STATEMENTS OF
MR. JOSEPH THOMPSON
UNDER SECRETARY FOR BENEFITS
AND
KENNETH W. KIZER, M.D., M.P.H.
UNDER SECRETARY FOR HEALTH
DEPARTMENT OF VETERANS AFFAIRS
BEFORE THE
COMMITTEE ON VETERANS' AFFAIRS
U. S. SENATE

January 29, 1999

Statement of Mr. Joseph Thompson

Mr. Chairman and members of the committee, we appear before you today to discuss the report of the Commission on Servicemembers and Veterans Transition Assistance and funding issues on the committee’s agenda.

Mr. Chairman, let me start my comments by saying that it was a pleasure and an honor for me to serve as an ex-officio member of the Commission on Servicemembers and Veterans Transition Assistance. Upon my confirmation as Under Secretary for Benefits in late 1997, one of my first tasks was to familiarize myself with the mission and scope of the Commission and to advise Chairman Principi and the Commissioners on the state of veterans’ benefits delivery today and our plans for the future. I was immediately impressed with the mandate and potential of the Commission and its opportunity to recommend significant changes to the legislatively mandated transition benefits our nation provides its servicemembers and veterans – changes more sweeping than any envisioned or attempted since those proposed by General Omar Bradley nearly one-half century ago. The Commission made over 100 separate recommendations addressing 31 specific issues, and I am proud to have been associated with this endeavor.

To that end, I want to thank Senator Dole for facilitating the creation of this Commission and especially thank Chairman Anthony Principi for providing dynamic and focused leadership to the Commission throughout its deliberations. I also want to thank the many VA staff members who were detailed to the Commission and provided expert staff support to Chairman Principi throughout the Commission’s efforts.

Mr. Chairman, the questions this Commission asked were in areas that needed review: Do we enable servicemembers and veterans to improve themselves and their country by continuing their education? Do we adequately prepare servicemembers for life after a career in uniform? Are we doing enough to assist veterans in their pursuit of gainful employment? These questions and more were the focus of this Commission, and we look forward to reviewing its findings and recommendations. The report of the Commission on Servicemembers and Veterans Transition Assistance has given those of us whose careers are dedicated to serving America’s veterans much to consider, analyze and, if enacted by Congress, to implement.

During the next 60 days, I will be working in concert with Dr. Kizer and Secretary West, our counterparts in the Departments of Defense and Labor, the Small Business Administration, and other federal agencies, as well as Veterans Service Organizations, to thoroughly review the findings and recommendations of the Commission and report back to Congress with our assessment. We will assess the Commission’s recommendations from the perspective of the servicemember and the veteran, and as stewards of good public policy, ensuring that our analyses and plans are integrated and seamless. Although I cannot, at this time, comment in any greater detail regarding the specific findings and recommendations of the Commission, I can say that we at VA look forward to working with you, the Congress, and our partners in veterans’ service to take full advantage of the opportunity that this report presents.

This concludes my statement. I would be pleased to respond to your questions.

Statement of Kenneth W. Kizer, M.D., M.P.H

Mr. Chairman, the healthcare recommendations of the Congressional Commission on Servicemembers and Veterans Transition Assistance (Commission) arise from its stated themes of improving access to healthcare for transitioning servicemembers and their families and increasing the cost-effectiveness of the healthcare systems of the Department of Defense (DoD) and VA. An overarching implicit theme is the desire to "incentivize" the two healthcare systems to work more closely together. Recommendations to combine congressional appropriations and oversight for DoD and VA healthcare systems, as well as budget review at OMB, are included as well as a recommendation for a joint policy staff serving both DoD and VA, and a recommendation for a common information technology system. These recommendations require significant analysis and consultation with the DoD before formal Administration views can be offered.

The Commission’s report represents a thoughtful analysis, and its recommendations should prove useful in shaping the future of both healthcare systems. It is important, however, to acknowledge that VHA and DoD Health Affairs have already moved toward significant collaboration in recent years. In June 1997, DoD Health Affairs joined VHA in a formal effort to address common issues jointly through the VA/DoD Executive Council (Council). The Council, which meets approximately monthly, is co-chaired by myself and DoD’s Assistant Secretary of Defense (Health Affairs). The Council has already embraced the concept of advancing the partnership between DoD and VA that is an important underpinning to the Commission’s healthcare recommendations. This progress is demonstrated by ongoing initiatives of the Council, including the Government Computer-Based Patient Record (G-CPR), Specialized Treatment System/Centers of Excellence, development of a common discharge physical, development of a Cost Reimbursement Methodology and joint approaches to purchasing of pharmaceuticals and medical/surgical supplies. These concrete initiatives are in many of the same areas that the Commission has highlighted for their recommendations. At the moment, VA and DoD are jointly pursuing the following initiatives:

The Commission’s major healthcare recommendations involve facilitating a closer partnership between DoD and VA healthcare organizations. To expand partnering, one recommendation suggests coordinated eligibility criteria for DoD and VA healthcare system beneficiaries so that care could be sought by military personnel or veterans from either system’s facilities with provision for reimbursement for services provided, as appropriate. Other recommendations suggest needs for integration of DoD and VA clinical, management, financial and cost accounting systems to include joint procurements where feasible. A final recommendation proposes coordination of DoD and VA medical research.

The Commission also recommends realignment of infrastructure to match the physical infrastructure of both systems to joint needs and to pursue elimination of redundancy.

While a BRAC-like process is proposed, looking at the needs of DoD and VA beneficiaries jointly could support the continuation of some operations that might not be viable on the basis of just one Department's requirements. I should note that the VA and DoD already have undertaken numerous joint facility operations, for example, with the Air Force and Albuquerque VAMC and with Palo Alto Health Care System and Fort Ord. To date, VA’s experience with such initiatives suggests that joint ventures related to infrastructure realignment are challenging, since the populations served are so different – i.e., young, largely healthy soldiers versus much older and sicker veterans with a significant prevalence of psychiatric illness. We look forward to working with the DoD to review this recommendation.

The Commission recommended increased treatment of TRICARE beneficiaries by VA. One recommendation to encourage this is to eliminate current TRICARE co-payments. Another recommendation proposes to open TRICARE contracts to VA beneficiaries of the CHAMPVA and Fee programs. In FY 1997, these were $100M and $543M programs, respectively. Finally, there is a recommendation to make boundaries for DoD’s 12 TRICARE Regions and VA’s 22 VISNs congruent. As noted above, the VA/DoD Executive Council has been exploring ways to increase VA provision of TRICARE services and we look forward to reviewing the Commission’s recommendations in this regard.

While the Commission presents business practices as a separate category of recommendations, they are really special cases of the theme of expanded DoD/VA partnership. This is also an area where many of the VA/DoD Executive Council initiatives have already begun work. Information technology, cost accounting, and joint procurement initiatives are in various stages of development and implementation.

To facilitate joint purchasing objectives, the VA/DoD Executive Council has created a Federal Pharmacy Executive Steering Group. Other negotiations brokered by the VA/DoD Executive Council include a draft agreement between DoD and VA on integration of some DoD and VA prime vendor contract pricing for medical/surgical items. Beyond purchasing per se, the Federal Pharmacy Executive Steering Group created by the VA/DoD Executive Council is also exploring joint formulary issues and has already formed a list of what could become a core formulary.

Mr. Chairman, we intend to continue our joint efforts with DoD to find ways to enhance the effectiveness of both health care programs, and we look forward to working with you and other Members of Congress as you consider the Commission’s report.

Mr. Chairman, you also requested that I address certain funding and legislative issues. Before commenting further, I would note that, the President’s Budget is scheduled for release on February 1 and, as you know, by convention I am not allowed to discuss the funding requests or other initiatives that are included prior to that date. However, I can tell you that the current major sources of non-appropriated funding for veteran’s health care are from patient co-payments and recoveries from third party sources for VA care. Substantially all of these funds are deposited in "no year" accounts and are retained at the VISN level. This offers VISNs needed flexibility in planning the expenditure of funds over a multi-year timeframe. We have initiatives under way to enhance our cost recovery efforts that we believe will produce a moderate increase in these funds in FY’s 1999 and 2000.

This concludes my statement. I would be pleased to respond to your questions.