TESTIMONY BEFORE THE SENATE VETERANS' AFFAIRS COMMITTEE
BY MIKLOS LOSONCZY, M.D.,PH.D., CO-CHAIR
COMMITTEE ON CARE OF VETERANS WITH SERIOUS MENTAL ILLNESS

July 24, 2002

The SCMI Committee appreciates the opportunity to help inform the Senate Veterans' Affairs Committee about the issues raised in your letter of July 3, 2002 in requesting our testimony for today.

I'd like to begin by offering some background on the role of the committee, its legislative mandate, and its composition.

I. Legislative Mandates for the Committee on Care of Veterans with Serious Mental Illness (SCMI Committee)

Public Law 104-262, section 335, The Veterans Eligibility Reform Act of 1996, established the Committee. This law required that the Secretary of Veterans Affairs, acting through the Under Secretary for Health, "establish in the Veterans Health Administration a Committee on Care of Severely Chronically Mentally Ill [SCMI] Veterans."

The function of the Committee as defined by Public Law 104-262 is to assess the capability of the Veterans Health Administration to "meet effectively the treatment and rehabilitation needs of mentally ill veterans whose mental illness is severe and chronic and who are eligible for health care furnished by the Department, including the needs of such veterans who are women." To accomplish this function, Public Law 104-262 requires that the Committee:

1. evaluate the care provided to SCMI veterans;
2. identify system-wide problems in such care;
3. identify specific VA facilities that need program enrichment in order to improve treatment and rehabilitation of SCMI veterans;
4. identify model programs that could be more widely implemented within VA;
5. advise the Under Secretary regarding the development of policies for care and rehabilitation of SCMI veterans; and
6. make recommendations to the Under Secretary regarding the improvement of care, the establishment of education programs, the research needs and priorities, and the appropriate allocation of resources.

In addition to the section mandating the establishment of the Committee, section 104 of Public Law 104-262 requires that the Department "maintains its capacity to provide for the specialized treatment and rehabilitative needs of disabled veterans," including those with mental illness. To fulfill this requirement, the Secretary of Veterans Affairs must consult with the Committee on Care of Severely Chronically Mentally Ill Veterans.

The legislation that mandated the maintenance of capacity for special populations was amended in 1998. The amendments mandated that the Under Secretary develop job performance standards for the VA leadership who have responsibility for the allocation and management of the resources needed for the maintenance of capacity. These performance standards are to be developed in consultation with the SCMI Committee.

Finally, Public Law 104-262 requires that the Secretary of VA submit an annual report to Congress that addresses the effectiveness of VA's treatment and rehabilitation of veterans who are severely, chronically mentally ill. The SCMI Committee releases an annual report in February to the Under Secretary that constitutes the findings and recommendations to which the Secretary must respond in the mandated report to Congress. Public Law 106-419 amended the original law and extended VA's reporting requirements through 2004.

II. Reporting Structure of the Committee

The SCMI Committee reports directly to the Under Secretary. The Committee publishes an annual report with recommendations in February that is sent to the Under Secretary for his response. The report and the Under Secretary's response are then sent through the Secretary of Veterans Affairs to the Congress.

In addition to the formal mechanism of the Annual Report, the Co-Chairs will typically meet with the Under Secretary after a meeting of the Committee. Or, in some cases, the Under Secretary will attend the actual meeting for a discussion with the entire Committee.

The Committee is also required by Congress to comment on VA's annual report on the maintenance of capacity for the special emphasis populations. The point at which the Committee members receive a draft version of the Capacity Report varies each year. Once the draft is received, the Committee formulates a draft response that is sent to the VA Central Office official responsible for the capacity report. If changes are made in the Capacity Report, the Committee may re-draft its response to reflect these changes. The final response of the Committee is attached to the Capacity Report and sent to Congress.

Finally, the SCMI Committee has a close working relationship with VA Central Office's Mental Health Strategic Health Care Group (MHSHG). The Chief Consultant of the MHSHG and members of his staff serve as consultants to the Committee, but the Committee is independent of them.

III. Composition of the SCMI Committee: Members, Consultants, and Consumer Liaisons

The SCMI Committee membership is field-based. The members are professionals from the major mental health disciplines, hold a variety of positions within VHA (both at the facility and Network level), and represent a variety of geographic areas within the VA system. The members of this diverse group, however, have all demonstrated excellence in their respective disciplines and commitment to the service of veterans who are seriously mentally ill. The Committee members are solely responsible for the formal recommendations made to the Under Secretary.

In their work, the Committee members are assisted by consultants from the MHSHG, from the field, and from VA's Serious Mental Illness Treatment Research and Evaluation Center in Ann Arbor. The consultants contribute additional expertise to the Committee, as well as provide essential data on VHA's mental health services.

The Consumer Liaisons are the third component of the SCMI Committee. Early in the life of the Committee, the membership realized that they needed the input and unique perspective of mental health consumers. The Committee asked representatives from the Veterans Service Organizations and from national mental health organizations to attend the Committee meetings, join in the monthly conference calls, and generally to advise the Committee. These representatives from the consumer groups have been articulate voices for those veterans who are seriously mentally ill. This body does not vote on Committee recommendations, which are the sole purview of the members of the Committee.

See Attachment A for a complete listing of Committee members, consultants and consumer liaisons.

IV. Key Findings of the Committee in its 2002 Annual Report

Your letter of July 3, 2002 asked the Committee to review the findings of the Committee. The SCMI Committee has issued six annual reports. It may be most useful to summarize the most recent report, dated February 2002.

The SCMI Committee has noted for years that there is substantial inter-VISN variability of access to, and intensity of, a variety of MH services. Indeed, the percentage of patients served by VHA who receive any type of mental health service has dropped from 20.3% in FY96 to 17.4% in FY2001. In FY2001 Networks varied widely and unexplainably in the proportion of veterans receiving mental health care, by a factor of 2, from 12.9% to 24.8%. Whether one examines mental health intensive case management (MHICM) programs, MH services in Community Based Outpatient Clinics ( CBOCs), opioid substitution programs, or any of a whole host of mental health programs, the inter-VISN variability is marked. Long-term care beds for veterans with serious mental illness are also distributed quite unevenly, with 11 of the 22 VISNs with little or no such beds available. Furthermore, there is no defined mental health benefits package nationally. These considerations led the Committee to make, as one of its key recommendations this year, the following:

" VHA needs to develop comprehensive national standards for the required continuum of care for the veteran with serious mental illness and a strategic plan to achieve these standards."

Recommendation
"A concerted, integrated effort to detail the optimal, population-based continuum of care for the various mental disorders should be completed, under the direction of Patient Care Services Mental Health Strategic Health Care Group (MHSHG), in 2002. The first step should be to delineate VHA's mental health benefits package. The continuum of care recommendations should include the types and intensity of services that are to be available in areas with various population densities. It should also include recommended measures of productivity for programs and staff in these programs or services. These standards should then be applied nationally no later than FY 2003. Any variance from these standards should be explicitly justified by the Networks and should be subject to approval by the Under Secretary."

Under Secretary's Comments to this recommendation in the Annual Report: "Concur in part. The establishment of a population-based continuum of care is an appropriate goal for all VA health care services including our mental health services. VHA policy on the breadth of the mental health continuum of care and the overall benefits package are already in place. Initial needs assessments of mental health services have taken place, and an approach to assessing current services and the range and scope of future needed services is part of the CARES process in which mental health services are a part. MHSHG and other program offices and field representatives of these services will have input into CARES. The Mental Health Strategic Health Care Group will put together a task group to look at research-based evidence regarding productivity standards in mental health programs and to make recommendations to the Under Secretary for Health by December 30, 2002."

Status of this recommendation: The Committee made a similar recommendation to the Under Secretary in its 2001 Annual Report. The Under Secretary responded to this 2001 recommendation by also noting that the Capital Asset Realignment for Enhanced Services (CARES) initiative would be the appropriate vehicle for identification of a continuum of care for mental health services

The Committee remains unconvinced that the CARES initiative is the proper mechanism to delineate a continuum of care for mental health. CARES conducted its initial project in Network 12. The published implementation process for CARES required adequate input from local providers and stakeholders. However, after the publication of the report on Network 12, the Committee determined that there was actually little input into the project from the Network mental health leadership and other stakeholders. In addition, it appears that the model relies on private sector data, which are not particularly applicable to the population of veterans with serious mental illness. Most private sector health plans attempt to exclude more than minimal contact with such individuals. Furthermore, the actuarial model used in CARES to predict future demand has been notoriously inaccurate in recent experience, since these models predicted declining demand, while actual experience has been increasing demand. The Committee would like to see that the second phase of the CARES project incorporates a more VA-based model, and a real understanding of unmet mental health needs of veterans.

The second major concern of the SCMI Committee has been the lack of systematic development of evidence-based community support programs following the massive deinstitutionalization of the population of veterans with serious mental illness since FY96. The Committee, since its inception, has strongly supported the need for VHA to move away from the heavy emphasis on hospital-based mental health programming. There is a special need to develop programs that successfully transition veterans who have spent long periods of time as inpatients. However, the Committee has always maintained that this can only be properly done by development of a comprehensive array of community support programs, which are not inexpensive, and require time, money and effort to put into place. In 1999, in response to a request from the Under Secretary, the Committee outlined its view of mental health services, with full implementation of a continuum of integrated medical and psychosocial services for veterans with mental illness (see Attachment B).

The need to do such reinvestment of the resources saved by closing inpatient beds into outpatient programs has been recognized by many public programs. In New York state, the 1993 Community Reinvestment Act required 100% of the savings from bed closures to be reinvested in outpatient programs to serve the mentally ill. Similarly, under Governor Whitman, the state of New Jersey has committed to a reinvestment of 100% of the savings into community support development (personal communication, Alan Kaufman, Director, NJ Division of Mental Health). These states began with substantial outpatient programs before the deinstitutionalization programs of the 1990's, unlike the VA, yet still invested in their continued development. VHA had historically only minimal interest in outpatient programs, until the major reorganization in 1996 fashioned through the Network structure and VERA. Yet, the reinvestment of inpatient into outpatient resources has been substantially less in VHA than in other parts of the public sector.

According to information published by the Northeast Program Evaluation Center (NEPEC), the National Mental Health Program Performance Monitoring System:FY2001 (and FY1996) report (Table 6-8), the reinvestment for the VA can be computed as follows (all dollars in millions):

It is understandable that VHA had enormous challenges finding adequate funding to meet all of the various needs of the rapidly expanding population of veterans seeking services. Lower priority veterans, who often use VHA for a marginal portion of their health care, for services not covered by their other health insurance options, have been drawn increasingly to VHA services. The number of Category C veterans treated in VHA increased by 964% (almost ten-fold) from FY96 to May 2002. During the first eight months of FY2002 the rate of growth in Category C veterans has continued to accelerate. The number of Category C veterans increased by 46%, compared to the same period in FY2001. In FY2001, only 23% of the costs of treatment for Category C veterans was reimbursed by insurance. The net cost to VHA in FY2001 for the treatment of Category C veterans was $747 million. During a comparable time period, FY1996 to FY2000, there was a decrease of $478 million (inflation adjusted dollars) in expenditures for specialized mental health care for veterans with serious mental illnesses. These data suggest that the dollars saved in mental health expenditures were absorbed by the treatment costs of lower priority, Category C veterans. It is not surprising that little was available for reinvestment of saved inpatient dollars into new community support programs to address unmet needs of this high priority group.

This low level of reinvestment is reflected in the ongoing concern by the Committee that the Department has consistently not met the provisions of the capacity legislations laid out by Congress. Since the Capacity Report for FY2001 is still in draft form, the Committee is unable to comment on it, so we will review the Committee assessment for FY2000.

It is important to restate the precise language of the capacity provisions of Public Law 104-262 for reference. That law stated: "... the Secretary shall ensure that the Department maintains its capacity to provide for the specialized treatment and rehabilitative needs of disabled veterans (including veterans with spinal cord dysfunction, blindness, amputations, and mental illness) within distinct programs or facilities of the Department that are dedicated to the specialized needs of those veteran in a manner that (A) affords those veterans reasonable access to care and services for those specialized needs, and (B) ensures that the overall capacity of the Department to provide such services is not reduced …." The baseline year for determining capacity is FY96. Public Law 104-262 itself originally did not define capacity. (We note, however, that this law was recently amended to include, among other changes, a definition of capacity.)

The Department, after consulting with the Committee, originally determined that both the number of veterans treated and the dollars expended for their care in specialized programs would be the most appropriate measures for capacity. Capacity could only be maintained if both components were met. It was recognized that mere measurement of the number of individuals served was insufficient, since these patients have broad needs for a full continuum of care, and the mere measurement of the number served could result in providing inadequate service to the same or larger number of patients.

The quality and adequacy of the care required by these special patients also must be measured. The Committee concurred that beds would not be an appropriate measure of quality, since there was the desire to move the care of these patients to the community whenever feasible. It was recognized, however, that comprehensive community care for these very complex patients was also expensive, and that VA had a great need to expand and improve its array of community-based services prior to the deinstitutionalization of the seriously mentally ill. Dollars expended was seen as a pragmatic means to measure the intensity of service provided this special population. The Committee's advice was sought and we concurred that this was a reasonable way to monitor whether the necessary reinvestment of resources from institutional to community-based care was occurring. This measure would be used until valid and comprehensive measures of the outcomes of care for these patients were implemented nationally. As a measure of intensity of service, the Committee believes this is meaningful only if a reasonable adjustment for inflation is included. Over the several years of the capacity report, such an adjustment has become more important. Indeed, the FY99 Capacity Report included in Table 1 inflation adjusted dollars expended on specialized services, in response to comments from the Committee on the need to do so. Subsequently, the FY00 report omits this key information.

Reviewing the summary information for the report, as presented in Table A.1 of the FY00 report, one should only compare the two elements of the definition of capacity above, after appropriate adjustment for inflation. Even without such an inflation adjustment, however, it is clear that the two elements of the capacity definition were not both met for PTSD, the overall SMI group, and most strikingly, for the Substance Abuse population of veterans. They were met for the SMI homeless population. The interpretations provided in this table use the term capacity solely for the numbers of individuals served. These interpretations are at variance with the capacity definition. Based on the data supplied in the FY2000 Capacity Report, the Committee concluded that the Department was still not in compliance with the Capacity provisions of P.L. 104-262. The Capacity report indicates that in FY00 VHA was spending, in unadjusted dollars, only 92% of the FY96 expenditures for the seriously mentally ill. The erosion of financial commitment to these patients, when expressed in terms of constant 1996 dollars, is actually greater, with the Department spending only 77% of the 1996 levels on their specialized care, a further decrease in buying power over last year's report. This reflects an effective decline of $ 478 million annually. To meet the intent of the capacity law, this amount should be immediately and on a recurrent basis invested in community support development.

To most meaningfully reverse this decline, and meet the intent of the capacity law, the Committee specifically recommended expansion of intensive case management programs, providing MH specialty access in the CBOCs and expansion of opioid substitution programs where need exists. The Under Secretary supported these measures with Directives and performance measures. There has been some expansion of MHICM teams throughout the VHA since then, although these teams appear to have come from redirecting already existing MH resources, and a number of key components of the MHICM directive have not been consistently followed by many programs. Plans have been created to bring MH access into CBOCs and expand opioid substitution programs in the past year, but it is unclear if these will lead to new services in the near future.

On a related note, the Committee noted in its 2002 Annual Report that VERA must be assessed and revised as necessary to assure that the overall funding of mental health cohorts in VERA is in alignment with, and not less than, the overall costs of these cohorts. Funding generated revenue for mental health cohorts that was less than costs by 10% in FY00. This difference is even greater for the subpopulation of the SMI veteran, which was underfunded by 20%. With the difficulties already cited above in establishing a continuum of care for the SMI veteran, removal of fiscal disincentives is a logical and necessary step. The Under Secretary, in his testimony to Congress during the Capacity hearings in June, 2001, committed to eliminating these fiscal disincentives and to ensuring that the funding model is cost-neutral for the mentally ill. A number of changes have been made in the model, but data are not yet available to determine if the fiscal disincentive through VERA has been removed. Concerns continue that changing the VERA model to another, diagnosis-based model, will need careful scrutiny to ensure that it is at least cost-neutral for mental health cohorts.

Through the years, the Under Secretary has been generally supportive of the recommendations of the SCMI Committee. We have seen major recommendations implemented to

• bring new antipsychotic medications into the VA national formulary
• to develop Mental Illness Research, Education and Clinical Center grants for 8 sites, with the possibility of an additional two sites
• prevent decreases in mental health programs without headquarters approval (Directive 99-030)
• to develop Mental Health Intensive Case Management Programs sufficient to meet the need
• to require VISN plans to bring MH specialty programs to CBOCs except by approved exceptions
• to require VISN plans to implement opioid substitution programs where needs exist
• to develop professional training programs in psychiatric research fellowships, and psychosocial rehabilitation fellowships
• to produce a national satellite broadcast series on recovery for the veteran with serious mental illness

Given the challenge of meeting the needs of the entire, rapidly expanding veteran population, the Committee understands the difficulty of finding resources for the expansion of the needed community support structure for veterans with serious mental illness. Indeed, it may not be fiscally possible without abruptly discontinuing other services, unless there is a major expansion in appropriations. The Committee hopes that VA will find a way to fund all needed medical and psychiatric services for the veterans who have served our country selflessly throughout the years, and who now need service in return.

In summary, the committee is recommending to the Under Secretary that he direct VHA to

• Conduct a national assessment of unmet needs for veterans with SMI, leading to
• National population-based standards for a MH continuum of care
• A strategic plan, with appropriate incentives, to eventually achieve these standards
• Take immediate steps to fully implement MHICM, access to specialized MH services in CBOCs, and ensure access to opioid substitution programs
• Ensure that the funding model has no disincentives to care for veterans with SMI
• Reinvest savings from MH inpatient closures to address these unmet needs in community support programs

The SCMI committee wishes to thank the members of the Senate Veterans' Affairs Committee for their time and support for these disabled American veterans.