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







 
THE DEPARTMENT OF VETERANS AFFAIRSï¿½ BUDGET REQUEST FOR FY 2007 FOR THE 
VETERANS HEALTH ADMINISTRATION


TUESDAY, FEBRUARY 14, 2006

U.S. HOUSE OF REPRESENTATIVES,     
SUBCOMMITTEE ON HEALTH,
COMMITTEE ON VETERANSï¿½ AFFAIRS,
Washington, D.C.

	The Subcommittee met, pursuant to call, at 2:03 p.m., in Room 
334, Cannon House Office Building, Hon. Henry Brown [Chairman of the
 Subcommittee] Presiding.
 
	Present:  Representatives Brown of South Carolina, Miller of 
Florida, Michaud, and Snyder. 
 
	MR. BROWN OF SOUTH CAROLINA.  The Subcommittee will now come to 
order.  I would like to take a moment to welcome everyone to the first
 Subcommittee hearing of the second session of the 109th Congress.  I 
look very forward to again working with my good friend, Mr. Michaud, 
the Ranking Member of this Subcommittee from the beautiful State of 
Maine.  I am assuming it must be all white today.  It is all white 
down here.  I had the good fortune to visit Maine last year.
	I would also like to welcome my Subcommittee colleagues back and
 provide you fair warning that we have considerable amounts of work ahead
 of us this year, and it effectively starts with our hearing today 
focused on assessing, with the help of both the VA and the veteransï¿½ 
service organizations assembled here today, the Presidentï¿½s budget
 request for fiscal year 2007.
	Dr. Perlin, it seems we have come a long way since last year.  
I want to publicly applaud you, Secretary Nicholson, and the President 
for assembling a budget request that I feel speaks loudly to the needs 
of our Nationï¿½s veterans, and attempts to keep pace with the emerging 
health care requirements of those who have faithfully served this 
country.
	I think your 12.2% increase in a time of budgetary belt 
tightening is impressive and characteristic of an Administration that 
is continuing to defending the Nation.  Having said that, I share the 
concerns of a number of my colleagues, Republicans and Democrats alike,
 about the Administrationï¿½s continued reliance on legislative proposals
 requiring veterans to pay more out of their pockets for health care.
	I am afraid the political will of the Congress will simply not
 support such a proposal and I am equally concerned about the signal 
it sends to the country.  I am also a bit concerned about a reduction 
in appropriated dollars for medical and prosthetic research.  While I
 understand the research budget predicts an overall increase in 
research funding, the reliance on other Federal grants and private 
partners gives me pause.
	In my mind there are few greater pursuits aside from the 
provisions of direct medical care that can have a greater impact on 
meeting veteransï¿½ health care needs in the future than good 
old-fashioned clinical research.  I am sure you would agree.
	Even with those few concerns in mind, I am encouraged by the 
proposed increase of funding levels put forward in fiscal year 2007 
that would address important ongoing issues like long term care, 
mental health, and major and minor construction projects.
	I look forward to discussion here today on all these issues.  
I also look forward to hearing from the veterans service organizations
 assembled here today, those who represent the Independent Budget, and
 those who have alternative ideas on what VAï¿½s budget should look 
like.  Over the course of the next few weeks I want to work with all 
of you on issues where common ground can be found and to forge a solid 
budget of which all of us can be proud.
	Mr. Under Secretary, I would again like to thank you for your
 continued service to the Department and this Nation.  I would also 
like to remind you of a statement made by the Chairman of the Full 
Committee during last yearï¿½s budget hearings.  Chairman Buyer
 acknowledged that Secretary Nicholson had inherited the budget that 
you and he were forced to defend but he also warned that the Secretary 
would own it from now on. Today you own it and I look forward to your
 assessment of that proposal weighed against the Departmentï¿½s current
 requirements for health care.
	[The statement of Mr. Brown appears on p. 40]

	MR. BROWN OF SOUTH CAROLINA.  At this time, I now yield to our 
Ranking Member, Mr. Michaud, for an opening statement.
	MR. MICHAUD.  Thank you very much, Mr. Chairman.  I would like 
to welcome both panels and also wish everyone a happy Valentineï¿½s Day.
	I want to thank you, Mr. Chairman, for holding this hearing to 
examine in more depth the fiscal year 2007 budget for veteransï¿½ medical 
care proposed by the President.  I look forward to working with you to 
make sure that the budget reflects our Nationï¿½s full debt of gratitude 
to our veterans, the men and women who answered the call to service, 
whether it was combat or whether they wore a uniform as a career.
	I am pleased that the VAï¿½s proposed budget for fiscal year 
2007 includes increases in an attempt to meet the needs of our 
veterans.  However, in the brief time that I had a chance to look at
 the proposed budget, it is clear that the impact of this budget 
proposal does not meet the much needed efforts of our veterans.
	Several proposals are nonstarters, as the Chairman had 
mentioned.  I will oppose any proposed enrollment fees, increased 
copayments and other efforts to place the burden of payment on the 
backs of our veterans who are seeking treatment from VA.  These 
proposals finance VAï¿½s health care out of the pockets of our veterans.
	The Administration calculates that its proposals will also 
discourage some 200,000 patients from continuing their treatment at 
the VA.  Some suggest that fees and increased copayments are
 reasonable policies given the Presidentï¿½s proposal for military 
retirees.
	The systems are very different in key respects.  The VA 
proposed fees and increased copayments greatly affects priority 7ï¿½s
 and priority 8ï¿½s veterans, most of whom are over age 65.  TRICARE 
for Life beneficiaries, who are over 65, do not have to pay any 
enrollment fees and TRICARE for Life pays their Medicare deductible
 and copayments.  Most importantly, TRICARE for Life beneficiaries 
can count on mandatory funding to pay for their health care.
	If we are to import anything from the TRICARE system into the 
VA health care system, it should be the mandatory funding of TRICARE 
for Life.
	I am troubled by the Administrationï¿½s claim that the budget 
has a $3.5 billion increase when its budget request claims $1 billion 
in fiscal year 2007 in savings from efficiencies.  The recently 
published GAO report, requested by Ranking Member Evans, found that 
the VA was unable to provide any support for the estimates of savings 
through efficiencies in the Presidentï¿½s past budget request.  Given 
the GAO found that the VA lacks a methodology for even making the 
savings assumptions about efficiencies, you can understand my concerns
 when you look at these efficiencies.  Veterans health care needs real
 dollars, not smoke and mirrors on accounting methods.  It needs the 
actual dollars.
	VA also was proposing to continue the temporary ban on allowing 
new priority 8 veterans into the VA system.  This policy has shut out 
over a number of years more than 2,403 Maine veterans, who have turned 
to the VA asking for their earned benefits, and they continue to do 
so.  Rather than seek needed funding for these veterans, the 
Administration is seeking to keep the door closed to these veterans.
	I disagree with this approach.  In fact, Maine has a program 
and hopefully other States will adopt this program called Project I 
Served.  It encourages all veterans regardless of category to attempt 
to enroll in the VA system so that we can understand what the real 
need is out there.  I think that it is an important program and 
hopefully other states will adopt it as well.
	Finally, at the last weekï¿½s full committee hearing on the 
budget, the Administration acknowledged that it was violating the 
law by proposing to reduce the VAï¿½s own capacity to provide nursing
 home care.  The law requires the VA to have a capacity of 13,391 
veterans, the same as it had in 1998.  The VA wants to cut this 
capacity by 17 percent.  It is wrong for the VA to ignore the law, 
especially at a time when more veterans are aging and the need for 
this type of care is growing.  
	I am also concerned with a report of VA facilities experiencing
 budget short falls.  We heard that from Congressman Miller and others 
last week.
	We all want to do right by our veterans.  Dr. Perlin, I want 
to applaud you and the VA employees for the high quality care that the 
VA does provide to millions of veterans and I also want to commend the 
workers of VA for the courage and dedication during the Hurricane 
Katrina and Rita, and I look forward to working with you.
	Our returning veterans and veterans from previous wars count 
on us to get this budget right, and I look forward to this Subcommittee
 doing its work and look forward to working with you, Dr. Perlin, and 
to make sure that we get the adequate resources that we need to do 
right by our veterans.  It is the right thing to do, and I look 
forward to working with you to make sure that we do the right thing.
	Thank you very much, Mr. Chairman.
	[The statement of Mr. Michaud appears on p. 45]

	MR. BROWN OF SOUTH CAROLINA.  Thank you.  I note we are joined 
by Dr. Snyder.  Dr. Snyder, do you have any opening statements?
	MR. SNYDER.  No.
	MR. BROWN OF SOUTH CAROLINA.  Thanks for joining us.
	Before we introduce the panel, I would like to enter into the 
record a letter from the Friends of VA Medical Care and Health Research
 proposing objection to the research budget cut.  Without objection, I 
would like to enter this into the record.
	[The letter appears on p. 105]

	MR. BROWN OF SOUTH CAROLINA.  Our first panel is Dr. Perlin.  
Would you please take a moment to introduce the members of your group 
with you.




STATEMENT OF HON. JONATHAN B. PERLIN, M.D., PH.D.,
	MSHA, FACP, UNDER SECRETARY FOR HEALTH DEPART-
	MENT OF VETERANS AFFAIRS, ACCOMPANIED BY BRIGA-
	DIER GENERAL MICHAEL J. KUSSMAN, M.D., M.S., MACP
	(U.S. ARMY RETIRED), PRINCIPAL DEPUTY UNDER SECRE-
	TARY FOR HEALTH FOR VETERANS HEALTH ADMINISTRA-
	TION, RITA A REED, PRINCIPAL DEPUTY ASSISTANT SEC-
	RETARY FOR MANAGEMENT, DEPARTMENT OF VETERANS
	AFFAIRS, JAMES F. BURRIS, M.D., CHIEF CONSULTANT
	FOR GERIATRICS AND EXTENDED CARE, DEPARTMENT OF
	VETERANS AFFAIRS, AND MARK SHELHORSE, M.D., DEPU-
	TY CHIEF PATIENT CARE SERVICES OFFICER FOR MEN-
	TAL HEALTH, DEPARTMENT OF VETERANS AFFAIRS

	DR. PERLIN.  Thank you and good afternoon, Mr. Chairman, 
Ranking Member Michaud and Dr. Snyder.  I am pleased to be here 
today to discuss the Veterans Health Administration Budget, and I know 
this is something this committee not only takes seriously, but makes 
sure to get a close view of how VA operates.  I want to thank both 
the Chairman and the Ranking Member for coming to the Gulf Coast 
this summer and seeing the heroism of the work, but also the extent 
of the challenge that our employees faced.  
	I am pleased to be joined today, going from my right to left,
 by Dr. Jim Burris, who is the Chief Consultant for Geriatrics and 
Extended Care; by Ms. Rita Reed, Principal Deputy Assistant Secretary 
for Finance and Budget; Mr. Jimmy Norris, who is our Veterans Health
 Administration Chief Financial Officer; Dr. Michael Kussman, Under 
Secretary for Health, Dr. Mike Shelhorse, who is our Acting Deputy 
Chief of Patient Care Services for Mental Health Care.  I would like 
to request your permission to enter the full statement into the record.
	MR. BROWN OF SOUTH CAROLINA.  Without objection.
	DR. PERLIN.  Thank you, sir.  Mr. Chairman, the VAï¿½s fiscal 
2007 year budget totals $34.3 billion, an increase of $3.5 billion 
over fiscal year 2006 request.  This represents an 11.3 percent 
increase, including $2.8 billion we estimate we will collect through 
the medical care collections fund.  It is the largest dollar increase 
for VA medical care ever requested by a President.  The proposed 
increase will allow VHA to continue to provide the highest quality 
care of any provider of health care in the Nation and in the world.
	I am proud to note that our ability to provide the best care
 anywhere has been extensively documented in the media, in articles 
in Washington Monthly, The Journal of American Medical Association, 
U.S. News and World Report, New York Times, The Washington Post, most
 recently, The National Journal, among others.
	For the 6th consecutive year, VA has also set the benchmark 
for health care satisfaction in both public and private sectors.  
These external acknowledgements of the superior quality of VAï¿½s health 
care reinforce our Departmentï¿½s own findings.  VA not only leads the 
Nation in quality care but we are showing the health care professions 
an indeed the world how quality can be measured and improved.
	Fiscal year 2007 we expect to treat nearly 5.3 million 
patients, including more than 100,000 combat veterans in Operations 
Enduring Freedom and Iraqi Freedom.  To date, over 433,000 veterans of 
the two operations have separated from service and approximately 
119,200 have come to VHA to meet some or all of their health care needs.
  More than 36,700 hundred of these individuals visited vet centers at 
least once.  Last year, VA began hiring an additional 50 Operation 
Iraqi freedom and Enduring Freedom veterans to enhance our ability to 
reach out to their comrades through our readjustment counseling or vet 
center program, joining the 50 original OIF/OEF veterans who were 
previously hired into those roles.
	We continue to take steps to insure that our health care 
forecasting model projects the needs of OIF and OEF veterans and based 
on these actuarial adjustments we have made additional investments in 
key services such as mental health care, prosthetics and dental care 
to insure that we will be able to continue to successfully meet the 
health care needs of those returning veterans and the needs of 
veterans from other eras.
	Three key factors drive our additional funding requirement 
for fiscal year 2007.  These are inflation; the aging of our VA 
veteran population; and, third, the greater intensity, complexity of 
the services provided when veterans seek care.  We anticipate a 
significant increase in the use of our health care services in 2007 
for several reasons.  These include the utilization trends for health 
care in the United States, which are continuing as they have for 
several years to increase, as well as general medical practice 
patterns throughout the Nation that have resulted in an increase in 
the intensity of health care services provided per patient due to the 
growing use of complex diagnostic tests, advanced pharmaceuticals and
 biologicals and other sophisticated medical services.
	This rising intensity of care can be seen in the VAï¿½s health 
care system as well.  It has contributed to the higher quality of care 
and improved patient outcomes but requires additional resources to 
continue to provide the kind of care Americaï¿½s veterans have earned.
	In long term care VAï¿½s 2007 request includes over $4.3 billion 
for long term care, $229 million dollars more than the 2006 level.  We 
plan to expand our extended care services.  Percentage increase in 
funding for non-institutional care grows about twice that for 
institutional care.
	VA works to deliver care in the least restrictive environment 
for veterans.  Our emphasis is on community-based an in-home care to 
provide extended care services to veterans in a more clinically 
appropriate setting and closer to where they live and in the comfort 
of their family and familiar settings.
	In mental health, the Departmentï¿½s 2007 request includes 
nearly $3.2 billion.  This is $339 million over the 2006 level and 
the provides comprehensive mental health services to veterans.  
These additional funds help insure the VA continues to realize the 
aspirations of the Presidentï¿½s New Freedom Commission Report as 
embodied in VAï¿½s mental health strategic plan and will continue 
working toward restoration of function for mental health patients 
throughout our system.
	VA will continue to place particular emphasis on providing care 
to those suffering from a spectrum of combat stress reactions ranging
 from normal and expected readjustment issues to post-traumatic stress
 disorder, all of which may occur as a result of service in combat in
 Operations Enduring Freedom and Iraqi Freedom.  This includes the 
December, 2005 designation of three new centers of excellence in Waco,
 Texas, San Diego, California, and Canandaguia, New York, devoted to 
advancing the understanding and care of mental illness.
	In research, the Presidentï¿½s 2007 budget also includes $399 
million to support advances in medical and prosthetic research.  Last 
year VAï¿½s partnering with a major pharmaceutical company produced a 
vaccine that decreases the incidence and severity of shingles and 
will become a world wide practice standard for preventive care.
	This investigational study was one of the largest adult
 vaccines studies ever conducted.  Through recognized studies such 
as these, VA continues to able to attract, what I believe, is the 
best team of investigational researchers in the world; scientists who
 are also physicians and nurses and psychologists and pharmacists and 
other health professionals who also bring state of the art knowledge 
and skills to the care of Americaï¿½s veterans.
	The 2007 budget also includes $832 million for IT services for
 our medical care program.  The most critical IT project or our medical 
care program is the continued operation of our Departmentï¿½s electronic 
health record, one of the crown jewels in VA health care.  Our 
electronic health care system has been recognize worldwide for its 
ability to increase productivity, safety, quality and to increase 
efficiency.
	The President has made the implementation of the electronic 
health record throughout all of health care in the United States one 
of his highest priorities and VHA is proud to support the President 
in this vital effort.
	In summary, Mr. Chairman, the $34.3 billion that the President 
is requesting for 2007 will provide the resources necessary for VHA to 
provide timely, high quality care to nearly 5.3 million veterans, 
especially those with service connected disabilities, lower incomes 
or special health care needs.
	I look forward to working with the members of this 
Subcommittee to continue our Departmentï¿½s tradition of providing 
timely, high quality services to those who help defend and preserve 
freedom around the world.
	So I thank you, Mr. Chairman, for the opportunity to be here 
today and for your continued support of VA and the veterans.  At this 
time my colleagues and I would be pleased to answer any questions that 
you or other members of the Subcommittee may have.  Thank you.
	[The statement of Dr. Perlin appears on p. 48]

	MR. BROWN OF SOUTH CAROLINA.  I thank you, Dr. Perlin, and we 
do have some questions we would like to ask if you would bear with us 
just for a moment.
	DR. PERLIN.  Mr. Chairman, one question.  We had heard there 
may be some interest in going through a review of the budget.  That is 
the reason the projector is here.  If you would like to go through with 
that, we would be happy to do that.  Alternatively, our chief financial
 officer would be delighted to go through it with staff at another time.
	MR. BROWN OF SOUTH CAROLINA.  How long would it take, do you 
think?
	DR. PERLIN.  Probably not more than 10 minutes.
	MR. BROWN OF SOUTH CAROLINA.  Dr. Snyder, do you have a 
position on that?
	MR. SNYDER.  I will defer to your good judgment, Mr. Chairman.
	MR. BROWN OF SOUTH CAROLINA.  Dr. Perlin, the staff says they 
have the copies and already have been briefed.  So if you would go with
 us on the question period, and maybe that would help us get through. 
 I appreciate the thoroughness of your presentation, and I think you 
covered a lot of points. This would give us a chance to utilize your 
time more valuably just by responding to these questions.
	DR. PERLIN.  Thank you, sir.
	MR. BROWN OF SOUTH CAROLINA.  If I may, according to the 
budget submission, the VA anticipates a $13 million reduction in the
 appropriation request for VA research programs.  I know you went 
through a lot of programs where additional money was being spent.  
While research funding overall is expected to increase due to other 
Federal grants and resources, why is veterans research taking a back 
seat in the budget proposal?
	DR. PERLIN.  Thank you, Mr. Chairman.  I appreciate the 
concern of this Committee.  I have a bias; I am trained as a researcher
 and this is an area that is particularly important to us.  It is 
correct that there is a $13 million decrease in the 2007 appropriation 
request over the 2006 enacted.  I would note that there is an increase 
of the same amount in the medical services budget, and it is 
anticipated that this direct appropriation and additional support can 
be leveraged to obtain additional Federal resources and nonfederal 
resources in the amount of $17 million, for a net increase in the size 
of the research program of $17 million.
	MR. BROWN OF SOUTH CAROLINA.  Further, I am hoping that you 
can comment on the process we started down in my district between the 
VA and the Medical University of South Carolina.  As we consider major
 and minor construction projects on an ongoing basis, can you provide 
me with some type of assurance that the VA and University model and 
their synergy can be seriously considered when new construction 
projects are put on the table?  Also, can you provide information on 
any other VA facilities where this type of model may have clinical and
 financial utilities in the near future?
	DR. PERLIN.  Thank you, Mr. Chairman, for the opportunity to 
comment on that.  I want to thank you and Chairman Buyer and the 
entire team because looking at the opportunities for potential 
collaboration at Charleston allowed us essentially not only to look 
to what we might be able to do to improve veteran care in the
 Charleston, South Carolina area and create synergies with the
 community, but how that might apply more broadly.
	One immediate outcome of that collaborative effort with 
Medical University of South Carolina was the ability to determine 
that it would be useful to share some high tech equipment for very 
advanced radiation therapy and angiography in a process in which VA 
would provide the equipment and that the services would be provided 
at free or reduced cost to veterans.  So this would advance care not
 only for veterans, but citizens in the State of South Carolina.  So
 we think we have a template.
	You asked how this might be applied, and in the spirit of that
 being a template, it is really a tool that we hope to look at other
 collaborations when we have potential for developments at new sites.  
Of course, as we contemplate how to recover in New Orleans, and you saw
 the extent of the damage yourself, and Congressman Michaud as well.  We
 have academic affiliations there.  And I think it appropriate that we 
use that sort of analysis to determine what the most efficient, most
 effective, highest quality approach to health care is, and we will 
be using that as a lens to look at that sort of relationship.
	MR. BROWN OF SOUTH CAROLINA.  How is New Orleans coming?  Have 
you been able to make any kind of determinations whether you are going 
to be able to have some joint collaboration with any of those hospitals 
there?  Are any of them back in operation yet?
	DR. PERLIN.  Sir, the city hospitals are not up to full level 
as they were before the storm.  In terms of the academic affiliates, I
 understand that parts of Tulane University have resumed activity in 
town.  The hospitals of Louisiana State University which operate the 
Charity System as well as University Hospital have a little bit deeper 
damage.
	We affiliate and partner with both, and in fact, in terms of 
answering your question, we formally owe you a report of our plan on 
the 28th of this month.  We will be actually continuing negotiations, 
which are really very promising in terms of looking at ways that we 
might be most effective and efficient in the delivery of services.
	I am proud to say that we are not only coming back in terms of
 inpatient care but we are back in terms of outpatient care.  The week
 before Christmas, I was really privileged to go down and open up an
 outpatient clinic right adjacent to the hospital site, in the 
building that has eight floors of parking deck and then a nursing 
home above it; that nursing home is now offering primary care, and 
within a couple of weeks specialty care services as well.
	As well, I commend the staff of VISN 16 under the leadership 
of Dr. Lynch for really expediting three clinics from a very temporary
 status into a much more robust form to really serve those veterans 
who were forced to leave the downtown city proper.
	MR. BROWN OF SOUTH CAROLINA.  Do you get a feel for whether
 many of them are coming back or how the patient load compares to, 
say, the same time last year?
	DR. PERLIN.  That is such an important question because it,
 of course, is key to how we consider getting back in town.  It is 
pretty clear that while the city population may not reach the 
prestorm levels, a lot of those veterans only went a short distance 
to a ring around the city.  And even with very conservative estimates
 about the repopulation of New Orleans, it is clear over the 20-year 
period there will still be growth in the utilization of services in 
the metropolitan area and part of Louisiana, and even Mississippi.
	MR. BROWN OF SOUTH CAROLINA.  The 2007 budget before us calls 
for an increase of $339 million above last yearï¿½s level for mental 
health services.  In the absence of a concrete strategic plan is this 
adequate to address the new realities, especially in areas like PTSD?
	DR. PERLIN.  The increase of $339 million actually brings the 
mental health, in a very restricted statutorily defined definition, to
 $3.2 billion.  It absolutely increases the capacity in our specific 
areas such as PTSD care.  In fact, there will be PTSD care teams at 
every hospital, and in fact, PTSD specialists available throughout 
all of the of medical centers and system.
	MR. BROWN OF SOUTH CAROLINA.  One last question.  I am 
interested in the Departmentï¿½s opinion on Senate bill 716, the Vet 
Center Enhancement Act of 2005.  You know, it calls for 50 additional 
FTEEï¿½s to be used for outreach and counseling at the now 207 Vet 
Centers around the country, while expanding bereavement eligibility 
to the parents of those who are killed in service to this country.
	I know that we have hired roughly 200 new FTEEï¿½s for this role 
over the past few years.  Can you tell me whether or not those FTEEï¿½s 
are meeting the current requirements at the Vet Centers?
	DR. PERLIN.  Thank you for that question.  Yes, the FTEE who 
are these global war on terror outreach counselors are themselves 
veterans, and they are, in fact, going out to demobilizing units and 
meeting with separating service members.  Sometimes when the unit 
comes back to drill, they meet again with them, and they really are 
an excellent group of individuals.
	Our Department, and I honestly cannot remember the formal 
opinion of this prepared legislation, but this would formalize what, in 
fact, we are doing, which is to provide that outreach.
	As to the bereavement counseling aspect, regrettably, there 
are times when it is necessary to provide counseling because there has 
been a loss of a service member, and our vet centers and the counselors 
do step forward, are ready to provide grief counseling to families and 
all survivors of a deceased service member.
	MR. BROWN OF SOUTH CAROLINA.  Do you think the 50 FTEEï¿½s are 
adequate?  Is there enough demand to utilize 50 additional FTEEï¿½s?
	DR. PERLIN.  As I understand this bill, and I may need to check, 
is that this would formalize not the first 50 FTEï¿½s, but the second
 FTEï¿½s who are already on board.  It would change their appointment 
category from a term limited to a permanent, which is something that 
I would have no objection to, particularly as some of the older 
members of the counselor cohort from the Vietnam era retire.
	MR. BROWN OF SOUTH CAROLINA.  Thank you.  Thank you very much.
	Mr. Michaud.  
	MR. MICHAUD.  Thank you very much, Mr. Chairman.
	Dr. Perlin, you had talked about the increase in budget for VA. 
 Having been Chair of the Appropriation Committee for many years in the 
Maine legislature, I look at when we give increases as far as the 
outcomes.  And when you look at the need out there, particularly with
 the World War II veterans, as they get up in age, they require more 
services, plus the war in Iraq and Afghanistan, where having men and 
women come back and also the increase in need.  Even though there has 
been an increase, my concern is the fact that we are not meeting that 
need because of these components.  Although I do agree with you as far 
as the quality of care for those veterans who receive care from the VA.
  I have heard nothing but high remarks for them, so I commend you for 
that.
	On fiscal year 2005 and 2006 budget projections and assumptions 
were off the mark.  Fortunately, through a bipartisan effort Congress,
 corrected this shortfall and I am very concerned when I am hearing 
from facilities who are struggling to make ends meet and are facing 
shortfalls, and as the Chairman mentioned, this is your budget, you 
own it, you canï¿½t blame it on the previous administration for that of 
the VA.
	Some of the shortfalls that we are hearing and as brought up 
last week as well with the Secretary is that the VA Medical Center at 
West Palm Beach is facing an $18 million shortfall, San Diego facility,
 an $8 million shortfall, the facility in Seattle, a $4 million 
shortfall.  Iowa City is projecting it will need to convert nearly $2 
million in equipment dollars.  Clarksburg, West Virginia will have a 
$4.5 million shortfall.  There are many more.
	When the shortfalls were brought up last week, you said you 
would look into it.  How many VISNï¿½s out there will be facing a 
shortfall?
	DR. PERLIN.  First, I want to thank you for your support of 
budget amendments in 2005 and 2006 in response to the Presidentï¿½s 
request.  The 2007 budget is indeed Secretary Nicholsonï¿½s and my 
budget.  We are able to understand and describe that this is a very 
robust increase relative to growth.
	To your question of the current status of facilities, networks 
in terms of making sure they have the resources to provide care to 
veterans this year, I have queried each of the networks and they have 
the resources to provide care throughout the system to veterans.
	Are there facilities that, at any point, which in a very early 
point in the year may project that things will be tighter than they 
would want?  I think it is fair to say there are facilities that 
individually may believe that they face a challenge.
	Our network directors, however, have the responsibility of 
making the allocations within the networks and moving dollars around. 
 We feel pretty good about the VERA, Veterans Equitable Resource 
Allocation, model which distributes dollars to the network on the 
basis of a formula based on the complexity of patients and the
 historic workload.
	On the other hand, within the network there are a lot of 
judgments that are made facility to facility and we will be working 
with network directors to make the adjustments in terms of the micro
 allocations to individual facilities to make sure that they have 
the resources necessary.
	I think Florida is a very interesting area.  If I remember 
off the top of my head, for this year the budget is $2.674 billion.  
This is over a of 9 percent increase in the face of a 3.6 percent 
increase in workload.
	So there is also a question I have to ask which is how do we 
improve efficiency in the use of those dollars, and I think that is a 
fair question as well and will be working to do that and working with 
the networks to move resources if there are particular issues.
	MR. MICHAUD.  I can appreciate that and I think you ought to 
do everything that you can to be efficient, but an $18 million 
shortfall is a significant shortfall, and there are shortfalls out
 there.  I have got, which I will not share with you, internal memos 
from the VA from different VISNï¿½s telling about their shortfall.  And 
if I have those memos, I am sure that central office should be aware 
of, the shortfalls.  
	Will you be requesting a supplemental budget to help address 
this issue, because it is an issue that when the Secretary first came
 on board I had talked about shortfalls and later in the year proved 
out that they were borrowing money from other VISNï¿½s just to meet the 
dramatic shortfall, and ultimately you came in and asked for this.
	What are you doing to monitor this, the shortfall in the VISNï¿½s 
to make sure that they are meeting needs.  I just visited Togus before 
I flew down here yesterday.  There are about 40 vacancies at Togus.  
They delayed hiring.  I am sure that is occurring throughout the 
Nation as far as hiring delays, as far as purchasing equipment.
	DR. PERLIN.  You have very important questions.  Let me be 
clear, we have the resources to provide high quality care to veterans 
this year.  I think it is important in terms of the use of the term 
shortfall to be clear in terms of the way funds may be reprogrammed 
and that is a technical and formal aspect and I would ask our chief 
financial officer Jimmy Norris, Mr. Norris to comment on that.
	MR. NORRIS.  Yes, sir.  We do monitor the VISN execution on a 
monthly basis in looking at that, and no one, no network director or 
VISN CFO has told me they are having a global problem or problem with 
their total amount of funding.  What we do know they are having a 
problem with is some out of balance in the accounts. We have three
 appropriations, and we are probably a little short in medical 
administration. We know there are some shortages out there in that
 account.  We are analyzing that.  We will probably be coming forth 
with a request to reprogram some money and move money around among 
accounts.
	But when we add it up at the bottom line we donï¿½t see any 
indication at this point, and it is early in the year, but we donï¿½t 
see any indication at this point that overall there is a shortfall.
	DR. PERLIN.  I would just add if I might that Secretary 
Nicholson made a commitment as well to meet with our oversight 
committees, appropriations committees quarterly and provide that 
information so that you have the information as we do to see if 
anything is getting out of kilter.
	I think it is well known that 2005 was a very tough year. 
 In retrospect, no one has any desire to recapitulate that.  This 
is something I can assure you we will monitor closely and look at 
those micro allocation aspects on the budget line appropriation 
transfers that Mr. Norris discussed as well.
	I should note that we also have a parallel set of briefings 
	with the Office of Management and Budget so that they are 
	apprised and know exactly how we are executing relative to 
	budget.
	MR. MICHAUD.  The VA National Leadership Board has a finance 
	committee that I believe is meeting shortly.  Will you, 
	Dr. Perlin, direct your staff to ask about these shortfalls at 
	the facilities and report to the Subcommittee the information 
	that you receive.  Because my concern is that VISN folks are 
	told not to ask for any additional money and to try to keep the 
	issue about the shortfall quiet.  And I hate to read about it 
	in the paper first before we hear from you.
	My second question is I have heard that facilities must pay back 
	the amount that they received to cover the last yearï¿½s 
	shortfall.  What process do you deal with VISNï¿½s that had to 
	borrow money, as far as paying it back?
	DR. PERLIN.  If I might answer your first question, which is I 
	believe the finance committee is actually meeting yesterday and 
	today in conjunction with the national leadership board.  In 
	fact, this is something that is discussed there but it is 
	something that I, because of my interest, asked our office to 
	query each of the network directors, and do this periodically.
	As to the second part, I donï¿½t know whether we have determined 
	exactly what the manner of repayment will be, and I might ask 
	Mr. Norris to comment on that and whether we are maybe granting
	any leniency.
	MR. NORRIS.  Sir, I am not sure I am familiar with that.  We 
	did not provide any money to any VISNï¿½s or facilities that I 
	am aware of that we have asked for them to return in a 
	subsequent year.  I do think there was some trading among 
	themselves out there and perhaps they made deals that they 
	would trade and pay back.  I would be happy to follow up an 
	check that out; I am just not aware of it myself at this point.
	MR. MICHAUD.  So you think it is within VISNï¿½s if they 
	borrowed money from another VISN.
	MR. NORRIS.  Yes, sir.
	MR. MICHAUD.  I appreciate you checking on that.
	MR. NORRIS.  I think the reason is some of them were better off
	in their capital areas than others were and they were able to 
	forego some of those things and so they could delay some things
	to a subsequent year and help their counterparts out.  I will 
	be happy to check that.
	MR. MICHAUD.  Thank you.
	Last week, the Secretary testified that in the budget they plan
	on opening, I believe it is 43 new CBOCï¿½s.  The CARES process
	identified the need for CBOCï¿½s in VISN 1 and we, Mr. Brown and
	I had a hearing actually in Maine and that was one of the issues
	that came up, Maine being a rural state and actually 16 percent
	of our population veterans, one of the highest percentage in the
	country.
	Presuming that you receive the budget request for fiscal year 
	2007, or hopefully an improved budget for fiscal year 2007, 
	would you envision that one of the 43 CBOCï¿½s actually as 
	predicted under the CARES process be in Maine?  
	DR. PERLIN.  I note that there are a number of CBOCï¿½s that have
	been identified in the CARES process for Maine specifically.  I 
	would prefer to look into the details and discuss with the 
	network.  As you know, the CBOCï¿½s process is a consideration 
	where a plan is put together that especially with those that 
	have been approved or identified in the CARES process meet 
	certain criteria in terms of need, access, in terms of capacity.
	But subsequently there is a process where an operational plan is
	put together, the network comes forward having to demonstrate 
	that they have the resources, and ultimately Secretarial approval
	is required.  And so it is something that has helped us improve 
	health care, it is helped us move to a model that helps to 
	promote health and prevent disease, so it is something that we 
	very much endorse.
	As I think you know, since 1996 we have increased the number of
	outpatient clinics by over 350 percent.  So we obviously 
	believe in this model and will open clinics as we can.
	MR. MICHAUD.  Thank you.  My last question, Mr. Chairman.  I 
	donï¿½t know off the top of your head, but if you can provide
	later on, it is either to Mr. Norris or Dr. Burris.  The VA is 
	budgeting to maintain an average daily census of 11,100 in 
	VA-operated nursing home units.  The law requires the VA to 
	maintain a level of 13,391.  How does the VA project the cost 
	to maintain the 11,100 ADC in fiscal year 2007, and how much 
	would it cost to maintain the statutory minimum of 13,391.  If
	you donï¿½t have those numbers with you, if you can provide it 
	in writing to the Committee.
	DR. PERLIN.  I think we probably should calculate those and 
	then provide those back to the Committee.  [This information 
	was not provided to the Committee.]
	MR. MICHAUD.  Thank you.  Thank you very much, Mr. Chairman.
	MR. BROWN OF SOUTH CAROLINA.  Thank you, Mr. Michaud.
	I will take this opportunity to enter Ms. Corrine Brownï¿½s 
	statement in the record, without objection.
	[The statement of Ms. Brown appears on p. 47]

	MR. BROWN OF SOUTH CAROLINA.  Dr. Snyder.
	MR. SNYDER.  Thank you, Mr. Chairman.  Dr. Perlin, I would 
	like to continue this discussion about the research numbers 
	that I had asked about the other day when you were here with
	the Secretary.  In Little Rock, we get very good feedback 
	about the patient care there and in your written statement you
	talk about the high quality of care.  In your section on 
	intensity of care, because of the increase of sophistication, 
	for want of better word, of the care, but a lot of it comes 
	from research, and a lot comes from research at the VA, so I 
	am having trouble reaching a conclusion about why this number 
	is not more robust in this budget at this time in our history.
		My math may not be right, but I think your research 
		number is 399 million, which you say is an increase of 
		17 million from 
	2006, is that correct?
	DR. PERLIN.  The 399 million; the direct appropriation is 
	$13 million less than the direct appropriation in the 2006 
	budget request.  $13 million is added to medical services and 
	17 million is what is anticipated to accrue from other research.
	MR. SNYDER.  So you are saying that is a net increase in the 
	research budget of 4 million?
	DR. PERLIN.  No, sir.  The 13 million that is being requested 
	for the direct research appropriation -- the direct research 
	appropriation is $13 million less.  Medical services support 
	component is $13 million more, offsetting any decrement in the 
	direct medical research appropriation.  So that is a sort of 
	net of zero.
	Then it is estimated that $13 million can be accrued from 
	Federal grants and $4 million from private foundation grants,
	for a net increase of 17 million.
	MR. SNYDER.  A net increase of 17 million.
	DR. PERLIN.  Yes.
	MR. SNYDER.  Over the budget.  I will begin with what I said,
	your number 399 million.  So for the last year it must have 
	been we are saying 282.  I am sorry; 382.  382 plus 17 gets me 
	to 399.
	DR. PERLIN.  No.  I need to sum up the different components of 
	the research budget.  I will just take a moment.
	MR. SNYDER.  I know this is important but we have limited time.
	I am going by your number and says it is $339 million to support
	VA medical and prosthetic program.  You stated that that is a 
	$17 million increase, because the 13 is a wash, so why am I
	going wrong by saying last yearï¿½s must have been 382?
	DR. PERLIN.  I am sorry if I made it confusing in terms of the
	terms.  The overall research resources are $1.649 billion, 
	$17 million more than the $1.632 last year, but you are 
	absolutely correct that the direct research support component of
	that actually is $13 million less than the 412 in last yearï¿½s 
	budget appropriation.
	MR. SNYDER.  I want you to help me then.  So we are saying the 
	total research budget is 1.65 billion, an increase of 17 million.
	I donï¿½t have a calculator here with me, but that must be a .01 
	increase or somewhere less than -- just a very minimal increase
	over 1.65 million.
	What do you consider is the medical inflation rate amongst VA 
	research.  How much increase do you need from year to year to 
	hold your own?
	DR. PERLIN.  I would have to get back on a specific number.  I 
	know that overall inflation will certainly be higher than the 
	number you have suggested.
	MR. SNYDER.  I know that but it is substantially higher than 
	the normal inflation rate on groceries and everything else, is
	it not?
	DR. PERLIN.  That would be correct.
	MR. SNYDER.  I am trying to get a feeling for how you all 
	arrived at a number when, you know, you are bragging on the
	research your doing at the VA and the kind of research you have 
	ongoing, bragging on the results, and then -- I donï¿½t know if 
	this is right or not, the FOVA letter today, they say it is 
	going to result in cutting 286 VA direct research employees. 
	Because of the inflation, they donï¿½t discuss that in detail, if
	you have a number that is essentially a hold your own number in
	nominal terms, it real terms it doesnï¿½t, and you end up in cuts
	in the VA budget.  This is a budget that cuts VA research and 
	you canï¿½t say that it is not.  It is a substantial cut in VA 
	research because of the medical research inflation rate, which
	is high.  Why would we end up -- is this an OMB thing?  Did you
	all ask for a higher number and OMB said no, we canï¿½t do that?
	DR. PERLIN.  I am not sure on that specific aspect.
	MR. SNYDER.  Is the number that is in this budget that you are
	testifying here today, is this adequate to do the job for 
	maintaining the level of research that is going on now at the
	VA?
	DR. PERLIN.  The proposed appropriation for direct research 
	support of $399 million will not maintain to the level of 
	activity of direct VA employees.  It does, however, allow for 
	leveraging for additional activity, other Federal grants, but 
	the direct answer to your question is no.
	MR. SNYDER.  Even if you achieve the level of research grants
	from outside entities, it wonï¿½t do it with the numbers you are
	giving me.
	DR. PERLIN.  In terms of the FTEE, the full-time employee 
	equivalence, you are correct.
	MR. SNYDER.  So why are we doing that, Dr. Perlin.  Are you 
	satisfied with this?
	DR. PERLIN.  I am a researcher by background so I have to 
	identify that I am very biased in that area.  I do know that the 
	research that is being conducted is increasingly focused on 
	veterans issues, but I also know research is one of the most 
	important ways of attracting topnotch physicians and scientists
	and, as I mentioned, nurses, psychologists and other health 
	care professionals to both advance the science in the interests
	of the health and well being of veterans and serve veterans 
	with patient care.
	MR. SNYDER.  My time is up, Dr. Perlin.  I have great respect 
	for you and the work you are doing.  I am glad you there. 
	Everything I have heard you say in your opening statement and 
	written statement in response to questions from the Chairman 
	and Mr. Michaud argue for a robust budget for research.  The 
	only thing that is inconsistent with that is the budget for
	research.
	I donï¿½t know where the problem is.  Somebody is trying to find 
	dollars to save in an area we ought to not find dollars to save
	in.  We ought to be doing it by increasing efficiencies and 
	then plussing up the numbers so more good things can be done.
	All your arguments point, we ought to be going in a different 
	direction because this budget is a cut in medical research in 
	real terms, and there is no way, I mean, as you acknowledge, 
	there is no way to get around it.
	I assume maybe we will have another round of questions, 
	Mr. Chairman.  
	MR. BROWN OF SOUTH CAROLINA.  Thank you, Dr. Snyder.  I would
	like to ask, on that same line of questioning, Dr. Perlin, is
	VA partnered with any other medical groups in research like 
	we have been asking you to do, to partner up with the health
	care delivery system?
	DR. PERLIN.  Are there partnerships going on in research; that
	answer is yes, there are absolutely partnerships going on in 
	research.  Part of the capacity of the VA to really provide
	cutting edge research are partnerships that exist not only 
	with 107 of the Nationï¿½s medical schools, but 1,500 programs 
	in health profession educations, partners as well with other
	Federal agencies, including obviously, Department of Health 
	and Human Services and all branches of the National Institutes
	of Health, but also with State agencies and of course the 
	Department of Defense.  So the answer to your question is 
	partnership is absolutely critical.
	Partnership also occurs in the private sector.  I mentioned in
	my opening statement a vaccine that will fundamentally change 
	preventive health care practice in adults, that was a 
	partnership with private sector bringing this vaccine to the 
	market, probably twice as fast as had it been done anywhere
	else other than in VA.
	MR. BROWN OF SOUTH CAROLINA.  I know we are reducing, the 
	funding just we put in the record earlier, but are we getting 
	the same bang for the buck by coordinating VAï¿½s research 
	activities with other partners?  I guess my concluding 
	question would be, are we effectively cutting down research 
	or trying to do it in a different way?
	DR. PERLIN.  Thank you.  I will answer your question now.  
	Yes, we are amplifying the investment that the American 
	taxpayer through Congress at the request of the administration
	makes in direct VA research.  $399 million in this yearï¿½s
	budget is a direct investment that we would ask for you to 
	make and to that budget additional funds are added for the 
	conduct of research in VA and those come from the National 
	Institutes of Health and from private sector, including
	pharmaceutical companies and other entities.  In fact, the
	Federal grants on the back of the $399 million in the direct
	research appropriation, and $366 million in the support for 
	that, that are part of medical services budget, provides 
	leverage to bring in an additional $376 million in Federal 
	grants and $208 million in private sector grants.
	MR. BROWN OF SOUTH CAROLINA.  Okay.  Thank you.  Thank you 
	very much.  We have been joined by Mr. Miller from Florida. 
	Do you have any questions?
	MR. MILLER.  Thank you, Mr. Chairman.  I also have a statement
	I would like to enter into the record.
	[Mr. Millerï¿½s statement was unavailable at press time.]

	MR. BROWN OF SOUTH CAROLINA.  Without objection.
	MR. MILLER.  I apologize for being late.  We are on the floor
	doing a resolution for the 65th anniversary of the USO.  You 
	probably already have covered this but, Dr. Perlin, I would 
	like to hear an answer and if you have already done it, you can
	encapsulate what you said prior to my arrival.  Given the 
	resistance of any enrollment fees in the past and increased 
	copays, why is VA doing that again?  In fact, it is the exact
	same policy.  Can you shed some light on it?
	DR. PERLIN.  This budget contains a request that we understand 
	emphatically has been rejected by Congress previously, and in
	the earlier comments today we heard emphatic concerns about the
	request for policies that would require priority 7 and priority 
	8 veterans to pay an enrollment fee of $250, sharing the cost of
	pharmaceuticals at a rate of $15. 
	DR. PERLIN.  And sharing the cost of pharmaceuticals at the rate
	of $15.  And I would note that the value of those policy 
	proposals is $795 million including an offset to the first-party
	collections.  And so I think, it is fair to say, as was indicated
	also earlier, that there is a belief that it is fair and 
	equitable to ask some veterans to share modestly in the cost of
	their health care.  We, nevertheless, hear your voice and 
	concerns about this.
	MR. MILLER.  Another question, if you would, in your testimony,
	you said that all of the resources for capital construction are
	going to be devoted toward achieving the goals of achieving
	delivering greater access for high quality health care for more 
	veterans as was the goal of the CARES report, and I think this 
	has been addressed, too.  And I donï¿½t think the information that 
	I got was correct.  So I am hoping that maybe I misinterpreted
	what was sent to me.  But given the unmistakable shifts in
	population along the gulf coast after the hurricanes last year,
	do you feel the current and projected population numbers should 
	be revisited and the 5-year capital plan adjusted accordingly?
	What I heard, somebody said was reported to this committee, was 
	that VA doesnï¿½t feel that the veterans moved away geographically
	from the New Orleans area but further than nonveterans.  And how
	do you know that?  And then answer that first question.
	DR. PERLIN.  Right.  Well, thank you.  This is an appropriate
	question in looking at how we best serve veterans in the areas 
	devastated by Hurricane Katrina.  I appreciate your support for
	helping us to provide that care back to those veterans.
	MR. MILLER.  Let me make sure you understand.  I want veteransï¿½
	health care for my veterans in northwest Florida, as well.  So 
	while I am concerned about making sure that those in New Orleans
	were taken care of, there was a declining veteran population
	prior to Hurricane Katrina in New Orleans, a growing population 
	in northwest Florida, and I donï¿½t know if we need to go back as 
	the old CARES report was established or if we need to open it 
	up again and say, things have changed.
	DR. PERLIN.  That is absolutely a fair question.  And I
	appreciate that.  I have done some research.  It is obviously a 
	question that is weighing heavily on my mind.
	What I understand both from the demographics in the area and from
	the actuaries, even with the most conservative projections, that
	there will be more veterans seeking care between now and 2023 in
	the New Orleans Metropolitan area.  It is also true -- I have the
	data as well --  that in your area of the country, there is also
	growth in veterans care.  But it does, even with an actuarial
	estimate that provides for minimal change, extreme change and a 
	moderate change in terms of resettling New Orleans proper, it is 
	absolutely clear, unequivocal, that there is growth in the use 
	of VA health care services in that region, sir.
	MR. MILLER.  Can you define for me the difference?  You say the 
	use of the facility, but is the use of the facility including
	veterans who donï¿½t live in metropolitan New Orleans?  It is 
	people who travel from out of the area to go to that facility; 
	correct?
	DR. PERLIN.  I want to be careful how I define this.  I am going 
	to use the CARES data and define the central southern market,
	which is how it is defined as the cachement of the hospitals 
	they listed previously to include 27 Louisiana parishes.  And 
	we know that there are a band of people who emigrated slightly
	to a perimeter around New Orleans are now using Hammonds,
	Slidell and La Place for a new CBOCs as well as Baton Rouge. 
	We know that Lake Pontchartrain area to the west of Homa, 
	straight west as opposed to the northwest and over to the east,
	Slidell, and in the northeast area, that there is growth in 
	those markets.  And there was already a population shift from
	one part of town to the suburban surrounding areas.  But it 
	is not people from a different part of the State or region.
	MR. MILLER.  Do you anticipate spending $800 million in the 
	New Orleans area for a new hospital?
	DR. PERLIN.  I believe that the numbers will come in well
	below that.  But we are looking at any number -- 
	MR. MILLER.  That was what was asked for in the supplemental 
	before we adjourned last year, and $753 million was stripped 
	from that supplemental.  So my question is, do you anticipate
	using those dollars for that?
	DR. PERLIN.  We -- I think the Secretary last week was 
	clear--that we plan to be back in New Orleans and that we 
	will be as efficient as possible in our operation and have a
	final budget estimate in the report due to you, sir, in
	Congress on the 28th of this month.
	MR. MILLER.  Thank you, Dr. Perlin.
	DR. PERLIN.  Thank you.
	MR. BROWN OF SOUTH CAROLINA.  Dr. Perlin, if you would bear with
	us, we would like Counsel to ask a question, particularly about 
	the inflation rate on health care delivery.
	MR. WEEKLY.  Dr. Perlin, from your testimony here today and from
	the Secretaryï¿½s testimony last week, the funding drivers 
	associated with this yearï¿½s budget request are fairly clear and 
	I think fairly well articulated in the testimony.  One is 
	inflation.  Two is the aging of VAï¿½s patient population, and the
	third is the greater intensity of the services provided.  While 
	we, I think, can wrestle with the latter two, that is aging and 
	the greater intensity of services, I think there are still some
	outstanding questions as it relates to inflation in particular.  
	Your testimony, the Presidentï¿½s budget proposal in particular, 
	suggests that a majority of medical services, not the least of
	which is the procurement of medical supplies and/or 
	pharmaceuticals, is tagged to medical CPI.
	We have heard on a number of occasions that VA, both in medical
	services as well as procurement, does things far more efficiently
	than the private sector.  So the question then becomes, and I 
	think -- I hope -- a logical one, is there not or would there
	not logically be a delta between the inflation rate that you 
	would normally witness at VA having statutory protection as it 
	relates to the procurement of pharmaceuticals and medical 
	devices et cetera and the medical procurement in the private 
	sector?
	And why then is the Presidentï¿½s budget and VA budgeting always 
	tagged to a higher medical inflation rate?  And this may be a 
	more appropriate question for Mr. Norris or Ms. Reed, but if you
	can address it, I would appreciate that.
	DR. PERLIN.  Let me start and I may turn to Mr. Norris to 
	amplify.  But first let me acknowledge and agree with the 
	economy of scale that exists in VAï¿½s national health system. 
	Our leverage, more efficient purchasing power, is clear cut. 
	As well, you have identified some statutory opportunities to 
	procure materiel, such as pharmaceuticals, at essentially 
	"best price," combined with efficient formulary management.  
	That does lead to certain efficiencies.  
	Our budget, and the model portion of that, in terms of 
	projecting what the demand for resources will be to care for the
	population includes the factors that you have mentioned.  There 
	is an inflation factor, and that is in part given to us.  And 
	that is, in this model, at about 4 percent.
	Now, I need to mention that the -- intensity of services, and 
	that approaches 1 percent, and just to be clear in what the 
	intensity is; it is the amount of care that is given within a
	particular type of service.
	And with advancing technologies, new biological products, 
	et cetera, that drives the cost up.  It also improves the
	outcome.  The utilization goes up by almost 1.2 percent.  And
	utilization is the number of the same services provided.  So 
	in addition to getting more care per unit intensity, there are
	also more units of service utilization, not unexpected given 
	that the population is one that tends to be older and typically
	sicker; with three additional physical and one additional 
	mental health diagnosis as compared to age-matched Americans 
	and oftentimes poorer, less resources.
	The aging and gender change also contributes to the cost of 
	the care.  And that approaches one and three quarters percent
	and then, with that, there are oftentimes shifts in income 
	within the population of veterans that use VA.  And that is 
	another three quarters of a percent right there.
	On top of that, we add certain things that we are intentionally
	doing to change how we deliver care.  In this model, there is
	nearly half a percent of increase in resources based on a very
	clear intent to improve and enhance the mental health services
	delivery in areas such as those we have discussed before.
	So, this model and our approach actually does exactly what you 
	have suggested.  It demonstrates that we approach with a lower
	rate of inflation than others might experience.  It also, I
	think, takes into account that we have a very complex and aging
	veteran population by and large.  And on top of that, there are
	some areas where we are making some very goal-directed 
	enhancements to service.
	MR. WEEKLY.  So if I understand you correctly, while it may be 
	true that the annual inflation rate, as it relates to medical
	services and procurement, may be dramatically lower, the other 
	factors that you just articulated make up for that and, in
	fact, overcompensate for a lower inflation rate leading to one
	that is consistent with the rest of the nation across the
	whole panoply of medical services?
	DR. PERLIN.  I think in short that is a reasonable 
	characterization.  The inflation rate for the same services for
	unchanging population would be lower when you take into account
	the demographics of this population and the needs.  It is a 
	higher number as you see before you in this very robust budget. 
	MR. BROWN OF SOUTH CAROLINA.  Thank you, Dr. Perlin.  I have
	one further question.  Can you tell me what, if any, progress
	has been made on the electronic exchange of medical information
	between DOD the VA at the polytrauma centers?
	DR. PERLIN.  Thank you, Mr. Chairman, for that question.  This 
	is an area that we think about daily.  In fact -- Dr. Kussman 
	and I were discussing that on the way over here today.  Where 
	electronic data exists within the Department of Defense, they 
	are transmitted to VA.  Not all data exists electronically.  But
	we are pleased to report that there are advances that allow us 
	to take better care of veterans.  For example at our polytrauma 
	units specifically, as you have identified, they now have access 
	to tap into the health records that exist at Walter Reed.  So 
	in the large picture, we are working toward interoperability, 
	the Joint Electronic Health Records Interoperability Program,
	and that is moving forward, where there are electronic data in 
	DOD -- those data are being mapped to the electronic health 
	record in VA, and where this data doesnï¿½t exist electronically
	or where it only exists some places electronically in some
	places like Walter Reed, we have increased access to that.  This
	is an area that the Secretary and deputy and I personally take
	an interest in and desire with you to push forward.
	MR. BROWN OF SOUTH CAROLINA.  Do you have target when you think
	the exchange will be transparent between DOD and VA, or is 
	there anything we can do legislatively to help accelerate that
	process?
	DR. PERLIN.  Well, first, thank you for your offer of support.
	And let us consider if there is anything that might accelerate 
	it.  But I believe there is a good bit of progress in the first
	stage; the Federal Health Information Exchange (FHIE) created 
	a repository of, predominantly laboratory and pharmacy data,
	but electronic data that VA can now reach into essentially as
	its repository and pick out that information.  I personally
	have used that information to look up bits of patientsï¿½ records
	for a veteran who has some electronic data.  And that is 
	available nationally.  This year, we are completing the piloting
	of BHIE, the Bidirectional Health Information Exchange.  And 
	this will allow realtime transfer of pharmacy and lab services.
	The end goal is the full joint electronic health record 
	interoperability and the time course for that is completion of
	our Health Data Repository, HDR, and completion of DODï¿½s
	Clinical Data Repository, CDR, and only the way we in government
	can do, putting CDR and HDR together is the acronym for CHDR,
	and the goal for CHDR is, I hope, within the next couple to
	3 years.  And then we should have seamless interoperability 
	of our health records.
	MR. BROWN OF SOUTH CAROLINA.  Is there a system in place to be
	absolutely sure that we arenï¿½t leaving any third party payee 
	on the table?  
	DR. PERLIN.  This is a great question.  And I think it is an
	opportunity to really identify that there has been just 
	incredible progress in the third-party collections.  Even absent
	any of the policy proposals that were discussed earlier today, 
	I think you see on this curve over the last 6 years that in 
	2000, the collections were $573 million, and even absent any 
	additional policy proposals, in 2007, we would anticipate 2.288,
	really, $2.3 billion of collection, pretty significant growth.
	We use the same sort of actuarial models to estimate who has
	insurance, and indeed, we try to determine this.  I canï¿½t tell
	you that we would never leave money on the table.  What I can 
	tell you is that we are ambitious and assertive in terms of 
	trying to collect that and appreciate the support of this 
	committee in terms of improving the efficiency and timeliness 
	of collections.
	MR. BROWN OF SOUTH CAROLINA. Thank you, Dr. Perlin, and we 
	certainly would like to do what we can to enhance that.  And, 
	remove? I know it is probably difficult to estimate, but we 
	move from half a billion to almost $2.6 million did you say?
	DR. PERLIN.  2.3, sir.
	MR. BROWN OF SOUTH CAROLINA.  $2.3 million, in what, 5 years?
	DR. PERLIN.  In the 2007 budget, without any change in policy,
	it will be $2.054 billion we estimate at the end of this year.
	MR. BROWN OF SOUTH CAROLINA.  So based on that scenario, you 
	think you maximized it, or do you think we are 50 percent
	there, 35 percent there, or 90 percent there?
	DR. PERLIN.  I think we are getting -- I think it is
	substantial progress.  And I canï¿½t give you a specific
	percentage.  I think it is probably very, very high, and I 
	would be pleased to provide better quantitative estimate for
	the record.
	MR. BROWN OF SOUTH CAROLINA.  Thank you very much. Mr. Michaud?
	MR. MICHAUD.  Thank you, Mr. Chairman.
	Mr. Norris, did you or do you plain to make a presentation to 
	the national leadership board on the VAï¿½s fiscal year 2006 
	budget?  Have you already done so, or do you plan on doing it?
	MR. NORRIS.  Yes, sir, I plan to update that body every month
	with the status of where we think we are financially.
	MR. MICHAUD.  Would you please provide the committee with a
	copy of the January and February report?
	MR. NORRIS.  Yes, sir.
	MR. MICHAUD.  Thank you.  My next question is about
	prescription drugs. What has as the CBO given the VA as 
	estimates when you negotiate for prescription drugs?  Have 
	they put a number with that as far as the savings, and is that 
	calculated?  What is the methodology that they use, and is 
	that calculated when you put your budget together?
	DR. PERLIN.  I think that is a great question.  We estimate 
	roughly that the savings approach, a billion dollars a year in
	terms of the pharmaceutical savings due to a variety of factors.
	MR. MICHAUD.  What method, does OMB, use to do that?  Or do 
	they pretty much take whatever number you give them?
	DR. PERLIN.  OMB has recognized that we are extremely efficient
	in this.  You mentioned CBO, and in point of fact, there have 
	been estimates of VAï¿½s efficiency, and I believe that has been
	one of the sources, sir.
	MR. MICHAUD.  The VA did a mental health model to project
	demand on returning soldiers.  Returning soldiers account for 
	roughly 2 percent of the VAï¿½s overall patient workload but 
	nearly 6 percent of the PTSD patient workload.
	Has VA revised its mental health demand model to reflect this
	disproportionate increase in workload, and was that budget 
	based on that revised model?
	DR. PERLIN.  I would ask Dr. Mark Shelhorse to talk about what
	some of the percentages have been.  I would be happy to follow 
	that with some comment on the budget estimates.
	DR. SHELHORSE.  Yes, sir.  We are very sensitive to the issue
	of Post-Traumatic Stress Disorder population In the OIF/OEF
	returnees, last year, the figures were indeed 5 percent of the 
	total.  And it is modifying a little bit as the overall number 
	of PTSD numbers of cases goes up and fluctuate between 3 to
	5 percent right now.  We are very acutely aware that we need 
	to maintain those programs.  And in 2005, we put $20 million 
	toward additional programs for PTSD and OIF programs.  That
	accounted for 44 new programs that focus purely on the 
	Operation Enduring Freedom and Iraqi Freedom veterans that are
	returning.  And we called those Veterans Outreach and 
	Enhancement Centers.  They go out, identify those veterans, try
	to educate them as to what services are available, what kind of
	symptoms they might expect, et cetera.  We also put out 43 new
	programs for Post-Traumatic Stress Disorder.
	In 2006, we will invest another $29 million in PTSD and OIF 
	programs.  And that money is yet to be distributed in the 
	field.  We are in the process of choosing those programs right
	now.
	The model itself was a model that was generated slightly before
	the conflict, before we knew how many returnees we would get. 
	It predicts PTSD population based on residential treatment beds,
	which are the comparable beds that would be used in the 
	community for the types of programs that we have.
	It is not sensitive enough to extract OIF/OEF veterans out of 
	the current model.  But we are using the model in terms of 
	projection of PTSD need for the future.  We have asked divisions
	to look at their gaps and address where the programs need to be 
	and, in fact, have used that for the 2006 distribution, with the
	idea of plugging in any gaps that might be in place and making 
	sure those veterans have access to care when they need it and 
	where they need it.
	MR. MICHAUD.  If I may ask a follow-up question, Mr. Chairman.
	The Department of Defense has a new program, The Post-Deployment
	Health Reassessment.  And this pilot, nearly 48 percent of the
	service members are referred to the VA.  How does the VA support
	that program, number one?  But how do you keep track of what 
	they are doing?
	DR. PERLIN.  Thank you for that question.  The PDHRA, 
	Post-Deployment Health Reassessment, is really a very noble 
	effort to follow up between 90 and 180 days after deactivation.
	And this program is being conducted in many small groups, 
	60 service members at a time.
	In point of fact, to date, we have actually had both VHA and 
	VBA personnel there, and so the cognizance of what is going on
	is really very immediate.
	I think you have hit a very salient feature, and one that we
	were also quite attuned to is that the survey is extremely 
	sensitive, and as a result, a number of, a large proportion
	of the individuals seek care or seek to establish a 
	relationship with VA.
	We are actually currently seeking to better understand the 
	implications from DOD and are having ongoing meetings both 
	with the Department of Defense at regional levels where this 
	work in the field is actually occurring nationally and hope 
	to have continuing information on the effect of the program 
	in terms of VA utilization.
	MR. MICHAUD.  Thank you.
	Thank you, Mr. Chairman.
	MR. BROWN OF SOUTH CAROLINA.  Mr. Snyder, did you have any 
	further questions?
	MR. SNYDER.  Yes, Mr. Chairman, thank you.
	Dr. Perlin, just one quick note on this research and then I 
	have two other questions I want to ask.  If I start with 
	$1.65 billion, and I assume a medical inflation rate of about
	5 percent for medical research, which is different than 
	research or than medical care -- it is higher, I think it is
	because everything has to be new; you are trying to do
	cutting-edge stuff, not stuff with old equipment.
	So if I assume a 5 percent increase, inflationary increase, 
	of my 1.6, I am going to say $1.633 billion, that gives me 
	like over $80 million.
	And so you all are saying, well, we have increased it by
	$17 million.
	But in order to just to maintain a 5 percent inflation rate,
	it has got to be a little over $80 million which means 
	actually in real terms a cut of over $60 million.
	Now, I donï¿½t know what the medical inflation rate is but my 
	guess is the VA is not that much different from other 
	institutions because most medical research is done by 
	institutions, and you have a lot of jointness with medical
	schools but that is a -- if you came in here today and 
	stated -- if your written statement said, well, bad news in
	the research front.  In real terms, we are going to cut the
	research number by over $60 million, that is a totally 
	different picture than the way it is presented.  But I think 
	that is in reality what is going on.  It is probably worse 
	than that.
	My two questions for the record -- would you respond for 
	the record, please, to this letter that was sent to the 
	committee from FOVA?  And they have specific items in there 
	about things they think are going to be cut in research.  
	And second, for the record, would you tell us please what
	you think the medical research inflation rate is nationally
	and then also for the VA, and what distinguishes the
	difference between them if there are any differences?  And 
	the two questions I want to ask are on page four.  You are 
	talking about the initiatives, increased copays, you say 
	both of these provisions would apply only to priority 7 and 
	8 veterans who have no compensable service connected 
	disabilities who typically have other alternatives for 
	addressing their medical care costs, including third-party 
	health insurance and Medicare.  Typically.  What is your 
	definition of typically?  Do you have that number available 
	in terms of -- 
	DR. PERLIN.  95 percent.  The Chairman hit the nail on the
	head because many of those veterans are older and Medicare 
	eligible.
	MR. SNYDER.  So, of that number, 5 percent donï¿½t have any 
	insurance?
	DR. PERLIN.  That is correct.
	MR. SNYDER.  And then my second question on page five is the 
	provision in which you talked about a provision to eliminate 
	the practice of offsetting or reducing VA first-party 
	copayment debts with collection recoveries from third-party 
	health plans.
	This provision applies to all categories of veterans; is 
	that correct?
	DR. PERLIN.  It applies to nonservice connected medical
	activities but across all categories, exempting the highest 
	priorities by definition.
	MR. SNYDER.  My question is, have you all evaluated this 
	from the perspective of the potential unintended consequences?
	I was trying to put myself in the place of veterans who may
	be at work, or I may have a working wife who is a bit younger
	than me, since I have a working wife who is younger than me, 
	and who is paying into this insurance.  I have some kind of
	private insurance.  I am not Medicare age eligible.  And 
	then this comes down that I canï¿½t use that insurance any 
	more, so it is costing money to have it.  And I like to have
	my care at the VA.
	Do you think there will be some potential impact, people will
	say letï¿½s just not carry the insurance since they are not 
	going to use it any way and we get our care at the VA?  Is
	that scenario a possibility?
	DR. PERLIN.  I think that would have to be within the realm 
	of possibility.  It is likely individuals who have insurance
	or have alternative coverage do so because of other factors,
	such as being over age 65.  But in a pure sense, yes, that
	could, potentially do that.  I would note that this is a very 
	challenging area, the first-party offset -- it is one of the 
	complexities in the billing process for VA.  There is no other
	entity that offsets a copayment with a bill to an insurance 
	company.  And that almost singularly is one of the things that 
	makes it impossible for VA to buy an off-the-shelf billing
	program that would be used in any other medical enterprise.
	MR. SNYDER.  Thank you, Mr. Chairman.
	MR. BROWN OF SOUTH CAROLINA.  Thank you, Mr. Snyder. 
	Dr. Perlin, I thank you and your team for coming here today. 
	We certainly didnï¿½t mean to drill you so heavily, but thank 
	you.  And if there are other questions, we can certainly 
	submit them to you for response.
	While the first panel is vacating and the second panel comes 
	forward, we are going to take about a 5-minute recess.
	[Recess.]
 
	MR. BROWN OF SOUTH CAROLINA.  Meeting will now come back to
	order, and letï¿½s welcome our second panel.


STATEMENT OF CARL BLAKE, ASSOCIATE LEGISLATIVE 
	DIRECTOR, PARALYZED VETERANS OF AMERICA, REPRE-
	SENTATIVE OF THE INDEPENDENT BUDGET; AND CATHY
	WIBLEMO, DEPUTY DIRECTOR FOR HEALTH CARE, THE
	AMERICAN LEGION.

	MR. BROWN OF SOUTH CAROLINA.  Mr. Carl Blake, Associate
	Legislative Director of Paralyzed Veterans of America, 
	representing the Independent Budget, and Ms. Cathy 
	Wiblemo -- is that pronunciation close?
	MS. WIBLEMO.  Sir, thank you.  Very close.  Yes.
	MR. BROWN OF SOUTH CAROLINA.  Thank you very much.  Deputy 
	director for health care, representing the American Legion,
	and we will begin with Mr. Blake.
	Welcome both of you.

STATEMENT OF CARL BLAKE

	MR. BLAKE.  Thank you, Mr. Chairman.  I would like to ask 
	that my full written statement be submitted for the record.
	MR. BROWN OF SOUTH CAROLINA.  Without objection.
	MR. BLAKE.  Chairman Brown, Ranking Member Michaud, PVA 
	would like to thank you for the opportunity to testify 
	today on behalf of the IB regarding the fiscal year 2007 VA 
	health care budget.  We are proud that this will mark the 
	20th year that PVA along with AMVETS and Disabled American 
	Veterans and the Veterans of Foreign Wars have presented the 
	Independent Budget, which is a comprehensive budget and
	policy document.
	The Independent Budget uses commonly accepted estimates of
	inflation, health care costs and health care demand to reach 
	its recommended levels.  This year, the document is endorsed
	by 60 veteran service organizations and medical and health 
	care advocacy groups.  For the first time, a reasonable starting
	point was offered by the President to fund the VA health care 
	system.  For fiscal year 2007, the administration has requested
	$31.5 billion for total veteransï¿½ health care, a $2.8 billion 
	increase over the fiscal year 2006 appropriation.  Although 
	this is a significant step forward, we still have some concerns 
	about proposals contained within its request.
	The Independent Budget for fiscal year 2007 recommends 
	approximately $32.4 billion for total veteransï¿½ health care, an 
	increase of $3.7 billion over the fiscal year 2006 appropriation
	and about $900 million over the administrationï¿½s request.  We
	believe that the recommendations of the Independent Budget have 
	been validated once again this year, as the administration 
	indicated, that it will actually take $25.5 billion to fund the 
	medical services account, an amount very close to what we 
	recommend.
	However, they only requested $24.7 billion in appropriated 
	dollars.  The administration hopes to raise an additional $800
	million by instituting a new enrollment fee and an increase in 
	prescription drug copayments to achieve the necessary funding 
	level.  We are deeply concerned that, once again, the 
	Presidentï¿½s recommendation proposes the $250 enrollment fee
	for priority 7 and 8 veterans and an increase in the 
	prescription drug copayment from $8 to $15.
	These proposals will put a serious financial strain on many
	veterans, including certain catastrophically disabled veterans
	with non service-connected injuries.  These veterans, because 
	of their catastrophic disabilities, are enrolled in VA health
	care as priority 4 veterans.  However, due to a glitch in 
	drafting of eligibility reform legislation in 1996, because of
	their income, they are still required to pay all copayments 
	and fees as though they are priority 7 and 8 veterans.  We 
	urge the committee to correct this unfair situation immediately.
	The VA estimates that these proposals will force nearly
	200,000 veterans to leave the system and approximately
	1,000,000 veterans to choose not to enroll.  Congress has 
	soundly rejected these proposals for the past 3 years, and
	we urge you to do so once again.
	Our health care recommendation does not include additional
	money to provide for the health care needs of category 
	8 veterans being denied enrollment into the system.  However, 
	it is included in our bottom line for total discretionary 
	dollars needed by the VA to provide health care to all 
	eligible veterans.
	Despite our clear desire to have the VA health care system 
	open to these veterans, Congress and the administration have
	shown little desire to overturn this policy decision.  The VA
	estimates that a total of over 1 million category 8 veterans
	will have been denied enrollment into the VA health care 
	system by the fiscal year 2007.
	We believe it would take approximately $684 million to meet 
	the health care needs of these veterans if the system were
	reopened.
	For medical and prosthetic research, the administration has 
	requested $399 million, a cut of approximately $13 million 
	below the fiscal year 2006 appropriation.  The Independent
	Budget recommends $460 million.  Research is a vital part of
	veteransï¿½ health care and an essential mission for our national
	health care system.  It has been responsible for such 
	advancements as the cardiac pacemaker, the CT scan, and world-
	class prosthetics.
	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 Independent Budget has 
	proposed that funding for veteransï¿½ health care be removed 
	from the discretionary budget process and be made mandatory.
	Mr. Chairman, I would like to thank you again for the 
	opportunity to testify today, and I would be happy to answer 
	any questions you might have.
	[The statement of Carl Blake appears on p. 56]

	MR. BROWN OF SOUTH CAROLINA.  Thank you, Mr. Blake.
	Ms. Wiblemo.

STATEMENT OF CATHY WIBLEMO

	MS. WIBLEMO.  Thank you, Mr. Chairman, and members of the
	Subcommittee for inviting the American Legion to offer its 
	views on the Presidentï¿½s budget request for the Veteransï¿½ 
	Health Administration for fiscal year 2007.  It is a pleasure 
	to be here today, and I would request that my entire testimony 
	be submitted, entered into the record.
	MR. BROWN OF SOUTH CAROLINA.  Without objection.
	MS. WIBLEMO.  The American Legion is a member of the 
	Partnership for Veteransï¿½ Health Care Budget Reform, and we
	strongly encourage the Subcommittee to hold a hearing to discuss 
	the annual funding process for veteranï¿½s health care before the 
	end of this session.  Just recently the Veteransï¿½ Health 
	Administration was recognized as scoring higher than the
	private sector industry and other Federal programs in patient 
	satisfaction for the sixth year running, a true testament to 
	the superb job they continue to do for the Nationï¿½s veterans.
	We are all very proud of the Veteransï¿½ Health Administration.  
	Indeed, they have received many such recognitions over the past
	few years, and deservedly so.  Yet this fiscal year 2007 budget
	proposal aims to drive away over a million veterans from using 
	the high quality health care system.  In January 2003, category 
	8 veterans were suspended from enrolling.  We would like to see
	that suspension lifted to allow those veterans to enroll in the
	health care system that was established for them.
	Once again, the American Legion raises objection to the proposal
	that would charge an annual enrollment fee of $250 for priority 
	group 7 and 8 veterans and the proposal that would raise the 
	prescription copayment amount from $8 to $15.
	We also question the validity of the management efficiencies in
	light of the recent GAO report that found VA lacked both the 
	methodology for making health care management efficiency savings
	assumptions and adequate documentation for calculating and 
	reporting management efficiency savings.
	Undocumented management efficiencies result in real budgetary 
	shortfalls of finite resources.  The American Legion is also 
	concerned with the apparent stall on the capital asset realignment
	for enhanced services process.  With just half of the local 
	advisory panel meetings being accomplished, we are wondering if 
	and when the others are going to be held.  CARES is an extremely 
	important and needed initiative.
	Mr. Chairman, the American Legion appreciates the 
	administrationï¿½s continued focus and increased funding for the 
	implementation of the mental health strategic plan that will 
	facilitate equitable access and delivery of mental health and 
	substance abuse care across the nation to veterans in need.  We
	would ask that the same intensity and energy poured into the 
	strategic mental health plan be the same for the formulation of
	the long overdue long-term care strategic plan.
	I would also like to add that Dr. Shelhorse and the mental health
	strategic committee did a wonderful job with the mental health 
	strategic plan.  The American Legion is working hard to ensure a
	true and accurate picture is portrayed of the funding and 
	services needed to allow VHA to continue to provide high quality
	health care to the Nationï¿½s veterans.
	In August 2005, we published the third annual system saving 
	report, completing site visits to every VA medical center over
	the course of nearly 3 years.  The third report revealed a 
	critical shortage in the funding of VA health care with the
	biggest budgetary challenges being increased patient workload 
	demand, upkeep of equipment and maintenance, pharmacy costs and 
	staffing levels.
	In January 2006, the American Legionï¿½s system savings task force
	began another round of visiting the VA medical centers.  We 
	thank Dr. Perlin for that.  By the end of this week, we will 
	have visited 12 facilities.
	Preliminary reports suggest staff cuts and facilities struggling
	to meet patient workload increases.  We plan to visit at least 
	45 facilities to include the polytrauma centers.  Through these
	site visits, we learn what is going on in the trenches, where 
	the rubber meets the road.
	Indeed, we are in the gulf coast area this week with plans to 
	publish an interim report on just those specific areas.
	Mr. Chairman, veteransï¿½ health care is the price tag of freedom. 
	The American Legion stands ready to assist you in ensuring that 
	VA health care is adequately funded to meet the needs of all 
	veterans.  Thank you.
	[The statement of Cathy Wiblemo appears on p. 65]

	MR. BROWN OF SOUTH CAROLINA.  Thank you very much, and we will 
	entertain some questions at this time.
	Mr. Blake, I am going to ask you the question first, and either
	one of you can join in with a rebuttal or your feelings on that
	same question.
	Mr. Blake, what is your assessment of VAï¿½s progress to date in
	getting veterans appointments within 30 days of request?
	MR. BLAKE.  Mr. Chairman, I have to say, from my professional 
	opinion, I couldnï¿½t give an accurate answer to that.  I would be 
	happy to refer that question to our veterans benefits staff at
	PVA who have service officers in the field and see this happen 
	every day and get back to you with a more accurate answer on 
	behalf of PVA.
	MS. WIBLEMO.  Could you repeat that question, sir?
	MR. BROWN OF SOUTH CAROLINA.  What is your assessment of VAï¿½s 
	progress to date in getting veterans appointments within 30 days
	of request?
	MS. WIBLEMO.  We, our experience has been that the priority 
	veterans, OIF/OEF, are getting within the 30 days.  We do not see,
	and it has not been reported to us, that they are not.
	We do, though, have some documentation on the electronic waiting 
	list, and that it is getting longer, that veterans with non 
	service-connected conditions are waiting -- are being put on 
	this waiting list and are waiting a significant amount of time 
	and/or referred to the community.
	MR. BROWN OF SOUTH CAROLINA.  What would you recommend as the
	solution?
	Is it because VA is understaffed or the facilities are too small
	or the commute is too long, or not enough nurses, etc.?
	MS. WIBLEMO.  Well, definitely staffing levels are a problem, 
	but that is all a funding issue.  So, you know, adequate funding
	of course, you hate to keep throwing money at something, but 
	adequate funding is definitely an issue when it comes to staffing
	levels.  Anesthesiologists are just one example of where 
	veterans are having to wait to get surgery because they donï¿½t 
	have enough anesthesiologists, which is a funding issue because 
	VA canï¿½t pay.
	MR. BLAKE.  Mr. Chairman, I would like to concur with 
	Ms. Wiblemo, too.  Particularly in the areas of specialized
	care, we have seen some difficulty in hiring nurses.  We all 
	know that there is a recognized nurse shortage across the 
	country in all fields.  This is particularly true in 
	specialized areas, and that problem is amplified by VAï¿½s 
	inability to hire, in some cases, physicians as well.
	It is one thing when you donï¿½t have the direct bedside care 
	from nurses.  It is another one when you donï¿½t have the 
	physicians that oversee a lot of this care as well.
	MR. BROWN OF SOUTH CAROLINA.  That leads me to my second 
	question.  In Charleston and around some other parts of the 
	country, we are trying to do some consolidation or at least 
	cooperating sharing in some of the services.  And so my question
	would be, do you agree in concept with VA working with their
	medical affiliations to enter into sharing agreements that 
	maximize the ability of the VA to provide veteran patients with
	the most advanced technology and treatments?  How would you 
	respond?  I am sure you are involved somewhat with the idea of
	trying to combine some resources.
	MR. BLAKE.  Absolutely, Mr. Chairman.  I think coordination is
	the key.  Our position has always been, however, in any 
	coordinated setting, veterans should still get the priority for
	care.  If you are bringing in outside patients who are 
	nonveterans into whatever coordinated system you may have, 
	ultimately we believe that the veterans should still get the 
	priority for care.
	MS. WIBLEMO.  I would just like to echo some of that, 
	absolutely, coordination, you know, sharing, and all of that,
	to get the best care.
	Our position has always been to keep the VA a separate system, 
	because they are unique and different.  And the face of the VA 
	needs to be out there for the veterans to see.
	MR. BROWN OF SOUTH CAROLINA.  I think that has been a major 
	concern, too, that the veterans would feel like they might lose
	their identity, and I donï¿½t think there is any effort at all to
	lessen that point.  I think the number one point, exactly what 
	the shortcomings you all expressed in the first question is 
	that we want to enhance health care for veterans.  It is
	becoming more complicated.  Some of the veterans coming home 
	today didnï¿½t come home in prior wars, but are now because of 
	the new technology.  And this is something that we mentioned 
	with Dr. Perlin earlier about research dollars, combining some
	of those research resources with other like interests to try 
	to stretch those dollars.  And so this is what we are trying 
	to look forward to in the 21st century.
	MR. BLAKE.  Mr. Chairman, I would like to make one other point
	also.  We certainly support the idea of coordinated care when 
	it comes to basic care.  But one thing we have to make sure 
	we understand is that when it comes to specialty care, we donï¿½t
	believe that there is another type of health care system or 
	anybody else that the VA can coordinate with that could provide
	better services than the VA itself.  So in this effort to 
	require the VA work together with another system, we have to
	make sure that veterans with the most important needs and the 
	specialized services, particularly, get their care directly
	through the VA.
	MR. BROWN OF SOUTH CAROLINA.  I think that is a good point, and
	it is certainly well taken.  This is something that we certainly 
	are trying to build on, too, because I donï¿½t know of any process
	where 2 units come together to try to offer some kind of a 
	shared responsibility where you donï¿½t gain something from both.
	I donï¿½t think either one comes to the table with all the 
	technology.  Something we are trying to look at as we look at
	new construction projects around the country, is to try to pull
	the best from both worlds and try to coordinate it so that 
	veterans themselves can get a higher level of treatment because 
	we know the technology is going to be switching and changing as 
	we move forward.  And we have to be sure we are on the cutting
	edge, particularly to address the health care needs of our 
	veterans.
	Mr. Michaud.
	MR. MICHAUD.  Thank you very much, Mr. Chairman.  Before I ask 
	my question, I think it is worth noting, Mr. Chairman, that I am
	very pleased to see Dr. Perlin and his staff decided to stay to 
	hear the panel as well, and actually, I noticed last week also,
	Dr. Perlin, that you were here to hear the second panel.  I 
	appreciate your taking an interest in this.  And I do want to 
	thank you both for testifying and for your advocacy on behalf of 
	our Nationï¿½s veterans.  I also want to thank you both for your
	service in the Army.  I appreciate your service to the country.
	My first question, maï¿½am, is the American Legion produces an 
	excellent report each year called, A System Worth Saving.  This 
	report outlines how the budget works from the ground up, from 
	a provider, in a veteranï¿½s perspective.  Previous reports have 
	documented frustration of and harm to veterans from waiting 
	lists, appointments and what have you.  Your site visits have
	been an early warning sign to Congress that the system, that 
	there are flaws in the system, particularly with inadequate 
	budget.
	Do you have an initial impression on your visits, so far, from
	the sites you have visited, that the new shortfalls are rearing
	their ugly head once again?
	MS. WIBLEMO.  We have, like I said, at the end of this week, we
	will have been to 12 facilities.  I am going to Albuquerque, as
	a matter of fact, tomorrow.
	Preliminary reports from just -- we have like 6 reports that we
	have in.  The budgetary challenge for all of them has been the
	increased patient workload.
	And the other we have had some reports of running in the red, 
	facilities.  These are not pictures; these are facilitiesï¿½ 
	specific information that we are getting.
	MR. MICHAUD.  Thank you.
	This one is to both of you.  Could you elaborate on your 
	concerns with the VA proposed budget for meeting the long-term
	care needs of our aging veterans?
	MR. BLAKE.  Well, Mr. Michaud, this is something we felt was 
	really starting to rear its ugly head last year when there 
	were some recommendations to significantly cut long-term care 
	programs.  We have always pushed for the VA to continue to 
	maintain the capacity requirements as laid out in the mil bill.
	And clearly, the evidence doesnï¿½t bear out that the VA has been
	able to do so.  We could debate the reasons for why they 
	havenï¿½t.  We firmly believe that, obviously, not receiving the 
	funding necessary is a large part of that.
	I donï¿½t think it is appropiate for the VA, to move down the 
	road of curbing its long-term care abilities, given that the 
	veteransï¿½ population is certainly not getting any younger. 
	Though I might fall into a younger veteran status, there are a 
	whole lot more veterans that are significantly older than I am.
	And even a recent GAO report bore out the fact that with the 
	aging veterans population, the VA has to do much more to be able
	to meet that demand as that population grows.
	MS. WIBLEMO.  The long-term care issue is huge, much like the 
	mental health issue.  During CARES, of course, they tabled all 
	of that.  And they have struggled to come up with a strategic 
	plan, which I think is very, very important, so they know where
	they are going to go and what they need to do and where they 
	need to put those beds.
	We have always advocated for maintaining the 1998 law.  And we
	are not quite sure where those veterans are going, you know.  
	The VA is pushing -- as is the rest of the Nation, in long-term
	care, which is also struggling by the way, meaning the demand 
	-- but the VA is pushing them to go out, you know, home, in the 
	home, closer to home, which is fine, but that is not always
	relevant for some veterans, those with mental health problems.  
	And the VA, of course, is leading the industry in that type of 
	treatment.  So, we are very concerned, but I think really it
	is an issue of getting that long-term care strategic plan out,
	published and starting to be implemented so the dollars are
	going where they need to go.
	MR. BLAKE.  I would like to make a couple other points.  One,
	I would like to point out that one of the recommendations in 
	the Independent Budget is that the VA immediately develop a 
	long-term care strategic plan.  The issue of long-term care and
	how to best provide it is something that PVA grapples with 
	particularly because of the nature of our membership with 
	catastrophic disabilities.  On the one hand, we recognize the 
	importance of institutional long-term care, like nursing home
	care, because of the ability to provide advanced services in 
	that setting.  At the same time, one of the biggest things we
	are advocates for is the ability of catastrophically disabled
	veterans to be out in society and to function and be independent.
	So, while we believe that the capacity requirements for 
	institutional long-term care are necessary, we also support
	additional long-term care through things like the Assisted-
	Living Pilot Program, which the VA conducted in a few VISNs,
	and we believe that the successes from that pilot program bear 
	out that maybe this is something that should be implemented
	across the entire country.
	MR. MICHAUD.  Thank you.  In my last question, and you both 
	sat through the first panel, and I appreciate that as well, and
	you heard that the response and the opening statements of 
	Dr. Perlin and the team.  Is there anything that you heard from
	the first panel in either any of the testimonies you would like
	to comment on or add or dispute?
	MR. BLAKE.  I donï¿½t know about dispute, Mr. Michaud.  I would 
	just like to say, I would like to reiterate our concern as was 
	done so by the panel about medical and prosthetic research. 
	Research is something that is very, very close to PVAï¿½s heart as
	well as the Independent Budget.  Not only do we get support from 
	the four organizations of the Independent Budget, but we also 
	work hand-in-hand with friends of VA research as we develop our
	medical and prosthetic research recommendations.
	So any time we see a cut, we are certainly concerned about the 
	long-term effects that this may have on veterans now and in the 
	future.
	Just as I laid out in my statement, there are so many 
	advancements that the VA has been responsible for in the medical
	field through this research.  I think we do veterans and even 
	all citizens an injustice by reducing the ability of the VA to 
	conduct this much needed research.
	MS. WIBLEMO.  I would just like to comment on the continual 
	comparing of DOD and VA.
	They are completely different systems.  They serve different 
	populations.  And so I donï¿½t think it is really a fair 
	comparison.  So we certainly donï¿½t support VA going the way of
	DOD.  While we support the sharing agreements and the joint 
	ventures, as long as VA has a handle on that, that is all well 
	and good.  But, you know, the copays, and DOD treats, you know,
	dependents, family members.  Children.  So, it is a little bit 
	different.
	MR. BLAKE.  Ms. Wiblemo triggered something in my head.  I 
	wanted to comment on the same topic.  I think it is important 
	that we understand the difference between the TRICARE system 
	and VA health care system.  TRICARE is an entitlement for its
	enrollees.  And VA obviously is veterans who are eligible, and
	it is subject to the discretionary nature of its funding.  
	Because TRICARE is an entitlement, retirees who are enrolled in 
	TRICARE cannot be denied access to that.  Furthermore, it is 
	really just an insurance program.  VA is a provider of health 
	care.  However because it is discretionary, at any time, due to
	the discretionary nature of its funding process, those veterans
	could be cut out of the system.  That is not true of TRICARE 
	enrollees. 
	MR. MICHAUD.  I see the VA officials shaking -- nodding their 
	heads, yes, so I assume that they agree.
	No further questions.  Thank you, Mr. Chairman.
	MR. BROWN OF SOUTH CAROLINA.  Thank you, Mr. Michaud.
	The Independent Budget recommended $38 million in minor 
	construction projects for the Veteransï¿½ Benefit Administration
	and $24 million more than the Presidentï¿½s request.  What areas
	does the Independent Budget recommend funding for on par with 
	what the President requested?
	MR. BLAKE.  Mr. Chairman, my area of expertise is not in 
	construction at all.  However, I would be happy to take that 
	question into writing and submit it to our people who work on 
	the construction portion of the IB and get back to you.
	MR. BROWN OF SOUTH CAROLINA.  Let me ask you one further question
	then, and either one of you can answer this.  The independent 
	Budget expressed concern about a VA nursing shortage.  Do you 
	support specific funding to establish magnet status at VA 
	medical centers to recruit and retain nursing personnel and 
	improve the level of quality care?
	MS. WIBLEMO.  Well, I canï¿½t answer for the Independent Budget. 
	However, the American Legion is a big supporter of the nurses 
	-- the nurses of VA foundation and also maintaining -- and the
	nursing education and the furthering of that education.  And 
	since the VA is older, we would support the magnet, you know,
	getting the magnet certification, or whatever it is.  We would
	support that.
	MR. BLAKE.  Mr. Chairman, I would say, on behalf of the IB, we
	would certainly support any additional resources poured into
	the system to support hiring more nurses.  Clearly, it is a 
	major problem as I already addressed.  And I think in previous 
	hearings before this committee and the full committee, it has 
	been shown that magnet status for a medical center serves as a
	recruiting tool in bringing nurses into the system.  So that 
	being the case, we would certainly support any efforts to get 
	VA in line with that to -- if we believe that it will, or we 
	believe that it will allow the VA to recruit more and better 
	nurses, and ultimately that would be a positive for the VA 
	health care system.
	MR. BROWN OF SOUTH CAROLINA.  Let me just say thank you to both
	of you for coming, and as a member of the American Legion, I 
	appreciate you being part of this.  One minute, we are not 
	going to conclude right yet.  Mr. Michaud wants to ask one 
	more question.
	MR. MICHAUD.  Thank you, Mr. Chairman.  Actually, their 
	comments triggered another question.  Just a brief one, if
	you might.  You had talked about DOD and the VA, and clearly
	I am not sure whether it is mandatory or not, but as far as 
	medical records, be it shared, with DOD and the VA, my first
	question, is that mandatory?  My second question is, seems to
	me if it is mandatory, that once a system is implemented that 
	there should be some management efficiencies there.  And I was
	wondering if you had done an analysis about those management
	efficiencies and whether those can be booked and if they are 
	real, if the management efficiencies arenï¿½t there once its 
	implemented, if we reduce the DODï¿½s budget by that amount, if
	they canï¿½t meet those management efficiencies.
	And it is more a question for the VA, but if you can answer 
	that.
	MS. WIBLEMO.  I am probably not qualified to answer that
	question, other than to say that the sharing of the records, 
	it would make sense that there would be management 
	efficiencies there and the savings of money.  But past that,
	I donï¿½t know if it is mandatory or not that they share
	records.  I donï¿½t know.  
	MR. BLAKE.  I would say, too, I donï¿½t know if it is mandatory.
	It seems like to me it would only make sense.  Having gone 
	through medical boarding process when I was retired from the 
	service due to a service-connected disability, I know that 
	all of my medical records personally were shared with the VA 
	facility as part of the process of filing a claim for 
	disability.  They had to request my medical records for part
	of that process.
	So I would just assume maybe it already is mandatory, and if
	it is not, it would only make sense that it would be.
	MR. MICHAUD.  Well, thank you very much, and I also want to
	thank you, Mr. Chairman, for your patience this afternoon. 
	I know the first panel went longer than you probably expected,
	but I really appreciate your willingness to allow members the
	opportunity to ask questions because as you well know this is
	a very important issue and really appreciate your patience,
	thank you.
	MR. BROWN OF SOUTH CAROLINA.  Well, thank you, Mr. Michaud. 
	I appreciate, working with you in a nonpartisan spirit to 
	support health care for veterans, as it is a top priority for
	both of us and its certainly meaningful for us to listen as 
	long as we may.
	I would just like to further ask you, Mr. Blake, were those 
	records transferred electronically or did you have to manually
	take them with you?
	MR. BLAKE.  I didnï¿½t manually take them.  I think they were 
	probably transferred manually, or faxed maybe. They were faxed.
	I know that, in the process, there were time frames built in
	for requests and follow-ups and all that sort of thing, but the
	VA, as I understood it, requested a full copy of my medical 
	records, and they were forwarded along to the necessary
	physician as I went through that process.
	MR. BROWN OF SOUTH CAROLINA.  That is the link we are trying 
	to overcome  --  to have that transparency between DOD and VA.
	MR. BLAKE.  Not on behalf of the Independent Budget or anybody
	else but just from a personal perspective, it seemed to me 
	that one of the biggest challenges in going through the claim
	for disabilities process was time limits that were built in 
	by nature for 30 days, from the time they file a request to 
	receive some kind of a notification and a follow-up with an 
	additional 30 days from that time of contact.  And a lot of 
	those time frames, it seems to me, could be shortened or done
	away with through electronic transfer of any kind of that 
	information.  And that would, you know, not to say that there
	is an example of how you can shorten the disability claims 
	process, but it just seems like to me that could be a 
	possibility.
	MR. BROWN OF SOUTH CAROLINA.  Looks to me it would be a
	no-brainer.  Somebody said, if Walmart could tell you when 
	they sold a box of Tide anywhere in the world, we ought to be
	able to track our veterans and our DOD personnel.  Looks like 
	to me the format ought to be somewhat compatible so you can 
	do that in an outreach effort.
	Today, we are building a combination clinic on the weapon 
	station in Charleston which is going to be a DOD and a VA 
	outpatient clinic, and so we are trying to make sure we 
	consolidate as many of our resources as possible. 
	MR. BLAKE.  So what we are trying to do is consolidate as 
	many of our resources as possible.  We feel like that is
	going to be a good thing.  But you donï¿½t think so, Cathy.
	MS. WIBLEMO.  Oh, no.  Again, the other thing I would say 
	about that is that the stakeholders, the veterans need to 
	be at the table from the beginning.  I know, down in 
	Charleston, because I went down there, that that wasnï¿½t the 
	case.  So I would say that the veterans need to be at the 
	table in any of those -- like we were with CARES, like former
	Secretary Principi.  I think that is important.
	MR. BROWN OF SOUTH CAROLINA.  Thank you very much for your
	patience and for the knowledge that you bring to the table,
	and thank you for your service to the veteransï¿½ population.
	Dr. Perlin, thank you so very much for staying. We all want 
	to work together that is our goal.  Thank you so very much.
	[The statement of the Vietnam Veterans of America, submitted
	by Rick Weidman appears on p. 78]

	[The statement of the American Psychiatric Association 
	appears on p. 90]

	[The statement of the American Federation of Government 
	Employees, AFL-CIO appears on p. 95]

	[Whereupon, at 4:08 p.m., the Subcommittee was adjourned.]