[Senate Hearing 107-393]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 107-393
 
          PRESIDENT'S FISCAL YEAR 2002 BUDGET PROPOSAL FOR VA
=======================================================================





                                HEARING

                               BEFORE THE

                     COMMITTEE ON VETERANS' AFFAIRS
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION


                               __________

                             MARCH 13, 2001
                               __________

       Printed for the use of the Committee on Veterans' Affairs














                        U.S. GOVERNMENT PRINTING OFFICE
76-697                          WASHINGTON : 2002
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512-1800  
Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001










                     COMMITTEE ON VETERANS' AFFAIRS

                 ARLEN SPECTER, Pennsylvania, Chairman

STROM THURMOND, South Carolina       JOHN D. ROCKEFELLER IV, West Virginia
FRANK H. MURKOWSKI, Alaska           BOB GRAHAM, Florida
JAMES M. JEFFORDS, Vermont           DANIEL K. AKAKA, Hawaii
BEN NIGHTHORSE CAMPBELL, Colorado    PAUL WELLSTONE, Minnesota
LARRY E. CRAIG, Idaho                PATTY MURRAY, Washington
TIM HUTCHINSON, Arkansas             ZELL MILLER, Georgia
                                     E. BENJAMIN NELSON, Nebraska
                                     
           William F. Tuerk, Chief Counsel and Staff Director
                William E. Brew, Minority Chief Counsel

                                  (ii)

  













                            C O N T E N T S

                               __________

                             March 13, 2001

                                SENATORS

                                                                   Page
Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado, 
  prepared statement.............................................    51
Craig, Hon. Larry E., U.S. Senator from Idaho, prepared statement     7
Rockefeller, Hon. John D., IV, U.S. Senator from West Virginia, 
  prepared statement.............................................    86
Thurmond, Hon. Strom, U.S. Senator from South Carolina, prepared 
  statement......................................................     2

                               WITNESSES

Cullinan, Dennis M., Director, National Legislative Service, 
  Veterans of Foreign Wars of the United States..................    83
    Prepared statement...........................................    84
DeWolf, Howie, National Service Director, AMVETS.................    73
    Prepared statement...........................................    75
Fischl, James R., Director, Veterans Affairs and Rehabilitation 
  Commission, The American Legion................................    63
    Prepared statement...........................................    64
Principi, Hon. Anthony J., Secretary, U.S. Department of Veterans 
  Affairs........................................................     8
    Prepared statement...........................................     9
    Response to written questions submitted by:
        Hon. Arlen Specter.......................................    11
        Hon. Ben Nighthorse Campbell.............................    25
        Hon. John D. Rockefeller IV..............................    29
Surratt, Rick, Deputy National Legislative Director, Disabled 
  American Veterans..............................................    76
    Prepared statement...........................................    77
Thomas, Harley, Health Policy Analyst, Paralyzed Veterans of 
  America........................................................    80
    Prepared statement...........................................    81

                                APPENDIX

Weidman, Richard, Director, Government Relations, Vietnam 
  Veterans of America, prepared statement........................    89

                                 (iii)

  










          PRESIDENT'S FISCAL YEAR 2002 BUDGET PROPOSAL FOR VA

                              ----------                              


                        TUESDAY, MARCH 13, 2001

                                       U.S. Senate,
                            Committee on Veterans' Affairs,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:35 a.m. in room 
SR-418, Russell Senate Office Building, Hon. Arlen Specter 
(chairman of the committee) presiding.
    Present: Senators Specter, Thurmond, Campbell, Craig, 
Hutchinson, Wellstone, Murray, Miller, and Nelson.
    Chairman Specter. Good morning, ladies and gentlemen.
    We will now proceed with the hearing of the Veterans' 
Affairs Committee.
    Senator Rockefeller, our distinguished Ranking Member, will 
be joining us shortly. His staff advises that he would prefer 
that we proceed, which we shall do at this time.
    We are pleased to have with us this morning the new 
Secretary of Veterans Affairs, Anthony Principi, and his 
distinguished staff. We welcome you here again, Mr. Secretary. 
I personally thank you for attending the session in 
Philadelphia last week at the Veterans Hospital there, and then 
you proceeded with Congressman Christopher Smith up to North 
Jersey, Congressman Smith being the chairman of the Veterans 
Committee in the House.
    We have a very pleasant proceeding at this time, and that 
is the recognition of the distinguished President pro tempore 
of the U.S. Senate, a man who has established an extraordinary 
record. Without further preliminaries, I will ask the Clerk to 
make a reading at this time.
    The Clerk [reading]:

  Resolution Designating the Honorable Strom Thurmond, President Pro 
    Tempore of the Senate, as Chairman Emeritus of the U.S. Senate 
                     Committee on Veterans' Affairs

    Resolved,
    Whereas, Senator Strom Thurmond was instrumental in the 
founding of the Committee on Veterans' Affairs and has served 
continuously on the Committee since its creation in 1971; and
    Whereas, Senator Thurmond has served for forty-seven years 
in the U.S. Senate, and has served with distinction as Chairman 
of the Judiciary Committee, Chairman of the Armed Services 
Committee, and was designated in 1999 as Chairman Emeritus of 
the Armed Services Committee; and
    Whereas, Senator Thurmond has not heretofore served as 
Chairman of the Committee on Veterans' Affairs despite his 
status as the senior member of the Committee; and
    Whereas, Senator Thurmond was commissioned a 2nd Lieutenant 
in the United States Army Reserve in 1924 and served in the 
Army Reserve and on active duty for thirty-six years rising to 
the rank of Major General; and
    Whereas, Senator Thurmond received the Purple Heart for 
injuries received while participating in the Normandy invasion 
with the 82d Airborne Division on D-Day, June 6, 1944; and
    Whereas, Senator Thurmond, in addition to the Purple Heart, 
was awarded five Battle Stars for his military service and, in 
addition, earned eighteen decorations, medals, and ribbons 
including the Legion of Merit with Oak Leaf Cluster, Bronze 
Star for Valor, Belgian Order of the Crown and French Croix de 
Guerre; and
    Whereas, Senator Thurmond's leadership and devotion to duty 
have been dedicated to his fellow veterans through his 
sponsorship of such legislation as: the Department of Veterans' 
Affairs Act, establishing the Veterans Administration as an 
executive department; the Veterans Cemetery Protection Act; and 
the establishment of the Department of Labor Assistant 
Secretary for Veterans Employment and Training; and
    Whereas, Senator Thurmond has been recognized by the 
American Legion, the Veterans of Foreign Wars, AMVETS, the 
Disabled American Veterans, the Paralyzed Veterans of America, 
and by many other veterans service organizations, for his 
sincere dedication and enormous contributions to veterans:
    Now, therefore, be it
    Resolved, that the Honorable Strom Thurmond, President Pro 
Tempore of the Senate, in recognition of his outstanding and 
selfless service to America's veterans, is hereby designated 
Chairman Emeritus of the U.S. Senate Committee on Veterans' 
Affairs, and he shall hereafter receive the same 
acknowledgement and recognition as that fitting other Senators 
who have served as Chairman of this Committee. [Applause.]

    Chairman Specter. It is too late at this point to call for 
a vote. [Laughter.]
    So, as the lesser chair of the committee, I will determine 
that the resolution is adopted by acclamation.
    Senator Thurmond, would you care to make a comment?
    Senator Thurmond. Thank you very much, Mr. Chairman.
    Thirty years ago the Senate passed a resolution organizing 
the committee for the first time. Since that time, I have had 
the privilege of serving on this committee with many fine men 
and women. Although the faces have changed over the years, the 
dedication of the members of this committee has remained 
constant. I enjoy my service on this committee and the 
association I have had with those who have served and with each 
of you who presently serve on this important committee.
    I am pleased that Secretary Principi and representatives 
from the various veterans service organizations are here today. 
I appreciate their service and the veterans they represent. I 
know they continue to care about issues we originally faced and 
which are still areas of concern: compensation and pensions; 
improving medical care; and veterans education, training, and 
employment.
    I greatly appreciate the honor which this committee has 
bestowed on me. I express my great appreciation to you, to the 
other members, and to the staff for this recognition as 
Chairman Emeritus. Thank you again.
    [The prepared statement of Senator Thurmond follows:]

  Prepared Statement of Hon. Strom Thurmond, U.S. Senator From South 
                                Carolina

    Mr. Chairman: Thirty years ago, on January 28, 1971, the 
Senate passed a Resolution organizing this Committee for the 
first time. On that day five members of the majority party 
where named as members--Senator Hartke as Chairman, joined by 
Senators Talmadge, Randolph, Hughes and Cranston. The following 
day, January 29, the Republican members of the Committee were 
elected. Joining me were Senators Hansen, Cook and Stevens.
    Since that time, I have had the privilege of serving on 
this Committee with many fine men and women. Although the faces 
have changed over the years, the dedication of the Members of 
this Committee have remained constant. I enjoy my service on 
this Committee and the association I have had with those who 
have served and with each of you who presently serve on this 
important Committee.
    I reviewed the Congressional Record for the 92nd Congress, 
that first year of this Committee's existence. The issues which 
we faced then might seem familiar. Our agenda then including 
Veterans loans, compensation and pensions, improving medical 
care, grants for adapted housing for disabled veterans, 
national service life insurance, establishment of a National 
Cemetery system, the Health Professions Training Act, and the 
Veterans Education and Training Assistance Act.
    These were not new issues to the Congress. Prior to the 
establishment of this Committee, however, veterans issues were 
divided among other Committees of the Senate, including the 
Labor Committee and Finance Committee. The establishment of 
this Committee ensured that veterans issues would receive the 
attention they deserved in a comprehensive manner. I supported 
the establishment of this committee and continue to be a strong 
advocate.
    Veterans issues have been very important to me. Mr. 
Chairman, the veterans who are with us today, and those they 
represent, served with honor and distinction. They fulfilled 
the highest obligation of American citizenship by defending 
this country in time of need. Accordingly, our Nation has an 
equal responsibility to care for these men and women who have 
sacrificed and suffered as a result of their service. We must 
continue to work to ensure that the great debt owed to our 
veterans is honored. They deserve no less. Therefore, as a 
member of this Committee, I will continue to look after the 
interests of our Veterans.
    I greatly appreciate the honor which this Committee has 
bestowed on me. I express my great appreciation to you, to the 
other Members and to the staff for this recognition.
    Mr. Chairman, with regard to the subject matter of this 
hearing, It is a pleasure to be here this morning to consider 
the budget requests for the Department of Veterans Affairs for 
fiscal year 2002. I join you and the members of the Committee 
in welcoming the Honorable Anthony J. Principi, Secretary of 
Veterans Affairs and representatives of the Veterans Service 
Organizations. I look forward to each of their statements.
    Mr. Chairman, the President has outlined his budget 
blueprint. He referred to that document as ``A Responsible 
Budget for America's Priorities.'' I am pleased that among the 
President's priorities is his commitment to revitalize National 
Defense. Included in that priority is his focus on high-quality 
health care and timely benefits. I look forward to working with 
you and the Administration in ensuring this priority is met, 
and the promise to our Veterans is fulfilled.
    Mr. Chairman, I thank the witnesses for appearing here 
today and I look forward to reviewing the testimony.

    Chairman Specter. Thank you very much, Chairman Emeritus 
Strom Thurmond. You honor us by being the President pro tempore 
of the U.S. Senate, and you honor us with your presence here 
and by being Chairman Emeritus.
    The resolution recites only a few of the achievements 
during your extraordinary service of 47 years in the U.S. 
Senate, and before that Governor of South Carolina, and 
candidate for the Presidency of the United States in 1948, and 
your extraordinary devotion to duty including parachuting 
behind the lines in World War II when most men in excess of 40 
at that time would have been at home enjoying comfortable 
leisure. But you have, indeed, set an example and have made a 
milestone.
    Just one personal recollection. When Senator Howard Baker 
was the majority leader in 1981-82-83-84 he made it a practice 
to have all night Senate sessions to finish the work of the 
Senate. One evening, illustratively, when we were on the 
finance bill, at 11:45, standing next to the chairman of the 
Finance Committee, Senator Dole, he said, ``There are 63 
amendments pending, and amendments, like mushrooms, grow 
overnight. So we are just going to work through the bill.'' At 
6:30 a.m. when the sun came up, we finished the bill. We had 
about four or five roll call votes, many amendments had been 
withdrawn, some voice votes, and it was amazing how short the 
debate gets at about 3 a.m.----
    [Laughter.]
    Chairman Specter [continuing]. With 60 or 70 Senators on 
the floor, and 30 or 40 sleeping in the Cloakroom, and the 
shouts ``a vote, a vote'' would be heard, and the speeches were 
abbreviated.
    But during those all night sessions, I made it a point to 
have a protracted bowl of soup with Senator Thurmond. And I 
learned about his tenure in the service with that young fellow 
Jack Kennedy, and Lyndon Johnson, his work with President 
Roosevelt and President Truman, and all of the legends. And, 
Strom, you are a living legend in your time.
    In the absence of the ranking member, we will alternate 
across the aisle. I believe Senator Wellstone is next ranking 
Democrat.
    Would you care to make a comment, Senator Wellstone?
    Senator Wellstone. Mr. Chairman, I am sorry to be late. 
Have we heard from the Secretary yet?
    Chairman Specter. We have not. But we will just take a 
moment or two.
    Senator Wellstone. I will just take 1 minute to put the 
Secretary's comments at least in my context as a Senator. I was 
just meeting with the DAV, and have been at the joint hearing 
with PVA not too long ago with a lot of other organizations, 
and I know that the chairman has spoken out on this as well--
and I think we have got a great Secretary of Veterans Affairs, 
I have said this to Tony, if I could call him Tony, when I met 
him, and I am so thrilled--but there is a concern about the 
budget.
    And if I could make an announcement, Mr. Chairman, with 
your forbearance. On Wednesday at noon, I do want members of 
the committee to know that there is going to be an unveiling of 
the portrait of Secretary Jesse Brown at the VA building. It 
would mean everything in the world to Secretary Brown if we 
could be there. So I hope as many Senators as possible can be 
there. He is struggling with a difficult disease now. So it is 
really important for people to celebrate his work. So I want to 
mention that.
    And then to say to you, I have no doubt about this 
Secretary's commitment. I have grave reservations about the 
budget in the context of the overall tax cuts budget. I do not 
think $1 billion does the job, for reasons that are real 
clear--Millennium Care, veterans' mental health services, 
uninsured veterans and how we deal with them. I think we are 
going to have to have a better budget. I think most all of us 
are committed to that.
    And the only other thing I will say to you, Mr. Secretary, 
and to everybody, is I had the opportunity to be at a press 
conference with Heather French the other day introducing the 
bill that deals with homeless veterans, with Lane Evans on the 
House side, and I want to get that to all of my colleagues. 
About 30 percent of homeless adults in the country are veterans 
and this is a wonderful effort to put more of a focus on how we 
can really put the services to them. I want to get this, Mr. 
Chairman, to all of my colleagues, and I look forward to 
working with the Secretary. Thank you so much.
    Chairman Specter. Thank you, Senator Wellstone.
    Senator Campbell?
    Senator Campbell. Thank you, Mr. Chairman.
    Mr. Secretary, welcome. I hope you will bear with us a 
moment or two while we say a few things about our colleague and 
friend, Strom Thurmond.
    We live in a country, Mr. Chairman, where the word ``hero'' 
is bandied around pretty lightly. We hear about movie heroes 
and sports heroes and so on. My view of what a hero is, is a 
person that has made a commitment at great personal risk and 
sacrifice to make this a better Nation. Certainly, from that 
context, our colleague Strom Thurmond is a hero in my view.
    About 5 years ago, Strom was down by the lower level about 
to get on the subway, and there was a man down there who was, I 
guess, partly deranged. And, maybe you remember this, Mr. 
Chairman, he hit Strom with his elbow, and Strom did not pay 
much attention to it. But I did, and the policeman down there 
did, too. The policeman and I both wrestled this guy down to 
the floor and got some handcuffs on him and turned him over to 
the Capitol Police where he was taken out of the building. But 
a few days later somebody said to me, ``That sure was nice of 
you for coming to the aid of Strom Thurmond.'' I told them, ``I 
was not coming to his aid, I was trying to protect that guy 
from Strom.'' [Laughter.]
    Because knowing Strom's history as a real warrior, I am 
sure he could have done very well on his own.
    There has been a lot written about Senator Thurmond. But I, 
like you, have had opportunities in the past on late nights 
when we would sit down in the Senate buffet at the table where 
Senators sometimes sit around and eat, to have coffee with him 
and talk. I can tell you, the things that are not written in 
those books about Strom are equally valuable. I would often ask 
him about his personal interaction with Harry Truman or John 
Kennedy or some of the people that you mentioned, some of the 
people that I will never have the good fortune of knowing. 
Those personal recollections of his about what he said and what 
Harry Truman said, things of that nature, they were absolute 
gems. They may never be recorded, but they were just a 
marvelous experience for me and something that I am going to be 
able to take away from here and consider myself fortunate and 
lucky, indeed, that I served with one of the really great men 
in American history.
    I heard that he has been in office about one-fifth of the 
whole time we have had a United States form of government. That 
is a lot of years of service. I notice even now with all the 
years he has been here, and with all the wonderful awards he 
has gotten, and all the accolades from people who have 
cherished him and admire him, he is never too busy to talk to 
anybody. This is a body where egos tend to get fed a little 
bit, and some of us maybe get the idea we are a little more 
important than we really are. But if you watch Strom in the 
halls, it does not make any difference if he is speaking to a 
world leader or the young lady that operates the elevator. He 
treats them all the same, with dignity and graciousness, 
caring, and understanding. I think that is the real quality of 
a really great man.
    He has never forgotten his roots. I lived in Japan a few 
years, and they have a saying in Japan, Mr. Chairman, and it 
is, ``Be kind to the people you meet climbing Mount Fuji 
because they are the same ones you are going to meet on the way 
back down.'' Which is just a way of saying that you should 
never forget where you came from and the people that make this 
Nation great. Strom has not forgotten that. And, it has just 
been a delight for me to be able to work with him. Thank you, 
Mr. Chairman.
    Chairman Specter. Would anybody else care to make a comment 
about Senator Thurmond?
    [No response.]
    Chairman Specter. Well, we have a busy agenda, Strom, so we 
shall proceed.
    Yes, Senator Craig?
    Senator Craig. Mr. Chairman, I am going to have to step out 
in a few moments to go Chair the Senate, so I would like to 
make a few comments, if I could.
    Chairman Specter. We recognize Senator Craig.
    Senator Craig. Mr. Chairman, first of all, let me thank you 
for the honor you have by this resolution bestowed on Senator 
Strom Thurmond. It is appropriate and befitting a person who we 
have all cherished knowing and who we have all benefited a 
great deal from knowing, and continue to do so.
    The Chairman and I were in the elevator coming over here 
this morning and we were hustling to get here because we were 
reminded that if we were late, we would be late and Strom 
Thurmond would be early. I think that says so much about a 
person who at 98 years of age still serves and serves on 
schedule and on time. And that is exactly the case here. And as 
someone who has known Strom Thurmond by name and by reputation 
all of my political life, and then to have the privilege of 
serving with him in the U.S. Senate, that is, in fact, a great 
honor.
    So, Mr. Chairman, thank you for honoring him today with 
this resolution.
    Strom, congratulations on becoming the Chairman Emeritus of 
this committee.
    I want to recognize our new Secretary. I look forward to 
working with him in the coming months and years as he works to 
build the confidence and the dignity of the Veterans 
Administration and provide the kinds of services to veterans 
that this committee expects our Government to do for our 
veterans. We will work with you in a cooperative manner. There 
will be times when we may criticize you but it will be in the 
constructive way of urging you on to make sure that the 
Veterans' Administration provides the services to America's 
veterans that are befitting and that in most instances were 
promised.
    Over the last several years this committee has stepped 
forward and actually gone beyond what was the intent of the 
past administration because we did not feel we were meeting the 
targets and/or the responsibilities to our veterans. We will 
continue to do the same. I am not pleased with the level of 
budget that we see at this time. We are going to have to work 
to solve those problems to make sure that we maintain those 
levels of service. But I look forward to you being here, and I 
apologize that I will have to step out of the committee.
    Mr. Chairman, let me ask unanimous consent that my full 
statement be made a part of the record.
    [The prepared statement of Senator Craig follows:]

   Prepared Statement of Hon. Larry E. Craig, U.S. Senator From Idaho

    Mr. Chairman, it is indeed a pleasure to be here with 
Veterans Administration (VA) Secretary Principi and 
representatives of five of our veterans service organizations. 
You all share a commitment to our Nations veterans and their 
families that honors their sacrifice and service. The American 
Legion, Veterans of Foreign Wars, Disabled American Veterans, 
Paralyzed Veterans of America, and AMVETS provide a wonderful 
service to our veterans which does not go unnoticed. I look 
forward to your testimony as we develop a budget that 
recognizes the immeasurable contributions veterans have made to 
this great country.
    Last year we provided the VA with a blueprint for 
desperately needed services. We must review the President's 
preliminary budget proposal to ensure that it enforces the 
legislation that has been passed as well as looking forward to 
the future. I strongly support a VA which is committed to 
providing accessible high quality medical care and other 
veterans benefits and services in a timely and effective 
manner. The heroic defenders of our democratic way of life 
deserve nothing less.
    I am looking forward to working with Mr. Principi to 
restore confidence of so many of our veterans who lost faith in 
the VA's ability to fairly and promptly respond to their many 
needs. Of primary concern is the time it takes to process 
benefit claims for compensation. Another concern is the long 
list of veterans waiting to receive various services, 
especially medical care. In recent years there were tremendous 
staff reductions that resulted in reduced services. The 
necessary steps must be taken to reverse this trend.
    I also realize there are several additional issues that are 
a concern to America's heroes. The National Defense 
Authorization Act for Fiscal Year 2001 established a new 
Department of Defense (DoD) benefit for military retirees over 
age 64 who have Medicare coverage. We must work with DoD to 
ensure our veterans are properly served.
    I expect a healthy and sometimes controversial debate 
related to the 2002 Department of Veterans Affairs budget 
submission. Because of the proposed increase from the FY01 
appropriation, this budget should help enforce our commitment 
to our Nation's veterans. In order to do that we must recognize 
the tough fiscal decisions that must be made, and work hard to 
find the most cost effective ways to provide high quality 
services.
    As a fiscal conservative, I believe it's critical to keep 
program funding consistent with a balanced Federal budget. In 
the long run, a balanced budget will serve all Americans, 
including our veterans. But, I also know that along with this 
commitment to a balanced budget, comes the responsibility to 
ensure our government honors its promises to our veterans.
    In making policy decisions on veterans services, we must 
ensure the highest standards of care and service delivery. When 
we restructure the VA health care system to enhance our ability 
to provide healthcare to eligible veterans, we must not forget 
those living in underserved geographic areas and rural States. 
In southern Idaho, the initial steps were taken and clinics 
were provided in Pocatello and Twin Falls. But we must not 
forget the large population of veterans in the north who must 
drive over twelve hours to a clinic. A third clinic in Lewiston 
would provide desperately needed access to essential services.
    I look forward to hearing from our representatives today. 
As the Congress continues to work on addressing the President's 
budget, the information from our witnesses will be crucial in 
providing ways to improve the delivery of services and benefits 
to our Nation's veterans.
    In closing, Mr. Chairman, there is no way to over emphasize 
the honor and respect this Nation owes the military men and 
women who sacrificed so much. I look forward to working with 
all of our veterans service organizations who continue to 
contribute to the long-range vision for the Department of 
Veterans Affairs.

    Senator Thurmond. Thank you for your kind words.
    Senator Wellstone. Mr. Chairman, thank you for your 
resolution. I did not thank you for your resolution earlier.
    And to Senator Thurmond, thank you.
    Senator Thurmond. Thank you very much.
    Chairman Specter. Since we have a very crowded agenda, I 
have two votes stacked at 11, and Secretary Principi would like 
to speak to the American Legion at 11, we will proceed at this 
time.
    Mr. Secretary, we note that the President has submitted a 
total figure of $23.4 billion for fiscal year 2002, which is an 
increase of $1 billion from fiscal year 2001. We do not have 
any specification or details. We all know that we are looking 
at a very sacred obligation to America's veterans at a time of 
escalating cost and an aging veterans population.
    We turn to you at this time.

    STATEMENT OF HON. ANTHONY J. PRINCIPI, SECRETARY, U.S. 
     DEPARTMENT OF VETERANS AFFAIRS ACCOMPANIED BY: THOMAS 
   GARTHWAITE, MARK CATLETT, JOSEPH THOMPSON, AND ROGER RAPP

    Mr. Principi. Thank you, Mr. Chairman. May I proceed with a 
short opening statement, or would you prefer, in the interest 
of time, to----
    Chairman Specter. Your full statement will be made a part 
of the record, and a short opening statement would be fine.
    Mr. Principi. Thank you, Mr. Chairman, and members of the 
committee. Congratulations, Senator Thurmond, on this very 
distinguished naming of you as Chairman Emeritus of this great 
committee. I applaud you, sir, for your service to our Nation.
    It is good to be before the members of the committee. We 
are requesting more than $51 billion for veterans' benefits and 
services--$28.1 billion for entitlement programs, and $23.4 
billion for discretionary programs such as medical care, burial 
services, and the administration of veterans' benefits. Our 
budget increases VA's discretionary funding by $1 billion or 
4.5 percent over the fiscal year 2001 level. With an increase 
in medical care collections which will remain with the VA of 
approximately $200 million, this brings the total increase in 
discretionary spending to $1.2 billion or 5.3 percent.
    Although all of the specifics of this increase are not 
quite worked out, I would like to give you a quick overview of 
how I intend to allocate those dollars.
    The lion's share of the increase would go, of course, to 
medical care. Approximately $1 billion or 4.8 percent would be 
allocated to medical care. Of the $1.2 billion, 13 percent 
would be for the Veterans Benefits Administration. That is an 
increase of 13 percent or $134 million to allow us to get a 
handle on this enormous crisis we face in the claims backlog. 
An 11-percent increase, approximately $12 million, would be for 
the National Cemetery Administration to continue our expansion 
of National Cemeteries and to make a downpayment on the backlog 
of repair and maintenance to bring our cemeteries up to the 
status of national shrines. And, we would make our first 
investment in capital infrastructure a 20-percent increase over 
the 1991 levels of $78 million for major construction.
    The budget ensures veterans will receive high-quality 
health care, that we will keep our commitment to maintain 
veterans' cemeteries as national shrines, and that we have the 
resources to tackle this ever-growing claims situation.
    The President promised a top-to-bottom review of our 
benefits claims processing. He has designated this area as a 
key budget initiative and I have made it my most important 
priority. I know you share our commitment to restore the 
confidence of many veterans who have lost faith in our ability 
to provide timely and quality evaluations of their claims.
    This requests fully implements the new legislation that 
strengthens VA's ``duty to assist'' role in helping veterans 
prepare their claims. We will be hiring 800 new people in our 
Veterans Benefits Administration; 100 of the 800 would be for 
our educational processing, 700 would go to rating claims in 
the disability compensation and pension area.
    Additional resources will be coupled with a proactive 
approach to solving problems. I plan to establish a task force 
this month that will address claims processing and developing 
hands-on, practical solutions.
    Our future approach to benefits delivery will incorporate a 
paperless technology. The Veterans Benefits Administration 
plans to consolidate the aging data centers into VA's core data 
center in Austin, TX. This is an important first step in 
realizing our vision for the future.
    For veterans' health care, the budget request reaffirms our 
primary commitment to provide high-quality health care for 
service-connected disabilities or veterans with low incomes who 
really have no other option for health care. VA provides 
important specialty care and we need to ensure that we are 
funding spinal cord injuries, Post-Traumatic Stress Disorder, 
issues related to homelessness, mental health, drug and alcohol 
abuse treatment programs, to ensure we are in compliance with 
the Millennium Act and we are maintaining capacity at 1998 
levels to provide for the specialized treatment and 
rehabilitative needs of disabled veterans, including veterans 
with spinal cord dysfunction, blindness, amputations, and 
mental illness, within distinct programs or facilities of the 
Department.
    We also will be convening a task force to take a look at 
how our health care system interrelates with the Department of 
Defense, and to see how we can bring down the barriers between 
the two systems so that they can work closer together in 
partnership.
    In our National Cemetery System, as I have indicated, we 
are increasing the Cemetery System's budget 11 percent. We have 
a lot to do to restore the situation in our National Cemeteries 
with regard to repair and maintenance.
    In view of the time, Mr. Chairman, I will submit the rest 
of my statement for the record. Thank you very much.
    [The prepared statement of Mr. Principi follows:]
    Prepared Statement of Hon. Anthony J. Principi, Secretary, U.S. 
                     Department of Veterans Affairs
    Mr. Chairman, and members of the Committee, good morning. Thank you 
for inviting me here today to discuss the President's FY 2002 budget 
proposal for the Department of Veterans Affairs.
    As you know, the President released his budget blueprint on 
February 28, 2001. Additional information regarding specific funding 
levels for each of our programs will be provided early next month. I 
look forward to addressing the details of our request at that time. 
Until then, I am pleased to discuss the overall budget request for VA 
and my priorities for the next fiscal year.
    We are requesting more than $51 billion for veterans' benefits and 
services: $28.1 billion for entitlement programs and $23.4 billion for 
discretionary programs, such as medical care, burial services, and the 
administration of veterans' benefits. Our budget increases VA's 
discretionary funding by $1 billion or 4.5 percent over the FY 2001 
level. With an increase in medical care collections of approximately 
$200 million, this brings the total increase to $1.2 billion or 5.3 
percent.
    The budget ensures veterans will receive high-quality health care, 
that we will keep our commitment to maintain veterans' cemeteries as 
national shrines, and that we will have the resources to tackle the 
challenge of providing veterans more timely and accurate benefits 
claims determinations.
    The President promised a top-to-bottom review of our benefits 
claims processing. He has designated this area as a key budget 
initiative and I have made it one of my top priorities. I know you 
share this Administration's commitment to restore the confidence of 
many veterans who have lost faith in VA's ability to fairly and 
promptly decide their benefits claims.
    Mr. Chairman, as we all know, VA is not completing work on benefits 
claims in as timely a manner as our veterans deserve. I am proud to say 
this budget will rejuvenate VA's efforts to process compensation claims 
promptly and accurately.
    This request fully implements new legislation that strengthens VA's 
``duty to assist'' role in helping veterans prepare their claims. It 
also will enable us to carry out the new policy of adding diabetes to a 
list of presumptive conditions associated with exposure to herbicides. 
The 2002 budget provides additional staffing for these efforts. 
Additional resources will be coupled with a proactive approach to 
solving problems. I plan to establish a task force that will address 
claims processing and develop hands-on, practical solutions.
    Our future approach to benefits delivery will incorporate a 
paperless technology. The Veterans Benefits Administration plans to 
consolidate its aging data centers into VA's core data center in 
Austin, Texas. This is an important step in realizing our vision for 
the future.
    For veterans' health care, the budget request reaffirms our primary 
commitment to provide high-quality medical care to veterans with 
service-connected disabilities or low incomes. VA provides 
comprehensive specialty care that other health care providers do not 
offer, such as services related to spinal cord injury, Post Traumatic 
Stress Disorder, prosthetics and addiction programs. I am proud of our 
unique accomplishments and will insist on full funding to continue our 
leadership role in these areas.
    We recognize the need to improve access to health care for eligible 
veterans. The budget supports the President's new health care task 
force, which will make recommendations for improvements. The task force 
will be comprised of representatives from VA and the Department of 
Defense (DoD), service organizations, and the health care industry.
    The budget request also ensures that our National Cemeteries will 
be maintained as shrines, dedicated to preserving our Nation's history, 
nurturing patriotism, and honoring the service and sacrifice of our 
veterans. Funding will be used to renovate gravesites and to clean, 
raise and realign headstones and markers.
    Mr. Chairman, our 2002 budget is not simply a petition for 
additional funding. It also reflects opportunities for cost savings and 
reform. VA will do its part to ensure the most efficient use of limited 
resources, while maintaining the highest standards of care and service 
delivery.
    The National Defense Authorization Act for Fiscal Year 2001 
established a new DoD benefit for military retirees over age 64 who 
have Medicare coverage. These retirees will be able to use their own 
private doctors for free care and receive a generous drug benefit. 
Currently, 240 thousand of these retirees are enrolled in VA's health 
care system. Our budget assumes that 27 percent of them will switch to 
the DoD benefit in 2002, which shifts $235 million in VA medical 
liabilities to DoD.
    This recent legislative change underscores a critical need for 
better coordination between VA and DoD. The Administration will seek 
legislation to ensure DoD beneficiaries who are eligible for VA medical 
care enroll with only one of these agencies as their health care 
provider. We will work with DoD to avoid duplication of services and 
enhance the quality and continuity of care.
    Restructuring efforts in our health care system will continue in 
2002. VA has begun an infrastructure reform initiative that will 
enhance our ability to provide health care to eligible veterans living 
in underserved geographic areas. Savings from this effort will allow us 
to redirect funds from the maintenance of underused facilities to 
patient care. As we await the results of this assessment--referred to 
as ``CARES''--we will continue to expand sharing agreements and 
contracting authorities with other health care providers.
    The budget also includes legislation for several proposals that 
will yield mandatory savings totaling $2.5 billion over the next ten 
years. Most of these proposals will extend previously enacted mandatory 
savings authorities that would otherwise expire over the next several 
years.
    Finally, we will continue to reform our information technology. New 
technology offers VA opportunities for innovation. It also offers a 
means to break down the bureaucratic barriers that impede service 
delivery to veterans, divide VA from other Federal government 
departments, and create inefficiencies within VA itself.
    I have gone on record as stating that I will not initiate any new 
technology-related activities until an integrated strategy for 
addressing our information systems and telecommunications is developed. 
We will continue to improve coordination among our three 
administrations to implement a technology plan that serves veterans 
first. Reforms will include developing a common architecture, 
establishing common data definitions, and coordinating systems across 
VA.
    Mr. Chairman, that concludes a general overview of VA's 2002 budget 
request. I thank you and the members of this Committee for your 
dedication to our Nation's veterans. I look forward to working with 
you. My staff and I would be pleased to answer any questions.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Arlen Specter to 
                          Anthony J. Principi
                           health care issues
    Question 1. The Veterans Health Care Eligibility Reform Act of 1996 
requires that VA maintain capacity to treat special needs populations 
such as veterans with spinal cord injuries, blindness, mental illness, 
and homeless veterans. Will the current funding proposal be adequate to 
continue timely and quality health care for these special populations?
    Answer. Yes, the current funding proposal will be adequate to 
continue timely and quality health care for these special populations.
    Question 2a. Over the past few years, VA has been transformed from 
a hospital-based provider to one that relies on ambulatory settings to 
meet veterans' needs. This surely assists VA in meeting the primary 
care needs of veterans--but I am concerned that specialty care is being 
compromised. Can VA provide adequate mental health services in an 
outpatient setting?
    Answer. VA has been providing the bulk of its mental health 
services on an outpatient basis for many years. In the 1960's VA 
pioneered the development of partial hospitalization programs such as 
Day Hospitals and Day Treatment Centers, as supplements to traditional 
outpatient clinics, in an effort to keep more VA patients in the 
community. It is true that in recent years more of our mental health 
care has shifted to outpatient settings. In FY 1994, VA served 125,045 
veterans in inpatient mental health units, 23 percent of the 541,261 
mental health patients seen that year. In FY 2000, only 75,745 veterans 
had inpatient mental health care, 11.2 percent of the 678,932 seen that 
year. Although VA is increasing its outpatient mental health services 
for veterans, nonetheless, we are still mindful of those veterans whose 
severity of illness requires inpatient care. It should also be noted 
that nearly 99 percent of veterans who received inpatient mental health 
care in FY 2000 also received outpatient mental health services.
    VA has been working to enhance our outpatient capabilities for our 
most severely mentally ill veterans through the development of Mental 
Health Intensive Case Management (MHICM) programs, which are designed 
help these patients adapt to community life. Forty of these programs 
are now operating, and we are currently engaged in a system-wide 
increase in MHICM activity. We also are working to increase the mental 
health capability of our Community Based Outpatient Clinics (CBOCs), 
which are designed to bring health care closer to where veterans live. 
Currently, about 50 percent of CBOCs have mental health capability, and 
we are striving to increase that percentage. Furthermore, we are 
developing ways to enhance the involvement of mental health staff in 
medical and geriatric primary care settings to provide care to veterans 
who need mental health services in the familiar surroundings of the 
primary care clinic.
    Question 2b. Can it provide adequate blind rehabilitation services 
in an outpatient setting?
    Answer. VA cannot provide comprehensive blind rehabilitation in an 
outpatient setting. Limited portions of blind rehabilitation programs 
can be met in an outpatient setting, but early preliminary data from 
outcome measures indicate that VA residential programs are far superior 
to all other models of blind rehabilitation, including state, private, 
and VA outpatient models. Nonetheless, as the number of older veterans 
increases, VA's Blind Rehabilitation Outpatient Specialists (BROS) may 
play a more significant role in blind rehabilitation. Currently, VA has 
only 19 BROS, and they have proven to be most effective in 
supplementing the services provided by the residential programs.
    Question 3. There are close to 500,000 veterans service-connected 
for mental illness. Over the past five years, VA spending on mental 
health care has declined by 8 percent. To what do you attribute this 
decline in spending? Has VA become a markedly more efficient provider 
of mental health services? Or is VA neglecting the need of veterans 
with mental illnesses?
    Answer. In 1996, there were 456,527 veterans service-connected (SC) 
for a mental health disorder. Of these, 167,845 (37 percent) were 
receiving care in VA facilities. By FY 2000, there were 452,890 
veterans SC for a mental health disorder. Of these, 191,243 (42 
percent) were treated in VA facilities. This reflects a 14 percent 
increase in the number of veterans treated in VA facilities for an SC 
mental health disorder.
    For patients with a serious mental illness, VA has shifted from a 
system of care that heavily relied on hospital care to a comprehensive 
continuum of care, ranging from outpatient care in the community 
through partial hospitalization settings, residential care, and 
intermediate hospital settings, to high intensity hospital care. Our 
clinicians have found that many patients with serious mental disorders 
could be treated for much shorter lengths of stay, and in intermediate, 
residential, or supportive community settings. In these settings, 
patients have a larger participation and role in their treatment and 
more freedoms than in often over-protective hospital settings.
    Over the last five years, we have seen an 8 percent increase in the 
number of veterans with a mental illness who were either hospitalized 
or received significant outpatient mental health treatment (6 or more 
visits per year). This has been accompanied by an 8 percent decrease in 
specialized mental health costs. The lower mental health costs most 
likely reflect two factors: (1) a 33 percent decrease in the number of 
psychiatric inpatients, from 113,719 in FY 1996 to 75,745 in FY 2000; 
and (2) a 39 percent decrease in overall average length of stay, from 
27.3 days in FY 1996 to 16.6 days in FY2000.
    Thus, the decreased costs actually reflect a more modern and 
effective approach and philosophy for treating veterans with mental 
disorders, rather than a neglect of their needs.
    Question 4. While the total veteran population is declining, the 
female veteran population is rising; now there are over 1.2 million 
women veterans. Even so, approximately one-third of VA hospitals do not 
have women's clinics. Does this budget contain funds to increase 
services and provide appropriate facilities for women veterans? If not, 
should it?
    Answer. With the exception of the elderly veteran population, 
female veterans are the fastest growing segment of the veteran 
population. In FY 2000, women veterans comprised roughly 1.4 million of 
the Nation's 26 million veterans, or approximately 5.5 percent. In 
facilities without formal ``women's clinics'', gender-specific health 
services are provided by women's health personnel in women's health 
specialty clinics, while primary and preventive medicine services are 
performed by gender-neutral primary care teams. VA has acknowledged the 
growing population of women veterans by establishing Women Veterans 
Health as a special program with designated headquarters and field 
staff. The needs of women veterans are included in the VERA model in 
the FY 2002 budget. Infrastructure challenges related to privacy exist 
and are being addressed.
    Question 5a. VA leads the nation--as it should--in the treatment of 
Post Traumatic Stress Disorder (PTSD). I want VA to continue to so lead 
the nation. Can VA effectively treat PTSD in an outpatient care 
setting?
    Answer. Yes. Consistent with all health care systems, the 
preponderance of care for PTSD can be and is being provided effectively 
on an outpatient basis.
    Question 5b. Is this an area where VA must continue to provide care 
on an inpatient basis?
    Answer. Yes. Although the preponderance of care can be provided 
effectively on an outpatient basis, VA is committed to maintain 
appropriate inpatient capacity to provide clinically-indicated and 
necessary treatment.
    Question 5c. Can VA adequately provide needed care for PTSD under 
this budget proposal?
    Answer. Yes. Public Law 106-117 provided $15 million for new 
specialized PTSD and Substance Use Disorder care in VHA. These funds 
were awarded through a competitive Request for Proposal (RFP) process. 
Approximately $5.5 million of this amount was distributed to fund new 
PTSD treatment programs. VISNs received this funding with the 
requirement to maintain these services through FY 2002.
    Question 6. During the appropriations process in the Senate last 
year, Chairman Bond of the Senate VA-HUD Appropriations Subcommittee 
placed a moratorium on new major construction projects until VA showed 
positive movement implementing its Capital Asset Realignment for 
Enhanced Services (``CARES'') process. Where does VA now stand on 
``CARES''? Will VA need to proceed with any major construction this 
year-prior to completion of the CARES process?
    Answer. The CARES contractor, Booz-Allen & Hamilton, has projected 
that they will complete their CARES Report on VISN 12 by the end of 
May. I am to receive recommendations in June. During the May-July 
period, we will be consulting with stakeholders, evaluating the overall 
CARES process, and applying lessons learned from the Phase I pilot to 
the Statement of Work for the Phase II markets. Since the remaining 21 
VISNs will follow the process and methodology developed in Phase I, VA 
is carefully working through the process the first time. Adjustments to 
the database and communications portions of the task have been 
required, and it is anticipated that more adjustments to the CARES 
process will be made following the lessons learned overview of Phase I. 
Phase II is targeted to be started in summer 2001, and Phase III in 
summer 2002. Phase II and III will be completed a little more than one 
year after initiation.
    VA will need to proceed with select major construction projects 
prior to the completion of the CARES process, especially those 
addressing safety-related issues for our patients and employees. For FY 
2002, we are proposing an emergency electrical project at Miami, FL, in 
the major construction account. Over the next several years, while the 
CARES studies are underway, increased funding for such projects will be 
required. In particular, projects to correct seismic deficiencies 
should proceed at those facilities we expect to be identified as health 
care sites in the CARES studies.
    Other needed improvements and renovations at over 4000 aging 
buildings at VA medical centers, national cemeteries and regional 
offices will be addressed through the minor construction program. Our 
FY 2002 request includes $178.9 million for minor construction 
projects, $25 million of which is dedicated to CARES projects.
    Question 7. The Veterans Millennium Health Care and Benefits Act of 
1999 requires VA to provide nursing home care to all veterans who are 
70 percent or more service-disabled if they seek--and need--such care. 
At the time of enactment of this mandate, VA advised the Committee that 
it might have problems implementing this charge. Has VA had such 
problems? Are any ``70-percenters'' who need nursing home care being 
denied such care by VA? Will they be under this budget request?
    Answer. VA has not had difficulty in implementing the mandate to 
provide nursing home (NH) services to veterans who need such care for a 
service-connected disability or who have a disability rated 70 percent 
or greater and need NH care. VA estimates that approximately half of 
the service-connected veterans rated 70 percent or higher who are 
eligible for NH care under this Act receive their care through one of 
the three VA-sponsored NH Programs. The budget request for FY 2002 
contains sufficient funds to meet the NH care needs of all the service-
connected veterans covered by this statute who might seek NH services 
from VA.
    Question 8a. Last year, VA announced its ``30-30-20'' initiative--a 
program designed to reduce patients' waiting times by assuring that a 
veteran would receive an initial visit at a VA facility within 30 days 
of requesting enrollment; see a specialist within 30 days of referral; 
and been seen by a provider within 20 minutes of arriving at a VA 
facility. Despite this initiative, veterans are experiencing waiting 
times that are unacceptable--for example, in Lebanon, Pennsylvania, 
veterans seeking to enroll for VA care are forced to wait up to 7 
months or more before they can see a primary care provider. Are the 
goals of the ``30-30-20'' initiative realistic?
    Answer. VHA's goal is that clinic wait times will be significantly 
reduced over several years. The specific targets established for 2003 
are:
     90 percent of non-urgent primary care patients scheduled 
within 30 days.
     90 percent of non-urgent specialty care referrals (eye 
care, audiology, orthopedics, cardiology, urology) scheduled within 30 
days.
     90 percent of patients seen within 20 minutes of their 
scheduled appointment time.
    I believe that the 30-30-20 goals are very aggressive and 
benchmarks are not available for access and waiting times goals in 
other health care systems. However, VA believes that these goals are 
important and are consistent with veteran expectations, and I am told 
that they are obtainable over time. Performance data will soon be 
available showing the progress we are making towards meeting these 
specific targets. We will begin monitoring our progress, nationally and 
by medical center, in June. I will be receiving regular reports, which 
will be available to you, as well as all of the members of our 
authorizing and appropriations committees.
Performance Data on Access--July 2001
    VHA's Fiscal Year (FY) 2002 budget submission included goals for 
clinic wait times:
     90% of enrolled veterans will be able to obtain a non-
urgent patient appointment with their primary care provider or other 
appropriate provider within 30 days.
     90% of patients will be able to obtain a non-urgent 
appointment with a specialist within 30 days of the date of referral.
    In May of 2001, 87% of all primary care appointments were scheduled 
within 30 days of the desired date and 82% of specialty clinic 
appointments were scheduled within 30 days of the desired date.
    Attachment A includes longitudinal data on average clinic waiting 
times (for non-urgent, next available appointments) and best 
demonstrates the dramatic improvements made by VHA over the last year.
                              attachment a

                            Average Waiting Time To Next Available Appointment--2000
----------------------------------------------------------------------------------------------------------------
                   VHA                      Apr     May     Jun     Jul     Aug     Sep     Oct     Nov     Dec
----------------------------------------------------------------------------------------------------------------
Prim....................................    65.1    64.4    63.8    62.8    61.8    60.4    60.5    58.2    58.5
Eye.....................................   101.0    94.2    93.8    88.0    90.1    83.7    86.7    89.8    89.1
Audio...................................    49.9    50.1    52.1    50.2    47.1    40.3    43.8    44.4    47.1
Cardio..................................    51.7    53.0    48.0    47.0    45.4    44.5    44.3    43.6    44.7
Ortho...................................    44.6    46.7    44.8    42.0    44.6    40.1    43.3    43.4    43.1
Uro.....................................    80.7    78.7    74.1    72.5    69.3    69.1    67.8    71.6    74.1
----------------------------------------------------------------------------------------------------------------


                            Average Waiting Time To Next Available Appointment--2001
----------------------------------------------------------------------------------------------------------------
                                                                                                  May 01-Apr 00
                          VHA                             Jan     Feb     Mar     Apr     May  -----------------
                                                                                                  Dif     % Dif
----------------------------------------------------------------------------------------------------------------
Prim..................................................    56.1    54.6    44.4    42.6    42.6    -22.5    -34.6
Eye...................................................    80.6    83.7    72.9    72.3    69.6    -31.4    -31.1
Audio.................................................    43.9    45.3    39.7    38.2    40.4     -9.5    -19.0
Cardio................................................    41.6    40.6    40.4    37.5    41.9     -9.8    -19.0
Ortho.................................................    45.3    40.6    39.7    39.2    38.3     -6.3    -14.1
Uro...................................................    77.1    67.8    52.7    53.0    52.8    -27.9    -34.6
----------------------------------------------------------------------------------------------------------------

    VHA's FY 2002 goal for in-clinic waiting times is:
     90% of patients should be seen within 20 minutes of the 
scheduled appointment time.
    The time that patients wait to see their provider has greatly 
improved VHA-wide. The chart in Attachment B shows the percentage of 
patients who report waiting longer than 20 minutes beyond their 
appointment time to see their provider. The decreasing percentage 
demonstrates the clear performance improvement. (Source: Veterans 
Customer Satisfaction Surveys 1995-2000.)
attachment b.--percent of outpatient respondents who report waiting >20 
                     minutes to see their provider


    Question 8b. If so, what financial resources will be devoted to 
implementation of the ``30-30-20'' plan for fiscal year 2002?
    Answer. An increase of $164 million is requested in the FY 2002 
budget for this purpose. According to the Networks financial plans, 
this increase would be in addition to an estimated $294 million 
recurring in the base and would increase the program funding level to 
$458 million in FY 2002.
    Question 8c. When can veterans expect to see results?
    Answer. I too continue to hear complaints from veterans and others 
about excessive clinic waiting times. However, I am told that 
improvements are being made. Between April 2000 and December 2000, 
primary care clinic times decreased by ten percent and specialty clinic 
waiting times decreased by approximately nine percent. It is important 
to note that these decreases were accomplished at a time when the total 
number of VHA outpatient visits was significantly increasing due to 
greater demand for outpatient care.
    Of equal or possibly greater importance are patients' perceptions 
of waiting times. VHA's most recent customer satisfaction survey (FY 
2000) shows that 80 percent of patients report appointments scheduled 
at times that are convenient to them. Similarly, 85 percent of patients 
report waiting less than 30 minutes to be seen by their providers.
    Specifically, at Lebanon VAMC, information from patient interviews 
with veterans during the past several months indicates that the 
majority of veterans are enrolling because Medicare HMO's are pulling 
out of central Pennsylvania. This dramatic recent increase in 
enrollees, coupled with an 11 percent general increase in enrollees 
using the facility in FY 2000, has resulted in the establishment of the 
current waiting list.
    To deal with this issue, the medical center has initiated 
recruitment of 18 additional Primary Care staff positions. These 
positions will be located where the need is greatest. An additional 
primary care team (M.D., Nurse Practitioner, RN, LPN, and two clerks) 
is being added to the Lebanon VA Medical Centers. An additional 
Physician Assistant, LPN, and clerk will be added at both the Lancaster 
and Berks CBOCs. Recruitment of staff for the newly approved York 
County CBOC (M.D., Physician Assistant, RN, LPN, and two clerks) should 
allow CBOC opening in May 2001. The Lebanon VA Medical Center has 
briefed area veterans' organizations, County Directors of Veterans 
Affairs, and congressional offices on a bimonthly basis on the status 
of this waiting list. The medical center also has provided stakeholders 
an opportunity to provide input and to gain an understanding of why the 
waiting list has occurred and what specific strategies are being 
implemented to eliminate the list. These briefings have fostered a 
clear understanding of the situation and have enlisted the 
stakeholders' unanimous support.
    Recognizing these indications of improvement, complaints about 
waiting times are consistent at all of my visits to our medical 
facilities. As we monitor these standards, we will ensure accurate 
reporting with appropriate oversight by the Inspector General and other 
auditing offices.
    Question 9a. It is reported that the Nation--and VA--will soon 
experience a significant nursing shortage. How can VA assure adequate 
nurse staffing?
    Answer. VA closely monitors nursing staff demographics, gauging the 
sufficiency and availability of nursing staff at a national level. In 
addition, every effort is made to support VAMCs as competitive 
employers in local communities. VA has begun comprehensive policy 
development related to nurse staffing, including competitive pay, 
recruitment, and retention bonuses, work environment, occupational 
health and safety, as well as education initiatives and a loan 
repayment program.
    Question 9b. Do you believe that VA has a role to play in helping 
to recruit more young people into the field of nursing?
    Answer. VA facilities do have a role in recruiting more young 
people into the field of nursing. One such successful program is the VA 
Cadet program implemented at VA Medical Center Salem, VA. This program 
brings high school students into the VAMC for educational and volunteer 
experiences in nursing. VA would welcome the opportunity to participate 
in a broader, national effort to increase the number of individuals 
choosing nursing and other health care profession careers.
    Question 9c. Does VA have any plans or programs in place to help 
sustain the proper level of nursing staff?
    Answer. VA has initiated the Nursing Workforce Planning Group with 
the directive to identify the impact of the predicted nursing shortage 
on VA and to recommend strategies and actions to maintain a qualified 
nursing workforce in VA. This multidisciplinary group is engaged in a 
number of comprehensive activities that will lead to immediate, short-
range, and long-range activities. Currently, VA operates the Veterans 
Affairs Learning Opportunities Residency Program (VALOR), an internship 
program aimed at recruiting high-performing baccalaureate students for 
specialized clinical experiences and eventual hire by VA facilities. 
VA's National Nursing Educational Initiative (NNEI) has made $50 
million available to registered nurses who are obtaining baccalaureate 
or higher degrees and the Employee Incentive Scholarship Program (EISP) 
provides funds to VA employees enrolled in programs leading to a degree 
in nursing.
    Question 10. You have stated that you are reviewing the costs 
associated with providing care to so-called ``Priority 7'' patients-
those who are not service-connected, poor, or entitled to priority 
enrollment on other grounds. As I understand it, ``Priority 7'' now 
comprise 20 percent of VA's patient population--up from only 4 percent 
just five years ago. VA asked for ``eligibility reform''--the change in 
the law that has made the full continuum of VA care available to even 
non-``priority'' patients. In so doing, VA led Congress to believe that 
it would be able to handle such an influx of patients--due, in part, to 
the fact that VA would be able to collect, and retain, insurance 
reimbursements and co-payments from such patients. Is that no longer 
the case?
    Answer. I will make the enrollment decision for FY 2002 later this 
year. If availability of sufficient resources becomes an issue, 
different policy decisions and options will need to be considered. 
Enrollment of Priority 7s is anticipated for FY 2002 with the 
recognition that fewer will be treated by the VA than in FY 2001 due to 
TRICARE for Life and higher copayments for Priority 7 veterans we 
expect to implement this fall. However, let me assure you that the FY 
2002 budget request reaffirms our primary commitment to provide high-
quality medical care to veterans with service-connected disabilities or 
with low income.
    Question 11. I led the fight some years ago for legislation 
allowing VA to retain insurance company collections so that VA would 
have an incentive to pursue such reimbursements. I then followed up 
with legislation allowing the collecting VA Medical Center to retain 
any and all funds collected by its staff. Even so, should I conclude 
that there are not sufficient incentives for VA to pursue such funds? 
What else can Congress do to energize collections? What will you do to 
energize collections?
    Answer. VA is committed to improving revenue and collections and 
increases are already occurring. For the first half of FY 2001, monthly 
collections have been 50 percent ahead of last year. For FY 2002, 
increased co-payments for pharmacy, long-term care, and outpatient care 
will provide additional revenue. Specific proposals for improvements to 
increase the collections from insurance companies will be identified 
soon. I am directing VHA to provide a detailed plan in 90 days to 
improve dramatically the documentation and coding by physicians, 
identification of insurance, and identification of changes in the 
billing and collections process. These will be implemented in FY 2002 
with accountability for these improvements to the local facility and 
individuals as necessary.
    Question 12. The VA State Home Grant Program--a partnership that 
allows the Federal Government and the States to work together to 
provide high quality long-term care to veterans--has been a major 
success in Pennsylvania and throughout the U.S. Will this budget 
proposal allow this program to grow? What are your plans for the State 
Home Grant Program?
    Answer. Yes. The funding request in 2002, when combined with 
unobligated funding from previous years' appropriations, represent a 
continued commitment to support VA-sponsored nursing home care through 
less expensive State and community programs.
    The Veterans Millennium Health Care and Benefits Act (Public Law 
106-117) required VA to revise the State Home Construction Grant 
regulations. Interim regulations will be issued in June and in place 
for the FY 2002 grant funding cycle. The revised methodology provides a 
higher priority for renovation projects with the highest priority for 
projects that remedy life safety problems. The new methodology also 
requires that existing VA and community nursing home beds be considered 
when ranking bed-producing projects for funding.
    Question 13. The Veterans Millennium Health Care and Benefits Act 
of 1999 requires VA to pay for veterans' emergency room visits in 
certain circumstances--starting in May 2000. Even so, I am advised VA 
has not implemented this mandate and that it is collecting information 
from veterans about their emergency room visits. Why is VA collecting 
information rather than paying bills? When will VA implement this 
statutory mandate?
    Answer. Section 111 of the Veterans Millennium Health Care and 
Benefits Act of 1999 required VA to prescribe regulations to establish 
the maximum amount payable and to delineate the circumstances under 
which payments may be made. The implementing regulations for the 
emergency care provision were completed and forwarded to OMB for review 
in November 2000. On February 3, VA withdrew all regulations to allow 
my staff to review any regulations developed by the previous 
administration. The revised regulations were returned to OMB on April 
11, 2001. Among revisions made to the proposed rules prior to their 
resubmission to OMB was the addition of a requirement that a claimant 
must certify, in writing, that a claim meets all of the conditions for 
payment and that he or she is aware of the criminal penalties for 
obtaining payments with the intent of defrauding the United States.
    Because regulations were not published prior to the May 2000 
effective date, VA health care facilities were advised in July 2000 to 
begin tracking and documenting claims that may meet the criteria of the 
emergency care provisions. It is anticipated that these implementing 
regulations will become effective before the end of this year. Once 
final regulations are published, VA will retroactively reimburse any 
claimant back to the effective date of the legislation if the veteran 
meets the eligibility requirements set forth in the regulation.
    Question 14a. The operation of VA's Veterans Equitable Resource 
Allocation (VERA) system has raised many concerns among members of this 
Committee. As I understand it, this funding allocation formula does not 
take into account the number of ``Category 7'' veterans that a given 
Veterans Integrated Service Network (VISN) is treating. As a result, 
areas like Pennsylvania that have many ``Category 7'' veterans who are 
coming to VA seeking care are squeezed by this formula. Do you 
anticipate any changes in the methodology used in calculating resource 
allocation among the various VISNs to rectify this situation?
    Answer. VERA provides funding for Priority 7 veterans who are 
classified in the Complex Care category. VHA is currently examining the 
issue of providing workload and funding credit for Basic Care Priority 
7 veterans in VERA. This issue will be carefully considered and will be 
influenced by the improvement in cost recovery from insurance companies 
and Priority 7 veterans to be outlined in the detailed plan mentioned 
in my response to question 11.
    Question 14b. Do you think it is right for VA to open outpatient 
clinics and stimulate demand for VA care and then to deny--of at least 
delay unreasonably--such care when veterans seek to enroll?
    Answer. The relationship of the large increase in Priority 7 
veterans and the complaints on waiting times that I am hearing will be 
evaluated. There will be no new CBOCs approved for opening until I have 
approved a policy on placement of CBOCs. VHA is committed to ensuring 
that patients do not experience delays in receiving care and, to that 
end, has undertaken significant initiatives to reduce patient waiting 
times. We will continue to monitor and evaluate our CBOCs and patient 
waiting times.
    Question 15. It has been proposed that VA modify VERA to account 
for the fact that veterans who are classified as ``priority'' patients 
on the basis of a ``means test'' might properly have their ``means'' 
judged by different measures in different parts of the country because 
of variances in the costs of living from place to place. Does this 
proposal make sense to you? Is VA considering it?
    Answer. Linking a veterans ``means'' to geographic cost-of-living 
variances might serve veterans better than the current one-tier test. 
However, reviews performed in 1989 and 2000 indicate that it would pose 
a number of challenges for the Department. For example, veterans living 
in close proximity of one another, and receiving health care at the 
same facility, could potentially have their ``means'' judged 
differently, even though they may have identical or similar income.
    Another challenge would be how to properly handle veterans who 
relocate at certain times of the year to another State. VA would need 
to decide which county or region to use in calculating their ``means.'' 
Lastly, since VA currently uses a one-tier test to determine a 
veteran's means, this proposal would have a major impact on VA's 
Information System. I believe we must study this proposal carefully and 
evaluate the impact it would have on VERA against the potential 
benefits veterans may derive from this or a similar proposal. The Under 
Secretary for Health has convened a group to examine the impact of this 
proposal on VERA as well as on VA's Information System. Upon completion 
of their review, I will submit a full report of their findings to the 
Committee on Veterans' Affairs.
    Question 16a. Advances in pharmaceutical science have assisted VA 
in its transition from hospital-based to an outpatient care-based 
health care provider. Along with these advances, VA's cost for 
medications has increased dramatically--making pharmacy costs a large 
percentage of total medical care expenditures. Please describe the 
strategies VA has undertaken to keep pharmacy costs under control.
    Answer. VA supported the passage of Public Law 102-585, which gives 
VA, DoD, the Coast Guard, Public Health Service, and the Indian Health 
Service pricing for many high cost medications base-lined at the non-
federal average manufacturer's price, minus 24 percent. VHA also 
supported a pilot allowing a commercial vendor to supply drugs to VA 
medical facilities. This eventually led to closure of VA's historic 
depot system. By closing the depots, VA moved from expending $18 
million annually in 1992 dollars for drug warehousing and distribution 
to receiving approximately $50 million annually today for procuring 
most of its pharmaceuticals through a commercial prime vendor--a 
savings rate of approximately $68 million per year.
    In 1992, the development of VA's national drug utilization database 
began, which served as the foundation for the establishment, in 1995, 
of a systems approach to pharmacy benefits management. National 
contracts and FSS blanket purchase agreements directly linked to the 
development and promulgation of pharmacological treatment guidelines 
helped VA avoid nearly $778 million in unnecessary drug costs from 1995 
through 2000. Pharmacy benefits management has contributed to VA's 
ability to treat 500,000 new patients between 1995 and 2000, has 
increased equitable access to needed pharmaceuticals through the 
implementation of a national formulary process in 1997, and has driven 
unit costs downward. VA's pharmacy benefit management process is driven 
from the grass roots and receives substantial support from practicing 
physicians across the system.
    Question 16b. Are VA formulary policies adequate to keep costs down 
while still assuring that VA patients get the best care possible?
    Answer. Yes. VA's formulary policy is designed to manage costs and 
provide quality care, while assuring access to medically necessary 
drugs. VA's guiding principle for formulary management and the overall 
management of the pharmacy benefit is to provide enrolled veterans with 
``quality medical care at an affordable price.'' Operating within this 
maxim, the decisions VA makes regarding the pharmaceuticals available 
to treat veterans are driven by groups comprising 12 practicing 
physicians and representatives from each of the 22 Veterans Integrated 
Service Networks. These two groups determine the appropriate clinical 
strategy at a given point in time, which then drives the contracting 
process. VA's ability to determine an evidenced-based clinical strategy 
that best fits the needs of veteran patients, solicit bids in selective 
high-volume/high cost therapeutic classes, and then utilize the 
contracted products has produced significant cost avoidance, while 
increasing access to needed pharmaceuticals. The Institute of Medicine 
(IOM) in its June 2000 report on VA's National Formulary Process 
documented this outcome. The study by IOM and the preparation of the 
report was mandated by language contained in the House Report (105-
610), which accompanied Public Law 105-276, the Fiscal Year 1999 
Department of Veterans Affairs and Housing and Urban Development 
Appropriations Act. A copy of the report is attached.*
---------------------------------------------------------------------------
    * Note: The information referred to has been retained in the 
committee files.
---------------------------------------------------------------------------
    VA, through its Pharmacy Benefits Management Strategic Healthcare 
Group, is committed to regular physician surveys on pharmacy benefits. 
These surveys assess the perceived impact of our formulary policies on 
access to appropriate pharmaceuticals and the quality of care. Two 
surveys have been completed, and the results of these surveys are used 
to inform and assist policy. The results of the first survey were 
published in the March 2001 edition of the American Journal of Managed 
Care.
    Inasmuch as VA's national formulary system is dynamic, adjustments 
are planned based upon recommendations from the above-referenced IOM 
report and two General Accounting Office reports on the formulary 
process (December 1999 and January 2001). However, in spite of the 
success of VA's formulary system, outlays for pharmaceuticals are 
expected to increase. The increases are being driven by utilization and 
new technology.
    Question 17a. Last year's Defense Authorization Act created a new 
benefit dubbed ``TRICARE for Life'' by allowing military retirees over 
age 64 to remain under DoD-funded care despite Medicare eligibility. 
The Administration's budget proposal apparently assumes savings of $235 
million in VA health care costs as a result of this legislation, based 
on the assumption that military retirees who had lost TRICARE 
eligibility at age 65 and who had come to VA for care will now stay 
within DoD's TRICARE system. What is the basis for the assumption that 
it will save $235 million? How did the Administration arrive at this 
number?
    Answer. The Administration estimated that approximately 27 percent 
of military retirees who are age 65 or older and currently enrolled in 
the VA health care system would voluntarily choose to shift their 
medical care to the TRICARE system. The following figures were used in 
the calculations:
     64,540 enrollees at an average cost of $3,705 per enrollee 
equal $239,120,700.
     This amount is then reduced by the nearly $4 million in 
collections that would otherwise have been anticipated for those 
enrollees.
     The net savings is, thus, approximately $235 million.
    Question 17b. I am told that VA may request legislation to require 
military retirees over age 64 to choose either VA- or DoD-provided 
care. Is this so? Do you believe it is fair to require men and women 
who have served 20 or more years and who, therefore, are eligible for 
care under both systems to waive eligibility to either?
    Answer. At this time the Administration has proposed legislative 
language to allow DoD beneficiaries, who are also eligible for VA 
medical care, to enroll with only one of those agencies for their 
health care. Coordination within the Administration among OMB, DoD, and 
VA has begun. More details in the proposal should be available soon.
White Paper--VA Requesting Legislation to Require Military Retirees 
        Over Age 64 to Choose VA or DoD Provided Care
            Medical Sharing Office (176), June 2001
    The President's Budget Message, ``A Blueprint for New Beginnings'' 
(February 28, 2001), proposed that DoD beneficiaries, who are also 
eligible for VA medical care, enroll with only one of these Federal 
government health systems as their health care program. This concept 
has been under review at VA, DoD and the Office of Management and 
Budget. DoD is considering proposing legislation for annual enrollment 
for care in either health system to avoid duplication of benefits and 
enhance continuity of care. VA is unable to provide an estimate on when 
DoUs review will be completed.
    In addition, improving coordination of VA and DoD health care will 
be addressed by the ``President's Task Force to Improve Health Care 
Delivery for Our Nation's Veterans,'' created by Executive Order on May 
28, 2001. The task force will also identify ways to improve benefits 
and services for veterans who are also military retirees. The Executive 
Order states that the task force will issue an interim report in nine 
months and a final report within two years.
    Question 18. As you may know, I strongly support Federal 
investments in medical and biological research, and I am pleased that 
President Bush agrees that Federal funding of medical research must 
increase dramatically. VA's research budget for FY 2001 is $350 
million. Do you anticipate requesting that VA research funding be 
increased in fiscal year 2002? If so, by how much?
    Answer. An increase of $10 million is requested for the research 
appropriation to reach a level of $360.237 million in FY 2002.
                    non health care benefits issues
    Question 19. The President has promised a ``top to bottom'' review 
of the disability claims process, and you, in your confirmation 
testimony, announced that a task force would be created to put the 
President's promise into effect. Has this task force yet been 
appointed? When will it be? When will it conclude its deliberations?
    Answer. On April 16, 2001, we held a preliminary meeting of the 
special Claims Processing Task Force that will address claims 
processing and develop hands-on, practical solutions to the challenges 
we face. The 10-person task force, headed by retired Vice Admiral 
Daniel L. Cooper, will examine a wide range of issues affecting the 
processing of claims, from medical examinations and information 
technology, to efforts to shrink the backlog and increase the accuracy 
of decisions. The panel's final report is due to me in approximately 
120 days.
    Question 20a. In your testimony, you proposed a specific increase 
in VBA spending to address the backlog in VA's disability claims 
process.
    Inasmuch as your task force has not yet, I believe, made 
recommendations for reforms, how would you propose that this additional 
money be spent?
    Answer. Of the total VBA request, $775.5 million in total 
obligations will fund the Compensation and Pension Program reflecting 
an increase of $94.6 million over the FY 2001 current estimate. 
Included in this total is $44.5 million dedicated to initiative 
funding. Direct FTE levels for C&P increases by 863 for a total of 
7,351 FTE in FY 2002. The majority of the increased FTE counters the 
effects of recently enacted Veterans Claims Assistance Act and Diabetes 
regulations. Our efforts are focused on effectively training these new 
hires to ensure we continue in our mission to process claims more 
efficiently and with greater accuracy. Continued support of initiatives 
like the Training and Performance Support Systems, Benefits Payment 
Replacement System (VETSNET Migration), Virtual VA, and the One VA 
Telephone Access, moves VBA towards achieving its vision of processing 
claims accurately and in a timely manner. We are committed to utilizing 
our most recent information technology advances while pursuing an 
aggressive strategy to address the current situation. Funding will 
allow continued and deliberate actions to maintain current 
achievements, invest in productive endeavors, and research enhanced 
business practices. In addition to these initiatives, many of which 
fall into the category of long-term process improvement efforts, I look 
to the Task Force to recommend practical changes that will result in 
immediate cycle time reductions.
    Question 20b. Do you believe that your task force will necessarily 
issue recommendations consistent with the proposal under which you 
intend to spend that additional funding if it is granted to you?
    Answer. Yes, I fully expect the task force recommendations will 
support our budget request. However, if our current outline for 
spending funds is not supported by the task force findings, we will 
align resources to provide optimal service to veterans.
    Question 20c. If you are now recommending very substantial 
increases in VBA funding, what function do you intend your task force 
to serve?
    Answer. The kind of systemic challenges that exist and inhibit 
timely and accurate claims processing need a top-management focus and a 
plan of action that can be embraced at the Department level, and 
supported through the ranks as an aggressive plan for long-term action. 
I believe the task force can focus on such a plan and present me with 
the blueprint for changes, which can improve our service in this area. 
The short-term initiatives shown in the budget are necessary and will 
have an impact in dealing with our current crisis, but we need to go 
beyond that and fix this problem once and for all.
    Question 21a. During your confirmation hearing, you stated that VA 
had spent $30 million, since 1995, on information technology 
resources--without noticeable improvements. Do you now believe that you 
were wrong in suggesting that information technology spending had been 
ineffective?
    Answer. No. In my opinion, information technology spending has not 
been as effective as it should be. I remain concerned that our IT 
achievements have not lived up to expectations. I have stated in 
previous testimony that we will not throw good money after bad. The 
approach VBA is now taking as they proceed with the VETSNET program 
illustrates the critical review to which I believe all major IT 
expenditures must be subjected.
    I have directed that before we proceed to a fully operational 
status on VETSNET, we will conduct an independent audit of the overall 
system. This audit will provide us with the assurance that this system 
will meet all of the security, functional, and performance requirements 
we have set for it. If it passes these tests, we will go forward with 
its implementation on the current schedule. If not, we will develop a 
plan to extend the life of the current systems and immediately begin 
the development of a replacement system.
    If this current version of VETSNET does not meet our needs for the 
next several years, we will terminate its development. Conversely, if 
it does meet our needs, we will not hold past failures against it, and 
we will go into production with the system. I have been assured that 
VETSNET is being developed in an open architecture to facilitate 
eventual integration into a future system and that it should fit within 
the framework of the Enterprise Architecture I have previously 
discussed. That system will be part of an integrated, whole solution to 
the needs of our veterans.
    Question 21b. Despite this testimony just a few weeks ago, you now 
propose a specific increase in VBA spending to address the issue of 
backlogs in VA's disability claims process. Would any of this funding 
be directed to information technology resources? If so, are you now 
adopting a plan to expend funds on such resources in accordance with a 
plan that, just a few weeks ago, you had criticized?
    Answer. As I have previously stated, there will be no spending on 
new IT initiatives until a comprehensive, integrated IT Enterprise 
Architecture has been adopted.
    Question 22a. The Veterans Benefits Administration (VBA) faces both 
short-term and long-term challenges in addressing the backlog of 
pending veterans claims for benefits. This budget proposal requests a 
total increase of only $1.0 billion--the lion's share of which will go, 
I presume, to medical care spending increases. How much of this funding 
increase will go to the Veterans Benefits Administration?
    Answer. Total discretionary funding (GOE Budget Authority and 
Credit Reform Budget Authority) of $1,116,300,000 and 12,019 FTE 
reflect increases of $133,531,000 and 904 FTE.
    Question 22b. You stated during the confirmation process that the 
adjudication backlog was the biggest challenge that you face. Does this 
budget proposal address that challenge?
    Answer. Yes. Compensation and Pension (C&P) receives the lion's 
share of total obligations ($775.5 million), as well as the largest 
increase in direct FTE (863). With these resources, VBA will be better 
able to counteract the increases in workload generated from recently 
enacted Duty to Assist legislation and regulations regarding diabetes. 
The strategy calls for these specialized claims to be worked in newly 
formed SDN Service Centers. The Centers are composed of Veterans 
Service Representatives (VSRs) and Rating VSRs, with lower graded 
employees to perform data entry and reemployed annuitants to guide and 
mentor trainees.
    The challenges facing VBA, specifically improving accuracy and 
timeliness in claims processing, will not be solved overnight. VBA has 
developed an aggressive plan contained in this budget request to 
continue progress in many areas while mitigating the effects of recent 
legislative and regulatory actions. To the extent that resources become 
available in FY 2002, VBA's new initiatives and additional FTE will 
reinvigorate and improve the current process. This task is not 
insurmountable. VBA is poised to implement the Secretary's commitment 
to processing claims in 100 days with a manageable pending workload of 
250,000 by summer 2003 and that is achievable with hard work, 
determination, ingenuity and a deliberate emphasis on accuracy.
    Question 22c. I understand that one of VA's most significant 
longer-term challenges is the issue of the impending retirement of 
VBA's most experienced adjudicators. Does this proposal address that 
challenge?
    Answer. VBA has recognized the need to hire and train new personnel 
as increasing numbers of employees become eligible to retire, We have 
included a request for 485 FTE in FY 2000, 243 additional FTE in FY 
2001, as well as reprogramming from other areas in order to increase 
C&P direct FTE. We believe that the additional 863 FTE requested for FY 
2002 mainly associated with the recently enacted legislation and 
regulations, will help prevent a skills gap as VBA experiences 
increased attrition rates in the next several years. As the workload 
generated by Duty to Assist legislation and diabetes regulations 
becomes more manageable, VBA envisions assigning these specialized VSRs 
and RVSRs to broader claims work.
    Question 23. In each off the past three budget cycles, VA has 
requested--and has received--funding to address its 1998 estimate that 
255 of compensation and pension ``decision makers'' would retire by 
fiscal year 2004. VA's Under Secretary for Benefits testified last July 
that fiscal year 2002 would be the last year funding would be requested 
for ``succession planning'' purposes. In your view, is this still the 
case? How many experienced decision makers have retired already.
    Answer. The FY 2002 Budget request does not include a ``Succession 
Planning FTE Initiative.'' However, we believe that the additional 863 
FTE mainly associated with the recently enacted legislation and 
regulations will go a long way toward precluding a skills gap as VBA 
experiences increased attrition rates in the near future. As the 
workload generated by Duty to Assist legislation and Diabetes 
regulations becomes more manageable, VBA envisions assigning these 
specialized VSR's and RVSR's to broader claims work. VBA still 
maintains the need to hire and train now to prepare for heavy attrition 
losses due to retirements. Due to aggressively pursuing this issue, VBA 
has been able to plan ahead for this inevitable wave of retirements. No 
further succession planning FTE requests beyond FY 2002 are planned at 
this time. Since 1998, VBA has lost approximately 900 decision makers.
    Question 24. While improvements have been made in recent years, it 
takes roughly two years for an appeal to be resolved once a veteran 
files a Notice of Disagreement. What is your assessment of the staffing 
needs within the Board of Veterans Appeals to address the appeals 
backlog and the two-year wait for final appeals resolution? Does the 
budget reflect funding levels consistent with your assessment?
    Answer. Since 1998, the Department has reported on ``appeals 
resolution time.'' Appeals resolution time measures the time from the 
receipt of the Notice of Disagreement (NOD) to the issuance of a final 
decision, which could include a decision by the regional office 
granting benefits. (A remand by the Board of Veterans' Appeals is not a 
final decision.) As such, it is a combined measure of timeliness of 
both the Board and the Veterans Benefits Administration (VBA). To 
achieve meaningful improvement in this timeliness measure, VA must 
optimally manage appeals workloads both at the Board and in regional 
offices and balance resources accordingly.
    Appeals resolution time has been steadily decreasing, from 745 days 
in 1999 to 682 days in FY 2000. We currently project 650 days for FY 
2001 and 590 days for FY 2002. While additional improvements must be 
made to achieve VA's appeals resolution time goal of 365 days, we 
believe this budget reflects the appropriate balance of resource levels 
for both the Board and VBA.
    Question 25. As you know, the Committee has worked hard to increase 
Montgomery GI Bill (MGIB) benefits over the past two Congresses, and we 
have achieved success: an increase of 87 percent in the maximum monthly 
payout under MGIB. Do you recommend that the Congress enact further 
increases in MGIB benefits?
    Answer. The President's Budget includes the annual cost-of-living 
increase for education benefits for veterans and service members, but 
does not include an additional benefit increase. The Administration 
fully supports these benefits and is evaluating how to continue to 
improve them. Consistent with MGIB's mission, the Administration will 
work to strike the appropriate balance between improving veterans' 
readjustment to civilian life and enhancing military recruitment and 
retention.
    Question 26. Does this proposed budget address expected workload 
increases in VBA's education service due to recent increases in basic 
benefits under MGIB? If so, how?
    Answer. The Tuition Assistance Top Up legislation, effective 
October 30, 2000, is expected to create 161,000 new claimants in FY 
2001 and 214,000 additional claimants in FY 2002. Legislation allowing 
for payment of Licensure and Certification exams became effective March 
1, 2001. We anticipate this legislation to generate 25,000 new 
claimants for FY 2001 and 100,000 additional claimants in FY 2002. 
These provisions could dramatically affect workload and our ability to 
process claims in a timely and effective manner.
    VBA is planning to combat the increased workload through increased 
staffing for FY 2002, overtime usage, and the use of Virtual Help 
Teams. In addition, the current benefits delivery system, which cannot 
efficiently process the new workload, will undergo programming 
modifications. However, systems changes are long-term solutions and 
will not have a positive impact by 2002. The proposed budget has money 
to enable us to do all these things.
    We have already started to address the increased workload in the 
current fiscal year. First, 25 additional FTE were allocated in the 
fall, 40 FTE were earmarked in December 2000, and 60 more FTE were 
allotted to Education in February 2001. Seasonal employees will 
constitute some portion of the 125 additional FTE because they can be 
used effectively during critical periods and make a dramatic impact on 
workload. The goal is that the additional resources for increased 
staffing in Education will be a top priority for the remainder of FY 
2001, as well as FY 2002.
    Second, overtime money will continue to be committed as needed 
during peak enrollment periods and to combat increased workload from 
new legislation. More than $300,000 has been used so far this fiscal 
year. In addition, during the workload crisis in fall 2000, mandatory 
overtime was implemented at the four Regional Processing Offices (RPOs) 
and will be used as needed to control cyclical workloads and increased 
workload due to new legislation.
    Third, new ways of processing claims were tried and tested in fall 
2000. With technology enhancements, RPOs were able to go beyond normal 
help teams and use Virtual Help Teams by pointing workstations towards 
other RPOs. The electronic environment puts all pertinent information 
related to a claim at one's fingertips, regardless of location. This 
allows personnel to process claims for another station without having 
to be on site physically, thus eliminating travel costs. In addition, 
virtual brokering work relieves the burden of having to ship claims to 
another office as well as eliminating the potential loss of claims in 
the mail. Because RPO workload peaks vary among offices, Virtual 
brokering can be used to manage part of the increase in workload.
    Question 27. The President's budget recommends that VA's vendee 
loan program be eliminated. Why? How would elimination of this program 
save VA money?
    Answer. The vendee home loan program, which is a non-veteran 
program, interacts with several accounts (saving money in one account 
and costing money in another). While vendee loans allow the Department 
to sell properties faster and at higher prices, thus reducing VA's cost 
of providing veterans with guaranteed loans, the cost of offering 
vendee loans to the general public is not offset by this reduction. 
Past cost estimates did not formally score all the components and 
interactions between these accounts. OMB and VA recently completed this 
complex scoring, which takes into consideration all of the components 
and interactions, and determined that the elimination of the vendee 
loan program will have a net savings of $226.7 million over the next 
ten years.
    Question 28. Do you think VA will be able to ``unload'' excess 
properties-particularly in depressed areas and during ``bad'' times--if 
VA ceases financing purchasers? If VA cannot sell its properties 
because it is unable to finance purchasers, how will the Government 
have saved money by continuing to hold onto distressed properties that 
VA cannot sell?
    Answer. It is possible, if not probable, that there would be a 
build-up of property inventory in areas with distressed real estate 
markets, with or without the vendee loan program. In the past, the 
vendee loan financing tool has been very beneficial in holding 
inventory levels down. However, our ten-year savings estimate ($226.7 
million) takes into account our best economic and property inventory 
assumptions.
    Question 29. What does the Administration's budget propose for the 
administration, operation, and maintenance of the National Cemetery 
Administration's burial service and programs?
    Answer. The National Cemetery Administration (NCA) appropriation 
funds the operation and maintenance of VA's 19 national cemeteries. A 
total of $121.2 million and 1,499 FTE are requested for 2002. This is 
an increase of $11.3 million and 33 FTE over the 2001 current estimate 
level.
    The budget request includes an increase of $5 million for the 
National Shrine Commitment. This increase is in addition to the $5 
million provided for this initiative in the 2001 appropriation, 
bringing the total funding for the program in 2002 to $10 million. The 
National Shrine Commitment is a program to improve the appearance of 
burial grounds and historic structures required for NCA to fulfill its 
commitment to maintain our national cemeteries as national shrines. The 
resources provided in the 2001 appropriation and requested in this 
budget will be used to address currently identified deficiencies in the 
appearance of a number of headstones and markers and the condition of 
some gravesites. The VA national cemeteries continue to experience an 
increase in the number of gravesites and developed acres that must be 
maintained. This budget requests $1.6 million to address an increase of 
67,700 gravesites, and an additional 217 acres of developed land in 
2002 that will require maintenance.
    As the rate of death of the veteran population continues to 
increase, the annual number of interments at VA national cemeteries 
continues to increase, In order to maintain the quality of our 
interment service, this budget requests $1.1 million and 25 FTE to 
address the 3.1 percent increase in projected interments in 2002. This 
increase in veteran deaths will also result in an increase in the 
number of headstones and markers ordered, not only for veterans buried 
in national cemeteries, but also state veterans' cemeteries and private 
cemeteries. This budget requests an additional $51,000 and one IFTE to 
maintain the efficiency of the headstone and marker ordering process 
with the projected increase of over six thousand orders in 2002.
    NCA continues to expand the capacity and improve the infrastructure 
of existing cemeteries to ensure that they continue to meet the needs 
of veterans and other stakeholders. NCA will add four IFTE to perform 
in-house architectural and engineering efforts and construction 
contract support that were previously performed by the Veterans Health 
Administration (VHA). These will be funded within existing resources by 
ending the reimbursement to VHA for these services. An additional 
$241,000 is requested to support two more FTE for contracting support 
and one FTE to establish the position of Information Technology 
Security Officer.
    The 2002 budget request also includes an additional $3.3 million 
for federal pay raises and projected inflation.
    Question 30. What is the status of each of the six cemeteries for 
which VA has received either design funding or full funding? What is 
the construction timetable for each of the cemeteries? Does the fiscal 
year 2002 budget request full construction funding for any national 
cemeteries?
    Answer. The status of the efforts to establish six new national 
cemeteries is described below. Land has been acquired for the Ft. Sill, 
Oklahoma and Atlanta, Georgia areas. In addition, full construction 
funding was provided in the FY 2001 appropriation for the Ft. Sill 
location and full construction funding is requested in the FY 2002 
President's budget for the Atlanta location. Progress in identifying 
and acquiring land for each of the remaining four locations is ongoing.
    Atlanta, Georgia--The Department has acquired an approximately 770-
acre site in Cherokee County, north of Atlanta. Mr. Scott Hudgens, a 
World War II veteran, donated this site. A contract for developing the 
cemetery's Master Plan is scheduled to be awarded this summer. The 2002 
President's Budget requests $28.2 million for Phase I construction of 
this new national cemetery. If these requested funds are appropriated, 
the construction contract award is expected in August 2002, and 
completion of the construction is expected in May 2004.
    Detroit, Michigan--Representatives of the National Cemetery 
Administration (NCA) actively worked with the Michigan Veterans Affairs 
Directorate, area real estate agents, and the Veterans Benefits 
Administration's (VBA) Loan Guaranty officials at the Detroit VA 
Regional Office to identify available property for evaluation as a new 
national cemetery. Eight potential parcels of land were identified for 
further consideration. Pending full evaluation of the characteristics 
of each site, the best sites for environmental assessment will be 
selected. After all environmental assessments are completed, a 
recommendation for final selection will be forwarded to the Secretary 
of Veterans Affairs. An appraisal of the preferred site will also be 
conducted.
    The 2002 President's Budget includes $18 million to be available 
for the purchase of land for new cemeteries in the vicinity of Detroit, 
Michigan; Pittsburgh, Pennsylvania; and Sacramento, California.
    Miami, Florida--Representatives of the National Cemetery 
Administration (NCA) and the Florida Department of Veterans Affairs 
visited eleven prospective sites in south Florida and developed a 
recommendation of ``top sites'' for further consideration. The Acting 
Under Secretary for Memorial Affairs and the Director, Florida 
Department of Veterans Affairs visited the top three sites in August 
2000. As a result, two top sites were selected. Both sites are located 
in Palm Beach County.
    In October 2000, URS, Greiner, Woodward, and Clyde began conducting 
the environmental assessment process on each of the two top sites to 
assess the impacts of developing the land for use as a cemetery. 
Subsequently, the owner of one site removed it from consideration. The 
environmental assessment is being completed for the remaining location, 
which is near the West Palm Beach VA Medical Center. Very recently the 
EA consultant has identified two factors that will require further 
investigation. Realizing the negative potential of these findings, NCA 
is directing the EA consultant to expand their review to two additional 
sites that had been identified during initial site evaluation visits.
    After all environmental assessments are completed, a recommendation 
for final selection will be forwarded to the Secretary of Veterans 
Affairs. An appraisal of the preferred site will also be conducted.
    The 2001 appropriation contained $15 million for land acquisition, 
and the 2002 President's Budget requests Design Funding for the 
preparation of Construction Documents.
    Oklahoma City, Oklahoma--The National Cemetery Administration (NCA) 
anticipates that a construction contract will be awarded in order for 
construction to begin before the end of 2001. NCA's goal is to complete 
construction in the fall of 2003. Design is being made for a ``fast 
track'' section that will permit interments to begin prior to full 
completion of all construction activities at the new cemetery. NCA 
projects that the ``fast track'' section will be available for burials 
in the fall of 2001.
    The 2001 appropriation included $12 million for construction- All 
Phase I development costs are fully funded.
    Pittsburgh, Pennsylvania--The Governor of Pennsylvania established 
a Cemetery Site Selection Committee to serve as a primary evaluation 
mechanism for locating sites and scheduling site visits. The National 
Cemetery Administration (NCA) staff visited Pittsburgh during June 2000 
to meet with the State's Cemetery Site Selection Committee. NCA staff 
toured eleven proposed sites. In October 2000, the Under Secretary for 
Memorial Affairs toured the three top sites. Based upon these visits, 
the Under Secretary identified the Morgan Farms site, 15 miles 
southwest of Pittsburgh, as the most desirable and feasible location. 
The Morgan Farms location was also the preferred site named in the 
Cemetery Site Selection Committee's report that was submitted to the 
Pennsylvania House of Representatives.
    A contract for an environmental assessment of the Morgan Farms site 
was awarded in December 2000 and the final report is expected by May 
2001. An appraisal of the preferred site will be undertaken as a part 
of the environmental assessment contract. If the site is purchased, NCA 
anticipates that a contract for master planning will be awarded in the 
fall of 2001.
    The 2002 President's Budget includes $18 million to be available 
for the purchase of land for new cemeteries in the vicinity of Detroit, 
Michigan; Pittsburgh, Pennsylvania; and Sacramento, California.
    Sacramento, California--The National Cemetery Administration (NCA) 
officials worked closely with representatives of the California 
Department of Veterans Affairs and local realtors to identify suitable 
locations for consideration as a new national cemetery. A joint VA/
State site evaluation team visited nine sites in the Sacramento area 
during October 2000. Several potential cemetery sites were identified.
    NCA continues to analyze each site's characteristics. Pending full 
evaluation of each site the best sites for environmental assessment 
will be selected. After all environmental assessments are completed, a 
recommendation for final selection will be forwarded to the Secretary 
of Veterans Affairs. An appraisal of the preferred site will also be 
conducted.
    The 2002 President's Budget includes $18 million to be available 
for the purchase of land for new cemeteries in the vicinity of Detroit, 
Michigan, Pittsburgh, Pennsylvania; and Sacramento, California.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Ben Nighthorse Campbell 
                         to Anthony J. Principi
    Question 1. I know you are supportive of innovative and creative 
ideas for modernizing and streamlining the health care services 
provided to our veterans. In my home State of Colorado, there is the 
unique opportunity to build new facilities on the old Fitzsimons site 
that would be shared by both the Veterans Administration Medical Center 
(VAMC) and the University of Colorado Hospital (UCH). I understand a 
joint study shows this sharing of location and facilities could save 
the VA Medical Center one billion dollars over 20 years. Veterans in 
Colorado are generally supportive of this move. How would you see such 
collaboration fitting in with the mission and priorities of the VA?
    Answer. In 1999, the University of Colorado Health Sciences Center 
(UCHSC) and University of Colorado Hospital (UCH) decided to relocate 
to the former Fitzsimons Army Base. The entire campus of the UCHSC, 
including UCH, will be relocated over the next several years. It will 
be part of a larger complex that is expected to draw world-class 
research and development, talent, and resources. All of this will have 
great impact upon the quality, timeliness, and cost of care at the 
Denver VAMC, which is directly adjacent to the current campus and about 
eight miles away from the Fitzsimons site.
    As a result of this decision to relocate, representatives from the 
VA Rocky Mountain Network (VISN 19), the Denver VA Medical Center 
(VAMC), UCHSC, UCH, and veterans service organizations began meeting to 
assess future collaborative arrangements between VA and the UCHSC and 
UCH. A subcommittee was charged with developing a preliminary concept 
for a collaboration of the Denver VAMC with UCH at Fitzsimons. A 
consultant was hired to develop a conceptual plan to propose several 
options for a possible relocation of the Denver VAMC.
    The consultant's report included options that ranged from building 
a new VA hospital totally separated from the UCH to full integration of 
the VAMC and UCH. One option also provided for integrating some 
services between the two organizations. The report indicated that VA 
might save as much as one billion dollars over a twenty-year period due 
to reduced maintenance, remodeling, and replacement costs, if co-
location was accomplished with the University at Fitzsimons. Co-
location could facilitate continued recruitment and retention of 
clinicians with faculty appointments at the University, rather than 
requiring a commute to the current VAMC site.
    VA and University of Colorado planning groups are continuing to 
discuss the options proposed by the consultant. These are early 
discussions and no proposal has been submitted to VA Central Office for 
review. Initial indications are that the University of Colorado will 
ask VA for a decision on relocating to the Fitzsimons campus by July 
2003. The next step is to determine which, if any, of the options 
outlined in the consultant's report is a better way to provide high-
quality health care to veterans. In addition, the Department will be 
performing Capital Asset Realignment for Enhanced Services (CARES) 
studies of this area in the near future. If it is determined to be in 
the best interest of VA that the Denver VAMC be relocated to the 
Fitzsimons campus, then a further decision will be needed on the type 
and extent of integration with UCH.
    Question 2. Is there a process in place for a private property 
owner to donate his/her land to the Department of Veterans Affairs, 
some other government entity, or non-profit organization for the 
express purpose of establishing a local, State or federal military 
cemetery? If so, please provide the Committee with a brief outline of 
the process. If such donations are allowed, are they considered 
deductible for tax purposes?
    Answer. The concentration of veterans in any particular geographic 
area, and their need for a national cemetery, is a primary 
consideration in the selection or acceptance of land. The Federal 
Government is authorized to accept donations of land from individuals 
to be used for creation or expansion of national cemeteries. The 
Federal Government cannot accept real property for the purpose of 
establishing local or State cemeteries. The site of the pending 
Atlanta-area national cemetery is a donation from a private individual, 
and the site of the San Joaquin Valley National Cemetery in California 
is formed from a private donation. Many of our existing cemeteries have 
expanded on land donated by adjacent property owners (Fort Smith N/C 
(AR), Camp Butler N/C (IL), Port Hudson N/C (LA)). The acceptance of 
land to create a State veterans' cemetery would be the responsibility 
of the respective State government, subject to any rules or criteria 
that the State may require.
    The process by which the Department of Veterans Affairs (VA) may 
accept a donation of land is relatively simple, yet subject to legal 
review in order to protect the interest of the Government. A basic 
``Offer to Donate Real Property'' form is completed and signed by the 
owner; authorization to proceed with acceptance is signed by the 
Secretary; a survey and title search are conducted by the Government; 
an environmental assessment is conducted by the Government in 
compliance with National Environmental Protection Act (NEPA) 
provisions; and, if all legal aspects are in proper order, closing is 
held. Most States exercise these same or similar procedures for 
accepting donated land.
    VA defers to the Internal Revenue Service (IRS) on the issue of 
whether donations of land for national cemeteries are deductible for 
tax purposes. The IRS is responsible for determining whether donations 
of real property are tax deductible under the Internal Revenue Code.
    Question 3. Many service organizations have expressed interest in 
improving women's care in VA hospital--such as providing equipment and 
training staff to perform mammograms. How do you see the future of 
health care for women in the VA?
    Answer. Women veterans are one of the fastest growing segments of 
the veteran population, second only to elderly veterans. In FY 2000, 
they comprised 5.5 percent of the total veteran population, an increase 
from 4.7 percent in FY 1997. Women veterans currently represent 
approximately 5 percent of all users of the VA health care system. The 
Veterans Health Administration (VHA) estimates that by 2010, women will 
comprise 10 percent of veterans utilizing VA health care services.
    The needs of women veterans are often different than those of male 
veterans. In addition to access to primary care, medical subspecialty 
care, mental health services, and geriatric care, women veterans also 
require access to gynecological care and, for younger women, obstetric 
and infertility services. Maternity and infertility services, except 
invitro fertilization, are a part of VHA's uniform health care benefits 
package, which was published in October 1999, and makes the full 
spectrum of health care available to women veterans through VA. We will 
ensure that these programs remain available and expand in scope in 
order to accommodate the projected increase in women veterans using the 
VA health care system.
    It is VHA policy that breast screening services be included as part 
of the complete primary care examination for women. VA facilities 
performing mammograms are required to be certified by the Food and Drug 
Administration (FDA) to provide screening and diagnostic services. When 
VA facilities have the necessary equipment and staff training, and do 
enough mammograms each year to be certified, they are encouraged to do 
so. When mammography services are obtained through contractual 
arrangements or sharing agreements, the referring VA facility must 
ensure that the provider has current accreditation and FDA 
certification.
    Educational opportunities designed to develop clinical skills and 
knowledge for VA clinicians is available through traditional training 
programs. For example, the Annual Ambulatory Care Conference, to be 
held this year in San Diego from August 28 through 30, includes women's 
health topics such as cancer screening, breast disease, pregnancy care, 
and sexual trauma. Videotapes on these topics are available in the VA 
Medical Center libraries and local educational programs are held 
regularly. Veterans service organizations have cooperated with VA staff 
in developing women's health educational and training efforts in areas 
related to experiences specific to women veterans or to health care 
problems prevalent in the women veteran population, particularly sexual 
trauma. The Disabled American Veterans co-sponsored the National Summit 
on Women Veterans in June 2000, which was very useful in educating VA 
staff on the needs and views of women veterans.
    To ensure that women veterans receive appropriate, timely, and 
compassionate health care, VHA established the Women Veterans Health 
Program (WVHP) in 1997. The program director is based in VHA Central 
Office in Washington, DC, and is assisted by four Deputy Field 
Directors. At the local medical facility level, Women Veterans 
Coordinators are responsible for coordinating health care services for 
women veterans.
    In March 2000, VA's Under Secretary for Health requested the Women 
Veterans Health National Strategic Work Group to evaluate the current 
status of women's health care in VA and make recommendations for 
strategic planning for women's health. The culmination of the work 
group activities will be a National Women Veterans Health Program 
Strategic Plan for FY 2002 through 2007. The plan is expected to be 
completed by October 2001.
    Question 4. In the past, the Veterans Administration has seemed to 
ignore the grass roots input from veterans around the country 
concerning care and services they receive. What would be your position 
on forming a fact-finding commission that would go to areas of high 
concentrations of veterans to conduct town hall meetings where 
veterans' concerns could be aired?
    Answer. Veterans Health Administration (VHA)--VHA has numerous 
mechanisms in place to seek input from both the veterans we serve and 
veterans service organizations (VSOs) at all levels. VHA uses this 
information to formulate policy and refine its services and program 
activities. We do not believe that a special ``fact-finding 
commission'' is needed at this time.
    VHA's Veterans Integrated Service Networks (VISNs) and local 
medical facilities conduct frequent Town Hall meetings to allow 
veterans an opportunity to express their concerns and have these 
concerns addressed. These forums are used to explain changes in 
programs and services and to facilitate dialogue with veterans.
    The VISNs have advisory groups, called Management Assistant 
Councils, whose members include VSOs, Congressional staffs, and other 
stakeholders. The groups meet regularly with directors and other 
facility and network officials. At headquarters, regional and local 
levels, VHA enjoys a collaborative working relationship with the VSOs, 
who very capably represent the views and interests of their members.
    There are literally hundreds of community events across the country 
attended by VA leadership, including service chiefs, associate 
directors, and directors. At these events, VHA officials provide 
information to small and large groups of veterans on VHA services and 
answer questions on VA health care. VHA's directors and other senior 
officials also participate in panel discussions and question-and-answer 
opportunities at local, State, and national VSO conventions and 
meetings.
    Veterans with Internet access have opportunities to ask questions 
and voice concerns through VA's interactive Web sites. These are 
routed, based on subject matter, to the appropriate individuals for a 
direct response to the veteran. Since January of this year, for 
example, VA's Office of Consumer Affairs has averaged about 400 
Internet, phone, and letter inquiries per month, much of it health-care 
related.
    Each VA medical center (VAMC) has a patient advocate office that 
can be used by veterans as a forum to air their concerns. Veterans are 
informed of the right to request Patient Advocate assistance through 
the distribution of patient rights brochures, Patient Advocate 
brochures, and posters and signs throughout the medical center. VAMC 
staff members are informed of the Patient Advocate Program through 
orientation meetings. Patients may contact the Patient Advocate in 
person, by phone, letter, or e-mail. A response to all patient 
complaints, with documentation of the resolution effort, occurs as soon 
as possible, but no longer than 7 days after the patient's complaint. 
Many complaints are resolved immediately.
    VHA is committed to a process of continuous assessment of patient 
satisfaction. National Veteran Satisfaction Surveys are administered 
semi-annually by mail to a sample of veteran patients meeting 
qualifying factors in six different survey cohorts (ranked by size). 
The survey cohorts include Ambulatory Care, Inpatient Care, Gulf War, 
Prosthetics/Sensory Aids, Spinal Cord Injured, and Home Based Primary 
Care.
    The standardized survey instrument, methods, and analyses support 
comparisons between facilities or VISNs, as well as comparisons of 
performance over time. These analyses help VHA managers, clinicians, 
and employees better understand veterans' perceptions and needs. The 
information provided by the surveys drives process improvement at all 
levels of the organization in support of VHA's strategic plan and 
service commitments. VHA is committed to surveying because we have 
learned that surveys are a valuable, systematic way of listening to the 
needs and concerns of Veterans.
    The Office of Quality and Performance has developed a hand held 
electronic Patient Satisfaction Survey Toolkit. The Toolkit is designed 
to support field-based patient satisfaction survey initiatives. The 
Toolkit will greatly enhance the local facility's ability to gather 
real-time patient feedback data to support improvements of care 
delivery. The Toolkit is currently being pilot-tested at the VA medical 
centers in Columbia, SC, Durham, NC, Lexington, KY, Richmond, VA, and 
Valley Healthcare System, NY.
    In an effort to provide services to homeless veterans, and in 
conjunction with many community agencies, VHA plays a major role in 
stand-downs. These one, two, and three-day events offer a variety of 
services: housing and shelter referrals, Social Security benefit 
counseling, Agent Orange information and counseling, mental health and 
other health care services, and legal services. From November 1999 to 
December 2000, VA participated in 216 stand-downs and benefits 
assistance fairs in 47 States, the District of Columbia, and Puerto 
Rico. Nearly 36,000 veterans (including 1,573 women veterans), 4,225 
spouses, and 1,576 children attended these events, received assistance, 
and were given the opportunity to speak with and express their 
interests and concerns to VA staff and volunteers.
    VHA will continue to seek feedback and dialogues with veterans in 
each community it serves and with the organizations that represent 
them, both through new and current initiatives and through patient 
satisfaction surveys.
    Veterans Benefits Administration (VBA)--Many Regional Offices 
initiate and participate in a variety of forums to reach out into the 
veteran communities within their jurisdictions. They use these forums 
to provide information, to hear veterans' concerns, and to counsel 
veterans and receive claims applications. Regional Offices do hold Town 
Hall meetings. The Boise Regional Office conducted the most recent of 
these in April 2001.
    VBA participates in VA initiatives such as stand-downs for homeless 
veterans and in health fairs held in a variety of community settings. 
Regional Offices participate in other types of community outreach as 
well, including information fairs held at local shopping malls. Another 
effective way Regional Offices receive veteran feedback is by 
participating in call-in radio programs. These programs offer veterans 
an opportunity to provide VA with their input on a broad range of 
issues. Each of these outreach efforts affords VBA with an opportunity 
to hear veterans' concerns.
    Staffs at Regional Offices interact with VSOs in ways other than 
through daily contact in the Regional Offices. Regional Office staffs 
attend conventions and local meetings to interact not only with 
organization executives but also with local memberships. These are 
opportunities for VBA to provide information and receive feedback from 
the local veteran communities and from those who represent veterans in 
the local communities.
    Outreach efforts such as these give VBA important information on 
services and benefits we are providing. These efforts can supplement, 
in a more current manner, the information and feedback that we receive 
through our customer surveys. VBA will continue to encourage these 
types of outreach activities in order to provide needed information and 
services to the community, as well as to gather information from 
veterans about their concerns.
    National Cemetery Administration (NCA)--Collecting ``voice of the 
veteran'' feedback is an important component of NCA's customer 
satisfaction strategy. For many years NCA has used focus groups to 
gather first hand accounts about the level and quality of services 
provided by national cemeteries, as well as the expectations and 
preferences held by veterans regarding their national shrines. For 
example, NCA conducted focus groups with local VSOs, members of the 
veteran community at large, and their family members, and funeral homes 
prior to the opening of the four newest national cemeteries: Saratoga, 
New York, Abraham Lincoln (Chicago, Illinois); Ohio Western Reserve 
(Cleveland, Ohio), and Dallas-Fort Worth, Texas. These focus groups 
were used to ascertain the expectations, requirements, needs and hopes 
that veterans, their families and funeral professionals held for the 
new national cemetery being constructed in their area. Results of these 
sessions were shared with the local cemetery director and his/her staff 
as well as NCA senior leadership for potential changes or adaptations 
to plans for cemetery operations. As a follow up to the ``Pre Opening'' 
focus groups, NCA is in the process of planning and conducting ``Post 
Opening'' focus groups at these cemeteries, as a way to determine if 
NCA met the expectations and requirements of its customers. NCA 
anticipates utilizing this same strategy for the six new national 
cemeteries currently being developed a part of the implementation of 
the Veterans Millennium Health Care and Benefits Act of 1999.
    Question 5. Recent actuarial records show that World War II 
veterans are dying at the rate of 1,000 per day, and other veterans at 
586 per day. The existing State and federal veterans cemeteries are 
almost at capacity. The previous administration had selected sites and 
planned to build an additional six federal cemeteries. What would be 
your policy concerning adding more federal cemeteries and increasing 
the federally subsidized State veterans cemetery program?
    Answer. Veterans cemeteries are solemn shrines to those who served 
their country in time of need. VA is keeping this promise to America's 
veterans to honor them with a final resting place and lasting memorials 
that commemorate their service to the Nation. VA is accomplishing its 
mission to provide burial space for veterans in three ways:
     Establishing new national cemeteries--The FY 2002 Budget 
includes $48 million for land acquisition, design, and construction of 
new cemeteries in Atlanta, Georgia; Detroit, Michigan; Pittsburgh, 
Pennsylvania; Sacramento, California; and Miami, Florida.
     Expanding existing national cemeteries wherever and 
whenever possible--The President's FY 2002 budget includes $16 million 
to fund the expansion of existing cemeteries in Massachusetts and 
Washington.
     Helping States establish, expand, or improve State 
veterans cemeteries through the State Cemetery Grants Program--The FY 
2002 budget includes $25 million for this program.
    The majority of the Department's current national cemeteries are 
open with available unassigned gravesites for both casketed and 
cremated remains, many with capacity beyond the year 2030. NCA 
continually monitors the inventory of gravesites at the national 
cemeteries, and where appropriate, NCA attempts to acquire additional 
land to extend the service life of these cemeteries. In many other 
instances where cemeteries have, or will soon close, NCA works in 
partnership with the States to establish State veterans cemeteries to 
ensure that the veterans in that area continue to be served by a burial 
option.
    NCA is projecting that the percent of veterans served by a burial 
option in a national or State veterans cemetery within a reasonable 
distance of their residence will increase from 76 percent in FY 2001 to 
88 percent by FY 2006 with the opening of the six new national 
cemeteries and additional planned new State veterans cemeteries. At the 
end of 2001, of the 119 existing national cemeteries, 87 will have 
space for first interments, whether full-casket or cremated remains, to 
include either in-ground or in columbaria. The other 32 national 
cemeteries will have exhausted their space for first interments of 
full-casket or cremated remains and can only perform interments in the 
same gravesite as a previously deceased family member.
    As you know, we are establishing new national cemeteries to serve 
veterans in the areas of Oklahoma City, Oklahoma, at Ft. Sill; Atlanta, 
Georgia; Detroit, Michigan; Miami, Florida; Pittsburgh, Pennsylvania; 
and Sacramento, California. Beyond the opening of these six new 
national cemeteries, section 613 of The Millennium Act directed that VA 
contract for an independent study to, among other things, identify 
those areas of the United States with the largest number of unserved 
veterans and identify the number of new cemeteries needed from 2005 to 
2020. This study will guide us in the future as we strive to achieve 
our long-range goal of providing all eligible veterans reasonable 
access to a burial option.
    Public Law 105-368, which provided for Federal participation of up 
to 100 percent for State cemetery grants, has effectively encouraged 
participation in the State Cemetery Grants Program. This program is an 
important part of our strategy for meeting the burial needs of our 
veterans. It is a successful program, and I support it wholeheartedly. 
In FY 2000, 43 operational State veterans cemeteries provided 14,354 
burials to veterans and eligible family members. This figure 
represented a 7.7 percent increase over the previous year and accounted 
for approximately 15 percent of the total number of burials provided by 
VA national cemeteries and VA-assisted State cemeteries combined. VA 
will continue to work closely with the members of the National 
Association of State Directors of Veterans Affairs (NASDVA) to increase 
State participation in this program.
                                 ______
                                 
Response to Written Questions Submitted by Hon. John D. Rockefeller IV 
                         to Anthony J. Principi
                                general
    Question 1. How will the $1 billion dollar increase for VA proposed 
in the President's budget be divided among the various elements in VA?
    Answer. The attached table lists VA's discretionary program budget 
submission to Congress. The budget provides for $896 million in medical 
care and millennium collections. The millennium collections of $121 
million (* below), which were not available in 2001, are now available 
in 2002 and are scored as mandatory.

                          Budget Authority Net Comparison of the FY 2002 Budget Request
                                             [dollars in thousands]
----------------------------------------------------------------------------------------------------------------
                                                                                    President's
                     Discretionary Programs                      -----------------------------------------------
                                                                      FY 2001         Request       Difference
----------------------------------------------------------------------------------------------------------------
Medical Programs:
  Medical Care 1 ...............................................      20,229,799      20,979,742        +749,943
    Medical Care Collections Fund...............................         675,000         775,000        +100,000
    Health Services Improvement Fund collections *..............  ..............         121,000        +121,000
                                                                 -----------------------------------------------
      Subtotal, Medical Care....................................      20,904,799      21,875,742        +970,943
  Medical and Prosthetic Research...............................         350,228         360,237         +10,009
  MAMOE.........................................................          61,780          67,628          +5,848
                                                                 -----------------------------------------------
      Total Medical Programs....................................      21,316,807      22,303,607       4,986,800
Construction Programs:
  Construction, Major Projects..................................          65,895         183,180        +117,285
  Construction, Minor Projects..................................         165,974         178,900         +12,926
  Parking Revolving Fund........................................           6,486           4,000          -2,486
  Grants for State Extended Care................................          99,780          50,000         -49,780
  Grants for State Cemeteries...................................          24,945          25,000             +55
                                                                 -----------------------------------------------
    Total Construction Programs.................................         363,080         441,080         +78,000
Veterans Benefits Administration:
  Education Loan Program Account (subsidy)......................               1               1               0
  Vocational Rehabilitation Loans Program Account (subsidy).....              52              72             +20
                                                                 -----------------------------------------------
    Total Veterans Benefits Administration......................              53              73             +20
General Operating Expenses & Misc.:
  Veterans Benefits Administration (GOE only) 1 ................         825,832         955,352        +129,520
  Veterans Housing Benefits Program Fund Program Account........         157,239         161,483          +4,244
    Proposed legislation........................................  ..............          -1,400          -1,400
  Native American Veterans Housing Loan Program Account.........             514             527             +13
  Education Loan Program Account................................             220              64            -156
  Vocational Rehabilitation Program Account.....................             431             274            -157
                                                                 -----------------------------------------------
    Subtotal, Credit Reform.....................................         158,404         160,948          +2,544
                                                                 -----------------------------------------------
    Total, Veterans Benefits Administration w/Credit............         984,236       1,116,300        +132,064
General Administration 1 .......................................         226,521         239,479         +12,958
  Credit Reform (General Counsel)
  Veterans Housing Benefits Program Fund Program Account........           4,404           4,414             +10
  Native American Veterans Housing Loan Program Account.........              17              17               0
                                                                 -----------------------------------------------
    Subtotal, Credit Reform (General Counsel)...................           4,421           4,431             +10
                                                                 -----------------------------------------------
    Subtotal, General Administration w/Credit...................         230,942         243,910         +12,968
                                                                 -----------------------------------------------
    Total General Operating Expenses w/out Credit...............       1,052,353       1,194,831        +142,478
                                                                 -----------------------------------------------
    Total, Credit Reform--Administrative........................         162,825         165,379          +2,554
National Cemetery Administration 1 .............................         109,045         121,169
                                                                                         +12,124
Office of Inspector General 1 ..................................          46,284          48,308          +2,024
                                                                 -----------------------------------------------
    Total General Operating Expenses and Misc...................       1,370,507       1,529,687        +159,180
                                                                 -----------------------------------------------
    Total Discretionary with Collections (including HSI               23,050,447      24,274,447       1,224,000
     collections which are scored as mandatory).................
Proprietary Receipts:
  Medical Care Collections Fund.................................        -675,000        -775,000        -100,000
  Veterans Health Service Improvement *.........................  ..............        -121,000        -121,000
                                                                 -----------------------------------------------
    Total Discretionary Programs................................      22,375,447      23,378,447      +1,003,000
----------------------------------------------------------------------------------------------------------------
1 Excludes the transfers and reprogramming to General Operating Expenses--General Administration for the Office
  of Employment Discrimination Complaint Adjudication and the Office of Resolution Management activities in
  2001. For 2002, VA is proposing that funding for these activities be handled on a reimbursable basis.

                              health care
    Question 2. What more could be done if the VA health care account 
received an additional increase above what the President is requesting?
    Answer. I believe that the President's budget request for VA health 
care is sufficient and supports the continuation and strengthening of 
very important health care initiatives impacting the health and well-
being of veterans. As with the rest of the budget, details of VA health 
care appropriations and accounts were released on April 9,2001.
    Question 3. Great progress has been made in expanding long-term 
care services to veterans-nursing home care for those with 
disabilities. rated 70 percent and higher, and non-institutional care 
for all enrollees. What is your view about including all long-term care 
services in the standard benefits package?
    Answer. As authorized by the Veterans Millennium Health Care and 
Benefits Act, VA plans to add all non-institutional extended care 
services to the Medical Benefits Package, thus providing access to 
these services for enrollees. These high-priority, non-institutional 
extended care programs will join Home-Based Primary Care, Homemaker/
Home Health Aide, and Hospice Care, in creating a comprehensive array 
of home and community-based care for enrolled veterans.
    VA believes it is appropriate to keep nursing home and domiciliary 
eligibility separate from home and community-based care at this time. 
VA believes it can meet its mandate for nursing home and domiciliary 
care without including these services in the Medical Benefits Package. 
At the same time, VA expects to meet many of the transitional needs of 
veterans requiring nursing home care. VA is interested in fostering the 
idea of coordination of federal health benefits, and this may be 
especially beneficial in the area of long-term care.
    Question 4. The current network structure has seen various forms. 
The networks were originally envisioned as small entities with 
managerial control over a group of hospitals. Today, networks are 
rather large operations, some of which have line control over hospital 
services. Are you confident that the network structure allows you to 
oversee health care operations and to make sure that your priorities--
on quality and on access--are being met?
    Answer. Perhaps the principal distinction between the VA health 
care system at the beginning of the last decade and today is the degree 
to which service delivery is integrated across discrete geographic 
areas. This has been, in large measure, the result of the network 
organizational structure adopted by the Veterans Health Administration 
(VHA) in the early 1990s. This model, now a hallmark of high performing 
private health care delivery systems, has been instrumental in VA's 
impressive progress in controlling costs and unnecessary utilization 
while dramatically improving service delivery, patient safety, and 
quality. These strides have allowed the VA health care system to emerge 
from the last decade as an acknowledged leader in the health care 
industry. Another principal strength of the Veterans Integrated Service 
Network (VISN) management structure is its operational ability to keep 
pace with a rapidly changing health care. environment. The VISN 
structure allows VHA to maximize policy oversight and compliance while 
maintaining the flexibility to respond to local health needs and 
stakeholders more quickly.
    VA emphasizes managing health care versus managing facilities. 
Through a major transformation effort, VA has improved safety and 
quality of care, veteran satisfaction, enhanced veterans' access to 
care, reduced gaps and overlaps in services and reduced administrative 
overhead. It also emphasizes collaborations, with other federal 
agencies, academic affiliates, and community partners to achieve these 
goals.
    As the Department continues to improve services for our Nation's 
veterans, we have imposed a number of requirements on the field, such 
as the need for each facility and Network to have dedicated information 
security officers and dedicated patient safety staff. Implementation of 
bar code medication administration, the emphasis on wafting times, 
clinical practice guidelines, and the increased reliance on the 
Institute for Healthcare Improvement principles to improve waiting 
times are issues discussed continuously in VHA, including a review 
during the Network Director quarterly performance reviews. I am paying 
close attention to waiting times for clinic appointments and pharmacy 
waiting times specifically and feel confident that the network 
directors will continue to make improvements in these areas.
    Question 5. Despite the fact that GAO has not done an actual audit 
of VA's capital assets, many have been quick to cite GAO findings that 
VA is wasting a million dollars a day on its physical plant. What is 
your sense about how much of that $1 million is actually wasted (for 
example, heating an abandoned building), and how much is actually the 
cost of caring for patients?
    Answer. GAO's $1 million per day estimate of the ``cost of asset 
ownership'' included a combination of indirect operating costs and 
fixed costs. Some of the costs included in this estimate were 
administration, engineering, environmental, security, textile, food 
service, and capital investment in VHA's infrastructure. GAO stated 
that their basis for including all these activities was founded on 
OMB's definition of the cost of asset ownership: ``the total of all 
costs incurred by the owners and users to obtain the benefits of a 
given acquisition.'' While VA agrees with GAO that these costs are, in 
fact, part of the total costs incurred by VA to obtain the benefit of 
our capital assets, this is entirely different from a concept of 
``waste.'' Many of the costs included in this estimate, such as 
utilities, food preparation, housekeeping services, textile management, 
and security, are essential elements for the delivery of patient care. 
VA does not believe that these essential indirect costs of patient care 
should be included as part of asset ownership costs in the context of 
this question. However, VA does expect to realize significant cost 
savings by investing resources in realigning VA's existing capital 
assets through the implementation of Capital Asset Realignment for 
Enhanced Services (CARES) options. These savings would be a result of 
reduced costs including direct, indirect, and operations and 
maintenance costs.
    VA recognizes that there are efficiencies that can be achieved 
through possible integration and/or consolidation of facilities and 
services. VHA will carefully monitor maintenance and operation 
expenditures and significant efforts will be undertaken to reduce or 
eliminate unnecessary expenditures such as the cost of heating and 
maintaining vacant space as referenced in this question. CARES studies 
and identification of CARES options are needed to help VHA identify 
excess or underutilized capital and specific capital restructuring 
options to reduce the cost of asset ownership while simultaneously 
improving both access and quality of patient care.
    Question 6a. The President's budget will likely contain proposals 
to manage the increase in demand for health care services. The data I 
have received indicates that less than 20 percent of the patients using 
the system are ``higher income'' veterans and that they use 6 percent 
of the resources. These numbers do not indicate to me that these 
veterans are seriously taxing the entire system. What is your view?
    Answer. Your perceptions are a fair assessment of the utilization 
of priority 7 (``higher income'') veterans. Our FY 2001 Enrollment 
Report shows that 21 percent of the users will be priority 7 veterans, 
and they will consume 9 percent of the resources equal to $1.6 billion. 
Data for FY 2000 show the average cost for a priority 7 veteran patient 
was $1,844, compared to $4,856 for all veteran patients. Sixty percent 
of the priority 7 veterans had annual patient costs of less than 
$1,000. Additionally, 23 percent of our priority 7 patients did not 
receive any prescription drug benefit from VHA.
    Data from the FY 1999 and FY 2000 Enrollee Surveys show that 
``new'' enrollees (i.e., those new to the system since enrollment began 
in FY 1999) do not rely as heavily on VA for their health care as do 
``past'' enrollees, veterans who used VA anytime in the three years 
prior to enrollment (FY 1996-FY 1998). According to these surveys, 
``new'' priority 7 enrollees received only 26 percent of their 
outpatient care and 7 percent of their inpatient care from VA. ``Past'' 
enrollees demonstrated higher reliance on VHA (up to 50 percent of 
their outpatient health care and 33 percent of their inpatient care).
    Another issue that may affect priority 7 reliance on VA is the new 
TriCare for Life. Approximately 10 percent of priority. 7 enrollees are 
retired military, and half of these retirees are eligible for Medicare. 
With the introduction of TriCare for Life in October 2001, we estimate 
15,000 of these enrollees will revert to reliance on TriCare and 
Medicare for most of their health care. Although not seriously taxing 
the system, the needs for specialty care and timely access for 
priorities 1 through 6 are concerns that will be considered when we 
make the enrollment decision for FY 2002.
    Question 6b. Given that the proposed budget may not allow for 
continued enrollment of higher income veterans, how specifically will 
you reduce expenditures?
    Answer. VA will continue to deliver high-quality and cost-effective 
health care to all veterans who enroll in the VA health care system to 
receive treatment. VA will operate within its appropriated medical care 
resources and continue to enhance those resources through effective 
collections of alternative revenues. The President's budget request 
reaffirms our primary commitment to provide high-quality medical care 
to veterans with service-connected disabilities or low income. The 
enrollment decision for FY 2002 is not scheduled until August. However, 
if availability of sufficient resources becomes an issue, different 
options will be considered, including limiting the enrollment of 
veterans in the ``priority 7'' enrollment priority. Increased co-
payments to recover more of the cost of care provided to veterans who 
are required to make co-payments for their VA health care will be 
implemented.
    Question 7. We know that Medicare is failing beneficiaries when it 
comes to prescription drug coverage. Many would be surprised to learn 
that the VA health care system is picking up the slack for the absence 
of drug coverage in Medicare. Indeed, large numbers of higher income 
veterans are now turning to the VA for drug coverage--and they only 
want the drug coverage. Do you believe VA should become a pharmacy--
simply handing out the medications prescribed by non-VA doctors? If 
not, are there ways to better ensure that patients come for care, 
rather than just prescriptions?
    Answer. I do not believe that VA should become a pharmacy. My 
belief is based on two important considerations. First, and most 
importantly, we believe that coordination of care by one provider is 
the cornerstone of high-quality health care. The accurate and up-to-
date medical information that can only be provided by a single Primary 
Care provider (e.g., detailed medical history, complete medication use 
summary, and other pertinent clinical information) can reduce the risk 
that a course of treatment for an individual patient could lead to 
significant negative outcomes. Practicing, pharmacy in a fragmented, 
non-integrated manner is conducive to medication misadventures. It is 
VA's experience that providing pharmaceuticals as an integrated portion 
of VA's total health care benefit is both effective and efficient.
    Second, dispensing prescriptions prescribed by non-VA doctors would 
dramatically increase VA's outlays for pharmaceuticals above today's 11 
percent of the VA health care dollar. VA's current outlays for 
pharmaceuticals are below those of most managed-care organizations in 
the United States, largely for two reasons. First, the infrastructure 
is in place to develop and promulgate drug treatment guidelines and an 
effective National Formulary process. Second, and perhaps more 
importantly, VA's clinical pharmacists are members of primary care 
teams.
    Question 8. Community-based outpatient clinics are terrific access 
points for our veterans. VA's own studies have found that care provided 
at CBOCs was similar to care provided at the hospitals. However, VA's 
own evaluations only looked at a small number of clinics, and still, 
found a lack of available information on clinics run by contractors. 
Are you confident that VA is able to manage the great proliferation of 
the clinics? And what is your sense of quality and timeliness concerns 
at these clinics?
    Answer. VHA currently operates about 600 CBOCs and is in the 
process of opening close to 100 additional clinics. These CBOCs have 
been extremely successful, providing veterans with improved access to 
health care services.
    VHA recently completed a 3-year study of new CBOCs, using a 
statistically significant sample of clinics. The study found that, 
overall, CBOCs have met their goals in improving access and providing 
quality care, consistent with that provided by VA hospitals. VHA 
studies have also shown that, regardless of contractual relationship, 
quality of care at the CBOC is comparable to care provided at the 
medical center clinics, with the exception of Ophthalmology. The 
finding regarding Ophthalmology was not surprising given that it is a 
specialty service and is more likely to be available at a VA medical 
center setting.
    VHA monitors the quality of care at CBOCs through the Performance 
Measurement Program (PMP). CBOC patients are included in the random 
sampling of VHA cases that are selected for the External Peer Review 
Process (EPRP). Given the rapid growth in the numbers of CBOCs, VHA 
recently determined that it would increase the number of CBOC cases 
sampled through EPRP to provide better data about the quality of care 
provided at CBOCs.
    Primary Care Clinics are the most frequently accessed clinics at 
the CBOCs. Average clinic wafting times at CBOCs nationwide are within 
10-percent of the average waiting times at the parent facilities. VHA 
includes CBOC data in its assessment of performance relative to VHA's 
appointment waiting time goals, which are as follows:
     90 percent of requested next available, non-urgent primary 
care appointments should be scheduled within 30 days.
     90 percent of requested next available, non-urgent 
specialty (eye care, audiology, orthopedics, cardiology, urology) 
appointments should be scheduled within 30 days.
    CBOCs are planned and managed by the local VISN, within the context 
of national policies and procedures. Decisions are made by the VISNs 
regarding the scope of CBOC services and mode of service delivery, 
based on local circumstances, including veteran demographics, 
availability of health care providers, demand for services, etc. We 
remain confident that we can continue to manage the proliferation of 
these clinics in this manner.
    Question 9. The VA health care system--with its relatively closed 
system of care--could be a wonderful model for other systems. For 
example, the recent changes in law to provide all needed non-
institutional long-term care would seem to provide a perfect 
opportunity for translation to other health care systems. VAs long-term 
care could be the model to prove something to the larger health care 
system, which is so woefully inadequate when it comes to long-term 
rare. VA has also led the nation on assessing and treating pain for 
patients at the end of life. Do you see an opportunity for the VA to 
serve as a model for other health care systems? And if so, what will 
you do to make it happen?
    Answer. VA does see the opportunity to serve as a, model to other 
health care systems for providing long-term care in an effective and 
efficient manner. Over the past several years, VA has developed and 
evaluated a number of geriatric and long-term care models, including 
geriatric evaluation and management, home-based primary care, and adult 
day health care. VA is also recognized as a national leader both in 
training geriatric clinicians for VA and other health care systems and 
in pain management at the end of life.
    VA believes that the recent changes in law will facilitate our 
ability to better coordinate services for veterans who need long-term 
care. Specifically, VA plans to standardize the assessment of veterans 
referred for long-term care, in order to better target the services 
needed by patients over time. VA is also in the process of implementing 
three pilot projects for all-inclusive long-term care and one pilot 
project for assisted living, as authorized by law. VA health service 
research experts carefully designed the evaluation plans both for these 
pilots and for VA's overall experience in implementing the changes in 
the law. They will be collecting information on patient outcomes, 
utilization of services, and other variables over the next three years. 
The results of the evaluations will inform VA and other health care 
systems of the most effective and efficient ways of providing health 
care services to patients with long-term rare needs.
    Question 10. Several grant programs for substance abuse and PTSD 
were recently awarded. Congress saw these grants as necessary to 
compensate, in some cases, for the elimination of inpatient programs. 
Before programs are eliminated-like inpatient substance abuse or PTSD-
should VA be doing more to assess the potential effect? Do we at least 
need to know if a new type of care is as effective as the old one?
    Answer. VHA Directive 99-030 requires that VISNs notify VHA 
Headquarters prior to making changes to mental health programs, 
including changes in mission, staffing, or bed levels. Proposals are 
reviewed by VHA's Mental Health Strategic Health Group (MHSHG) and 
forwarded to the Chief Network Officer. Approval must then be obtained 
from both the Chief Patient Care Services Officer and the Under 
Secretary for Health.
    The Directive requires that all proposals include methods used to 
monitor the clinical impact of the change and an indication of outcome 
measures that will be used to assure continuation of high-quality care 
to affected patients. Proposals recommending bed closures must also 
include specific plans for assuring:
     the availability of intensive case management services and 
community-based services;
     increased access to outpatient follow-up care;
     uniform access to appropriate anti-psychotic or substance 
abuse therapies, including medications and psychotherapy;
     ready access to crisis management support comparable to 
that available to patients with other conditions or healthcare needs;
     continuity of care.
    Given the social and economic burdens of many veterans who suffer 
from substance abuse or PTSD, the availability of the support and 
structure of inpatient/residential care may be important for them, not 
only in times of crisis but also when working through severe trauma or 
addiction issues. Therefore, VHA's MHSHG is engaged in continuous 
follow up on those programs that have changed to ensure that quality of 
care is maintained.
    Question 11. On the subject of spinal cord injury centers, VA 
officials in the last. administration made a commitment to add beds and 
staff, returning the program to the capacity level mandated in the 1996 
eligibility reform law. Still, compliance to the directives was spotty. 
What will you do to make sure that these staffing levels will be 
maintained? For example, does the budget contain the needed funds to 
bring the system up to current staffing levels?
    Answer. VHA Directive 2000-022, issued in July 2000, identifies the 
number of available and staffed beds for each SCI Center, and 
articulates minimal staffing of SCI physicians, nurses, social workers, 
psychologists, and therapists. The Paralyzed Veterans of America and VA 
conduct monthly collaborative surveys to assess compliance with the 
directive. Although recruitment has been challenging, staffing and bed 
numbers are increasing. VHA has achieved nurse staffing for 91 percent 
of the beds expected within the SCI Centers. The goal is to fully staff 
100 percent of the beds as specified in the directive. Network 
Directors are charged to devote adequate funding from existing 
resources to support this commitment.
    Question 12. Many proposals to offer drug coverage to Medicare 
beneficiaries are tied to drug management and procurement. One tool VA 
uses to get these price breaks is the Federal Supply Schedule. What are 
your thoughts today about VA's price protection, in light of the fact 
that expanding the list of FSS purchasers will, in effect, raise the 
price of drugs for the VA?
    Answer. I am concerned that VA prices will increase. VA's price 
protection applies to ``covered'' drugs (i.e., prescription drugs 
marketed under an NDA from the FDA and licensed biologicals), pursuant 
to P.L. 102-585 Sec. 603. Generic and even ``covered'' drugs that sell 
below the Federal price ceiling receive only temporary price 
protection. Increased access to new non-Government purchasers will 
increase the price of drugs as elements of the pharmaceutical industry 
seek to abandon their FSS contract or raise prices. Additional access 
to the FSS with anticipated per unit drug cost increases might decrease 
VA's capacity to provide health care to enrolled veterans. I believe 
efficient and effective drug coverage in other organizations is 
possible through other methods. Specifically, a private-sector 
pharmaceutical benefit management process, like the one used in VA's 
health care. system that recognizes all health care as local, can 
achieve effective pharmaceutical pricing and distribution without a 
link to FSS if properly organized.
    Question 13. VA has done excellent work in treating veterans 
afflicted with Hepatitis C. Still, there is a sense that there are 
veterans with specific health concerns who have not sought treatment. 
Do you believe that VA is doing an adequate job of reaching out to 
veterans With specific health concerns, like Hepatitis C or AIDS? What 
more can be done to treat veterans with such health concerns, such as 
those with substance abuse problems, who may not be appropriate 
candidates for treatment right now?
    Answer. To ensure that veterans with Hepatitis C receive state-of-
art health care services and treatments, VA continues to expand and 
refine implementation of its Hepatitis C initiatives. Screening for 
Hepatitis C risk factors, followed by blood tests when appropriate, is 
performed throughout the VA health care system. For veterans who are 
Hepatitis C positive, treatment options are available when clinically 
appropriate for patients. All drugs and diagnostic tests approved for 
the treatment of Hepatitis C are available for use in VA. If treatment 
for Hepatitis C is not appropriate, veterans receive education and 
counseling in risk reduction and further transmission, as well as long-
term monitoring or ``watchful waiting.'' During FY 2000, 27,855 
veterans had positive lab tests for Hepatitis C infection, and over 
70,000 veterans with Hepatitis C infection received care in VA 
facilities. In order to reach out to veterans with specific concerns 
about Hepatitis C, VA has worked with the American Liver Foundation to 
develop an informational brochure to provide all veterans with 
important information about Hepatitis C risk factors, natural history, 
and testing. This brochure will be distributed to approximately 3.5 
million veterans currently utilizing VA medical services.
    In the arena of care for HIV-infected veterans, VHA has implemented 
policies and procedures for testing and counseling for HIV infection; 
updated and improved treatment guidelines for clinicians; conducted 
clinician education and training programs on HIV issues, HIV prevention 
screening, and risk reduction; and catalyzed HIV research conducted by 
VA scientists.
    To address the specific health concerns of veterans with particular 
needs, a full range of health care services are offered in a variety of 
clinical settings. These settings include infectious disease clinics, 
homeless health care programs, Vet Centers, mental health programs, 
substance abuse programs, women veterans health programs, and primary 
health care settings. Provision of the most advanced diagnostic 
technology and treatment modalities, in conjunction with attention to 
the co-existing health and social problems of veterans with Hepatitis C 
or HIV/AIDS, remains a focus of VA.
    Question 14. In pre-hearing questions before your confirmation 
hearing, I asked you about specific examples where sharing with DoD has 
been successful--both in terms of savings and improvements in the 
delivery of services. Your response was a less than impressive list of 
smaller projects. Do you think VA should be doing more to promote 
sharing? What kinds of projects do you envision?
    Answer. VA and DoD have made a significant effort to establish a 
cooperative relationship with each other. VA's goal is to work with DoD 
to create a health care partnership that: (1) offers beneficiaries a 
seamless transition from one system to the other; (2) provides 
beneficiaries the highest possible return on the human and physical 
assets invested in the two systems; and (3) empowers each Department to 
fulfill its unique core missions. As described in the FY 2002 
blueprint, the President will convene a Veterans Health Care Task 
Force. This group will be composed of officials and clinicians from VA 
and DoD, leaders of veterans and military service organizations, and 
leaders in health care quality to make recommendations for improvement.
    The Congressional Commission on Service Members and Veterans 
Transition Assistance Report made many recommendations regarding joint 
VA and DoD procurement, to include joint procurement of 
pharmaceuticals, medical/surgical supplies, and equipment. In response 
to that report, in December 1999, VA entered into a Memorandum of 
Agreement (MOA) with DoD to combine the purchasing power of the two 
Departments and eliminate redundancies. The MOA has three appendices. 
One deals with pharmaceuticals; the second encompasses medical and 
surgical supplies. The third appendix covers high-tech medical 
equipment.
    While the negotiations have not always been easy, a major 
breakthrough occurred in late calendar year 2000 when DoD agreed to 
eliminate their Distribution and Pricing Agreements (DAPAs) for 
pharmaceuticals, and instead rely upon VA's Federal Supply Schedule 
(FSS) as the primary source for pharmaceuticals. As a result, DoD DAPAs 
were eliminated in January 2001, for all pharmaceuticals that are 
available in the FSS. This is a major step toward implementing the 
intent of the ``Transition Commission.''
    A joint VA/DoD Data Management Group is developing data gathering 
and assessment plans for medical/surgical items. However, a major 
impediment toward standardizing and consolidating medical/surgical 
supply items is the lack of a Universal Product Numbering (UPN) system. 
VA is currently taking the lead by developing requisite cost-benefit 
analyses to support requiring Federal contractors to provide UPNs for 
medical/surgical commodities. This proposed requirement will undergo 
scrutiny at the Office of Management and Budget under the auspices of 
the Office of Information and Regulatory Affairs (OIRA) and will 
undergo public rulemaking.
    As of March 1, 2001, there are 33 joint VA/DoD national committed 
use contracts for pharmaceuticals. The total estimated cost savings in 
FY 2000 for both Departments from these contracts were $42.5 million 
($30.8 million for VA and $11.7 million for DoD). These savings were 
realized from 24 contracts. To date in FY 2001, eight additional 
national contracts have been awarded with discounts off the lowest FSS 
price, ranging from 0.19 percent to 53.75 percent. Once purchase/
utilization data are available for these eight new contracts, cost 
savings data will be updated. Also, as of March 1, 2001, 24 additional 
joint contracts are pending award; four joint contracts were not 
awarded due to no cost savings afforded the government under the offers 
received. It is difficult to project how much additional savings will 
be achieved due to the dynamics of the pharmaceutical market place, 
i.e., branded products going generic and the clinical strategies 
employed by both Departments in the provision of their drug benefit. 
Many other drug categories will be considered for joint VA/DoD 
contracting activity as the contract period expires for their 
individual contracts.
    The next major phase of the MOA implementation, converting 
Distribution and Pricing Agreements for medical/surgical products to 
FSS, and identifying joint opportunities for standardization that would 
promote even greater savings, is underway. VHA's Office, of Logistics 
will be working With the VA National Acquisition Center and respective 
DoD counterparts to facilitate shared acquisition strategies through 
the VA and DoD product standardization committees.
    VA is pursuing many other sharing activities with DoD, e.g., the 
Government Computerized Patient Record, patient safety, depleted 
uranium research, the Military and Veterans Health Coordinating Board, 
and common treatment protocols for asthma, bad backs, and high 
cholesterol. VA remains committed to finding opportunities to share 
resources with DoD to expand quality services to veterans in a cost-
effective manner.
    Question 15. A number of new quality management programs have been 
developed since my staffs 1997 Staff Report on Quality Management. Do 
you believe that VA's quality management program is where it should be?
    Answer. Quality management is never a completed task. However, VA's 
strides in quality and leadership in health rare quality management 
were specifically cited at the recent Institute of Medicine briefing 
accompanying the publication of their report, ``Crossing the Quality 
Chasm.''
    The recommendations of your staff report were taken seriously. As 
recommended, the Office of Quality and Performance was created to 
specifically support the Under Secretary for Health's leadership and 
responsibility for the provision of consistent, high-quality care for 
veterans. Your report stressed the need for staff dedicated to quality 
management. We are pleased to report that a number of highly talented 
staff with excellent credentials have been recruited. All have 
significant experience and training in quality management, data 
analysis, clinical care, and health system operations.
    VA is increasingly able to measure and report on quality. The 
ability to measure allows us to identify areas for improvement. It also 
allows recognition of areas where quality is excellent. In areas of 
preventive health, such as cancer screening, women's health care, and 
immunization, VA quality is not merely good but is increasingly 
surpassing government targets and private sector performance.
    For example, improvements in pneumonia vaccination rates, from 
rates already above community performance, translate into important 
outcomes for veterans. Almost 4,000 lives have been saved because of 
improved pneumonia vaccination of patients with chronic lung disease 
alone.
    Improvements are also occurring in areas of disease treatment. VA 
diabetes care programs are increasingly regarded as national models. 
Treatment of heart attack patients with aspirin and beta-blocker 
medications, and heart failure patients with ACE-inhibitor medications, 
is consistently better than reported elsewhere, including major 
teaching hospitals. This also translates into the very real outcome of 
lives saved.
    Our ``Quality Enhancement Research Initiatives,'' the QUERI 
programs, are specifically noted in the Institute of Medicine report as 
a model for translating the best research evidence into the best 
patient care. These ``best practices'' are supported through clinical 
practice guidelines and clinical reminders in the computerized patient 
record system. The combination of measurement and accountability 
provided through our Performance Measurement Program ensures that best 
practices are consistently provided.
    Increasingly, VA's outcomes are validated in the most prestigious 
scientific journals. Dr. Laura Petersen described our quality in heart 
care in a recent New England Journal of Medicine article. The fact that 
these quality outcomes include all patients is also critical; a recent 
article in the Journal of the American Medical Association by Dr. 
Ashish Jha found that African Americans fared at least as well, if not 
better than, white patients in all of the conditions studied.
    VA has also been recognized widely for its progressive approach to 
improving patient safety. Our National Center for Patient Safety is 
increasingly receiving more thorough ``Root Cause Analyses'' of both 
adverse events and close calls. Only through creating a culture in 
which people report freely will we learn, and avoid having the same 
situations recur. This process has revealed lessons valuable to both 
patients in VA and elsewhere, such as a programming defect in a widely 
used pacemaker.
    VA is a complex organization. Quality management is not an 
afterthought or an ancillary program. It is embedded in our core 
processes. VHA's strategic goals establish a framework for measuring 
outcomes, and the performance management process requires 
accountability. In addition to the Office of Quality and Performance 
and the National Center for Patient Safety, the Office of the Medical 
Inspector is critical for investigating specific issues of concern. 
Program leaders in Patient Care Services are responsible for 
development of state-of-the-art clinical strategies for providing 
optimal care, and the network office must ensure the operational 
underpinnings for all of these activities. Each of these offices is 
represented on the Under Secretary's Coordinating Council for Quality 
and Safety. All leadership offices are represented on the Quality 
Management Integration Committee, which meets with field leadership and 
quality and safety managers via video teleconference each month for 
discussion of critical issues and to share best practices.
    VA is also leading in terms of data-driven management of surgical 
outcomes. There is no more comprehensive and ongoing evaluation of 
surgical outcomes than VA's National Surgical Quality Improvement 
Program (NSQIP), or the parallel Continuous Improvement in Cardiac 
Surgery Program (CICSP). Continuous improvement in surgical morbidity 
and mortality has been sustained for more than a decade. Most 
remarkable, though, is that mortality rates in VA surgical programs are 
now consistently lower than would be expected on the basis of a 
patient's clinical risks. The American Surgical Association has cited 
the NSQIP model and is considering its use for surgeon re-
credentialing.
    While we have experienced many excellent outcomes, we have 
opportunities for improvement. We are working to ensure that care is 
not only of consistent, high quality, but that it is accessible. The 
30/30/20 access goals are ambitious, yet appropriate. We will provide 
90 percent of new primary care and specialty care visits within 30 
days, and see 90 percent of patients within 20 minutes of their 
scheduled appointment time. Of course, patients with emergencies or 
urgent needs are seen as immediately as appropriate.
    One of the key challenges for improving access and for monitoring 
and improving quality in VA is information management. Good data about 
clinical outcomes and core business processes is required. It should be 
obtained in a manner that is not intrusive to patient care or 
burdensome to the system, and in a manner that extends across all sites 
of care. An Information Letter has been released and additional policy 
is imminent which requires the provision of quality and safety data in 
all contracted care services. As well, we are enhancing mechanisms to 
better assess and report on care provided through our CBOCs. This 
includes use of electronic data where available and expansion of our 
External Peer Review Program (EPRP). Our information systems have 
improved and will continue to improve for the dual purposes of 
supporting and assuring high quality care.
    In summary, improvement in quality and safety in VA are unmatched 
in scope, scale, or speed by any other health system. Increasingly, 
these improvements are recognized as model systems--by authoritative 
external appraisal. We are empathetic to any veteran whose care is 
poor, untimely, or dissatisfying. We accept and appreciate the 
tremendous responsibility of examining both individual breaches of 
quality or safety, as well as the need to ensure that we are a leader 
in assessing, supporting, and improving the delivery of consistent, 
high-quality care.
    Toward identifying gaps in our processes, in information, and in 
best meeting the needs of our patients, VHA is embarking on a process 
of critical self-evaluation through Baldrige-based self-assessment. The 
reward of this effort is in better addressing these issues for the 
veterans we serve.
    Question 16. Despite the recent improvements in developing better 
billing methods, I think there is general recognition that VA's 
collections efforts could be better. Given your familiarity with the 
collections effort, does it make sense to contract out the collections 
function?
    Answer. We agree VA's medical care collections could be better. VA 
is committed to improving its revenue, collections, and billing 
procedures. We are open to the possibility of contracting out 
collection functions. In fact, VHA has a contract in place with a 
private vendor, TransWorld, Inc., to assist in the collections of third 
party claims to insurance carriers. Our experience with TransWorld has 
been quite favorable. We have invested slightly over $2 million and 
have recouped $57 million. We recognize that identifying and fixing 
process deficits must be done at the outset and we will continue to 
make these types of improvements. VA also needs to do a better job of 
identifying on insurance company bills which services we have provided. 
Finally, it is important that we better document services provided to 
veterans, and identify the insurance coverage that they hold. Perhaps 
the private sector can help with that process.
    Currently, VA is running two pilots which contract for the 
collections and preparation of bills. Ongoing feedback from these 
pilots will be evaluated during the next year.
    Question 17. In your testimony today, you indicated that in 
actuality, the proposed budget includes $1.2 billion in additional 
funds, including $200 million more in Medical Care Cost Fund 
collections. What is this increase predicated upon?
    Answer. Two factors contribute to the estimated $200 million 
additional Medical Care Cost Fund collections. First, collections for 
the Medical Care Cost Funds are well above our FY 2001 goal. We are 
currently collecting at a rate of $57 million a month for the first 
five months. As you know, we now bill reasonable charges rather than a 
per them rate. This has greatly contributed to the increased 
collections, which we believe will continue in future years. The second 
factor is the increased revenue that we are anticipating from increased 
pharmacy co-payments as authorized by the Veterans Millennium Health 
Care and Benefits Act.
    Question 18. Without a detailed budget request, it's difficult to 
discuss appropriate funding levels. This is especially true in the 
construction account. We do know, however, that we've seen a trend 
toward low requests for construction. What can we expect for this 
account? Are you willing to push for increased funding?
    Answer. A system as large as the VA health care system cannot 
maintain quality and productivity over time without appropriate 
recognition of the need for infrastructure improvements. We believe 
that the VA health care system will require larger construction budget 
requests in the future for a variety of reasons: to correct seismic 
safety concerns, to provide for an orderly reinvestment in the system's 
infrastructure, and to implement CARES decisions.
    As VHA proceeds through the CARES process, we expect to gain a more 
settled picture of the future need for VHA medical facilities. The 
first CARES studies will be done in 2001, and are expected to identify, 
among other things, options for reengineering VHA's physical 
infrastructure. Implementing these options will no doubt require major 
construction funding in many instances, but final decisions will come 
after careful consideration of the options available to meet VHA's 
health care missions. In the interim, the absence of completed CARES 
studies should not prohibit funding of a major project, but careful 
analysis is required before such a proposal can be made. For these 
reasons, I support the level of construction in the FY 2002 President's 
Budget.
    Question 19. VA plans to reduce a hospital presence in some areas. 
At the same time, we are opening up more and more outpatient clinics. 
Both of these will naturally lead to reductions in training 
opportunities for medical residents. Do you believe that affiliations 
are important to VHA in the 21st century? If so, how can VA maintain 
the emphasis placed on teaching, given the budget request?
    Answer. VA's medical school affiliations are essential to VA in the 
215t century in accomplishing its missions. For over 50 years, VA has 
worked in partnership with this country's medical schools and other 
academic institutions to provide high quality health care to America's 
veterans, train physicians, and train other health care professionals 
to meet the patient care needs of VA and the Nation.
    The academic mission in VA, as reflected in its academic 
affiliations, requires nurturing in these times of dramatic change in 
health rare. I will continue to meet regularly with the leadership of 
various clinical and academic components of VA to provide my commitment 
to their value to VA and veterans' health care. Just like VA health 
care, VA's academic affiliates are being impacted by the dramatic 
changes that are taking place in health care. We maintain active 
dialogues with our affiliates regarding how the affiliations can 
contribute substantively to improvement in many complex areas of change 
in health care. However, the rapidity of change requires extra efforts 
at communication and I am establishing a cadre of VA staff to lead a 
group to address VA academic relations. There are many issues to 
address, including expanding education and training opportunities in 
ambulatory care, primary care, specialty care, care for patients near 
the end of life, systematic approaches to improving quality of care, 
more effective inter-professional care and education, and more 
efficient use of scarce health care resources.
    I believe VA.'s academic affiliations are robust and vigorous 
opportunities for providing the best approaches for continuous 
improvement of health care for veterans while contributing to 
strengthened academic medical institutions throughout the country. I 
also believe that we must work hard to keep them healthy even in times 
of budget constraints.
                           veterans benefits
    Question 20. What will the targeted amount for VBA buy for VBA--how 
many people? What kind of technology? What gains in processing and 
timeliness will be tied to this funding?
    Answer. The $133.5 million requested increase over the FY 2001 
enacted budget authority level, will provide for a net increase of 890 
IFTE and $89.4 million in increased payroll. This increase includes 701 
FTE to counter the expected increased workload from the recently 
enacted Duty to Assist legislation and new regulations regarding 
diabetes. New legislation impacting the education program requires 193 
FTE for projected workload increases. Additional FTE for compensation 
and pension (C&P) initiatives, e.g., C&P Evaluation Redesign (CAPER)--
10 FTE, Overseas Benefits Delivery at Discharge--12 FTE, and Systematic 
Individual Performance Assessment (SIPA)--80 FTE, are also funded. 
Decreases in information technology FTE and loan guaranty FTE 
associated with the proposed legislation eliminating the vendee loan 
program partially offset these increases.
    The requested increase will also provide for continued and new 
investments in. technology, including Benefits Payment Replacement 
System (VETSNET Migration), Training and Performance Support Systems 
(TPSS), Virtual VA, Security and Infrastructure Protection (SIPO), 
Configuration Management, Operational Data Store, WINRS, EDI/EFT, and 
One VA Telephone Access. Information technology (IT) investments are 
requested only after they have passed a rigorous review from the 
Department's Capital Investment Board. The Veterans Benefits 
Administration (VBA) ensures solid IT investments that will deliver 
fully automated systems that are secure and which provide the access 
and ease of use that will ultimately produce the kind of accuracy, 
timeliness, and customer satisfaction VBA strives to achieve. However, 
there will be no spending on new IT initiatives until a comprehensive, 
integrated IT Enterprise Architecture has been adopted.
    The increase over the FY 2001 enacted level will mitigate the 
performance setbacks we will encounter in claims processing and will be 
a first step to achieving the Department's goal of processing rating-
related claims in 100 days by summer 2003.
    Question 21. You have said that the budget includes a 13 percent 
increase in funding for VBA. Is this sufficient to achieve the goals 
you have set for VBA? If you had more money for VBA, what would you do 
with it?
    Answer. VBA believes a 13 percent increase over the appropriated FY 
2001 level represents a firm commitment and sufficient resources to 
achieving improvements in service and delivery of benefits. The 
Administration has designated claims processing as a Presidential 
initiative and has made funding for it a priority. This budget will 
allow VBA to hire 890 new employees, make IT investments as 
appropriate, and identify best practices as it strives to improve the 
service and delivery of benefits to veterans and their families. As you 
know, it takes 2 to 3 years for a newly hired claims adjudicator to 
become productive. Moreover, training, supervising, and mentoring new 
hires, which is necessary and invaluable, takes current staff away from 
their primary responsibility of processing claims. As such, the 
Administration's budget strikes the appropriate balance between 
investing in new employees and the immediate task of processing a 
backlog of claims.
    Question 22. The Veterans Claims Adjudication Commission issued its 
report in December 1996. Have you reviewed it as part of your 
preparation to become Secretary or before issuing the Transition 
Commission Report? As Secretary, do you plan to pursue any of its 
findings?
    Answer. While I am familiar with the report of the Veterans Claims 
Adjudication Commission in general, I did not review the report in 
preparation for assuming the responsibilities of Secretary. While the 
report was a portion of the body of knowledge available to the 
Congressional Commission on Servicemembers and Veterans Transition 
Assistance, it did not form the basis for the Commission's report. I 
would have to be briefed on the report before making any decisions as 
to the desirability of pursuing its findings.
    Question 23. In 1991, Congress enacted legislation charging VA to 
contract with the National Academy of Sciences to periodically review 
the scientific literature to determine associations between health 
conditions and exposure to herbicides like Agent Orange. The NAS 
reports are intended to advise the Secretary in determining what 
conditions warrant presumptive service connection. In 1998 Congress 
mirrored this bill, providing a similar process for Gulf War veterans. 
However, veterans exposed to ionizing radiation have experienced a more 
piecemeal approach to compensation. In your view, is there value in 
crafting authority for atomic veterans similar to Agent Orange and Gulf 
War legislation?
    Answer. We do not see much value in crafting authority for atomic 
veterans similar to the Agent Orange and Gulf War legislation. The 
primary reason is that many of the diseases that are believed to be 
radiogenic commonly appear only after exposure to relatively large 
doses of radiation, such as those used in cancer therapy. Applying the 
``positive association'' standard does not resolve this issue.
    Therefore, any approach that does not address the issue of 
radiation exposure levels would be vastly over-inclusive. If Congress 
were to draft such legislation, we would recommend that: (1) it not use 
the ``positive association'' standard, but rather a standard based on 
the probability of causation; (2) it be expanded to cover all veterans 
exposed to radiation during active military service, not just those 
present at Hiroshima, Nagasaki; or the atmospheric nuclear tests; and 
(3) it replace the presumptions established under Public Law 100-321.
    Question 24a. Last year, we passed legislation reinstating VA's 
duty to assist veterans in developing their claims for benefits. I am 
very concerned about the impact that this legislation will have on 
veterans' claims. The U.S. Court of Appeals for Veterans Claims ruled 
last month, in Holliday, that it could not decide the applicability of 
this new law on pending claims until VA had addressed it first. This 
may result in remands back to the Board of Veterans' Appeals for 
virtually all claims.
    A concerted, coordinated effort by VA will be needed to address 
this development. All elements within VA--the General Counsel, the 
Board, the Regional Offices, and the C&P Service--must work together. I 
am concerned that this may not be happening. What is VA's plan to 
tackle this? Please specify who is leading the effort.
    Answer. Veterans Benefits Administration (VBA) action--C&P Service: 
The C&P Service has undertaken four main initiatives to address the 
impact of the Veterans Claims Assistance Act of 2000 (VCAA):
     It has made regulatory changes to implement the VCAA. 
These regulations were drafted in conjunction with input from the 
National Service Organizations, the Board of Veterans' Appeals, and VA 
General Counsel.
     The C&P Service has established interim claims processing 
procedures, incorporating the notice and development requirements of 
the VCAA. These interim procedures were conveyed to regional offices in 
several Fast Letters, conference calls, and via VA Internet sites. This 
interim guidance was reviewed for concurrence by VA General Counsel, 
who continues to review interim instructions disseminated via the 
Internet to field stations.
     The Compensation and Pension Service continues to meet 
regularly with members of the Board of Veterans' Appeals, General 
Counsel, and the Office of Field Operations to coordinate VCAA policy 
and procedures. Most recently, during the week of March 12, 2001, the 
Deputy Vice Chairman of the Board of Veterans' Appeals met with the 
Under Secretary for Benefits, the Deputy Under Secretary for Benefits, 
and the Acting Director of the C&P Service to discuss additional steps 
to take to minimize the impact of VCAA on pending workload.
     The C&P Service has kept the National Service 
Organizations informed of VA's proposed policy and procedures to 
implement VCAA and has solicited input from these organizations. In 
addition, they were consulted while VA was drafting the proposed 
regulation. We look forward to their comments on the proposed 
regulation, which was published in the Federal Register on April 4, 
2001.
    Board of Veterans' Appeals (Board) action: The Board expects that 
the vast majority of cases pending at the Court of Appeals for Veterans 
Claims (CAVC) will be remanded so that they may be considered under the 
provisions of the VCAA. In the first five months of FY 2001 (October 
through February), we have received more that 1, 100 CAVC remands-an 
amount roughly equal to the total number of cases remanded to the Board 
during all of FY 1999 (1,412 cases) and FY 2000 (1,060 cases).
    Although the Chairman has no authority to tell a Board member how 
to decide a case, the Board is not taking the position that these cases 
are all automatic remands to the regional office. Board members are 
reviewing each case on its merits based on the law currently 
available--statutes, court precedents, and precedent decisions of the 
General Counsel--to determine the proper outcome.
    Among other things, there are appeals the Board can allow--26 
percent in 2000--and it intends to allow them. In addition, there will 
be situations where it is clear that the regional office had, in fact, 
complied with the substance of the VCAA, and such cases can be decided 
on other grounds.
    Nevertheless, it is likely that there will be a very high 
percentage of remands to regional offices. Indeed, we are seeing that 
already. The remand rate, which was 30 percent for FY 2000, was 56 
percent for the month of February 2001.
    The Board is also concerned about continuing to receive cases from 
the regional offices, as those offices struggle to comply with the new 
Duty to Assist features of the VCAA. Chairman Clark and Under Secretary 
Thompson are working together to ensure that the Board continues to 
receive appeals from regional offices.
    Question 24b. What are the real costs of the new law? What portion 
of those costs are new staff time? Where do you plan to spend the 
money?
    Answer. There are no significant benefits costs associated with the 
Veterans Claims Assistance Act of 2000. However, in developing the FY 
2002 President's Budget, the C&P program gained 863 direct FTE. Of this 
total, 701 FTE, at a cost of $45.9 million, are slated for specialized 
work to counter the effects of the recently enacted Duty to Assist 
legislation and diabetes regulations. VBA has developed a strategy that 
calls for these claims to be worked in newly formed SDN service 
centers. The centers are composed of veterans service representatives 
(VSR) and rating VSRs, with lower graded employees to perform data 
entry and reemployed annuitants to guide and mentor trainees. While 
timeliness performance data for FY 2002 remains high, this plan 
presents a path toward achieving the Secretary's intent of processing 
claims in 100 days by March 2003. The Board does not anticipate any 
increased costs based on the VCAA.
    Question 25. Last year, Congress also passed significant 
enhancements to the GI Bill--increasing the basic monthly benefit, 
paying for licensure and certification exams, and covering the 
remaining costs of servicemembers' courses after payment from DoD's 
tuition assistance. I have been told that these provisions are 
projected to double the workload of the education service, adding 
further stress on top of some recent increases in your backlog due to 
the imaging of claims at one of your four processing centers. What are 
you plans to address this new wave of claims?
    Answer. The Tuition Assistance Top Off legislation, effective 
October 30, 2000, is expected to result in 161,000 new claimants in FY 
2001 and 214,000 additional claimants in FY 2002. Legislation allowing 
for payment of Licensure and Certification exams became effective March 
1, 2001. We anticipate this legislation to generate 25,000 new 
claimants for FY 2001 and 100,000 additional claimants in FY 2002. 
These provisions could dramatically affect workload and our ability to 
process claims in a timely and effective manner.
    VBA is planning to address the increased workload through increased 
staffing for FY 2002, overtime usage, and the use of Virtual Help 
Teams. In addition, the current benefits delivery system, which cannot 
efficiently process the new workoad, will undergo programming 
modifications. However, systems changes are long-term solutions and 
will not have a positive impact by 2002. The proposed budget has money 
to enable us to do all these things.
    We have already started to. address the increased workload in the 
current fiscal year. First, 25 additional FTE were allocated in the 
fall, 40 FTE were earmarked in December 2000, and 60 more FTE were 
allotted to Education in February 2001. Seasonal employees Will 
constitute some portion of the 125 additional FTE because they can be 
used effectively during critical periods and make a dramatic impact on 
workload. The goal is that the additional resources for increased 
staffing in Education will be a top priority for the remainder of FY 
2001, as well as FY 2002.
    Second, overtime money will continue to be committed as needed 
during peak enrollment periods and to combat increased workload from 
new legislation. More than $300,000 has been used so far this fiscal 
year. In addition, during the workload crisis in fall 2000, mandatory 
overtime was implemented at the four Regional Processing Offices (RPOs) 
and will be used as needed to control cyclical workloads and increased 
workload due to new legislation.
    Third, new ways of processing claims were tried and tested in fall 
2000. With technology enhancements, RPOs were able to go beyond normal 
help teams and use Virtual Help Teams by pointing workstations towards 
other RPOs. The electronic environment puts all pertinent information 
related to a claim at one's fingertips, regardless of location. This 
allows personnel to process claims for another station without having 
to be on site physically, thus eliminating travel costs. In addition, 
virtual brokering work relieves the burden of having to ship claims to 
another office as well as eliminating the potential loss of claims in 
the mail. Because RPO workload peaks vary among offices, Virtual 
brokering can be used to manage part of the increase in workload.
    Question 26. I understand that VBA is hiring additional, previously 
not programmed staff to address the growing backlog of claims. Does VA 
need a supplemental appropriation for the current fiscal year to pay 
for this additional staff? What will VBA do or what initiatives will be 
cut short if it does not receive a supplemental appropriation this 
year?
    Answer. To address the significant increase in workload caused by 
recently enacted Duty to Assist and diabetes legislation, VBA has begun 
hiring new employees. As you know, it takes 2 to 3 years for a newly 
hired claims adjudicator to become fully productive. Consequently, the 
earlier they are hired, the earlier they can become productive. The 
Administration has identified resources within the FY 2001 budget to 
help accelerate the hiring of claims adjudicators and will be seeking 
transfer authority to move the resources into VBA. It is important to 
note that the Administration is not seeking new budgetary resources, 
but new authority necessary to effectuate the transfer.
    Question 27. Sadly, our veterans population is aging rapidly, which 
means that we must focus on providing them with a place of honor to be 
laid to rest. Does the President's budget provide sufficient funds to 
move ahead on construction of the six new cemeteries authorized by 
Congress in 1999?
    Answer. The status of the efforts to establish six new national 
cemeteries is described below. Land has been acquired for the Ft. Sill, 
Oklahoma and Atlanta, Georgia areas. In addition, full construction 
funding was provided in the FY 2001 appropriation for the Ft. Sill 
location and full construction funding is requested in the FY 2002 
President's budget for the Atlanta location. Progress in identifying 
and acquiring land for each of the remaining four locations is ongoing.
    Atlanta, Georgia--The Department has acquired an approximately 770-
acre site in Cherokee County, north of Atlanta. Mr. Scoff Hudgens, a 
World War II veteran, donated this site. A contract for developing the 
cemetery's Master Plan is scheduled to be awarded this summer. The 2002 
President's Budget requests $28.2 million for Phase I construction of 
this new national cemetery. If these requested funds are appropriated, 
the construction contract award is expected in August 2002, and 
completion of the construction is expected in May 2004.
    Detroit, Michigan--Representatives of the National Cemetery 
Administration (NCA) actively worked with the Michigan Veterans Affairs 
Directorate, area real estate agents, and the Veterans Benefits 
Administration's (VBA) Loan Guaranty officials at the Detroit VA 
Regional Office to identify available property for evaluation as a new 
national cemetery. Eight potential parcels of land were identified for 
further consideration. Pending full evaluation of the characteristics 
of each site, the best sites for environmental assessment will be 
selected. After all environmental assessments are completed, a 
recommendation for final selection will be forwarded to the Secretary 
of Veterans Affairs. An appraisal of the preferred site will also be 
conducted.
    The 2002 President's Budget includes $18 million to be available 
for the purchase of land for new cemeteries in the vicinity of Detroit, 
Michigan; Pittsburgh, Pennsylvania; and Sacramento, California.
    Miami, Florida--Representatives of the National Cemetery 
Administration (NCA) and the Florida Department of Veterans Affairs 
visited eleven prospective sites in South Florida and developed a 
recommendation of ``top sites'' for further consideration. The Acting 
Under Secretary for Memorial Affairs and the Director, Florida 
Department of Veterans Affairs visited the top three sites in August 
2000. As a result, two top sites were selected. Both sites are located 
in Palm Beach County.
    In October 2000, URS, Greiner, Woodward, and Clyde began conducting 
the environmental assessment process on each of the two top sites to 
assess the impacts of developing the land for use as a cemetery. 
Subsequently, the owner of one site removed it from consideration. The 
environmental assessment is being completed for the remaining location, 
which is near the West Palm Beach VA Medical Center. Very recently the 
EA consultant has identified two factors that will require further 
investigation. Realizing the negative potential of these findings, NCA 
is directing the EA consultant to expand their review to two additional 
sites that had been identified during initial site evaluation visits.
    After all environmental assessments are completed, a recommendation 
for final selection will be forwarded to the Secretary of Veterans 
Affairs. An appraisal of the preferred site will also be conducted.
    The 2001 appropriation contained $15 million for land acquisition, 
and the 2002 President's Budget requests Design Funding for the 
preparation of Construction Documents.
    Oklahoma City, Oklahoma--The National Cemetery Administration (NCA) 
anticipates that a construction contract will be awarded in order for 
construction to begin before the end of 2001. NCA's goal is to complete 
construction in the fall of 2003. Design is being made for a ``fast 
track'' section that will permit interments to begin prior to full 
completion of all construction activities at the new cemetery. NCA 
projects that the ``fast track'' section will be available for burials 
in the fall of 2001.
    The 2001 appropriation included $12 million for construction. All 
Phase I development costs are fully funded.
    Pittsburgh, Pennsylvania--The Governor of Pennsylvania established 
a Cemetery Site Selection Committee to serve as a primary evaluation 
mechanism for locating, sites and scheduling site visits. The National 
Cemetery Administration (NCA) staff visited Pittsburgh during June 2000 
to meet With the State's Cemetery Site Selection Committee. NCA staff 
toured eleven proposed sites. In October 2000, the Under Secretary for 
Memorial Affairs toured the three top sites. Based upon these visits, 
the Under Secretary identified the Morgan Farms site, 15 miles 
southwest of Pittsburgh, as the most desirable and feasible location. 
The Morgan Farms location was also the preferred site named in the 
Cemetery Site Selection Committee's report that was submitted to the 
Pennsylvania House of Representatives.
    A contract for an environmental assessment of the Morgan Farms site 
was awarded in December 2000 and the final report is expected by May 
2001. An appraisal of the preferred site will be undertaken as a part 
of the environmental assessment contract. If the site is purchased, NCA 
anticipates that a contract for master planning will be awarded in the 
fall of 2001.
    The 2002 President's Budget includes $18 million to be available 
for the purchase of land for new cemeteries in the vicinity of Detroit, 
Michigan; Pittsburgh, Pennsylvania; and Sacramento, California.
    Sacramento, California--The National Cemetery Administration (NCA) 
officials worked closely with representatives of the California 
Department of Veterans Affairs and local realtors to identify suitable 
locations for consideration as a new national cemetery. A joint VA/
State site evaluation team visited nine sites in the Sacramento area 
during October 2000. Several potential cemetery sites were identified.
    NCA continues to analyze each site's characteristics. Pending full 
evaluation of each site the best sites for environmental assessment 
will be selected. After all environmental assessments are completed, a 
recommendation for final selection will be forwarded to the Secretary 
of Veterans Affairs. An appraisal of the preferred site will also be 
conducted.
    The 2002 President's Budget includes $18 million to be available 
for the purchase of land for new cemeteries in the vicinity of Detroit, 
Michigan; Pittsburgh, Pennsylvania; and Sacramento, California.
    Question 28. VA is long overdue in its efforts to deal in a more 
coherent, uniform basis with the U.S. Court of Appeals for Veterans 
Claims. Decisions are not properly disseminated; litigation positions 
are inconsistent with practice in the field. Who leads the overall 
effort to interpret the Court's rulings, to disseminate that 
information, and to monitor compliance with the Court's rulings?
    Answer. Over time, a multi-tiered system for analyzing and 
disseminating Court decisions has evolved at VA. It involves the Office 
of General Counsel (OGC), the Board of Veterans' Appeals (BVA), and the 
Compensation and Pension (C&P) Service.
    The Appellate Litigation Group of the OGC, Professional Staff Group 
VII (PSG VII) distributes the court's orders and decisions to BVA, OGC 
(PSG II), and the Judicial Review staff of the C&P Service on a daily 
basis. The principals of those activities regularly discuss the 
decisions and the impact that they will have on operations throughout 
VA. Discussions are conducted by phone and e-mail, on an as-needed 
basis, and there is a scheduled meeting the first Thursday of every 
month. That meeting includes the senior leaders of PSG VII, PSG II, BVA 
and the Judicial Review staff of the C&P Service. That group leads the 
effort to interpret the court's rulings, disseminate information, and 
monitor compliance with the court's rulings. BVA and C&P Service 
produce timely written assessments of the court's case law and 
disseminate them to decision makers in Washington and in VBA's 57 field 
stations. BVA, C&P Service, and OGC frequently participate in 
nationwide video broadcasts regarding the court's case law, and each of 
the activities participate in training sessions conducted around the 
country.
    I agree that this process is likely to function most effectively 
and efficiently if one organization within VA were to lead the overall 
effort. I believe OGC is best positioned to assume this leadership 
role, and I have asked VA's General Counsel to develop a plan 
describing how he will manage this process.
    Question 29. A VA contractor recently completed a report on the 
burial benefits administered by VA and found that funeral expenses had 
increased faster than the rate of inflation, and that the VA burial and 
plot allowances had not even kept pace with the rate of inflation. Do 
you have any plans to submit a request for legislation to increase the 
benefit rates?
    Answer. H.R. 801, the Veterans' Opportunities Act of 2001, Title 
III--Memorial Affairs, Insurance, and Other Provisions, Section 301(a) 
would increase the burial and funeral expense allowances payable for 
service-connected deaths from $1,500 to $2,000, and for nonservice-
connected deaths from $300 to $500. Section 301(b) would increase the 
plot allowance payable for veterans buried in state or private 
cemeteries from $150 to $300. Pursuant to section 301(c), these amounts 
would be indexed to increases in Social Security benefits under section 
5312 of title 38. The initial increases in the various rates would be 
applicable to deaths occurring on or after the date of enactment of 
this legislation.
    The adequacy of the current rates must be judged in the context of 
the overall package of burial benefits available to veterans, and with 
reference to other competing needs for finite budget dollars. The 
Government has responded to veterans' burial needs in recent years by 
establishing several new national cemeteries and by significantly 
enhancing the grant program under which state veterans cemeteries are 
established. The State Cemetery Grants Program now provides up to 100 
percent of the costs of construction associated with the establishment, 
expansion, or improvement of state veterans cemeteries. This 
partnership between VA and the states helps to support the Department's 
strategic goal of providing veterans with reasonable access to burial 
in a veteran's cemetery. Since the 1998 enactment of Public Law 105-
368, which in effect increased the permissible grant amount from 50 to 
100 percent of construction costs, there has been an increased interest 
from the states in the program, as reflected in the increased number of 
pre-applications received.
    Given the expanding availability of burial options within both 
national and state veterans cemeteries, and the competing demands for 
scarce VA resources, we can at this time support only that portion of 
section 301 that would increase to $2,000 the burial and funeral 
expense allowance for service-connected deaths. The last increase (from 
$1,000 to $1,500) occurred in 1988. The greatest obligation is owed to 
the families of those who have paid the ultimate price for their 
service, and we believe such an increase is warranted in their case.
    Our preliminary cost estimate indicates that section 301 would 
result in benefit costs of $35 million in FY 2002 and a total benefit 
cost of $201 million for FYs 2002-2006. We estimate that an increase in 
only the service-connected burial allowance, from $1,500 to $2,000, 
would result in benefit costs of $5.3 million in FY 2002 and a 5-year 
benefit cost of $31.7 million.
    VA is currently conducting a program evaluation and analyzing the 
contractor's report on burial benefits that was submitted to Congress 
in February 2001. Once VA's evaluation and analysis is complete, we can 
provide you with the results.
    Question 30a. VBA specifically--and VA generally--has not had a 
history of stellar development and implementation of information 
technology systems. What strategies do you have for acquisition of new 
technology and ensuring VA-wide compatibility?
    Answer. VA has adopted several strategies for acquiring current and 
emerging technologies, as well as ensuring compatibility across VA's 
Administrations and all of its diverse business lines. Foremost among 
these strategies is the integration of VA's IT capital investment 
process with the Department's capital investment program. This process 
requires VA's organizations to specifically address issues of 
interoperability when designing, developing, implementing, and 
maintaining IT systems. The VA capital investment process also 
evaluates an acquisition's ability to advance the idea of One VA 
customer service, requiring organizations to address issues regarding 
the compatibility and transfer of data.
    As a complementary strategy to ensure compatibility in acquiring 
information technology, the Department is in the process of developing 
and implementing for the first time an enterprise-wide architecture 
that will bring together information on all of VA's business processes, 
information flows, applications, data, and systems infrastructure. It 
will serve as an integrated framework that, when tied to the capital 
investment process, will be an integrated framework of principles, 
guidelines, and rules for evolving and maintaining existing systems and 
acquiring new information technology. In addition, VA is including as 
part of its enterprise architecture, an updated Technology Reference 
and Standards Model that was developed several years ago and has been 
used as a guide in the acquisition of new technology since its 
adoption. When submitting an initiative into the capital investment 
review process, organizations are required to discuss conformance to 
VA's technical architecture to ensure compliance with VA standards. 
This adherence will cause compatibility issues to be sharply reduced.
    To further ensure compatibility across VA, the Department uses its 
corporate IT contract, known as the Procurement of Computer Hardware 
and Software (PCHS) Contract, to encourage VA organizations to acquire 
computer products that conform to VA's Technology Reference and 
Standards Model. PCHS has been successful in implementing a common 
infrastructure across the Department.
    In summary, VA is aggressively working to ensure that information 
technology is used in an integrated and compatible manner across the 
Department and that it supports VA's business operations in a One VA 
manner.
    Question 30b. Do you think VBA is pursuing appropriate strategies? 
Has this determination been ratified by any outside entity?
    Answer. VBA's experience in developing and implementing IT systems 
has not been without problems. However, we believe we are beginning to 
turn the corner toward success.
    As a specific example, we can look at VETSNET. VETSNET has been 
under development far too long. Its development was delayed as new 
technologies and technical approaches came. and went. Over time, it has 
suffered from a lack of focus, the absence of clear goals and, at some 
points, inadequate management. These problems are behind us. The 
current VETSNET management plan addresses these problems. What began as 
too comprehensive an effort is now focused as a replacement system for 
the C&P claims processing system that was developed in the 1960s and 
1970s. Still, concern remains about critical issues of performance and 
effective systems integration. Therefore, before we proceed to a fully 
operational status on VETSNET, we will conduct an independent audit of 
the overall system. If it passes all tests, we will go forward with its 
implementation on the current schedule. If not, we will develop a plan 
to extend the life of the current system and immediately begin the 
development of a replacement system.
    VA is not spending any new funds on IT until we have defined an 
Enterprise Architecture that ends ``stove-pipe'' systems design, 
incompatible systems development, and the collection of data that do 
not yield useful information. We are convening a panel of world experts 
in the area of systems architecture to team with key business unit 
decision makers throughout VA to develop a comprehensive Integrated 
Enterprise Architecture Plan. It is VA's top management's highest 
priority, and in a matter of months, this new plan should be finalized.
    All projects will be developed in an open architecture to 
facilitate eventual integration into a future system that will fit 
within the framework of the Enterprise Architecture previously 
discussed. All of VBA's IT strategies will be developed with this 
philosophy, as well as ensuring that systems will be part of an 
integrated, whole solution to the needs of our veterans.

    Chairman Specter. Thank you very much, Mr. Principi.
    We will now proceed with 5 minute rounds for the members. 
Starting with the Veterans Millennium Health Care and Benefits 
Act which provides access to nursing home care for veterans, we 
now have the largest aged veterans population in history, over 
9 million veterans over age 65. In another decade, 42 percent 
of the entire veteran population will be 65 or older. What 
strategies is the VA adopting to increase long-term care, and 
does this budget proposal address this need?
    Mr. Principi. Mr. Chairman, our nursing home census has 
gone down since 1998. We have dropped 9 percent, based upon the 
statistics I have before me, in the number of veterans who are 
occupying long-term beds. And, clearly, with the burgeoning 
elderly population, veterans over the age of 65 and, in some 
cases, quite a few over the age of 85, we need to do more. And, 
we are taking steps to do more, by building a model so that we 
clearly know how many beds we are operating on any given day in 
our system.
    Chairman Specter. Mr. Principi, let's focus on the issue of 
resources. Does this budget enable you to apply adequate 
resources to this need?
    Mr. Principi. Yes, I believe it does. One of our highest 
priorities is long-term care. So as we look at our budget and 
the allocation of those dollars within medical care, I will 
ensure that adequate dollars are provided to long-term care 
beds.
    Chairman Specter. Would you give the committee a figure as 
to what you deem to be adequate for long-term care and an 
analysis as to how those funds can be provided from the 
existing budget. I am not asking you to make that rather 
complex computation at the moment, but I would like to go 
beyond the generalization and see what funding you anticipate 
for this line and where the money will come from.
    Mr. Principi. Mr. Chairman, I can tell you that in our 
long-term care budget for 2002, we estimate we will spend in 
excess of $3 billion for long-term care. That is an increase 
over the fiscal year 2001 estimate of $2.8 billion. So, we are 
increasing our long-term care needs by approximately $200 
million over the 2001 level.
    Chairman Specter. How do you calculate the sufficiency of 
that increase compared to the need? And Mr. Garthwaite, do you 
want to supplement the Secretary's answer?
    Dr. Garthwaite. We believe that there is considerable need 
beyond what we are able to meet. Based on the total amount of 
appropriations in 2002, we think we will meet the total need 
for 17 to 19 percent of long-term care needs of all veterans. 
We will meet 100 percent of the mandated needs.
    Chairman Specter. Are you saying you will need more?
    Dr. Garthwaite. I am saying we will meet 100 percent of the 
mandated need for the 70 percent and above, and we will meet 
about 17 percent--we currently believe we are about in the 15 
or 16 percent range of all long-term care needs. So we will 
maintain and slightly gain on the market share for the 
nonmandated portion.
    Chairman Specter. I do not understand that at all. Will the 
$3 billion be adequate to cover the needs for long-term care?
    Dr. Garthwaite. Well, it will be adequate to cover the 
mandated needs for the 70-percent service-connected and above 
who are mandated to get long-term care from the VA. We will 
maintain our current effort and slightly increase it for the 
remainder of veterans.
    Chairman Specter. Mr. Secretary, I would like a written 
response on the details as to how you evaluate the need for 
long-term care and how the allocated resources will meet that 
need.
    [The information referred to follows:]

    FY 2002 Increase: The FY 2002 increase of $200 million was 
developed in two parts. First, state nursing home (NH) increase 
was estimated on the basis of the additional workload 
associated with activation of nursing homes funded through the 
Grants for Construction of State Extended Care facilities 
program. Second, VHA's networks, as part of their financial 
planning, estimated increases in other institutional and non-
institutional programs. On the basis of (1) their estimated 
needs for LTC services in their geographical areas and (2) the 
overall FY 2002 budget request, networks provided estimates of 
resources that could be devoted to LTC. The total investment 
represents a 9.2 percent increase in resources and supports a 
census increase of 7,145 (1,879 increase in institutional care, 
and a 5,266 increase in non-institutional care).
    Assessment of Long-Term Care Needs: VHA uses the LTC 
Planning Model to determine demand for LTC services. The model 
predicts demand for NH care and home and community based care 
(H&CBC) by priority group at a national, VISN, and local level. 
It is based on the 1996 Medical Expenditures Panel Survey for 
NH care and the 1998 National Home and Hospice Care Survey. The 
Federal Advisory Committee on Long Term care endorsed the use 
of this model. The model is sensitive to different utilization 
rates by age and disability level.
    Future Projections: VA is in the process of validating data 
from the LTC Planning model within the Administration, along 
with other outyear budget estimates. Once completed, we will 
forward data projections to the Committee.
    As with the demand for all health care by the VA, long term 
care demand, and an ability to provide this care, must be 
addressed. Policies for the type of long term care to be 
provided by priority group and its funding need to be clear. We 
will work with you on this issue over the next year.

    Chairman Specter. Before my red light goes on, it is 
reported that you suggested in a briefing to staff that VA may 
have to limit enrollment at some point in the near future. What 
do you mean by limiting enrollment?
    Mr. Principi. Since 1998, we have seen a dramatic increase 
in the number of Category VII's who have enrolled in VA's 
health care system. Category VII's are the lowest priority 
nonservice-connected, higher income veterans. That number has 
grown from approximately 350,000 to over 1 million who have 
enrolled in the system. Of that number, approximately 700,000 
actually seek their care in the VA health care system.
    If that trend in this Category VII continues at the same 
dramatic rate as the past few years, we may have to limit the 
enrollment of Category VII's. And, Category VII now comprises 
20 percent of the care provided in VA health care facilities, 
about a third in some of the Networks. New York is an example 
of a Network where about a third of their workload is the 
Category VII's. Many of these Category VII's come to the VA in 
order to have their prescriptions filled. The VA has a very, 
very generous prescription program and we see a lot of the 
nonservice-connected, higher income veterans are coming into 
the system to avail themselves of that benefit.
    So, clearly, as we look at the future of the VA, we need to 
consider balancing out the needs for our service-connected, 
lower income veterans, and balancing the needs of the Category 
VII's as well. But, it was strictly Category VII's.
    Chairman Specter. The red light went on in the middle of 
your answer. So I will observe it and turn now to Senator 
Wellstone.
    Senator Wellstone. Thank you, Mr. Chairman.
    Mr. Secretary, I want to followup on the chairman's 
question. By the way, part of my context is the Independent 
Budget that a number of veterans organizations put together. A 
couple of years ago, veterans organizations were being told you 
are always criticizing and to be proactive, so they came up 
with their budget. I do not get the arithmetic of this. I want 
to be a harsh critic, not of you, of the budget, because, 
frankly, I have to believe that both you and Mr. Garthwaite and 
others would like to have more resources to work with. I 
believe that.
    If you just take medical inflation alone, my understanding 
is we are talking about $900 million, or there about. We are 
only talking about an additional $1 billion now. The CBO, going 
back to the Millennium Health Care Act, they estimate that the 
noninstitutional--and that is what we want to do, right, want 
the veterans to be able to live at home; I would argue we want 
all people to be able to live at home in as near normal 
circumstances as possible, with dignity--CBO says this will 
cost more than $400 million a year. The Independent Budget puts 
this at $500 million a year.
    And I cannot tell you how important it is. I bet everyone 
of my colleagues has had the same experience, that when I am at 
the medical center in Minneapolis, you know it well, if I am 
visiting a veteran in a room, and say it is a World War II 
veteran and he has had a hip replacement, or maybe he is 
struggling with a disease, and if I get a minute with his wife 
and we go out in the lobby and sit down and talk to one 
another, maybe over a cup of coffee, she does not have a clue 
what she is going to do when he gets home. She is terrified. 
She loves him dearly, but she does not know how she is going to 
take care of him.
    So, we are talking about $900 million just medical 
inflation. Another $400 million or $500 million more just for 
the Millennium. Then there is a commitment we have made to 
additional mental health care services which could run up to 
several hundred million as well. Then there is the spinal cord 
injury program that PVA talks about. They want to make sure 
that is adequately funded. Then there is the presumptive 
compensation of Vietnam veterans for diabetes and other 
diseases associated with Agent Orange, that's another $132 
million according to the President's Blueprint. And then I 
would argue, and I want to ask you about this Heather French 
homeless veterans bill that we have introduced, that we ought 
to be putting services there. This does not add up.
    Tell me how we can possibly give the veterans the health 
care that we are committed to giving them with this budget. The 
arithmetic does not add up, does it?
    Mr. Principi. Again, I am not sure there is any Cabinet 
secretary who would not like to have a larger budget.
    Senator Wellstone. Just say that.
    Mr. Principi. Clearly, that is the case. We fought very, 
very hard. I am proud, and it is not a political issue, but 
this budget is 63 percent higher than the average percentage 
increases over the past 8 to 10 years. It is 14 percent higher 
in health care alone over the past 8 to 10 years--average 
percentage increase.
    So, clearly, Mr. Wellstone, sure, there are lots of 
unfunded mandates that we have to comply with--important ones. 
The emergency care, to provide veterans with emergency care who 
cannot get to a VA hospital----
    Senator Wellstone. That is another issue. Thank you, I 
forgot that one.
    Mr. Principi. It is almost $500 million to private sector 
hospitals that will come out of the direct health care system.
    So, yes, sir, with more dollars we can certainly do more in 
extended care, and we can do more across the board. What we 
have to do when you give us a final number is to make sure that 
it is spent in accordance with the priorities and dictates of 
the committee, as well as our own. If it is a $1 billion 
increase, then we will apply it to the important issues of 
homelessness and extended care.
    Senator Wellstone. I would like to thank you, my time is 
going to run out, thank you for adding that additional because 
the sort of scandal of this is we have got another 1 million 
veterans who do not have any coverage and we are going to try 
and cover them through emergency care.
    My point is, look, this is not Democrat going after a 
Republican administration. I hated the flatline budgets. I was 
as openly critical of those flatline budgets as anybody in the 
Senate, and I understand what you are saying. But I just will 
tell you, and I followup on the chairman, I add up the 
arithmetic and I look at the needs and I look at the 
commitment, and this budget does not do it. We are going to 
have to do better.
    Might I just ask you whether or not, not a yes or a no 
answer, but I am very focused on--Heather French has been a 
Miss America who has been a great advocate, I think her dad was 
a DAV member, for homeless veterans--this Homeless Veterans 
Assistance Act that I am introducing with Lane Evans and I hope 
many other colleagues, I want to get your quick reaction 
whether we are going in the right direction with this.
    Mr. Principi. I think you are certainly going in the right 
direction. I spoke to the Homeless Coalition last week and I 
told them of my unswerving commitment to this issue. I want to 
see homelessness amongst the veteran population eradicated. I 
intend to walk the talk. I intend to establish a Secretary's 
advisory committee on homelessness issues. I believe that I 
have the commitment of Dr. Garthwaite and his people so we will 
be able to dedicate the resources and, we will work with you to 
do what is necessary. Such as the grant per diem program that 
has done so well, the multifamily housing program, which we 
just got approval to make loans so that we can start buying or 
building multifamily homes for veterans who are in transition, 
homeless veterans. These are the kinds of things we should do.
    And we should also hold people accountable to make sure the 
dollars we are spending are working, that veterans are indeed 
getting jobs, that they are able to stay away from drugs and 
alcohol abuse. We need to put the money to the programs that 
are working and succeeding, and we need to have milestones and 
metrics by which we can determine what is working and what is 
not working.
    Senator Wellstone. Thank you, Mr. Secretary.
    Chairman Specter. Senator Campbell?
    Senator Campbell. Thank you, Mr. Chairman.
    Mr. Secretary, I was interested in your comments. I think I 
can speak for all of us in saying we appreciate the increase in 
the budget. But I have to say that Senator Wellstone is right 
on. It is still not meeting the needs. The veterans are all in 
town now, as you probably know. The last few weeks the American 
Legion, the VFW, the Paralyzed Veterans, and so on, are all 
coming in and talking to us and they are all pretty much saying 
the same thing, that the budget is not keeping up with the 
needs.
    I also was very appreciative that you are going to try and 
focus on increasing the speed of the claims process. That is 
one of the biggest complaints we get in our individual offices, 
people that have long waiting periods before they are taken 
care of.
    But with the limited time, I want to focus just a question 
or two on the veterans' cemeteries. As I understand it, about 
1,000 veterans are dying a day, World War II veterans, and we 
are simply running out of space. I am a veteran, by the way, 
and I have no intention of availing myself to that process in 
any near future. But I would still like to know the answer on 
how we address that. Let me ask you just a couple of specific 
questions.
    Since we do have budgetary constraints, if someone, a 
nonprofit individual, has a piece of land and they want to 
donate it to the Veterans Administration for the expressed 
purpose of using it for a veterans' cemetery, can that be done, 
and how do they do that?
    Mr. Principi. Yes, it can be done, and it is done. I 
believe the new cemetery that will be opened in Atlanta is the 
result of a grant by a family of 700 acres to us.
    Senator Campbell. Do you need legislative approval to 
accept it, or can you just accept it?
    Mr. Principi. No, we can accept it once a determination is 
made, I believe, that we are going to expand a cemetery in that 
area. So, I think, we need to have an understanding that there 
is going to be a National Cemetery in a given location, at 
which time our people go out and look at the possibility of 
land being purchased or granted.
    Mr. Rapp. I am Roger Rapp. I am the Acting Under Secretary 
for Memorial Affairs, the one involved with doing these new 
cemeteries. The cemetery that the Secretary referenced in 
Atlanta is the result of a donated property, donated to the 
Federal Government to do a National Cemetery, in a spot that we 
had identified to do a National Cemetery. The Secretary has 
statutory authority to accept donated land.
    Senator Campbell. Are those grants of land tax deductible?
    Mr. Rapp. Yes, they are.
    Senator Campbell. Just one last comment, Mr. Chairman. I 
happened to speak to the Secretary just a little bit before we 
started and he tells me he is going to be visiting Fitzsimons 
in Colorado in the near future. Some years ago when we were 
dealing with the base closure acts--you know how tough those 
were to get through--when you talk about closing a base, every 
community in the area gets very worried about the loss of jobs, 
loss of access, and so on.
    Fitzsimons has really been a model, and I think you are 
going to find that the local community, Aurora and Denver, is 
very, very happy with that transition. They have a terrific 
interaction with the University of Colorado and with the local 
community, and they have used that relationship to interest 
some pharmaceutical companies and all kinds of health care 
allied industries in moving into that area.
    I do not know what other people are doing in other areas 
with those closed bases, but you might take a look at that as a 
model. They have generated just hundreds of millions of dollars 
of private sector money with the little amount that we put into 
the transfer.
    Mr. Principi. Dr. Garthwaite and his team will look into 
the possibility of whether Fitzsimons can be converted into a 
VA-university hospital and some of the repair and modifications 
that would have to be made to Fitzsimons. So it is under 
review, sir. I do not know where it is going to lead, but we 
will keep in close touch with your office.
    Senator Campbell. Thank you. And one last little comment. I 
guess one of the very, very few complaints I have had about the 
VA is that when they decide to close a place, they have not in 
the past taken the locals into consideration very much. We have 
an old hospital called Fort Lyons, it is probably not cost-
efficient to keep open, and it is being closed, as you know, in 
southeast Colorado. The biggest complaint down there was, of 
course, the anxiety of what happened after it closed. It is 
going to be turned over to the State of Colorado. But I would 
encourage you, when there are any changes that affect local 
communities, to have somebody go out there and do some town 
meetings or some old fashioned public hearings so the VA can 
hear from people about what is going to happen. That will help 
us because I will not get so many angry calls and letters, as 
you might guess.
    Mr. Principi. Yes, sir, we will.
    Senator Campbell. Thank you, Mr. Chairman.
    [The prepared statement of Senator Campbell follows:]

 Prepared Statement of Hon. Ben Nighthorse Campbell, U.S. Senator From 
                                Colorado

    Thank you, Mr. Chairman. I would like to welcome you, Mr. 
Secretary, and thank you for appearing before the committee 
today. I am looking forward to your testimony which will give 
us a better picture of how the Administration is going to 
address the serious issues facing the VA as we begin a new 
century.
    I am encouraged that President Bush has said his goal is to 
modernize our veterans' health care system and to speed up the 
agency's notoriously slow claims process. And, I see your 
appointment, Mr. Secretary, as a powerful sign that this 
administration wants to take better care of its veterans.
    You have said that the nation can not ignore its debt to 
its military veterans. That attitude will go a long way in 
tackling the tough job ahead of you. I think we can all agree 
that one of our greatest national responsibilities is the 
welfare of our nation's veterans. It is critical that we find a 
balanced way to make good on the promises to them.
    I have looked at the testimony of the many service 
organizations testifying at the joint hearings during the past 
month, and I have listened carefully to the Colorado veterans 
who have met with me.
    Though I am encouraged with the overall FY 2002 funding 
increase, and particularly the increase for medical care, I 
continue to be concerned that we find a way to take care of 
what will be an increasing number of elderly veterans. They 
will need nursing homes and long term care facilities, they 
will need state of the art health facilities and services, and 
they will need new ways to access that care. Access to quality 
health care for women veterans is also an important issue.
    And, I remain concerned for the present backlog that 
continues to hinder the adjudication process of veterans' 
claims appeals. I understand that is one of your top 
priorities, and I heartily support you in that objective.
    I look forward to hearing more details of your budget plan 
and how you plan to address these issues in an efficient and 
effective manner within the proposed budget.
    Speaking as a veteran, I want to do all we can to serve 
those who have so honorably served all of us.
    I thank the chair and look forward to today's testimony.

    Chairman Specter. Thank you, Senator Campbell.
    Senator Miller?
    Senator Miller. Mr. Secretary, I applaud your appointment 
and I believe that you are going to be a great Secretary who is 
going to be able to look after our veterans and also be, at the 
same time, a steward of taxpayer dollars. And I think you can 
do both at the same time.
    I know that you have spoken about there be a better 
coordination between the Veterans Administration and the 
Department of Defense. We know that this lack of communication 
has resulted sometimes in duplication of services, with some 
beneficiaries actually being enrolled in health care programs 
with both agencies. Do we have any idea of what could be saved 
by eliminating these duplications of service? Have you spoken 
to Secretary Rumsfeld?
    Mr. Principi. I have, Senator. I have spoken to Secretary 
Rumsfeld on several occasions. We are planning a meeting in the 
very near future. My staff is in the process now of developing 
a strategy paper on how we will proceed with some form of 
interagency understanding addressing some of the cross-cutting 
issues of both departments. I know they are having their own 
share of challenges and problems with TriCare and the costs 
associated there.
    When I was Chairman of the Congressional Commission on 
Servicemembers in Veterans Transition Assistance, we believed 
that by consolidating the procurement activities of DoD and VA 
in pharmaceuticals and supplies and equipment, that the savings 
in this alone would be enormous. And by adopting a national 
formulary and using universal product numbers, we could save I 
think it was close to $400 million a year. I believe the 
Department of Defense IG also found that there were savings in 
excess of what the Commission had found.
    So I believe there are opportunities for efficiencies, 
greater effectiveness that can expand the reach of health care. 
It is troubling to me any time we leave money on the table that 
goes in someone else's pocketbook, so to speak, and that we 
cannot use the money to provide more care to more needy people, 
whether they are dependents of military personnel, retirees, or 
needy veterans.
    I look forward to getting together with the Secretary. I 
think we have made great steps, great progress over the past 
several years, and I applaud my predecessors for the work they 
have done. But I think more can be done, and certainly we need 
to do that.
    Senator Miller. I hope you will keep us informed as you 
move along with that.
    Mr. Principi. I will, sir.
    Senator Miller. Thank you, Mr. Chairman.
    Chairman Specter. Thank you very much, Senator Miller.
    Senator Hutchinson?
    Senator Hutchinson. Thank you, Mr. Chairman, and thank you 
for calling the hearing today. It is very timely.
    Mr. Secretary, I want to thank you. I think the last time 
we had you before this committee I raised a question about VA 
architects and a long-term facility in northwest Arkansas and 
you responded promptly and got me the answers I needed. I 
appreciate that very much and compliment you for that.
    Help me to understand the numbers a little bit. The $23.4 
billion is a 4.5-percent increase. That is a $1 billion 
increase. And then you said there was another $200 billion that 
would be retained----
    Mr. Principi. $200 million.
    Senator Hutchinson. $200 million, which puts us at $1.2 
billion. That is what, a 5----
    Mr. Principi. A 5.3-percent increase.
    Senator Hutchinson. A 5.3-percent increase.
    Dr. Garthwaite, what is medical inflation right now?
    Dr. Garthwaite. I am not 100 percent sure. One figure that 
has been quoted is 4.36 percent. I would say that the average 
increase that employers expect to pay or the Federal Employee 
Health Benefits folks, like many of us in this room have to 
pay, is closer to 8 and 10 percent.
    Senator Hutchinson. My understanding was that health care 
inflation is running quite a bit higher than the CPI and 
inflation in general. On the surface at least, it would appear 
we are going in the wrong direction on this, that the amount of 
increase does not really even meet the increased health care 
inflation rate.
    Mr. Principi. You know, Senator, an interesting point, 
since 1994, Medicare costs have increased in the 30's, I want 
to say 33 or 36 percent. In that same period, the medical CPI 
has gone up about 26 percent. And in that same period of time, 
VA's average costs have declined per patient 2 percent. So, 
clearly, we are very efficient.
    I fully agree with what Dr. Garthwaite said. The medical 
CPI is high and, you are right, employers are paying 8 or 10 
percent and even more than that a year. And we feel those cost 
increases. But we provide a lot of care. When you look at what 
has happened in Medicare and the medical CPI, the VA has done 
very, very well in controlling cost, bringing cost down, and 
moving more to outpatient care. We can do a lot. And with more 
resources, we can keep people off of the Medicare rolls and the 
Government would be saving money. That is the point I would 
make.
    Senator Hutchinson. I do not dispute that at all. I think 
VA has done an excellent job. To me, that is a concern, with 
that aging veteran population, more acute health care needs, 
and a very modest increase, how you meet those competing 
interests.
    The National Cemetery budget increased 11 percent, and the 
Benefits Administration increased was it 13 percent?
    Mr. Principi. Yes, sir.
    Senator Hutchinson. OK. If you have a 13-percent increase 
in benefits and an 11-percent increase in the cemeteries, what 
is the percentage increase on the medical care side? It has to 
be less than the 5.3 percent.
    Mr. Principi. It is 4.8 percent. Taking the $1.2 billion 
and rounding it to $1.2, it is actually a little above $1.2 
billion, but when you divide it up that is what I come up with, 
about 4.5 or 4.8 percent in medical care, 13 percent in 
veterans benefits, 11 percent in cemeteries.
    Senator Hutchinson. How are those priorities determined on 
the amount of increase in each area?
    Mr. Principi. I think collectively. The senior leadership 
team works together and ultimately I have to make a decision. 
But it is done in consultation with the Under Secretaries, 
staff offices, and the comptroller.
    Senator Hutchinson. Mr. Secretary, you mentioned that the 
Category VII's had gone from 350,000 to over 1 million and that 
700,000 were seeking their care in the VA. So that is doubling 
the Category VII's, 350,000 to 700,000 who are using the VA. To 
what do you attribute that dramatic increase?
    Mr. Principi. I think, clearly, veterans are seeing the 
attractiveness of the VA for a high-quality health care 
provider, in view of the fact that we have moved from a 
traditional hospital-based health care system to a more 
contemporary veterans-focused health care system with 
outpatient clinics within close proximity of their homes.
    Senator Hutchinson. Let me stop you because I think you are 
right on and I am about to run out of time. The outpatient 
clinics, the whole goal of which was to increase access and to 
make health care closer to the veterans, is working. We are 
seeing that happen. But now you are talking about capping 
enrollment or stopping enrollment.
    Mr. Principi. That is one option if it continues to grow. 
But, I think ideally we would like to see Category VII's 
continue to enroll in the system. We do have to do a better job 
of recovering some of the cost from the higher-income, 
nonservice-connected veteran. It was always, I believe, 
premised on Category VII's contributing more to the cost of the 
care.
    Senator Hutchinson. I agree.
    Mr. Principi. Today, we are collecting less than 15 cents 
on the dollar from these Category VII's for cost of care. I 
think we need to do better than that.
    Senator Hutchinson. Let's work on that, higher-income 
veterans, we ought to be able to recoup more----
    Mr. Principi. From insurance companies and----
    Senator Hutchinson. Rather than keeping them from being in 
the system.
    I know my time is up, but let me just followup one thing 
that was from the briefing you presented to congressional 
staffers last week, and I appreciate your doing that. But this 
chart indicates on the inventory of unprocessed claims a 
projection of going from 309,000 last year to over 600,000. 
That is not your fault, you are inheriting this. But that is 
very discouraging. What are your plans to get your arms around 
this problem?
    Mr. Principi. Well, we have now lots of plans in the works. 
Certainly, the cornerstone is a task force comprised of the 
best minds of people who are in the VA who understand this 
area, the private sector management people, and CEO's of 
companies who can teach us some lessons they learned. Together 
they hopefully can come up with some practical, hands-on 
solutions on how to better manage, organize, and process 
claims.
    We are also taking steps to hire more people. We are 
changing the way we do training. We are moving workload around 
to more productive stations, to resource centers. We are 
looking at technologies that we have implemented which have 
caused a logjam in productivity, and to maybe suspend some of 
that until we get out from under this mess.
    The bottom line is I want to see the inventory at 250,000 
claims, and processing times of 90 days in 2 years. We need to 
have milestones to get to that point by March 2002-2003, to 
hold people accountable, to hold people's feet to the fire, and 
measure it every 6 months to see how well we are doing. So, we 
are going to implement new steps. We are gong to take some of 
the money you have given us to process claims, hire more 
people, train them differently than we have in the past, move 
workload around, and procure expert systems that will allow a 
rating specialist to do work more efficiently. Hopefully, the 
combination of these steps, and watching it, will allow us to 
get there.
    Senator Hutchinson. Thank you, Mr. Secretary. Thank you, 
Mr. Chairman.
    Chairman Specter. Thank you, Senator Hutchinson.
    Senator Nelson?
    Senator Nelson. Thank you, Mr. Chairman.
    Congratulations, Mr. Secretary. This is the first time I 
have had occasion to see you since your confirmation. We 
appreciate very much what you are doing.
    Mr. Principi. Thank you, Mr. Nelson.
    Senator Nelson. During the President's Day recess, I had 
the occasion to tour the Grand Island, NE facility and found 
that a lot of improvements have been made there. There are 
others that are on the schedule for the future. I found it to 
be a facility very well-received by the public, but also a 
functioning facility. I appreciate very much what your 
Administration will do to continue to see that those 
improvements occur.
    We may be victims of our own success in terms of 
utilization as we try to expand the availability of services. 
People take us at our word and they avail themselves of our 
services. So utilization increases will continue I am sure as 
we do that. Likewise, the medical care costs, inflationary 
costs, they are only one of the factors. Utilization will 
continue on its own even as you try to sort out the challenge 
of Category VII members.
    What I am hopeful is that we will be able to put together a 
budget not just simply for veterans, but overall, for all the 
needs of our country and that we will be able to work together 
to do this on a bipartisan basis. Otherwise, I am very 
concerned that the veterans may be part of the process that is 
left out or not included at the level that we need them to be 
included.
    Let me also comment that as I toured the facility in 
Nebraska, there were two things that came to mind. One is that 
the President put a statement in the budget that this special 
effort would be made to serve veterans who live in an 
underserved geographic area. Nebraska, like many other rural 
States, would be in that category. I am hopeful that we will be 
able to see that promised carried out in a meaningful way.
    The final thing that I would like to say, and this is not 
just a statement but is, in fact, a question for you, one of 
the concerns about the means test is that in a rural area you 
can be land rich and cash poor. Is there any thought about 
excluding family farm land from the means test in establishing 
whether or not a veteran would qualify for care? I would hate 
to see veterans have to sell their family farm to realize the 
assets necessary so that they can pay for their care. It seems 
to me that there may be a way to look at the means test that 
takes into account assets that can be reduced to cash in some 
meaningful way versus those that cannot. And as a Senator from 
a rural State, I have a great deal of interest, I am sure 
others share that interest, too.
    Mr. Principi. I am sure. It is a unique problem. I think it 
is a problem shared in some urban areas as well, where mom and 
pop have owned----
    Senator Nelson. Right, the family business.
    Mr. Principi. They have owned a business and live above the 
business, and they have the assets tied up in that grocery 
store or clothing store, but they are not wealthy in terms of 
how they qualify. We have talked about that, sir, and I think 
we need to continue to do so to make sure that it is fair, and 
that people can access the system, so that they are not 
unwittingly thrown into a Category VII group, but that they can 
gain access. I hope by working in a bipartisan manner we can 
get the resources we need so we can allow them to come into the 
system, irrespective of what category they are--Category VII's 
or Category I service-connected. We need to do that.
    Senator Nelson. Thank you.
    Chairman Specter. Thank you very much, Senator Nelson.
    Senator Murray?
    Senator Murray. Thank you very much, Mr. Chairman, for 
having this hearing. I apologize for being late.
    Mr. Secretary, it is great seeing you again. I really want 
to welcome you to this committee and let you know how much I am 
looking forward to working with you. But I want you to know the 
veterans in my State are really delighted that you are doing 
this and give you their best as well.
    I think you have one of the toughest and most important 
jobs in the cabinet because you represent a group of people who 
really do not often feel like they have a voice. They have 
served our country with honor and pride and they do not like 
asking. But they are today in a position of having to ask 
because their needs are not being met. I know that President 
Bush has promised a $1 billion increase in the VA budget. I am 
happy about that but I am also very concerned about whether a 
surplus will materialize and we will have the ability to put 
that increase in there.
    I am curious as to whether you think that increase is 
sufficient to address the real needs that are out there for our 
veterans, particularly with the health care system. I would 
just love to hear your comments on what you think the needs are 
in our health care system and what we need to address that.
    Mr. Principi. Thank you, Senator Murray, for your kind 
words. It is, indeed, the greatest job in the Cabinet and, I 
think a very difficult one, and I certainly accept that.
    I am pleased with the budget. I need to tell you that the 
first couple of weeks after I arrived and saw what OMB passed 
back to me, I thought I would have the shortest tenure in 
history because I did not think I could survive, or would want 
to survive. But, we managed to get it up to a $1 billion 
increase. Certainly, as I mentioned to Senator Wellstone, I 
know I am not the only one in the budget who believes they need 
more money or would like more money, but I am grateful for what 
I consider a significant increase relative to past years when--
again, not a political issue--when we did not even get that 
high.
    I believe it is a workable budget. I know it is only the 
first step in the process and the Congress has a say in this 
matter as well. But, I believe it is workable. We need to be 
careful on how we prioritize for long-term care and other 
special programs that the Congress has spoken about. We need to 
make a better effort of collecting medical care cost recovery. 
You have given us the authority, when I was here as a young 
staffer more than 10 years ago, to collect from insurance 
companies for the nonservice-connected care of veterans who 
have insurance. I do not think we have done a very good job in 
collecting that. You have told us we can keep that money in our 
medical centers and that it can be used to expand the reach of 
care. We have improved, but I think we have a long way to go.
    And we have the CARES process underway now to take a look 
at our infrastructure to see how it should be realigned. We are 
not really in the real estate business, we are in the health 
care business. And if there is real estate that we have that 
can be used for other purposes, for assisted living or whatever 
it might be, that allow us to cut down our infrastructure cost, 
more efficiently utilize our infrastructure, I think we can 
further expand the reach of health care.
    So I think there are things that we can do, and must do, to 
improve the delivery of health care. Opening all these 
outpatient clinics is a much more effective way to reach 
veterans and provide health care rather than having them drive 
to an inpatient facility maybe hundreds of miles away. And, we 
are doing that. We are transitioning the health care system. So 
I think it is a good start.
    Senator Murray. I look forward to working with you, hearing 
your ideas, and working with our committee to make sure that we 
fund these really important needs. I urge you to really have 
good communications with veterans because change is not easy 
for people who have seen an awful lot of change and do not 
trust what the word ``change'' means anymore. I really would 
like to work with you on that.
    In your testimony, you state that the VA will fully 
implement the VA's ``duty to assist'' role. As an author of 
that legislation, I want to know exactly what you mean by that.
    Mr. Principi. I am sorry we had to get into the situation 
where we had to overturn the court and have legislation. The 
``duty to assist'' legislation will require us to review 
approximately 342,000 claims for well-groundedness. But, we are 
allocating $134 million of this budget increase, 13 percent 
increase over last year, Senator, that will be used to bring on 
800 additional employees into our Benefits Administration. A 
significant number will be used to allow us to work on ``duty 
to assist'' and the claims backlog. Coupled with other steps, 
procurement of expert systems, I believe we will, indeed, fully 
implement the legislation and get on with reducing the backlog.
    Senator Murray. Great. I am delighted to hear that. Let me 
just also thank the Secretary for his work with one of my 
constituents. I really appreciate it and hope we can resolve it 
very quickly.
    Mr. Principi. I hope so. I think we are well on our way to 
getting that resolved, Senator.
    Senator Murray. Thank you. Thank you, Mr. Chairman.
    Chairman Specter. Thank you, Senator Murray.
    Secretary Principi, in looking at the overall budget, we do 
not have any specification yet as to the breakdown, we simply 
have the total figure. I note that the House Committee has 
recommended an increase of $2.4 billion as opposed to $1 
billion, raising the same question which has been raised at 
this hearing, which is whether the administration's budget is 
adequate. I am skeptical that it is but I am going to reserve 
judgment until I see the fine print as to how you are going to 
make your allocations and also until we see how you may 
undertake some other measures within the VA to help on the 
funding side.
    You had mentioned briefly the issue of insurance carriers 
paying. The estimate has been submitted that the VA is 
collecting less than 15 percent of the money spent on the care 
of the priority VII patients. Do you know if that is true?
    Mr. Principi. Yes, that is true.
    Chairman Specter. What can be done to collect on those 
insurance policies which might add substantially to the 
resources of the Veterans Administration?
    Mr. Principi. Well, certainly, I think one of the first 
steps is to identify the veterans in Category VII, the 
nonservice-connected, who carry insurance and finding a way to 
obtain that data. That is the first thing.
    Chairman Specter. Is there any problem with obtaining that 
data?
    Mr. Principi. Well, I think we just have not done very well 
in learning whether veterans have insurance. Dr. Garthwaite is 
closer to it, maybe he can just talk about that for a moment.
    Dr. Garthwaite. I think there are several aspects that are 
important. One is that veterans believe that if they use their 
insurance too much, they might lose it. So they do not always 
want to share the fact that they have insurance. And it is a 
voluntary process for them to give us that information.
    Chairman Specter. Dr. Garthwaite, what do you mean it is 
voluntary? Does the VA ask the veteran if they have insurance?
    Dr. Garthwaite. Right. We ask, but we do not have a good 
way to check to see if they have given us accurate information 
and told us about insurance policies that they might have.
    Chairman Specter. Let's back up just a minute. Does the VA 
always ask?
    Dr. Garthwaite. We do ask and means test any nonservice-
connected veterans, yes.
    Chairman Specter. In what way do you make the request, is 
it orally, is it in writing?
    Dr. Garthwaite. They sign a form.
    Chairman Specter. It is a serious matter to provide false 
information to the Federal Government. What I would like you to 
do, I may be wrong, but I note some hesitancy in the response 
about--well, let me put it this way, give us a written report 
as to how you make the request; is it oral, is it in your 
regulations, do you put it in writing, do you put on the 
writing the kind of language which appears on the tax return 
about subject to the penalties if you do not provide an 
accurate answer. I think that kind of information is something 
VA is entitled to obtain. And you are talking about Category 
VII. I know that the Veterans Administration would not like to 
cut down on the priority VII people, but you have to establish 
your priorities. So, really, in asking them for their 
insurance, you are saying to them we need the resources in 
order to continue the coverage. But provide the committee in 
writing with precisely what is the way of seeking the 
information and what you could propose to do to sharpen it up.
    Dr. Garthwaite. We would be happy to.
    [The information referred to follows:]

    Insurance Identification Process: Insurance identification has been 
problematic for the VA. Although insurance information is requested 
during the enrollment process and is recorded on the VAF 10-10EZ form, 
we believe that we miss a substantial number of individuals with some 
type of billable insurance coverage.
    Questions concerning insurance information are contained on the VAF 
10-10EZ. This information is also updated periodically throughout the 
year. A veteran can also provide updates at any time to reflect any 
changes in data. Medical centers obtain insurance information using 
several methods:
          1. During the initial interview process: Intake personnel 
        request the information during the enrollment registration 
        process. Each veteran is queried for a health insurance card as 
        well as any applicable spousal coverage. If the veteran has an 
        insurance card, a copy of the card is made. If the veteran does 
        not have an insurance card, they are asked to provide the name 
        of the insurance company that provides their health insurance 
        coverage. Veterans are also asked to provide their employment 
        information, as well as spousal employment information. 
        Insurance and employment information is verified and recorded 
        into the VistA system.
          2. Using the `pre-registration' process: Pre-registration 
        clerks use a call list to contact veterans two weeks prior to 
        their scheduled outpatient appointment. The purpose of the pre-
        registration process is to update demographic data, including 
        health insurance information prior to the outpatient visit. 
        Insurance verification clerks use a similar process and contact 
        veterans two weeks before an inpatient admission for updating 
        demographic data, to include all health insurance data.
          3. Mailing of Questionnaires: Medical centers can generate 
        reports detailing information for patients with upcoming 
        scheduled appointments where there is no listed health 
        insurance. Staff then mail these patients a questionnaire to be 
        completed and returned to the medical center. The questionnaire 
        requests updated addresses, employer, next-of-kin, telephone 
        number, and pertinent health insurance information.
    Insurance Verification Process: Insurance verification is the 
process used by the insurance verification clerk to contact the 
veteran's insurance company to determine the policy benefits and 
exclusions for appropriate billing action. The insurance verification 
clerk uses the information in the VHA data system insurance buffer file 
for verification with the applicable insurance companies. Information 
that is verified includes the name of the policyholder, policy number, 
effective date of coverage, expiration date of coverage, type of 
coverage, special riders, applicable exclusions and addresses for 
claims submissions. The process also includes determining if the 
insurance policy covers inpatient, outpatient, mental health, substance 
abuse, dental, prosthetics, skilled nursing, and home health care 
services.
    Pre-certification requirements for inpatient and outpatient care 
are obtained during the verification process. The pre-certification 
information is particularly important for inpatient care. Many 
insurance companies require pre-certification for outpatient services 
such as ambulatory surgery and psychiatric treatment. The insurance 
verification clerk also determines the percentage that the insurance 
will reimburse on submitted claims and obtains information about 
deductibles and out of pocket expenses, as well as lifetime maximum 
benefits coverage.
    After verification of the information, it is entered into the 
patient insurance file and is readily available for all users. The 
overall benefit for insurance verification and re-verification is that 
it enables the VA to send accurate claims to the insurance companies, 
decreases the number of claims that need to be cancelled and submitted 
to different insurance companies.
    Planned Actions: VHA recently initiated several pilots with private 
sector firms that indicate that they can assist in identifying billable 
data to improve insurance identification. VHA is also in the 
preliminary stages of discussing with the Health Care Financing 
Administration (HCFA) the development of a match with the Medicare 
common working file primary insurance data base that may help us 
identify billable insurance for veterans. Finally, VHA is in the 
process of revising VA Form 10-10EZ to include a certification that the 
information the veteran is providing is true and accurate. The form 
will also include a notification of penalties for false reporting.

    Chairman Specter. In 1999, the Veterans Administration 
requested, and the Congress approved, legislation authorizing 
the VA to modify existing copayment rates for a variety of 
services. Despite the congressional action over a year ago, no 
such changes have been proposed. What do you have in mind on 
that, Mr. Secretary?
    Mr. Principi. You are absolutely correct, sir. We have not 
done so. We are in the process. Dr. Garthwaite and I have 
talked about it as late as this morning that we need to get on 
with taking a look at the copayments to ensure that they are at 
the right level, that they do not discourage or deny veterans 
the opportunity to come to the VA for care, and that, at the 
same time, especially in the Category VII's again, your higher 
income veterans who have average incomes of about $40,000, pay 
a more realistic cost for their care.
    I think pharmaceutical prescriptions is a good area, where 
we have been at $2 for a long time, and we all know that for a 
30-day or a 90-day prescription for certain medications, many 
Americans, unfortunately, pay hundreds upon hundreds of 
dollars. We believe we should raise that a slight amount, to 
perhaps $7 for the more expensive medications, that would allow 
those dollars to be used to offset some of the cost of the 
rapid growth in pharmacy costs, and allow us to provide 
prescriptions for more veterans.
    At the same time, we need to look at lowering the copayment 
for outpatient care. Right now we charge a veteran, nonservice-
connected, $50 to come to a clinic for a simple examination. 
That is way too high. That should be more like $15. At the same 
time, if we do sophisticated outpatient surgery, whether it be 
a cataract surgery or something else, then there should be a 
higher copayment for that. So, we need to make our copayments 
much more realistic, which would provide us some income, some 
revenues for the system.
    Chairman Specter. Mr. Secretary, what do you think is a 
reasonable period of time to give you to submit to the 
committee a report on this copay issue? 60 days?
    Mr. Principi. No more than 60 days. Perhaps even as short 
as 30 days. We have been at it a long time. So we need to get 
on with it. We need to make some decisions and report to you.
    Chairman Specter. No more than 60, perhaps as short as 30?
    Mr. Principi. Yes.
    Chairman Specter. Settle on 45? [Laughter.]
    Mr. Principi. Deal.
    Chairman Specter. In 45 days, Mr. Secretary, give the 
committee a report on the copay issue. You have already 
indicated your sensitivity to not discouraging veterans from 
seeking the service on an ability to pay. But it ought to be 
reevaluated. I believe if we are to hold down spending, in 
accordance with President Bush's request, and additional 
funding, that we ought to be looking very closely within the 
existing resources.
    [The information referred to follows:]

    Background: Public Law 106-117, The Veterans Millennium 
Health Care and Benefits Act authorized the Secretary, 
Department of Veterans Affairs, to set an applicable outpatient 
copayment rate, to increase the medication copayment amount, to 
establish maximum monthly and annual medication copayment 
amounts and to establish copayments for extended care services.
    Current Status: VA is currently reviewing copayment-setting 
options for long-term care, medication, and outpatient 
treatment. Proposed regulations are being developed for each 
copayment category. Since these proposals are subject to the 
Notice and Comment Procedures of the Administrative Procedure 
Act, they are required to go through the normal regulatory 
process.
    The normal process can take eight to ten months once we 
submit the proposed regulation to OMB. We intend to work 
closely with OMB to expedite this process. It is my intention 
that the long term care, revised outpatient, and revised 
medication copayment regulations be in effect in October, at 
the beginning of the fiscal year. General Counsel and the 
Office of Management will assist VHA in this effort. These 
regulations have been delayed long enough. This is a high 
priority for the VA to complete this work.

    Chairman Specter. On Medicare subvention, Mr. Secretary, 
what do you think might be doable there?
    Mr. Principi. Part of this discussion that we had earlier 
in response to Senator Miller's question about more cooperation 
with DoD in health care delivery, more coordination and 
partnership between the two systems. And I think the same holds 
true with HHS. I think Secretary Thompson should be involved in 
this discussion because of overlapping eligibilities.
    On the whole issue of Medicare subvention, clearly, I would 
like to see us get reimbursed from Medicare for the cost of 
some of this care that we provide. HCFA has a different view of 
the whole thing. But I believe when we coordinate health care 
policy in this country, the VA needs to be part of that because 
we are such a large provider of health care. So I think 
Rumsfeld, Thompson, and Principi need to sit down with our 
leadership in health care and talk about some of these issues, 
and how we could provide it.
    Chairman Specter. Mr. Secretary, I think your work with the 
Department of Defense is an excellent idea. Let me ask you to 
take the lead on the Medicare subvention idea, and give us a 
response, again within 45 days, as to what you see there. 
Because as we look at budgetary shortfalls, and again trying to 
honor the new President's request that we not add to his 
budget, those may be areas where we can come up with the 
funding and recognize the President's figure. But there is 
going to have to be some innovation and some ingenuity to work 
it out.
    [The information referred to follows:]

    As you know, much work and negotiation on this issue 
occurred in the last Administration. We have not had the time 
to review this proposal within the Administration. Just as 
before, much coordination and cooperation will be needed in the 
development of any proposal in this matter.

    Chairman Specter. We have a vote in 14 minutes and we have 
five more witnesses.
    Senator Murray, do you have anything you would like to add?
    Senator Murray. Mr. Chairman, if I could just do a quick 
followup.
    Mr. Secretary, you talked a minute ago about outpatient 
clinics, which I think are important in order to bring VA 
health care closer to veterans. But I want to make sure we do 
not lose sight of specialty care needs, specifically, spinal 
cord injuries, which is important in my State. If you could 
just comment really quickly on your commitment to that.
    Mr. Principi. We are certainly cognizant of the issue, the 
Millennium Care Act, that we maintain capacity at 1998 levels. 
I believe in all areas, with the exception of substance abuse, 
we have done well. We have increased funding. We are very, very 
close to meeting our capacity requirements in spinal cord 
injury, and we will continue to do so to make sure we maintain 
those levels.
    Senator Murray. Good. Also, I am concerned about the 
staffing needs for specialty care, especially nursing 
shortages. If you could comment on that really quickly.
    Mr. Principi. Well, I think it is a crisis that we need to 
deal with. That is another issue that is very, very important. 
I am certainly receiving reports from various sources that not 
only in specialty care, but around the system, there is a 
shortage of registered nurses. And we are losing some nurses to 
the private sector because the salary rates are going up 
because of the shortage. When you get to that intensive care, 
whether it be nursing home care or spinal cord injury, where 
the demands are even greater on the nurses, I think we have to 
be more innovative there. I know Dr. Garthwaite, we are looking 
at new equipment that allows us to transport spinal cord injury 
patients without the nurse having to do a lot of the lifting.
    So we are trying to find new ways to bring nurses into the 
system; more attractive salary rates, better education, 
scholarship programs. But this is an issue that all American 
health care is going to have to grapple with.
    Senator Murray. Absolutely. Thank you. And I would love to 
have you come out to the Seattle VA and see some of the work 
they are doing there with spinal cord injuries.
    Mr. Principi. I would love to. And I am pleased that we 
were fortunate not to sustain damage at Seattle, Portland, or 
Vancouver, although, as you know, Senator, we did have some 
minor damage at American Lake. We have addressed that, we sent 
a team out there.
    Senator Murray. He is talking about the earthquake, Mr. 
Chairman. Thank you.
    Chairman Specter. Thank you, Senator Murray.
    Thank you, Secretary Principi, Dr. Garthwaite, Mr. 
Thompson, Mr. Rapp, Mr. Catlett. We appreciate your being here.
    I would like now to call Mr. James Fischl, Mr. Howie 
DeWolf, Mr. Rick Surratt, Mr. Harley Thomas, Mr. Dennis 
Cullinan. We very much appreciate the activity and the inputs 
of the veterans service organizations. In representing 
America's veterans, you have a very high degree of 
responsibility. As we so frequently find, we are squeezed on 
the scheduling with votes at 11. But we do appreciate your 
being here.
    Let us start with you, Mr. James Fischl, Director of the 
Veterans Affairs and Rehabilitation Commission of the American 
Legion.

 STATEMENT OF JAMES R. FISCHL, DIRECTOR, VETERANS AFFAIRS AND 
         REHABILITATION COMMISSION, THE AMERICAN LEGION

    Mr. Fischl. Thank you, Mr. Chairman. Good morning, Mr. 
Chairman and members of the committee. The American Legion 
appreciates the opportunity to appear before you this morning. 
Our submitted statement outlines what we believe are VA's real 
funding needs for fiscal year 2002. Our budget recommendations 
are unchanged from those initially presented to this committee 
last September by Commander Ray Smith.
    In the fiscal year 2002 outline for the Department of 
Veterans Affairs, the President calls for $1 billion increase 
for the entire VA. Simply put, the American Legion believes 
that this is not good enough. It is not good enough to continue 
to provide quality health care for eligible veterans. It is not 
good enough to offset fixed cost increases and medical 
inflation, and to address long-term care mandates contained in 
the Millennium Act. It is not good enough to support a strong 
medical and prosthetic research program. It is also not good 
enough to hire and train enough veteran service representatives 
to expedite the delivery of earned benefits for veterans and 
for their dependents.
    The American Legion recommends a minimum $1.3 billion 
increase in health care appropriations for fiscal year 2002. 
Maintaining current health care services alone requires nearly 
a $900 million increase. The Veterans Health Administration has 
made significant progress over the past two fiscal years in 
correcting years of funding neglect and now is not the time to 
take a step backward from these recent gains.
    The American Legion supports Medicare subvention and 
generating new revenue sources for Veterans Health 
Administration. We believe that the G.I. Bill of Health is a 
large part of the solution to VHA's annual budgetary dilemma. 
It is up to this Congress to provide VHA with the tools it 
needs to help improve its own financial situation.
    In the past there has been much opposition to Medicare 
subvention. And as we heard this morning, part of the problem 
seems to be collection of benefits. We feel very strongly that 
collection of benefits is something that can, and should, be 
done. We look forward to the report that the VA will make on 
how they will collect money from third party sources. We 
believe that third party revenue is extremely important to the 
streamline of funds into the Department of Veterans Affairs.
    The American Legion over the past few years supported a 
number of initiatives within VHA and VBA to improve the 
efficiency and effectiveness of service. The American Legion 
will continue to support reform that clearly enhances services 
to veterans.
    Mr. Chairman, the American Legion notes for the record that 
the House Veterans' Affairs' Committee has called for a $2.1 
billion increase in discretionary VA spending, stating that the 
Administration's recommended $1 billion, or 4.4 percent, 
increase outlined by Secretary Principi would just about keep 
veterans health care even. The American Legion urges this 
committee to act in the same bipartisan spirit as your 
colleagues in the House and to recommend an appropriate 
increase.
    The American Legion looks forward to working with this 
committee to seek a long-term solution to VA's recurrent 
problems. We applaud your positive comments this morning that 
express the need for additional revenue. We look forward to 
working with you and joining with you in recommending an 
adequate increase in VA's discretionary budget for fiscal year 
2002.
    Mr. Chairman, that concludes my remarks, and I will be 
happy at some point to answer any questions the committee may 
have.
    [The prepared statement of Mr. Fischl follows:]
 Prepared Statement of James R. Fischl, Director, Veterans Affairs and 
             Rehabilitation Commission, The American Legion
    Mr. Chairman and Members of the Committee:
    Thank you for the opportunity to appear before you today to express 
the views of The American Legion concerning the Fiscal Year (FY) 2002 
Department of Veterans Affairs (VA) appropriations. Last September, The 
American Legion's National Commander Ray G. Smith offered many of these 
same recommendations during a joint session of the Veterans' Affairs 
Committees. The National Commander called for an overall increase in 
discretionary spending of approximately $1.75 billion in appropriations 
for VA in FY 2002. The purpose of the joint hearing was to paint a 
clear budgetary picture for the next administration and Congress. These 
recommendations were also provided to the major political parties, to 
all incumbents seeking re-election, and to those candidates who 
requested copies of the testimony.
    The American Legion believes the formulation of the VA budget must 
be based on the needs of America's veterans, especially those with 
service-connected disabilities. This is especially important if the 
Department of Defense (DoD) plans to effectively resolve its 
recruitment and retention problems. America must honor those promises 
(implied or not) made previous generations of veterans. The American 
Legion believes taking proper care of those who have already served is 
the linchpin to future veterans. Veterans and their families are DoD's 
very best recruiters. Young men and women considering military service 
will seek out active-duty personnel, veterans and their family members 
for advice. Their voices will carry more weight in the decision process 
than slogans, recruitment materials or glowing promises.
    Honorable military service must provide a veteran with more than 
individual pride, personal dignity and self-respect. Broken promises, 
hollow pledges and meaningless gestures do not strengthen national 
resolve, build morale, or promote unselfish devotion to duty. The 
thanks of a grateful Nation must be much more than holidays and 
parades. Long after the guns are silenced, the parades are over and the 
dead are buried, medals and citations do not help feed, house, educate 
or heal a veteran.
    Mr. Chairman, The American Legion notes for the record that the 
House Veterans' Affairs Committee has called for a $2.1 billion dollar 
increase in discretionary VA spending, stating that the 
Administration's recommended billion-dollar, 4.4 percent increase 
outlined by Secretary Principi would ``just about keep veterans health 
care even.'' The American Legion urges this Committee to act in the 
same bipartisan spirit as your colleagues in the House and to recommend 
an appropriate increase.
    Over the years, Congress has implemented an array of programs 
designed to meet the needs of the veterans' community. Many veterans 
have never turned to VA for any assistance until now. Many of them 
never thought that VA would become an important part of their lives, 
but due to external factors (time, money and health), VA has become 
their life support system!
    In addition to the specific budgetary recommendations outlined 
below, The American Legion believes Congress needs to focus on other 
budgetary solutions that involve both mandatory and discretionary 
funding. Medicare subvention is one such issue. Why must a Medicare-
eligible veteran have to pay for treatment from VA for a nonservice-
connected medical condition out of his or her own pocket, especially if 
he or she has purchased Part B? Congress allows VA to bill, collect, 
and retain third-party reimbursements, except Medicare. Why? Medicare-
eligibility is not, and never has been, a priority or criteria for 
treatment in VA. When VA treats a Medicare-eligible veteran for a 
nonservice-connected condition, the veteran is billed. If these 
Medicare-eligible veterans want to seek health care in VA facilities, 
why can't they use their Medicare dollars to cover the cost of care for 
nonservice-connected medical conditions?
    TRICARE is another such issue. All military retirees are eligible 
to seek treatment in VA medical facilities. Should they receive 
treatment for nonservice-connected conditions, the veteran or TRICARE 
will be billed. If the military retiree receives a prescription from 
VA, he or she can get the prescription filled at no charge in a DoD 
pharmacy. If the prescription is filled in the VA pharmacy, he or she 
may or may not have to pay a copayment (depending on the status of the 
veteran). This does not make sense, since the Federal government buys 
the medications for both agencies! This is but one instance where 
greater cooperation and coordination between VA and DoD could provide 
better quality, more timely and accessible health care coverage for all 
veterans and their families.
    The American Legion greatly appreciates the actions of all Members 
of Congress regarding the increases in VA health care funding for FY 
2000 and FY 2001 of approximately $3 billion. The American Legion 
believes such an increase was long overdue and has allowed VA to better 
meet the needs of veterans seeking care for their many medical 
problems. The American Legion believes VA should continue to receive 
full funding in to order to continue providing world-class health care. 
However, in order to do so, the Veterans Health Administration (VHA) 
requires just a billion dollars in new funding each year just to 
maintain existing services. With a mediocre budget request from a new 
Administration, the veterans' community must, once again, turn to 
Congress to make sure ``no veteran is left behind.''
    The American Legion is very appreciative that Congress has realized 
that the flat-line funding imposed on VA health care under the Balanced 
Budget Act of 1997 was a bad idea. Just like the Medicare and Medicaid 
programs, the VA health care budget requires an annual increase to 
maintain its existing service level and to fund new mandates. For 
years, VA managers were asked to do more with less. The recent funding 
increases now allow VHA to do more with more, and will repair some of 
the problems related to long patient waiting times and limitations on 
access to care. Congress must not allow the recent funding gains to 
regress back to the day of doing more with less.
    The past eight years have witnessed a significant reorganization 
and realignment of VHA resources and programs. Many dramatic and bold 
changes were initiated to improve VA's ability to meet the health care 
needs of the veterans' community. Now over four million veterans seek 
their health care in VA medical care facilities and even more veterans 
would come, if additional resources were available to cover the cost of 
care. VA continues to provide outstanding quality care that is 
recognized and praised by health care critics internationally. VA's 
medical research is still, dollar-for-dollar, the Nation's best 
investment. Quality, efficiency and effectiveness are the hallmarks of 
today's VHA.
    Congress must continue to support increased VHA funding to maintain 
a world-class health care system. There are precious little additional 
efficiency savings expected throughout the system. Yet, those veterans 
now enrolled and using the system will continue to rely on VHA for the 
foreseeable future. Therefore, The American Legion believes that 
Congress must examine how to balance the annual appropriations process 
with additional funding that will not be offset by the Office of 
Management and Budget (OMB). The American Legion believes that a 
strategic goal of VHA should be to seek opportunities to increase 
funding sources, both appropriated and nonappropriated.
    The overall guiding principle for VA must be improved service to 
veterans, their dependents, and survivors. This requires improving 
access to and the timeliness of veterans' health care, increasing 
quality in the benefit claims process, and enhancing access to national 
and state cemeteries. Specific American Legion objectives yet to be met 
by Congress include:
     Set the veterans' health care system on a sound financial 
footing for meaningful long-term strategic planning and program 
performance,
     Improve clinic appointment scheduling for access to 
medical treatment,
     Enact Medicare subvention legislation,
     Establish pilot programs to provide health care to certain 
dependents of eligible veterans,
     Improve cooperative arrangements between VA and DoD's 
TRICARE system,
     Reduce the benefits claims backlog and improve the quality 
of the claims process,
     Continued enhancement of the Montgomery GI Education Bill,
     Repeal of section 1103, title 38, U.S.C., removing the bar 
to concerning service-connection for tobacco-related illnesses,
     Increase the rate of beneficiary travel reimbursement, and
     All third-party reimbursements collected by VA should be 
used to supplement, rather than offset, the annual Federal 
discretionary appropriations.
    The American Legion offers the following budgetary recommendations 
for FY 2002:
               budget proposals for selected va programs

----------------------------------------------------------------------------------------------------------------
                                                FY 2001 Appropriations          The American Legion's Proposal
----------------------------------------------------------------------------------------------------------------
Medical Care............................                       $20.2 billion                       $21.6 billion
Medical and Prosthetic Research.........                         350 million                         375 million
Construction:
  Major.................................                          66 million                         250 million
  Minor.................................                         166 million                         175 million
Grants for State Extended Care                                   100 million                          80 million
 Facilities.............................
National Cemetery Administration........                         109 million                         115 million
State Cemetery Grants Program...........                          25 million                          25 million
VBA's General Operating Expenses........                        1.08 billion                         1.2 billion
----------------------------------------------------------------------------------------------------------------

                          medicare subvention
    Public Law 105-33, the Balanced Budget Act of 1997, established 
VA's Medical Care Collection Fund (MCCF) and requires that amounts 
collected or recovered after June 30, 1997, be deposited in this 
account. Beginning October 1, 1997, amounts collected in the fund are 
available only for furnishing VA medical care and services during any 
fiscal year; and for VA expenses for identifying, billing, auditing, 
and collecting of amounts owed the Federal government fore such care. 
Public Law 105-33 also extended to September 30, 2002, the following 
Omnibus Budget Reconciliation Act (OBRA) provisions:
     Authority to recover co-payments for outpatient 
medications, nursing home and hospital care;
     Authority for certain income verification; and
     Authority to recover third-party insurance payments from 
service-connected veterans for nonservice-connected conditions.
    The Health Service Improvement Fund was established to serve as a 
depository for amounts received or collected under the following areas 
as authorized by title 38, U.S.C., Section 1729B:
     Reimbursements from DoD for TRICARE-eligible military 
retirees;
     Enhanced-use lease proceeds; and
     Receipts attributable to increases in medication co-
payments.
    The Extended Care Revolving Fund was also established to receive 
per diems and co-pays from certain patients receiving extended care 
services authorized in title 38, U.S.C., Section 1710B. Amounts 
deposited in the fund are used to provide extended care services.
    Congress is providing VA with the authority to bill, collect, 
retain, and use revenues from sources other than Federal 
appropriations. However, the country's largest health care insurer 
(Medicare) is exempt from billing; yet, its beneficiaries are welcomed 
and encouraged to receive treatment in VA medical facilities.
    Currently, approximately 10.1 million veterans are Medicare-
eligible solely based on their age. Criteria for Medicare-eligibility 
are different than eligibility for treatment in VA. In the VA health 
care network, certain veterans are eligible for treatment at no cost 
for medical conditions determined to be service-connected. Medicare-
eligibility is not a priority or criteria for health care at no cost in 
the VA health care system. Other veterans are eligible for treatment at 
no cost, because they are economically indigent. All other veterans 
must pay for treatment received.
    Medicare subvention would allow VA to seek reimbursement from the 
Health Care Financing Administration (HCFA) for treatment of 
nonservice-connected medical conditions of Medicare-eligible veterans. 
VA and HCFA should explore either the Fee-For-Service or 
Medicare+Choice options or both. Medicare-eligible veterans should not 
forfeit their Medicare health care dollars because they prefer VA 
health care to health care offered in the private sector.
    More than 734,000 Medicare beneficiaries have lost HMO coverage 
over the past two years and another 934,000 seniors will be dropped by 
their HMO plans next year. Many VA-eligible beneficiaries are included 
in those dropped from coverage and will eventually come to VA for care. 
The argument that VHA is already reimbursed for its Medicare population 
and that Medicare subvention will result in double funding is mistaken. 
VHA is now mandated to provide care to all seven priority groups. As 
more Medicare-eligible veterans seek first time care in VHA, health 
care costs and subsequent waiting times will increase. It is imperative 
that Congress examine this issue and take the actions necessary to 
ensure that VHA receives all funding necessary to execute its health 
care mission with quality and in a timely manner.
    Medicare subvention for VA must be included in any planned Medicare 
reform legislation passed in the 107th Congress. Access to VA health 
care is an earned benefit. No Medicare-eligible veteran, treated for a 
nonservice-connected medical condition, should be deprived of his or 
her Federal health care insurance dollars to pay for the care received 
in a VA medical facility.
                  veterans health administration (vha)
    The American Legion commends VHA for the evolutionary changes made 
over the past several years. Most, if not all, of these alterations 
were long overdue and necessary. This includes eligibility reform, 
enrollment, the reorganization of the 172 medical centers into 22 
integrated service networks, the elimination of certain fiscal 
inefficiencies, and the expansion of community-based outpatient 
clinics. For many years, VHA's annual budget appropriation was the 
guiding principle behind its management decisions. To a degree this is 
still true. However, today there is growing evidence that VHA strategic 
planning will help guide future budget development.
    The primary short-term objectives of VHA must be to improve patient 
access and health services delivery. The American Legion's VA Local 
User Evaluation (VALUE) guidebook cites patient access as the largest 
single source of continuing veteran complaints. In accordance with its 
strategic planning, VA annual inpatient admissions have decreased by 32 
percent since 1994; ambulatory care visits have increased 35 percent. 
However, in some areas, like substance abuse, the number of veterans 
actually being able to access treatment has declined. This phenomenon, 
along with a large decrease in administrative and clinical staff, and a 
significant increase in patient enrollments over the past few years, 
has placed a huge strain on VHA's ability to meet its workload in a 
timely and consistent manner. As VHA becomes more proficient in 
attracting new patients, it must also provide consistent access to care 
across all 22 Veterans Integrated Service Networks (VISNs).
    Currently, the national average waiting time for a routine, next-
available appointment for Primary Care/Medicine is 64 days (with a 
range of 36-80 days). The next available appointments for specialty 
care:

------------------------------------------------------------------------
                                                  Average
                Specialty Care                      Days        Range
------------------------------------------------------------------------
Eye Care (Ophthalmology & Optometry)..........           94       42-141
Audiology.....................................           50        22-91
Cardiology....................................           53        19-78
Orthopedics...................................           47        12-69
Urology.......................................           79       39-108
------------------------------------------------------------------------

    There are additional concerns about the average clinic appointment 
waiting times for dermatology and pulmonary clinics. However, these 
specialty clinics are not included in the VISN director's performance 
standards. Therefore, no national average waiting times were reported. 
These waiting times indicate that there are serious access differences 
between VA health care and private sector health care.
    There are also reported concerns about long distances that veterans 
in rural areas have to travel for certain care. For example, veterans 
in eastern Montana must travel nearly 700 miles to Fort Harrison, MT 
for routine inpatient surgery. For complex surgical procedures, these 
same veterans are required to travel to Salt Lake City or Denver. This 
excessive travel places great strain on veterans and their families. 
Since 1994, the Miles City, MT VA Medical Center has reduced its 
payroll over $7 million per year by eliminating nearly 145 full time 
employee positions. The American Legion questions why contract services 
for required surgery have not been acquired to reduce excessive travel 
requirements?
    In some cases, The American Legion believes VHA has gone too far, 
too fast in attempting to improve its fiscal efficiency. Veterans 
should not have to increase their travel time for the benefit of VA. 
Rather, VHA needs to improve its cooperation with other federal, state 
and private health care providers to improve the quality and timeliness 
of care for veterans.
    VHA's short-term and long-term future must be clearly defined to be 
responsive to the needs of the veterans' community. All individuals who 
enter military service should be assured that there is a health care 
system dedicated to serving their needs upon leaving the military. That 
concept is especially important to disabled veterans and military 
retirees. The GI Bill of Health would ensure that all honorably 
discharged veterans would be eligible for VA health care on a permanent 
basis, as they would fall into one of the core entitlement categories. 
A unique feature of the GI Bill of Health is that it would also permit 
certain dependents of veterans to enroll in the VA health care system. 
The American Legion advocates that dependents of veterans be allowed to 
use the system and that VA retain any third-party reimbursements for 
treatment. An additional significant step will be to enact VA-Medicare 
subvention.
    At the current workload level, VHA requires an annual appropriation 
increase of approximately $1 billion to maintain current services and 
meet its prosthetics and pharmacy costs. The amount of potential 
efficiency savings is decreasing yearly. The projected $3 billion 
funding increase over FY 2000-2001 must compensate for the flat line 
budgets of FY 1997-99, and fully fund the provisions of the Millennium 
Act involving emergency and long-term care, Hepatitis C treatment. 
Consequently, there is a continuing need to adequately fund VHA's 
uncontrollable cost increases at an acceptable level in order to 
maintain capacity in the Special Emphasis Programs (Mental Health, SCI, 
Blind Rehab, etc).
    Change within VHA, over the past several years, has been the result 
of a series of small steps. The American Legion acknowledges that the 
progress made within VHA has been extraordinary. However, this progress 
has to be sustained and reinforced. In order to accomplish this goal, 
Congress must unlock the creative potential of VHA to develop 
alternative revenue sources to complement the annual appropriations 
process, but these additional sources of revenue should not be used to 
offset the appropriated dollars from Congress.
    At a recent VA planning meeting, VHA unveiled six strategic goals 
to be accomplished by 2006:
     Put quality first,
     Provide easy access to medical knowledge, expertise and 
care,
     Enhance, preserve and restore patient function,
     Exceed customers' expectations,
     Maximize resource use to benefit veterans, and
     Build healthy communities.
    The American Legion believes these are important goals. However, we 
believe VHA must explore all opportunities to develop alternative 
revenue sources to complement its annual appropriations. To do less 
will continue to force VHA to solely rely on the annual budget process 
to establish patient treatment priorities. There is a distinct 
possibility that if future funding does not keep pace with the growing 
needs of veterans who seek treatment through VHA; the current open 
access to all seven-priority groups will close.
    The American Legion recommends $21.6 billion in VHA.
                                tricare
    The most significant recent change in military health care is the 
introduction of TRICARE (DoD's regional managed care program). TRICARE 
is facing many challenges to providing and maintaining a quality health 
care delivery system for active duty military personnel, military 
retirees, and dependents.
    DoD continues to confront severe administrative problems with 
TRICARE. The American Legion is extremely concerned how DOD will fix 
these problems and if DoD can guarantee TRICARE's long-term success.
    There are multiple reasons why TRICARE is failing to meet the 
expectations of its beneficiaries:
     Infrastructure and financial problems,
     Problems with provider networks--resulting in weak network 
links to subcontractors,
     The inability to attract and retain qualified health care 
contractors,
     No financial tracking system outside of the military 
treatment facilities,
     Difficulties in processing claims in a timely manner,
     TRICARE lacks portability between all 12 regions, and
     Military retirees and their dependents are required to pay 
an annual enrollment fee.
    The American Legion believes that VHA can greatly assist DoD 
through expanded authority to provide care to TRICARE beneficiaries. 
With limited budgets, both VA and DoD must discover innovative ways to 
provide care to active duty personnel, to all veterans and military 
retirees, and to eligible dependents.
    Congress recognized the utility of having VHA play a greater role 
in the treatment of TRICARE beneficiaries when it passed the Veterans' 
Millennium Health Care and Benefits Act (PL 106-117). This legislation 
requires VA and DoD to enter into an agreement to reimburse VA for the 
cost of care provided to retired servicemembers who are eligible for 
TRICARE and who are enrolled as Priority 7 veterans. These veterans 
would not be required to pay VA inpatient and outpatient copayments. 
The program is to be phased in as DoD enters into TRICARE contracts 
after November 30, 1999.
    Five years ago, it was impractical to suggest that VHA was capable 
of assisting DoD in resolving many of its patient treatment problems. 
Today, although not without concerns of its own, VA is in a much better 
position, both financially and organizationally, to assist with the 
delivery of health care to DoD beneficiaries. The American Legion 
believes that VA and DoD should better coordinate medical care and 
services to the extent possible, thereby eliminating duplication of 
effort and achieving greater cost efficiencies. With proactive 
planning, VHA can become the largest single provider of health care to 
America's veterans, military retirees and their dependents. DoD could 
then assume the responsibility of providing health care to active duty 
servicemembers, Reserve Component members and their dependents.
                    medical and prosthetic research
    The contributions of VA medical research include many landmark 
advances, such as the successful treatment for tuberculosis, the first 
successful liver and kidney transplants, the concept that led to 
development of the CAT scan, drugs for treatment of mental illness, and 
development of the cardiac pacemaker. The VA biomedical researchers of 
today continue this tradition of accomplishment. Among the latest 
notable advances are identification of genes linked to Alzheimer's 
disease and schizophrenia, new treatment targets and strategies for 
substance abuse and chronic pain, and potential genetic therapy for 
heart disease. Many more important potentially groundbreaking research 
initiatives are underway in spinal cord injury, aging research, brain 
tumor treatment, diabetes and insulin research, and heart disease, 
among others.
    VA devotes 75 percent of its research funding to direct clinical 
investigations and 25 percent to bioscience. Patient-centered research 
comprises one of every two dollars spent on research within VA. In FY 
2001, VA's appropriations funding for research is $350 million.
Gulf War Veterans' Illnesses
    The American Legion continues to actively support Gulf War veterans 
and their families, as it has since August 1990. The American Legion 
created two programs specifically for Gulf War veterans, the Family 
Support Network in October 1990, and the Persian Gulf Task Force in 
October 1995. Today, The American Legion serves Gulf War veterans and 
their families at the community, state, and national levels through 
15,000 local posts and an array of programs and services.
    Thousands of Gulf War veterans, who suffer undiagnosed illnesses 
with a range of symptoms, know as ``Gulf War veterans' illnesses,'' are 
not receiving adequate care or compensation from VA and DoD. As the 
number of sick Gulf War veterans has continued to increase, it is 
apparent that VA has narrowly interpreted and implemented the Persian 
Gulf War Veterans' Benefits Act (Public Law 103-446), effectively 
denying compensation to some of the veterans the law was designed to 
help. It is clear that the intent of Congress was not only to 
compensate Gulf War veterans with conditions that can not be diagnosed, 
but to also compensate sick veterans diagnosed with poorly defined 
conditions such as chronic fatigue syndrome and fibromyalgia. As a 
result of VA's narrow interpretation of PL 103-446, it has become quite 
clear that legislation is needed to amend Title 38 USC Sec. 1117, 
Compensation for Disabilities Occurring in Persian Gulf War Veterans.
    The American Legion makes the following recommendations in addition 
to the legislative course of action discussed above:
     VA and DoD should conduct their respective exams in a 
standard and uniform way as well as create a database that will merge 
the individual data from both exams so that patterns in health can be 
better analyzed,
     VA and DoD should aggressively move to educate its medical 
doctors about newly defined illnesses (Chronic Fatigue Syndrome, 
fibromyalgia, etc.) that are commonly misdiagnosed as psychological 
conditions. VA should also discourage its doctors from giving diagnoses 
for common symptoms unless diagnosed properly, so that the VA's Persian 
Gulf War Registry and DoD's Comprehensive Clinical Evaluation Program 
(CCEP) data will be accurate,
     VA and DoD should conduct extensive follow-up to Gulf War 
veterans who participate in the Registry and CCEP examinations to 
monitor health status.
    Additionally, this past September the Institute of Medicine (IOM) 
released a much-anticipated report on the health effects of exposures 
during the Gulf War. Unfortunately, due to the lack of evidence and 
quality research on the long-term health effects of the various 
exposures these veterans faced during the Gulf War, IOM was unable to 
make any determinations regarding veterans' health due to exposures. 
IOM recommended additional research for long-term health effects. In 
light of the inconclusive findings and IOM's call for additional 
research, appropriate action should be taken to extend the presumptive 
period for VA undiagnosed illness compensation claims which is set to 
expire January 1, 2002.
    Additional research on the long-term health effects of the various 
hazards veterans were potentially exposed to during the Gulf War, as 
called for by IOM, will require additional funding. Anticipated 
extension of priority health care for sick Gulf War veterans will also 
require additional funding. The American Legion urges Congress to 
continue aggressive oversight of the implementation of the landmark 
Gulf War legislation passed by the 105th Congress (PL 105-368).
    The American Legion recommends that Medical and Prosthetics 
Research be increased to $375 million.
            medical construction and infrastructure support
Major Construction
    The VA major construction program is not being funded in an 
adequate manner. The major construction appropriation over the past few 
years has allowed for only one or two projects per year. Meanwhile, the 
number of priority projects continues to accumulate. For FY 2001, 16 
major ambulatory care or seismic correction projects were submitted to 
Office of Management and Budget. Of this number, only one major VHA 
project is recommended. For FY 2002, 28 major projects are to be 
submitted for funding. The American Legion does not believe that the FY 
2001 funding level of $66 million is sufficient to meet this goal.
    The American Legion recommends $250 million for Major Construction.
Minor Construction
    Annually, VHA must meet the infrastructure requirements of a system 
with approximately 4,700 buildings, 600,000 admissions and over 35 
million outpatient visits. To do so requires a substantial inventory 
investment. The FY 2001 appropriation of $166 million for minor 
construction needs additional funding to meet future physical 
improvement needs. It is penny-wise and pound-foolish to reduce this 
investment. VHA was forced to delay approximately one-third of its 
priority minor projects. The American Legion believes that Congress 
must be consistent from year to year in the amount invested in VHA's 
infrastructure.
    The American Legion recommends $175 million for minor construction.
     grants for the construction of state extended care facilities
    Currently, this nation is faced with the largest aging veterans' 
population in its history. VA estimated the number of veterans 65 years 
of age or older will peak at 9.3 million in the year 2000. By 2010, 42 
percent of the entire veteran population, an estimated 8.5 million 
veterans, will be 65 or older, with half that number above 85 years of 
age. By 2030, most Vietnam Era veterans will be 80 years of age or 
older. The State Veterans' Home Program must therefore continue, and 
even expand its role as an extremely vital asset to VA. Additionally, 
state homes are in a unique position to help meet the long-term care 
requirements of the Veterans' Millennium Health Care and Benefits Act.
    State veterans' homes provide over 24,000 beds with a 90 percent 
occupancy rate that will generate more than seven million days of 
patient care each year. The authorized bed capacity of these homes is 
90 nursing care units in 40 states (17,844 beds); 46 domiciliaries in 
32 states (5,841 beds); and 5 hospitals in 4 states (469 beds). For FY 
2000, VA spent approximately $255 per day to care for each of their 
long term nursing care residents, while paying private-sector contract 
nursing homes an average per diem of $149 per contract veteran. The 
national average daily cost of caring for a state veterans' home 
nursing care resident during FY 2000 was $137. VA reimbursed state 
veterans' homes a per diem of only $40 per nursing care resident.
    On the basis of the available funding in FY 2001, a total of 42 
priority one state home construction grant projects with an estimated 
cost of $110 million remain unfunded. As many VA facilities reduce 
long-term care beds and VA has no plans to construct new nursing homes, 
state veterans' homes are relied upon to absorb a greater share of the 
needs of an aging veteran population. If VA intends to provide care and 
treatment to greater numbers of aging veterans, it is essential to 
develop a proactive and aggressive long-term care plan. VA should work 
with the National Association of State Veterans' Home Directors to 
convert some of its underutilized facilities on large multi-building 
campuses to increase the number of available long-term care beds.
    The American Legion recommends $80 million for the State Veterans' 
Home Extended Care Construction Grants Program.
                 national cemetery administration (nca)
    Currently, NCA oversees 119 national cemeteries in 39 states and 
Puerto Rico. The Department of the Army or the Department of the 
Interior administers sixteen other national cemeteries. Sadly, there 
are 57 national cemeteries closed to first interments. Recently, new 
national cemeteries were opened in Chicago, IL; Albany, NY; Cleveland, 
OH; and Dallas, TX. Major construction projects are planned at other 
existing sites to extend the active life of the cemeteries for as long 
as possible.
    The National Cemetery Administration has no national cemeteries in 
some critically needed areas. Among these are Atlanta, GA; south 
Florida; Pittsburgh, PA; Sacramento, CA; Detroit, MI; and Oklahoma 
City, OK. Additionally, some existing cemeteries will soon run out of 
available space without significant expansion.
    The National Cemetery Administration statistics project over 80,000 
burials during FY 2001. The number of veterans' deaths is projected to 
peak at 620,000 in 2008 and slowly return to the 1995 level of 500,000 
by 2020. Notwithstanding the development of six new national cemeteries 
over the past 10 years, there is an urgent requirement to continue the 
recent expansion. Without a strong commitment from Congress to take on 
this effort, VA will not be able to improve access to burial in 
national cemeteries for millions of veterans and their eligible 
dependents.
    The American Legion believes that Congress should remove the 
current restriction on eligibility to an appropriate government 
furnished marker for veterans that have a marked grave. This outmoded 
statute affects over 20,000 families per year. This restriction should 
be removed so NCA can be of assistance to all families that seek 
appropriate recognition of a veteran's honorable military service.
    The American Legion recommends $115 million for NCA. Additionally, 
Congress should commit to building six new national cemeteries by 2008 
and provide appropriate funding in VA's major construction program for 
this purpose.
       grants for the construction of state veterans' cemeteries
    The State Cemetery Grants Program is an excellent complement to 
NCA. The enactment of PL 105-368 in November 1998 significantly 
improves the state grants program, but does not ensure that the states 
will commit to developing veterans' cemeteries in the areas of greatest 
need. Therefore, to strengthen the program, Congress must increase the 
burial plot allowance paid to the states and make the allowance 
applicable to all veterans. Additionally, to lessen the demand to 
invest millions of dollars in the construction and long-term 
maintenance of new national cemeteries, a significant increase in state 
grants applications funding must be provided.
    The American Legion recommends $25 million in new State Veterans' 
Cemetery Grants.
                    veterans benefits administration
    Mandatory spending for the payment of compensation, pension, and 
burial benefits by the Veterans Benefits Administration (VBA) for FY 
2002 is expected to exceed $23 billion. This reflects the impact of 
recent new regulatory and legislative entitlements as well as higher 
average benefit payments, certain new proposed legislation, and a cost-
of-living adjustment.
    The proposed increase in discretionary funding for FY 2002 will do 
little, if anything, to improve VBA's claims adjudication process. The 
promised improvements in service cannot be achieved without a 
substantial staffing in the regional offices. This is clearly evident 
in the fact that the current backlog of pending claims, new appeals, 
and remanded cases from the Board of Veterans Appeals is continuing to 
grow rather than decrease. In addition, there will be a substantial 
increase in the regional offices' workload associated with new claims 
for diseases such as diabetes related to Agent Orange exposure, 
Hepatitis C, and radiation-related claims, as well as the 
readjudication of claims as a result of the Veterans' Claims Assistance 
Act of 2000. Additional funding is also needed to enable VBA to 
continue its efforts to reengineer their business processes, improve 
training, continue succession planning, and improve the overall quality 
and timeliness of the service provided to veterans and their families.
    The American Legion is supportive of the broad performance and 
service improvement goals set forth in VBA's strategic management plan. 
Progress has been made in a number of areas under the current year 
budget. However, this is a long-term process and many significant 
challenges remain. Without adequate funding support at this critical 
period, VBA's implementation of a broad spectrum of operational, 
programmatic, technological, and administrative initiatives now 
underway or planned will be delayed and service will deteriorate. 
Disabled veterans must now wait months and sometimes years for their 
benefit claims to be decided. They are deeply frustrated and 
disappointed by a bureaucratic system that appears to be ``not very 
user friendly'', inefficient, and frequently unresponsive to their 
personal problems and needs. VBA's budget for FY 2002 must ensure that 
progress toward its stated service improvement goals will continue and 
that veterans and their survivors receive the benefits and services 
they are entitled to in a timely manner
                            benefit programs
    In FY 2002, the estimated number of compensation, pension, 
education, and burial claims is expected to increase over the FY 2001 
workload projections. While the number of pension claims will decline, 
due to the high mortality among World War II veterans, this will be 
substantially offset by the expected influx of claims for diabetes, 
Hepatitis C, additional radiation-related diseases, and requests for 
readjudication under the Veterans' Claims Assistance Act of 2000. It is 
apparent from the growing backlog of pending claims and appeals, which 
is now in excess of 500,000 cases, that present staffing levels are 
inadequate to meet the current workload and provide veterans and other 
claimants the level and quality of service they are entitled to and 
deserve.
    One of the biggest challenges facing VBA over the next several 
years, in addition to the much needed modernization of its computer 
systems, is the prospect of the large scale turnover among its most 
experienced and senior personnel within the next three to five years. 
This issue was recognized as a major concern in the FY 1999 budget 
request and we were pleased that additional staff for VBA has been 
authorized in each of the past three-year budgets. However, currently, 
only 45 percent of authorized decisionmakers have three years or more 
of experience. The prevailing level of inexperience, the sheer number 
of claims and appeals to be processed, and the legal and medical 
complexities of all types of claims has contributed to an unacceptable 
error rate and a growing backlog of pending cases. VBA is continuing 
its efforts to recruit new personnel, improve the level, and the 
availability of training. It has also instituted several initiatives 
that will not only help identify errors in adjudication and improve the 
quality of decisions, but will make individuals and managers personally 
accountable for the quality of their work. It is essential that these 
initiatives continue and be fully funded.
Hepatitis C Claims
    Hepatitis C has become a national public health challenge and The 
American Legion is deeply concerned by the prevalence of the Hepatitis 
C virus in the veteran population. According to government estimates, 
there are approximately 4 million Americans with this virus and many 
have serious health problems, such as cirrhosis of the liver and liver 
cancer. According to VA estimates, 400,000 veterans may be infected 
with this disease. The reason why veterans are more likely to have 
Hepatitis C than the non-veteran population is because of the presence 
of a variety of risk factors inherent in military life and the 
increased risk of exposure by those serving on active duty.
    The American Legion has been generally pleased by VA's 
responsiveness to the Hepatitis C problem. In light of study data 
showing an increased incidence of this disease among the veteran 
population, The American Legion asked the VA Secretary to consider 
issuing regulations providing for presumptive service connection. 
Proposed regulations are now under development and will, hopefully, be 
available for public comment later this year. When finalized, these are 
expected to result in a substantial influx of claims for disability 
compensation and VA medical care. While these regulations will assist 
veterans in establishing entitlement to disability and medical care 
benefits, we believe that Congress should codify by statute the 
presumptions which will apply to Hepatitis C claims. This will ensure 
VA has the necessary resources to fully and fairly adjudicate this type 
of claim and provide the support needed for its outreach, information, 
and treatment programs.
    The American Legion recommends $1.2 billion in VBA-GOE.
                       board of veterans appeals
    The American Legion believes the Board of Veterans Appeals (BVA) 
will require additional staffing resources for FY 2002, so that efforts 
to improve productivity and reduce their response time can continue. 
Staffing at the BVA is currently 520 FTEE. However, due to a number of 
internal and external factors, the BVA's workload is expected to remain 
high and their response time increase to over 220 days. In FY 2002, BVA 
expects to increase production slightly and reduce the number of 
pending appeals at the Board. However, these modest gains will be 
largely offset by the impact of directives of the Court of Appeals for 
Veterans Claims that require additional time, effort and resources in 
deciding appeals and those cases remanded from the Court to the Board 
for readjudication. In addition, the Board's long-term workload 
continues to trend upward, despite VBA's many quality and service 
improvement initiatives, including the establishment of the Decision 
Review Officer program and greater cooperation between the regional 
offices and the BVA. The number of new appeals filed each year remains 
in excess of 60,000 and the number of substantive appeals filed is at 
least 32,000, most of which will eventually reach the BVA. In addition, 
there are thousands of cases remanded to the regional offices over the 
last several years and a majority of these will return to the BVA.
                                summary
    Immediately after seeing the new Administration's budget request 
for FY 2002 and its recommendation of only a billion dollar increase in 
VA discretionary funding, National Commander Smith said, ``The 
administration's suggested increase is simply not good enough.''
    The American Legion believes VA must receive at least $750 million 
more than the $1 billion in discretionary spending requested by 
President Bush and Secretary Principi. The American Legion specifically 
recommends the following minimal funding levels:

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Medical Care........................                       $21.6 billion
Medical and Prosthetic Research.....                         375 million
Construction:
  Major.............................                         250 million
  Minor.............................                         175 million
Grants for State Extended Care                                80 million
 Facilities.........................
National Cemetery Administration....                         115 million
State Cemetery Grants Program.......                          25 million
VBA's General Operating Expenses....                         1.2 billion
------------------------------------------------------------------------

    If VA is to provide quality health care to America's veterans more 
funding is absolutely necessary. A billion dollars will not begin to 
address Hepatitis C treatment or long-term care mandated by the 
recently enacted Veterans' Millennium Health Care and Benefits Act. A 
billion-dollar increase will just about cover the on-going costs 
associated with maintaining current health care services, but there 
will be nothing left to address the claims adjudication crisis. VA must 
hire enough new claims adjudicators to expedite the delivery of 
benefits and replace the large number of retiring experienced 
adjudicators
    This budget request is insufficient to fulfill the campaign 
promises made by President Bush, Vice President Cheney, and Secretary 
Principi to America's veterans and their families:
     Improve health care delivery,
     Modernize the claims process,
     Closer cooperation with TRICARE, and
     Full utilization of health care facilities throughout the 
system.
    Mr. Chairman and Members of the Committee, adequate health care for 
veterans is important because veterans are important. Their sacrifice 
is the human cost of failed foreign policy. Whenever the VA budget 
suffers, it hurts America's veterans, and adversely impacts on their 
families. Many of you know of classic examples of your constituents 
that waited months, and sometimes years, for a claim to be processed. 
You know of others that must wait weeks, and sometimes months, for a 
medical appointment. Yet, when this Nation called on them to fight, 
their response was immediate!
    Sadly, many veterans do not live long enough to see their claims 
resolved. Years of suffering, frustration, and financial hardship all 
too often follow them to their grave. The American Legion knows this is 
wrong and you know this is wrong. These problems cannot be properly 
resolved without adequate discretionary funding.
    Thank you Mr. Chairman, this concludes my testimony.

    Chairman Specter. Thank you very much, Mr. Fischl.
    We now turn to Mr. Howie DeWolf, National Service Director 
for AMVETS.
    Mr. DeWolf.

  STATEMENT OF HOWIE DeWOLF, NATIONAL SERVICE DIRECTOR, AMVETS

    Mr. DeWolf. Mr. Chairman, members of the committee, I am 
Howie DeWolf, the National Service Director for AMVETS. AMVETS 
is honored to join our fellow veteran service organizations in 
providing you with our best estimate of the resources necessary 
to carry out a responsible budget for the fiscal year 2002 
programs of the Department of Veterans Affairs.
    Mr. Chairman, I have submitted my written statement for the 
record and request that it be accepted, with your approval.
    Chairman Specter. It will be made a part of the record in 
full.
    Mr. DeWolf. Thank you, sir. Sir, I will briefly summarize 
our recommendations as they pertain to the National Cemetery 
Administration. The three remaining Independent Budget veteran 
service organizations will follow me to cover the remainder of 
the document.
    The Independent Budget veteran service organizations 
acknowledge the dedication of the National Cemetery 
Administration staff that provides the highest level of service 
to veterans and their families. To provide this service, they 
oversee an infrastructure of 119 National Cemeteries, and they 
perform over 77,000 internments yearly. With this level of 
effort, the addition of new cemeteries and the anticipated 
increased internment rate of the aging veteran population, the 
Independent Budget veteran service organizations recommend the 
following:
    First, the National Cemetery Administration operating 
budget should be funded at $119 million for fiscal year 2002, a 
$10 million increase over 2001. This ensures our Nation's 
veterans are honored with a final resting place and lasting 
memorial to commemorate their service to our Nation.
    Second, we recommend the State Cemetery Grants Program be 
funded at $30 million. The Grants Program provides funds to 
assist States in establishing, expanding, and improving State-
owned cemeteries. We need to encourage their participation. 
Lack of participation is due in part to the low plot allowance 
of $150. We recommend it be increased to $600. Additionally, we 
recommend that the eligibility be expanded for all veterans who 
would be eligible for burial in a National Cemetery, not just 
those who served during wartime.
    Finally, we recommend that the National Cemetery 
Administration establish a strategic plan for the years 2003 to 
2008, the period of greatest demand, and that Congress make 
funds available for planning and fast-track construction of 
needed National Cemeteries.
    We ask you to remember the service of all our Nation's 
veterans who have guaranteed our freedoms by honoring them with 
a final resting place and lasting memorials. Your support of 
proper funding for the National Cemetery Administration will 
help accomplish that goal.
    The Independent Budget provides a well-developed and 
comprehensive summary of our recommendations to properly fund 
the Department of Veterans Affairs for the fiscal year 2002. By 
funding the budget's discretionary programs at $23.3 billion, 
you will assist greatly in ensuring veterans are provided the 
benefits they so rightly deserve for the personal sacrifices 
they have made on behalf of all Americans. That completes my 
statement, sir.
    [The prepared statement of Mr. DeWolf follows:]

 Prepared Statement of Howie DeWolf, National Service Director, AMVETS

    Mr. Chairman, Senator Rockefeller, and members of the 
Committee:
    I am Howie DeWolf, National Service Director for AMVETS. 
AMVETS is honored to join fellow veterans service organizations 
in providing you our best estimates on the resources necessary 
to carry out a responsible budget for the fiscal year 2002 
programs of the Department of Veterans Affairs.
    AMVETS testifies before you today as a co-author of The 
Independent Budget. For over 15 years AMVETS has worked with 
the Disabled American Veterans, the Paralyzed Veterans of 
America, and the Veterans of Foreign Wars to produce an 
Independent Budget. This document provides our spending 
recommendations on veterans' programs for the new fiscal year. 
Besides working collaboratively on the overall publication 
effort, AMVETS' primary responsibility has focused on 
developing the recommendations in the National Cemetery 
Administration section of The Independent Budget.
    Neither AMVETS nor I have been the recipient of any federal 
money for grants or contracts. All of the AMVETS activities and 
services are accomplished completely free of any federal 
funding.
    Before I address budget recommendations for the National 
Cemetery Administration, I would like to say that AMVETS fully 
appreciates the strong leadership and continuing support 
demonstrated by the Senate Veterans Affairs Committee. AMVETS 
is truly grateful to the members who serve on this important 
committee. Clearly, you have at heart the best interests of 
veterans and their families and have distinguished yourselves 
as willing to work in a bipartisan manner to address numerous 
issues of great importance to the Nation's veterans.
    Since its establishment, the VA National Cemetery 
Administration (NCA) has provided the highest standards of 
service to veterans and eligible family members in the system's 
119 national cemeteries in 39 states, the District of Columbia, 
and Puerto Rico. Recently opened NCA cemeteries in Chicago, IL; 
Albany, NY; Cleveland, OH; and Dallas, TX., continue this 
tradition of remarkable achievement and service. Additionally, 
the NCA expects to begin the second phase of construction on 
four new cemeteries in 2001 and the completion of the planning 
process on a fifth.
    While the National Cemetery Administration maintains more 
than 2.3 million gravesites in over 13,000 acres of cemetery 
land, there remains a need to establish additional national 
cemeteries in some critically needed areas. AMVETS supports the 
Committee's active review of encouraging the Administration to 
add more cemeteries to meet the growing demand for space. 
Clearly, without the strong commitment of Congress and its 
authorization, VA will likely fall short of burial space for 
millions of veterans and their eligible dependents.
    The members of The Independent Budget recommend that 
Congress provide $119 million for the operational requirements 
of NCA in fiscal year 2002. Currently, the NCA averages more 
than 77,000 interments annually. The aging veteran population 
has created great demands on NCA operations. The NCA is a 
labor-intensive workplace. We believe that the continued high 
standard of service cannot be maintained without the provision 
of adequate resources of new staff and equipment improvements. 
$119 million for the NCA will provide the additional full-time 
employees and necessary supplies and equipment for grounds 
maintenance and program operations.
    For funding the State Cemetery Grants Program, the members 
of The Independent Budget recommend $30 million for the new 
fiscal year. The State Cemetery Grants Program serves a 
critically important function working in complement with the 
National Cemetery Administration to encourage states to 
establish state veterans cemeteries. Through the State Grants 
Program, VA can provide up to 100 percent of the development 
cost for an approved cemetery project. This type of support can 
greatly assist in establishing gravesites for veterans in those 
areas where NCA cannot fully respond to burial needs.
    To properly support veterans who desire burial in state 
facilities, members of The Independent Budget support 
increasing the plot allowance to $600 from the current, 
unreasonably low level of $150. In addition, we firmly believe 
the plot allowance should be extended to all veterans who are 
eligible for burial in a national cemetery not solely those who 
served in wartime.
    Based on National Cemetery Administration statistics 
projecting a dramatic increase in the interment rate until 
2010, members of The Independent Budget recommend that the 
National Cemetery Administration establish a strategic plan for 
the period 2003 to 2008. We must plan for a truly national 
system, and it must have congressional and administrative 
budgetary support. We call on Congress to make funds available 
for planning and fast-track construction of needed national 
cemeteries.
    Mr. Chairman, this concludes my statement. I thank you 
again for the privilege to present our views, and I would be 
pleased to answer any questions you might have.

    Chairman Specter. Thank you very much, Mr. DeWolf.
    We turn now to Mr. Rick Surratt, Deputy National 
Legislative Director of the Disabled American Veterans. Thank 
you for joining us, Mr. Surratt, and the floor is yours.

    STATEMENT OF RICK SURRATT, DEPUTY NATIONAL LEGISLATIVE 
              DIRECTOR, DISABLED AMERICAN VETERANS

    Mr. Surratt. Good morning, Mr. Chairman. I am Rick Surratt 
with the Disabled American Veterans. My remarks today will 
focus on the budget and policy for the benefit programs, the 
DAV's primary area of responsibility in the Independent Budget. 
Also, because the President's budget does not offer details for 
us to address, I will highlight the IB recommendations for 
legislation and resources.
    Typically, the administration's budget proposes a cost-of-
living increase for compensation and dependency and indemnity 
compensation. The IB also recommends an increase to keep 
compensation in line with the increase in the cost of living.
    To stay even with the cost of living, compensation must be 
increased by the same percentage as the annual rise in the cost 
of goods and services as measured by the Consumer Price Index. 
However, as temporary deficit reduction measures and to offset 
other spending, the COLA's have been rounded down to the 
nearest whole dollar. Regrettably, the new administration's 
budget continues the same old objectionable recommendation of 
prior administrations that you make this rounding down a 
permanent requirement.
    Mr. Chairman, we are at a loss to find any legitimate 
reason for that recommendation. We all know that many disabled 
American veterans barely survive on the modest compensation 
they receive. It is bad enough to reduce benefits for disabled 
veterans in the name of budget reconciliation. But we simply 
cannot understand why the administration wants to take such 
advantage of our Nation's disabled veterans when no reason 
exists for doing so. To us, that certainly is not in keeping 
with the obligation this Nation has to care for those disabled 
in service to our country.
    Fortunately, the President cannot do this without your 
concurrence. We look to you to make a strong statement that you 
will not move legislation for this purpose. We also urge you to 
reject the administration's proposal to make permanent the user 
fees and other temporary deficit reduction measures imposed 
upon veterans.
    Now let me turn to the delivery of benefits. For years, VA 
has struggled to overcome poor quality and large backlogs in 
its compensation and pension claims processing system. Adequate 
resources are a central issue. In the IB, we recommend an 
additional $60 million to cover the cost of 830 new full-time 
employees for VA's compensation and pension service. VA 
desperately needs these additional employees to make up for 
unwarranted past reductions in staffing and to meet increased 
workload demands.
    It also needs those employees to improve adjudicator 
proficiency and accountability and thus improve efficiency of 
the system. To do this, VA needs not only to increase the 
number of decisionmakers, it needs employees to train 
adjudicators in the law and procedures, and employees to 
perform quality control reviews and enforce quality standards. 
These additional employees are absolutely essential to any hope 
of fixing the problems in VA's claims processing system.
    Mr. Chairman, that concludes my statement. Thank you for 
allowing us to come before you today to offer our views on the 
fiscal year 2002 budget related matters. Certainly, I would be 
happy to answer any questions you may have.
    [The prepared statement of Mr. Surratt follows:]

    Prepared Statement of Rick Surratt, Deputy National Legislative 
                  Director, Disabled American Veterans

    Mr. Chairman and Members of the Committee:
    I am pleased to appear before you on behalf of the more 
than one million members of the Disabled American Veterans 
(DAV) and the members of its Women's Auxiliary to discuss the 
fiscal year (FY) 2002 budget for the Department of Veterans 
Affairs (VA) and to present the alternative recommendations of 
the Independent Budget (IB).
    This year marks the 15th year the DAV has joined with 
AMVETS, Paralyzed Veterans of America (PVA), and the Veterans 
of Foreign Wars of the United States (VFW) to assess the 
funding needs and make recommendations for veterans' programs. 
With the shared goal of ensuring that the needs of America's 
veterans are adequately addressed, we engage in this 
collaborative effort to present our collective views on policy 
questions, programmatic issues, and resource requirements for 
the effective and efficient delivery of benefits and services 
to veterans and their families.
    The DAV has primary responsibility for the portions of the 
IB that deal with Benefit Programs, General Operating Expenses, 
and Judicial Review of Veterans Matters. My focus will 
therefore be on those areas of policy and the budget. The 
members of IB group appreciate the courtesy this Committee has 
extended by permitting us to present our views together in this 
format.
    Because the President submitted only a broad budget outline 
without details, we are unable to compare in any depth his 
funding recommendations with our assessment of VA's resource 
needs. Unquestionably, his recommended $1 billion increase in 
discretionary budget authority will fall far short of what is 
necessary to maintain adequate delivery of benefits and 
services for veterans, however.
    Similarly, the President's budget submission contains few 
details on the Administration's policy positions and 
legislative proposals for veterans' benefits. The narrative 
does indicate that the budget includes ``several proposals'' 
for legislation designed to ``yield net mandatory savings 
totaling $2.5 billion over the next 10 years.'' According to 
the discussion, these several proposals comprise one to 
eliminate VA's vendee home loan program and other proposals to 
``extend permanently mandatory savings authorities that would 
otherwise expire over the next several years.''
    If it will result in savings, we have no objection to 
elimination of vendee loans. Vendee loans are those that VA 
provides to purchasers of properties VA has acquired by reason 
of default on guaranteed loans. We agree that such loans are 
outside VA's mission of providing benefits and services to 
veterans and their families.
    However, we strongly oppose recommendations to permanently 
extend budget reconciliation measures that were enacted for a 
limited period to reduce budget deficits. Most of these 
measures adversely affected veterans. They reduced veterans' 
benefits or imposed upon them such things as user fees and co-
payments. Especially repugnant is the one that requires 
rounding down compensation rates to the nearest whole dollar 
amount after adjustment for increase in the cost of living. 
Veterans have borne a substantial part of the burden of deficit 
reduction. No justification exists for permanently imposing 
these burdens upon veterans. We urge you, in the strongest 
possible terms, to reject these proposals as unfair, 
unwarranted, and unconscionable.
    In the IB, we have presented several positive proposals to 
improve veterans' benefit programs to make them more effective 
and make them better meet veterans' special needs. For benefits 
funded under the compensation and pension appropriation, we 
recommended changes in law to:
     Provide a cost-of-living adjustment (COLA) for 
compensation and dependency and indemnity compensation
     Permit career military veterans to receive 
disability compensation and military longevity pay without 
offset
     Remove the offset between military nondisability 
separation, severance, or readjustment pay and disability 
compensation
     Permit veterans to recover taxes withheld on 
disability severance pay or exempt retired pay beyond the 
current 3-year period
     Include certain radiogenic diseases in the list of 
disabilities that may be presumed service connected on the 
basis of radiation exposure
     Presume all Vietnam veterans were exposed to 
herbicides containing dioxin
     Authorize presumption of service connection for 
amyotrophic lateral sclerosis affecting Persian Gulf War 
veterans
     Repeal the prohibition on service connection for 
smoking-related disabilities
     Authorize presumption of service connection for 
hearing loss and tinnitus for combat veterans and veterans that 
had military duties typically involving high levels of noise 
exposure
     Authorize temporary increases in compensation to 
be effective on the date of hospitalization or medical care 
that resulted in temporary total disability
     Restore the reimbursement for a headstone or 
marker acquired privately in lieu of furnishing a Government 
headstone or marker
     Increase the amounts of the burial allowances
     Permit payment of fees under the Equal Access to 
Justice Act to nonattorneys who successfully represent eligible 
VA claimants before the Court of Appeals for Veterans Claims
    For readjustment benefits, the IB proposes legislation to:
     Permit refund of Montgomery GI Bill (MGIB) 
contributions when the individual becomes ineligible for the 
benefits by reason of a ``general'' discharge or a discharge 
``under honorable conditions''
     Increase the amount of specially adapted housing 
grants, provide for automatic annual COLAs, and authorize a 
grant for adaptations to replacement homes
     Increase the allowances for specially equipped 
automobiles to 80% of the average cost of a new automobile and 
to provide for automatic annual COLAs
     Increase the maximum home loan guaranty amount to 
$63,175
    For veterans life insurance programs, the IB recommends 
legislation to:
     Exempt the cash value, dividends, or proceeds from 
consideration in determining entitlement under other Federal 
programs
     Authorize VA to revise its premium schedule for 
Service-Disabled Veterans Insurance to reflect current 
mortality rates
    The IB also recommends repeal of the 2-year limitation on 
the payment of accrued benefits to survivors and repeal of the 
estate limitation for mentally incompetent veterans.
    Without specifics, the Administration's budget indicates 
that it will provide the means to ``rejuvenate'' the VA's 
``efforts to ensure the timely and accurate processing of 
veterans' disability compensation claims.'' The budget states 
that it will ``fully fund the Veterans Benefits 
Administration's (VBA) additional workload'' from last year's 
legislation that restored the VA's ``duty to assist'' and the 
additional workload from a presumption of service connection 
for diabetes related to herbicide exposure. We support these 
recommendations in concept.
    Problems with claims processing, accurate decisions, and 
timely benefits delivery have plagued and challenged VA for 
years. VBA has a number of initiatives and reforms under way to 
correct these problems. While Congress must hold VA accountable 
for effective and efficient administration of benefit programs, 
Congress must support VA with resources adequate to overcome 
past inefficiencies and to meet increasing demands. Without the 
necessary resources, the existing major problems will only grow 
worse.
    To bring about positive change, VA must train both its new 
and experienced adjudicators in the procedural and substantive 
aspects of veterans' law without losing additional ground to 
the claims backlogs while adjudicators' time is spent 
administering or undergoing training. VA must increase staffing 
levels to meet the workload demands; it must devote sufficient 
time to claims development and analysis in decisions to allow 
for complete records, thorough reviews of the law and evidence, 
and well-reasoned, well-explained decisions. VA must devote 
additional resources to quality assurance, an area where its 
vigilance has been lacking and a crucial aspect of proficiency, 
performance, and accountability. VA is already understaffed in 
its claims processing personnel, yet it also desperately needs 
an infusion of substantial numbers of new employees to offset 
the expected retirement of many of its experienced adjudicators 
in the near future. Thus, a sizable number of additional full-
time employees (FTE) is essential to meet real needs and make 
up for past staffing reductions.
    In the IB, we recommend that VA add 200 FTE to deliver 
training on a systematic and system-wide basis. We have 
recommend that VA add 170 new adjudicators to bring its 
staffing to the minimum level necessary to meet its workload 
demands. VA's appellate workload in field offices places great 
demands on its personnel. We recommend that VA add 200 new 
Decision Review Officers to address this appellate workload.
    VA needs additional staff to perform quality reviews of the 
work of each of its claims adjudicators to assess performance, 
impose accountability, and remedy deficiencies on an individual 
employee level. Through its ``Systematic Individual Performance 
Assessment'' (SIPA) initiative, VA intends to review 100 
decisions of each adjudicator per year. To accomplish this 
task, VA needs 260 additional new employees.
    Accordingly, we have recommended that VA be authorized a 
total of 830 additional FTE for its Compensation and Pension 
Service in FY 2002.
    Even with optimum quality, an irreducible number of errors 
are inevitable in a mass adjudication system as large and 
complex as VA's. With the necessarily and intrinsically complex 
statutes and regulations that govern disability and 
compensation issues, errors and legitimate differences of 
interpretation are unavoidable. In veterans' benefits, as it 
has often been acknowledged generally, law is not an exact 
science. The variables of human interactions and the 
corresponding nuances inherent in the factual bases on which 
legal rights rest require the intervention of human judgment. 
Such judgment is, of course, not infallible. Meaningful and 
effective judicial review is essential to maintain fairness and 
uniformity and to remedy the injustices that result from human 
error. To make judicial review a more effective enforcement 
mechanism for veterans, the IB recommends legislative changes 
in three areas.
    First, we recommend a change in the legal standard under 
which the United States Court of Appeals for Veterans Claims 
reviews VA's findings of fact. In veterans' benefits law, the 
``benefit-of-the doubt'' rule is a fundamental element of the 
process designed to favor veterans. This rule mandates that VA 
decide a factual question in favor of the veteran unless the 
evidence against the veteran is stronger than that supporting 
him or her. However, under its ``clearly erroneous'' standard 
of review, the Court allows VA's decision to stand unless a 
factual finding is without a plausible basis. The Court's lack 
of enforcement of the benefit-of-the-doubt rule nullifies and 
renders it meaningless. We have therefore recommended a change 
in the Court's standard of review to require that it set aside 
any finding of fact adverse to a veteran when the finding is 
not reasonably supported by a preponderance of the evidence.
    Second, we recommend that the jurisdiction of the Court of 
Appeals for the Federal Circuit be expanded to permit it to 
review questions of law. Under its jurisdiction now, the 
Federal Circuit can review disputes involving the 
interpretation of a statute or regulation, but it cannot review 
ordinary questions of law decided in the first instance by the 
Court of Appeals for Veterans Claims. These questions of law 
arise when the Court of Appeals for Veterans Claims imposes its 
own new rule of law to govern a matter of substance or 
procedure. This situation presents an anomaly inasmuch as it 
insulates decisions on such questions of law from any appellate 
review whatsoever.
    Third, we recommend that the law be amended to authorize a 
direct challenge in the Federal Circuit of VA's changes to its 
schedule for disability rating. Currently, VA regulations are 
subject to such direct challenge, but regulations in the form 
of rating schedule changes are immune to such challenge. That 
means there is no remedy for changes to the rating schedule 
that are clearly unlawful or arbitrary and capricious. No 
unlawful or arbitrary and capricious regulation, especially one 
governing disability rating, should be immune to correction. As 
it should, this very narrow basis for challenge would leave 
protected VA's lawful exercise of discretion in establishing 
disability rating criteria.
    We hope our analyses of these issues and VA's funding needs 
will be helpful to you. We appreciate the opportunity to 
present our views, and we thank this Committee for its 
continuing support of our Nation's veterans.

    Chairman Specter. Thank you very much, Mr. Surratt.
    We now call upon Mr. Harley Thomas, Health Policy Analyst, 
Paralyzed Veterans of America.
    Mr. Thomas.

 STATEMENT OF HARLEY THOMAS, HEALTH POLICY ANALYST, PARALYZED 
                      VETERANS OF AMERICA

    Mr. Thomas. Good morning, Mr. Chairman. On behalf of the 
Paralyzed Veterans of America and the Independent Budget, it is 
indeed a pleasure to give our views and estimates on the 
Independent Budget's health care budget for fiscal year 2002 
for the Department of Veterans Affairs.
    The Independent Budget recommends for fiscal year 2002 a 
$2.7 billion increase for VA medical care. For fiscal year 
2002, the Independent Budget estimates that uncontrollables 
such as salary increases and inflation increases alone will 
require an increase of $1.3 billion.
    In addition, the IB has identified a necessary increase of 
$848 million to cover the costs of institutional and 
noninstitutional long-term care initiatives mandated by the 
Veterans Millennium Health Care and Benefits Act.
    Over the past 5 years the capacity of the VA to provide SCI 
care has been seriously degraded by substantial staff 
reductions, despite the mandate instituted by the 1996 Congress 
to maintain system capacity. Local hospital officials reduced 
SCI staff to a point that they could only operate about 65 
percent of the SCI/D beds reported as operational in 1996. Last 
year, the VA issued a directive establishing a minimally 
acceptable level of staffing and staffed beds at each SCI 
center, and issued a memorandum regarding the need for local 
managers to identify and provide additional resources required 
to restore the mandatory staffing levels.
    Based upon actual site inspections, we have identified the 
need for at least 212 FTEE's which would allow for full 
staffing of SCI beds. We have identified the need for 128 
specialty nurses, 19 psychologists, 47 PT's, and 7 social 
workers. Additionally, we believe there should be an increase 
of at least 11 medical doctors with SCI specialty. The IB has 
requested $25 million additional in funding to begin this 
restoration work.
    The IB has estimated increased costs of pharmaceuticals 
will total $65 million because of increased patient load 
projected by the VA.
    The IB recommends $100 million increase for mental health 
programs, a first step in a 3-year recommendation to add a 
total of $300 million to these vital programs.
    The IB has recommended an increase for Medical 
Administration and Miscellaneous Operating Expenses of $12 
million, bringing this account up to $74 million.
    We also advocate $45 million to increase the Medical and 
Prosthetic Research Program account, up to $395 million.
    On February 28, the President released his Administration 
Blueprint for New Beginnings. A $1 billion increase, of course, 
will not fully be realized by the veterans' health care. 
Traditionally, only approximately 90 percent of discretionary 
increases accrue to health care. As I stated before, the VA 
requires at least $1.3 billion increase just to keep pace with 
2001. This means that the President's budget blueprint falls 
far short of what is required to maintain the status quo.
    We recognize this committee does not appropriate dollars, 
but you do authorize them. You serve as a resource and as an 
advocate to the appropriators as they fashion budget policy. 
The authorization process must recognize the real resource 
requirements of the VA. We look to you, and to your expertise 
in veterans' issues, to help us carry forward this message to 
your colleagues and to the public.
    That concludes my statement.
    [The prepared statement of Mr. Thomas follows:]

 Prepared Statement of Harley Thomas, Health Policy Analyst, Paralyzed 
                          Veterans of America

    Chairman Specter, Ranking Minority Member Rockefeller, 
members of the Committee, the Paralyzed Veterans of America 
(PVA) is honored, on behalf of our members and the Independent 
Budget, to present our views on the Department of Veterans 
Affairs' (VA) budget for fiscal year (FY) 2002. We are proud to 
be one of the four co-authors, along with AMVETS, the Disabled 
American Veterans, and the Veterans of Foreign Wars, of the 
15th Independent Budget, a comprehensive policy document 
created by veterans for veterans.
    The Independent Budget is an annual budget and policy 
review for veterans programs and represents an unprecedented 
joint effort by the veterans' community to identify the major 
issues facing the veterans' community today while serving as an 
independent assessment of the true resource and policy needs 
facing veterans. It is our distinct pleasure, once again, to be 
responsible for the health care recommendations and analysis, 
and I shall address these in my testimony today.
    The VA medical system is a national asset. After years of 
chronic under-funding and fiscal neglect, the VA has seen 
budget increases for the past two fiscal years. It is essential 
that the health care increases realized over the last two years 
be continued in FY 2002. There must be continued and sustained 
investment in the national resource which is the VA health care 
system, investment in protecting and strengthening specialized 
services and in improving access and ensuring that the 
infrastructure exists to provide first-rate health care, as 
promised by the President and sought by our members.
    To accomplish these goals, the Independent Budget 
recommends, for FY 2002, a $2.7 billion increase for VA medical 
care.
    Every year, the VA requires additional funding in order to 
remain in the same place it was the previous year. This 
additional funding is required because of mandatory salary 
increases and the effects of inflation. For FY 2002, the 
Independent Budget estimates that these ``uncontrollables'' 
will require an increase of $1.3 billion.
    In addition, the Independent Budget has identified a 
necessary increase of $848 million to cover the costs of 
institutional and non-institutional long-term care initiatives 
mandated by the Veterans Millenium Health Care and Benefits Act 
(P.L. 106-117) enacted last Congress.
    This $848 million represents start up costs for the long-
term care initiatives established in the Millennium Act two 
years ago that have yet to be implemented. The VA has a 
responsibility, and an historic duty, to meet the long-term 
care needs of an aging veteran population. It has the 
opportunity to do so in the most cost-effective and appropriate 
way by implementing the community and home-based care programs 
called for in the bill. It can also show that it can become a 
leader in the United States in providing long-term care in a 
country that has no broad based long-term care programs for 
older Americans and all Americans with disabilities.
    The remainder of the recommended increase, $523 million, is 
slated to fund vitally needed initiatives. These initiatives 
include restoring spinal cord injury/dysfunction capacity, 
meeting the challenge of rising pharmaceutical costs, and 
maintaining VA capacity for mental health services.
    Over the past 5 years the capacity of the VA to provide SCI 
care has been seriously degraded by substantial staff 
reductions despite the mandate instituted in 1996 by Congress 
to maintain system capacity. Local hospital officials reduced 
SCI staff to a point that they could operate only 65 percent of 
SCI/D beds reported as operational in 1996. Last year, the VA 
issued a directive establishing the minimally acceptable level 
of staffing and staffed beds at each SCI Center, and issued a 
memorandum regarding the need for local managers to identify 
and provide additional resources required to restore the 
mandatory staffing levels. The Independent Budget has requested 
$25 million in additional funding to begin this restoration 
work.
    We have all read the news stories concerning the increased 
costs of pharmaceuticals faced by our citizens. The Independent 
Budget has estimated that these increased costs will total $65 
million because of the increased patient load projected by the 
VA.
    The Independent Budget recommends a $100 million increase 
for mental health programs, a first step in a three-year 
recommendation to add a total of $300 million to these vital 
programs. We have witnessed an unprecedented erosion of the 
VA's capacity to provide specialized treatment within distinct 
dedicated programs for veterans with serious mental illness, 
substance-abuse problems, and post traumatic stress disorder. 
Extensive closures of specialized inpatient mental health 
programs, coupled with slashed budgets, have lead to the 
emergency situation faced by these vital programs. These 
programs must be protected and expanded in order to meet the 
needs of veterans.
    The Independent Budget has recommended an increase for 
Medical Administration and Miscellaneous Operating Expenses 
(MAMOE) of $12 million, bringing this account up to $74 
million. Funding shortfalls in the MAMOE account have left the 
VA unable to adequately implement quality assurance efforts or 
to provide adequate policy guidance within the 22 Veterans 
Integrated Service Networks (VISN). Veterans Health 
Administration headquarters staff play the essential role of 
providing leadership, policy guidance, and quality assurance 
monitoring under the decentralized VA health care system. It is 
important that these important roles be strengthened.
    Another important asset of the VA is its Medical and 
Prosthetic Research Program. VA research plays a critical role 
in attracting first-rate clinicians to practice medicine and 
conduct research in VA health care facilities, keeping 
veterans' health care at the cutting-edge of modern medicine. 
Advancements in medical treatment and technology developed in 
VA hospitals and laboratories have revolutionized modern health 
care and pioneered advances that are sustaining the health and 
quality of life of veterans and all Americans. As has been 
stated, ``today's research indeed creates tomorrow's health 
care.''
    With the bipartisan push to increase research funding for 
the National Institutes of Health (NIH), to double its funding 
over the course of five years, the VA Medical and Prosthetic 
Research program must not be left behind. The President is 
seeking a $2.8 billion increase for the NIH. VA research is an 
important component of our national research effort. The 
Independent Budget advocates a $45 million increase to bring 
this account up to $395 million.
    The President, on February 28, 2001, released his 
Administration's ``Blueprint for New Beginnings.'' PVA has many 
questions concerning the Administration's plans for the VA. 
Although we were heartened by the fact that the Administration 
has proposed an increase in discretionary spending for the VA, 
this ``Blueprint'' raises more questions than it answers. We 
look forward to seeing the full scope, and the complete 
rationale, of the Administration's FY 2002 budget request for 
the VA in April.
    The President's ``Blueprint'' trumpets a discretionary 
spending increase for veterans of $1 billion. This $1 billion 
increase, of course, will not be fully realized by veterans' 
health care. Traditionally, only approximately 90 percent of 
discretionary increases accrue to health care. As I stated 
before, the VA requires at least a $1.3 billion increase just 
to keep pace with FY 2001. This means that the President's 
budget ``Blueprint'' falls short of what is required to 
maintain the status quo of the health care system for this 
coming year.
    In addition, any additional funding needed to address 
claims backlogs will come at the expense of VA health care 
because these additional funds would lay claim to the finite 
pot of discretionary spending. It is essential that the claims 
process be fixed--we have argued for years that a benefit 
delayed is a benefit denied--but this vital work must not come 
at the expense of sick and disabled veterans.
    The ``Blueprint'' assumes a transfer of health care 
liabilities. The Administration may argue that the increase for 
VA health care will be higher because of its assumption that 
$235 million in VA health care ``liabilities'' will be shifted 
to the Department of Defense (DOD). This will be implemented by 
proposed legislation that would mandate that veterans choose 
either DOD or VA to receive their health care. The budget 
assumes that 27 percent will switch to the DOD. There seems to 
be no justification for this percentage, and we have questions 
concerning how the figure of 27 percent was settled upon.
    The President's ``Blueprint'' assumes that the VA will 
realize ``net mandatory savings totaling $2.5 billion over the 
next 10 years.'' The OBRA Extenders are slated to save $2.3 
billion over ten years and the elimination of the VA's vendee 
home loan program is slated to save $228 million over the same 
time frame. None of these savings are available for FY 2002, 
and, in fact, eliminating the vendee home loan program is 
estimated to cost $19 million in FY 2002. Finally, these 
savings would not be available for discretionary programs 
unless budgetary legerdemain is employed.
    PVA awaits the final budget numbers to ascertain the role 
played by the Medical Care Collections Fund (MCCF) in any of 
these projections. As we have stated in the past, and firmly 
hold today, these funds should be used to augment, not replace, 
appropriated dollars to enhance the health care provided to 
veterans. The inflated collection estimates have never been 
reached in the past, and, in fact, have steadily declined each 
year since 1995 despite highly exaggerated yearly estimates of 
soaring receipts. Veterans should not be forced to pay the 
price for these failures to reach these rosy estimates.
    The President's ``Blueprint'' states that the ``VA has 
begun the assessment phase of an infrastructure reform 
initiative that will result in a health care system with 
enhanced capabilities to treat veterans with disabilities or 
lower incomes living in underserved geographic areas. Savings 
from the disposal of underused VA facilities will support these 
improvements.'' We await the details and we urge caution. It is 
not clear how, in a budget sense, these savings will be 
realized and directed to VA health care. We applaud the 
President's desire to protect and augment the VA's core 
missions, but we insist that the needs of veterans, not the 
needs of budgets, must come first.
    We believe that the Administration's ``Blueprint'' is a 
step in the right direction, but much more is needed, and much 
more must be done.
    We recognize that this Committee does not appropriate 
dollars, but you do authorize them. You serve as a resource, 
and as advocates, to the appropriators as they fashion 
budgetary policy. The authorization process must recognize the 
real resource requirements of the VA. We look to you, and your 
expertise in veterans' issues, to help us carry this message 
forward, to your colleagues and to the public.
    We need your help, and we offer our assistance, to ensure 
that the VA receives the funding it needs to ensure that 
veterans receive the health care they have earned, and the 
health care they have been promised. Let us move forward from 
our accomplishments of the last couple of years and build a 
strong, and continuing base, for the national asset that is the 
VA.
    On behalf of the co-authors of the Independent Budget, I 
thank you for this opportunity to testify concerning the 
resource requirements of VA health care for FY 2002. I will be 
happy to answer any questions you might have.

    Chairman Specter. Thank you very much, Mr. Thomas.
    And now we recognize Mr. Cullinan, Director of the National 
Legislative Service, Veterans of Foreign Wars.
    Mr. Cullinan.

STATEMENT OF DENNIS M. CULLINAN, DIRECTOR, NATIONAL LEGISLATIVE 
     SERVICE, VETERANS OF FOREIGN WARS OF THE UNITED STATES

    Mr. Cullinan. Good morning, Mr. Chairman. On behalf of the 
entire VFW membership, I thank you for including us in today's 
most important discussion of funding for the Department of 
Veterans Affairs.
    The authorizing/oversight activities of this Committee are 
paramount to the effective and compassionate operation of the 
VA. We thank you for past accomplishments, and we look forward 
to working with you into the future.
    As in the past, the VFW has dealt with the construction 
portion of the VA budget, and I will now briefly turn to the 
main points of my oral statement.
    Past year shortfalls in construction funding, even as the 
population of sick and elderly veterans is rapidly on the rise, 
have seriously eroded VA's ability to sustain a physical plant 
adequate to meeting veterans' needs. Major and minor 
construction projects funding has plummeted dangerously since 
fiscal year 1993 to the current fiscal year, from $600 million 
to just over $200 million. Among other things, this has 
resulted in an untenable backlog of nonrecurring maintenance 
needs that have not been adequately funded under the medical 
care account.
    For major construction, we recommend an increase of $308 
million, for a total funding level of $374 million. This 
increase is needed for a major portion of the seismic 
correction needs of $250 million, such as the one that needs to 
be carried out at Palo Alto VAMC.
    An increase of $265 million to the minor construction 
account is recommended, for a total funding level of $431 
million. This increase will support inpatient and outpatient 
care delivery infrastructure improvements, research facility 
upgrades, and a historic preservation initiatives.
    VA must be provided with the requisite dollars to update 
facilities and services for women veterans. All necessary steps 
must be taken to ensure their privacy and comfort at VA 
facilities. Women in uniform have continued to serve with 
distinction, and they deserve the very best from us.
    In another area, while we of the VFW and the IB applaud 
congressional and VA efforts to more effectively configure and 
apply existing resources so that more veterans may be better 
served, resources must be placed in response to need, not 
circumstance or expediency. We are deeply concerned, however, 
that as VA attempts to achieve this objective through 
implementing its CARES process, it does not result in a de 
facto moratorium in needed construction and renovation 
projects. There are, and will continue to be, certain projects 
that need to be completed well in advance of the conclusion of 
the CARES process, and we urge that this happen.
    Mr. Chairman, this concludes my statement. Thank you.
    [The prepared statement of Mr. Cullinan follows:]

     Prepared Statement of Dennis M. Cullinan, Director, National 
   Legislative Service, Veterans of Foreign Wars of the United States

    Mr. Chairman and members of the committee:
    This year, as in the past, Mr. Chairman, the Veterans of 
Foreign Wars of the United States is proud to be one of the co-
authors of the Independent Budget. Our primary responsibility 
is for the Construction Programs and my remarks will be focused 
on that major area.
    The capacity to provide timely access to quality care for 
service disabled and low income veterans, while further 
transforming the VA into the health care provider of choice for 
those veterans whose cost of care can be covered by third party 
payers, symbolizes an acknowledgement of the special debt of 
gratitude owed by our nation to those who faithfully served to 
ensure our freedom and security. That this unique system of 
delivering health care to America's veterans has undergone a 
major transformation is in itself a major understatement. The 
many milestones that have marked the VA health care system 
during the past decade have had the ironic effect of both 
helping in its transformation into a world-class medical 
system, while at the same time placing it in a dilemma that can 
potentially lead to the deterioration of the system and, 
eventually, to its inexorable collapse.
    Succeeding Administrations and Congresses have promulgated 
numerous measures that have made possible the significant 
improvements of the system. These efforts, however, have been 
neither sufficiently consistent nor amply sustained to ensure 
the Veterans Health Administration timely evolvement into a 
streamlined, cost-effective provider of health care that will 
stay ready to change with the times. The present condition of 
the substantial capital assets held by the VA, through which it 
is expected to deliver most of the services it's mandated to 
provide to veterans and their dependents and survivors, stands 
out as a glaring example of the deleterious consequences of an 
on-again-off-again approach to funding VA programs.
    The improvements in VA health care, coupled with the 
advancing age of the entire veterans population, have resulted 
in a substantial increase of the number of veterans seeking 
services from the system. At the same time the level of 
investment in maintaining the physical infrastructure, through 
Major and Minor Construction projects, has plummeted 
dangerously since fiscal year 1993 to the current fiscal year, 
from $600 million to just over $200 million. Understandably, 
the focus of construction projects has had to change from one 
of building large centralized physical plants to a design of 
having more access points to state of the art facilities that 
can provide primary and specialty care, backed by centers of 
excellence ready to provide more complex care for acute and 
chronic or long-term ailments. But this strategy has been 
weakened by the lack of consistent funding. In addition to the 
lack of attention to the construction needs, this neglect has 
created an untenable backlog of non-recurring maintenance needs 
which have not been adequately funded under the medical care 
account.
    VA must maintain and improve its existing facilities to 
support delivery of veterans' benefits and health care 
services, while protecting the nation's investment by assuring 
the continued viability of this infrastructure. The ongoing 
evaluation under the Capital Assets Realignment for Enhanced 
Services (CARES) to design a reconfiguration of the 
Department's physical plant that will free up--or generate 
new--resources to provide more timely access to quality care 
for more veterans, while a worthy effort, should not be an 
impediment to meeting ongoing construction and maintenance 
needs. Regrettably, the defacto moratorium on funding already 
approved construction projects since the start of the CARES 
studies has further exacerbated the manifest lack of 
stewardship of the system's facility assets.
    As the Committee is well aware, an independent study by 
Price Waterhouse concluded that the VA should be investing an 
amount equal from 2 to 4 percent of the value of its facilities 
to improve and update them. It recommended a similar amount 
annually for non-recurring maintenance. Not to do so would 
amount to a plan for the deterioration of the system that would 
lead to its closure. We are much encouraged, Mr. Chairman, by 
the legislative measure you--along with Messrs. Evans, Moran 
and Filner--have introduced to address this and the other 
construction concerns cited in the Independent Budget.
    The construction needs of the VA are evident, and can only 
be missed--or ignored--by those who would like to see the 
Veterans Health Administration deteriorate out of existence. 
Men and women of good will, both in Congress and throughout the 
nation, want to see the right thing done. As daunting as the 
funding requirements to meet these needs may seem, a strategic 
approach would validate the need for a major investment today 
that would save much unnecessary waste in the future. The 
demonstrated need for a $30 million project in Veterans 
Integrated Service Network 1, which would facilitate the 
consolidation of certain services in the Boston area, resulting 
in an annual operating savings of $50 million, is a poignant 
example of how the current approach to approving and funding VA 
construction needs is seriously flawed. Failure to realize 
these improvements since they were first identified in 1998 
will cost the VA over $100 million in extra operating costs. 
This is just not a good way to run a business. It is, 
particularly, not the way to care for the trust placed on the 
Administration and Congress by America's taxpayers.
    As we are all well aware, the VA has an inventory of 
seismic improvement projects that continue to go unfunded. Just 
in the last budget cycle, Congress failed to fund a much-needed 
seismic project in the Palo Alto VA Medical Center at a cost of 
$26.6 million. The critical nature of this need was, 
ironically, poignantly underscored on the same day the 
President released his budget proposal, when the 6.8 magnitude 
earthquake in the state of Washington damaged two buildings at 
the American Lake VA Medical Center resulting in the temporary 
evacuation of many of the patients. These buildings were part 
of the VA inventory of seismic needs. While we are relieved 
that the damage wasn't extensive, and no one was injured, the 
timing would seem almost providential. We should all be 
thankful that, by Divine grace, the earthquake did not occur 
hundred miles to the south at that other more seismically 
unstable area where the Palo Alto facility is located. But, 
this is a warning that should not go unheeded.
    Continued neglect of all the VA construction needs 
constitutes a tragic mismanagement of what is the free world's 
most cost-effective system for delivering quality health care, 
education, research and pioneering in the delivery of medical 
care and rehabilitation. Moreover, not allowing the system to 
go beyond the threshold, at which it is presently poised, of 
fulfilling its potential for being all that it can be in 
serving America's veterans, would be tantamount to squandering 
what is a national health care treasure that indirectly 
benefits all citizens.
    In order to prevent this tragic consequence, the 
Independent Budget recommends a total funding level for 
construction in Fiscal Year 2002 of $804 million as a down 
payment to complement the total transformation of the Veterans 
Health Administration into a more agile and cost effective 
deliverer of quality health care for today and tomorrow's 
veterans.
    For Major Construction, we recommend an increase of $308 
million, for a total funding level of $374 million. This 
increase is needed for a major portion of the seismic 
corrections needs of $250 million.
    An increase of $265 million to the Minor Construction 
account is recommended, for a total funding level of $431 
million. This increase will support inpatient and outpatient 
care delivery infrastructure improvements, research facility 
upgrades, and a historic preservation grant program that will 
protect the VA facilities which are part of the historical 
heritage of our nation. We also recommend that the current $4 
million ceiling authority for Minor Construction projects be 
increased to $16 million. The current limitation results in a 
piecemeal approach to design and completion of projects that 
adds delays, facility disruptions and promotes poor fiscal 
management practices.
    Other programs covered by the Independent Budget with 
recommended construction funding increases include grants for 
construction of state extended care facilities and state 
veteran's cemeteries. In addition, we are recommending an 
increased funding in the medical care account for nonrecurring 
maintenance to the level of $391 million. This would be a 
modest step in the right direction towards addressing the 
considerably higher funding needed to address the problems 
cited in the Price Waterhouse report.
    Finally, Mr. Chairman, the Independent Budget calls for 
Congress to provide sustained support for Major and Minor 
Construction so that planning and design for future projects 
can continue without interruption.
    Mr. Chairman, this concludes my statement. I will be happy 
to answer any question you or members of the Committee may 
have.

    Chairman Specter. Thank you very much, Mr. Cullinan.
    I regret that there is not time for questioning. I just 
have a few minutes left on a vote which is now pending. But the 
committee very much appreciates your coming forward to testify, 
and we very much appreciate the work that you do for the 
veterans.
    Just a personal note from me. My father was a veteran of 
World War I. He served in the Argonne Forest and was wounded in 
action. I recall living in Wichita, KS, and how my father 
received benefits from the Veterans Administration Hospital 
there for the wounds he sustained and also for nonservice-
connected injuries. He was severely injured when a spindle bolt 
broke on a pickup truck, a brand new pickup truck, that rolled 
over and crushed his right arm. So, in addition to the 
disability of his legs, he had metal wires put in his arm, 
which was the best they could do for him at that time. So when 
I hear of cutting back on nonservice-connected help for 
veterans who are in need, and this was 1937, in the midst of 
the Depression, I am very much concerned.
    We will be submitting questions to you for the record. This 
committee will take a very, very close look at the budget 
submissions. We are mindful of the increase which has been 
requested already by the House Committee and I have talked to 
Chairman Smith about that directly. And we will be reviewing 
other sources of income. And as you know, this committee was 
instrumental, as was this Senator, in an increase of $1.4 
billion last year, and $1.7 billion the year before.
    Without objection, Senator Rockefeller's statement will be 
made a part of the record.
    [The prepared statement of Senator Rockefeller follows:]

 Prepared Statement of Hon. John D. Rockefeller IV, U.S. Senator From 
                             West Virginia

    The Congress faces tremendous challenges this year, as we 
begin the budget process without any of the detail that usually 
accompanies the President's budget. Indeed, I understand that 
VA may not be able to provide more information until sometime 
in April, long after the Committee will have provided its 
required input to the Budget Committee. It is, therefore, 
vitally important that we use our time wisely this morning to 
learn as much as we can about VA's needs, and how the 
President's budget proposes to meet those needs.
    While we currently lack the details of the President's 
submission, the proposed budget provides for a net 
discretionary increase of $1 billion, or 4.5 percent, above the 
FY 2001 level. Notably, the consortium of veterans services 
organizations that authors the Independent Budget for Fiscal 
Year 2002 recommends an increase of $3.5 billion over FY 2001 
funding.
    We haven't been provided with information about how the 
President's proposed $1 billion is to be allocated among the 
various accounts. Clearly, though, the amount requested for the 
health care system is far from adequate. If the appropriation 
is actually less than $1 billion more than last year, I believe 
we can expect to shrink the system, to contract out for more 
and more care, to reduce staff, and to slash programs. These 
reductions would be occurring at a time when vast numbers of 
our veterans are in need of long-term care and specialized 
services, and they are increasingly turning to the VA health 
care system for care. The situation is tenuous, at best.
    I have no doubt that the proposed budget would have a 
devastating effect on our four West Virginia VA Medical 
Centers. In spite of the decrease in the total number of 
veterans statewide, more and more West Virginia veterans are 
turning to the VA for care. For example, the Martinsburg VAMC 
has had an increase in new enrollees of 25.8 percent over the 
last two years. Expanded enrollment at all four medical centers 
has resulted in financial crises, threatening their ability to 
provide high quality care in a timely fashion.
    What level of funding is appropriate for the VA in the 
coming fiscal year? We need to understand what is required to 
deal with the impact of inflation, to fund existing 
initiatives, and to move forward in the ways we all want the 
system to go.
    There are many reasons to provide additional funds for VHA 
medical care. Landmark legislation signed into law late in 1999 
significantly increases noninstitutional long-term care, which 
for the first time is available to all veterans who are 
enrolled with the VA health care system. While I am enormously 
proud of this legislation, there is no doubt it is costly, as 
are all long-term health care expansions. Providing long-term 
care to all Americans is a priority; VA can begin this effort 
for our Nation's veterans, but it must have sufficient funds to 
do so.
    The Millennium Act also ensures emergency care coverage for 
veterans who have no other health insurance options. This is a 
costly, but necessary provision: nearly 1 million veterans 
enrolled with the VA are uninsured, and they are in poorer 
health than the general population. While this legislation has 
not yet been implemented or publicized, the claims for this new 
benefit are already mounting and will require substantial new 
resources.
    VA must also contend with higher expenses of medical care 
caused by inflation and wage increases, which are estimated to 
cost nearly a billion dollars annually. Between these two 
large-scale initiatives--long-term care and emergency care 
coverage--and simply maintaining current services, we know that 
we must meet a minimum funding threshold. The President's 
entire discretionary increase would not be sufficient to cover 
these baseline costs.
    Simply maintaining current services may not be enough to 
ensure that VA can meet the health care needs of veterans. 
Chronic illnesses of the aging veterans population and newly 
recognized challenges--such as the need to shape new programs 
for veterans affected by Hepatitis C--will further strain VA's 
resources. We must anticipate increased and changing demands 
for treating complex diseases, such as HIV and Hepatitis C, and 
ensure that veterans with multiple, overlapping medical 
problems receive all the treatment that they need.
    What level of funding is needed for VA to develop 
consistent outcome measures for specialized services, or to 
restore the capacity for PTSD and substance abuse treatment to 
the legislatively mandated level? In West Virginia, many 
veterans not only wait months and months for specialty care, 
but have to travel hundreds of miles to get it. While opening 
community outpatient clinics has allowed VA to increase 
veterans' access to primary health care, we must ensure that 
the many veterans who require more intensive specialized 
services can turn to adequately funded inpatient programs.
    VA has been progressing slowly toward equitable payment for 
care in state veterans homes, the largest providers of long-
term nursing care in the United States. Without an increase in 
the budget, can we expect VA to adequately staff its State Home 
Program office, or adequately support nursing and domiciliary 
care?
    VA research not only makes a major contribution to our 
national effort to combat disease, but also serves to maintain 
a high quality of care for veterans through its impact on 
physician recruitment and retention. The proposed budget would 
allow, at best, for a stagnant research budget. Not only might 
this hamper VA researchers in their search for new and better 
medical treatments, but it could weaken efforts to protect 
human subjects in VA-sponsored studies. The Independent Budget 
suggests that an increase of $45 million will be required 
merely to offset the costs of inflation and increasingly 
stringent research guidelines.
    There are certainly savings to be gained through 
resourceful management of VA hospitals and clinics, and VA is 
pursuing this possibility through the Capital Asset Realignment 
and Enhancement Studies (CARES). However, I am resolved that 
efficiencies not come at the expense of veterans who turn to 
the VA health care system for needed treatment. It is 
imperative that VA not neglect essential repairs and 
maintenance of its infrastructure while awaiting the outcome of 
the CARES process. A shortsighted focus on immediate gains from 
halting necessary construction, or from failing to preserve 
existing facilities, will most likely prove costly to VA and 
veterans in the long run.
    I realize that there may be budget constraints on VHA's 
ability to carry out its many missions, but we must know what 
the impact would be of funding at different levels. Only then 
can we make informed choices.
    Clearly, there is also a need for a focused, sustained 
effort to improve claims processing and other activities within 
VBA. Again, we need to know what level of funding is needed.
    We already know that VBA needs a significant increase in 
staffing to eliminate its increasing backlog. New legislation 
reestablishing the duty to assist, regulations presumptively 
connecting diabetes to Agent Orange exposure in Vietnam 
veterans, and new software systems have severely affected VBA's 
workload and slowed output. West Virginia veterans are already 
receiving letters from the Regional Office warning them to 
expect a 9-12 month delay for initial consideration of their 
claims.
    If VBA is unable to hire new staff and continue with its 
technology pilot programs, the backlog of claims is expected to 
grow from the current 400,000 claims (up from 309,000 in 
September 2000) to 600,000 by March 2002. We need to make 
certain that VBA receives sufficient funding to deal with this 
crisis.
    VBA also faces an aging workforce, with projections that 25 
percent of their current decisionmakers will retire by 2004. 
These losses would be in addition to the staff that has already 
left service. It takes 2-3 years to fully train a new 
decisionmaker. Therefore, it is critical that VBA hire new 
employees now to fully train them before the experienced 
trainers and mentors have retired.
    We cannot forget our commitment to provide a final resting 
place of honor for our Nation's veterans. Sadly, the aging of 
our veterans population has created great demands on the 
National Cemetery Administration, and projections suggest that 
the need will continue to grow, peaking in 2008. We must act 
quickly to ensure that we are prepared to meet this solemn 
duty. How much funding will be required to maintain the current 
facilities, to implement fully the National Shrine initiative, 
and to fund construction of the six new cemeteries authorized 
by Congress in 1999?
    While Congress is deciding how to cut taxes responsibly, we 
mustn't lose sight of our other critical priorities. We all 
need to agree on how much goes to tax cuts and how much should 
be saved to strengthen Medicare, invest in education, and fully 
address the needs of the men and women who have served our 
Nation. The budget before us does not fully recognize our 
responsibility to this Nation's veterans and their families. I 
will be working to make sure that it does.

    Chairman Specter. As I say, we will be submitting questions 
for the record to you gentlemen, also to the Secretary.
    Thank you for coming this morning.
    That concludes our hearing.
    [Whereupon, at 11:10 a.m., the committee was adjourned, to 
reconvene at the call of the Chair.]
                            A P P E N D I X

                              ----------                              

Prepared Statement of Richard Weidman, Director, Government Relations, 
                      Vietnam Veterans of America
    Mr. Chairman, on behalf of Vietnam Veterans of America (VVA), I 
thank you and your distinguished colleagues for the opportunity to 
express our views for the record in regard to the President's proposed 
FY 2002 budget for the United States Department of Veterans Affairs 
(VA).
    While we appreciate President Bush speaking with emphasis about the 
nation's responsibility toward veterans in his recent address to 
Congress, a one billion dollar increase in discretionary spending at VA 
is not an acceptable increase. VVA is very concerned about the effects 
of this grossly inadequate proposal will have on vitally needed 
services for veterans. VVA is equally concerned about accountability; 
will the resources made available by Congress be utilized for maximum 
impact, and will VHA actually spend funds in the manner directed by 
Congress.
    The rate of medical inflation in the United States varies from 
about 8-12 percent (+) per year. An $800 million dollar increase for 
the Veterans Health Administration (VHA) from FY 2001 to FY 2002 is 
represents a 4 percent increase. In other words, the administration's 
proposal for VHA is less than half of the conservative estimate of what 
VHA simply to maintain its ability to serve veterans. Congress can and 
must do better than this.
    Vietnam Veterans of America enthusiastically endorse the 
Independent Veteran Service Organization (IBVSO) budget. At least $1.7 
billion in additional funds over the FY 2001 level is needed in the VHA 
just to keep up with inflation. This level of funding for VHA does not 
address the need to restore the organizational capacity to serve 
veterans that was lost because of flat-lined appropriations in FY 1996, 
FY 1997, and FY 1998.
    Specialized care services at VHA (e.g., spinal cord injury 
treatment, blind & visually impaired services, Post-Traumatic Stress 
Disorder (PTSD) treatment programs and services have all been 
dramatically eroded in the past five years. When the Veterans 
Eligibility Reform Act was enacted in 1996, Congress mandated that the 
level of resources and capacity to deliver the specialized services, 
which is really the heart of the VHA mission, be maintained at least at 
the FY 1996 level of effort. That has not happened. Rather, such 
services have been diminished and truncated due to a lack of resources 
and a lack of emphasis on these programs by key managers at the VHA the 
local health care delivery level, the Veterans Integrated Services 
Network (VISN) level, and at the national level.
    One example of this diminishment of services is to the Seriously & 
Chronically Mentally Ill (SCMI) patients, which includes Post-Traumatic 
Stress Disorder (PTSD) treatment and substance abuse treatment. The 
funding for SCMI has dropped dramatically below the funding provided in 
FY 1996. At least five VISNs have no inpatient or resident treatment 
for chronic, acute PTSD. Substance abuse treatment programs have 
disappeared or been dramatically cut. Yet VA maintains that they are in 
compliance with the capacity requirements of the 1996 law.
    The General Accounting Office (GAO) has determined that the 
management information systems and documentation of where it spends 
resources (much less the outcomes and results for the veteran) are 
woefully inadequate or non existent. VVA believes that even without 
adequate systems it is clear that VA is not in compliance with the 1996 
law and needs to move to restore needed capacity, particularly in the 
specialized services.
    Therefore, VVA recommends that an average of $1 billion per year be 
dedicated to restoration of vitally needed organizational capacity in 
VHA. This would probably be $600 million the first year, $1 billion the 
second year, and $1.4 billion the third year. The overwhelming majority 
of these funds (75-90 percent) would go to specialized services, with 
the balance going to staffing needs in acute care areas such as 
hepatitis C.
    It is the belief of Vietnam Veterans of America that centralized 
control of funding is required in the specialized services and in some 
other key areas. The decentralized allocation of funds to the VISNs for 
the past five years has resulted in dramatic reductions in specialized 
services. After the flood of complaints of denial of service from 
veterans who needed prosthetics to Congress, and the resulting seeming 
inability of VHA central management to win cooperation of the VISN 
Directors, it was determined that the only way to ensure that veterans 
could get proper prosthetics services, no matter where they lived in 
the United States, was to centralize the funding. That effort has been 
successful.
    VVA believes that the same centralized control of funding is 
necessary for all specialized services and other key areas, such as 
services to homeless veterans, and outreach, testing, and treatment of 
hepatitis C. This requirement for centralized control can be removed 
once the VHA has actually developed a sensible and workable 
computerized management information system, and has proven that there 
is a working system for holding VISN directors and other managers truly 
accountable for results and performance of the right measures.
    Although VHA has done a great deal to address hepatitis C in terms 
of national policy, there still has not been the kind of outreach, 
testing, treatment, and case management program, on a consistent 
facility to facility basis that is needed. Nor has there generally been 
proper moves to acquire new staff at the medical center level needed to 
deal with the more than 70,000 veterans who have tested positive for 
the hepatitis C virus, even with only sporadic testing and virtually no 
outreach. Congress appropriated $350 million to deal with this problem, 
but VHA cannot account for these funds. The same could be said about 
any of the specialized services.
    The bottom line is that VVA recommends a minimum of at least $2.3 
billion in discretionary funding be appropriated to VHA over the FY 
2001 level, with special tight controls over at least $ 600 million of 
these funds to ensure that these funds are utilized as intended by 
Congress (for the restoration of vitally needed organizational 
capacity, mostly in specialized services and the VA Vet Centers).
           readjustment counseling service (rcs) vet centers
    Readjustment counseling is provided through a national system of 
206 community-based Vet Centers. The Vet Centers are located outside of 
the larger medical facilities, in easily accessible, consumer-oriented 
facilities highly responsive to the needs of the local veterans. For 
many veterans who would not otherwise receive VA assistance, the Vet 
Centers are the community-access points for VA healthcare. Vet Centers 
also prioritize care to high-risk groups such as minorities, women, 
disabled, high combat exposed, rural and homeless veterans. Comprising 
a unique more-than-medical VHA program, Vet Centers report to the Chief 
Readjustment Counseling Officer at VA Headquarters. Locally, the Vet 
Centers function in full partnership with the medical facilities in 
each of the 22 VISNs to effect a coordinated spectrum of care for local 
veterans.
    Vet Center counselors are well-trained clinicians operating close 
to the veterans in the community and tailoring the services provided to 
the needs of the local veterans. The Vet Center program service mission 
features a holistic mix of direct counseling and multiple community-
access functions: psychological counseling for veterans exposed to 
psychological war trauma, or who were sexually assaulted during 
military service, family counseling, community outreach and education, 
and extensive case management and referral activities. The latter 
activities include the full range of social and psychological services 
designed to assist veterans improve their quality of life and their 
level of social and economic functioning.
    However, the lack of consistent employment services at the Vet 
Centers needs to be addressed by the VA and the U.S. Department of 
Labor. Given that neither Labor or VHA is seemingly prone to address 
this need (otherwise they would have addressed it long ago), Congress 
must reform the Department of Labor's Veterans Employment & Training 
Service grant programs to the states to make them much more accountable 
for results, and to ensure much collaboration with the Vet Centers as 
well as VA Vocational Rehabilitation & Education Service.
    In the past two years, the Vet Centers have also acquired the 
additional function of providing education and counseling to veterans 
treated for HIV and hepatitis C at VA medical centers. The latter 
services also include assistance to veterans' family members. In 
addition, Vet Center community access functions are used to facilitate 
provision of VA primary care closer to veterans' communities through 
collocation and tele-health initiatives.
    There has been no specific augmentation of Vet Center resources in 
over 10 years. Small annual incremental budget increases have enabled 
the program to meet inflationary increases and to maintain the same 
level of services over the years. With no increase in program 
resources, the Vet Centers have, nonetheless, systematically extended 
the scope of their mission to include new veteran populations from the 
Gulf War; the peace-keeping missions in Somalia; Bosnia and Kosovo; 
World War II; the Korean War; as well as taking on the largest 
component of VHA's sexual-trauma counseling.
    Through stringent cost saving approaches, the Vet Centers continue 
to be one of VA's most cost-effective programs. The Vet Centers have 
managed to remain cost-effective without sacrificing services to 
veterans; they have the highest rate of consumer satisfaction for any 
VA program. Additional FTEE and associated salary dollars for the Vet 
Centers will ensure the program's capacity to fully provide its unique 
service mission in those communities needing staff augmentation.
    RCS currently has 206 Vet Centers and 941 FTEE. The operating 
budget for FY 2001 (minus field travel dollars and the contracts 
program budget) is $70.6 million. Vietnam Veterans of America urges 
that for FY 2002, the RCS Vet Centers be specifically authorized and 
appropriated an additional 60 FTEE, and be specifically accorded $3.8 
million in additional funds, for a total of $74.4 million and 1,001 
FTEE for FY 2002.
                    veterans benefits administration
    In regard to the Veterans Benefits Administration (VBA) we 
recommend at least $80 million increase, with the proviso that 
increased attention be paid to the hiring and proper training of new 
adjudicators, ensuring that these new personnel are attuned to 
knowledgeably, accurately, and equitably adjudicate veterans claims in 
a timely manner, with presumption in favor of approving a substantiated 
claim. To train new personnel and to look for reasons to deny a claim, 
as opposed to working with veteran to identify evidence that supports 
the claim, is not acceptable.
    Furthermore, the VBA needs to take significant meaningful steps 
toward holding their staff in particularly the supervisors and 
managers, on more accountable for the accuracy and quality of their 
work. As of now, the predominant measurement emphasis is on volume of 
processed veteran claims, irrespective of how well or accurately the 
decisions were made. Because veterans know this, the number of appeals 
and remands by the Court of Veterans Appeals and the Board of Veterans 
Appeals back to the Regional Office of the Veterans Benefits is very 
high.
    Veterans have lost confidence in the system and appeal everything. 
The number of remands and regional office decisions overturned indicate 
that veterans are correct to have little faith in the fairness and 
accuracy of decisions in many regional offices. Moreover, the high 
remand rate on appeal is directly responsible for increasing the 
pending claims backlog at the regional offices. Returned claims are 
afforded expedited consideration, pushing new claims that have been 
languishing in piles even further down the docket.
    If we are ever going to eliminate the backlog of claims, the focus 
has to be on doing it right the first time. A few years ago the Ford 
Motor Company almost went out of business because the emphasis on the 
production line was solely on speed and volume, and not on quality. 
Once Ford focused on getting it right the first time, production costs 
went down Ford survived and earned the trust of the American people.
    The same sort or improvement in performance and results can also 
happen at the VA if Congress moves to assist Secretary Principi in this 
task. While at least $80 million more is required for VBA, VVA is 
equally concerned about performance and results. Vietnam Veterans of 
America is very concerned that the money that is being spent toward 
accomplishing the objectives set by Congress and the Secretary.
    The National Cemetery Administration needs a significant increase 
to keep pace with inflation (at least $10 to $12 million). The Office 
of the Inspector General appropriation should be significantly 
increased, at the same time that Congress help refocus their mission. 
Too much time is being spent on recurring reviews that result in few 
changes or improvements of services to veterans. VA management needs to 
be held accountable for following through with decisive action.
    Mr. Chairman, Vietnam Veterans of America urges you and your 
distinguished colleagues to push hard for a significant increase in the 
administration's request for the FY 2002 VA appropriation. VVA also 
urges that you push hard for safeguards to ensure accountability for 
actual performance and results in all areas of the VA.
    VVA strenuously objects to the proposal to transfer $235 million 
from the Veterans Health Administration (VHA) to the Department of 
Defense (DoD) to help pay for the recently expanded Tri Care benefits. 
This is an outrageous suggestion, and we urge Congress to reject it out 
of hand. The Defense side of the budget has plenty of room under the 
cap to pay for these benefits that retirees have earned by virtue of 
longevity retirement. General Motors does not ask Medicare to pay part 
of the ``retiree benefits'', nor should a resource-rich DoD ask an 
under-funded VA to pay their bills.
    VVA also strongly urges you and your distinguished colleagues on 
this Committee to hold a series of oversight hearings this year 
focusing on what VA said they were going to do with both the money 
appropriated for FY 1999 and FY 2000. Since Congress gave significantly 
more funds than VA said they needed to accomplish the goals set forth 
in their submittal, the central question should be about results and 
performance.
    Mr. Chairman, Vietnam Veterans of America thanks you for this 
opportunity to share our views on the budget for FY 2002 for the 
Veterans Administration. We stand ready to actively support you and 
your colleagues on this Committee in every way we can to achieve proper 
funding for vitally needed services and treatment of veterans, and to 
ensure that those funds are spent effectively to achieve the best 
performance.

                                   - 
