights,
the IB has urged the VA Secretary to reform his department's
rulemaking. Court challenges to what is viewed as self-serving
VA rules are becoming commonplace.
Under the VBA portion of the GOE appropriation, the IB also
includes a recommendation to fund new information technology
for VBA's Education Service. Administration of VA's education
programs involves the routine exchange of massive amounts of
data between educational institutions and VA. This routine
exchange of correspondence and data is particularly well suited
to automated systems, which can greatly reduce personnel costs
and processing times. The IB therefore recommends that Congress
provide $16 million for upgrading and expanding the limited
application and capabilities of the existing system. For this
VA initiative, known as The Education Expert System (TEES), the
President's budget requests only $6.3 million. Again,
information not revised to meet the objectives of the
Administration's budget process indicates that $16 million is
the real funding level needed for this project.
The President's budget proposes legislation to establish a
new program in VBA for providing grants to states for
employment and training services for veterans. This new VA
program would replace the veterans' employment and training
services of the Department of Labor. The IB has taken no
position on this issue, but the DAV and other veterans'
organizations have mandates from their membership to oppose the
transfer of veterans' employment and training services to VA
from the Department of Labor. The President's proposal raises
many questions about the nature and effectiveness of such a
program. When the details of this proposal are made available,
the IB will give it additional consideration.
The President's budget request would reduce the number of
employees authorized for the Board of Veterans' Appeals (BVA)
from 464 to 451. The caseload at the Board is temporarily down
because VA regional offices have directed their resources to
reducing the backlog of claims and neglected work on their
appellate workload. However, new VA regulations recently
assigned BVA the added responsibility for correcting the
regional offices' failure to obtain all necessary evidence.
Eventually, VA regional offices must resume work on their
pending appeals, and BVA will begin receiving large numbers of
appeals that have been allowed to accumulate in regional
offices. Many of VA's problems stem from improvident reductions
in staff in the face of impending increases in workload. We
therefore recommend caution in considering any reduction in
BVA's workforce at this time.
In enacting legislation in 1988 to authorize veterans to
challenge VA decisions in court, Congress recognized the
importance of the right to have VA's decisions reviewed by an
independent body. Judicial review has had the beneficial effect
of exposing administrative departure from the law and forcing
reforms within VA. However, the judicial review process needs
some adjustments itself to make it serve veterans in the manner
envisioned by Congress.
The IB recommends legislation to change the standard under
which the Court of Appeals for Veterans Claims (CAVC) reviews
VA's findings of fact in claims decisions. The current
``clearly erroneous'' standard conflicts with and undermines
the benefit-of-the-doubt rule. Under the statutory benefit-of-
the-doubt rule, VA is mandated to resolve factual questions in
the veteran's favor unless the evidence against the veteran is
stronger than the evidence for him or her. However, CAVC will
uphold a VA decision if there is any evidence to support it,
and this renders the benefit-of-the-doubt rule unenforceable.
Currently, VA regulations, with the exception of provisions
in the Schedule for Rating Disabilities, are subject to
challenge in the Court of Appeals for the Federal Circuit
(CAFC). The IB recommends expanding CAFC jurisdiction to permit
it to review challenges to the validity of the rating schedule
on the narrow basis of whether the rating is contrary to law or
is arbitrary and capricious. The coauthors of the IB believe
that no unlawful or arbitrary and capricious rating schedule
provision should be immune to review and correction.
The jurisdiction of CAFC is restricted in another manner
that does not serve the cause of justice well. While CAFC has
jurisdiction to consider an appeal that involves a dispute
about the proper interpretation of a law or regulation, it has
no jurisdiction to consider an appeal that involves a dispute
about the proper application of the law to the facts in a case.
The IB recommends that CAFC jurisdiction be expanded to cover
these so-called ordinary questions of law.
Much of what this Committee will seek to accomplish on
behalf of veterans this year will be subject to what Congress
appropriates for veterans' programs. We urge the Committee to
press for a budget that is adequate for existing programs and
allows for some improvement in benefits and services for
veterans. We hope our independent analysis of the resources
necessary for veterans' programs and our legislative and policy
recommendations are helpful to you, and we sincerely appreciate
the opportunity to present our views and recommendations to the
Committee.
Chairman Rockefeller. Thank you, Rick. I hope the committee
tries to maintain its commitment to veterans also.
Please.
STATEMENT OF PAUL HAYDEN, ASSOCIATE DIRECTOR, NATIONAL
LEGISLATIVE SERVICE, VETERANS OF FOREIGN WARS
Mr. Hayden. Mr. Chairman, on behalf of the 2.7 members of
the Veterans of Foreign Wars of the United States and its
Ladies' Auxiliary, I would like to thank you for the
opportunity to participate in today's hearing. The VFW's
primary contribution as a member of the Independent Budget is
an analysis of the Department of Veterans Affairs' construction
programs. Therefore, as in years past, I will confine my
remarks to this particular area of the VA budget.
As this committee is well aware, VA possesses an immense,
aged infrastructure that is in need of urgent funding. Your
colleagues in the House of Representatives acted during the
First Session of the 107th Congress to arrest the shortfall in
VA construction funding by passing H.R. 811, the Veterans
Hospital Emergency Repair Act. The Independent Budget was
pleased to endorse this bill, and we respectfully request this
committee to favorably report this much-anticipated legislation
to the full Senate without further delay.
The administration is requesting $194 million for major
construction, up $11 million over fiscal year 02 funding, while
funding for minor construction remains nearly flatlined at $211
million. An $11 million increase is hardly sufficient to
sustain and improve nearly 1,300 care facilities, including 163
hospitals, 800 ambulatory care and community-based outpatient
clinics, 206 counseling centers, 135 nursing homes and 43
domiciliary facilities. In fact, VA's capital assets value is
in a constant state of deterioration. For nearly 5 years, we
have cited an independent study conducted by Price Waterhouse
that concluded VA should be investing an amount equal to 2 to 4
percent of its facilities to maintain and another 2 to 4
percent to improve them. In other words, VA should be investing
roughly a minimum of $700 million annually on just upkeep.
Yet, a quick analysis of VA's construction budget since the
1998 study was published show us that VA received an average of
$291 million a year for both major and minor construction since
fiscal year 99, and if we figure in the fiscal year 03
proposal, it would bring that 5-year average to a mere $314
million. These figures represent less than half the recommended
investment and have forced VA to delay high priority projects
and other renovations to meet basic patient safety standards.
Realizing that restructuring could reduce budget pressures
or generate revenues that could be used to enhance veterans
health care benefits, we continue to be supportive of VA's
capital assets realignment for enhanced services, or the CARES
process. We note that CARES remains behind schedule, while
needed construction is being held hostage. The independent
budget recommends that VA immediately identify all of the
facilities that will certainly be retained and allow
construction of already-approved and/or urgently needed
projects to improve patient safety and environment.
As always, stakeholders need to be included and consulted
in every step of the process. Of great concern to the
Independent Budget is that veterans and staff continue to
occupy high-risk buildings. For example, 1 year after
experiencing a 6.8 magnitude earthquake, the American Lake VA
Medical Center and the State of Washington has yet to receive a
dime for structural repairs to its main hospital and nursing
home.
In order for VA to properly operate, maintain and improve
its facilities, the Independent Budget recommends a minimum of
$800 million for major and minor construction projects for
fiscal year 03. For major construction, we recommend that
Congress appropriate $400 million, $217 million higher than
fiscal year 02. We have also recommended $400 million for VA's
minor construction account. This represents an increase of $190
million. This increase will support construction projects for
inpatient and outpatient care support, infrastructure and
physical plant improvements, research, infrastructure upgrades
and a historic preservation grant program to protect VA's most
important historic buildings.
In order for VA to more effectively carry out these
projects, we also recommend raising the ceiling on minor
construction projects from the current $4 million per project
to $16 million per project.
Mr. Chairman, this concludes my statement, and I will be
pleased to answer any questions you or members of the committee
may have.
[The prepared statement of Mr. Hayden follows:]
Prepared Statement of Paul Hayden, Associate Director, National
Legislative Service, Veterans of Foreign Wars
Mr. Chairman and members of the Committee:
On behalf of the 2.7 million members of the Veterans of
Foreign Wars of the United States (VFW) and its Ladies
Auxiliary, I would like to thank you for the opportunity to
participate in today's hearing. The VFW's primary contribution
as a member of the Independent Budget is an assiduous analysis
of the Department of Veterans Affairs' (VA) construction
programs. Therefore, as in years past, I will confine my
remarks to this particular area of the VA budget.
As this committee is well aware, VA possesses an immense,
aged infrastructure that is in need of urgent funding. Your
colleagues in the House of Representatives acted during the
first session of the 107th Congress to arrest the shortfall in
VA construction funding by passing
H.R. 811, Veterans Hospital Emergency Repair Act. The
Independent Budget was pleased to endorse this bill, however,
we are concerned by the inaction of this committee to address
this important legislation that has been in your possession
since March 28, 2001. We respectively /request this Committee
to favorably report this much anticipated legislation to the
full Senate without further delay.
Unhappily, we again find that VA's budget request for
fiscal year (FY) 2003 as it pertains to construction programs
is inadequate. The administration is requesting $194 million
(numbers are rounded up or down) for major construction, up $11
million over FY 2002 funding, while funding for minor
construction remains nearly flat-lined at $211 million. An $11
million increase is hardly sufficient to sustain and improve
nearly 1,300 care facilities, including 163 hospitals, 800
ambulatory care and community-based outpatient clinics, 206
counseling centers, 135 nursing homes, and 43 domiciliary
facilities.
In fact, VA's capital asset value is in a constant state of
deterioration. For nearly five years we have cited an
independent study conducted by Price Waterhouse that concluded
VA should be investing an amount equal from 2 to 4 percent of
the value of its facilities to maintain (nonrecurring
maintenance) and another 2 to 4 percent to improve them. That
means VA should be investing roughly a minimum of $700 million
annually on just upkeep. Yet a quick analysis of VA's
construction budgets since the 1998 study was published show us
that VA received an average of $291 million a year for both
major and minor construction since FY 1999; and if we figure in
the FY 2003 proposal, it would bring the five-year average to
$314 million. These figures represent less than half the
recommended investment and have forced VA to delay high
priority projects and other renovations to meet basic patient
safety standards.
Recognizing that VA has undergone a major transformation in
its health care delivery process (primarily inpatient-based to
outpatient-based) and noting a Government Accounting Office
(GAO) report that ``without major restructuring, billions of
dollars will be used in the operation of hundreds of unneeded
VA buildings'' and ``restructuring'' could reduce budget
pressures or generate revenues that could be used to enhance
veterans' health care benefits' we continue to be supportive of
VA's Capital Assets Realignment for Enhanced Services (CARES)
process.
We note that CARES remains behind schedule while needed
construction is being held hostage. The Independent Budget
recommends that VA immediately identify all the facilities that
will certainly be retained and allow construction of already
approved and/or urgently needed projects to improve patient
safety and environment. Further, property divestures should be
placed on hold until a comprehensive capital assets plan is
formulated. As always, stakeholders need to be included and
consulted in every step of the process.
Of great concern to the Independent Budget is that veterans
and staff continue to occupy high-risk buildings. We have
identified and expanded our list to 73 facilities that are
subject to collapse or serious structural damage from an
earthquake. We commend VA for funding seismic corrections in
four of its California-based facilities in its FY 2003 budget
request. We, however, remain perplexed that one year after
experiencing a 6.8 magnitude earthquake, the American Lake VA
Medical Center in Washington has yet to receive a dime for
structural repairs to its main hospital and nursing home.
In order for VA to properly operate, maintain and improve
its facilities, the Independent Budget recommends a minimum of
$800 million for major and minor construction projects for FY
2003. It is important to keep in mind that the administration's
request is $400 million for FY 2003.
For major construction, we recommend that Congress
appropriate $400 million, $217 million higher than FY 2002. A
majority of this funding request, $250 million, is needed for
seismic corrections. Earlier in our testimony we noted our
pleasure that VA is requesting major construction funds for
seismic corrections, and we are also happy to see funding
requests for national cemetery expansion.
We have also recommended $400 million for VA's minor
construction account. This represents an increase of $190
million. This increase will support construction projects for
inpatient and outpatient care support, infrastructure and
physical plant improvements, research infrastructure upgrades,
and an historic preservation grant program to protect VA's most
important historic buildings. In order for VA to more
effectively carry out these projects we recommend raising the
ceiling on minor construction projects from the current $4
million per project to $16 million per project. As we have
testified in the past, the current limitation results in a
piecemeal approach to design and completion of projects that
adds unnecessary delays, facility disruptions, and promotes
poor fiscal management practices.
Other construction items recommended for increased funding
include grants for state extended care facilities and state
veterans' cemeteries.
As stated previously, we believe the administration's
request is inadequate as it pertains to VA's construction
programs. Further, we believe we have presented compelling
evidence such as patient safety, asset management, and
continued access to support our proposed increase. Therefore,
we look to Congress to correct this shortfall. The passage of
H.R. 811 would be a good step in that direction and a valid
attempt to forestall the continued deterioration of VA's
infrastructure. Yet without continued increases in construction
appropriations to sustain VA facilities during the CARES
process, there will be a need for authorizing legislation such
as H.R. 811 every year in addition to appropriations. We look
to the leadership of this committee to ensure adequate funding
for Major and Minor Construction so that VA may realize its
potential without compromising veterans' services.
Mr. Chairman, this concludes my statement and I will be
pleased to answer any questions you or members of the committee
may have.
Chairman Rockefeller. Thank you very much, Paul.
STATEMENT OF RICHARD JONES, NATIONAL LEGISLATIVE DIRECTOR,
AMVETS
Mr. Richard Jones. Mr. Chairman, we thank you for your time
today. On behalf of Commander Joseph W. Lipowski, AMVETS is
honored to join these veterans service organizations in
providing you our best estimate for fiscal year 2003 spending.
AMVETS' primary focus is on funding for the national
cemeteries in the new year. Before beginning on the budget, I
would like to commend the Chairman for your strong leadership
on veterans issues and legislative achievements in the First
Session of this Congress. AMVETS and the members of the
Independent Budget are truly grateful to you.
Members of the Independent Budget would also like to
acknowledge the commitment of the National Cemetery
Administration's staff. Their work at the World Trade Center,
the Pentagon and Pennsylvania were outstanding.
Since its establishment, the National Cemetery
Administration has provided the highest standards of service to
veterans and eligible family members. Their work oversees 120
national cemeteries, located in 39 states, the District of
Columbia and Puerto Rico. With the recent openings of four new
national cemeteries within the last 2 years in Chicago, Albany,
Cleveland, and Dallas and fast-tracked operations at Fort Sill
and Atlanta, the National Cemetery Administration now maintains
more than 2.5 million gravesites on nearly 14,000 acres of
cemetery land.
With adequate funding for design and construction,
development of national cemeteries will continue to future
facilities in Miami and Pittsburgh, Detroit, and Sacramento.
Currently, NCA provides more than 83,000 burials yearly. That
is an 8-percent increase in workload over last year.
To ensure that the burial needs of veterans and eligible
family members are met, the Independent Budget veterans'
service organizations believe that the budget must be
increased. To meet this commitment and maintain NCA facilities
as national shrines, the Independent Budget veterans' service
organizations recommend $138 million for NCA in fiscal year
2003. That is an increase of $17 million, and it does not
include the $5 million Office of Personnel Management bump that
is in the administration's request.
This level of funding will provide the additional full-time
employees and the equipment necessary to maintain services. For
funding the State Cemetery Grants Program, the members of the
Independent Budget recommend $32 million for the new fiscal
year. That is an increase of $7 million. As you know, the State
Cemetery Grants Program works in complement with the NCA to
establish gravesites for veterans in areas where NCA cannot
fully respond to the burial needs of veterans.
Enactment of the Veterans Program Enhancement Act of 1998
has increased the activity and the attractiveness of this
program. Through the State Grants Program, the National
Cemetery Administration can now provide up to 100 percent of
the planning, design and construction of approved new
cemeteries in the states, and at the start of this current
year, there were 10 new cemeteries under design, 11 in
planning, and there were scheduled fast-track openings in
central Indiana, northern Wisconsin, Arkansas, Massachusetts,
Maine, and Montana.
The Independent Budget veterans organizations also request
Congress to please review a series of burial benefits that have
seriously eroded in value over the years. These benefits were
never intended to cover the full costs of burial, but now, they
pay for only a fraction of what they covered when they were
first initiated in 1973. These burial benefits are included in
the Independent Budget and outlined there specifically. We
fully appreciate action in the first session to increase burial
benefits, however we also would appreciate your giving these
burial benefits a second look in the second session.
In addition, we would ask your committee to take a very
careful look at the National Cemetery Administration's plans
for the future. We face a dramatic upward increase in the
interment rate, and members of the Independent Budget recommend
the National Cemetery Administration work with you to help
establish a strategic plan for the future. We must plan for a
truly national system. It must have congressional and
administrative budget support, and in this regard, we call on
Congress to make funds available.
Mr. Chairman, this concludes my statement. I thank you
again for the privilege to be here today.
[The prepared statement of Mr. Richard Jones follows:]
Prepared Statement of Richard Jones, National Legislative Director,
AMVETS
Mr. Chairman, Ranking Member Specter, and members of the
Committee:
AMVETS is honored to join fellow veterans service
organizations in providing you our best estimates on the
resources necessary to carry out a responsible budget for the
fiscal year 2003 programs of the Department of Veterans
Affairs.
AMVETS--a leader since 1944 in preserving the freedoms
secured by America's Armed Forces--provides, not only support
for veterans and the active military in procuring their earned
entitlements, but also community services that enhance the
quality of life for this nation's citizens.
AMVETS testifies before you today as a co-author of The
Independent Budget. For over 16 years AMVETS has worked with
the Disabled American Veterans, the Paralyzed Veterans of
America, and the Veterans of Foreign Wars to produce a working
document that sets out our spending recommendations on
veterans' programs for the new fiscal year. Besides working
with our coauthors on the overall development and publication
of The Independent Budget, AMVETS' primary focus is on
developing the recommendations for funding the National
Cemetery Administration in the new year.
Before I address budget recommendations for the National
Cemetery Administration, I would like to say that AMVETS fully
appreciates the strong leadership and continuing support
demonstrated by the Senate Veterans Affairs Committee. AMVETS
is truly grateful to the members who serve on this important
committee. Clearly, your achievements in the first session of
this Congress demonstrate you have at heart the best interests
of veterans and their families. You have distinguished
yourselves as willing to work in a bipartisan manner to address
numerous issues of great importance to the Nation's veterans.
Since its establishment, the National Cemetery
Administration (NCA) has provided the highest standards of
service to veterans and eligible family members in the system's
120 national cemeteries in 39 states, the District of Columbia,
and Puerto Rico. A year ago, NCA opened cemeteries in Chicago,
IL; Albany, NY; Cleveland, OH; and Dallas, TX. Late last year,
fast-track operations were started at Ft. Sill, OK, and
Atlanta, GA. And development will continue, with adequate
funding for design and construction, for future facilities in
Miami, Pittsburgh, Detroit, and Sacramento.
While the National Cemetery Administration maintains more
than 2.5 million gravesites on nearly 14,000 acres of cemetery
land, there remains a need to establish additional national
cemeteries in some critically needed areas. AMVETS supports the
Committee's active review of this matter and its continued
encouragement of the Administration to meet the growing demand
for space. Clearly, without the strong commitment of Congress
and its authorizing and appropriations committees, VA would
likely fall short of burial space for millions of veterans and
their eligible dependents.
The members of The Independent Budget recommend that
Congress provide $138 million and 1,525 full time employees for
the operational requirements of NCA in fiscal year 2003. This
is an increase of $17 million and 65 FTE over the 2002 current
estimate level.
Currently, the NCA provides more than 83,000 interments
annually, an eight percent jump over last year. The aging
veteran population has created great demands on NCA operations
and actuarial projections do not suggest a decline in these
demands for many years. To ensure that the burial needs of
veterans and eligible family members are met, the IBVSOs
believe the budget must be increased to provide new staff and
equipment improvements. Maintaining quality service with an
accelerating workload will require additional resources. $138
million for the NCA will provide the additional full-time
employees and necessary supplies and equipment for grounds
maintenance and program operations.
For funding the State Cemetery Grants Program, the members
of The Independent Budget recommend $32 million for the new
fiscal year. The State Cemetery Grants Program works in
complement with the NCA to establish gravesites for veterans in
those areas where NCA cannot fully respond to the burial needs
of veterans. The enactment of the Veterans Programs Enhancement
Act of 1998 has made this program very active and attractive to
the states. At the start of the current year, there were 10 new
cemeteries under design and 11 new cemeteries in planning.
There are also scheduled fast-track openings in central
Indiana, northern Wisconsin, Arkansas, Massachusetts, Maine,
and Montana. Through the State Grants Program, NCA can provide
up to 100 percent of the planning, design, and construction of
an approved new cemetery.
To properly support veterans who desire burial in state
facilities, members of The Independent Budget support
increasing the plot allowance to $670 from the current level of
$300. The plot allowance now covers only 6 percent of funeral
costs. Increasing the burial benefit to $670 would make the
amount proportionally equal to the benefit paid in 1973. In
addition, we firmly believe the plot allowance should be
extended to all veterans who are eligible for burial in a
national cemetery not solely those who served in wartime.
The IBVSOs also request Congress review a series of burial
benefits that have seriously eroded in value over the years.
While these benefits were never intended to cover the full
costs of burial, they now pay for only a fraction of what they
covered in 1973, when they were initiated.
The IBVSOs recommend an increase in the service-connected
benefits from $2,000 to $3,700. Prior to action in the last
session of Congress, increasing the amount $500, the benefit
had been untouched since 1988. The request would restore the
allowance to its original proportion of burial expense.
The IBVSOs recommend increasing the nonservice-connected
benefit from $300 to $1,135, bringing it back up to its
original 22 percent coverage of funeral costs. This benefit was
last adjusted in 1978, and today covers just 6 percent of
burial expenses.
The IBVSOs recommend changing current law to provide a
headstone to mark the grave of all honorably discharged
veterans upon request of the family. The current code, allowing
a headstone only for unmarked graves, causes unnecessary
confusion and unsettling aggravation to the families who see VA
headstones at nearby marked sites and cannot understand why
their loved one cannot likewise be distinguished. Providing a
headstone is a small price to pay for commemorating the service
of a veteran to our Nation.
The IBVSOs also recommend that Congress enact legislation
to index these burial benefits for inflation to avoid their
future erosion.
Finally, the IBVSOs note that the National Cemetery
Administration's greatest challenge is yet ahead. Based on
statistics projecting a dramatic increase in the interment rate
until 2010, members of The Independent Budget recommend that
the National Cemetery Administration establish a strategic plan
for the period 2003 to 2008. We must plan for a truly national
system, and it must have congressional and administrative
budgetary support. We call on Congress to make funds available
for planning and fast-track construction of needed national
cemeteries.
Mr. Chairman, this concludes my statement. I thank you
again for the privilege to present our views, and I would be
pleased to answer any questions you might have.
Chairman Rockefeller. Thank you, sir, for an excellent
statement.
Mr. Fischl?
STATEMENT OF JAMES FISCHL, DIRECTOR, NATIONAL VETERANS AFFAIRS
AND REHABILITATION COMMISSION, THE AMERICAN LEGION
Mr. Fischl. Mr. Chairman, thank you for the opportunity to
appear before you today to express the views of the American
Legion concerning the President's VA budget for fiscal year
2003.
Mr. Chairman, the American Legion is very appreciative of
the work that you have done to advance the cause of our
nation's veterans. We look forward to working with you again
this year. We all remember where we were on 9/11. The American
Legion national commander, Richard J. Santos, was preparing for
testimony in this very room--not in this room; in the Cannon
Building--but he was preparing testimony before a joint session
of the Veterans' Affairs Committee. This presentation was not
to be, however. The American Legion was being suddenly and
brutally attacked, and before his testimony, the decision was
made to evacuate the Capitol.
Although the national commander did not testify, he did
submit his written testimony to both committees. In that
testimony, the American Legion outlined its fiscal year 2003
budget recommendations for VA. The American Legion greatly
appreciates the actions of all Members of Congress regarding
the $1.3 billion increase in VA medical care funding for fiscal
year 2002.
However, even with that substantial increase, it is not
enough. It required a supplemental, and this becomes a very
important issue, because the 2002 budget is the foundation for
the 2003 budget. Because of the dramatic rise in the Priority 7
veterans in the use of VA health care and to keep enrollment
open to Priority 7 veterans, Secretary Principi asked for a
supplemental of the $142 million in the fiscal year 2002
appropriations. We applaud this effort to allow Priority 7
veterans to continue to enroll.
The American Legion believes, however, that this additional
request will not cover the anticipated shortfall. The American
Legion recommends increasing the proposed supplemental to $300
million, reflecting our original fiscal year 2002 funding level
for VA medical care.
Focusing ahead to fiscal year 2003, the American Legion
takes exception to the proposed budget being portrayed as an
8.3 percent increase, and I think the Secretary addressed this
issue somewhat this morning in his testimony. And also, the
Secretary spoke of the additional money that is not really an
increase in the budget, and you pointed out, Mr. Chairman, that
we can do better. The budget request is, in fact, a decrease
and not really an increase.
While we understand that today's fiscal realities require
VHA to seek other revenue streams to support the growing demand
for service, the American Legion strongly recommends Medicare
subvention as a more appropriate remedy. Medicare subvention
will result in more accessible, quality health care for all
Medicare-eligible veterans. Medicare is an entitlement that
veterans have earned. The advocate community is strongly united
on this issue. Medicare subvention must and will work.
The American Legion appreciates the support of this
committee and looks forward to working with you to make this a
reality. We also commend the Secretary for his commitment to
Medicare subvention.
As for medical construction and infrastructure support, we
believe that the CARES program has hampered this substantially,
and there are many buildings that require seismic correction.
We have identified over 70 buildings that need these
corrections or modifications, and we feel that no veterans
should be placed in harm's way while being hospitalized. They
were placed in harm's way while in combat. They should not be
placed in harm's way while in a VA hospital.
I would like to briefly talk a little bit about benefits.
The fiscal year 2003 budget proposal outlines the various
internal changes that the VBA is making and intends to make to
improve the level of quality of service it provides. We do have
some concerns about this. We are concerned about the work
measurement, and we are concerned about accountability. And the
task force mentioned accountability many, many times. We are
concerned that they speak of the VA being accountable, but yet,
on the other hand, they speak of transferring work to offices
that are more capable of doing it. Our question would be if you
have an office that is not functioning the way that it should,
why are we not doing something about that? Why are they not
accountable? So that is a concern that we have.
We are also concerned about implementing the intent of
VCAA. This legislation was intended to bring veterans into the
light, to tell them what was required to successfully prosecute
their claims. We are now very concerned that claimants are
receiving only boilerplate notices of why their claim is being
disallowed, and we are very, very concerned about this.
A claimant should know exactly what is happening with their
claim and should know what it would take to perfect their
claim, and we feel that they are just receiving boilerplate
notices on that.
We also share the concern of the Independent Budget people
that VA perhaps needs additional personnel. The Secretary has
said if he needs more, he will ask for more. We feel that might
be too late. You need to have them trained and ready to go at
the time that you need them, so we are concerned about that.
We are also concerned in the decrease in the Board of
Veterans Appeals staff. Their work is increasing, and we feel
that they would need more rather than less people.
Mr. Chairman, that concludes my testimony. I would be happy
to answer any questions that you might have.
[The prepared statement of Mr. Fischl follows:]
Prepared Statement of James Fischl, Director, National Veterans Affairs
and Rehabilitation Commission, The American Legion
Thank you for the opportunity to appear before you today to express
the views of The American Legion concerning the President's budget
request for FY 2003 for VA.
On September 11, 2001, The American Legion National Commander,
Richard J. Santos, was preparing to present testimony before a joint
session of the Veterans' Affairs Committees, when America was attacked
by terrorists. Although the National Commander did not testify, he
submitted his written testimony to both Committees. In that testimony,
The American Legion outlined its FY 2003 budget recommendations for VA.
Copies of this congressional testimony were shared with the
Administration.
The American Legion continues to believe that the primary mission
of the Veterans Health Administration is to meet the health care needs
of America's veterans. The American Legion greatly appreciates the
actions of all Members of Congress regarding the $1.3 billion increase
in VA medical care funding for FY 2002.
Congress, like The American Legion, quickly recognized that the
President's budget request for FY 2002 was totally inadequate.
Immediately after the President signed the FY 2002 budget, Secretary
Principi was prepared to end the enrollment of additional Priority
Group 7 veterans. Many of these veterans would have included recently
separated service personnel from the Persian Gulf War, Kosovo and even
Afghanistan. Fortunately, President Bush intervened and agreed to seek
supplemental appropriations to allow VHA to continue its enrollment of
additional Priority Group 7 veterans. Recently, VA briefed The American
Legion that the Administration will seek a $142 million supplement to
the FY 2002 appropriations. The American Legion still believes this
additional request will not cover the anticipated shortfall.
The American Legion recommends increasing the proposed supplemental
to $300 million reflecting The American Legion's original FY 2002
funding level for VA medical care.
veterans health administration (vha)
The American Legion finds it hard to contemplate the President's FY
2003 budget request without a clear vision of FY 2002 funding. Focusing
ahead, The American Legion is very concerned with VA's approach to the
veterans' medical care budget in FY 2003.
The major reason for Secretary Principi's inadequate FY 2002
estimates was the dramatic increase of new patients choosing to enroll
in VA. Many factors are driving more veterans to use VHA as their
primary health care provider:
<bullet> Many Medicare+Choice health maintenance organizations
(HMOs) withdrew from the program;
<bullet> Many HMOs have collapsed;
<bullet> VHA has opened community based outpatient clinics;
<bullet> Double-digit increase in health care premiums;
<bullet> The dramatic fluctuations in the national economy make VHA
a more cost-effective option for veterans; and
<bullet> VHA's reputation for quality of care and patient safety is
attracting new patients.
Where comparable data exists, VHA continues to outperform the
private sector in all indicators in health promotion and disease
prevention. The American Legion adamantly believes VHA is the best
health care investment of tax dollars. The average cost per patient
treated within VHA is unmatched by any other major health care delivery
system, especially with comparable quality of care.
The reason VHA medical care continues to increase annually is not
due to uncontrollable cost increases or poor cost estimates, but rather
because thousands of veterans are voting with their feet. More and more
veterans are choosing to use their earned benefit--access to VHA.
However, enrollment in VHA is clearly limited by existing discretionary
appropriations. The American Legion urges Congress to evaluate several
options that would assure every veteran that wants to enroll in VHA can
enjoy that earned benefit. The key factor driving the increases in
medical care funding requirements is the unexpected and dramatic
increase in demand for care from VHA.
The American Legion does not oppose veterans paying for the
treatment of nonservice-connected medical conditions. In fact, The
American Legion's GI Bill of Health (a blueprint for VA health care for
the 21st Century) advocates collecting from veterans and all third-
party insurers, including Federal health insurers. This plan also
recommends VA provide health care benefits packages on a premium basis
for those veterans with no health care coverage.
To cover the cost of the dramatic increase in the enrolled Priority
Group 7 veterans population, VA proposes a $1500 deductible for the
Priority Group 7 veterans. The American Legion questions the
President's logic behind this new initiative to collect $363 million.
The VA shows an ``accounting adjustment'' of $892 million, (cost of the
Civil Service Retirement System and Federal Employees Health Benefit
Program accrual for employees) as an increase in the medical care
funding. Add to that the first-party and third-party collections from
the Medical Care Collection Fund (MCCF), which VA estimates will reach
nearly $1.5 billion. This budget picture presented to veterans is
seriously skewed. After stripping away all of these ``increases'' the
actual request for increase in medical care funding is $1.4 billion,
barely covering the cost of inflation. In essence, veterans will be
paying the cost of the ``increase'' out of their pocket.
Under the President's plan, VA would charge Priority Group 7
veterans 45 percent of reasonable charges until the deductible amount
of $1500 is reached. After the deductible is met, the inpatient and
outpatient co-payments will resume. According to VA, approximately 25
percent of Priority Group 7 veterans report having billable insurance.
According to VA, 55-60 percent of Priority Group 7 veterans are over
the age of 65, and thus Medicare-eligible. VA is prohibited from
billing the Centers for Medicare and Medicaid Services (CMS), but can
bill the Medicare supplemental insurers. Only the remaining 15-20
percent of Priority Group 7 will be expected to generate over $500
million in medical care costs.
In FY 2002, VHA estimates first-party collections will reach $228
million. VHA estimates that in FY 2003 it will collect $192 million in
first-party collections. In FY 2002, VHA estimates third-party
collections will reach $577 million. VHA predicts FY 2003 will generate
$529 million in third-party reimbursements. VHA expects to collect $363
million in deductibles in FY 2003. This new proposal calls for fewer
first-party reimbursements, fewer third-party reimbursements, but more
in deductibles.
The American Legion believes these are optimistic estimates, at
best. VHA's past MCCF performance in meeting collection expectations is
a major concern to The American Legion. VHA's billing and collection
reputation is rather embarrassing.
The American Legion believes in order for billing and collections
to improve VA must be provided with the resources to obtain the
necessary technology and to properly train MCCF personnel or consider
contracting out the entire process.
Unlike in the private sector, Medicare-eligible veterans cannot use
their Medicare benefits in a VHA facility. When Medicare-eligible
veterans receive health care treatment for any medical condition in the
private sector, the federal government reimburses the health care
provider for a portion of that service. When Medicare-eligible veterans
receive health care treatment for the same medical conditions within
VHA, the federal government will not reimburse VHA for any portion of
that service. This equates to a restriction on veterans' right to
access health care of their choice and using their Medicare insurance
coverage.
The American Legion believes that Medicare subvention will result
in more accessible, quality health care for all Medicare-eligible
veterans. Furthermore, Medicare subvention should greatly reduce
incidents of fraud, waste and abuse in billing because it will occur
between two Federal agencies with congressional oversight. Today's
fiscal realities requires VHA to seek other revenue streams to
supplement the growing demand for service and not simply rely on saving
more dollars to serve more veterans. The American Legion strongly
recommends allowing Medicare subvention for Medicare-eligible veterans
enrolled in VHA.
While there is much dialogue concerning the tremendous patient
population growth, very little has been mentioned about the addition of
health care professionals to meet the growing demand for health care.
The American Legion understands that there are currently many veterans
waiting to enroll in VHA. Additional health care professionals will
also help reduce the long waiting periods for appointments, especially
for specialized care. In the private health care industry, there is
great concern over the growing nursing shortage, yet this budget fails
to address any recruitment or retention proposal, much less, funding.
The American Legion recommends VHA medical care receive $23.1
billion in FY 2003 and that all third-party reimbursement, to include
Medicare, be considered as a supplement rather than an offset.
medical and prosthetic research
The contributions of VA medical research include many landmark
advances, such as the successful treatment of tuberculosis, the first
successful liver and kidney transplants, the concept that led to the
development of the CT scan, drugs for treatment of mental illness, and
development of the cardiac pacemaker. The VA biomedical researchers of
today continue this tradition of accomplishment. Among the latest
notable advances are identification of genes linked to Alzheimer's
disease and schizophrenia, new treatment targets and strategies for
substance abuse and chronic pain, and potential genetic therapy for
heart disease. Many more important potentially groundbreaking research
initiatives are underway in spinal cord injury, aging, brain tumor
treatment, diabetes and insulin research, and heart disease. The
American Legion views these research advances as so significant that it
has devoted a column in its magazine to VA Research and Development.
Dollar for dollar, others recognize VA as conducting an
extraordinarily productive research program. Currently the VA devotes
75 percent of its research funding to direct clinical investigations
and 25 percent to bioscience.
The Quality Enhancement Research Initiative (QUERI) is the highest
priority within the VA's Research and Development program. The
Institute of Medicine has recognized this program as the best of its
kind. QUERI is a multidisciplinary, data-driven national quality
improvement program designed to promote the systematic translation of
evidence into practice. In other words, ``putting research results to
work.'' Currently, QUERI focuses on 10 priority conditions. These
conditions include congestive heart failure, heart disease, mental
health, substance abuse, HIV/AIDS, diabetes, stroke, spinal cord
injury, dementia/Alzheimer's and prostate cancer. Without sufficient
funding, VA will not be able to continue all of the QUERI initiatives
that involve new technology and the cutting edge of scientific
advances. This will have a direct impact on the rapidly aging veteran
population.
VA's overall research program requires a significant increase in
funding above current levels in each of the next several years to
perform important research and evaluation studies. The President's
budget request of $409 million is inadequate and should be increased,
especially with the growing threats of nuclear, biological and chemical
terrorism.
The American Legion recommends $420 million for the research budget
in FY 2003.
medical construction and infrastructure support
Major Construction
The VA major construction program continues to be under funded. The
major construction appropriation over the past few years has allowed
for only one or two projects per year. For FY 2001, 16 major ambulatory
care or seismic correction projects were submitted to OMB. Of this
number, only one major VHA project was recommended. For FY 2002, 28
major projects have been submitted for funding.
Over the past several years, The American Legion has testified that
VA's major and minor construction appropriation must include all
infrastructure priorities. Unfortunately, over the past several years,
VA has not received appropriate funding
Private consultants have been warning for years that dozens of VA
patient buildings were at the highest level of risk for earthquake
damage or collapse. Currently, the VHA has identified 890 buildings in
its inventory as being at risk. Of those 890, 560 are identified as
essential--defined as bed, clinic, psychiatric, research, boiler plant,
etc. Additionally, VHA has identified 67 patient care and other related
use buildings as Extremely High Risk--danger of collapse or heavy
damage. Along with the necessary ambulatory care and patient safety
projects, it will require well over $250 million to address VHA's
current major construction requirements.
The Capital Asset Realignment for Enhanced Services (CARES) program
has impeded construction projects throughout VHA. Many much needed
construction projects that would maintain and update VHA's
infrastructure are being put on the back burner while CARES awaits full
implementation. The American Legion fears that the CARES process does
not allow for the local VA managers to implement the facility
improvement projects that they know are necessary to maintain a
functional service delivery system. The President's budget request for
only $194 million severely inhibits VHA's ability to properly care for
America's veterans.
The American Legion recommends $310 million for major construction
in FY 2003.
Minor Construction
The American Legion believes that Congress must be consistent from
year to year in the amount invested in VHA's infrastructure. Annually,
VHA must meet the infrastructure requirements of a system with
approximately 5,000 buildings that support 600,000 admissions and over
35 million outpatient visits. This accomplishment requires a
substantial inventory investment. The FY 2001 appropriation of $166
million for minor construction was not nearly enough to meet future
physical improvement needs. With the added cost of the CARES program
recommendations and the nearly $42 million request for minor upgrades
in the research facilities, it is essential that funding be increased
considerably from that of past fiscal years. It would be foolish to
reduce this investment. The President's budget request for $211 million
falls short of VHA's minor construction needs.
The American Legion recommends $219 million for minor construction
in FY 2003.
grants for the construction of state extended care facilities
The State Extended Care Facilities Grant Program continues to be a
cost-effective provider of quality care services to the nations'
veterans who require domiciliary, nursing home, and hospital care. The
State Veterans Home Program must continue, and even expand its role as
an integral vital asset to VA. State homes are in a unique position to
help meet the long-term care requirements of the Veterans' Millennium
Health Care and Benefits Act (Public Law 106-117). By 2010, 42 percent
of the entire veteran population, an estimated 8.5 million veterans,
will be 65 or older, with half of that number over 5 years of age. By
2030, most Vietnam Era veterans will be 80 years of age or older.
As many VA facilities reduce long-term care beds and VA has no
plans to construct new nursing homes, state veterans' homes are relied
upon to absorb a greater share of the needs of an aging population. If
VA intends to provide care and treatment to greater numbers of aging
veterans, it is essential to develop a proactive and aggressive long-
term care plan.
The Veterans Millennium Health Care and Benefits Act requires VA to
provide long-term nursing care to veterans rated 70 percent disabled or
greater. The new law also requires VA to provide long-term nursing care
to all other veterans for service-connected disabilities and to those
willing to make a co-payment to offset the cost of care. Further, it
requires VHA to provide veterans greater access to alternative
community-based long-term care programs. These long-term care
provisions have placed greater demand on VHA and on the State Extended
Care Facilities Grant Program. This legislation has been on the books
for almost 2 years and it is time for full implementation.
The American Legion believes it makes economic sense for VA to look
to State governments to help fully implement the provisions of PL 106-
117. VA spends on average $225 per day to care for each of their
nursing care patients and pays private-sector contract facilities an
average per diem of $149 per contract veteran. The national average
daily cost of care for a State Veterans Home nursing care resident is
about $140. VA reimburses State Veterans Homes a per diem of $40 per
nursing care resident. Over the long term, VA saves millions of dollars
through the State Extended Care Facilities Grant Program.
The American Legion supports the State Extended Care Facilities
Grant Program and believes the federal government must provide
sufficient construction funding to allow for the expected increase in
long-term care veteran patients. The President's budget request for
$100 million should be increased to help meet the growing demand for
care by veterans of the ``Greatest Generation.''
The American Legion recommends $110 million for the Grants for the
State Extended Care Facilities for FY 2003.
national cemetery administration (nca)
The National Cemetery Administration (NCA) is making great strides
in meeting the interment needs of the nation's veterans and their
dependents. As of October 31, 2001, NCA maintains more than 2.4 million
gravesites at 120 national cemeteries in 39 states (and Puerto Rico).
Currently, 75 percent of all veterans live within 75 miles of open
national or state veterans' cemeteries. The ultimate goal is to have 90
percent of all veterans living within 75 miles of open national or
state veterans' cemeteries.
NCA's workload is increasing by nearly five percent per year, with
cremations accounting for the majority of new interments. The peak
years for the interment of World War II veterans is expected to be 2006
to 2010. Over the next decade, new national cemeteries are planned for
Atlanta, GA; Miami, Fl; Pittsburgh, PA; Detroit, MI; and Sacramento,
CA. P.L. 106-117 requires NCA to contract a study to determine where
additional national and state veterans' cemeteries will be required
through 2020.
NCA is preparing ``fast track'' construction projects to open new
national cemeteries. This allows burials to occur in each section of a
new cemetery as it is being constructed. Instead of taking the
conventional approach to new cemetery construction, ``fast track''
authority would permit the planned new national cemeteries to open in
less than half the normal time, which is seven years. The most recent
cemetery to open under the ``fast track'' authority is the Fort Sill,
Oklahoma National Cemetery. Burials began on November 5, 2001.
The National Shrine Initiative continues to be one of the highest
priorities of the NCA. This is an ongoing commitment and scheduling
continues to fulfill the pledge of aesthetically improving the national
cemeteries. Major improvements and renovations have started at several
cemeteries with wonderful results. However, there is much that remains
to be done. A tremendous amount of time and money is needed to continue
this commitment.
The American Legion recommends $140 million for NCA in FY 2003.
state cemetery grants program
The State Cemetery Grants Program, which provides 100 percent
federal funding for new state veterans' cemeteries, has received a
significant increase in the number of state cemetery applications.
Within the next several years, NCA is hopeful that up to 30 new state
veterans' cemeteries will be opened. The workload and budgetary
requirements of NCA will continue to grow over the next 15-20 years.
The American Legion continues to fully support the further development
of the State Cemetery Grants Program.
The American Legion recommends $30 million for the State Cemetery
Grants Program in FY 2003.
veterans' employment and training programs (vets)
The American Legion adamantly opposes the President's new
initiative to transfer VETS from the Department of Labor (DoL) to VA.
In the President's budget request for FY 2003, he proposes to add
$197 million to VA budget for a new competitive grant program that
replaces programs currently administered by DoL. The American Legion
expressed opposition to a similar recommendation proposed by the
Congressional Commission on Servicemembers and Veterans Transition
Assistance back in 1999. The American Legion strongly suggests this
Committee consider oversight hearings before such an initiative is
allowed to prevail. DoL has all of the expertise and resources for
effective job placement and training. The National Veterans Training
Institute (NVTI) provides standardized training for all veterans'
employment advocates in an array of employment and training functions.
Some suggest that moving VETS to VA would improve the overall
performance of VA's Vocational Rehabilitation Program (Voc Rehab).
Others would argue that moving Voc Rehab to VETS in DoL would be a much
better approach. Nearly all VETS employees attend NVTI and receive
continuing training, few (if any) Voc Rehab employees have attended
NVTI training. The American Legion perceives the relationship between
VETS and DoL much more germane than VETS and VA.
The American Legion welcomes the opportunity to work with the
Assistant Secretary for Veterans' Employment and Training (ASVET) and
his staff to improve and enhance the overall performance of VETS.
However, The American Legion believes reinventing the wheel within VA
would be counterproductive and ineffective. The American Legion
believes that many of VETS problems stem from persistent inadequate
Federal funding, failure to be staffed at Federally mandated levels,
and inconsistent national leadership.
The mission of VETS is to promote the economic security of
America's veterans. This stated mission is executed by assisting
veterans in finding meaningful employment.
Annually, DoD discharges approximately 250,000 service members.
These recently separated service personnel are actively seeking
immediate employment or preparing to continue their formal or
vocational education. The veterans' advocates in VETS program play a
significant role in helping the recently separated service personnel
(veterans) reach their employment goals.
1) VETS continues to improve by expanding its outreach efforts with
creative initiatives designed to improve employment and training
services for veterans.
2) VETS provides employers with a labor pool of quality applicants
with marketable and transferable job skills.
3) VETS took the initiative in identifying military occupations
that require licenses, certificates or other credentials at the local,
state, or national levels.
4) VETS helps to eliminate barriers to recently separated service
personnel and assist in the transition from military service to the
civilian labor market.
VETS started an information technology project with the Computing
Technologies Industry Association, to recruit veterans recently
separated from the military; assess their interest and skill level for
a career in information technology; provide occupational skills
training and certification; and place these veterans into information
technology jobs. VETS continues to expand its PROVET (Providing Re-
employment Opportunities for Veterans) program. PROVET is an employer-
focused job development and placement program that focuses on
screening, matching and placing job ready transitioning service members
into career-building jobs. PROVET programs are currently operating in
several states. In addition to employment services, VETS also supports
the Transition Assistance Program (TAP), the Disabled Transition
Assistance Program (DTAP), Veterans Preference in the Federal
workplace, and the Uniformed Services Employment and Re-employment
Rights Act (USERRA).
The American Legion strongly recommends restoring funding for the
ASVET within DoL's FY 2003 budget at a funding level of $300 million.
Staffing levels for Disabled Veterans Employment Program Specialists
and Local Veterans Employment Representatives should match the Federal
mandates or those statutes should be rewritten. The American Legion
recommends an increase in the NVTI budget to $3 million annually. The
American Legion further recommends that VA send Voc Rehab employees to
NVTI training.
veterans benefits administration
Under the proposed budget for FY 2003, mandatory spending for
compensation, pension, education, burial, and other benefit programs is
expected to be $31.5 billion. This is an increase of $3.4 billion over
the level approved for FY 2002. It represents the funding requirements
for ongoing statutory benefit payments to some 3.25 million veterans,
dependents, and survivors, as well as the impact of recent, expanded
statutory and regulatory entitlements, higher average benefit payments,
and certain new legislative proposals. It also includes an estimated
1.8 percent cost-of-living adjustment.
Under General Operating Expenses (GOE), the budget request for FY
2003 includes a total of $1.2 billion for discretionary spending to
cover staffing and other costs associated with the administration of
the various benefits and service programs within the Veterans Benefits
Administration (VBA). This represents a net increase of $94 million
over the amount approved for FY 2002. It includes an additional 125 FTE
to support current efforts to bring the case backlog under control and
support a new case development program at the Board of Veterans
Appeals. The budget request also includes funding for a number of
information technology initiatives that will provide much needed direct
and indirect support toward improving the claims process.
In addition to this modest staffing increase, the FY 2003 budget
request for VBA describes a number of steps that, over time, are
expected to steadily reduce the backlog of pending cases to about
250,000 and the claims processing time to 100 days by the end of FY
2003. As part of the strategy to reach these rather ambitious goals,
VBA has implemented a broad spectrum of regulatory, programmatic, and
administrative changes, in addition to its long-term strategic plan
initiatives, that are intended to improve the regional offices'
operational efficiency and decision-making. Also, recommendations of
the Secretary's Claims Processing Task Force have been accepted and are
in the process of being implemented over the next year. VA expects
these changes to produce both near-term and long-term improvements in
the quality and timeliness of the decision-making process.
The data upon which VBA's budget request is predicated shows a
continued overall increase, rather than a decrease, in the volume of
incoming claims. With more complex claims per case and the level of
available adjudication expertise, it is doubtful that regional offices
will be able to achieve the dramatic increases in production and
improvements in quality that will be necessary to reach the claims
processing goal of 100 days with a backlog of 250,000 cases. In an
effort to achieve such ambitious production goals, The American Legion
is concerned that regional offices will emphasize expediency rather
than ensuring full compliance with the due process and assistance
requirements of the Veterans Claims Assistance Act and other provisions
of the law. Even with the implementation of the many changes and
efficiencies described, claims development and adjudication will
continue to be a very labor intensive and time-consuming process.
The American Legion believes that the requested staffing increase
is insufficient to meet the expected workload demand in FY 2003.
benefit programs
The American Legion is pleased to see some special attention being
given to expediting the 81,000 oldest claims by the nation's oldest
veterans. No veteran or survivor should have to wait a year or longer
for a decision on their claim, least of all elderly claimants.
Tragically, many die before receiving a decision and the long-awaited
benefits to which they were entitled. The Tiger Team initiative at the
Cleveland VA Regional Office and the nine Service Delivery Network
(SDN) Resource Centers will go a long way toward alleviating much of
the hardship and frustration that thousands of veterans experience
while waiting for their claim to be decided.
The FY 2003 budget proposal outlines the various internal changes
VBA is making and intends to make in order to improve the level and
quality of the service it provides veterans. However, there are a
number of external factors that have an ongoing impact on VBA's ability
to drastically improve regional office performance and production. In
FY 2003, while there will be a slight decrease in the number of pension
claims, this will be more than offset by the substantial increase in
the overall number of compensation claims. Most of this increase is
expected to come from the continued influx of new and reopened claims.
The number of Agent Orange-related diabetes claims is expected to be up
substantially over FY 2002. VBA must also rework thousands of cases as
a result of Nehmer v. United States Veterans' Administration.
Congress has recently expanded entitlement to service connection
for radiation-related diseases as well as disabilities affecting
veterans who served in the Persian Gulf War. The requirements of the
Veterans Claims Assistance Act of 2000 have greatly increased the
regional office's workload and processing time. The United States Court
of Appeals for Veterans Claims and the United States Court of Appeals
for the Federal Circuit have continued to issue precedent decisions
requiring frequent and often far-reaching changes in adjudication
procedures and the reworking of thousands of previously decided and
pending cases.
The American Legion tentatively supports VBA's proposed initiatives
for FY 2003. We hope these will enable substantial progress to be made
toward the overall goal of providing veterans proper and timely
decisions on their benefit claims.
The American Legion is deeply concerned that the 125 additional
staff for VBA in FY 2003 may not be adequate, if VBA is to be even
partially successful in meeting its stated claims processing goal of
100 days.
board of veterans appeals
Veterans or other claimants must have the right to appeal any
decision by the regional office to the Board of Veterans Appeals (BVA
or the Board). BVA staffing for FY 2002 is 464 FTE. In FY 2003,
however, it is projected to further decline to 451 FTE. The American
Legion is again concerned by this reduction. Given the current number
of initial appeals and remands pending in the regional offices coupled
with the fact that the Board will soon begin a major new initiative to
do the development work that the regional offices would have normally
done pursuant to a BVA remand, manpower shortages may adversely impact
on the timeliness of decisions.
In FY 2001 and for the first quarter of FY 2002, the number of new
appeals filed in the regional offices has continued to rise. This
reflects a high level of dissatisfaction with regional office actions.
However, over the same period of time, the number of cases transferred
to the Board has steadily declined, due to the overall slow down in
claims processing. In particular, regional office compliance with the
requirements of the Veterans Claims Assistance Act has prolonged the
development of appeals and their eventual transfer to the Board.
The American Legion's longstanding concern with the appeals process
is with those factors that contribute to an annual influx of 60,000 to
70,000 new appeals. Veterans and other claimants feel they are not
treated fairly or properly by a system that is very complex, highly
bureaucratic, and legalistic. They feel very strongly that the process
is basically adversarial and not ``user friendly.'' This perception is
reinforced by the fact that, in FY 2001, the BVA allowed the claimant's
appeal in 22.3 percent of the cases and remanded 48.8 percent of the
appeals for further required action. The Board only affirmed regional
office decisions 27 percent of the time.
Of the approximately 60,000 appeals decided in FY 2000 and 2001,
the Board remanded about 32,000 cases for additional development and
readjudication. Unfortunately, most of the appellants in these cases
are still waiting on action by the regional offices. Some of these
appeals date from 1997 and 1998, and as noted previously, the issue on
appeal in these cases is much older still.
Remands involve substantial additional work for the regional
offices. To try and reduce this portion of their workload as well as
provide more timely decisions on all appeals, VA regulations will go
into effect later this month authorizing the BVA to fully develop
appeals without the necessity of remanding them back to the regional
office of such action. This will involve reorganization of the BVA
staff and the reassignment of a limited number of FTE from the
Compensation and Pension Service to assist in the additional
development work.
Under this new program, it's expected that the Board will be able
to provide more expeditious and complete development of appeals. In FY
2001, with a staff of 454 FTE, the BVA issued approximately 31,000
decisions. Of these decisions, approximately 8,500 or 48.8 percent were
remands. Now, the Board itself will undertake this development in the
majority of those cases, which would have otherwise been remanded. The
American Legion believes that more, rather than fewer staff at the
Board will be needed in FY 2003 to handle this additional workload.
By substantially reducing the number of remands, the regional
offices should be able to concentrate on completing more pending
benefit claims and completing the outstanding remands. While The
American Legion believes this new procedure will ultimately benefit
veterans and provide more timely service, we are concerned that, in the
interest of expediency, the regional offices may try and use this
program as a way around full compliance with their responsibilities
under the Veterans Claims Assistance Act. In our view, the high remand
rate of the past several years is a direct reflection of poor decision-
making and the lack of an effective quality assurance program. Since
the BVA will be assuming the responsibility for correcting errors and
mistakes by the regional offices, there will be an incentive for the
regional offices to try and shift as much of the appellate workload
onto the Board as possible. VBA must ensure this does not happen. More
stringent quality assurance standards and performance measures must be
promptly implemented. To make this program a success there must also be
a closer working relationship and improved communication between VBA
and the Board at all levels.
The American Legion recommends a total of $1.3 billion in VBA-GOE.
homeland security
The important role of VA in Homeland Security is not highlighted in
the President's budget request. The American Legion saw the critical
actions of VA in response to the September 11, 2001 disasters. VA
employees sprang into action to assist response personnel, victims, and
surviving family members. Yet, VA was not actually a part of any
emergency response plans immediately implemented, but rather acted
unilaterally. VA employees provided medical care, counseling, and
claims processing. VA was prepared to do even more if called into
action.
The Director of Homeland Security, Tom Ridge, will need the
cooperation of an array of Federal agencies. Since VA medical
facilities are geographically diverse, VHA is a logical partner for the
pre-positioning of inoculations and medical supplies needed to address
acts of terrorist or natural disasters. Currently, every VA campus is
scheduled to undergo an evaluation under CARES. Homeland Security
requirements must be included in the criteria used to determine
possible utilization of physical plants that may currently be
considered underutilized.
In the event of a nuclear, chemical, or biological terrorist
attack, each VA campus may become a key element in the care and
treatment of mass causalities. As national emergency plans are reviewed
at every level of government--local, state, and national--VA must be
seen as valuable resource. Whether housing response workers, military
forces, or law enforcement personnel; providing quality medical care;
or serving as a command, control and communications center, VA must
have the resources to meet the assigned mission as back up to DoD and
the National Disaster Medical System.
summary
Mr. Chairman and Members of this Committee, The American Legion
applauds the leadership of President Bush and his Administration,
especially under the current wartime conditions. As an organization of
wartime veterans, we continue to stand shoulder-to-shoulder with the
President, Congress, and our comrades-in-arms--past, present, and
future.
The American Legion knows that the President's budget request is
focused on winning the war on terrorism. Therefore, adequate defense
spending is extremely critical and The American Legion fully supports
the direction the President has chosen. However, the cost of waging war
continues long after the dead are buried, the guns are silenced, and
the treaties are signed. The war continues to rage in the hearts and
minds of its veterans. No combat veteran completely walks away from any
war untouched, physically or mentally.
The cost of freedom rests in this nation's ability to recruit and
retain young men and women willing to pay the ultimate sacrifice in the
name of liberty. This nation has been blessed since its inception with
similar citizen-soldiers, sailors, airmen, and Marines that have set a
standard of excellence for others to follow. Recently, a new generation
of Purple Heart recipients demonstrated on the field of battle the
courage, determination, and loyalty exhibited by--the Minutemen, the
Roughriders, the doughboys, the GIs--that preceded them in protecting
and defending America against all enemies, foreign or domestic.
Mr. Chairman and Members of this Committee, The American Legion
doesn't ask for much, just another installment in the ongoing cost of
freedom.
______
Response to Written Questions Submitted by Hon. John D. Rockefeller IV
to James R. Fischl
discouraging priority 7 veterans through $1500 deductible
Question 1. Please comment on the VA's proposed $1,500 deductible
for Priority 7 veterans. In my memory, this is the first time we have a
proposal on the table that aims to drive away existing VA health care
users. What are your thoughts about this proposal?
Answer. Many would argue that this is not the first time a proposal
was offered to drive away existing VA health care users. With the
enactment of PL 99-272, Congress established means testing within VHA
that placed veterans into three categories: A, B, and C. Category C
veterans had very little access to VHA. Wisely, Congress enacted PL
104-262 that allows VHA to enroll all veterans within existing
appropriations. Now the challenge is to generate enough revenue through
Federal appropriations, co-payments, deductibles, and third-party
reimbursements to meet the growing demands for quality health care.
The American Legion opposes the $1500 deductible, as proposed in
the President's budget request. The American Legion does not oppose
certain veterans paying for the treatment of non-service-connected
medical conditions. We have consistently offered alternative ideas on
how veterans could pay for the care of their non-service-connected
medical conditions. The American Legion's GI Bill of Health (a
blueprint for VA health care for the 21st Century) advocates collecting
from veterans and all third-party insurers, to include all Federal
health insurers, such as Medicare. The GI Bill of Health also
recommends VA provide health care benefits packages on a premium basis
for those veterans with no health care coverage.
The American Legion continues to advocate for Medicare subvention
for VHA for the treatment of non-service-connected medical conditions
of enrolled Medicare-eligible veterans in Priority Group 7. There are
logical reasons to justify Medicare subvention:
<bullet> The majority of enrolled Medicare-eligible veterans meet
or exceed the 40 quarters standard of Medicare covered employment.
<bullet> For Priority Group 7 veterans, Medicare is a pre-paid
Federal health insurance plan.
<bullet> All enrolled Medicare-eligible veterans are free to choose
any health care provider. Based on the quality of service provided in
VHA and its pharmacy, many Medicare-eligible veterans wisely opt for
VHA.
<bullet> As a Federal health care provider, VHA's billing should
not exceed Medicare's allowable rates.
<bullet> Under current law, VHA is authorized to bill and collect
third-party reimbursements, with few exceptions. Medicare is normally
the secondary payer and would meet these criteria.
<bullet> VHA is an integrated health care delivery system, which
could easily accommodate the Medicare+Choice option of the Centers for
Medicare and Medicaid Services (CMS).
<bullet> Direct billing between two Federal agencies, VA and CMS,
should greatly reduce opportunities for fraud, waste, and abuse.
<bullet> Priority Group 7 veterans' access is contingent upon the
ability to collect both copayments and third-party reimbursements.
<bullet> Medicare-eligibility does not grant a person access to VHA
health care.
<bullet> VHA's quality of care compares favorably when benchmarked
against Medicare providers' performance measures of quality.
eliminating va's claims backlog
Question 2. Clearly, VA's current claims backlog is intolerable,
and new steps are needed to improve the claims process. We know from
past experience that VA's attempts to streamline this process often
lead to a temporary slowdown that makes the problem worse. What steps
do you think that VA could take, and what resources would be necessary,
to prevent the backlog from swelling even more while VA puts its new
plans into place?
Answer. The American Legion has a number of concerns with VA's
recent efforts to address the backlog of pending claims, in regard to
staffing, and quality assurance issues. Secretary Principi's often-
repeated promises to improve VA's service have significantly raised
veterans' level of expectation. However, it remains to be seen if VA
can, in fact, deliver quality decisions in a timely manner.
Under ideal circumstances, a backlog of almost 600,000 pending
cases might not be too large, if these could be processed in a
reasonable amount of time with a high degree of user satisfaction and
few appeals. However, when Secretary Principi took over VA in 2001, VBA
was in the process of hiring large numbers of new adjudicators and
integrating them into a very labor intensive, claims adjudication
system. He also inherited a backlog that was growing in size, age, and
complexity.
At this time last year, the backlog of pending cases was some
485,000 with about 91,000 over six months old. In the eight weeks since
the first of this year, the number of compensation and pension cases in
process has risen from 548,846 to 594,030 or a net increase of about
5,800 cases per week. The core staff of experienced adjudicators must
try and balance the continuing need to train the new hires with the
need for production.
It is apparent, based on VBA's weekly work reports, that despite
current efforts, including the additional staff, VBA has not been able
to stem the growth in the overall backlog of claims and appeals,
although there has been a slight decline from 230,000 to 229,000 cases
over six months old. This may be a sign of some initial progress in
reducing at least one part of the backlog. More time is needed to see
if this favorable trend continues.
In recent months, there have also been a variety of new initiatives
to process the oldest pending cases, such as the use of the Tiger Team
and SDN Resource Centers. Regional offices are putting most of their
time and effort into claims processing, rather than expediting appeals,
which are claims that often go back two, three, or more years. There
are currently about 96,400 pending appeals, including some 32,000
remands. The recent change in VA regulations permitting the BVA to do
development work on appeals rather than remanding them is a partial
solution to the regional offices continuing poor quality decision-
making problem. A coordinated VBA/BVA quality assurance program may
help improve regional office performance, in the long run.
VA continues to emphasize that they are now doing more claims
actions as more and more of the new adjudicators complete their basic
training. We believe this gives a false impression that VA has turned
the corner and the backlog is on its way to being controlled. More
claims actions, however, does not necessarily mean that more claims are
being completed and benefits paid. We are concerned about compliance
with the VCAA.
Claimants are entitled to an explanation of the decision process
and what would be required to grant the benefit sought. In visiting
regional offices we have observed that claimants are being provided
with boilerplate explanations rather than meaningful responses. We are
also concerned that the emphasis on requesting submission of evidence
in thirty days will result in premature denials followed by reopened
claims when the evidence is later submitted. Workload reports will then
reflect improved timelines and productivity. The current work
measurement system does not provide accurate, reliable data on the time
it actually takes to complete a claim. It has a long history of
manipulation and abuse and does not provide management necessary and
appropriate information on regional office staffing and resource needs.
We believe the backlog will get worse before it gets better. If VA
is going to be even partially successful, it must avoid the types of
problems it created for itself and veterans in the handling of the
backlog crisis of the mid-1990s. At that time, all efforts were focused
on production in order to reduce the backlog and claims processing
time. VBA's training program was essentially put on hold. Quality in
decision-making was subordinated to expediency. There was no effective
quality assurance program. Overall ``customer dissatisfaction'' was
reflected in a sustained high rate of appeals filed.
BVA overturned the regional office's actions two-thirds of the
time. The poor quality work and unnecessary appeals squandered valuable
federal resources and taxpayers' dollars. It also subjected many
veterans and their families to prolonged financial and emotional
hardship while their claims and appeals churned through an uncaring
system. The lessons of the recent past are: VBA must have a strong
training program, even though it constrains station output somewhat in
the short-term; VBA must have an independent, effective quality
assurance program that tracks individual and station performance; and
there must be sufficient staffing in order for VBA to carry out its
claim processing responsibilities.
Looking at its announced goals, current tasks, and future
challenges, including the need for succession hiring, we do not believe
the proposed increase of 125 FTE for VBA in FY 2003 will be adequate.
Unfortunately, we are unable to suggest an appropriate staffing level,
since the details of VBA's FY 2003 GOE request have not yet been
released to the public.
shortfalls in the medical care budget
Question 3. The level of funding proposed for this year includes a
mishmash of shifting funds, revenue collections and new charges to
veterans. It's hard to tell what the actual new appropriated medical
care funding amount is but it is safe to say that it is no where near
the $3.14 billion increase proposed by the Independent Budget. What
initiatives and funding needs will the Independent Budget cover that
are not going to be met by the Administration's budget?
Answer. The American Legion is not affiliated with the Independent
Budget; therefore, The American Legion will not comment on the
Independent Budget or its recommendations. However, we applaud their
dedication and commitment to America's veterans.
Annually, The American Legion presents its budget recommendations
before a joint session of the Veterans' Affairs Committees shortly
after The American Legion's National Convention. During this early Fall
hearing, The American Legion offers its recommendation for the next
fiscal year. This provides the Committees, other Members of Congress,
and the Administration The American Legion's expectations well before
the President's budget request is submitted to Congress.
On September 11, The American Legion submitted to the Veterans'
Affairs Committees, its recommended funding level for VA in FY 2003.
The American Legion recommends VHA medical care receives at least a
$23.1 billion funding level in FY 2003. This is a $1.8 billion dollar
increase over last year's medical care budget. Moreover, The American
Legion has always believed that all third-party reimbursements, to
include Medicare, be considered as supplements rather than offsets.
Obviously, that recommendation does not include the transfer of
funding from the Office of Personnel Management (OPM) to pay for the
Federal employee benefits (Civil Service Retirement System and Federal
Employees Health Benefit Program) addressed in the President's budget
request for FY 2003. The American Legion does not oppose this
bookkeeping adjustment; however, this adjustment would increase The
American Legion's request, as well. Congress should not confuse this
OPM transfer as an increase in funding for the delivery of health care.
In fact, The American Legion believes the FY 2002 VA medical care
budget still needs a $300 million in supplement appropriations to avoid
the rationing of health care delivery in local VA medical facilities at
the end of the fiscal year.
VHA has seen a dramatic rise in the Priority Group 7 veterans'
population use of VHA facilities and services, most notably pharmacy
services. The American Legion believes that all veterans should
maintain their eligibility status and none of the Priority Group 7
veterans should ever be disenrolled because of budget constraints. The
American Legion is deeply concerned with the Medical Care Collection
Fund (MCCF). Eligibility reform was based on the premise that Priority
Group 7 veterans would generate revenue through co-payment and third-
party reimbursements to offset the additional costs. The majority of
the Priority Group 7 enrollees are either Medicare-eligible or do not
have third-party insurance coverage.
The American Legion recommends:
<bullet> Authorizing VHA to bill, collect and retain reimbursements
from Medicare;
<bullet> Authorizing VHA to offer premium-based health care
policies (basic care, complex care, or specialized services) for
Priority Group 7 enrollees with no third-party coverage; and
<bullet> Requiring VHA to either dramatically improve internal MCCF
collections or contract out MCCF collections.
Another observation concerning the tremendous grow in VHA
enrollment is the significant lack of additional health care
professionals hired to meet the patient demand for services. Two years
ago, PL 106-117, the Veterans' Millennium Health Care and Benefits Act
of 1999, provided greater specificity in directing VA to address long-
term care. The American Legion is deeply concerned that VA is not
aggressively meeting that congressional mandate.
transfer of the veterans employment and training service (vets)
Question 4. VA is proposing a new competitive grant program that
would shift VETS from the Department of Labor to VA. Do you think that
VA is better equipped to provide employment and training services to
veterans? What effects will the transfer have on veterans?
Answer. The American Legion adamantly opposes the President's new
initiative to transfer VETS from the Department of Labor (DoL) to VA.
DoL possesses all of the expertise and resources for effective job
placement and training. The National Veterans Training Institute (NVTI)
provides standardized training for all veterans' employment advocates
in an array of employment and training functions.
Some suggest that moving VETS to VA would improve the overall
performance of VA's Vocational Rehabilitation Program (Voc Rehab).
Others would argue that moving Voc Rehab to VETS in DoL would be a much
better approach. Nearly all VETS employees attend NVTI and receive
continuing training, few (if any) Voc Rehab employees have attended
NVTI training. The American Legion perceives the relationship between
VETS and DoL much more germane than VETS and VA.
The American Legion welcomes the opportunity to work with the
Assistant Secretary for Veterans' Employment and Training (ASVET) and
his staff to improve and enhance the overall performance of VETS.
However, The American Legion believes reinventing the wheel within VA
would be counterproductive and ineffective. The American Legion
believes that many of VETS problems stem from persistent inadequate
Federal funding, failure to be staffed at Federally mandated levels,
and inconsistent national leadership.
The mission of VETS is to promote the economic security of
America's veterans. This stated mission is executed by assisting
veterans in finding meaningful employment.
Annually, DoD discharges approximately 250,000 service members.
These recently separated service personnel are actively seeking
immediate employment or preparing to continue their formal or
vocational education. The veterans' advocates in VETS program play a
significant role in helping the recently separated service personnel
(veterans) reach their employment goals:
<bullet> VETS continues to improve by expanding its outreach
efforts with creative initiatives designed to improve employment and
training services for veterans.
<bullet> VETS provides employers with a labor pool of quality
applicants with marketable and transferable job skills.
<bullet> VETS took the initiative in identifying military
occupations that require licenses, certificates or other credentials at
the local, state, or national levels.
<bullet> VETS helps to eliminate barriers to recently separated
service personnel and assist in the transition from military service to
the civilian labor market.
VETS started an information technology project with the Computing
Technologies Industry Association, to recruit veterans recently
separated from the military; assess their interest and skill level for
a career in information technology; provide occupational skills
training and certification; and place these veterans into information
technology jobs. VETS continues to expand its PROVET (Providing Re-
employment Opportunities for Veterans) program. PROVET is an employer-
focused job development and placement program that focuses on
screening, matching and placing job ready transitioning service members
into career-building jobs. PROVET programs are currently operating in
several states. In addition to employment services, VETS also supports
the Transition Assistance Program (TAP), the Disabled Transition
Assistance Program (DTAP), Veterans Preference in the Federal
workplace, and the Uniformed Services Employment and Re-employment
Rights Act (USERRA).
saving money through sharing unused va space
Question 5. Three years ago GAO criticized VA for having over 5% of
its space unoccupied. GAO said that VA was losing a million dollars a
day. I think that we would all agree that many more veterans could be
served if the VA had an additional $360 million dollars. What can VA do
to create more sharing opportunities? With what organizations might
they share?
Answer. Clearly best practices need to be shared by those that have
a successful sharing agreement, joint venture or cooperation.
Currently, VA and DoD sharing occurs among 165 Veterans Affairs
Medical Centers (VAMC) and most military medical treatment facilities.
VA and the military have agreed to share 7,963 services covering a
broad range of hospital related activities. Both Departments are
exploring ways to improve coordination of service delivery in such
areas as long-term care, pharmacy, chiropractic services, and
radiology.
The American Legion is impressed with the joint venture sites it
has visited and other sharing arrangements it has reviewed. There is a
clear indication of benefits for both systems. The American Legion
encourages VA and DoD to continue to explore more avenues for
cooperation and to assist other areas of the country in formulating and
negotiating these opportunities. The American Legion believes there are
many more of these opportunities out there to be developed. The number
and types of sharing agreements (as indicated by the amount of dollars
exchanged) are minor, relative to the overall budgets for each Federal
agency.
In reviewing the cooperative efforts between VA and DoD, The
American Legion identified several different ways in which VA and DoD
could cooperate:
<bullet> buy or sell services between the Federal agencies. VHA
facilities are authorized to make maximum effective use of their
resources and can provide services to community entities when there is
no diminution of services to veterans. All revenue generated from the
sale of services is used to enhance care for eligible veterans. During
2000, there were 1,136 new contracts for resources purchased
($289,712,000) and provided ($32,090,000) totaling $321,802,000. This
is a significant increase in activity from past years in resources
purchased. The expanded authority gives VHA the mechanism to make the
best use of available resources to purchase services in the most cost-
effective manner.
<bullet> share staff, such as having reservists drill at VA
hospitals, especially since VA is affiliated with many medical schools.
<bullet> share technology and other equipment. A mammography
machine, which might not be a justifiable cost for one, can become
beneficial if bought jointly as was done in Albuquerque.
<bullet> conduct joint education and training. VA is affiliated
with 103 medical schools.
<bullet> co-purchase pharmaceuticals and medical/surgical supplies.
They can share supplies and borrow pharmaceuticals from each other in
emergency situations.
<bullet> VA can increase its role as a TRICARE sub-contractor.
<bullet> patient medical records and other information can be
jointly accessed to enable service members a smoother transition from
active duty.
The American Legion's approach to underutilized space is to utilize
the space. Veterans are waiting to enroll in VHA--a great many of them
are Priority Group 7 veterans--those veterans capable of generating new
revenue through co-pays, deductibles, and third-party reimbursements.
VHA has a long-term care congressional mandate that is currently not
being aggressively met. Some of this current underutilized space may be
a cost-effective approach towards meeting its long-term care
objectives. Other veterans, already enrolled, experience long waiting
periods for appointments. If they have other alternatives, such as
Medicare or third-party coverage, they may very well go elsewhere with
their health care dollars.
The American Legion continues to caution Congress and VA to
evaluate these physical plants from a proactive rather than a reactive
mindset. Once the property is gone, replacement may be twice the cost
of renovation, restoration, or replacement. These decisions should not
be purely budget-driven, but rather patient-driven. The question should
be asked, ``What services could this facility provide to VHA
beneficiaries?''
The American Legion would rather see these spaces used by contract
health care provider, contracted long-term care providers, or National
Guard medical battalions rather than being eliminated from VA's
inventory. Based on increased concerns for Homeland Security and the
War on Terrorism, VHA role as a back up to DoD during national
emergencies or natural disasters must also be factored into future
evaluation of capital assets.
deceptive increase in benefits budget
Question 6. Although this year's budget recommends a $94 million
increase in funding for VBA, more than half of that will be consumed in
an administrative shift of employees' benefits. Even given the
efficiencies that VBA hopes to gain in processing claims, what do you
think the short- and long-term impact of this budget will be for
veterans?
Answer. VBA discretionary funding in FY 2003 indicated an increase
of $94 million. This gives the general impression that additional
funding is being requested for more staffing in the regional offices
and, thereby, improving claims processing and service to veterans.
However, in reality, the net increase in GOE is $40 million and 125
FTE. The difference of $54 million reflects a bookkeeping adjustment
for employee retirement benefit costs. We believe this an attempt to
mislead veterans and the Congress into thinking that VBA has turned the
corner on the backlog problem and only a modest increase in staff is
needed.
VBA has hired several thousand new employees in the last two years
and embarked on a variety of major programmatic changes that are
intended to improve the quality and timeliness of its services. We
believe VBA is still in a transitional phase and the full impact of
these initiatives has yet to be seen. The staff build-up of the last
several years has been essential in order to offset previous years of
severe staffing cutbacks and develop a new cadre of adjudicators to
handle the existing workload and eventually replace retiring senior
adjudicators. We strongly believe this build-up must continue, at least
through FY 2003. However, a more specific recommendation about staffing
needs will be contingent upon an analysis of the data in VBA's GOE FY
2003 budget request, which is not yet available. Training is a long-
term investment and must remain a central part of VBA's strategy to
provide veterans the benefits and services they expect and to which
they are entitled.
funding for medical research
Question 7. This year's Medical and Prosthetics Research Budget
request is actually 6% higher than last year's request. The VA says
that this will allow for 76 new projects and an additional 184 staff.
What are your thoughts on this level of funding for research?
Answer. The American Legion continues to recommend an increase in
Medical and Prosthetics Research. The American Legion's budget
recommendation for FY 2003 is $420 million. With the growing threats of
nuclear, biological and chemical terrorism, and the direct impact
medical and prosthetic research has on the rapidly aging veterans'
population, we believe the level of funding for research outlined in
the President's budget is too low. Recent advances, such as
identification of genes linked to Alzheimer's disease and
schizophrenia, new treatment targets and strategies for substance abuse
and chronic pain, are very important to the veterans' population.
Additionally, VA is conducting very progressive research in spinal cord
injury, aging, brain tumor treatment, diabetes and insulin research,
and heart disease. The American Legion views these research advances as
so significant that it has devoted a column in The American Legion
Magazine to VA Research and Development.
medicare subvention
Question 8. I notice that you support Medicare subvention for the
VA. Several years ago the Department of Defense had this opportunity
and ended up spending more than they collected. Why do you feel that
the VA would be successful at this when DoD wasn't?
Answer. Currently, Indian Health Service is successfully billing
and collecting from the Centers for Medicare and Medicaid Service (CMS)
for both Medicare and Medicaid. TRICARE for Life is DoD's newest
version of Medicare subvention and is being heralded by DoD as
successful. The American Legion is unaware of any third-party
reimbursement billing and collection problems being experienced with
CMS by either of these Federal agencies. Therefore, The American Legion
believes similar success could be experienced by VHA with CMS'
assistance.
One noticeable barrier is the concept known as level of effort or
maintenance of effort. In DoD's first attempt with Medicare subvention,
this philosophy became a reality in the budgeting formula. In essence,
DoD was tasked to continue to treat an estimated number of Medicare-
eligible patients, before DoD could bill CMS for any new Medicare-
eligible patients. This faulty assumption was somewhat confusing,
because the entire patient population being treated by DoD was eligible
for care based solely on honorable military service. Medicare-
eligibility had absolutely nothing to do with access to care, but
rather a coincidence. Medicare-eligibility in and of itself did not
justify care within DoD. Initially, Medicare-eligibility disqualified a
patient from participation in TRICARE. Level of effort or maintenance
of effort should not apply to VHA, as well.
Another problem with DoD's demonstration program was the negotiated
reimbursement rate once DoD surpassed its level of effort or
maintenance of effort. DoD agreed to bill CMS at 90 percent of the
reimbursement rate. Private health care providers are screaming that
the full reimbursement rate is too low, yet DoD would receive even
less. The contractual agreement between CMS (HCFA) and DoD doomed this
demonstration project from the very beginning.
Medicare is a Federally mandatory, pre-paid senior health benefit
insurance policy. Currently, Medicare-eligible beneficiaries are free
to use their Medicare throughout the private sector and in other
Federal health care delivery systems, except VHA. Enrollment in other
health care insurance policies is normally voluntary, yet veterans'
enrolled in VHA are required, by law, to identify any third-party
health benefit coverage to be billed for the treatment of service-
connected and non-service-connected medical conditions. The American
Legion believes VA and CMS could achieve Medicare subvention on two
levels: fee-for-service or Medicare+Choice. However, in either case, VA
must be treated like an integrated, quality health care delivery system
by CMS. In return, CMS should not be billed for the treatment of any
non-service-connected medical conditions or the treatment of
economically indigent veterans. Under current law, VA is
congressionally mandated to deliver quality health care for service-
connected medical conditions and economically indigent veterans.
Chairman Rockefeller. Thank you, and thank you all very,
very much.
It happens occasionally that I miscalculate, and today is
one of those days. I overestimated the amount of time that I
would be able to be here. I also have 10 questions for you, and
I have concluded that I cannot ask them at this time.. And so,
what I am going to do is the next best thing, which is actually
sometimes even better. I am going to submit the questions to
you, and they will cover some of the areas that you have
discussed and some that you have not discussed and would ask if
you would be kind enough to get back to me within about 2
weeks. There is no law on that; but as you can get them done,
it would be very helpful.
[The information referred to follows:]
Response to Written Questions Submitted by Hon. John D. Rockefeller to
the Co-Authors of the Independent Budget *
---------------------------------------------------------------------------
* AMVETS, Disabled American Veterans, Paralyzed Veterans of
America, and the Veterans of Foreign Wars.
---------------------------------------------------------------------------
discouraging priority 7 veterans through $1,500 deductible
Question 1. Please comment on the VA's proposed $1,500 deductible
for Priority 7 veterans. In my memory, this is the first time we have a
proposal on the table that aims to drive away existing VA health care
users. What are your thoughts about this proposal?
Answer. The Independent Budget is opposed to the Administration's
proposal to begin charging a $1500 deductible for health care for
category 7 veterans. The primary reason we can see for the imposition
of a deductible requirement is to discourage currently eligible
veterans from seeking VA health care. Recently, the Administration
announced that it would continue enrolling category 7 veterans. It said
that it would find the resources to cover the costs of these health
care services. Instead of providing the additional resources, it has
proposed to have veterans pay for this care out of their own pockets.
The VA itself estimates that a deductible will deter 121,000 new
veterans from seeking health care. Requiring a $1500 deductible could
adversely affect lower-income veterans, veterans whose insurance will
not pay the deductible, and who want and need to go to the VA
particularly to provide services they cannot find elsewhere in the
private sector or on Medicare, for instance long-term care,
prescription drugs, or specialized services. Finally, we are concerned
about the perverse disincentive that this deductible scheme could have
on veterans who represent the core mission of the VA.
eliminating the claims backlog
Question 2. Clearly, VA's current claims backlog is intolerable,
and new steps are needed to improve the claims process. We know from
past experience that VA's attempts to streamline this process often
lead to a temporary slowdown that makes the problem worse. What steps
do you think that VA could take, and what resources would be necessary,
to prevent the backlog from swelling even more while VA puts its new
plans into place.
Answer. The claims backlog in VA is intolerable. We would not
characterize the solution as ``new steps'' to ``improve the claims
process,'' however. We believe the current claims process is
fundamentally sound, although improvements can always be made with
evolving technology and process innovations. We contend that decisive
action is needed to improve claims processing. Experience has shown
that past attempts to streamline the process has led to decreases in
production. It is known that improvements come at a cost. Under what
has been termed the ``incorporation effect,'' the incorporation of new
skills or methods for long-term improvement causes short-term decline
in performance. However, we believe VA's past attempts to improve have
not produced the desired results because they were half-heartedly
implemented, did not take a well-managed and carefully-monitored
strategic approach, or, in some instances, were misguided.
Perhaps several improvements could contribute to VA's overall
efficiency in claims processing, but first and foremost, VA must tackle
the root causes of the claims backlog. We have discussed the root
causes and our recommendations in general terms in The Independent
Budget for Fiscal Year 2003 at pages 26-27.
One factor contributing to the backlog was the improvident
reduction in staffing in VA's C&P service in past years. VA has
increased its workforce to address the claims backlog. Initially, new
employees tend to add to the burden on the system rather than to
increase production, because experienced employees must devote part of
their time to training. As training progresses, new employees can begin
to contribute some to case production. This requires more employees in
the short term, but eventually the work could be done with fewer
employees if it were not for the continual turnover in old and new
employees. The intervention of other unforeseen factors into this
complicated situation makes accurate projection of future staffing
needs very difficult. However, without OMB constraints, VA can roughly
determine how many employees it currently needs to allow it to train
new employees, retrain existing employees, perform essential quality
review, and maintain case production enough to minimize short-term
declines in case production. In the fluid dynamics of the current
situation, perhaps the only workable solution is to let staffing levels
follow current demand, and hopefully a more forward-looking, strategic
approach can be employed once the current crisis is brought under
control and a level of stability is attained. Unfortunately, the
political goals of the budget process in OMB seem to drive VA's request
for resources more than its real needs. The President's FY 2003 budget
suggests that increased staffing is not the answer quoting the Chairman
of the VA Claims Processing Task Force: ``I must say that I think the
VA has the necessary resources right now to do the job . . . the Agency
can't justify asking for more people right now.'' However, even the
Administration does not appear to subscribe to that blanket statement
because the President's budget requests authority for 96 additional FTE
for compensation and pension claims processing. From our discussions
with VA management outside the budget process, The Independent Budget
recommends 350 additional FTE for C&P Service. We agree that any number
of additional FTE will not solve the problem unless VA gets more
serious about correcting the root causes of its problems.
shortfalls in the medical care budget
Question 3. The level of funding proposed for this year includes a
mishmash of shifting funds, revenue collections and new charges to
veterans. It's hard to tell what the actual new appropriated medical
care funding amount is but it is safe to say that it is no where near
the $3.14 billion increase proposed by the Independent Budget. What
initiatives and funding needs will the Independent Budget cover that
are not going to be met by the Administration's budget?
Answer. The Administration has proposed a medical care
appropriation of $22.744 billion, an increase of $1.4 billion over FY
2002. Although veterans appreciate any increase, we are also cognizant
of the fact that this does not meet the needs of the VA in the coming
fiscal year, and does not provide the resources necessary to ameliorate
the effects of recent inadequate appropriations. Unless additional
resources are provided, the current situation, as intolerable as it is,
will continue into the foreseeable future, and sick and disabled
veterans will once again be shortchanged by the very government they
have served, and rely upon to care for them.
The FY 2002 budget falls short by at least $1.5 billion. Already, a
few short months into FY 2002, the Administration has reported a
shortfall of close to $500 million, and is seeking supplementary
funding, a step we fully support nationally, we are witnessing an
explosion in health care costs, especially in pharmaceutical costs
which increased 17.3 percent in 2000. VA health care budgets have not
kept pace with this explosive spending growth.
Again, we note that the Administration's budget relies upon
``management efficiencies'' to address real budgetary needs. Inadequate
appropriations force the VA to ration care by lengthening waiting times
and delaying services.
We have not included collections as part of our recommendations
concerning appropriated dollars. We recognize that nonappropriated
funding may be available to expand VHA operations and ultimately
improve care for veterans. However, we are strongly committed to the
principle that the cost of VA health care is a federal responsibility
that must be met in full by Congress and the Administration through
adequate appropriations. VA must not be forced to rely on subsidies
from veterans or their insurers to cover the costs of caring for
veterans.
We are very concerned that the Administration has failed to provide
funding for the VA to meet its critical fourth mission--to serve as a
backup to the Department of Defense in times of war or national
emergency. The Administration's budget fails to address this issue with
adequate funding.
transfer of the veterans employment and training service (vets)
Question 4. VA is proposing a new competitive grant program that
would shift VETS from the Department of Labor (DOL) to VA. Do you think
that VA is better equipped to provide employment and training services
to veterans? What effects will the transfer have on veterans?
Answer. The authors of The Independent Budget for fiscal year 2003
do not directly address the transfer of the Veterans Employment and
Training Service programs. However, we do make recommendations on the
DVOP and LVER programs.
The members of The Independent Budget believe veterans would be
best served by funding DVOP and LVER programs at the statutorily
mandated levels. With adequate funding, we believe that enough staff
would be available to provide maximum services to veterans. At minimum,
we recommend sufficient funding to ensure the DVOP and LVER programs
remain national in scope and that DVOP/LVER staff be assigned to each
major office from which services are provided to veterans in transition
to the job market.
In addition, the members of The Independent Budget recognize a
clear need to institute consistent performance standards for the VETS
programs. These standards should be in place to improve and strengthen
available management tools and enhance overall program effectiveness.
Without performance standards, the system has no way to compare one
state to another, or even one office to another within a state. Recent
testimony from the DOL Assistant Secretary for VETS indicates movement
in the right direction with a strong focus on developing these
management tools.
The partnership members of The Independent Budget have recommended
several improvements in the DVOP/LVER programs to make these programs
work better so more veterans can get the help they need to find better
jobs. As outlined above, these include adequate funding and improved
performance standards.
AMVETS Answer.* Shifting VETS to VA from DOL will not improve the
employment and training needs of veterans. Within DOL, VETS has a
wealth of departmental knowledge at its disposal. DOL knows the job
market and the skills required to fill jobs over and above any other
executive department.
---------------------------------------------------------------------------
* Because the proposal to cut the VETS programs from the Department
of Labor arose after our collaboration on The Independent Budget,
AMVETS submits the attached response to Question 4 regarding the
transfer of DOL/VETS to VA.
---------------------------------------------------------------------------
While we agree that DOL needs to review its structure and process
for the delivery of employment services to veterans, AMVETS does not
agree that radical amputation of VETS from DOL is a solution to
improving job placement.
We do not see how VA is prepared to accept a program, which so
naturally suits DOL. VA has its own challenges with backlogs in claims
processing and lengthy waiting lists for health care. In forcing VETS
upon the VA, we fear that the main mission of the VA will be further
backlogged and jeopardized.
Certainly VA has the ability to provide outreach to veterans at
their time of separation, but DOL knows the labor marketplace, and they
know better than anyone else where the jobs are. To date, the only
rationale given for the shift is that VA wants to become a ``one stop
shop'' for veterans programs, but they have ignored veterans' programs
in departments and agencies other than DOL. VETS must be retained
within the DOL and the VA must be allowed to continue its valued
service to our veterans.
In addition, AMVETS notes that the administration proposes no funds
in fiscal year 2003 for the National Veterans' Training Institute.
Because NVTI is the only source of formal training available to federal
and state employees for veterans employment programs, the Institute is
vital to the success of VETS. We believe that NVTI should be funded at
a level adequate to ensure training is continued.
saving money through sharing unused va space
Question 5. Three years ago GAO criticized VA for having over 5% of
its space unoccupied. GAO said that VA was losing a million dollars a
day. I think that we would all agree that many more veterans could be
served if the VA had an additional $360 million dollars. What can VA do
to create more sharing opportunities? With what organizations might
they share?
Answer. As you may recall, that same GAO report stated,
``restructuring . . . could reduce budget pressures or generate
revenues that could be used to enhance veterans' health care
benefits.'' The VA's Capital Asset Realignment for Enhanced Services
(CARES) process serves the purpose of identifying all the facilities
that will be retained, consolidated, or reconfigured. It is, therefore,
our position that VA needs to incorporate sharing agreements into this
process as much as possible.
One organization sticks out above all others when it comes to
sharing and potential cost savings--the Department of Defense (DOD). It
is important to note that although there are areas where VA and DOD can
improve upon existing sharing agreements they are two, separate and
distinct entities with different missions: One, to fight and win the
nation's wars; and the other, to care for those who bear the scars from
those wars. DOD conducts its health care mission as a direct care
provider and insurance purchaser (TRICARE) for members of the Armed
Forces, retirees, and their dependents through the Military Health
System (MHS) while VA conducts its health care mission as a direct care
provider to honorably discharged veterans through the Veterans Health
Administration (VHA). As such, they both possess cultural and
institutional barriers that must be broken down, or at the very least
mitigated, in order to create a healthcare partnership. We know from
experience that this is easier said than done.
There are areas, however, such as joint ventures that come to mind
immediately. For example, the Alaska VA Healthcare system that boasts a
VA/DOD hospital shared with the 3rd Medical Group, Elmendorf Air Force
Base. Locating other areas around the country where military bases and
VA facilities are in close proximity has the potential to produce
similar results.
The Independent Budget cannot emphasize enough our conviction that
any sharing agreement between DOD and VA conform to 38 U.S.C.
Sec. 8111(c)(1) in that it not ``adversely affect the range of
services, the quality of care, or the established priorities for care
provided by either agency.'' Simply put, we will support only that
which does no harm to the beneficiary no matter the cost savings that
may be generated. Further, any savings realized as result of a sharing
agreement should be immediately reinvested into their respective health
care systems without offset from congressional appropriation.
In addition to DOD, there is the potential to pursue sharing
agreements with HHS and other governmental agencies charged with
medical preparedness in case of war or national emergency.
Further, the private sector provides another avenue for sharing,
especially when it comes to long-term care. Contracting enhanced use
leases to provide such services as Residential Care, Respite Care,
Hospital Based Home Care, Adult Day Health Care, and other extended
care programs.
Aside from the private sector, VA should consider leasing space to
non-profits, specifically homeless veterans advocates.
We also support VA's partnering with the National Trust for
Historic Preservation within the context of the CARES process to ensure
the appropriate, lawful, and financially prudent management of VA's
historic properties.
VFW's Answer.* GAO found that DOD needed to manage patient care and
cost more efficiently. Unlike DOD, VA's mission is to take care of
veterans. It is our opinion that the Veterans Health Administration
(VHA) is the most efficient and cost-effective health care system.
Scientific research has proven that VHA provides care for 25 percent to
30 percent less than comparable Medicare services. VHA makes no profit,
buys no advertising, pays no insurance premiums, and compensates its
physicians and clinical staff significantly less than private-sector
health care systems. VA manages to provide this more efficient and
cost-effective care even though it serves a population of veterans that
is older, sicker, and has a higher prevalence of mental and behavioral
health problems.
---------------------------------------------------------------------------
* Although VFW's responses are in accordance with those of the
Independent Budget's, our view differs slightly to question No. 5.
---------------------------------------------------------------------------
Most important to us, as veterans' advocates, the report stated
``enrollees in [the pilot program] said they were better able to get
care when they needed it. They also reported better access to doctors
in general as well as care at military treatment facilities. Enrollees
generally were more satisfied with their care than before the
demonstration.''
The VFW has made Medicare subvention one of its top legislative
priorities. This past August, our National Convention approved VFW
National Resolution 4622 calling for a change in law that would
authorize VA to collect and retain all Medicare dollars. I have
attached a copy of this resolution for your information.
Again, we thank you for affording us the opportunity to present our
views before your committee.
Resolution No. 622 VA MEDICARE SUBVENTION
WHEREAS, the VA health care system must provide all veterans access
to a full continuum of care; and
WHEREAS, the Department of Veterans Affairs has suffered from years
of chronic under-funding, limiting its ability to properly care for its
current workload; and
WHEREAS, it is now absolutely essential that VA be authorized to
capture and retain federal dollars in addition to its annual
appropriation so as to revamp and revitalize its health care system;
and
WHEREAS, a large number of VA's potential patients are Medicare
eligible; now, therefore
BE IT RESOLVED, by the Veterans of Foreign Wars of the United
States, that we support the swift enactment of legislation authorizing
VA to collect and retain all Medicare dollars.
deceptive increase in benefits budget
Question 6. Although this year's budget recommends a $94 million
increase in funding for VBA, more than half of that will be consumed in
an administrative shift to employees' benefits. Even given the
efficiencies that VBA hopes to gain in processing claims, what do you
think the short- and long-term impact of this budget will be for
veterans?
Answer. This President's budget is concerned more with making VA's
numbers fit within the President's overall political agenda in the
budget than addressing VA's true needs. Regrettably, VA's future
direction and policy positions seem to be determined more by a few
``bean counters'' in OMB, who do not appreciate the purposes and
philosophy of veterans' programs, than by VA management. OMB has become
a dictatorship within a democracy, whose policies are moderated and
countered only by a vigilant and determined Congress.
The Independent Budget recommendation for VBA under the General
Operating Expenses appropriation is a ``current services'' budget with
money added only for our recommendations of additional FTE and funding
for specific information technology initiatives. Obviously, the
President's budget requests funding for other ongoing and new
initiatives that we have not requested funding for in The Independent
Budget. Given that, the President's budget would appear to be
inadequate. The Independent Budget recommendation includes funding for
350 additional FTE for C&P Service and two other information technology
initiatives. Appropriations for other projects included in the
President's budget should be added to The Independent Budget request.
Otherwise, both the short- and long-term impact of this budget will
only worsen an already unacceptable situation in claims processing. As
with the President's budget overall, the request for VBA is inadequate.
The $53.9 million included in the $94-million increase requested for
VBA is somewhat deceptive but is unlikely to succeed in deceiving those
who must give real consideration to its impact on veterans.
funding for medical research
Question 7. This year's Medical and Prosthetics Research Budget
request is actually 6% higher than last year's request. The VA says
that this will allow for 76 new projects and an additional 184 staff.
What are your thoughts on this level of funding for research?
Answer. Although VA Medical and Prosthetic Research (MPR) has not
suffered the same budget pressures that have beset health care, it is
still suffering from the uncertainty it faces each budget cycle. The
MPR account fell short by $24 million in FY 2002 and will result in
numerous MPR projects to be placed on hold. With the modest increase
requested by the Administration for FY 2003, the MPR account will be
hard pressed to maintain the status quo.
va medicare subvention
Question 8. I notice that you support Medicare subvention for the
VA. Several years ago the Department of Defense had this opportunity
and ended up spending more than they collected. Why do you feel that
the VA would be successful at this when DoD wasn't?
The Independent Budget Answer. The Independent Budget VSOs in
general feel Medicare Subvention in some form may be appropriate.
However, at this time there is no consensus with respect to the actual
implementation or specifics of such. Each of the four Independent
Budget VSOs will respond independently to this issue. Following are the
responses from the Disabled American Veterans and the Paralyzed
Veterans of America. AMVETS and the Veterans of Foreign Wars will
respond by separate letter.
DAV Answer. We understand that DoD negotiated an unfavorable
contract with Medicare that required it to exceed the level of effort
and in addition it was a complex program including an HMO and Medicare
Plus Choice delivery model which resulted in additional administrative
problems.
We would encourage Congress to draft appropriate legislation to
ensure problems faced by DoD would be rectified and that the contract
between VA and Medicare would clearly outline the intended outcome for
VA.
The DAV supports Medicare Subvention and we believe VA
participation in this initiative will benefit veterans, taxpayers, and
ultimately VA as long as Medicare subvention dollars are a supplement
to an adequate VA appropriation. To offset federal appropriations for
VA health care by revenue from Medicare makes no sense and benefits no
one, not veterans, not the VA, not the Medicare Trust Fund, and not
American taxpayers.
As you are aware, although access to health care is an earned
benefit, based on honorable military service, it is not considered an
entitlement; therefore, it is subject to annual discretionary
appropriations. Priority level funding may change from year to year,
depending on congressional appropriations. Currently, VHA is authorized
to retain all copayments collected from Priority Group 7 veterans and
third-party reimbursements collected from their private insurance
companies. However, VHA is prohibited from billing Medicare for
services rendered to Priority Group 7 Medicare-eligible veterans.
Medicare-eligible Priority Group 7 veterans have earned the right
to use VA health care services. We strongly believe that Congress
should pass legislation that permits Medicare-eligible Priority Group 7
veterans the option of choosing VA health care and using their Medicare
coverage. Citizens purchase Medicare coverage through payroll
deductions and should have the right to use those benefits to receive
care from the provider of their choice. The VA health care system is
well known for its specialized programs in areas such as blind
rehabilitation, spinal cord injury, post-traumatic stress disorder,
traumatic brain injury and mental health. Medicare subvention would
give veterans who currently cannot use their Medicare coverage at VA
facilities, but who need specialized care, the option of choosing the
VA system and using their Medicare coverage. Additionally, VA believes
it can deliver care to Medicare beneficiaries at a discounted rate,
which would save money for the Medicare Trust Fund and stretch taxpayer
dollars. Allowing Medicare-eligible Priority Group 7 veterans to apply
their Medicare benefits in VA facilities would reduce the government's
total health care expenditures. VA health care costs less, at least 25%
less, than private-sector providers billing at Medicare rates. The
savings could be realized by reduced cost to patients, through low or
no copayments, or passed on to taxpayers by setting subvention rates
discounted from standard Centers for Medicare & Medicaid Services (CMS)
rates, or by a combination. A large number of Priority Group 7 veterans
bring diversity to the case mix and lower average costs. Finally, this
group comprises a body of users that could be directed to other
Medicare providers outside the VA system in case VA is needed to
fulfill its fourth mission as backup to the Department of Defense in
time of War or domestic emergency.
The VA Secretary determines Priority Group 7 veterans' access to VA
health care on an annual basis. VA's ability to provide their care
largely depends on if it receives an adequate appropriation for health
care. From one year to the next, this group of veterans is not sure if
they will be able to continue to use VA health care services. Secretary
Principi was prepared to announce his decision to limit enrollment of
new Priority Group 7 veterans for this year. At the last minute he
reversed his decision based on a promise from the Administration to
provide supplemental funding to VA to continue open enrollment for all
priority groups in 2002. The potential closure of enrollment for new
Priority Group 7 veterans demonstrates that appropriations cover only
Priority Groups 1-6. Medicare Subvention would obviate the need to deny
access to Priority Group 7 users.
The cost of care for this growing population of enrolled Priority
Group 7 veterans exceeds medical care cost recovery (MCCR) from these
patients and their secondary insurers. The DAV along with the
Independent Budget (IB) group has consistently opposed the offset of
MCCR collections. We believe that it is the responsibility of the
Federal government to fund the cost of veterans' care; therefore, we do
not include any cost projections for MCCR in the IB budget development.
VA's historical inability to meets its collection goals has eroded our
confidence in VA estimates. We have urged the Administration and
Congress to drop this budget gimmick and address the veterans' medical
care appropriations in a straightforward manner by providing a
realistic budget fully funded by appropriations. We strongly believe
monies collected through MCCR should be a supplement to, not a
substitute for, appropriations. Collections from Medicare-eligible
Priority Group 7 veterans do not cover the cost of their care, and
since appropriations are not sufficient, these funds are redirected
away from service-connected and poor veterans to subsidize the Medicare
trust fund. Additionally, because of the shortfall in appropriated
funds, services provided for the care of service-connected and poor
veterans are delayed, and those veterans particularly must wait much
too long to receive necessary care.
While we support Medicare subvention, we would want Congress to
ensure that service-connected disabled veterans would not be displaced
or forced to wait even longer for necessary care and that revenue
generated from Medicare subvention will not be used to offset federal
appropriations. It doesn't make any sense to replace appropriated funds
with Medicare funds. There is no benefit to VA, Medicare, or taxpayers
if VA appropriations are offset by Medicare revenues.
The assumption that subvention dollars should necessarily be offset
by VA appropriation reductions is invalid because it is based on the
incorrect belief that current appropriations are sufficient to provide
services to service-connected, poor, and Priority Group 7 Medicare-
eligible veterans. While VHA sets standards for quality and efficiency,
veterans' access to health care is constrained. Consistently inadequate
appropriations have forced VA to ration care by lengthening waiting
times. Last year appropriations were barley sufficient to cover the
cost of care for Priority Groups 1-6. Appropriations over the last
several years have been insufficient to provide services to service-
connected, poor, and Priority Group 7 Medicare eligible-veterans. By VA
estimates, there are approximately one million Priority Group 7 users
with 50-65 percent Medicare eligibility. Only 15 percent of Priority
Group 7 Medicare-eligible users have billable Medigap insurance,
leaving 85 percent where VA receives no insurance reimbursement. The
average collections from Medigap insurance for Priority Group 7
Medicare-eligible veterans is estimated at only 12-13 percent of the
possible total billable portion. Obviously, VA spends a significant
amount of resources on providing health care services for Priority
Group 7 Medicare-eligible veterans with little reimbursement. We
strongly believe their health care costs should be covered by Medicare
funds.
The director of CMS has stated that veterans' care should be
covered by VA appropriations and that subvention would represent a
double payment by the government. This is a spurious argument;
actually, the current situation represents ``reverse subvention'' with
VA appropriations used to pay for care that has already been funded by
contributions to the Medicare Trust Fund. We estimate that $600 million
of the veterans medical care appropriation is used to subsidize
Medicare.
No veteran should be denied access to the veterans health care
system. Veterans, even veterans like those in Priority Group 7, who are
not poor, have the right to take advantage of VA health care. However,
service-connected and poor veterans should not have to subsidize care
for veterans who have public or private insurance coverage. Medicare
subvention would allow Medicare-eligible Priority Group 7 veterans to
become a source of funding rather than a drain on an already over-
extended system. We strongly urge the Committee to support Medicare
subvention without offset to the annual appropriation.
PVA Answer. Medicare Subvention could benefit the provision of
veterans health care, but, in PVA's view, only if the services provided
equated to the full range of fee-for-service Medicare, and, if VA could
be assured that appropriations to provide the full range of services
for non-Medicare eligible would not be offset by collections from the
Medicare Trust Fund.
remaining management efficiencies in va health care
Question 9. In this year's Independent Budget, you state under
Medical Care issues that ``There are no more `efficiencies' to be wrung
out of the system.'' Are you saying that you believe that the VA can't
be more efficient in their management of health care?
Answer. The Independent Budget will be the first to acknowledge
there are always ways in which efficiencies can be improved. However,
VA management efficiencies historically are achieved through the
rationing or elimination of services and personnel. This can only
result in longer waiting lines for sick and disabled veterans.
Chairman Rockefeller. I very much appreciate the effort of
veterans service organizations to try to work the budget
process seriously, and I am on the Finance Committee. I receive
many visitors who, shall we say, and always think about their
particular niche. They never think about the larger situation.
And what I think you all are trying to do--and I do not know of
any representative that unite on behalf of an entire segment in
our population. You look at the entire budget and try to
present what you think is best and right for all veterans. And
luckily you do not have the constraint of having to worry about
the Office of Management and Budget.
Mr. Paul Wellstone has just entered, which means that he
may ask all of my questions, Paul Wellstone, and because I am
about to leave, you also become chairman.
Senator Wellstone. You know what, Jay, Mr. Chairman? I can
do this in 30 seconds.
Chairman Rockefeller. That, I have heard from you before.
[Laughter.]
Senator Wellstone. No, no, watch it. Watch it. A, thank you
everyone, and I had to chair a hearing on working poor, and I
could not leave, because I was chairing it, and I apologize for
missing this very important hearing. B, if the Secretary is
still here, you know, I would thank him, and I would thank
everybody, all of the panelists and people who are here for all
of the work and getting compensation for atomic veterans and
the homeless veterans bill, and thank you, Mr. Chairman, and
then, see, I have just got to say that I see that there is an
increase in the budget, but when I look at inflation, and I
look at the commitments that we have made, I actually do not
see that in relation to--I think we are short, and there are
huge gaps, and I think we have got to do a lot better. And I
think there is going to be a pretty significant debate on the
Independent Veterans Budget, which is the direction I think we
need to go in.
So thank you, everyone. I am ready to raise cain about the
budget, and I will not say anything else.
Chairman Rockefeller. That was not only substantive but
accurate in terms of time.
And more importantly to me is that generally people come to
our hearings and leave. But when people have been at other
committee hearings and then come here, that is very duly noted
by me. And that shows your commitment, and I appreciate that
very much.
So with the previous apologies that I have made and thanks
to all of you for your work and for your broader vision; thank
you very much, and this hearing is adjourned.
[Whereupon, at 11:59 a.m., the committee was adjourned.]
A P P E N D I X
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Prepared Statement of Hon. Ben Nighthorse Campbell, U.S. Senator From
Colorado
Thank you Mr. Chairman. I would like to welcome you, Mr. Secretary,
and thank you for appearing before the committee today. I am looking
forward to your testimony which will give us a better picture of how
the Administration is going to address the serious issues facing the VA
at this time.
I am encouraged that President Bush wants to fulfill the nation's
commitment to its veterans by guaranteeing that veterans' disability
claims are processed accurately and quickly, and by focusing medical
care resources on treating disabled and low-income veterans.
Though I am encouraged with the overall FY 2003 funding increase,
and particularly the increase for health care, I continue to be
concerned that we find a way to take care of what will be an increasing
number of elderly veterans. In my home state of Colorado, several
veterans clinics are no longer able to take new primary care patients
due to a lack of funding and providers. I think we can all agree that
one of our greatest national responsibilities is the welfare of our
nation's veterans. It is critical that we find a balanced way to make
good on the promises to them.
I also remain concerned about the backlog that continues to hinder
the adjudication process of veterans' claims appeals. I understand that
this is one of your priorities, and I heartily support you in that
endeavor.
I will be listening carefully to the veterans who are meeting with
me this month and I am looking forward to the testimony of the many
service organizations that will be testifying at the joint hearings
during the next few weeks.
Speaking as a veteran, I believe we need to do all we can to serve
those who have so honorably served all of us.
Mr. Secretary, again, I thank you for being here. I look forward to
hearing details of your budget proposal and how you plan to address
these issues in an efficient and effective manner within the proposed
budget.
I thank the chair and look forward to today's testimony.
______
Prepared Statement of Hon. Larry E. Craig, U.S. Senator From Idaho
Mr. Chairman. it is indeed a pleasure to welcome the VA Secretary
Tony Principi and members of his staff. I applaud you and your team in
your efforts to ensure our government honors our commitments to
Veterans while implementing the most beneficial and cost effective
programs. To do this, we must continually look for opportunities to
reform the VA health care system, while maintaining as our number one
priority, our combat veterans with disabilities or veterans with low
incomes who often rely exclusively on the VA for their care.
The VA's Budget proposal totals $56.5 billion for Veterans'
benefits and services, $30.1 billion for entitlement programs and
includes $26.4 billion in discretionary spending, for medical care,
burial services, and the administration of Veterans' benefits. This is
an increase of almost $6 billion over last year's budget, and it
clearly demonstrates the President's commitment to Veterans' Health
Care.
I strongly support a VA which is committed to providing accessible,
high quality medical care and other Veterans benefits and services in a
timely and effective manner. However, we must expand and improve the
delivery of service and benefits so that all Veterans have equal access
to high quality medical care, particularly in under served rural areas
such as Idaho. Of particular note are concerns that I have with the
doctor shortage we are currently experiencing in our Pocatello
facility. It is of utmost importance that the long list of Veterans
waiting to receive various services, especially medical care, are able
to get it in a timely, courteous manner with a minimal amount of
necessary travel time. In recent years there were tremendous staff
reductions that resulted in reduced services. The necessary steps must
be taken to reverse this trend.
In closing, Mr. Chairman, there is no way to over emphasize the
honor and respect this nation owes the military men and women who
sacrificed so much to accomplish a strong national defense. I believe
that this proposed budget is a good beginning for ensuring our Veterans
will receive high-quality health care, that we keep our commitment to
maintain Veterans' cemeteries as national shrines, and we have the
resources to process Veteran Benefit claims in a more timely and
accurate manner. I look forward to working with Secretary Principi to
meet the many challenges that the VA will face in the coming years.
______
Prepared Statement of the Friends of VA Medical Care and Health
Research
The Friends of VA Medical Care and Health Research (FOVA), a
coalition of 78 medical research, specialty, physician, academic,
patient advocacy and industry organizations committed to quality care
for veterans, is pleased to provide recommendations regarding FY 2003
funding for the Department of Veterans Affairs (VA) medical and
prosthetics research program. FOVA strongly encourages the Committee on
Veterans Affairs to support VA research by recommending an FY 2003
appropriation of at least $460 million and $45 million for research
facility improvements.
FOVA's FY 2003 VA research recommendation builds on the $20 million
increase provided for the current year. FOVA thanks the Committee for
recognizing that the less-than-inflationary increase requested by the
Bush Administration last year would have been detrimental to the long-
term viability of the program. We are grateful for the Committee's
strong leadership in securing a final outcome that was a significant
improvement.
The Administration's FY 2003 budget request for a $23 million (6%)
increase in research program dollars * is notable for being the first
time in many years that an administration has proposed funding
sufficient to maintain VA's current level of effort in advancing
treatments for conditions particularly prevalent in the veteran
population including prostate cancer, diabetes, heart diseases,
Parkinson's disease, mental illnesses, spinal cord injury and aging
related conditions. We applaud the Bush Administration and Department
of Veterans Affairs Secretary Anthony J. Principi for recognizing the
invaluable contribution VA research makes to delivering high quality
care for veterans and toward improving the health of veterans and the
nation.
---------------------------------------------------------------------------
* The Administration's budget request for a $38 million increase
for VA research includes a shift from OPM to VA of $15 million in
accrued government health and retirement benefit funds. Consequently,
the Administration's budget proposes a $23 million (6%) increase in
research program funds plus $15 million in benefit expenses previously
held in an OPM account, for a total increase of $38 million (10%) over
current year funding of $371 million.
---------------------------------------------------------------------------
However, a $23 million increase would not allow VA to expand its
efforts to improve care for veterans, nor to meet the new challenges
presented by the tragedies of September 11 and subsequent events. FOVA
strongly encourages the Committee on Veterans Affairs to recommend an
FY 2003 appropriation of at least $460 million for the VA medical and
prosthetics research program. This represents growth in program dollars
of $74 million (19%).
Four core needs justify the FOVA recommendation of $460 million:
1. Investments in investigator-initiated research projects at the
VA have led to an explosion of knowledge that promises to advance our
knowledge of disease and unlock new strategies for prevention,
treatment and cures. Attachment 1 is a list of just a few of VA's
recent achievements and initiatives. However, many health challenges
still confront the veteran community. Additional funding is needed to
take advantage of the burgeoning scientific opportunities and to
improve quality of life for our nation's veterans as well as the
general public. FOVA urges the Committee to support additional funding
for the following research priority areas identified by the VA for FY
2003:
<bullet> Quality of Care: Additional funding for the Quality
Enhancement Research Initiative (QUERI) program would be used to fund
centers in prostate cancer and dementia/Alzheimer's.
<bullet> Special Populations: VA would expand research in quality
of care, community access and restoration of function to achieve
greater understanding of existing racial, ethnic and gender disparities
in health care.
<bullet> Diseases of the Brain: Additional studies are needed on
the impact of different classes of psychiatric drugs on cognitive and
behavioral function.
<bullet> Treatment Strategies in Chronic Progressive Multiple
Sclerosis: Recent studies have shown that immunotherapy of acute MS can
reduce disability. More studies are needed to determine the optimal
therapy for patients.
<bullet> Micro Technology: In the area of low vision, work in
retinal prostheses is an emerging science and may restore sight lost as
a result of a variety of disorders including age-related macular
degeneration and retinal pigmentosa.
<bullet> Patient Outcomes in Rehabilitative Care: Specific areas of
emphasis include long-term care strategies to enhance patients'
independence and activities of daily life, consequences of community
reintegration and the impact of assistive technology on quality and
functionality of life.
<bullet> Chronic Disease Management: VA is proposing two major
initiatives in comparing clinical efficacy of 1) vascular surgery
conducted on and off cardiopulmonary bypass machines, and 2) open
versus endovascular surgery for abdominal aortic aneurysms.
2. The complexity of research combined with biomedical research
inflation has increased the costs of research. The average cost of each
VA research project is now $150,000, a 9% increase in just two years.
As a result, VA requires an increase of at least $15 million just to
maintain a stable number of programs.
3. In response to the events of September 11, VA seeks to establish
a research portfolio to address the threats of bio-terrorism. This
objective is consistent with VA's statutory obligation to provide
medical back-up services in times of national emergencies. VA has an
established history of research accomplishments in the areas of
infectious diseases and immunology, including vaccine development. The
laboratories of VA research scientists are disseminated nationwide, and
are affiliated with top-flight universities. VA research provides a
unique national resource that can be readily adapted and quickly
mobilized in response to diverse biological threats.
To meet this emerging challenge, consistent with H.R. 3253, the
National Medical Emergency Medical Preparedness Act of 2001, FOVA
strongly supports VA's proposal to establish four new centers of
research excellence focusing on fundamental issues critical for
responding to chemical, biological and radiological threats to public
safety. The targeted research portfolio would include pathogen
detection, disease diagnosis and treatment, protection, and vaccine
development. The mission of these centers would also encompass the
evaluation and management of illnesses consequent to military service,
especially in our current conflict.
4. VA's career development programs are a national resource for
training the next generation of clinician scientists, those doctors who
treat patients and address questions that have a direct impact on
patient care. Additional funding is needed to expand this program in
order to address the growing national shortage of clinician-
investigators.
Separate from its recommendations for the VA research
appropriation, FOVA strongly encourages the Committee to address the
increasingly urgent need for improvements in VA's research facilities.
In 1997, NIH conducted site visits of six VA research facilities
and concluded that, ``VA has had increasing difficulty in providing
sufficient resources via its congressional appropriation to
satisfactorily fund the infrastructure necessary to support research at
the VAMCs.'' It is FOVA's understanding that VA has made no
significant, centrally administered investment in its existing research
facilities since this finding. Ventilation, electrical supply and
plumbing appear frequently on lists of needed upgrades along with space
reconfiguration. Substandard facilities make VA a less attractive
partner in research collaborations with affiliated universities; reduce
VA's ability to leverage the R&D appropriation with other federal and
private sector funding; and make it difficult to attract cutting edge
researchers, both clinician investigators and laboratory scientists, to
careers in VA. Facility R&D Committees regularly disapprove projects
for funding consideration because the facility does not have the
necessary infrastructure and has little prospect of acquiring it.
Under the current system, research must compete with other medical
facility and clinical needs for basic infrastructure and physical plant
support. Unfortunately, the minor construction appropriation is
chronically inadequate to meet facility needs for clinical improvements
much less research upgrades, and year after year the list of urgently
needed research repairs and upgrades grows longer. VA has identified 18
sites in urgent need of minor construction funding to upgrade their
research facilities. These sites plus the many facilities with smaller,
but no less important needs, provide more than sufficient justification
for an appropriation of $45 million specifically for research facility
improvements.
FOVA recommends that a new funding mechanism, such as a minor
construction appropriation specifically for research facilities, be
developed to provide a permanent, steady stream of resources dedicated
to upgrading and renovating existing research facilities. State-of-the-
art research requires state-of-the-art facilities.
FOVA thanks the Committee for consideration of its views. For
questions or additional information, please contact any member of the
FOVA executive committee listed on this letterhead. Thank you for your
consideration.
Organizations that have endorsed FOVA's FY 2003 recommendations (as of
February 7, 2002):
Administrators of Internal Medicine; Alliance for Aging Research;
Alzheimer's Association; American Academy of Child and Adolescent
Psychiatry; American Academy of Neurology; American Academy of
Opthalmology; American Academy of Orthopaedic Surgeons; American
Association of Colleges of Osteopathic Medicine; American Association
of Colleges of Pharmacy; American Association of Neurological Surgeons;
American Association of Spinal Cord Injury Nurses; American Association
of Spinal Cord Injury Psychologists and Social Workers; American
College of Clinical Pharmacology; American College of Physicians-
American Society of Internal Medicine; American College of
Rheumatology; American Dental Education Association; American
Federation for Medical Research; American Gastroenterological
Association; American Geriatrics Society; American Gold Star Mothers of
America; American Heart Association; American Lung Association;
American Military Retirees Association; American Optometric
Association; American Osteopathic Association; American Paraplegia
Society; American Physiological Society; American Psychiatric
Association; American Psychological Association; American Society for
Pharmacology and Experimental Therapeutics; American Society of
Hematology; American Society of Nephrology; American Thoracic Society;
American War Mothers; Association for Assessment and Accreditation of
Laboratory Animal Care International; Association for Research in
Vision and Ophthalmology; Association of Academic Health Centers;
Association of American Medical Colleges; Association of Pathology
Chairs; Association of Professors of Medicine; Association of Program
Directors in Internal Medicine; Association of Schools and Colleges of
Optometry; Association of Subspecialty Professors; Association of VA
Chiefs of Medicine; Blinded Veterans Association; Blue Star Mothers of
America; Clerkship Directors in Internal Medicine; Coalition for
American Trauma Care; Coalition for Heath Services Research; Congress
of Neurological Surgeons; Digestive Disease National Coalition;
Gerontological Society of America; Independence Technology, Inc.;
Johnson & Johnson; Juvenile Diabetes Research Foundation International;
Legion of Valor; Medicine-Pediatrics Program Directors Association;
National Alliance for the Mentally Ill; National Association for
Biomedical Research; National Association for the Advancement of
Orthotics and Prosthetics; National Association for Uniformed Services;
National Association of State Universities and Land Grant Colleges;
National Association of VA Dermatologists; National Association of VA
Physicians and Dentists; National Association of Veterans' Research and
Education Foundations; National Mental Health Association; National
Multiple Sclerosis Society; National Organization of Rare Disorders;
Nurses Organization of Veterans Affairs; Paralyzed Veterans of America;
Partnership Foundation for Optometric Education; Research Society on
Alcoholism; Research!America; Society for Investigative Dermatology;
Society for Neuroscience; Society of General Internal Medicine;
Veterans Affairs Physician Assistant Association; Veterans of the
Vietnam War.
Attachment 1.--Research--Recent Achievements and Initiatives
promise for tb vaccine
Researchers at the Portland VA have found a unique mechanism by
which human T cells recognize cells infected with Mycobacterium
tuberculosis, the bacteria that cause TB. They have found that the
molecule HLA-E can present TB antigens to cytotoxic T cells. A further
understanding of this mechanism may facilitate the development of an
improved TB vaccine. Worldwide, over 2 million people die each year
from TB. Advancement towards an effective TB vaccine has significant
potential to improve both national and global health.
new centers to study parkinson's disease
VA created six new centers specializing in research, education and
clinical care for Parkinson's disease. The centers--in Houston,
Philadelphia, Portland (Ore.), Richmond (Va.), San Francisco and West
Los Angeles--will conduct research covering basic biomedicine, clinical
trials, rehabilitation, and health services. In addition, each center
will take part in a major VA clinical trial to assess the effectiveness
of surgical implantation of deep brain stimulators to reduce symptoms.
(Feb. 2001)
key to wasting syndrome discovered
Researchers at the San Diego VA Medical Center have unraveled the
biological chain of events that causes wasting syndrome in mice, and
identified the same process in liver and tissue from cancer patients.
Wasting syndrome or cachexia, affects about half of all cancer and HIV/
AIDS patients, as well as those with bacterial and parasitic diseases,
rheumatoid arthritis, and chronic diseases of the bowel, liver, lungs
and heart. By noting the similarities between animal and human models,
researchers hope to expedite the development of treatments to help
patients. (Dec. 2001)
va evaluating robotic walker for vision-impaired
VA researchers in Pittsburgh and Atlanta are testing a new high-
tech walking frame designed to promote mobility and independence for
the vision-impaired frail elderly. Using laser range finders, sonar
sensors, steering motors and a motion controller, the Personal Adaptive
Mobility Aid (PAM-AID) seeks to build the functionality of a guide dog
into a robust walking frame. (Oct. 2001)
va establishes new hiv research center
VA is the nation's largest single provider of health care to HIV-
infected persons. A new Center of HIV Research Resources at the Palo
Alto VA Health Care System seeks to improve health care for veterans by
assessing research and clinical trials throughout VA and other agencies
and determining their potential for further research and clinical
application. (Oct. 2001)
rehab researchers collaborate in artificial retina trials
VA researchers from the Rehabilitation Research and Development
Service have recently collaborated with colleagues at the Louisiana
State University Medical Center on studies to implant silicon-chip
retinas in the eyes of patients blinded by retinal disease. About the
size of a pinhead, the artificial silicon retinas are completely self-
contained and require no wires or batteries. They contain 3,500
microscopic solar cells that generate electrical current in response to
light. The implants stimulate healthy retinal cells underneath the
retina in a pattern that resembles the light images focused on the
chips. These images are then transmitted to the brain via the optic
nerve. The implants are designed to treat retinitis pigmentosa and
macular degeneration. (Sept. 2001)
new blood test speeds diagnosis of heart attacks
Researchers at the San Diego VA Medical Center have developed a
simple, inexpensive blood test to increase the speed at which heart
attacks are diagnosed in hospital emergency rooms. The new blood tests
can rule out a heart attack with 100% accuracy within 90 minutes by
looking for three cardiac enzymes released by distressed heart tissue
during an attack. Ruling out a heart attack by traditional methods
usually takes 6 to 24 hours. As a result, critical care admissions
dropped 40% and overall hospital admissions dropped 20%. (Sept. 2001)
chronic lymphocytic leukemia may be underestimated
VA researchers at the Central Arkansas Veterans Healthcare System
have found that the true incidence of Chronic Lymphocytic Leukemia
(CLL) is substantially higher than estimated from the tumor registry
database. Researchers credited the VA's Computerized Patient Record
System (CPRS) as making the study possible by allowing researchers to
review data from a large patient population without handling paper
records. Revision in the data may show CLL to be the most common
lymphoid malignancy in the United States. (Sept. 2001)
friendly virus may slow replication of hiv
VA researchers at the University of Iowa have shown that a form of
the hepatitis virus called GPV-C may prolong the life of patients with
HIV by preventing the HIV from replicating. GPV-C does not appear to
cause any symptoms and may provide future therapy options for HIV.
Specifically, the VA team showed that infecting human blood cells with
GPV-C in the laboratory slowed the rate at which HIV multiplies. (Sept.
2001)
higher estrogen doses may enhance memory for alzheimer's patients
VA researchers have found that higher doses of estrogen may enhance
memory and attention for post-menopausal women with Alzheimer's
Disease. Building on previous research showing the positive effects of
estrogen administered by a skin patch, the researchers showed that a
short-term administration of a higher dose of estrogen was found to
significantly improve verbal and visual memory as well as attention in
post-menopausal women. Although estrogen therapy does not show improved
brain function for patients with mild to moderate Alzheimer's, it may
slow the progression or prevent the disease. (Aug. 2001)
diet and exercise reduce risk and delay onset of type 2 diabetes
As part of the Diabetes Prevention Program (DPP), researchers at
the VA Puget Sound Health Care System and the University of Washington
have collaborated in a major clinical trial that showed at least 10
million Americans can reduce their risk of contracting Type 2 diabetes
with a regimen of diet and exercise. Funded by a wide group of federal
agencies, private associations, pharmaceutical companies and product
manufacturers, the DPP was ended a year early because the data had
clearly answered the major research questions. (Aug. 2001)
va researcher identifies breast cancer gene
A VA researcher at the San Francisco VA Medical Center and the
University of California at San Francisco led a study that showed that
women who have a specific sequence of a transforming growth-factor gene
have a 60% lower risk of developing breast cancer. (June 2001)
increased ``good'' cholesterol reduces rate of strokes
A VA Cooperative Study at 20 VA Medical Centers has found that
treatment aimed at raising levels of high-density lipoproteins (HDL),
commonly called ``good'' cholesterol, substantially reduces the
incidence of strokes in some patients. Patients who received the drug
Gemfibrozil had a 31% lower incidence of stroke. The result is part of
a larger study aimed at showing that higher HDL levels reduce the risk
of major cardiovascular events. (June 2001)
brain development continues into late-40's
An inter-agency study led by a VA researcher at the Central
Arkansas Veterans Healthcare System has shown that the brain continues
to develop in late 40-year olds. This view contradicts the current view
that brain maturation ends before age 20 and may shed light on brain
ailments such as Alzheimer's Disease, schizophrenia and drug addiction.
Using magnetic resonance imaging (MRI) to measure brain development,
the study showed that so-called white matter--where memory, higher
reasoning, and impulse functions take place--continues to develop until
the age of 48, on average. (May 2001)
reduced opiate treatment may increase efficacy of chronic pain
treatment
Researchers at the Tampa VA Medical Center have found that patients
taking opiates for chronic pain conditions reported no greater pain
intensity than those not taking the drugs. Those receiving opiate
treatment did report increased impairment. The program gradually phased
out opiate use and those who remained off the drugs reported less pain
and increased functionality and reduced depression. (May 2001)
new technique to evaluate corneal tissue for implants
Researchers at the Central Arkansas Veterans Healthcare System and
the Jones Eye Institute at the University of Arkansas for Medical
Sciences have developed a new technique to evaluate the surface of a
cornea to determine suitability for transplantation. The new technique
allows for evaluation of the entire surface of the cornea; current
inspection is done visually or by methods that detect only large
lesions. (May 2001)
old drug resists pull of cocaine
Researchers at the Philadelphia VA Medical Center and the
University of Pennsylvania report that Propranolol, a drug currently
used to treat high blood pressure, helps addicts remain in treatment
when the withdrawal effects of cocaine are especially high and
treatment dropout rates are otherwise high. The research suggests that
the drug reduces withdrawal symptoms by lowering the anxiety causing
effects of adrenaline. (April 2001)
new method to treat osteoporosis, grow bone tissue
By using a synthetic form of estrogen that promotes bone growth
without affecting the reproductive system, researchers at the Central
Arkansas Veterans Healthcare System and the University of Arkansas for
Medical Sciences may have discovered a new way to treat osteoporosis.
Existing estrogen replacement therapy for osteoporosis is associated
with several side effects including uterine cancer. This conceptual
breakthrough could lead to a new generation of drugs and hormone
therapies. (March 2001)
natural recovery from spinal cord injury shown in rats
Researchers at the San Diego VA Medical Center have found that rats
with spinal cord injuries develop some spontaneous re-growth of nerves
leading to increased motor function. In rats where 97% of the spinal
cord connections are severed, rats were able to regain function within
four weeks of surgery. Further research in continuing to determine how
this process of ``sprouting'' can be enhanced. (March 2001)
flu vaccines could save the nation $1.3 billion annually
Routine influenza vaccinations of all working adults could save the
nation as much as $1.3 billion each year according to a study led by
researchers at the Minneapolis VA Medical Center and the University of
Minnesota Medical School. By examining both the direct and indirect
costs associated with influenza, researchers estimated that health care
costs could be reduced by an average of $13.66 per person vaccinated.
(March 2001)
implanted electrodes help stroke patients walk
Using a technique known as Functional Neuromuscular Stimulation
(FNS), VA scientists implanted electrodes in the leg muscles of stroke
patients and used sophisticated software to electrically stimulate the
muscles over a six-month course of treatment. The patients experienced
significant improvements in gait and other abilities, with no adverse
effects. The research was described in the Journal of Rehabilitation
Research and Development and other journals. (Feb. 2001)
______
Prepared Statement of Richard Weidman, Director of Government
Relations, Vietnam Veterans of America
Chairman Rockefeller, Ranking Member Specter, and other
distinguished members of the committee, Vietnam Veterans of America
(VVA) is grateful for this opportunity to provide testimony on the
administration's fiscal year 2003 budget request for vitally needed
veterans services.
I want to preface my remarks by saying that VVA continues to hold
Secretary Principi in the highest regard. He has worked with us to
address a number of issues of concern to VVA, its membership, and all
veterans. We believe that his commitment to helping veterans is
genuine. In contrast, VVA believes that some permanent members of the
bureaucracy at the Office of Management and Budget (OMB) may not share
his understanding or concern for veterans, particularly low-income and
other economically disadvantaged veterans.
When President Bush announced in his State of the Union speech that
he would seek ``an historic increase'' in funding for veterans health
care, VVA's leaders and members were left with the impression that the
President was about to make a clean break with the past, that veterans
could expect full and honest funding of real appropriated dollars for
real health care. Having examined the budget in some detail, we have
found budget gimmicks built into the overall request, making it less of
an ``historic increase'' than it might seem at first glance.
The President has asked for $1.414 billion more for FY2003 than the
level set for FY2002, and this is a significant increase in comparison
to some other programs. While the President was correct when he and the
U. S. Department of Veterans Affairs (VA) stated in their press release
of February 4 that the FY 2003 proposed budget was the largest overall
increase in recent memory, it would in fact be the second largest
increase ever provided for veterans health care in purely appropriated
dollars. In ordinary times, this would be a major achievement. These
are not ordinary times, however.
We believe that the Veterans Health Administration (VHA) needs at
least another $1.3 billion in addition to the $1.414 that the President
requested. However, that additional $2.7 billion for veterans health
care over the FY2002 level must be ``real'' appropriated dollars. An
appropriation of this magnitude is vitally needed partly because of the
significant shortfall this year, which made the starting base too low.
Indeed, it is clear that a supplemental appropriation of approximately
$750 million is needed to stop the reductions in force now occurring at
every VA medical facility in the nation. A $2.7 billion increase in the
appropriated dollars is vitally needed to advance meaningful and
permanent improvements in veterans health care.
VVA would also point out that one cannot speak realistically of
preparedness for further attacks from our enemies on American soil and
of homeland security without ensuring that the VA healthcare system is
restored enough funding and positions for the VHA to be able to rebuild
the organizational capacity lost since 1996. Put quite simply, in case
of an attack resulting in 5,000 or more casualties at one time in any
given congressional district, the civilian medical system would be
overwhelmed and the VHA medical facilities would implode. Many American
citizens would suffer and die needlessly in such a scenario. Currently
the VA cannot properly meet its first three missions, much less
adequately meet the vital ``Fourth Mission'' of acting as a backup to
the National Disaster Medical System.
I will spend the balance of my testimony providing specific
examples that I think help illustrate this brutal reality.
``fuzzy math''
The VA press release touting the President's budget request claimed
that it was ``the largest increase ever for the Department of Veterans
Affairs.'' As House Veterans Affairs Committee Ranking Member Lane
Evans has pointed out, of the $25.5 billion the Bush administration
claims the budget will provide for veterans medical care, $794 million
will simply shift personnel-related costs to VA from the Office of
Personnel Management (OPM). Another $1.28 billion is to offset
unavoidable cost increases like inflation, higher pharmaceutical
prices, and federal pay raises. It was this type of budgetary sleight-
of-hand that helped produce the VA's current FY 2002 budget shortfall,
which even the most conservative estimates place at $492 million. If
the same accounting gimmicks are allowed to pass as ``realistic''
budget policy for FY 2003, we can expect even larger shortfalls by this
time next year.
What is especially disturbing about the administration's rosy
claims over the FY 2003 budget is their belief that they will be able
to achieve significant revenue increases through the Medical Care
Collection Fund (MCCF), the third-party payer billing mechanism used by
the VA to recover costs for treating service-connected veterans for
nonservice-connected ailments. Every year between 1995 and 2000, MCCF
collections consistently fell far short of the Executive branch
projections--often by hundreds of millions of dollars. VVA is highly
skeptical that this trend will suddenly reverse unless fundamental
management reforms are implemented that lead to genuine increases in
MCCF collections.
The VA has an equally undistinguished track record of collecting
from private insurers. As GAO reported in 1999, VA collections from
insurers declined in every fiscal year from 1995 through 1999. From a
peak of $532 million in 1995, VA third-party collections declined to
roughly $400 million by the end of fiscal year 1999. While we
understand that there was some slight improvement during 2001, GAO has
reported that the increase was largely due to a shift from a flat rate
to a ``reasonable charges'' billing model. The billing model change
allowed the VA to do a better job of collecting reimbursements for
treating roughly the same number of veterans as in FY 2001. Thus,
unless other improvements in billing occur, MCCF collections are likely
to level off or even decline in future years, invalidating OMB's
optimistic assumptions about this revenue stream.
VVA believes that the entire concept of using co-payments and
third-party collections as an integral part of the VA budget request is
a fundamentally flawed accounting gimmick, in addition to putting a
significant part of the burden of paying for veterans health care on
the backs of the veterans themselves. OMB's penchant for
``discounting'' the Veterans Health Administration's budget request by
the amount in collections anticipated inevitably makes the collections
a wash in terms of bringing more revenue into the chronically starved
veterans health care system. OMB has repeated this practice in the FY
2003 budget, with what we believe will be predictably bad results.
Additionally, VA's shift from an inpatient-based to an outpatient-
based healthcare model has dramatically reduced the number of
opportunities to bill insurers for medical services; outpatient
treatment episodes are almost always less costly than inpatient
encounters. GAO reported in September 1999 that the annual number of VA
inpatient episodes dropped by more than 250,000 between 1995 and 1998,
while the number of outpatient episodes climbed by nearly 7 million.
One could argue that this has made the system more ``efficient,''
although VVA would argue that in many instances veterans should be
hospitalized, but there simply is no capacity for that clinically
indicated inpatient care available at that facility or in the Veterans
Integrated Service Network (VISN).
VVA does not at present have figures on the numbers of outpatient
encounters involving over-65 veterans. We would suggest to the
committee that this is an area requiring further study and
investigation, because another key problem facing the MCCF--and one
completely outside of the VA's control--is the aging veteran
population. An increasing number of veterans are over 65 and thus
Medicare eligible. At present, however, there is no Medicare subvention
program available to the VA through which the VA could bill Medicare
for veteran's health care. Because the VA is not an authorized provider
under any existing HMO plan, VA cannot bill those plans for services
provided to veterans.
This issue is becoming more acute due to the VA's Capital Asset
Realignment for Enhanced Services (CARES) process. In essence, CARES
serves as a vehicle for the VA to shut down aging medical centers,
shift functions and services to more modern facilities, and expand the
number of community-based outpatient clinics (CBOCs) within the VA
system. We have testified before the full committee on previous
occasions about our growing concerns over the decline in access to VA
health care for hundreds of thousands of veterans across America.
On September 17, VVA filed comments with the VA opposing their
proposed CARES-driven reorganization of VISN 12 for a number of
substantial reasons, including the VA's refusal to contract for medical
service for veterans living in regions not within an easy drive of a
VAMC or even a CBOC. Similarly, the VA's inability to bill Medicare for
services compromises health care for elderly veterans by tying over-65
veterans to VAMCs that are often hours from their homes. These issues
are closely linked, and require a comprehensive Congressional response.
co-payment deductibles: draconian and discriminatory
The Administration's proposed $1,500 per year deductible for ``high
income'' veterans (i.e., Category 7 veterans) can most charitably be
described as a form of Darwinian class warfare, an attempt to force out
of the VA system some of the most economically and socially
disadvantaged members of the veteran community.
What constitutes a ``high income veteran'' by VA standards? A
single veteran earning more than $24,500 per year, or a veteran with a
family of four making more than $28,800 per year. Both of these figures
are well below the national poverty level. That most certainly is the
case in any metropolitan area in the country, whether the veteran lives
in New Jersey, Illinois, or California.
Tens of thousands of veterans nationwide are living at or just
slightly above the current VA Category 7 means test threshold. We can
assure this committee and the American public that if the
administration's proposal is adopted, tens of thousands of veterans
will effectively be priced out of health care altogether. Given the
decline in state health care budgets, these low-income veterans and
their families will plunge straight through the remaining shreds of a
very tattered social and economic safety net, perhaps to a future of
homelessness and steadily declining health for themselves and their
families.
We remind this committee that many veterans who begin as Category
7's move to higher categories once their claims have been approved.
While they wait for their claims to be approved, these veterans are
paying much more out of pocket for their medical care than would
otherwise be the case. How many veterans have slipped into poverty in
this way, by losing their ability to hold down a job as their health
declined, all the while having to make significant co-payments as their
claims sat for months or even years?
What also happens in some cases is that veterans simply do not seek
any medical care until they are so sick that they cannot work at all,
therefore needing much more extensive and intensive care than if they
had sought the care earlier. You can be sure that if the
administration's proposal is adopted, without the Congress adjusting
the means test to at least conform with the Federal poverty guidelines
in a given area, the number of veterans who slip into poverty will
increase as they are forced to choose between paying for health care or
buying food or paying rent. Then the VA healthcare facilities will
treat them, but those same veterans will cost a great deal more to
treat.
VVA is fully committed to the VA acting as the primary health care
system for service-disabled veterans. We recognize that those veterans
who wish to receive health care from the VA for nonservice-connected
conditions should pay for those services, if their economic
circumstances allow them to do so. Accordingly, VVA believes that the
means test threshold for Category 7 veterans should be raised to not
less than $38,000 per year for single veterans, and not less than
$45,000 per year for a family of four. We also believe that the
deductibles should be set on a sliding scale, with veterans at the
lower economic end of the scale paying no more than a $250 per year
deductible. We believe that these figures are far more realistic,
affordable, and fair for the average veteran and/or veteran and family.
VVA also urges this distinguished Committee to begin seriously
examining the concept of making veterans health care for service-
connected disabled or potentially service-related illnesses a legally
mandated right, and not merely a discretionary expenditure.
vet centers: cost effective and vital
One critical VA program that received no substantive coverage in
the administration announcement of the budget was the Readjustment
Counseling Service Vet Centers. As this committee knows, the Vet
Centers provide a nationwide system of community-based centers designed
to provide counseling for psychological war trauma. VA operates 206 Vet
Centers in all 50 states, Puerto Rico, the Virgin Islands, the District
of Columbia, and Guam. In 2000, Vet Centers saw more than 131,000
veterans and provided more than 890,000 visits to veterans and family
members, according to the VA.
Many have expressed surprise at the sheer number of persons
exhibiting Post-Traumatic Stress subsequent to the attacks of last
September 11. Many also seem surprised by the acuity and the
persistence of both the symptoms and of the condition itself. VVA and
many of the distinguished Members on this panel were not surprised. It
is now time to recognize that the Vet Centers have a vital, unique, and
positive role to play in the mix of services that is so needed by
today's veterans, as well as those now serving in uniform when they
return to civilian life.
Interdisciplinary teams that include psychologists, nurses, and
social workers staff the centers. Readjustment counseling features a
non-medical setting, a mix of social services, community outreach
activities, psychological counseling for war-related experiences and
family counseling. These services are designed to assist combat-
affected veterans and other veterans have well-adjusted lives. In other
words, the Vet Centers help families stay together, help veterans
surmount problems that threaten their job, and help those unemployed to
become more job ready. The Vet Centers are the only element of the VA
that is authorized to treat family members, even when the veteran
refuses to come in for treatment. This service is part of the holistic
approach to health care that VVA has been advocating for many years.
VVA knows from our members and from talking to Vet Center staff
across the country that the Vet Centers have been inundated with
``new'' veterans and their family members seeking counseling, as well
as previously treated veterans and their families seeking additional
counseling and assistance in the wake of the September 2001 terrorist
attacks on the United States. We believe that this program needs a
minimum increase of $17 million to both enhance organizational capacity
and to be able to deal even more effectively with the new influx of
cases related to the terrorist attacks. In addition, an additional 250
FTEE must be added. Most of the $17 million would be used to pay for a
family services counselor in each of the 206 Vet Centers, and to
augment those Centers with the most overwhelming needs. This is a very
modest increase that will pay very large dividends in assisting
veterans, and indeed whole communities by extension.
national center for post-traumatic stress disorder
Related to our concerns regarding funding for the Vet Centers, VVA
also believe that the National Center for Post-traumatic Stress
Disorder (NCPTSD) must be expressly authorized and mandated in statute,
and that NCPTSD should receive a line item funding directly in the
appropriations bill of not less than $20 million each year. This is
necessary in order to ensure that this invaluable national asset
remains a viable research, repository, and consultation center for
clinicians at VHA, FEMA, and other clinicians in the public and private
sector. This national asset not only benefits combat veterans, but also
many others who can benefit from its research into the effects of
trauma such as the attacks on September 11 on the physical and
emotional health.
medical research
The administration has requested $409 million for the VA research
budget in FY 2003, an approximately $38 million increase from FY 2002.
VVA will support this request only if the committee issues report
language mandating that VA approve only those research projects that
are directly relevant to the specific health concerns or service-
related exposures of veterans.
Moreover, new research projects should only be funded if the
researchers collect the full military medical history of veteran
subjects and patients involved in the study. We believe such
prescriptive measures are the only way to begin changing the VA
Research and Development Office's corporate culture, which currently
seems to view the VA's research mission as one largely dedicated to
general medical research, rather than one focused on medical research
specific to and relevant for veterans. Despite continuing efforts of
VVA leaders to help this section of VHA to understand the vital
importance of this refocusing of their efforts, persuasion and
intellectual arguments have not worked. Therefore, we ask the Congress
to mandate such a proper focus.
Moreover, VVA believes that it is long past time to end the DoD-VA
monopoly on the control of funds allocated for military and veteran-
related medical research.
As we testified before the Health subcommittee last month, for the
last decade, Congress has allowed the agency that most likely created
the Gulf War illness problem (DoD), and the agency charged with paying
for the problem (i.e., the VA, through health care and disability
payments to sick veterans), to investigate Gulf War illnesses and their
own role in responding to sick Desert Storm veterans. This is an
obvious conflict of interest, one that has prolonged the suffering of
veterans, destroyed their trust in the federal government, and resulted
in the waste of at least $150 million over the past five years through
OSAGWI, as the Defense Department has ``investigated'' its own response
to Gulf War illnesses. It is also how the Pentagon and the Air Force
have managed to squander over $180 million on Agent Orange-related
Ranch Hand research that has produced less than half-a-dozen peer-
reviewed scientific papers over the last 15 years.
a national institute for veterans health (nivh) is needed
To end this conflict of interest and restore integrity to the
process of investigating and treating veteran's medical conditions,
last year VVA called for the creation of a National Institute of
Veterans Health (NIVH) within the NIH. NIVH would not only eliminate
the conflict-of-interest problem outlined above, it would provide a
vehicle for establishing a medical research corporate culture focused
on veteran health care, in contrast to the current VA medical corporate
culture of ``health care that happens to be for veterans.''
VVA recognizes that the VA has established a reputation for
providing advanced care for blinded veterans and those with severe
ambulatory impairments. However, the VA has never truly developed a
corporate culture focused on the diagnosis and treatment of the full
range of environmental and occupational hazards that are unique to
military service. This is especially true of the VA's Research and
Development Office, where the overwhelming majority of VA-funded
research programs are geared towards medical problems found in the
general population, not those specific to the veteran patient
population or those with military service. Many of the current projects
could, at virtually no additional cost, be restructured to benefit
veterans specifically, as well as the general population. This is not
only proper for the VA's role, but it is also better science, since the
impact of toxic exposures of war-related neuropsychiatric conditions
may significantly affect both diagnosis and treatment modalities that
are being investigated.
We urge this distinguished Committee to work with other
jurisdictional elements of the Congress to establish a new section of
the National Institutes of Health to be known as NIVH, with veteran
advocates serving along with scientists who understand veteran health
issues on the peer-review panels that make research funding decisions.
VVA believes that by so doing the Congress would be creating a research
institute that would be truly focused on the unique medical needs of
veterans. Locating the NIVH within NIH would ensure that the full
medical resources of the federal government and private sector could be
marshaled in a rational, veteran-friendly environment, free of the
politicizing and conflict-ridden influences that have for more than 20
years precluded effective research into the unique environmental and
occupational hazards that have impacted the health of American
veterans.
Additionally, this proposed NIVH must be supplemented by the
creation of a Congressionally directed mandatory declassification
review panel, whose purpose would be to screen (on both a historical
and an ongoing basis) and declassify any operational or intelligence
records for evidence of data that would have an impact on the health
and welfare of American veterans. The need for such an entity--
completely independent from the Pentagon and the U.S. intelligence
community--is obvious.
Even today, thousands of pages of Gulf War-related records remain
classified. In January 1998, the CIA admitted that its own internal
review had identified over one million classified documents with
potential relevance to Gulf War illnesses. Virtually no documents
associated with the 1960's era Shipboard Hazard and Defense (SHAD)
program have been declassified, and DoD has thus far rebuffed VVA's
FOIA requests that the documents be made public. Through the experience
of the Kennedy Assassination Review Commission, we have learned that
such specialized declassification panels work well. If we are to be
certain that all data that may affect the health of American veterans
is to be available for the veterans and their physicians, Congress must
create such a standing declassification review panel immediately. Such
a move would also help to restore trust and confidence among veterans
in the federal government and its response to veteran's health issues.
needed: more funds for veterans health care and greater accountability
Mr. Chairman, while VVA believes that an increase of at least $2.7
billion in appropriated dollars must be approved for FY2003 over the
current FY2002 budget, there also must be additional steps taken
towards assuring greater accountability for how these funds are used.
Further, in order to stop further erosion of organizational capacity
and prevent further reductions in vitally needed services at the VA, we
must have a $750 million emergency supplemental appropriation
immediately.
While Secretary Principi deserves high marks for his initial
efforts to better track use of funds within the VA, especially within
VHA, much more needs to be done. As one example, there is yet to be a
full accounting of what happened to the $350 million appropriated for
screening, testing, and treating hepatitis C, which Congress authorized
last spring, of the 80% of veterans who do not use VA veteran health
care facilities at all.
Additionally, VVA believes that the VA has a long way to go even to
be able to tell who they have at each facility and what their function
might be in the care of veterans. We would not tolerate this within the
military. We should not tolerate it within the VA. If Secretary
Principi needs more funds--in addition to those described above in
order to speed his determined effort to develop and implement a viable
management information system that will allow top leadership to make
better and more timely decisions--then the Congress should provide said
funds.
VVA believes that the VA, as well as other executive departments
and entities, need additional tools to hold GS14, 15, and Senior
Executive Service employees more accountable for both performance and
their compliance with the law. VVA National President Tom Corey has
written to the President, with copies to Secretary Principi and
Director of the Office of Personnel Management, pledging VVA's full
support in seeking legislation to allow elected and duly appointed
officials to be able to rein in the sometimes rogue fourth branch of
government--namely, the permanent most senior civil service and
excepted personnel.
In the interim, VVA urges the Congress to require VA to post the
criteria they will use to award bonuses at the beginning of each fiscal
year in a given area. At the end of the year the amount of the dollar
amount of each bonus and the specific reasons for awarding that amount
to each recipient should be posted freely for public knowledge. If the
size and reasons for these bonuses cannot stand the light of daylight
and the sunshine, then said bonuses should not be awarded.
other key veteran issues
VVA is grateful to all in Congress (but particularly to the
distinguished leaders and Members on this Committee) for the increases
in the Montgomery GI Bill. These increases will make it possible for
many more young veterans to acquire the education that will not only
help them personally as a reward for a job well done in military
service, but will greatly benefit our nation's economy in the future.
VVA continues to believe strongly that what is called for is a GI Bill
modeled on that accorded to World War II veterans, as we are currently
engaged in a world wide war against terrorist. The accomplishment of
this largest ever increase in the Montgomery GI Bill for educational
benefits is something of which all of you can and should be very proud.
To ensure that all of the programs that can be utilized by eligible
veterans for furthering their educations are sound and accredited,
there must be an increase in the funding for the State Approving
Authorities, which have the duty and expertise to accomplish this
mission. VVA believes that these agencies need at least $18 million in
appropriated dollars for FY2003, with increases for inflation in every
year, as long as the use of these benefits stays at the current volume
of usage.
In regard to the Veterans Employment & Training Service at the
United States Department of Labor, the Congress should increase the
amount requested for the overall activities of this function to
approximately $252 million appropriated dollars for FY2003. No matter
where this vital employment function ultimately is housed, additional
funds are needed to provide incentives for placement (not ``obtained
employment'') of special disabled veterans, disabled veterans, and
veterans who are at risk. Further, the specific line item for the
National Veterans Training Institute (NVTI), currently at the
University of Colorado at Denver, should be funded at least at the $3
million mark. NVTI is one of the best elements of this entire
operation, where excellence is not only taught but consistently
practiced.
The vital role of small business, especially very small businesses
and self-employment, must not be overlooked. The President has only
asked for $750,000 for the SBA Office of Veterans Business Development
for FY2003. VVA points out that most of the provisions of Public Law
106-50 have yet to be implemented some three and one half years after
enactment. The Small Business Administration (SBA) appropriation for
this function must be increased to at least $4 mission for FY 2003.
While VVA recognizes that the SBA is outside the jurisdiction of
this Committee, many of the Members of this panel, as well as staff on
both sides of the aisle, played a most key role in formulation and
passage of this vital legislation. Proper funding is necessary to
ensure that the potential of this law is realized.
VVA also notes that the Center for Veterans Enterprise (CVE),
founded last year based on the recommendations of the ``Principi
Report,'' has been somewhat helpful in this area. While there is a
great deal more that could and should be done by the VA to augment that
which is done by the SBA and other entities (such as the National
Veterans Business Development Corporation), Secretary Principi is to be
congratulated for his work in developing the CVE, and rewarded with
additional funds targeted to augment current efforts in this area.
Mr. Chairman, on behalf of Vietnam Veterans of America and our
national leadership I thank you for this opportunity to express our
views on the vital subject of the President's budget request for
veterans services in FY2003.
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