[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]



 
THE VA'S BUDGET REQUEST FOR FISCAL YEAR 2007
Wednesday, February 8, 2006
House of Representatives,
Committee on Veterans' Affairs,
Washington, D.C.


The Committee met, pursuant to call, at 10:10 a.m., in Room 334, Cannon 
House Office Building, Hon. Steve Buyer [Chairman of the Committee] 
presiding.


Present:  Representatives Buyer, Stearns, Moran, Brown of South 
Carolina, Miller, Boozman, Brown-Waite, Turner, Evans, Filner, Snyder, 
Michaud, Herseth, Strickland, Berkley, and Udall.


The Chairman.  Good morning.  I would like to welcome everyone to our 
first hearing of the second year of the 109th session of Congress.  The 
Committee on Veterans' Affairs Full Committee will come to order this 
day February 8, 2006.  Today you will hear testimony from Secretary Jim 
Nicholson on the Administration's fiscal year 2007 budget request to the 
Department of Veterans Affairs.  You will then hear testimony on the 
Independent Budget, provided by representatives of four veterans' 
services organizations which developed that document: AMVETS, Disabled 
American Veterans, the Paralyzed Veterans of America, and the Veterans 
of Foreign Wars of the United States.  We will also then hear testimony 
on the budget from the American Legion and Vietnam Veterans of America.


Mr. Secretary, I am glad you can be with us here today to share with 
this Committee the President's proposed budget for 2007.  I commend you 
for taking both hands onto this challenge, because what was presented to 
you last year wasn't your budget.  You went through some difficult 
moments, and it appears that improving the integrity of the process has 
borne fruit with this budget.


Mr. Secretary, you just marked your one-year anniversary as the chief 
steward of our nations veterans.  It's been a year of challenge, and you 
are to be thanked for your willingness to squarely meet those 
challenges.  A year ago I expressed my confidence that you would join 
Mr. Evans, this Committee and me in making the VA the best it could 
possibly be.  You have done so.  Veterans' health care is excellent by 
any standard.  Your National Cemetery Administration and the VA's 
insurance program continually rate among the nation's best-run 
government programs.  Your leadership and that of Dr. Perlin, and many 
within the department, in response to the catastrophe of hurricane 
Katrina, was magnificent.  The VA set the standard in your response.  It 
is our job to preserve those areas of excellence and work together in a 
bipartisan fashion to ensure that every service we provide meets high 
standards, which means to right the wrongs.


It is worth noting that the President has proposed substantial increases 
in the budgets of four agencies: the Departments of Defense, State, 
Homeland Security, agencies focused on fighting the war on terror; and 
the Department of Veterans Affairs, an agency focused on caring for 
those who are in the battle.


As Chairman of this Committee, my three top priorities remain: number 
one, caring for veterans who have service-connected disabilities, those 
with special needs, and the indigent; two, insuring the seamless 
transition from military service to the VA; and three, providing 
veterans every opportunity to live full and healthy lives.


Mr. Secretary, these priorities I noted from your statement almost 
mirror your own.  As stated in your written testimony, "The cornerstone 
of VA's medical care budget is providing for the veterans who need VA 
the most: those with service-connected disabilities, those with lower 
incomes, and veterans with special health care needs."  You further 
emphasize the importance of priority consideration for ill and injured 
veterans returning from combat in the global war on terror.


We have an obligation to those who bear the burdens of war and of 
military service, and their survivors.  Our work must move us toward 
fulfillment of that obligation.  There are some concerns in the budget 
that you have before us today.  Mr. Secretary, last year you brought us 
a similar request for enrollment fees and increased co-pays.  While I 
personally agree that it is appropriate to ask for cost sharing of these 
veterans, category sevens and eights, this Committee by a majority did 
not support them.  This is around the 795 million.  If the Committee 
does not go along with these, then we must buy that back into the 
budget, and that will be a challenge before us.  So, the lobbying effort 
is going to have to intensify to convince members as to why this is the 
prudent thing to do.


You will hear great demagoguery in this room today with regard to 
increased fees, or even the creation of an enrollment fee.  You have got 
organizations out there that almost want -- they want to create, and 
convince the sevens and eights that they have an entitlement by virtue 
of service.  And so you have got a challenge ahead of you.


Your request also relies on funds generated by management efficiencies 
recently called into serious question by the GAOs, so I welcome your 
response to the GAO report.  Further, the VA's projections of nearly $3 
billion in collections, given the agency's track record, appear to be 
overly optimistic.  I want to applaud you, though, on your focus on 
improving the revenue cycle management process.


Nowhere in the statement, Mr. Secretary, did you mention your plans to 
enhance management of the information technology within your department.  
And so I would like for you to address the CIO issue.  And with a new 
generation of veterans looking to us for care, this is a management 
efficiency that we must realize without delay.


Also, nowhere did you mention enhancements to the education benefit for 
our veterans, especially those now returning from their service.  As you 
know, I created the Subcommittee on economic opportunity to emphasize 
programs that focus on empowering veterans to take advantage of this 
Nation's opportunities by creating and fostering ability and self-
sufficiency.  Increasing the skills of veterans is a means to get good 
jobs, own their own homes, and support their families, as an investment 
in America's future.  History has shown that veterans empowered to take 
the opportunities offered by this great country is a repayment many 
times over in the investment made.


That is why that I am announcing today that I will support initiatives 
to modernize the GI Bill.  I welcome ideas and proposals such as the one 
made by the Partnership for Veterans' Education led by Vice Admiral Norb 
Ryan.  The Montgomery GI Bill, as good as it is, does not reflect the 
realities facing today's service members, especially in the Guard and 
Reserve.  We must modernize the GI Bill.  I've directed my staff to work 
with Ranking Member Evans on this endeavor.


This is a complex effort, given the need to coordinate with numerous 
House and Senate Committees, as well as various departments and agencies 
within the executive branch.  So Mr. Secretary, I would also call on 
your help in this endeavor to modernize the GI Bill, and welcome your 
comments.


This budget sends the right message to our men and women in uniform, 
that if you are hurt or wounded, the VA will be there for you.  After 
all, budgets, systems, and programs are about service to people.  I have 
visited with soldiers wounded in Iraq who are recovering at the VA 
Polytrauma Rehabilitation Center in Minneapolis.  This is one of the 
VA's four such centers dedicated to treating patients with multiple 
complex traumas, which often include brain injuries.


The Committee's staff has also visited the three other polytrauma 
centers, and I extend my deep appreciation and tremendous satisfaction 
for the dedication of the employees who are doing quality work.


The quality of care these heroes receive, again, it's impressive, and we 
are grateful to the VA professionals because they zealously provide that 
care.


What was perhaps even more impressive to me was the spirit of the young 
warriors.  They wanted to rejoin their unit.  They are very optimistic 
about their recovery, they are proud of their service, and they have not 
taken counsel of their fears.  We owe these men and women and their 
family members, and all America's veterans, our best.


[The statement of Chairman Buyer appears on p.  ]



The Chairman.  I would now like to thank Mr. Evans for his opening 
statement.


Mr. Evans.  Thank you, Mr. Chairman. I know that I expressed the 
sentiments of many on this Committee when I say that we will do all that 
we can to make sure VA does not experience any more budget shortfalls.  
Yesterday, I stated that I was baffled by the Administration's remark 
that this budget was a landmark budget for veterans.  I am still baffled 
today.  Although the President's budget requested increase looks good at 
first glance, it does not deliver the resources needed to provide 
veterans with the health care and benefits they need.  Across the gamut 
of VA health care I can see actual cuts in such areas as in medical 
research.  In other areas I have seen slight increases, over what, I 
believe it is not sufficient.


I have learned something already, something we learned since last year 
is to treat the VA health care budget with caution.  I certainly hope I 
colleagues approach this request with skepticism, which to me seems to 
be warranted.


Mr. Chairman, I have a prepared statement I'd like to submit for the 
record.  Thank you very much.


The Chairman.  Mr. Evans, your written statement will be submitted into 
the record.  Without objection.


[The statement of Mr. Evans appears on p.  ]



The Chairman.  I will now turn to our first witness and I will share 
with my colleagues that we will give great latitude during your time 
period for questioning and statements that you may have.


Our first witness is the Secretary of Veterans Affairs, the Honorable R. 
James Nicholson.  He's a 1961 graduate of the United States Military 
Academy of West Point, New York.  Secretary Nicholson served eight years 
on active duty as a paratrooper and ranger-qualified army officer, and 
then 22 years in the Army reserve, retiring at the rank of colonel.  
While serving in Vietnam, he earned the Bronze Star, Combat Infantry 
Badge, the Meritorious Service Medal, Republic of Vietnam Cross for 
Gallantry, and two air medals.  He is our former ambassador to the Holy 
See.


We welcome you, Mr. Secretary.  The Committee looks forward to hearing 
your testimony, and you may begin.  And please begin, opening with an 
introduction of the staff that you brought with you.


STATEMENT OF THE HON. R. JAMES NICHOLSON, SECRETARY, DEPARTMENT OF 
VETERANS AFFAIRS, ACCOMPANIED BY JONATHAN B. PERLIN, MD, PHD, MSHA, 
FACP, UNDER SECRETARY FOR HEALTH, VETERANS HEALTH ADMINISTRATION; DANIEL 
L. COOPER, UNDER SECRETARY FOR BENEFITS, VETERANS BENEFITS 
ADMINISTRATION; WILLIAM F. TUERK, UNDER SECRETARY FOR MEMORIAL AFFAIRS, 
NATIONAL CEMETERY ADMINISTRATION, ROBERT J. HENKE, ASSISTANT SECRETARY 
FOR MANAGEMENT, DEPARTMENT OF VETERANS AFFAIRS; TIM S. MCCLAIN, GENERAL 
COUNSEL, DEPARTMENT OF VETERANS AFFAIRS; AND RITA A. REED, PRINCIPAL 
DEPUTY ASSISTANT SECRETARY FOR MANAGEMENT, DEPARTMENT OF VETERANS 
AFFAIRS



Secretary Nicholson.  Thank you, Mr. Chairman, Mr. Ranking Member, 
members of the Committee.  I do have a written statement that I would 
like to have entered into the record.


The Chairman.  Your written statement will be entered into the record.  
Hearing no objection, so ordered.


Secretary Nicholson.  And I would like to introduce the team that I have 
with me here at the table this morning, a team of dedicated, competent 
experts.  And to my immediate left is Dr. John Perlin, the Under 
Secretary for Health.  Next is Admiral Dan Cooper, the Under Secretary 
for Benefits.  He is a submariner, but seems to operate pretty well on 
the surface, we are finding.  And on the far left is Under Secretary 
Bill Tuerk, the Under Secretary for Memorial Affairs.


To my immediate right is Bob Henke, Assistant Secretary for Management.  
To his right is Ms. Rita Reed, the Deputy Assistant Secretary for 
Management.  And to the far right is Tim McClain, the General Counsel 
for the Department of Veterans Affairs.


Mr. Chairman, as Secretary, it is my great privilege and responsibility 
to lead the Department of Veterans Affairs.  I am pleased to announce 
this morning a landmark Department of Veterans Affairs budget proposal 
of $80.6 billion for 2007 that is truly historic in its scope of 
services to veterans.  Behind the budget figures, Mr. Chairman, is a 
great story.  It is one of America's truly good news stories.  And so 
before we get down to the numbers, I would like to brag a bit on my 
department's people and their successes.  And back home, where I come 
from they used to say it ain't bragging if it is true.


And one of those truths, Mr. Chairman, is that our VA employees, all 
225,000 of them, come to the aid of their communities and their fellow 
citizens, veterans and non-veterans alike, in times of disasters and 
other national emergencies.  To make my point I need only to mention the 
heroic efforts of VA employees during hurricane Katrina, and Rita.  Not 
only did our staffs evacuate several hundred patients out of our 
hospitals in the Gulf area to other hospitals, and not only did they do 
it quickly and efficiently, they did it at great personal risk and great 
personal sacrifice and loss.


It is also a fact that the VA knows how to protect our veterans' vital 
health information against these kinds of catastrophic events that swept 
us in the Gulf Coast.  Because veterans' health care records are 
electronic, no matter where our New Orleans veterans were eventually 
relocated, their complete health records were available for 
uninterrupted care and treatment.


And I might add that in recognition of our accomplishments during the 
storm, I was recently privileged to present Senate Resolution 263 to 
Gulf region VA employees.  That was a congressional commendation for 
their extraordinary efforts as a first responder to a disaster of 
unprecedented proportion.


Mr. Chairman, following a decade-long health care transformation, my 
department stands as a recognized leader of America's health care 
industry, and we have the credentials to prove it.  The Journal of 
American Medical Association has applauded VA's dedication to patient 
safety.  The Washington Monthly featured VA in an article entitled, "The 
Best Care Anywhere."  U.S. News & World Report described the entire VA 
as the home of "top-notch health care," in its annual best hospitals 
issue.  And a Rand report ranked VA performance, on 294 measures of 
quality, as significantly higher than any other health care system in 
America.  Even the New York Times, just last month, in an article by 
Paul Krugman, no less, called the VA the model for our nation.


While these enthusiastic stories about the VA from outside are always 
welcome, truly welcome, the most meaningful measure of our success comes 
from the millions of men and women that we serve, that we care for: our 
patients, our veterans.  They are our biggest supporters.  Our veterans 
ranked our care a full 10 percentage points above their counterpart 
patients in private hospitals.  Yes, for the sixth consecutive year the 
American Customer Satisfaction Index reports that veterans are more 
satisfied with their health care than any other patients in America.  
This speaks volumes about the competency and the compassion of our 
caregivers in our health care system.  For us, the support of our 
veterans, the people who know us the best, is the highest level of 
praise that we can receive.  That is what gives us our bragging rights.


Because of our first-rate, high quality health care, veterans are coming 
to us in ever greater numbers.  Fully 7.6 million are currently enrolled 
for our care.  This year, we expect to see well over 5 million of them.


Mr. Chairman, President Bush in his 2007 budget proposal for the 
Department of Veterans Affairs is fulfilling his promise to our veterans 
with a strong budget that respects their service to our country, and 
takes a significant step toward redeeming America's debt to our heroes.  
The President's total request is for $80.6 billion.  This is an increase 
of 12.2 percent over last year's record amount.  It is 8.8 billion above 
the fiscal year 2006 level.  This budget contains the largest dollar 
increase in discretionary funding for VA ever requested by a president.


The resources requested for VA in the 2007 budget will strengthen even 
further our position as the nation's leader in delivering accessible, 
high-quality health care, that already sets the national benchmark for 
excellence.


In addition, this budget will allow the department to maintain our focus 
on benefits, on timely and accurate claims processing.  The President's 
2007 budget will also enable us to expand veterans' access to national 
and state veterans cemeteries.  As an integral component of our fiscal 
year 2007 goals, we will continue to work closely with the Department of 
Defense to fulfill our priority that service members, transition from 
active duty military status to civilian life, veteran life, is smooth 
and as seamless as possible.


Mr. Chairman, our written statement presents a detailed description of 
the President's proposal for fiscal year 2007, but I would like to take 
a few moments to highlight some of the key component of this historic 
budget.


During 2007, we expect to treat 5.3 million patients, including more 
than 109,000 combat veterans who served in Operation Enduring Freedom, 
and/or Operation Iraqi Freedom.


The 3.8 million veteran patients in priorities one through six will 
comprise 72 percent of our total patient population in 2007.  This will 
be an increase of 2.1 percent in the number of patients in this core 
group, and will represent the fourth consecutive year during which those 
veterans who count on us the most will increase as a percent of all 
patients treated.


The President's 2007 budget request reflects the largest dollar increase 
for VA medical care ever requested by a president, and includes our 
funding request for the three medical care appropriations, 27.5 billion 
for medical services, including 2.8 billion in collections, 3.2 billion 
for medical administration, and 3.6 billion for medical facilities.


The total proposed budgetary resources of 34.3 billion for the medical 
care program represent an increase of 11.3 percent, or 3.5 billion over 
the level for fiscal '06.  And it is 69.1 percent higher than the 
funding available at the beginning of the Bush Administration.


The VA is also focused on delivering timely, accurate, and consistent 
benefits to veterans and their families.  The volume of claims' receipts 
has grown substantially during the last few years, and is now the 
highest that it's been in the last 15 years, as we received over 788,000 
claims in 2005.  This trend is expected to continue.  We are projecting 
the receipt of over 910,000 compensation and pension claims in 2006, and 
more than 828,000 claims in 2007.


One of the key drivers of new claims activity is the increase in size of 
the active-duty military force now including reservists and National 
Guard members who have been called to active duty to support Operation 
Enduring Freedom and Operation Iraqi Freedom.  This has led to a sizable 
growth in the number of new claims, and we expect that this pattern of 
growth will continue.


A natural outcome of this increasing claims workload is growth in our 
mandatory spending accounts, which are growing even faster than VA's 
discretionary accounts.  We estimate that mandatory spending will 
increase by 14.5 percent, to over $42 billion, from an estimated fiscal 
year 2006 level of 36.7 billion.  This growth is largely in the 
compensation and pension account, and reflects the combined impact of 
adding new veterans and beneficiaries to the rolls, increasing levels of 
disability ratings for veterans already on the rolls, and annual cost-
of-living adjustments for all veterans' beneficiaries.


In addition, we expect to continue to receive a growing number of 
complex disability claims, resulting from post-traumatic stress 
disorder, environmental and infectious risks, traumatic brain injuries, 
complex combat-related injuries, and complications resulting from 
diabetes.  Each claim now takes more time and more resources to 
adjudicate.  We will address our ever-growing workload challenges by 
improving our training and productivity, by moving work among regional 
offices in order to maximize our resources and performance, by 
simplifying and clarifying benefit regulations, and by improving the 
consistency and quality of claims processing across our regional office 
system.


Mr. Chairman, our veterans are leaving this life at an ever-increasing 
pace.  Every day now 1,800 men and women who dedicated their lives to 
the continuation of our democracy are being laid to rest in fields of 
honor.  Of the 16 million World War II veterans who proudly served us, 
fewer than 3 and a half million now remain.  And by this time next year, 
that number is projected to be less than 3 million.  Korean War veterans 
are all in their seventies and eighties now, and Vietnam veterans, most 
of us, at least, are resisting the notion that we are next, but of 
course we are.


It has been said that a nation is known by the way it honors its dead.  
I firmly believe that America's greatness is reflected in the final 
tributes and perpetual care with which we respect the service of our 
departed veteran.  Buglers play taps for more than 107,000 veterans in 
our national cemeteries each year, and in '07 that will increase by 5.4 
percent, and will be 15.1 percent more than the number that were 
interred in 2005.


The President's 2007 budget request for the VA includes 160.7 million in 
operations and maintenance funding for the National Cemetery 
Administration.  This represents an increase of 11.1 million, or 74.4 
percent over the amount for fiscal year 2006.  We will expand access to 
our burial program by increasing the percent of veterans served by a 
burial option in a national or state veterans Cemetery within 75 miles 
of their residence, to 83.8 percent in '07, which is 6.7 percent over 
that of '05.  Our plan for the biggest expansion of the national 
cemeteries since the Civil War is on track.


So Mr. Chairman, I started out my testimony by saying that this budget 
is historic, that this is a landmark proposal funding, unmatched by any 
previous VA budget ever.  And I also said that VA's 225,000 employees 
are doing a terrific job of taking care of our veterans.  This level of 
competent and compassionate care was earned by the men and the women 
who, through blood, sweat, and tears, served America selflessly, 
honorably, courageously.


Veterans don't seek the spotlight of approval, Mr. Chairman.  So as the 
Secretary of Veterans Affairs, it is my privilege to lead our national 
applause in grateful thanks for every gift our veterans have given us.  
This proposed budget for the VA is President Bush's appreciation for our 
heroes.


Thank you very much, Mr. Chairman.


[The statement of R. James Nicholson appears on p.  ]



**********INSERT**********


The Chairman.  Thank you, Mr. Secretary.  At this time, I would like to 
yield to Mr. Evans.  He has a question now and then he's going to have 
to leave the room.  Mr. Evans?


Mr. Evans.  Thank you, Mr. Chairman.


You once again offer up legislative proposals that have been soundly 
rejected by Congress.  Is this just stubbornness?  As a Marine, I am 
quite familiar with stubbornness, but do you find it impossible to 
request a budget in leiu of legislative proposals?  Thank you Mr. 
Chairman 

The Chairman.  I would like to ask minority counsel to repeat the 
question.


Minority Counsel.  Mr. Evans notes that you once again offer up 
legislative proposals that have been soundly rejected by Congress and 
asks, "Is it just stubbornness?" Mr. Evans notes that as a Marine, he's 
familiar with stubbornness, and then asks, "Do you find it impossible to 
request the dollars that you actually need, in lieu of the legislative 
proposals?"


Secretary Nicholson.  Thank you, Mr. Evans.  That is an important 
question and was not unanticipated.  I personally believe in these 
policy proposals.  I think they are reasonable in the overall context of 
what we are doing in this giant health care and benefits system, because 
what we are asking is for people who want to get the best health care in 
the world, who have no injuries, disabilities, service-connected 
ailments of any kind, and who are working and have work, to pay $21 a 
month for their health insurance, and to pay a reasonable co-payment for 
their pharmaceuticals.  And the composite of that to this budget, as you 
know, is $795 million, which is a significant amount.  It's in the 
composite of the revenue that would accrue as a result of that, and the 
adjustment in the number of people using the service.


What it will do, in spite of the fact that this is a huge budget, it 
would just help ensure our ability to do our job even better.  And there 
are things that in spite of how well we are doing, there's more that we 
can do, and there are things that we can do better.  And I don't see it 
being a hardship.  It is just for categories seven and eight, and I 
think it is very reasonable.  It is also very equitable, because if you 
spent 30 years in the service and retire, you go on TriCare and you have 
both a copayment and an enrollment fee, and it is substantially higher 
than this.


The Chairman.  Thank you, Mr. Evans.


I have four questions.  First, Mr. Secretary, I would direct this to you 
and then perhaps further comment from Dr. Perlin and Mr. McClain.  I am 
hoping that you can comment on the process that was a started down in 
Charleston with regard to the VA and the Medical University of South 
Carolina, on the issues of collaboration, and how that is possibly being 
leveraged, not only with regard to construction at New Orleans; now even 
possibly in Las Vegas, and Orlando.  So I welcome your comments on that.


I also welcome your comments on regard the land acquisition issues at 
Denver.  You had made a request to us at the end of last year.  Minority 
had made an objection, so I would like you to help explain that to the 
Committee, and what your proposals are.


With regard to diabetes standardization, I am aware that in 2006, the VA 
Appropriations Act specifically prohibits the VA from replacing the 
current system by which VISNs select and contract for blood glucose 
testing supplies and monitoring equipment.  I would like to know what 
the present status is, and what directives you have given to the VISN 
directors; and it is my understanding there are three VISN directors 
that are not conforming, so I would appreciate your comments.


Mr. Secretary, another question  --  perhaps Admiral Cooper can help us 
-- is with regard to a budget reduction.  On the direct compensation 
FTE, it actually decreases by 48 in this '07 budget.  Given the number 
of claims that are coming in and the expected backlog, please explain.


Also, Mr. Secretary, and perhaps directed to Under Secretary Tuerk, the 
Committee has an interest in the National Shrine Program, and I welcome 
your comments with regard to that, because I also don't see that in this 
budget.  Mr. Secretary?


Secretary Nicholson.  Thank you, Mr. Chairman.  I will start, and then 
refer to the experts that we have.


The question of collaboration is an important one, and I strongly 
support collaboration wherever we can achieve it.  That is, with the 
military, with DOD, and/or with academia.  Collaboration with academia 
has redeemed itself.  It was, you know, it was General Bradley right 
after the war who had my job, who insisted to President Truman that we 
locate these new hospitals, wherever possible, next to an existing 
academic medical facility.  And he had the vision, and it is so valid 
that we could, cross-pollinate the staffs through the training, the 
research, the teaching that would go on, and we could further stimulate 
and grow our doctors, and that has worked wonderfully well to the 
advantage of the VA, such that we have three Nobel Prize winners out of 
the VA system, as doctors.


Sixty percent of the physicians in America today received training in a 
VA hospital. We have good physicians, and so does America.  An added 
plus is the economies, as well as the dynamics, that inure to that, 
especially when we can co-locate with DOD facilities, so I am very 
supportive of that proposition.


And I am quite aware of these areas that you mentioned.  I will probably 
let Dr. Perlin address the Charleston issue, having been down there. Let 
me just address New Orleans.  We have a major study group, task force, 
really, going on in New Orleans, trying to decide what we should do in 
New Orleans.  We are collaborating with the local leadership group in 
New Orleans, Bring New Orleans Back, with the local elected officials 
and the people here in Washington representing the state.  We are hoping 
to have our task force study done by the end of February, so that we 
have a good notion of what we should do, based on what we know.


But the last point is not unimportant, because there are things that 
still are not clear, like what is going to be the population of New 
Orleans.  What is going to be the veteran population of New Orleans.  
And what is going to be the status of protecting a facility, of 
hardening it against a recurrence like we've just been through, vis-a-
vis the levees or hurricane vulnerability?


These are important questions.  We want to collaborate, as we have down 
there for so long, with LSU, Charity, and Tulane.  So, where are they 
going to locate?  You know, the good news is that everybody's talking 
and everybody has, good intentions, and we know that we will replace 
that hospital, at some size and in some location.  But I could not tell 
you that today.


You mentioned the land acquisition in Denver.  Denver is another area 
that the CARES process has deemed needs a new hospital.  And the 
existing hospital will no longer be located with the collaborative 
hospital, which is the University of Colorado Health Science Center, 
because it has moved out to the old Fitzsimmons General Hospital campus.


And we've gone through turmoil trying to find a place to locate our new 
hospital out there so that we cannot only be next to the new university 
hospital, but the new children's hospital that is under construction.  
Happily, with the cooperation of some of the local elected people who 
had other notions about a piece of ground that was still left there, we 
have been able to get that under control, so to speak, and at a price 
that is compatible.


But it's not going to stay that way forever, because the local 
municipality there, Aurora, really wanted to use that piece of ground 
for a destination resort hotel.  Since they've accommodated us, they 
still want to have that destination hotel.  They need to acquire that 
ground, and they've done an assemblage, and they want our transaction to 
take place; i.e., buy the ground, so they have the money to go buy the 
other ground, to do what they really wanted to do.


And that can be done in two stages.  The initial ground acquisition to 
tie up the deal would be $25 million.  There is another office building 
involved that will become part of the hospital, but that does not have 
to be appropriated with the expedition that is needed, for us to secure 
the ground, to be in a position to build and collaborate like we have in 
the past.


I think while we are on that subject, I will hand this to Dr. Perlin to 
talk to you about Charleston, and then we can come back and talk about 
FTE and other things, after that.


Dr. Perlin.  Thank you, Mr. Chairman.  And Mr. Secretary, I would agree 
with the way you have laid this out.  I particularly appreciate the 
support of you, Mr. Chairman, Chairman of the Health Subcommittee, 
Chairman Brown, for really helping us discover a template for a way of 
looking at the value of collaborations.  Down in Charleston, we were 
presented with an analysis of the economic value of collaboration.  It 
looked not only at media capital costs, but life cycle costs for 
operations, suggesting ways that we might partner.


As a first step in this partnership, the ability to provide not only 
veterans but citizens of the state of South Carolina with new technology 
for cancer therapy that has a precisely-aimed beam, a technology known 
as TomoTherapy, and angiography suites, present the very first starting 
block of improved sharing.  For our providing some capital equipment, 
the return is free or significantly reduced costs for the use of this 
equipment, enhancing care for veterans and the community and state.  So 
this is really a win-win.


I make this point because it really provides us nationally with a 
template for looking at opportunities for collaboration, ways to improve 
operational efficiencies, capital efficiencies, as we think about some 
of the challenges of ensuring the veteran get the care they need in the 
out years.


So certainly, as we look at sites such as New Orleans, we place a great 
deal of attention not only on the long-standing relationship of 
affiliations, but ways in which we go forward that create synergies for 
all involved.


The Chairman.  John, if you can be brief so we can move to the other 
members' questions: the diabetes question, the FTE, and the national 
shrine.  So if you can try to hold your comments to a minute.


Secretary Nicholson.  Yes, sir.  The question on information technology, 
again, another very important area.  In spite of how well we have done 
in the transformation and use of modern technology for our electronic 
record system, which is nothing less than phenomenal -- and 
unprecedented; no other major health care system has yet achieved it -- 
we still need a major transformation inside the VA in information 
technology.  I think all of you members know that, and we know that.  
The question then is, how to do it?  How to force that cultural change 
that is going to take an organization that's big, spread out, far-flung, 
and to achieve the standardization that you really need so that we can 
have it do much better in reporting inventory control, collection 
processes, and talking to each other.  I think we all stipulate to the 
need.


So then, how should we do this?  We've had a major consultant come in, 
Gartner, and look at it, and they looked at also the history on this, 
which hasn't been very good, in trying to do this, and said, "You need 
to do the draconian step, you need to just totally change this," which 
would be to just move to a total centralized model.  The impacts of that 
you have to think through, because again, we have, medical applications 
going on all over this country, the Philippines, Guam, and some of them 
are quite unique, especially in the research area.


So, do you take that prerogative of developing their own model and their 
own software for that application, draw that all back up into the 
central headquarters here in Washington, and then have an IT czar 
decide, or is there some hybrid of that?


I believe that we need to do the hybrid, which we call the federated 
system, which is that we do consolidate the budgeting.  We would give 
far more responsibility and authority to the Assistant Secretary for IT, 
the Chief Information Officer, who is currently Assistant Secretary 
McFarland, who is brilliant and again, one of those other lucky things 
we have a guy like that that has come into the government, and who has 
the background to help us.


If you think tactically, we can still have these medical modules working 
on their own unique software that they may need, after getting the 
budget approval for that, from the centralized authority for it. If we 
can get that done, we will have taken quantum steps toward standardizing 
this organization.  And then see what, how it evolves.  That is what I 
think we should do.


The Chairman.  All right.  Now we are going to have to narrow it down to 
30 seconds.  The really brief on this, I need to get to other members.  
The diabetes standardization, are you following what the appropriators 
have asked?


Dr. Perlin.  Yes, we are.


The Chairman.  Thank you.  With regard to the direct compensation on FTE 
you have a decrease, Admiral Cooper, in the budget, in the face of 
growing claims.


Mr. Cooper.  Mr. Chairman, we developed the budget 18 months ago. At 
that time we considered certain planning factors.  In fact, we got a 
fairly large increase in FTE for 2006. That increase was predicated 
partially on the fact that we anticipated the legislation that called 
for special outreach in states with the lowest average compensation 
payments per veteran. We factored that in.  We figured there will be 
98,000 more claims coming in because of that outreach.  We expected to 
start that outreach close to the start of fiscal year 2006.  Therefore, 
we would have fewer total incoming claims, as we headed into 2007.  We 
have not started that project yet, but we are in a hiring process now.


The fact is, for VBA in general, we got an increase.  We apportioned 
that out to the several programs.  If I need to, I will reapportion 
within those numbers.  So across VBA we recieved a slight increase of 
about 173.  So, in the planning process 18 months ago, it looked logical 
to reduce slightly in 2007.  I will reorient as the budget is approved.


The Chairman.  Secretary Tuerk?


Mr. Tuerk.  Thank you, Mr. Chairman.  I appreciate your bringing the 
National Cemetery Administration, and particularly, our National Shrine 
Commitment into focus.  Apart from keeping our cemeteries open, and 
developing 11 new cemeteries to serve the needs of veterans, advancing 
the National Shrine Commitment is my highest priority.


This budget is good news with respect to the National Shrine Commitment 
program.  This year, the budget for the National Shrine Commitment is 
increased by 40 percent, from approximately $20 million to $28 million.  
Perhaps of equal significance, funding for the gravesite renovation 
projects, for the raising, realigning, the cleaning of headstones, and 
for turf maintenance, is scheduled to increase at an even higher rate, 
by 65 percent.


Clearly we are headed in the right direction.  We are on a growth curve.  
When we get this funding, it is my belief and my hope, that we will be 
nearly halfway down the list in the National Shrine Commitment projects.  
So I am quite pleased with this proposal.


The Chairman.  Okay.  Thank you very much.  Mr. Filner?


Mr. Filner.  Thank you, Mr. Chairman.  Let me first say for the record 
something that we Democrats communicated with you, Mr. Chairman, in 
writing: that while Congress on the floor of the House is moving to 
greater transparency in our processes, you are taking us and this 
Committee backwards.  To stop the joint sessions with the Senate, 
inviting the members of the VSOs really makes the process less 
transparent.  Regardless of the timing of those meetings, we had 
thousands of veterans able to see what was going on here, able to 
connect up with their own members of the Committees, and see what we do.  
I, again, would urge you to reconsider that decision to stop a long, 
long tradition of having VSOs and their members come in for their own 
sessions.


Mr. Secretary, you called this is a, "landmark, historic budget, biggest 
increase ever by a President."  I am sure the President said to you, 
"You are doing a heck of a job, Jimmy."  And I think that is a good 
comment on this budget.


I think you could have sent a video from last year's appearance, because 
the same costs for veterans are being proposed as last year.  We have 
proposals that have been soundly rejected by the Congress which are in 
your budget; steep increases in co-payments for the prescription drugs; 
enrollment fees; another underestimation of returning soldiers from Iraq 
and Afghanistan; continuing to drive priority eights out of VA health 
care; an unrealistic figure for third-party collections and inflation; 
management efficiencies which seems to be a category so flexible that 
you add that to whatever perceived shortfall is and one, that the GAO 
recently said was undocumented in the past budgets.


So, your real budget is way below what you are claiming here as historic 
and landmark.  Not only are you on the surface $1.7 billion below what 
the Independent Budget will show us in the next panel, including the 
priority eights, your legislative proposals probably won't get passed.  
And so that is another $1.3 billion out.  Your management efficiencies 
of close to a billion may not materialize.  You overestimate 
collections.  So I count you are almost $4 billion short of where we 
ought to be.  Heck of a job.


And to the tired old proposals you have the nerve to say this is not a 
hardship by increasing the fees, and yet your own budget shows we are 
going to drive 235,000 veterans out of VA Healthcare.  It must be a 
hardship on them if you are driving them out of such a wonderful system 
that you described.  Mr. Secretary, if it is such a wonderful system, 
why are you driving out 235,000 of them, as the only way that you are 
going to meet your budgetary needs?


In addition to the tired, old proposals, you add another wrinkle.  You 
are very creative.  You have changed the rules so you put more money on 
the backs of veterans, and that is in regard to third-party collections 
for care of non-service-connected illnesses and disabilities.  Right now 
your practice, as I understand it, is to bill the veterans' insurance 
companies, the third-party, and when the insurance company pays, if they 
do, the VA takes off the top the co-payment that the veteran would owe.  
This means that the VA reduces what the veteran has to pay with the 
insurance company collections.  A reasonable approach.


Now what you want to do is to bill them simultaneously, as I understand 
it, and you get $30 million more out of the pockets of veterans in 
fiscal year 2007, and $192 million over the next five years.  Once 
again, you are adding a new wrinkle to your enrollment fees and your 
increase in the co-pays for drugs.


In addition, another thing I couldn't understand, you seem to double-
count moneys in here, in another accounting gimmick that I think gives 
you the "landmark" figure that you claimed.  You have in collections an 
amount of $544 million that seems to be counted twice: once to reduce 
the medical service appropriations, and again as part of the 
collections.  You subtract it from one to reduce the appropriation, and 
you add it again.  So it seems to me you are double-counting. And if 
that is a mistake that seems to be there, we will look through the 
budget in more detail and see if there are any others.


I don't call it a landmark budget.  I don't call it the biggest increase 
ever by a President.  I call it more of the same that we saw last year, 
accounting gimmicks, double-counting, legislative proposals that won't 
come true, management efficiencies that never are there.  I think you 
are doing a heck of a job of driving veterans out of this system, and I 
think we ought to reverse that course, Mr. Chairman and Mr. Secretary.  
Is there anything I said wrong?


Secretary Nicholson.  Let me say, number one, Mr. Filner, the increase 
in direct appropriation is up 9.4 percent.  As to the -- 


Mr. Filner.  Only if all those figures I counted are true.


Secretary Nicholson.  The "driving out", as you call it, of the almost 
200,000 people that we project that would not -- 


Mr. Filner.  Your number is 234,566 in your budget.  You called it an 
adjustment; I call it driving out.


Secretary Nicholson.  Well, 95 percent of those people we find have 
other insurance; either public, private, employer-type insurance, or 
Medicare.  And they make a conscious decision at that point about what 
works best for them, and do project that there would be this reduction.


And I will say categorically there's no double counting in that budget.  
I will ask Dr. Perlin if he wants to expand on that in any way.


Dr. Perlin.  Mr. Filner, I am happy to go through the budget with you, 
but the 544 million dollars is the combination of the collections from 
the pharmacy co-pay and the enrollment fee.  I would be pleased to go 
over that.  It is counted once.  I should note that that is after the 
9.4 percent direct appropriation increase. Including the collections, 
the increase in this budget over last year goes to 11.3 percent.


Mr. Filner.  I am sure you'll be able to tell me more, but if you look 
on your budget's submission page: chapter one, page two, you add to the 
medical service budget the $544,000 that you claim as a savings from the 
legislative proposal.  Then, in another figure below it, collections, it 
is in there also.  So it is an addition because of certain proposals to 
your budget, but then it is also included in another line-item.  If that 
is not right, I will be happy to hear from you, but it looks to us that 
is what you are doing.


Dr. Perlin.  We are absolutely certain that the resources, that $544 
million, are counted once and only once as collections.  Let me explain 
what seems to be some confusion about the difference between 235,000 and 
199,000, is.  Absent any policy proposals whatsoever, we estimate that 
about 35,000 fewer priority seven and eights would be in the system as 
patients next year.  The number one reason for attrition for veterans 
who are with us generally for life is because they pass away.


Secretary Nicholson.  Let me also, if I may, Mr. Filner, point out -- 


Mr. Filner.  So you mean that's not part of your model, the people who 
die and are taken out?  You are double counting again, Now we've got 
dead people you are double counting.


Dr. Perlin.  Absolutely not.  There are estimated to be 35,000 people 
fewer.  The residual is 199,600 -- 


Mr. Filner.  So we are talking about 199,000-something that you are 
driving out, not 235.  Okay, I stand corrected.


Secretary Nicholson.  I would just like also to point out to you your 
comment with respect to collections.  We increased collections in the 
just-finished fiscal year of 2005 by 8.6 percent over the prior year.  
So I think we've established -- 


Mr. Filner.  How much money is that?


Secretary Nicholson.  Sir?


Mr. Filner.  How much money is that?


Secretary Nicholson.  In absolute terms?  How much is the increase, or 
the total -- 


Mr. Filner.  Certain times, you use percentage, other times you use 
numbers.  You are always trying to spin it in a way that sounds better.  
But what does the eight percent represent?  If it's of one dollar, it's 
not a great increase, you know.


Secretary Nicholson.  Fair enough.  The amount collected was 
$1,897,000,000.


Mr. Filner.  And that's an increase from?


Secretary Nicholson.  The prior year it was $1,747,000,000.


Mr. Filner.  So how much increase?  $200 million?


Secretary Nicholson.  8.6 percent.


Mr. Filner.  How many hundred million was what I asked.


Secretary Nicholson.  $150 million.


Mr. Filner.  Out of a $70 billion budget?  We've had these 
miscalculations in past budgets so, we don't have a lot of confidence in 
those figures.  How much did you project, by the way, in the previous 
budget?  Was that what you projected?


Secretary Nicholson.  I think I stand corrected if I am -- we were 
within two percent of what we projected we would collect.


Mr. Filner.  And so you overestimated your collections.


Secretary Nicholson.  By two percent.


Mr. Filner.  It's that $100 million or something?


Secretary Nicholson.  Oh, no, no.


Mr. Filner.  I am saying if you overestimate your collections -- 


Secretary Nicholson.  Three million dollars.  Three million.


In fact, I don't know if you can see this but we should have a chart.  
You see that line?


Mr. Filner.  I can't see it.


Secretary Nicholson.  That's the progression of collections, starting in 
2000.


Mr. Filner.  What page is that on?  Is that in here somewhere?


Secretary Nicholson.  I don't know that you have this, but the point is 
that it's a very good story.  In fact, in 2000, the VA collected $573 
million.  As I just told you, in '05, it's collected $1,897,000,000, and 
that line is ascending because we are getting better at it.


Mr. Filner.  And how much would that increase if you included Medicare?


Secretary Nicholson.  I don't know, we'd have to get you that.


Mr. Filner.  It would be a lot bigger than this.


Secretary Nicholson.  Oh, it would be bigger.


Mr. Filner.  If you went for reimbursement from Medicare, that would be 
very good.


The Chairman.  Thank you, Mr. Filner.


Mr. Filner.  Think about that.


Secretary Nicholson.  We have.  You'll have to do it, because we've been 
told we can't do it.


Mr. Filner.  You also can't increase enrollment fees, but you suggested 
it.


The Chairman.  Thank you, Mr. Filner.  Will now recognize Mr. Miller, 
who chairs the Disability and Memorial Affairs Subcommittee.


Mr. Miller.  Is there time still remaining, Mr. Chairman?


The Chairman.  Well, we want to give members latitude.  This is our 
opportunity to speak with the Secretary about the budget. We are under 
the five-minute rule, but we want to give latitude.


Mr. Miller.  I see a green light down here.  What does a red, blinking 
light mean?


The Chairman.  It means I am going to give some latitude.


Mr. Miller.  Will you give it to me?


The Chairman.  I will.


Mr. Miller.  Why do I always have to follow my good friend, Mr. Filner?


Mr. Miller.  Mr. Secretary, thank you for being here today and 
presenting the blueprint.  I don't imagine that any of us totally agree 
with what's in here, but we have to have a starting point somewhere, and 
I appreciate it.  Some of my questions may be a little bit off subject, 
but because you are here I want to be able to ask you a question, in 
particular about an issue that's floating around VISN eight in Florida, 
about a potential shortfall at Bay Pines, of some $20 million.


That concerns me, that there is a shortfall, potential shortfall, there.  
What concerns me probably even more is that this Committee is being told 
that members and staff down there are not to communicate with members of 
Congress in regards to the shortfall.  And I wanted to know if you would 
address that this morning.  Or Dr. Perlin, or anybody that's at the 
table.


Secretary Nicholson.  Thank you, Congressman Miller.  There is some 
history at Bay Pines in the last few years. The IG looked into that, and 
I think it was in August of '04, issued a report, and corrective action 
was implemented.  A plan was developed.  There were weekly conference 
calls were being conducted, I think it went on for about six months.  
And the IG took another look and said, "All these recommendations have 
been implemented, and these problems have been satisfactorily resolved."


I am aware of the issue that you are bringing up this morning, but I was 
just made aware of it this morning.  Someone wrote an anonymous letter 
pointing out that there were some problems and that there's a shortfall 
at that hospital.  I have not yet had a chance to look into this 
substantively.  There are serious allegations in that anonymous letter.  
We take those seriously and we will look into it.  I am going to be down 
in Florida myself later this month, and will personally talk to some 
people and look into it.  To the best of my knowledge, these are 
unsubstantiated allegations.


Dr. Perlin, do you have anything to add?


Dr. Perlin.  I just note that we were made aware of this, as Secretary 
said, this morning.  And I looked back in terms of the allocation of 
resources to all of VISN eight, I note that the VISN was allocated 
$2.647 billion, a 9.1 percent increase over the previous year.  Bay 
Pines received $303.46 million as an allocation within the VISN, and I 
just note that these are somewhat protean during the course of in a 
year.  And obviously this has grabbed my attention.  We want to make 
sure the veterans at every facility, but particularly given the history 
of the challenges at Bay Pines, get the best possible care, and in 
fairness, that we do so efficiently.


So I am going to be devoting some good deal of attention to making sure 
that not only the resources are there, but that they are used wisely.


Mr. Miller.  Thank you.  We look forward to hearing what you find, and 
we will provide you the information that we may be able to pick up, as 
well, Mr. Secretary.


Also, Mr. Tuerk, thanks for coming to first Florida district.  I am 
sorry I wasn't able to be with you when you were at Barrancas.  I am 
pleased to see the increase in dollars for the National Shrine 
Commitment, some $14 million additional over last year's request.  A 
long way to go, 300 million is the number that we need to get to, but I 
do want to say thank you.


And the yellow light is on, so I am going to ask a question of the 
Secretary.  You brought it up.  I wasn't going to, but you mentioned New 
Orleans in several parts of your comments.  The purpose of a VA hospital 
is what?  Who is it supposed to serve?  Tulane, LSU, Charity, or 
veterans?


Secretary Nicholson.  Well, the purpose of a VA hospital is to serve 
veterans.  The history has shown that this service is enriched when 
those hospitals can be co-located and collaborate, and get the specialty 
services of those people in those other hospitals.  For example, there 
are some very esoteric kinds of diseases, or surgical procedures that 
are needed by our veterans, where we don't staff that narrow specialty.  
We are able to get those because we've accredited doctors that are at 
those nearby teaching hospitals with that specialty.  I mean, that has 
just absolutely redeemed itself.


Mr. Miller.  The light is blinking, but since the Chairman is giving us 
latitude, since there is a somewhat clean slate today, is New Orleans 
exactly the place the VA would want to site a medical facility?


Secretary Nicholson.  I would say, Mr. Miller, that the answer is in the 
affirmative, at least in greater New Orleans.  I can't tell you where 
that hospital will be sited, but from what we know, there will be a 
justifiable need to replace that hospital in the residual veteran 
population of the New Orleans area that we serve, yes.


Mr. Miller.  For the record, New Orleans is in a declining -- was prior 
to Katrina -- declining veteran population.  There was a lot of use of 
the facility by facilities other than VA.  My statement, for the record, 
is I don't know if 800 million to $1 billion in the New Orleans area is 
an appropriate expenditure of funds, and I hope that VA is looking at 
the broader picture.  And as long as the greater New Orleans area 
includes the panhandle of Florida and the needs that are there, we will 
continue to broach the subject.  Thank you.


[The statement of Mr. Miller appears on p.  ]



**********INSERT**********


The Chairman.  Thank you, Mr. Miller.  I have a statement to be 
submitted for the record from Ms. Corrine Brown.  Hearing no objections, 
so ordered.


[The statement of Ms. Brown of Florida appears on p.  ]



**********INSERT**********


The Chairman.  Mr. Secretary, I would like to recognize the Ranking 
Member of the Health Subcommittee, Mr. Michaud.  He also, to let you 
know, was at the genesis in Charleston for this collaborative effort 
that, as you said, Dr. Perlin, is this template.  He was there at the 
beginning of that and has also had a great interest in increasing the 
revenue cycle management.  A very thoughtful member.  Mr. Michaud.


Mr. Michaud.  Thank you very much, Mr. Chairman.  I would like to thank 
you and Ranking Member Evans for having this hearing, and would like to 
thank you, Mr. Secretary, for coming over to testify.  I would ask 
unanimous consent to submit my opening remarks for the record.


I have basically four types of questions, Mr. Secretary.  I will run 
through them and then go back so that way it will give you time, or Dr. 
Perlin, to answer them.


My first one, and it's similar to Mr. Miller's question: last February 
when you were here you were asked if any VISNs had a shortfall.  You 
both stated that no VISN had requested additional money, and I think 
part of the reason is they were told not to request any additional 
funding.  Like last February, this year we are hearing that facilities 
are delaying hiring, and deferring purchases to cover differences 
between operating funds and demand for services.  My question is, how 
many VISNs will be forced to tap into reserves or non-recurrent 
maintenance funds in order to make ends meet?  That's my first question.


The second question is, last year, VA had a shortfall due in part to 
underestimating the demand for services from the veterans who were 
returning from Iraq and Afghanistan.  I am glad that you have included 
estimates in the budget. I have a couple of questions about the budget 
assumptions for returning OIF and OEF veterans, because we all agree we 
need to take care of these veterans.


As of October 2005, the VA treated over 119,000 OIF-OEF separated 
veterans.  But your budget for fiscal year 2007 projects 109,000 OIF-OEF 
patients.  So your estimates are 10,000 fewer than what the VA has 
already seen.  The recent published Quadrennial Defense Review states 
repeatedly that we are in a long war, and I think they're probably 
right; we are in a long war, so it seems to me like you are starting at 
a low number for your budget assumptions, that could negatively impact 
the VA's ability to care for veterans.  Could you explain how you 
arrived at these assumptions?  Do you need to revise your budget 
projections to meet the increased demand on OIF-OEF veterans?


The third question is on the CARES process which identified the needs 
for hundreds of community-based outpatient clinics and other expanded 
access points, including many in rural states, like the state of Maine.  
How many new CBOCs are funded in fiscal year 2007 budget?


And beyond the increased number of access points, what other initiatives 
are included in the budget that will assist in easing the travel burden 
facing many veterans, particularly in rural states?


My last question is on the special Committee on PTSD which has begun 
recommending that each vet center have a family therapist on staff.  
Each year the VA concurs in principle, but does not commit the funds or 
staff to make this recommendation a reality.  Instead, the 
Administration says it is actively monitoring the vet center program 
workload, to identify potential gaps, and those identified gaps are 
forwarded to the Under Secretary of Health.


It is our understanding that the vet centers are functioning at 
capacity.  We met with several groups last year, and that came out.  My 
question, relating to that are what gaps have been identified and are 
these initiatives to close the gaps in your fiscal year 2007 budget?


Do you want me to go back and restate the questions?


Secretary Nicholson.  I think I have them, sir, if we are not responsive 
to one, please feel free to ask us again.


First, on the VISNs, you related back to experiences last year, saying 
that you are hearing rumblings that there is delayed hiring, and we are 
tapping into nonrecurring funding now in this fiscal year.  That is news 
to me.  I am not aware of that.  That's something that we will look 
into, that I don't believe is the case, and should not be.  We are going 
to dig into that and we will get back to you.


The OIF-OEF question is a very important one, and the nuances of that I 
am going to ask Dr. Perlin to address.  It has to do with cumulative 
patient load versus new patients.  Well, maybe we will just take that 
right now.  You can speak to that, John, if you would.


Dr. Perlin.  Thank you, sir.  In brief, exactly right.  The difference 
between the numbers, that I understand they lead to some confusion, is 
how many OIF-OEF we have treated cumulatively, are indeed, we have 
treated 119,000, more than 119,000 in VHA.  How many do we expect in a 
particular budget year?  Using best estimates at the moment, that 
109,000 for the fiscal year 2007 is correct.  Obviously, we are going to 
keep monitoring any changes in tempo, and information from the 
Department of Defense, that would lead us to change as need be.  But 
that's why the discrepancy between the two numbers are -- 


Mr. Michaud.  How did you arrive at your assumptions, particularly when 
you look at the insurgencies that's occurring over in Iraq?


Dr. Perlin.  Right.  Easy enough.  About a quarter of those numbers were 
really projected based on the use patterns of the current OIF-OEF 
veterans in VA.  The other three quarters are based on the history, or 
the rates of separation, from Department of Defense.  All components, 
active as well as reserve components, coming into VA.


Secretary Nicholson.  The next question I think you addressed was to the 
CARES process, the Capital Asset Review for Enhanced Services, with 
respect to CBOCs.  At the beginning of this fiscal year we had 712 
freestanding Community-based Outpatient Clinics.  We plan to add 15 
additional this year, and in this budget that we are here discussing, 
the '07 budget, we have 43 planned in that budget.


Mr. Michaud.  So, 43 plus the 15?


Secretary Nicholson.  Yes, sir.


Mr. Michaud.  Great.  And the second part of that question was, are 
there any other things that the VA is going to do to help increase the 
access points, particularly in rural states?


Secretary Nicholson.  Well, we are very active in rural health care.  
The CBOCs of course are a real tangible extension of that, trying to 
push them out, get them more out into the communities.  You know, I 
think the department has a very commendable record in the way that these 
CBOCs have grown.  And the way we are planning to grow them, we also are 
burnishing our efforts in telemedicine, rural home medical care, and 
it's a real growth area of ours, and one that's getting quite a bit of 
attention.


I think the final question was on PTSD.


Mr. Michaud.  That's correct.


Secretary Nicholson.  And that's an area getting a considerable amount 
of our attention, because it's quite prevalent in both the medical side 
and the benefits side of what we are doing, say, sort of overarching 
what we are endeavoring to try to do, is to be a very affirmative in our 
entire outreach efforts, in our seamless transition, and trying to get 
these young returning folks, particularly returning from the combat 
area, oriented towards coming in and seeking counsel, if you will, and I 
didn't say, "therapy" yet, but just come in and talk about it without 
some feeling of a stigma, that they are losing their mind or something 
because of an experience that they've had, or have a recurring feeling 
from some, sort of nonnatural human occasion they've had in combat.


And people have that.  And most people can get over that if we can get 
our arms around it quickly enough, and get them the right treatments.  
So we are really trying to emphasize that, and we are doing that in our 
Vet Centers as well as, of course, in all of our clinics and in the -- I 
think we had over 8000 briefings last fiscal year to units that were 
deploying back, in an endeavor to try to emphasize the health part of 
that, the recovery part of that, before the compensation part of it, 
because our real goal is to make people healthy.


Mr. Michaud.  Could you provide for me, Mr. Chairman -- 


Mr. Stearns.  The gentleman's time has expired.  You are five minutes 
over, and it is double the time that was allotted.


Mr. Michaud.  If the Secretary could, my specific question was, what gap 
has been identified out of the initiatives in the '07 budget, taking 
care of that gap?  So if the Secretary could provide us with the special 
Committee's report, talking about the gap, so that we can look at it.


Mr. Stearns.  Yeah, I think you can do that in writing to the gentleman.


Secretary Nicholson.  Yes, we will be happy to.


Mr. Stearns.  There is a lot of members here who wish to speak, and we 
all have busy schedules, so we are just trying to stay to the time 
limit.


[The statement of Mr. Michaud appears on p.  ]



**********INSERT**********


Mr. Stearns. [Presiding]  Mr. Chairman, I was here slightly ahead of the 
gentleman from Arkansas, so I was going to start my questions.


Let me first of all commend you.  I've been on the budget now, this is 
my 18th year, and this is the largest increase I've ever seen a 
secretary offer Congress in his budget.  And I think this is probably a 
reality, because of the war on terrorism and the war in Afghanistan and 
in Iraq.  So I commend you for doing this.  But having said that, 
looking at the three areas that you have in your budget proposal: a $250 
annual enrollment fee for priority seven and eight, increasing in 
pharmacy co-pays from eight to $15, and your third-party offset; all 
three of those together is a little less than one percent, like, .98 
percent.  And it is controversial.  I submit that you probably, if you 
work this third-party offset you probably could make up a large portion 
of this.


And let me first of all ask, what is the status of the Cleveland 
demonstration project that we keep hearing about on third-party offset?  
Is somebody prepared to give us an update of this demonstration project 
that we are hoping will give us information so we can save a lot of 
money in this third-party offset?


Secretary Nicholson.  Mr. Chairman, I am going to ask Dr. Perlin if he 
would respond to that, and then ask your leave, if I could run out for a 
minute and come back.


Mr. Stearns.  Absolutely, absolutely.  Sure, yeah.


Secretary Nicholson.  As I said, I am a Vietnam veteran, I am -- 


Mr. Stearns.  No, I understand.


Dr. Perlin.  Thank you, Mr. Chairman.  The PFSS, to spell it out is the 
Patient Financial Services System program, and the idea is to improve 
all of our collections by allowing our great electronic health record 
interface electronically with billings and collections.  And that is 
working, and completion of testing is actually scheduled for May of 
2006.


Mr. Stearns.  So this year, the Cleveland project will start?


Dr. Perlin.  Yes, sir.


Mr. Stearns.  Okay.  And do you have the resources and in place, the 
people  --  are you happy with that?


Dr. Perlin.  The project, to be fair, had a challenging start because I 
think people underestimated the complexity of creating programming that 
was idiosyncratic with hospital or health care billing, or anywhere 
else.


Mr. Stearns.  Okay.


Dr. Perlin.  The issue you mentioned, the first-party offset, presents 
that unique challenge.


Mr. Stearns.  You know, having been into these discussions before, there 
is two areas -- any way to turn this volume down?  I guess not.  Just a 
shade, maybe?


The two areas I find have always been a problem is, can you identify the 
cost it takes to get the third-party collections?  Because I hear the 
veterans come up to me and say, "Oh, we got so many millions of dollars 
back."  But no one has ever told me what the cost is per outpatient -- 
third-party, rather -- to get this money back.  Had you done an analysis 
to say, "Okay, Congress, it's costing us 'X' dollars to get this money 
back and maybe we would be better off not to even do it, and we should 
outsource this," or something like that?


Dr. Perlin.  Yes, sir.  I do follow what it costs us to collect.  We 
want to be efficient about doing that.  I think it's worth stating that 
whomever did the collections would have to do a number of things that 
don't occur in other sectors.  For instance, we have to generate a bill 
to include what Medicare might have reimbursed, even though we don't get 
the value of that back.  So all of the effort that goes into a bill 
that's, say, $100; actually at the outset, because we don't collect 
Medicare as an example, only returns $20.  But you still have to go to 
the effort on the other 80 percent, the $80.


And so on average, across all the different sorts of collections we 
have, it's approximately 10 to 11 percent.


Mr. Stearns.  Okay.  Before I forget it now, will this Cleveland 
demonstration, when will it be complete, and you be able to come back to 
us and give us a some quantitative information?


Dr. Perlin.  Yes, we are hoping to go live in approximately July, and we 
would be pleased to report on the success with that, after that goes 
live.


Mr. Stearns.  Okay.  So you intend to get us a report then perhaps to 
one of the Subcommittees, the full Committee, on this, as soon as you 
have got information?


Dr. Perlin. We would be pleased to discuss with the Committee any of the 
performance of that as soon as it is available.


Mr. Stearns.  Okay.  And the other thing before I conclude is, do you 
keep accurate reimbursement values that are done throughout industry?  
For example, if a veteran comes in and he has to get Blue Cross Blue 
Shield to pay and then you pay them, I mean, how are you determining 
these DRGs?  Are you doing it with in-house?  Are you taking information 
from industrywide, from TriCare?  In other words, are you tying all 
these systems together so that you can say the DRGs are accurate and you 
have got enough information to say, "We are not overpaying for 
reimbursements"?


Dr. Perlin.  Sir, thank you very much for that question because it's 
tremendously important.  I think Mr. McClain might speak to statute that 
determines how we set the rates that are there.  And -- substantially 
complex that we should respond to them in writing to you, if that would 
be okay, as to how the rates are actually matched.  I know they do shop 
markets to try to identify fairly accurately and precisely the usual and 
customary rates.


Mr. Stearns.  My time has expired.  Ms. Berkley?


Ms. Berkley.  Thank you, Mr. Chairman.  I appreciate the time.  And 
thank you, gentlemen, and Ms. Reed, for being here.  I appreciate the 
opportunity to speak with you.


During our break I was watching television, and I just caught you on TV 
as you were touting the Las Vegas VA medical complex project, and I was 
very happy to hear your enthusiasm about it.  You know, this is a great 
passion of mine that I have worked very hard towards.  And I attended a 
week and a half ago a blessing ceremony that the Southern Nevada Paiute 
Tribal Council conducted in order to bless the land that the VA complex 
is going to be located on, and it was quite exciting, and a unique 
opportunity to share this with our Native Americans.


But I need to share with you something that transpired just in the last 
few days.  On Monday, we received a call, my office received a call from 
your office explaining that there was a $27 million shortfall for the 
nursing home.  Well, we knew that and were anticipating it, and were 
told initially that this additional $27 million would be contained in 
this year's budget.  It was not contained in the budget.  My staff then 
reviewed the rest of the budget and found that there is actually a $147 
million shortfall.


Now, we contacted your office immediately to get an explanation of what 
was going on, what exactly was the shortfall, what's the breakout of the 
numbers, are we still on schedule, when do we break ground, when do we 
initiate the vertical construction?  And imagine my chagrin when we 
didn't hear from you, but later that afternoon, Senator Ensign from 
Nevada issued a press release that contained the information that we had 
requested.


Now I am sure that was an accident, but I don't appreciate having my 
questions that are directed to your office answered in Senator Ensign's 
press release.  And this is, quite candidly, Mr. Secretary, the second 
time this has happened and I, quite frankly, am tired of that.  If I 
contact your office and request information, I would appreciate a timely 
response before Mr. Ensign's office is notified with the information.


Having said that, it is important for me to have on this record: where 
the additional $47 million is, why we need an additional $47 million?  
And I understand it, but I would like it for the record.  And I would 
like to know when we anticipate breaking ground, where we are, and when 
we start vertical construction?  And when will that $147 million be 
appropriated along with the other money that has already been 
appropriated?


Secretary Nicholson, Thank you, Congresswoman.  First, may I ask you a 
question, did you call me?


Ms. Berkley.  Yeah, we called your office.  It's my understanding -- 


Secretary Nicholson.  I didn't get your call.  I do not have a record of 
your calling me.


Ms. Berkley.  Yeah, ordinarily I wouldn't be particularly chagrined, but 
this is the second time, and it is beginning to get under my skin.


Secretary Nicholson.  I apologize for that, because I wasn't aware that 
you were calling, or I would have called you back.


Onto your questions, we are very committed to the new hospital in Las 
Vegas, and we are appreciative of your support and your efforts in 
helping getting the land transferred from BLM, and so we have the land. 
In looking at the hospital and re-scoping it, or making the hospital 
somewhat bigger and adding a long-term care facility to it, we have 
noted, given I think in a lot of measure due to the vitality of your 
market out here, the cost -- 


Ms. Berkley.  Yeah, the construction.  Plus labor costs are going up.


Secretary Nicholson.   -- costs have gone up -- 


Ms. Berkley.  Do you have a breakdown of the $147 million?  I mean, I 
appreciate the challenges, believe me.  There's not a bigger advocate 
for the VA than I.  But I think I need to know where the money is.


Secretary Nicholson.  We will provide that.


Ms. Berkley.  You will provide that?  Great.  And do we still know when 
we are breaking ground?


Secretary Nicholson.  Yes.  We plan to break ground in either August or 
September of this year.


Ms. Berkley.  Okay, all right.  And vertical construction will commence?


Secretary Nicholson.  Well, the first thing we will be doing is the 
infrastructure, site preparation.  Utility extensions, as you know, we 
have to run utilities for about two miles to get out to that site -- 


Ms. Berkley.  I am very familiar with the area, yes.


Secretary Nicholson.   -- so it will be site preparation, very important 
work.  Not very visible, but very important.  And the additional $147 
million that it will take to -- over the $259 million already approved 
for the project, we are requesting in the '08 budget.


Ms. Berkley.  For sure?


Secretary Nicholson.  Yes, ma'am.


Ms. Berkley.  All right.  Another question is, I appreciate your support 
of collaboration, but we have been -- the Nevada Cancer Institute, and I 
think we have spoken about this a number of times already, the Nevada 
Cancer Institute called me yet again last week, saying they have gotten 
nothing from the VA, and they are most anxious to collaborate.  When I 
first started talking about this, the Nevada Cancer Institute didn't 
exist.  Now they are up and running.  They have a building, and they 
still wish to collaborate with the VA.  Is there anybody in your office 
that you can assign to this to make this happen?  And who would that 
person be, so I can give that name to the Nevada Cancer Institute, and 
we can move forward?


Secretary Nicholson.  There is certainly someone in our office that they 
can talk to.  I can't tell you -- making it happen, because I don't know 
what they want to happen.  But they certainly -- 


Ms. Berkley.  Well, we know what they want.  They have made very clear 
in meetings, they have flown in here, they have met with your people, 
they have commemorated their requests in writing, and we are still no 
further than we were.


Secretary Nicholson.  I am going to ask Dr. Perlin if he has some 
history on this, because I do not.


Dr. Perlin.  Thank you, Congresswoman.  I personally had the pleasure of 
speaking to representatives at your request.  In fact, one of the things 
that is lacking in our environment for us to have the full collaboration 
is the hospital.  We look forward to having that, and there looks like 
in the future there will be opportunity for them -- 


Ms. Berkley.  But there are some things, Dr. Perlin, as you know, that 
we could be doing now.  To whom do they speak, so we can get this 
moving?


Dr. Perlin.  I would be happy to receive information, and their call, 
and get the right people engaged.


Ms. Berkley.  I am going to hold you to that, because we have had this 
conversation before, as well.  Or I have had this conversation with VA 
representatives before.


Very quickly, there are a couple of things that I would like to discuss 
in my capacity as Ranking Member of the Benefits Subcommittee.  As we 
know, the budget calls for a cost-of-living increase in compensation and 
other benefits.  But I was somewhat dismayed at the small $250 
additional payment made to surviving spouses with children is not 
included in the proposed COLA.  Last year I proposed at this Committee, 
and the House agreed, that those surviving spouses who qualify for the 
additional $250 per month should not should not see the value of the 
payments erode.  Unfortunately, when the COLA was proposed in this 
budget, this was not included, and the value of the benefit, you know, 
is going to erode.  I am concerned about that.


I also have to lend my concern about a budget that anticipates an 
enrollment fee and doubling the payment for prescription medication.  
You know the likelihood of that happening in Congress is a slim and 
none, and I fear you are going to be back here, just as we were last 
year, asking for additional supplemental money because the numbers just 
aren't going to match.  So if your budget is based on the reality that 
an enrollment fee and a doubling of the co-pay for prescription 
medication is going to happen by this Congress, I can tell you this 
Congresswoman will not be supporting that.  And I would hate to see you 
having to come back again as we did last year.


Two other very quick things, Mr. Chairman, if I may. Secretary 
Nicholson, you indicated that improved productivity would enable the VBA 
to cut the number of employees needed to handle compensation claims by 
142 in fiscal year 2007.  Now, according to VA's own data, employees at 
some of the regional offices are expected to decide two or three times 
more claims and appeals than other offices.


I've got a little chart here that I would like to share with you.  But 
in our Reno office, the employees in the Reno office are handling twice 
as many claims as the Salt Lake City office, and we have the fourth 
highest remand rate, which indicates to me that they are already 
overstretched.  And how we are going to have less personnel, and what 
efficiencies can possibly be initiated that's going to help this Reno 
office, and as God is my witness, this is my fourth term in Congress and 
I started talking about this four terms ago, and I am still having the 
exact same conversation.  So I have very serious concerns about the 
numbers.


Also, when it comes to laying our nation's veterans to rest, they don't 
have adequate burial benefits.  They haven't increased since 1978.  We 
need to provide some relief, and I know that this is something Congress 
could and should be doing, but I would appreciate the support.  I hope 
this Committee is going to consider HR 808, which I introduced last 
year.  Burial costs have increased substantially since 1978, and 
recently have not kept up with it, and I think it is a shame.


I am going to submit in writing a couple of other questions.  The VA 
received a report concerning it's pension programs.  The report found 
that veterans' surviving spouses do not receive income sufficient to 
cover their basic necessities.  The pension program was designed to 
fulfill our nations promise to those who honorably served this country.  
Isn't it about time that we provide, and the VA help Congress to provide 
enough money for these veterans to live on?  I think that answer is 
rather self-evident.


One other question -- 


The Chairman.  Thank you.


Ms. Berkley.  All right.  Thank you very much.  If you wouldn't mind, I 
am going to submit the other questions in writing, would appreciate a 
response.  Thank you very much for being here.


[The attachment appears on p.  ]



**********INSERT**********


The Chairman.  Thank you, Ms. Berkley.


To my colleague on Ms. Berkley's point, we will work with Mr. Evans.  
One of the first full Committee hearings we will have out of the box, we 
will deal with the issue about collaboration, further collaboration with 
regard to facilities.  So we will work with Mr. Michaud, and Mr. Brown, 
and Mr. Evans, and myself, to kickoff -- it will be one of our first or 
second hearings.  Because we have a very expensive construction in front 
of us, when you think of Denver, New Orleans, Orlando, Las Vegas, and 
Charleston.  And when the secretary mentioned re-scoping, you know, I 
was pleased to come out to your district so I can see firsthand what was 
planned to build for that VA.  Now it is almost outdated.


And at the same time, you have the Chancellor of UNLV interested in 
building the medical University, and making sure that it's done in a 
manner that can be not only just in close proximity, but somehow it 
could be that shared facilities.  And so we need to move in a direction 
for which we have the best understanding, and we educate all the members 
with regard to what knowledge Mr. Michaud and Mr. Brown have.  So I just 
wanted to share with the gentleman here -- 


Ms. Berkley.  Mr. Chairman, I meant to say in my opening remarks what a 
pleasure it was having you share that experience with me in Las Vegas.  
I think it was educational for the both of us, but I think the operative 
word in your comments is, "move."  Let's move on this.


The Chairman.  Now recognize Dr. Boozman, Chairman of economic 
opportunity, and then I will go to Mr. Strickland.


Mr. Boozman.  Thank you, Mr. Chairman.  I really just got one kind of 
technical thing that concerns our Committee, and so let me ask that, and 
then I've got a comment while you are trying to figure out the answer.  
But the question I've got is, the rehabilitation counselors that are 
going to be hired, how many out of the additional 130 FTEs, how many 
direct claim adjudicators will be hired out of the additional 46 FTEs?  
Does that make sense?


While you are pondering that, if you understand the question -- 


Secretary Nicholson.  I am not sure I understand the question.  Could 
you -- 


Mr. Boozman.  How many rehabilitation counselors will be hired out of 
the additional 130 FTEs?  And how many direct claims adjudicators out of 
the additional 46 education FTEs?


Let me just say one thing.  Over the weekend I was at a veterans event.  
We have a quarterly thing here where we bring in our representatives 
from our VSOs, and anyone else that wants to come.  And we held that at 
our hospital.  And just in the course of that, after I was visiting with 
one of the administrators, and they told me that the Inspector General 
had come in and, you know, done their thing, looked at the hospital and 
stuff, and basically had given them a clean bill of health, you know, a 
kind of a superior thing in every category that they had.  And they said 
that might have been, you know, one of the few situations, you know, 
that that's ever happened.


So again, that's really indicative.  Ten or fifteen years ago if they 
had come in and done that, our scores would not be anywhere near that, 
okay.  So I think it's something that we can all be very, very proud of.  
You can be very, very proud of, because it's not just true of 
Fayetteville, Arkansas.  That's true across-the-board.  So we got our 
problems, we are going to work those out.  You got your budget, we are 
going to look at it and get back and forth.  The Senate will have some 
ideas, but you all, the people in the room that have pushed so hard for 
so many years to move this thing forward, you really are doing a good 
job.  The senior members on our Committee, Filner, Mr. Evans, Mr. Buyer, 
Bilirakis, Mr. Smith, all of these people, and now us, you know, that 
are coming forward and continuing the banner.


Like he said, I think we just need to not lose sight, as we hash this 
thing out, that we really have made tremendous gains, and the VA system 
in Arkansas, the VA system, despite, you know, we are not perfect by any 
means, but we really have made tremendous gains.  Yes, sir?


Mr. Cooper.  Let me attempt to answer your question.  As I break this 
down and look at the numbers of people that we are bringing on in this 
'07 budget, of the 100 and some that we are bringing on in Vocational 
Rehabilitation and Employment, VR&E, a few of those will be counselors.  
Many of them will be employment specialists, because the primary purpose 
of Voc Rehab is to get the individuals either into independent living, 
if they are seriously disabled, or get them employed.  And one of the 
new things we've done as a result of this study completed two years ago 
is that we've looked very carefully at a five track program leading to 
employment.


So some of those people, will be counselors, a few will be 
psychologists, but many of them will be employment specialists that will 
help us in that particular endeavor.


As for those that we are hiring going into '07 for grade C&P claims 
processing, most of those are hired at a lower grade than a rating 
specialist, because it takes us three to four years to develop a rating 
specialist, and we prefer to bring them in, highly intelligent young men 
and women, and many veterans, in order to train them to be the type of 
people that work up the claims, and get all the material necessary to 
then go to the rating specialist, who makes the decision.


So most of those people, possibly all of those people, will come in at 
that level, to eventually move up.  It takes them about a year plus to 
become properly trained in order to carry out their function, which is 
so important to making the decision.  Does that answer your question?


Mr. Boozman.  Yes, sir.  Thank you very much.


Secretary Nicholson.  If I could, Congressman Boozman, I want to thank 
you for your acknowledgment of things at the Fayetteville, Arkansas 
hospital.  And I just want to also tell you that we have a letter of 
commendation on its way to Mike Wynne, the director, for the exemplary 
job that he's done there.  Our IG found that to be just a superb 
hospital, and job being done by its director.  Thank you for 
acknowledging that.


Mr. Boozman.  Well again, I appreciate that.  And like I said, I mention 
that in the context that again, you know, a few years ago that would not 
be the case.  And yet, that's not only in that hospital and that system, 
that's systemwide.  And again, that's just a lot of hard work and a lot 
of peoples, so give yourselves a pat.  Thank you.


[The information follows:]



**********Committee INSERT**********


The Chairman.  Thank you.  I will now yield to Mr. Strickland.  Mr. 
Secretary, Mr. Strickland is the ranking on the Oversight and 
Investigation Subcommittee, and also was very helpful in the CIO 
legislation, and so he has great knowledge on that issue.  Mr. 
Strickland.


Ms. Strickland.  Thank you, Mr. Chairman.  Mr. Secretary, I am just 
struck by the fact that you brought us a budget that contains a 
projected savings of I think the Chairman said about $775 million.  That 
will not happen.  I don't know how many times this bipartisan Committee 
has to say "no" to these increases in co-payment and user fees, but 
they're not going to happen.  So we start out with a budget that is 
unrealistic, in my judgment.


Now I know you said that you believe in these actions, but the fact is 
that's not what counts.  What counts is what the Congress says they are 
willing to do.  And this Congress is not going to do it.  So, it just 
strikes me as an act of bad faith to come forth with a budget listing 
increased copayments and user fees as income for the VA.  That's not 
going to happen.


But I would like to just reiterate a brief bit of history.  During our 
February 16th, '05 hearing on the budget, I asked you about the 
department's continuing claims of savings due to management efficiencies 
for the fiscal year 2006 budget.  Those claimed savings amounted to 
almost $1.8 billion.  I asked you whether the VA was able to document 
efficiency-based savings claims, and I was promised in that hearing that 
the VA would get back to me with the details.  And as I recall, our 
Chairman characterized my questions as appropriate, and directed that 
the VA be responsive.


When our Chairman asked VA about its level of confidence of achieving 
the 1.8 billion savings for '06, the response from the VA was, "very 
confident".


When Ranking Member Evans sought explanation for the savings, he was 
provided a scant five item chart to account for almost 1.8 billion in 
fiscal year 2006 savings.  Both sides of the aisle of this Committee 
challenged the efficiency savings claims, and further requested that a 
portion of those claimed savings not be used to offset the budget.


However, the VA did not provide adequate documentation to prove net 
savings efficiencies.  As a result, I supported Ranking Minority Member 
Evans and Senator Akaka's request that the GAO audit VA's claimed 
savings efficiencies.  The result of that audit, which were released on 
February 1, confirmed the worst of our concerns about VA's claims.  
According to the GA audit, the VA lacked a methodology for making 
savings assumptions.  The VA was unable to provide any support for 
savings estimates that it used to offset the veterans health care.  And 
the VA lacked adequate support for some 1.3 billion it reported as 
actual management efficiency savings achieved for fiscal years 2003 
through 2004.


But perhaps the most significant revelation is that VA officials told 
the GAO during three interviews that the management efficiency savings 
assumed in the budget were, and I quote, "Savings goals used to reduce 
requests for a higher level of annual appropriations in order to fill 
the gap between the cost associated with the VA's projected demand for 
health care services, and the amount the President was willing to 
request," close quote.


In other words, it seems that the VA had identified veterans' health 
care budget needs, and the President refused to meet those needs.  So 
the VA chose to fill the gap with these phantom savings goals.  
Unfortunately, in the '07 budget request, this Administration continues 
to claim more than one billion in management efficiency offsets.  
Respectfully, Mr. Secretary, I and I think some others on this Committee 
feel that this shell game should stop.


Including the '07 estimated budget efficiency savings, the total funds 
potentially skimmed from VA health care by unsubstantiated claims is 
over $5 billion in total, for the five years of the Bush Administration.


Mr. Secretary, I ask you this question: in this budget, the VA claims 
884 million in efficiency savings from fiscal year 2006.  The GAO has 
stated that VA was unable to provide support for its fiscal year 2006 
estimate.  Now this budget that we have was presented after the GAO 
report.  The VA carries this 884 million claim over a two-year period, 
which totals $1.768 billion in offsets originating from the fiscal year 
2006 estimate, that GAO found unsupported.


Mr. Secretary, can I assume that you can present documentation to this 
Committee and the GAO audit team to support the 884 claims in efficiency 
savings the VA relies upon from the fiscal year 2006 to delete the 1.7 
billion from the veterans health care budget?  I think that's a 
reasonable question to ask, given the GAO report.


Secretary Nicholson.  Well, thank you, Mr. Strickland.  And your 
recitation of those GAO comments for I think starting in fiscal year 
2003, 2004, and so forth, were I think pretty accurate as the GAO stated 
them.  The VA has disagreed with some of the GAO findings  -- the 
composite of those reports.


But fast forwarding to '06, the GAO said, and I will quote, "Based on 
the VA's past experiences, 2006 estimate of 590 million in management 
savings appears achievable."  And I would tell you that in this budget 
that we are here today to consider, there are no offsets in this budget 
for management efficiencies, and I want to ask Dr. Perlin to expound on 
that.


Dr. Perlin.  Thank you, Mr. Secretary.  That is exactly correct.  I 
appreciate the opportunity to explain that The Secretary built this 
budget from scratch.  In fact, I want to separate the concept of 
management efficiencies from efficiencies in the provision of care. $197 
million is in the demand model.  It is what is expected of all of the 
sectors of health care in terms of improving, in terms of pharmaceutical 
use, in terms of better scheduling of patients, better use of inpatient 
hospitalization, standardization of pharmaceuticals, and the like.  That 
has always been in the model, and is really well substantiated, well-
documented.


What is not in this budget: there is no offset of the demand with 
additional management efficiencies, so this is categorically different 
than the exposition of budget last year.  Thank you, I appreciate your 
points.


Ms. Strickland.  Mr. Chairman, can I just make one follow-up comment.  
So you are telling me that the management efficiencies that were 
evaluated by the GAO -- effort to achieve management efficiencies in 
prior budgets -- that there are no such management efficiencies built 
into this budget?


Secretary Nicholson.  That is correct, Congressman, yes.


Ms. Strickland.  Mr. Chairman, I have two or three other questions which 
I will not ask.  I would like to submit those questions if I could do 
that, and one more thing, Mr. Chairman.  If I could ask for unanimous 
consent that the Web links to the three GAO reports that I've referred 
to could be included in the record?


The Chairman.  The Web links?  Can you restate that?  The addresses?


Ms. Strickland.  Yes.


The Chairman.  I have no objection, just state the addresses.


Ms. Strickland.  So that could be a part of the record in case people 
wanted to find them.


The Chairman.  All right.  My only hesitation, I didn't want the link 
and therefore other's documents to be -- 


Ms. Strickland.  Got you.


The Chairman.  All right, thank you.


Ms. Strickland.  Thank you, Mr. Chairman.


[The information follows:]




The Chairman.  Mr. Udall, you are now recognized.


Mr. Udall.  Thank you, Mr. Chairman, and I would ask that my opening 
statement be inserted in the record.


The Chairman.  Hearing no objections, so ordered.


Mr. Udall.  Thank you, Secretary Nicholson, for being here, and I want 
to express my gratitude of many veterans in my district who suffer from 
PTSD, for your decision last year to cancel the review.  Nearly one in 
five vets returning from OEF or OIF duty are estimated to suffer from 
some form of PTSD.  And there is some concern that the fiscal year 2007 
VA budget is not sufficient to ensure that each of these veterans 
receives the mental health assistance they need.  This means all efforts 
of the VA to make veterans aware of the disease, to make veterans aware 
of the assistance offered by the VA, and to de-stigmatize, as you 
mentioned earlier, PTSD, that these would be rolled back.


How is your office going to deal with the increase in the number of 
veterans seeking assistance?


Secretary Nicholson.  An important question.  Thank you for it.  As I 
said earlier, this is a very big priority area of ours. You will see 
sharp increases in our budget request for mental health.  I think it's, 
if my memory is right, it's right at $340 million for that.  We are 
emphasizing both the outreach attempts to capture these people who come 
to us,  -- in each of our medical centers we have a PTSD expert.  At our 
four polytrauma centers we've populated them with just really the finest 
PTSD people that there are.  We have probably the world's foremost PTSD 
research facility at White River Junction, Vermont.  We are ramping, and 
ramped up for this, and I will let Dr. Perlin further expound with more 
detail.


Mr. Udall.  Please, Dr. Perlin.


Dr. Perlin.  Thank you, Mr. Secretary and Congressman.  I appreciate 
your passion for assuring that mental health services are always 
improved.  Just as the Secretary stated, the increase in mental health 
funds in the '07 budget is almost $340 million, bringing the specialty 
mental health services to $3.16 billion.  This augments all sorts of 
improvements in programmatic activity including, as the secretary 
indicated, PTSD specialists at each and every medical center, 160 full-
blown PTSD teams throughout the system.


As well, you made the point about de-stigmatizing, and it is, as the 
Secretary indicated earlier, completely normal for people to have combat 
stress reactions, reactions to some of the horrific circumstances they 
will experience.  Our goal with the Vet Centers, and the Global War on 
Terrorism Outreach Coordinators, or at the hospitals, is to make sure 
that we don't stigmatize, and that we treat so that people are able to 
be as highly functional as possible.


The numbers are at this point much lower than I believe you suggest.  
And I am pleased to note that the Vet Centers are doing outreach at the 
transition assistance briefings that are increasingly coordinated, not 
only with DOD directly, but the adjutant general and state veterans' 
directors of each state.


Mr. Udall.  This review, as both of you know, caused a great deal of 
concern in the veterans community.  And we have heard other rumors out 
there about possible other reviews.  We have heard that, and I have 
heard this from veterans, that there is a suspicion that the Veterans 
Administration is now being much more aggressive in terms of PTSD 
analysis, and that in the past, if claims were approved, they were 
approved on one standard and one criteria, and that that criteria is 
getting much tougher.


Can you give us any assurances today that we are not going to have any 
other review on the PTSD issue, and that you are applying the same 
standard you have always applied?


Secretary Nicholson.  Well, I can assure you that those 72,000 cases 
that were given 100 percent disability ratings that were reported in the 
IG report, that we are not going to review those, no.


As to PTSD in chief, we are going to continue to try to understand the 
dynamics of this condition, and so that we get better at understanding 
it, and being affirmative in our outreach, and in treating it, because 
it's a very germane matter, given the numbers and what's going on both 
in our health side and our benefits side.


Mr. Udall.  Thank you very much.  I have additional questions, and we 
will submit those for the record.  Thank you.


[The statement of Mr. Udall is found on p.  ]




The Chairman.  Ms. Herseth, you are now recognized.


Ms. Herseth.  Thank you, Mr. Chairman.  I want to thank all of you for 
your time and your testimony today, and your hard work.  And I hope you 
know what a great team you have in the Black Hills health care system in 
South Dakota, who recently in a survey ranked top in the region, as well 
is in a number of categories nationally.  So I commend you and the folks 
there in particular for your work on behalf of the country's veterans 
that are served throughout that region.


It will come as no surprise to you, Mr. Secretary and Dr. Perlin, that I 
want to talk a little bit about long-term care.  It's an issue I am 
particularly worried about for our nation's veterans, as well as our 
overall health care system in this country.  And I want to begin by just 
making a few observations, and then I will end with a separate question 
on a separate topic.


Thank you for the increase, the 14 percent increase, as it relates to 
the average daily census for veterans in home and community-based care.  
This is particularly important for older veterans in rural areas, and 
throughout the great plains we have a very high percentage of World War 
II and Korean War veterans who are in need of long-term care options, 
and live in very remote areas where perhaps long-term care facilities 
aren't based, and to have programs designed for the home-based care I 
think are particularly important, and hope that you'll continue to seek 
increases in that level of funding.


But I've got a couple of concerns.  The first, and if you could address 
this, is the statutory requirement.  The mandatory minimum that Congress 
has imposed for the number of nursing home beds within the VA is 13,391, 
but the budget is only funding 11,100 beds.  Now, you are moving them 
into other areas that we do have to address this issue of a statutory 
requirement that is being ignored in the budget, and how we address that 
situation.


And the other issue that causes great concern, and it is not just an 
issue for the VA, it is an issue for Medicaid in particular, and other 
programs, and that is the fact that your own survey for using the VA's a 
long-term care model projected the demand for VA-sponsored nursing home 
care for fiscal year 2007  --  and at the outset, this includes all 
priority groups I know to be 80,511 average daily census.  But the 
budget is funding roughly 34,000 beds, whether that be VA, state, or 
community-based care.


Now, I know by law the VA is only required to provide the long-term care 
to the 70 percent or greater, and then additional.  And I know that with 
the 34,000, that's beyond the 70 percent service-connected disabled.  
But in your own projections, just as the midpoint projections for older 
veterans who will suffer from dementia, 42,827 veterans.  So you know, 
we've got to look at our priority groups one and two, and even beyond 
that in other priority groups that may suffer from different types of 
conditions where long-term care is perhaps one of the best settings for 
meeting the health care needs of our older veterans.


So just a couple of observations but perhaps you could address the issue 
of the statutory requirement, and then the last question I would have 
would be for Mr. Cooper.  And that is on the seamless transition for 
returning veterans from Iraq.  I would like to know what VBA is doing to 
identify recent veterans who are at risk for homelessness, who have 
claims pending but no source of income?


So, questions primarily concerning our older veterans and long-term 
care, and then our most recent veterans who have a risk for 
homelessness.


The Chairman.  Ms. Herseth, your question also incorporates veterans of 
Afghanistan?


Ms. Herseth.  Yes, it would.


The Chairman.  Thank you.


Secretary Nicholson.  Well, thank you, Congresswoman, for those 
comments.  Thank you for your compliments.  Our people out there in 
western South Dakota are doing a great job.  I've been out there.


And your points are well presented.  There is a statutory requirement, 
an objective number of beds for long-term care, and we are not filling 
those beds.  But we are meeting the need at this time.  But we have that 
statutory authority to go up, and certainly will, if there is that need.


The other law is that we are really only supposed to put people in those 
beds who are 70 percent disabled.  And those two existing legal 
conditions, coupled with the real progress that we are making in 
noninstitutional long-term care, in the composite I think are resulting 
in us meeting the needs at this time.  And this budget reflects what we 
think we will need in resources to continue to do that.


Dr. Perlin, you have anything you would like to add to that?


Dr. Perlin.  Ms. Herseth, I think you have well stated the statute that 
governs -- Congresswoman, we appreciate your acknowledgment of the 
increases in noninstitutional care.  In fact, it's really pretty 
incredible.  There has been an eighty-five percent increase in 
noninstitutional care since 1998.  The program of care coordination, 
particularly in rural areas, supporting individuals with frailties, be 
it of age or otherwise, has actually increased 466 percent from 2005.  
So really, investing in additional technologies, recognizes that there 
are challenges to an aging population of veterans, and for those that 
were authorized. We will look to every possible means to meet that need.


Ms. Herseth.  Before you respond, Mr. Cooper, if I might, Mr. Chairman, 
just to clarify. And I respect the work that you are doing to meet the 
needs.  That's why I began with acknowledging the increases in these 
different areas.  But I do think that for the Committee and the ongoing 
working relationship that we want to have with all of you, that while 
it's important to meet the needs, it's also important to come to us if 
you see the need for a statutory change, so that we can see more clearly 
how the needs are being met, what areas were increasing, community based 
or home health care, and to make the changes so that you don't perhaps 
lose some credibility.  Because my understanding is that it's a 
mandatory minimum.  It's not so much discretion to go up to a certain 
amount.  Is my understanding of the statute correct?


Secretary Nicholson.  No, you are correct, Congresswoman.  I mean, I 
would stipulate to you, there are two parts to this that we are not 
literally fulfilling.  One is that objective number of those beds.  And 
the other is that requirement that they be 70 percent disabled.  We have 
considerably more people right now in our long-term care facilities than 
there are just of that number.


Ms. Herseth.  And that's the discretion I think you have under the 
statute, that there is the specific number, and then you fill them with 
the 70 percent or greater service-connected disabled, and then fill in 
others who may need up to that point.


Secretary Nicholson.  We've done that, and they are still there because 
we just have not put them out.


Ms. Herseth.  Okay.  Well, I hope that you will take my point in the 
manner in which it is intended.  It is intended to be helpful in an area 
of long-term care, but yet also looking at what is required by statute, 
and how you have adjusted that over time in a way a I think that is 
positive, but yet at the same time I am interested in meeting even more 
of the needs of our older veterans than what you have already done in a 
very remarkable way, and a laudatory way.  And so that is just the point 
I wanted to make, as it relates to the statutory requirements that we 
have to be cognizant of in the Committee.


[The statement of Ms. Herseth appears on p.  ]



The Chairman.  Thank you.  Mr. Secretary, Ms. Herseth is our ranking on 
the Economic Opportunity, Subcommittee and gives a valuable 
contribution.


I would now like to recognize Dr. Snyder.  Dr. Snyder is also the 
ranking on the personnel Subcommittee of armed services, so he gives us 
a valuable insight, because he gets the total military health delivery 
system, and then as the soldiers transition to the VA.  I yield now to 
Dr. Snyder.


Mr. Snyder.  Thank you, Mr. Chairman and Mr. Secretary.  I apologize for 
being late.  We simultaneously have the armed services Committee hearing 
with Secretary Rumsfeld and General Pace this morning, and that started 
at 10:00, and so they took a lunch break and so I ran over here.


One thing that came out of the discussion this morning in General Pace's 
assessment of the Quadrennial Defense Review; in his written statement, 
he made a specific reference to educational opportunities or people in 
the military, to help them both professionally but also in their 
personal goals.  And I understand, Mr. Chairman, that you mentioned the 
GI Bill earlier on.  I think that we have some work to do.  One of the 
problems that we have as an institution is that this Committee handles 
the GI Bill for veterans.  The armed services Committee handles the GI 
Bill for Reserve component.  And they don't run in tandem.  And I have 
been trying for some time to get a joint hearing between this Committee 
and perhaps the personnel Subcommittee on the other side, to have a full 
discussion of all the different proposals related to the GI Bill.  I had 
45 months of GI Bill after I came back from Vietnam, both to finish my 
undergraduate and three years of medical school, and it was very, very 
helpful to have, and I think men and women today should have those 
opportunities.


I wanted to ask one question.  I apologize again for not having heard 
the discussion today, so perhaps you have already dealt with this.  But 
in your written statement you have a section on medical research.  We 
have the Little Rock VA in my district, in Little Rock, Arkansas, and 
they do great, great work there.  It's right next to -- in fact it's 
connected by a federally-funded little bridge there, because of a lot of 
communication with our medical school there.


But in your written statement you say the following: "In addition to VA 
appropriations, the department's researchers compete and receive funds 
from other federal and nonfederal sources.  Funding from external 
sources is expected to continue to increase in 2007 through a 
combination of VA resources and funds from outside sources.  The total 
research budget in 2007 will be almost 1.65 billion, or about 17 million 
more than the 2006 estimate."  And that's the end of your statement.


But when you just look at the federal number that's coming from your 
all's budget, it's a decrease; is it not?  I mean, you are betting on if 
there's going to be competition for, you know, pharmaceutical companies 
or other organizations that you are hoping will give you the total 
increase, but in terms of our federal commitment, it's actually a 
decrease of $13 million in federal commitment to medical research, and 
this seems like a bad time to be trying to save money on medical 
research, when we have got so much going on overseas with our veterans.


Would you comment on that, please?  First of all, am I accurate in that, 
that there is a decrease in the federal commitment?


Secretary Nicholson.  Yes, you would be.  I think that based on our 
history, our track record, being able to leverage our dollars with those 
of other federal and private entities, we feel pretty confident that we 
will make that number, and that will result in over 2000 projects.  I 
think actually 2045 different research projects, which will be one and a 
half percent more than in '06.


So I think your point is well taken.  It is not a time to diminish 
research, and that is certainly not our intention, and even that 
reduction would not very material, given the total amount.  But I think 
we are going to do well in partnering, as we have done in the past.  I 
will ask Dr. Perlin if he -- 


Mr. Snyder.  I would like to hear your comment, Dr. Perlin, but the 
issue, though, too becomes, you are kind of saying you are holding your 
own.  You are estimating maybe 17 million more.  But medical research 
inflation is greater, substantially greater than the normal inflation.  
So when you are just holding your own, as you say it's not very much 
either way in the total budget, but if the nominal numbers stay static, 
it's a substantial reduction because of the medical research inflation 
rate.


And Dr. Perlin, I appreciate your comments.


Dr. Perlin.  Thank you, Dr. Snyder.  I think you have laid out exactly 
how the budget is constructed in this area.  399 is the VA component.  I 
should note that in medical services, we are actually increasing by $13 
million to help fund the administrative overhead of that research.  The 
proposition is that VA in 2007 will continue its trend of attracting, 
"leveraging" the investment that's been made through this direct 
appropriation to research, toward attracting predominately federal 
grants.  Mostly, National Institute of Health, as well as private 
foundation grants.  So your outlay is correct.  I would simply note that 
Secretary has really worked with us to also ensure that we do increase 
the focus, specifically on those areas of research that are most germane 
to the history of the lives of service members: everything from 
occupational exposures to traumatic injury, and I am pleased to note 
that this budget supports a $10 million increase in those sorts of 
areas.


Mr. Snyder.  Well, I just hope, if I could, Doctor, I hope you are 
tracking that.  Because we have some very exciting stuff going on as a 
result of our research on both shingles and artificial retina 
replacement, and urinary infections.  Really, I think we are on the edge 
of some exciting stuff.  No, I agree with that.  I think some great work 
is going on.  But if your budget doesn't keep pace with the rate of 
medical research inflation, you have got researchers out there saying, 
"Hey, the Secretary just bragged on my work and we are going to have to 
fire people."  You know, I don't think that is the message we need to be 
sending, so I would hope this is an area we will work on, Mr. Chairman, 
because in the President's State of Union speech he made I thought a 
very impassioned endorsement of research in the math science area, and 
certainly medical research is part of that.  Thank you for your time.  
Sorry I was late.


The Chairman.  Dr. Snyder, the Committee wants to work with you and Mr. 
McHugh, because you know, you just heard testimony from the SECDEF, and 
General Pace, and with regard to the increase in fees on TriCare for 
Life, on military retirees.  I mean, we are faced with that challenge 
already.  TriCare, you have the enrollment fee, you have the increased 
co-pays over what we do on sevens and eights and the deductibles on 
TriCare standard and prime.


And this Committee has been unwilling to resolve that inequity, so we 
are treating military retirees differently than somebody who has been on 
one tour of duty.  And the worst thing that we could ever happen is the 
Armed Services Committee increases fees in TriCare for life for the 
military retiree, and then this Committee takes no action; all we are 
doing is exasperating this.  And it's just a challenge, and I want to 
work with the gentleman on how we properly proceed on this one.  I mean, 
we don't want that scenario to occur, whereby now there is a greater 
bias or prejudice against the military retiree, versus the seven or 
eight.  This is a real challenge we have in front of us, Dr. Snyder.  
Thank you.


Mr. Brown of South Carolina, Chairman of the Health Subcommittee.


Mr. Brown of South Carolina.  Thank you, Mr. Chairman, for holding this 
hearing today.  And thank you, Mr. Secretary, and all the associates for 
being part of this deliberation.  And I am particularly pleased at the 
cooperative spirit that you have entered into with the other 
institutions, as far as health care delivery.  And I just wanted to 
express my appreciation publicly for that commitment.  Mr. Chairman, I 
don't have any questions at this time.


The Chairman.  I am sorry, restate?


Mr. Brown of South Carolina.  No questions at this time.  I just had a 
statement.  Thank you very much.


[The information follows:]




The Chairman.  He's so eloquent, the man from Charleston.  It's because 
we can't understand you anyway, right?


Mr. Michaud.  I concur with that, Mr. Chairman.


The Chairman.  Like you are any better?  No, I was just kidding you.


The Chairman.  Go ahead, Mr. Michaud.


Mr. Michaud.  Just a clarification, that Mr. Strickland had asked about 
the question about the management efficiencies, and Dr. Perlin had 
mentioned the GAO report said that they agreed that the efficiencies 
could be achieved.  I was just wondering if he can get a copy of that 
report, or what report was he referring to?


The Chairman.  Doctor?


Secretary Nicholson.  Yes, it's in a letter of March 2nd, '05, addressed 
to the Appropriations Committee, and I would be happy to provide you 
with a copy of it.


Mr. Michaud.  Yes, if you could.  Because I believe in that letter it 
said that they did not test the reliability and the validity of the data 
used to calculate, if my recollection -- but if you could provide that 
letter to the Committee, I would appreciate it.


Secretary Nicholson.  Yes, sir.


Mr. Michaud.  Thank you, Mr. Chairman.


The Chairman.  Thank you.  I would ask unanimous consent that opening 
statements of Mr. Brown, Mr. Boozman, and Mr. Reyes be submitted for the 
record.  Hearing no objections, so ordered.


[The statement of Mr. Reyes appears on p.  ]



The Chairman.  Also, we have a unanimous consent request for Mr. 
Michaud, and any other members will have three legislative days to 
submit an opening statement for the record.


I have a quick follow-up, and then we are going to conclude, Mr. 
Secretary.  I appreciate your patience.  And maybe we can go to Under 
Secretary Tuerk on this.


The Military Quality of Life and Veterans Affairs Appropriations Act 
conference report asked for a study on the feasibility of developing 
land at Fort Ord, which was closed during the BRAC process of some 10 
years ago, for a national cemetery.  I have a copy of your response on 
that, but my question is, are you working with DOD, and you are looking 
at BRAC-ed properties, with regard to where there is a need and 
available land?


Mr. Tuerk.  We have looked at BRAC-ed properties, Mr. Chairman, as their 
availability has been made public.  It is my understanding, that we have 
not yet identified any properties via the BRAC process in areas where we 
seek to address the most pressing needs for new cemeteries.


There is one opportunity to acquire some DOD land for development of a 
national cemetery. In Columbia, South Carolina.  But that Fort Jackson 
land is not part of the BRAC process, it is outside of the BRAC process.


The Chairman.  All right.


Secretary Nicholson.  Mr. Chairman, if I may, I would just add -- 


The Chairman.  Yes, sir?


Secretary Nicholson.    -- a little more specific to that.  We have 
actually made seven different applications to the Army, and three to the 
Air Force, on specific pieces that we would like to have a chance to 
look at.


The Chairman.  If someone could give us an update.  And we are going to 
look at this further in some hearings with regard to the PFSS revenue 
cycle management issues.  We have Cleveland ongoing, and with regard to 
the second competitive pilot, a Committee initiative, I believe there is 
an anticipated request for proposal.  If you could give us an update, I 
would appreciate that, now.


Dr. Perlin.  Thank you, Mr. Chairman.  Just to reiterate: while you were 
out of the room, we are on track on terms of going live at Cleveland 
early July of this year, and look forward to wiring our electronic 
health record with electronic billing and collections, taking it into 
the future, and we appreciate your support, and the support of this 
Committee.


The revenue improvement pilot is multifaceted.  As you know, we are also 
developing the CPACs, the Consolidated Patient Accounting Centers, to 
regionalize, not re-duplicate what can be more efficient when 
regionalized.  That's been in development since '05, and piloting in 
this year.


The revenue improvement pilot projects specified, actually build on the 
CPAC activity out of Asheville.  And the statement for objectives I 
understand are ready for release.  We hope to award the contract within 
the next month or so.


And finally, what was originally known as contract care coordination, 
renamed because of the confusion with our very successful care 
coordination program, and Telehealth program, to project HERO, 
Healthcare Effectiveness through Resource Optimization, is slated for 
competitive award by the end of this calendar year, with three 
objective-oriented demonstrations appropriate industry and academic 
collaboration.


I spoke at a kickoff for this on industry day, as it was framed just 
last week, February 2nd, so I am pleased to report that all these 
projects are moving forward.


The Chairman.  So our second competitive pilot on a pending RFP will 
most likely occur at Asheville?  Is that what I am taking away from your 
statement?


Dr. Perlin.  There are two sets.  And yes, the revenue improvement pilot 
will leverage the consolidations there, so that we can really go to 
scale -- 


The Chairman.  No, I have no objection to that.  I think you are moving 
smartly.


Dr. Perlin.  Thanks.


The Chairman.  Thank you.


The last is, and I hate to be redundant, but I have to go back to the 
CIO issue.  The Committee has taken this issue on, been dealing with it 
for seven years.  So Mr. Secretary, we have been in discussions about 
this before, and the Senate, they are standing over there being good 
listeners, and will react to what actions or inactions the VA takes.


So help me here.  In order for your federated approach to work, you are 
going to have to move the infrastructure, which is your personnel, 
budget and assets, under the CIO, Mr. McFarland, now.  Is that correct?  
And then -- 


Secretary Nicholson.  Correct.


The Chairman.  The Secretary answered in the affirmative.


The other, then, would be the development, the software development in 
particular, that is then left in the hands of your three under 
secretaries. Correct?


Secretary Nicholson.  Well, yes and no.  I think it depends on the 
scale, and if it's a local, unique, what I call tactical application, it 
would be left to those that are working that project.  But the CIO will 
have, the main responsibility to set -- 


The Chairman.  The architecture?


Secretary Nicholson.   -- the central enterprise architecture.  That 
these tactical application would have to comport to.


The Chairman.  All right.  In order for -- 


Secretary Nicholson.  That's an important step toward standardization, 
and centralization.


The Chairman.  And in order for us to support you to do that, would you 
not concur that when we submit our budget views and estimates to the 
Budget Committee, to support this endeavor of empowerment of the CIO so 
that he can do his job to create the one architecture, we are going to 
need to fund the data center consolidations, you are proposing four of 
them so that's around $60 million that we are going to have to come up 
with; about $30 million for Telecom, for redundant backup, and the 
continuation of operating plans.  And about $12 million for VBA's code 
conversion within the benefits delivery network.  Would that be 
accurate?


Secretary Nicholson.  I don't have those numbers in front of me, Mr. 
Chairman, but I think that's pretty close.  We have Mr. McFarland here.


The Chairman.  Mr. McFarland, could you come forward, please?  Would you 
please state your name and your position?


Mr. McFarland.  Robert McFarland, Assistant Secretary for Information 
and Technology, and the CIO of the VA.


The Chairman.  With regard to the funding issues that I just specified, 
would it be accurate that these are three things that are very important 
for you to proceed in the development of the one architecture?


Mr. McFarland.  Yes, sir.  Those are accurate projects that we need to 
move forward on in both '06 and '07 in order to get the economies of 
scale that we anticipate out of this reorganization.


The Chairman.  Are there any barriers left in front of us, for this 
transfer of personnel, assets, and budget to you?


Mr. McFarland.  I don't anticipate any barriers.  We have some decisions 
that have to be made and are scheduled to be made on the 15th of this 
month, at a senior management Committee meeting.


The Chairman.  The last comment that I have, then, to Dr. Perlin, is 
with regard to our software development.  We are going to make sure that 
we have a near-term plan I mean, since we don't have the standardization 
process, rules, and structures for the developing of new software 
applications, I believe it's pretty important for you to come up with 
one.


Dr. Perlin.  Mr. Chairman, that's one of the areas where I couldn't 
agree more emphatically.  We need to comport with enterprise 
architecture.  And just as Mr. McFarland is brilliantly leading a 
reorganization, standardization, it is our goal within VHA, under the 
aegis of Craig Luigart, who has a background as a fighter test pilot, 
and CIO at the Department of Education, to create a standardized, tight, 
responsible, accountable, (and built on a history of effectiveness) 
system that comports to the organizational architecture, and advances 
our health IT.


The Chairman.  Mr. Secretary, I want to thank you for being here with 
your staff.  I want to extend some compliments, not only to Mr. 
McFarland but also to Mr. McClain, your general counsel.  Your general 
counsel has been very responsive to the Committee.  I've been doing this 
for 14 years, and I can't remember a Secretary being here this long.  
This was your budget, and you took ownership of this budget.  And given 
what we went through last year, I wanted all the members to be availed 
of the greatest opportunity to discuss this budget with you.  And so for 
that, I appreciate your being here.


Right now the Committee will recess for five minutes, and then we will 
bring the second panel.  Thank you, Mr. Secretary.
[RECESS]


The Chairman.  The Committee will come back to order.


I want to thank the Secretary for his indulgence of the Committee and 
all their questions.  We look forward to working with him in this coming 
year.  And the Committee will also be submitting questions, for the 
record, to the Secretary.


Our second panel today consists of representatives of the Independent 
Budget (IB), as well as the American Legion, and the Vietnam Veterans of 
America.  Representing the IB, we have David Greineder, who is the 
National Legislative Director of AMVETS.  Before his posting with 
AMVETS, David served as congressional aide to several members of 
Congress advising them on veterans issues.


We also have Rick Surratt, who is the Legislative Director of DAV.  Rick 
is the combat-disabled Vietnam veteran who enlisted in the United States 
Army in 1966.  In 1967, he was wounded by shell fragments in the thigh 
during a Vietnam combat field operation, while serving with the 101st 
Airborne Division, and was honorably discharged in 1969.


Carl Blake is the Senior Associate Legislative Director for PVA.  He is 
a West Point graduate, was commissioned as a second lieutenant in the 
United States Army.  He was assigned to the first brigade of the 82nd 
Airborne Division at Fort Bragg, North Carolina.  He retired from the 
military in October of 2000 due to a service-connected disability.


Finally, we have Dennis Cullinan, who is the legislative director of the 
VFW.  He was discharged from the United States Navy in 1970.  Before his 
discharge he served as an electronic technician aboard the USS Intrepid, 
and completed three tours of duty in Vietnamese waters.


I would like to thank your organizations for visiting with us last 
month, and giving the full Committee staff an overview of the methods 
used in developing the IB, as well as a preliminary idea of what the IB 
would recommend this year.  I don't know if such a briefing has ever 
been done before, and it is a good example of how the veterans' groups 
and the Committee can work proactively together, for the good of our 
veterans.


We also have as part of the second panel Mr. Steve Robertson 
representing the American Legion as the Legion's Legislative Director.  
Steve served 12 years in the United States Air Force from 1973 to 1985 
as a security police officer in Louisiana, Turkey, and North Dakota -- 
three very remote locations. He was a missile combat crew commander for 
the Minuteman III ICBM in North Dakota, and was a flight commander on 
the ground launch cruise missile silo in Sicily.  Steve was also a 
military policeman in the D.C. Army National Guard.  When he was 
activated in January, 1991, for the Persian Gulf war, and served from 
February to June in Saudi Arabia.


Finally, representing the Vietnam Veterans of America, we have Rick 
Weidman, Director of Government Relations.  During the Vietnam War, Rick 
served as an Army medical corpsman, including service with Company C of 
the 23rd Medical Battalion of the AMERICAL Division, located in I Corps 
of Vietnam in 1969.


Who wants to go first?  We will turn it over to the IB, and let you go 
first.


Mr. Greineder.  I guess everybody's looking at me so it's my turn.


The Chairman.  All right.


STATEMENTS OF DAVID G. GREINEDER, DEPUTY NATIONAL LEGISLATIVE DIRECTOR, 
AMVETS (AMERICAN VETERANS); RICK SURRATT, DEPUTY LEGISLATIVE DIRECTOR, 
DISABLED AMERICAN VETERANS; CARL BLAKE, SENIOR ASSOCIATE LEGISLATIVE 
DIRECTOR, PARALYZED VETERANS OF AMERICA; DENNIS CULLINAN, LEGISLATIVE 
DIRECTOR, VETERANS OF FOREIGN WARS OF THE UNITED STATES; STEVE 
ROBERTSON, LEGISLATIVE DIRECTOR, THE AMERICAN LEGION; AND RICK WEIDMAN, 
LEGISLATIVE DIRECTOR, VIETNAM VETERANS OF AMERICA; ACCOMPANIED BY ROBERT 
MCFARLAND, ASSISTANT SECRETARY FOR INFORMATION AND TECHNOLOGY, AND CIO 
OF THE VETERANS' ADMINISTRATION

STATEMENT OF DAVID G. GREINEDER



Mr. Greineder.  Mr. Chairman, members of the Committee, thank you for 
the opportunity to be here today.  As a co-author of the Independent 
Budget, AMVETS is pleased to give you our best estimates on resources 
necessary to carry out a responsible National Cemetery Administration 
budget for fiscal year 2007.  The Administration requests $160.7 million 
in discretionary funding for NCA operation and maintenance of 125 
national cemeteries and 33 soldiers and sailors lots, 53.4 million for 
major construction, 25 million for minor construction, as well as 32 
million for the State Cemetery grants program.


The members of the Independent Budget recommend Congress provide $214 
million for the operational requirements of NCA, the National Shrine 
Initiative, and the backlog of repairs.


In total, our funding recommendation for NCA represents a $54 million 
increase over the Administration's request, an increase almost entirely 
aimed at the National Shrine Initiative.


The members of the Independent Budget and the more than 60 veteran and 
military groups who endorse our recommendations ask Congress to 
establish a five-year, $250 million National Shrine Initiative, to 
restore and improve the condition and character of NCA cemeteries.  We 
recommend $50 million for fiscal year 2007 to begin this important 
program.


As the veterans' population ages, and the global war on terrorism 
continues, demand for NCA services unfortunately remain high.  In recent 
years, the burial rate has averaged more than 90,000 interments per 
year, and is expected to exceed 110,000 before too long.  To meet the 
demands for services, the Independent Budget recommends hiring an 
additional 30 FTE for fiscal year 2007, an increase of seven FTE over 
the Administration's request.  Additional employees are necessary to 
staff and maintain existing and new national cemeteries across the 
country.  For funding the State Cemetery Grants Program, the Independent 
Budget recommends $37 million for fiscal year 2007.  The State Cemetery 
Grants Program is an important component of NCA.  It has greatly 
assisted states to increase burial service to veterans, especially those 
living in less densely populated areas not currently served by a 
national veterans' cemetery.


The Independent Budget also strongly recommends Congress review a series 
of burial benefits that have seriously eroded in value over the years.  
While these benefits were never intended to cover the full cost of 
burials, they now pay for only a fraction of what they covered in 1973.  
These recommendations are contained in my written testimony, but I would 
like to say our recommendations, which represent a modest increase, 
would restore the allowance to its original proportion of burial 
expenses, and tell veterans that their sacrifice is given the 
appreciation it so well deserves.


The NCA honors veterans with a final resting place that commemorates 
their service to this nation.  More than 2.6 million soldiers who died 
in every war and conflict are honored by burial in a national Cemetery.  
Each Memorial Day and Veterans' Day, we honor the last full measure of 
devotion they gave for this country.  Our national cemeteries are more 
than a final resting place.  They are hollowed grounds for those who 
died in our defense, and a memorial to those who survived.


Mr. Chairman, this concludes my statement.  I thank you again for the 
privilege to present our views.


The Chairman.  Do you offer a written statement for the record?


Mr. Greineder.  Yes.


The Chairman.  It shall be entered.


Mr. Greineder.  Thank you.


[The statement of David G. Greineder appears on p.  ]




The Chairman.  Mr. Surratt.


STATEMENT OF RICK SURRATT



Mr. Surratt.  Good afternoon, Mr. Chairman -- 


The Chairman.  Hello.  No objection, your written statement will be 
entered into the record.


Mr. Surratt.  I will just touch briefly on the budget request for the 
Veterans Benefit Administration.  We view adequate staffing levels for 
the VBA business lines as a most important issue for consideration in 
this particular component of the VA budget.  In the five-year period 
from the end of fiscal year 2000 to the end of fiscal year 2005, the 
volume of disability claims increased 36 percent, or an average of 7.2 
percent annually.  VA projects that the number of disability claims will 
increase only three percent during 2006, and two percent in 2007.  But 
even with those modest projections for increased work, the 
Administration's budget requests 149 fewer direct program FTE to 
adjudicate compensation claims in 2007 than was authorized for 2006.


What makes this proposed reduction of staffing all the more questionable 
is VA's estimate that above these projected increases in regular claims 
work, it will receive an additional 98,000 claims from its outreach to 
veterans in the six states with the lowest average compensation 
payments, as mandated by last year's legislation.  Apparently, VA 
projects that all this additional work will be completed in 2006, which 
we believe is doubtful.


We have not had time to analyze VA's workload projections, production 
assumptions, and staffing requests carefully.  But they admittedly 
contemplate and accept increases in the already unacceptable claims 
backlogs in these two years, despite the fact that VA projects it will 
increase its 2005 production by 75,000 completed claims in 2006, and 
85,000 completed claims in 2007.


In the IB, we have recommended a substantially higher staffing level 
that we believe reflects a more realistic assessment of what VA needs to 
deliver benefits to entitled disabled veterans in a reasonably timely 
manner.  The IB recommends that the fiscal year 2006 staffing of 9431 
FTE for C&P service be increased to 10,820, and I would invite your 
attention to the IB and my written statement for the bases of that 
recommendation.


Similarly, we have recommended staffing levels for the educational 
program and the vocational rehabilitation and employment program that we 
think are necessary to get the job done in an acceptable manner.  Though 
the Administration's budget seeks increases for these programs, the IB 
recommendations are slightly higher.  We recommend an increase of 155 
FTE for education service, compared with the Administration's requested 
increase of 46.  And we recommended an increase of 250 FTE for 
vocational rehabilitation, compared with the Administration's request of 
130 FTE.


Thank you, Mr. Chairman.  That completes my statement.  I would be happy 
to answer any questions the Committee may have.


[The statement of Rick Surratt appears on p.    ]



The Chairman.  Thank you, sir.  Mr. Blake?


STATEMENT OF CARL BLAKE



Mr. Blake.  Mr. Chairman, Mr. Michaud, the PVA would like to thank you 
for the opportunity to testify today on behalf of the Independent Budget 
regarding the fiscal year 2007 Department of Veterans Affairs health 
care budget request.


For fiscal year 2007, the Administration has requested -- 


The Chairman.  Do you have a statement?


Mr. Blake.  Yes, sir.  I have a statement to be submitted for the 
record.


The Chairman.  It shall be entered, hearing no objections.


Mr. Blake.  For fiscal year 2007, the Administration has requested 31 
and a half billion dollars for veterans' health care, a $2.8 billion 
increase over the fiscal year 2006 appropriation.  Although we recognize 
this as a significant step forward, we believe that more can be done.  
The Independent Budget for fiscal year 2007 recommends approximately 
$32.4 billion, an increase of 3.7 billion over the fiscal year 2006 
appropriation, and about 900 million above the Administration's request.


Furthermore, the Administration's request is approximately $1.3 billion 
less than what the IB recommends for the medical services account.


We believe the recommendations of the IB have been validated once again 
this year as the Administration indicated that it will actually need 
real resource requirements of $25.5 billion to fund the medical services 
account.  Where we disagree is on their desire to how to achieve this 
level of funding, particularly through the use of a new enrollment fee, 
and an increase in prescription drug co-payments.


We are deeply concerned that once again the President's request includes 
a recommendation for a $250 enrollment fee for priority seven and eight 
veterans, and to increase the prescription drug co-payments from $8 to 
$15.  These proposals will put a serious financial strain on many 
veterans, including PVA members who are high-end users of the VA health 
care system.  The VA estimates that these proposals will force nearly 
200,000 veterans out of the system, and will result in more than one 
million veterans choosing not to enroll in the system.


Congress has soundly rejected these proposals in the past years and we 
urge you to do the same once again.  Although our health care 
recommendation does not include additional money to provide for the 
health care needs of category eight veterans being denied enrollment 
into the system, we believe that adequate resources should be made 
available to overturn this policy decision.  The VA estimates that a 
total of over one million category eight veterans will be denied 
enrollment into the VA health care system by fiscal year 2007.  Assuming 
the utilization rate of approximately 20 percent for this group of 
veterans, we believe that it will take approximately $684 million to 
meet the health care needs of these veterans if the system were 
reopened.


We believe that the system should be reopened to these veterans, and 
that this money should be appropriated on top of our medical care 
recommendation.  For medical and prosthetic research the Administration 
has requested $399 million, a cut of approximately $13 million below the 
fiscal year 2006 appropriation.  The IB is recommending $460 million.  
Research is a vital part of veterans' health care, and an essential 
mission for our national health care system.  Despite a reasonable 
request this year, the budget and appropriations process over the last 
number of years demonstrates conclusively how the VA labors under the 
uncertainty of how much money it is going to get, and when it is going 
to get that money.  In order to address this problem, the IB has 
proposed that funding for veterans' health care he removed from the 
discretionary process, and be made mandatory.


Mr. Chairman, I would like to thank you again for the opportunity to 
testify.  We look forward to working with you and the Committee to 
ensure that adequate resources are provided for the VA health care 
system, and I would be happy to answer any questions that you might 
have.


[The statement of Carl Blake appears on p.  ]



The Chairman.  Thank you, sir.  Mr. Cullinan?


STATEMENT OF DENNIS CULLINAN



Mr. Cullinan.  Good afternoon, Mr. Chairman, Mr. Michaud.  We, too, 
would request that our written statement be made part of the record.


The Chairman.  It shall be entered.  Hearing no objection, so ordered.


Mr. Cullinan.  Mr. Chairman, you and your staff have seen our written 
statement, and are familiar with our views on the recommended funding 
levels and some of the problems therein.  So for the purposes of 
timeliness and emphasis, there are a couple of points I would like to 
make with an eye towards this Committee taking a look at some of these 
things.


The first thing is to do with the recapitalization of the VA's 
infrastructure.  The industry standard for medical care is that a 
facility be recapitalized at a rate from two to four percent.  In recent 
years, the VA has been pursuing a rate of slightly more than six tenths 
of a percent.  You know, obviously this will lead to problems in both 
the short-term and long-term, and we think that this is something that 
need be addressed.


Another area is nonrecurring maintenance.  Nonrecurring maintenance of 
course is funded out of the health care allotment, and it is allocated 
through VERA.  VERA may work with respect to allocating funds for 
patient care, but with respect to construction and maintenance, it's 
problematic.


For example, one could have a facility, a relatively underutilized 
facility in the northeast, with very high maintenance cost.  Under VERA, 
they would simply get enough money to accommodate its patient workload 
without really taking into account the actual expense of maintaining 
that facility.  That could lead to problems for the veteran patients, 
and long-term expenses to the system.


Another thing we would like very much for the Committee to take a look 
at is the issue of reprogramming.  Despite the best efforts on the part 
of the VA, on occasion a bid gets busted.  In other words, an effort is 
made to build a facility, a CBOC, for example, in a given area.  
Contracts are undertaken or negotiated with various contractors, and 
then for a variety of reasons, the money is simply not there to pay for 
it.  That then means that with the exception of some very narrow 
limitations, that money is frozen up.  What we would like to see, and we 
don't know the exact solution to this, is VA to have increased 
reprogramming authority in such situations, so that money doesn't simply 
sit there.


It's especially important now, in lieu of the astronomical rate of 
construction inflation.  In our written testimony we indicate it is nine 
percent generally, nationwide.  In some parts of the Southwest it is up 
to 35 percent.  So if a project gets halted in place, and it need be 
started all over again in a following fiscal year, not only does the 
additional effort of looking at this again have to take place, but the 
cost is going up.  So the reprogramming is something we would love for 
you to take a look at.


Architectural master plan, we address that in our written statement.  
Architectural master plan would help steer CARES in the right direction.  
It could accommodate some things that CARES isn't handling, such as 
long-term care, severe mental health, those kinds of things.


I would like to offer a compliment to this Committee and your 
counterparts in the Senate.  For years, VA construction was saddled with 
the lowest good obligation in negotiating its contracts, and now has 
something called, "best value," that it is our understanding that this 
is working out way, way better than was the case before.  We are getting 
better projects for less money.  Thank you for that.


Another issue, the Veterans Benefit Administration, they have not had 
anything built since 1992.  We well understand that oftentimes it is 
better to rent or lease, to get a modern facility in a timely manner, 
but perhaps there are instances where the system could save money, and 
veterans would be better served through construction.


And finally, with respect to collaboration, we strongly support 
collaborations in those areas where both the veteran population and the 
active-duty military population are properly served, and their unique 
identities maintained.  The one thing that we would point to, in those 
instances where a VA facility is located on, say, a military base.  Due 
to increasing security measures, it is getting more and more difficult 
and indeed more and more daunting to get onto such facility.


And that concludes my statement, Mr. Chairman.  Thank you.


[The statement of Mr. Dennis Cullinan appears on p.  ]




The Chairman.  Thank you.  Mr. Robertson?


Mr. Robertson.  Thank you, Mr. Chairman.  We, too, would like our 
written statement to be added for the record, with a little caveat that 
we would like to be able to add some additional remarks concerning the 
President's budget specifically.  Because we had the budget presented to 
us at noon on the same day that the written statement was due to you, we 
were not able to put a full analysis into the President's budget.  We 
are working on it -- 


The Chairman.  The statement that you have today will be submitted for 
the record.  Any additional  --  if you could have your commander 
provide that to the Committee next week at that hearing, I think it 
would be a good way to cover it.


Mr. Robertson.  We should have it done today or tomorrow, so we should 
be able to get it to you very, very quickly.  But we will do it at that 
meeting.


Thank you for inviting the American Legion -- 


The Chairman.  Your statement will be submitted for the record, hearing 
no objections, Mr. Robertson.


STATEMENT OF STEVE ROBERTSON



Mr. Robertson.  Thank you for inviting the American Legion to offer 
views and estimates on the President's budget request.  As a member of 
the Partnership for Veterans Health Care Budget Reform, the American 
Legion strongly recommends this Committee to hold a hearing to discuss 
the annual funding process for the veterans' health care, before the end 
of this session.  We still believe that there are better ways to make 
sure that no veteran is turned away from the health care he needs or she 
needs in a VA medical facility.


In the 1980s, most of the complaints that I received from veterans was 
concerning the complicated rules and regulations which regard the care 
each individual veteran was entitled to.  Things were done to bend the 
rules, and thus, proper care and treatment was not always provided in an 
appropriate setting.  VA medical facilities were few and far between, 
requiring long trips for care and treatment.


In 1996, Congress wisely reopened the doors to all veterans with the 
goal of timely access to health care in the most appropriate setting.  
The transformation of VA changed from a hospital-based system into the 
integrated system we have today, and clearly it is a health care 
industry leader on so many fronts.


Today, there's a tremendous demand for the care VA provides to a very 
small percentage of America's veterans.  Mr. Chairman, last year at this 
time, the entire veterans' Committee was deeply troubled with the 
President's budget request, and nearly every veterans' organization 
expressed concerns over the shortfall in the fiscal year 2005 budget and 
the fiscal year 2006 budget request.


The American Legion applauds the President's budget request for its 
clear increases in certain areas.  However, we remain deeply concerned 
over other aspects.  VA's close collaboration with OMB has paid big 
dividends, and the funding model now reflects a nation at war, to some 
degree.  However, VA should not be a system that welcomes new, younger 
patients in the front door, by shuffling older patients out the back 
door.


The President's legislative initiative to charge an annual enrollment 
fee of $250 did not make sense the first time it was proposed, and it 
still doesn't make sense.  Likewise, the initiative to double the 
prescription co-payments still does not make sense.  Both of these 
initiatives are clearly targeted to priority group seven and eight 
veterans.  VA anticipates that these proposals will drive more than a 
million veterans from the system, just as DOD predicts TriCare's 
proposals will drive hundreds of thousands of military health care 
beneficiaries away from the DOD health care system.


Their decision is not going to be based on the best health care options 
available, but the best financial decision.  Mr. Chairman, rather than 
trying to figure out ways to shed veterans, the American Legion believes 
this Committee and Congress should be trying to figure out ways to make 
sure no veteran is ever turned away.  This is an issue of fairness.  Why 
should a Medicare-eligible veteran pay an enrollment fee if he or she 
pays part A and part B to Medicare?  Why should a veteran with private 
health insurance that reimburses VA be required to pay an enrollment 
fee?  Why should a veteran enrolled in TriCare be required to pay an 
enrollment fee?  If VA is their best health care option, why should we 
try to penalize them?


After all, Mr. Chairman, many of these veterans had other options than 
military service.  They chose to serve this nation with honor.  The 
American Legion believes the annual VA budget should reflect the thanks 
of a grateful nation.  Much has been said about the increases in VA 
medical funding since 1996.  Most notably, in the last five years.  
Compared to the cost of other public and private health care plans, VA 
stands clearly alone as the most cost-effective and best value for the 
dollar, especially taxpayer dollars.  VA is the ongoing cost of the 
price of peace.


National Commander Tom Brock provided you and your colleagues with views 
and estimates of the American Legion on September 20th at the joint 
hearing.  Hopefully, VA and OMB had an opportunity to review those 
recommendations, as well.  Mr. Chairman, the American Legion applauds 
the President's serious approach to properly funding VA.  The American 
Legion is confident that the mandatory funding portion of the 
appropriation is probably right on target.  Unfortunately, it is the 
discretionary funding portion that troubles us the most, because 
miscalculations have a direct impact not only on health care, but on 
other services and benefits VA provides.  Undocumented management 
efficiencies result in real budgetary shortfalls of limited resources.  
While third-party collection goals continue to increase, the uncollected 
dollars result in real budgetary shortfalls.


Where in the budget does VA receive credit for the billions of dollars 
in savings to Medicare for the treatment of non-service-connected 
medical conditions?  If VA can't receive third-party reimbursements from 
the nation's largest health care insurance company, why can't VA take 
credit for the real savings in mandatory appropriations?  Delayed claims 
as well, as we all know, delays earned benefits and services for months, 
sometimes for years, and unfortunately even decades.  Mr. Chairman, you 
have said over and over that the job of this Committee and this Congress 
is to get it right.  The American Legion is here to assist you.  Thank 
you for allowing us to testify.  We are prepared to answer any questions 
you may have.


[The statement of Mr. Steve Robertson appears on p.  ]




The Chairman.  Thank you, Mr. Robertson.  Mr. Weidman, you are now 
recognized.


STATEMENT OF RICK WEIDMAN



Mr. Weidman.  Mr. Chairman, on behalf of Vietnam Veterans of America, I 
thank you for allowing us to present our views here today.  We would be 
grateful if you would take our written submission and enter it into the 
record.


The Chairman.  It shall be entered into the record, without objection.


Mr. Weidman.  Much has been heard about the President's budget and how 
it is much better than many of us anticipated in the veterans Committee.  
Unfortunately, our view of it at Vietnam Veterans of America is that the 
bad news is that the good news is wrong.  In fact, what we really need 
is approximately $35.7 billion without collections, I say that again, 
$35.7 billion for VHA, without collections.  And then with collections, 
it would then add up to 37.9.


That would be 5.6 billion more than fiscal year 2006, which includes the 
1.2 billion that the President recently signed off on.  The President 
requested 31.5 billion for VA medical care, business line, which 
includes medical services.  And that from our point of view is simply 
not adequate to meet the needs even of the truncated enrollment, with 
the freeze on sevens and dates.


The 35.7, or a total of 37.9, would allow us to reopen to the seven and 
eights who have been frozen out, which would be about 260,000 people per 
year.  Perhaps as many as a million, over the last couple of years.


Even without reopening at the registration and enrollment at usage to 
the sevens and eights, we believe that it still would take approximately 
3.6 billion above the current level of the 2002 budget, added into VHA, 
in order to meet the need.


We will comment more specifically in the statement for the record for 
the Health Subcommittee, which we will be filing at the end of this week 
for the hearing next week, and when our president, John Patrick Rowan, 
testifies at the hearing next Thursday on the 16th, sir.


In addition to that, the other place where the bad news is the good news 
is wrong: it was testified here earlier today that the 197,650 VHA, or 
Veterans Health Administration staff is remaining steady.  That is not 
what we are hearing around the country.  It is not just in VISN eight, 
as Mr. Miller pointed out.  It is currently in VISN five, where there is 
a two percent reduction in staff at every single hospital.  And we are 
hearing that all over the country.


So, in order to increase the staff to 198,302 in the next fiscal year, 
it's going to take a much larger increase than has been requested by the 
President.


On the other side of the House I would first of all, Mr. Chairman, 
greatly applaud on behalf of Vietnam Veterans of America your comments 
in regard to the GI Bill this morning, and giving the young men and 
women who are serving today, in active duty, as well as the Guard and 
Reserve, a GI Bill like that which your father and my father had coming 
out of World War II, which transformed this nation, which was a most 
cost-effective, cost efficient social program perhaps ever tried by this 
nation.  And so we would like to associate ourselves with your remarks, 
and stand ready to help you in any way we can.


In regard to the Veterans' Benefits Administration, we believe that 300 
more C&P than had counselors, Competition and Pension, adjudicators, and 
VSOs need to be provided, other than that which -- instead of what the 
VBA has asked for in the President's request.  How to use those most 
effectively, as to whether they are VSOs or C&P adjudicators, we would 
certainly leave up to the under secretary.  One thing that we would say, 
however, there is that some portion of additional funds there needs to 
be set aside for much more effective training and competency-based 
testing of everybody concerned.  We are not going to do well with just 
additional bodies, if they are not trained well, and they do not have 
the additional -- if there is not competency-based training at the end 
of training completed.


We also believe that we cannot rely on the VA DVOP/LVER system and the 
state workforce development agencies to deliver the kinds of services 
necessary to disabled veterans who are returning from OIF-OEF, so we 
would strongly encourage many more Voc Rehab counselors across the 
nation, with a much greater focus on helping people return to work.


There are a number of specific items that we would just mention very, 
very briefly, that we would recommend very strongly that the Committee 
try and get report language on.  First of all, is $18 million set aside 
specifically for the vet centers, which would allow them to have 250 
more permanent, permanent slots, of which 206 would be family 
counselors, one for each of the 206 vet centers in the country?  We have 
made this recommendation before.  VHA, it is clear now after all these 
years, will not do it unless so directed by the Congress, and we ask 
your assistance in that, sir.


The second is that we would recommend a 10 percent increase over the 
current level of research and development funds, with report language 
that 25 million of that in no-year money be set aside to complete the 
national Vietnam veterans longitudinal study, which was suspended by 
means of an IG report issued on the 30th of September of 2005, and it 
was due to the Congress on October 1, 2005.  We would also hope that the 
oversight and investigations Committee will look into the independence 
of the IG in that particular effort, as well as others.


Next is that we ask that $3 million be set aside for the Disability 
Compensation Commission, for two reasons: one, at this key juncture when 
they are just getting their research back, they have limited the 
commissioners to 20 hours of billable hours back to the commission, from 
this point forward.  This is a time we had believed that there is a fine 
bipartisan group of commissioners, who are people of real integrity, but 
it is becoming increasingly a staff-driven process, and it is a staff 
that only includes two people who are not permanent employees of the VA.  
So if it is going to be an independent commission, and clear that it is 
an independent commission, then it needs to have independent funding, 
and certainly the latitude for the commissioners to do their jobs.


There are several other points having to do with report language that we 
strongly recommend.  I am over time, and I ask your indulgence for that, 
but we will submit that with the statements for next week.  I thank you 
again, Mr. Chairman, be happy to answer any questions.


[The statement of Mr. Rick Weidman appears on p.  ]




The Chairman.  I appreciate your comments on the National Shrine 
Program.  It is an issue that we took up in last year's, views and 
estimates that I submitted to the Budget Committee.  And the 
appropriators, for whatever reason, didn't put the money there, and so 
we are going to take on that endeavor again.  And you know, as you 
travel differently than I do, and you can go to Normandy, you can go to 
some of these other sites; compare those cemeteries to a national 
cemetery in America.  I think they should all be the same.  And so I 
want to thank you for bringing that up.


I don't know if the efforts of Mr. Weidman's task force are going to be 
done in time for us to be able to get this in our budget views and 
estimates, but I want to work with you.  I want to make sure that we get 
an idea of where we are going.  I was disappointed that DAV pulled out 
of that task force.  I think your insights would have been valuable, and 
so I expressed to you my disappointment that had occurred.


I am most hopeful that you have got some positive recommendation from 
this task force to us.  You don't have to talk about it today, we are 
going to set that aside, and are going to address that.


I want all of you also to know that in our hearings coming up, one of 
our full Committee hearings that we are going to do is, have a 10-year 
look back over the eligibility reform.  And I am not going to beat this 
one again, because all of you know exactly where I stand.  And it is 
challenging for me, because I lived through it, and I was obedient at 
the time, and gave great deference to Chairman Stump when that went 
through, and have now seen the reality that we all embrace, that it was 
a revenue enhancement, when in fact it was not.


And I am also continuing to live with this pain of how the military 
retiree is getting treated differently than someone who may have only 
served one tour of duty.  It is the biggest elephant in the room that 
nobody is paying attention to.  So I am going to pay attention to it.  
And it is even more highlighted now, guys, because of what the Armed 
Services Committee may do.  And you know, turn to the American Legion.  
The American Legion in Indiana had to increase their annual fees.  I 
don't remember anybody saying, calling the Indiana commander, "You are 
anti-veteran because you had to increase your fees annually."  I mean, 
probably the error that occurred with regard to enrollment fees on 
sevens and was not created when the law was. And I created the 
enrollment fee when we did Tricare for Life.  And enrollment fees, 
deductibles, and co-pays are utilization tools in a health system, and 
they are important.


It is unfortunate how language, rhetoric and demagoguery, pound this 
one, and then in an effort, you also are playing to a greater membership 
at the prejudice of the military retiree.


And I will appreciate -- no, I welcome your response to it, because I 
have to figure out how I work with my colleagues to take away this 
inequity and make the system right.  I will go back to you, Mr. 
Robertson.


Mr. Robertson.  Mr. Chairman, thank you very much for -- because this is 
a bone that I have in my throat as well.  First of all, when I came in 
in 1973, there was a promise for health care at no cost to military 
retirees and their beneficiaries.  That's a fact.  Somewhere along the 
way in the eighties, the boat got turned around sideways.  The American 
Legion actually came up with a plan to address the CHAMPUS problem, that 
led to the genesis of TriCare.  And that plan was to incorporate 
military retirees and their families in the VA health care system; that 
it would be like TriCare is today, but it would be managed by the 
Department of Veterans Affairs and the Department of Defense; i.e., 
taking out contract bidders.  We would be doing the same thing with the 
VA that the contractors are doing for TriCare.


I guess the bone that is in my throat is I don't know whether the 
increases for TriCare are going to the Pentagon or to the contractors; 
whether the increase in prescriptions is going to pharmaceutical 
companies, or going to the Pentagon.  Everybody and his brother wants to 
get in to the pharmaceutical that the VA has because it is able to get 
such an economy of scale that it is getting the medications and 
prescription at the rock-bottom price.


So if we are doing so many things right, then why are we being compared 
to systems that don't seem to be doing it right?  TriCare started out 
with 12 regions.  They are down to three bidders now.  And it had to 
restructure its entire area, catchment areas.  So you know, people can 
hold up private plans, and they can hold up TriCare, and they can hold 
up Medicare, and they can hold up everything they want to.  But right 
now, there are more people trying to get into the VA system than trying 
to get into TriCare or any other private health care plan that is out 
there.


You talked about seventh and eights that, you know, somebody, I don't 
know who you are referring to and I hope it is not the American Legion, 
is trying to convince sevens and eights that they are entitled to care.  
The American Legion has never said sevens and eights were entitled to 
care.  They are eligible for care.  Title 38 says that they are eligible 
for care, within existing appropriation.  So our responsibility as I see 
it is to figure out how to come up with those extra dollars to expand 
the pool.  Medicare reimbursements is one area in which, when I think 
that provision was put into law, they had service-connected disabilities 
in mind, that there were so many service-connected, Medicare-eligible 
veterans in the system at that time, that they didn't think that it was 
fair to pay VA for taking care of veterans that they were already 
supposed to be taking care of.


When we brought in non-service-connected veterans in large numbers, that 
Medicare reimbursements for treatment of non-service-connected 
disabilities seems like a very, very logical thing.  To be able to let 
them use a health care pharmaceutical plan that they understand, rather 
than trying to figure out what Medicare part D does for them, and which 
is better: to be in Medicare part D, or in the VA, and "Will I get 
penalized if I don't immediately sign up for part" -- it is so confusing 
on the outside that even more veterans that are in the system want to 
stay in the system.


Dr. Perlin and his people deserve all the credit in the world for doing 
an outstanding job.  Medical research I think it is unprecedented at the 
VA, and I am very concerned about the future of that.  But pitting us up 
against systems that aren't working as advertised I think is a tragic, 
tragic mistake.  And I think that TriCare could probably learn a few 
things from the VA, if they would attend the meetings, and communicate 
with us.


I am sorry, the bone is out of my throat now.


The Chairman.  Well, as I said, we are going to hold a hearing on this 
one, and we are going to get into the issues a little bit deeper.


The issue on enrollment fees and co-pays is not going to go away.  It is 
a management tool of a health system.  It is just a fact.


We will look closely at the issue, and I will be a good listener to Mr. 
Michaud and Mr. Brown on the medical research.  My sense is that they 
have had such an increase in grants and other sourcing is the reason it 
has come down in their budget, but I will yield to Mr. Michaud and Mr. 
Brown to give the Committee some guidance on that.


At this time, let me yield to Mr. Michaud for any questions that he may 
have.


Mr. Michaud.  Thank you very much, Mr. Chairman.  I want to thank all 
the VSOs for coming out today. I really appreciate your input, I 
appreciate your comments that you just gave, Mr. Robertson, I appreciate 
that very much.  I Have a couple of questions.


Mr. Blake, you had mentioned that under the Independent Budget, that you 
did not include priority eights, as far as in the overall line.  Why did 
you exclude them?


Mr. Blake.  Mr. Michaud, if you look at our chart, we do include them in 
the bottom-line total discretionary funding.  However, in the past 
couple of years, we have included that in our recommendation for 
developing our medical services line.  And we felt that if we continued 
to do this, we are being a little bit disingenuous, because we were 
asking for money that was going to be going towards care for people that 
aren't actually going to be getting care in the VA.


So we recognize that that is money that still has to be appropriated for 
those people, but for us to claim, to build our request on that alone 
would not be fair.


Mr. Michaud.  Thank you, I appreciate it.  Mr. Surratt, the VA 2007 
proposed budget calls for a reduction of 142 employees to handle 
compensation claims in 2007.  What impact would you expect such a 
reduction to have on the quality and timeliness of claims, including 
those filed by returning veterans?


Mr. Surratt.  Well, first of all let me say that it is 149 direct 
program FTE for the compensation program.  Now, there is a requested 
increase for pension, but you would assume that if they requested more 
FTE for pension, they need that there.  So VA must have assumed that 
they can do with 149 fewer for compensation claims.


It is hard to quantify, but we know already that they are losing ground, 
that they are having difficulty handling the workload that they have.  
So that can't be good, and it has to be detrimental.  To what extent, I 
can't say, but certainly intuition would tell you that it is going to 
have a further detrimental impact on a system already very much 
strained.


And again, as I noted in my oral statement, last year VA's budget said 
that one of their top priorities was reducing the claims backlog.  Well, 
this budget this year acknowledges that with the staffing they have 
requested, that the pending caseload, and that is only rating caseload, 
at the end of the year of 2006 and 2007 will be higher than it was at 
the end of 2005.  So now they have accepted that the backlog, already 
unacceptable, will grow with the resources they have asked for.


Mr. Michaud.  Thank you.  Mr. Weidman, you mentioned earlier and I only 
caught part of it, it sounded to me like you needed a -- were you 
recommending in dealing with the IG that you need an oversight Committee 
to look at the oversight Committee?  Could you elaborate a little more 
on that?


Mr. Weidman.  The National Vietnam Veterans' Longitudinal Study was 
mandated by the Congress, and it is a replication of the National 
Vietnam Veterans Readjustment Study, which was done back in the 1980s, 
which was a seminal work on post-traumatic stress disorder among combat 
veterans.  And the cohorts involved were those who served in Vietnam, 
those who served in the military during Vietnam but did not serve in a 
combat theater of operations, and a non-veteran cohort group.


Having all three cohort groups is key.  This is really essential given 
the fact that we are in a war now, and that estimates of PTSD and PTSD-
like problems among OIF-OEF returnees ranges from 17, and that is the 
official estimate by the army, up to 30 percent, or much more.  The 
CARES model that we have currently that is using -- and incidentally 
that is the same thing that they use for projecting need, is essentially 
a civilian formula.  It is a civilian formula developed for middle-class 
people who can afford HMOs and the PPOs.  That is not who comes to VA, 
one.  Two, we have had exposures that, from my lips to God's ear, the 
civilian population in our great nation will never be exposed to.  But 
you have to factor that in.


So, the NVVRS, or the National Vietnam Veterans Readjustment Study, is 
really essential to projections for the future.  I noticed last week, 
NPR did a story on a study that came out in the archives at General 
Psychiatry, where they look back at records of civil war veterans, and 
documented that all of those who had a heavy combat exposure, 
particularly the younger they were, had significant physiological and 
other problems throughout their lifetime, much greater than the general 
population at the time.


This is not a new problem, but it has not been documented, and it has 
not been projected for the future.


The National Vietnam Veterans' Longitudinal Study was supposed to be due 
October 1 of last year, to this Committee.  In October of 2003, then 
Under Secretary suspended it, and we tried to talk to him about what was 
going on.  There were some questions that we had at VVA about what was 
going on, including Dr. Linda Schwartz, who is currently the 
Commissioner of Veterans Affairs in Connecticut, who sat on the Science 
Advisory Committee, believed that the Chairman and some of those folks 
were expanding the study and the cost of the study in a way that was not 
legitimate, and not called for.


Instead of adjusting, and looking to the fact that it was lousy contract 
management on the part of the Veterans Health Administration, and 
tightening that up, then Under Secretary Roswell suspended and then 
cancelled the contract altogether with the Research Triangle Institute, 
turned it over to the Inspector General and said he couldn't talk to 
anybody about it because it was under IG investigation.


Repeatedly, we reached back to him and to his successor, Under Secretary 
Dr. Perlin, about "Where are we at with the National Vietnam Veterans' 
Longitudinal Study?"  And there was all kinds of questions expressed, 
"It's too expensive, it's too expensive, it can cost more than 17 
million."  Well, how expensive is it to underestimate the needs of VA, 
repeatedly?  Never mind in human terms, just in fiscal terms.


By their own admission in the summary of the IG report that was issued 
September 30th of 2005, they had completed all their work between May 
and September 2004, and sat on that IG report for over a year before 
they released it.  And they released it on a Friday afternoon, September 
30th.  October 1 was on a Saturday.  That Monday, VA Congressional 
Affairs was up here asking you to change the law requiring that they do 
that study.


If that doesn't seem a little bit suspicious, and coordination between a 
supposedly independent Inspector General's office and parts of the 
agency that didn't want that study to happen, because we believe that 
many people at VA didn't want it to happen because of what they believed 
it would show in terms of physiological and psychological long-term 
damage, and morbidity and mortality, of combat veterans, and how that 
could be extrapolated to the coming population.


So that is the reason why we would ask for your Committee that you are 
ranking minority member on to look at it, number one.  And number two, 
we have wasted so much time, and would encourage the full Committee to 
seek report language to require VA to get that study underway, no matter 
who they contract with.  We are not wedded to the Research Triangle 
Institute, it is whoever is going to get the study done right in a 
timely way.


Thank you very much.  Thank you for your indulgence, Mr. Chair, in 
allowing me to tell out that whole story.


The Chairman.  Thank you.  Who is responsible for the IT section?


Mr. Blake.  I guess I can take responsibility for it, Mr. Chairman.


The Chairman.  Do you want to take responsibility for this statement?


Mr. Blake.  I will be glad to take responsibility for it.  It is an 
inexact science.


The Chairman.  You didn't write this, did you?  Obviously you didn't 
write this.


Mr. Blake.  No, sir.


The Chairman.  I know you didn't write this.  A West Point grad would 
never write like this.


Mr. Blake.  I don't even know where the IT section is in here, sir.


The Chairman.  Let the gentleman's statement speak for itself.


Well, I invite you to review that section, and I really am challenged to 
believe that you would embrace it in its entirety.  I just want you to 
know that when this Committee voted unanimously, and the House voted 
unanimously to do the centralized approach, there is no one here that 
would want any decrease in the quality of care that Dr. Perlin and his 
staff are providing.  So it is sort of disingenuous, and a very broad 
statement.


There is another statement in here that is really very peculiar.  Well, 
I don't even want to go into it.  It just looks like somebody had a 
little bit of information and thought that they really needed to cover 
this because it's never been covered before, and it is sort of 
disjointed.


You know, you do this bottom line, this is really bizarre,"A centralized 
approach will give you an inevitable overlay of bureaucracy."  You know, 
it doesn't even fit what Gartner consulting even testified to this 
Committee, and they are the consultant to the top 500 companies in the 
world.  And so what we are trying to do is to cut through the 
bureaucracies and provide some streamlining.  So something is not right 
here.


The goal here is to create the one architecture.  The CIO needs to be 
the partner in the room with Dr. Perlin's clinical chiefs.  So when the 
clinical chiefs, have an idea, or somebody at the business table out of 
finance has an idea, the CIO's job is not to say "no."  It is to ensure 
that it fits under the one architecture so that we have this 
standardization.


I've been a very good listener to Dr. Perlin about how he has such great 
minds in the field, and these are the crucibles of innovation, and I 
understand this decision on this, "federated model" that is very new to 
Gartner.  Gartner is also going to advise the VA on how to do this.  But 
getting to this one architecture, gentlemen, is so important.  We have 
127,000 PCs out there that can't even run on the new Microsoft program.


So getting to this one architecture, letting Dr. Perlin get the 
infrastructure in place, getting these four data processors up and 
running, I think the clinicians are going to be pretty excited.  Once 
they get the one architecture, we can then begin to sophisticate the 
patient medical record for which the rest of this country, has this 
appetite for.


So, watch this one as it goes.  Don't stake your guidon in the ground 
like you have done here, and, "Heck, no."  Watch this one as it 
progresses.  I mean, this is very important for all of us to get the IT 
right, because it is so meaningful to increase the quality of care.


Where we are going to end up on this one by the end of the year, I can't 
foretell.  Listening to Dr. Perlin -- why, he's still in the room.  
Thanks for staying, Dr. Perlin.  And Admiral Cooper.  Who else have we 
got?  Well, thank you for staying around and listening to the testimony.


Listening to Dr. Perlin's testimony along with the Secretary and the 
CIO, they have a decision, a strategic decision, they need to make.  
They need to get on with it.  We will fund that.  What Chairman Craig is 
going to do in the Senate with regard to this, I don't know yet.  We 
will take up another hearing to examine it.


This is a strong bipartisan issue of the Committee, and it is one of 
where you shouldn't be pitting yourselves against us on this one, 
because I think that we are all in a concentrated effort in the same 
direction.  So I just invite you to take -- whoever this is -- please, 
Mr. Blake, take another look at that one.


The last one I had was Mr. Cullinan, I want to make sure I get this 
right.  With regard to New Orleans and the Gulf Coast region, that they 
should only be considered for repair and rebuilding if it does not upset 
the existing CARES process?  I never interpreted CARES as an inflexible 
model.  I mean, it was a snapshot in time, and it is one we can rely on, 
but can you help me explain that one to us?


Mr. Cullinan.  Allow me to elaborate on that, Mr. Chairman.


Our primary concern is that if the -- and let me talk about that -- if 
the decision is made, and to what extent New Orleans is going to be 
rebuilt, that it not absorb all the money from the construction budget 
for everything else, that's the problem.


Having said that, with respect to New Orleans, I will state the obvious.  
The VA is in a tough spot.  There is a huge debate raging within New 
Orleans, throughout the nation, as to "Is New Orleans going to be 
rebuilt?  To what extent?  What are we going to do about the wetlands?" 
There is the huge issue about demographics coming into play, who is 
going to live there, who is not.  It is our view that VA should not take 
the lead in that debate but should at least be given some sort of 
clarity with respect to what they are going to be dealing with in VA.  
With respect to the veteran population, the non-veteran population, the 
degree of protection they are going to get from future flooding.  And I 
will stop, thank you.


The Chairman.  Okay.  Now I understand that a little bit better.  
Sometimes, I can't get behind a statement on its own.


Mr. Cullinan.  I was shocked by that myself, sir.


The Chairman.  Who made the comment on collaboration?  You did, earlier?


Mr. Cullinan.  Yes.


The Chairman.  Okay.  But you excluded this endeavor of taking the next 
logical step of a collaboration of personnel to collaboration with 
facilities with medical universities owned by states.  Did you exclude 
that on purpose?


Mr. Cullinan.  That is not by design.  That is just simply something we 
didn't mention.  Where that would work, we would clearly support.


The Chairman.  Okay.  That is something that we are examining, Dr. 
Perlin and I, and General Love, Mr. McClain, Mr. Michaud, down in 
Charleston; we went into this not really knowing what this was going to 
look like with the life cycle costs, and we were all pretty surprised.


Mr. Cullinan.  Yeah, and we have been supportive -- oh, I am sorry.


The Chairman.  No, I just wanted to let you know that, we were pretty 
surprised by it.  So when Dr. Perlin testified, said this is 
a"template," there are some other issues that we want to examine 
further, but what we are able to do is break through the no-go's that 
were identified.  And because sometimes we go, "Oh, we can't do that," 
or "You can't do this, you can do that," well, let's examine.


And we learned a lot.  So I welcome some testimony coming up at this 
collaboration hearing that we are going to have.  And as the secretary 
mentioned, with regard to New Orleans, we want to keep not only the 
collaboration with personnel, now we have got to get them back in New 
Orleans, right?  Where is a facility going to be built?  And to do this 
with Tulane and LSU, will probably be the first one out of the box.


So it wasn't excluded on purpose?


Mr. Cullinan.  Absolutely no.  It was not by design.  We didn't exclude 
it by purpose.


Mr. Robertson.  Mr. Chairman.


The Chairman.  Yes, sir?


Mr. Robertson.  Our veterans in South Carolina have expressed a great 
deal of concern, I am sure you are well aware of the proposals that were 
being kicked around.  And their major concern is the loss of identity.  
In the joint efforts we have seen with the military, when the military 
was in charge of the joint effort, it seemed to crash and burn for the 
most part.  But where you had the VA was in charge of the collaboration 
-- they were the host and the military was the guest -- that it seemed 
to work a lot smoother.


What our initial concern was with the Charleston was whether or not VA 
would lose its autonomy in its access for veterans?  Would they be on 
the waiting list?


The Chairman.  Well, what we've learned is that none of those are true.  
And for all the veterans' organizations that came to the hearing Mr. 
Michaud was also attended, those concerns were alleviated.  We want to 
share with you as you go into this hearing that you can learn more about 
what the VA wants and their options.  And we want to make sure that the 
VA has an identity, that veterans are sure that they are given 
preference.  I mean, a lot of those concerns that were initially laid 
out I thought were pretty well laid to rest.  Would you, Mr. Michaud -- 
did you -- 


Mr. Michaud.  Yes, if I might, Mr. Chairman.  Yes, that was an 
interesting hearing.  And actually, what I learned going into it was a 
little different then when I was talking to veterans beforehand versus 
some of the veterans that were there afterwards, is the biggest problem 
is actually a lack of communication between everyone involved.  And, I 
think once they heard what was going on, I am not going to say that all 
the concerns they had were all alleviated, but clearly the communication 
effort was needed. 


Mr. Robertson.  Well, you are 100 percent right, that if we are at the 
table expressing our views and concerns so that they are being addressed 
up front, rather than chasing the dog and hoping to catch it and check 
for fleas, you know, that will go a long, long way.  And we would ask 
very much to be part of that dialogue, as well as the IT dialogue.  Our 
testimony -- 


The Chairman.  I think there was some gentleman that testified, I can't 
remember.  He was from one of the veterans organizations, and then there 
was concern by one of the state commanders  -- he really wasn't speaking 
for me, and I think there got to be a little confusion from it.  But I 
just want to let you know, a lot of those initial concerns got laid to 
rest.  Some of them did, for some people.  Thank you, sir.  Mr. 
Robertson?


Mr. Michaud.  If I may, Mr. Chairman.


The Chairman.  Yes?


Mr. Michaud.  One of the things that we did request at that hearing was 
for the VA and those involved in that process, that they do include, you 
know, the players into the process, which I felt was extremely 
important.  And we made that clear that it is important to have people 
involved.


Mr. Robertson.  May I just add one more -- 


The Chairman.  Yes.


Mr. Robertson.  You know, from the national perspective, we have staff 
here in D.C. that deal with the entire system.  And a lot of times when 
you go to the local Blue Cap Legionnaire, they may understand the 
problems that are unique to that area, but sometimes they are not as 
knowledgeable of the bigger picture than what we have here at the 
national office.  So I would hope that we would be engaged here, as 
well.


The Chairman.  Yeah, it seems like whenever you go to a state, there are 
also interstate rivalries, you know, upstate South Carolina versus the 
low country, and not a knowledge of the totality of that VISN.


Mr. Robertson.  There is no politics inside these organizations.


The Chairman.  Okay.  Sure.


Mr. Weidman.  Mr. Chairman, I certainly wouldn't be so rash as to agree 
with my colleague from the Legion on that one.  But where others are in 
charge of collaboration, it seems that the veterans are left out.  At 
Nellis Air Force Base Hospital in Las Vegas, it's a classic example.


The Chairman.  I disagree.  I was just there.


Mr. Weidman.  I can tell you -- 


The Chairman.  I was just there.


Mr. Weidman.   -- it was the impetus for -- 


The Chairman.  You had VA employees working right there alongside DOD. 
Those VA patients were excited to be around their activeduty 
counterparts.  I just want to let you know, Rick, I was just there.


Mr. Weidman.  It was complaints from folks in there from veterans using 
their facility that led to the impetus to move forward with doing that 
new facility.


The Chairman.  The complaint that I have heard is the one that somebody 
mentioned  -- I think you did, Mr. Cullinan about it being more 
difficult now to get on that base, and it's tougher for family members 
to gain access to the base.  So those are things that you have asked us 
to be good listeners to, and I appreciate that.


Well, gentlemen, I think we have come a long way.  You know, here, for 
about three or four years the Congress ended up in some pretty nasty and 
ugly fights over the budget, more on political lines, unfortunately.  
And it also then took veterans organizations and pitted them with party 
lines, and it got pretty ugly.


And when I took over this Committee, I leveraged the knowledge that I 
brought to this Committee from dealing with the military health delivery 
system, and the Surgeons General in health modeling.


And I took that knowledge, and then how to apply it by understanding the 
health modeling the VA uses, the methodology, and whether the data that 
is input is correct.  We learned about those shortfalls.  We have a 
secretary that embraced that he was going to own a budget.  We worked 
with him behind the scenes, making sure that if there's nothing wrong 
with the model, then let's get the data right, and get our most accurate 
forecast possible.  And that's why he delivered the budget we did today.


And so I think some of you may have been surprised when you first heard 
about the budget number in some areas, and perhaps not surprised in 
others.  I mean, I am not surprised that they are continuing to do the 
co-pays and the enrollment fees, and that type of thing.  But for them 
to come up with the number that they did, even in mandatory spending, 
because we have so many of our brothers and sisters, comrade in arms, 
who have been hurt on the job, and have been wounded.  And so we need to 
make sure that that the disability system and health care system is 
there to take care of them.


I want to thank you for your partnership in this endeavor in the budget.  
Next week we will hear from all the commanders and the presidents.  That 
is extremely important, next Wednesday and Thursday, because then 
Thursday, this Committee will hold its business meeting on the budget 
views and estimates.  Getting all of your testimony on all of your 
resolutions in a snapshot in time, prior to this budget's views and 
estimates, is extremely important. It is the first time it has ever been 
done.  And we only have, then, less than a week after that Thursday to 
deliver our letters on budget views and estimates to the Budget 
Committee.  So it is a very fast train.  So I look forward to your 
commanders' testimonies next week.


This Committee now stands adjourned.


[Whereupon, at 2:26 p.m., the Subcommittee was adjourned.]


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