[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]



 
                DEPARTMENTS  OF  VETERANS  AFFAIRS  AND
                 HOUSING  AND  URBAN  DEVELOPMENT,  AND
                  INDEPENDENT AGENCIES APPROPRIATIONS
                                FOR 1999

========================================================================

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED FIFTH CONGRESS

                             SECOND SESSION
                                ________

            SUBCOMMITTEE ON VA, HUD, AND INDEPENDENT AGENCIES

                    JERRY LEWIS, California, Chairman

TOM DeLAY, Texas                     LOUIS STOKES, Ohio
JAMES T. WALSH, New York             ALAN B. MOLLOHAN, West Virginia
DAVID L. HOBSON, Ohio                MARCY KAPTUR, Ohio
JOE KNOLLENBERG, Michigan            CARRIE P. MEEK, Florida
RODNEY P. FRELINGHUYSEN, New Jersey  DAVID E. PRICE, North Carolina
MARK W. NEUMANN, Wisconsin           
ROGER F. WICKER, Mississippi         

NOTE: Under Committee Rules, Mr. Livingston, as Chairman of the Full 
Committee, and Mr. Obey, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.

  Frank M. Cushing, Paul E. Thomson, Timothy L. Peterson, and  Valerie 
                      L. Baldwin, Staff Assistants
                                ________

                                 PART 5

                     DEPARTMENT OF VETERANS AFFAIRS

                              
                                ________

         Printed for the use of the Committee on Appropriations
                                ________

                     U.S. GOVERNMENT PRINTING OFFICE
48-492 O                    WASHINGTON : 1998
------------------------------------------------------------------------

             For sale by the U.S. Government Printing Office            
        Superintendent of Documents, Congressional Sales Office,        
                          Washington, DC 20402                          















                       COMMITTEE ON APPROPRIATIONS                      

                   BOB LIVINGSTON, Louisiana, Chairman                  

JOSEPH M. McDADE, Pennsylvania         DAVID R. OBEY, Wisconsin            
C. W. BILL YOUNG, Florida              SIDNEY R. YATES, Illinois           
RALPH REGULA, Ohio                     LOUIS STOKES, Ohio                  
JERRY LEWIS, California                JOHN P. MURTHA, Pennsylvania        
JOHN EDWARD PORTER, Illinois           NORMAN D. DICKS, Washington         
HAROLD ROGERS, Kentucky                MARTIN OLAV SABO, Minnesota         
JOE SKEEN, New Mexico                  JULIAN C. DIXON, California         
FRANK R. WOLF, Virginia                VIC FAZIO, California               
TOM DeLAY, Texas                       W. G. (BILL) HEFNER, North Carolina 
JIM KOLBE, Arizona                     STENY H. HOYER, Maryland            
RON PACKARD, California                ALAN B. MOLLOHAN, West Virginia     
SONNY CALLAHAN, Alabama                MARCY KAPTUR, Ohio                  
JAMES T. WALSH, New York               DAVID E. SKAGGS, Colorado           
CHARLES H. TAYLOR, North Carolina      NANCY PELOSI, California            
DAVID L. HOBSON, Ohio                  PETER J. VISCLOSKY, Indiana         
ERNEST J. ISTOOK, Jr., Oklahoma        ESTEBAN EDWARD TORRES, California   
HENRY BONILLA, Texas                   NITA M. LOWEY, New York             
JOE KNOLLENBERG, Michigan              JOSE E. SERRANO, New York           
DAN MILLER, Florida                    ROSA L. DeLAURO, Connecticut        
JAY DICKEY, Arkansas                   JAMES P. MORAN, Virginia            
JACK KINGSTON, Georgia                 JOHN W. OLVER, Massachusetts        
MIKE PARKER, Mississippi               ED PASTOR, Arizona                  
RODNEY P. FRELINGHUYSEN, New Jersey    CARRIE P. MEEK, Florida             
ROGER F. WICKER, Mississippi           DAVID E. PRICE, North Carolina      
MICHAEL P. FORBES, New York            CHET EDWARDS, Texas                 
GEORGE R. NETHERCUTT, Jr., Washington  ROBERT E. (BUD) CRAMER, Jr., Alabama
MARK W. NEUMANN, Wisconsin             
RANDY ``DUKE'' CUNNINGHAM, California  
TODD TIAHRT, Kansas                    
ZACH WAMP, Tennessee                   
TOM LATHAM, Iowa                       
ANNE M. NORTHUP, Kentucky              
ROBERT B. ADERHOLT, Alabama            

                 James W. Dyer, Clerk and Staff Director















DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT, AND 
             INDEPENDENT AGENCIES, APPROPRIATIONS FOR 1999

                              ----------                              

                                           Tuesday, March 17, 1998.

                     DEPARTMENT OF VETERANS AFFAIRS

                               WITNESSES

TOGO D. WEST, JR., ACTING SECRETARY
KENNETH W. KIZER, MD, M.P.H., UNDER SECRETARY FOR HEALTH
JOSEPH THOMPSON, UNDER SECRETARY FOR BENEFITS
JERRY BOWEN, DIRECTOR, NATIONAL CEMETERY SYSTEM
DENNIS DUFFY, ASSISTANT SECRETARY FOR POLICY AND PLANNING

                            Opening Remarks

    Mr. Lewis. The Committee will come to order.
    We are today going to take up the 1999 budget request for 
the Department of Veterans Affairs. The VA, this year, is 
requesting total budget authority of $42.8 billion and 203,849 
FTEs for fiscal year 1999; a net increase of $1.5 billion and a 
decrease of 2,082 FTEs below fiscal year 1998.
    It is important to note right at the beginning that the 
proposed increase is not discretionary appropriations. It is on 
the mandatory appropriations side. Mr. Secretary, these 
hearings will cover a wide range of issues.
    The accuracy of the estimate for medical collections, the 
quality of health care being provided, the shifting of medical 
care funds so as to achieve a more equitable distribution and 
resources among the hospitals, the proposed legislation to deny 
compensation for smoking-related disabilities, the timeliness 
of processing claims, and the year 2000 problems, just to name 
a few of the difficulties.
    For the Members that may not be aware, the Secretary and I 
spent some time together on more than one occasion. In terms of 
this specificly, we spent some time discussing the 
opportunities that we have this year to lay the foundation for 
in-depth evaluation; and not just the volume of dollars 
received by veterans programs over the years, but to examine 
the quality of the delivery of services and the use of those 
dollars in terms of those people for whom we suggest we hold 
the highest priority of regard. Men and women who have made the 
maximum contribution to the country deserve the best that we 
can give. That is what these hearings are about and what, 
indeed, the work of the Congress should be about in this 
connection.
    Before I call upon the Secretary, let me call on my friend, 
Louis Stokes, for any comments he might have.
    Mr. Stokes. Thank you very much, Mr. Chairman.
    I do not have any formal opening statement. I would like to 
take just a moment to welcome Secretary West before our 
subcommittee. This is his first appearance here. We certainly 
welcome him.
    I had a brief opportunity to have a courtesy visit from him 
a couple of weeks ago. I enjoyed that very much. He has a very 
distinguished career.
    I think he is going to do an outstanding job in his 
capacity as Secretary of this very important agency. We look 
forward to working with you. We look forward to your testimony 
this morning.
    Thank you, Mr. Chairman.
    Mr. Lewis. Mr. Stokes, thank you.
    This is the first occasion that we will have Secretary West 
before us. I wonder if we should not call upon our other 
Members, if they have any opening comments. Mr. Frelinghuysen.
    Mr. Frelinghuysen. I will save my opening comments for my 
time.
    Mr. Lewis. All right. Mr. Mollohan.
    Mr. Mollohan. I want to thank you, Mr. Chairman. That is 
very gracious of you. I have nothing more than to congratulate 
the Secretary and welcome him to the hearing.
    Mr. Lewis. Mr. Secretary, your entire statement will be 
included in the record. You can present it all to us or 
summarize it as you will.

                Acting Secretary West's Opening Remarks

    Mr. West. Thank you, Mr. Chairman.
    I will accept your invitation to summarize it briefly since 
I know you want to get on with the questions.
    Mr. Chairman, Mr. Stokes, and Members of this subcommittee, 
it is a pleasure to appear before you. I know you are aware 
that I appear as the Acting Secretary of Veterans Affairs. I 
await confirmation in the other house.
    I have been Acting Secretary for about nine weeks. I guess 
this is my tenth week in office. So, I believe I am a fast 
read. I hope I am. I am accompanied, however, just in case I am 
not.
    On my left, your right, the Under Secretary who heads the 
Veterans Health Administration, Dr. Ken Kizer, whom I know you 
already know. On my right, your left, the Under Secretary who 
heads the Veterans Benefits Administration, Joe Thompson; both 
a veteran and a newcomer. A veteran in that he had a 
distinguished career culminating as head of the New York office 
of the Administration and a newcomer because he is recently 
confirmed himself.
    Also, present as well is the head of the other operating 
part of the Department. Seated just to my left, to your right, 
the Director of the National Cemetery System, Jerry Bowen. I 
acknowledge, if Imight Mr. Chairman, the fact that the Ranking 
Member, the distinguished Member from Ohio, has announced his intent to 
retire at the end of this present term.
    I must acknowledge that during 30 years in Washington, he 
has been an ardent supporter of veterans and also, as I well 
know from my time as Secretary of the Army, an ardent supporter 
of our men and women in uniform.
    He supported them, their budgets, their needs, and their 
families. So, to the extent that I am able to speak for all of 
those constituencies, and for a whole host of others, I would 
like to say for the record, thank you for your service. To that 
Ranking Member, we will miss him.
    Mr. Stokes. Thank you very much.
    Mr. West. During my years of service to this country, Mr. 
Chairman, I had a chance to learn first-hand of the 
extraordinary contributions that America's men and women in 
uniform have made.
    I have four and a half years of traveling, both with active 
duty service members and with veterans. In every case, my 
impressions are the same; these men and women have left home 
and family to give of themselves for their country.
    As the President's nominee for Secretary of Veterans 
Affairs and the Acting Secretary, I appreciate this opportunity 
to work with you on behalf of all of those veterans.
    Mr. Chairman and Members of this subcommittee, in the past 
five years, the Department of Veterans Affairs has, we believe, 
made significant progress in changing the way we provide 
service to veterans and their families.
    More important than even the fact of change, has been that 
the effort is to change for the better. I believe that our 
responsibility in this era of change, the delivery of services, 
and the benefits to veterans is not just to maintain the 
quality, but to improve that quality.
    I know that is the intent of the colleagues that I have 
identified already. Much has occurred. The fact is the 
processing is better today than it was five years ago, but much 
remains to be done.
    We have made improvements in timeliness of claims, but we 
look today, and you will hear about this from our Under 
Secretary in charge of the Veterans Benefits Administration, to 
improve across the board in a number of categories.
    This is the fourth year of a massive transformation in the 
VA health care system. It has resulted in more outpatient care 
and less inpatient care to include the establishment of more 
outpatient clinics, and the closing of unused and unneeded 
hospital beds.
    Mr. Chairman, the President's fiscal year 1999 budget 
request for the Department of Veterans Affairs will permit us 
to continue to provide health care to even more veterans. It is 
our determination that we will provide quality health care; 
quality that will set the standard across the nation.
    We continue to integrate organizational elements within VA; 
becoming more efficient, more cost effective, and more vigilant 
in expending taxpayer dollars. As we move to the next 
millennium, I look forward not only to working with this 
committee, but I am prepared to expect and even demand of the 
Department of Veterans Affairs several things.
    First, that we improve the timeliness, dependability, and 
quality of the delivered benefits.
    Second, that we continue the transformation of our health 
care system, emphasizing quality, compassion, and 
effectiveness.
    Thirdly, that we master the challenges of information 
technology, including the looming issues of Y2K which, and I 
will go out on a limb here since someone has already made a 
statement to this effect, I think that the VA is doing very 
well.
    That we assure our employees in this Department a work 
environment that is conducive to their best efforts in order 
that they can better serve our veterans. The fact is, Mr. 
Chairman and Members of this subcommittee, we do our work 
through the one key tool that is available to us, our 
employees. They are the mechanism by which we deliver our 
services to our veterans. They need an environment in which 
they can realize their greatest potential.
    Finally, we must continue the efforts commenced under my 
predecessor, Jesse Brown, to more fully integrate the 
Department's organizational elements. That effort is known as 
One VA.
    Mr. Chairman, Members of this subcommittee, the proposed 
fiscal year 1999 budget will permit VA to continue to keep 
America's promise to our veterans while building on previous 
successes and improving where we have not been as successful as 
we need to be.
    As you pointed out, Mr. Chairman, this year's budget 
request is $42.8 billion for mandatory and discretionary 
programs. Within that, the budget will call for $17.7 billion 
in medical care; $21.9 billion for compensation and pension 
payments, and $92 million for the National Cemetery System.
    Within that, we seek a 10-percent increase in funding for 
medical research; a 9-percent increase for our National 
Cemeteries, and a 7-percent increase to administer the Veterans 
Benefits Program.
    If this budget is approved, Mr. Chairman and Members of 
this subcommittee, we will open 71 new outpatient clinics. We 
will treat 134,000 more veterans in fiscal year 1999, than we 
did in 1998. That is a 4-percent increase.
    The bottom line is that we expect to provide quality health 
care to more than 3.4 million unique patients; an increase of 
134,000, with a level of funding that supports some 695,000 
inpatients at the centers, and 37 million outpatient visits.
    Mr. Chairman, this budget reaffirms our commitment to reach 
our strategic goals by the year 2002. We continue to strive to 
reduce the per-patient cost of health care by 30-percent, 
increase the number of veterans served by 20-percent and to 
fund 10-percent of our health care budget from non-appropriated 
sources.
    Mr. Chairman, last year, at the request of the 
Administration, Congress passed legislation that would allow VA 
to retain all third-party collections. Essential to continuing 
our progress and meeting our strategic goals is to be able to 
fund 10-percent of our health care budget from non-appropriated 
sources.
    Essential to that is our proposal for Medicare subvention. 
This will permit VA to receive reimbursement from Medicare for 
health services provided to higher income, non-service 
connected veterans who choose VA health care.
    Legislation which will permit VA to conduct a demonstration 
to validate the feasibility of Medicare subvention is proposed. 
We will strongly support it.
    There are some new initiatives in this budget, Mr. 
Chairman. There is a smoking cessation program in which we 
request authorization to provide treatment to any honorably 
discharged veteran who began smoking in the military. Thebudget 
request is $87 million to establish the effort.
    We propose to increase the Montgomery-GI Bill education 
benefits by 20-percent. I understand that this is the largest 
in the history of the bill. It is a long-awaited increase. It 
is an increase of $191 million in 1999. The effect is to raise 
the active duty benefit to more than $500 per month in 1999 for 
full-time enrollment. The five-year cost, Mr. Chairman, is 
estimated at $1 billion.
    We are also proposing an increase of $100 million for VA's 
Readjustment Benefits Account to reimburse the Department of 
Labor for programs that assist veterans to find employment.
    There is funding in this budget, Mr. Chairman and Members 
of this subcommittee, for four new cemeteries during the next 
two years. The metropolitan areas of Chicago, Illinois, Dallas, 
Texas, Saratoga, New York, and Cleveland, Ohio will be served 
by these cemeteries.
    In sum then, we believe this budget is sound. It is 
balanced and it touches all of the elements of needed service 
for our veterans and their families.
    Mr. Chairman, we believe this budget is realistic. It puts 
our veterans and their families first, even in an environment 
in which the President has proposed the first balanced budget 
in a generation. Our job, Mr. Chairman, mine as the acting head 
of this Department, is to be a part of the Administration's 
program, yes, but to keep foremost in our minds and in our 
plans that we in this Department are here to serve veterans.
    We are here to stand up for those who have stood up for 
America. It is true, Mr. Chairman, we are changing the way we 
do business. I plan to continue that course charted to ensure 
that we will have future successes in that respect.
    When the President announced my nomination some two months 
ago, he referred to a comment that he said I had made in a 
speech at the West Point commencement the first year of my 
presence as Secretary of the Army.
    In fact, those are not my words, Mr. Chairman and Members 
of this subcommittee. Those are the words of my father, a high 
school principal. He said, and I said to those cadets, ``You 
teach the life you live.''
    Our veterans have taught us in this country by their lives 
of service and sacrifice. You, the Members of this 
subcommittee, have taught us all something about supporting our 
veterans.
    We are grateful for your support. I look forward to the 
opportunity to work with you. Thank you.
    [The statement of Mr. West follows:]


[Pages 6 - 21--The official Committee record contains additional material here.]



    Mr. Lewis. Thank you, Mr. Secretary, for your statement. As 
I indicated, it will be included in its entirety in the record.
    In order to expedite the hearing, Members, while they have 
their questions they wish to ask in priority, I am sure there 
will be other questions that will be submitted by them. We 
would appreciate you and your assistants in responding to 
those.

                        MEDICAL CARE COLLECTIONS

    First, Mr. Secretary, concern has been expressed over the 
adequacy of the proposed 1999 budget level for medical care. In 
part, this results from last year's budget agreement between 
the Executive and the Legislative Branches which changed the 
way funds are provided for medical care.
    Instead of increasing the amount of appropriations each 
year, future year increases were to come from collections as 
well as from Medicare. What is the collection experience to-
Date in 1998?
    I am sure you did not anticipate this question, but in the 
meantime please.
    Mr. West. I think that our experience, Mr. Chairman, is 
running roughly the same as our experience a year ago which was 
in the neighborhood of 20-percent to 21-percent.
    I am going to ask Dr. Kizer to correct me on this and to 
support me on this in a second. What I would say, of course, is 
that we asked this question of ourselves at an awkward point in 
the fiscal year. This is March. So, I think we have truly at 
our hands the results of the first quarter. We are just about 
to have the second quarter. We will know a little bit more I 
suspect next month. Let me just ask Dr. Kizer.
    Mr. Lewis. Dr. Kizer, if you would, let me elaborate just a 
bit on the question then for you. Based on the experience to-
Date, what are the chances the VA will collect the $604 million 
in 1998? The collections in 1997 were a little below the 
revised 1997 estimate which is somewhat below the original 
estimate.
    Dr. Kizer. I think to answer your specific question I would 
say the chances are good. At the end of the first quarter, if 
my memory serves me correctly, we were about 7-percent below 
the projection which is not altogether surprising at this point 
in the fiscal year.
    Again, if my memory serves me correctly, our target at that 
point was about $127 million. I believe we were at $118 million 
or $119 million in collections at that point in time. There are 
a number of specific efforts underway to increase the 
collections and to get us back on target.
    I do not anticipate that at the end of the second quarter 
we will be on target. I am hopeful by the end of the third 
quarter we will either be back on target, or very close to it, 
and that we should end the year either there, or very close to 
it, and possibly exceed the target.

                         COLLECTIONS SHORTFALL

    Mr. Lewis. The 1999 target is $677 million, a little larger 
than $98 million. You have explained efforts being made in 
expectancies. I know that you will keep the Committee informed 
if we have problems as time goes forward.
    Last year there was a great deal of concern that the 
estimated level of collections from third-party insurers' 
various co-payments would not materialize. Legislation was 
enacted to permit the Secretary of the Treasury to provide the 
difference between the amount collected and the current CBO 
base line minus $25 million.
    The CBO base line was $604 million. The assumption was that 
$579 million would be available. In the event that collections 
fall short, what is the amount from which the $25 million is 
taken?
    Dr. Kizer. That is an adjustment that we would have to make 
as we move forward. I do not have a specific figure that I 
could give you at this time.
    Mr. Lewis. So, nobody has done any game planning that 
essentially says that if we fall short and need $25 million, 
this is where we would take it from? I would think that some 
people would be a little anxious about that.
    Dr. Kizer. The anxiety is, of course, there as is the 
expectation that we will arrive on target. At this point in 
time, while there has been discussion about it, there has 
notbeen a concreteness to any scenario planning since the expectation 
is still that we will arrive on target.
    Mr. Lewis. Is it last year's CBO estimate of $604 million 
or the current CBO base line of $579 million?
    Dr. Kizer. I am sorry?
    Mr. West. That is the trip wire?
    Mr. Lewis. Yes.
    Mr. West. That we would be comparing ourselves to in terms 
of triggering the need for the assistance?
    Mr. Lewis. Yes.
    Mr. West. It is the current one.
    Mr. Lewis. The $604 million?
    Mr. West. Yes.

                   MEETING 1999 COLLECTIONS ESTIMATES

    Mr. Lewis. Okay. The authorizing legislation mentions using 
the current CBO base line. The legislation permitting the 
Secretary of the Treasury to make up any shortfall in 
collections only applies in fiscal year 1998.
    It might be described as an insurance policy. It costs us 
about $15 million in budget authority and $14 million in 
outlay. What reassurances can you give us that collections in 
1999 will not fall short of the estimate of $677 million?
    Last fall, a report by the General Accounting Office 
concluded that the VA would succeed only if it does a 
dramatically better job of collecting payments. Do you see 
specific results that should encourage this committee?
    Dr. Kizer. Well, there are a couple of things. One, I just 
want to go back to something that I should have noted that I 
did not. We have held a $100 million reserve so that answers 
your question about where the $25 million would come from.
    My comments were predicated on if it exceeded that, which 
we do not expect to be the case. In addition, I would note that 
each of the networks is holding a reserve as well.
    We are currently in the process of working with them to 
clarify where their expectation is as far as where they will 
end the year to see how much of that reserve which was 
previously set at 2-percent of their operating budget, how much 
of that we could release at this point in time, and what their 
expectation would be as far as continuing to hold a reserve.
    So, there is at least two layers that would have to get 
worked through before that trip wire, in your words, would need 
to be met.
    Mr. Lewis. Thank you, Dr. Kizer. Mr. Stokes.

                       PUBLIC'S PERCEPTION OF VA

    Mr. Stokes. Thank you, Mr. Chairman.
    Mr. Secretary, if you see me slipping in and out of the 
hearings, it is because I am also on another subcommittee that 
is meeting next door. I have to go over there and put in an 
appearance also.
    There were reports last week on the results of a study 
conducted by the Pew Research Center for the people in the 
press dealing with the public's perception of government. You 
are probably familiar with this article, I am sure.
    The favor of most government agencies has increased during 
the past years. However, numbers for the Department of Veterans 
Affairs are slipping. From 1986 to 1997, the percent of people 
who view the VA favorably declined from 68 to 59.
    The percent who view the VA unfavorably increased from 22-
percent to 26-percent. Compared with the survey results from 
1984, the decrease is even sharper. In 1984, 77-percent viewed 
the VA favorably while only 15-percent viewed it unfavorably.
    Even more troubling is that people's perception of the VA 
has declined, while it has increased for most other government 
agencies. The only agencies which have marked bigger declines 
in favor are the FBI and the Internal Revenue Service.
    I have several questions to pose to you relating to this 
trend. First, do you agree with the thrust of the numbers that 
I have just recited which were in this particular article?
    Mr. West. Well, I do not have any basis to disagree. I 
accept their results I guess is the best thing to say. That 
does not keep me from being disappointed by them.

                          VA CUSTOMER SURVEYS

    Mr. Stokes. Does the VA conduct any surveys of its own with 
reference to the public's perception of the agency?
    Mr. West. I am not sure.
    Dr. Kizer. Yes, sir. We have for the last three years. We 
have been conducting customer satisfaction or patient 
satisfaction surveys. We have been able to show statistically 
significant increases or improvement in how our patients 
perceive the care.
    I cannot comment on the benefits side of the house since I 
do not know what they are doing. On the health side of the 
house, our patients view the services that they receive as 
better than they were three years ago.
    Mr. West. For fairness in advertising, the benefit could 
speak to that as well, sir.
    Mr. Thompson. We also conduct national surveys, 
particularly in the Disability Compensation Pension Program. We 
have run one. We are now in the process of running a second. 
So, we will have some comparisons between the base line and the 
current performance.
    Mr. Stokes. Just so I understand this gentleman's comments. 
Are you disagreeing with the particular poll that I have 
referenced here?
    Dr. Kizer. I do not know the methodology or the technique 
by which they conducted their poll. I actually, when I saw 
that, did jot down a note to see if we could find out how they 
did it.
    Certainly my experience as an epidemiologist who has some 
training in how you conduct these things is that often the 
results one gets depends a lot on how you set-up your survey 
instrument; what specific questions you ask; how it is 
conducted; and the number of persons that you sample. There is 
a whole host of technical and methodological questions that I 
would want answered before I knew how to interpret the numbers 
that they cite.
    I do not disagree with the numbers that they cite, but how 
significant they are or what they really mean is something that 
one needs to understand the methodology better before you can 
interpret them.
    Mr. West. Mr. Stokes, I do not think we disagree.
    I think Dr. Kizer's survey would have been among customers 
of the veterans served in the Veterans Health Administration. I 
think the survey that Under Secretary Thompson has in mind 
would similarly have been among customers; veterans served and 
the benefits.
    I think that the Pew Research was done of Americans at 
large by some sampling that exceeds veterans. Although we have 
a substantial population of veterans, some 27 million alive in 
the country today, they are not by any circumstance a larger 
part of that subset that Pew would have beenconsidering.
    Mr. Lewis. Mr. Stokes, would you yield just a minute?
    Mr. Stokes. Certainly. I will be glad to yield, Mr. 
Chairman.
    Mr. Lewis. I am sorry to interrupt your thought, but Mr. 
Secretary, I have spent some time massaging this survey 
information on the medical side. I have not done so on the 
benefits side. Under Secretary Thompson, I would be interested 
in doing that.
    If you can speak to it now or provide for the record, but 
do you have a percentage of satisfaction expressed by the 
veterans?
    Mr. Thompson. No, I do not have it, but I can provide it.
    Mr. Lewis. Okay.
    [The information follows:]


[Page 26--The official Committee record contains additional material here.]



                         customer satisfaction

    Mr. Stokes. Is VA doing anything to increase the customer 
and public satisfaction with the agency?
    Mr. West. Yes, sir. I think to some extent what you are 
hearing from our two Under Secretaries suggests some of the 
steps. First of all, we, too, are interested to learn what they 
have said and what our customers say and how they react.
    Secondly, we are building in, on both sides of our house, a 
sense that the final measure of our success is indeed customer 
satisfaction.
    Mr. Stokes. One of the reasons why we have posed this 
question to you is because we are wondering if the budget cuts 
of recent years have been too severe, and if their impact has 
resulted not only in some decreased trust in the VA, or perhaps 
even worse?
    I am particularly referring to the situation at the Castle 
Point and Montross Medical Centers in New York with serious 
questions raised last year to the effect that budget reductions 
made pursuant to the veterans equitable resource allocation 
system had resulted in degraded medical care and increased 
mortality rates.
    Partly in response to news media reports of the request 
from the New York Congressional Delegation, the VA conducted an 
extensive investigation of the hospitals and prepared a 400- 
page report. First, I guess it should be noted that the report 
concluded mortality at two facilities were not higher than 
expected, however problems were certainly discovered. Are you 
in position to make any comment with reference to that 
situation?
    Mr. West. Surely. I suspect Dr. Kizer will want to make 
even more. Let me just say this, Mr. Stokes, about that. There 
is no doubt that the reporting of unfavorable conditions, 
whether that reporting is entirely accurate or not, will have 
an affect on the perception of our agency.
    That gives us two different responsibilities. One, to make 
sure those things do not happen. Secondly, to make sure that we 
report the good news.
    Specifically, I would point out that, that very same 
medical inspector's report I think you are referring to that 
has been characterized in the press account I thought made it 
clear that whatever failings the medical inspector found there, 
they did not relate to the VERA allocation to those hospitals. 
Dr. Kizer.
    Mr. Stokes. Dr. Kizer.
    Dr. Kizer. I would add to what the Secretary has said in a 
couple of ways. One, going outside of the VA, as you may recall 
a few years ago, the tragedy of the Dana Farber Cancer 
Institute and then after that a succession of other medical 
problems were reported in the press at private institutions.
    Some polling after that also showed a dip in public 
perception of the medical profession and health care after 
that. I used that example to underscore the point that the 
Secretary made that when things are reported in the press, 
regardless of their etiology or genesis, that influences public 
perception.
    I would also underscore the point that he made about the 
medical inspector and their very extensive review of the 
situation at those two institutions. They did not find that the 
problems were due to VERA.
    Indeed, there were some longstanding problems. It appears 
that if anything the integration of those two facilities that 
the VERA has highlighted and helped facilitate the resolution 
of those problems.
    Mr. West. Mr. Stokes, may I just make a comment?
    Mr. Stokes. Sure.
    Mr. West. I do not wish to be misunderstood as somehow 
blaming the press for the perceptions of us. I think we are 
responsible for the perceptions out there. So, I emphasize as 
well that our job is not just to improve our getting out our 
story, but to make sure our story is a good one.
    That we are delivering and doing the things that we need to 
do and that we are providing the best. I think that is the real 
effort we are all undertaking at the Department.

                  va's request to omb for medical care

    Mr. Stokes. Let me ask you this. The 1998 appropriation of 
the VA Medical Care Account is $17.057 billion. The estimated 
medical care costs recovery collections bring the total funding 
available to $17.7 billion.
    For a year that reflects numerous budget increases 
throughout the government, the 1999 medical care request 
actually declines to about $17.028 billion or about $30 million 
less than this year. What was the VA's request to OMB for 
medical care?
    Dr. Kizer. The request was a part of, as I think the 
Chairman mentioned earlier, there was an agreement reached as a 
part of the balanced budget agreement last year that we would 
maintain our request at a certain level. So, that was the 
request that was put in.
    Mr. West. I think our request was honored.
    Mr. Stokes. I am sorry?
    Mr. West. I was just saying that I think our request was 
honored by OMB. I was not here, but that is my impression.
    Mr. Lewis. For the record, what was that number?
    Dr. Kizer. It was $17.027 as I recall.
    Mr. Stokes. OMB actually granted your request?
    Dr. Kizer. Yes, sir.
    Mr. Stokes. Okay. Are you satisfied at the amount then that 
is in the proposed budget that this will adequately take care 
of your needs in terms of medical care?
    Dr. Kizer. I think the budget request and what is requested 
for the next several years reflects a shift, if weare 
successful in not only getting the appropriation, but also achieving 
our receipts on the Medical Care Collection Fund, and importantly 
Medicare subvention.
    This whole balanced budget agreement was predicated on a 
number of factors that if all of those come to fruition, which 
we are still hoping that the Congress will pass the Medicare 
subvention piece of that, then we are optimistic that we will 
continue on the course that we are going of treating more 
veterans, and providing higher quality, and more consistently 
high quality throughout the system.
    Mr. West. I think, Mr. Stokes, we are satisfied with the 
numbers. For the record, our request to OMB was $17.027 
billion. We are satisfied with the number. A part of those 
numbers are an obligation on us to make sure our collections 
work, and also to get Medicare subvention.
    Mr. Stokes. Thank you very much. Thank you, Mr. Chairman.

                       medical care funding level

    Mr. Lewis. Thank you, Mr. Stokes. I might just intervene 
here. Mr. Stokes, the question you are asking is one that is 
pressing us all and we will have to focus on it over time.
    It is important to note that in 1998, there was $17.057 
billion. The MCCF presumption was $688 million. That would 
bring the total to $17.745 billion, sharing and other 
reimbursements for $104 million. So, a total of $17.849 
billion. We go to 1999, the projected year, to get very 
specific regarding your question, the appropriation would be 
$17.852 billion. That would remain the same through, by way of 
the budget agreement, 2002 each year.
    The MCCF presumption is $677 million. That gives us a total 
of $17.705 billion and other reimbursements are $147 million 
for a total of $17.852 billion. It is essentially the same as 
1998. The cumulative increases over the years between now and 
2002 are only slight adjustments upwards.
    If you took in any kind of inflation, it might very well be 
considered to be flat at best or maybe less than flat. That is 
why the un-ease on the part of some service organizations.
    Mr. Stokes. Right. That was one of the reasons why we posed 
the question.
    Mr. Lewis. Thank you, Mr. Stokes. Mr. Frelinghuysen.
    Mr. Frelinghuysen. Good morning, Mr. Secretary.
    Mr. West. Good morning, sir.
    Mr. Frelinghuysen. Congratulations on your new post.
    Mr. West. Thank you.

             veterans equitable resource allocation (vera)

    Mr. Frelinghuysen. All of us hold you in high regard and 
wish you the best. As my Chairman and other committee Members 
know, I have for the past three years been more than outspoken 
about the VERA Plan, both in substance and how it has been 
presented.
    Mr. Secretary, allow me to be blunt. The implementation of 
the VERA Plan in the northeast has been a disaster. There is 
now a crisis in confidence among the veterans in the northeast, 
a good number of whom I represented in northern New Jersey. I 
know what VERA is about. I agree that efficiencies can be found 
and that the way of doing business at the VA can be brought up 
to modern standards without sacrificing the quality of care for 
our veterans.
    In reality, for the past three years, serious questions 
have been raised about the extent of what are called 
efficiencies and at what point they compromise the quality of 
care for our veterans.
    When I and others from the northeast have raised these 
types of questions, we have received the ultimate in 
bureaucratic run around. Budget numbers conflict. Actual steps 
taken to realize cost savings are entirely unclear.
    Worst of all, reports of individual cases of substandard 
care are written off as isolated incidents and somehow 
unrelated to asset or dollar allocation issues. When the 
Director of Medical Operations in my own backyard, and I have 
two VA Hospitals in northern New Jersey, tells me he does not 
even know what the budget is for his facilities, something is 
wrong.
    The increases are cumulative increases. First, we were told 
that VISN Three is taking a $148 million cut. Then last year we 
were told that $112 million has already been cut. Now, the GAO 
was in my office the other day. They tell me the number is 
really between $63 million or $73 million, depending on how you 
count. On top of this, I am told that our VISN actually gave 
back during fiscal years 1996 and 1997 $20 million back to 
Washington to the VA.
    Then we hear through the media that we are facing 
additional cuts of $80 million over the $146 million to-Date. 
Which is it, Mr. Secretary? Is there anyone in the VA that can 
give us some straight answers, when we are told that those cuts 
are a result of ``accounting errors.'' That is what had 
appeared in the New York/New Jersey newspapers.
    Something is wrong to those of us who represent New York 
and New Jersey. When the numbers never match up, something is 
wrong. When our own medical directors appears to have no input 
in their budgets, something is wrong.
    I have never heard of a budget that does not start with the 
particular institution. In this case, it appears that 
Washington decides and the institutions back in my home state 
find out after the fact.
    Mr. Secretary, by any definition you have your work cut out 
for you. The veterans in my area, I believe, are losing 
confidence in the VA. That alone is alarming. The statistics, 
budget statistics, are arguable because they are so unclear.
    After repeated attempts to get a clear picture, it is more 
confusing than ever. I have actually had to call on the GAO to 
come in and do a study of what is going on in the northeast; 
not only a study of the budget numbers, but more importantly 
than the budget numbers is whether veterans are getting the 
quality of care that they deserve.
    Public perception is everything. What I think the reality 
is that this VERA system has been very damaging to the 
northeast. So, I appreciate your hearing me out. I am 
frustrated. I would like your reaction.
    I do not think I am an isolated voice in the wilderness. I 
work with the so-called stakeholders that everybody holds up as 
the means for communication with the veterans' community.
    Recently those stakeholders in my area have been left out 
of the loop too and surprised by information coming out of 
Washington that relates to the President's new budget 
submission for the VA.
    If I am out of the loop and I serve on the Committee, and 
the stakeholders in our medical facilities are out of the loop 
because the people who run the institution do not know what is 
going on, then we are in some deep trouble.
    So, I would like to know your view of what is going on in 
the northeast and whether you have heard from other Members of 
Congress on these types of issues.
    Mr. West. Thank you, Congressman, for the opportunity to 
respond. I have a sense, I assume you expect that. To my left 
is someone who would like to respond to some of the details. 
Let me answer your question directly to me with a little of my 
ten weeks' worth of wisdom.
    The easiest of your questions and comments to answer is the 
last one. Yes, sir, I have heard from some other Members. Yours 
is not the only voice. I have heard from the New York 
Delegation as well.
    I think that some of you may well be aware of the letters 
that have been fairly public. I make a couple of observations. 
In my comments, I said for the last several years that VA has 
been on a course of rather basic change in its delivery of 
health services.
    Although I am absolutely certain this will not satisfy you 
and it is not intended to. It is by way of my opening 
explanation. Change is not easy. Change is not easy because of 
its impact on people who feel it.
    It is not easy because of the burdens it puts on us to make 
sure that when we do it, we do it right. We do it so that 
people are not left out of the loop. We do it so that our 
stakeholders do not lose confidence.
    We do it so that there is no perception, or more 
importantly, there is no reality that some section, some group, 
some place, some part is being unfairly treated or unfavorably 
penalized.
    My brief review says to me that we undertook this course 
because you told us to. The Congress said, you have got to 
reorganize the way you do it. VERA is a response to that.
    The data, I gather, is not all in on how successful VERA 
is. I must tell you that my initial impression is that it is 
well-conceived, well-constructed, and well-intended. The 
question is in our execution.
    I would ask you to remember also that the people who are 
engaged in this who are trying to work their way through 
budgets, trying to make explanations, trying to get things to 
happen the way they should, all have the same intention that 
you and I do.
    That is to serve our veterans, every one of them, 
everywhere they are located; those in your District, those in 
the northeast, the absolute best way that VA has within its 
means.
    My understanding of the way that VERA has been put in place 
is that where we find we are falling short, we will add in the 
additional resources. We have that fail safe. So, the question 
for me to work through is, just where are we failing in that 
VISN, if indeed failing we are.
    Let me add a couple of other things. I have looked at some 
of the projections and the explanations of what is happening in 
VISN Three. I have looked at the reports of the allocations.
    It actually seems to me that the explanations, that the 
numbers, have been remarkably consistent. The question of an 
accounting shortfall or whatever it is, has been a question of 
the buying power in that VISN as it is affected by inflation, 
which is not initially calculated into the numbers that we do.
    Inflation is an added factor. I am going to ask Dr. Kizer 
to refer to that as well. I have seen charts which, as I 
understand it, have indicated all along that the Health 
Administration has attempted to make clear that here are the 
numbers, but also here is the additional impact that inflation 
would have.
    The bottom line though is something you said. You said that 
veterans in your District are losing confidence in VA and the 
health services. We cannot have that. I will not have that.
    I will do whatever is necessary to make sure that every 
veteran in your District understands what is happening and has 
confidence. I understand that begins with you and the 
Delegation.
    Mr. Frelinghuysen. I appreciate that assurance. I know your 
heart is in the right place. I must say, it gauls me being a 
veteran. I am on your side. I will be willing to advocate until 
the cows come home to get you more resources, most particularly 
for medical accounts.
    We in the northeast do not see any of those add-ons for 
medical care. I understand that there are constituencies in the 
south and west who feel that they ought to get more of these 
resources.
    When we go to the mat to increase those accounts and we do 
not see any of that reflected in our veterans hospital budgets, 
just take that issue. One of the hospitals that I have, and I 
know my time is about up here, is the largely psychiatric-
based.
    When I said to Jim Farsetta and to Ken Mizerak up in my 
area, do you actively advocate knowing you have a specialized 
population which requires more care and therefore more cost? Do 
you specifically advocate?
    Do you speak up for the northeast, for veterans in our area 
who have mental illness? I got a very fuzzy non-answer. I mean, 
this is not a time to resign yourselves from the VISN 
principles and VERA principles. It is a time to be proactive.
    I do not want the men who are representing me in the 
northeast to be quiet if in fact we are getting the short end 
of the stick and that is affecting the quality of VERA. I get 
the feeling that they are not speaking up in the power circles 
that are represented in this room.
    Mr. West. I only smile because I do not think I know a 
single medical professional, whether doctor or director of a 
center, who is a tongue-biter. That is not in their instincts. 
I say this. I know that you and I have great confidence in the 
talent and capability that has been brought to this by Dr. 
Kizer and his folks. I know that they have great confidence in 
that VISN Director Jim Farsetta. He does speak up. We will 
review our undertaking countless times. We will work with you. 
We will give explanation-after-explanation. We will work 
through every one of these issues with you. I do believe going 
in that the efforts with respect to that VISN have been fair 
and principled.
    That does not change the fact that if you have a concern, 
if your veterans have a concern, if your people have a concern, 
then we need to take those seriously.

                return of excess funds by network three

    Mr. Frelinghuysen. Just one last question. It is my 
understanding, and I put it in my statement because I met with 
the GAO, that between fiscal years 1996 and 1997, VISNThree 
turned back $20 million to Headquarters.
    I further understand that we were the only VISN to return 
money. Can you explain to me why this was done?
    Mr. West. You have now asked me a factual question. I get 
to ask my Under Secretary for help.
    Mr. Frelinghuysen. Thank you.
    Dr. Kizer. They did turn back money. I cannot, at this 
moment, confirm that it was $20 million or if it was a number 
slightly higher than that.
    Mr. Frelinghuysen. Well, any amount. By any definition $20 
million is a lot of money. I had the GAO come in trying to make 
some sort of sense out of all your budgetary charts. Why would 
we turn money back if we are short?
    Dr. Kizer. Actually, if it would facilitate this discussion 
at all, Mr. Chairman, I have a couple of charts and tables here 
that might help inform this discussion.
    Mr. Lewis. I intended to be involved pretty heavily in the 
budget questions tomorrow. If you would try to respond 
specifically to him or have somebody help you with it, I would 
appreciate that.
    Dr. Kizer. Thank you.
    Mr. Frelinghuysen. Mr. Chairman, I do have some additional 
questions, but thank you.
    Mr. Lewis. If you cannot be specific regarding him, I 
suppose that will have to wait too.
    Dr. Kizer. I just do not have all of those figures in my 
head. So, I would have to verify whether it was 20 or some 
other different number. It sounded about right.
    [The information follows:]

                     Network Return of Excess Funds

    The network initiated several management efficiency 
measures in FY 1997. These included actions such as 
consolidation of labs, dietetics, and procurement functions. 
With the refocus from inpatient to outpatient care, acute beds 
were reduced in most of the network facilities. All of these 
actions resulted in staffing and other savings necessary for 
operating within future resource levels. Most of these FY 1997 
savings were reinvested for network needs. These needs included 
both equipment and infrastructure improvements for all 
facilities. Approximately $13 million of these savings were 
given to Montrose/Castle Point VAMCs. After all FY 1997 bona 
fide needs had been satisfied, the Network returned $20 
million.
    The returned funds were placed in the National Reserve Fund 
(NRF), a contingency account maintained in headquarters and at 
that point lost their unique identity. During the latter part 
of FY 1997 almost all the funds that were in the NRF were used 
to enhance ADP and telecommunications infrastructure of VHA.

    Mr. Lewis. To further his question, does it not seem kind 
of strange to you that they got money and they are sending it 
back? That is a pretty straightforward question.
    Dr. Kizer. Obviously, there was no mandate to return the 
money. If they returned money, it was because they felt they 
were meeting their needs, and had that to return.
    Mr. Lewis. Well then, let me further extend the question of 
my colleague. He is very dissatisfied, a reflection of his 
constituents, with the quality and the level of the service, 
yet his VISN has returned money.
    If they thought that the service was great, it seems to me 
there is a huge gap between that kind of assumption and what 
the experience of my colleague, who is a Members of this 
subcommittee, is expressing.
    Dr. Kizer. That is, obviously, the sort of thing we want to 
work through with Mr. Frelinghuysen. I would note that at least 
the information that has been provided by the network from the 
customer satisfaction surveys that have been done is that the 
patients who were being treated there have expressed a higher 
satisfaction level than before. Also, the VISN is treating more 
patients than it has ever treated before.

                            customer surveys

    Mr. Frelinghuysen. Can I speak to the issue briefly?
    Mr. Lewis. Yes.
    Mr. Frelinghuysen. Customer satisfaction is somewhat like 
the Secretary said a few minutes ago. It really depends what 
you ask people. It is like the customer satisfaction of the 
stakeholders. Many of the stakeholders work for the VA. So, you 
can be sure that they will not be publicly dissatisfied.
    None of us want to hurt the VA system. We want to work with 
you to increase it. So, I think it is all good, fine and good, 
to take customer surveys to make sure that we pay tribute to 
the heart, the volunteers, who make-up the stakeholder group.
    In reality, this is a group that is fearful. My job is to 
relieve that fear and apprehension. The bottom line, the best 
way to do it is this whole issue of asset allocation. We are 
getting the short end of the stick. Thank you, Mr. Chairman.
    Mr. Lewis. Thank you, Mr. Frelinghuysen.
    As I indicated, Mr. Secretary, I intend to spend a good 
deal more time on the budget questions tomorrow, beginning with 
the Veteran Equitable Resource Allocation System.
    The reason why I pointed earlier at what appears to be a 
freezing of VA medical care between now and the year 2002 
isthat certainly is a reflection of a piece, a significant piece, of 
what appears to be a growing problem and concern being expressed by 
Members of the House, not just this committee.
    I expect we are going to hear a lot of it from Members, 
particularly in the northeast, as we go forward with this 
legislation. Mr. Mollohan.

                                30-20-10

    Mr. Mollohan. Mr. Secretary, congratulations and welcome 
again Mr. West and the other members of your panel and your 
fine staff at the VA. We appreciate your all's good work. At 
the same time, we share a lot of the concerns that have been 
raised by Members in their questioning forum.
    We want to understand how you can achieve level medical 
budgets and continue to deliver high quality health care to 
veterans. I have a couple of questions following up on the 
general questions of Mr. Frelinghuysen perhaps.
    The formula that you set forth has, as I understand it, 
basically three assumptions. The first is that you are going to 
reduce average costs for individual veterans by 30-percent; the 
cost of delivering care to individual veterans by 30-percent. 
Is that correct?
    Mr. West. Yes, that is.
    Mr. Mollohan. That you are going to raise 10-percent from 
the MCCR collections.
    Mr. West. Yes, from third parties. That would include 
getting Medicare subvention, sir.
    Mr. Mollohan. That in the process, you are going to serve 
20-percent more veterans. So, that is your 30/20/10 goal for 
veterans. Is that correct?
    Mr. West. I think that is a fair statement. Would you care 
to comment, Dr. Kizer?
    Dr. Kizer. The only thing I would add is that those three 
elements are three of ten goals that were laid out for 2002. 
The others do not deal specifically with fiscal matters and 
have attracted less attention than what is coming to be known 
as 30/20/10, sir.
    Mr. Mollohan. But these drive the budget considerations, 
these three, do they not?
    Dr. Kizer. They are a part of the budget considerations.
    Mr. Mollohan. Well, let us just talk about these that are a 
part of the budget consideration. What is the basis for those 
assumptions for each and every one of them?
    Dr. Kizer. The 30-percent is an amalgamation, if you will, 
of experience that has been found elsewhere as far as the 
ability to reduce expenditures by using clinical practice 
guidelines and a host of other things.
    I should say that in many of those cases where that data 
comes from, that 30-percent, is reported as anywhere from a 25-
percent to a 45-percent reduction in expenditure, which has 
been achieved in one year as opposed to the five-year strategy 
that we are employing.
    There are a number of references or items in that regard 
that I will be happy to share with you, if you would like. The 
20-percent increase in users is predicated in part on the 
historical patterns of increasing utilization, as well as what 
we thought would be a realistic figure, looking five years out 
or down the road.
    I would note that last year the VA treated more patients 
than it has ever treated in its history in a year. Then the 10-
percent, again, was based on some best projections. If we are 
able to get these three elements of the non-appropriated 
funding, which includes CHAMPUS and other sharing agreements 
that we now have in the Medical Care Collection Fund. The third 
element would be the Medicare subvention which, would provide a 
reasonable scenario to project out over five years.
    Mr. West. I want to add one element to that explanation. I 
think it is based also on what is reasonably achievable. I 
think those numbers could have been carried further.
    Mr. Mollohan. Okay.
    Mr. West. I think the efforts at reducing costs could have 
been made even more stringent.
    Mr. Mollohan. I hear you say that. What I am trying to get 
to is what is the basis? What rigor? What studies? What 
experts, not including yourselves, have looked at this to come 
up with these numbers?
    You are using these numbers as a basis for projecting level 
funding for medical care. You obviously have confidence in the 
numbers. I am just inviting you to give us the confidence in 
the numbers.
    Frankly, looking at them and obviously not being anywhere 
near as familiar with how they were developed as you are, it 
almost appears to be a rule of thumb.
    Dr. Kizer. They are not. Again, they are based on an 
amalgamation of data. We will be happy to share that with you. 
In the latest issue of the Veterans Health System Quarterly one 
short note explains some of the basis for this and cites a 
number of specific literature citations from which this was 
drawn.
    We can add to that if that would be helpful to your 
understanding. I just do not carry all of those references in 
my head.
    Mr. Mollohan. I would very much like for you to submit to 
the Committee the basis of the formula, how they were 
developed, and what kind of studies and computations are 
underlie them.
    [The information follows:]


[Pages 37 - 38--The official Committee record contains additional material here.]



    Dr. Kizer. Sure.

                      efficiencies in medical care

    Mr. Mollohan. With regard to efficiencies, if you are going 
to increase about 20-percent the number of patients,what 
efficiencies are you going to affect? Let me ask it in the context of 
this question.
    I know that you have had a decrease in FTEs from 1998, 
according to your budget submission of 183,000 FTEs. Is that 
the efficiency?
    I mean, obviously if you are measuring it by number of 
employees servicing an increasing number of veterans, I guess 
that is efficiency. The question is, can you do that? What is 
the affect on the quality of the health care delivered to 
veterans.
    Mr. West. I do not know if Dr. Kizer is going to say this, 
but I think the number you just gave is the total number of 
FTEs, not the decrease. We have decrease down to that number. I 
think the actual decrease is not more than about 25,000 or so. 
We have gone down to that level.
    Mr. Mollohan. According to the fiscal year 1999 budget 
submissions, FTEs for medical care in fiscal year 1999 will be 
180,411.
    Dr. Kizer. Right.
    Mr. Mollohan. A decrease from 1998--you are right. Thank 
you.
    Dr. Kizer. There are a number of things obviously that 
contribute to the ability to treat more patients more cheaply, 
not the least of which is treating more on an outpatient basis 
where that is appropriate.
    As you may know, in the last three years, we have closed or 
at least at the end of December, had closed about 43-percent of 
our acute care beds, reflecting the shift to treating more 
patients in the outpatient setting.
    For example, over the last three years, of the last three 
fiscal years, the number of outpatient visits had increased by 
about 6.6 million.
    There had been about a 26-percent increase in outpatient 
visits and about a 29-percent decrease in the number of 
inpatient beds.
    Since one can treat more patients much more cheaply on an 
outpatient basis there are savings to be realized. We have 
reinvested those in taking care of more patients.
    At the same time, if you use the standard or some of the 
standard indicators that are used in the private sector to 
measure quality of care, for example, the Health Plan Employee 
Data and Information Set (HEDIS) Measures that are promoted by 
the National Commission on Quality Assurance.
    If you look at measures that are comparable between the VA 
patients and non-VA patients, what you see is that over the 
last two years, not only has there been a dramatic improvement 
in those indicators among VA patients, but the average among 
the VA is uniformly and, in most cases, markedly higher than in 
non-VA patients.
    So, the quality of care has increased, at the same time 
that efficiency has increased, as well as the number of 
patients being treated has increased.
    Mr. West. May I add, if I might, sir, I do not think it is 
so inconceivable that we can improve health care while 
delivering it at less cost. I just came from a place where if 
you take the overhead down, and that is a part of what was just 
described by Dr. Kizer, then you will be doing something that 
has no effect on the actual delivery of the health care. If you 
can improve the health care as well. All over America, that is 
what Americans are demanding, is that we deliver excellent 
health care but at less cost. The fact is it is simply not 
true, that the best health care is the most expensive health 
care.

            veterans healthcare patient satisfaction surveys

    Mr. Mollohan. Well, of course, we are reflecting a lot of 
concerns being expressed out there. Hopefully, they are 
concerns anticipating a diminution in health care and not 
experiencing it. We will just see. Who conducted your VA 
surveys, your opinion surveys, on the quality of health care 
and satisfaction with it?
    Dr. Kizer. Those are conducted by the VA's National 
Customer Feedback Center using an instrument that was developed 
by the Picker Institute in Boston. It is a standard instrument 
that is used in health care across the board.
    It reflects a decision to use an instrument that was common 
in the industry, so that one could compare results in the VA 
with the results found in the private sector and make what are 
commonly known as apples-to-apples types of comparisons of the 
results.
    Mr. Mollohan. Can you make those surveys and methodologies 
available to the Committee?
    Dr. Kizer. Of course.
    Mr. Mollohan. So, you will do that automatically based upon 
just my questioning right here?
    Dr. Kizer. We will provide that for the record, sir.
    [The information follows:]

            Veterans Healthcare Patient Satisfaction Survey

    The following attachments provide the 1997 patient 
satisfaction and opinion surveys for recently discharged 
inpatients and for ambulatory care.


[Pages 41 - 123--The official Committee record contains additional material here.]



    Mr. Mollohan. Thank you. Thank you, Mr. Chairman.
    Mr. Lewis. Thank you, Mr. Mollohan. Mr. Price.

                     processing compensation claims

    Mr. Price. Thank you, Mr. Chairman. Mr. West, I, too, want 
to congratulate you and welcome you and your colleagues here 
today.
    Mr. West. Thank you.
    Mr. Price. I would like to begin by asking you about a 
matter that I am sure you have heard from other Members about 
as well. It has to do with the time that it is taking to 
process compensation claims.
    In my region, and perhaps around the country, but it is my 
region that I know most about because we do receive calls every 
day from veterans wanting to hear some word from the office in 
Winston Salem and concerned about the time that it is taking to 
have these claims reviewed.
    North Carolina has more than 700,000 veterans and another 
112,000 active duty personnel that are potential customers. At 
the end of 1996, it took 138 days to process original claims; 
an average of 138 days.
    That seems to me to be a long time. Today, we are told the 
situation is worse. The process today takes an average of 175 
days. The information I have indicates that there are only 100 
employees available to process the 14,073 pending claims.
    Now, are these numbers typical of what we would seeacross 
the country or is there some kind of special problem in North Carolina?
    Mr. West. I am going to let Under Secretary Thompson 
respond in detail. Let me just say a word or two about that, if 
I may, sir.
    We have been on a line at the Department certainly that was 
my experience coming in that would suggest that 138, I think 
you mentioned, which is actually down from a high of 213 some 
years prior, was part of a line heading down towards even 
better timelines.
    That is still our purpose and our objective at this 
Department: to continue to drive down the time that it takes to 
process a claim. The fact is that benefits late delivered are 
benefits that our veterans have been penalized by not 
receiving.
    That is very important to us. At the same time, just as 
important is making sure we get it right the first time. As we 
have begun to focus on not having veterans go through numerous 
steps to finally get a result, I believe that the experience 
that you have just identified, and I am not happy to say this, 
is reflective across the system. It does not just identify 
problems in that office in my hometown.
    Let me ask Under Secretary Thompson to respond more fully.
    Mr. Thompson. What you said is true. The system itself has 
backed up. We have approximately 10.7-percent more claims 
pending this year at this point in time than we did last year. 
The goal we had scheduled originally was to hit 106 days by the 
end of this year. We will not achieve that goal. Today, 
nationwide we stand at 153 days.
    Mr. Lewis. Excuse me, Mr. Price. Let me just clarify what 
you are asking here. Are you asking that the number of days to 
process a claim?
    Mr. Price. Yes, sir.
    Mr. Thompson. Yes, sir.
    Mr. Lewis. Last year, it was somewhere like 140. It is now 
153?
    Mr. Thompson. That is correct.
    Mr. Price. In North Carolina, the number has gone from 138 
to 175. So, the trend is even more pronounced.
    Mr. Lewis. My veterans are kind of old. I am just wondering 
how many days can we afford to wait? Excuse me, Mr. Price. It 
is your time.
    Mr. West. Well, there is no doubt that, that is way too 
long, Mr. Chairman.
    Mr. Thompson. There are several things that I think are 
important. I think the amount of time that we spent on 
reviewing and re-reviewing Gulf War claims has come at a price.
    We have injected these claims several times into the 
process. It speaks to the processing speeds for all of our 
disability compensation. We are also involved in the middle of 
a major redesign within the Veterans Benefits Administration.
    We traditionally have handled claims the way General Motors 
would have manufactured forty years ago. It was an assembly 
line. In order to try to change the dynamics of that system and 
create one that is more responsive to veterans where they can 
go in and know who they can talk to, and who can help them, and 
be able to answer their questions, and do things more quickly, 
we have begun the process of redesigning work processes at 
regional offices.
    That comes at a cost because we pull people out of 
production to be trained to move operations around. So, that 
has added time as well. I think there is a third factor. We 
have demanded more accurate counts from regional offices.
    Some of the performance that has been cited in the past, in 
fact, was not reflective of what actually took place. So, I say 
those three things are contributing to the increase. But I will 
say we will not hit the 106-day mark this year.

            veterans benefits administration reorganization

    Mr. Price. I am not certain how the reorganizing factor 
plays out. Is the ultimate purpose of the reorganization to 
achieve greater efficiency?
    Mr. Thompson. It is both, greater efficiency and better 
quality. In the past, the people that veterans spoke to worked 
in one part of the operation. The people that handled claims 
worked in another part of the operation. The communications and 
the way we had for moving information between those systems was 
not good.
    When we brought veterans in and they either ran the 
surveys, or ran focus groups, they would tell you very clearly 
they were unhappy with our ability to answer their questions. 
We also found that the quality of the work we were producing 
was not acceptable.
    We make too many mistakes in the claims in a rush to get 
them done versus trying to get them done right the first time. 
So, in an attempt to completely reorient the system, which has 
been in place for many decades, it does take some time, 
resources, and energy. Some of that is being devoted as we 
speak, including in Winston Salem, during the process of 
changing their organization; coupled with the fact that they do 
have a heavy work load there.
    Mr. Price. Well certainly the aim at improved accuracy and 
improved quality of service is a worthy aim. You seem to be 
suggesting that the reorganization that is designed to carry 
that out exacerbates the problem of delay.
    My question is when will that be overcome? When will the 
pay-off come in efficiency as well as these qualitative 
standards of service?
    Mr. Thompson. This does get staggered through several 
fiscal years, on an office-by-office basis. Within a year of 
completing the conversion, they should see some real 
efficiencies and improvements in service.
    Over the system, we will stretch this out into the year 
2000 at least, so that we do not load up all of the regional 
offices at one time.
    Mr. Price. Well, apart from these aggravating factors that 
you have identified, to what extent are we simply looking at 
too few people, at a lack of resources? Do we have long term 
problems here that this subcommittee needs to address? What are 
the underlying factors here that have prevented this progress 
that you have been wanting to make from occurring?
    Mr. West. Mr. Price, let me just say, I do not want to get 
in the way of the expert here. So, I will say this and then 
step aside. It may be too early to say. The fact is that this 
effort to reorganize has just started. It clipped what appeared 
to be the progress and pushing down on the numbers right then.
    The fact is that I think you are right in your suspicions. 
The things that to a ten-week expert drive down the time it 
takes to process claims, are the things that would appear to 
you and me are common sense.
    Training; I think that is an organizational problem. As VBA 
prepares its employees to be responsible for the whole process, 
that takes training. When people are being trained, they cannot 
also process claims, temporarily increasing processing time in 
return for long term benefits.
    Secondly, taking advantage of technology. Lord knows we 
should be able to do that in this enlightened time in our 
country's life. And finally, resources, numbers of people that 
you put into it.
    I think all of that has to be looked at as we make this 
effort to re-wicker the way we are doing business in those 
centers. I suspect that we will know more as he works his way 
through it.

                   improvements in processing claims

    Mr. Price. Well now, you do, as I understand it, have in 
this proposed budget $22.6 million targeted to produce 
improvements in processing claims. I gather that is qualitative 
improvements and also improvements in the turn around time.
    How is this money going to be used? When can we expect 
results? Can we have assurance that this request has been 
carefully considered and will in fact produce the results you 
want?
    Mr. Thompson. We believe it will produce the results. The 
difficulty is that there is no slack in the system. The people 
that are being retrained, learning new roles and 
responsibilities, the ones that interact with the veterans are 
the same ones that produce the work. When we bring them off-
line to train, there is that loss of productivity at that point 
in time. The second issue facing us within VBA right now is the 
amount of training it takes to get people on-line to do the 
most difficult decisions.
    For a disability rating specialist, it takes two years of 
training at a minimum, after having mastered claims processing, 
which usually takes several years itself. So, those are the 
things that face us.
    We will use that $22 million to bring about this change in 
the regional offices. Some of it is for infrastructure. Some of 
it is for training. Some of it is for technology. The reality 
is, is that we are operating at capacity right now.

                    farewells to congressman stokes

    Mr. Price. Thank you. Thank you, Mr. Chairman.
    If I might, now that Mr. Stokes has returned, could I just 
take one further minute?
    Mr. Lewis. Go right ahead.
    Mr. Price. In Secretary West's presence, I want to thank 
the Department and to thank the Chairman and Mr. Stokes for the 
cooperative effort we have had to put this veterans center in 
Raleigh after many years of struggle to get the center 
established, to get this center operating, and offering mental 
health services to veterans so effectively.
    We really do appreciate that support. Mr. Stokes, when he 
was Chairman of this committee, took a trip to Raleigh and saw 
the need first-hand. He helped us write into an appropriations 
bill a few years ago a directive that, that center be 
established. With Mr. Stokes' retirement coming this year, I 
know the folks in Cleveland are going to miss his presence 
here, but I also want him and the Committee to know that the 
veterans in Raleigh, North Carolina owe him a debt of gratitude 
as well.
    So, I am glad you came back in, Mr. Stokes, because I did 
want to express that, and of course to thank the Department for 
their continuing efforts in Raleigh and in these veterans 
counseling centers all over the country. I think it is an 
important vital arm of the health care that you proved. Thank 
you, Mr. Chairman.
    Mr. Stokes. Thank you very much.
    Mr. Lewis. Thank you, Mr. Price. Mr. Walsh.

             veterans equitable resource allocations (vera)

    Mr. Walsh. Thank you, Mr. Chairman. Mr. Secretary, welcome 
and congratulations on your appointment. I expect you will be 
appointed.
    I have two questions. One, I would like to follow on and 
associate myself with the remarks of Mr. Frelinghuysen. I think 
he put our concerns about as well as they can be put. New York 
State in this bureau process has really, we feel, our veterans 
feel, we Representatives feel, been hurt by the reduction in 
the support for our hospitals.
    The estimates are as high as $266 million. Your 
predecessor, Secretary Brown, pledged that VERA would not 
result in any negative care to any veteran in the country. It 
was a relatively bold statement in light of the reductions that 
we have talked about; the expanded length of processing 
applications, and so forth.
    Realistically, how can this magnitude of reduction be 
achieved without negatively impacting veterans' care or without 
significant reductions to VA services in New York State? What 
actions are you taking to address specifically the legitimate 
concerns of New York veterans?
    Mr. West. I will let Dr. Kizer answer in greater detail, 
but let me just say again. Secretary Jesse Brown's statement 
may have been bold, but it is absolutely on point. There is no 
way that Veterans Affairs, this Department, can ever back away 
from that. There is no way this country can back away from 
that.
    We cannot allow the quality or the delivery of our health 
services to our veterans, or any of our benefits as far as 
veterans, take a step backwards.
    If we find out that what we are doing under VERA is having 
that affect in an area, I believe the Department is already on 
record as committing itself to go and look at that and make 
that adjustment there.
    I think that we are still sorting out whether the fact that 
there is being some negative impact on the delivery of health 
services in that VISN and in New York is in fact a true fact.
    There is no debate over whether if it is true, it is 
undesirable. We would agree with you. I believe that we all 
believe that at this point, we are still able to provide 
insurances that we are delivering quality health care to 
veterans; I will bet to even more veterans than we had before 
in that VISN.
    We have always retained, and even I know this in my ten 
weeks, the guarantee that if we find that there is a 
deleterious effect there, we will go in and deal with that. 
Now, I may have said too much. Let me let Dr. Kizer speak.
    Mr. Walsh. Thank you. I appreciate your comments. I look 
forward to hearing from Dr. Kizer. My veterans advisory and 
other veterans organizations I am sure will hear your words. 
They will hold you and this subcommittee to those words and 
make sure that we maintain that high level, that high standard 
of care.
    Mr. West. Sir, that VISN is getting a lot of attention from 
us. I have been here for ten weeks. That is the only VISN I 
have been to twice already.
    Dr. Kizer. I would just underscore what the Secretaryhas 
said that if we find methodologically or otherwise the ways to improve 
VERA, we certainly are committed to do that. I would also note that 
while a great deal of attention, both this morning and otherwise, has 
been focused on the reductions that are occurring in Network Three, it 
is probably worthwhile to also note that as far as full and complete 
information that when VERA is fully implemented, veterans in New York 
will still receive 27-percent more per patient than the average 
elsewhere in the system.
    Indeed, I was afraid Mr. Price was going to ask me why the 
veterans in North Carolina will receive 40-percent less than 
those in New York when VERA is fully implemented.
    Mr. Lewis. Do you want to revise next time, Mr. Price?
    Mr. Walsh. If I could just comment on that statement. There 
is a feeling that the people who are of retirement age and are 
veterans, who have the ability to go south from the New York 
winters. They do it.
    North Carolina is one of our favorite places to visit, as 
is Florida, Georgia, and so forth. The people who are real 
sick, just cannot leave. That is one of the reasons their costs 
are so high.
    Mr. Walsh. I think just to probably summarize that when 
VERA is fully implemented, the amount that is allocated will 
address all of the things that can be explained, all of what 
you are talking about.
    That is, indeed, why the veteran users in New York will 
have a 27-percent higher expenditure than veterans elsewhere in 
the country. Those are things that we can explain. The VERA 
accounts for that. The things that we cannot explain are really 
what VERA is targeted at.
    Mr. Walsh. Would you explain how you got from 27-percent to 
50-percent higher? If you take the veterans in Phoenix in 
Network 18, when VERA is fully implemented, their averaged 
expenditure will be about $3,800 per person versus New York 
where it will be $5,700.
    Mr. Walsh. There is anecdotal information that you cannot 
compare costs between the two. I think that certainly our VA in 
Syracuse has done a terrific job of getting costs down. I think 
good management goes a long way. I would suggest the model that 
Phil Thomas has developed there to any of the hospitals.
    Still in all, the cost of living is much higher in New 
York. As I said, we have older, sicker veterans who just cannot 
get away. That is where they are going to be. So, there are 
some problems unique to the northeast that I think mitigate for 
those higher costs.
    Dr. Kizer. I think that is what is reflected in VERA. The 
fact that New York does get a higher expenditure than any other 
place in the country and that is a reflection of those costs.

               medicare subvention demonstration program

    Mr. Walsh. Let me just ask along another vein on Medicare 
application subvention. Many veterans advocates have suggested 
that veterans' should be reimbursed for non-service connected 
care that the Veterans Administration provides to veterans who 
are also covered by Medicare.
    This concept is referred to as Medicare subvention, would 
transfer funds from Medicare to the VA to cover the cost of the 
VA services to an existing case load of patients who are also 
covered by Medicare.
    Critics of Medicare subvention have argued that this would 
lead to an increase in federal spending authority. Proponents 
feel that savings could be achieved because the Department of 
Veterans Affairs could provide veterans with that care less 
expensively than under Medicare, enabling the VA to employ 
under-utilized capacity in many of their facilities.
    I know you support a Medicare subvention demonstration 
program. Can you comment about the feasibility of implementing 
a Medicare subvention program and address the cost implications 
of this and its impact on VA medical care and the VA medical 
care budget?
    Dr. Kizer. Well, what you have said, does indeed reflect 
our thinking. That one, from a philosophical point of view, it 
is somewhat ironic that the only people in this country who are 
discriminated against in their ability to use their Medicare 
benefit are veterans. It is an irony that is pretty hard to 
explain.
    Mr. Walsh. I have not be able to explain it too.
    Dr. Kizer. We would hope that the Congress would see fit to 
correct that problem this year. From a pragmatic or a 
programmatic point of view, again, we agree with your comments 
and those of your constituents that the VA can provide care 
that is not only less expensive, but also higher quality 
throughout the system.
    Just to put that in some perspective, under VERA, for about 
96-percent of our patients, the average expenditure would be 
about $2,600 or $2,700 per year. Now, if you compare that basic 
care cost with the Medicare which is running somewhere between 
$5,600 and $5,700 under a managed care HMO model, you can see 
that there is room there to provide not only the Medicare scope 
of benefits, but an expanded scope of benefits for less cost.
    That is why we are agreeable in the statute or in the 
potentially authorizing statute to accept a lower rate of 
reimbursement than would be provided to private Medicare 
providers.
    Mr. Walsh. Mr. Chairman, I do not have any questions at 
this point, but I may submit for the record, if it will be all 
right.
    Mr. Lewis. Fine, Mr. Walsh.
    I just want to interpose this. A statement was made that 
the only group in this country that might be discriminated 
against for the Medicare availability are veterans.
    For the record, it should be noted that if a veteran were 
to choose to use Medicare services, he, like any other citizen, 
can go to the marketplace and get those services.
    There are some people who would suggest that the veteran 
might be better off going somewhere else and using that other 
option. So, I do not want it to be suggested that we are 
suggesting against veterans here.
    By way of this, just because the Department of Veterans 
Affairs provides government medical care does not necessarily 
mean that a veteran would not have other options under 
Medicare.
    Mr. West. Well, I guess the point, Mr. Chairman, is that 
the veteran does not have complete freedom of choice. A veteran 
could not go and use that in a VA hospital where the veteran 
may feel more comfortable, where the hospital bears his name 
``Veterans.''
    Mr. Lewis. Be very careful, Mr. Secretary. I may be 
suggesting a lot more if we want to carry this conversation on 
further.
    Mr. West. I accept your caution.
    Mr. Lewis. To the Gentle Lady who is the recipient of all 
of these veterans' activities from New Jersey and New York, and 
otherwise the Gentle Lady from Florida.

                     veterans--specific census data

    Ms. Meek. Thank you, Mr. Chairman. I am wearing my 
setpattern, green today. So, I am in a fairly good mood.
    Welcome, Mr. Secretary and members of your group. I have 
concerns about what your Department is thinking in terms of 
veterans-specific census data. In that a lot of the problems 
that we are having now came from inaccurate census data. I am 
just wondering if the Department is in any mode of 
predictability in terms of census data. Will you be involved 
with the Census Bureau in this regard?
    Mr. West. Your question takes me by surprise. I do not know 
what our interface is with respect to that data. Someone from 
my staff is here, Assistant Secretary Duffy. May I offer him to 
respond?
    Ms. Meek. Thank you, Mr. Secretary.
    Mr. West. Mr. Chairman, could he answer?
    Ms. Meek. My rationale for that, Mr. Secretary, is that in 
the past the VA has not been very good in extrapolating these 
data and using it, in terms of the size of veterans' 
populations.
    In the 1990 census data in Florida, we were about 10-
percent low. In 1980, we were about 5-percent low. So, I am 
just wondering whether or not I would like to urge the Bureau 
to get a handle on this to be sure that there is more accuracy.
    If you do that, you will be doing better than the 
government. I hope that you would get a handle on this. Thank 
you.
    Mr. West. Dennis Duffy is Assistant Secretary of the 
Department of Veterans Affairs. Can you add something?
    Mr. Duffy. Congresswoman Meek, we do in fact interface with 
the Bureau of the Census. Members of my staff and the Office 
Policy and Planning who are professional demographers work with 
them in ensuring that indeed veterans are one of the subsets 
identified in the population and looked at in the decennial 
census.
    Indeed my staff at the present time is in the process of 
updating the estimates and projections from the 1990 census. 
Every couple of years we try to refine our estimates of the 
number of veterans located in various states and counties 
throughout the nation and include in those projections and 
estimates such factors as migration, which has a huge impact on 
Florida.
    It is my understanding that our projections are within 
approximately one-percent, plus or minus, of what the actual 
numbers are. That is based on the best calculations that we 
have available to us.
    Ms. Meek. Thank you. That leads me to think that no matter 
how magnanimous you may be in your budget, if the people are 
there, if the veterans are there, you should have the facility 
to do many of the things that we would like to see you do.
    So, it is extremely important that, that count is accurate 
so that you would not have an under-count in the veterans 
because that means lack of funding for the resources. Thank you 
so much. I will go on with my questions.
    The main concern is your having the ability to extrapolate 
those figures and being sure that your contact with the Census 
is good and an accurate one.

                    medical and prosthetic research

    My second question has to do with research. I asked about 
this the last time you came to the hearing. I am so concerned 
about VA research in that over the years, anyone as old as I am 
would know that the Department of Veterans Affairs had a 
propensity for doing excellent research.
    We have seen perhaps a diminution of that in recent years. 
I would like to ask you, just what plans do you have for good 
medical research? I think it came to my attention more 
persistently with the Gulf War kind of problem.
    I would like to feel a little bit more strongly about the 
kinds of research you are doing. I notice your budget request 
asks for an increase in that particular area. Would you comment 
on that?
    Mr. West. You are correct. Our budget does ask, I think for 
a 10-percent increase in research funding. We are glad about 
that. I am going to ask Dr. Kizer to talk about our research 
program.
    Ms. Meek. All right. Thank you.
    Dr. Kizer. I think what I would like to do is perhaps 
provide some information for the record.
    [The information follows:]

       Research Being Conducted by VA Due to Increases in Funding

    Of the total increase of $28 million, $9 million is for 
current services. The additional $19 million will allow the 
start of three major new research initiatives that exploit VA's 
unique assets in clinical research, including: 1) outcomes 
research; 2) rehabilitation research; and 3) large scale 
cooperative studies of new therapies. These areas capitalize on 
our focus within a large integrated health care system. The 
first of the three initiatives includes VA's new outcomes 
research initiative on quality of care--the Quality Enhancement 
Research Initiative (QUERI) which establishes unprecedented 
collaboration among research, patient care, policy and 
performance, and informatics. Presumptive target conditions for 
this initiative include such prevalent conditions as prostate 
disease including cancer, coronary heart disease, heart 
failure, diabetes, mental illness such as depression and 
schizophrenia, cerebrovascular disease, AIDS and chronic spinal 
cord injury. This initiative will cost approximately $9 
million. Secondly, we propose to invest an additional $2 
million on Rehabilitation Research initiatives, especially in 
the areas of vision and hearing, aging with a disability and 
prosthetics. Also, we propose to add a new research center of 
excellence in Acute Brain Injury. Thirdly, in the area of large 
scale clinical trials we plan to initiate major new cooperative 
studies, costing $8 million, on Parkinson's Disease--$5 million 
will be devoted to research focused on the evaluation of 
surgical treatments (pallidotomy) and $3 million will be 
focused on diagnostic Single Positron Emission Computed 
Tomography (SPECT) imaging studies. In all these areas, no 
other federally supported clinical or research entity can 
initiate or complete such critical and ambitious research 
activities on behalf of America's veterans.


    Dr. Kizer. Actually, the last three years provide a very 
good story as far as our ability to increase the number of 
projects that are funded and increase the number of 
investigators that are being funded, increase the number of 
collaborative studies that are being done to establish some new 
centers and to partner with non-VA entities.
    Since there are numbers in that regard, I would hazard to 
cite all of those at this point. So, I would like to provide 
that for the record. I would only note that I think as you have 
so generously commented that the VA has an excellent and indeed 
a very stellar history of producing research that not only 
benefits veterans, but benefits everybody in the nation.
    I think in the last three years, we have built on that 
significantly. I know with the increase in funding that is 
proposed, we will do even a better job.

                       vera allocation in florida

    Ms. Meek. Thank you. The VA is extremely important to my 
State. I am from Florida. From 1980 to 1990, the census data 
showed that 47-percent of all veterans relocated to another 
state during the decade.
    In that decade, they moved to Florida. They moved there and 
they remained there. The net gain of veterans to Florida in the 
last decade alone, was about 349,000 people, from my own 
figures, was greater than the overall veterans population in 22 
states. Florida is the home of the nation's second largest 
population, other than my Chairman's state of California.
    We are home to that many veterans. These are veterans that 
come into Florida's programs and they remain there. The only 
areas where I have had complaints had to do, number one, with 
the slowness of claims and, of course, all of the other Members 
mentioned that.
    My second reason for mentioning these data is to say to you 
that when you begin to manage the funding that this committee 
will give you in VERA, that is why VERA was initiated in the 
first place, so you could use these data as a basis for 
allocating funds.
    I am sure you must have some other things that you can fold 
in. We used to call those things equalizers in certain formulas 
that you can help the other areas. My main statement is do not 
forget the basic figures.
    The statistics are there. Of course, you certainly want 
equal treatment, as well as you can, of all the other veterans. 
So, I would implore you to do the same thing as you have always 
done and make sure that you follow the regulatory and the 
statutory effects of VERA.
    Mr. West. We will. Certainly, we realize the importance of 
what you say. I think you would agree with us that every single 
Veteran is important to us.

                        national cemetery system

    Ms. Meek. Yes. My last question has to do with cemeteries. 
I said that because that will be the last one that lets you 
down. I understand that our budget--I am so comical at times.
    You need a little comic relief on this committee, I think. 
Your budget supports the opening of four new cemeteries during 
the next two years, more than any time since the end of the 
Civil War. Can you tell me how these new cemeteries will be 
financed; both for construction and operations?
    Mr. West. We have them in the budget.
    Ms. Meek. You put them in the budget. That is right.
    Mr. West. I am going to let Jerry Bowen who is the Director 
of the National Cemetery System be more specific on that 
question.
    Ms. Meek. Thank you.
    Mr. Lewis. Mr. Bowen.
    Mr. Bowen. Yes, most of the increase in our budget of 9-
percent will be directed towards bringing on-line four 
additional cemeteries before the year 2000. So, we are planning 
for that. We also have under way a $6 million construction 
project to expand the Florida National Cemetery at Bushnell.
    We also have $6 million in the 1999 budget request for the 
construction of a columbarium for the burial of cremated 
remains at Ft. Rosecrans National Cemetery in California.

                        memorial park in florida

    Ms. Meek. All right. I asked that question to lead to my 
last question. It has to do with the fact that many of the 
veterans in south Florida say to me that they would certainly 
like to be buried close to home in south Florida.
    Is there any chance that there maybe somewhere between now 
and, well I do not know, I will just say agamemnon, a national 
cemetery coming to south Florida?
    Mr. Bowen. Yes. In 1987, Congress directed the VA to do a 
study to identify the ten areas of the country that were in 
most need of a new national cemetery. That was strictly based 
on veteran demographics; the number of veterans that would live 
within 75 miles of a particular site.
    One of those ten areas was Miami. We encountered some 
problems in finding suitable land in and around Miami. Number 
one, we like to go for high ground for our cemeteries, and the 
high water table in that area is a problem.
    Second, finding a sufficient number of acres that are 
available for development is also a problem. The cost would be 
prohibitive due to the topography of the land and the water 
table as I mentioned.
    So, what we are going to explore now, because the cremation 
rate in our national cemeteries has been rising consistently 
and is now approaching 30-percent, is building a memorial park 
for the burial of cremation remains only. Thus we would not 
have casket burials available in and around Miami.
    However, we still would have casket burials at Florida 
National Cemetery in Bushnell. So, this would be an additional 
burial option that the veterans would have available to them.
    Ms. Meek. Thank you. Would you, for the record, keep me 
apprised of how that is going in terms of your research that 
would validate you are looking for the type of crematorium or 
memorial park that you are interested in?
    Mr. Bowen. We would be glad to do that.
    [The information follows:]

  New National Cemetery Initiatives for the Miami/Fort Lauderdale Area

    Miami/Fort Lauderdale was one of the locations documented 
in 1987 and 1994 Reports to Congress identifying large veteran 
population areas not served by a national or state veterans 
cemetery. In evaluating the feasibility of establishing a 
national cemetery in the area, a need of at least 200 acres was 
identified and the region was canvassed for appropriate sites. 
The five best sites were analyzed for environmental and 
gravesite development feasibility. In general, it was found 
that due to the high water table poor soils and poor drainage, 
construction of a traditional cemetery with casketed gravesites 
would be very difficult, at best. Those sites which offered the 
best conditions would be very expensive to develop. With the 
experience in recent years of a significant increase in the 
number of cremation burials, the National Cemetery System will 
evaluate the potential establishment of a cremation only 
cemetery in the Miami/Fort Lauderdale area as part of its 
strategic planning process. This would likely involve the 
construction of columbariums only, therefore requiring much 
less acreage.

    Ms. Meek. Thank you, sir. Thank you, Mr. Chairman.
    Mr. Lewis. Thank you, Ms. Meek.

                  tobacco-related legislative proposal

    Mr. Secretary, you may have noted that Ms. Meek has a 
unique capability to bring us very close to the rough.
    The 1999 budget assumes $17 billion saved over five years, 
if legislation denying compensation for certain smoking related 
disabilities is enacted. Similar legislation was proposed last 
year.
    For the benefit of those who may not be familiar with this 
matter, would someone briefly explain how we have come to be in 
the situation we now find ourselves in regard to the payment of 
compensation for certain smoking-related disabilities?
    Mr. West. I will make a brief effort, Mr. Chairman. I 
certainly have enough experts with me to catch me when I am 
wrong.
    Until quite recently, compensation for a disability which 
did not manifest itself in service and for which the only 
service connection was tobacco use while in service, did not 
exist.
    We did not provide compensation for a smoking-related 
disability, nor did we provide health care as if it were 
service connected. Two decisions by the General Counsel; one a 
few years ago and one much more recently, I think in 1997, have 
changed that. If you would like to hear more from him on their 
rationale, I see that he is here.
    Essentially, the General Counsel's opinions left us with 
this position: if a veteran could establish that he or she had 
smoked while on active duty, and then developed a disability 
from smoking, that the veteran had demonstrated sufficient 
service connection to obligate us to pay compensation for that 
disability.
    The legislation to which you refer simply negates that 
conclusion and says that we will not make that compensation. It 
also affects an obligation to provide health care that would 
have flowed from such a presumption, of service connection.
    Mr. Lewis. Mr. Secretary, do you support this legislation?
    Mr. West. I do. The fact is you referred to the savings 
over five years. I think that is a savings of over five years.
    Mr. Lewis. I understand the savings, Mr. Secretary.
    Mr. West. Okay.
    Mr. Lewis. I asked if you support it. Let me ask further, 
do you think such a legislative proposal is fair to our 
veterans?
    Mr. West. I think so. I was about to say that as best we 
can determine, there would be a number of veterans affected by 
this.
    Mr. Lewis. Can you imagine some Philadelphia lawyer arguing 
that this 17-year-old seeing this delightful Camel pack next to 
his C rations recalled years later was, by way of imagination, 
tempted to smoke? I can--anyway.
    Mr. West. That is at least one of the failings of such a 
broad brush approach as is forced on the Department by our 
legal interpretation. We are talking about folks from World War 
II who may or may not have had the reaction you have described.
    Today's young 17 or 18-year-old who goes in with full 
awareness of all the programs, of all the advertising, of all 
of the statements from medical professionals that say smoking 
can kill you, indeed, smoking mostly likely will kill you and 
it will kill those around you too.
    My sense is that, that is more than the American public is 
prepared to have its government do. It is very important to us 
to maintain the confidence in our system of compensation that 
does not flow from such a broad approach as that.

                   processing tobacco-related claims

    Mr. Lewis. I must say, Mr. Secretary, and one could dwell 
on this a lot. I do note in the President's budget which is, of 
course, his submission of a balanced budget there is a nice 
non-specified off-set from these savings of somewhere between 
$15 billion and $17 billion for other veterans programs. I am 
not a smoker myself, but I scratch my head at that. What is the 
estimated number of claims that would be filed over a five-year 
period if the proposed legislation is not enacted?
    Mr. West. Well, I think if we are looking at something that 
assumes that--I think this is all very iffy. We have had a very 
small 6,000 or 7,000 claims so far. I think those have all been 
in the environment in which there has been an assumption that 
we are just not going to be granting them.
    Now, with hearings and all of the publicity, I do not know 
how many claims might fall in. I assume right now that the 
estimate that assumes that savings of $17 million assumes about 
half a million, 500,000 claims over a five-year period.
    Mr. Lewis. I have some questions along those lines, but I 
think I will pass them for the moment. There is an anticipated 
increase claim in connection with this. How much time would be 
needed to process original compensation claims increase, to how 
many days, if the proposed tobacco-related legislation is not 
enacted?
    Mr. West. Do you mean how would our average number of days 
in which the process claims balloon?
    Mr. Lewis. Yes.
    Mr. West. Like if we assume it is at 150 now, where do we 
go to?
    Mr. Lewis. Yes.
    Mr. West. I do not know. Do you?
    Mr. Thompson. No. It would be driven strictly by the number 
that came in the door. We are operating at capacity right now. 
Tobacco claims would be among the most complex. It will 
contribute significantly if we receive somewhere on the order 
of 50,000 to 60,000 claims next year. It would significantly 
increase, perhaps up to a fourth of the total, the amount of 
time it takes to do a claim.
    Mr. Lewis. Although this, from my perspective, has to 
relate to what it will cost and how many people are involved. 
So, would $30 million or so and 500 FTE be in the ballpark if 
the processes ceases to handle this expansion?
    Mr. West. I will bet that is not at all out of the 
question, sir. Certainly if you use the assumptions that 
500,000 claims and what maybe 6 FTE per thousand or something 
like that, that sounds like that would be very close to 
aballpark in an environment in which we really cannot tell what the 
claims experience will be.
    Mr. Thompson. Mr. Chairman, if I could add one thing to 
what the Secretary said. The important consideration is it is 
not for us. It is not just a staffing issue should the 
legislation not pass. It is a training issue as well. We need 
significant lead time.
    Mr. Lewis. Yes. I had asked the question, how much 
additional administrative money, as well as FTEs, would the 
benefit program need in 1999 to process this?
    Mr. Thompson. I guess what I am saying is even with the 
additional monies, it would still delay claims processing. We 
would not be able to hold our own because we would not get the 
people in the right jobs. We could not add that many people 
into making disability evaluations because of the lead time it 
takes to train them for that.
    Mr. Lewis. Okay. I do have some clarification that I need 
for the record here. I will ask those questions and if you will 
respond. I will be with you in just a moment, Mr. Stokes. Just 
one more line here, if that is all right with you.
    The way this legislative proposal is handled in the 1999 
budget is somewhat out of the ordinary. The traditional method 
of preparing a budget is to base your request on existing 
legislation. Is that not correct?
    Mr. West. I will accept your judgment on that, Mr. 
Chairman.
    Mr. Lewis. I would think that it would be based upon the 
laws as we see it and not a guesstimate that maybe we are going 
to have a law.
    Mr. West. If we did that, we would be basing it on an 
existing General Counsel opinion I guess.
    Mr. Lewis. I guess that is right. Everybody has to do their 
own thing. Why did you not include in your 1999 general 
operating expense appropriation request the administrative 
funds, which are discretionary, necessary to process the 
smoking-related claims which are paying under existing law?
    Mr. West. I think all things considered, Mr. Chairman, we 
probably would not have included a single cent in our budget on 
the assumption that the legislation was going to pass. The 
claims amount that you see reflected there is there because our 
sense is that must be reflected there by law.
    This other discretionary amount is not reflected there 
because the Administration's position is simply fairly 
straightforward. We simply should not be paying those claims.
    Mr. Lewis. Well, it is very, very close to the edge of a 
budgetary flem-flam. Earlier, I was going to ask you, what do 
you think the prospects of this legislation really is?
    You are too new on the job to be getting involved in 
predicting legislative success or a lack of success. It does 
not take much to say it has got a ways to go. Have you got all 
of the VSOs on board?
    Mr. West. I would think not.
    Mr. Lewis. Do they influence this process at all? What is 
the prospect that this legislation will be passed?
    Mr. West. Well, we are still very hopeful for it, Mr. 
Chairman because the alternatives are not good. The 
alternatives of the Department trying to sort this out are not 
good ones. The philosophy, and I understand you differ with me.
    Mr. Lewis. I do not differ with you.
    Mr. West. The VSOs may differ with me. The philosophy is 
not good as well. I do not think the American people expect us 
to pay compensation, disability compensation, for someone for a 
smoking-related disease when the sole connection to military 
service is that he or she began smoking on active duty.
    Mr. Lewis. Mr. Stokes, this is not exactly fun, but I could 
see a circumstance where they really work hard, get legislation 
passed, you know, it would be pretty far out, but then all of 
the VSOs would be marching around the White House and the 
President would veto the bill. I can see that happening.
    Mr. Stokes, I will yield to you.
    Mr. Stokes. Mr. Chairman, I notice that it is about noon 
now. If you would like, I can just be first up this afternoon, 
if you would rather.
    Mr. Lewis. You know, frankly, I think probably that would 
be smart, because we have some other commitments down the hall.
    Mr. Stokes. Sure.
    Mr. Lewis. I appreciate your saying that.
    You Gentlemen and Ladies can take a break. I am sure you do 
not feel you need one. We will come back at 2:00 p.m. We will 
be in session for approximately two hours.
    At that time, I could get to some of those budget questions 
this afternoon rather than tomorrow.
                             WAITING TIMES

    Mr. Lewis. The Committee will come to order.
    Mr. Secretary, the committee reports for the last few years 
have admonished the VA to improve customer service and quality 
of care.
    Veterans deserve, as we have discussed, the best health 
care possible. I believe that Dr. Kizer is on the right track, 
but the system does need to deliver better service, at least 
the perception of better service, if not more than that.
    For example, how long does a veteran wait to be seen at 
outpatient clinics? How does that compare to two or three years 
ago? How often do patients carry around their own records as 
they go about from clinic to clinic?
    Why do we not start with that?
    Dr. Kizer. The waiting times have decreased substantially, 
both waiting times in the sense of how long one has to wait to 
get in to see a care giver once they have arrived at a facility 
or clinic for care, as well as the amount of time that one has 
to wait to schedule either a primary care appointment or a 
specialty clinic appointment. There is and continue to be 
heterogeneity in those times. We are working to bring the 
system wide consistency to that, just as we are in a number of 
other areas.
    If it will be helpful to you, I certainly can provide you 
with some specifics as far as the exact intervals of time for 
the most recent data collection, as well as prior to that so 
you can make your own judgment about the amount of change that 
has occurred.
    Mr. Lewis. I am very interested for the record.
    The question is specific about outpatient but it is more 
generally as well. I would like to add some detail about the 
waiting lengths of time and what the pattern is. What has 
changed? What direction are we going in?
    [The information follows:]

                             Waiting Times

    According to the April 1997 Primary Care Survey, the 
average wait for a new patient appointment was 19 days. We are 
confident that the date being collected is more accurate now 
than when we started the first survey. The field staff 
recognize the value of good data gathering and documentation. 
It allows them to monitor their own progress and their progress 
in comparison with other VISNs/facilities. We anticipate that 
over-time the number of days until a new patient appointment 
will decrease.
    Data from previous Primary Care Surveys indicate the 
following average number of days for a new patient appointment:

                                                                    Days
October 1995......................................................    25
April 1996........................................................    22
October 1996......................................................    17
April 1997........................................................    19

                       ELECTRONIC PATIENT RECORDS

    Mr. Lewis. What is the status of converting to electronic 
patient records?
    Dr. Kizer. There are a few facilities that have made that 
conversion overall. In all candor, the VA is probably well-
ahead of where the rest of health care is.
    I think one of the things that is of particular note in 
this regard, and I believe something of considerable interest 
to you, Mr. Chairman, is the fact that we recently announced 
our intention to work with DOD to develop a common electronic 
medical record that would serve both the active duty personnel, 
as well as veterans. I think frankly that would go a long way 
in addressing many of the informatic issues and concerns that 
have been a problem for the past 50-plus years.
    Mr. Lewis. Mr. Stokes, you may not recall this, perhaps you 
do, but because of concern about these sorts of questions, some 
time ago on several occasions, I had different Members of my 
staff in my District as though they were family members, travel 
with my veterans to the local hospital and go around with them.
    One of the things that was most disconcerting to them, but 
amazing to me was to have, you know, an older person, perhaps 
not well, toting around his or her, usually his, records from 
location-to-location. Now, physicians are noted to be the 
finest of businessmen I know.
    For God sakes, to have those records handed off and 
sometimes disappear, it would seem to me that the Veterans 
Department only talks about the fact that we were early on in 
the computer business.
    Supposedly we were becoming aware of their value to now 
expect to be able to walk in a hospital, particularly a well-
established long-term hospital, and ``bang'' have records come 
up electronically instead of expecting that individual to carry 
all of their medical records. I mean, long waits are 
ridiculous. That sort of paper-dependent organization--it is 
almost laughable. There is not a hospital in the country that 
would not go broke if they allowed every patient to walk in and 
carry their records around.
    It seems to me that at least in a modeling way, we ought to 
know where the best illustrations are in the country, one or 
two clinics or hospitals where the modern era is being taken 
advantage of and then maybe we could just see how we could 
replicate that elsewhere.
    I would like to see a proposal that says this is what it 
would cost to take the best model and move it to another 
hospital. Maybe we can move it from some other hospital to mine 
and see what happens.
    When we are delivering the finest care to the most 
important patient group in the country. To be in the 1990s and 
operating medical facilities this way is just ludicrous, if not 
plain outrageous. So, I would like to see what we can do about 
that goal. I will ask the same question next year. I will be 
looking for some of those models.
    Mr. Stokes was kind to let us go out to lunch. He did that 
with the assurance that I let him be up first. Sorry, Mr. 
Stokes. I appreciate your patience. I have turned just as red 
as you are.

                           INDEPENDENT BUDGET

    Mr. Stokes. Do not worry about it, Mr. Chairman.
    I have made some of the same mistakes when I was in the 
Chair. I understand. So, I can empathize with you. Thank you, 
Mr. Chairman.
    Mr. Secretary, the independent budget endorsed by more than 
50 veteran service organizations estimates that the 1999 
current services amount, that is the amount needed in 1999 to 
maintain the level of services provided in 1998 is $18.3 
billion.
    Their recommended funding level for 1999, including third-
party collections is $19.5 billion or nearly $2 billion more 
than the amount requested by the Administration. In a press 
release issued at the time that their budget was presented, 
leaders of four national service organizations stated, and I 
want to quote them:
    ``Chronic under-funding and staff shortages facing the 
Department of Veterans Affairs could result in a catastrophe 
for Veterans seeking VA health care.'' My question to you is 
how can you convince these groups and the Congress that this 
budget will not degrade the level of care provided our nation's 
veterans?
    Mr. West. The first part of the answer, Mr. Stokes, in 
terms of how we will convince the groups, is I think, with a 
great deal of attention to detail, with a great deal of 
openness and candor about what we are trying to do.
    Also, with a great deal of attention to the concerns they 
are voicing. Obviously, we have disagreement with respect to 
the independent budget versus the President's budget. To some 
extent, that is not so terribly unusual. An independent budget 
takes a different point of view. It takes a different approach.
    It has far less confidence in some of the efficiencies that 
we are proposing. Some of the ways in which we are proposing, 
especially in the health care arena, to do our jobs. We have to 
instill some of that confidence in them and, incidently in the 
process, that confidence in you as well.
    The best I think that we can do to instill that confidence 
is to explain very carefully the assumptions we have. I think 
that Dr. Kizer has done some of that already this morning.
    We will continue to do so, to explain why it is that we 
believe that with a combination of appropriated funds requested 
in this appropriation, third-party payments, and with the 
efficiencies that we are going to undertake, and that we are 
undertaking, that we can do it. Also, to show the progress.
    I think that some of our answers that you heard from us 
this morning already show that we believe there are reasons to 
be encouraged about our success in what is after all a very 
wide ranging change in the way we are delivering these 
services.
    Remember the points of encouragement. We are seeing more 
veterans, providing more medical care to more veterans than 
ever before in this system. I do not think we can discount the 
responses that our veterans have given about the health care 
when we have surveyed them.
    Those are the kinds of assurances I would give them. I do 
not know if Dr. Kizer wants to add to it or not. I do not think 
we can get away with saying, ``trust me,'' obviously, but I 
think we can show the things we are doing.
    Mr. Stokes. Dr. Kizer, did you want to add something?
    Dr. Kizer. Well, I understand it and appreciate the concern 
expressed by the independent budget and certainly appreciate 
the support of the VSOs for the system. I think that the 
dialogue needs to occur around what Mr. Secretary has said what 
the data are.
    We are treating more veterans than every before. The 
quality of care indicators from a number of different areas 
show that care is getting better, using the same instruments 
that are used to judge care in the private sector.
    Our waiting times are down. The cost effectiveness of the 
care is greater. I think we need to continue to let the data 
speak for itself.
    While there is not the uniformity or the consistency 
throughout the system that I would like to see at this point, I 
think we have made it clear that that is our goal. We are 
making progress towards that goal.

                          COMPENSATION CLAIMS

    Mr. Stokes. Would you not say the services are getting 
better? Would you also include in that category the 
compensation claims? Are you putting those in the same 
category?
    Mr. West. Well, let me take that up, since that is not Dr. 
Kizer's area. Mr. Stokes, I believe we are undergoing in the 
compensation and pension area a change that is almost as great 
as what we are seeing in health care.
    Under Secretary Thompson spoke about reorganization and 
retraining. We are essentially putting in place, and actually 
we are retraining the people who are there, personnel that will 
be accountable for what I will call in my laymen's terms the 
whole claim, not just process a little piece here, and then 
someone else here and there, but to takeresponsibility for the 
whole claim.
    That gives a great deal more accountability to the 
individual for the quality of what he or she is doing. Also, a 
great deal more sense of responsibility by that individual. We 
think that will take, I heard Under Secretary Thompson say that 
it will take, about a year to have all of that kick in. So, 
yes, I think we are on the road to improvement.
    I have great confidence in the balanced score card approach 
of the VBA right now, but it is new. It is just starting. It 
will take a little bit to show improvements.
    We are trying to do something that I think has not been 
attempted in this Department, which has existed as a part of 
the United States Government for a long time, that has not been 
attempted many times before. Wholesale change in the two 
largest operating divisions to improve the way we deliver 
services to veterans.

                             30-20-10 Goal

    Mr. Stokes. My next question, I understand while I was out 
of the room, was touched upon by Mr. Mollohan, although I think 
he may not have gotten into it quite the same way that I want 
to get into it.
    It has to bear on the fact that last year, Secretary Brown 
had testified before our committee. I just want to quote him,
    ``The passage of our legislative package will permit us to 
accomplish the following:
    ``By the year 2002, we expect to reduce the outpatient 
health care cost by 30-percent; increase the number of veterans 
served by 20-percent; fund 10-percent of VA's health care 
budget from non-appropriated revenues. These three goals are 
mutually dependent. We cannot accomplish any of them alone.
    ``Without enactment of these legislative proposals, 
straight line appropriation in 1998 would force VA to treat 
fewer veterans and eliminate thousands of health care 
positions.''
    It appears that the Agency is not meeting last year's 
estimates for the amount of non-appropriated funding, much less 
increasing the amount to 10-percent.

                   Medicare Subvention Demonstration

    Tell us, Mr. Secretary, what is the status of your 
legislative proposal and how you are doing towards the goals of 
reducing costs and increasing the number of veterans served?
    Mr. West. As to the status of the proposal, of course, we 
are still hopeful that the Congress will approve Medicare 
subvention, the pilot program.
    Getting through the pilot program and then eventually into 
Medicare subvention is going to be a significant part of how 
the whole picture works in terms of financing health care now 
and in the foreseeable future.
    In terms of the part that we, as an Agency, essentially 
control, that is the other third-party payments, I think Dr. 
Kizer has already testified that we are making encouraging 
progress. I will let him say again, so that I do not misstate 
them, how the progress looks.
    I had said I thought we were running roughly the same. He 
says we are about 6-percent or 7-percent below collections last 
time after the first quarter. We have not seen the second 
quarter results.
    I think he says that he believes that by the third quarter, 
we should see a pretty good indication. Why do you not speak to 
this.
    Mr. Stoke. Sure, Dr. Kizer. Please feel free to add 
whatever you would like.

                            Collection Goals

    Dr. Kizer. Right. The points that the Secretary made, in 
essence, restated what I testified earlier to a question that 
at the end of the first quarter, we were, as I recall, about 7-
percent below on the MCCF collections target. A number of 
efforts were being made to increase collections. While I do not 
expect that we will be back on target by the end of the second 
quarter, I am hopeful and optimistic that by the end of the 
third quarter, we will be very close and will be on target at 
the end of the year.
    As far as the overall package which I think you asked 
about, we are just beyond the first quarter of a five-year 
plan. I think at this point it would be premature to judge the 
progress on where we are as far as achieving those five-year 
goals.
    Mr. West. Let me say one other word. I think a fair amount 
of the skepticism, if there is skepticism in terms of the 
funding plan, Mr. Stokes, could focus on whether or not we will 
be successful in meeting our targets for third-party 
collections. It seems to me that is a big part of the real 
question.
    I asked the question yesterday. My sense of that, again, 
from a bit of a laymen's point of view is that, that is driven 
by a couple of things. One is what is the universe of 
collections?
    Have we out there potential third-party payments that we 
have been so unsuccessful in getting a significant portion of 
in the past that we have room to expand our success. The 
answer, I guess, is yes.
    There is expansion out there to be achieved. Well, then the 
next drive it seems to me is are we taking steps that in a more 
business like fashion assure that we will actually make the 
contact, put the call through, get to the third party, and make 
the collection?
    I think that is the package of activities that VHA has 
underway right now to have a realization of success on that. I 
guess we will have to wait and see how our experience is 
through this year.
    I think there is a reasonable expectation. We will know a 
lot better when we get a couple more quarters under our belt 
that we could do it. That, I think, is what we are pointed 
towards.
    We certainly do not yet, and this is an unfortunate 
standard to use, but I think we ought to need to be reminded of 
it. We certainly do not yet have indications to the contrary. 
We do not have signs of some great failure occurring here. We 
only have the results from the first quarter.

                     Interim Goals Before year 2002

    Mr. Stokes. As you look out at your picture, when we are 
talking about goals, have you set, say, some interim goals that 
you would like to reach before the year 2002 in terms of 
reducing the costs and increasing the number of veterans to be 
served?
    Mr. West. I think so.
    Dr. Kizer. We have essentially prorated that over four 
years. So, for example, if you take the easiest one, a 20-
percent increase in the number of veterans at the end of fiscal 
year 1998, we would hope to be at 4-percent above where we were 
at the beginning of the year. You could also do the 10-percent 
of the operating budget coming from non-appropriated funds. We 
would hope that at the end of fiscal year 1998, we would have 
about 2-percent. Again, basically dividing thosefive-year goals 
by five for each year.

                          Availability of Care

    Mr. Stokes. Let me take you a little further into it with 
this. Again, I want to quote Secretary Brown last year. I do 
not want to be unfair to you, Mr. Secretary at all. This is a 
part of the record.
    I think in all fairness we have to look at the record and 
pose questions to you relative to the record, even though you 
were not the secretary at that time. Secretary Brown stated 
last year, and I quote him:
    ``We have estimated that 105,000 veterans will be denied 
care next year, and 6,600 health care positions may be 
eliminated. A straight line budget in 1998 would force us to 
change the veterans equitable resource allocations.
    Networks that will receive increases would get less. Those 
that will lose dollars will lose more. By the year 2002, we 
will have denied care to half a million veterans.''
    I guess what I am asking you is can you assure the 
Committee that all eligible veterans are receiving care in the 
VHA and that at the present time, at least, there is no 
rationing of care?
    Mr. West. I have an assurance I want to give you, but let 
me ask Dr. Kizer to answer you sir. Then I will speak to you 
about the future.
    Mr. Stokes. Dr. Kizer.
    Dr. Kizer. We are certainly providing more care today and 
treating more patients than ever before. We are doing that 
thanks to the Congress allowing us to provide it in a much more 
rational way with the eligibility reform legislation that was 
passed in 1996.
    The reason I am hesitating a little bit in the answer, I 
mean, we also know that of the approximately 9.5 million 
Category A veterans that are the most needy of our veteran 
population, that we are not treating all of them. A part of the 
whole strategy of Medicare subvention and others is to allow us 
to provide care to more veterans than we are able to do with 
just an appropriated funding amount. So, we know that there is 
unmet need, if you will, out there that we would like to try to 
do a better job of addressing and that we cannot through the 
appropriated funds we have to-Date.

                           Future Health Care

    Mr. Stokes. Just one follow-up question. How confident are 
you that there will be no rationing of health care in the VA 
health system through 2002, given the Administration's budget 
projections?
    Dr. Kizer. There is nothing that at this point would make 
me think that we would be rationing care. I actually have 
significant philosophical problems with the idea of rationing 
care. If we cannot provide what a patient needs, then we should 
not embark upon taking care of them. The issue in my mind comes 
down to if we do not believe we can provide the full amount of 
care that, the patient will need over the course of the year, 
then we should not start to take care of them.
    That is in the eligibility reform scheme. A part of what we 
are going through right now is to try to figure out exactly how 
many we think we can take care of in fiscal year 1999 when 
eligibility reform kicks in, based on the tentative enrollment 
figures that we will have this year. So, it is certainly not 
our intent. It would be our stronger aversion to doing anything 
that would appear to be rationing care.
    Mr. West. I said I wanted to say a word about the future. I 
want to be careful about the answers we are giving. I think you 
asked for an assurance that all eligible veterans are receiving 
health care.
    I assume one part of that is there are probably eligible 
veterans out there we are not reaching. I think one of the 
things that comes through very strongly from Dr. Kizer's 
testimony is that we are reaching more eligible veterans than 
we ever have in the past.
    My view about the future is we will continue. That, of 
course, as you all know is the purpose for the outpatient 
clinics. The effort to take health care to veterans and to 
reach more. We will continue doing that.
    Continue expanding our efforts to reach as many veterans as 
possible. Continue to have that number grow, not to have that 
number diminish.
    Mr. Stokes. I think you will realize that the thrust of our 
questions is to gain assurance from our perspective that the 
type of appropriation that you are proposing will in fact do 
precisely what we are discussing. That is provide adequate 
health care to all of our veterans.
    Thank you very much, Mr. Chairman.

                              Managed Care

    Mr. Lewis. Thank you, Mr. Stokes. Mr. Frelinghuysen.
    Mr. Frelinghuysen. Thank you, Mr. Chairman.
    Appropo Mr. Stokes' comments, I think there is a public 
perception that the VA is rationing health care. I think it is 
somewhat demonstrated through the Pew Study. I think to a 
certain extent, it may well be reflected, and you are welcome 
to correct me if I am wrong.
    It may be reflected in your annual surveys of customer 
satisfaction. I made a note, Dr. Kizer, when you spoke earlier. 
When you talked about the VA system, you said, ``The VA system 
is well-ahead of where other types of medical care are 
nationally.''
    Well, the public perception is that non-medical VA care is 
mired in health management issues. The public perception of 
health management organizations is not particularly positive. 
What we may have developing here is that the model that you are 
pushing forward here, even with Congressional concurrence, 
VERA, the VISN Program is just a managed care health model in a 
veterans health care package.
    I would like to get your reaction to that. We are not in 
the business, hopefully, of rationing health care. We would 
state for the record, I am sure you would, that veterans have 
served their country.
    So, they are in fact a class of citizen that deserves, by 
its very definition, some extra special attention. So, I am 
sure we are all on that waive length.
    Dr. Kizer. On two things I would comment. They are 
different in nature. If you go to any textbook on managed care 
and you look at what are viewed as examples of managed care 
systems, VA is cited. So, I find it somewhat ironic that in 
some of the press today cite VA as adopting managed care 
principles when most of the references cite us as an example of 
one of the longest standing managed care organizations.
    That does not necessary require any further comment or 
discussion. That is just one of those ironies. The second, and 
I think perhaps much more important and responsive to your 
question has a lot to do with the incentive of these managed 
care principles. They are very different. In VA, when we apply 
some of these principles, whatever savings may accrue go back 
into taking care of more patients or doing a better job taking 
care of those that we have.
    There is no return to shareholder. There is no quarterly 
dividend paid. They do not go into executive salaries, or 
perks, or other things of that nature, which is what I think is 
reflected in much of the public perception.
    The concern today about managed care, particularly as 
health care and managed care organizations have increasingly 
moved to a for-profit mode, is that savings somehow then get 
redirected and go back to shareholders or to executive 
salaries, et cetera, et cetera, as opposed to being reinvested 
into care. Our measure of success is going to be how well we 
take care of our patients.
    So, whatever we can do as far as taking care of more 
patients and doing a better job of it, that is how we use 
whatever savings that accrue. It is a very different dynamic 
than what you are seeing certainly in the for-profit private 
sector.

               Efficiencies Affecting Quality Health Care

    Mr. Frelinghuysen. It is a different dynamic, but in 
reality many veterans are wondering where all of these savings, 
these so-called efficiencies, you know, to what bottom line are 
they going to and how in fact are those so-called efficiencies 
affecting quality health care?
    Dr. Kizer. Well, let me give you one example. As this 
committee knows that over the last two years, we have 
established or are in the process of establishing 188 new 
community-based outpatient clinics.
    All of those clinics have come from redirected savings. 
They all have come from efficiencies that we have achieved. 
There are no new taxpayer dollars going into any of those 
clinics and access is much better than it was.
    Mr. Frelinghuysen. For the record, and we all come from 
somewhere, the stakeholders in our neck of the woods say that 
you are drawing away from the base operation of the hospital to 
fund these new outreach centers. I am not saying they are not 
good.
    They have obviously signed up a lot of people. Heretofore, 
it had never been a part of the process. I think that is 
admirable. That means we are capturing more people. You are 
looking after their needs.
    There are some who argue you are in some way lessening the 
hospital-based delivery system. I am sure you have an answer 
for that as well, and well you should. Some would say that you 
are taking doctors away from seeing patients in the hospital.
    Dr. Kizer. No. This is part of the area where communication 
is important and where you can also be very helpful in 
increasing the understanding.
    People marvel at what health care can do today. That we can 
monitor people from long distance. That we can use tele-
medicine. That there are all kinds of these advances in health 
care.
    To think that it would be delivered in the same way that it 
was 30 years ago, somehow, the connection is not made. That all 
of these advances that have occurred in health care, such as, 
new drug delivery systems allow us to do things in ways that 
have never been done before, indeed, are forcing us to provide 
care in different ways. So, when you talk about, I think you 
used the term erosion of the hospital, what it really reflects 
is that the hospital as an institution of the late 20th Century 
is dramatically changing.

                    Management Efficiencies--VISN 3

    Mr. Frelinghuysen. I understand that. In our area, 
management has made some tough choices. Congressman Walsh made 
reference to some tough choices in upper state New York. But 
having made all of the painful choices about some degree of 
consolidation, lay-offs, program elimination, slimming down of 
bed slots; all of those tough measures.
    Then it is almost that we pay a greater penalty under this 
VERA program for having made all of those decisions. I hate to 
be parochial here, but if somebody is not parochial from where 
you come from, you will find somebody else replacing you.
    In reality, having tightened our belt in the Northeast and 
maybe you feel that we have not done it to enough degree, we 
are actually being penalized over and above what we have 
already done in terms of strengthening our management cutting 
costs. That is why we are hollering.
    Mr. West. I think one of things I would say as my 
contribution here, Congressman, is I see several principles at 
play. One of them, as Dr. Kizer has described, is how best we 
utilize the advances in the way of delivering health care so 
that we can do the job, in this case, for your and our 
veterans, the veterans that are there in your state and in your 
District.
    I do think also that the community-based outpatient clinics 
have meant that some veterans may miss or may be concerned 
about the erosion at the hospital. More of your veterans are 
quite likely receiving health care. More of the eligible 
veterans who want it.
    That is a very significant imperative for us at VA. It is 
one that I think Dr. Kizer and the Veterans Health 
Administration have taken on. I think it is one we are going to 
continue to drive at.
    Yes, that may say something about the traditional operation 
of a large medical center. We are trying to expand. We are 
expanding and we are getting to more. I think the other thing 
that we have had to be concerned about is the importance of the 
hospital, the big center.
    That is the sense that any patient would have, I, you, and 
that is that because it is bigger, there we have more services 
available. There are the specialties and the things that can be 
done for our veterans. We are cognizant of that.
    We are attentive to that. The fact is that the developing 
difference in balance between outpatient clinics and the sort 
of main hospital we view as a very healthy one. It is not just 
a sign of the times. I think it is a sign of the times to come.
    Mr. Frelinghuysen. My point and what I want to have on the 
record is having made all of these management decisions, 
consolidating, lay-offs, program elimination, all of which you 
need to do which is happening in the private care market, I 
think we are paying a larger price on top of that because of 
the way this formula is calculated. This indeed is a formula. 
Is not VERA a formula-based program?
    Dr. Kizer. In a sense, yes.
    Mr. West. But not applied so rigidly that it does not take 
into account the particular circumstances.
    Mr. Frelinghuysen. It is difficult for us as lay people. 
Maybe it is designed to be complex so we cannot understand it. 
For us to understand having made all of the tough decisions and 
slimming down the work force, this and that, in terms of the 
consolidation why you would have to pay a higher price.
    It may get back to the earlier issue of the fact that 
health care in the Northeast is a lot more expensive than itis 
in the South and West. It is more than the issue of just the sickest 
people, but to a certain extent that may be true.
    It is a higher degree of unionization. It is a higher 
degree of costs of all sorts of medical devices and services. I 
will suspect there are a hell of a lot more expensive in the 
Northeast, maybe not justified, than they would be in other 
parts of the country.
    So, I yield back, but I have plenty more questions. Thank 
you, Mr. Chairman.
    Mr. Lewis. Thank you Mr. Frelinghuysen. Mr. Price.

                    Medical and Prosthetic Research

    Mr. Price. Thank you, Mr. Chairman. Before I start with my 
final round of questions which has to do with your research 
budget, I would like to note the presence in the room with us 
today of some veterans leaders from my home State of North 
Carolina. Mr. Wally Tyson who is the Adjutant for the Disabled 
American Veterans; Barry I. Souders, the State Commander with 
is wife, Barbara; and Gerald A. Jones, the Past-State 
Commander.
    They are in town for their legislative meeting. I invited 
them to come by and witness this hearing. Welcome.
    Mr. Lewis. Glad you could be with us.
    Mr. West. I am glad to see my fellow North Carolina 
veterans here, sir.
    Mr. Price. Yes. Well, we know we have a North Carolinian in 
the Secretary's Chair now. We feel very fortunate because of 
that, Mr. Secretary.
    I am pleased today to be able to note that the medical and 
prosthetics research budget that you are proposing is a 
relatively generous one, compared to some of the proposals in 
the past.
    The research funding for fiscal year 1997 was $262 million. 
We had an Administration request last year cutting that to $234 
million. Instead, we enacted a slight increase to $272 million. 
The Congress worked its will in this matter.
    Now, we are looking at a Presidential request for fiscal 
year 1999 of $300 million. So, I am pleased that you have been 
able to make that kind of 10-percent increase request. I know 
that the increase is based in part on assumptions about a 
tobacco settlement which may or may not occur. I hope that our 
subcommittee can work to ensure that this kind of increase 
happens, even if the tobacco settlement does not. Of course, we 
are going to be working along on that front.
    Mr. West. I might just point out that I know because I saw 
it in my written testimony that was submitted that we have 
linked this research to, I think it is called, a Research Fund 
for America which is tied in some way to the tobacco issues.
    In fact, that is misleading. Our budgetary proposal will be 
there. The increase is there with or without the settlement. I 
apologize for the misleading effect of what we said.

                      UpDate On Research Projects

    Mr. Price. Well, that is reassuring.
    Last year when we were faced with the prospect of a 
reduction, I asked Secretary Brown to enter into the record an 
estimate of what those cuts might mean specifically for the 
research program.
    Rather than go into the detail of that here today, I would 
like to ask you, Mr. Secretary, to refer to that report on 
pages 88 and 89 of last year's hearing. For the record, submit 
an update because of course, those cuts did not occur.
    On the other hand, a slight increase did occur. There are a 
number of areas of concern which were highlighted in that brief 
report. I wonder if you could just update that so that we have 
that kind of follow-up for the record.
    Dr. Kizer. All right, sir.
    [The information follows:]

                      Update on Research Projects

    The President's proposed VA Research and Development budget 
of $234,374,000 for FY 1998 was 11% below the FY 1997 
appropriation of $262,000,000. Because of the actual 
appropriation of $272,000,000, the anticipated reductions 
described on pages 88 and 89 of the report did not occur. 
Appointments to the Career Development have not been delayed 
and the number in FY 1998 will show an increase to 135 from the 
FY 1997 level of 88. Medical Research Service will fund 315 
investigator initiated projects in FY 1998 instead of the 
earlier projection of 188. The two new Rehabilitation Research 
and Development Centers that were threatened by the proposed 
decrement budget are now fully funded, bringing the total 
number these centers to six. The two multi-hospital clinical 
trials--SMART (Specialized Medical and Revascularization 
Therapy) and CARP (Coronary Artery Revasculariztion 
Prophylaxis)--are on track to start this fiscal year. Instead 
of facing a 15-20 percent reduction in investigator initiated 
projects, the Health Services Research and Development Service 
actually shows an increase in projects being funded.

                     Merit Review Research Programs

    Mr. Price. One reason I want to ensure that this increase 
occurs is to reverse the decline in the number of VA-funded 
merit reviewed medical research programs. I understand that it 
is this component of the VA's research program that arguably 
has the most impact on veterans care.
    It certainly needs some increased support. Ten years ago, 
there were more than 2,350 of these programs. Today, I 
understand more like 1,375. Now, is a substantial amount of the 
increase in this account going to support more merit-reviewed 
medical research programs? Do you feel more resources could 
effectively be used by this program?
    Dr. Kizer. I would preface I would like to ask Dr. 
Feussner, the Chief of our Research and Development Officer, if 
it is agreeable with the Chairman to comment on this.
    I would note that over the past three years despite the 
constrained funding, we actually have quite, I think, a good 
story to tell as far as increasing the number of projects that 
have been funded, increasing the number of investigators, 
corporative studies, and a number of other things. Dr. 
Feussner, I know, has those numbers on the tip of his tongue, 
if it is agreeable.
    Mr. West. Mr. Chairman, is it all right if we have Dr. 
Feussner speak to this issue?
    Mr. Lewis. Yes. Dr. Feussner.
    Dr. Feussner. Yes, sir. I think there are two answers to 
that question. The short answer is yes. We are absolutely 
committed to the investigator-initiated component of our 
research program. We feel that is really the heart and soul of 
the creativity and innovation that we bring to the Department. 
We have not been able to achieve a funding level in the mid-
2000 projects yet.
    With the budget over the past two years, we have increased 
the investigator-initiated funding within medical research 
while holding the investigator-initiated research stable in 
rehab research.
    We have improved it slightly in health services research. 
Specifically, since fiscal year 1995, we have maintained our 
rehab pay line at about 40-percent. We have improved our 
medical research pay line for investigator initiated research 
from about 20-percent to almost 35-percent of meritorious 
projects.
    We have improved the health services research pay line 
slightly from the high 20-percent to about 30-percent. So that 
we feel that we have been able to improve slightly. This new 
budget will certainly help us improve further, but we have not 
been able to fund yet up to the level that we did, for example, 
in 1985.
    Mr. Price. Do you expect to reach that late 1980's level of 
funding? Is that possible or desirable?
    Dr. Feussner.  Yes. I think that is very desirable. I think 
that it is possible, depending on what the out-year budgets 
look like. We might be able to refine that pay line.
    Mr. Price.  Well, I would appreciate your presenting for 
the record, if you will, maybe a tabular version of what you 
just summarized; the trend lines and the number of studies that 
we are funding. Perhaps, if you have some figures on the 
percentage of eligible or meritorious proposals that you are 
able to support.
    Dr. Feussner.  Yes. Those were really the numbers. The 
numbers that I gave you in terms of the pay line are the 
proportion that we are funding; 40-percent rehab, about 35-
percent in medical research, and about 30-percent in health 
services research. In our Cooperative Studies Program, we have 
no projects that have been approved and not funded.
    Mr. Price.  All right. If you could furnish that for the 
record and give us some sense of where we have been, what the 
trend lines look like, and what the implications are of this 
current fiscal year 1999 budget proposal.
    [The information follows:]

                     Merit Review Research Programs

    Using the FY 1987 total of 2,353 as the base year for 
comparison, the following table shows the total number of VA 
Research and Development funded projects from FY 1995 through 
the estimated number of projects for FY 1999:

----------------------------------------------------------------------------------------------------------------
                                                                             Fiscal year--                      
                                                      ----------------------------------------------------------
                                                                                            1998         1999   
                                                          1995       1996       1997      estimate     estimate 
----------------------------------------------------------------------------------------------------------------
Budget totals, all services..........................      1,771      1,666      1,693        1,730        1,795
----------------------------------------------------------------------------------------------------------------

    In the most recent merit review rounds, Medical Research 
Service funded approximately 35% of the applications submitted, 
Health Services Research and Development funded approximately 
30% of the applications submitted and Rehabilitation Research 
and Development funded approximately 40% of the applications 
submitted. In general, all of these figures are higher than the 
percent funded during the last four years.

             partnership with juvenile diabetes foundation

    Mr. Price.  Now, I know you have been working with outside 
partnerships in research on various illnesses that affect 
veterans. In particular, I am aware that the Juvenile Diabetes 
Foundation has been working with both the VA and NIH on 
diabetes research.
    I know Type II Diabetes affects thousands of veterans and 
is a high research priority for you. I wonder if you could 
specifically say something about how this particular 
partnership works either orally or for the record; this 
partnership with the Diabetes Foundation.
    [The information follows:]

             Partnership With Juvenile Diabetes Foundation

    VA Research and the Juvenile Diabetes Foundation have a 
very workable partnership and one that typifies in many ways 
the VA's willingness to leverage its Research appropriation to 
the mutual benefit of both parties. It is true that Type II 
diabetes affects thousands of veterans and is of high priority 
for the VA's Research program. The Juvenile Diabetes Foundation 
is focussed on Type I Diabetes because it is the form of 
Diabetes manifesting itself primarily in children. While the 
interests appear divergent, there is enough common ground in 
the science of Diabetes and its clinical management for the two 
partners to come together and share resources.
    The Juvenile Diabetes Foundation has agreed to fund half of 
the core cost of six VA Diabetes Research Centers for a period 
of five years. This is a total commitment of $7.5 million 
($250,000  6 center  5 years). The first 
solicitation of centers applications has resulted in the 
initiation in FY 1997 of three VA Diabetes Centers at 
Nashville, TN, Iowa City, IA and San Diego, CA. The VA and the 
Juvenile Diabetes Foundation jointly fund the centers at 
Nashville and Iowa City because of the mutual interest of the 
research programs. While the center in San Diego did not meet 
the programmatic needs of the Juvenile Diabetes Foundation, its 
science was so excellent that VA Research funded it. The second 
round of solicitation is under review at this time and three 
new centers should result from the review. As this partnership 
proceeds into the future, it will allow the VA to double its 
investment in centers of excellence devoted to the study of 
Diabetes. A win for the VA. It also allows the Juvenile 
Diabetes Foundation to participate in research that it could 
not otherwise support. A win for the Juvenile Diabetes 
Foundation.

               partnerships with non-government entities

    Mr. Price.  Then tell us, if this is a promising model. Are 
there other examples of the VA partnering with non-governmental 
organizations to increase research resources? Is this a model 
we can expect to see the VA using more to extend your leverage?
    Dr. Kizer.  We are very interested in partnering with both 
other governments and non-government entities and have effected 
a number of agreements in that regard in the last two or three 
years.
    Specifically in response to your question about the 
Juvenile Diabetes Foundation (JDF) Agreement, the essence of 
how that works is that they match us dollar-for-dollar so that 
every dollar that we put in, they will also put a dollar on the 
table. These funds go to centers of excellence in diabetes 
research conducted at VA facilities by VA investigators. It is 
certainly in our judgment a win-win for all involved. 
Basically, we committed $7.5 million over five years and so 
have they. So, it is a $15 million, five-year project. We are 
only into the second year at this point. We will look to see 
whether it makes sense to continue. Certainly at this point, it 
looks like it would be a good thing to do.
    We have also had discussions, but have not finalized 
anything with some other entities. We have also been talking 
with industry as far as we believe that certainly the way the 
VA is organized now, that we provide some unique opportunities 
for industry to fund research that would be done in VA. We have 
recently consummated a deal with one of the large 
pharmaceutical companies to look at the use of a particular 
psychotropic agent. We are talking with some others as well. 
These are all ways that would increase funding to support the 
VA research program.

                      research career development

    Mr. Price.  Finally, if I could just ask about the career 
development aspect of your research program. I know that is an 
important goal in making certain that there will always be 
investigators trained to do research on conditions prevalent in 
the veterans population.
    The opportunity for this kind of funding was a major factor 
in many young physician investigators' decision to seek 
employment at the VA or to stay at the VA to pursue a research 
career.
    What portion of this fiscal year 1999 increase in medical 
research do you plan on providing to reinvigorate career 
development programs or other innovative strategies to attract 
young investigators to the VA and to keep them there?
    Dr. Kizer.  Let me just say two brief things and then ask 
Dr. Feussner to respond directly to that. One of the 
differences in the VA compared to the private sector is that 
about a 70-percent or so of our physicians are involvedin some 
way or other with investigator research. This is a much higher 
percentage than you would find anyplace else in health care. Secondly, 
we also, I think, over the last two or three years have made progress 
in increasing support in this area. I will ask Dr. Feussner to fill in 
the blanks with some numbers.
    Dr. Feussner.  Yes, we agree. In the past several years, 
one of the parts of the VA research program that suffered the 
most was the research career training.
    When Dr. Kizer appointed the Research Realignment Advisory 
Committee, one of the recommendations that committee made to us 
was that we invest up to 10-percent of our budget in research 
career development.
    We started at a little over 3-percent. We moved up to 4-
percent in 1997. We moved beyond that to 5-percent in 1998. The 
commitment that we have made to the field is to fund all 
research career investigators who pass the merit review system. 
Actually, I feel like we have taken some significant first 
steps in revitalizing the program. In addition to the research 
career pathway that we have had in medical research and health 
services research, in the past there had never been a research 
career pathway in rehab research.
    Last year, in fiscal year 1997, we began a research pathway 
in rehab and started on a small scale funding approximately 
six, I think, career awardees, but funded all of the awardees 
that passed the merit review system.
    So, we are quite committed to growing that. We are trying 
to reach that 10-percent target.
    Mr. Price.  Thank you. Thank you, Mr. Chairman.

          grants for construction of state veterans cemeteries

    Mr. Lewis.  Thank you, Mr. Price.
    So that Members of the panel and also others will know that 
I am getting close, at least to the close of general questions. 
The bulk of those that remain will be a part of the record. I 
do have a couple of questions that I do want to ask now, then I 
will be handing the gavel over to Mr. Frelinghuysen who in turn 
will recognize Ms. Meek. The Secretary and I have conflicting 
meetings here. If you would, Mr. Secretary, just a moment.
    Last year the VA proposed modifications to the grants for 
construction of state veterans cemetery programs. That proposal 
was to increase the federal share from 50-percent to 100-
percent, plus provide 100-percent of initial equipment costs.
    The 1999 request assumes enactment of this legislation. Mr. 
Secretary, is it your intention that this proposal for the 
state grant program be a replacement for the current program of 
building new national cemeteries?
    Mr. West.  I would think not, Mr. Chairman. I would think 
that the reinvigorated state program that we hope will result 
from this will be a complement.
    I believe the National Cemetery System is here to stay. 
That is our national obligation.

            line-item veto of planning for oklahoma cemetery

    Mr. Lewis.  One might draw that conclusion since the 
President used a line item veto for $900,000 in 1998 
appropriations for planning a new national cemetery in 
Oklahoma. Does the 1999 budget request assume any planning 
funds for a new national cemetery? If so, would you explain?
    Mr. West.  This is the Director of the National Cemetery 
System, Jerry Bowen. May he speak to the question?
    Mr. Lewis.  Yes, sir.
    Mr. Bowen.  No, sir, it does not. The reason there was a 
veto of the planning funds for the construction of a new 
national cemetery in Oklahoma was because of the five new 
cemeteries that we were bringing on-line in a period of only 
three years.
    We brought one of those on-line in Seattle in 1997. We have 
three others under construction this year. In 1998, we have the 
authorization and the construction funds for a new national 
cemetery near Cleveland.
    Quite frankly, our plate was full. We started with a list 
of ten sites in 1987. We only completed one new cemetery up 
until 1992. In 1997, we completed the second one. Now we have 
four more planned prior to the year 2000.
    Mr. Lewis.  Presuming that your plate is not so full, then 
we will just produce the money, the $900,000--yes or no?
    Mr. West.  Why do you not let me.
    Mr. Lewis.  Yes or no?
    Mr. West.  I do not think we are making an assumption one 
way or the other, Mr. Chairman. I encourage you not to make an 
assumption either that as we complete the full plate now, that 
we will not then look to the needs to see where our path goes. 
We will do that.
    Mr. Lewis.  I assume we will be discussing this more 
between now and then, whenever then is out there.
    Mr. West.  Yes, sir.

            reclassify veterans programs to defense function

    Mr. Lewis.  In the 1999 budget, it contains a proposal to 
reclassify veterans programs to the defense function. Mr. 
Secretary, how do you feel about this proposal?
    Mr. West.  Well, it is an interesting topic for discussion. 
I do not think it holds any real prospect for doing the 
nation's business, Mr. Chairman.
    The VA, the Department, the government and veterans need an 
Agency that will focus on their mission of tending to the needs 
of our veterans.
    I think that we can best analyze the budget, analyze the 
mission, do the job that way. I suppose I can understand the 
desire of OMB to want to have us look at this as an element of 
the overall cost of the nation's defense.
    I encourage us all not to lose sight of the very real and 
very unique focus of this Department and it has to remain so.
    Mr. Lewis.  I imagine those are very interesting 
discussions indeed.
    Mr. West.  I have not been a part of them.
    Mr. Lewis.  Mr. Frelinghuysen, I am going to ask you to 
take the gavel, if you will. Hershel Gober, the Deputy 
Secretary, is going to come up. The Secretary and I have, as I 
suggested, conflicting meetings here. So, if you will excuse 
us.
    Mr. West.  Thank you, Mr. Chairman.
    Mr. Lewis.  Thank you all.
    Mr. Frelinghuysen.  Thank you, Mr. Chairman.
    The Gentle Lady from Florida is recognized. Thank you for 
your patience.

                 spinal cord injury center at tampa, fl

    Mrs. Meek.  Thank you, Mr. Frelinghuysen.
    Mr. Gober, my question has to do with the Spinal Cord 
Injury Center at Tampa, Florida. Since you have already 
established yourselves as the number one system in the nation 
in terms of spinal cord injuries and the help for these kinds 
of patients, recently the James Haley Medical Center in Tampa 
was given the title of a ``Center of Excellence'' in spinal 
cord injury care.
    It was made in spite of the fact that this center is long 
overdue, according to my reports, for a replacement. It has 
space inefficiencies, no patient privacy, and even barriers to 
the handicapped.
    Treatment areas are split between floors, which is against 
VA's own SCI treatment regulations. Now, it has also been 
reported to me that for nearly 20 years, the VA has moved 
forward and moved back to the drawing board trying to find a 
way to replace this facility.
    This facility serves veterans from all over Florida, and 
even Georgia and Alabama. This committee has already 
appropriated $6 million for advanced planning and design funds 
for this project. The first phase of the project, a power plant 
is nearly completed.
    Yet, we were concerned when we did not see funding for the 
actual construction of the SCI Center which you estimated at 
$26 million in the Administration's fiscal year 1999 budget 
request.
    I understand that plans have been completed for the 100-bed 
replacement structure. My question is, is VA ready to move 
forward with construction of the SCI center if the funds are 
secured?
    Mr. Gober. Yes, ma'am. I will answer that question first 
and then let Dr. Kizer chime in when he wants to. There is no 
doubt that a new facility that is needed in Tampa because 
treatment areas are currently split between two levels.
    We treat spinal cord injury as well as people that need 
other types of therapy. The 1999 budget already contained one 
large construction project earmarked for VISN 8 in Puerto Rico 
where we had to make seismic corrections.
    As you know, our capital budget, in the past few years has 
been relatively small and will be for the foreseable future. We 
recognize there is a need. Based on our current thinking, this 
project will probably be the number one project in that VISN 
for the fiscal year 2000 budget.
    We do agree with you that we need a single floor where we 
can provide veterans with treatment and where it is more 
efficient for our staff. Then we will take the other building 
that, I understand is abandoned, and convert it, to provide 
some other type of clinical services.
    So, I will let Dr. Kizer come in, but I think to answer 
your question, there needs to be a facility there. We are doing 
a study right now to determine what size we need.
    As you know, it was originally planned to have more than 
100 beds; now, we are planning only 100 beds. What we need to 
do is decide exactly what type and size of facility we need. 
That, to my understanding, will be done within 90 days. Is that 
right, Dr. Kizer?
    Dr. Kizer. Right. The only thing I would add is just in the 
overall budget development process, because there were some 
questions. This did not rise to the level that it was proposed 
in the budget. In part, because there are a number of other 
changes underway as well, there were some questions that still 
need to be answered. We are having ongoing dialogue with OMB 
and others in this regard.
    Mrs. Meek. So, your answer is probably unless OMB says yes, 
we still may ask you this same question in another year?
    Mr. Gober. No. We agree we need a facility there. Tampa has 
done a good job. The hospital there has done a good job with 
its SCI.
    We also need a new SCI unit. So, when we receive the plan 
and decide exactly what we need, and are reasonably sure that 
we can be successful, we will request to build that project. We 
will be glad to keep you informed, as well as Mr. Bilirakis who 
is very interested in it also.
    I visited down there. We are not wasting the money. Some 
people say, well, you are wasting the money if you do not build 
the second part of the project, but that is not true. We needed 
the energy plant. We are taking a very serious look at this.
    Mrs. Meek. It is a question that comes up each time when 
you come before this committee.
    Mr. Gober. Yes, ma'am.
    Mrs. Meek. It is really important to us. I know that having 
to wait until the year 2000, in terms of my particular 
assessment, that is a pretty good distance away. I wish it were 
so that you would not have to do too many more studies. You 
have already studied it, to the extent that you have been able 
to ask for funding. I do hope that Dr. Kizer and the rest of 
the staff will look at this more closely in terms of the time 
frame needed to begin construction in the hospital.
    Dr. Kizer. I think a part of the issue there is that there 
is a need for increased ambulatory care space. How can we fold 
these things together and address as many needs as possible 
with the fewest number of construction dollars.

                   Nursing Home In Broward COunty, FL

    Mrs. Meek. All right. I have another concern from Florida. 
I think it becomes repetitive for me to keep mentioning about 
Florida being the home to so many veterans. It does have the 
oldest mean age of any veterans group in the nation.
    Many of these veterans are severely disabled, as you know. 
They live there. I have said that in the last session. My home 
county is Dade County, and the county next to me is Broward 
County; two very large counties.
    They have the largest number of veterans in the entire 
State of Florida. The standard 75-mile service area includes 
386,000 veterans. Yet, there is not a veterans nursing home 
within 75 miles of these veterans.
    In fact, there are only two other veterans nursing homes in 
the State of Florida. Now, our State Department of Veterans 
Affairs has proposed to locate a new state veterans nursing 
home in Broward County.
    This is a 120-bed facility. It will be a county, state, 
federal partnership, hopefully. They are asking for $4.3 
million local and $8.1 million federal. When will they be 
seeing funding for this needed facility in your budget as it 
emanates from you to OMB and the President?
    Mr. Gober. Well, the way we do our funding for the state 
veterans home is they go on a priority list. Florida is one of 
those states where for years and years they have needed an 
increase in state veterans homes.
    State veterans homes are one of the best buys. It is one of 
the best programs that we have. We pay 65-percent of the 
construction cost. The state government pays the rest. The 
taxpayers get a good deal.
    Plus, the veterans are housed in an environment where they 
are with their comrades and they are treated with dignity and 
respect. It is very good treatment. I think it is in August 
when we will make the awards for our contracts.
    It is August when we will come up with our list. I have not 
seen the list, but I would assume that Florida, with its strong 
need there, would be on that list. I will be glad to get back 
with you and tell you where it stands.
    Mrs. Meek. Thank you.
    [The information follows:]

                Nursing Home in Broward County, Florida

    The State of Florida has selected Pembroke Pines, Broward 
County, Florida, as the site for its third State Veterans Home. 
The application is identified as FAI 12-004 and ranks number 62 
of 89 projects on the FY 1998 Priority List of Pending State 
Home Construction Grant Applications. The priority list is 
established once each year, as of August 15th. The application 
ranked lower on the FY 1998 priority list because the State did 
not certify its matching funds prior to August 15, 1997. To 
qualify for ranking in Prioirty Group 1, the State must 
legislatively approve the home and certify matching funds. If 
the State of Florida is successful with obtaining its State 
matching funds before August 15, 1998, the project will 
probably rank within the top 10 applications. The President's 
budget proposal will be enough to fund approximately 3-4 new 
applications and the remainder of one partially funded 
application from FY 1998.
    Additional Florida Veterans Home Issue: On February 25, 
1998, VA awarded the State of Florida a construction grant 
totaling $7,763,683 (65 percent of the construction costs) to 
build a 120-bed nursing home for veterans in Land O'Lakes 
(Pasco County), Florida.

    Mr. Gober. We fully support state veterans homes. That is a 
good program. No doubt about it, Florida, needs those veterans 
homes.
    Mrs. Meek. Thank you. Somewhere in the back of my mind, a 
rumor keeps circulating. I thought I heard this. I do not want 
this on the record, Mr. Chairman.
    Mr. Frelinghuysen. We are off the record.
    [Recess.]
    Mr. Frelinghuysen. We are back on the record for good news.
    Mr. Gober. Florida is number two on the list for 
construction of a state veterans home. Barring somebody's veto, 
this list should be approved in August.

                        Veteran Population Data

    Ms. Meek. All right. Thank you very much. That is good 
news. My last question is one that is related to one that I 
asked the Secretary this morning.
    The answer that I received from the staff, from this 
gentleman, regarding your new census estimates of veterans 
populations in the states. Could you please--all of you all 
look alike.
    Mr. Frelinghuysen. I can see why Mr. Lewis left me in 
charge. Will you be good enough, the two people who were 
identified to identify yourselves?
    Mrs. Meek. Could you please provide for the record the 
latest veterans populations estimates when you get them, 
perhaps categorized by states, the age, and service connected 
disability; whether the disability is 90-percent to 100-percent 
or 60-percent to 90-percent, et cetera. Could you do that?
    Mr. Duffy. We would be pleased to.
    [The information follows:]

  Clerk's Note Concerning Facts on Veterans: Florida and United States

    Please not that Mrs. Meek's request was clarified in 
subsequent conversations between Mr. Dennis Duffy and Mrs. 
Meek's staff. It was confirmed that she was seeking figures for 
Florida, not for all states as the transcript wording would 
appear to suggest.


[Pages 159 - 160--The official Committee record contains additional material here.]



    Mrs. Meek. All right. Thank you, sir.

                  Funding Allocations in Network Three

    Thank you, Mr. Chairman. Those are all of my questions.
    Mr. Frelinghuysen. Thank you, Ms. Meek.
    Before recognizing Mr. Stokes, I just have a couple of 
questions. The gave me a list of 100 questions. I have my own 
list of 100. So, I am going to do mine first.
    Mr. Secretary, soon after the President delivered his 
budget to Capitol Hill, I believe that was about February 9th, 
all hell broke loose up in VISN Three in the northeast. I sort 
of want to get back to some of our discussion this morning.
    I happen to pick up the phone and called the medical 
director for the hospitals in my neck of the woods. It 
surprised me in my discussion with them, I said, are you aware 
of the budget figures that the President has in his package and 
how they will affect northern New Jersey and New York.
    He said he had not seen any figures. It was deja vu. We had 
some difficulty over the last two or three years actually 
getting a handle on exactly what the VA's budget is in VISN 
Three.
    It has been difficult at times to understand how great the 
cuts are. It really depends on who you talk to. The VA gives 
you one figure. The GAO gives you another figure. There are 
other groups that come up with their own figures based on their 
own inclination and information base.
    I worry that somebody in a position like that would have 
such a high level of uncertainty as to the dollars that he 
would be working for, for the two institutions in question.
    I would like to know quite simply, to what degree are 
medical directors involved? When I served in the state 
legislature, and many members come from the state legislature, 
budgets are usually built from the ground up.
    Is there something going on with VA in terms of its budget 
structure which would suggest an imposition from Washington or 
indeed budgets, do they grow from the ground up?
    Mr. Gober. Mr. Chairman, I will answer a part of that and 
then I am going to ask Dr. Kizer to finish. Our budget has 
grown from the ground up. When we work on the budget after we 
get the figures from the field and do all of the budget work, 
then we work with OMB and work with the Administration.
    That budget then is embargoed. So, it is not unusual that 
the director would not know what he is going to get, because 
until the President announces his budget, there is no budget 
information avaialble that can be shared.
    That is how we handle that. Dr. Kizer will be glad to tell 
you how it starts and worksits way up.
    Mr. Frelinghuysen. I do not want to mischaracterize the way 
you described the system. So, because there is an embargo, and 
obviously the President has the first shot in terms of 
announcing the budget, and I can respect that.
    There has to be a unified front. How does anybody in the 
field know how much money they have to deal with. It seems 
almost like some good guesswork.
    Dr. Kizer. Actually, to the contrary. Indeed, one of the 
beauties of the VERA system is that they should know very well 
what their budget is within a very small amount because it is 
predicated on the average number of users for the three 
preceding years, according to whether they fall into what would 
be a basic VERA or a special VERA category.
    About 96-percent of patients are basic care; most of the 
routine sorts of things; whether they be hernias, or 
gallbladders, or heart attacks, or whatever. Then the 4-percent 
is special care for things like spinal cord injury, and long-
term care, and advanced AIDS, or things that are much more 
complicated and require more prolong intense care.
    So, it is hard for me to understand the response that you 
say you got because the principles of VERA are very 
straightforward. They are very simple. I must say that it is 
hard for me to understand the response.

                     BUDGET FORMULATION ASSUMPTIONS

    Mr. Frelinghuysen. I made the point that if we are to have 
any credibility with the stakeholders, somebody ought to have a 
handle on exactly the amount of money in all likelihood the 
institution is going to be working with.
    Maybe this gets to a general series of questions I would 
like to direct to you, Dr. Kizer, perhaps more than to Deputy 
Secretary Gober. How do you actually calculate your budget 
numbers? Do they include all VA medical care appropriations in 
the calculation?
    Dr. Kizer. I am not sure what you asked there.
    Mr. Frelinghuysen. How do you put your budget together? Do 
you calculate the overall budget numbers? Do you include all VA 
medical care appropriations in the calculation? Do you include 
calculation for prosthetics?
    Do you include inflation, adjustments? Do you include 
expected revenues from third-party payments and the so-called 
increased ``efficiencies?'' What makes up your budget 
calculations?
    Dr. Kizer. If I understand your question correctly, all of 
those things go into the calculation.

                          RESOURCE ALLOCATION

    Mr. Frelinghuysen. Have I left any out?
    Dr. Kizer. Well, you have left a lot out because certainly 
it is fundamentally predicated on the number of veterans that 
we are taking care of, as well as increased revenues and other 
things. A part of what I think you are asking as well is how 
has that money been returned to the networks which are the 
basic operating units of the organization? Most of that money, 
indeed, about 90-percent, is returned through the VERA model.
    There are some programs that are funded centrally. For 
example, the GREC, the Geriatric Research and Education Centers 
are funded centrally. The prosthetics are still funded 
centrally. There are certain things that are funded from 
Headquarters, like Readjustment Counseling as opposed to going 
into the VERA model.
    The overwhelming majority of funds, as I say, about 90-
percent go into the VERA model and then is passed back to the 
networks who then allocate to the facilities within their 
networks.
    Mr. Frelinghuysen. In the VA's projections of reductions in 
future allocations to VISN Three, which is my VISN, does the VA 
include increased efficiencies that may off-set declines in 
purchasing power resulting from inflation? If not, why not?
    Dr. Kizer. Under the VERA formulation, and as you recall 
from our prior discussions on this, the decision was made that 
no network would take more than a 5-percent reduction under the 
VERA model. That is why Network Three, which is unique in the 
sense that it will take four fiscal years, given that VERA was 
implemented in mid-fiscal year 1997. So, VISN Three will not 
achieve its new level until the year 2000 as opposed to most 
other networks which will achieve their new level this year. 
There are a couple which will achieve their new homeostasis 
next year. VISN Three is the only one that will stretch out to 
the fourth fiscal year. In that, a certain amount is targeted 
under the VERA reduction. That changes a small amount each 
year. Since the base changes, the actual dollar amount changes 
a small amount, but it is not a huge amount. Those numbers have 
been discussed at a number of other forums. If you like, we can 
give you a table which list those for current year and future 
years.
    Mr. Frelinghuysen. I think we need a clear table because 
certainly to the lay person, the VISN Three resources have been 
reduced since the implementation of VERA. I think it would be 
good for us to know what those reductions would mean five years 
out from now.
    Dr. Kizer. Those numbers are essentially the same numbers 
that were provided beginning in fiscal year 1997 and what the 
networks have used to build their business plans and calculate 
their future budgets.
    We are happy to provide them to you again. I would just 
make the point, as we had some discussion this morning as well, 
that when this is all done and the new homeostasis is reached, 
that VISN Three will still be 27-percent higher than the 
average in the system.
    [The information follows:]

                  Analysis of VERA Funding Projections

    Please refer to the attached table, titled ``VISN 3 Funding 
Analysis,'' which comes from the VISN 3 FY 1998 business plan. 
This table shows that when VERA and projected non-appropriated 
revenues are accounted for, the VISN 3 budget dollar decreases 
over six years--FY 1997 to FY 2002--is projected to be $4 
million. That is, the VISN 3 budget goes from $1.024 billion in 
1996--the pre-VERA baseline year--to $1.020 billion in 2002. 
During the same period, inflation is projected to reduce VISN 
3's buying power by approximately $35 million per year, with 
the specific projected annual amounts being $32.3 million in FY 
1997, $32.6 million in FY 1998, $36.7 million in FY 1999, $36.1 
million in FY 2000, $33.5 million in FY 2001, and $39.3 million 
in FY 2002. It is important to emphasize that these are 
network-wide projections; they are not facility-specific.
    It is probably also relevant to reiterate in more detail 
what has been noted previously--that in the short run, 1996 
through 1998, the VISN 3 budget is essentially frozen. This is 
due to two factors: increased funds from non-appropriated 
revenues, and $134 million that Congress--$98 million--and 
VHA--$36 million--put into the VERA model in 1998. The VISN 3 
budget in FY 1996 was $1.024 billion, and for FY 1998 it is 
$1.026 billion. While dollar-wise a small increase, this is, 
for all intents and purposes, a freeze, requiring that VISN 3 
manage only the reduced buying power that results from 
inflation by using its resources more efficiently.


[Page 165--The official Committee record contains additional material here.]



    Mr. Frelinghuysen. That sticks in my craw because quite 
honestly the cost of living up in the Northeast is much higher 
than the rest of the country. Quite honestly, I am not sure 
that is good enough.
    I know that others can argue from the south and west that 
we are taking too much out of the system, but I think that 
there are some unique characteristics in the VA's population in 
the northeast that may be severely impacted, if in fact those 
reductions are as high as you may be providing in the way of 
your projections.

                         INFLATION ADJUSTMENTS

    One just last question before just recognizing Mr. Stokes. 
The inflation adjustment issue; has that inflation adjustment 
always been a part of the picture? In my discussions with the 
GAO they had not identified that inflation adjustment in the 
way that you have done it for the first time in this budget 
cycle.
    Dr. Kizer. I cannot comment on what GAO has done. The 
inflation has always been a part of our calculation. As you may 
recall from a prior discussion we had, the figure of 5-percent 
was set because we knew that inflation would be on top of that.
    So, whatever amount was set in VERA, the network would take 
an additional 2-percent, or 3-percent, or 4-percent, depending 
on the year, inflation reduction or reduced buying power, in 
addition to whatever occurred under VERA.
    The judgment was made that a reduction of 7-percent, or 8-
percent, or 9-percent, while it would be certainly challenging, 
was do-able.
    Mr. Frelinghuysen. All right. Thank you. I am pleased to 
recognize the Gentleman from Ohio, the Ranking Member.

                CLEVELAND VAMC AMBULATORY CARE ADDITION

    Mr. Stokes. Thank you very much, Mr. Chairman.
    Mr. Secretary, there continues to be a dramatic increase in 
outpatient care throughout the health care system. This is, of 
course, true for VA facilities as well. Last year, the VA 
hospital for northern Ohio treated in its ambulatory care unit 
10,000 additional patients; a 25-percent increase in work load.
    The over-crowding has violated local and state safety 
codes, as well as regulations of the Joint Commission on 
Accreditation of Hospitals. The over-crowding has caused an 
unbearable situation with patients and medical staff.
    In the FY 1999 OMB budget, VA requested $76 million for 
major construction of three ambulatory care units. Cleveland 
was given the highest priority. I understand that the Office of 
Management and Budget has eliminated the three projects and 
substituted two of its own which were of lower priority on the 
VA list. The reason given was that the VA does not need more 
hospital space.
    My question to you is for you to inform us of the criteria 
that VA used in setting its construction priorities, and the 
criteria used by OMB.
    Additionally, how will you respond to the ever present 
danger that over-crowding may cause in the Cleveland VA Medical 
Center.
    Mr. Gober. If you do not mind, Mr. Stokes, Dr. Kizer will 
answer the question.
    Mr. Stokes. Dr. Kizer, sure.
    Dr. Kizer. Let me actually ask Mr. Yarbrough who I believe 
is right here. He is in charge of Facilities Management and can 
speak to the construction criteria.
    Mr. Stokes. Sure. Mr. Yarbrough, do you want to come down 
and have a seat.
    Mr. Yarbrough. Yes, thank you, Mr. Stokes, I cannot speak 
to OMB's criteria, but I can describe ours. We have used a 
system for a number of years that has been significantly 
revised in the last two years. It is not yet a mature 
replacement system, but it incorporates a number of different 
factors that were not previously considered net present value, 
the return on investment, what the alternatives were that were 
considered and so forth. We went through a lengthy and very 
detailed process in order to come up with a list to submit 
through the budget process. In fact, Cleveland was on the list. 
I cannot, again, speak to OMB's reasons for coming up with a 
slightly different set of projects.

                  OVER-CROWDING IN OUTPATIENT DELIVERY

    Mr. Stokes. Are you in position to be able to address my 
question relative to the danger of over-crowding?
    Mr. Yarbrough. In part, I believe I can, yes.
    We have criteria about fire safety, over-crowding, hygiene 
and so forth that all medical and outpatient clinics that are 
renovated or constructed must meet. We build new facilities so 
those criteria can in fact be satisfied.
    When we renovate facilities, those characteristics are 
included in the design. In the case of the Cleveland situation, 
if the project is funded the design will alleviate the over-
crowding and other criteria shortfalls.
    Mr. Gober. Mr. Stokes, I have visited many of our clinics. 
It sounds like the Cleveland Clinic is doing a good job. They 
have increased their number of patients that they are seeing by 
25-percent. That is pretty substantial.
    There are a lot of competing projects. Dr. Kizer is doing a 
great job in putting in these other outpatient clinics. 
Cleveland was on our list. For some reason, it didnot make the 
final cut. It is something that we are concerned about.
    We are concerned about over-crowding. We are concerned 
about veterans having to wait too long. We are concerned about 
all of these problems. There is not an easy answer. Are we 
concerned about it? Yes, sir, we are concerned about it.
    Mr. Stokes. You have mentioned that you visited some other 
hospitals. What is the condition of the VA outpatient 
facilities?
    Mr. Gober. Well, we have some beautiful outpatient 
facilities. I have been to the one in Las Vegas. I have been to 
the one in Los Angeles. I have been to several other ones. Many 
of them are doing a great job. We have some that are co-located 
with veteran centers.
    They appear to be serving the veteran very well. I have 
seen an increase in the satisfaction of the veterans in the 
five years that I have been in this job. In the majority of the 
outpatient clinics, the veterans are so happy to have them 
because it is convenient to them.
    When they go in there, there is very little waiting time. 
In most places you go in, they will have a sign that says, ``we 
guarantee you are not going to wait to be seen by someone.'' If 
you do, talk to the receptionist.
    Now, there are exceptions. This is a big system and there 
are places where we are not up to standards, as we all realize. 
It is not because our people are not trying to do it or are not 
compassionate or do not want to do it.
    Mr. Stokes. When you say to us that there are exceptions, 
give us some understanding. You already said that everything is 
happy-go-lucky in so many places. Then you are saying there are 
exceptions. Paint a picture for us. You know the system.
    Mr. Gober. Yes, sir.
    Mr. Stokes. We have to try and judge what is best from our 
perspective. You tell us in terms of when you say 
``exceptions,'' is that just minimal or is it greater than 
minimal? Tell us what it is.
    Mr. Gober. Being a country boy from Arkansas, I think I am 
being sucked in here, but I will take a stab at it.
    Mr. Stokes. From an old trial lawyer, when the other lawyer 
says that, I know I am in trouble. When he goes to being a 
country boy, I am in trouble.
    Mr. Gober. I will be glad to address that because we do 
have exceptions where clinics are over-crowded, where you walk 
into the waiting rooms and some of these clinics were built in 
the 1950s. The architecture is old. The rooms are small. They 
are not well lit. They are not airy.
    There are too many people in there. It is too crowded. We 
have some clinics like that. We still have some hospitals that 
are like that. Our newer clinics, the ones that we have opened 
up, they are roomy. They are spacious.
    Veterans can find their way around easier. They are much 
more handicap accessible. So, there has been a dramatic change 
in the five years that I have been here. It is not even the 
same VA.
    As a matter of fact, we have a saying, this is not your 
daddy's VA. It is different, it is changing. We have gone 
through some dramatic changes. We are not there yet, we still 
make mistakes and there are things that we need to do better, 
but we are working hard to do that.
    So, overall, I think VA has done a remarkable job. The 
people that work for VA have done a tremendous job in the last 
five years that I have been here.

                             Waiting Times

    Mr. Stokes. I appreciate that. I think I understand what 
you are saying. Can you give me some idea of the extent of the 
waiting list for services and/or over-crowding in the rest of 
the VA health care system. I have talked about Cleveland. I am 
interested in what happens nationally.
    Dr. Kizer. I do not know if I can give you a specific 
answer to that. Do you want a percentage or something? We 
discussed this morning and we were going to provide for the 
record some further, more detailed information on the specific 
waiting times; waiting times as far as how long to make an 
appointment, and how long to get in to see a care giver after 
an appointment is made, those sorts of things.
    So, I think that we will address your questions through the 
additional information that will be provided for the record. If 
it is helpful, I would also note that VA physical plant 
structures in many ways mirror health care elsewhere in the 
country in that we have some very modern, very state-of-the art 
facilities and we have some facilities that go back to the turn 
of the century and before. The average age of VA facilities is 
about 35 years. So, recognizing that some facilities have only 
come on line in the last two or three years, that, I think, 
gives you some indication that some have been around for quite 
a long time.
    Mr. Stokes. Okay, well feel free to expand on that in the 
record. Perhaps you have answered my question on that matter.
    Mr. Gober. If we could, we will take a look at the 
Cleveland Clinic.
    Mr. Stokes. I would appreciate it if you will do that.
    [The information follows:]

                    Cleveland VAMC Outpatient Clinic

    The ambulatory care facilities at Cleveland have several 
notable shortcomings that cause congestion and confusion in 
their operations. The facility lacks a formal and efficient 
entry, corridors are narrow, waiting space is insufficient, and 
clinical functions are scattered into several areas of the 
building. Crowding therefore occurs at many and varied 
locations in the treatment process. Aging building systems 
further contribute to the discomfort of building occupants.
    The Cleveland Ambulatory Care Addition and Renovations 
Project was submitted as the highest priority project by the 
Veterans Integrated Service Network for Fiscal Year 1999 budget 
consideration. The project received the third highest score by 
the Under Secretary for Health's Construction Advisory Board 
and was submitted to the Secretary's Capital Investment Board 
(CIB). The CIB rated the Cleveland project as the VA's fourth 
highest capital assets initiative and the project was included 
in the budget submission to the Office of Management and 
Budget, but was deleted during budget deliberations.

               Diversity and Affirmative Action Programs

    Mr. Stokes. Mr. Secretary, let me get into an area that is 
of great concern to me. I had hoped to get into this with 
Secretary West before he left. I did not realize he was going 
to leave so soon.
    Consequently, I did not get a chance to pose my questions 
relative to it. I have now sat on this particular subcommittee 
for more than 20 years. I sat on the Appropriations Committee 
itself for 28 years.
    During the time I have sat on this subcommittee as well as 
other subcommittees, one of my major concerns has been the 
whole question of diversity and the degree to which taxpayer 
funds are utilized by federal agencies.
    In that respect, of course, I very much applaud President 
Clinton who has stated that a part of his Administration's 
goals will be to see that federal agencies and his 
Administration look like America.
    This is one of the agencies I have great concerns about in 
terms of both the diversity within the agency itself and then 
diversity in terms of its contractual relationships with 
contractors, utilizing taxpayer dollars, and funds of that 
sort.
    My intention with your agency, of course, has been focused 
by posing questions to your various secretaries over the years. 
Secretary Brown and I went into this rather extensively every 
time he appeared before me.
    I had intended to get into this with Secretary West today. 
So, I want to take a few moments and go over it with you and 
also Mr. Hensley who recently was quoted in the newspaper with 
reference to this particular subject in a speech that he had 
made somewhere.
    I have asked, if he is present, that he be given the 
opportunity to respond to me too. I am sure you are aware of my 
concerns from the record.
    First, I would like for you to tell me how is this agency 
doing in terms of its minority employment?
    Mr. Gober. Mr. Stokes, if I could ask Mr. Hensely to come 
forward and he could answer the second part of the question.
    Mr. Stokes. Sure. I would like to have him come around.
    Mr. Gober. Let me say this, I totally agree with and 
support the President when he said that he wanted the 
government to look like America. We have made a very honest 
attempt in this agency to make sure that we do have such 
diversity.
    I like to think that we have done better than anybody 
before. Of course, I always want to think that. I think that 
there is still much we need to do. I think that we have to be 
really active in seeking out diversity.
    I know that when we started looking for candidates for high 
positions, we very aggressively looked for minorities and women 
to put in those slots, of course, with always the same basic 
requirement that they be qualified for the job.
    Everyone wants that. They are out there. You really have to 
seek hard. I think that sometimes we get a little lazy. We need 
to be more diligent in doing this. Having said that, I will ask 
Mr. Hensley to comment.

                       Minority Employment Gains

    Mr. Stokes. Mr. Hensley, before you make your remarks, I 
had mentioned your name earlier. I do not know whether you were 
quoted accurately or not. You can tell me whether you were 
quoted accurately.
    You were quoted in a newspaper article as saying, 
``Minority gains are being made, but not without problems. 
There is a new high-tech sophisticated form of discrimination. 
I think there is still some catching up to be done.''
    As I said, I do not know whether you were quoted accurately 
or not or in context. I do think it is important that this 
committee have an honest candid picture of what is occurring at 
this Agency.
    From the position that you hold as National Director of the 
Center for Minority Veterans, is that correct?
    Mr. Hensley. That is correct.
    Mr. Stokes. Then I would think you are perhaps in a 
uniquely qualified position to be able to shed some insight on 
this.
    Mr. Hensley. Sure. Mr. Stokes, the article is partially 
correct in that I was quoted in my address to veterans and 
employees at Lebanon about Black History Month.
    My comments were particularly in reference to the gains 
minorities have made in the military; looking back at the 
positions that they were not able to hold; looking at the ranks 
that they were not able to make, and comparing that to the 
strides and the gains we have made today.
    The article tried to address that, but not fully. We are 
concerned, as Mr. Gober mentioned, about employment in the VA. 
I think we have made great progress in that arena. We do need 
to realize that there are some areas, however, where the 
representation of minorities is not as great as we would like.
    For example, with Hispanics and Asian Americans. We are 
actively seeking qualified candidates for those positions. In 
my role as Director of the Center, we are playing an advocate 
role in trying to find minorities to fill positions as 
vacancies occur.
    As a matter of fact, I would like to also state that Dr. 
Kizer's office sends me a copy of all vacancies in his office. 
In taking a look at that, I am able to send those out to 
various sources that we have contact with in an effort to 
recruit qualified candidates for those positions.
    Mr. Stokes. Does that include the SES positions?
    Mr. Hensley. Yes, sir. It sure does.
    Mr. Stokes. Highest level?
    Mr. Hensley. Yes, it does.

                  Contracts With Minority Contractors

    Mr. Stokes. I would quite agree with the statements that 
you have made in your address to the military personnel at 
Lebanon. As someone who serve in World War II in America's 
segregated Army, I am very much aware of what it was to serve 
in the military in those days and what it is to serve in the 
military today.
    This country has made great strides from what it was when I 
was an 18-year-old youth. Do you have anything at all to do in 
terms of contracting with minority contracting firms? Can you 
give us any information in that area?
    Mr. Hensley. While I do not have anything to do with the 
actual awarding of contracts, we do partnership with the VA 
Office of Small and Disadvantages Businesses to do business 
seminars around the country.
    Our focus there is to attract minority veterans to the VA, 
minority veteran business owners to the VA, so that they will 
know what business opportunities exist.
    Those seminars are designed to educate veterans, to let 
them know what kinds of procurement contracts are available, 
and to make sure that they have an opportunity to compete 
forthose contracts once they are open.
    We did a successful business seminar in Los Angeles, 
California this past summer. We have another scheduled I think 
the 21st of April in Houston, Texas. Our focus is veterans who 
are business owners, minority veterans who are business owners 
and getting them into the VA proper.
    Mr. Stokes. I would appreciate it if, relative to all of 
these questions, if you would expand upon this for me in the 
record. Feel free to provide any statistical data you have 
relative to this whole question.
    Along with it, I know Ms. Meek is wanting me to also 
include what you are doing in terms of women and females. She 
has already made an observation here today about all of the 
males here looking alike. I hate to ask her what she thought 
about the lack of women in this room today.
    So, if you would also expand upon what is being done in 
terms of recruitment of women and inclusion of them in terms of 
diversity, I would appreciate it.
    Mr. Hensley. We will provide the data, sir.
    [The information follows:]


[Page 173--The official Committee record contains additional material here.]



    Mr. Stokes. Thank you very much.
    Thank you, Mr. Chairman. I have got to get back to the 
other subcommittee.
    Mr. Frelinghuysen. Thank you, Mr. Stokes.
    I am sure if Mr. Lewis was here, he would second your 
questions, both yours and Ms. Meek's observations. I have heard 
him do it on many other occasions.
    Mr. Stokes. He has been extremely supportive in this 
respect and has often times taken the lead in terms of posing 
these types of questions. Both Ms. Meek and I are very 
appreciative of the type of support that Chairman Lewis has 
give us.
    Mr. Frelinghuysen. It has been a lesson to me as a 
relatively new Member of this subcommittee to listen to you and 
hear what you have to say. I knew of your military career, but 
certainly your career in Congress in many ways--even match 
that. We thank you for your service to our country.
    Mrs. Meek, would you like a parting shot?
    Mrs. Meek. No, Mr. Chairman. Thank you.

                          third party payments

    Mr. Frelinghuysen. I have a couple of quick questions and 
then we will move towards the recess for tomorrow at 10:00 a.m.
    Relative to third-party payments, Mr. Secretary, in the 
third party-payments that you are assuming in your budget, what 
is the breakdown by VISN for each third-party payment? Can we 
get that information?
    Mr. Gober. Yes, we can provide that for the record.
    [The information follows:]


[Page 175--The official Committee record contains additional material here.]



                          collections reserve

    Mr. Frelinghuysen. Dr. Kizer, earlier today you referred to 
a national budget reserve of $100 million that would be used in 
the event that third-party collections did not meet anticipated 
levels.
    You stated at that time that each VISN has a reserve. Could 
you tell us what each VISN has as a reserve? How do those 
budget numbers fit into your overall budget calculations?
    Dr. Kizer. Again, we can provide a VISN-by-VISN delineation 
of the numbers. If it is helpful, basically the reserve was set 
at 2-percent of their operating budgets. So, whatever their 
given operating budget is, it would be 2-percent of that.
    We are now going through the process of working with the 
VISNs to see about releasing some of those funds into their 
operations so they do not have to hold it in reserve. Based on 
prior history, at this point in the fiscal year, we have a 
pretty good idea as to what the expected work load will be for 
the rest of the year. So, as we move forward through the second 
quarter and into the third quarter, it should be possible to 
release those funds into their general operating budget.
    [The information follows:]

                          Collections Reserve

    The Headquarters maintains a contingency reserve of $100 
million. In addition, the newtworks have reserved the following 
amounts ($ in 000s):

VISN:                                                      VISN Reserves
    1. Boston, MA.............................................   $19,309
    2. Albany, NY.............................................     9,892
    3. Bronx, NY..............................................    21,653
    4. Pittsburgh PA..........................................    15,221
    5. Baltimore, MD..........................................    12,325
    6. Durham, NC.............................................    18,337
    7. Atlanta, GA............................................    29,655
    8. Bay Pines, FL..........................................    26,000
    9. Nashville, TN..........................................    13,696
    10. Cincinnati, OH........................................    23,058
    11. Ann Arbor, MI.........................................    11,713
    12. Chicago, IL...........................................    18,762
    13. Minneapolis, MN.......................................     7,838
    14. Omaha, NE.............................................     6,662
    15. Kansas City, MO.......................................    21,099
    16. Jackson, MS...........................................    35,953
    17. Dallas, TX............................................    19,265
    18. Phoenix, AZ...........................................    15,081
    19. Denver, CO............................................    10,543
    20. Portland, OR..........................................    12,642
    21. San Francisco, CA.....................................    28,600
    22. Long Beach, CA........................................    32,962
                    --------------------------------------------------------------
                    ____________________________________________________

      Total...................................................   410,266

                        prostate cancer research

    Mr. Frelinghuysen. Thank you. Relative to prostate cancer 
research, we had a brief discussion last year about the 
alarming rate of prostate cancer, the fact that the VA, I 
understand, has made a commit in fiscal years 1997 and 1998 to 
spend approximately $12.8 million.
    Relating to that spending, what do you have in terms of 
plans for fiscal year 1999? How much of the previous fiscal 
year's funds have been expended?
    Dr. Kizer. Let me ask Dr. Feussner to comment specific on 
that.
    Mr. Frelinghuysen. Dr. Feussner, welcome back to the 
microphone. When you are about to sit down, if you could also 
give us an idea where the money has gone; to institutions, and 
to whom?
    Dr. Feussner. Well, I can not give you that level of detail 
straight away, but I could provide that level of detail for the 
record. You are quite correct. Our funding stream for prostate 
disease including cancer has gone up substantially from 1995. 
Our projections for this year are about $13 million. That 
projection seems to have leveled.
    You will recall that the 1995 figure was $3 million. We 
have increased that dramatically over the ensuing years. We 
have reached a leveling point. What we have done to be sure 
that we have saturated the system versus not is three things.
    As a matter of fact this morning there was a meeting at 
Headquarters with representatives from medical oncology, 
urology, et cetera, to develop a program announcement for 
additional treatment trials in prostate cancer. Hopefully, that 
program announcement will come out sometime this quarter and 
simulate additional treatment trials. We have met several times 
now with the American Urological Association to see if there 
are treatment issues, surgical treatment issues, that are not 
being addressed by research.
    As you know, we have a collaborative relationship with DOD. 
I think the number is about $3 million in the prostate 
diseases. That is all prostate diseases, including cancer.
    We have also developed our epidemiological research 
capacity, we have funded additional studies in the epidemiology 
of prostate cancer focusing primarily on two issues; early 
stage disease and the role of race and ethnicity in the natural 
history of prostate cancer.
    Mr. Frelinghuysen. I commend you for your efforts. As time 
permits, if you could let us know what institutions the dollars 
have gone and whether they go to individual research efforts or 
whether they are all institutional-based.
    [The information follows:]




[Page 178--The official Committee record contains additional material here.]





    Mr. Frelinghuysen. Have all of the dollars we have given 
you been spent?
    Dr. Feussner. Yes, sir. The overwhelming majority of the 
dollars go to individual investigators. I can provide a listing 
of what institutions the money has been disbursed to.
    Mr. Frelinghuysen. Thank you for your response.
    If there will be no further questions, I want to thank you 
Gentlemen, for your active participation this morning and this 
afternoon. The Committee stands in recess until 10:00 a.m. 
tomorrow morning.
    Thank you very much.
                                         Wednesday, March 18, 1998.

                     VETERANS HEALTH ADMINISTRATION

                               WITNESSES

HERSHEL GOBER, DEPUTY SECRETARY
KENNETH W. KIZER, M.D., UNDER SECRETARY FOR HEALTH
D. MARK CATLETT, ACTING ASSISTANT SECRETARY FOR MANAGEMENT
JOHN R. FEUSSNER, M.D., CHIEF RESEARCH AND DEVELOPMENT OFFICER
W. TODD GRAMS, CHIEF FINANCIAL OFFICER

             veterans equitable resource allocation (vera)

    Mr. Lewis. The hearing will come to order.
    Mr. Gober, we will proceed with budget questions. I thought 
we were going to get through yesterday. I guess you had an 
entertaining time while I was away.
    There has been a good deal of discussion about the Veterans 
Equitable Resource Allocation, VERA, as I mentioned yesterday, 
in the past year. To address certain concerns, the conference 
committee asked the General Accounting Office to study and 
report on the effects of Veterans Equitable Resource 
Allocation, or VERA processes and their implementation.
    That report has not been ready until this summer, but I am 
sure that you had plenty of questions regarding that yesterday 
from a variety of interested members. To follow up on some of 
that, how many of the 22 networks do you anticipate will 
actually receive less funding at the end of the four year 
period during which resources will be shifted?
    Dr. Kizer. As I recall, it was seven.
    I might, Mr. Chairman, if it is of interest note that we 
also have contracted with an outside consultant who looked at 
the methodology and other aspects of it to help inform us as 
well.
    Mr. Lewis. Yes.
    Dr. Kizer. And when that report is done, which we expect 
before very long, we will, of course, share it with the 
Committee.
    Mr. Lewis. To say the least, that pot is stirring out 
there. We have heard a lot so far from members who are 
concerned about veterans who are moving out of their territory, 
and that impacts services available and dollars available.
    I hear on the other side of that, in the West, I hear from 
people who are receiving the benefit of all these arrivals, 
that is, the numbers of veterans that need to be serviced, and 
people are wondering where the rest of their money is.
    So this is not a problem that is going to go away.
    Dr. Kizer. We have tried to strike a balance. It was 
interesting in the dialogue yesterday, that Mr. Frelinghuysen 
was commenting about the age and severity of illness in his 
patients. Mrs. Meek was commenting that hers were worse than 
his.
    We are trying to strike a balance, and we have, on the one 
hand, as you say, people who are receiving increased funds who 
want it yesterday, and those who are losing, who do not want it 
ever to go away. And I think the course that we have charted is 
an appropriate one that addresses the needs, and will not 
disrupt the care. But certainly it is challenging for some 
networks, and we realize it may not be quick enough for others, 
but we think it is an appropriate and rational approach.
    Mr. Lewis. I would hope that all in the audience who have 
an interest, as well as the panel itself, would note with 
particular interest that this problem may be creating more 
difficulty, not simply because people are becoming aware of 
veterans moving, but because of the history and tradition of 
veterans medical care programming. It used to be every year we 
just said how much more money do we need, not necessarily how 
can we evaluate how the money is being spent, but how much more 
do we need.
    And in this current environment, we do not have that 
opportunity, and as we have noted already, essentially freezing 
out through 2002 means that this challenge is going to become 
more complicated, there will be more heat. It comes under the 
category that I often describe as sometimes it is nice to be 
wanted, but we can only be wanted so much.
    In this case you will be hearing from folks.
    Mr. Gober. I think, too, Mr. Chairman, if I may, that had 
we not gone to VERA we would be in really dire straits. I think 
we would not be treating the number of veterans we are 
treating. States like Florida, California, and Arizona would be 
hurting.
    Because what we have done is, and you stated it very 
eloquently, given money to a hospital year after year after 
year. Now the money goes to the veteran. At $2,600 a year, or 
$36,000 a year for the special needs veteran, the funding 
follows that veteran.
    And eventually it will be just like the credit card. 
Wherever that veteran goes, that money will go with him or her.
    Mr. Lewis. Do you hear that, Mrs. Meek? Eventually it will 
be like the credit card. I am not sure the medical community 
totally understands that. We were talking about Medicare 
yesterday, and these things have a way of running right over 
themselves over time.

                           medical inflation

    Nonetheless, let us move on. What does VA estimate medical 
inflation will be over the three or four year period in which 
funds are being shifted?
    Dr. Kizer. At this point, we expect it will run between 3 
and 4 percent.
    Mr. Lewis. Medical inflation costs will be at 3 and 4 
percent? That is very conservative. Other figures I have 
heard----
    Dr. Kizer. I was just going to follow up and say that this 
year will probably be a watershed year in determining what that 
will be. As you may recall, in 1997, medical inflation was very 
low. It was inordinately low.
    The early results from 1998 from the private sector 
suggests that medical costs may rise 8 percent of more this 
year. So while the projections, what I cited for you are the 
projections that have been used, based on the most recent 
years, but if health care expenses take off this year much more 
dramatically than they have over the past four or five years, 
then that inflation rate will follow as well. So I put a 
cautionary or clarifying note on what I said.
    Mr. Lewis. A follow up question would relate to costs 
shifts and the impact, affected by factors other than 
inflation, such as the value of real purchasing power, once you 
have offsets like increases in efficiency, shifting of care 
from inpatient settings, versus contracting, et cetera.
    I mean, do you anticipate real savings that are meaningful 
there that can essentially increase the purchasing power of the 
dollar?
    Dr. Kizer. Inflation, whatever level it is, erodes the 
purchasing power. However, we can purchase more with the 
dollars we have by using those dollars more wisely, and I think 
that we can.
    Mr. Lewis. Presumably, if you are involving yourself in 
contracting, et cetera, you are doing that for a reason. Maybe 
that saves money, et cetera. That is really the point.
    Dr. Kizer. We think we can use the appropriated dollars 
that we have in more prudent ways than we have in the past, and 
we think there is still room to achieve more there, although 
some point in the future you cannot do any more with what you 
have.
    And we have had some of this discussion in the past.

                            quality of care

    Mr. Lewis. Yes. One of the greatest concerns heard from 
those who anticipating losing funding is that quality of care 
is declining of will decrease. This is for you, Dr. Kizer. 
Should the quality of care decline at those hospitals that may 
lose funds over the three or four year allocation period?
    Dr. Kizer. The quality of care----
    Mr. Lewis. You heard a lot about that yesterday, I would 
guess.
    Dr. Kizer. Should there be any instance that there is a 
decrease in quality of care, or that the quality of care has 
historically not been up to what we believe it should be, then 
obviously we need to dissect the reasons for that. If one of 
the reasons should be that they need more staffing, or they 
need more funding, or equipment, money to buy, et cetera, then 
that will be made available. If it turns out that it is some 
other reason, then that needs to be addressed.
    I think that it is overly simplistic, at a minimum, to 
think that dollars equates with high quality care, and 
particularly if those dollars are going just for inpatient 
care.
    Mr. Lewis. It strikes me, that at least for Members of the 
Committee, where, to say the least, the focus is a little 
different intensity, you may want to help us with someof the 
pros and cons of the complaints out there.
    Because there are people in the regions where shifts have 
taken place where they distinctly think dollars relate to 
quality of care.
    Dr. Kizer. We would be more than happy to meet one on one, 
meet as a group, meet with whoever to try to facilitate an 
understanding. And particularly the understanding of what the 
specific concerns of the members might be, and what the issues 
are that we can better address.
    Mr. Lewis. The interesting thing about this issue is I can 
already more than sense that this is a concern that does not 
know partisan lines. Democrats and Republicans in Florida and 
California are going to have one concern and view, and people 
in the Northeast are going to have the reverse side of the 
coin. Massaging both ends, I think, is going to be needed.

                      increase of unique patients

    Despite concerns about the level of resources, the number 
of unique patients continues to increase, from 2,937,000 in 
1996 to 3,142,000 in 1997, to 3,278,000 in 1998, to 3,400,000 
plus in 1999.
    Numbers for 1997 and 1998 are above those estimated last 
year. So what caused the number of uniques in 1997 to increase 
by 205,000 that was estimated in 1997?
    Dr. Kizer. I think in brief, at the time the budget is 
developed those figures are projected and have lagged behind 
the rapidity of the change that is occurring in the system. We 
have actually been able to make progress faster, in shifting 
care from an inpatient to an outpatient basis, and frankly 
doing this better than what was projected in the budget.
    Mr. Lewis. Do the actual numbers in 1998 indicate that you 
will exceed your current estimate?
    Dr. Kizer. I am somewhat optimistic that we will exceed the 
estimates this year, although I say that with some trepidation.
    Mr. Lewis. Do you believe that the emphasis to increase the 
numbers of patients that receive health care that may have 
inadvertently had an adverse impact on the quality of care?
    Dr. Kizer. No, I do not. If we cannot deliver quality care 
to those folks, then we have no business taking care of them. 
And that message, I think, has been very clearly articulated. 
This is not a numbers game. Indeed, it goes back to some of the 
discussion that we had yesterday. There is no incentive to 
enroll more people if we cannot provide the care. We do not get 
more premium. I mean, our appropriation is fixed. So, unlike in 
the private sector, where you make more money if you get more 
patients in, it does not apply here.
    Mr. Lewis. We would appreciate your including some of those 
numbers and tables in the record so we can focus in our own 
special way.
    [The information follows:]

                            Unique Patients

    The actual number of uniques in 1997 increased by 205,000 
over the original estimate for 1997. More than 91,000 of the 
250,000 increase represented an improvement in our ability to 
count unique patients. For the first time, the 1997 actual 
count of unique patients includes CHAMPVA--40,000--and 
Readjustment Counseling--51,000--patients not previously 
counted or reflected in previous budget estimates. The 
remaining increase of 114,000 is mainly due to increased 
primary care patients treated on an outpatient basis. Early 
indications from our current data are that the 1998 estimate of 
unique patient workload continues to increase and we expect to 
meet our estimates. However, we do not anticipate that we will 
significantly exceed that estimate.
    Table reflects the number of basic and special care unique 
patients:

----------------------------------------------------------------------------------------------------------------
                                                                           Fiscal year--                        
                 Unique patients                 ---------------------------------------------------------------
                                                       1996            1997            1998            1999     
----------------------------------------------------------------------------------------------------------------
Basic care......................................       2,894,694       3,004,089       3,140,970       3,275,418
Special care....................................         139,168         137,976         137,976         137,976
                                                 ---------------------------------------------------------------
      Total unique patients.....................       3,033,862       3,142,065       3,278,946       3,413,394
----------------------------------------------------------------------------------------------------------------

    Table reflects the number of veteran and non-veteran unique 
patients.

----------------------------------------------------------------------------------------------------------------
                                                                                     Estimated       Estimated  
                      Status                          Unique          Unique          unique          unique    
                                                   patients 1996   patients 1997   patients 1998   patients 1999
----------------------------------------------------------------------------------------------------------------
Veterans........................................       2,658,665       2,791,514       2,928,446       3,062,894
                                                 ===============================================================
Non-Veterans....................................         338,197         310,236         310,200         310,200
CHAMPVA.........................................          37,000          40,315          40,300          40,300
                                                 ===============================================================
      Total Non-Veterans........................         375,197         350,551         350,500         350,500
                                                 ===============================================================
      Total unique patients.....................       3,033,862       3,142,065       3,278,946       3,413,394
----------------------------------------------------------------------------------------------------------------

            national community-based outpatient clinic plan

    Mr. Lewis. The concern has been expressed that VHA has not 
yet developed a nation-wide plan for community based outpatient 
clinics. A nation-wide plan would also provide an estimate of 
the total number of community based organizations planned. The 
VA currently has 22 individual network plans.
    Does VA plan in the future to develop one national plan of 
CBOCs?
    Dr. Kizer. I know the Congress has asked for that, and we 
will certainly make every effort to comply. I think you need to 
understand, though, that you are asking something that is 
exceedingly difficult, given the rapidity of change, not only 
in the Veterans health care system, but in the private sector.
    What happens in a given community as far as managed care, 
as far as the location of their hospitals, where there are 
mergers, et cetera, going on in the private sector bears 
directly on our opportunities to contract for care or to site a 
clinic.
    So whatever we can provide to comply with the request of 
the Congress we will but I think it has to be understood that 
it needs to be a flexible plan, and one that takes, or is 
cognizant of the many forces of change that come to bear on it, 
only some of which we are in control of.
    Mr. Lewis. Nonetheless, as we are trying to get a handleon 
this, 22 individual plans does not a national plan begin to make. Some 
help in evaluating and reevaluating what flexibility really means or 
should mean would be helpful.
    Dr. Kizer. I think to date we have been cognizant of the 
need for equity and assuring that over a year or a period of 
time that there is some evenness throughout the country as far 
as where these are sited, and in the numbers and other things. 
And I think by and large that is being recognized.
    Mr. Lewis. Speaking just for the West, even the most 
flexible plans when designed inside the Beltway do not 
understand some factors. For example, in my desert you can put 
four Eastern States.
    Dr. Kizer. You know, these people back here, they just 
don't understand California. [Laughter.]
    Mr. Lewis. They may understand North Carolina, but not 
California, right?
    Both the enrollment process required by the eligibility 
reform legislation to be implemented on October 1, and the 
establishment of new CBOCs have and will increase demand for 
health care services.

                          demand for services

    Does VA have a plan to insure that the demand for health 
services does not exceed the amount of resources available?
    Dr. Kizer. That concern is a principle reason why we are 
going through this year what some people have characterized as 
a dry run for the eligibility to try to get a better fix on 
exactly how many individuals within the different priority 
levels that are set in law that we should expect when we 
implement. Those numbers will become more solid in the late 
spring or early summer. Then we can do some projections as to 
how far down realistically we expect to go in that priority 
scheme, and where we will need to set the level to live within 
the budget that we have.
    Mr. Lewis. The follow up is somewhat obvious. Would you 
stop establishing new CBOCs if at sometime in the future you 
believed demand for services would exceed the supply of 
available resources?
    Dr. Kizer. If it is apparent that those CBOCs would 
increase the demand that would not be offset by ability to 
provide care in a cheaper manner. In other words one of the 
strategies for using the CBOCs is to take care of existing 
patients, not only in a more accessible way, but in a more cost 
effective way.
    So I cannot say that we would just stop it, because some of 
those may allow us to do more with the dollars that we have, 
depending on the specific reasons why it was being established, 
and where it was being established. So, indeed, it could be 
that establishing another CBOC to take care of only existing 
patients--no new patients; you could put caveats on it--would 
allow us then to do more with the money that we have.
    Mr. Lewis. But if the demand would happen to exceed the 
funds available, would you cease services?
    Dr. Kizer. We would have to look at that situation. That is 
why I have insisted that we hold a $100 million reserve, and 
why we have the networks hold a reserve, as well. So that if as 
we get to mid-year and we have a fairly good idea of what the 
numbers are going to be at the end of the year, we will know 
whether we can use those reserves of not.
    Mr. Lewis. Thank you. Mr. Stokes.

              spinal cord injury center at cleveland vamc

    Mr. Stokes. Thank you, Mr. Chairman.
    Mr. Secretary, the Spinal Cord Injury Unit of the Cleveland 
VA Medical Center serves as the hub for five States--
Pennsylvania, Kentucky, Indiana, Michigan and Ohio. However, as 
an SCI center, it draws from all over the Nation, and sometimes 
from abroad.
    There appear to be several problems with the SCI unit 
there. Among these is a severe shortage of doctors. The 
Operations Manual, that is the VA Manual for Spinal Cord 
Patients, indicates that the ratio is to be 1 to 10 for 
inpatient care. I understand it is presently 1 to 42.
    I also understand the current waiting list for non-
emergency visits, like annual check ups, is two years. The 
manual also indicates that no new patients may be accepted 
without a spinal cord chief. The unit has three MDs in 
residence. The chief was transferred in December to become 
chief of orthopedics, and the vacancy has not yet been filled.
    Although technically the hospital does have a chief in 
residence, I understand that he neither does site visits nor 
apparently supervises the SCI unit.
    I suppose the question that I want to pose to you is how 
common is this shortage of medical personnel throughout the VA 
health system?
    Mr. Gober. If I may, sir, I would like Dr. Kizer to answer 
that.
    Mr. Stokes. Dr. Kizer.
    Dr. Kizer. Two things I would say is that, one, I need to 
check on some of your numbers. Those do not jive with my 
understanding of the situation there, and I am not going to 
dispute them. Because what I would like to do is go back and 
find out from the facility whether that is, indeed, the case, 
but that is not my understanding.
    The other point is that SCI medicine, as you know, is not a 
specialty, per se. It is not recognized. We are actually trying 
to get that recognized as a specialty. So there is a shortage 
everywhere in the country of physicians who are trained in 
spinal cord injury medicine.
    There are a number of different types of specialists, 
urologists, orthopedists, neurologists, neuro-surgeons, who 
have an interest and training and some expertise in this area. 
But because it is such a small area, there is always a shortage 
of physicians who are trained and knowledgeable in this area.
    Some of the difficulties that we have are the same 
difficulties that are shared in the private sector as far as 
getting physicians with the special expertise that is needed.
    One thing that might be of interest in this regard is that 
we have just finished, and are in the process of distributing a 
continuing medical education program to all of our physicians 
in the VA on spinal cord injury and the particular medical 
concerns and special considerations for spinal cord injury 
patients.
    This is unique in the country. It is something that we are 
going to ask all of our physicians and other clinicians to take 
and become more knowledgeable in.
    Mr. Stokes. Okay. I would appreciate it if you would check 
it out for yourself and then provide me a response in the 
record.
    Dr. Kizer. Certainly.
    [The information follows:]

     Spinal Cord Injury Center at Cleveland VAMC Staffing Shortage

    The Spinal Cord Injury and Dysfunction (SCI/D) program 
office and the Chief of Staff at Cleveland are concerned and 
dealing with the Spinal Cord Injury (SCI) physician shortages. 
There has been a turnover of personnel due to the stepping down 
of the Service Chief and the retirement of the assistant chief. 
The SCI physician providing services had an unexpected medical 
leave in early March but is now back at work. Two Board-
eligible internists and a geriatrics fellow provide additional 
staffing. Additional specialized services are provided by an 
orthopedist, urologist and physiatrist, all experienced their 
respective Spinal Cord injury specialty areas. The SCI Chief 
from San Antonio was detailed to Cleveland to provide interim 
care and to further assess coverage capabilities. His opinion 
is that there is sufficient staffing to safely manage patient 
care. There is no curtailment in admissions to the unit.
    The average daily census for Cleveland's SCI program was 33 
patients during FY 1997; it is 36 patients thus far this fiscal 
year. The Department of Veterans Affairs Special task Force on 
SCI Programs in 1993 recommended physician staffing of one 
physician per 10 initial rehab patients; 1 physician per 15 
sustaining care patients; and 1 physician per 40 long term care 
patients. Although not incorporated in policy, these numbers do 
serve as a guideline when reviewing SCI Center staffing levels. 
Recruitment is underway for a Service Chief and a full-time 
physician.
    The question was raised of the shortage of medical 
personnel throughout the VA health care system, presumably 
related to spinal cord injury. Recruitment is underway to fill 
several service chief vacancies and finding the best leaders 
for these key positions has been a challenge. At this point in 
time, overall SCI physician staffing is adequate. The VA has 
recognized and supported the training of SCI physicians through 
the SCI fellowship program. Fifty-two individuals have 
completed such training.

                       gulf war illness syndrome

    Mr. Stokes. Mr. Secretary, please bring the Committee up to 
date on any new developments related to the Gulf War illness 
syndrome, and also address the recent report issued by three 
advocacy groups that raises the question about the possibility 
that some of the illnesses could have been caused by exposure 
to depleted uranium weapons.
    Has the VA performed any research on the linkage to 
depleted uranium exposure, and potential ill effects?
    Dr. Kizer. The answer is yes. At the Baltimore VA we have a 
physician who is overseeing this program. I have read the 
newspaper accounts of the report that you cite. I do not think 
that we are in a position at this point to comment. We have not 
been able to assess it. The report was only released a week or 
two ago, something like that.
    Obviously we are very interested in their thesis, and what 
they say and what it is based upon. We will look at it very 
carefully.

                      parkinson's disease research

    Mr. Stokes. Last year's medical research appropriation of 
$272 million included a Congressional increase of $10 million 
for research on Parkinson's disease. What is the status of that 
effort?
    Dr. Kizer. I am going to ask, if it is agreeable with the 
Chairman, for Dr. Feussner to comment on that. As you know, we 
have a considerable interest in doing it. It has become a bit 
complicated, and unfortunately does not have a real short 
answer, if that is okay.
    Mr. Stokes. Sure.
    Mr. Lewis. You have 30 seconds. [Laughter.]
    Mr. Stokes. And the Chairman is being lenient. [Laughter.]
    Dr. Feussner. I tried to answer that question briefly once, 
and did not succeed. What I thought I would do is break the 
answer down into three discrete parts. The first is what we are 
actually funding. The second is what we have initiated since 
the meeting that the Chairman scheduled with Congressman McDade 
and Skeen last June.
    And then the third part is what is on the table today.
    Now, the first part is what we are actually funding. Our 
current funding is about the same as it was last year, at 
roughly $1.2 million. What is not included in that is two 
projects that we funded recently.
    One is an epidemiological research proposal that came 
through our normal merit review process, and was approved for 
funding last week. This is a project in Texas that focuses on 
looking at minority issues in Parkinson's disease. Specifically 
the differences between white, African-Americans and Hispanic-
Americans.
    That's a $609,000 project.
    The award for that will go out either this week or next 
week.
    The second proposal that came through the normal research 
pathway is one of the Presidential Early Career Awards. This is 
a scientist in the Bronx. We had two Presidential Awards in VA. 
His research relates to energy metabolism. It leads to neuronal 
cell death, and he is a neurologist with an interest in 
Parkinson's. That is about a $500,000 project.
    Now, clearly these numbers do not add up to the mark that 
the Committee set for us last year, and we did not think that 
we could get to that mark with our usual grant practices. The 
size of each one of our grants is about $150,000. We would 
essentially need to have coming into our office ten new 
proposals a week for an entire year.
    So what we did is take a much more direct approach. I 
believe the meeting that the Chairman had set up was June 12th, 
and essentially within two weeks of that meeting we started on 
the following pathway.
    I met with the American College of Surgeons, June 26th, I 
believe. Doctors Hoffman and Booz, who were at the meeting, met 
with the American Academy of Neurology. We have met with the 
National Institutes of Health, the genetics branch. We have met 
with one of the--and continue to meet with one of the 
investigators who was at the meeting that Mr. Lewis convened, 
specifically Dr. Fahn.
    And then we have been in contact with the pharmaceutical 
industry about neuro-protective agents.
    Now, what has come from all of that? What has come from all 
of that is two new research efforts, and this gets fairly 
technical, but I am going to explain it as best I can.
    One research effort is a collaboration between the 
Department and the American College of Surgeons. This is a 
project that is a new treatment trial. It looks at a surgical 
procedure called pallidotomy. It is a destructive surgical 
procedure. That is, it destroys the part of the brain that is 
causing the Parkinson's symptoms that are refractory to medical 
management.
    And it will compare the surgical treatment to a new, FDA-
approved deep brain stimulator, that is a non-destructive 
surgical procedure to see if we can help patients with 
refractory Parkinson's disease.
    Now, this project is in the planning phase. There are two 
principal investigators. There is a neuro-surgeon from the Iowa 
City VA, an investigator from Chicago, and the coordinating 
center for this trial is also out of Hines in Chicago.
    We expect this to involve 15 VA hospitals, approximately 
200 patients, and take us three years. The mark for this trial, 
very conservative mark in my opinion, is about $4.5 million.
    Mr. Lewis. If I could interrupt.
    Mr. Stokes. Mr. Chairman, I yield to you.
    Mr. Lewis. I am not sure if you and I discussed this at the 
time, but you recall we had a day long session with a cross 
section of experts across the country in this subject area 
because of interest that has developed on our committee.
    Mr. Stokes. Right.
    Mr. Lewis. Dr. Feussner participated in that, and I must 
say enthusiastically participated. The interesting piece to me, 
among other things, was that we had all these fabulous people, 
and several of them walked away, scratching their heads, 
saying, gosh, we have never talked to each other before.
    And it really is rather phenomenal what happens when you 
bring brain power together. And some of what we are hearing 
here is a reflection of that. So excuse me.
    Mr. Stokes. Well, I appreciate your leadership in this 
area, Mr. Chairman.
    Dr. Feussner. So that, sir, is a treatment trial. As best I 
can tell, a treatment trial of this scope and this complexity 
has never been undertaken in the United States. We are 
proposing to undertake it.
    The other major study is not a treatment trial. It is a 
diagnostic study, and we expect the mark on that, the 
conservative mark on this is about $3.5 million. That is a 
study that is being planned out of the West Haven VA Medical 
Center, in affiliation with Yale, and involves the positron 
emission tomography scanning.
    That is currently proposed as a five year study. As I say, 
the conservative mark on that is $3.5 million, but the cost of 
the scans alone in this study will be at least $3 million.
    So we have a major treatment trial. If we are able to 
implement this treatment trial, it will set the standard of 
care for the treatment of patients with refractory Parkinson's 
disease in the United States, and will be the first time this 
FDA approved device has actually been formally tested in a 
clinical trial like this.
    The spect scanning study out of West Haven is somewhat more 
complicated. It can only be done in two places in the United 
States, that is, our facility at West Haven, and the facility 
in Bethesda, at the National Institutes of Health. So this also 
involves about 240 patients, and in that case all of the 
patients are going to have to come, have to be flown to West 
Haven at least twice.
    The first study looks at refractory Parkinson's disease. 
The second study looks at early Parkinson's disease, and the 
research technique actually may allow us to observe the 
abnormalities as they develop in the brain. Some of the 
chemicals that will be labeled are the chemicals that are 
absent or not being used properly in Parkinson's disease.
    So there are substantial studies. The preliminary estimates 
coming in for their cost is about $8 million. I think that is a 
very low estimate. We have not made the mark for funding this 
year that the committee recommended, but I think the amount of 
action that has ensued after the June meeting has been 
remarkable.
    Mr. Stokes. You do not think, however, you will make the 
$10 million mark. Is that what you are saying?
    Dr. Feussner. I do not believe I will be able to make the 
$10 million mark this year. But I think with these activities 
we will probably exceed that mark.
    But again, the difficulty with these large trials is that 
they are multi-year studies. For example, in the case of the 
first study, even engaging 15 hospitals simultaneously, they 
estimate it still is going to take three years from beginning 
to end to identify whether the treatments are effective and how 
effective.
    Mr. Stokes. Obviously it is a very ambitious undertaking, 
and very promising from what you are relating to us. I 
appreciate very much your testimony.
    Thank you, Mr. Chairman.
    Mr. Lewis. Thank you. Mrs. Meek.
    Mrs. Meek. Thank you, Mr. Chairman.
    Good morning.
    Mr. Gober. Good morning.

                spinal cord injury center at tampa vamc

    Mrs. Meek. I would like to follow up on some of the 
questions that I asked yesterday regarding the Spinal Cord 
Injury Center at the Medical Center in Tampa.
    Yesterday the VA testified that it agrees that the facility 
is needed, and one of you said it will probably be a first 
priority in the year 2000 budget, but that the plans had to be 
further viewed because there is a need for ambulatory care, and 
to assure the best use for the taxpayers' money.
    That was not very specific. I was not able to grasp an 
answer from that. I would like a little more specificity in how 
you think you will go forward on this. This issue has been 
really bouncing around VA for ten years.
    And I just thought, suppose that it is delayed long enough, 
and the time and needs change, and what you may have thought 
back then is not what is needed now, I am just wondering 
whether or not I am in trouble with this particular project at 
this medical center.
    First, I would like to know the context of the number one 
rating priority. What does that mean? Is this number one in our 
VISN 8? Or number one in the VA system-wide?
    Dr. Kizer. It is certainly the top or number one priority 
for VISN 8. At this point it is certainly right up there at the 
top, if not the top priority for VA.
    The other thing--I would just digress for a moment--when I 
commented yesterday about the issue of ambulatory care, that 
may or may not be in here. That is one of the issues that they 
are looking at. They are also looking at the sizing of the 
unit, and whether the original plan for 100 beds is, indeed, 
the right number. So there is more than just the one issue as 
far as the specific plans for the project. But it is certainly 
a high priority for the Department.
    Mrs. Meek. Second, just a little bit more clarification. 
Can we finally expect to see that replacement of the Spinal 
Cord Injury Center at Tampa in your fiscal year 2000 budget, in 
that it is not in this budget?
    Dr. Kizer. As I said, it is a very high priority for the 
Department. I do not know that I can project what will be in 
the President's budget, but certainly we will advocate very 
strongly for it.
    Mrs. Meek. So that means it will be in the budget that you 
give to OMB for the year 2000?
    Dr. Kizer. As we sit here right now, we expect it will be, 
yes.
    Mrs. Meek. You have not been very specific, Doctor.
    Dr. Kizer. Are any doctors?
    Mrs. Meek. I hope you are more precise in your medical 
practice.
    Mr. Gober. If I may, Congresswoman, it is very difficult, 
because there are a lot of projects that will come in. And this 
is a very high priority, but we do not know what will happen 
between now and the time we get our final budget.
    But as we sit here, and I think this is what Dr. Kizer is 
saying, as we sit here we are telling you it is a very high 
priority, and would most likely be in our budget for the year 
2000.
    Mrs. Meek. All right. I could not tie them down, Mr. 
Chairman. But I will keep going.

                medical and prosthetic research funding

    I understand that your fiscal year 1998 budget for research 
and development was $272 million. Can you tell me what your 
proposed figure may be for fiscal year 1999?
    Dr. Kizer. $300 million is what is in the proposed budget. 
A $28 million increase.

                    research and development effort

    Mrs. Meek. Thank you. One of the methodologies proposed by 
this subcommittee, particularly in the housing part of it, and 
space utilization, is the use of Federal funds in one agency to 
leverage funds in other agencies, or levels of government and 
non-profit organizations and private sources.
    Can you tell us if the VA is using this approach for its 
research and development efforts?
    Dr. Kizer. There are a number of activities that we are 
doing. I may ask Dr. Feussner to come forward again, but we are 
working with the National Institute of Drug Abuse, the Agency 
for Health Care Policy and Research, the Federal Bureau of 
Prisons, and a whole bunch of other agencies doing either work 
for them on a contractual basis, or in joint investigative 
projects with them.
    Would you like Dr. Feussner to comment further?
    Mrs. Meek. Yes, thank you.
    Dr. Feussner. Yes, ma'am. We have been very successful with 
several of the Institutes at the NIH. We have met with almost 
all of them over the past year. We do not think we should 
confine our partnering to the borders of our country.
    And one of the studies that Congressman Price asked about 
yesterday is our SMART trial. That is a three way partnership 
between the Department of Veterans Affairs, contributing about 
$10 million, the private sector contributing hopefully 
somewhere between $12-15 million, and the Canadian Medical 
Research Council contributing $3 million.
    So that the answer to the question is, with multiple 
institutes within NIH, with the Department of Defense, with the 
AHCPR, the Agency for Health Care Policy and Research, with 
private foundations like Juvenile Diabetes Foundation, we are 
finding common ground wherever we can find common ground with 
these other research entities and capitalizing on our mutual 
research interests.
    Mrs. Meek. Thank you. And you think that makes your 
research and development program stronger?
    Dr. Feussner. Yes, ma'am.
    Mrs. Meek. Thank you.
    Mr. Lewis. Will the Gentle Lady yield on that point?
    Mrs. Meek. Yes.
    Mr. Lewis. I might mention, perhaps Dr. Feussner may or may 
not be aware of this, but one area where the VA is doing very 
significant work is calcium retention and bone strength. NASA 
is beginning a proposed experiment in connection with the VA's 
work there.
    Currently they are talking about a flight where one of our 
colleagues may go up, and indeed we may be looking at bone 
retention questions there. That sort of collaboration, indeed, 
can extend research.
    Mrs. Meek. That is fine.
    Mr. Lewis. I just thought I would mention that.
    Mrs. Meek. Thank you. I am very concerned about the area of 
research and development. And I do hope it is not integrated 
with other functions in such a way that it does not really 
exist. That was one of my concerns. I am hoping that the VA is 
taking advantage of the leveraging with other agencies, but 
being sure that your concepts or your desires are met through 
that research.
    Dr. Kizer. Mrs. Meek, if I could just follow up on that. 
One of the strategies that we have been pursuing for the last 
three years, because I think it is an unrealized potential, is 
that the Government has this health care system, the largest 
health care system in the country, and it provides an 
incredible laboratory to address all kinds of questions in 
health services delivery, as well as basic science questions 
and clinical questions.
    And we have been pushing with other Government agencies, as 
well as outside of the Government, that this is a laboratory 
that should be used, and the Government should view it as 
something where it can investigate problems that may not have 
some of the complicating factors that outside you would see 
outside.
    For example, it does not have some of the financial 
incentives that can create perverse behavior at times. And 
there are a number of other things that really provide a unique 
opportunity to look at problems.

                    readjustment counseling services

    Mrs. Meek. Thank you. Some of my veterans groups, Mr. 
Secretary, have contacted me in support of Readjustment 
Counseling Services. Can you explain to us what the VA does in 
this program?
    Dr. Kizer. The Readjustment Counseling Service provides 
basically counseling for veterans. We have 206 of these 
counseling centers across the country. It is done in a 
typically or historically a non-medical mode, which has been a 
positive, or is viewed by the clients as a positive way. And 
basically it has been a very successful program.
    One of the things that we are exploring more and is 
seemingly meeting with a good response, is providing more 
primary care services at those facilities. And late last year, 
we funded for 20 of the Vet Centers to expand, or have 
available on site primary care resources in addition to the 
counseling services that are provided.
    Mrs. Meek. Thank you. What kinds of veterans are targeted 
for these services at the readjustment centers?
    Dr. Kizer. Well, the genesis of the program was with the 
Vietnam era veterans, and they are probably the largest users, 
but over the years the user population has increased, and 
certainly includes more recent veterans, Gulf era veterans, and 
others since Vietnam, as well as Korean War veterans and even 
World War II veterans.
    Mrs. Meek. Thank you, Mr. Chairman.
    Mr. Lewis. Thank you, Mrs. Meek. Mr. Neumann.

                          atomic test exposure

    Mr. Neumann. Thank you, Mr. Chairman. I would like to bring 
up a very specific issue and it was brought to me by a 
constituent, and if you are not familiar with it, I would 
certainly understand and then just request the information on 
it.
    Apparently in February of 1947, the U.S.S. Brush was moored 
in the Marshall Islands, and apparently there were 44 ships 
moored within 150 yards. Are you familiar with thissituation?
    Dr. Kizer. That was before I was born. [Laughter.]
    Mr. Neumann. Me, too, I might add. The 44 ships had 
apparently been the targets of a Bikini atomic bomb test, and 
therefore contained radioactive substances. The members on the 
U.S.S. Brush--there were 340 of them, of which 30 are still 
alive today, apparently were moored within 150 yards of these 
ships.
    There has recently been information released in documents 
that verifies their claim to this situation. Apparently the men 
from the U.S.S. Brush were allowed to go aboard some of these 
other ships that had been used as targets, and they are now 
claiming that there is radioactive repercussions from what they 
did at that point in time.
    I will give you a name or two of the folks we are working 
with. Two of the 30 currently have cancer related injuries. One 
is Harold Kolb of California. The other is Quinton Miller of 
Mississippi. Ted Ovorak of Kenosha, Wisconsin, is the 
constituent who brought this to my attention, and I certainly 
respect the fact that you would not be up to speed on an issue 
like this being brought to you.
    But I would request that you get back to me with 
information. First, can we verify that this actually took 
place? Second, can we verify the men that were on the ships? 
Third, have there been any studies done to indicate to us what 
the condition is of these 340 men who were in this situation, 
assuming they were in the situation?
    I would like you to take a look at it for us, and get back 
to me with information on what the status is.
    Dr. Kizer. We will be happy to do that. Just in the way of 
interest, I have been to the Marshall Islands and been to 
Bikini, and know the area. We will be happy to look into it. I 
do not know the specific situation, and if it would be possible 
for us to get a copy of the document that you are reading from 
so we could have that information, that would facilitate our 
response.
    Mr. Neumann. Apparently the Department of Energy's 
Coordination and Information Center in Las Vegas, Nevada just 
declassified some papers that assisted these people who have 
been claiming this for quite some time, in verifying their 
claim.
    And at this point what they have been trying to do is get 
the Veterans Affairs Department to take a look at their claim, 
and apparently they have been struggling with that particular 
aspect of it.
    So I would sure appreciate your taking a look into it. If 
we cannot get there, I would ask the Chairman to include some 
language in this year's appropriations bill directing it. But I 
would just as soon we do it ahead of time, if we possibly can.
    Dr. Kizer. We will facilitate that response.
    Mr. Neumann. Thank you.
    [The information follows:]

       Atomic Test Exposure in the Marshall Islands During WW II

    Operation Crossroads, the first post-World War II 
atmospheric nuclear weapons test series, was conducted In 
Bikini Lagoon in 1946. During Shot Baker, a number of target 
ships were contaminated with radioactivity following an 
underwater detonation in Bikini Lagoon. The USS Brush did not 
participate during the actual test but later was anchored near 
target ships taken to Kwajalein for less than 48 hours between 
February 25-27, 1947.
    The Defense Special Weapons Agency (DSWA) has confirmed 
that the three veterans cited during the hearing (one of whose 
name was misspelled) were on the Brush during the period when 
the ship was anchored in Kwajalein. There is no documentation 
to confirm that the men went aboard the target ships. The DSWA 
has estimated a worse-case scenario dose for one of these 
veterans of 0.010 rem. The other two veterans did not provide 
specific information regarding their boarding of target ships.
    In 1996, the Medical Follow-up Agency (MFUA) of the 
Institute of Medicine, National Academy of Sciences, published 
a report on the mortality of veterans who participated in the 
Crossroads Nuclear Test. The MFUA included a cohort of Brush 
crew members in the ``control'' group to compare to actual 
Crossroads participants. As of January, 1993 the mortality data 
for the 196 crew members of the Brush included in the study 
were similar to that of other control ships and did not show 
any unexpectedly large numbers of leukemia or cancer.

                  smoking related legislative proposal

    Mr. Neumann. I have just a couple of other issues. Can you 
briefly, from your perspective, explain to me exactly what the 
President's proposal is in terms of taking away smoking related 
benefits from veterans and your position on that?
    Mr. Gober. I will take a crack at that. There are several 
issues, and the first issue has to do with the fact that the 
way it works now, a veteran can file a claim, and we have had 
over 6,000 claims filed, based on the VA General Counsel's 
opinion that a claim can be filed for tobacco related injuries 
or addiction that occurred in service.
    We proposed legislation that would remove the right of 
those veterans to file for those claims. Under the legislation, 
if a veteran develops a tobacco related illness while on active 
duty, or in a presumptive period, a year or so afterwards, then 
they would be cared for.
    But for at veterans that smoked when they were in the 
military for two years, or less, 50 years ago, to come forward 
now and to file a claim, we do not honestly feel it is the 
Government's responsibility to provide benefits for those 
people.
    We provide medical care. I have been told that almost a 
third of our budget for medical care goes for treating people 
with tobacco related illnesses.
    Mr. Neumann. So under this proposal, the medical care would 
still be provided for the veterans.
    Mr. Gober. That is correct.
    Mr. Neumann. So would you describe exactly what the 
President is proposing to take away from the veterans?
    Mr. Gober. We would not pay benefits or compensation to a 
veteran that came in and filed a claim and says he started 
smoking when he was on active duty ten years, twenty years, or 
thirty years ago and says he became addicted in the military.
    I, myself, served in the military altogether about 23 
years, and the argument has always been that, well, they gave 
us C-rations that had cigarettes in them. Sure they did, and I 
gave mine away.
    And the other concern that we have, a very basic concern 
that I have, and we have, is the fact that----
    Mr. Lewis. You want the record to show that you gave yours 
away.
    Mr. Gober. Yes, sir. I gave mine away. And every once in a 
while I would smoke one. But obviously I did not become 
addicted, and I do not criticize those people that did.
    But the other basic concern I have is that VA has an 
obligation to care for the men and women who served this 
country. If something happened to them while serving on active 
duty, I think American taxpayers would expect us to care for 
those heroes that served this country.
    I do not think that the average taxpayer would want us to 
spend billions of dollars compensating people for smoking.

                      smoking-related disabilities

    Mr. Neumann. Again, forgive my ignorance in this area, but 
would you just walk me through exactly what benefits you are 
talking about? Are you talking about disability benefits, then?
    Mr. Gober. Absolutely. We probably have some cases like 
this, where we are paying 100 percent compensation for a 
disability that could be attributed to tobacco related illness.
    Mr. Neumann. And that would translate into a monthly 
payment of some sort?
    Mr. Gober. For a single veteran it would be roughly $1,900 
a month for the rest of their lives. It could also involve 
paying entitlements to widows of veterans who passed away who 
were service connected for tobacco related illness.
    Mr. Neumann. And that would be tax free.
    Mr. Gober. That is correct. And our basic concern is that 
we not bankrupt the system. I want the veterans, and VA to 
survive for years and years to come and to take care of those 
men and women that we have to take care of. But I think to lay 
something like that on the Government is not right, I must also 
tell you this, that there is a lot of disagreement on this 
issue from the veterans service organizations.
    Mr. Neumann. So if a veteran walks in and they are 65 or 68 
years old and they say I was addicted to smoking back then and 
I now have cancer because of that, you would provide the health 
care for that veteran?
    Mr. Gober. The health care is provided.
    Mr. Neumann. But what this debate is about----
    Mr. Gober. I'm sorry?
    Mr. Neumann. Go ahead.
    Mr. Gober. If they are being provided health care now it 
would be provided for them. And we are doing that.
    Mr. Neumann. Are there situations where they are not being 
provided health care now that they would then be denied health 
care?
    Mr. Gober. That is a possibility, because under the 
enrollment system, we do not know how many veterans are going 
to come seeking care, but a veteran, yes, could conceivably 
come in and say I want to get in the system, and we may not be 
able to treat him.
    Mr. Neumann. So it is possible that a World War II veteran 
develops cancer, has been smoking all these years, started in 
the service or what have you, from C-rations, it is possible 
that this veteran develops cancer and comes in now--he is 69, 
70 years old--and we would not provide that senior with health 
care benefits.
    Mr. Gober. If the veteran falls into a category, for 
example, what used to be called Category A, and is classified 
as a service connected veteran for another reason, and is being 
treated by us now, or is a veteran with an income so low that 
it falls into Category A where he does not have the funds to 
pay for his own medical care we will treat him. We established 
an income threshold which is somewhere around $21,000 a year. A 
veteran below that falls into a category where we would be able 
to treat him or her.
    Mr. Neumann. I want to make sure for my understanding, it 
seems to me that there might be two different issues that 
should be debated here as we look at this presidential 
proposal. One might be the providing of health care to this 
veteran. The second issue is those monthly cash benefits that 
we are talking about, and that might be two different issues.
    Mr. Gober. There are two issues.
    And if the veteran is a Category A veteran, like I said, he 
does not make over $21,000 a year, the veteran could be treated 
for these smoking related illnesses in our hospital.
    If the veteran is a Category C veteran, which is above 
$21,000, they still might be treated if they had third party 
insurance, or if we had room in our facility. Because that is 
one of those categories that falls down to Priority Group 6 and 
7. So if we can treat all the way down to Priority Group 7 in a 
specific area, they might be able to be treated.
    I realize this is a little bit confusing. But the bottom 
line is if the veteran is being treated now in our VA 
hospitals, or is a Category A veteran, or falls into one of the 
other categories--ex-POW for example--they can be treated 
currently.
    But if they were in a category that, like I say, Category 
C, which has above $21,000 a year income, they could not be 
treated in our hospital.
    Mr. Neumann. Is there some way that you could break out 
with the President's numbers and what he is proposing to save 
here, would you break out for me the difference between the 
health care costs provisions versus the cash payment provision?
    Mr. Gober. The health care provision is not in the $17 
billion. That is strictly for compensation.
    Mr. Neumann. That is all cash payments.
    Mr. Gober. Yes, sir.
    Mr. Neumann. When was this provision providing this benefit 
to veterans first included in our appropriations process?
    Mr. Gober. There was a General Counsel decision in 1993 
that said we had to pay these veterans. And it was the former 
secretary that did not want to do that. And another General 
Counsel opinion in 1997 reaffirmed that we should do it, so we 
started processing claims in 1997.
    And thus far I think we have had 6,000 claims filed, and of 
those 6,000 claims, I think 214 of them have been allowed. And 
2,000 or so have been denied, which means that they will 
probably be coming back to us on appeal. They will have to 
develop more information before it comes back to us on appeal.
    Mr. Neumann. Perhaps we should consider ways to make sure 
that the health care itself is provided, and we separate that 
discussion somehow in our discussions from the cash portion of 
this discussion or the cash benefits.

                       gulf war illness syndrome

    The only other issue that I wanted to raise, and again I do 
not want to get into it a whole lot, is on Gulf War syndrome. 
And I understand this was discussed yesterday. I just would add 
my concern on the Gulf War syndrome issue, and especially the 
issue of potentially uranium, as I understand it, and the 
exposure to it.
    And we are very concerned about the issue.
    Thank you, Mr. Chairman.
    Mr. Lewis. Thank you, Mr. Neumann.
    Mr. Hobson.

                     medical care collections fund

    Mr. Hobson. Thank you, Mr. Chairman.
    I have just three questions that I will ask for therecord, 
sir. One of these has been, I think, discussed a little bit, but I want 
to go back to it a little bit. I have to go down to the AMVETS this 
Saturday and discuss some things with them. They announced a meeting 
without telling me, so I have to show up. It is a State-wide meeting. I 
am a life member of that particular place.
    I have a VA Medical Center in my District, in Chillicothe, 
and I understand that overall in the medical centers, and VISN 
10, which includes my District, have been unable to recover as 
much as anticipated in 1997 due to unexpected complications. 
This is from the third party payers.
    And I want to know what the VA is doing to improve the 
collection from the insurance companies. Does the VA need to 
become more aggressive about collecting, or perhaps more 
precise in detecting veterans who have private insurance? I 
mean, this is something that everybody has wanted to do.
    Mr. Lewis. You are off your normal line of questions.
    Mr. Hobson. I know. I am not going to do those today.
    Mr. Lewis. We asked those kinds of questions yesterday.
    Mr. Hobson. I know. Well, they were partially asked. I want 
to go back over it, because I have to go down there Saturday, 
and I want to be able to say I asked you about this.
    Dr. Kizer. If it would facilitate the time management here, 
the answer is yes. We need to, and we are becoming more 
aggressive, and we are doing a number of things as far as 
better identification of insurance, better claims processing, 
better utilization of management.
    And if it would be helpful for you, and recognizing your 
time line here, we can provide you with a listing of about ten 
different areas, and a number of things within each of those 
areas that we are specifically doing in this regard, and I will 
try to have that to you by the end of the day.
    [The information follows:]


[Pages 200 - 201--The official Committee record contains additional material here.]



                               nurse pay

    Mr. Hobson. The second question, when I was in the 
legislature I did a lot with nurses, and nurse practices. And I 
am concerned about recent reports that VA hospital nurses are 
underpaid.
    And anybody who has ever been in a hospital knows, if you 
have been a patient, you become a real fan of nurses fast. And 
VA nurses in certain areas of the country are falling behind 
their GS equivalent staff, and have been behind the nurses in 
their communities.
    Since 1991, VA nurses have been under a salary system 
separate from other VA employees. The reason for the separate 
system was to give hospital directors more authority to set 
nurse's pay so it was compatible to those of non-VA nurses in 
the same community.
    Question: Do you think the Nurse Pay Act of 1990 is being 
applied correctly? Secondly, is the law appropriate to enhance 
recruitment and retention? What are the pros and cons of this 
pay system since it was enacted, and does the VA plan to create 
a new pay system for nurses or modify the current system?
    Dr. Kizer. Let me answer you in three ways, which I think 
address your questions. One is that we have concerns, as you 
do, about the current pay system, and its ability to recruit 
and retain individuals. Because of that, we did an internal 
study that was recently provided to a number of members of 
Congress who have been interested in this. I do not 
specifically recall whether you got it, but I would be happy to 
provide that to you as well.
    Based on that study, two things emanated from it. One was 
we are relooking right now internally to insure that our 
facilities and networks are using all of the flexibility that 
they have within the existing law to make sure that the pay is 
not an issue in retention and recruitment of nursing.
    Secondly, we are hiring an outside entity, consultant group 
to look at the databases, as far as the comparability of pay. 
There are a host of questions that arose as far as what the 
data is that the pay is being compared to. We are going to hire 
a consultant to go out and acquire the data so we can then come 
back and decide whether the law does need to be changed, 
whether we need to do something else.
    So I cannot answer part of your question, because it 
ispremature. We need to get the results of that survey, and we also 
need to finish the assessment of our own internal use before I could 
answer that.

                  per diem pay in state veteran homes

    Mr. Hobson. I think it is important for all of us, and 
certainly important to your clients.
    I have a somewhat parochial question which I guess all of 
us always do. We are trying to establish another veterans home 
in Ohio, in the southern part of the State.
    But one of the things that seems to be a problem is this 
percentage per diem that is being paid, which is 33.5 is the 
national average, cost of providing long term care, with the 
State and the resident also contributing 33.5 each of the cost.
    According to the VA Office of Geriatrics and Extended Care 
in 1997 the VA per diem payment was 29 percent of the national 
daily average cost. I note that the VA will increase payments 
to the State veterans homes in 1999. With this increase, will 
the VA reach the 33.5 percent goal?
    Mr. Gober. Mr. Hobson, if I could address that. Before I 
came to Washington, I ran a veterans home in the State of 
Arkansas. I was one of the people that always thought the 
Government got a good deal from the States because they pay 
such a small amount to keep them there, even though we pay a 65 
percent grant towards building the home.
    Because of this belief I have been pushing to get increased 
per diem funding. We have made a commitment to the National 
Association of State Veterans Homes that we are going to get to 
the 33 and a third. It may take us three years, but this year 
is the first increase towards that.
    We now are at 30 percent with the budget just passed by 
Congress as it is currently submitted.
    Mr. Hobson. Thank you very much. The other thing I would 
like to say, and I do not want to hurt this person by saying 
this, but you have a very wonderful, professional person in 
Laura Miller, running VISN 10 right now.
    She is probably the best professional. I used to be the 
Chairman of Health in the State of Ohio, and was on that 
committee for eight years, and I have been on a hospital board. 
But she is a true professional, and is willing to stand up, 
take a position, and get it done.
    And it is so pleasant or wonderful to find people like that 
within the system. And I hope you encourage other Laura Millers 
around the country.
    Mr. Gober. I assure you that will not hurt her career, and 
we appreciate those comments.
    Mr. Hobson. Thank you, Mr. Chairman.
    Mr. Lewis. Thank you, Mr. Hobson.

                     retaining research scientists

    Mr. Hobson took me very close to the edges of a question I 
wanted to ask earlier, relative to the pay and the impact that 
pay may have upon retention, continuing services, et cetera.
    In the research area, where we are going to be spending 
more money on research. We are at the $300 million level, yet 
research that goes forwards oftentimes requires people who are 
very unusual, very high quality people, et cetera.
    Do our pay schedules allow us to effectively retain those 
high quality researchers within the system? Do GS levels limit 
our capability, et cetera?
    Dr. Kizer. The researchers are like everybody else in that 
they would like to get paid more. The issue that I think you 
are addressing had to do with the promotion of some of our----
    Mr. Lewis. I was not talking just about doctors.
    Dr. Kizer. Well, we do not get paid enough. [Laughter.]
    But there was an issue that has been resolved about the 
promotion of research scientists through the Grade 14 and 15 
level, and that issue has been addressed and resolved, and we 
are actually, I think, making progress in that area, and 
addressing some of those concerns.

                     overhead costs of collections

    Mr. Lewis. I was going to ask questions relative to the 
overhead costs of collection. You have done this before, and 
you can do that for the record.

                       smoking cessation program

    Mr. Lewis. I have additional questions for the record that 
relate to the whole subject area of smoking cessation. I will 
ask those for the record, as well, if you could focus upon 
them, specifically a program that is taking place in the West, 
that I would like to have your interaction on.

          converting inpatient space to outpatient activities

    Mr. Lewis. Last year's conference report urged VA to 
utilize part of the increased 1998 minor construction 
appropriations for converting inpatient space to outpatient 
activities use.
    The committee is pleased to note that the VA has allocated 
an even greater amount for such activities in 1998. When does 
the VA expect that each hospital will be able to provide at 
least two examining rooms per health care provider. Having only 
one examining room per doctor does not appear to be efficient.
    Dr. Kizer. I cannot give you a specific date on that. The 
point is well taken, and this has been one of my questions, 
wherever I visit places, is how many examining rooms. Because 
one examining room per physician is inefficient, and two or 
more is often a much better use of time. We can try to get back 
to you for the record on that. But that is something that will 
stretch out over several years as individual facilities change, 
and we change the way the care is provided in those facilities.
    [The information follows:]

         Conversion of Inpatient Space to Outpatient Exam Rooms

    Since the early 1990's VHA facilities have been converting 
inpatient spaces to outpatient activity uses, and moving to 
provide multiple exam rooms per health care provider. An 
especially large number of conversions have occurred since Dr. 
Kizer's VISN for Change concept was adopted in 1995. Network 
Directors are emphasizing these conversions and developing 
Network Strategic Plans to accomplish even more in the next 
five years.

    Mr. Lewis. Well, it certainly seems to me that there are 
many locations where just minor reorganization, including using 
different floors, would make all the difference in the world.
    Dr. Kizer. All of our facilities are under that pressure, 
if you will. We are looking at that. I just do not have a date 
that I could realistically tell you that this is when we will 
be there.
    Mr. Gober. We have done a lot of that, Mr. Chairman. We 
have moved administrative space off the first floor, up into 
one of the closed wards or some place else, so that the 
patients----
    Mr. Lewis. Wait a minute. What?
    Mr. Gober. We have moved administrative space.
    Mr. Lewis. Really?
    Mr. Gober. Yes, sir.
    Mr. Lewis. That's outrageous.
    Mr. Gober. I know.
    Mr. Lewis. That is not for the record. Well, it is. That is 
all right.
    Mr. Gober. Well, we have done that in several locations. 
And like Dr. Kizer says, everywhere I go, I ask, how many rooms 
do you have. But the problem comes where we have so many of 
these old facilities.
    Mr. Lewis. Look, I will put this on the record, too. I 
mean, if you think I am being critical, just wander around the 
Rayburn Building and look at many of the Capitol view site 
locations. Most of them are held by staff. Something screwy is 
going on here. [Laughter.]

                         medical care staffing

    Mr. Lewis. Nonetheless, last year you estimated that 
medical care FTE levels would be 189,000 in 1997. The actual 
FTE level was 186,000. What caused the 1997 FTE level for 
medical care to be nearly 3,000 below the estimate of last 
year?
    Dr. Kizer. In a word, what we have tried to do is to manage 
it, our personnel, so that we start the year as close as 
possible to where we think we need to be, recognizing that if 
we start above that, the personnel system is such that you may 
end up having to cut deeper if you are going to make your 
target at the end of the year, because of the way the personnel 
system works, and the requirements attendant to that.
    If Mr. Grams or Mr. Catlett wanted to comment further, they 
may help elucidate that.
    Mr. Catlett. The only other thing I would note is that we 
utilized the buy out provision in 1997, and in 1998 as well. We 
will be under our original 1998 projection, because of the buy 
outs given in the first quarter of FY 1998.
    So we utilized that option one last time.
    Mr. Lewis. It certainly would not appear that such a 
reduction should be the result of a lack of funds for salaries.
    Mr. Catlett. No, sir.
    Mr. Lewis. Could more veterans have received health care 
from VA if staffing levels had been higher?
    Dr. Kizer. I do not think so, no.
    Mr. Lewis. Could you explain that any further? If staffing 
levels are higher, some people would suggest that more people 
could be served, and some others would suggest that the quality 
might even be better.
    Dr. Kizer. Well, what happened then is that if we have 
these targets, then it results in discontinuous care, and it 
results in more chaos. What we have tried to do is to manage 
this in a way that slowly gets down to where we need to be, 
that does not involve big swings one way or the other, which 
end up disrupting care and creating more problems.
    And if we can plan and predict where we are going to be, 
then we can plan care accordingly.
    Mr. Lewis. The people who were discussing this with you in 
some depth yesterday would suggest that if you actually had a 
little more money in the budget and you brought more bodies, in 
the Northeast, they would not have the problems that they have 
with continuity, or quality of care.
    Dr. Kizer. Well, I think the continuity of care there goes 
right to the heart of it, that if you have those bodies doing 
it, and then you have to get to a certain level, at a certain 
point in time you suddenly cut off care, that that is not good. 
It disrupts care.

                           equipment funding

    Mr. Lewis. It has been suggested that what you did with 
that money in the pool was to put it all in equipment instead 
of worrying about more bodies, if, as some suggested, you 
needed more bodies.
    Did you put it all in equipment?
    Mr. Catlett. The funds, I would not say it is all in 
equipment.
    Mr. Lewis. A sizable amount.
    Mr. Catlett. My perspective on this, Mr. Chairman, is that 
we are driving towards 30, 20, 10. Nonetheless, that is not the 
only driver here. Quality is important as well. There are seven 
other measures in his measures of changing the way we provide 
health care.
    But in moving towards a 30 percent efficiency, complemented 
by 20 percent more patients, our personnel costs are 60 percent 
of our costs to provide health care. There is no question in 
achieving these efficiencies over this five year time frame 
that we have set we will have to do it with fewer people.
    And, again, efficiency, as Dr. Kizer said, efficiency does 
not mean it is going to reduce quality.
    Mr. Lewis. I am going to ask the next question, and then we 
will wander off and vote and give you a break here. But we will 
have to come back here probably during the lunch hour.
    But I am asking or suggesting that because I really want 
Mrs. Meek to listen to this question. I know that she might 
want to chew on this while we are voting, and perhaps ask it in 
a different way later.
    It appears that the savings in salaries, because of lower 
FTE level, was used to purchase additional equipment. I have 
suggested that.
    Last year you estimated $567 million for equipment in 1997, 
and ended up actually spending $876 million for equipment in 
1997.
    Why was more than $300 million above what you had estimated 
for equipment spent in 1997? As I suggest, it might very well 
be personnel dollars that were used for equipment instead.
    What type of equipment was bought, and was this a 
centralized decision, or the result of 22 different networks 
making individual decisions?
    Dr. Kizer. If it is agreeable to the Chair, I would like 
Mr. Grams to comment on that.
    Mr. Lewis. Come right ahead, Mr. Grams.
    Mr. Grams. It was the decision by the 22 networks. This was 
not directed from central office. It was adding up the actions 
on the part of all the 22 networks. During the year they made 
decisions to reduce staff and to put those funds into 
equipment.
    Mr. Lewis. Is that described as flexibility?
    Mr. Grams. Yes, sir. At the local level. I would also add 
that this committee a couple of years ago did something that 
gave us a great deal of flexibility. You lifted an age old 
requirement that set an FTE floor on the system. When you 
lifted that, it gave the networks the flexibility to hire at 
the staffing levels that they believe are appropriate. And I 
think in part what you are seeing here is the networks 
gravitating to what they believe is the best staffing level to 
provide health care which also, within a fixed budget, affects 
how much they can have available for equipment.

                              fedSIMS, GSA

    Mr. Lewis. I hear through my staff that part of those funds 
were given to FedSIMS, GSA, which is a computer equipment 
center, as I understand it. Is there any truth to such a rumor, 
and if so, would you explain that?
    Mr. Grams. The money for FedSIMS came out of the reserve 
that Dr. Kizer had referred to that we have this year. We had a 
similar reserve last year. As the fiscal year proceeded, Dr. 
Kizer checked with the network directors frequently, and about 
three quarters of the way through the year when all 22 said we 
are not going to need any of that reserve, he then set into a 
place a plan to spend that in a planned fashion.
    Our CIO had identified numerous needs in the area of 
Information Technology (IT), and it was decided in working with 
the Department that the best investment of those funds was to 
not quickly spend them at the end of the year, but put them in 
the FedSIMS because that gives us greater flexibility in terms 
of how they can be spent in the future.
    Mr. Lewis. As we are defining and redefining flexibility, 
whether it is central flexibility or 22 different locations, it 
makes it pretty difficult for the Committee to effectively 
evaluate the way funds are being spent, how much might be 
needed in these various categories et cetera.
    It is an item that I bring to your attention, because this 
is a very tough year, and we are just learning that maybe we 
are going to have to offset much of that which we do in this 
bill, and problems like this, or circumstances like this just 
put all the more pressure on budgets like this.
    Dr. Kizer. Let me just make one general comment in 
reference to what was said before, to underscore the 
criticality of our information management capabilities. I think 
we have discussed it in this committee, and certainly in other 
committees before, that the success of any health care system 
in the 21st century is going to be largely predicated on their 
ability to manage information.
    This is particularly so in the VA. I think Mrs. Meek 
commented yesterday, as did others on the mobility of our 
patients across the system. And they may spend part of the year 
in New York, part of the year in Florida, or elsewhere.
    We have to have the information management infrastructure 
so we can track those patients, and when the patient shows up 
in the Bronx versus Miami we can punch up on a computer, their 
medical record is.
    And enhancing our information management capability is a 
major strategic goal of the Department. I think you commented 
yesterday about the essentiality of things like the electronic 
medical record, and other things.
    Mr. Lewis. We will be discussing that an awful lot more 
with you, I am sure. In the meantime, I just wanted you to have 
a chance to chew on that while we go and vote.
    We will be in recess. We hope to come back right after 
these votes.
    [Recess.]
    Mr. Lewis. The committee will come to order, very briefly.
    I had forgotten a meeting that is with the Speaker at noon 
that I cannot avoid, and other Members who were here, planning 
to be here, are going to submit questions for the record. So if 
you would pay very careful attention to the questions for the 
record, including my own, we will give you a long lunch.
    Mr. Grams. That's fine, sir.
    Mr. Lewis. With that, this meeting is adjourned.



[Pages 209 - 1506--The official Committee record contains additional material here.]















                           W I T N E S S E S

                              ----------                              
                                                                   Page
Bowen, Jerry.....................................................     1
Catlett, D.M.....................................................   181
Duffy, Dennis....................................................     1
Feussner, J.R....................................................   181
Gober, Hershel...................................................   181
Grams, W.T.......................................................   181
Kizer, K.W.......................................................1, 181
Thompson, Joseph.................................................     1
West, T.D., Jr...................................................     1












                               I N D E X

                              ----------                              

                     Department of Veterans Affairs

                                                                   Page
Witnesses........................................................1, 181
Benefits Programs...............................................21, 294
    Part I: Benefits.............................................   296
    Part II: Veterans Housing Benefit Program Fund...............   379
    Part III: Insurance Appropriation/Funds......................   419
    Tobacco-Relative Legislative Proposal......................134, 195
        Processing Tobacco-Related Claims........................   136
        Smoking-Related Disabilities.............................   196
Construction Programs............................................   621
    Capital Planning.............................................    27
    Cleveland VAMC Ambulatory Care Addition......................   166
    Grants for the Construction of State Extended Care Facilities
                                                                28, 740
        Broward County, FL, Nursing Home in......................
          157, 158...............................................
    Grants for the Construction of State Veteran Cemeteries....28, 153, 
                                                                    745
    Grants to the Republic of the Philippines....................   747
    Major Construction..........................................27, 625
    Major Medical Facility Project and Lease Authorizations......   750
    Minor Construction..........................................28, 720
    Nursing Home Revolving Fund..................................   733
    Parking Revolving Fund......................................28, 732
    Special Analyses, Construction...............................   749
Departmental Administration:
    Affirmative Action Programs:
        Diversity and Affirmative Action Programs................
          169, 173...............................................
        Minority Employment Gains................................   170
        Minority Contractors, Contracts with.....................
          171, 173...............................................
    Customer Surveys, VA.........................................24, 34
        Customer Satisfaction....................................    27
        Public's Perception of VA................................    24
        Veterans Benefits Administration--Customer Satisfaction 
          Survey.................................................    26
        Veterans Healthcare Patient Satisfaction Surveys.........    40
            Performance on Customer Service Standards: Ambulatory 
              Care 1997 National Survey Report...................    81
            Performance on Customer Service Standards: Recently 
              Discharged Inpatients 1997 National Survey Report..    41
    Defense Function, Reclassify Veterans Programs to............   155
    Franchise Fund...............................................  1243
    FedSIMS, GSA.................................................   207
    General Operating Expenses..................................23, 763
        Board of Veterans Appeals..............................26, 1056
        General Administration..............................25-27, 1021
        Veterans Benefits Administration........................24, 772
            Benefits Delivery, Improving.........................    16
            Claims Processing:
                Compensation Claims, Processing................124, 142
                Improvements in Processing Claims................   126
            Reorganization.......................................   125
    Government Performance and Results Act (GPRA):
        Performance-Based Budgeting, Improve.....................    17
        Performance Plan and Budget Summaries....................  1282
    Summary Volume...............................................  1495
    Supply Fund, Office of Acquisition and Materiel Management...  1232
    Veterans Population:
        Census Data, Veterans--Specific..........................   130
        Data, Veterans Population................................   158
        Florida and U.S., FY 1997 Facts on Veterans.............159,160
Independent Budget...............................................   140
Medical Programs................................................18, 448
    Health Professional Scholarship Program......................   587
    Information Technology--Medical Programs.....................   611
    Medical Administration and Miscellaneous Operating Expenses..   568
    Medical Care................................................18, 455
        Atomic Test Exposure in the Marshall Islands During WW II
                                                         194, 195
        Availability of Care.....................................   144
        Business-like Approach to Health Care, Emphasize a.......    15
        Cleveland VAMC, Spinal Cord Injury Center at.............   186
            Staff Shortages, Spinal Cord Injury Center at 
              Cleveland VAMC.....................................   187
        Community-Based Outpatient Clinic Plan, National.........   185
        Electronic Patient Records...............................   139
        Equipment Funding........................................   206
        Funding Level............................................    29
            OMB Request for Medical Care.........................    28
        Future Health Care.......................................   145
        Goal, 30-20-10..........................................34, 142
            20 Percent Goal to Treat More Veterans, Anticipated..    39
            Goals 2002...........................................    37
            Interim Goals Before Year 2002.......................   144
        Inflation, Medical.....................................166, 182
        Managed Care.............................................   146
        Medicare Subvention Demonstration Program..............129, 143
Medical Care--Continued
        Nurse Pay................................................   202
        Outpatient Services:
            Converting Inpatient Space to Outpatient Activities..   204
            Cleveland VAMC Outpatient Clinic.....................   169
            Over-Crowding in Outpatient Delivery.................   167
        Quality Health Care, Provide............................14, 183
            Efficiencies Affecting Quality Health Care...........   147
        Per-Diem Pay in State Veteran Homes......................   202
        Readjustment Counseling Services.........................   193
        Staffing.................................................   205
        Tampa, FL, Spinal Cord Injury Center at................155, 191
        Unique Patients..........................................   184
        Veterans Equitable Resource Allocations System (VERA)....
                                                     29, 127, 181
            Florida Veterans.....................................   132
            Inflation Adjustments................................   166
        Veterans Integrated Service Networks (VISN) 3:
            Analysis of VERA Funding Projections................163-165
            Budget Formulation Assumptions.......................   162
            Funding Allocations in Network 3..............161, 162, 163
            Management Efficiencies--VISN 3......................   147
            Return of Excess Funds by Network 3..................32, 33
        Waiting Times..........................................139, 168
    Medical Collections...............................21, 22, 198r, 574
        Collections:
            Collection Goals.....................................   143
            Increase Collection Efforts, List of Ten Areas to....
                                                          200-201
            Meeting 1999 Estimates...............................    22
            Rserves, Collections.................................   176
            Shortfalls, Collections..............................    22
        Third-Party Payments....................................174-175
    Medical and Prosthetic Research...................20, 131, 149, 556
        Career Development, Research.............................   153
        Diabetes Foundation, Partnership with Juvenile..........151-152
        Funding..................................................   192
            Research Being Conducted by VA Due to Increases in 
              Funding............................................   132
        Gulf War Illness Syndrome Research.....................188, 198
        Merit Review Research Programs..........................150-151
        Non-Government Entities, Partnerships With...............   152
        Projects, Update on Research............................149-150
        Parkinson's Disease Research.............................   188
        Prostate Cancer Research...............................176, 178
    Medical and Prosthetic Research--Continued
        Research and Development Effort..........................   192
        Retaining Research Scientists............................   203
    Revolving and Trust funds....................................   588
    Smoking Cessation, Other Medical............................20, 555
National Cemetery System..................................25, 133, 1183
        Ensure a Lasting Tribute for Veterans and Family Members.    17
        Florida, Memorial Park in................................   134
        Line-Item Veto of Planning for Oklahoma Cemetery.........   154
        Miami/Fort Lauderdale Area, New National Cemetery 
          Initiatives for the....................................   134
Office of Inspector General....................................27, 1217
Remarks:
        Farewells to Congressman Stokes..........................   127
        Opening Remarks..........................................     1
        Acting Secretary of Veterans Affairs Statement........... 2, 13
Questions for the Record:
    Congressman Lewis:
        Construction:
            Construction Grant Application--Nevada...............   251
            Grants for the Construction of State Extended Care 
              Facilities.........................................   226
            Major Construction--Long Beach, CA and San Juan, PR..   224
            Mobile, AL National Cemetery Expansion...............   251
            National Memorial Cemetery of the Pacific............   252
            Parking Structure--Denver VAMC.......................   225
        General Operating Expenses--General Administration:
            Board of Veterans' Appeals Remands...................   227
            General Counsel Funding..............................   233
            Wide Area Network....................................   258
        Government Performance and Results Act...................   252
        National Cemetery System.................................   235
            Funeral Honor Guards.................................   237
            Strategic Plan, National Cemetery System.............   236
        Veterans Benefits:
            Balanced Scorecard...................................   234
            Blocked Call Rate....................................   231
            Buyouts--VBA.........................................   232
            Customer Satisfaction with Claims Processing.........   226
            Customer Surveys.....................................   212
            Data Processing Centers at Hines and Philadelphia....   257
            Information Technology, Veterans Benefits............   228
            Loan Guaranty Fee....................................   230
            Loan Guaranty Restructuring..........................   230
            Processing Compensation and Pension Claims...........   209
            Smoking-Related Legislation..........................   233
            Timeliness in claims Processing......................   227
            VETSNET..............................................   257
            Vocational Rehabilitation............................   232
            Year 2000 Compliance, Veterans Benefits..............   229
        Veterans Health Care:
            Activation Costs.....................................   240
            Alcohol Research Centers.............................   241
            Biomedical Research..................................   244
            Community-Based Outpatient Clinics (CBOCs)...........   217
            Compensation Medical Exams...........................   220
                Contract for C&P Exams, Status of Pilot Program 
                  for............................................   249
            Customer Surveys.....................................   211
            East Central Florida Cost Effectiveness..............   238
            Gulf War Illnesses Research..........................   243
            Hepatitis C Treatment................................   241
            Incinerators for Disposal of Hospital, Medical and 
              Infectious Waste...................................   255
            Information Technology in Medical Programs...........   222
            Medical Care Appropriation...........................   219
            Medical Care--Budgetary Resources...................215-216
            Medical Collections..................................   217
            Medical and Prosthetic Research......................   221
            Medicare Subvention..................................   239
            Musculoskeletal Disease Prevention and Treatment 
              Center.............................................   221
            Polio Incubation Period Regulation...................   214
            Preventive Medicine..................................   248
            Prostate Cancer Research.............................   222
            Proton Therapy.......................................   244
            Smoking Cessation....................................   218
            Smoking Cessation Research and Programs..............   245
            Tuskegee and Montgomery Medical Centers..............   242
            Unique Patients......................................   215
            Williamsport, PA.....................................   240
            Year 2000 Estimate by Year, Breakdown of VHA.........   224
    Congressman Stokes:
        Eligibility Reform.......................................   259
        Filipino Veterans, Compensation for......................   261
        Healthcare Enrollment System.............................   259
        Montgomery GI Bill Benefits..............................   262
    Congresman Knollenberg:
        Buyouts..................................................   264
        Constituent's Concern....................................   263
        PARMIN (Henry Ford Healthcare)...........................   264
        Smoking and Service Connection...........................   266
        Veterans Benefits Administration.........................   265
    Congressman Frelinghuysen:
        Drug Formulary, VA's National...........................267-278
        Lyons Ambulatory Care Facility...........................   279
        Morristown Outpatient Clinic.............................   278
    Congressman Hobson:
        Board of Veterans Appeals................................   281
        Electronic Data Transfer.................................   285
        Nurse Salary, VA.........................................   280
        Per Diem Rate, State Veterans Home.......................   280
        Rent Obligations........................................282-284
        Year 2000 Compliance.....................................   284
    Congresswoman Kaptur:
        Infrastructure, VA.......................................   287
        Medical Care and Research, VA............................   291
        Medicare Subvention......................................   291
        Mental Illness Research..................................   292
        Mental Illness Research and Education Center (MIRECCs)...   292
        Women Veterans..........................................288-290