[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]



 
 DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING  AND  URBAN  DEVELOPMENT,

                                 AND

           INDEPENDENT AGENCIES APPROPRIATIONS  FOR 2001

                                

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS
                             SECOND SESSION
                                ________

            SUBCOMMITTEE ON VA, HUD, AND INDEPENDENT AGENCIES
                   JAMES T. WALSH, New York, Chairman

 TOM DeLAY, Texas                      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
 ANNE M. NORTHUP, Kentucky             ROBERT E. ``BUD'' CRAMER, Jr.,
 JOHN E. SUNUNU, New Hampshire          Alabama
 VIRGIL H. GOODE, Jr., Virginia     
                                    
                                    

 NOTE: Under Committee Rules, Mr. Young, 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, Timothy L. Peterson, Valerie L. Baldwin,
          Dena L. Baron, and Jennifer Whitson, Staff Assistants
                                ________ 

                                 PART 5
                     DEPARTMENT OF VETERANS AFFAIRS

                              

                                ________
         Printed for the use of the Committee on Appropriations
                                ________
                     U.S. GOVERNMENT PRINTING OFFICE

 64-315                     WASHINGTON : 2000


                 COMMITTEE ON APPROPRIATIONS

                   C. W. BILL YOUNG, Florida, Chairman

 RALPH REGULA, Ohio                      DAVID R. OBEY, Wisconsin
 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                 STENY H. HOYER, Maryland
 TOM DeLAY, Texas                        ALAN B. MOLLOHAN, West Virginia
 JIM KOLBE, Arizona                      MARCY KAPTUR, Ohio
 RON PACKARD, California                 NANCY PELOSI, California
 SONNY CALLAHAN, Alabama                 PETER J. VISCLOSKY, Indiana
 JAMES T. WALSH, New York                NITA M. LOWEY, New York
 CHARLES H. TAYLOR, North Carolina       JOSE E. SERRANO, New York
 DAVID L. HOBSON, Ohio                   ROSA L. DeLAURO, Connecticut
 ERNEST J. ISTOOK, Jr., Oklahoma         JAMES P. MORAN, Virginia
 HENRY BONILLA, Texas                    JOHN W. OLVER, Massachusetts
 JOE KNOLLENBERG, Michigan               ED PASTOR, Arizona
 DAN MILLER, Florida                     CARRIE P. MEEK, Florida
 JAY DICKEY, Arkansas                    DAVID E. PRICE, North Carolina
 JACK KINGSTON, Georgia                  MICHAEL P. FORBES, New York
 RODNEY P. FRELINGHUYSEN, New Jersey     CHET EDWARDS, Texas
 ROGER F. WICKER, Mississippi            ROBERT E. ``BUD'' CRAMER, Jr., 
 GEORGE R. NETHERCUTT, Jr.,              Alabama
Washington                               MAURICE D. HINCHEY, New York
 RANDY ``DUKE'' CUNNINGHAM,              LUCILLE ROYBAL-ALLARD, California
California                               SAM FARR, California
 TODD TIAHRT, Kansas                     JESSE L. JACKSON, Jr., Illinois
 ZACH WAMP, Tennessee                    CAROLYN C. KILPATRICK, Michigan
 TOM LATHAM, Iowa                        ALLEN BOYD, Florida                
 ANNE M. NORTHUP, Kentucky
 ROBERT B. ADERHOLT, Alabama
 JO ANN EMERSON, Missouri
 JOHN E. SUNUNU, New Hampshire
 KAY GRANGER, Texas
 JOHN E. PETERSON, Pennsylvania
 VIRGIL H. GOODE, Jr., Virginia     
                                    
                                    
                                    


                 James W. Dyer, Clerk and Staff Director

                                  (ii)


DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT, AND 
              INDEPENDENT AGENCIES APPROPRIATIONS FOR 2001

                              ----------                              

                                         Wednesday, March 22, 2000.

                     DEPARTMENT OF VETERANS AFFAIRS

                               WITNESSES

TOGO D. WEST, JR., SECRETARY
          ACCOMPANIED BY:
THOMAS L. GARTHWAITE, M.D., DEPUTY UNDER SECRETARY FOR HEALTH, VETERANS 
    HEALTH ADMINISTRATION; JOSEPH THOMPSON, UNDER SECRETARY FOR 
    BENEFITS, VETERANS BENEFITS ADMINISTRATION; MICHAEL WALKER, ACTING 
    UNDER SECRETARY FOR MEMORIAL AFFAIRS, NATIONAL CEMETERY 
    ADMINISTRATION; D. MARK CATLETT, DEPUTY ASSISTANT SECRETARY FOR 
    BUDGET; DEPARTMENTAL ADMINISTRATION

                       Chairman's Opening Remarks

    Mr. Walsh. Good morning. The hearing will come to order. 
Today is the first day of budget oversight hearings for the 
Department of Veterans Affairs and the President's budget for 
fiscal year 2001. I would like to welcome the Secretary, his 
assistants and the staff and members of the Veterans Affairs 
Department. We are glad to have you back.
    This year it seems the Administration finally got the 
message that we have a responsibility to our Nation's veterans 
and need to provide enough resources to care for them. The 
Department's budget increases $1.5 billion in fiscal year 2001 
and includes an additional $1.355 billion for medical care, 
$109 million for claims and processing and $13 million for 
cemeteries, yet popular programs that produce positive results, 
like medical research programs and grants for State homes are 
flat-lined or reduced.
    Despite these increases, the Committee is wary that the 
additional resources in areas like claims processing, medical 
care and appeals are not translating to improved performance in 
these areas. We will be watching the performance plans and 
targets closely in the next few years to see if these 
investments are paying off because the veterans community 
deserves better treatment than they have received in the past.
    We will be sharing our concerns and expectations with you 
in the course of our hearings. We are concerned with the VA's 
ability to implement the Millennium Health Care Act while 
improving the level of basic care to our veterans in hospitals 
at outpatient clinics. We are concerned with the 
Administration's plan to return $350 million to the Treasury 
from medical care collections. We are going to be looking to 
the Department to produce real results when it comes to 
processing benefits. We are looking to the Department to 
provide a plan for addressing cemetery needs, as we lose more 
of our Nation's heroes.
    We are depending on the inspector general to catch waste, 
fraud and abuse by those inside and outside of the Department, 
and we are depending on the Department to provide a solid plan 
and sensible plan for providing medical care in all parts of 
the country for veterans, including a plan for merging capital 
assets.
    I will address many of my questions and concerns to the 
respective assistant and under secretaries at our April 5th 
hearing and look forward to your testimony today.
    I would, at this time, yield to my colleague and friend, 
Mr. Mollohan, for any opening remarks that he may have.

                    Ranking Member's Opening Remarks

    Mr. Mollohan. Thank you, Mr. Chairman, just a few remarks 
welcoming the Secretary. I, along with the Chairman, look 
forward to his testimony.
    Mr. Secretary, I was pleased when I received your budget 
submission, it demonstrated that the administration recognizes 
the medical care funding needs of our veterans and is 
attempting to meet them. The $1.5 billion requested increase is 
the largest discretionary dollar increase ever proposed for 
veterans' programs, and you are to be commended.
    That being said, it must be noted that the VA continues to 
face significant challenges in meeting the obligations that our 
Nation has to veterans. Access to medical care must be achieved 
in a more timely manner, appeals of benefits decisions need to 
be heard and decided in a more timely manner and the VA needs 
to make a better effort to ensure that veterans are aware of 
the benefits to which they are entitled.
    Finally, one of the biggest challenges facing the VA today 
involves the aging veteran population. The VA must be prepared 
to provide long-term care and to increase home health care to 
meet the needs of these veterans. The Millennium Health Care 
Act of 1999 provides some authority to begin to meet these 
needs, and I am interested to learn how this law is being 
implemented and what needs are still unmet.
    I look forward to your testimony, Mr. Secretary.
    Thank you, Mr. Chairman.
    Mr. Walsh. Thank you.

                    Secretary West's Opening Remarks

    Mr. Secretary, please make your statement. It will be 
included in the record in its entirety.
    Secretary West. Thank you, Mr. Chairman, for including the 
full statement in the record. I will just make some brief 
opening comments.
    Mr. Chairman, Ranking Member Mollohan, members of the 
committee, good morning. It is a pleasure, and thank you for 
inviting me and my colleagues to join you once again with this 
opportunity to present the President's Veterans budget for 
fiscal year 2001.
    The President's overall budget for 2001 is the fiscally 
responsible approach to balancing the budget. It puts our 
Nation on a path to eliminate the national debt in the year 
2013, making our Nation debt free the first time since 1835. 
This budget recognizes, as well, another debt; that of this 
Nation to her veterans. The President's request for Department 
of Veterans Affairs reflects his and this Nation's continuing 
commitment to those who have served our country with valor and 
with honor.
    Our budget proposes significant increases for each of the 
Department's, three administrations, whose under secretaries 
are here before you with me, and for all of our staff functions 
represented by the assistant secretaries behind me. These 
resources will allow us to continue to improve our ability to 
provide the highest quality service to our Nation's veterans.
    The VA fiscal year 2001 budget request is for approximately 
$48 billion, which includes $22 billion for discretionary 
programs and $26 billion for entitlement. As you, Mr. Chairman, 
and the ranking member have noted, that is a discretionary 
increase of $1.5 billion above last year's appropriated funding 
level, the highest increase requested by any President. That 
request, along with the additional resources agreed to by the 
Congress, at the insistence of this subcommittee and by the 
administration in 2000, reflects a 2-year discretionary total 
increase of more than $3.1 billion or 16.4 percent.
    Mr. Chairman, our veterans are, as we often say, entitled 
to the best health care America can provide. It is our 
determination to provide that. The past few years at the 
Department, we have transformed the hospitals, medical centers, 
outpatient clinics run by the Department to provide greater 
access to better care for more veterans. And with the funding 
in this year's fiscal year 2001 budget, we will continue this 
improvement.
    Within the VA budget, we are requesting $20.3 billion to 
provide health care for veterans. This represents an increase 
of $1,355 billion over last year's authorized and appropriated 
level. Added to that approximate amount is an additional $608 
million we anticipate in medical collections. With these health 
care funds, the Department will treat 3.9 million veterans, 
100,000 more patients in 2001, than in 2000. We will open 63 
new outpatient clinics, which when added to the clinics opening 
in 2000, will bring us well above the 600-outpatient clinic 
level.
    We will redirect 1,500 full-time equivalent employees to 
increase access to VA care and to improve our service to 
veterans. We will spend an additional $145 million to treat 
veterans with Hepatitis C for a total funding level in the 
fiscal year 2001 budget of $340 million. In addition, we will 
fully fund the implementation of the Veterans' Millennium 
Health Care Act passed by this Congress late last year at $548 
million. As you recall, the act deals with specialized mental 
health services, emergency care and extended care services.
    We will increase our funding for long-term care initiatives 
by $350 million. This will enhance home and community-based 
care programs for older veterans and will cover the 
implementation of emergency care programs.
    Once again, we will set aside $321 million for high-
priority research projects, some 1,942 of them.
    Mr. Chairman and members of the committee, recently, 
medical journals and other media have carried reports that as 
many as 180,000 deaths occur in the United States each year due 
to errors in medical care, many of which are preventable. It 
will take dramatic action from all health care providers in the 
United States, not just VA, to improve in this area.
    To enhance VA's leadership in patient safety management, 
however, we plan to spend $137 million to monitor and oversee 
safety issues and to comprehensively train all VHA staff on a 
recurring basis on patient safety issues. VA has not only 
recognized the problem, but we have recognized a basic fact; 
this is one of the greatest opportunities we will have and have 
had in a long time to make dramatic improvements in the way 
health care is provided in this country. At VA, we have 
insisted that it is impossible to correct or prevent errors 
without first acknowledging that they occur.
    We have launched the National Patient Safety Partnership, 
an organization that has brought together Federal and private 
sector experts to join forces to address the patient safety 
problem. We recognize that change will require team effort at 
every level in our organization, and we will make those 
changes.
    We have led the Nation in identifying problems that result 
in medical errors. This budget will enable us to continue that 
leadership. We will engage in comprehensive monitoring at the 
national and local levels with respect to patient safety. We 
will be redirecting an additional 190 FTE towards patient 
safety enhancements, which means a total of 500 FTE dedicated 
to this effort in fiscal year 2001. Significant training, 
highlighted by VA's National Center for Patient Safety, the 
Quality Scholars Program and 20 hours of biannial training for 
all full-time staff, will keep this Department in the forefront 
of this important area to our veterans, to their families, to 
the Nation.
    VA's benefit programs are a tangible expression of this 
Nation's determination to meet its obligations to our veterans. 
For fiscal year 2001, we are requesting $22.9 billion to 
support compensation payments to 2.3 million veterans, 301,000 
survivors of veterans, and 864 children of Vietnam veterans 
born with spinal bifida. This amount will also support pension 
payments to some 363,000 veterans and 253,000 survivors.
    We propose a cost-of-living adjustment at 2.5 percent, to 
be effective on the 1st of December 2000. If this body, if 
Congress approves, we will pay full disability compensation to 
veterans and survivors of Filipino forces who served with U.S. 
forces in World War II and are now living in the United States. 
They currently receive benefits at half the level of the U.S. 
veterans beside whom they fought.
    In this budget, we are requesting $1.6 billion for 
readjustment benefits, to provide education opportunities to 
veterans and eligible dependents and for special assistance 
programs for disabled veterans. Educational benefits will be 
provided to about 480,000 veterans and dependents in 2001, 
including 309,000 who will be receiving training under the 
Montgomery GI bill.
    We will emphasize faster, more accurate claims decisions, a 
priority of ours for some years now, along with a high level of 
customer service and satisfaction. In the discretionary budget 
for the Veterans Benefits Administration, for administration 
and claims processing, we provide $999 million and 11,824 FTE. 
That request reflects an increase of $109 million in the 
discretionary budget for VBA and an increase of 287 FTE over 
the 2000 level. This will enable us to direct 586 new FTE into 
compensation processing. They will help process disability 
claims in a more timely fashion and to continue with quality-
enhancing initiatives.
    You will recall that we added 440 FTE into adjudication in 
fiscal yer 2000, which will give us an increase in FTE devoted 
to processing claims in excess of 1,000 personnel for fiscal 
years 2000 and 2001. This is not our only undertaking to 
improve the timeliness, effectiveness and accuracy of our 
claims processing. Also included in this budget is yet another 
payment on our effort to go to a totally computerized claims 
processing environment. That, of course, is a process which 
will take several years.
    Last year, 561,000 veterans died--an average of about 1,500 
per day. For the operation of the National Cemetery 
Administration, this budget requests $110 million, a $13-
million increase over the fiscal year 2000-enacted level. This 
includes funding and FTE to address an increasing interment and 
maintenance workload at our national cemeteries. It also 
includes the high rate of interments during the first years of 
operation at four new national cemeteries being opened in 
fiscal year 1999 and being opened in fiscal year 2000; two in 
1999 in Sarasota and outside of Chicago, and two in 2000 at 
Dallas-Fort Worth and Cleveland.
    We have in the budget planning funds for four additional 
cemeteries in Atlanta, Miami, Detroit and Sacramento. And we 
proceed, as well, with plans under legislation in the fiscal 
year 2000 for cemeteries in Oklahoma and Pittsburgh.
    Mr. Chairman and members of the committee, one of the 
initiatives reflected in this budget for the national cemetery 
system is what we have identified as the national shrine 
commitment. It assumes that our cemeteries are not just places 
where our veterans rest in honored glory, as they are, but also 
national shrines: shrines to patriotism, shrines to service and 
sacrifice for our Nation, shrines for the eternal verities of 
this Nation--faithfulness, integrity and belief in our country 
and in her people.
    To carry out this commitment, we will need to take care of 
backlogs of maintenance that have not been accomplished over 
the years--gravestones, grave markers that have sunk in some 
parts of cemeteries, roads that need repair, activities that 
are not funded out of our daily regular operating budget for 
the cemetery system. That amount, $5 million, is only a down 
payment, and to make a real investment, real progress, will 
need to be replicated each year.
    For those of you who have had the opportunity to visit 
American cemeteries abroad, not maintained by this Department, 
they are a fine statement and an effective representation of 
our devotion to our veterans and our dead abroad. American 
families do not get to visit them as much as they do our 
cemeteries here. So we can do something to improve the 
appearance of those parts of our cemeteries that have begun to 
suffer from decay.
    For 224 years, America's veterans and our men and women who 
currently serve on active duty in uniform have brought a record 
of security and peace to the North American continent and the 
American people who live here. With this bill, we say to our 
veterans, ``Well done. The Nation values your gift of service 
and patriotism and will honor her commitment to you.''
    Mr. Chairman, I thank the members of your staff and the 
members of this committee for your continued interest to the 
Department's needs, the needs of our veterans. We look forward 
to working with you. We thank, as well, the VSOs, the veterans 
service organizations, for their vigorous advocacy during last 
year's authorization appropriation process doing this year's 
budget cycle. We look forward to working with them as well.
    Seated here with me to my far right, the Acting Under 
Secretary for Memorial Affairs, Mike Walker; the Deputy Under 
Secretary for Health, Tom Garthwaite; the director of our 
budget, the Deputy Assistant Secretary for Budget, Mark 
Catlett; and the Under Secretary for Benefits, Joe Thompson.
    Mr. Chairman, we are fully identified. I have completed my 
remarks. We are prepared for your questions.
    [The information follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                 veterans claims--well-grounded claims

    Mr. Walsh. Thank you very much for those remarks and for 
your service to the Veterans Administration and to the veterans 
of this country.
    I would like to ask some questions beginning with veterans 
claims, the new veterans agency, policy, and well-grounded 
claims.
    I think it is safe to say that many of us have heard from 
various veterans service organizations regarding the Agency's 
pending rule on well-grounded claims. We have been hearing that 
this rule will further clog the already choked C&P process by 
adding another level of decision making, and it puts a larger 
burden of proof on the veteran. I do not think the claims 
process can stand another delay. Please tell us the VA's vision 
for how the rule changes claim processing and how you perceive 
this change will be a benefit to the veteran and to the 
Department.
    Secretary West. Mr. Chairman, you have asked specifically 
about the rule, so I will let Joe Thompson, our Under 
Secretary, go directly to the specifics of our proposed rule.
    Mr. Thompson. Mr. Chairman, last summer the Court of 
Appeals for Veterans Claims issued a decision in a case known 
as the Morton case. This case limited our duty to assist 
veterans in pursuing their claims. I have to say up front that 
we take very seriously our obligation to help veterans in the 
pursuit of their claims. We believe it is part of our core 
mission to do that. But as a result of the court's decision, we 
put out an interim policy statement late last summer basically 
telling regional offices that they have to comply with the 
court's decision. Shortly thereafter, we also issued a proposed 
regulation that would, in effect, liberalize the court's 
decision. We are in the middle of that rulemaking process right 
now.
    Our view of how the proposed regulation would work is this: 
Number one, a well-grounded claim is simply a plausible claim. 
We believe it to have a low threshold of proof, one that is 
very consistent with most claims processes in the Federal 
Government. We do not believe it will put a significant burden 
on claimants.
    What we will do, under our proposed regulation, is this: we 
will presume the credibility and truthfulness of the evidence 
presented to us, and we will request and review all service 
medical records and all VA treatment records that VA possesses 
before we make decisions. In no case will we go back to the 
veteran and simply deny his or her claim. What we will say is, 
``You are missing this piece of evidence that will allow us to 
go further with your claim.'' So we give them 30 days to 
provide us with that evidence.
    And then we have allowed for exceptions in the regulations, 
which may change based on the public comments we receive. But 
veterans who do not have the financial means to pursue a claim, 
veterans who have psychiatric problems, veterans suffering from 
post-traumatic stress disorder, and anyone discharged within 
one year, of this filing, all of them would be presumed to have 
well-grounded claims.
    I also have to point out that veterans have an extensive 
network of help throughout the United States. There are 
approximately 3,700 people who do not work for VA, but who are 
charged primarily with the responsibility to help veterans 
pursue their claims at the State level, at the county level and 
at the national service organization level. They are there to 
help veterans with these issues.
    Right now we are meeting with the stakeholders in this 
process: the NSOs, members of the congressional committees 
staffs. We are looking at the 22 comments we received on our 
proposed regulation. We do not believe a change of law is 
required. We think it will cost more and we do not believe it 
will help veterans. In fact, implausible claims that come into 
us overwhelmingly end up denied no matter the efforts we go to. 
And we think it could create unforeseen obligations for the 
Federal Government that are hard to predict at this point in 
time. So we believe that our regulation will get the job done 
and will meet veterans' needs. Veterans with plausible claims 
that ultimately can be proved will prevail in this process. 
That is our position.
    Secretary West. I would like to add one point, Mr. 
Chairman, and that is this: I would not want the fact that we 
are pursuing this rulemaking effort to confuse a larger 
overarching point, and that is the question of where this 
Department stands on its duty to assist veterans who file a 
claim. We believe that, unlike other agencies, we have a duty 
to assist; that we have a duty to lean forward in our chair 
when veterans come in and to be as helpful to them as we can. 
The court decision cut back on that. This regulation is an 
attempt to carve out the ways in which we can preserve that in 
a balanced fashion.

                reactions to well-grounded claims ruling

    Mr. Walsh. Clearly you are putting the burden of proof onto 
the veteran. While they do have lots of support from the 
veterans service organizations, you are talking about an 
individual taking on an agency, and there is a lot of concern 
out there about, ``Wait a minute. This is our agency. They are 
protecting our benefits and the promises the country has made 
to us. Why are we the bad guy? Now we have to prove these 
things?'' There should be a presumption here on the part of the 
Agency.
    Secretary West. Of course, we did not put that burden on 
it, the court did in Morton v. West.
    Mr. Walsh. I understand that.
    Secretary West. What we are trying to do is carve out ways 
in which to live with the ruling and show our willingness to 
reach across in specific cases and be even more helpful to 
veterans.
    Mr. Walsh. Is it the intention of the Agency that anyone 
who files a claim must have now all of their military and 
service records before they file?
    Mr. Thompson. Not at all. We will secure the evidence 100 
percent of the time. We will get their service records. If 
there are VA treatment records, we will secure those as well. 
We think the threshold is not high. It is simply putting forth 
a claim that we believe has a chance of being approved. It does 
not mean proving it yourself. We will assume the responsibility 
of going in and digging into the evidence, but we do not think 
the threshold we are establishing is very high.
    Mr. Walsh. Could you explain the Agency's view of the 
veteran's claim prior to this ruling as opposed to after this 
ruling.
    Mr. Thompson. The Agency had a rule that said we would 
develop the evidence in all cases. The Court of Appeals for 
Veterans' Claims said before the Agency has an obligation to 
assist veterans in developing their claims, it is the 
responsibility of the veterans to present a plausible claim to 
us. So they reversed the process. In the past, we would have 
developed all issues. Under the Morton decision, the court 
said, in order for you to invoke those Government resources to 
developing issues, the veteran needs to put forth a plausible 
claim.
    By studying the claims that were coming in to see whether 
they met a well-grounded threshold or not, we found that, 
overwhelmingly, if we cannot get the veterans to meet that 
threshold, their claims ultimately are denied. And the irony is 
that we will spend more resources pursuing evidence which 
oftentimes does not exist or does not exist in a form to 
support their claim versus using those resources for veterans 
who do have plausible claims before us.

                        veterans service records

    Mr. Walsh. When I asked if the veteran has to have all of 
his military and service records prior to filing, you said, 
``No, we will get their service records.'' What is the 
difference between the prior standard and the current, in terms 
of your support for getting the data for that claim.
    Mr. Thompson. In the case of the military records, service 
medical records or VA records, there is no difference. We would 
have done it in the past and we will do it under our proposed 
regulations.
    Mr. Walsh. What does the veteran have to provide now that 
is different from before?
    Mr. Thompson. The court imposed a three-part test. 
Basically, they said that first, you need to have some evidence 
within your service records that there was a disability 
incurred; second, you need to have a current disability; and 
third you need to have a nexus to show that there is some 
relationship between those two things. That is the test. As far 
as securing the service records and VA treatment records, we 
have done that historically and we will continue to do so.

               impact of new ruling on claims processing

    Mr. Walsh. The practical application of this, other than 
the burden-of-proof issue on the veteran, is the processing 
time. How will this new ruling affect processing?
    Mr. Thompson. We know it takes, on average 60 days longer 
when the claim is not well grounded to make a final decision on 
the claims. And I think the difference is somewhere between 130 
and 199 days. This is the impact. They slow you down because 
you have to pursue more evidence and oftentimes you have to 
pursue it multiple times before concluding that it does not 
exist. If a plausible claim comes in, not only are they easier 
and faster to do, they almost certainly have a higher chance at 
being granted than cases where that plausibility test is not 
met.
    Mr. Walsh. You mentioned that the veterans service 
organizations are there to help the veteran process easier and 
to help make their case. What is their reaction to this 
rulemaking?
    Mr. Thompson. Most of them do not like it. We have 
extensive comments to our regulation. They think the regulation 
needs to be seriously changed. A number of them support 
legislation to codify the duty to assist in the law before a 
well-grounded claim is filed.
    Mr. Walsh. If a statute were passed that shifted the burden 
back to the Agency, for example, that would be something the 
veterans service organizations would support?
    Mr. Thompson. I do not want to speak for all of them, but 
for some of them, yes. The ones we have been dealing with, I 
would say that is probably more the sentiment than otherwise.
    Secretary West. I would say something slightly different, 
Mr. Chairman. I would say we have not finished our rulemaking 
process and that the important part of it right now is to try 
and take into account and to accommodate those very concerns 
and comments they have raised. The test will be whether we come 
up with a rule that they think they can live with. If not, the 
answer is yes to your question; that is, they would probably 
like legislation. But if we come up with a rule that they can 
live with, they may prefer that. We need to see how that works, 
and that is not going to take forever. It is going to take a 
little bit longer because we are going to be very careful--22 
comments and lengthy comments at that. We are going to take 
time. We are going to talk with them and work through it, but 
we will know better once we finish the process, and we should 
know in a reasonable time.
    Mr. Walsh. What is the time frame for a decision on the 
rule.
    Secretary West. The general counsel thinks approximately 
two to three months.
    Mr. Walsh. From this day.
    Secretary West. From today, yes.
    Mr. Walsh. I would like to ask you just a few more 
questions, now on the Board of Appeals.
    Secretary West. Can I say one other thing about this?
    Mr. Walsh. Sure.
    Secretary West. It is not, Mr. Chairman, as if the court 
has acted in this case and VA has sort of happily joined hands 
and skipped off to say, ``Great. A burden has been lifted from 
us.'' On the contrary. VA persisted in our practice of 
developing all of the evidence, despite the fact that the court 
had sent several warnings to us in earlier decisions. In some 
respects, this thunderbolt is not really a thunderbolt. We 
could have seen it coming because we persisted in developing 
the evidence for veterans.
    Now that we are faced with it, we are making a good-faith 
effort in working with the VSOs and others to try to deal with 
this in a regulatory fashion. If we failed, then it would 
certainly be appropriate for whatever legislative remedy you 
would consider.
    Mr. Thompson. Mr. Chairman, if I could mention that we have 
been meeting particularly with the NSOs on this issue, and we 
have another meeting scheduled for early next month. We are 
going to sit down, and if there is any middle ground where we 
can craft the regulation to address their concerns, their valid 
concerns, we will certainly do so. So we will pursue that.
    Mr. Walsh. I have used up enough time for now. I think I 
will go to Mr. Mollohan for questions.

            veterans millennium health care and benefits act

    Mr. Mollohan. Thank you, Mr. Chairman.
    Mr. Secretary, your budget includes $548 million to 
implement the new Veterans' Millennium Health Care and Benefits 
Act. That law makes substantial changes in your programs for 
veterans. I would like to hear you talk about what you feel it 
will mean to the individual veteran and the individual 
veteran's families.
    Secretary West. All right. I will make a couple of 
comments, and Dr. Garthwaite, deputy under secretary of health 
will want to fill in some details. But one thing I would like 
to focus on specifically, a couple of things actually. This is 
a great step forward in trying to help us deal with the problem 
that both VA and the Nation are wrestling with, long-term care 
for veterans.
    As our veterans population continues to age, I think now 
the number is approximately 63 percent of all of our veterans 
are over 65. Thus, long term care is of immediate importance to 
veterans. The act and our implementation of it depended on us 
specifically to look at long-term care alternatives to 
institutional care such as community-based and home-based 
initiatives. That is going to be very important. It will make a 
difference to every veteran and veteran's family for whom long-
term care is a factor.
    Similarly, we have had for a long time the issue of 
emergency care for veterans, emergency care, especially when 
they are out of system. The act also advances that. And it 
makes an effort to lay out some things that we will be 
undertaking over the next several years. That is why we have 
chosen to fully fund it with an appropriation of $548 million.
    Let me let, if I might----

                       funding the millennium act

    Mr. Mollohan. Let me ask you just on that point, when you 
say ``fully funded,'' do you mean it is fully funded up to the 
authorization or it is fully funded to meet all of the needs 
that could be met under its provisions?
    Secretary West. Without sounding presumptuous, it is just 
the latter; that is, we tried to fully fund everything we can 
see that would flow from it. And I may have not----
    Mr. Mollohan. What is the authorization funding level for 
the provisions of that Act?
    Secretary West. There is none specified. The only----
    Mr. Mollohan. It is not specified.
    Secretary West. The only measure I have is that built into 
it is an effort to offset some of that funding with increased 
authorization for copays and the like. That does not come to 
that. That comes to only $350 million; whereas, we are 
suggesting an appropriation of $548 million.
    Mr. Mollohan. All right. Well, I want to get to that as 
well.
    What is your request with regard to funding? As I 
understand it, the act anticipates an appropriation 
supplemented with fee collections. But as you have structured 
your budget request, you are asking for a full appropriation 
and a return of whatever fees are generated to the general 
revenue. Is that the authorization scheme?
    Secretary West. No, it is not a scheme. Every year since I 
have been here, I have come before you, Mr. Mollohan, this 
subcommittee and others have said to me: Can we trust your 
projections on third-party collections? Are you really going to 
meet that number?
    At the same time, when I go before the VSOs, they say: Why 
are you using that money for operations? You are supposed to 
get appropriations for authorizations. And this money that 
comes from collections is supposed to be available to center 
directors to fill in, as it were, to meet the needs 
essentially, unanticipated and the like.
    Now, whether they are correct about that or not, this year 
we are going to try to, especially in the case of the 
Millennium Act, do something that perhaps offers greater 
certainty. The one thing that is for certain is that if that 
appropriation is there----
    Mr. Mollohan. You are asking for an appropriation and you 
want the authorization you are operating under, which provides 
that fees be used to offset benefit costs, to be changed.
    Secretary West. Only the amount attributable to the 
Millennium Act, however, one half of the first $700 million of 
all collections would go to Treasury.
    Mr. Mollohan. I understand. Are you requesting that 
authority from this committee or from the authorizing 
Committee?
    Secretary West. I think we are trying to structure it where 
it is appropriate. And so we are requesting it from you.
    Mr. Mollohan. Have you talked with the Authorization 
Committee about this request?
    Secretary West. Yes, sir. I testified before them three 
weeks ago and presented it.
    Mr. Mollohan. Do they like that request? Do they want this 
committee to deal with that issue?
    Secretary West. Well, they did not express themselves on 
the issue of which committee should deal with it. Obviously, 
the opinions as to whether having the $350 million in 
collections go into the Treasury rather than be retained were 
divided between different points of view.
    Mr. Mollohan. It was discussed, though.
    Secretary West. Yes, sir. I think they are well aware of 
our proposal.
    Mr. Mollohan. Did you request of them that they fix this in 
authorization? As a part of your presentation to that 
committee, did you request that they be responsive to the way 
you want to handle collected fees and the way you want the 
Millennium Act funded through the general appropriation?
    Secretary West. Well, we certainly presented it to them.
    Mr. Mollohan. You made that request of them?
    Secretary West. Yes, sir. And said this is our legislative 
program.
    Mr. Mollohan. So that is an action item for the authorizing 
committee?
    Secretary West. We think it is an action item for the 
Appropriations Committee, sir.
    Mr. Mollohan. So you are asking this Committee to allow 
that funding structure and not asking the Authorizing Committee 
to do so?
    Secretary West. We are presenting it to both, but asking 
you to do it.
    Mr. Mollohan. Okay. All right.
    Did you want to elaborate on that?
    Dr. Garthwaite. I think it has been answered. [Laughter.]
    Secretary West. No, this was on the Millennium Act.
    Mr. Mollohan. So just to be clear, the $548 million that 
you are presenting here as fully funded, you think it is fully 
funded to meet all of the needs that could flow from the 
Millennium bill to veterans?
    Secretary West. For fiscal year 2001.
    Mr. Mollohan. I am going to submit the Medicare subvention 
issues for the record.

                             drug addiction

    Mr. Mollohan. Let me ask you does the VA see drug addiction 
among veterans to be a significant problem?
    Secretary West. Well, we certainly treated it as one, sir. 
It has always been one of our high priorities. Substance abuse 
issues, especially among homeless veterans, for example, have 
always had a high priority with us. So, yes.
    If you look at it from the attention we paid to it, we 
certainly do.
    Mr. Mollohan. How is that expressed in your budget request?
    Secretary West. For example, how much of our request can we 
identify as flowing to treatment, to substance abuse treatment?
    Mr. Mollohan. That would be a good way of answering it. 
Well, you can answer for the record if you or you can talk 
about it.
    Secretary West. My budget director is saying it is in the 
range of $300 to $400 million, but we will give you the exact 
figures for the record.
    Mr. Mollohan. Would you do that?
    Secretary West. Yes, sir.

                         insert for the record

    Mr. Mollohan. In addition to supplying the information for 
the record, would you send it over to me?
    [The information follows:]

                 Specialized Substance Abuse Treatment

    VA specialized Substance Abuse Treatment Programs provide 
for the care and treatment of eligible veterans with alcohol 
and drug use disorders. They are estimated to cost $391 million 
in FY 2001.

    Secretary West. Dr. Garthwaite might have some numbers for 
you.

                        medical research funding

    Mr. Mollohan. Why not just submit it for the record.
    What is your request for research generally?
    Secretary West. $321 million.
    Mr. Mollohan. That is a flat request; is it not?
    Secretary West. Yes, sir, it is. It is the same as last 
year.
    Mr. Mollohan. Sir, why are you not asking for additional 
money for VA research, medical research?
    Secretary West. Two basic reasons, maybe more, but one is 
the straightforward fact that we have to assign our priorities 
somewhere, and our priorities in health care this year have 
been in clinical efforts. The increase that we got for research 
last year for $321 million was significant. We think we can do 
a lot with it. There is also the other fact that that is not 
the only source of our research budget. I think we have another 
$343 million in Federal grants, $154 million in other grants, 
$331 million support from Medical Care, for a total of almost a 
billion dollars.
    Mr. Mollohan. You are giving me history now?
    Secretary West. No, sir. This is what we have proposed to 
spend in fiscal year 2001.
    Mr. Mollohan. Does that represent an increase?
    Secretary West. About $7 million.
    Mr. Mollohan. In a really generous budget request, that 
seems like a small increase request.
    Secretary West. I think it is a small increase, but it is a 
large amount that we are spending. We are spending in the 
neighborhood of a billion dollars on research in fiscal year 
2001. That is to say that we will spend every cent we get.
    Mr. Mollohan. Did you request more in this area from OMB?
    Secretary West. I am not sure. We will find out.
    Mr. Mollohan. Somebody here is sure. Please ask them, will 
you? I would like you to respond to that question.
    What was your first request to OMB or your highest request 
to OMB in this area?
    Secretary West. It was for about $65 million more.

    [Clerk's note.--On page 32, line 754, Mr. Mollohan asked 
``What was your first request to OMB or your highest request to 
OMB in this area?'' He was requesting information on VA's 
Medical and Prosthetic Research request. Secretary West 
answered $65 million more than the FY 2000 enacted level. The 
additional $65 million was for initiatives only. The OMB 
request included an additional $11 million for current services 
or uncontrollable adjustments and $65 million for initiatives, 
for a total of $76 million above the enacted level. On the next 
two pages of the testimony, the reference to $65 million is 
correct when referencing the additional funding for research 
program initiatives.
    Secretary West's testimony (line 756) is edited then as 
follows (edits in italic):
    Secretary West. It was for about $76 million more than the 
FY 2000 enacted level, $11 million for current services 
adjustments and $65 million more for program initiatives.]

    Mr. Mollohan. So it was OMB that pushed it back. In what 
research areas were you requesting an increase that OMB did not 
approve?
    Secretary West. Which areas within our research?
    Mr. Mollohan. Yes, sir.
    Secretary West. I am not sure we have that breakdown. This 
was just a discussion, unless I am wrong, of the macro number, 
the total number.
    Mr. Mollohan. You had to have a basis for requesting $65 
more than you requested the year before, and I am asking you 
what was the basis for----
    Secretary West. I will try to tell you, but I do not think 
I have that here.
    Mr. Mollohan. Excuse me. I have not finished my question 
yet.
    Secretary West. I am sorry.
    Mr. Mollohan. There must have been a basis for that 
requested increase. I mean, that $65 million request was for a 
purpose, and what I am asking is what was that purpose?
    Dr. Garthwaite. We can break that out. I believe there were 
some increases in health services research.
    Secretary West. While he is doing that, can I say that OMB 
did not specifically deny some specific elements of our 
research. That is the answer I was trying to give. But go ahead 
and finish your----
    Dr. Garthwaite. We can break out what other programs----
    Mr. Mollohan. I am interested in knowing where you wanted 
to increase your research activities and where this $65 million 
would have allowed you to do that.
    Dr. Garthwaite. I believe in addition to inflationary 
increases, we added to health services research. I think there 
was more for Gulf War, but we can get you the specifics.
    [The information follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Mr. Mollohan. Do you have any increase provided for in your 
research request for drug addiction, drug treatment?
    Dr. Garthwaite. I will have to get you that information for 
the record.
    Mr. Mollohan. Sure. That is fine. Thank you, Mr. Secretary. 
Thank you.
    [The information follows:]
                      Research for Drug Addiction
    Presently, spending for Drug Addiction/Substance Abuse VA Research 
is $29.9 million per year.

    Mr. Walsh. Thank you. Mr. Knollenberg?

                 bio-artificial kidney implant research

    Mr. Knollenberg. Mr. Chairman, thank you very much and 
welcome, Mr. Secretary, and your group this morning. I want to 
thank you for coming to my office the other day to discuss a 
number of issues, and one in particular that I want to thank 
you on, too, for having put in the persuasion or whatever it 
was that allowed us to get a letter in regard to this issue 
that you are very familiar with now, and I am sure your staff 
and the officials that are here with you are becoming familiar 
with it.
    It is on the issue of the bio artificial kidney implant. 
And I am a little bit confused, and again bear with me on this 
because you and I talked about this. We did receive a letter 
from Dr. Garthwaite, I believe it is. I know that this is a 
position that you have held for some time now, but it has not 
been forever. So perhaps some of--there is a lot of work that 
you have to do and catch up on.
    But what I am confused about, and I wanted to bring this up 
kind of in the order of the sequence of the communications 
first from me and then Dr. Humes. And let me just briefly state 
that Dr. Humes is a researcher in Ann Arbor. Incidentally, on 
this research issue, I noticed that you mentioned that that is 
pretty flat. I noticed that you also mentioned that a lot of 
your research is done with NIH but that has been, as a 
component of your total research budget, pretty flat, too. So, 
it is not really increasing as I can see in either category.
    But what I wanted to talk about, to get a better 
understanding because this research that Dr. Humes is involved 
in is cutting edge. You know, there is a Phase I, there is a 
Phase II. Phase I, obviously, is the one that was overlooked in 
the process. I don't exactly understand why but let me get to 
that.
    Phase I really was the device worn outside the body. Phase 
II was the implantation of the device in the body. And what we 
have received is what looks like a go-ahead, a green light for 
Phase II, which is the second, but there has been an 
overlooking of Phase I. This is sort of like putting the cart 
in front of the horse. Phase I should have been looked at 
because Phase II can't really take off until Phase I is in 
place, unless somebody can explain that to me.

            correspondence on bio-artificial kidney implant

    I know that you know the background on this. We originally 
had it in the House bill last year. It was tempered in the 
conference with the Senate. Because they didn't want earmarking 
we got in some language that was pretty specific and, in fact, 
you quoted that language, I think Doctor, in your response to 
me. But my problem with this is simply the sequence. It took 
the conversation with the Secretary to get a response from you 
regarding our request which goes back to the 14th of January. 
On the 10th of January Dr. Humes sent his request in for the 
grant and both Phases came in the same letter, two different 
documents, but Phase II, we finally received some response on, 
the 7th of March.
    And incidentally, in my letter that went out on the 14th of 
January, just after Dr. Humes' letter, we requested an 
expedited procedure, something quick, because we felt this was 
something we should get to. Your response of the 7th ignored 
anything to do with Phase I. It talked about Phase II. That is 
one question I have for you. I don't understand why.
    Then the response that we got last night at 5 o'clock, I 
believe, at the urging of the Secretary, indicates that you 
have stepped up somehow, the dog didn't eat that first letter; 
you found it on Phase I and your response is what I want to 
talk about as well. Because the response, it seems to me, 
indicates that certain conditions must be met. I am going to 
refer to those so that there is no mistaking what is taking 
place here.
    Your letter of the 7th of March says that--it took almost 
two months, by the way--that there were two issues, two 
conditions that had to be considered. And one was documentation 
from the FDA that the device has been evaluated and determined 
to be safe for initial clinical testing in humans. And, number 
two, evidence from Phase I studies that the device is safe with 
an acceptable rate of adverse effects for human research 
participants.
    My understanding is that the VA--and tell me if this is not 
true--commonly, very commonly approves grants, pending FDA 
approval, and I am particularly perplexed that that was not an 
option that was provided at least in your letter. Maybe that is 
forthcoming. But we want to work with you on this. We need to 
have a more expedient return or response to our request for 
information so we can, in fact, do something about this in 
fiscal year 00. That was the whole design of that language that 
is in the conference report, to do it this year.
    And, so, my concern is that you are perplexed about, I am 
perplexed about your concerns and about your assurances that 
the device is safe. So, tell me in a few words, if you can, 
very briefly, what are your concerns about this on this Phase I 
device? And explain for me, too, how you move on Phase II 
without even considering Phase I? It almost seems like you are 
coming at yourself. And if you can be fairly brief about that 
because we do want to work with you, but we have to know what 
you are thinking and I don't know right now.
    Dr. Garthwaite. First, let me apologize for any delay in 
any correspondence. I did not become aware of this until early 
March and have had several conversations----

                  delay in response to correspondence

    Mr. Knollenberg. Do you know why? Can you tell me why?
    Dr. Garthwaite. I can't. I have to trace it back. I mean we 
had a lot of correspondence and it is routed through various 
offices and we have come down from 800 to 500 FTE over the last 
several years so it is hard to get all the papers through. But 
we will redouble our efforts and certainly there should be no 
delay to any Congressional member.
    Secondly, you know, part of the confusion may lie in the 
cooperative studies program aspects in which we have large 
multi-center trials of projects that have gone through a Phase 
I trial. And we are going to have to get Dr. Humes and our head 
of research together to talk about the timing of the Phase II 
versus Phase I.
    We believe we got the Phase II in January and that was 
responded to on January 20th. Now for Phase I whether it was 
sent originally and we somehow lost it or whether we didn't get 
it until later, and we could trace that back, the bottom line 
is that once we received that piece I believe we did respond in 
a timely fashion to that as well.
    Mr. Knollenberg. They were sent at the same time. They came 
in the same envelope. And I related to that in my letter of the 
14th, four days later. So, I don't know what happened but that 
is what we want to get to the bottom of, what did happen? Where 
did it go?
    Dr. Garthwaite. I think the smart thing here is for perhaps 
a member of your staff and a member of our research staff to 
sit down and with either Dr. Humes or with him on the phone and 
work through the issues.
    Mr. Knollenberg. And I would be happy to do that because I 
don't want to confront you and confront you and confront you 
but to say that we are perplexed, we are confused.
    Dr. Garthwaite. And we want to be as responsive as we can.

                   merit review of research proposal

    Mr. Knollenberg. Let me just--and Mr. Secretary, you know 
that we are halfway, almost halfway through this fiscal year, 
so, with the months in mind here, it looks like even if we do a 
rapid turn-around it may be getting dangerously close to the 
end of the fiscal year--we will be talking about 02 or 01, I am 
sorry. So, I want, if I could, to ask you to do whatever you 
can as well to provide any kind of coordination on this so that 
we do bring that about. And we would like very much to have 
your assurance that we can get together on that, as the Doctor 
suggests.
    Secretary West. You have that assurance, Congressman, with 
one note. I saw this morning a letter that you should have 
received late yesterday. I am concerned that if there is a 
proposal that we bypass merit review processes in this that we 
are careful because we have learned over time, I think at VA, 
that when we bypass those kind of review processes we may have 
to pay the piper later.
    So, with that----
    Mr. Knollenberg. Are you suggesting anything from that that 
I should know that would indicate that there is a delay or a 
denial?
    Secretary West. I know far less about this than you and I 
am certainly not withholding any knowledge from you that I 
have. I know what I read in that letter and it caught my 
attention that included in here is a merit review process. That 
concerns me because when we have found research efforts that 
have avoided merit review, peer review, other kinds of 
protections that we suffer from that later.
    Mr. Knollenberg. Well, I am very comfortable with that. I 
think those are the things that should be applied in every 
case.
    Secretary West. Fair enough.
    Mr. Knollenberg. But I just want to know if there is 
something else out there that we should be----
    Secretary West. No. I am not withholding any--I am not 
saying that with any knowledge that I have. I am saying it, 
simply having read the letter.
    Mr. Knollenberg. Expedited review was a thing that I 
requested here. I didn't get that on Phase II, either. It did 
not happen. So, expedited review is something that I would like 
to have a lot of persuasive ability provided to bring it to 
reality because I think we deserve a little better response and 
certainly you don't need this kind of approach from me as to 
what these questions raise but I think that with your assurance 
that we can move forward and get into those conversations that 
that would be very helpful.
    Secretary West. As long as expedited review does not mean 
no review.
    Mr. Knollenberg. Absolutely. I am not suggesting that there 
shouldn't be a review. Mr. Chairman, how is my time?
    Mr. Walsh. The gentleman's time has expired.
    Mr. Knollenberg. Then I relinquish my time to the Chairman, 
thank you.
    Mr. Walsh. We should have time for a second round.
    Mr. Cramer.
    Mr. Cramer. Thank you very much.

                veterans benefits administration funding

    Mr. Secretary, Mr. Under Secretary, welcome to the 
Committee and you have already--I wasn't here for your 
statement, though I do have your statement in front of me. But 
some questions have been asked already about the claims 
process. And I know you know that this is one of the most 
frustrating processes that our veterans have go to through. And 
my colleagues and I, our casework largely pivots around 
frustration over the claims process. And it is not just a 
matter of no assistance with the filing of claims and that 
issue that is not necessarily under our control, but it is the 
long lines, too few staff, the delays in processing, the loss 
of documents, the inability to understand what needs to be 
submitted for there to be a timely ruling, and the constant 
interaction that we face with veterans that are trying to 
survive, literally, survive that process.
    What would you say about this budget and the way this 
budget will impact those issues?
    Secretary West. I would add one other thing to your list of 
bad things that have happened. That is the constant assurances 
that by day certain we are going to meet targets, which I think 
is a fine thing to do, we should set goals for ourselves, and 
then remediate our failure to meet them.
    In the budget, we do two things. There is a $109 million 
increase in the VBA processing budget. It has a two-pronged 
purpose. The first is to try to deal with a long-range, 
reliable solution to the timely and accurate processing of 
claims. I think, in my view and that of the VBA Under Secretary 
Thompson, that has to go with getting rid of the bulky paper 
files, misplaced files, the necessity to get them from one 
place to another, access to them by veterans, their 
representatives, national service officers and the like and by 
our people. That would be a computerized processing, an 
entirely computerized processing environment.
    That will take several years to get to. I think VBA is only 
in their second year of pilot programs, a study contract. There 
is money for that in this $109 million increase.
    Secondly, though, because that is like saying be patient 
with us. Some day out there in the future you will see an 
improvement. We have to have some improvement now. We started 
last year by adding 440 additional FTE bodies and minds into 
the claims processing process. Now, the bodies and minds also 
have to be trained. So, they are still struggling with getting 
the training done. But in this budget----
    Mr. Cramer. So, you think we haven't seen the impact of 
that yet?
    Secretary West. Not yet. And in addition, in this budget we 
have a provision for an additional 586, for a total of 1,000. 
We haven't seen the impact yet. I think we should hear from 
Under Secretary Thompson about when we will see the impact. But 
those are the two things in this budget that will address that.
    Mr. Cramer. Be brief, if you would, I wish I had more time.
    Mr. Thompson. Mr. Congressman, let me say up front, this is 
the most complex disability evaluation process in the Federal 
Government, perhaps, in the United States. Our pages just for 
calculating an effective date for the benefits runs to 35 pages 
of matrixes. We are acutely aware of the veterans' concerns.
    Mr. Cramer. It would be difficult to design a system that 
is more difficult or more frustrating than this.
    Mr. Thompson. Believe me, it is frustrating for veterans 
and it is frustrating for the people that have to administer 
it. It is way more complex, I believe, than it needs to be. One 
of the things we are doing that I think will have an immediate 
impact is moving away from an assembly-line type process, where 
you send the paper in and somewhere along the line somebody 
will contact you and let you know what is going on. We are 
moving towards a case-managed environment.
    This means that when a veteran files a claim with a 
regional office, they will know precisely who is responsible 
for making the decision and keeping them apprised of what is 
going on. The case managers have a responsibility, not just to 
wait for the veteran to come in and to ask the questions, but 
to go out and make sure that the veterans are kept informed not 
only about the issue in front of them, but about everything 
else that they may be entitled to.
    We piloted case management in six regional offices last 
year. We piloted that. We added nine more this month. By the 
end of this year, we will have 41 of 57 regional offices using 
case management. This move will have an immediate impact. We 
know that because we are surveying veterans----
    Mr. Cramer. You have tracked it. You are tracking it and 
already seeing in those demonstration projects----
    Mr. Thompson. Absolutely. We tracked it----
    Mr. Cramer [continuing]. Success?
    Mr. Thompson. We track customer satisfaction. We asked the 
veterans questions about whether they are kept informed, 
whether they are satisfied, whether they felt they were treated 
fairly, a host of issues. We know that the six prototype sites 
have significantly better performance in this respect than do 
the traditional organizations.

                    medical care access and service

    Mr. Cramer. Thank you. As well, it has been frustrating for 
veterans' access to just the facilities, the doctors, the waits 
and that process have been very difficult, to say the least.
    Your budget reflects you plan to open 63 new outpatient 
clinics. You will see 100,000 more patients in 2001 than in 
2000. What about new doctors?
    Secretary West. That is the way to deal with access with 
the waiting times and the like: To put more docs, more nurses, 
more technicians into the process of dealing with them in 
clinics.
    What we contemplate is redirecting 1,500 health care 
personnel into that clinical process as part of this budget.
    Mr. Cramer. You are talking about----
    Secretary West. And contracting for additional ones.
    Mr. Cramer [continuing]. Newly established service 
standards and access goals, including patients will be seen 
within 20 minutes of their scheduled appointment?
    Secretary West. Yes, sir.
    Mr. Cramer. Is that what you have already implemented or 
what you will implement?
    Secretary West. That is a process we have underway. We 
haven't gotten there yet. We are measuring ourselves against 
it, but that is our goal. That is what this 1,500 is for and 
that is that no patient, no veteran should have to wait more 
than 30 days for his or her first appointment with a primary 
care provider. That thereafter no veteran should have to wait 
more than 30 days--and, frankly, we would like it to be less 
than 30 days, obviously--more than 30 days for the appointment 
with a specialist for specialized care. And once there, once in 
the waiting room, no veteran would have to wait more than 20 
minutes.
    Mr. Cramer. Well, it is going to be difficult to accomplish 
that but, please, stay on that.
    Secretary West. Yes.

                          disability benefits

    Mr. Cramer. I want to talk about veterans' benefits offsets 
quickly. The disabled veterans have their disability benefits 
reduced if they are receiving other types of Government 
benefits. Has the VA done any studies to examine the 
practicality and the cost of exempting those disability 
benefits, certain groups, such as combat-wounded veterans from 
the offset rule?
    Mr. Thompson. Their benefits are offset only against 
military retired pay. If the veteran is receiving other types 
of benefits, we don't reduce their compensation based on that. 
It would only be offset against military retired pay. In other 
words, if you are entitled to a $1,000 a month in military 
retired pay and $500 a month for VA, we would offset that. 
There is a tax advantage for veterans to do that, that is why 
they opt for our payments. For other programs there is no means 
test for compensation other than this one exception.

                          hepatitis c funding

    Mr. Cramer. And in this budget you are requesting an 
increase of $145 million to treat veterans with hepatitis C; 
more power to you there, thank you, Mr. Chairman.
    Secretary West. For a total of $340 million.
    Mr. Cramer. Is that the total?
    Secretary West. Yes.
    Mr. Cramer. Thank you.
    Mr. Walsh. Mr. Frelinghuysen?

                     medical services for veterans

    Mr. Frelinghuysen. Thank you, Mr. Chairman.
    My apologies for being late, Mr. Secretary and gentlemen. I 
know last year I provided, I think, a high degree of discomfort 
because I was on the attack and several people have suggested I 
ought to be somewhat more restrained today in your waning hours 
as the head of the operation.
    While I personally like you and you certainly have a lot to 
be proud of in terms of your career, I do get a feeling as I 
visit with veterans in New Jersey and have contacts now, as a 
Member of Congress, with veterans around the country, that 
there is not a sense of urgency at the VA, and that we are not 
concentrating enough resources in meeting the needs of these 
individuals.
    And I am dismayed at times, I am angry at times, but I 
don't get the feeling that there is a sense of urgency. I think 
Members of Congress on both sides of the aisle feel there is 
some urgent needs out there. When we embraced the Veterans 
Millennium Health Care Act, I think we wanted it to be more 
inclusive and more expansive and, hopefully, we sent a message 
to you and your colleagues that you need to reinvigorate 
yourself.
    I get the feeling--and maybe this is an unfair 
characterization--that somehow we are sort of treading water 
and we shouldn't be treading water. If the men and women 
veterans of World War II are dying at a rate of 30,000 a month 
we ought to be escalating our efforts and reaching out. Many 
veterans have already voted with their feet as to where they 
want to get their health care--let's be blunt. Some have the 
luxury of using other hospital systems in their States but some 
are wholly dependent on the VA system. They love it. They 
protect it. They are stakeholders.
    And there are a lot of men and women who actively support 
your endeavors and make our hospitals, given their meager 
resources, work remarkably well. And I particularly would like 
to commend all those veterans groups who work with the VA 
system for their volunteer efforts. It is, indeed, remarkable. 
And I am sure if you were to measure it in dollars and cents 
that it would be pretty difficult. It is an incredible gift to 
the nation.
    That is why even with your increase for medical care--and I 
salute you for that, although a little late in coming--I still 
get a concern here that there is not a sense of urgency. The 
statistics cry out for us to do more. And I think actually the 
issues that relate to veterans are resonating in the American 
public. It may have as much to do with ``Saving Private Ryan'' 
as anything or maybe the recent involvement of Senator McCain 
in his bid to be President. Regardless, veterans are waking up 
and I think many of us here would like to be more responsive 
and I am here today to ask you, specifically, to be more 
responsive.
    I literally, Mr. Chairman, have dozens of questions. So, 
let me begin but let me just say again that I think that the VA 
needs to be far more proactive and I don't get the feeling, 
even with the new money, that there is the degree of advocacy 
that there should be and has traditionally been.
    I would like to know, relative to the National Reserve 
Account--I represent VISN 3, New York and New Jersey, for those 
of you not familiar with that VISN and, yes, we make a hell of 
a lot of noise on behalf of our veterans, Republicans and 
Democrats, in that part of metropolitan New York and New 
Jersey--how much money was in the National Reserve Account in 
the start of fiscal year 2000?

                        national reserve account

    We have been able to tap in it, thank God, because we have 
lobbied, and I think effectively, we have made a case. But I 
would like to just know for the record, how much money was in 
the National Reserve Account at the start of the fiscal year 
2000?
    Dr. Garthwaite. We started with $150 million in that 
account.
    Mr. Frelinghuysen. How much has been spent to date and 
could you provide me, very briefly, with a breakdown of the 
expenditures?
    Well, if you can't provide----
    Dr. Garthwaite. About $70 million.
    Mr. Frelinghuysen. What?
    Dr. Garthwaite. We have spent about $70 million.

                           nursing home care

    Mr. Frelinghuysen. That is $70 million. So there is $70 
million in that account. Last week, I visited Lyons VA Hospital 
in northern New Jersey and learned that 60 beds in that nursing 
home at Lyons are empty, as well as 60 beds of the East Orange 
Nursing Home--Mr. Chairman, another VA hospital in New Jersey--
and I was told that there is no waiting list for veterans to 
get into the homes.
    Personally, I find that hard to believe given, obviously, 
the death statistics that I mentioned. There are obviously a 
lot of people that are near death, incapacitated, for one 
reason or the other, certainly old age being the primary cause. 
We have the second oldest veterans population in the nation, 
behind Florida. I am told, in fact, by the New Jersey 
Department of Military and Veterans Affairs that there are over 
250 veterans waiting for a bed in one of the three State-run 
veterans homes. We are proud of what we do on the State level.
    And, so, I am very surprised that none of these veterans 
would qualify for a bed at the two facilities in New Jersey. 
Can you tell me why?
    Well, let me fill the gap. I hear the rumor that veterans 
are not admitted to the VA nursing home beds if they cannot be 
moved to another facility within 45 days. Is there a VA 
regulation that prevents veterans from taking those beds if 
they can't be moved to a State veterans home or other facility 
after 45 days?
    Dr. Garthwaite. There is no regulation. Certainly I think 
over time that we have emphasized the rehabilitative nature of 
our nursing homes. We used to get a lot of complaints that 
there was no turnover in our nursing homes, that the same 
veterans were there forever and that there was a long line of 
veterans trying to get in.
    We have also seen that a major part of what we provide 
especially well is rehabilitation in nursing home beds and 
transition after acute care.
    Mr. Frelinghuysen. But we have nobody in our beds in these 
two hospitals.
    Dr. Garthwaite. Right. And----
    Mr. Frelinghuysen. And obviously, we have got a lot of 
older veterans that are waiting for the State facility. There 
seems to be some disconnect here and I would like to know--
there has to be more to it than just the continual push of the 
VA to adopt even more of a managed care model than we have now. 
I mean we are literally supposed to be serving veterans but we 
have designed a system where we have the potential for 120 
veterans to be in these two hospitals between them and there is 
nobody in these beds.
    Dr. Garthwaite. We will take a hard look at what exactly 
the issue is with those.
    Mr. Frelinghuysen. Well, I would suggest that a hard look 
may be the kindest way. I mean you have an obligation. Why do 
we have a Department of Veterans Affairs, why are we providing 
nursing home care if we don't have anybody in those beds?
    How much, on average, does the VA pay for every veteran 
placed in a State nursing home? And how does that compare with 
the cost of treating that same veteran in a VA nursing home?
    Dr. Garthwaite. The cost is significantly less than the 
State veterans home cost and we can get you that information. I 
think it is about a third as much in a State veterans home as 
in the VA. I think our costs are comparable or slightly less 
than the private sector.
    [The information follows:]
                    Nursing Home Care in New Jersey
    The total number of Nursing Home Care Unit beds at Lyons Campus is 
240 beds. The 60 beds at East Orange Campus were not closed. The 
patients were moved to the Lyons Campus and staff was redistributed to 
other patient care units. Currently there is no waiting list for VA 
Nursing Home Care beds at the VA New Jersey Healthcare System (VA NJ 
HCS). As recently as of March 24, 2000, the total number of eligible 
individuals on the waiting list for the NJ State Homes was reported to 
be 100. This number includes spouses or widows of veterans who are not 
eligible for admission to VA Nursing Home beds. In addition the VA NJ 
HCS may already be serving some of the veterans on the waiting list 
through a variety of Extended Care programs. The VA New Jersey Health 
Care System would be happy to meet with congressional staff and discuss 
specific cases.
    There is no regulation that prevents veterans from being admitted 
to VA Nursing Home beds if they are not admitted to a State Veteran 
home within 45 days. VA Nursing Home admission criteria, clinical 
assessment results and veteran eligibility are the determining factors 
in VA Nursing Home admission.
    In FY 2001 average cost per patient day in a VA Nursing Home is 
estimated to be $346. The average cost per patient day in State Home 
Nursing is estimated to be $154 of which VA pays $55 (which includes 
administrative support).

                              respite care

    Mr. Frelinghuysen. Are there any plans to allow or even 
require the VA nursing homes to take empty beds and use them 
for respite care, for families who are caring for veterans at 
home but perhaps need a week or two break from the demands of 
caring for their elderly or sick veteran?
    Dr. Garthwaite. We do have respite care beds in VA nursing 
homes. We have other alternatives to nursing care home programs 
including home health care. Our hospital-based primary care 
programs actually send providers out into the community which 
is quite distinct from what you see in home health care in the 
private sector, which is much more therapy oriented, ours are 
assessment oriented as well. But we do have respite care beds 
in VA nursing homes.
    Mr. Frelinghuysen. But, getting back, why aren't these 
nursing home beds being used? I think it is wonderful to look 
at respite care and provide respite to those that need it but 
why aren't these beds being filled?
    Secretary West. Congressman----
    Mr. Frelinghuysen. Is it my imagination or are we having a 
problem here communicating?
    Secretary West. No.
    Mr. Frelinghuysen. This is what I am talking about.
    Secretary West. I was wondering if we have any indication 
that we are somehow turning people away who would qualify for 
those beds? Is that the suggestion here?
    Mr. Frelinghuysen. Yes. I get the feeling from talking to 
my veterans that some sort of strategy has been devised here 
that you are wholly dependent now on the three State veterans 
homes. Why do we have a veterans facility at all if we are not 
using the nursing home beds that we have in these two 
hospitals? And what I am saying, largely, Mr. Chairman, is this 
symptomatic of what we see around the nation? And if it is, to 
this layperson, that is totally unacceptable.
    Secretary West. I would say it is not symptomatic. And I 
have been listening to this line of questioning because I was 
wondering if the point here is that we are suspected there of 
having a policy that leaves beds empty of people who are 
qualified for them. I would assume that the same rules apply 
there as everywhere else.
    Certainly we have not been unresponsive to the needs of 
that Network. You asked about----
    Mr. Frelinghuysen. Oh, I understand that we have received 
money and we lobbied for it, but we have nursing homes with the 
second oldest veteran population in the nation, and a waiting 
list of 250 people for State nursing home beds. The VA ought to 
be opening those beds to those veterans.
    Secretary West. Well, we will look to find out what the 
story is there for you.
    Mr. Frelinghuysen. Thank you.
    Secretary West. But I would be very disturbed to find out 
that we had some affirmative policy of trying to keep those 
beds empty. We are there to serve the veterans.
    Mr. Frelinghuysen. In the days of managed care, which the 
VA has embraced and Dr. Kizer is--I won't say long gone--but 
not soon forgotten, things have occurred that I think are very 
unhealthy.
    The whole nature here is that we are supposed to be 
embracing and looking after our veterans. In some ways, it 
appears that we are turning them away.
    Thank you, Mr. Chairman.
    Mr. Walsh. Mrs. Meek.

                       women veteran initiatives

    Mrs. Meek. Mr. Chairman, and I would like to apologize to 
the Chairman. I am on two committees at the same time and I had 
to makeup the absence of someone else. But I want to thank the 
Secretary and his staff today for a job that you work very hard 
at doing. We gave you a pretty good hosing down the last time 
you were here and it appears that you have rebounded in a very 
good fashion.
    And I am very happy that the President showed some 
affirmation by providing, suggesting more money to be added to 
the veterans budget. You are our most honored resource in this 
country.
    And I hear from all kinds of veterans, of all age groups 
and I also visit the Veterans Hospital in my area, and it just 
looks like we are doing our very best and, of course, we could 
never do enough in this particular area, it is never enough 
that you can do for veterans.
    I wasn't here when you spoke about some of the questions. I 
understand you answered quite a few of the questions that I had 
an inquiry about. So, I won't repeat it. But I just wanted to 
commend you on your performance and to ask you to continue the 
advocacy that some members of the Committee have challenged you 
on today because that is extremely necessary and it is 
something that we will look very closely at, how well you 
advocate for the people you serve.
    I understand that the VA Advisory Committee on Women 
Veterans is meeting here in Washington this week. I am not sure 
that I saw any information in your updates about the 
participation of women and initiatives that you have for women. 
Would you mind addressing that quickly as to the participation 
of women, any concerns they have which I am not privy to?
    Secretary West. Well, thank you for your comments. And, 
yes, the Advisory Committee chartered by the Congress is 
meeting here this week for three days. I had the opportunity to 
speak to them yesterday. Dr. Garthwaite may want to talk a bit 
about our extensive commitment to health care for our women 
veterans.
    As you know, by statute we have a Center for Women Veterans 
Office in the Department. It is required by law to report 
directly to the Secretary. Our director of that office, Joan 
Furey, may or may not be present but she is an important part 
of the staff and is probably meeting with them now and is not 
here.
    They have voiced several concerns to me. One of them is 
their concern that we have established specific clinics or 
centers across the nation to deal with the specific health care 
problems of women veterans because they have some unique issues 
around their health care requirements. At the same time, their 
numbers of participation in the system have been so small--that 
is the small representation of women veterans in our system, 
that the effort to make sure that medical personnel in training 
get an opportunity to be exposed to those issues--has caused 
some of the centers to assign health care to other parts of the 
system. This is needed by, I guess, our accreditation people.
    That has caused a concern. It means that the centers may be 
in danger of disbanding. We do not intend to disband them but 
the Committee has raised that issue with them.
    They have also raised the fact that in dealing with benefit 
concerns of women veterans on issues such as breast cancer 
women veterans are rated in the same way without any regard to 
the particular impact, for example, of a mastectomy. That is an 
issue they have raised with Under Secretary Thompson that we 
are still looking at because right now that is precisely the 
way that the rating process occurs. That is a concern of the 
Advisory Committee and I think we can all understand why it is.
    They have several other issues that they have raised. Our 
concern has been that we be as in touch with them, as 
responsive to them as possible. Women veterans are still not 
using our facilities, not engaged in the system in numbers that 
represent their presence in the veterans community. That means 
we have still not done our job in terms of outreach, in terms 
of going to them, making them aware and also, perhaps in 
creating a receptive atmosphere for them. So, we have a lot of 
work to do there. I don't know if Dr. Garthwaite wants to say 
anything more on the health care area.
    Mrs. Meek. Okay. I just needed to have that question 
addressed. If there is any additional information, would you 
please send it to me, Doctor.
    Dr. Garthwaite. All right.

                  medical programs for women veterans

    Mrs. Meek. In that I am interested in the medical research 
and the medical programs for women. Many of the diseases are 
distinctly higher in incidence among women veterans than others 
and I would appreciate that.
    [The information follows:]



[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



                  rehabilitation for blinded veterans

    Mrs. Meek. Several veterans visited my office and one took 
quite a strong interest in the blinded veterans. They are 
concerned about the rehab centers. You have a good rehab center 
according to their report but many times it sort of impinges on 
their mobility to be able to reach those centers. And they 
figured it would be much easier if they did not have to travel, 
you know, they are more concerned about being near a home and 
the rehab centers are quite some distance from where they are.
    Now, have you had any success with your clinic programs 
relative to meeting the needs of these blinded veterans?
    Secretary West. I think our clinics--I see Dr. Garthwaite 
reaching for his microphone, he probably wants to answer. Let 
me just say a word. I think our clinics have actually been 
quite successful. I think they are very popular with blinded 
veterans and the association keeps a watchful eye on the 
centers, how we staff them, how we resource them.
    I think one of the keys though for effective provision of 
specialized services to our blinded veterans is something 
called the Blinded Vet Coordinator. This is the person in our 
medical centers and other facilities whose job is to connect 
the blinded veteran and blinded veteran population with the 
center or with a resource so they can get the care.
    Blinded veterans have expressed to me on several occasions 
that if we let those coordinators get, perhaps, caught up in 
ancillary duties, not able to devote themselves to it, then the 
key link between the services we provide and the blinded 
veterans who need them will be lost. And they have seen some of 
that occurring.
    I know Dr. Garthwaite is looking to answer.
    Mrs. Meek. Now, Doctor, it appears that most of your 
facilities for blinded veterans are located in large central 
cities or is that assumption incorrect? I say that because many 
of them mentioned to me that they have to travel to central 
cities for this kind of service. So, is there any way we could 
bring some of those services closer to those veterans?
    Dr. Garthwaite. Well, I appreciate that. We have several 
large inpatient facilities for week-long rehabilitation 
programs for veterans where there are specially trained staff, 
specially trained experiences of the inpatient nature which is 
a critical part of their rehabilitation.
    We have other models of outpatient rehabilitation that we 
are disseminating and, because many blinded veterans today lose 
their sight more gradually, we are introducing training that 
would be helpful if their sight further deteriorates earlier in 
the disease process.
    So, we have a series of things going on including a very 
extensive report and a Gold Ribbon Panel reviewing blind 
rehabilitation and vision preservation. And we have a new 
advisory committee I think will add to this which includes 
representatives of blinded veterans. So, there has been a fair 
amount of activity over the last year in attempting to engage 
in dialogue.
    We also have performance measures for blinded veterans in 
terms of the quality of service they are given and their 
satisfaction with it that we will be holding our managers 
accountable to. So, I anticipate some good news by next year on 
blinded veterans.
    Mrs. Meek. I have quite a few other questions, but I will 
make this my last one and I will submit the others for the 
record.
    I am a World War II person of the greatest generation and I 
am not planning to leave right now. I want to say that to my 
colleagues.
    Mr. Frelinghuysen. Thank God. [Laughter.]

                             long-term care

    Mrs. Meek. Mr. Frelinghuysen and I are good friends. So, I 
just wanted to let you know there are a lot of people my age 
around. I want to know from the Department here just what are 
you doing in terms of long-term care? These people are still 
living. They are not dead. So, what are you doing in your 
system to make aging a process that is good for the elderly?
    Dr. Garthwaite. Well, you may be aware that the VA has been 
a leader in the field of geriatrics. In fact, the VA almost 
invented the term, geriatrics----
    Mrs. Meek. True.
    Dr. Garthwaite [continuing]. With the geriatric 
rehabilitation and education centers that we have introduced. 
We funded a couple more of them during the past year. You know, 
although a critical piece, it isn't just about the effects of 
aging. There are simply more health issues when you get older. 
And there are specific diseases, some of which are very much 
more treatable today and some of which are preventable.
    For instance, our immunization rates have gone from a 
relatively low number to the high 80s to 90 percent in the 
Medicare population. It is about 75 percent for pneumococcal 
pneumonia.
    That, in and of itself, saves significant numbers of lives 
and it keeps people out of the hospital. It is cost saving and 
life saving that will assure these systems are in place.
    Mr. Walsh. Excuse me, Doctor, I am going to have to 
interrupt.
    You can finish up your response when we return, if you 
would.
    Thank you.
    [Recess.]
    Mr. Walsh. If everyone would take your seats, we will get 
right back at it.
    Dr. Garthwaite was just finishing his response to Mrs. 
Meek's last question.
    Dr. Garthwaite. Yes. I was just trying to make the point 
that we do a lot of geriatrics and we do a lot in geriatrics 
research and we also believe that there are a lot of medical 
problems that are more common as we age and we put a lot of 
emphasis on that, as well.
    Mr. Walsh. Thank you.
    Yes?
    Mrs. Meek. Mr. Chairman, I will submit the rest.
    Mr. Walsh. Thank you very much. Mrs. Northup.

                      medical services in kentucky

    Mrs. Northup. Thank you, Mr. Chairman.
    I just have a couple of questions. Primarily, I want to 
pursue a question that I raised last year. I will tell you I 
have met with the head of the VISN that we are in which is 
Nashville and I have a lot of faith in the answers I got from 
that gentleman and reassurances. But I am not sure that the 
people in my district do in Louisville. There is a continuing 
concern and a lot of rumors that services in Louisville were 
the largest percentage of the veterans live that are in 
Kentucky, not only because we are the largest city but also 
because of the proximity to Ft. Knox, people tend to retire 
near that area.
    There is considerable concern that when you are targeting 
tertiary care and high specialist care that there is a strong 
pull to put that in Lexington. And I have to tell you I think 
it is more than just people being fearful. I think there is 
some evidence of that.
    You may know that Louisville, out of all of the locations, 
has the second most efficient rating of all the facilities. It 
is considerably better than Lexington. And I asked you last 
year to provide me with some sort of list of how you make the 
allocations and you said there was a 10, I think, 10 principles 
or goals. The goals are very vague. They are very vague. They 
would in no way sort of decide how you would appropriate 
resources and what locations you would put facilities.
    And it seems that to me that those 10 principles need to be 
visited in much more measurable, mathematical terms. For 
example, where the largest number of veterans to be served 
exist? What are the precise services they need and are 
requesting? And your strategic plan should reflect 10 
principles that are measurable and much more specific.
    Secretary West. You are talking about the fairness of the 
distribution within a Network as between different medical 
centers.
    Mrs. Northup. Right.
    Dr. Garthwaite. The only thing I would say is that we are 
not 100 percent sure how you distribute dollars without putting 
the wrong incentives in medicine. I think managed care has not 
been successful. Capitated contracting hasn't been terribly 
successful. Fee-for-service has a separate set of problems 
associated with it and it tends to induce volume of services.
    But we are dedicated to try and do that and we have a group 
looking at that. I actually think you are right on target that 
we have to look at the needs of veterans and adapt the systems 
to them. We are dealt a historical set of buildings that makes 
it a lot more challenging and a historical set of relationships 
and teaching programs and research programs and others. I agree 
with you.

                  medical services at Louisville VAMC

    Mrs. Northup. Well, I think that there is more than just 
those challenges involved here. Let me, again, for example, we 
are the second out of seven of the medical centers. The next 
nearest one, the average cost per admission is $4,100 compared 
to ours which is $3,100. And both locations have a medical 
school. They have excellent outcomes. I am concerned that there 
is, as I was last year, that there is a political draw to more 
specialized care in the future heading towards the one in 
Lexington.
    And I would be--I don't mind telling you--I would be 
appalled if that happened. I think that if there are concerns 
with--you know, I think one of the problems is that there 
aren't precise measurements, there isn't clear discussions 
about just what the criteria are going to be, how many veterans 
are going to be served, what are the specialized services, what 
is going to be the measurement of where it ought to be? And, 
so, it leaves people in my district with a very uncertain idea 
of how it is going to be judged, and how they reassure or 
compete for the location to provide these services.
    And, of course, if it is something that is political it 
would be no wonder you would be very unsure about that.
    Secretary West. Would you like us to revisit that in some 
way, again, in the specific context of those medical centers 
there, with you, with the veterans, with the----
    Mrs. Northup. What I want to make sure doesn't happen is 
that anybody intervenes because of the close relationship or 
past working relationship to pull services out of Louisville 
and send where you have a much smaller proportion of veterans 
that are to be served. That there would be intervention that 
would wait, that would cause that to happen.
    At this point I do have confidence in the head of that 
VISN. He is located in Lexington. He and I have talked, and I 
feel somewhat reassured. But it does occur to me that if he 
doesn't have the final authority or somebody decides to make 
that decision from Washington, it doesn't matter what the 
reassurances are.
    Mr. West. I think our model is to put a great deal of 
responsibility on the shoulders of the network director to make 
those calls.
    Dr. Garthwaite. Absolutely.
    Mrs. Northrup. Well, I think that is usually the way, 
although if one of your high-ranking past veterans medical 
people happen to become an official at the University of 
Kentucky, they might have a direct line and be able to persuade 
somebody to go in a different direction. That is the concern in 
Louisville.

                        third-party overpayments

    Let me just ask you about one other concern, and that is 
the question of third-party payments. I read in the GAO that 
you all estimate that there were--I am really concerned about 
over payments, and what the level of those are. The GAO report 
said that there are some people that estimate that the over 
payments that have been made to you, not to mention the money 
that has not been collected, but the money that has been 
collected, that there is possibly $600 million of that that was 
made incorrectly in over payments that would have to refunded. 
Where are we on asserting exactly what that amount will be, and 
what is the process by which those over payments would be made, 
especially the ones since 1997 where it would not be returned 
from the Treasury, but from the VA.
    Dr. Garthwaite. As you are probably aware, that billing in 
all of medicine is not as accurate as it should be. There have 
been considerable issues in billing in the private sector and 
since we have become billers late in the game, we have 
significant issues in the quality of documentation that 
supports the bill that is rendered. We became aware of that 
when the AARP challenged some of our bills and we ended up 
having to pay them back. And then we commissioned our study 
from Price Waterhouse to get a handle on that, and found that 
indeed, as bad as it is in the private sector, we were worse. 
And it probably is not unrealistic to expect that that would 
have happened, given the fact that billing was not a part of 
our nature and wasn't built into our culture from the day we 
opened the hospitals.
    Having said all of that, we have had a very aggressive 
approach at improving our compliance, and given the squawks I 
have heard from deans of medical schools and other physicians 
about how much trouble this is to make sure that documentation 
is placed in there, they thought we were the reprieve from the 
private hospitals where they are constantly being harangued 
about documentation. I know that this is happening. I have 
visited several medical centers and seen it in progress. I do 
not know if we will ever have a completely accurate assessment 
of what our overall liability is. We can do sampling techniques 
and then try to guess. And a lot will depend on if they come 
back to us and challenge all the bills. The other thing though 
is if they come back and challenge all the bills, as we open 
those up, there may be other billing that we have missed. So we 
may find some other billings that we can make as opposed to 
just what we owe.
    The bottom line is we are going to need to get back to you 
on the record if we can give you an estimate of the total 
dollar amount, but I do feel pretty confident that we have made 
dramatic strides in the past year and even in the past few 
months at getting it under control.
    Mrs. Northrup. Well, I think it is important, Mr. Chairman, 
for us to know what that liability might be and what we might 
be facing in terms of a payout. Thank you.
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    Mr. Walsh. Thank you. Ms. Kaptur.

                       nobel prizes awarded to va

    Ms. Kaptur. Yes. Welcome, Mr. Secretary and representatives 
of the Department of Veterans Affairs. Thank you for the fine 
job you do in caring for our veterans across this country and 
for managing this system of benefits that we hope to improve 
over the years.
    I have several questions. Some require only very short 
answers. One is: historically, it is my understanding, that the 
VA has received Nobel Prizes for the development of the cardiac 
pacemaker and magnetic resonance imaging. Does the Secretary 
have a list of other technologies that the VA may have received 
Nobel Prizes for other than those two?
    Mr. West. Or that are otherwise worth noting?
    Ms. Kaptur. Yes.
    Mr. West. We do. Would you like us to recite some of it or 
furnish it to you?
    Ms. Kaptur. Yes, I would very much appreciate that for the 
record.
    Mr. West. We have a whole list of ``did-you-knows'', and we 
would be happy to pass them along to you.
    Ms. Kaptur. All right. I think that is very important for 
us to enter in the record and remind the newer members of 
Congress and the American public how important this department 
is and all of the people who work for it.

                        mental illness research

    I wanted to ask you how do we get Nobel Prizes out of the 
VA in the area of neuropsychiatry and the development of 
pharmaceuticals to treat serious mental illness? How do we help 
the world through the VA?
    Mr. West. Fair enough question. Do you want to----
    Dr. Garthwaite. Well, I think----
    Mr. West. One thing I would say is you recruit the very 
best people, and you support them, and you attract them with 
research, something we have been challenged on already, but let 
me let him continue. Go ahead.
    Ms. Kaptur. While he is doing that, maybe I could ask of 
any of the staff from the VA would have the percent of veterans 
treated annually, either as inpatients or in outpatient 
facilities; of all of your visits that would present with 
serious mental illness, what percent of your population? I know 
some have dual diagnoses, but where that would be one of the 
diagnoses that bring them to a facility. Is it a significant 
percent.
    Dr. Garthwaite. It is very much a significant percentage. 
With regards to how do we improve the discoveries in 
neuroscience, I would just say I used to do research in 
neuroendocrinology and have a great personal interest in this. 
And I would say that we have done some things already that are 
putting us on that path. In our medical research we have 
targeted mental illness through the years, and you may be aware 
that one of our researchers discovered a gene for schizophrenia 
in the last year to year and a half, which is profoundly 
important both in the understanding of a critically important 
disease, but also the recognition that there is a genetic basis 
for mental illness. The stronger that evidence becomes, and the 
more that those not in the area understand that, the more I 
think we can destigmatize mental illness as a problem.
    Secondly, we have started what are called MIRECCs, Mental 
Illness Research and Education Centers. These are modeled after 
our successful GRECC program in geriatrics.
    Ms. Kaptur. You only have about, what, 8 of those?
    Dr. Garthwaite. 8 of those.
    Ms. Kaptur. At about $1.5 or $1.6 million per site?
    Dr. Garthwaite. Correct.
    Ms. Kaptur. So that is less than $10 million.
    Dr. Garthwaite. But what it does is it provides a fertile 
soil for researchers and the critical mass of researchers to go 
out and attract other money from the NIH, which has been 
getting some increases in their funding, and from our own merit 
review and other studies. So I think all of those pieces are 
critically important.
    I can tell you that for all VA patients, 23 percent of 
outpatient visits are mental health visits, and 20 percent of 
all of our outpatients use mental health services. Now, how 
that breaks out in terms of seriousness I think would be a much 
harder number to come up with.
    Ms. Kaptur. Well, I think that the veterans of this country 
are going to help us find an answer for the rest of the nation 
and the world. I really do.
    Dr. Garthwaite. We hope to be part of that.
    Ms. Kaptur. And I was going to ask you, the materials that 
have been provided, Mr. Secretary, for my perusal--and I will 
read every word, I guarantee you that--in this area of 
psychiatric illness, have been very helpful. What is hard to 
decipher on first reading, and I would ask you, who at the VA 
we work with on this. I want to distinguish between basic 
research, applied research, actual care, therapeutic care, so I 
can see how the VA compares to other instrumentalities of this 
government.

                         mirecc in the midwest

    Another question I have, which is sort of a politically 
loaded one because I am from the Midwest. If I look at where 
these MIRECCs are located, Philadelphia, I think Seattle, Palo 
Alto, Boston. There is one in Connecticut. There is not a 
single one in the Midwest. So being very parochial, could I ask 
you, did no one apply? Were their applications insufficient? 
What happened there?
    Dr. Garthwaite. I would have to go back and check who 
applied. There was a process, a request for applications, so 
the applications were reviewed by the best scientists in the 
area we could find, and then there was a site visit team that 
visited all the top applicants to gauge their feeling about the 
success of the endeavor and the commitment of the institutions 
to making it work. So we can provide those who got screened 
out, but I don't have those in the top of my head.
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    Ms. Kaptur. All right. I am going to ask a question for the 
record, and then I will take my final question.

                              respite care

    Mr. Frelinghuysen had talked about respite care. And for 
the record, I would like to ask you, Mr. Secretary, to tell me 
whether under existing authority that the VA has or under 
authority that we would have to provide, how could we begin 
working with the VA at some of the nursing home sites, some of 
the long-term care sites, where you have spouses that are 
permanently going to be housed, and their wives or husbands are 
driving miles across the countryside to visit these people--
many of them are elderly--how do we embark upon some type of a 
program that would provide a bed on site, maybe kitchen access 
or something, so these people would not be split from perhaps 
their only living relative in the last few years of their 
lives?
    I am really interested in looking at that issue, maybe 
starting experimentally with some of our state homes or maybe 
some of the nursing homes around the country. There must be a 
way that we can deal with this.
    Somebody said to me--I think, Mr. Secretary, you said there 
was a McDonald's house on one of the----
    Mr. West. Fisher Houses.
    Ms. Kaptur. Fisher Houses on one of the bases or something. 
But you know, it just seems to me we ought to be thinking about 
a way. I think a lot of our local veterans organizations would 
support this in terms of publicizing it and so forth. So many 
of these local homes are understaffed and we can just be more 
family friendly.
    Mr. West. We will furnish it for the record. There may be 
some authority on the Millennium Act that helps us, but we will 
furnish it for you.
    Ms. Kaptur. All right. I would love to work with you on 
that.
    [The information follows:]

                              Respite Care

    VA has no legislative authority to provide housing services 
to veterans and/or family members. VA expects that such 
services might best be developed through some form of public/
private partnership or sharing agreement.

                     training physicians and nurses

    Ms. Kaptur. And, finally, I want to ask something about 
nursing care and physician care. Historically--and if you do 
not have this information now, please provide it for the 
record--what are the most consequential education and training 
programs that the VA has embarked upon for the training of 
physicians and nurses? Right now I know--for instance, in the 
area of psychiatry I know nationally we have a problem.
    Dr. Garthwaite. We probably should go back and look at this 
more carefully, but I know that we have used an opportunity we 
have to create special fellowships in particular areas. One 
that comes to mind immediately is the one we created a few 
years ago in health quality scholars, because we believe that 
not enough physicians have been trained to think systematically 
about how to improve the quality of a system of care. We have 
been pretty good about pointing the finger and saying, ``You 
are at fault'', but we have not been very good at making the 
system work better, and we think that is an important need.
    Through the years we have been very active in producing 
subspecialists in medicine in a number of psychiatric residency 
programs. But I think your questions are great ones, and we 
look forward to working with you with those.
    Ms. Kaptur. Well, you know, there is not a community in 
this country that hasn't been riveted by changes in the health 
system. And the VA, as the largest health care system in the 
United States and probably the world, has a whole lot of role 
modeling to do. And with the kind of people that I have met at 
the VA and with the dedication that I have seen, if we do our 
job here and you do your job as professionals, we can make a 
big difference across this country if we can think outside the 
box a little bit. So we really appreciate your testimony this 
morning.
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    Thank you very much.
    Mr. Walsh. Thank you. Mr. Goode.
    Mr. Goode. Thank you, Mr. Chairman, and thank you to the 
Department of Veterans.

                    satellite clinic at danville, va

    Thank you. In Danville, Virginia a satellite clinic was 
recently opened, and we are certainly thankful of that, and 
that is under the Salem Veterans Hospital's jurisdiction. That 
clinic treats only service-connected veterans. And my first 
question is: is that typical of your clinics nationwide, or do 
they treat both non-service-connected and service-connected in 
most of your clinics? And this is a private contract clinic. 
You have it I think with the Sandy River Medical Center which 
is in Danville. Is that typical or----
    Dr. Garthwaite. No, they should be seeing all veterans, and 
we will need to look into why that might be the case, if it is 
a volume issue or just because they had started up that way, 
but we need to take a look. They should be treating all 
veterans, all enrolled veterans.
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    Mr. Goode. All right. Danville is located between Durham 
and Salem, and some of the veterans had been to the Durham 
hospital, but they have been told that since they are under the 
jurisdiction of Salem at this satellite clinic, that if they 
have to go to the hospital, they have to go Salem and not 
Durham, and I just wondered if that is standard procedure?
    Dr. Garthwaite. No, I think they--clearly, our preference 
is that they go where they feel most comfortable getting care. 
There may be special programs in a particular place where it is 
to their advantage to go there, but generally they should be 
able to go where they choose, where they like.
    Mr. Goode. That is not the case, at least with the couple 
that I----
    Dr. Garthwaite. I would just say that VISN 6 has not jelled 
as a team-base network between the medical centers as quickly 
as possible. We had some turnover early on with the network 
director, and we have had some real challenges in recruiting, 
in that we have had to go through two cycles of interviewing 
and so forth, even though I think Jerry Husson's done an 
admirable job in an interim basis, to get at some of these root 
issues of cooperation among medical centers we really need some 
strong leadership.
    Mr. West. Let me add one other thing. We will specifically 
follow up on both of these.

                 federal employees health benefits plan

    Mr. Goode. All right. Thank you. A more general question--
well, I want to say I am glad in the budget that you have 
gotten increased funding for veterans health care. You are 
familiar with the bill sponsored by--I believe it is 
Congressman Norwood and Congressman Shays, to say all veterans 
can get in--Medicare-eligible veterans can participate in the 
Federal Employees Health Benefits Plan.
    Mr. West. Is this retirees, Congressman?
    Mr. Goode. Yes.
    Mr. West. This is military retirees?
    Mr. Goode. Right. And I have seen different estimates on 
the cost. Do you all have a cost guess on that? I think it was 
like $10 billion on that.
    Mr. West. I don't think so, no, sir. I don't think we have 
a cost estimate on that.
    Mr. Goode. All right. Your total for health care in the 
last fiscal year, what was it for retirees?
    Mr. West. For retirees?
    Mr. Goode. Yes. You all have a figure on that?
    Mr. West. We can look to see if we can separate that out. 
Of course----
    Mr. Goode. I don't want you to go to--if you don't have 
something readily available.
    Do you think you will have it?
    Mr. West. I would think it would be a small number. 
Retirees, of course, are provided by and large by DOD hospitals 
until 65, and then the whole point of the bill is that they are 
thrown into, as it were, out on the economy. To the extent they 
come through our system, it will be as any other veteran, 
service-connected disability or the like. But we can certainly 
go try to see if we have some sort of an ability to segregate 
those numbers. I think it would be small though.
    Dr. Garthwaite. I remember reading, I think last night, 
that there is somewhere an estimate of around 600,000 military 
retirees enrolled in the VA health care system. I think we have 
that.
    Mr. Goode. That is retirees?
    Dr. Garthwaite. Yes. So I think we have enrollment data but 
I do not think we have ever run the cost of care for that 
particular group, and the cost might be quite different than 
another group of veterans. I would suspect it might be a little 
less.

                          empty hospital beds

    Mr. Goode. This is an observation about the Salem Hospital. 
It takes a long time to get in, and it is just like the 
Congressman from New Jersey was commenting about the hospitals 
in his area there, empty beds there and empty spaces, and a 
typical veteran looks at that and says, ``Well, if you could 
see me quicker, and I could be in the hospital if you would 
just utilize this other wing.'' And I know that is not always 
the best avenue from a cost effective viewpoint, but it is 
still--the perception to the veteran is that you are not 
providing me with as quick a care as you could if you would 
utilize more of your facilities.
    The director at the Salem Hospital I think is working hard 
and doing a good job and no reflection there. I think it is a 
perception that exists in New Jersey, Virginia, and in a number 
of points across the country.
    Mr. West. Let me, if I might, Congressman, say something 
before Dr. Garthwaite does. We will look into that. That is 
always the first point. But the possible existence of beds 
other than long-term care beds that are empty is a little more 
understandable to me. As the system over the past, what five or 
six years, has gone from a residential care inpatient base to 
outpatient. Remember that the number of veterans we are serving 
is going up, not down. We are not declining in care we provide 
for veterans. We are increasing. We are going to treat 100,000 
more in 2001 than we are treating in 2000. Now, the question of 
timing, how long they wait, is of vital concern to us, and I 
described earlier that we are looking to get the waiting times 
down for that first appointment for referrals and even for the 
time waiting in the doctor's office. And that will allow us to 
care for more people. But in terms of beds, residential beds, 
we actually expect them to be emptier, because we are doing 
more of our treatment in those 600 plus outpatient clinics, the 
benefit being that they get us closer to the veterans.
    Mr. Goode. My last point is I certainly like what you said 
in your statement about 30 days max. Just keep going in that 
direction and get it back.
    Thank you, Mr. Chairman.
    Mr. Walsh. Mr. Price.

                     claims decision waiting times

    Mr. Price. Thank you, Mr. Chairman.
    Mr. Secretary, I want to welcome you and your colleagues 
back before us, and welcome Dr. Garthwaite for the first time 
to this hearing.
    And I would like to follow-up on a discussion that we had 
last year concerning the claim waiting times, the initial claim 
waiting times for veterans seeking disability rating reviews.
    But the first thing I want to say is that we have gotten 
excellent cooperation from your people in Winston-Salem. The 
staff there has been very helpful to us. They have always been 
timely.
    Mr. West. The regional office?
    Mr. Price. Yes.
    Mr. West. Under Secretary Thompson.
    Mr. Price. All right. Well, they have been very responsive 
working with my staff. Director Montgomery spent time very 
recently with two of my staff members, answering questions, 
giving full access to rating and training staff, which was very 
helpful I think in our understanding of how the disability 
claims process works. And of course in our office, we are 
trying to work on this on two levels, first in dealing with 
individuals who need help in getting their claims processed, 
and then coming back here to the committee and trying to make 
good funding decision that will help us improve the process.
    I know this has come up many times today. I understand the 
question about the claims decision waiting times has been 
raised by the Chairman, Mr. Mollohan, and Mr. Cramer. I am 
particularly interested in the situation, of course, with the 
regional office there in Winston-Salem. At last year's hearing, 
the amount of time that a veteran had to wait to get an initial 
disability compensation determination had increased to 238 days 
or nearly eight months. The year before that the waiting time 
had been 175 days. I am aware of the various problems that led 
to this, particularly staffing problems, experienced staff, the 
loss of some experienced staff, and the need to bring people on 
and train them so that we have not only better turnaround 
times, but also acceptable rates of accuracy.

            update on claims processing at winston-salem var

    I wonder if you or Mr. Thompson could give me an update on 
the situation in Winston-Salem, Mr. Secretary. How long are 
those initial disability review waiting times now? And while 
you are at it, could you give me an indication of how we are 
doing on the accuracy front? It is not just speed we are 
looking at. Have the remand rates dropped? And how do these 
numbers, both on speed and accuracy, compare to the rest of the 
country, and what kind of rate of improvement can we expect in 
the future?
    Mr. West. Fair enough. And I think Under Secretary Thompson 
will give you those figures. I will just say a brief couple 
words.
    I know that you want me to keep these answers short and I 
may be going on too long. First of all, with regard to Winston-
Salem I am particularly aware of it. Let me put it that way.
    Mr. Price. For very good personal reasons, I am aware of 
that.
    Mr. West. Secondly, Under Secretary Thompson, two years ago 
told me and this committee and other committees, something that 
has turned out to be true. He said the waiting times will get 
worse before they get better, because he was instituting a 
program that requires our people in our regional offices to 
follow steps that make them essentially more honest in the way 
they deal with the claims, not that anybody has been dishonest, 
the tendency is to complete the easier claims, in order to 
complete the easier claims, in order to improve the numbers 
quickly. He has put in programs that require more honesty.
    Secondly, as he attempts to divert more people into the 
processing, there is a training problem to be dealt with as he 
reorganizes the offices.
    That is just an overview to say to you, as distressed as 
every one of us is, me personally, our veterans, our 
organizations, and the members of this subcommittee, over the 
waiting times, they are not a surprise. We knew this was going 
to happen before the numbers got better. Now we believe that 
things are being put in place that will make them better. Go 
ahead.
    Mr. Thompson. Thank you, Mr. Secretary.
    I do agree with what the Secretary said. I will speak to 
Winston-Salem in particular. I believe we have turned the 
corner down there. For February the original rating actions are 
taking approximately 180 days.
    Mr. Price. And that is the--the point of comparison there 
is to the 238-day?
    Mr. Thompson. No. The national average, actually, is 183, 
so they are just slightly better than the national average. 
That is just for the month of February. It is the most recent 
data we have. If you look at 12-month trends, those numbers 
would be higher because they are inching down.
    Mr. Price. Okay. But in terms of Winston-Salem's 
performance, the point of comparison is the 238?
    Mr. Thompson. Last year.
    Mr. Price. That we had last year.
    Mr. Thompson. Correct. Winston is an interesting case. They 
have a middle to large veteran population in the State of North 
Carolina. But the military bases add 112,000 potential 
claimants to our workload down there. Winston-Salem actually 
comes out to be about the fourth largest compensation and 
pension workload office.
    I will say in advance that VBA is a Vietnam-era 
organization. By that I mean that most of our senior officials 
and most of our senior decision makers came to work for this 
agency during the Vietnam War years. With a 30-year full 
retirement in the federal government, if you do the math, you 
realize that many of our most senior and experienced people 
either have retired, are going to retire, or will shortly be 
eligible for retirement. In Winston-Salem, 56 percent of people 
in the first line of decision makers are in a training status. 
The percentage of rating specialists in a training status is 50 
percent and that is the most critical decision-making job. Of 
the remaining rating specialists, 70 percent will be eligible 
to retire in 3 years.
    What you are seeing in VBA is an enormous transition from 
one generation to the next as the work continues to come in. We 
scramble to try to bring on new employees and to train them in 
what, by any measure, is an extraordinarily difficult process. 
Nationwide 40 percent of our decision makers are in training.

               rating specialists eligible for retirement

    Mr. Price. And the number eligible for retirement, do you 
know what that figure is, the rating specialists and appeals 
specialists who are eligible for retirement say in the next 5 
years?
    Mr. Thompson. In Winston-Salem, about 70 percent will be 
eligible in the next 3 years, of the ones that are not in 
training. We have about half of them who are in training. Of 
the remainder, it is about 70 percent of them. Nationwide, I 
can get you the specific numbers, but the average age for a 
disability rating specialist is up around 50. For other jobs it 
is higher than that.
    [The information follows:]


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    Mr. Price. Well, I would appreciate that. That certainly 
does underscore the nature of the problem you face in replacing 
these personnel and getting them trained.

                   processing times and remand rates

    I do want to go back just briefly if I might to the 
turnaround times. You gave me a February figure. I want to 
understand exactly what I am getting there and how accurate 
that number is--or how representative it is of what we are 
really getting done month by month over in Winston.
    Mr. Thompson. That is a point in time. We also measure by a 
12-month rolling average. I don't have that right in front of 
me. I will be glad to get that for you for the record.
    [The information follows:]


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    Mr. Thompson. I can answer your remand question. Winston-
Salem has dropped the remand rate from 48 percent to 38 
percent. The national average right now is 29, so they are not 
doing as well as the national average, although they have made 
good improvements. I think a lot of that has to do with the 
percent of trainees they have in this process.
    Mr. Price. All right. We will pick up again after the vote. 
Thank you.
    Mr. Walsh. Thank you. We will return.
    Mr. Knollenberg. Mr. Chairman, just before you drop the 
gavel, is there any chance of getting in a minute?
    Mr. Walsh. You are welcome to stay and ask questions.
    Mr. Knollenberg [presiding].

                   allen park health care needs study

    Mr. Secretary, very quickly, Allen Park is a community in 
my area, and the Detroit Metropolitan area. There was to have 
been a study which would include a projection of current and 
future health care needs of this facility. As you know, it was 
vacated when the new Dingell Center was brought into play in 
1996. I would like to know if you are prepared to submit this 
report to the House. We have inquired about this, I think it 
was last year and maybe the year before, and we want to know if 
there is a report coming. I don't have to have the details, but 
is there something that we can anticipate seeing?
    Mr. West. I think there was a report received at VHA. I 
have not seen it, and I think they are not ready to forward it 
to me because they have some questions about the report.
    Mr. Knollenberg. So it is still in the process? We may want 
to follow up on that with you, because it has been a while 
since that request was made.
    The other thing that I should tell you about, there is a 
lingering problem. As you know, that facility was granted to 
the VA back in the '30s by Ford. Ford may want it back. They 
are talking in some earnest about--because that was a part of 
the provision, that once it was----
    Mr. West. A reverter?
    Mr. Knollenberg. It was a reverter type clause that allows 
it to come back. And I am sure that you are aware there is a 
38-acre campus there, so there is some concern about the use. 
So I would like to make sure that we hear what is being 
proposed, what is the situation, and then finally with the 
Dingell Veteran Center, I want to know if there is any way that 
we can utilize some of the space in there? That is a facility 
that is not entirely being used. Could it be possible--I am 
just asking--if Wayne State University and my office could work 
with you in some fashion to determine if any of that unused 
space could be available for some other research or whatever. I 
am not clear on what we could do, but if it is not being used, 
could we use it for something?
    Mr. West. Let us take a look.
    Mr. Price. And so that is the focus of my intent. So I will 
be glad to----
    Dr. Garthwaite. My understanding is we are currently 
examining whether that would be useful for the benefits office 
for co-location, but we have other examples where we have used 
space, so we would be happy to----
    Mr. Knollenberg. We would be interested in all that, and I 
guess I am the only one that has access to the gavel, so with 
that, I will call for a recess. Thank you very much.
    [The information follows:]

                            Allen Park Study

    The medical center has met with representatives of Wayne 
State University on more than one occasion to discuss the 
possibility of utilizing VAMC space. These discussions have 
centered on the use of research space in light of the fact that 
the John D. Dingell VAMC and the Wayne State University School 
of Medicine are educational affiliates. These discussions have 
resulted in Wayne State University and the VAMC entering a 
contractual arrangement whereby the University uses VA research 
space and the VAMC is provided educational tuition credits at 
Wayne State University. This agreement is in the final review 
process at Wayne State University.

    Mr. West. All right, sir.
    [Recess.]

                        processing remand cases

    Mr. Walsh [presiding]. My opportunity right now to ask 
questions.
    I have some concerns about the way the department handles 
remand cases, as most of the members here have expressed today. 
The VA budget justification states remands represent a rework 
phase of the appellate cycle, and typically add two years to 
the processing time for an appeal. Two years is a long time.
    I can say from my experience with my regional office in 
Buffalo, there are 163 remanded cases as of January 18th that 
are more than two years old. The length of time is in addition 
to the time it took the Department to initially adjudicate 
those cases. And I might add, this is a tremendous workload on 
my office too, because my veterans issues and claims expert is 
handling the same cases over and over and over. So obviously, 
it is difficult for me. Imagine the veteran that has waited 
two, sometimes three years to have their claim adjudicated.
    What is the Department doing to clear these cases, 
specifically Buffalo, but obviously Winston-Salem has some 
problems, and others do too.
    Mr. Thompson. Mr. Chairman, I will put this in a little 
better perspective. The same people that process claims handle 
the remands in a regional office. In the middle of the last 
decade, as this agency focused on trying to get original claims 
decision done more quickly, we put a lot of the other types of 
work aside, including appellate work and remands. We did not 
focus on them because we simply did not have the resources.
    I can tell you that over the last 18 months to two years we 
have required regional offices to put increasing attention on 
remands. That has contributed some to the original decisions 
taking more time. But the good news is that the pending remands 
in regional offices are down 14 percent over the last year. The 
oldest ones, the ones over two years and the ones over four 
years, which are also there, have declined significantly, by 
more than half. We have the rate at which the appeals are 
remanded from the Board of Veterans Appeals (BVA). In 1997, 45 
percent of the claims we sent to them were remanded back to 
regional offices. That number right now is at 29 percent, which 
we think is a significant decline.
    VBA and BVA meet biweekly to make sure we are on the same 
page. We have joint training. Probably one of the most 
significant things we did was last year was to develop a joint 
evaluation system. We have one computer system now that tracks 
the process from the regional office through BVA and any 
iterations of that. This is the first time that has ever 
happened. Traditionally, VBA had its system, BVA had its 
system, and never the twain did meet.
    I am not satisfied with how we are doing with remands, but 
I think we are on the right track. With continued effort, I 
think we will get the numbers down to where we are much more 
comfortable.

                             appeal process

    Mr. Walsh. One of the really frustrating aspects to this, 
certainly for my office, and for veterans in general, is that 
in so many of these cases the first action that the veteran 
sees after waiting for months and months and months is to get a 
referral back from the appeals or from the agency that says, 
``You are missing certain forms'', or ``Something is not 
signed'' or some ``i'' isn't dotted or some ``t'' isn't 
crossed. And to wait for months and months and months to get an 
answer back, and then to get that sort of response back makes 
people angry. What are you doing about that? There has to be a 
way to clear those out, clean them up first.
    Mr. Thompson. It makes me angry as well. At a minimum, 
veterans who file claims with us need to know quickly and 
accurately what the status of their claim is, and to be kept 
apprised of that. Frankly, if they have waited months, and are 
then told they are missing a document or didn't sign something, 
that is just a flat-out mistake. There is really no excuse for 
that. Again, part of that has to do with claims backlogs and 
people not having the opportunity to look at these things as 
they are coming in the door. They often sit for extended 
periods of time before anyone can consider them.
    I think the long-range solution to this is to have a 
relationship with the veterans that currently does not exist in 
most VA regional offices. Currently, it is a machine-like 
process. You send your paper in, and when we get to it, when we 
can, we will let you know what is going on when we think we 
should. What I mentioned in response to Congressman Cramer's 
question, we are going to a case management system. You will 
have individuals in regional offices that the veterans know; 
they know their phone number; they know how to get hold of 
them; they know these people that are the veteran's advocate in 
the regional office. I think moving to that system will do more 
than almost any other single thing I can think of to make 
veterans satisfied with the process and make them feel not only 
that we make fair and accurate decisions, but that we have 
their best interests in mind at all times.

                         reduction in backlogs

    Mr. Walsh. The skeptic, or even worse, the cynic, might 
suggest that these reductions in backlogs are more of a result 
of the statistic that Mr. Frelinghuysen mentioned earlier, a 
thousand veterans a day dying. How would you refute that?
    Mr. Thompson. I think the facts speak otherwise. The older 
veterans, the World War II generation, don't constitute a 
significant part of our work right now. For the most part they 
have had settled issues with us oftentimes for many decades. 
Our largest single workload area are Vietnam-era veterans, 
followed by Gulf War veterans and peacetime-era veterans. World 
War II and Korea constitute a small fraction of what we do. If 
you are using age as a measure of the likelihood of death, I 
think that it won't significantly impact the claims process, 
because most of our claimants are somewhat younger than World 
War II and Korea.

                  additional funding for medical care

    Mr. Walsh. Lastly, we provided an additional $1.7 billion 
last year to the Agency for medical care. The President has 
requested in the neighborhood of $1.3 billion. That is $3 
billion. It is a substantial increase. How are you going to 
spend that money? What are your priorities for spending it? 
What can we, as representatives, and what can the veterans 
expect from the Department of Veterans Affairs with that 
substantial increase in expenditure?
    Mr. West. A half a billion of it is in implementing the 
Millennium Act, $548 million. That is very significant because 
of how it will help us in terms of real solutions to the long-
term care problem. I mentioned community, home-based and the 
like, and to the emergency care, will have an effect on 
veterans. I think the other big portion--I will give Dr. 
Garthwaite, who is our health person, a chance to talk briefly 
on access to health care and service. And that is the 
outpatient clinics opening up, the 63 additional ones to go 
with the 77 opened this year, which takes it out to more 
points. Then is the FTE that we are able to redirect nurses and 
doctors into the clinical health care provision. And quite 
frankly, that is also the ability in most of our networks now, 
who are passed the impact, except I think for one, the 
significant impact that was driving down the amount that they 
were getting there to begin to build their programs again.
    We will do a lot of health care with that, just as we will 
with all of the $1.7 in fiscal year 2000. The $1.355 will help 
fund improvements in service and increased access, Millennium 
Act and of course, the cost of hepatitis C. The procedure is 
expensive. We started from a small cost just a few years ago 
now, to $340 million. So those will be part of it, as well as 
the ongoing activities. Research is staying the same, at $321 
million, but that is still a big amount of money.
    What else would you say are our priorities within that?
    Dr. Garthwaite. Clearly, the hepatitis C piece, the 
increase in drug costs. We have noticed a continuing increase 
in drug costs over time. It was 6 percent of our budget in 1994 
and now last year over 10 percent of our budget. So as new 
therapeutic drugs come out that are effective, we have invested 
more and more in getting those appropriately to veterans. We 
have committed to homeless veteran initiatives, and some 
additional dollars there. Clearly, one of the big pushes is to 
improve our waits and delays, and we have not waited to start. 
We have a huge initiative ongoing with the Institute for Health 
Care Improvement on the processes that underlie some of the 
waits and delays. Some are resource issues. Some are 
recruitment of doctors and nurses. Some of them are just the 
dumb old way we have always done business that needs to change, 
and we have dramatically changed some of those.
    Health care inflation is not an insignificant part of all 
this, and it would be wrong, I think, not to point out that my 
health care premiums have been going up by 8, 9, 10 percent the 
last couple years. That reflects the increased cost of 
pharmaceuticals. It reflects the increased cost for personnel 
that we have to recruit against the private sector. It reflects 
a whole series of things that are underlying that health care 
inflation piece. That is a big part.
    Secretary West. Speaking of drug costs, that is, obviously, 
not inconsiderable. Over two years that will be another half a 
billion. So, that in 2001, you might assume half of it or 
approximately half is a significant part of the increase, as 
well.
    Mr. Walsh. It certainly is.
    Thank you. Mr. Mollohan?
    Mr. Mollohan. Thank you, Mr. Chairman.

                           access and service

    Mr. Secretary, you have been asked some access and service 
improvement questions. I just want to go over them a little 
bit. The VA medical system has had chronic problems with 
managing outpatient care schedules. Veterans have complained to 
all of us over the years that it takes forever to get an 
appointment and that the wait once they arrive at the facility 
can be hours. I get this all the time from veterans in North 
Central West Virginia that have to go to Pittsburgh. They have 
a real dilemma once they get there. The bus they go on, except 
on one day of the week, returns at 2:30. They will have an 
appointment in the morning and they don't get served until they 
are bumping up against the time that the bus has to leave. Many 
of them have to choose between staying past the time the bus 
leaves or making another appointment.
    The President's budget request includes $400 million 
targeted to improving access in service. This includes meeting 
the goal of an appointment within 30 days and patients being 
served within 20 minutes, as you have testified here today.
    Can you put this goal into perspective? Tell us where we 
started in terms of scheduling problems? What progress has been 
made to date? I do know that you have been working on it. When 
do you expect to achieve the goals that you are setting forth?
    Dr. Garthwaite. We have a little better data, I think, on 
seeing you within 20 minutes. We said, please come in for a 2 
o'clock appointment, when did we actually take you into the 
room? In 1997, we believe we did that 55 of the time; in 1998, 
66 percent; in 1999, 69 percent of the time. Our goal by 2003 
is to do that 90 percent of the time. We would love to exceed 
that goal if that is at all possible and we are going to split 
the difference in what we demand of our managers in that we 
will ask them to make a third of that progress during each of 
the next three years.
    Now, the other issue is when can you get in and when is the 
next available clinic waiting time? We temporarily used the 
next third available appointment. It is a computer term that 
will give us a better handle on how soon until the next 
appointment.
    And we don't have good system-wide data yet, but we have 
been using clinic data to feedback to teams that are involved 
in trying to improve that process. And we have made some 
dramatic improvements. And all 162 medical centers have 
improved some and at least their most problematic clinic that 
they chose to work on during this initiative and we are rolling 
out that data. And as soon as I have it, I will get you a copy. 
Because I think it is going to be very impressive.
    Our goal, however, is to get to that 30-day. Again, I will 
say our data isn't the best as a baseline. We thought we were 
about 60 percent on the 30 days for primary care. A lot 
depended on the type of specialty, whether we were close. Our 
baseline data estimates vary by specialty. They are probably 
the worst in ophthalmology, where we dispensed almost a half a 
million eye glasses last year, and orthopedics and urology 
which affects a lot of older veterans.
    So, I think we have made significant progress but we are in 
the midst of change and I think we have now the fix in our 
computer systems that allows us to track it. Every time you 
ask, we will be able to give you that running average of how 
long until the next appointment and I think that will 
dramatically change.

                             waiting times

    Mr. Mollohan. I think the questions on this subject assume 
that a veteran who is waiting actually gets seen. But in the 
situation that I described for you, that veteran would not be 
seen that day because the bus was leaving at 2:30 from 
Pittsburgh and they had to go back to West Virginia.
    In your statistics, do you track the veterans who, because 
they have had to wait so long, don't get seen?
    Dr. Garthwaite. I am not aware that that is the focus of 
what we have done. It is obviously an inexcusable situation and 
whenever it occurs, we would like to know about it. We have a 
lot of systems set up to try to help people who are having 
trouble, patient reps that are easily available to a veteran 
who is concerned about that and should intervene.
    Mr. Mollohan. But is this a problem that you know about, 
veterans leaving because they have had to wait so long for 
their appointment?
    Dr. Garthwaite. My guess is that it probably happens 
occasionally and, that because it happens occasionally and 
should never happen, that it is well-remembered and----
    Mr. Mollohan. No, no. Excuse me.
    Dr. Garthwaite. But I don't believe it happens a lot.
    Mr. Mollohan. Okay. My question was do you track that? Do 
you know?
    Dr. Garthwaite. Not that I am aware of.
    Mr. Mollohan. I would like to get some sense of to what 
extent that is a problem. I know that just last week I had 
veterans bring this to my attention. I don't know how unique it 
is that veterans have to get on a bus to go some distance, but 
that leads me into another question.
    Veterans tell me that when they are seeking eye exams or 
some sort of specialty examinations, they call into a system to 
get an appointment. They may get an appointment, but at a 
number of different institutions which may be some distance 
from their home. Is that the way it happens? I know that it 
does in some situations because I was on the phone with a 
veteran waiting to get an appointment. The veteran was 
complaining it took so long to get an appointment and it would 
be so far from home. It was like the VA was booked up and had a 
central operator that has the schedule for all the different 
clinics in the Washington area.
    The veteran was complaining about doing this time and time 
again and not getting an appointment. However, when I was on 
the phone they were routed to Aberdeen and got an appointment 
in about two weeks.
    So, the veteran was disappointed in this case that they got 
an appointment because he wanted to impress the Congressman 
that they couldn't get one. But, they had been trying for some 
time to get an appointment. Is this a part of the process that 
you are looking at?
    Dr. Garthwaite. Well, the system is, I believe, designed to 
work a fair amount better than that. If it is your first visit 
to the system, brand new, we have set up a fair number of 
mechanisms where you can call in, who you talk to, and we have 
tried to expedite that process where you can do a lot of the 
registration over the phone. There is even one medical center 
that allows you to do it over the Internet. You can fill out 
the forms before you get there, come in and try to expedite 
your first visit.
    Now, if you are in the system you should have a primary 
care provider. Veterans answer to that question, well over 80 
percent of the time, they knew who is in charge of their care 
and who is coordinating their care.
    So, if you are seeing us fairly often, someone who is your 
primary care provider or team should be referring you for 
specialty care. And they should be making those appointments or 
calls for you.
    Each medical center has a call-in number to straighten out 
prescription issues, appointment issues, and so forth, as well.

           va medical performance compared to private sector

    Mr. Mollohan. How does the current performance compare to 
the private sector, say, the largest HMOs or managed care 
plans?
    Dr. Garthwaite. We have a lot of trouble finding that 
information. I think that in a sense if it is exceptional they 
are already bragging about it and trying to get business and if 
it is not so good they don't really want to brag about it 
because it would deter business. And, so, no one really 
publishes that.
    We have been looking for waiting times in the private 
sector to benchmark against but we have not been terribly 
successful to date.
    Secretary West. Was your question also, do we have any 
suspicions or--I mean----
    Mr. Mollohan. Well, I don't know that suspicions are 
helpful. But if you have anything a little better than 
suspicions, I would like that.
    Dr. Garthwaite. One anecdote that I am not terribly in 
favor of----
    Mr. Mollohan. Well, tell me, what are your suspicions? 
[Laughter.]
    Get those on the record and then maybe you can follow-up 
them up with something.
    [The information follows:]

                        Waiting Time Performance

    In developing the customer service standard of 30 days to 
obtain a speciality appointment and 30 days to obtain an 
initial primary care appointment, information was obtained from 
some non-VA health care systems (Air Force and Group Health of 
Puget Sound). The 30-day period appears to reflect community 
standards, but no comparable data is available for HMOs in 
general. We are also not aware of any industry information on 
waiting times for a scheduled appointment that could be used as 
a benchmark.
    Since 1995, our overall customer service scores for access 
have improved from a problem rank of 24% to a problem rate of 
11%. On the 1999 customer service survey, only 17.6% of 
respondents said they were not able to get an appointment in a 
timely fashion.

    Secretary West. It may be good news.
    Dr. Garthwaite. I am not a proponent of anecdotes but we 
have one anecdote where we tried to contract for eye exams 
where we weren't going to provide them, we were trying to set 
up a contract for them. And because we asked--and we put in the 
contract-to meet a 30-day recommendation, a 30-day time frame. 
They told us that they can't do that for all their other 
patients, so it will cost you more. The particular area was, I 
believe, Colorado or Wyoming.
    So, that is an anecdote which is worth just that. But there 
will be places around the country where an appointment within 
30 days will exceed what the community standard is. We think 
overall health care could induce fewer waits than it does, VA, 
non-VA.
    Mr. Mollohan. Thank you, Secretary, for helping me 
understand.
    [The information follows:]

                            Additional Money

    If additional monies were made available, priorities would 
include accelerating the investment in timeliness and access to 
care and reducing waiting times for Medical Care and increasing 
Health Services Research, the delivery of health care research 
as being of particular importance to VA's large health care 
delivery mission.

                           tobacco litigation

    Mr. Walsh. This issue of the tobacco suit. The Federal 
Government, the Justice Department, I think, was fairly 
strongly instructed by the Congress not to enter this suit. We 
did not provide any funds to DOJ to pursue the suit. And yet 
you have decided to provide $2.5 million of veterans' health 
care money for this lawsuit.
    Why did you do that?
    Secretary West. Mr. Chairman, we took a very careful look 
at this and it turns out that the Justice Department has 
statutory authority to ask us to contribute to this suit.
    Mr. Walsh. You believe you have statutory authority to 
provide the money?
    Secretary West. Yes we do.
    Mr. Walsh. There is absolutely no question about that?
    Secretary West. Our lawyers are pretty clear on that. 
Because I asked it several times and I am a former agency 
general counsel two times over and was concerned about that 
very point. And, thirdly, it is true that we are one of the 
departments that will benefit significantly from any recovery 
from that suit. It does not go into the general fund of the 
Treasury. It will go into our health care budget.
    Mr. Walsh. How much might you get in return?
    Secretary West. We won't get all of it but we will get a 
share of it.
    Mr. Walsh. What is the anticipated opportunity here?
    Secretary West. You mean how much do we think we will get? 
I am not real clear on that. I don't know if we have a good 
feel for it. This is the general counsel, Leigh Bradley.
    Ms. Bradley. We don't have a good idea at this time about 
what our recovery will be because there are still some legal 
issues to determine which of our veterans would, in fact, fall 
within the class. Can you hear me okay?
    I don't know that I have anything to add to that. The 
Justice Department has been working very closely with us to 
determine the class of veterans that, in fact, will be subject 
to the lawsuit. So, I can't give you a good idea about what we 
think the estimated recovery will be. I can tell you, to 
reinforce what the Secretary said, that we have taken a very 
careful look at our authority to support the litigation with 
our appropriated dollars and we feel very confident that we 
can.
    Mr. Walsh. Why did these dollars come out of medical care 
as opposed to administrative costs?
    Ms. Bradley. Because of the authority that Congress gave us 
under the Medical Care Recovery Act to use the Medical Care 
Collections Fund to pay expenses incurred in collecting VA 
health-care costs. Since it is money that we are going to put 
back into the MCCF it is appropriate for us to use that fund to 
pay for the litigation.
    Mr. Walsh. If you lose the suit, are you going to put $2.5 
million back in?
    Ms. Bradley. It is a good question. We don't anticipate 
losing the suit. [Laughter.]
    Mr. Walsh. I will leave it there. Thank you.
    [Recess.]

                           reduction in force

    Mr. Frelinghuysen [presiding]. I would like to call the 
hearing to order. Mr. Secretary, last year we talked quite 
extensively about reductions in force, 1,100 of those, which 
you approved, including 320 RIFs at Lyons and East Orange VA 
Hospitals in New Jersey and other reductions in force in the 
New York area.
    How many RIFs, in total, did you approve last year and 
perhaps, more importantly, do you anticipate any additional 
RIFs in fiscal year 2000?
    Secretary West. This is a total throughout VHA, throughout 
the system.
    Mr. Frelinghuysen. Yes.
    Secretary West. We sent out 1,349 notices of RIFs to 
employees in fiscal year 1999. Of those, 55 were actually 
separated under the RIF procedures. And did you also ask about 
anticipations for this year, as well?
    Mr. Frelinghuysen. Yes.
    Secretary West. So far in fiscal year 2000 we have sent out 
already 137 notices, of which 8 have actually led to 
separations. And I don't know that we have any anticipated RIFs 
on board except for one package that has been previously 
discussed in Network 1. Is that right?
    But those are on hold. We have had an acting or interim 
Network director in there. Dr. Garthwaite has just recommended 
and I have just approved, I don't know if we actually got her 
in the position yet, a new Network director, who is going to 
review that whole question.
    Mr. Frelinghuysen. That is, obviously, in anybody's vision 
demoralizing. Certainly people work hard but those are the 
statistics?
    Secretary West. Yes, sir.

                    patient health status evaluation

    Mr. Frelinghuysen. Your fiscal year 2001 budget states that 
the VA has undertaken a study of how high cost, sicker patients 
are distributed among the 22 VISNs, giving the perception that 
these patients are not evenly allocated among VISNs. A final 
report is supposed to be provided to the VA last month. Has 
that report been submitted?
    Secretary West. Let me ask Dr. Garthwaite to answer that.
    Dr. Garthwaite. I have not seen the complete report. It has 
come in to our financial people and to our VERA work group and 
they are reviewing its implications. The verbal report that I 
have, to the best of my memory, was that the major issue still 
remaining has to do with age and whether there should be an 
adjustment for age. And I have asked them to pursue that 
vigorously and carefully but quickly.
    Mr. Frelinghuysen. So, that is just the short review? There 
will be a more comprehensive version?
    Dr. Garthwaite. People that we have who know the most about 
all of this are just going to provide their comments so we have 
that full vetting when we take a look at it. But I anticipate 
that that would be around shortly.
    Mr. Frelinghuysen. So, Congress may anticipate the report 
at what point?
    Dr. Garthwaite. I will look at it but I would think that it 
is not far away, hopefully a month or a month and a half. Maybe 
sooner.

                               Hepatitis

    Mr. Frelinghuysen. Some reference was made earlier in the 
discussion about the receipt of letters and the New York and 
New Jersey members of Congress have written to you, Mr. 
Secretary, quite a few pieces of correspondence. There seems to 
be some lack of response, most particularly, in the are of 
questions relating to the funding of Hepatitis C in VISN 3. I 
have sent a couple of letters to you, Dr. Garthwaite, the most 
recent being March but I think we initiated the letter-writing 
process regarding Hepatitis C back in October of last year.
    When will our delegations get the response we have been 
looking for?
    Dr. Garthwaite. I will check on the specific response. I 
have now a recommendation that is about a week old to me about 
the cost of hepatitis C and whether that should be included in 
the model, in the VERA model. And, so, I do have some data and 
I am in the process, personally, of looking at that data.
    This year it is not a huge issue in terms of the total 
numbers. There are some differences and they are in the order 
of magnitude of a million dollars or so. And I think on 
principle that it may be something that we want to get into the 
model fairly quickly because we anticipate it will grow because 
our testing is now going up and then a significant number of 
veterans test positive for hepatitis.
    Mr. Frelinghuysen. By all evidence that we have seen, the 
hepatitis C situation is a growing problem, as has been stated 
earlier, largely among Vietnam Era veterans.
    In my neck of the woods, VISN 3, alone, during March of 
last year, in a random one-day hepatitis screening about 12 
percent of those tested, tested positive for the virus. All of 
us here are pleased that there is an increase of $145 million 
in funding for hepatitis C. It is a huge problem. I am not sure 
if it is on everybody's radar screens in the general public.
    However, I do have some questions about Hepatitis C funding 
and you have somewhat indicated that you are reviewing this. I 
and other members from my area would like to know how this 
money will be distributed? Based on need or on the VERA 
formula? We can say more and I will say more about VERA, 
generally, later, but what do you anticipate basing your 
distribution on?
    Dr. Garthwaite. Where we can find differences by region 
that need to be accounted for in VERA, we have tried to account 
for those. We, for instance, provide some increase in the VISN 
3 budget because it is more expensive, the cost of living in 
that area is higher and there are other adjustments that we 
make in terms of building and research and education.
    Given the fact that these patients are not distributed 
equally and given the fact that they don't fall into the 
special categories, like AIDS patients do, I think it is going 
to be wise for us to account for that, even though I think it 
is a small percentage today.
    Mr. Frelinghuysen. There is actually quite a correlation 
between the number of AIDS patients and the number of HIV.
    Dr. Garthwaite. That is correct.
    Mr. Frelinghuysen. Drug users.
    Dr. Garthwaite. That is correct. I mean just, for example, 
last fiscal year we were able to document the VISN 3 
expenditures, which were about $3 million, which is .31 percent 
of their total VERA allocation. That ranges across the United 
States all the way down to VISN 2, which is in the same State, 
of .09 percent of their budget or $384,000. New York and New 
Jersey had 1,700 patients with hepatitis C, versus Albany VISN 
which had 451.
    Mr. Frelinghuysen. We are always appreciative whenever you 
can tinker with VERA, without repealing the law--of course, 
many of us would like you go to back to the drawing board. And 
not all people that have hepatitis C go through the VA system, 
obviously, to seek a remedy and assistance. Some do and I think 
you actively recruit as many veterans as you can to participate 
in the overall system and that is an ongoing effort. And, 
obviously, some people get so damn sick and need such immediate 
attention they go to the nearest emergency room and that may be 
a university of medicine and dentistry hospital perhaps before 
one of our VA hospitals.

                   Hepatitis C Treatment and Funding

    How will that money be spent? How much for treatment? How 
much do you anticipate for testing and will it be spent for any 
other purposes?
    Dr. Garthwaite. That is actually what was spent and I don't 
have the detail with me. About 10 to 13 percent of patients who 
have hep C are currently being treated. And that seems like a 
relatively low number to me and I think maybe to many others. 
But there are significant side effects and contraindications to 
the medications. And, so, I was in VISN 3 last week and they 
were telling me that the real problem is getting concomitant 
treatment with psychiatry because the drugs can worsen 
depression and there is preexisting depression in many of the 
patients.
    But they are working through those processes. But it is 
important. What we made very clear is that no veteran must be 
denied access to the drugs for other than a medical reason. 
Financial reasons are not adequate as an excuse simply because 
the drugs are relatively expensive. So, we have reinforced 
that.
    Mr. Frelinghuysen. It has come to my attention that the VA 
may not be spending the entire amount appropriated for 
hepatitis C in fiscal year 2000 on treatment and testing. Is 
this true? And if so, where else would that money be spent if 
it isn't being spent where we think it should be?
    Dr. Garthwaite. I think our original numbers for 1999 
suggest that we are a little less than we had originally 
predicted. I think we projected $46 million and we believe we 
have spent around $27 million that we can directly attribute in 
our data bases to treatment for veterans with hepatitis C.
    Mr. Frelinghuysen. Where does the money go if it isn't 
spent on treatment or testing? I am sure you have an answer at 
the ready there.
    Dr. Garthwaite. Well, there are always plenty of other 
demands for all the resources in the medical care budget. You 
know, these estimates that we put forward are our best estimate 
based on the number of veterans we have seen and, often not too 
much real world experience. As we gain real world experience, 
we try to go back and change that.
    Obviously, any dollars that we have are plowed back into 
treating veterans, whether they----
    Mr. Frelinghuysen. I understand things are fungible but if, 
in fact, this is a crisis and one of the biggest financial 
obligations you are faced with, I think the assumption here is 
that we would be putting the money into treatment or to 
testing.
    Dr. Garthwaite. Correct. But to my knowledge, we are 
treating and testing every veteran who presents. We are 
actively screening and asking the questions whether you are at 
risk or not for hepatitis C of all the veterans that we serve. 
We are working with the American Liver Foundation, the Vietnam 
Veterans to get the word out to veterans on the street that 
they should come in and get tested.
    We have worked with other public figures to get that word 
out.
    Secretary West. Congressman, can I say a word here about 
that?
    Mr. Frelinghuysen. Jump in.
    Secretary West. And I want to give Dr. Garthwaite a chance 
to correct me if I am wrong. But I think the money----
    Mr. Frelinghuysen. I am sure he would not think of it, 
would he? [Laughter.]
    Secretary West. He does it all the time. I think the money 
gets distributed under VERA. So, that if you are hearing that 
we are not using all of say the $199 million that was 
appropriated in 2000 for hepatitis C, it would be because we 
are not seeing that incidence of patients that add up to that 
much money, essentially.
    I think our number of $340 million for testing and 
treatment is our estimate of the incidence that we will see, an 
estimate of the number that will come in for testing and then 
the incidence we will find after that that will require 
treatment of this expensive amount. But it gets distributed 
under VERA and that is why your conversation with him, that 
says, hey, we need to tweak this to look at the Networks in 
which there is likely to be a higher incidence is so pertinent 
to the discussion.
    Mr. Frelinghuysen. Well, as long as that happens and the 
money isn't spent on other things, since members of Congress 
think that you are going to be spending it on hepatitis C.
    Secretary West. Which we will to the extent that it is 
needed.

                          Hepatitis C Funding

    Mr. Frelinghuysen. Just for the record, how much do you 
anticipate spending on hepatitis C in fiscal year 2001 on 
testing and treatment?
    Secretary West. That is the number we have requested.
    Mr. Frelinghuysen. What number?
    Secretary West. Oh, the $340 million.
    Mr. Frelinghuysen. The $340 million that was mentioned?
    Secretary West. Yes, sir.
    Mr. Frelinghuysen. That is the total sum?
    Secretary West. That appropriation is for testing and 
treatment.
    Mr. Frelinghuysen. Okay. I understand that veterans are not 
automatically tested for hepatitis C and from what I can gather 
it is pretty expensive and there is certain identifiable 
characteristics in the individuals you are working with that 
perhaps would automatically exclude a few people from that 
process.
    Dr. Garthwaite. Correct.
    Mr. Frelinghuysen. But are they tested if they meet several 
risk factors and what are those risk factors?
    Dr. Garthwaite. Well, the major ones would be transfusion 
blood products, drug use with unclean needles, and there may--
--
    Mr. Frelinghuysen. And this is not a pleasant test. So, 
people may be in a state of denial.
    Dr. Garthwaite. Right.
    Mr. Frelinghuysen. But it may be obvious to the 
professionals in the VA that there are some primary candidates 
for testing?
    Dr. Garthwaite. Right. We have a meeting going on in this 
area tomorrow and Friday with our practitioners and experts in 
this area in our continued effort of bringing ourselves up to 
date and then proposing new actions that will be more effective 
at getting more people to get tested.
    Just for the record, we tested in fiscal year 1998 95,000 
veterans; in 1999 we tested 177,000 veterans, and I anticipate 
it will be higher this year.
    Mr. Frelinghuysen. So, it would be fair to say that you are 
doing everything with the resources you can to make sure that 
all at-risk veterans are screened for hepatitis C?
    Dr. Garthwaite. Yes. I don't know what everything is but I 
feel we feel an urgency to this problem. We feel that testing 
needs to happen and we feel that the patients who can tolerate 
the treatment and who will benefit ought to be on the drugs as 
soon as possible.
    Mr. Frelinghuysen. Thank you, Mr. Chairman.
    I know Mr. Hobson has been waiting.
    Mr. Walsh. Thank you.
    Mr. Hobson?
    Mr. Hobson. Thank you, Mr. Chairman.
    Nice to see you, sir, all of you.

                   Community Based Outpatient Clinics

    I have three questions I would like to talk about. First of 
all, I would like to commend you on the community based 
outpatient clinics. Those seem to be working very well in my 
district and across my State. Laura Miller seems to have done a 
good job in locating those in our State.
    The veterans in Lancaster are very excited. The veterans in 
Springfield are very excited. They just had--I didn't get to 
it--but they just had a big open house in Springfield, I think, 
last weekend. I think these have been a tremendous success 
elsewhere in getting convenient access for patients.
    Can you tell me how many of these have been opened 
nationwide and how is this affecting your medical care budget 
allocations? And are you saving money by doing these? Certainly 
from a wellness standpoint, I think these are good. Do you have 
any results yet?
    Secretary West. Well, I am sure that Dr. Garthwaite and our 
financial people can talk a bit about whether we are saving 
money. We are certainly getting health care closer to veterans. 
I mean they are like Americans, they live where they choose to 
live, not necessarily where there are medical centers. And this 
has been an effort to get the health care closer to them. We 
have over 530 now.
    We are still on target for 77 in this fiscal year 2000. So, 
we have 63 more in the 2001 budget, the one we are discussing. 
I think they are working. They are quite popular. But whether 
we are saving on them I don't know. I don't know that that was 
necessarily our intent. I think our intent was a better model 
of health care delivery.
    Dr. Garthwaite. I don't know that I know any data about 
whether we save money or not. What is very clear, though, if we 
give primary care and we can get to a disease earlier, in 
general, that is believed in the medical model to save more 
money. I mentioned earlier that I think that immunizations save 
money.
    If we take elderly, 65 and older, people with lung disease 
and immunize them for pneumonia, we save $294 every time we 
give a shot because we avoid hospitalization and we avoid other 
illnesses that require medications and antibiotics and they 
live longer and feel better.
    Mr. Hobson. The point is that people will go and get those 
in these community centers when they wouldn't drive to Dayton 
or to Chillicothe or Columbus to do it.
    Dr. Garthwaite. Exactly.

                          enhanced use leasing

    Mr. Hobson. Let me ask another question. As you know I have 
got one medical center in my district in Chillicothe and 
another just outside of my district in Dayton, which is in Tony 
Hall's district. In the past year both centers have had to make 
touch decisions concerning deteriorating buildings on their 
campuses. However, in both cases the buildings are quite 
significant to the campus and the surrounding communities.
    In Dayton, Tony and I put together a group that both 
financially and physically to turn a building that was 
constructed by Civil War veterans into a national museum 
without using any medical center funding.
    Chillicothe is also looking at several alternatives to fill 
empty buildings which the VA recently decided it no longer 
needed. Obviously, the top priority for your medical centers is 
to provide quality medical centers for veterans. However, I 
suspect that older medical centers across the country are 
experiencing similar situations with their campuses like the 
ones that are occurring in Chillicothe and Dayton.
    I guess my question to you is, what are you doing to assist 
medical centers and communities in finding viable alternative 
uses for buildings no longer needed by the VA? And I think you 
need to share these options with the various directors.
    I can tell you this is not an unusual problem. I am 
chairman of Military Construction and I can tell you in bases 
across the country there is going to be a whole bunch of 
buildings in the Army and the Navy and the Air Force that all 
go on the historical register and we can't afford all those. 
You have got similar type problems and how are you looking at 
these issues?
    Secretary West. The Congress has been very helpful to us 
and given us special statutory authority. We have the enhanced 
use authority to make leases, which allows us to be able to use 
money other than just appropriated money, to be able to take 
buildings and to lease them and use them for purposes and we 
can invite people in to do that.
    I think that has been a big help to our medical center 
directors. I am not sure how many cases we have used it. But we 
have made fairly good use out of it and it is one of our 
mainstays.

                          chillicothe facility

    Mr. Hobson. Well, let me tell you what I find, and I would 
like to see--I think sometimes the people who run these things 
are a little afraid to be creative because I am not sure it is 
in their job description.
    For example, at Chillicothe, they have got a building that 
I wanted to turn into a State facility for the veterans in 
Ohio, a nursing home. Now I think that we might give some 
thought to some outside group coming in from the community, and 
leasing that facility and making it into a nursing home, 
because the State has decided not to take you up on the State 
Nursing home plan.
    But I think somehow you need to send messages to the 
Regional Offices to think outside the box a little bit on how 
we use some of these facilities. You have got big campuses, and 
I think we need to get you some revenue from some of these 
things, and you need to encourage them to come up with creative 
plans.
    For example, in both instances they were a little afraid to 
ask for money maybe even out of cycle or pushing things forward 
because of all this--you know what I am talking about.
    Secretary West. It probably varies. We have got some 
medical center directors and some network directors who are 
actually quite aggressive, so much so that every now and then 
we have to go back and make sure we, in thinking outside the 
box, have not thought outside the rules.
    I meant to mention we are also, trying to colocate as much 
as possible the Under Secretary for Benefits regional offices 
on these campuses so that veterans can have one-stop shopping 
in terms of their benefits and their health care.
    Dr. Garthwaite has what he calls the CARES Initiative, 
which we are trying to share with you and your staff, to look 
at how we are using all of our facilities.
    Do you want to add anything?
    Dr. Garthwaite. We have briefed with directors with the 
people who are expert in the enhanced use leasing fairly 
recently to re-emphasize how to go about that process to 
expedite it. In Indianapolis, we were able to actually turn 
over a building to the State, and we have an account that bears 
interest that is put to veterans' use out of all that.
    So we have 16 examples of enhanced use leases, and we are 
exploring a variety of other options. We are currently working 
with VSOs to allow a rehabilitation contractor to use an extra 
floor in Reno where they would not interfere with the VA care 
but the space which is excess to our needs might be used.
    So we encourage this. We try to support it as much as 
possible.

                           claims processing

    Mr. Hobson. I know we have got the baseball stadium that 
has been leased. Now it has been so successful they want to 
build a stadium in downtown Chillicothe. I don't know whether 
that is going to fly or not.
    Let me ask one other question here, and this has been 
beaten around a little bit here, and I am going to give you an 
editorial out of the Lancaster Eagle Gazette which says, 
``Veterans not getting what they deserve.'' And you can take a 
look at it. It is kind of a theme that has gone throughout 
today, and a couple of other people--I haven't been here for it 
all, but they tell me that Mr. Cramer asked, and when I was 
here, the gentleman from North Carolina asked about it. I think 
Mr. Mollohan may have asked also.
    They published an editorial stating that the VA takes 
longer to process disability claims than it did a decade ago, 
despite spending more than $200 million to upgrade the VA's 
computer system. The numbers I have indicated--and I was 
listening to the numbers--that it takes an average of 205 days 
to complete an original disability claim today compared to 164 
days--and you answered some of this. I want you to explain a 
little bit more about that. You have got a budget request for 
$10.9 million to continue the expansion of a pilot program. I 
guess this is going to be for computer use, and I just want to 
talk about that for a minute.
    I guess Mr. Cramer talked about the complexity of the 
claims filing. The VA stated they have the most complex filing 
process in the Federal Government and are trying to move in a 
more case-based system, which would be less bureaucratic.
    What else can you do to cut the red tape? Because this is 
very frustrating to the veterans. It is very frustrating to 
staff, also, who works on these cases when they are working 
with the veteran and the families. You are dealing generally 
with older people.
    I wonder how are you going to deal with this better? And I 
wonder if you could get some of the people out of Washington 
out into some of these districts?
    Secretary West. Well, I agree with you. I will say several 
things, and then I know the Under Secretary for Benefits wants 
to comment again.
    First of all, you are absolutely right. We should get 
people out there in the field to have that experience. We 
haven't done it. What we did do is we took one of them and 
brought them in here who already had the experience and made 
him the Under Secretary for Benefits. Joe Thompson worked for 
years in the New York office, became its Director, won the 
Hammer Award for turning around its performance----
    Mr. Hobson. We have a Hammer guy, too. We have a guy in our 
leadership they call ``The Hammer,'' too. That is interesting. 
[Laughter.]
    Secretary West. And he is a hammer. And, secondly, you are 
right, if there is one common thing that veterans say to me 
wherever I go, it is, well, you know, I have this claim and let 
me tell you how long I have been waiting and let me tell you 
what has happened on it. It hits them where they live and where 
they hope to live, and we have a duty to improve.
    We have got things in the budget to seek to do that, yes, 
in terms of the computerized--in the effort to computerize, but 
also in terms of the additional people we are building into it.
    Joe, why don't you comment?
    Mr. Thompson. A couple of points I think----

                           claims processing

    Mr. Hobson. Joe, the Hammer?
    Mr. Thompson. Yes, sir.
    Secretary West. Joe Thompson is the Hammer for benefits.
    Mr. Thompson. Two things are really important to keep in 
mind. One, which I mentioned before, is that this agency is 
turning over a generation. We are moving from a retiring 
Vietnam era generation to newer employees. That brings enormous 
requirements for training. Approximately 40 percent of our 
decisionmakers nationwide are in training today. When you 
train, you can't also do the work, so there is a conflict 
there.
    The claims themselves are considerably more complicated and 
have more issues embedded in them. In other words, veterans are 
filing for more issues today than they ever have before.
    I will note, by way of passing, more veterans are receiving 
disability compensation today than at any time in this Nation's 
history, despite the fact that the veterans population has been 
in decline for 21 years.
    As an illustration of the complexity of the work, in 1989, 
one rating specialist would have been expected to make 1,700 
decisions a year. Today that number is around 750. They didn't 
get lazy, they didn't get stupid, and they didn't get 
unmotivated. It is a simple fact that to make the decision with 
issues that are much more subtle--for example, undiagnosed 
illnesses from the Gulf War and things like that--it is much 
more complex, and trying not only to change a generation but 
also to train them on systems and disability evaluations that 
are frankly very new to us, is really a complicating factor in 
all this.
    There are three keys, as far as we are concerned, to 
reversing this situation. The most critical one is we have to 
hire new staff. We have to bring in the generation that will 
run VBA in this century. Secondly, we have to build training 
systems. I can tell you, a little over 2 years ago when I took 
this job we had no national program for training people who 
made disability claims. We are working furiously and spending 
every dollar we can to build those training systems.
    The third key, which you mentioned, is getting our computer 
systems up-to-date. We still are a paper process. We house tens 
of millions of cubic feet of records. Getting your hands on 
them and getting them to the right person at the right time to 
make a speedy decision is an enormously complex process.
    So we have long-range issues, which we are trending in the 
right direction now. Our backlogs are down. A lot of our 
appellate work is down. We are seeing our busy signals on the 
phones down by 90 percent. The remands from the Board of 
Veterans Appeals are way down.
    So we are trending in the right direction. I wish I could 
tell you that we are moving as fast as veterans would like us 
to be. We are not. We have a lot of work to do and we are 
committed to doing it.
    Secretary West. What we can say is that we are pretty good 
at it, a lot better than most people think. For example, some 
time back someone wrote a report--was it the GAO?--that 
contrasted our performance with another agency, Social 
Security. And they said, boy, why isn't VA as fast at 
processing its claims as Social Security?
    So the Under Secretary's people went to check on it, and 
when you compare what we do that is like what they do, our 
pension processing, we are just as fast. Indeed, we are faster. 
It is the complicated compensation processing which nobody else 
does that we do that continues to be the source that we are 
continually trying to improve.

                      electronic transfer of data

    Mr. Hobson. I don't want to go too long. The chairman is 
gone and is coming back. My State had the same problem with 
disability. They used to have to go to shoe boxes to find the 
claims.
    But I think what is frustrating to us is when we see $200 
million out there as being spent. You know, you are going to 
say, well, when is this going to get there, and you are saying, 
well, we have got to train all these people to get there. But 
how many more hundreds of millions of dollars is it going to 
take to get this system to where you are comfortable with it 
and we are comfortable with it is still out there.
    The other thing I would just like to say, I hope you keep 
the commitment up to keep working on this. It is not an easy 
problem. It is a difficult problem. But we can get there with 
computerization and electronic transfer of data. And I had a 
bill that a lot of people shot at me about, the electronic 
transfer of data, especially in health care and things. But it 
can be done and it is being done in the private sector, and I 
think you need to look at some of the things that are going on 
in the private sector in the electronic transfer of data and 
you can save a lot of money, because when the Congressman from 
Chicago was here, he thought at one time we could pay for all 
of health care, universal health care, by getting to electronic 
transfer of data. But there are tremendous savings in the 
electronic transfer of not only dollars but in giving good 
health care.
    So I would just leave you with that. Thank you very much.
    Secretary West. Thank you.
    Mr. Frelinghuysen. Thank you, Mr. Hobson.
    Mr. Mollohan?
    Mr. Mollohan. I have some questions for the record, but 
thank you, and I already thanked the Secretary for his 
appearance.

                          medical care request

    Mr. Frelinghuysen. I know the hour is late. I just have a 
couple more questions, Mr. Secretary. How much of the $1.3 
billion increase for veterans' medical care is from actual 
appropriations? Maybe I should repeat it. How much of the $1.3 
billion increase for veterans' medical care is from actual 
appropriations as opposed to other anticipated revenue streams 
such as the medical care collections fund and things of that 
nature?
    Secretary West. It is all from actual appropriations. The 
whole $1,355,000,000 is an appropriation that we request of 
this committee.
    It is true that the equivalent of the $350 million of 
collections we intend--that would come from the Millennium Act 
authority will go into the general fund of the Treasury, but we 
are not including in any of that $1.3 billion the collections. 
We are anticipating an additional $608 million in collections 
that would be collections. But I think what your question is 
dealing with is this. The Millennium Act will provide us 
authority with copays and the like for an additional $350 
million collections in addition to the $608 million we would 
normally have collected in the fund. One half of the first $700 
million collected, or $350 million which is that additional 
amount, equivalent to we are proposing to pay directly into the 
Treasury rather than as part of our collections. And we have 
asked the Congress instead, have asked you instead to 
appropriate as part of our $1.355 billion that amount. So it is 
all appropriations.
    Mr. Frelinghuysen. The $608 million from the medical care 
collections fund is for fiscal year 2001.
    Secretary West. Yes, sir.

                                tricare

    Mr. Frelinghuysen. I understand that some of that amount is 
expected from the Department of Defense, from DOD. I serve on 
that Defense Appropriations Committee, and if you want an 
invitation to confusion, you serve on that committee and you 
talk with Dr. Sue Bailey, and you try to understand the TRICARE 
system.
    The TRICARE system owes the VA money. Isn't that correct?
    Secretary West. Yes, sir.
    Mr. Frelinghuysen. Well, for the life of me, nobody at DOD 
knows how much it is. How much are you owed in your estimation?
    Secretary West. Well, I don't know what that number is, 
but----
    Mr. Frelinghuysen. Well, actually, I think it is important 
for us to know because if your budget is going to be as----
    Secretary West. We may be able to----
    Mr. Frelinghuysen [continuing]. Whole as we anticipate it 
will be----
    Secretary West. Here is the way I understand it will work, 
sir. We are requesting an appropriation of $1,355,000,000 for 
health care, and that is all appropriations. On the other side 
of collections, we anticipate some $900-plus million in 
collections. That is a total of $608, which is the amount we 
would normally be collecting. It is the fiscal year 2001 
component of the collections we collected in 2000.

                     medical care collections fund

    Mr. Frelinghuysen.  Before you go too much farther, using 
your own budget documents, fiscal year 2001, fiscal year 2000, 
and fiscal year 1999, your estimates for the medical care 
collections fund in fiscal year 1999 were $637 million. Your 
actual receipts were $573 million. For fiscal year 2000, your 
estimates of collection were $761 million. Your actual receipts 
were $600 million. And God only knows what your actual receipts 
will be that relate to the $608 million.
    You need to tell me a little more directly: If DOD owes you 
money----
    Secretary West. It won't be part of that. It will be part 
of the Millennium Act collections, the extra amount, the $355 
million.
    Mr. Frelinghuysen. But does the DOD owe you money, and how 
much do they owe you?
    Secretary West. I think our estimate is--I don't even 
think--do we have the agreement in place yet?
    Mr. Frelinghuysen. In the way of background----
    Secretary West. We are scheduled not to have the agreement 
in place until I think August or so.
    Dr. Garthwaite. I think there are a couple of things being 
mixed together. I think under current TRICARE agreements, their 
payments have lagged for a more technical reason that we are 
working through.
    Mr. Frelinghuysen. Well, actually, the technical reasons 
involve substantial sums of money. Isn't that correct?
    Secretary West. I don't think those do add up to 
substantial sums. In fiscal year 2001, in the Millennium Act, 
there will be a substantial sum, but the ones you are talking 
about I don't believe are substantial.
    Dr. Garthwaite. My understanding is we weren't doing that 
much TRICARE business, even though we have a lot of agreements. 
And my folks say we are trying to get our hands on that number. 
But I don't believe that is a huge number.
    Mr. Frelinghuysen. What worries me, whether it is DOD or 
any other third party money that we can claim out there that is 
due the system, does somebody have a handle on it? And how much 
are we talking about? If it isn't received on a timely basis--
and I understand there is a lag in collections, because TRICARE 
is getting a super black eye, generally speaking, from most of 
the people in that system. The committee would want to know 
whether your budget in some way is going to be impaired, 
because while we celebrate this increase in medical care 
dollars here, we want to make sure there is real substance that 
in the final analysis, you are really going to have as much 
money for medical care as you originally anticipated, and 
which, Congress and the veterans' community are expecting you 
to spend.
    Secretary West. If we receive our appropriation request, we 
will get all of that, $1.355 billion. The question then will be 
whether the $608 million is less reliable or more reliable than 
past estimates, and we will try to get you better information 
on that.

                        national drug formulary

    Mr. Frelinghuysen. And for the record, I would particularly 
want to speed up your report on the national drug formulary.
    Secretary West. Yes, sir.
    Mr. Frelinghuysen. The report is still being formed. It has 
been quite a period of time since the committee asked that that 
research and those statistics be gathered. I hope we can 
expedite that before we are all old and gray.
    Secretary West. All right.
    Mr. Frelinghuysen. We ought to have that study of the VA's 
formulary. I do understand from at least the local people in 
our area that every effort is made to give veterans who need 
the latest drugs and technology access to them, which is 
reassuring. There had been considerable evidence at some point 
in time that VA had the most restrictive drug formulary. So the 
sooner we have information that relates to that subject, I 
think it will be reassuring to us.
    Dr. Garthwaite.
    Dr. Garthwaite. I will just mention, as you are aware, this 
is an Institute of Medicine study, and as of last week when we 
talked to them, they believe they will beat the July 2000 due 
date for the study. So they are progressing reasonably well.
    Mr. Frelinghuysen. The 2000----
    Dr. Garthwaite. July.
    Mr. Frelinghuysen. July 2000.
    Dr. Garthwaite. The July 2000 date. That is when the 
Institute of Medicine projected finishing the study.
    Mr. Frelinghuysen. Okay. Mr. Mollohan, anything else?
    Mr. Mollohan. No, thank you.
    Mr. Frelinghuysen. Well, thank you very much. I guess we 
will see some of your colleagues back here on April 5th. We 
stand adjourned.
    Secretary West. Thank you, sir. Thank you, Mr. Mollohan.
                                          Wednesday, April 5, 2000.

       VETERANS HEALTH ADMINISTRATION DEPARTMENTAL ADMINISTRATION

                               WITNESSES

THOMAS L. GARTHWAITE, MD, DEPUTY UNDER SECRETARY FOR HEALTH, 
            VETERANS HEALTH ADMINISTRATION
          ACCOMPANIED BY:
MELINDA L. MURPHY, CHIEF OF STAFF; KENNETH J. CLARK, CHIEF NETWORK 
    DIRECTOR; JOHN R. FEUSSNER, MD, CHIEF RESEARCH AND DEVELOPMENT 
    OFFICER; JOHN E. OGDEN, CHIEF CONSULTANT, PHARMACY BENEFITS 
    MANAGEMENT STRATEGIC HEALTH GROUP; JIMMY A. NORRIS, ACTING CHIEF 
    FINANCIAL OFFICER; C.V. YARBROUGH, ACTING CHIEF INFORMATION OFFICER 
    AND CHIEF FACILITIES MANAGEMENT OFFICER; AND ART KLEIN, ACTING 
    DIRECTOR RESOURCE FORMULATION
RICHARD J. GRIFFIN, INSPECTOR GENERAL, DEPARTMENT OF VETERANS 
            AFFAIRS
          ACCOMPANIED BY:
LEIGH A. BRADLEY, GENERAL COUNSEL; JOHN H. THOMPSON, DEPUTY GENERAL 
    COUNSEL; E.D. CLARK, CHAIRMAN, BOARD OF VETERANS' APPEALS; GUY H. 
    McMICHAEL III, CHAIRMAN, BOARD OF CONTRACT APPEALS; EDWARD A. 
    POWELL, JR., ASSISTANT SECRETARY FOR FINANCIAL MANAGEMENT; DENNIS 
    M. DUFFY, ASSISTANT SECRETARY FOR PLANNING AND ANALYSIS; EUGENE A. 
    BRICKHOUSE, ASSISTANT SECRETARY FOR HUMAN RESOURCES AND 
    ADMINISTRATION; JOHN HANSON, ASSISTANT SECRETARY FOR PUBLIC AND 
    INTERGOVERNMENTAL AFFAIRS; HAROLD F. GRACEY, JR., PRINCIPAL DEPUTY 
    ASSISTANT SECRETARY FOR INFORMATION AND TECHNOLOGY; D. MARK 
    CATLETT, DEPUTY ASSISTANT SECRETARY FOR BUDGET; PHIL RIGGIN, DEPUTY 
    ASSISTANT SECRETARY FOR CONGRESSIONAL OPERATIONS

                            Opening Remarks

    Mr. Walsh. The subcommittee hearing will come to order.
    Good morning. Today we welcome, again, the Department of 
Veterans Affairs as we meet with Under and Assistant 
Secretaries. This morning we are going to discuss the medical 
aspect of the VA. This afternoon, when we reconvene at 1:30, 
the committee will hear from the Under and Assistant 
Secretaries representing the Benefits Administration, Cemetery 
Administration, Office of Financial Management, Information and 
Technology Office, Human Resources, Public and Congressional 
Affairs, Planning and Policy, General Counsel and Inspector 
General.
    At this time, I would ask my colleague Mr. Mollohan if he 
has any opening remarks?
    Mr. Mollohan. None, Mr. Chairman.

                            tricare payments

    Mr. Walsh. We will get right to it. These questions would 
be regarding collections. The budget assumes collections of 
$958 million; $608 million in standard MCCF collections and 
$350 million in new copays is authorized by the Millennium 
Health Care Act.
    Mr. Frelinghuysen touched a little on this issue in the 
last hearing, but now that the Budget Committees are coming 
forward with their estimates, I think we need to take a closer 
look. One source of these collections is TRICARE payments from 
the Department of Defense. The President's budget assumes that 
the VA will collect almost $190 million in 2001 from TRICARE 
agreements with DOD.
    Checking with our colleagues on the Defense Subcommittee, 
we have learned that these new agreements are not a priority. 
Could you please tell us how the VA is going to collect almost 
$200 million from DOD without their cooperation?
    Dr. Garthwaite. Mr. Chairman, I believe the Millennium Act 
provides for a period up to September for us to negotiate 
between the two Secretaries a cooperative agreement. And if 
that cannot be negotiated, to come back.
    We have identified the key players on both sides of for VA 
and on DOD, who are the key program individuals. And I have had 
personal conversations with Dr. Sue Bailey and will be taking 
this up again in another week or so when we get together in our 
executive council to look at the cooperation between the VA and 
DOD. I don't know whether to be optimistic or pessimistic in 
terms of whether or not an agreement can be reached. We do know 
that at least during the early phases of discussions about this 
issue, that DOD was somewhat reticent in terms of the overall 
legislation debated in the Millennium bill before its 
enactment.
    Mr. Walsh. Is this an all-or-nothing proposition? Either 
you get $190 million or you won't get any?
    Dr. Garthwaite. I think the agreement is that we would get 
the amount of money based on the amount of work we did. So 
presumably if we do not have an agreement, at least some of 
that workload wouldn't be coming to us. I think we currently 
provide an estimated $59 million of care to TRICARE-eligible 
beneficiaries.

                           va services to dod

    Mr. Walsh. What services do you provide for DOD?
    Dr. Garthwaite. We provide services in a variety of ways. 
We have some shared medical centers and we provide services 
under very specific contracts in those such as in Albuquerque, 
Las Vegas and Anchorage. We also provide some services under 
TRICARE but we negotiate directly with the TRICARE providers' 
intermediaries, and then we get reimbursed by them at their 
vary rates. Some of it is mental health, some is of it primary 
care. We also have some centers of excellence where they can 
refer patients for specific things, like in San Francisco where 
they would refer open heart surgery to a center of excellence.
    Mr. Walsh. Are military retirees eligible for services in 
both the VA and the military system?
    Dr. Garthwaite. Yes, in general, yes.
    Mr. Walsh. So they can enroll and receive care in both 
systems?
    Dr. Garthwaite. Right.
    Mr. Walsh. Does that create any problems?
    Dr. Garthwaite. I think it does. I think that in addition, 
I hesitate to make this more complex, but in fact there is a 
considerable amount of confusion in coordination of Federal 
benefits not only within VA and DOD with retired military, but 
also if you loop in Medicare. I think that overall, this whole 
coordination of Federal benefits is an issue to be addressed 
more in a global sense as to how--as to what benefits any given 
veteran has, because in truth military retirees are veterans, 
and then how to coordinate the care and the financing so as to 
not set up perverse incentives for moving between the systems 
to try to get some nuance of reimbursement for a particular 
service.
    Mr. Walsh. Who is the referee here? If the patient can move 
between the systems, does anybody say no, you cannot have that 
service? Or do you just shop it until you get care that you are 
looking for?
    Dr. Garthwaite. I think, regrettably, today veterans can 
shop between different systems. I am not aware of any computer 
matches with the DOD health care system in that regard, but 
that would be a good topic to take on.
    We are very close to an agreement or have already signed an 
agreement with HCFA to merge our databases so that we can have 
a better handle on the combined uses between Medicare and VA. 
But I am not aware of any in DOD. Others might be.
    Mr. Walsh. So you are negotiating with DOD regarding the 
collection of these fees? Is this joint health care that you 
are providing to military retirees, is that also part of the 
negotiation or not?
    Dr. Garthwaite. Yes, very clearly, understanding the 
current level of effort with about $59 million and the impact 
of any new use of VA facilities, and how that reimbursement 
would occur would be obviously the key part of the negotiation. 
In fact, the other key part is whether or not we set up 
incentives for one system versus the other, and what is the 
incentive to use a VA facility in place of a military treatment 
facility in place of a priority hospital. I think it is all 
related to the incentives and a lot of it will probably come 
down to drug benefit and copays.

                       scoring the millenium act

    Mr. Walsh. When the Millennium Health Care Act was under 
discussion, CBO scored the legislation as being very expensive. 
What role did the VA play in scoring that legislation?
    Dr. Garthwaite. In scoring the legislation?
    Mr. Walsh. Obviously not a major role.
    The additional services that would be provided under the 
Millennium Health Care Act, did you estimate the cost of those 
for CBO? Somebody in the VA must have determined what those 
services would cost.
    Dr. Garthwaite. Yes, I think our involvement, especially 
related to the long-term care provisions, included working 
carefully with and testifying in the House Veterans Affairs 
Committee and in working very closely with OMB on their 
estimates for the Millennium bill.
    Mr. Walsh. Mr. Powell?
    Mr. Powell. Yes, we did work with OMB. We had an OMB 
meeting with DOD, where there was an agreement by the 
representatives of DOD on the $180 million dollar reimbursable 
figure.
    Mr. Walsh. So they committed to collect that money?
    Mr. Powell. At the meeting that Tom and I had with OMB, 
they did.
    Mr. Walsh. Do you have any doubt that that commitment will 
be kept?
    Mr. Powell. I think there is reason to believe they will 
try within the context of it. But I cannot give you an absolute 
assurance, no.
    Mr. Walsh. Then how do you make up that shortfall?
    Mr. Powell. I think Tom's answer was appropriate. A lot of 
it would be depending on the amount of care that we provide. 
Collection methodologies should be followed to the same extent 
we do for any other reimbursable source.
    Mr. Walsh. Did the VA tell the authorizers VA would most 
definitely have the ability to recoup the costs associated with 
Millennium Health Care Act? Would the copays play a major role 
in recouping those costs?
    Dr. Garthwaite. I am trying to recollect that hearing. It 
seems to me, that what I remember testifying to with regards to 
the Millennium Act, is whether or not there would be 
significant incentives for an onrush of veterans to use the 
long-term care provisions, especially. And whether or not that 
copay would offset our costs and/or provide at least a neutral 
playing ground so that if people were happy in the situation 
they had, they wouldn't have a clear incentive to move to the 
VA and overwhelm the system.
    And I think that is probably true. As we speak, in 
Leesburg, Virginia, we have about 90 experts working on the 
policy and provisions of the Millennium Act and getting 
regulations ready. And that is clearly a significant part of 
that debate.
    Mr. Walsh. When will that be completed?
    Dr. Garthwaite. April 14th we plan to have everything 
ready, including draft regulations. Obviously we have to 
publish and get public comment and so forth. That is our goal.

                infrastructure--maintenance of buildings

    Mr. Walsh. I would like to ask now a couple of questions 
regarding infrastructure. Looking at another of GAO's reports 
issued last year, what is the VA doing about the reported $1 
million per day lost from medical care for the maintenance of 
buildings?
    Dr. Garthwaite. We have a series of initiatives to try to 
deal with our capital infrastructure globally. First of all, I 
will say that we do not know whether that million dollar figure 
is accurate. We do know that we have a lot of buildings in 
excess of our needs given the way we provide health care today 
compared to when the buildings were built.
    Probably the key piece in the future will be the CARES 
initiative, the Capital Asset Realignment for Enhanced 
Services, which will take on major markets this year and will 
look at the relationship of current assets to our current need 
and put forward some plans for aligning those assets to the 
best needs of veterans' care in these facilities.
    In addition to that, we are obviously doing things that we 
think make sense, especially with enhanced use leases. For 
instance, if we have vacant buildings that can be used by the 
community and can be rented out, we have done that. If we have 
excess land, where it can be put to good use and can generate 
rent, we do that.
    We have taken on the issue of Fort Lyon, Colorado, and are 
working with the State, with the possibility if we can work 
through the legalities of turning that facility over to the 
State, and developing other arrangements for the veterans of 
southern Colorado, which is a critical piece. We continue to 
integrate the centers in Boston. We are integrating the two 
largest medical centers that had about 90 percent redundance of 
programs and were only 6 miles apart. And we are well into the 
process of integrating those facilities and trying to put them 
into the right place and that has a profound effect on the 
kinds of infrastructure needs we would have.

                     occupancy rate in boston area

    Mr. Walsh. On that point, because there are a number of 
communities around the country, especially in the larger cities 
that have multiple facilities, Boston, for example, what is the 
occupancy rate of those two hospitals?
    Dr. Garthwaite. I would have to get you that for the 
record. All of our hospitals have significantly decreased their 
acute care hospital beds. The occupancy rate is somewhat 
adjusted by how many beds you keep open. So if we close beds, 
the occupancy rates will stay about 80 percent, but the total 
number of beds that we operate are significantly fewer. So in 
most of our centers we have decreased the total number of beds 
and kept the occupancy at 80 percent, but it leaves us space 
where those beds were for ambulatory care.
    [The information follows:]
            Occupancy Rate for Multiple Facilities in Boston
    As of March 2000, the Occupancy Rate for multiple facilities in 
Boston, Massachusetts is as follows:

----------------------------------------------------------------------------------------------------------------
                                                                                           Average    Occupancy
                   Station                               Bed section            Operating   daily       rate
                                                                                   beds     census  (percentage)
----------------------------------------------------------------------------------------------------------------
Boston, MA...................................  Hospital.......................       218     166.0        76.2
West Roxbury, MA.............................  Hospital.......................       118      90.9        77.0
Brockton, MA.................................  Hospital.......................       187     168.8        90.3
Brockton, MA.................................  Nursing home care unit.........       120     105.9        88.3
Brockton, MA.................................  Domiciliary....................        70      62.7        89.6
----------------------------------------------------------------------------------------------------------------


    Mr. Walsh. When you have hospitals that are 6 miles apart, 
you have what percent of redundancy?
    Dr. Garthwaite. At the time we started the integration in 
the program it was about 90 percent.
    Mr. Walsh. Obviously you are under pressure to make a 
decision. We are under pressure to retain both of those 
facilities, or in the case of Chicago, all three or in the case 
of New York City, all five. Would it not make some sense to 
look at closing one of those facilities and consolidating those 
services? For example, if I am a veteran and I need X-rays I 
can get them in one hospital but if I need a medical response 
to those X-rays I have to go to another hospital?
    Dr. Garthwaite. In some cases it makes sense to close 
facilities. In most--given that we have major facilities in 172 
places, probably, most of those places we continue to need a 
presence. Even if it is not an acute hospital, we still need to 
have a clinic or we still need to have a nursing home or we 
still need to have a drug treatment program or something else. 
So that actually walking away from the site, padlocking it, 
walking away and realizing large savings on that infrastructure 
closure is relatively problematic for us because we almost 
always have a significant program and service delivery need at 
that site.
    We have closed acute care in about, I believe it is 10 to 
12 places, depending on how you define that. But we have closed 
acute care in a significant number of facilities and we now 
have maybe a nursing home and outpatient care presence. But the 
problem we have then is the vacant buildings that are often 
old, relatively little use to anyone, often ridden with 
asbestos, and we face a significant investment in terms of 
closing those down totally.

                            Medical Services

    Mr. Walsh. Obviously, there are a lot of politics in this. 
There are a lot of additional decisions, such as shutdown costs 
that come into play. But if you have two facilities 6 miles 
apart--I don't know Boston that well. I know New York City. You 
have one in the Bronx, two in Brooklyn, one in Manhattan. Do 
these hospitals all have different services that they provide? 
Or are they basically the same services?
    Dr. Garthwaite. Well, in terms of Boston, a lot of the 
integrations have already occurred, a single medical service, 
single cardiovascular surgery, cardiac cath, and open heart 
surgery program.
    Mr. Walsh. So physicians might work at both of those 
hospitals, perform operations and see patients?
    Dr. Garthwaite. Correct, correct. Ken Clark who runs our 
operations, may want to provide additional detail on that.
    Mr. Kenneth Clark. In many metropolitan areas, it is true 
that services are duplicated. Much of that is for historical 
reasons. As technology continues to advance and as our 
inpatient programs are reduced in size it does provide 
opportunities for consolidation, further consolidation. And I 
think the question of whether that will ultimately lead to 
closures or certainly to a substantial change in mission is 
really at the heart of the CARES program, which is in fact a 
comprehensive capital asset assessment and management program.
    So out of that process over the next several years we will 
be doing comprehensive studies of our infrastructure, trying to 
match that to our service delivery needs and determining what 
additional infrastructure or changed infrastructure we will 
need. And if we have excess in that infrastructure, it will 
identify that and suggest ways that we can better use that 
infrastructure.

                    Vacant Space in Medical Centers

    Mr. Walsh. Well, Boston, for example, you have gone to this 
integrated approach. At this point in its implementation, what 
percent of those buildings are now vacant or otherwise not 
producing or providing medical services?
    Mr. Kenneth Clark. I think in the instance in Boston, none 
of the buildings, because there are actually relatively few 
buildings on both of those sites, none of the buildings are 
actually vacant.
    Mr. Walsh. What percent of the available square footage of 
office space, what percent of that is empty now?
    Mr. Kenneth Clark. I couldn't give you a precise answer. I 
would be happy to give you that after the hearing. I don't know 
what that is in those particular facilities.
    [The information follows:]

                    Vacant Structure--Infrastructure

    The integration of the Boston Healthcare System allowed for 
realignment of functional units and has not created additional 
vacant space. The downsizing of our major outpatient clinic at 
Causeway Street, Boston, has reduced our ability to capture 
vacant space at the Jamaica Plain campus. Currently there is 
approximately 0.6% vacant space between West Roxbury and the 
Jamaica Plain Campuses. If you include Brockton the percentage 
increases to 6.2%, however this is space that has been vacant 
and unused for a substantial amount of time.
    The percentage of office space between the Jamaica Plain 
and West Roxbury campuses of the Boston Healthcare System is 
6.3%. If you include the Brockton campus the figure increases 
to 8.1% of the total space. The vacancy rate for offices falls 
within the overall rate, 0.6% for the Jamaica Plain and West 
Roxbury campuses. Considering the Brockton campus in the mix it 
is 6.2%.

    Mr. Walsh. Do you know what it would be in any of the major 
urban centers, Chicago, New York?
    Mr. Kenneth Clark. It would vary dramatically according to 
the mission of the medical centers. In many of the medical 
centers, many of the urban areas, particularly where there has 
been a concentration of long-term psychiatry and has probably 
realized the most dramatic decrease in inpatient use, there 
would be substantial portions of facilities that are no longer 
needed.
    Mr. Walsh. For example?
    Mr. Kenneth Clark. In Los Angeles, California, where a 
major portion of that facility which was dedicated to long-term 
psychiatry by and large over the last 10 years probably as many 
as 3- or 400 beds have been taken out of service and 
consolidated into a single acute care building.
    Mr. Walsh. 300 or 400 beds out of how many?
    Mr. Kenneth Clark. Out of 1,300.
    Mr. Walsh. So it is a reduction of 30 percent, 40 percent?
    Mr. Kenneth Clark. Yes, I would estimate as just a rough 
estimate on my part. In that particular facility, and I don't 
know that it is that unusual we probably have floor space, 
gross space needs, that are 30 percent less than what they were 
just a few years ago. And, again, it is the capital asset 
planning initiative that Dr. Garthwaite referred to which will 
help us identify precisely what that reduction in need is, 
given our anticipated program and service delivery needs into 
the foreseeable future.

                          Facilities Closures

    Mr. Walsh. Is there any instance in any of these 
consolidations or integrations where you have 50 percent of 
those buildings empty?
    Mr. Kenneth Clark. I couldn't answer that question 
precisely.
    Mr. Walsh. Is it possible?
    Mr. Kenneth Clark. It is possible.
    Mr. Walsh. The gentleman makes an important point. This is 
important. For some of you, this is your responsibility.
    Dr. Garthwaite. If I could just make a comment, we have a 
significant number of ancillary buildings which are often older 
which could be closed, and we have many square feet of vacant 
space in many of the ancillary buildings. When you talk about 
the main bed towers and the main clinical delivery sites of 
care, I think in fact we often put clinic space into places 
where we have closed other beds. And that is not 100 percent, 
but it is predominantly what we have used.
    If you remember, in closing half of our acute care hospital 
beds, we have increased the number of outpatient visits by 10 
million. Those have to occur somewhere.
    Mr. Walsh. Right, and I think that is a move that we all 
agree with. But why are we maintaining dozens and dozens of 
empty or half empty buildings? If we are wasting, as GAO put 
it, a million dollars a day, that money either should be 
returned to the taxpayer or put into medical care. We raised 
medical care last year by $1.7 billion. The President requested 
we do it by another $1.3 billion this year. That is a $3 
billion increase. What are we doing with it? Are we maintaining 
old empty buildings? Are we providing medical care?
    Dr. Garthwaite. We agree totally that we need to look at 
closing some buildings. And that is really what the CARES 
effort is really about.
    Mr. Walsh. Thank you. Mr. Mollohan.

        Implementing the Millennium Health Care and Benefits Act

    Mr. Mollohan. Thank you, Mr. Chairman. Mr. Garthwaite, we 
discussed with the Secretary 2 weeks ago the efforts to 
implement the Millennium Health Care and Benefits Act. Your 
budget includes $548 million to finance the expanded benefits 
envisioned by the act. Please review for the committee again 
what these benefits are, the steps you have taken to make this 
law a reality for veterans and how will it impact the average 
veteran?
    Dr. Garthwaite. Sure. Pleased to. One of the main 
provisions is being the payer for emergency care. Although we 
are the payer of last resort for emergency care, there are many 
veterans who have avoided going to the closest emergency room 
for needed care because of the fear of incurring a large bill 
or have driven too far when they are really sick, and we think 
that is an important benefit for veterans. That is about $138 
million.
    A significant part of this has to do with long-term care, 
especially alternatives to nursing home care. These things 
would be things like hospital-based primary care where we send 
clinicians to the home to keep people out of the nursing home. 
And this is a significant part of this $365 million.
    That comprise is the bulk of it, although there are a few 
other minor provisions.
    Mr. Mollohan. In the long-term care area, which accounts 
for two-thirds of the $548 million, will that be provided by VA 
staff or by private contracting?
    Dr. Garthwaite. We have envisioned a mix. Again the group 
that is looking at this week will ferret out most of the final 
policy, but we have envisioned it will be a combination of VA 
and contract. In some cases it is efficient and effective for 
us to bring up a program, but in other cases we do not have the 
volume or transportation issues impede us from doing it.
    Mr. Mollohan. How does break down? What is the purpose of 
your Leesburg meeting?
    Dr. Garthwaite. We have a group of our policy and field 
representatives pulling together the policy decisions and 
writing regulations for the Millennium Act.
    Mr. Mollohan. Is that VA staff or contractors?
    Dr. Garthwaite. No, virtually all VA staff.
    Mr. Mollohan. With regard to how it is breaking down 
between providing these long-term services under the Millennium 
Act, how do you anticipate it breaking down, after your 
Leesburg meeting, between private contractors and VA staff 
providing those services?
    Dr. Garthwaite. I don't know for sure. I know in terms of 
the 70 percent and above service connected veterans who are 
eligible for nursing home care, we have envisioned that a 
significant amount of their care will be under contract. For 
extended care service other than nursing home, I do not have an 
estimate for you but I think we will be able to provide you one 
probably by early next week. I do believe that much of this can 
be contracted care.
    [The information follows:]
                      Implementing Long-Term Care
    Final decisions regarding the use of VA-provided or contract long-
term care services will be determined by such factors as medical need 
and availability of services inside and outside the VA. The extent to 
which VA provides long-term care directly or by contract will be 
tracked as we implement the Millennium Act at the facility level. Over 
FY 2000 and 2001, $365 million in additional spending for VA long-term 
care services is estimated/proposed. Of that amount, 51% is estimated 
to be used for contract care and 49% for VA-provided services.

    Mr. Mollohan. I can imagine quality control will be a real 
issue in the provision of long-term care outside of VA 
facilities. Are you looking at that?
    Dr. Garthwaite. Yes, we are. In addition to what we have 
done traditionally through the program office, within the 
Office of the Medical Inspector, we have established an 
additional group of professionals to review on an ongoing basis 
care delivered in a nursing home.
    In addition, any contract that we let will have a 
demonstration of quality as part of the conditions of meeting 
the contract.
    Mr. Mollohan. I recall the Secretary's testimony was that 
the requested amount was to--would fully fund the needs out 
there. Do you agree with that statement? And exactly what does 
it mean?
    Dr. Garthwaite. In terms of long-term care?
    Mr. Mollohan. No, in terms of providing all the services 
under the Millennium Act, that the $548 million, as I 
understood it, was a request that would sufficiently fund all 
of the needs and all of the benefits provided for under the 
Millennium Act.
    Dr. Garthwaite. Yes, I believe that is true.

                       funding the millennium act

    Mr. Mollohan. Okay. Would you review for the committee the 
financing scheme under the Millennium Act for this first year--
and then I am also interested in how you project it for future 
years. You are proposing to not forward fund, but to fund by an 
appropriation a certain amount of the resource needed to 
implement the Millennium Act, and then to come back around and 
fee-fund the rest of it. And I just want to hear you talk about 
what you anticipate. First of all, your proposal for this first 
year and then how you anticipate it working in future years.
    Dr. Garthwaite. I think the legislation anticipated 
copayments and fees as part of the ongoing funding for 
especially the extended care provisions.
    Mr. Mollohan. Part of or all of? What does the legislation 
anticipate?
    Dr. Garthwaite. Well, I think it depends on how we 
implement the copays.
    Mr. Mollohan. How does the authorizing legislation, which I 
understand is not how you intend to implement, anticipate you 
funding the Millennium Act?
    Mr. Catlett. What I understand of it, Mr. Mollohan, is it 
would be a partial recovery of the cost. The copayments would 
be based on the market rates in the community and that is what 
Dr. Garthwaite is indicating now is being examined.
    Mr. Mollohan. Does the authorizing legislation anticipate 
that the Millennium Act would be fully funded by fee 
collections and copays?
    Mr. Catlett. No, no.
    Mr. Mollohan. What does the authorizing legislation say, 
with regard to funding?
    Mr. Catlett. I don't believe it is clear. It does not 
specify a portion of it to be done by fee or collection. It 
just tells us to expand the copays but there is no direct----
    Mr. Mollohan. Will you look at that more carefully and give 
us a definitive response, because I sense a bit of uncertainty 
of how you interpret it.
    Dr. Garthwaite. The setting up of the copays is the 
critical piece because based on what those copays are, it will 
either draw or repel patients from the VA health care system 
and coverage. And, laying out those responsibilities is a lot 
of what the policy group is working on.
    Mr. Mollohan. Here is the question for this committee, you 
are asking for appropriation funding, then you are anticipating 
additional funding from copay and from other fees.
    What do you expect in the future after this first year, to 
fund this program with fee collections or do you expect to fund 
with appropriations? Do you expect to fund it with a 
combination of both? When you look at your fee collections, 
what do you expect to do with them? If you collect fees that 
are in excess of those anticipated, and they exceed the amount 
of the cost of the Millennium Act, what do you expect to happen 
to those fees? How are you looking at this and what are you 
going to be asking this committee for, not only this year but 
in the future with regard to funding the Millennium Act?
    Dr. Garthwaite. We certainly think it is a going to be a 
combination and given that we have no experience in this area, 
that experience----

                           copay collections

    Mr. Mollohan. Well, you do have experience collecting fees, 
although not terrific experience collecting them.
    Dr. Garthwaite. Understood. Yes, but we do not have 
experience collecting them in extended care. We will be in a 
much better position to estimate those within the next month or 
so. And then once we get the regulations out and get comments, 
I think we will be in a better position yet, to at least 
estimate the copay collections.
    And I believe the act anticipated that the copays for 
extended care would be plowed back into extended care. However, 
our budget proposal does not make that distinction.
    Mr. Mollohan. Well, let's take this year's request to the 
committee. Do you look at that as an advance to be repaid? Or 
do you look at it as an appropriation which----
    Dr. Garthwaite. We anticipate receipts of $350 million in 
this budget.
    Mr. Mollohan. From the Appropriations Committee?
    Dr. Garthwaite. No. Receipts.
    Mr. Mollohan. Fee receipts, not appropriation money? Okay. 
And the rest of it from appropriation? Would you expect the 
fees to go back to the Treasury?
    Dr. Garthwaite. Well, our budget proposes that $350 million 
in fees would go back and we would get an additional $350 
million this year.
    Mr. Mollohan. Would go back to the Treasury?
    Dr. Garthwaite. Correct. I mean, I may have been confusing 
on this and I apologize.
    Mr. Mollohan. I think you said that wrong.
    Dr. Garthwaite. Basically we would expect $350 million in 
fees. The administration proposed $350 million in 
appropriations with $350 million in fees going back into the 
Treasury to offset that.
    Which does a couple of things. One, it kind of guarantees 
that the act gets implemented and is not slowed down by the 
trouble of collecting fees but also keeps the incentive on us 
aggressively pursue collection of all fees.
    Mr. Mollohan. Well, will you put that policy in writing for 
the Committee? And submit it to us?
    Dr. Garthwaite. Be happy to.
    [The information follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



                        medical research request

    Mr. Mollohan. I would like to return this morning to what I 
consider a disappointing request in research. Despite an 
overall increase in the budget of more than $1.4 billion for 
medical care, your request for research is flat at $321 
million. You have been praised repeatedly for the high caliber 
research you do, and for its relevance. Do you disagree with 
that evaluation of the quality of the research that VA does?
    Dr. Garthwaite. I believe we do have very high quality and 
relevant research.
    Mr. Mollohan. You appear to have a unique advantage as a 
research system because of the large patient pool and the 
records you keep and how you can track patient care. Do you 
think that the research establishment has adequately used this 
aspect of VA?
    Dr. Garthwaite. Well, if your question is are our 
researchers using every dollar that we give them to do as much 
research of high quality as they can, I think they are. So, we 
work very hard to spend every dollar wisely and to get the 
maximum return on investment. I think Dr. Feussner has added a 
new energy to the research service and a new accountability, 
and we are very proud of the progress they have been making.
    Mr. Mollohan. Well, I guess what I am saying is you have 
this unique built-in advantage for a research system. You have 
got a large patient pool, a captive audience if you will. You 
track records well, and my question is have you maximized this 
advantage?
    Dr. Garthwaite. If your question is----
    Mr. Mollohan. My question is exactly as I asked it. So if 
you do not understand, tell me you do not understand it and I 
will ask it again. Do you understand it?
    Dr. Garthwaite. I believe so.
    Mr. Mollohan. No, you do not. Let me repeat it. If you 
don't understand the question, then I will ask it again, maybe 
I haven't been articulate enough.
    Dr. Garthwaite. I believe if we had additional dollars, we 
could determine additional important scientific findings using 
our health care system, which I think is a unique resource to 
study how health care is delivered in the United States.
    Mr. Mollohan. Dr. Feussner, can you respond to that, 
please?
    Dr. Feussner. Yes, sir, my understanding of the question is 
are we really using the health system that is available to us 
to maximize our research potential, and I think the answer to 
that is categorically yes. Our research enterprise is different 
from other federally supported research enterprises in two 
important ways. Almost 75 percent of our total research 
appropriation goes to support clinical research. That is 
research done on our patients or human materials. And unlike 
the rest of the research enterprise in the United States, 
almost 80 percent of our funded investigators are clinician 
investigators. Roughly 70, 72 percent physician investigators 
and then the other 8 percent are nonphysician clinicians.
    In the context of large scale studies, like treatment 
studies or large scale population-based epidemiological 
studies, I think we do an excellent job of leveraging the 
health care system to facilitate the research and to make the 
research less expensive.
    Mr. Mollohan. So quality is high.
    Dr. Feussner. Yes, sir.
    Mr. Mollohan. Are your research activities a very important 
to attract good providers.
    Dr. Feussner. Yes, sir.
    Mr. Mollohan. And you have no increase in your budget, a 
very generous budget request, for research, why is that?
    Let Dr. Feussner answer. You haven't asked for an increase 
in your research budget. Why is that? There is a reason for it. 
Did you request an increase? Did your views lose out in the 
competition for scarce resources or did OMB knock it down? Why 
do not we have a request for an increase in research?
    Dr. Feussner. Well, we did make a request for an increase 
in research, and that request was substantial.
    Mr. Mollohan. We, who?
    Dr. Feussner. VHA.
    Mr. Mollohan. To OMB?
    Dr. Feussner. Yes, sir.

                    omb request for medical research

    Mr. Mollohan. What was your request?
    Dr. Feussner. The request was for an increase from the 
current appropriation of $321 million to an appropriation of 
$397 million, or an increase of $76 million. We estimated that 
approximately $11 million of that would be for current services 
so in a sense, the net research increase requested is----
    Mr. Mollohan. Just to keep current services?
    Dr. Feussner. Yes, sir, and as the Secretary alluded to at 
the last hearing, and additional $65 million in research 
initiatives. And then I think it is fair to say that in the 
process other priorities competed more successfully for 
appropriations.
    Mr. Mollohan. That is obvious, but were you supported 
within VA for an increase in your research budget.
    Dr. Feussner. Yes, sir.
    Mr. Mollohan. What did you request up through VA as an 
increase?
    Dr. Feussner. What I just told you.
    Mr. Mollohan. So they took your request and passed it up to 
OMB.
    Dr. Feussner. That is correct.
    Mr. Mollohan. What research areas would you have used those 
additional resources?
    Dr. Feussner. Well, there are four major areas that I would 
list in the following groups: major new treatment studies in 
areas such as Parkinson's disease, end-stage renal disease, 
diabetes, PTSD, and so forth. Major initiatives in quality 
improvement of VA has initiated what is called a quality 
enhancement research initiative. Approximately half of that 
initiative is severely underfunded in specific areas such as 
mental health, spinal cord injury, stroke, cerebral vascular 
disease, and AIDS.
    The third area would be in brain disease and that is more 
basic, looking at regeneration of nerves that would have 
applicability to spinal cord injury. Brain remodeling. We 
believe that the brain, after stroke or traumatic injury, can 
actually recover more effectively. And then in the specific 
area, that is an overlapping area between basic and 
rehabilitation research and specific rehabilitation research 
area, we would like to make a better investment in upper 
extremity prosthesis development.
    And then finally in pure bioscience, we believe that our 
research efforts in schizophrenia are underfunded. We are 
reducing our commitment to our centers of excellence by half 
this fiscal year.
    Mr. Mollohan. In those areas, are you talking about 
underfunding? You have all of those research activities going 
on but they are underfunded? Or are you talking about research 
activities that you are not even undertaken because you do not 
have the money?
    Dr. Feussner. Mostly the latter, about two-thirds the 
latter and one-third underfunded.
    Mr. Mollohan. Are there research projects that you know of 
but are unable to fund?
    Dr. Feussner. That is correct.

                         mental health research

    Mr. Mollohan. In the mental health area, what comes under 
that? Are you doing addiction research?
    Dr. Feussner. Yes, we have a substantial investment in 
substance abuse research that is broad based, both drug abuse 
such as street drugs, alcohol abuse, and tobacco abuse. We also 
have extended that substance abuse research portfolio with a 
major collaboration with the National Institute of Drug Abuse. 
We have a formal MOU with NIDA that we have sustained over the 
past several years.
    In mental health research what we are specifically dealing 
with, where we would like to expand the research portfolio is 
in schizophrenia and depression.
    Mr. Mollohan. Thank you. We will follow up. Thank you, Mr. 
Chairman.
    Mr. Walsh. Thank you. Mr. Frelinghuysen.

        research collaboration with national science foundation

    Mr. Frelinghuysen. Thank you, Mr. Chairman. Good morning, 
gentlemen. Just to follow up on the mental health aspect, this 
committee spent about 3\1/2\ hours yesterday with Rita 
Caldwell, Director of the National Science Foundation. What are 
the VA's research relationships specifically with mental 
health, with the National Science Foundation? I did not get a 
feeling from the questions I asked Dr. Caldwell that there is a 
great deal of collaboration. Is there a collaboration?
    Dr. Feussner. There are not significant collaborations with 
the National Science Foundation. There are collaborations with 
the National Institutes of Health.
    Mr. Frelinghuysen. Yes, I understand that. I just think it 
would be reassuring to the committee, since we have the 
Veterans Administration under our jurisdiction, that there be 
some relationship between your good work and the work of the 
National Science Foundation. I find it hard to believe that 
good people are not comparing notes. And I assume that they 
mentioned some project at Emory that they are very active in, 
and I was just wondering whether you were aware of some of the 
things they are working on there.
    Dr. Feussner. Is this the--well, there is a lot of work at 
Emory that is being done by NIH----
    Mr. Frelinghuysen. I am talking about the National Science 
Foundation specifically.
    Dr. Feussner. No, I am not.
    Mr. Frelinghuysen. As one person on this committee, I would 
like to encourage you to work with Dr. Rita Caldwell and see 
what she is doing. We assume that information passes between 
Federal agencies. Maybe that is too much to assume.

                       occupancy rate reductions

    I want to get back to a few of the questions that the 
chairman asked. Were there specific hospitals in Los Angeles or 
were there several hospitals where the patient count had been 
reduced by 30 percent?
    Mr. Kenneth Clark. I was referring to my own experience, 
and that would be with regard to what was formerly known as the 
West Los Angeles VA Medical Center, now known as the Greater 
Los Angeles Health Care System, as it involves three campuses.
    Mr. Frelinghuysen. And there were 400 beds that were there 
that are there no longer?
    Mr. Kenneth Clark. No longer in use, approximately, yes.
    Mr. Frelinghuysen. Where do the patients go?
    Mr. Kenneth Clark. Many of those patients, as I said, were 
long-term mental health patients. As we have developed 
additional community-based programs, adult day health care 
programs, those patients no longer require institutional care.
    Mr. Frelinghuysen. Unless they are deceased they are all 
present and accounted for in somebody's jurisdiction?
    Mr. Kenneth Clark. Most are but they are receiving 
treatment in a different way than they did in the past; in 
other words, on an ambulatory basis rather than in a VA 
institution.
    Mr. Frelinghuysen. And I am intrigued. We have a lot of 
empty buildings? Do you have any idea how many square feet of 
VA buildings are unoccupied or vacant systemwide? Does that 
figure exist?
    Mr. Kenneth Clark. That figure exists. And could we paint a 
picture that in many cases, maybe this is the right thing to 
do, that there have been consolidations, there have been BOCA 
code issues, fire safety issues, technology issues that have 
driven you as a system to put people together in smart new 
technologically fire safe buildings?
    Mr. Frelinghuysen. But is there--can one get the picture 
that there is a lot of vacant space out there that is costing 
the system a lot of money to maintain and to protect? And could 
you, for the committee give us a general idea of what the 
carrying cost of all of this upkeep and maintenance might be?
    Mr. Kenneth Clark. We could provide you with those 
estimates and, yes, you are correct, I would not deny at all 
that there are a number of buildings where the substantial 
gross square feet of space that is no longer being needed for 
the purpose that was originally intended.

                         inpatient census rates

    Mr. Frelinghuysen. And could you give me just a general 
view, what would have been the inpatient population in our VA 
system 5 years ago versus today? I know we are working all 
sorts of outpatient clinics and we are doing outreach and we 
are doing consolidations. Can somebody just give me an 
overview? Many veterans ask.
    Dr. Garthwaite. Five years ago we admitted 900,000 patients 
a year to the hospital. Last year, I think the number was about 
600,000. Five years ago, we did 25 million outpatient visits. 
Last year we did about 37 million outpatient visits. So 
patients are getting treated and seen. In fact, the number of 
surgeries has risen mildly. The number of patients seen overall 
has gone up by 24 percent but a significant number of patients 
who had been admitted to the hospital no longer are.
    Mr. Frelinghuysen. Some of those patients are obviously 
seeking treatment in non-VA facilities? You do not necessarily 
win them over forever once you sign them up.
    Dr. Garthwaite. Correct, even within the 24 percent.
    Mr. Frelinghuysen. Some may have a choice by virtue of 
their means.
    Dr. Garthwaite. Correct.
    Mr. Frelinghuysen. And medical needs, and others may not 
because of their limited means.
    Dr. Garthwaite. There are some veterans coming in and some 
who we are not seeing in any given year, some coming in and 
going out. We have done some surveys on percent usage and we 
can provide for the record, I do not remember the percent 
reliance on VA for health care as part of our eligibility 
reform analysis. An actuary has done some estimates of the 
percent reliance of those who use our system or who enroll in 
our system, to project their percent reliance on VA.
    [The information follows:]
                     Reliance on VA for Health Care
    In the Spring of 1999, a survey was conducted of enrollees in the 
Department of Veterans Affairs (VA) health care system to determine 
their reliance on VA for health care. The information from this survey 
was used by the actuary VA contracted with to project utilization and 
expenditures. For inpatients, the average (Mean) reliance for all 
enrollees having at least one inpatient stay (either in VA or 
elsewhere) during 1998 was 54.6%. The average (mean) outpatient 
reliance for all enrollees having at least one outpatient visit in 
either VA or elsewhere in 1998 was 79.9%.

                    nursing home care in new jersey

    Mr. Frelinghuysen. I know you are promoting and are out 
there actively recruiting and that is not in and of itself a 
bad idea. I would like to ask some questions relative to 
nursing homes. At the hearing with, Secretary West on March 
23rd, I asked why there are over 100 empty nursing home beds in 
New Jersey's two VA hospitals, while there are over 250 
veterans waiting for beds in the State of New Jersey's three 
veterans' homes. At that time I was not provided with an 
answer. And as I look at your list of nursing home units in 
your budget document here, under New Jersey, you list East 
Orange and Lyons. For all intents and purposes there is no 
nursing home at East Orange because there are no patients. The 
physician unit, I assume, is still there, some of us would like 
to fill it up, but for all intents and purposes this listing 
here is not entirely accurate or maybe we just list it because 
it is available for future use.
    Would you tell me whether we have--I asked the question 
because each of us likes to think we have some facility with 
the nursing homes in our district, but is this symptomatic of 
the situation nationwide where you have 134 nursing home units, 
how many of them are vacant? We know in New Jersey there is one 
which is empty, but you can reply to the New Jersey question 
and then perhaps the general question nationally.
    Dr. Garthwaite. Sure. The Lyons campus has 240 beds. On 
paper, at least, the East Orange has 60 beds. They may not all 
be in operation because the number of veterans who are 
appropriate for placement at this time, and requests for 
placement have been down somewhat. Given the combination East 
Orange seems to be meeting the needs of the population. It is 
our understanding there are about 100 people on the waiting 
list, or at least when we checked following the hearing, about 
100 people on the waiting list now for state veterans homes, 
some of whom are wives and widows of veterans and who, 
therefore, would not be eligible for placement in our nursing 
homes.
    In addition----
    Mr. Frelinghuysen. You are aware that three of the veterans 
on the state's waiting list are 100 percent service connected 
and were you aware, Dr. Garthwaite, that an additional 40 of 
those veterans do have service connected disabilities ranging 
from 10 percent to 70 percent? I assume that knowing that we 
were having this hearing you did your homework and I give you a 
pat on the back, but some of these people who are waiting for 
state facilities could well be in our facilities.
    Dr. Garthwaite. Certainly, given the information you just 
provided we would be happy to look at those individuals to 
determine if they are interested for placement in our 
facilities, especially the 100 percenters who clearly are our 
first obligation. And we obviously would provide them care 
under the Millennium Act, regardless of where they would want 
to be.
    There are different criteria for admission in our nursing 
homes. They are largely rehabilitative although we have some 
that are long-term, but we often contract for the long term 
care in nursing homes.
    I think overall, our nursing homes are well used and the 
average occupancy rate is in the high nineties.

              va's collaboration with state nursing homes

    Mr. Frelinghuysen. Here again, we talk about collaboration, 
the VA does not work in a vacuum, or maybe it does, but I 
assume you work with the state nursing homes. If the state 
nursing homes have a huge backup and there are a number of 
people who would qualify for our units, why can there not be 
some sort of a temporary placement into our facility while 
these veterans are on the waiting list?
    Dr. Garthwaite. I don't know if that question has been 
asked but it is a good question.
    Mr. Frelinghuysen. I shouldn't have to ask it. We do not 
manage your operation on a day-to-day basis nor do we manage 
our own state nursing homes on a day-to-day basis, but I would 
assume that the entities talk, and if perhaps this hearing 
results in better communication, then----
    Dr. Garthwaite. I do believe we talk, but I do not know if 
that specific issue has been addressed and we should make sure 
that we have that conversation.
    Mr. Frelinghuysen. Having brought it up on March 22nd, and 
bringing it up today, maybe we can reactivate and reinvigorate 
the process so we can get the parties talking to one another 
again.

                   hepatitis c treatment and funding

    Hepatitis C. We talked about the growing problem of the 
hepatitis C virus and the veterans population at the last 
hearing and I asked several questions about how much money was 
actually being spent on testing and treatment. At that last 
hearing I noted that 6 percent of the veterans population 
nationally tested positive for hepatitis C virus in a one-day 
random screening test in March 1999, and that over 12 percent 
of veterans in my VISN, New York and New Jersey, tested 
positive for the virus on that day.
    Since then I have received some additional details about 
the March 1999 random hepatitis C test compared against the 6.6 
percent national average. A breakdown of VISN 3 shows that in 
New Jersey, Lyons, East Orange, 12.5 percent of veterans tested 
positive; in the Bronx, 15.8 percent tested positive; New York-
Manhattan, 18.3 percent; Hudson Valley, Castle Point and 
Montrose, 9.5 percent.
    Further, I understand that from the VA's own figures that 
VISN 8, Florida, Mrs. Meek's VISN, tested at about the national 
average of 6 percent. When we discussed this last month, I was 
told by Secretary West that the hepatitis C money in the fiscal 
year 2001 budget will be distributed under the VERA model, not 
based on need. Is that still the case, given the sobering and 
exceedingly high infection rate in our area of New York and New 
Jersey?
    Dr. Garthwaite. The policy board recommended to me, based 
on the numbers up to this point on the amount expended on 
hepatitis C, that this is not a significant amount. However, my 
own personal leaning at this moment is that we should 
distribute money based on the occurrence of hepatitis C.
    Mr. Frelinghuysen. On the need?
    Dr. Garthwaite. The need, because I believe--even though 
today it is not a large amount of money, and we believe that 
the VERA allocations actually cover the entire expense, the 
fact is that the treatment and testing are fairly expensive. I 
think we need to make sure that we are very aggressive in 
detecting and treating this disorder. I think that funding is 
going to be an important piece.
    There is another significant piece of----
    Mr. Frelinghuysen. It is an important piece, our VISN had 
to ask, as you know, for $22 million extra because it has a 
higher incidence of hepatitis C than other VISNs in the 
country. That should have been pretty much a warning shot 
across your bow.
    Dr. Garthwaite. For instance, with patients with HIV who 
also occur more commonly in VISN 3 and several other VISNs, we 
place them into the high reimbursement rate, especially if 
those patients are on the modern drugs for HIV, which clearly 
reimburses those VISNs with a higher percentage of patients at 
a higher rate. So the principle has been there that we do 
attempt to account for very expensive patients who are not 
distributed equally across the United States and therefore put 
the money where the need is. And that is the principle we will 
follow with hepatitis C. Right now we are working very hard to 
get all the numbers correct.
    One of the ways we look at the numbers is to look at the 
codes that are in our encounter forms. Whenever we see a 
patient we fill out what they were in for. But we have some 
concern that when we look at the laboratory tests, there are 
more patients' test being positive than turn up in the 
treatment codes. And so we are now trying to resolve that 
difference. We will have that fairly soon.
    Mr. Frelinghuysen. Well, I assume you have the computer 
capacity to do this pretty much instantaneously, or am I 
assuming too much?
    Dr. Garthwaite. Well, it is not usually the computer 
capacity that slows things down, it is the human beings 
entering information into the computers that is the challenge.
    Mr. Frelinghuysen. Do you have the authority to use 
hepatitis C funding to hire additional gastroenterologists and 
other medical personnel needed to administer and interpret 
these tests, the physicians----
    Dr. Garthwaite. Absolutely.
    Mr. Frelinghuysen [continuing]. That you need. Thank you, 
Mr. Chairman.
    Mr. Walsh. Mrs. Meek.

                         antibiotic resistance

    Mrs. Meek. Thank you, Mr. Chairman. And welcome. My 
questions are directed to Dr. Feussner and they pretty much 
have to do with your area of research and development. I am 
sure you are aware it was, as a doctor, of the fact that we are 
losing the battle against many of these infectious diseases 
because of the antibiotics that we have, many of them at first 
were very, very good and viable, but as time when on they 
became less viable. And I have just a series of questions I 
want to ask you about that. I would like to know if the VA 
health care system tracks the antibiotic use, the use of 
antibiotics in VA hospitals and your clinics? Do you track 
that?
    Dr. Feussner. Well, in a research mode, we don't 
specifically track the use of antibiotics in hospitals. But 
with the national pharmacy, antibiotics are tracked in those 
two sites, yes.
    Mrs. Meek. Do you track the antibiotic resistance rates 
because of these highly--maybe Dr. Garthwaite.
    Dr. Garthwaite. I just wanted to add that several years ago 
we set up a national surveillance system across the United 
States, so at each VA, our computers automatically roll up any 
new and emerging infections, any new and emerging bacteria with 
antibiotic resistance which we haven't seen before. And that is 
all fed into Dr. Rozelle, head of infectious disease in 
Cincinnati. We would be more than happy to get you a summary of 
how that program works, but it is one of the more novel and 
creative things that the VA does. So if there is a beginning of 
emergence of bacterial resistance to the antibiotics somewhere 
in the VA health care system, if they acquire it in the 
community, we should be able to detect that.
    Dr. Feussner. We are working with the Center for Disease 
Control to exchange that information.
    Mrs. Meek. So it is pretty much that you have sort of a 
model of showcase model of what has happened with the 
antibiotics as the VA has done in several other areas.

                 streptococcus pneumonia virus vaccine

    My second question has to do with the streptococcus 
pneumonia virus in the bloodstream, the bacteria at least. That 
has been very prevalent with elderly people and they have 
become many times compromised. And I would like to know if, for 
veterans whom the vaccine is indicated, are they offered the 
pneumococcus vaccine?
    Dr. Garthwaite. Absolutely. In fact, our immunization rates 
have continued to improve. One of our performance measures is 
the rate of immunizations as part of the preventation index. So 
we track that very aggressively. I think last year it was 76 
percent of all veterans received the pneumococcal, who were 
appropriate to receive it. It continues to improve over time. 
That number may not be exactly accurate, I don't know. But the 
point is that we have now exceeded, for both influenza 
immunization and pneumococcal and pneumonia immunization, all 
published rates for any other health care system and the 
Healthy People 2010 goals. We feel we have come a long way and 
we won't rest until every appropriate veteran gets the vaccine. 
But I think as a health care system, we aren't aware of any 
data that have shown any other health care system has done 
better.
    Mrs. Meek. So if any of them have become resistant, you are 
also utilizing any other vaccines that might fight the 
streptopneumococcus vaccine?
    Dr. Feussner. There is----
    Mrs. Meek. There's one that afflicts elderly people.
    Dr. Feussner. There currently is one vaccine that protects 
against multiple strains of the bacteria, and that is the one 
that we use. In addition to what Dr. Garthwaite said, 2 years 
ago we started an initiative, a joint initiative with VA and 
DOD looking at issues of emerging infections that is a research 
parallel to the emerging pathogens or germs. That initiative is 
coordinated in Cincinnati. And then VA did some of the major 
initial studies to demonstrate the risk groups, the elderly 
you've identified being one of them, that would benefit from 
the pneumococcal vaccine.

                      mental health care delivery

    Mrs. Meek. My third question has to do with your mental 
health, and the Secretary answered some of this, I think, Dr. 
Garthwaite, when you were here too before. I would like to know 
what is the status of the VA in terms of restructuring your 
delivery system regarding delivering mental health services to 
veterans?
    Dr. Garthwaite. We believe that the VA offers a unique 
resource to veterans in that we treat mental illness the same 
as physical illness. There is no lifelong benefit of number of 
days for the treatment that you might have for mental illnesses 
as many insurance policies have. In fact, as long as you need 
our help, we are able to provide it. I think that is a very 
positive thing. We actually believe that we have data that show 
that patients get more mental health treatment in the VA than 
comparable other systems. We have moved from an inpatient model 
to more of an outpatient model, especially in substance abuse. 
We believe that is, overall, a good thing. And I think we have 
evolved outpatient care in very intensive outpatient expenses 
and programs which substitute for the inpatient care and give 
us similar results. I think in the beginning there was a move 
to move patients out a little too quickly, but I talked to Dr. 
Lehmann, the head of our mental health, as recently as 
yesterday, and he said that in the last year plus, there have 
been no systems that have moved from inpatient to outpatient 
without the appropriate outpatient programs.
    I think overall we have really an impressive program. In 
addition, we built off of our experience in geriatrics where we 
have geriatric research education and clinical centers, GRECCs, 
which have been very important in advancing the cause of 
geriatrics in the United States, and we have now founded 
MIRECCS, mental illness, research education clinical centers. 
These now form a nucleus where we can bring in clinicians, 
clinical programs, educational programs and important research 
programs together, and then they go out and compete for 
additional dollars, both inside the VA and outside the VA to 
further our understanding of mental disease.
    So that is part of our program. I don't remember all the 
pieces, but it is a really impressive program. I think the 
important part to remember is that we treat mental health quite 
differently than it is often treated elsewhere. We treat it as 
a medical illness and provide the services that are needed.
    Mrs. Meek. Doctor, a snapshot of my district, most large 
urban areas show veterans in a pitiful condition mentally in 
terms, and I know you do have outpatient clinics that provide 
those services, but it does bother me to see them many times, 
and most of them are in need of psychiatric treatment.
    So I understand that you are cutting your work force in 
terms of your serving these veterans in most of your outpatient 
clinic. How do you plan with that work force so dismally cut to 
take care of these veterans, which are obviously in need of 
psychiatric care?
    Dr. Garthwaite. There are probably some decreases overall 
as we have moved from inpatient to outpatient. Once you do 
that, you don't necessarily need nursing staff and other staff 
associated with the inpatient program such as dietetics staff 
and housekeeping staff; when the treatments are given in 
outpatient settings rather than inpatient. So although the 
total number of staff associated with a given program may 
decrease as we move from inpatient to outpatient, that doesn't 
necessarily mean the intense interactions with the patients 
change.
    I have visited a program in one of my tours to the field 
where when they moved from inpatient to outpatient, the amount 
of time a professional spent with the patients actually went 
up. They were actually able to move some of the FTE from the 
inpatient to have more counselors, so when patients came in, 
they got more one-on-one time with counselors. Your issue about 
veterans on the street with mental illness is a significant 
concern of ours, and I am sure you're aware a significant 
number of homeless people in America are veterans. We continue 
to be the largest hands-on provider of care to the homeless and 
continue to fund growing number of initiatives, especially 
community-based initiatives in homeless care.

                    community-based outreach clinics

    Mrs. Meek. So you feel that the community-based outreach 
clinics which you propose for the year 2001 will be adequately 
staffed and be able to provide the services which you have 
listed here today?
    Dr. Garthwaite. Yes, I do believe that. In addition to 
that, as another check on that, there is an advisory committee 
on the care of the chronically and seriously mentally ill that 
meets on a regular basis, and includes providers, veteran 
advocates, advocates for the mentally ill. I meet with them to 
hear specifically their complaints. There are no filters 
whatsoever. I meet personally with them.
    So I think we have some checks and balances built in if 
there are focal areas, or local areas where we are not meeting 
that demand, or if we see additional demand that needs 
additional attention.
    Mrs. Meek. I understand you have a strong case management 
system in these outpatient clinics. And are you happy--not 
happy. Are you comfortable with the follow-up on the cases that 
you work with there?
    Dr. Garthwaite. Yes. I think case management in medicine 
overall, is an evolving discipline. I think it is an important 
part. We use primary care in our medical system and the 
providers serve largely to help guide and coordinate the care. 
I think it is critically important in the mentally ill, because 
often family members that serve in that coordinating function 
need a professional to make sure things get coordinated. And to 
the extent that that can help, we are dedicated to maintaining 
the gains we have and enhancing those coordination functions as 
we move forward.

                             claims process

    Mrs. Meek. Thank you. On the other major concern I have in 
my district is the claim situation. I am sure that will never 
be perfect. Because they appeal and they appeal. And I have 
been to court with some of them. I had the nerve to follow some 
of them to your courts. They are pretty tough. Give me some 
idea of what is going on now in the claims adjuster. We have 
asked these questions consistently regarding veterans, because 
I feel it is extremely important that the claims process be one 
that is the best.
    Dr. Garthwaite. I'll turn this over to Judge Clark.
    Mrs. Meek. He might be one of the tough ones that I faced 
when I came to court.
    Dr. Garthwaite. He sees the appeals.
    Mr. E.D. Clark. The Board of Veterans Appeals only gets the 
claims after they have been adjudicated at the various regional 
offices. So perhaps the one to more appropriately address this 
issue is someone who uses the regional offices and who is 
familiar with the process at that level, which would probably 
be the Under Secretary for Benefits. Is someone available to 
deal with that?
    Mrs. Meek. Thank you.
    Dr. Garthwaite. I think they are coming this afternoon.
    Mrs. Meek. I will ask the question. Thank you very much and 
thank you, Mr. Chairman.
    Mr. Walsh. Thank you, Mrs. Meek.
    Mr. Hobson, by the way, I am going to have to leave for 
about a half an hour. Mr. Frelinghuysen is going to take the 
chair. I really appreciate him doing that. I will be back as 
quick as I can. And actually we are giving members about 15 
minutes each to develop into these questions. I haven't heard 
any objection to that. It really does give you a chance to go 
in depth. So we appreciate your responses. If you could make 
them quickly we can get to ask more questions that way. Thank 
you.

                        departmental management

    Mr. Hobson. I want to ask some questions of this end of the 
table down here if I might. I want to get into some--I am going 
to ask seven questions here. I will read them to you, and you 
guys can come back and answer me if anybody else wants to jump 
in or stay quiet, they can. Are all of the VA hospitals using 
the same software and hardware for information and financial 
management? Secondly, who makes those decisions? Thirdly, how 
does the VA or VHA as a whole keep track of medical care 
expenditures and patient information? Why doesn't the 
department require the VHA to update and improve their systems? 
That is for the CFO, the CIO and maybe even the IG. And is this 
lack of central information and management contributing to the 
VA's problems?
    And Mr. Duffy, as Assistant Secretary for Planning, what 
help do you give to the VHA for their budget and resource 
allocation processes? I personally sense some real problems on 
the whole--well, frankly, HUD generally and VA with the 
computer technology coming into the real world. I happen to 
have been chairman of Health and Human Services in the Ohio 
State Senate. I want to know how you are going to grapple with 
this problem for the future. So you want to start with the 
first one about the software.

                         information technology

    Mr. Gracey. Yes, the software and hardware that is used in 
the VA medical centers across the system is essentially 
standard and the same. In fact, it was developed within VHA. It 
is now called the Vista system. It was originally the 
Decentralized Hospital Computer System. It is probably the 
premiere health care delivery support system in the world, very 
well attuned to direct support of clinicians and support of 
patient care. And it is being improved constantly, because it 
is a system that is in use by clinicians who have, as their 
driving need, the need to know as much information about the 
patient as they can. And I am very comfortable with that.
    The way the decision is made in VHA is their CIO, although 
vacant right now, in Veterans Health Administration, who 
oversees through the VISN structure, the decision-making with 
about the expenditures on information technology. It is around 
the standard framework of the VISN system that most of the 
process revolves.
    The larger challenge, sir, is the integration of 
information across the department. And we have, as a major 
initiative this year, a real attack on that through something 
called One VA Access to Information. We had four One VA 
conferences that Mr. Duffy organized and supported, which 
brought together people from the field and the headquarters. 
The number one concern we heard was that which you expressed in 
your series of questions, how can we have access to information 
across the organization benefits information, cemetery 
administration information as well as health care information. 
We put together a departmentwide task force, delivered a plan 
to begin doing that this year with a very small first step, but 
clearly that is the model from here on out as we make further 
investments in technology.
    Would you like to re-pose any questions I might have 
skipped. I feel like I didn't take good notes.
    Mr. Hobson. Who does the budgeting and the allocations on 
this particular part of your operation?
    Mr. Gracey. There is a formal process on large 
acquisitions, which is the capital investment process, where 
anything of significant value and for VHA, that is any 
expenditure over $10 million, comes from a process which is 
first reviewed at the staff level, then a formal review by an 
information technology board, then if it passes those two 
reviews, a review by the Department's capital investment board 
which is headed by the deputy secretary and includes most of us 
here at the table. If it passes all those tests, it is then put 
in the budget. It is a very rigorous test that is based on a 
number of criteria, including improvement of services to 
veterans, interoperability with other systems in the department 
and return on investment.

               updating financial and information systems

    Mr. Hobson. Are there any requirements to update these 
systems? And secondly, how do you know from region to region, I 
think this is one of the things you pointed out what your 
spending for certain types of patient care, whether you are in 
line, say, with what that same care would cost in the private 
sector, whether you are better, whether you are worse, and how 
do you keep updating that information in your systems is what I 
am worried about.
    Mr. Gracey. There is a system called a decision support 
system that Dr. Garthwaite probably knows the inner workings of 
better than I do, but it is designed to do exactly what you 
just described so that there is comparability between the 
VISNs.
    Mr. Hobson. I think it would be important for this 
committee, from time to time, to be able to see that kind of 
information. So you know one we can support you when we think 
you are doing right and we understand what you are doing. 
Because I found when I sat on the hospital board that was one 
of the most difficult things to get out of them is how they 
compared elsewhere. Because they don't want to tell you. They 
don't want to tell what their outcomes were. They don't want to 
tell what their costs are. They just want to show you the 
bottom line at the end. But I think we need to know that. So I 
would encourage you, some way, to get some system in place that 
we can interact with you on that.
    Mr. Powell. If I may address that. We do have a major 
effort underway to revamp our entire financial information 
management systems. We call this core FLS, which is the 
financial logistics system. We are in the process of 
redesigning how we accumulate our financial information to move 
to a new system. Our current FLS schedule is a Cobol-base 
system which was implemented some years ago.
    Mr. Hobson. You have to go back and try to find people who 
can understand that system today because they are all retired.
    Mr. Powell. That is one of our real problems. We are in the 
process now of conducting a VA wide effort with study groups; 
firms we have hired to help us through that process are KPMG 
Peat Marwick and Booz Allen Hamilton. We hope to be acquiring a 
new system towards the beginning of next fiscal year, maybe 
early October and November. Our goal is to provide a much more 
seamless financial management system. We currently have some 48 
different systems that integrate into our core system, about 30 
percent of the time of my staff is spent strictly on 
reconciling, and our goal is to eliminate that effort.
    Mr. Hobson. That was the point of my first question.
    Mr. Powell. Our current system is also an appropriations-
based system that is really just an expenditures system. It was 
not intended to be a cost-driven system. The new effort will be 
much more aligned with providing the types of national 
information that you are talking about. We also in partnership, 
Harold and I, are setting up an oversight board within VA. The 
CIO and CFO are the chair and the board will include the senior 
operating managers from each of the program offices. This is to 
insure IT projects stay on time and on budget. They will have 
direct oversight from the senior executives and hopefully this 
will bring more discipline to their implementation.
    Mr. Hobson. I think that is good. I hope you will also 
include the veterans health care in that system. Because the 
total management of your operation has got to be integrated 
today. It looks to me like you're moving to a more private 
sector-type of view from your financial management.
    Mr. Powell. Absolutely. VHA is a critical piece of that 
effort.
    Dr. Garthwaite. If I could briefly add that the decision 
support system, or DSS, is a private sector system used by 
several large academic health systems and other health centers. 
We have implemented that universally across the VA. This year's 
DSS data will be used to drive the budget allocations. So the 
interest in making sure those numbers are correct, used and 
understood by our managers. As a result is going to be very 
intense this year and into the future. So I think that will 
help get us the kind of information you are really talking 
about. Because we agree with you that we need that information 
to manage.

             policy change regarding nursing qualifications

    Mr. Hobson. Hope you'll keep the chairman involved in that. 
I have one other question I would like to ask. I had some 
people come to me extremely concerned about a policy change 
regarding nursing qualifications. As I understand it, 2 years 
ago you ruled that the VA nurses would have bachelor degrees 
and even designated 50 million in assistance for nurses to 
obtain BA degrees. And I agree that our veterans deserve the 
best care possible, however I think in not hiring or promoting 
registered nurses with associates degrees will have a negative 
effect on nursing supply and ultimately our veterans. I would 
like you to talk a little bit about the policy, because in a 
number of our districts, we have nursing shortages.
    We have these community colleges and I have a hospital that 
I was on the board of that has the nursing school; it is a 2-
year program. I think it is important that we encourage the 
degrees and we do things to assist that, but I am concerned 
about the practice of--I have had people come and say they 
won't hire our people. Now, I know everybody shakes their head 
and says that is not true. But the perception is reality in 
some cases, and maybe people have taken it a step further and 
said we are not going to do this because then we got to pay for 
these people to get the other 2 years in promoting it.
    And I would just like to support the idea, and I would like 
you to respond to the perception that, or the reality that you 
are only hiring people with 4-year degrees, and you know I have 
got what, Dayton, Chillicothe, Cincinnati and Columbus Center 
in my district. So--not in my district, but around it and in 
it. Can you respond to that. They came in extremely concerned.
    Dr. Garthwaite. Pleased to respond. I am somewhat 
apologetic that a good news story has been so misinterpreted. 
The goal that we set out was to achieve, was to, enhance the 
knowledge of our nursing personnel and staff so that it could 
be applied to the care of veterans. Simultaneously it would 
advance the careers of our nursing staff and personnel, so that 
they would be more employable and at a higher level, both 
within the VA and if they like, other parts of the health care 
sector. The policy is relatively simple. In the past you could 
be hired at an associate degree level after two-year training 
program, and then work your way up through a series of waivers 
to nurse level 3, a potentially higher level.
    And that is still true. You can be hired at associate 
degree level and work your way up. Now, the easiest way to work 
your way up is to go ahead and get your bachelors degree which 
raises your overall salary, but also allows you a great deal 
more flexibility in terms of your employability across health 
care systems. In addition, we maintained waiver provision; that 
is to say, if you can demonstrate that you can meet levels of 
competence and some clearly defined appropriate measures for 
nurses, you can move up under a waiver process.
    So it is not really that different. The concern, I think, 
has been the misinterpretation that we are not hiring these 
two-year nurses. We are just making it easier to move up with 
an educational credential and probably a little harder to move 
up with a waiver process. And we have put $50 million aside to 
fund the continuing education of these nurses. So, in fact, it 
should stimulate----
    Mr. Hobson. Got the news letter.
    Dr. Garthwaite. Should stimulate nurses who have an 
associate degree or who could see that as a way to get that 
education join the VA, begin to get a salary and have the VA 
help them get all the way through the full four years.
    Mr. Hobson. Can I suggest one thing to you. You need to go 
back and talk to these community colleges and these hospitals, 
somebody needs directly to talk to them and say hey, this is 
our program because I think there is some miscommunication. I 
think your intentions are correct. The message got out the 
wrong way to some of these people.
    Dr. Garthwaite. We have met a couple times and set up a 
liaison, but we will reintensify our efforts and see if we can 
help.

                           nursing home care

    Mr. Hobson. Around my district it still needs some help. 
Two comments. One, I really like the emphasis on the outpatient 
clinics. I think those have been well received in my district 
and in some of the surrounding districts where we have done 
them. And I don't know that the veterans really appreciate 
that. And I know it has some difficulty. The other thing I 
would like to comment about are the State initiatives that we 
are doing. And I didn't object to this one.
    But I think you all need to look at some oversight. Just 
because a State says they are willing to put up half the money 
doesn't necessarily mean--and they want to put it in a certain 
place. I think you should have more input into is it the right 
place when you do it for the nursing homes. For the reason that 
just because some State is willing to put up half the money 
doesn't mean it is the most cost effective way to use that 
money. It may be politically expedient to do, but it costs you 
resources to do that, and continuing resources to do that. And 
I have an instance in my state where they took, I don't know, 
$8 million, and another $8 million; they are going to have $16 
million, and they have reinvented the wheel in a particular 
spot that I think your region would say it is not necessarily 
the spot that they would prefer, certainly wasn't where I 
preferred, because I thought there was a more cost-effective 
way to get 100-bed nursing home open in a current VA facility 
where you don't have to reinvent all the ancillary stuff.
    So I don't know what the overall make of it is but it 
looked to me like that the VA was just willing to say well, if 
the State is willing to come up with half the money we are 
going to put up the other half. I don't think that's really the 
way it ought to be done. We ought to look at the veterans and 
the veterans service stuff. So that is just the comment.
    Dr. Garthwaite. Your comments are exceptionally timely. We 
are in the process of redoing the criteria, which basically 
sets the prioritization of funding of State veterans homes. So 
we have noted your concerns and we will try to incorporate them 
into the process.
    Mr. Hobson. Just to reminisce for a second when I was in 
the legislature I was on the review panel that went up and 
looked at the one in Sandusky many years ago and we had 
problems there. And I think it is a lot better today. But I 
think we need to watch how we are spending our money along with 
the State.
    Thank you, Mr. Chairman.
    Mr. Frelinghuysen [presiding]. Thank you very much.
    Mr. Mollohan.

                    federal research grants funding

    Mr. Mollohan. Thank you, Mr. Chairman. I want to thank 
Congresswoman Kaptur for allowing me to jump in here for a few 
minutes. I will just be a few.
    Dr. Feussner, I would like to ask a couple questions about 
research funding. I am going to be, I hope, fast. I notice that 
page 3(b)12 of your budget submission reflects Federal grants, 
1999, 2000, 2001 projections, which stay pretty constant at 
about $340 million. Does that reflect accurately the VA's 
participation in Federal grants? I assume most of that is NIH 
funding? I am on 3(b)12 in the summary. Your budget submission, 
summary volume 5.
    Dr. Feussner. I understand the question. And the way the 
data are displayed on the budget page is correct. And yes, you 
are also correct, most of the funding is NIH funding. If we 
were to present these data back a little further, sir, and 
start with a base year of 95 or 96 and what it would show is 
that we have essentially plateaued. Using the 95, 96 numbers as 
a base and for every dollar that the VA appropriation and 
research has gone up, the external dollars have gone up about 
two and a half to three fold.
    Mr. Mollohan. Say that again I am sorry.
    Dr. Feussner. What the current number shows is this is 
relatively stable.
    Mr. Mollohan. Actually it is a decrease in inflation-
adjusted dollars.
    Dr. Feussner. Yes that is correct. These data only go back 
to 1999. If you use a base year that was 95 or 96 and looked at 
the same numbers in 95 and then went forward through time, what 
you would see is that the VA appropriation over that period of 
time, say would go up $70 million, the external grants that VA 
competes for would go up approximately three times that. Okay. 
So what has happened is we have had a brisk step up in the 
acquisition or in the competition for external non appropriated 
dollars until very recently and that number has now stabilized. 
In terms of real dollars it has decreased.
    Mr. Mollohan. So the external source of funds for research 
has also plateaued.
    Dr. Feussner. That is correct.
    Mr. Mollohan. And your internal dollars have gone down.
    Dr. Feussner. Well, in real dollars yes. I mean inflation 
adjusted dollars over the period of time you are correct.
    Mr. Mollohan. NIH funding has increased by more than $4 
billion in the last 2 years. That is about a 33 percent 
increase. Your budget document, as I understand it, and as I 
understand your explanation of it, does not reflect VA 
researchers benefiting from this increase.
    Dr. Feussner. That is correct.
    Mr. Mollohan. So my question is why?
    Dr. Feussner. Well, what I haven't clearly explained yet, 
is that I think that the number of investigators in the VA is 
flat, and that the overwhelming majority of the NIH dollars 
that comes to VA comes through individual investigators located 
in the field. And that number is flat.

                           research personnel

    Mr. Mollohan. Your research infrastructure is capped out in 
terms of personnel, so you can't accommodate any more research 
activity?
    Dr. Feussner. I think that, in a sense, yes, that the 
individual investigators that are currently there are maximumed 
out.
    Mr. Mollohan. Okay. If you want to increase your research 
activity, you would need additional investigators or additional 
research infrastructure?
    Dr. Feussner. Yes, sir. And what we have done over the past 
4 years, as we have started along that pathway, our new career 
development awardees have increased from a low of about 90 to 
what is currently about 170 in just the last 3 years. So we are 
building the personnel research infrastructure that should make 
us be able to be more competitive for more external dollars 
down the line.
    Mr. Mollohan. Let me ask, in research organizations I am 
familiar with, they fund their researchers with direct dollars. 
Do you do that in the VA?
    Dr. Feussner. Not as clearly. The money to do the research 
comes out of the appropriation for research. The investigator 
time to do the research comes out of the medical care 
appropriation and is classified as VERA dollars in support of 
research. The research appropriation is $321 million, the VERA 
amount is approximately $331 million.
    Mr. Mollohan. You don't pay your researchers with direct 
dollars from a research grant you get from NIH?
    Dr. Feussner. Okay. The dollars for the NIH research grant 
do not come to headquarters. That would go either through the 
affiliated university or be managed by a VA nonprofit 
foundation, and would go directly from NIH to the investigator.
    Mr. Mollohan. Research facilities capabilities are often 
built up with indirect dollars. Do you get the advantage of 
indirect dollars in these grants?
    Dr. Feussner. No, at the moment we do not. We have been in 
negotiations with NIH now for the past two years to work out an 
arrangement such that for NIH grants that are done 
predominantly at VA facilities, that the NIH would support the 
infrastructure costs.
    Mr. Mollohan. I have, I think, exhausted the patience and 
graciousness of Ms. Kaptur here. I very much appreciate it. I 
would like to follow up outside the context of the hearing with 
regard to understanding how this works.
    Thank you, Mr. Chairman.
    Mr. Walsh [presiding]. Thank you, Mr. Mollohan.
    Ms. Kaptur.

                            psychiatric care

    Ms. Kaptur. I want to compliment Mr. Mollohan on his 
questions. It leads me into some of mine. I want to welcome you 
all here today. I feel like we are looking at the front line. I 
know this is the front line of the largest hospital system in 
the world, and Dr. Garthwaite, I wanted to ask you how many 
years have you been there now?
    Dr. Garthwaite. I have been at headquarters for 5 years, 
been in the VA health care system for 26.
    Ms. Kaptur. How does it feel to be at the head of the 
largest hospital system in the world?
    Dr. Garthwaite. It is challenging. I enjoy it. I think it 
is great opportunity to try to do the things I went into 
medicine to try to accomplish, which is to provide quality care 
to as many people as possible, and to help them out with 
problems that they are having. It is very challenging in terms 
of its complexity and the number of issues. It is a great job.
    Ms. Kaptur. I wanted to thank the department for sending me 
a lot of very detailed information on psychiatric care, which 
is something I am deeply, deeply interested in. And it is going 
to take me a long time to understand it, but I see all these 
experts here on information and technology, planning and 
analysis, there is somebody in finance. Financial officer, 
chief financial--associate, financial management.
    One of the questions I have, and I just want an answer on 
one page, because I have to pour through when I get an answer 
that fills a file drawer, then I worry. Because I ask myself 
where is the focus? And in this area of psychiatric care, what 
I want to ask you is the budget that you submitted to Congress 
for 2001 indicates the number of inpatient episodes that you 
cared for in 1999, 412,000 acute area, 15,000 rehabilitation, 
86,000 that are listed as psychiatric care, 99,000 nursing home 
care, 59,000 subacute care, 50,000 residential care and 41 
million outpatient visits.
    One of my questions is how would you go about using the 
data that you have to tell me in each of those categories, and 
then in totality how much of your dollars for care, putting 
research aside for the moment, goes into treating people whose 
primary diagnosis is some type of serious psychotic illness 
that may be complicated by alcohol and drug use? How can you 
pull that data out for me?
    [The information follows:]

                  Psychiatric Care for Substance Abuse

    The estimated cost to treat patients with dual diagnoses 
(substance abuse and psychiatric disorders) in FY 1999 was 
$703.9 million. There were 46,827 inpatient and 35,324 
outpatient visits in FY 1999.

    Dr. Garthwaite. We appreciate the opportunity to try to get 
that onto one page and to provide that information. I think the 
picture, or the concept that I would try to convey is that it 
is not always the number of dollars for a given individual or 
group of individuals, it is really whether they are spent 
effectively and if we have improved the outcomes for those 
individuals as well. Dollars can clearly be an important 
indicator of that, and in many cases are, but it is not the 
sole driving force. In our country, we spend many dollars doing 
operations that in the end we found not only didn't help 
patients, but in some cases hurt patients. So I think we want 
to make sure that we are focused, in addition, on the outcomes 
of the patient.
    So I would agree with you that the dollars we spent in 
mental health probably do bear a significant relationship to 
the quality of care, and there is a tendency in the country at 
large to avoid spending dollars on mental health. So we will 
get you the information on how we can do that as quickly as 
possible.

                             Mental Illness

    Ms. Kaptur. Well, I tell you what, I will tell you a story. 
Maybe you heard this story already, but it stays with me 
forever, when I was out at Hines and I was over in the 
emergency room, this is when I was back on the Veterans 
Authorizing Committee, and I watched admissions. And I was 
there, just happened that the Chicago Police brought in a 
veteran, it was his 19th admission. And they said we will clean 
him up, we will send him back out on the streets of Chicago and 
he will be back a year later because he won't take his 
medication.
    This is a pattern that is repeated in the private health 
care system of this country. I am out for a Nobel prize out of 
the VA in the area of serious mental illness. You are going to 
solve this problem for the world. I just got to get you 
organized to do that. I haven't been able to figure that out. 
It is now 18 years that I have been trying to figure this out, 
so I am not a very good student, I guess, because I am not 
getting the answers I want out of the VA, every time you push 
here something happens here. You can't quite figure out how to 
get a hold of this thing.
    But yes, the VA does a better job of receiving people who 
have these conditions, but I am not sure that it behaves any 
differently than the private sector in terms of solving the 
problem. That person probably needed transitional housing. Now 
we have had Secretary Cisneros and Secretary Cuomo, we have got 
more transitional housing, some of the psychiatric counseling 
programs that the VA has permitted certain veterans to be able 
to be housed in group situations where their meds are 
monitored. And we are further today than we were 18 years ago, 
but we are still not where we need to be in terms of the answer 
in terms of medication and of brain analysis, so that we 
understand what is really going on here.
    And I am--I really would like to know the percent, I mean, 
the percent that are operational within the VA at the health 
care level, in a given hospital, Ann Arbor VA, for example, how 
much time in dollars are spent there dealing with problems of 
psychiatric related illnesses? I would really--I sometimes read 
these studies, well, 10 percent. I think it is more than that 
if you really look at the dollars of the admission offices, of 
the nurses' dollars. And I am trying to get a sense of how 
significant this is in your population. And you have got an 
interesting population because many individuals who came into 
the military do so at an age where those illnesses onset, so my 
theory would be that you have a higher proportion that might 
present with those illnesses simply because of when they were 
inducted or when they enlisted than the general population that 
uses other hospitals in our country.
    So I guess I am looking to you for leadership here and I 
don't always sense it out of the VA. Now, I found out something 
yesterday. We were over on the National Science Foundation 
hearing and I asked the question of the director and of the 
head of the sciences board in some of the staff about why we 
can't come up with answers on mental illness or the country, 
the diagnosis, the treatment, understanding how the brain 
works. The answer I was given was that well, we don't 
understand the way the brain works. So therefore, we don't have 
the answer medically.
    And I said, is there any kind of interagency effort to work 
together, Congressman Mollohan was asking about NIH, and so 
forth. Oh, yes, yes there is an interagency effort and it 
involves NIH and NIMH and NSF. I said that is interesting. Is 
the VA involved? Oh, no the VA is not involved. I said oh, why 
is that. Everyone looked at one another. And it is the same 
reply I got from the vice president's officer when his wife did 
that mental illness workshop a year ago, and we were or 
whenever it was last year, and I was sitting there, I said why 
isn't the VA around the table. Where are they? Everybody looked 
at one another. The VA? Oh, no one even thought about it. 
Somehow you are not a player. Maybe you don't want to be a 
player. And I would hope that isn't the case. But you are 
always missing in action. And why is that?
    Dr. Garthwaite. That is a good question. I think we have 
made some significant strides in terms of quality measurement 
and in terms of patient safety to the point where we were 
consulted and were a significant part of the administration's 
response to the OIM report on safety. I know we did have people 
attend the seminar on mental illness. Whether we were a big 
enough player, a prominent enough player, certainly you could 
argue. I don't know. I didn't personally get to go. But I would 
say that we like your goal of getting a Nobel Prize for 
treatment of mental illness and we look forward to some 
significant new initiatives in mental illness over the next 
year or two.

                Psychiatric Counseling for Homeless Vets

    Ms. Kaptur. Let me ask you, in the area of psychiatric 
counseling in your budget is a program Dr. Errera started years 
ago. What has happened with that program? Where did I find it 
in your budget? What is it doing? I can't remember the exact 
title of the program, but this is dealing with homeless, 
mentally ill veterans around our country. That is it, for the 
chronically mentally ill. Could you give me, or one of the 
staff there, give me a sense of when did that program start, 
where is it today and how does it relate to your MIRECC 
initiative?
    Mr. Frelinghuysen. We have 14 panelists. You want to bring 
up another one?
    Dr. Garthwaite. We do have on page 2-114 we do have a 
break-out of homeless program budgeting for this year, up to 
$150 million proposed in 2001. That includes homeless grant per 
diems, and health care for homeless vets. So it is a 
multifaceted program.
    Ms. Kaptur. So the program for the chronically--is 
contained in one of those line items? Homeless, chronically 
mentally ill?
    Dr. Garthwaite. We are going to have to find that out for 
the record in terms of that specific program, is included it 
there or under our general medical expenses where I think it 
probably is.
    [The information follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Ms. Kaptur. May I ask over the years what has happened--can 
someone talk about this program? What has happened to it since 
it began? Where is it today? What have we learned what are we 
doing?
    Mr. Frelinghuysen. This is an issue that you should be 
familiar with because I believe Ms. Kaptur and others have 
raised it in previous hearings.
    Dr. Garthwaite. Well, I can tell you a few things, I guess. 
In 1998, Health Care for Homeless Veterans Program assisted 
40,335 veterans. And in 1999, 38,023. We believe that is a 
significant number of homeless veterans who do receive services 
and up to two-thirds do receive services of a specific program. 
And one of our issues is that to collect all homeless 
counseling that goes on, we have to look across many programs, 
but the ones specifically in this particular program are in 
that ballpark, about 40,000 veterans.

                        Mental Illness Treatment

    Ms. Kaptur. Doctor, may I just say I think you are a 
wonderful man and you are trying very hard, but I am shocked 
that there isn't another person on the panel that, knowing we 
have asked these questions year after year after year that is 
trying to help you answer. And let me ask this question. I want 
to know who at the VA is in charge of the treatment, diagnosis 
and treatment of those who are mentally ill? Then I want to 
know who is in charge of the program dealing with them? Which 
individual do we hold accountable?
    Dr. Garthwaite. For research, Jack is in charge of the 
overall research program, which includes emphasis on the 
mentally ill. Dr. Lehman has recently been appointed as our 
head of mental health. He has been working there in another 
capacity for a long period of time.
    Ms. Kaptur. May I ask what his title is, Doctor?
    Dr. Garthwaite. Associate chief medical director for mental 
health and mental behavioral health. I think that is right.
    Ms. Kaptur. He reports to you?
    Dr. Garthwaite. Reports to the chief patient care service 
officer who reports to me, so indirectly.
    You know, I think what you are asking very specifically is 
for this program, where we are today, and I apologize that we 
didn't ask those individuals to be present here. I am sure they 
can easily answer this question for you. And we would be happy 
to get you the answer in writing or set up a meeting.

                        Mental Illness Research

    Ms. Kaptur. Well, I can't speak for other members on this 
panel, and but I have got to have confidence that there is some 
focus, and there is some sense of mission within the VA in this 
serious area. I have got to figure out how to help you do that. 
I am a bit at a loss this morning. I will pore over the 
material that has been sent to me. I know Congressman 
Frelinghuysen has an interest in this. I know Congresswoman 
Meek has an interest. I would guess there are some other 
members of this panel that have an interest.
    Dr. Feussner. May I comment on the research component?
    Ms. Kaptur. I would love it.
    Dr. Feussner. I think that Congressman Frelinghuysen has 
addressed the issue of our lack of cooperation with NSF and 
that is a fair criticism. We have a brisk collaboration with 
NIH, and if there is a logical explanation for the fact that we 
have a brisk collaboration with groups, say, like NIH and DOD 
and not one with NSF I think, to some degree, our focus is more 
clinical research and basic research. So that may have been why 
we have not gone to NSF.
    In terms of the research portfolio in mental illness, it is 
quite substantial. If we, as we categorize our research 
portfolio, almost 17 percent as the data we sent you indicate, 
17 percent of our research portfolio is vested in issues of 
mental illness. We have done the definitive work establishing 
the basic treatment for schizophrenia, being antipsychotic 
agents.
    We have done the lead work establishing the effectiveness 
of Clozapine in the treatment of refractory schizophrenia. We 
are doing the largest study in the country to date on 
Clozapine, a family of antipsychotic agents that have a better 
adverse effect profile than do other agents. In terms of basic 
research, that is where one gets Nobel Prizes. There are no 
Nobel Prizes for applications of research funding. And boy, I 
would love to get there.
    Ms. Kaptur. The cardiac pacemaker.
    Dr. Feussner. We got no prize for the cardiac pacemaker. We 
received no prizes for the CT scans. We have gotten the Nobel 
Prize for discovering how brain hormones control the rest of 
the body. We have gotten the Nobel Prize for discovering the 
radio amino acid which allows us to measure a lot of body 
chemicals, and recently we received the Nobel Prize for studies 
of nitrous oxide which really relates to blood vessel 
functioning. But we have never gotten the Nobel Prize for those 
applications. In terms of current, in part, because of the 
question you asked earlier, and in part, because of something 
we are writing about in our clinical trials program, we were 
able to go back 30 years and look at these trials, and the 
major two national treatment groups that we have funded since 
1972 is heart disease first and mental illness second.
    So the research portfolio in mental illness is very brisk, 
especially in psychoses, schizophrenia and bipolar disorder. 
And that research portfolio spans the basics of schizophrenia, 
the discovery that we have made, all the way through 
implementation and assessment of, say, the schizophrenia 
guidelines in routine clinical care.
    Ms. Kaptur. I know that my time has expired here. I would 
ask for the next round, if you could be thinking about the 
number of neuropsychiatrists, the number of travel researchers 
that you include on your peer review groups when you select and 
when you determine and select research projects to fund or to 
seek. At one point it was about 4 percent back in mid-1980s, I 
would like to know whether that has gone up or not.
    Dr. Feussner. Okay. I will get you that. The mental illness 
research is reviewed exclusively by experts in psychiatry, 
psychology, et cetera, so all the research, we have organized 
in the peer review process is so that if you have a research 
project on brain disease such as mental illness, that would go 
to the panel of psychiatrists, psychologists, experts. If it is 
on gut disease, it would go to gastroenterologists. So off the 
top of my head, what I would say is that there are nine such 
panels and about one-ninth of those would be in the area of 
mental health, even though one-fifth of the research portfolio 
is in the area of mental health.
    Ms. Kaptur. Thank you. Thank you very much.
    Mr. Walsh. Mr. Knollenberg, it is your turn, thank you for 
your patience, and take the time you need.

                          bioartificial kidney

    Mr. Knollenberg. Thank you, Mr. Chairman. Thank you very 
much. Panel, welcome, Dr. Garthwaite and all. This is probably 
the most intimidating group of people that we get in front of 
us in terms of numbers and also in terms of maturity, and I 
presume wisdom and some other things but we will stop there and 
let you decide if that is totally true.
    What I want to do, first of all, is thank you, Dr. 
Garthwaite and Dr. Feussner, for your appearance in my office 
regarding the matter of the bioartificial kidney and the 
research that goes on there. And I know that you are well aware 
of my interest in that, and certainly both of you have been 
kind enough to come over and spend some time, and I think we 
have ground out a framework here that we can proceed with. I 
appreciate--your response came through just, I believe, 
yesterday. So I think that is the kind of interaction that we 
need to bring about some successes, hopefully, that we all want 
to see happen.
    And so I want to also thank Secretary West for his 
involvement to bring it about. And hopefully we can bring this 
to a closure that is successful for everybody.

                        allen park, mi, facility

    Let me go to a couple of issues. These are local issues to 
my district in Michigan. One is Allen Park, which is the 
facility that has been vacated by the VA. And we brought this 
question up and the other question has to do by the way with 
the new center, the Dingell Center, I believe appropriately 
named for the Dean of the House, in Detroit. But we have asked 
for a study, I think, in last year's report language, I believe 
there was a request for a comprehensive long-term study of 
veterans and their needs, their care, in southeast Michigan.
    Almost half the population of the State is kind of centered 
in that southeastern corner. And the reason for the study was 
to project current and future health care needs of veterans in 
the Detroit metropolitan area.
    It is my understanding, and you can correct me if I am 
wrong, that the report has been completed by the VA officials. 
The so-called VISN 11 report. And I would like to know, first, 
are you prepared to submit this report at this time? Or is it 
coming soon? What is the status of that?
    Dr. Garthwaite. I think we have just received it. I did 
peruse a final draft or near-final draft, and so it is very 
short. The fundamental conclusion address this question if 
there's a need for Allen Park and long-term care beds in Allen 
Park? And I think the fundamental conclusion is that the study 
did not demonstrate a need. So then the real question becomes 
what to do with it. It reverts back to, I think, the Ford Land 
Development Company.
    Mr. Knollenberg. I have a couple of questions on that, too. 
Relative to the new Dingell Center, there have been 
conversations going on about how, if possible, that some of the 
space of that center could be used by a private entity or a 
separate entity. And maybe a good question would be, can you 
even do that? Can you contract with, let's say, a university to 
provide space within the Dingell Center? Is that possible?
    Dr. Garthwaite. Yes, it certainly is. One of the creative 
pieces of legislation the Congress gave to the VA many years 
ago and even improved in the Millennium Act, is enhanced use 
leasing authority. This allows us to take underutilized space 
and work out contracts with private sector entities to develop 
and use that space for mutual benefit. And we have good 
examples of where we have done that.
    Mr. Knollenberg. So it does work?
    Dr. Garthwaite. Yes, the only thing I am aware of in the 
Dingell building that might be competing is that we also have 
an effort ongoing to try to collocate veterans benefit offices 
in vacant VA space, colocations are another thing we are trying 
to do to is utilize the space we have to the maximum benefit.
    Mr. Knollenberg. Okay. Back to the point of the original 
mandate, or gift made by Ford Motor back in, I think, the 
1930s. In that deed that was made at that time, there was a 
reverter clause which suggested that upon completion of use by 
the VA, that Ford would be interested. My understanding is that 
they are interested. Now, the dilemma, of course, comes up to 
the point of what do you do with all of those great big 
buildings that may or may not be made for anything that we can 
deal with in the 21st century? And there is the implication of 
cost.
    I noticed in the budget that there is absolutely--we talked 
about flat funding in the research end of it, but there is a 
$31 million reduction in the construction end of it. So when it 
comes to preparing that property for reversion to Ford, I don't 
know where the discussions are, who is going to tear down or 
what, but I would like some enlightenment on that.
    Dr. Garthwaite. I don't know all the specifics. I know that 
there have been at least some preliminary talks.
    Ms. Bradley. Thank you. You are probably aware that there 
is no common law right to simply abandon the property. There 
have been discussions that have been ongoing since 1997 between 
the Department of Veterans Affairs and Ford. It is not the Ford 
family per se, but it is an organization called the Ford Motor 
Land Development Company. And no formal proposals have been 
exchanged. My understanding from my lawyers in Detroit is that 
the Fords will not assent to the VA using the land for any 
commercial purposes, nor will they be willing to pay for the 
demolition costs or the environmental costs that will be 
required in order to give the property back to the Ford family 
in the event that we choose to use the reverter clause of the 
deed. And you are right, the Fords conveyed this property to us 
in 1937.

                         dingell building space

    Mr. Knollenberg. By the way, just jumping around here a 
little bit. What percentage of the Dingell building space is 
nonutilized?
    Dr. Garthwaite. We have two of the wards that are not 
utilized. About 5 percent of the total space.
    Mr. Knollenberg. Okay. Do you expect to utilize that in the 
future for your own needs?
    Dr. Garthwaite. I think it is adequate for current needs as 
we envision the system based on current utilization and current 
eligibility.
    Mr. Knollenberg. There is a diminishing population of 
veterans. I don't know what the matter would be or the number 
would be in terms of veterans needing services. Presumably some 
of those might be attracted from a region beyond the 
southeastern Michigan area for treatment there. So it might 
swell that number.
    There are guidelines that govern the--when this projection 
is made finally, there will be guidelines within that 
projection, presumably that will telescope into the future as 
to what your needs might be in the future along the line of 
veterans services, and I presume that will come out in this 
report; is that right?
    Dr. Garthwaite. Yes.
    Mr. Knollenberg. I know this report has been ordered. I 
don't know what kind of a deadline.
    Dr. Garthwaite. I believe at least a significant part of it 
tries to project long-term care beds across the network for the 
future, and compares both VA and community resources that might 
be available for that.

                             medical errors

    Mr. Knollenberg. Let me go to medical errors. I know that 
you have been getting some press, not necessarily the greatest 
press, when it comes to medical errors. A recent report 
indicated that some 98,000 people--this is not just VA, this is 
countrywide--die every year as a result of medical mistakes by 
physicians, by pharmacists, by other medical personnel. I have 
been told that more Americans die from medical mistakes than 
die from cancer, highway accidents and AIDS. I don't know the 
magic of that trio, but that begins to loom as a pretty large 
number.
    And like your counterparts in the private sector, the VA 
hospitals are not immune from medical errors either, and the 
study conducted back in 1997, and I think through 1998 in which 
the VA staff was required to report any indication of a medical 
error documents, nearly some 3,000 mistakes or 3,000 cases of 
medical mistakes. I guess the most disturbing figure of that is 
that 700 patients died while hospitalized or shortly 
thereafter. That could be a mirror of what goes on in the 
private sector. I don't know. You can respond to that but 
before you do, what is apparently true also is that about a 
third of those patients that were suffering from depression or 
mental illness, and I know that was a subject that was just 
brought up, committed suicide. That too may mirror the private 
sector, I don't know.
    But in terms of the Gulf War syndrome, and in terms of the 
posttraumatic stress syndrome so-called of the Vietnam era, I 
am wondering if any of those patients committed suicide or were 
a part of those numbers that come from those two categories. If 
you could respond to that as well.
    Dr. Garthwaite. Yes, if I could start way back at the 
beginning and talk a little bit about medical errors and the 
VA's response to medical errors.

                             patient safety

    Mr. Knollenberg. I will say this. I think you did a good 
job about being forthcoming. And that is appreciated. My 
understanding is that was something that you opened the door 
to, so I would applaud you for that.
    Dr. Garthwaite. Right. Right. We recognized in 1997 that 
there was a problem, whereas in much of American medicine woke 
up later when the Institute of Medicine released its report 
last December. In 1997, we began a very aggressive initiative, 
which included formation of the National Patient Safety 
Partnership, (with other large health care organizations) 
establishment of a center for patient safety within the VA 
which reports directly to the Under Secretary for Health, 
establishment of centers of inquiry for patient safety, and the 
institution of a reporting mechanism that is mandatory. The 
reporting system is one which we did not really have a lot of 
experience with, and which is the subject of the medical 
inspector's report.
    Based on the medical inspector's report, we did some 
additional things such that now we believe we have a much 
better reporting system, including root cause analysis of the 
problems. This system is being piloted in 8 networks in Florida 
and 22 in Southern California.
    Just a comment on the medical inspector review of the first 
approximately 3,000 adverse events. These were not defined as 
medical mistakes; these were defined as adverse events. By 
``adverse event,'' we meant things that we felt were not part 
of the predicted outcome in relationship to a hospitalization 
or the time immediately following a hospitalization.
    With today's knowledge, suicide within 30 days of 
hospitalization is not known to be preventable in all cases. We 
felt, however, that we ought to be looking to see if there were 
things that we could learn from the fact that someone has 
committed suicide shortly after a hospitalization or could we 
get better at predicting who was going to commit suicide, and 
therefore intervene in a different way. In fact, we have 
learned that if you are single, you have recently had a 
diagnosis such as cancer, and you own a handgun, you are much 
more likely to commit suicide than someone who does not have 
those characteristics. That allows us to look for those 
characteristics and also allows us the opportunity to intervene 
and hopefully prevent the problem.
    In addition, a number of those deaths and adverse events 
were falls, and today when you operate 130 nursing homes and 
are the largest integrated health care system in the world, you 
are not likely to get all the sick people in beds and keep them 
from falling unless you tie them in bed, which we also cannot 
do. So I don't think that we can eliminate all falls, but I do 
believe that if we think about it not as something that we are 
stuck with but rather that there are new technologies, new 
opportunities to assist. We could think more systematically, 
have you engineered beds properly? Have you engineered 
guardrails properly? Are we staffed appropriately? All of those 
sorts of things are questions that we ought to be asking, and 
we think we should.
    Overall, the issue of patient safety is, as you have 
suggested, not a good story for American medicine. But the good 
news is we have recognized it and the VA recognized it several 
years in advance, and we are hard at work at trying to fix the 
problems. And almost all of the problems are system problems. 
People do not get up in the morning going in to work to harm a 
patient. They go in trying to do the right thing. But I think 
what we have done, we have been guilty of thinking that human 
beings will become perfect if we train them hard enough. And 
the reality is, all of us are going to make a few mistakes, so 
we need to accept that and try to engineer systems that 
compensate for the fact that people are in them and people are 
imperfect.
    And so we either eliminate the mistake, like we are doing 
with bar coding in medication administration, or at least 
minimize any impact it would have.
    Mr. Knollenberg. Let me just ask, does an employee come 
under any criticism for reporting an adverse event?
    Dr. Garthwaite. In our system, they should not.
    Mr. Knollenberg. Do they?
    Dr. Garthwaite. Have they in the past? In most systems they 
might. We have worked very hard at changing that culture. I 
think that is an important aspect of this. If you turn yourself 
in, how are you treated? Are you treated fairly? Are you 
admired for improving the system so that the next person is not 
still in jeopardy?
    There was a plane crash west of here where all the United 
pilots knew that there were some altitude issues which they 
told each other. But there was a mandatory punishment if they 
violated altitudes, so they did not tell the FAA and another 
airliner crashed. That sort of thing.
    Mr. Knollenberg. And I know our time is running out, Mr. 
Chairman. I do want to get back to the Gulf War syndrome, and 
also the posttraumatic stress syndrome. Among these fatalities, 
and if you don't know, now you can submit that obviously in 
writing, but I would like to actually ask for some reassurance 
from you, Dr. Garthwaite that you will respond to those 
questions relative to Allen Park to the Dingell facility, to 
how quickly--and also the request in the report language of 
last year's bill relative to the projection for the 
southeastern part of Michigan as to what can we expect.
    Quickly on the Gulf War Syndrome.
    Dr. Garthwaite. We will have to get you the breakout by 
specific diagnosis if we can do that easily. Overall, veterans 
commit suicide at a slightly lower rate than the general 
population. But we are very interested specifically which 
veterans, which diagnoses and how to intervene to prevent all 
suicides.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Mr. Knollenberg. If you would respond with that, I would 
appreciate it.
    [Recess.]

                         capital asset planning

    Mr. Frelinghuysen [presiding]. I think we might as well 
begin. When Mr. Goode comes in, we will recognize him. I know 
we are going to have a full day, so we might as well keep the 
machinery moving here.
    I suppose this question goes to Dr. Garthwaite. Today, 
before the VA Health Subcommittee, the GAO testified during a 
hearing on the VA capital asset planning, and released at that 
time new information to last year's GAO report that pointed out 
that the VA is wasting a million dollars a day on underutilized 
buildings. And I note from that report last year, and I quote 
from page 7 of the March 1999 report, ``The VHA uses fewer than 
1,200 buildings, one-fourth of their overall buildings,'' which 
I believe are 4,700, ``to deliver health care services to 
veterans. The rest are used primarily to support health care 
activities, although many have tenants or are vacant. Of note, 
the VA has over 5 million square feet of vacant space which can 
cost as much as $35 million a year to maintain.''
    I assume those figures are out there. No one would argue 
that those figures are there. The findings that the GAO 
presented to the committee this morning show that despite the 
passage of a year, the VA has been unable to design a capital 
realignment plan. And further that, in their own words, 
``Senior managers,'' quote, unquote, ``have not been proactive 
enough in the process, delegating in many instances work to 
stakeholders and others that, at least in the case of the 
Chicago hospitals,'' which I guess is one of those, situations 
which you have been wrestling with for some time, ``has led to 
delays and sent the process back to the drawing board.''
    Dr. Garthwaite, what role have you taken in developing the 
VA's capital asset management plan? And have you worked with 
Secretary West on developing a framework that you can share 
with the committee?
    Dr. Garthwaite. The data that you point out that we have 
too many buildings we do not argue with, and we do believe that 
we have been working at getting a policy that can be acceptable 
to both veterans who look to VA to be there when they need 
them, and the symbolism is often the building that the VA has 
built as a part of that symbolism, that can get them 
comfortable; and our other stakeholders such as academic 
affiliations and others comfortable with how we realign our 
assets to maximally and efficiently care for veterans.
    Specifically what I have done is to meet with Secretary 
West, and he has significant concerns about the process under 
which we use to make these assessments. We have a draft policy 
that we sought input from stakeholders on. That is now back and 
should be available very shortly. We will have to get that 
approved by the Secretary, but we have had significant amount 
of input, and I think it is a much improved document.
    Simultaneous to that, we are writing the statement of work 
for contracts under this provision so that as we get the policy 
approved by the Department, we will simultaneously be able to 
let contracts to do the first 10 analyses of 10 geographic 
markets identified by the General Accounting Office as having 
perhaps excess infrastructure, but at least having several 
facilities in a small geographic area.
    Specifically about Chicago, I think the Chicago process has 
been too long and it has been something that we have used in 
part as a learning experience. We have taken several messages 
away from that experience. The first message is that not all 
contractors are the same. When we contracted in northern 
California, we did not rebuild Martinez and put in a northern 
California system of clinics. The data we got was very helpful 
in making a decision. We had hoped to have that same experience 
be repeated in Chicago, but we are disappointed that we had a 
lot of trouble early on getting the data generated from the 
contract.
    That required us to bring in some additional VA folks to 
oversee the process and to help work on that data. And I think 
that----

                   status of study on capital assets

    Mr. Frelinghuysen. Aren't the VA folks involved in that 
already?
    Dr. Garthwaite. Yes, they were. But their role became much 
more prominent when the data that they were getting presented 
to them and analyzed from the contractor did not seem to come 
fast enough or in meaningful enough manner.
    So I think that was a significant delay. We did get a 
proposal in the fall in which we then sent out for stakeholder 
comment and got significantly more comments than probably we 
would have anticipated. I think it was 4,000. Almost 5,000 
letters. It took us a while to read, categorize, try to 
understand and make sure that we utilized that input.
    The committee, with some additional members to it, then 
reconvened to consider those and to change any of the 
recommendations of the original proposal for Chicago. And the 
piece of paper that I got, or the report that I got about a 
week and a half ago, I felt was not driven enough by data. And 
I sent it back to make sure that the data was the first thing 
you saw, not the vote of the members on the committee.
    I don't think this is really an opinion issue, although 
expert opinions will be important. I do think this has to be 
driven by data that is important to patients.
    As a way of example, the driving force for the northern 
California study was the driving time and distance for 
veterans. There was an analysis done looking at the veteran 
population where they lived and the possible alternative 
solutions that were seen that absolutely made any other 
conclusion than the one we did very hard to make. And it was 
data driven and it was veteran-related, and convenience-related 
and it really drove the decision. And I think in the Chicago 
study, we got away from that, or the committee evolved itself 
away from that. I think they did the analysis in the beginning 
but then did not use data-driven criteria to make their final 
recommendations to analyze each option that way. So it may be 
there.
    Mr. Frelinghuysen. So to answer my question, you have 
learned some specific lessons from Chicago process, one of 
those being that accurate data is absolutely essential?
    Dr. Garthwaite. I think it is that the committee must be 
charged with and all the future committees must be charged with 
very accurate criteria that is data driven for which to assess 
the various options. I talked to the GAO about their testimony 
the day before yesterday and I think we are in complete 
agreement. They believe the same thing. I am not saying that 
this group did not use the criteria, but it is not evident in 
their report in how they selected the options, which is the 
difference. They did seek the data.
    Mr. Frelinghuysen. Page 2 from the April 5th--that is 
today--report, to a layperson is pretty damning. ``Our 
assessment of the VA's process as currently designed raises 
concerns about whether the right people are involved at the 
right times in the right ways. Specifically, senior managers at 
headquarters may not be proactively involved in the leadership 
role at key decision points.''
    And I assume that this is the situation that you will be 
working to rectify since you appear to be in agreement with 
most of the GAO's conclusions?
    Dr. Garthwaite. I am very much in agreement with that. 
Where this should lie and how it should be done, I think, can 
be debated and we should get on with that and get it done and 
make sure that someone is pushing to make the right decisions.
    Mr. Frelinghuysen. We are hoping that you will be one of 
those people. Mr. Goode, thank you for your patience.

                             adult day care

    Mr. Goode. I have got a question about adult day care. How 
many of your hospitals have outside adult day care? Like I am 
in a rural area, and persons in the center of my district, they 
are either going to go to Richmond, Virginia; Durham, North 
Carolina; or Salem, Virginia. Nationwide, how many of your 
hospitals have contracts with outlying communities to provide 
adult day care? Many or very few? You do not have to give me--
--
    Dr. Garthwaite. 83 VA medical centers have contracts for 
adult day care and 14 VA medical centers operate in-house 
programs.
    Mr. Goode. Okay. Maguire at Richmond, do they do any in-
house?
    Dr. Garthwaite. I don't know specifically. We can easily 
find out.
    Mr. Goode. And 83 have--you contract with outside entities?
    Dr. Garthwaite. Correct.

                       standards for purple heart

    Mr. Goode. All right. Let me ask you, or maybe this would 
not be you, doctor, can somebody just--anyone with the VA 
familiar with the standards for Purple Heart? I am not sure 
that you would be the right ones to ask.
    Dr. Garthwaite. I don't know if anyone wants to take that 
on. I don't know.
    Mr. Goode. I know you have to be wounded, but my question 
is if you had a morning report saying that you were wounded, 
but it was not on the DD-214.
    Dr. Garthwaite. That is determined in the Department of 
Defense, so I don't know.

                       service connected veterans

    Mr. Goode. To jump to another thing, on service connected 
veterans, if you gave every service connected veteran a 
Medicaid card and just let them be in Medicaid, I am not saying 
that all would like it, but some might like it better than 
going to a VA hospital because of length. Would that be 
cheaper?
    Dr. Garthwaite. It is a very difficult study to do. I know 
previous administrations have tried to study whether or not 
vouchering out health care for veterans would be economically 
feasible, having concluded it would not.
    I think the thing that I always say to people who raise 
that as an issue is that it would be relatively easy to voucher 
out certain things. Cataract surgery, general internal medicine 
for noncomplex conditions, hip replacements, knee replacements. 
The kind of things that there is a fair amount of profit, 
relatively simple to treat, and where there is a lot of 
capacity in the private sector.
    The line of people would be short to treat our patients 
with AIDS, and having 25 percent of our patients having 
hepatitis or a significant number of our patients having 
hepatitis C, or treating people with mental illness.

                             aids treatment

    Mr. Goode. What number of veterans treated by the VA 
percentagewise are AIDS patients? What percentage?
    Dr. Garthwaite. I don't know. I know we are the largest 
provider of care to patients with HIV, but I don't know the 
percentage.
    Mr. Goode. I mean, just you do not even have a ballpark on 
it? You are going to use that as an argument against a 
voucher----
    Dr. Garthwaite. I am just saying the alternative. To try to 
find alternative sources for that health care would be 
difficult. In other words, if you just gave them a voucher and 
said go find the same quality of care, the same coordination of 
care in the private sector for this amount of money that is 
included in your voucher. Are there systems out there designed 
and able to deliver that same kind of service? I think it would 
be difficult. We have treated 46,000 patients so far with HIV.
    Mr. Goode. Okay. Over what period of time?
    Dr. Garthwaite. I think that is since the epidemic began, 
essentially.
    Mr. Goode. How many did you treat last year.
    Dr. Garthwaite. 18,000.
    Mr. Goode. 18,000 in 1999? And how many patients did you 
say treat totally? You probably have got it right there.
    Dr. Garthwaite. Total number of patients in 1999, 3.6 
million.
    Mr. Goode. You treated 3.6 million and 18,000 of them with 
AIDS. That is not a big percentage. Look at your numbers. Is 
that correct? You treated 3.6 million different persons even on 
an inpatient or an outpatient basis just to see the doctor in 
the VA system, and 18,000 of 3.6 million had AIDS. That does 
not sound right to me. Is that what your figures show?
    Dr. Garthwaite. Yes.
    Mr. Goode. That is a very small percentage.
    Dr. Garthwaite. A percentage for other illnesses for which 
there is not excess capacity in the private sector are things 
like mental illness. It is one thing to say we will give 
general medical care for this voucher, but it is another thing 
to say what is the cost of a voucher for someone who has been 
hospitalized for schizophrenia for 5 years or requires long-
term care, aggressive care, or treatments for homeless. Where 
do you find spinal cord injury units of the quality and makeup 
of the VA?
    We have done a study, had a contractor do a study and 
looked for private sector equivalent.

                        spinal cord injury units

    Mr. Goode. Where are your spinal cord units now in the 
United States? Where are yours now? How many spinal cord units 
do you have? You do not have a whole lot.
    Dr. Garthwaite. We have 23 Spinal Cord Injury Centers.
    Mr. Goode. If I had Medicaid and I could go to the 
University of Virginia versus a VA, I think I would take the 
University of VA, not disparaging the VA system.
    Dr. Garthwaite. For spinal cord injury? It may be, but the 
Paralyzed Veterans of America believe that there are few places 
where you can get equivalent care, but by and large, you cannot 
find that equivalent care around the United States that offers 
the same services. I refer you to the patients on those.
    Mr. Goode. Because, I mean, I have got constituents that 
say both things. I have some constituents that like very much 
their treatment at the Salem VA hospital, but then I have 
others that tell me I would rather just be able to go anywhere 
I wanted to and just know that it was covered. I am going over 
to VA because the medicine is free or very cheap. And I am 
going to the VA because the doctor is free. You know, that is 
what a lot of them say. But I know they are not all one way or 
the other on it. But I would have thought you would have had 
more AIDS patients than 18,000 if that is----
    Dr. Garthwaite. Treated in the last year. Yes.
    Mr. Goode. That is all I have, Mr. Chairman.

                           veteran population

    Mr. Walsh [presiding]. A couple of general questions, Mr. 
Duffy, could you tell me generally or exactly how many veterans 
there are now in the country? I think you are the right person 
to address that question to.
    Mr. Duffy. At the present time there are just over 24 
million veterans who qualify in some way or another for VA 
services.
    Mr. Walsh. And how many new veterans come on every year?
    Mr. Duffy. If you would bear with me a moment, I can give 
you that number.
    Mr. Walsh. Sure.
    Mr. Duffy. There are approximately 200,000 to 210,000 
separations per annum from military service.
    Mr. Walsh. And how many veterans do we lose a year?
    Mr. Duffy. At the present time the rate is about 574,000 
per annum. That will increase to 618,000 per annum by the year 
2010.
    Mr. Walsh. Do you have a projection for how many veterans 
will be in the system in that year?
    Mr. Duffy. I do.
    Mr. Walsh. We could do the math, I am sure.
    Mr. Duffy. I have got it here if you will just bear with me 
a moment.
    Mr. Walsh. Sure. This is 10 years out.
    Mr. Duffy. 10 and 20 years out.
    Mr. Walsh. Assuming, hopefully, no major conflict.
    Mr. Duffy. Yes. In 1990, we had 27.32 million veterans. 
This year 2000 the estimate is 24.4 million. 2010, the 
projection is 20 million. 2020, the projection is 16.159 
million.

                        medical research funding

    Mr. Walsh. Thank you. Okay. Back to research for a minute. 
I know Mr. Mollohan addressed this, but I wanted to delve a 
little bit more deeply. Last year the Congress provided a $5 
million increase for the research account. This year, there is 
no increase in the budget request. Other research accounts in 
our bills like NASA, NSF and EPA all have increases requested. 
Why did the VA research not also seek an increase?
    Dr. Feussner?
    Dr. Feussner. I think that to elaborate on the question 
that Congressman Mollohan had asked earlier, the VA research 
sought an increase in the appropriation, but I think the 
competing priorities of patient care, et cetera, overwhelmed 
the research request.
    Mr. Walsh. What was the request for?
    Dr. Feussner. The request was to go from a budget of $321 
million, which is current, to approximately $397 million, which 
is about a $76 million increase. We estimated that about $11 
million of that is current services dollars. So that would have 
resulted in $65 million of new money, which is the figure that 
the Secretary quoted in the last hearing.
    Mr. Walsh. So that $397 million was it?
    Dr. Feussner. Yes, sir.
    Mr. Walsh. Where did that number appear in this process of 
budget making?
    Dr. Feussner. The number appeared in the research budget 
request that went to VHA, and then left VHA and went to the 
Secretary's office. And left the Secretary's office to go to 
Office of Management and Budget intact.
    Mr. Walsh. All right. So when it left the Secretary's 
office it was still at $397 million?
    Dr. Feussner. Yes, sir, that is correct.
    Mr. Walsh. And when OMB submitted, after consultation with 
you, the budget request, it was $321 million?
    Mr. Catlett?
    Mr. Catlett. Mr. Chairman, the decision about the research 
level is a VA decision, not an OMB decision. They gave us the 
target for total discretion any funding.
    Mr. Walsh. OMB does impact on some of these budgetary 
decisions.
    Mr. Catlett. Yes, sir, that changes year to year. This year 
in this budget we had no direction specifically to reduce 
research. VA was given a total amount money and having to make 
those priorities and decisions about how we spread the money.
    Mr. Walsh. Did they suggest to you this might be a place to 
look to find those funds?
    Mr. Catlett. I don't recall that this year. Generally, the 
OMB's attitude has been that the research focus at the VA 
should be subsumed within the broader government efforts. But 
there was no direct reference to that in this budget cycle as I 
recall.
    Mr. Walsh. Well, when the President's request came in for 
$1.355 billion increase for VA medical care, did they suggest 
line items?
    But did they suggest a specific number for research?
    Mr. Catlett. No, sir, they did not.
    Mr. Walsh. So even though when the Secretary sent it over 
with $397 million level, he got the sense that that was not a 
realistic number from OMB?
    Mr. Catlett. The amount that we received in total was 
obviously less than we had requested across the board. The 
decision was made to focus on direct health care, on 
improvement of benefits delivery, and on expanding the efforts 
in the cemetery operations. So it was a decision that we focus 
primarily on direct benefits delivered across the system versus 
research. So research was secondary to that in our decision-
making.

                        medical care omb request

    Mr. Walsh. Let me ask you, what was the request for medical 
care? From the Secretary going over to OMB? Do you know?
    Mr. Catlett. It was approximately a billion dollars more, 
and we will provide that for the record, but a billion more 
than we requested.
    Mr. Walsh. So you requested $2.3 billion?
    Mr. Catlett. Actually more than that, but I will provide 
that for the record.
    [The information follows:]

                   Medical Care OMB Request for 2001

    The Department requested $21,184,613,000 for the Medical 
Care account, an increase of $2.3 billion above the 2000 
enacted level.

                        medical research funding

    Mr. Walsh. So while we are talking about a flat line 
budget, in effect, the way you deal with research is to reduce 
FTEs because otherwise they would--those positions would 
absorb--in order to maintain the level of research, you had to 
cut people. Is that, in effect, what you are saying?
    Dr. Feussner. No, sir. The way we have dealt with the 
current year budget in 2000 is that we reduced across the board 
the funding level for all projects by 5 percent. And in that 
way, accommodated this current year budget. What we would do 
next year, in developing plans now for the $321 million 
appropriation, we will likely reduce the pay line drastically.
    Mr. Walsh. Employees?
    Dr. Feussner. I am sorry, I am sorry, the number of 
investigators supported by our appropriation will diminish. 
That does not necessarily translate into an FTE reduction. It 
depends on whether those investigators get money from other 
sources, get research money from other sources or do other 
things such as clinical care.
    Mr. Walsh. Okay. Do either Mr. Frelinghuysen or Mr. Goode 
have additional questions they would like to ask in this round?
    Mr. Frelinghuysen. Yes, I actually do, Mr. Chairman.
    Mr. Walsh. Go ahead. We will let Mr. Frelinghuysen 
conclude, then. Thank you.

                       adult day care regulations

    Mr. Frelinghuysen. I understand that when our State opened 
the Menlo Park Veterans Nursing Home last year, it included an 
adult day care facility which would provide daily assistance to 
at least 30 veterans. However, the State has informed me that 
the day care facility cannot open until the VA finishes 
developing the regulations for adult day care programs, a 
process State officials tell me has been ongoing for 5 years.
    For the record, when will the final regulations be issued 
and why has the process taken so long? When I meet with 
veterans they say they are going to go ahead and try to do this 
themselves, but they need a sign-off from you. What is going 
on? And I assume we are not the only State that has sort of a 
panoply of services that would help veterans.
    Dr. Garthwaite. You are talking about can we fund an adult 
day care program and place it in the veterans nursing home?
    Mr. Frelinghuysen. No, we have an adult day care facility 
ready to go, but we need your blessing. There are some 
regulations that you put out for adult day care programs that 
relate to veterans.
    Dr. Garthwaite. I really do not know what the hangup is, 
but we will find that out and provide you a record quickly.
    [The information follows:]

                       Adult Day Care Regulations

    The State Adult Day Health Care proposed regulation was 
approved by the Secretary and transmitted to Office of 
Management and Budget (OMB) for approval on November 9, 1999. 
OMB provided no feedback or approval related to these 
regulations until late February 2000. VA requested written 
comments and has not received them to date. VA General Counsel 
has contacted OMB several times concerning the approval or 
written comments related to the proposed regulations. On April 
7, 2000, VA General Counsel received comments by telephone. On 
that date VA provided the material that was requested. The 
approval of the State Adult Day Health Care regulations is 
pending OMB approval. VA is trying to resolve any concerns that 
OMB may have about these regulations.

                       asset realignment process

    Mr. Frelinghuysen. If you would, please. Several of the 
concluding observations, and I would like your reaction to 
them, to today's testimony from the GAO statement from Steven 
P. Bachus, director of Veterans Affairs and military health 
care issues, health education human services division, and I 
quote, among his concluding observations: ``we are concerned 
that the VHA's slow progress in establishing an asset 
realignment process needlessly delays critical decisions and 
the opportunity to reinvest resources to enhance veterans' 
future care.''
    And it goes on and I continue to quote the last paragraph, 
``Because the VHA is struggling to reach a sound realignment 
decision in Chicago and complete the design of a systemwide 
realignment process, and because the VA's capital investment 
board has a model that could address many of the VHA's 
weaknesses, it seems appropriate the VA consider transferring 
the asset plan responsibility to the board. The daily cost of 
delayed decisions is unacceptably high.''
    Would you react to that suggestion or proposal or 
recommendation?
    Dr. Garthwaite. I don't think that the delays are 
necessarily in the planning areas. I think really the delays 
all relate to the very challenging issue of moving care from 
where it traditionally has been, the relationships we have with 
our service organizations and their understanding of what that 
means to their own personal care. Also, how far they would have 
to travel, and the relationships to our affiliates who are 
working hard with us to try to educate smarter health care 
providers and do research. Those are where the real contentious 
issues are. We are willing to look on any----
    Mr. Frelinghuysen. We recognize that there are stakeholders 
at the table, but the GAO is suggesting that perhaps there is a 
state of semiparalysis here that could be moved forward by 
embracing this model. And I just wondered whether that is 
within the realm of possibility.
    Dr. Garthwaite. Absolutely within the realm of possibility. 
We will look at anything to help expedite it. I do think we are 
making some progress.
    Mr. Frelinghuysen. You made reference a few minutes ago 
when I came back from a vote, Dr. Garthwaite, as to 10 analyses 
that are moving ahead relative to regional capital assets.
    Dr. Garthwaite. Right.
    Mr. Frelinghuysen. Could you expand on that a little bit 
and how much these analyses are going to cost?
    Dr. Garthwaite. We anticipate to spend about $10 million 
the first year to do the top eight to 10 regions identified by 
the General Accounting Office as those in which we have a 
significant number of assets per unit of geography. And we are 
working on a statement of work, a criteria-based statement of 
work that we would anticipate letting the contract by July, I 
believe.

                     status of last year's cno memo

    Mr. Frelinghuysen. Two other areas. I know Mr. Clark is 
here, the chief network director. Last year, there was a memo 
attributed to you and I am not quite sure whatever happened to 
the Clark memo and some of the recommendations that discussed 
the potential closure of VA hospitals. Obviously, I assume this 
is part and parcel of the whole issue of asset realignment. 
Where do we stand would you say relative to your memo, is it 
still out there or has it been somewhat legitimized by the new 
push for asset realignment?
    Mr. Kenneth Clark. I hesitate to say it has legitimized. It 
has certainly been overtaken by events. The memo that you are 
referring to was really a precursor in some ways to the CARES 
program initiative. It raised the question of what criteria we 
use to make decisions about realigning our assets and that 
really is at the core of the CARES initiative. It is a process 
that would lead us to some intelligent decisions about what 
assets we need, which assets we no longer need and what will we 
do with the ones that we no longer need.
    So to answer your question specifically, no, that memo is 
no longer in effect. It has been taken over by the CARES 
initiative.

                             access to care

    Mr. Frelinghuysen. Thank you. Lastly, an issue that relates 
to access to care. After last year's hearing some 450,000 
veterans nationally received letters in the mail telling them 
that they might no longer be eligible to receive treatment at 
VA medical centers after September 30th of last year. The 
veterans were enrolled with the VA but were considered to be 
priority 7, or category C veterans who have no service-
connected disability and who had an annual income over $9,000. 
Some of these veterans have been receiving their medical care 
from VA hospitals, as you are aware, for over a decade. As a 
result, I did add language to last year's report preventing you 
from denying these veterans access to care at VA medical 
facilities.
    Is the VA planning on sending out any similar letters this 
year?
    Dr. Garthwaite. The initial letter we sent out, although 
technically correct in terms of eligibility reform legislation, 
contained the language that was too alarming compared to 
reality, and so the new mailings have all had a much different 
letter and an information packet explaining it, I think, in a 
much better way. And we have not heard any feedback in a 
negative way on those. Mr. Clark has signed these letters as 
well.
    Mr. Frelinghuysen. Are you the prophet of doom?
    Dr. Garthwaite. I think he just--ended up signing them and 
ended up getting all the responses back from people who were 
concerned. And in retrospect, I think the original language did 
confuse veterans, and I think we made a concerted effort to 
make it a little more clear, and we haven't heard the negative 
feedback this year.
    Mr. Frelinghuysen. Thank you very much, Mr. Chairman.
    Mr. Walsh. You are welcome. We anticipated concluding at 
12:30. Ms. Kaptur has returned, I assume you would like to ask 
some more questions.
    Ms. Kaptur. I have one more round.
    Mr. Walsh. I have a 12:30 appointment. I would like to ask 
if either Mr. Frelinghuysen or Mr. Goode could sit in for the 
next 10 minutes. Ms. Kaptur you can proceed. Thank you very 
much for this morning.

                         seriously mentally ill

    Ms. Kaptur. Thank you, Mr. Chairman. Could I ask you, Dr. 
Garthwaite, in the six volumes you have presented for your 2000 
budget submission, where are the MIRECCs, Mental Illness 
Research Education Centers? What page is that on, please?
    Dr. Garthwaite. They are included in the medical care 
appropriation overall. We take that money off the top and fund 
the MIRECCs specifically, so that is part of our administrative 
funding. It would----
    Ms. Kaptur. So it is not separately broken out?
    Dr. Garthwaite. I don't think so.
    Ms. Kaptur. Could I ask you this Dr. Lehmann that you 
mentioned, how long has that position existed? Mental 
behavioral health specialist or associate chief?
    Dr. Garthwaite. Or equivalent. A long time. Dr. Errera 
occupied that position for many years.
    Ms. Kaptur. Does this person have responsibility for 
overall coordination? Because I will tell you next year--
frankly, actually, I would like it for 2001. I would like you 
to give me the budget of the VA for the seriously mentally ill 
and those with psychiatric disorders and present it in a way 
that is not disorganized. Is that possible?
    Dr. Garthwaite. Sure. I hope so. We will do that.
    Ms. Kaptur. And I would hope that in the letter that I 
received from your department, which I appreciate, it tends to 
be a letter that lists the law that was passed and quotes from 
the law, and then says how much money has been apportioned to 
that account. I would hope that when this is submitted, one 
could have a more policy-oriented focus to the way in which the 
dollars and the responsibilities are respondent so that we 
could see that it has been internalized within the agency and 
there is actually a mission in this area.
    I am having trouble deciphering that from the materials 
that were sent to me and also the six volumes that have been 
sent to the committee. And we would be happy to respond to what 
is sent to us, and it would be very helpful in looking at the 
treatment, at the research, in trying to understand where this 
is in terms of total dollars and total need.
    It is almost impossible--it is impossible to decipher from 
what has been submitted to us thus far.

                           homeless programs

    I want to ask another question. Hopefully--who in VA 
coordinates all the homeless programs? The medical side as well 
as the benefits and all agency services in this area, does that 
have a chief coordinator?
    Dr. Garthwaite. There is both a VHA point person and a 
departmental homeless veteran advocate. Go ahead.
    Mr. Hanson. Ms. Kaptur, the departmental coordinator is 
Pete Dougherty, who works in the Office of Intergovernmental 
Affairs. He has a staff of three. And he works with VHA to 
coordinate. Pete's office coordinates the presentation or the 
disbursement of the homeless grants per diem programs that we 
have every year and we are in the middle of that round for this 
year.

                         va medical facilities

    Ms. Kaptur. All right. Thank you very much. Dr. Garthwaite, 
let me ask you a question. Just state for the record again, how 
many hospitals there are within the VA system, how many 
outpatient clinics there are, and for the outpatient clinics, I 
understand they can have an A, B, or C affiliation with a 
hospital. I want to understand the structure you are operating 
under now. I know there have been several reorganizations at VA 
over the last several years, and what does one have to do to be 
a class A affiliate of one of these hospitals a class B or 
class C. What are the determining features of this?
    Dr. Garthwaite. We have 172 medical centers, which are 
sites that have two major missions. We have 134 nursing homes. 
We have, let's take the year 2000, 596 community-based 
outpatient clinics; 162 hospital clinics; four mobile clinics.
    Ms. Kaptur. When you say ``hospital clinics,'' are those a 
part of the medical centers?
    Dr. Garthwaite. Right. They would be at a medical center. 
Four mobile clinics and four independent outpatient clinics 
that are just clinics. They are fairly larger operations that 
are just clinics.

              relationships of clinics to medical centers

    Ms. Kaptur. Now do all of those clinics or outpatient 
facilities have a relationship to a hospital?
    Dr. Garthwaite. 162 are actually in the hospital. All the 
others would have some relationship. They would have a base 
hospital, yes. Right.
    Ms. Kaptur. Now, what types of relationships do they have? 
How do you decide which hospital which clinic belongs to if 
they belong to any?
    Dr. Garthwaite. Our clinics all, except for the independent 
ones, would have that relationship----
    Ms. Kaptur. Are those the four?
    Dr. Garthwaite. That is the distinction. They are 
independent. The others, mostly because they were started at 
the impetus of the administration and leadership and funding of 
the base medical center. Give you an example. I was chief of 
staff in Milwaukee, we realized in the Fox River Valley, which 
is near Appleton, Fond du Lac, Oshkosh, that there was no 
available care for veterans in that area other than drive down 
to Milwaukee. Or you could, I suppose, go north to Iron 
Mountain, Michigan. We established a clinic, a Fox Valley 
clinic. It was established out of the budget of Milwaukee VA by 
internal mechanisms, and the budgeting was through the 
Milwaukee VA and most of the referral mechanisms for tertiary 
care and specialty care was through the Milwaukee VA.
    Ms. Kaptur. The clinics that exist, do they all have the 
same type of relationship to the medical centers?
    Dr. Garthwaite. To my knowledge, most have very similar 
mechanisms.
    Ms. Kaptur. This thing I am talking about, A, B, C, that 
does not exist? A clinic would not have a type A relationship 
or type B?
    Dr. Garthwaite. I am not familiar with that terminology 
myself. That is not something I have used or that I am aware 
of. They all report, and their data systems also are integrated 
together with a parent facility referral mechanisms. A lot of 
times they share the same human resources, the same 
administrative oversight, quality management is shared between 
them. Those sort of things.
    Ms. Kaptur. Does any clinic have a relationship with more 
than one hospital?
    Dr. Garthwaite. Not that I am aware of, nor is Mr. Clark. 
There are other relationships in terms of academic affiliations 
that may have something to do with this kind of----
    Ms. Kaptur. Would someone else want to comment on that 
please?
    Mr. Kenneth Clark. I know that historically we did have 
what we referred to as A and B affiliation agreements. But that 
is not in the context that you are describing. That has nothing 
to do with the relationship of our clinics to the host medical 
centers. But it sounds like the terminology you are referring 
to is old terminology with regard to academic affiliations.

                         academic affiliations

    Ms. Kaptur. These 172 medical centers, do they all have 
academic affiliations or do some stand on their own?
    Mr. Kenneth Clark. Not all of them. Most of them would have 
some sort of affiliation or another. 125 VA medical facilities 
are affiliated with medical schools.
    Ms. Kaptur. What are the rest? Freestanding?
    Mr. Kenneth Clark. Well, they may have affiliation 
agreements with other than medical schools. Nursing schools or 
universities of a variety of sorts, so there would be different 
kinds of affiliation agreements. Most of our hospitals (medical 
centers) in one way or another have some affiliation but not 
all. But again that is not related to the relationship between 
a clinic and a host medical center.
    Ms. Kaptur. How do you decide which medical centers can 
become a part of your academic affiliations?
    Mr. Kenneth Clark. A medical center that wishes to initiate 
an affiliation arrangement would submit that to headquarters 
for review.
    Ms. Kaptur. All right. And is there an application they 
have to fill out?
    Mr. Kenneth Clark. I don't know--it is not my immediate 
area. I am not aware of the precise procedures but yes, there 
is a format for an affiliation agreement.
    Ms. Kaptur. Doctor, you mentioned in Fox Valley, and you 
had worked in Milwaukee, and so the clinic was in the same 
State as the hospital that the center it was affiliated with. 
How many clinics do you have around the country that are not 
located in the State in which the medical center or the 
university-affiliated hospital is located? Out of the 596 
outpatient clinics that you manage?
    Dr. Garthwaite. I am not sure we have ever done that count. 
There are a fair number of situations where there are border 
issues where the closest VA facility and the closest medical 
school lies across a State boundary. And when we set up the 
network structure, we tried to follow the natural way veterans 
tended to go for their care to make it maximally convenient for 
them. That was the driving force, where they had actually 
traveled previously.
    Ms. Kaptur. Of the medical school affiliations, the 125 
that you do have, how many of them are recent as opposed to 
historic, existing for over 20 years?
    Dr. Garthwaite. Most of them are long-term. Medical schools 
have been around a while, and most of the VA affiliation 
agreements started in 1947, so many of them go back. We have 
added some in the last 20, 30 years, but many of them are 
historic.
    Ms. Kaptur. Doctor, I would really appreciate a listing 
from the VA of the medical school affiliations and the year in 
which those were established and the locations of those.
    Dr. Garthwaite. Be happy to do that, sure.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Ms. Kaptur. I would also appreciate a list of outpatient 
clinics that exist in our country that are affiliated with 
institutions that are not within the same State as those 
outpatient clinics exist in.
    Dr. Garthwaite. We can do that easily.
    [The information follows:]



[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                    residency and training programs

    Ms. Kaptur. Finally, for the record, could you provide--and 
this will be my last question--historically, has the VA ever 
been involved in a physician or nurse's training and residency 
program that provided a way for American citizens to gain their 
educations as well as serve the VA, and what were the nature of 
those programs and what exists today with regard to that? And I 
want you to talk to us in the answer a little bit about how 
many people were accommodated, what were the terms of those 
educational programs, what has happened over the years?
    I am very interested in how the VA--at one point, probably 
20 years ago, the VA had been responsible for residencies for 
over half the physicians in this country. I don't know what is 
true with nurses, whether there were residency or some type of 
training programs within the VA but I am very interested in 
that. And what kind of information you could give us 
historically what the VA has done to help on the medical 
education side of the equation, and what the costs of those 
were and how many sort of input, output, how many people were 
assisted, how many people ended up going into the health 
professions.
    [The information follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Ms. Kaptur. And then currently, does the VA have any type 
of relationship that exists in the country or relationships 
where there are shared personnel, let's say, at the local level 
between these medical centers, their nursing personnel, for 
example, in hospice or your nursing homes that you run where 
nurses are shared. Are there any types of sharing agreements 
that exist out in the country today?
    I would be very interested in understanding what those 
might look like, and if that is something the VA is embarking 
upon in trying to satisfy its own needs for personnel as well 
as sharing the people it has trained with broader community 
health needs.
    [The information follows:]

                            Shared Personnel

    Enhanced Sharing legislation does not permit shared 
staffing with the private sector. Department of Veterans 
Affairs and Department of Defense have twelve shared staffing 
agreements involving physicians and nurses at nine sites. The 
sites are Columbia, South Carolina; Albuquerque, New Mexico; 
Anchorage, Alaska; Honolulu, Hawaii; Northern California 
(including Travis Air Force Base); Miami, Florida, Richmond, 
Virginia; Dublin, Georgia; and, Cheyenne, Wyoming.

                       treatment of non-veterans

    Ms. Kaptur. Finally, are you aware of the authorizing 
committee doing anything relative to the treatment of 
nonveterans at veterans facilities, either outpatient clinics 
in urban or rural areas or the medical centers or universities 
associated with the VA? I understand there is some change of 
thinking at the authorizing committee level. Could you share 
with us now or in writing what that change of thinking might 
be?
    Dr. Garthwaite. The only thing I am aware of, off the top 
of my head, is that during the debate over last year and the 
Millennium Act, there was a provision, I think, pressed by 
American Legion, which would pilot families of veterans being 
able to buy in to the VA health care system and utilize the 
system. They would have to pay either an insurance premium or 
bring other insurance, but there was at The GI bill of rights, 
I think they call it. The legion has pushed this and there was 
some provision for a pilot program in the Millennium Act that 
did not make it through, I believe.

            family lodging on campus of state nursing homes

    Ms. Kaptur. I thank my colleagues for allowing me to ask 
these questions. I thank the Chairman very much. And also I 
would just say in ending for the State programs, and several of 
our members asked about those, if you have examples in the 
country of where State nursing home programs are allowing 
spouses to reside on that campus where the husband or the wife 
might be elderly and incapacitated, I would very much 
appreciate knowing where those are. It is something I am quite 
interested in and I have not been able to find examples within 
the VA system of that occurring.
    Mr. Hansen. We will find that out for you.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Ms. Kaptur. Thank you all for being here today, and I thank 
my colleagues again for their indulgence.

                  closing comments on medical programs

    Mr. Frelinghuysen [presiding]. Thank you, Ms. Kaptur. In 
wrapping up hours late, a lot of Ms. Kaptur's questions 
relating to psychiatry, psychiatric help and mental illness, I 
think we need to get a clearer picture of exactly what you are 
doing. We obviously have inpatient, outpatient, we have medical 
research, but somebody ought to have a handle on the 
homelessness issue, and I am not sure that question was 
adequately responded to. I assume that with our various 
outreach centers and clinics, that there is some sort of 
psychiatric component.
    This is not all done within a hospital setting. I think we 
need to get a clearer picture as to exactly what we are doing. 
And whether in fact we have social workers that are actively 
involved and prepared and whether we do things relative to job 
referrals. I am not familiar with the per diem program, but in 
reality, I assume there is a degree of comprehensiveness, or 
maybe I am just wishing it exists.
    Dr. Garthwaite. Most of the deficit is in my ability to 
explain it, sir.
    Mr. Frelinghuysen. For the record, I would like a copy of 
whatever you may have sent the committee. I would like to see 
the veterans relative to their eligibility and access issues 
that you referred to earlier.

                   ig investigation on bocchino death

    And lastly, to the Inspector General, it has been 2 years, 
almost, since you and others began investigating the Bocchino 
death at Lyons. I am not going to put you on the spot other 
than this. But we need to reach some sort of a conclusion. I 
have read all of the materials over. It seems that we are more 
interested in due process for the living than we are due 
process for this veteran who died. And I do not know where we 
stand on that, but if you would provide the committee with an 
update on that and we need to bring this to some sort of a 
satisfactory conclusion sooner rather than later.
    [The information follows:]

                               VAMC Lyons

    The Office of Inspector General (OIG) final report was 
issued June 4, 1999. The report identified several material 
weaknesses related to patient supervision and accounting for 
patients' whereabouts. The report also addressed concerns 
regarding findings and related personnel actions resulting from 
a VHA Administrative Board of Investigation into the 
circumstances surrounding the death of Mr. Bocchino. Because 
the VHA VISN 3 Director did not concur with several of the 
OIG's recommendations, the report was issued to the Under 
Secretary for Health for resolution. To address the disputed 
issues, on June 28, 1999, the Under Secretary for Health asked 
a review team, led by the VHA Office of Medical Inspector (OMI) 
to review the OIG report. The OMI report, dated August 5, 1999, 
generally agreed with the OIG. In a September 20, 1999 letter 
to the Inspector General, the Acting Under Secretary for Health 
stated that they had reached an agreement to concur in the OIG 
report recommendations. For the next several months, VHA worked 
to develop acceptable implementation plans for agreed upon 
recommendations. The OIG received a final status report from 
VHA, dated April 7, 2000, which outlines actions taken by the 
VISN 3 Director and the New Jersey Healthcare System Director 
to complete implementation of the OIG recommendations. With the 
corrective actions in place to improve patient supervision and 
accounting for patients' whereabouts, and after resolution of 
several personnel actions, the OIG considers the matter closed.

    Mr. Frelinghuysen. Anything else, Mr. Goode? Ms. Kaptur? 
Thank you very much we will see you, I think, at 1:30 or 
thereabouts.
    [Recess 12:49 p.m.]
                                          Wednesday, April 5, 2000.

                    VETERANS BENEFITS ADMINISTRATION

                    NATIONAL CEMETERY ADMINISTRATION

                      DEPARTMENTAL ADMINISTRATION

                               WITNESSES

JOSEPH THOMPSON, UNDER SECRETARY FOR BENEFITS, VETERANS BENEFITS 
            ADMINISTRATION
          ACCOMPANIED BY:
NORA E. EGAN, DEPUTY UNDER SECRETARY FOR MANAGEMENT; JAMES W. BOHMBACH, 
    CHIEF FINANCIAL OFFICER, AND JIMMY L. WARDLE, ACTING DEPUTY CHIEF 
    FINANCIAL OFFICER
MICHAEL WALKER, ACTING UNDER SECRETARY FOR MEMORIAL AFFAIRS, 
            NATIONAL CEMETERY ADMINISTRATION
          ACCOMPANIED BY:
ROGER R. RAPP, DEPUTY UNDER SECRETARY FOR OPERATIONS; VINCENT L. 
    BARILE, DEPUTY UNDER SECRETARY FOR MANAGEMENT; AND DANIEL TUCKER, 
    DIRECTOR, BUDGET AND PLANNING SERVICE
RICHARD J. GRIFFIN, INSPECTOR GENERAL, DEPARTMENT OF VETERANS 
            AFFAIRS
          ACCOMPANIED BY:
LEIGH A. BRADLEY, GENERAL COUNSEL; JOHN H. THOMPSON, DEPUTY GENERAL 
    COUNSEL; E.D. CLARK, CHAIRMAN, BOARD OF VETERANS' APPEALS; EDWARD 
    A. POWELL, JR., ASSISTANT SECRETARY FOR FINANCIAL MANAGEMENT; 
    DENNIS M. DUFFY, ASSISTANT SECRETARY FOR PLANNING AND ANALYSIS; 
    EUGENE A. BRICKHOUSE, ASSISTANT SECRETARY FOR HUMAN RESOURCES AND 
    ADMINISTRATION; JOHN HANSON, ASSISTANT SECRETARY FOR PUBLIC AND 
    INTERGOVERNMENTAL AFFAIRS; HAROLD F. GRACEY, JR., PRINCIPAL DEPUTY 
    ASSISTANT SECRETARY FOR INFORMATION AND TECHNOLOGY; D. MARK 
    CATLETT, DEPUTY ASSISTANT SECRETARY FOR BUDGET

                            Opening Remarks

    Mr. Walsh. The subcommittee will come to order.
    This morning we heard from the Veterans Health 
Administration regarding the fiscal year 2001 budget request. 
This afternoon, we are joined by the rest of the deputies to 
discuss the other appropriations under Veterans Affairs.
    We changed the format of the hearing this year so that the 
Committee could cover all topics surrounding the VA. Last year, 
we spent a great deal of time focusing on the medical issues of 
the VA, especially in light of the President's flat budget 
request and the crisis that would have caused if the Congress 
had not provided the additional $1.7 billion.
    While the President's budget includes an adequate increase 
for medical care, the budget justification also includes some 
significant increases for just about every other office in the 
VA. Because the budget resolution calls for some cuts in 
discretionary programs, we need to examine all of the VA's 
programs to see what expenditures are necessary to ensure a 
better quality of service for our Nation's veterans and how we 
can help the VA spend that money wisely.
    Do any of you have an opening statement that you would like 
to share at this point?
    Mr. Joseph Thompson. I do have an opening statement.

              Under Secretary for Benefits Opening Remarks

    Mr. Walsh. Please go ahead.
    Mr. Joseph Thompson. Okay.
    Mr. Chairman, there should be a package in front of you 
that we are about to discuss about VBA and what it is we are 
trying to do. I will try to keep my remarks brief.
    VBA administers a wide array of programs, perhaps the 
broadest array of programs in the Federal Government. I know, 
typically, most of the interest revolves around the 
compensation and pension program. But we do a number of other 
things that I think are important and I would like to share 
them with the committee today.
    We know that the benefits we provide are of critical 
importance to veterans. When they come to us, they are sick, 
they are disabled, often homeless. They may be buying a home, 
may be going to school under the GI bill, a whole host of 
things that are really key events in a person's life. So we 
know that what we do affects their lives in important ways.
    In one form or another we have been doing this for 211 
years; it is one of the first programs in the Federal 
Government signed right after the Constitution was enacted.
    There are several points I want to make today, if I could. 
I will talk about what we do in terms of volume both in the 
number of veterans we help and the amount of money we spend, of 
the challenges we face; our plans and accomplishments, and what 
lies ahead for VBA.
    The second page of the handout shows the number of folks 
that came to us in fiscal year 1999 that we were able to help. 
I won't go through each of them, but you can see both the array 
of programs that we administer, as well as the numbers of 
veterans' family members that come to us. The total helped is 
over 6 million.
    I should add that we sat down and counseled veterans more 
than a million times last year. We also spoke to them on the 
telephone more than 16 million times. We have a lot of 
interactions with veterans. I like to think in a very positive 
way each year.
    The next page talks about how the monies are spent. Of 
course, it does mention that compensation often gets most of 
the attention. You can see by the size of the dollars spent 
that it is probably well-deserved attention. In sum we spend 
$24 billion or so every year trying to help veterans. This is 
the largest part of VA, in terms of outlays.
    The next page talks about the challenges in VBA and some of 
the things that we think are of central importance and need to 
be addressed in order to make this agency what it was intended 
to be, which is an organization that keeps our Nation's 
commitment to veterans. We talk about culture, but I want to 
capsulize what we mean by that. The VBA that we want to change 
is inwardly focused, overly bureaucratic and very reactive. We 
want to get away from that scenario.
    The second bullet is succession planning. We are a Vietnam-
era agency. Most of the key decision-makers, senior officials 
in this agency came to work for the VA during the Vietnam era. 
They will be leaving soon. We have not been hiring since about 
1992. So we have a crisis, if you will, in terms of 
demographics in this agency. We have a lot of key jobs where 
the average age is in the 50s. We know these folks, at age 55, 
will have a fully vested retirement. So we need to get on with 
changing generations.
    Training is important to us. In 1997 when I came into this 
job, we had no centrally directed training program. Everything 
was ad hoc and done at the regional office level. It leads to 
very inconsistent, if not inaccurate, types of decisions.
    Program evaluations. Under the Government Performance and 
Results Act, we have to evaluate each of our programs to make 
sure they are doing what the Congress intended when they passed 
the laws. We are in the process of doing that.
    Strategic Planning. VBA has been broadly criticized for not 
having very good strategic planning, if any planning at all. 
The organizational structure had not changed since the early 
1950s. In essence, somewhere between World War II and Korea was 
the last time we really reorganized, particularly in the field.
    Information Technology. Again, well documented by many 
parties that we have been unable to deliver new technology very 
successfully.
    Quality. Our quality was poor in the area of decision-
making, and that it is something that is at the heart of what 
we needed to change.
    Data Integrity. Much of the information we reported was not 
accurate for many reasons, and that was a major concern.
    Rules and Regulations. We are often times tied in knots, as 
an organization, by both the regulations and the rules we 
impose on ourselves. As I mentioned in the first hearing, when 
we tried to simply quantify or list out all of the ways in 
which a veterans claims examiner would calculate the effective 
date of benefits, we not only had to look in a host of 
different manuals and citations, but when we got through 
listing all the combinations and permutations, we had 35 pages 
of matrices on how to calculate just one effective date.
    Workload Management. I will say again that we were reactive 
on this. We reacted to the things that came to us instead of 
trying to manage it.
    In terms of what we tried to do, on the next page, I 
mentioned what the strategies were in terms of our business 
processes themselves, how we were going to measure performance, 
what we would do in terms of training and developing our 
employees, how we would capitalize on technology, and how we 
would communicate all of this, both with veterans and with all 
the interested stakeholders in our business.
    The next page, if you will, the multicolored one, lists 
some of the initiatives that we have. I will not go through 
these. We have plenty of information to provide the committee 
if you are interested in any particular area. Just let me say, 
this is only a sample of the initiatives we have underway to 
address those major strategies. We actually have more than 80 
major initiatives underway right now. So we have a significant 
amount of work to do. We recognize that.
    The next page talks about some of the things that we think 
are going right for us now in terms of undoing or changing some 
of those past practices. Again, I won't mention all of these 
things; I will just touch on a few.
    We did get a clean financial opinion on our accounting 
systems the first time since 1997.
    Case management is where we provide veterans very specific 
one-on-one service, replacing the old assembly-line process. We 
have seen the veterans are happier with case management 
service. In the Voc-Rehab program, we are finding that we can 
get more veterans jobs. The number of remands from the Board of 
Veterans' Appeals has gone down significantly. We think this is 
going to be a very successful program.
    I won't go down through this entire list, but when we look 
at our macro trends they are going in the right direction. We 
have a number of challenges still facing us.
    Many of the things that require fixing in VBA will take the 
better part of a generation, in my view. There are no easy 
fixes. There is nothing that can happen overnight. Most of what 
we are doing requires years of effort and building of 
fundamental, basic structures. That will take some time.
    But I have to say something for VBA employees, many of whom 
are veterans. We care deeply about our mission and are 
enormously proud of what we do. We know we make a difference in 
veterans' lives. As Federal employees, we are also enormously 
frustrated by the fact that we don't do as good a job as we 
should and that we are often times hamstrung in our ability to 
help veterans.
    I promise you and all the members of this committee that 
the management of VBA and, I know, the rank-and-file employees 
as well, will do everything in our power to change the system, 
to make it one that we are all proud of.
    Thank you for hearing me today.
    [The information follows:]




                       Succession Planning in VBA

    Mr. Walsh. Thank you. Thank you, Mr. Thompson.
    If I could just comment briefly on Mr. Thompson's 
statement. I found it very thoughtful and well organized. And 
you were moving right along until you said you will have all 
these problems worked out by the next generation, and I almost 
fell off my chair.
    Could you imagine anyone in any other surrounding reporting 
to whoever the oversight responsibility for that department, 
business or governmental entity--can you imagine that being 
said anywhere else on Earth?
    You didn't mean that, right?
    Mr. Joseph Thompson. If you are looking at a generation as 
20 years, I didn't mean that.
    Mr. Walsh. That is 20 years.
    Mr. Joseph Thompson. No, that was not my intention. When I 
am talking about ``generation,'' it gets back to the earlier 
point I made. We have, at heart, a demographic issue that will 
take years in transition.
    Mr. Walsh. How many? I understand this is something that 
the Library of Congress brought to us when I was over on the 
legislative branch. We said, we had all these people we hired 
after World War II and we have got to move them out, we have to 
move new people in. They asked us for hundreds of millions of 
dollars to train people and have someone sit with somebody else 
for 5 years. I mean, it is a wonderful approach, but it is 
unrealistic.
    Mr. Joseph Thompson. Our estimate is that, over the next 7 
years, we will lose most of our key decision-makers. Most are 
in the center, around 3 to 4 years, we are going to lose our 
rating specialists, directors, and senior managers. That 
transition is going to take time. In fact, I wouldn't want it 
to go any faster than that, because it is easier for us the 
longer it gets spread out.
    There are other things in terms of technology, changing 
rules and a host of other things that we will do this year and 
next year. But I would think that for the Agency as we know it 
to be changed completely, 7 years is a fair range.
    Mr. Walsh. Okay.
    Mr. Walker.

      Acting Under Secretary for Memorial Affairs Opening Remarks

    Mr. Walker. Thank you, Mr. Chairman.
    On the attrition issue, if I might say, this is the third 
executive branch agency I have served in this administration--
the Department of Defense, FEMA, and now the Department of 
Veterans Affairs. There is concern all over the Federal 
Government that attrition is a significant problem. We are 
going to have a real talent drain. And all of us in our agency 
are very concerned about succession planning. That is a very 
important issue. And you asked a very important question.
    Mr. Chairman, I would like to thank you and the 
subcommittee for the strong support that you have given the 
National Cemetery Administration and National Cemetery System 
over the years. The President's budget request before the 
committee is the largest single budget increase that we have 
had in the history of NCA.
    We need that increase, Mr. Chairman, because, as you know, 
we are facing the real challenge of a rapidly aging veterans 
population. Interments will increase from 78,000 in 1999 to 
108,000 by the year 2008. That is a 39 percent increase in just 
10 years, and the number of interments are not going to go 
below the 1999 figure for decades to come. The workload of the 
National Cemetery Administration is going to be very high for a 
long time.
    As you know, we try to provide veterans with a burial 
option at either a national or a State cemetery within 75 miles 
of their home. Last year, only 67 percent of veterans were 
provided with such an option, and the budget that is before the 
committee provides for programs that will bring that percentage 
up to 82 percent by the year 2005. We are going to achieve that 
by building new national cemeteries, by extending the service 
life of existing cemeteries and also by continuing our 
partnership with the States through the State cemetery grant 
program.
    Last year, as you know, we opened the new Saratoga National 
Cemetery in New York. We also opened Abraham Lincoln National 
Cemetery in Illinois. And I am pleased to report that on May 
12th we will be opening and dedicating a new national cemetery 
in Dallas. In June, we will begin burials in the new national 
cemetery near Cleveland, Ohio.
    With regard to future cemeteries last month we awarded a 
contract for master planning for a new cemetery at Ft. Sill, 
Oklahoma. We are also aggressively proceeding with the site 
selection process for cemeteries in Atlanta, Detroit, Miami, 
Sacramento, and the Pittsburgh area. In addition to that, the 
Millennium Act has directed us to look at future needs beyond 
those next 6, out to the year 2020. We welcome that opportunity 
and will soon be awarding a contract to fulfill that 
requirement.
    And if I might just mention one other element of the budget 
request. I think we all agree that our veterans cemeteries are 
our national shrines and that we should maintain them in a 
manner and appearance that is befitting our veterans and gives 
lasting meaning to what our veterans did for all of us.
    Over the years, quite frankly, as the workload has grown, 
as the number of veterans' deaths increased, we had to divert 
funds from routine maintenance and repair just in order to keep 
up with the workload. And as a result, we have far too many 
sunken grave sites and far too many misaligned or damaged 
markers. And quite frankly, our men and women who served in 
uniform deserve more than that.
    This year we are requesting $5 million for a new 
initiative, what we call the National Shrine Commitment. It is 
a modest amount that will permit us to begin a program to bring 
our national cemeteries up to the standard that veterans 
deserve. So I urge the committee to support the National Shrine 
Commitment.
    Mr. Chairman, with the committee's support, we have made a 
great deal of progress in the last 10 years. We are going to 
continue to need your help as we look at the future and as we 
try to expand our service to veterans. We thank you for that.

                          Well-Grounded Claims

    Mr. Walsh. Thank you, sir, for your comments. I am sure 
there will be some questions regarding this cemetery proposal.
    I would like to begin in the area of well-grounded claims, 
an issue that we are all hearing so much about.
    Mr. Thompson, we spoke briefly at the last hearing about 
this. I just wanted to delve into it a little bit more. What 
exactly does a veteran need to include in an initial claim to 
establish well-groundedness that he or she did not have to 
include before?
    Mr. Joseph Thompson. There is a three-part test, Mr. 
Chairman. The veteran needs to show that he or she has a 
current disability.
    Mr. Walsh. Just what is different from before this ruling?
    Mr. Joseph Thompson. If I could, there is a three-part 
test. You need to show a current disability; there needs to be 
evidence in your service records that the disability or some 
related disability existed during service; and there needs to 
be a nexus or connection between these two events.
    The nexus is the key. The nexus is something the Court of 
Appeals for Veterans Claims said is required in order to well-
ground a claim. If I can go back and give you a little bit of 
history. If you go back before the court was established in 
1989, the nexus rule was applied by the people making the 
claims decisions.
    The ratings specialist would look at it and say there is no 
connection. The veteran hurt his knee in the service in 1940 
and its now 1985, but there is no medical treatment in between 
those dates. Even though you might have another knee condition, 
there is no nexus. The decisionmakers would apply the rules 
informally.
    When the court came in, they formalized that process. They 
said you need a much more stringent application of the rules. 
You can't allow individuals to make these decisions informally. 
They said you will formally and specifically apply these rules.
    There are two principles at play here. One is that a 
veteran must file a claim that is well grounded, which means 
plausible on its face or that looks like something that can be 
proved. The second part is that VA has a duty to assist 
veterans when they come to us filing claims. The Court's 
decision said that the well-grounded issue precedes the duty to 
assist a veteran. Before VA can expend resources assisting a 
veteran, the veteran needs to give VA enough information to say 
they have a well-grounded claim.
    Mr. Walsh. So in the prior construct of this claims 
process, the VA helped the veteran to establish this nexus; is 
that a proper characterization?
    Mr. Joseph Thompson. I will bring up one more issue in 
this. The Court has been ruling on the well-grounded issue for 
a number of years, becoming increasingly stronger in its 
opinions. They first issued well-grounded guidelines, if you 
will, years ago. And one of the things that was happening was 
that, in some regional offices, they helped veterans every time 
with every claim, even ones that were totally implausible. In 
other regional offices, they were applying the rules that the 
Court had given out.
    One of the reasons for the Court's reaction the last time 
was ``you can't do that.'' You can't apply Federal programs 
differently depending on the State you happen to live in. And 
so the Court said, you need to come out with stringent rules.
    So the answer is, it was done both ways. In some regional 
offices the help was given 100 percent of the time, in other 
regional offices they were more selective.

                    court Ruling on Veterans Claims

    Mr. Walsh. In your view, the intent of the court ruling, 
was it to reduce the number of claims or was it to ensure that 
these laws were interpreted evenly across the country in the 
system?
    Mr. Joseph Thompson. Well, I don't know that it was to 
reduce the number of claims at all. I don't think that was the 
intent.
    I think making them consistent was important. I think the 
Court's interpretation of the law was to ensure there would be 
no obligation for the government to expend resources until the 
veteran has furnished a plausible claim. And the claims the 
Court were looking at should never have risen to this level. 
This veteran never filed a plausible claim. Why is it ending up 
with all this work and litigation? You don't have a good issue 
here; this is one that can never be proved.
    Mr. Walsh. These decisions are subjective though. Even this 
idea of the nexus is subjective.
    Mr. Joseph Thompson. I think there is some subjectivity in 
it, but I don't think that it is a subjective call. The 
informal rule is one I am actually familiar with, because I 
used to be a claims examiner many years ago. Does it look like 
there is any chance of ever granting this benefit? The reason 
we are trying to get a regulation is that we could end up 
chasing a lot of things that don't exist when we recognize the 
claim is never going to be proven and we are never going to 
grant the benefit. Veterans who have plausible will claims have 
to wait while we chase this other evidence.
    We know that, on average, if a veteran submits what we call 
a well-grounded claim today, we can process them 2 months 
faster than the other claims. And the other claims are 
ultimately denied anyway, but may take us 2 months longer just 
to reach that point.
    The General Counsel is here. Where is Leigh? She is right 
here. I would suggest they have a more legal view on this.
    Mr. Walsh. Why don't you give us your view General Counsel, 
if you would, of the court's ruling and its impact on claims.
    Ms. Bradley. Jack Thompson, the Deputy General Counsel, is 
here. As a matter of fact, he spent all day yesterday with a 
group of Hill staffers and VSOs, so I think I will pass it over 
to him.
    Mr. Walsh. Good move.
    Mr. John Thompson. The stage was set back in 1988 when 
Congress enacted the Judicial Review Act, which created the 
Court of Veterans Appeals. And what happened was, in that act, 
Congress stuck together in statute two regulations that had 
existed at VA for years. One of the regulations said, the 
veteran is responsible for presenting a well-grounded claim; 
the other regulation said that VA has a duty to assist 
claimants.
    Mr. Walsh. Who said that?
    Mr. John Thompson. The one regulation said that; Congress 
then codified that in the statute. Congress tacked on language 
from another VA regulation that said VA has a duty to assist 
claimants. That is the way this new statute was assembled.
    Mr. Walsh. Is that a conflict?
    Mr. John Thompson. No, I don't believe so.
    The Court then interpreted this new statute, because of the 
way it was assembled, in such a way that it said the veteran 
must first present a well-grounded claim before VA's duty to 
assist arises.

                    well-grounded claim regulations

    Mr. Walsh. The court determined that?
    Mr. John Thompson. The Court determined it in interpreting 
the statute.
    More recently----
    Mr. Walsh. No responsibility to that claimant until what?
    Mr. John Thompson. Until it is a well-grounded claim, a 
plausible claim that meets the three-pronged test that the 
Under Secretary described.
    Mr. Walsh. So if a veteran calls the claims office, or 
assume he didn't deal with the VSO, and they say, ``I am sorry, 
we can't help you; you don't have a well-grounded claim.'' Is 
that the response they are going to get?
    Mr. Joseph Thompson. No. Number one, we do request service 
medical records VA or any other records in the government's 
possession. In essence, we will get them. If we find the 
veteran is missing any part, the nexus, the in-service event or 
the current disability we go back to him or her and say, ``this 
is what you are missing.'' They have 30 days to come back with 
that information or contact us and tell us what is going on 
with this.
    So if they say, I hurt my knee in service and I have a bad 
knee now, we will say there is no evidence of anything 
transpiring in the 20 years since you were in the military; do 
you have any medical records?
    Now, what is different? In the past, we would have gone out 
and asked for those private medical records ourselves. Under 
this regulation, we ask the veteran to secure the records and 
send them to us.
    Mr. Walsh. Okay. Did you want to go further?
    Mr. John Thompson. I would then add that this 
interpretation occurred a few years ago, and while we 
understood the court to say that VA has no statutory obligation 
to assist veterans until they file well-grounded claims, we did 
not believe we were forbidden from offering some additional 
assistance. And we had various instructions out during this 
interim that suggested we really ought to do a little bit more 
than the bare minimum required by the statute.
    This past summer, in July of 1999, the Court went further 
to say, no, has no authority to assist these claimants until 
they present well-grounded claims. That has really forced the 
issue and gotten the veteran community understandably upset.
    We have proposed a regulation that we think would go 
partially toward where the veterans service organizations would 
like us to be. The question is whether, under the current 
interpretation of the statute, we can by rule making go far 
enough and arrive at a position that the veteran community 
would be comfortable with.
    Mr. Walsh. So by virtue of your initial understanding or 
interpretation of the court's ruling on this, you were at odds 
with their decision, were you not?
    Mr. Joseph Thompson. Yes. Our instructions were at odds 
with their decision.

           pending legislation regarding well-grounded claims

    Mr. Walsh. So, if the VA is at odds with this decision, 
presumably--the remedy is a statutory remedy, is that right?
    Mr. Joseph Thompson. We thought we could handle it through 
regulation. We thought we could craft a regulation that would 
carve out the exceptions where we thought veterans needed 
special protection, needed more help than the average.
    Again, as Jack mentioned, the VSOs disagree with us on 
that. They believe, and perhaps Congress does as well, that 
legislation is required, since either our regulations could be 
undone or they won't be able to go far enough.
    Mr. Walsh. Have you seen the pending authorizing 
legislation regarding well-grounded claims?
    Mr. Joseph Thompson. Yes.
    Mr. Walsh. Would you care to comment, either of you?
    Mr. John Thompson.  We do not yet have a formal, cleared 
position on it. As the General Counsel mentioned, we had a 3-
hour meeting yesterday on these issues with representatives of 
the major veterans service organizations. We also had 
authorizing committee staff there. We had a very good, lengthy 
discussion of the issues.
    I think that there is enough common ground upon which to 
build. And I believe, based upon that, we will be able to 
develop a departmental position fairly rapidly.
    Mr. Walsh. Any further comment? Then I will yield to Mr. 
Frelinghuysen.
    Mr. Joseph Thompson. I agree. I think the key to what Mr. 
Thompson said is, there is middle ground, that when we sit down 
and talk specifics, we recognize that we have a duty to help 
veterans. That has never been in question. I think most VSOs 
recognize that we get claims that really aren't worthy of 
further pursuit, and how do you separate one from the other and 
make sure you protect the interests of those who do have valid 
issues? I think there is a middle ground. I am hopeful we can 
craft something.
    Mr. Walsh. I would hope that you could do that. There has 
always been a predisposition for the veteran on the part of the 
VA, certainly the Congress has always felt that way. If we have 
to make that law, then I think we probably will.
    Mr. Frelinghuysen.
    Mr. Frelinghuysen. Thank you, Mr. Chairman. Just for the 
record, we lost Dr. Garthwaite, but there are 13 people left. 
How many of you are veterans?
    Got a good crowd here. That is just a few exceptions. Thank 
you very much.
    I have a number of questions. Mr. Secretary, is this your 
sheet here?
    Mr. Joseph Thompson. Yes, it is.

                             VBA Challenges

    Mr. Frelinghuysen. Educate me here for a few minutes on the 
VBA challenges, accomplishing a balanced approach. Would you 
comment briefly on the culture issue?
    Mr. Joseph Thompson. Certainly.
    Mr. Frelinghuysen. I think I know what you are talking 
about, but I would like to hear it in your own words.
    Mr. Joseph Thompson. I mentioned that we were a 211-year-
old organization with all the blessings and curses that come 
with great age. The organization, as I saw it at least, was 
overly inward-focused, not focused on veterans, bureaucratic to 
a fault, and very reactive--waiting for things to happen and 
then reacting to them versus going out and trying to take your 
fate into your own hands.
    At heart, one of the things we have to change in the 
organization is the culture, the underlying assumptions. Why 
are you in business? Are you in business to move paper across 
your desk, or are you in business to help your fellow human 
beings?
    Mr. Frelinghuysen. We can assume most of the people in your 
employ are veterans?
    Mr. Joseph Thompson. No, it is not most.
    Mr. Frelinghuysen. What would be the percentage?
    Mr. Joseph Thompson. About 36 percent is the number that 
sticks in my mind right now.
    Mr. Frelinghuysen. I am sure, whether they are veteran or 
nonveteran, you have remotivated them all.
    Mr. Joseph Thompson. We are trying desperately to do that, 
sir. I think we are having some success.

                             vba employment

    Mr. Frelinghuysen. What is the average length of 
employment? I have to tell you, I had a call from Secretary 
Cuomo relative to HUD, making a plea on behalf of his agency. 
He bemoaned the fact that he was dealing with career employees, 
the average length of service was 17 years, he said, and he 
made a case that he needed X, Y and Z to overcome this huge 
employment barrier; and I somewhat sympathized with him.
    What is the average length of employment in your agency?
    Mr. Joseph Thompson. I don't know that off the top of my 
head. I can tell you that the average age, assuming there is 
some corollary there, is in the late 40s for most of our key 
jobs. So most of them are career. I don't necessarily see that 
as a bad thing.
    I think some bad habits develop over time, and maybe it is 
more difficult to motivate a long-term employee, but I think 
that our folks are, on balance, pretty focused.

                         customer satisfaction

    Mr. Frelinghuysen. Briefly, trending in the right 
direction, case management, how do you--literally, if you can 
give a brief response--measure customer satisfaction?
    Mr. Joseph Thompson. We go out and ask veterans. We have a 
contract to survey veterans. We ask, I think it is 83 
questions. We run a statistically valid sample every year.
    In our traditional assembly line process you drop paper 
into it, it comes out the other end at some point with a 
decision on it. In case management, veterans know who the human 
being is they can talk to, and who will keep them apprised of 
what is going on. Customer satisfaction is significantly higher 
for case-managed work, regardless of the decision.

                         claims filed with vba

    Mr. Frelinghuysen. A few questions. In fiscal year 1999, 
the Veterans Board of Appeals rejected approximately 14,000 or 
15,000 of the claims that were filed with the VBA.
    How many total claims were filed in fiscal year 1999?
    Mr. Joseph Thompson. Total claims filed with the VBA? It is 
more than a million, but I don't have the specific number in 
front of me. I can provide it for the committee.
    [The information follows:]

                                 Claims

    VBA received a total of 1,915,846 compensation and pension 
claims in fiscal year 1999.

    Mr. Frelinghuysen. It is my understanding, of the 15,000 
claims rejected, only 2,300 or 2,400 were appealed to the U.S. 
Court of Veterans' Appeals? Does anyone want to confirm that 
figure?
    Mr. John Thompson.  That is very close to the numbers I 
have.

                              remand rate

    Mr. Frelinghuysen. There has been a decline over the past 3 
years in the number of claims denied by the VBA, but an 
increase in the number of appeals brought before the Court of 
Veterans' Appeals. How many of VBA's decisions are being 
overturned by the appeals court?
    Mr. Joseph Thompson. I think you are looking at the Board 
of Veterans' Appeals decisions being reversed. Maybe Judge 
Clark has some information on that.
    Mr. Frelinghuysen. Your Honor, you are on.
    Mr. Clark. I don't have those figures immediately before 
me. We could provide them to you at some later date. But I can 
assure you that the rate of remand has been constantly 
declining. And both the rate of remands from the Board back to 
the regional office and from the Court to the Board. But I will 
have to provide those specific figures to you at some later 
time.
    [The information follows:]


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    Mr. Frelinghuysen. I don't know whether this is your 
jurisdiction or department, but I understand a number of 
concerns have been raised with the way the Department handles 
remand cases. According to the VA's budget justification, and I 
quote, ``Remand represents a rework phase of the appellate 
cycle, and it typically adds 2 years to the processing time for 
appeal,'' end of quotation.
    For many of these veterans, 2 years is an awfully long 
time, since this 2-year remand period is in addition, as I 
understand it, to the time it took the VA to initially 
adjudicate these cases.
    Mr. Clark. I am not sure I understand what your question 
is. Is it in reference to the length of time itself?
    Mr. Frelinghuysen. Yes.
    Mr. Clark. The cases are remanded for further development. 
This request involves many different things--possibly a 
physical examination, possibly going out finding medical 
service records, and there is just a great variety of things 
that can be involved in further developing the case. This is 
why the time is so lengthy, because of what is involved in 
trying to actually help the veteran develop a case which 
otherwise probably would not be granted.
    Mr. Frelinghuysen. So everybody is working mightily to 
clear these cases out of the system, given these types of 
roadblocks?
    Mr. Clark. We hope that everyone is working mightily.
    And also, when cases are sent back for remand, it is 
required that they be handled expeditiously.
    Mr. Frelinghuysen. The budget justification also states, 
and I quote, ``Many appeals that do go to the court''--and this 
is of appeals for veterans' claims--``are returned because of 
due process or other deficiencies found during the review,'' 
end of quotation.
    What can be done now to reduce the number of cases remanded 
back to VA? Is this a problem with claims processing or with 
the Board's decisions?
    Mr. Clark. It is probably a combination of the two, plus 
additional matters as well. Because the fact that a case is 
remanded from the Court to the Board does not necessarily mean 
that there has been anything that was done inappropriately at 
the time that that claim was decided. It might be, in some 
cases, the result of changes in the law in either statutes or 
court decisions. And of course, that doesn't rule out the 
possibility that there were some improper claims procedures 
involved. But it is not necessarily the deciding factor.
    Mr. Frelinghuysen. Some of them must relate, I suppose, to 
what was in the actual budget document due to due process 
issues and other deficiencies.
    Mr. Clark. That is correct, sir.

              funding increases to reduce backlog of cases

    Mr. Frelinghuysen. Over the past 4 years, this committee 
has provided significant funding increases to the VA's Office 
of General Counsel and the Board of Veterans' Appeals, as well 
as to the Court of Appeals for Veterans Claims to reduce the 
huge backlog of cases.
    When can we expect to see the results from these--that 
would come from these types of funding increases?
    Mr. Clark. We are constantly working on reducing----
    Mr. Frelinghuysen. Will you comment on the whole issue of 
older claims versus, shall we say, more current contemporary 
claims?
    Mr. Clark. Well, we are constantly trying to reduce the 
backlog. And I don't have the exact figures of what the backlog 
is now, but you know, we have to handle all the cases in exact 
docket order except for some exceptions which involve advances 
on the docket, something of that nature.
    But I am not aware of any distinction between the way the 
older claims are handled as compared to the newer claims.
    Mr. Frelinghuysen. Is there a distinction between 
disability claims and other types of claims, and how they are 
handled?
    Mr. Clark. I understand that all of the claims are handled 
primarily in the same manner.
    Mr. Frelinghuysen. They are. But is there not, in fact, 
some sort of a record as to the number of claims that have been 
in the system that are outstanding, for many years? Is that 
figure available?
    Mr. Clark. We do keep those figures. I don't have them 
available right now, but I will get them to you.
    [The information follows:]

                           Backlog of Claims

    Currently, there are about 44,000 claims on which an appeal has 
been filed. However, only about 21,000 of those are ready for BVA 
review. The remainder are in various stages of development by VA 
regional offices. Of the 21,000 ready for review about 4,800 are 
awaiting the scheduling of a travel board or video hearing. Appeals are 
forwarded to the Board as soon as they are ready for review and 
reviewed by the Board in docket number order. The Board is currently 
assigning cases with December 1998 docket numbers.
    In addition to new appeals, around 26,000 cases are currently in 
remand status. About 9,100 of these were remanded prior to FY 1999 with 
the oldest having been remanded in 1992. As of now, the average time 
for those cases in remand status is about 16 months.

    Mr. Frelinghuysen. I think it would be interesting to know 
how many might be a part of the older claims; if there is a 
backlog, to what extent older claims might represent a certain 
portion of that backlog. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. John Thompson.  If I could add, Congressman, that--the 
chairman spoke with respect to the backlog at the Board of 
Veterans Appeals. At the Court of Appeals for Veterans Claims 
the pending case load there has remained relatively constant 
over the last 12 months or so. However, the number of cases 
filed has increased, and VA Office of General Counsel has had 
to devote additional resources to this work in order to keep 
relatively current with the work there.
    And also, because the trend continues for additional 
filings in the court cases, the case--new cases are growing at 
a rate of about 300 per year, new cases filed. In order to keep 
on top of that case load and to keep current, we have requested 
some additional resources for fiscal year 2001.

             forecasting compensation and pension caseloads

    Mr. Frelinghuysen. And in the area of compensation, if I 
can reclaim my time a little bit here, I understand there is an 
ongoing assessment of the current methodology used to forecast 
compensation and pension case loads and related obligations.
    Who is up to speed on that? And where do we stand in terms 
of getting some recommendations?
    Mr. Joseph Thompson. Congressman, I will take it as far as 
I can. Nora Egan here can probably fill in some of the gaps. We 
contracted with the Institute for Defense Analyses to develop a 
forecasting model for compensation and pension claims, and they 
have delivered the first phase of that. We expect to have the 
last phase by later this spring.
    Mr. Frelinghuysen. What had existed before you had that 
contract?
    Mr. Joseph Thompson. It was pretty rough. It looked at 
historical trends made the best guesstimate as to what it would 
be.
    We think this will be a much more predictive model of what 
we are likely to see, bringing in a lot more variables. We are 
very hopeful we can provide better information to the Congress, 
when we come up with a budget request, about how many veterans 
are likely to file claims with us.
    Mr. Frelinghuysen. What are you budgeting for this?
    Mr. Joseph Thompson. The study itself, I think that was 
$600,000 total.
    Mr. Frelinghuysen. Thank you, Mr. Chairman.
    Mr. Walsh. We have two votes in succession. And unless any 
other members arrive, I am not sure--I have some additional 
questions, I will ask now and then submit for the record, but--
Rodney, how much?
    Mr. Frelinghuysen. Record, as well.

                   backfilling claims decision-makers

    Mr. Walsh. Just a thought on this backfilling problem where 
you are losing all these people, is there some opportunity 
there, too, that if part of the idea is to speed up this claims 
process and better manage these cases; and I understand the 
problem as we change laws here, having you go back and review 
each case and make sure it is in line with the current law.
    Isn't there an opportunity here with new information 
technology and new training programs and bringing in large 
groups of people to really change the culture of this claims 
process and improve it?
    Mr. Joseph Thompson. Absolutely. It is definitely a two-
sided coin. You lose the brain power, the people who spend the 
better part of their adult lives remembering the rules and the 
laws. But, on the up side, you also lose a lot of ingrained 
attitudes that maybe aren't as productive as you would like.
    The other key for us is that the people coming out of 
college today are very, very comfortable with where we are 
headed in terms of technology. They don't care that you don't 
have paper in front of you to read. They are very comfortable 
downloading data on a 25-inch computer screen and reading and 
making decisions on that. I think it is an advantage.
    Our big challenge, however, is to get them up to speed on 
what I described in the last hearing as the most complex 
disability claims process in the Federal Government.
    Mr. Walsh. Well, it would seem that it may be 
oversimplifying, but if we change the law, rather than having a 
human being go through and check every one of these cases to 
make sure that its activity date is changed, it could be done 
by software.
    Mr. Joseph Thompson. Absolutely. The capabilities in expert 
systems are ones that we hope to take full advantage of. Some 
of them are nuanced in the law, and no matter what the 
technology does, you still have over 700 disability evaluations 
that we can grant under. You have, literally hundreds of pages 
of regulations.
    Part of the earlier discussion on taking as long as I think 
it will take to make some of these changes, actually has to do 
with rewriting the underlying principles we use to make 
decisions on claims.
    We really do have to work with the authorizing committees 
on things that need to be changed to simplify our lives and 
make better and faster decisions for veterans.
    Mr. Walsh. Did you want to respond, Ms. Egan?
    Ms. Egan. If I can do this without upsetting everything. 
Sometimes it is easier to listen to the question than answer 
it.
    Mr. Walsh. You will get your new technology; maybe we will 
get some too.
    Ms. Egan. Just to enhance what the Under Secretary said, 
one of the things that we have worked very hard on in the last 
several years is to develop expert systems to help train the 
people. We are investing a fair amount of money in computer 
based training that will not only be an expert system to help 
our folks work through the simplest to the most complex cases, 
but it will be team based too, so that they will learn 
together, and that will reflect the case management approach 
that they will take in the regional office.
    In addition as we get more and more new folks in, although 
our last two recruitment classes have been about 40 percent 
veterans, there are fewer and fewer veterans and we want to 
make sure they understand our mission. Part of that culture 
change will be reflected in the way we orient them. Every new 
employee will spend at least 2 weeks learning what the VA is 
about, our mission and our culture. This computer training not 
only enables us to build in an expert system, which employees 
will continue to use as they become more expert in developing 
claims, but also when there are changes, such as those that you 
mentioned, we can make a change in that software and it will be 
reflected in the training packages relatively quickly. So, we 
don't have a lot of catchup to do. Those changes would also be 
used by our more senior folks so that skills are maintained at 
an expert level.
    Mr. Walsh. Rodney?
    Mr. Frelinghuysen. I just wanted to put my oar in the water 
here. Looking at the distribution compensation case load by 
period in service, I think sometimes we need to recognize that 
the Vietnam era veterans are at the top of the list followed by 
peacetime. But as some of you heard me say at the hearing with 
Secretary West, you have 30,000 World War II veterans dying 
every month. I would assume that a lot of those people cannot 
wait for action on their claim.
    And I would like for the record to know, in the overall 
scheme of things, how those cases would be distributed among 
those period of service areas categories, if possible.
    Mr. Joseph Thompson. We can get you the exact statistics 
but you had it right. Vietnam is one, peacetime, Gulf War, 
World War II decorated.
    Mr. Frelinghuysen. I am all for new technology, bright 
energetic people seizing control of the agency and this and 
that, but in reality some things need to be done with a little 
more rapidity.
    Thank you.

                            closing remarks

    Mr. Walsh. I have a series of questions that I would like 
to ask about cemetery administration. I do not have the time, 
but I will submit some for the record. I think one of the 
things that we as Subcommittee members hear a lot about from 
our colleagues and from the folks back home, is we need to 
address this issue in a serious way. There is tremendous demand 
out there. And again, if we are going to keep our promises we 
really need to step up to the plate, and I am not sure we have 
done that yet. I am sure we haven't done that yet.
    And so, we welcome your comments and if you could respond 
back constructively, maybe we could be able to address this 
issue in a more thorough way.
    Thank you. Thank you all very much for coming in today.


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                           W I T N E S S E S

                              ----------                              
                                                                   Page
Barile, V.L......................................................   171
Bohmbach, J.W....................................................   171
Bradley, L.A....................................................93, 171
Brickhouse, E.A.................................................93, 171
Catlett, D.M.................................................1, 93, 171
Clark, E.D......................................................93, 171
Clark, K.J.......................................................    93
Duffy, D.M......................................................93, 171
Egan, N.E........................................................   171
Feussner, J.R....................................................    93
Garthwaite, T.L.................................................. 1, 93
Gracey, H.F., Jr................................................93, 171
Griffin, R.J....................................................93, 171
Hanson, John....................................................93, 171
Klein, Art.......................................................    93
McMichael, G.H., III.............................................    93
Murphy, M.L......................................................    93
Norris, J.A......................................................    93
Ogden, J.E.......................................................    93
Powell, E.A., Jr................................................93, 171
Rapp, R.R........................................................   171
Riggin, Phil.....................................................    93
Thompson, J.H...................................................93, 171
Thompson, Joseph.................................................1, 171
Tucker, Daniel...................................................   171
Walker, Michael..................................................1, 171
Wardle, J.L......................................................   171
West, Hon. T.D., Jr..............................................     1
Yarbrough, C.V...................................................    93


                               I N D E X

                              ----------                              

                     Department of Veterans Affairs

                                                                   Page
Academic Affiliations............................................   147
Access to Care...................................................   144
Additional Funding for Medical Care..............................    74
Adult Day Care...................................................   137
Adult Day Care Regulations.......................................   142
AIDS Treatment...................................................   138
Allen Park Health Care Needs Study...............................    71
Allen Park, MI, Facility.........................................   129
Antibiotic Resistance............................................   112
Appeal Process...................................................    73
Asset Realignment Process........................................   142
Backfilling Claims Decision-Makers...............................   195
Backlog of Claims................................................   194
Bio-Artificial Kidney............................................   129
Bio-Artificial Kidney Implant Research...........................    31
Budget Justification Volume 1 Benefit Programs...................   261
Budget Justification Volume 2 Medical Programs...................   431
Budget Justification Volume 3 Construction Programs..............   649
Budget Justification Volume 4 General Operating Expenses.........   783
Budget Justification Volume 5 Summary............................  1270
Budget Justification Volume 6 Departmental Performance Plan......  1504
Capital Asset Planning...........................................   135
Chillicothe Facility.............................................    85
Claims Decision Waiting Times....................................    63
Claims Filed With VBA............................................   191
Claims Processing...............................................86, 115
Closing Comments on Medical Programs.............................   169
Closing Remarks..................................................   197
Community-Based Outpatient Clinics..............................84, 115
Copay Collections................................................   103
Court Ruling on Veterans Claims..................................   187
Customer Satisfaction............................................   190
Departmental Management..........................................   116
Dingell Building Space...........................................   131
Disability Benefits..............................................    36
Drug Addiction...................................................    27
Electronic Transfer of Data......................................    89
Empty Hospital Beds..............................................    63
Enhanced Use Leasing.............................................    85
Facilities Closures..............................................   100
Family Lodging on Campus of State Nursing Homes..................   167
Federal Employees Health Benefits Plan...........................    62
Federal Research Grants Funding..................................   121
Forecasting Compensation and Pension Caseloads...................   194
Funding the Millennium Act.......................................   102
Hepatitis C......................................................    80
Hepatitis C Funding..............................................    37
Hepatitis C Treatment and Funding...............................82, 111
Homeless Programs................................................   145
IG Investigation on Bocchino Death...............................   169
Impact of New Ruling on Claims Processing........................    23
Implementing the Millennium Health Care and Benefits Act.........   100
Information Technology...........................................   116
Infrastructure--Maintenance of Buildings.........................    96
Impatient Census Rates...........................................   109
Long-Term Care...................................................    47
Medical Care Access and Service..................................36, 75
Medical Care Collections Fund....................................    90
Medical Care OMB Request.........................................   141
Medical Care Request.............................................    89
Medical Errors...................................................   131
Medical Programs for Women Veterans..............................    42
Medical Research Funding...................................27, 140, 141
Medical Research Request.........................................   105
Medical Services.................................................37, 98
Medical Services at Louisville VAMC..............................    48
Medical Services in Kentucky.....................................    47
Mental Health Care Delivery......................................   113
Mental Health Research.....................................54, 127, 107
Mental Illness...................................................   124
Mental Illness Treatment.........................................   127
Merit Review of Research Proposal................................    33
MIRECC in the Midwest............................................    55
National Cemetery Administration.................................   184
National Drug Formulary..........................................    91
National Reserve Account.........................................    38
Nursing Home Care...............................................38, 120
Nursing Home Care in New Jersey..................................   109
Occupancy Rate in Boston Area....................................    97
Occupancy Rate Reductions........................................   108
OMB Request For Medical Research.................................   106
Opening Remarks..............................................1, 93, 171
Patient Health Status Evaluation.................................    80
Patient Safety...................................................   132
Pending Legislation Regarding Well-Grounded Claims...............   189
Policy Change Regarding Nursing Qualifications...................   118
Processing Remand Cases..........................................    72
Processing Times and Remand Rates................................    69
Psychiatric Care.................................................   122
Psychiatric Care for Substance Abuse.............................   123
Psychiatric Counseling for Homeless Vets.........................   125
Questions for the Record.........................................   198
Rating Specialists Eligible for Retirement.......................    66
Reduction in Backlogs............................................    73
Reduction in Force...............................................    79
Relationships of Clinics to Medical Centers......................   146
Remand Rate......................................................   191
Research Collaboration with National Science Foundation..........   107
Research Personnel...............................................   122
Residency and Training Programs..................................   164
Respite Care.....................................................40, 57
Satellite Clinic at Danville, VA.................................    60
Scoring the Millennium Act.......................................    95
Seriously Mentally Ill...........................................   144
Service Connected Veterans.......................................   138
Spinal Cord Injury Units.........................................   139
Standards for Purple Heart.......................................   137
Status of Last Year's CNO Memo...................................   143
Status of Study on Capital Assets................................   136
Streptococcus Pneumonia Virus Vaccine............................   113
Succession Planning in VBA.......................................   184
Third-Party Overpayments.........................................    49
Tobacco Litigation...............................................    78
Training Physicians and Nurses...................................    57
Treatment of Non-Veterans........................................   167
Tricare..........................................................    90
Tricare Payments.................................................    94
Update on Claims Processing at Winston-Salem VAR.................    64
Updating Financial and Information Systems.......................   117
VA Medical Facilities............................................   145
VA Medical Performance Compared to Private Sector................    77
VA Services to DOD...............................................    94
VA's Collaboration with State Nursing Homes......................   110
Vacant Space in Medical Centers..................................    99
VBA Challenges...................................................   190
VBA Employment...................................................   190
Veterans Benefits Administration................................34, 172
Veterans Claims--Well-Grounded Claims............................    21
Veterans Millennium Health Care and Benefits Act.................    25
Veterans Population..............................................   139
Veterans Service Records.........................................    23
Waiting Times....................................................    76
Well-Grounded Claim Regulations..................................   188
Well-Grounded Claims.............................................   186
Women Veteran Initiatives........................................    41
Written Statement................................................     7

                                
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